LIBERTY STEIN ROE ADVISOR TRUST, 485APOS, 1999-08-24

LIBERTY STEIN ROE ADVISOR TRUST
485APOS, 1999-08-24

Previous: ROADHOUSE GRILL INC, DEF 14A, 1999-08-24

Next: FIRST UNION MASTER CREDIT CARD TRUST, 8-K, 1999-08-24

<PAGE>

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]
Post-Effective Amendment No. 12 [X]

and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 14 [X]

LIBERTY-STEIN ROE ADVISOR TRUST
(Exact Name of Registrant as Specified in Charter)

One South Wacker Drive, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 1-800-338-2550

Heidi J. Walter Cameron S. Avery
Vice-President & Secretary Bell, Boyd & Lloyd
Liberty-Stein Roe Advisor Trust Three First National Plaza
One South Wacker Drive 70 W. Madison Street, Suite 3300
Chicago, Illinois 60606 Chicago, Illinois 60602
(Name and Address of Agents for Service)

It is proposed that this filing will become effective (check
appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on November 1, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485

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 Young
Investor Fund, Stein Roe Advisor Growth Stock Fund, Stein Roe
Advisor High-Yield Municipals Fund, Stein Roe Advisor Intermediate
Bond Fund, and Stein Roe Internet Leaders Fund.

This Registration Statement has also been signed by SR&F Base
Trust.

<PAGE>

The prospectuses and statements of additional information
relating to the series of Liberty-Stein Roe Advisor Trust
designated Stein Roe Advisor Growth & Income Fund, Stein Roe
Advisor Young Investor Fund, Stein Roe Advisor Growth Stock
Fund, and Stein Internet Leaders Fund are not affected by
the filing of this Post-Effective Amendment No. 12.

STEIN ROE ADVISOR BOND FUNDS
Prospectus, Nov. 1, 1999

Stein Roe Advisor Intermediate Bond Fund, Class K
Stein Roe Advisor High-Yield Municipals Fund, Class K

Advised by Stein Roe & Farnham Incorporated

The following eligible institutional investors may purchase Class
K shares: (i) any retirement plan with aggregate assets of at
least $5 million at the time of purchase of Class K shares and
which purchases shares directly from Liberty Funds Distributor,
Inc., the Funds' distributor, or through a third-party broker-
dealer; (ii) any insurance company, trust company or bank
purchasing shares for its own account; and (iii) any endowment,
investment company or foundation. In addition, Class K shares may
be purchased directly or by exchange by any clients of investment
advisory affiliates of the distributor provided that the clients
meet certain criteria established by the distributor and its
affiliates.

TABLE OF CONTENTS

THE FUNDS........................................2
Each of these sections discusses the
following topics, Investment Goals, Primary
Investment Strategies, Primary Investment
Risks, Performance History, and Your Expenses

Stein Roe Advisor Intermediate Bond Fund.........2
Stein Roe Advisor High-Yield Municipals Fund.....6

YOUR ACCOUNT....................................11
How to Buy Shares...............................11
Distribution and Service Fees...................12
How to Exchange Shares..........................12
How to Sell Shares..............................12
Other Information About Your Account............13

MANAGING THE FUNDS..............................16
Investment Advisor..............................16
Portfolio Managers..............................16

OTHER INVESTMENT STRATEGIES AND RISKS...........17

FINANCIAL HIGHLIGHTS............................21

The Securities and Exchange Commission has not approved or
disapproved these securities or determined whether this prospectus
is truthful or complete. Anyone who tells you otherwise is
committing a crime.

Not FDIC Insured May Lose Value
No Bank Guarantee

<PAGE>

THE FUND
STEIN ROE ADVISOR INTERMEDIATE BOND FUND

INVESTMENT GOALS
- ---------------------------------------------------------------
The Fund seeks a high level of total return by pursuing current
income and opportunities for long-term appreciation.

PRIMARY INVESTMENT STRATEGIES
- ---------------------------------------------------------------
The Fund invests all of its assets in SR&F Intermediate Bond
Portfolio as part of a master fund/feeder fund structure. The
Portfolio invests primarily in:

* debt securities issued by the U.S. government - these include
U.S. Treasury securities and agency securities; agency
securities include certain mortgage-backed securities, which
represent interests in pools of mortgages,
* debt securities of U.S. corporations, and
* mortgage-backed securities and asset-backed securities issued by
private (non-governmental) entities.

At least 60% of these securities are higher-quality debt
securities rated at the time of purchase:

* at least A by Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.,
* at least A2 by Moody's Investors Service, Inc., or
* with a comparable rating by another nationally recognized rating
agency.

The Portfolio may invest up to 40% of its assets in securities
rated at the time of purchase:

* BBB and below by Standard & Poor's,
* Baa and below by Moody's Investors Service, Inc., or
* with a comparable rating by another nationally recognized rating
agency.

The Portfolio may invest up to 20% of its assets in lower-rated
debt securities. These securities are sometimes referred to as
"junk bonds" and are rated at the time of purchase:

* below BBB by Standard & Poor's,
* below Baa by Moody's Investors Service, Inc., or
* with a comparable rating by another nationally recognized rating
agency.

Normally, the Portfolio expects to maintain a weighted average-
life range of three to 10 years.

The portfolio manager has wide flexibility to vary the allocation
among different types of debt securities based on the portfolio
manager's judgment of which types of securities will outperform
the others. In determining whether to purchase or sell a
security, the portfolio manager first evaluates the relative value
of the sectors he invests in. After selecting a particular
sector, the portfolio manager looks at both the relative value of
a security in comparison to its sector peers and the relative
value in comparison to other securities in the same rating
category. The portfolio manager may be required to sell portfolio
investments to fund redemptions.

PRIMARY INVESTMENT RISKS
- ---------------------------------------------------------------
The primary risks of investing in the Fund are described below.
There are many circumstances (including others not described here)
that could cause you to lose money by investing in the Fund or
that could cause the Fund's total return or yield to decrease.

The price of the Fund's shares - its net asset value per share
(NAV) - can fluctuate daily in response to changes in the market
value of the bonds it owns.

Market risk is the risk that the price of a security held by the
Portfolio will fall due to changing market, economic, or political
conditions. Market risk includes interest rate risk. Interest
rate risk is the risk of a change in the price of a bond when
interest rates increase or decrease. In general, if interest
rates rise, bond prices fall; and if interest rates fall, bond
prices rise. Changes in the values of bonds usually will not
affect the amount of income the Fund receives from them but will
affect the value of the Fund's shares. Interest rate risk is
generally greater for bonds having longer maturities.

Structure risk is the risk that an event will occur (such as a
security being prepaid or called) that alters the security's cash
flows. Prepayment risk is a particular type of structure risk
that is present in the Fund because of its investments in
mortgage-backed securities. Prepayment risk is the possibility
that, as interest rates fall, homeowners are more likely to
refinance their home mortgages. When mortgages are refinanced,
the principal on mortgage-backed securities is paid earlier than
expected. In an environment of declining interest rates,
mortgage-backed securities may offer less potential for gain than
other debt securities. During periods of rising interest rates,
mortgage-backed securities have a high risk of declining in price
because the declining prepayment rates effectively increase the
maturity of the securities. In addition, the potential impact of
prepayment on the price of a mortgage-backed security may be
difficult to predict and result in greater volatility.

Because the Portfolio may invest in debt securities issued by
private entities, including corporate bonds and privately issued
mortgage-backed and asset-backed securities, the Fund is subject
to issuer risk. Issuer risk is the possibility that changes in
the financial condition of the issuer of a security, changes in
general economic conditions, or changes in economic conditions
that affect the issuer may impact the issuer's ability to make
timely payment of interest or principal. This could result in
decreases in the price of the security.

Lower-rated risk debt securities are sometimes referred to as
"junk bonds." Lower-rated debt securities involve greater risk of
loss due to issuer risk and are less liquid, especially during
periods of economic uncertainty or change, than higher-quality
debt securities. Medium-quality debt securities, although
considered investment grade, may have some speculative
characteristics.

An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

Information on other securities and risks appears under "Other
Investment Strategies and Risks."

PERFORMANCE HISTORY
- ---------------------------------------------------------------
The bar chart below shows the historical performance for the
Portfolio restated as disclosed below and the performance of the
Fund's Class K shares. The performance table following the bar
chart shows how the average annual returns compare with those of a
broad measure of market performance for 1 year, 5 years and 10
years. The chart and table are intended to illustrate some the
risks of investing in the Fund by showing the changes in
performance. All returns include the reinvestment of dividends
and distributions. As with all mutual funds, past performance
does not predict the Fund's future performance.

[callout]
UNDERSTANDING PERFORMANCE
Calendar-year total return shown in the bar chart includes the
effects of Fund expenses. The bar chart does not take into effect
any expense reduction arrangements discussed in the footnotes to
the Annual Fund Operating Expenses table.

Average annual total return is a measure of the Fund's performance
over the past one-, five- and ten-year periods. It includes the
effects of Fund expenses. The table does not take into effect any
expense reduction arrangements discussed in the footnotes to the
Annual Fund Operating Expenses table.

The Fund's return is compared to the Lehman Brothers Intermediate
Government/Corporate Bond Index, an unmanaged index that tracks
the performance of government and corporate bonds. Unlike the
Fund, indices are not investments, do not incur fees or expenses,
and are not professionally managed. It is not possible to invest
directly in indices.
[end callout]
- ------------------------------------------------------------------
CALENDAR-YEAR TOTAL RETURNS(1)
17%
15% 16.56%
12% 12.24% 14.72%
9%
6% 6.92% 7.40% 8.98% 8.99% 6.27%
3% 4.31%
0%
- -5% -2.88%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ------------------------------------------------------------------
(1) Class K shares of the Fund commenced operations on February 4,
1998. The performance in the chart is the performance of the
Portfolio restated to reflect the Class K share expenses.

The Fund's year-to-date total return through Sept. 30, 1999, was
___%.

Best quarter: 2nd quarter 1989, +7.25%
Worst quarter: 1st quarter 1994, -2.47%
- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(2)-
FOR PERIODS ENDED DECEMBER 31, 1998
1 Year 5 Years 10 Years
Class K (%)
Lehman Brothers Intermediate
Government/Corporate Bond
Index (%)
- -----------------------------------------------------------------
(2) The 1 Year performance in the table reflects the performance
of the Fund's Class K shares. The 5 Year and 10 Year
performance in the table reflects the restated performance of
the Portfolio combined with the performance of the Fund's
Class K shares since inception. The performance of the
Portfolio is restated to reflect Class K share expenses.

YOUR EXPENSES
- ---------------------------------------------------------------
Expenses are one of several factors to consider before you invest
in a mutual fund. The tables below describe the fees and expenses
you may pay when you buy, hold and sell shares of the Fund.

[CALLOUT]
UNDERSTANDING EXPENSES
Annual Fund Operating Expenses are deducted from the Fund. They
include management fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.

Example Expenses helps you compare the cost of investing in the
Fund to the cost of investing in other mutual funds. The table
does not take into account any expense reduction arrangements
discussed in the footnotes to the Annual Fund Operating Expenses
table. It uses the following hypothetical conditions:
* $10,000 initial investment
* 5% total return for each year
* Fund operating expenses remain the same
* No expense reductions in effect
* Redemption at the end of each time period
[End of callout]
- ------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(1)(2) (EXPENSES ARE DEDUCTED
DIRECTLY FROM FUND ASSETS)
Class K
Management fee(3)(4) (%) 0.65
Distribution and service (12 b-1) fees (%) 0.25
Other expenses(4) (%) 5.09
Total annual fund operating expenses(4) (%) 5.99
- ------------------------------------------------------------
(1) A $10 annual fee is deducted from accounts of less than $1,000
and paid to the transfer agent.
(2) There is a $7.50 charge for wiring sale proceeds to your bank.
(3) Management fee includes both the management fee and the
administrative fee charged to the Fund.
(4) The Fund's advisor voluntarily waived advisory fees and
reimbursed the Fund for certain expenses. As a result, the
actual management fee was 0.00%, other expenses were 1.10% and
total annual operating expenses were 1.10% for the fiscal year
ended June 30, 1999.
- ------------------------------------------------------------------
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
Class 1 Year 3 Years 5 Years 10 Years
Class K $112 $350 $606 $1,340
- ------------------------------------------------------------------

<PAGE>

THE FUND
STEIN ROE ADVISOR HIGH YIELD MUNICIPALS FUND

INVESTMENT GOALS
- ---------------------------------------------------------------
The Fund seeks a high level of after-tax total return including
current income exempt from ordinary federal income tax and long-
term appreciation.

[Callout]
UNDERSTANDING TAX-EXEMPT SECURITIES
Tax-exempt bonds are issued by state and local governments for
various public purposes. A tax-exempt bond, like a bond issued by
a corporation or the U.S. government, obligates the issuer to pay
the bondholder a fixed or variable amount of interest
periodically, and to repay the principal value of the bond on a
specific maturity date. Unlike most other bonds, tax-exempt bonds
pay interest that is exempt from federal income taxes and, in some
cases, also from state and local taxes. As a result, the pre-tax
yields on tax-exempt securities are generally lower than the
yields on taxable bonds with similar maturities; however,
depending on your tax bracket, the after tax return (that is, the
gross return minus the effect of taxes on investment income) may
be equal to or better than those provided by taxable bonds.
Generally the higher your tax bracket the more likely it is that
tax-exempt bonds (and tax-exempt bond funds) may be appropriate
for you. Tax-exempt bond funds may be appropriate for investors
in high tax brackets who seek current income that is free from
federal income tax.
[End callout]

PRIMARY INVESTMENT STRATEGIES
- ---------------------------------------------------------------
The Fund invests all of its assets in SR&F High-Yield Municipals
Portfolio as part of a master fund/feeder fund structure. Under
normal market conditions, at least 80% of the Portfolio's total
assets will be invested in municipal securities, the interest on
which is exempt from ordinary federal income tax. In the event
that tax-exempt securities are not available, the Portfolio may
invest up to 20% of its total assets in high-quality taxable money
market instruments. The portfolio manager may purchase bonds of
any maturity.

In selecting municipal securities for the Portfolio, the portfolio
manager invests primarily in lower-rated debt securities. These
securities are rated:

* BBB or below by Standard & Poor's,
* Baa or below by Moody's Investors Service, Inc.,
* a comparable rating by another nationally recognized rating
agency, or
* unrated securities that Stein Roe believes to be of comparable
quality.

The Portfolio may invest any or all of its assets in high-quality
tax-exempt securities under the following conditions:

* the difference in returns between higher-quality and lower-
quality securities is narrow, or
* the portfolio manager expects increased volatility in interest
rates.

Investment in higher-quality securities may reduce the Fund's
current income.

At least 80% of the Fund's investments will produce income that is
exempt from federal income tax, except during periods that the
portfolio manager believes require a temporary defensive position
for the protection of shareholders.

The price of the Fund's shares-its net asset value per share
(NAV)-fluctuates daily in response to changes in the market value
of the bonds it owns.

Market risk is the risk that the price of a security held by the
Portfolio will fall due to changing market, economic, or political
conditions. Market risk includes interest rate risk. Interest
rate risk is the risk of a change in the price of a bond when
interest rates increase or decline. In general, if interest rates
rise, bond prices fall; and if interest rates fall, bond prices
rise. Changes in the values of bonds usually will not affect the
amount of income the Fund receives from them but will affect the
value of the Fund's shares. Interest rate risk is generally
greater for bonds having longer maturities.

Issuer risk is the possibility that changes in the financial
condition of the issuer of a security, changes in general economic
conditions, or changes in economic conditions that affect the
issuer may impact the issuer's ability to make timely payment of
interest or principal. This could result in decreases in the
price of the security.

Lower-rated debt securities are sometimes referred to as "junk
bonds." Lower-rated debt securities involve greater risk of loss
due to issuer risk and are less liquid, especially during periods
of economic uncertainty or change, than higher-quality debt
securities. Medium-quality debt securities, although considered
investment grade, may have some speculative characteristics.

An economic downturn could severely disrupt the high-yield market
and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. In
addition, lower-quality bonds are less sensitive to interest rate
changes than higher-quality instruments and generally are more
sensitive to adverse economic changes or individual corporate
developments. During a period of adverse economic changes,
including a period of rising interest rates, issuers of such bonds
may experience difficulty in servicing their principal and
interest payment obligations.

Tax-exempt bonds are subject to special risk. Changes in tax laws
or adverse determinations by the Internal Revenue Service may make
the income from some of these bonds taxable. Bonds that are
backed by the issuer's taxing authority, known as general
obligations, may depend partially on legislative appropriation
and/or aid from other governments. These bonds may be vulnerable
to legal limits on a government's power to raise revenue or
increase taxes. Other tax-exempt bonds, known as special revenue
obligations, are payable from revenues earned by a particular
project or other revenue source. These bonds are subject to
greater risk of default than general obligations because investors
can look only to the revenue generated by the project or private
company, rather than to the credit of the state or local
government issuer of the bonds.

An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

Information on other securities and risks appears under "Other
Investment Strategies and Risks."

[Callout]
UNDERSTANDING PERFORMANCE
Calendar-year total return shown in the bar chart includes the
effects of Fund expenses. The bar chart does not take into effect
any expense reduction arrangements discussed in the footnotes to
the Annual Fund Operating Expenses table.

The Fund's return is compared to the Lehman Brothers Municipal
Bond Index, an unmanaged index that tracks the performance of
municipal bonds. Unlike the Fund, indices are not investments, do
not incur fees or expenses, and are not professionally managed.
It is not possible to invest directly in indices.
[End callout]
- -----------------------------------------------------------------
CALENDAR-YEAR TOTAL RETURNS (1)
17% 17.36%
15%
12%
9% 11.10% 9.49% 10.34% 9.26%
6% 7.44%
3% 5.15% 4.26% 4.95%
0%
- -5% -4.27%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- -----------------------------------------------------------------
(1) Class K shares of the Fund commenced operations on February 4,
1998. The performance in the chart is the performance of the
Portfolio restated to reflect the Class K share expenses.

The Fund's year-to-date total return through Sept. 30, 1999, was
___%.
Best quarter: 1st quarter 1995, +6.73%
Worst quarter: 1st quarter 1994, -5.34%

- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS(2)-
FOR PERIODS ENDED DECEMBER 31, 1998
1 Year 5 Years 10 Years
Class K (%)
Lehman Brothers Municipal Bond Index (%)
- -----------------------------------------------------------------
(2) The 1 Year performance in the table reflects the performance
of the Class K shares. The 5 Year and 10 Year performance in
the table reflects the restated performance of the Portfolio
combined with the performance of the Fund's Class K shares
since inception. The performance of the Portfolio is restated
to reflect Class K share expenses.

YOUR EXPENSES
Expenses are one of several factors to consider before you invest
in a mutual fund. The tables below describe the fees and expenses
you may pay when you buy, hold and sell shares of the Fund.

- ------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES(1)(2) (EXPENSES ARE DEDUCTED
DIRECTLY FROM FUND ASSETS)
Class K
Management fee(3)(4) (%) 0.50
Distribution and service (12 b-1) fees (%) 0.25
Other expenses(4) (%) 3.11
Total annual fund operating expenses(4) (%) 3.86
- ------------------------------------------------------------
(1) A $10 annual fee is deducted from accounts of less than $1,000
and paid to the transfer agent.
(2) There is a $7.50 charge for wiring sale proceeds to your bank.
(3) Management fee includes both the management fee and the
administrative fee charged to the Fund.
(4) The Fund's advisor voluntarily waived advisory fees and
reimbursed the Fund for certain expenses. As a result, the
actual management fee was 0.00%, other expenses were 1.00% and
total annual operating expenses were 1.00% for the fiscal year
ended June 30, 1999.

- ------------------------------------------------------------------
EXAMPLE EXPENSES (YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER)
Class 1 Year 3 Years 5 Years 10 Years
Class K $102 $318 $552 $1,225
- ------------------------------------------------------------------

<PAGE>

YOUR ACCOUNT

HOW TO BUY SHARES
- ---------------------------------------------------------------
Your financial advisor can help you establish an appropriate
investment portfolio, buy shares and monitor your investments.
When the Fund receives your purchase request in "good form," your
shares will be bought at the next calculated NAV. In "good form"
means that you placed your order with your brokerage firm or your
payment has been received and your application is complete,
including all necessary signatures.

[Callout]
INVESTMENT MINIMUMS (1)
Initial Investment $1,000
Subsequent Investments $50
Automatic Purchase Plans $50
Retirement Plans $25
[End callout]
(1) Each Fund reserves the right to change the investment
minimums. Each Fund also reserves the right to refuse a
purchase order for any reason, including if it believes that
doing so would be in the best interest of the Fund and its
shareholders.

Outlined below are various ways you can purchase shares:

METHOD INSTRUCTIONS

Through your financial advisor Your financial advisor can help
you establish your account and buy Fund shares
on your behalf.
- -----------------------------------------------------------------
By check (new account) For new accounts, send a completed
application and check made payable to the Fund
to the transfer agent, Liberty Funds Services,
Inc., P.O. Box 1722, Boston, MA 02105-1722.
- -----------------------------------------------------------------
By check (existing account) For existing accounts, fill out and
return the additional investment stub included
in your quarterly statement, or send a letter
of instruction, including your Fund name and
account number with a check made payable to the
Fund to Liberty Funds Services, Inc., P.O. Box
1722, Boston, MA 02105-1722.
- -----------------------------------------------------------------
By exchange Your or your financial advisor may acquire
shares by exchanging shares you own in another
fund of Stein Roe Advisor Trust for the same
class of Fund shares at no additional cost. To
exchange by telephone, call 1-800-422-3737.
- -----------------------------------------------------------------
By wire You may purchase shares by wiring money from
your bank account to your fund account. To
wire funds to your fund account, call 1-800-
422-3737 to obtain a control number and the
wiring instructions.
- -----------------------------------------------------------------
By electronic funds transfer You may purchase shares by
electronically transferring money from your
bank account to your fund account by calling 1-
800-422-3737. Your money may take up to two
business days to be invested. You must set up
this feature prior to your telephone request.
Be sure to complete the appropriate section of
the application.
- -----------------------------------------------------------------
Automatic investment plan You can make monthly or quarterly
investments automatically from your bank
account to your fund account. You can select a
pre-authorized amount to be sent via electronic
funds transfer. Be sure to complete the
appropriate section of the application for this
feature.
- -----------------------------------------------------------------
By dividend diversification You may automatically invest
dividends distributed by one fund into the same
class of shares of another fund of Stein Roe
Advisor Trust at no additional sales charge.
To invest your dividends in another fund, call
1-800-345-6611.

DISTRIBUTION AND SERVICE FEES
- -----------------------------------------------------------------
Each Fund has adopted a plan under Rule 12b-1 that permits it to
pay marketing and other fees to support the sale and distribution
of Class K shares and the services provided to you by your
financial advisor. These annual distribution and service fees may
equal up to 0.25% for Class K shares and are paid out of the
assets of the class. Over time, these fees will increase the cost
of your shares and may cost you more than paying other types of
sales charges.

HOW TO EXCHANGE SHARES
- -----------------------------------------------------------------
You may exchange your shares for shares of the same share class of
another fund of Stein Roe Advisor Trust at NAV. Unless your
account is part of a tax-deferred retirement plan, an exchange is
a taxable event. Therefore, you may realize a gain or a loss for
tax purposes. The Fund may terminate your exchange privilege if
Stein Roe determines that your exchange activity is likely to
adversely impact its ability to manage the Fund. To exchange by
telephone, call 1-800-422-3737.

HOW TO SELL SHARES
- -----------------------------------------------------------------
Your financial advisor can help you determine if and when you
should sell your shares. You may sell shares of the Fund on any
regular business day that the New York Stock Exchange (NYSE) is
open.

When the Fund receives your sales request in "good form," shares
will be sold at the next calculated price. In "good form" means
that money used to purchase your shares is fully collected. When
selling shares by letter of instruction, "good form" means (i)
your letter has complete instructions, the proper signatures and
signature guarantees, (ii) you have included any certificates for
shares to be sold, and (iii) any other required documents are
attached. For additional documentation required for sales by
corporations, agents, fiduciaries and surviving joint owners,
please call 1-800-345-6611. Retirement Plan accounts have special
requirements. Please call 1-800-799-7526 for more information.

The Fund will generally send proceeds from the sale to you within
seven days. However, if you purchased your shares by check, the
Fund may delay sending the proceeds for up to 15 days after your
initial purchase to protect against checks that are returned.

Outlined below are the various options for selling shares:

METHOD INSTRUCTIONS

Through your financial advisor You may call your financial
advisor to place your sell order. To receive
the current trading day's price, your financial
advisor firm must receive your request prior to
the close of the NYSE, usually 4:00 p.m.,
Eastern time.
- -----------------------------------------------------------------
By exchange You or your financial advisor may sell shares
by exchanging from the Fund into the same share
class of another fund of Stein Roe Advisor
Trust at no additional cost. To exchange by
telephone, call 1-800-422-3737.
- -----------------------------------------------------------------
By telephone You or your financial advisor may sell shares
by telephone and request that a check be sent
to your address of record by calling 1-800-422-
3737 unless you have notified the Fund of an
address change within the previous 30 days.
The dollar limit for telephone sales is
$100,000 in a 30-day period. You do not need
to set up this feature in advance of your call.
- -----------------------------------------------------------------
By mail You may send a signed letter of instruction to
the address below. In your letter of
instruction, note your fund's name, share
class, account number, and the dollar value or
number of shares you wish to sell. All account
owners must sign the letter, and signatures
must be guaranteed by either 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
(IRA) owners. For details, call 1-800-345-
6611.

Mail your letter of instruction to Liberty
Funds Services, Inc., P.O. Box 1722, Boston, MA
02105-1722
- -----------------------------------------------------------------
By wire You may sell shares and request that the
proceeds be wired to your bank. You must set
up this feature prior to your telephone
request. Be sure to complete the appropriate
section of the account application for this
feature.
- -----------------------------------------------------------------
By electronic funds transfer You may sell shares and request that
the proceeds be electronically transferred to
your bank. Proceeds may take up to two
business days to be received by your bank. You
must set up this feature prior to your request.
Be sure to complete the appropriate section of
the account application for this feature.

OTHER INFORMATION ABOUT YOUR ACCOUNT
- -----------------------------------------------------------------
HOW THE FUND'S SHARE PRICE IS DETERMINED The price of each Fund's
Class K shares is based on its NAV. The NAV is determined at the
close of regular session trading on the NYSE, usually 4:00 p.m.
Eastern time on each business day that the NYSE is open (typically
Monday through Friday).

When you request a transaction, it will be processed at the NAV
next determined after your request is received in good form by
Liberty Funds Distributor, Inc. (LFD). In most cases, in order to
receive that day's price, LFD must receive your order before that
day's transactions are processed. If you request a transaction
through your financial advisor's firm, the firm must receive your
order by the close of trading on the NYSE to receive that day's
price.

A Fund determines its NAV by dividing its total net assets by the
number of shares outstanding. Securities held by High-Yield
Municipals Portfolio are valued based on valuations provided by a
pricing service. Securities for which market quotations are
readily available at the time of valuation are valued on that
basis. We value long-term straight-debt securities for which
market quotations are not readily available at fair value.
Pricing services provide the Funds with the value of the
securities. Short-term debt securities with remaining maturities
of 60 days or less are valued at their amortized cost, which does
not take into account unrealized gains or losses. The Board
believes that the amortized cost represents a fair value for such
securities. Short-term debt securities with remaining maturities
of more than 60 days for which market quotations are not readily
available are valued by use of a matrix prepared by Stein Roe
based on quotations for comparable securities.

When the price of a security is not available, including days when
we determine that the sale or bid price of the security does not
reflect that security's market value, we value the security at a
fair value determined in good faith under procedures established
by the Board of Trustees.

We value a security at fair value when events have occurred after
the last available market price and before the close of the NYSE
that materially affect the security's price. In the case of
foreign securities, this could include events occurring after the
close of the foreign market and before the close of the NYSE.

Intermediate Bond Portfolio's foreign securities may trade on days
when the NYSE is closed. We will not price shares on days that
the NYSE is closed for trading. You will not be able to purchase
or redeem shares until the next NYSE-trading day.

ACCOUNT FEES If your account value falls below $1,000 (other than
as a result of depreciation in share value), you may be subject to
an annual account fee of $10. This fee is deducted from the
account in June each year. Approximately 60 days prior to the fee
date, the Funds' transfer agent will send you written notification
of the upcoming fee. If you add money to your account and bring
the value above $1,000 prior to the fee date, the fee will not be
deducted.

DIVIDENDS, DISTRIBUTIONS, AND TAXES Each Fund has the potential
to make the following distributions:

TYPES OF DISTRIBUTIONS

Dividend/ordinary income Represents interest and dividends earned
from securities held by the Portfolio;
also includes short-term capital gains,
which are gains on sales of securities
the Portfolio buys and then sells within
a 12-month period.
Capital gains Represents capital gains on sales of
securities held for more than 12 months.

[Callout]
UNDERSTANDING FUND DISTRIBUTIONS
The Fund earns income from the securities it holds. The Fund also
may experience capital gains and losses on sales of its
securities. The Fund distributes substantially all of its net
investment income and capital gains to shareholders. As a
shareholder, you are entitled to a portion of the Fund's income
and capital gains based on the number of shares you own at the
time these distributions are declared.
[End callout]

DISTRIBUTION OPTIONS Each Fund declares dividends daily and pays
them monthly, and any capital gains (including short-term capital
gains) at least annually. Dividends begin to accrue on the day
that we receive payment and stop accruing on the day prior to the
shares leaving the account. You can choose one of following
options for these distributions when you open your account.(1) To
change your distribution option call 1-800-345-6611.

DISTRIBUTION OPTIONS
Reinvest all distributions in additional shares of your current
fund
- -----------------------------------------------------------------
Reinvest all distributions in shares of another fund
- -----------------------------------------------------------------
Receive dividends in cash and reinvest capital gains(2)
- -----------------------------------------------------------------
Receive all distributions in cash (with one of the following
options)(2)
* send the check to your address of record
* send the check to a third party address
* transfer the money to your bank via electronic funds transfer
- -----------------------------------------------------------------
(1) If you do not indicate on your application your preference for
handling distributions, the Fund will automatically reinvest
all distributions in additional shares of the Fund.
(2) Distributions of $10 or less will automatically be reinvested
in additional Fund shares. If you elect to receive
distributions by check and the check is returned as
undeliverable, or if you do not cash a distribution check
within six months of the check date, the distribution will be
reinvested in additional shares of the Fund.

TAX CONSEQUENCES
Advisor Intermediate Bond Fund. Regardless of whether you receive
your distributions in cash or reinvest them in additional Fund
shares, all Fund distributions are subject to federal income tax.
Depending on the state where you live, distributions may also be
subject to state and local income taxes. In general, any
dividends and short-term capital gains distributions are taxable
as ordinary income. Distributions of other capital gains are
generally taxable as such, regardless of how long you have held
your Fund shares. You will be provided with information each year
regarding the ordinary income and capital gains distributed to you
for the previous year and any portion of your distribution which
is exempt from state and local taxes.

Advisor High-Yield Municipals Fund. For federal income tax
purposes, distributions of net investment income by the Fund,
whether in cash or additional securities, will ordinarily
constitute tax-exempt income. Ordinarily, distributions to
shareholders from gains realized by the Fund on the sale or
exchange of investments will be taxable to shareholders. In
addition, an investment in the Fund may result in liability for
federal AMT both for individuals and corporate shareholders. You
will be provided with information each year regarding the amount
of ordinary income and capital gains distributed to you for the
previous year and any portion of your distributions that is exempt
from state and local taxes.

Your investment in a Fund may have additional personal tax
implications. Please consult your tax advisor on state, local or
other applicable taxes.

In addition to the dividends and capital gains distributions made
by a Fund, you may realize a capital gain or loss when selling and
exchanging Fund shares. Such transactions may be subject to
federal, state, and local income tax.

<PAGE>

MANAGING THE FUNDS

INVESTMENT ADVISOR
- -----------------------------------------------------------------
Stein Roe & Farnham Incorporated, One South Wacker Drive, Chicago,
IL 60606, manages the day-to-day operations of the Fund and the
Portfolio. Stein Roe (and its predecessor) has advised and
managed mutual funds since 1949. For the fiscal year ended June
30, 1999, aggregate fees paid by the Funds to Stein Roe were as
follows (as a percent of average net assets):

Before After
Reimbursement Reimbursement
Advisor Intermediate Bond Fund 0.50% 0.00%
Advisor High-Yield Municipals Fund 0.58% 0.00%

Stein Roe's mutual funds and institutional investment advisory
businesses are part of a larger business unit that includes
several separate legal entities known as Liberty Funds Group
(LFG). LFG includes certain affiliates of Stein Roe, including
Colonial Management Associates, Inc. (Colonial). The LFG business
unit is managed by a single management team. Colonial and other
LFG entities also share personnel, facilities, and systems with
Stein Roe that may be used in providing administrative or
operational services to the Funds. Colonial is a registered
investment adviser. Stein Roe also has a wealth management
business that is not part of LFG and is managed by a different
team. Stein Roe and the other entities that make up LFG are
subsidiaries of Liberty Financial Companies, Inc.

PORTFOLIO MANAGERS
- -----------------------------------------------------------------
Michael T. Kennedy has been portfolio manager of Intermediate Bond
Portfolio since its inception in 1998 and had been portfolio
manager of Stein Roe Intermediate Bond Fund since 1988. He joined
Stein Roe in 1987 and is a senior vice president. A chartered
financial analyst and a chartered investment counselor, he
received his B.S. degree from Marquette University and his M.M.
degree from Northwestern University.

Maureen G. Newman has been portfolio manager of High-Yield
Municipals Portfolio since November 1998. Ms. Newman is jointly
employed as a senior vice president by Colonial and Stein Roe.
She has managed tax-exempt funds for Colonial since May 1996.
Prior to joining Colonial, Ms. Newman was a portfolio manager and
bond analyst at Fidelity Investments from May 1985 to May 1996.

<PAGE>

OTHER INVESTMENT STRATEGIES AND RISKS

The first portion of this prospectus describes each Fund's
principal investment strategy and principal investment risks. In
seeking to meet its investment goals, a Fund also may invest in
other securities and use other investment techniques. A Fund may
elect not to buy any of these other securities or use any of these
other investment techniques. A Fund may not always achieve its
investment goal.

This section describes certain of those other securities and
techniques, and certain risks associated with them. The Statement
of Additional Information (SAI) contains additional information
about a Fund's securities and investment techniques (including
other securities and techniques) and the risks associated with
them. The SAI also contains a Fund's fundamental and non-
fundamental investment policies.

The Board of Trustees can change a Fund's investment objective and
its non-fundamental investment policies without shareholder
approval.

HEDGING STRATEGIES
- -----------------------------------------------------------------
Each Portfolio may enter into a number of hedging strategies,
including those that employ futures and options, to gain or reduce
exposure to particular securities or markets. These strategies,
which are commonly referred to as derivatives, involve the use of
financial instruments whose values depend on, or are derived from,
the value of an underlying security or an index. A Portfolio may
use these strategies to adjust its sensitivity to changes in
interest rates or for other hedging purposes (attempting to offset
a potential loss in one position by establishing an interest in an
opposite position). Derivative strategies involve the risk that
they may exaggerate a loss, potentially losing more money than the
actual cost of the derivative, or limit a potential gain. Also,
with some derivative strategies there is the risk that the other
party to the transaction may fail to honor its contract terms,
causing a loss to the Portfolio.

MORTGAGE-BACKED SECURITIES
- -----------------------------------------------------------------
Intermediate Bond Portfolio may invest in mortgage-backed
securities, which are securities that represent ownership
interests in large, diversified pools of mortgage loans. Sponsors
pool together mortgages of similar rates and terms and offer them
as a security to investors.

Most mortgage securities are pooled together and structured as
pass-throughs. Monthly payments of principal and interest from
the underlying mortgage loans backing the pool are collected by a
service and "passed through" regularly to the investor. Pass-
throughs can have a fixed or an adjustable rate. The majority of
pass-through securities are issued by three agencies: Ginnie Mae,
Fannie Mae, and Freddie Mac.

Commercial mortgage-backed securities are secured by loans to
commercial properties such as office buildings, multi-family
apartment buildings, and shopping centers. These loans usually
contain prepayment penalties that provide protection from
refinancing in a declining interest rate environment.

Real estate mortgage investment conduits (REMICs) are multiclass
securities that qualify for special tax treatment under the
Internal Revenue Code. REMICs invest in certain mortgages that
are secured principally by interests in real property such as
single family homes.

ASSET-BACKED SECURITIES
- -----------------------------------------------------------------
Each Portfolio may invest in asset-backed securities, which are
interests in pools of debt securities. These securities are
subject to prepayment risk, which is the possibility that the
underlying debt may be refinanced or prepaid prior to maturity
during periods of declining interest rates. In an environment of
declining interest rates, asset-backed securities may offer less
potential for gain than other debt securities. During periods of
rising interest rates, asset-backed securities have a high risk of
declining in price because the declining prepayment rates
effectively increase the maturity of the securities. In addition,
the potential impact of prepayment on the price of an asset-backed
security may be difficult to predict and result in greater
volatility.

MUNICIPAL LEASE OBLIGATIONS
- -----------------------------------------------------------------
High-Yield Municipals Portfolio may invest in municipal lease
obligations, which are revenue bonds backed by leases or
installment purchase contracts for property or equipment. Lease
obligations may not be backed by the issuing municipality, and the
Fund may have limited recourse in the event of a default or
termination.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
- -----------------------------------------------------------------
When-issued securities and forward commitments are securities that
are purchased prior to the date they are actually issued or
delivered. These securities involve the risk that they may fall
in value by the time they are actually issued or that the other
party may fail to honor the contract terms.

ILLIQUID INVESTMENTS
- -----------------------------------------------------------------
Each Portfolio may invest up to 15% of its net assets in illiquid
investments. An illiquid investment is a security or other
position that cannot be disposed of quickly in the normal course
of business. For example, some securities are not registered
under U.S. securities laws and cannot be sold to the U.S. public
because of SEC regulations (these are known as "restricted
securities"). Under procedures adopted by the Funds' Trustees,
certain restricted securities may be deemed liquid and will not be
counted toward this 15% limit.

ZERO COUPON SECURITIES
- -----------------------------------------------------------------
Each Portfolio may invest in zero coupon securities. These
securities do not pay interest in cash on a current basis, but
instead accrue over the life of the bond. As a result, these
securities are issued at a deep discount. The value of these
securities may fluctuate more than similar securities that pay
interest periodically. Although these securities pay no interest
to holders prior to maturity, interest on these securities is
reported as income to the Fund and distributed to its
shareholders.

INVERSE FLOATING RATE OBLIGATIONS
- -----------------------------------------------------------------
High-Yield Municipals Portfolio may invest in inverse floating
rate obligations representing interests in tax-exempt bonds.
These securities carry interest rates that vary inversely to
changes in market interest rates. Such securities have investment
characteristics similar to investment leverage. Their market
values are subject to greater risks of fluctuation than securities
bearing a fixed rate of interest, which may lead to greater
fluctuation in the price of the security. may invest in inverse
floating rate obligations representing interests in tax-exempt
bonds. These securities carry interest rates that vary inversely
to changes in market interest rates. Such securities have
investment characteristics similar to investment leverage. Their
market values are subject to greater risks of fluctuation than
securities bearing a fixed rate of interest, which may lead to
greater fluctuation in the value of the Fund's shares.

ALTERNATIVE MINIMUM TAX
- -----------------------------------------------------------------
The interest income distributed by Advisor High-Yield Municipals
Fund from certain tax-exempt bonds may be subject to the federal
AMT for individuals and corporations. Each Fund is permitted to
invest all of its assets in bonds subject to the AMT. Consult
your tax advisor for more information.

PORTFOLIO TURNOVER
- -----------------------------------------------------------------
There are no limits on turnover. Turnover may vary significantly
from year to year. Stein Roe does not expect it to exceed 100
percent under normal conditions. Portfolio turnover typically
produces capital gains or losses resulting in tax consequences for
Fund shareholders. It also increases transaction expenses, which
reduce a Fund's return.

TEMPORARY DEFENSIVE POSITIONS
- -----------------------------------------------------------------
When Stein Roe believes that a temporary defensive position is
necessary, a Portfolio may invest, without limit, in high-quality
debt securities or hold assets in cash and cash equivalents.
Stein Roe is not required to take a temporary defensive position,
and market conditions may prevent such an action. A Fund may not
achieve its investment objective if it takes a defensive position.

INTERFUND LENDING PROGRAM
- -----------------------------------------------------------------
A Portfolio may lend money to and borrow money from other funds
advised by Stein Roe. They will do so when Stein Roe believes
such lending or borrowing is necessary and appropriate. Borrowing
costs will be the same as or lower than the costs of a bank loan.

MASTER/FEEDER STRUCTURE
- -----------------------------------------------------------------
Unlike mutual funds that directly acquire and manage their own
portfolio of securities, each Fund is a "feeder" fund in a
"master/feeder" structure. This means that the Fund invests its
assets in a larger "master" portfolio of securities, which has
investment objectives and policies substantially identical to
those of the Fund. The investment performance of a Fund depends
upon the investment performance of its Portfolio. If the
investment policies of the Portfolio and the Fund became
inconsistent, the Board of Trustees of the Fund can decide what
actions to take. Actions the Board of Trustees may recommend
include withdrawal of the Fund's assets from the Portfolio. For
more information on the master/feeder fund structure, see the SAI.

YEAR 2000 COMPLIANCE
- -----------------------------------------------------------------
Like other investment companies, financial and business
organizations and individuals around the world, the Funds could be
adversely affected if the computer systems used by Stein Roe,
other service providers, and the issuers in which the Portfolios
invest do not properly process and calculate date-related
information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Funds' service
providers are taking steps that they believe are reasonably
designed to address the Year 2000 Problem, including working with
vendors who furnish services, software and systems to the Funds,
to provide that date-related information and data can be properly
processed after January 1, 2000. Many of the Funds' service
providers and vendors are in the process of making Year 2000
modifications to their software and systems and believe that such
modifications will be completed on a timely basis prior to January
1, 2000. In addition, Year 2000 readiness is one of the factors
considered by Stein Roe in its ongoing assessment of issuers in
which the Portfolios invest, to the extent that information is
readily available. However, no assurances can be given that the
Funds will not be adversely affected by these matters.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand
the Funds' financial performance. Information is shown for the
Funds' fiscal years since inception. The fiscal year runs from
July 1 to June 30. Certain information reflects financial results
for a single Fund share. The total returns in the table represent
the rate that you would have earned (or lost) on an investment in
the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst &
Young LLP, independent auditors, whose report, along with the
Funds' financial statements, is included in the annual report.
You can request a free annual report by calling 1-800-426-3750.

STEIN ROE ADVISOR INTERMEDIATE BOND FUND

Year Ended Period Ended
June 30 June 30
Class K 1999 1998(c)
- ----------------------------------------------------------------
Net asset value-Beginning of period $10.01 $10.00
Income from Investment Operations
Net investment income 0.60 0.24
Net gains on securities (both
realized and unrealized) (0.36) 0.01
Total income from investment operations 0.24 0.25
Less distributions from net
investment income 0.61 0.24
Net asset value-End of period $ 9.64 $10.01
Total return (b) 2.45% 2.52%
Ratios/Supplemental Data
Net assets, end of period (000 omitted) $1,706 $2,122
Ratio of net expenses to average
net assets (a) 1.00% 1.00%
Ratio of net investment income to
average net assets (b) 6.13% 6.06%

(a) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by Stein Roe, this ratio would have
been 3.86% for the year ended June 30, 1999, and 10.50% for
the period ended June 30, 1998.
(b) Computed giving effect to Stein Roe's expense limitation
undertaking.
(c) From commencement of operations on Feb. 4, 1998.
(d) Annualized.

<PAGE>

STEIN ROE ADVISOR HIGH-YIELD MUNICIPALS FUND

Year Ended Period Ended
June 30 June 30
Class K 1999 1998(c)
- ----------------------------------------------------------------
Net asset value-Beginning of period $ 9.94 $10.00
Income from Investment Operations
Net investment income 0.48 0.20
Net realized and unrealized loss on
investments and futures transactions (0.18) (0.06)
Total from investment operations 0.30 0.14
Less distributions from net investment
income (0.49) (0.20)
Net asset value-End of period $ 9.75 $ 9.94
Total return (b) 3.08% 1.42%
Ratios/Supplemental Data
Net assets, end of period (000 omitted) $936 $1,029
Ratio of net expenses to average
net assets (a) 1.10% 1.10%
Ratio of net investment income to
average net assets (b) 4.88% 5.13%

(a) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by Stein Roe, this ratio would have
been 5.97% for the year ended June 30, 1999, and 16.25% for
the period ended June 30, 1998.
(b) Computed giving effect to Stein Roe's expense limitation
undertaking.
(c) From commencement of operations on Feb. 4, 1998.
(d) Annualized.

<PAGE>

FOR MORE INFORMATION

You can get more information about the Funds' investments in the
Funds' semi-annual and annual reports to shareholders. The annual
report contains a discussion of the market conditions and
investment strategies that significantly affected a Fund's
performance over its last fiscal year.

You may wish to read the SAI for more information on the Funds and
the securities in which they invest. The SAI is incorporated into
this prospectus by reference, which means that it is considered to
be part of this prospectus.

You can get free copies of reports and the SAI, request other
information and discuss your questions about the Funds by writing
or calling the Funds' distributor at:

Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com

Text-only versions of all Fund documents can be viewed online or
downloaded from the SEC at www.sec.gov.

You can review and copy information about the Funds by visiting
the following location and you can obtain copies, upon payment of
a duplicating fee, by writing the:

Public Reference Room
Securities and Exchange Commission
Washington, DC, 20549-6009

Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.

Investment Company Act file number:
Stein Roe Advisor Trust: 811-07955

* Stein Roe Advisor Intermediate Bond Fund
* Stein Roe Advisor High-Yield Municipals Fund

[LOGO] LIBERTY
COLONIAL - CRABBE HUSON - NEWPORT - STEIN ROE ADVISOR
Liberty Funds Distributor, Inc. 1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-3750
Visit us at www.libertyfunds.com

- ------------------------------------------------------------------

Statement of Additional Information Dated Nov. 1, 1999

LIBERTY-STEIN ROE ADVISOR TRUST
Stein Roe Advisor High-Yield Municipals Fund
Stein Roe Advisor Intermediate Bond Fund

Suite 3200, One South Wacker Drive, Chicago, Illinois 60606

This Statement of Additional Information (SAI) is not a
prospectus, but provides additional information that should be
read in conjunction with the Funds' prospectus dated Nov. 1, 1999,
and any supplements thereto ("Prospectus"). Financial statements,
which are contained in the Funds' Annual Report, are incorporated
by reference into this SAI. The Prospectus and Annual Report may
be obtained at no charge by calling Stein Roe & Farnham
Incorporated. 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
Portfolio Investments and Strategies.....................4
Investment Restrictions.................................23
Additional Investment Considerations....................27
Management..............................................29
Financial Statements....................................32
Principal Shareholders..................................32
Investment Advisory and Other Services..................33
Custodian...............................................35
Independent Auditors....................................36
Distributor.............................................36
Transfer Agent and Shareholder Servicing................37
Purchases and Redemptions...............................37
Portfolio Transactions..................................39
Additional Income Tax Considerations....................44
Investment Performance..................................46
Master Fund/Feeder Fund: Structure and Risk Factors.....50
Appendix-Ratings........................................52

<PAGE>

GENERAL INFORMATION AND HISTORY

Stein Roe Advisor High-Yield Municipals Fund ("Advisor High-
Yield Municipals Fund") and Stein Roe Advisor Intermediate Bond
Fund ("Advisor Intermediate Bond Fund") (referred to collectively
as the "Funds") are separate series of Liberty-Stein Roe Advisor
Trust (the "Trust"). Each Fund offers one class of shares, Class
K. Prior to March 3, 1999, the name of the Trust was Stein Roe
Advisor Trust. On Sept. 13, 1996, the spelling of the Trust's
name was changed from "Adviser" to "Advisor."

The 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 the
Trust's shareholders or its trustees. The Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, five series are authorized and outstanding.
Each series invests in a separate portfolio of securities and
other assets, with its own objectives and policies.

Under Massachusetts law, shareholders of a Massachusetts
business trust such as the 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 the Trust or any
particular series shall look only to the assets of the 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
the 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 the 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 the
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.

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, the 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
its outstanding shares, the 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 the Trust were subject to Section 16(c) of the
Investment Company Act of 1940. All shares of all series of the
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

Each Fund acts as a "feeder fund." Rather than investing in
securities directly, it seeks to achieve its objective by pooling
its assets with those of other investment companies for investment
in a separate "master fund" having the same investment objective
and substantially the same investment policies as its feeder
funds. The purpose of such an arrangement is to achieve greater
operational efficiencies and reduce costs. Each Fund invests all
of its net investable assets in a separate master fund that is a
series of SR&F Base Trust, as follows:

Feeder Fund Master Fund
- --------------------------------------------------------------------
Advisor High-Yield Municipals SR&F High-Yield Municipals
Fund Portfolio ("High-Yield Municipals
Portfolio")
Advisor Intermediate Bond Fund SR&F Intermediate Bond Portfolio
("Intermediate Bond Portfolio")

The master funds are referred to collectively as the "Portfolios."
For more information, please refer to Master Fund/Feeder Fund:
Structure and Risk Factors.

Stein Roe & Farnham Incorporated ("Stein Roe") provides
administrative and accounting and recordkeeping services to each
Fund and each Portfolio and provides investment advisory services
to each Portfolio.

INVESTMENT POLICIES

The Trust and SR&F Base Trust are open-end management
investment companies. The Funds and Portfolios are diversified,
as that term is defined in the Investment Company Act of 1940.

The investment objectives and policies are described in the
Prospectus under The Funds. In pursuing its objective, a
Portfolio may also employ the investment techniques described
under Portfolio Investments and Strategies in this SAI. The
investment objective is a nonfundamental policy and may be changed
by the Board of Trustees without the approval of a "majority of
the outstanding voting securities."/1/

- ---------------
/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
are present or represented by proxy or (ii) more than 50% of the
outstanding shares.
- ---------------

PORTFOLIO INVESTMENTS AND STRATEGIES

AMT Securities

Although High-Yield Municipals Portfolio currently limits its
investments in Municipal Securities to those the interest on which
is exempt from the regular federal income tax, it may invest 100%
of its total assets in Municipal Securities the interest on which
is subject to the federal alternative minimum tax ("AMT").

Debt Securities

In pursuing its investment objective, each Portfolio invests
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.

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 Stein Roe 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.

Medium- and Lower-Quality Debt Securities

Each Portfolio may invest in medium- and lower-quality debt
securities. Medium-quality debt securities, although considered
investment grade, have some speculative characteristics. Lower-
quality securities, commonly referred to as "junk bonds," are
those rated below the fourth highest rating category or bond of
comparable quality.

Investment in medium- or lower-quality debt securities
involves greater investment risk, including the possibility of
issuer default or bankruptcy. A Portfolio seeks to reduce
investment risk through diversification, credit analysis, and
evaluation of developments in both the economy and financial
markets.

An economic downturn could severely disrupt the high-yield
market and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. In
addition, lower-quality bonds are less sensitive to interest rate
changes than higher-quality instruments and generally are more
sensitive to adverse economic changes or individual corporate
developments. During a period of adverse economic changes,
including a period of rising interest rates, issuers of such bonds
may experience difficulty in servicing their principal and
interest payment obligations.

Lower-quality debt securities are obligations of issuers that
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, and are commonly referred to as "junk bonds." The
lowest rating assigned by Moody's is for bonds that can be
regarded as having extremely poor prospects of ever attaining any
real investment standing.

Achievement of the investment objective will be more
dependent on Stein Roe's credit analysis than would be the case if
a Portfolio were investing in higher-quality debt securities.
Since the ratings of rating services (which evaluate the safety of
principal and interest payments, not market risks) are used only
as preliminary indicators of investment quality, Stein Roe employs
its own credit research and analysis, from which it has developed
a proprietary credit rating system based upon comparative credit
analyses of issuers within the same industry. These analyses may
take into consideration such quantitative factors as an issuer's
present and potential liquidity, profitability, internal
capability to generate funds, debt/equity ratio and debt servicing
capabilities, and such qualitative factors as an assessment of
management, industry characteristics, accounting methodology, and
foreign business exposure.

Medium- and lower-quality debt securities tend to be less
marketable than higher-quality debt securities because the market
for them is less broad. The market for unrated debt securities is
even narrower. During periods of thin trading in these markets,
the spread between bid and asked prices is likely to increase
significantly, and a Portfolio may have greater difficulty selling
its portfolio securities. The market value of these securities
and their liquidity may be affected by adverse publicity and
investor perceptions.

Defensive Investments

When Stein Roe considers a temporary defensive position
advisable, Intermediate Bond Portfolio may invest, without
limitation, in high-quality fixed income securities or hold assets
in cash or cash equivalents.

Derivatives

Consistent with its objective, Intermediate Bond Portfolio
and, to a lesser extent, High-Yield Municipals 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 using them 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 Stein Roe'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 intends to invest more than 5% of its assets in
any type of Derivative. (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 prepaid during periods of declining interest
rates, there would be a resulting loss of the full-term benefit of
any premium paid by a 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%.

Interfund Borrowing and Lending Program

Pursuant to an exemptive order issued by the Securities and
Exchange Commission, each Fund and Portfolio may lend money to and
borrow money from other mutual funds advised by Stein Roe. A
Portfolio 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.

Lending of Portfolio Securities

Subject to the restriction on lending under Investment
Restrictions in this SAI, Intermediate Bond 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. Cash collateral for securities loaned will be invested
in liquid high-grade debt securities. 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 Stein Roe'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.

Line of Credit

Subject to its restriction on borrowing under Investment
Restrictions, each Fund and 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.

Participation Interests

High-Yield Municipals Portfolio may purchase participation
interests in all or part of specific holdings of Municipal
Securities, but does not intend to do so unless the tax-exempt
status of those participation interests or certificates of
participation is confirmed to the satisfaction of the Board of
Trustees, which may include consideration of an opinion of counsel
as to the tax-exempt status. Each participation interest would
meet the prescribed quality standards of the Portfolio or be
backed by an irrevocable letter of credit or guarantee of a bank
that meets the prescribed quality standards of the Portfolio.
Some participation interests are illiquid securities.

High-Yield Municipals Portfolio may also purchase
participations in lease obligations or installment purchase
contract obligations (hereinafter collectively called "lease
obligations") of municipal authorities or entities. Although
lease obligations do not constitute general obligations of the
municipality for which the municipality's taxing power is pledged,
a lease obligation is ordinarily backed by the municipality's
covenant to budget for, appropriate, and make the payments due
under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for
such purpose on a yearly basis. In addition to the "non-
appropriation" risk, these securities represent a relatively new
type of financing that has not yet developed the depth of
marketability associated with more conventional bonds. Although
"non-appropriation" lease obligations are secured by leased
property, disposition of the property in the event of foreclosure
might prove difficult.

The Board of Trustees has delegated to Stein Roe the
responsibility to determine the credit quality of participation
interests. The determinations concerning the liquidity and
appropriate valuation of a municipal lease obligation, as with any
other municipal security, are made based on all relevant factors.
These factors may include, among others: (1) the frequency of
trades and quotes for the obligation; (2) the number of dealers
willing to purchase or sell the security and the number of other
potential buyers; (3) the willingness of dealers to undertake to
make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of
transfer.

PIK and Zero Coupon Bonds

Intermediate Bond Portfolio may invest up to 20% of its
assets in zero coupon bonds and bonds the interest on which is
payable in kind ("PIK bonds"). High-Yield Municipals Portfolio
also may invest in zero coupon bonds. A zero coupon bond is a
bond that does not pay interest for its entire life. A PIK bond
pays interest in the form of additional securities. The market
prices of both zero coupon and PIK bonds are affected to a greater
extent by changes in prevailing levels of interest rates and
thereby tend to be more volatile in price than securities that pay
interest periodically and in cash. In addition, because a
Portfolio accrues income with respect to these securities prior to
the receipt of such interest in cash, it may have to dispose of
portfolio securities under disadvantageous circumstances in order
to obtain cash needed to pay income dividends in amounts necessary
to avoid unfavorable tax consequences.

Rated Securities

For a description of the ratings applied by rating services
to Municipal Securities and other debt securities, please refer to
the Appendix. The fact that the rating of a debt security may be
lost or reduced below the minimum level applicable to its original
purchase by the Portfolio does not require that obligation to be
sold, but Stein Roe will consider such fact in determining whether
the Portfolio should continue to hold the obligation. In the case
of Municipal Securities with a demand feature acquired by High-
Yield Municipals Portfolio, if the quality of such a security
falls below the minimum level applicable at the time of
acquisition, the Portfolio must dispose of the security within a
reasonable period of time either by exercising the demand feature
or by selling the security in the secondary market, unless the
Board of Trustees determines that it is in the best interests of
the Portfolio and its shareholders to retain the security.

To the extent that the ratings accorded by Moody's, S&P, or
Fitch IBCA for debt securities may change as a result of changes
in such organizations, or changes in their rating systems, a
Portfolio will attempt to use comparable ratings as standards for
its investments in accordance with its investment policies. The
Board of Trustees is required to review such ratings with respect
to High-Yield Municipals Portfolio.

REMICs

Intermediate Bond Portfolio may invest in real estate
mortgage investment conduits ("REMICs"). REMICs, which were
authorized under the Tax Reform Act of 1986, are private entities
formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to
CMOs in that they issue multiple classes of securities. A REMIC
is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and invests in certain mortgages principally
secured by interests in real property. Investors may purchase
beneficial interests in REMICs, which are known as "regular"
interests, or "residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC
represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA-, FHLMC- or GNMA-
guaranteed mortgage pass-through certificates. For FHLMC REMIC
Certificates, FHLMC guarantees the timely payment of interest and
also guarantees the payment of principal as payments are required
to be made on the underlying mortgage participation certificates.
FNMA REMIC Certificates are issued and guaranteed as to timely
distribution and principal and interest by FNMA.

Repurchase Agreements

Each Portfolio may invest in repurchase agreements, provided
that it may 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.

Reverse Repurchase Agreements

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 the securities because it avoids certain market
risks and transaction costs.

At the time a Portfolio 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 this investment strategy may increase net asset value
fluctuation.

Private Placements

High-Yield Municipals Portfolio may invest in securities that
are purchased in private placements (including privately placed
securities eligible for purchase and sale under Rule 144A of the
Securities Act of 1933 ["1933 Act"]) and, accordingly, are subject
to restrictions on resale as a matter of contract or under federal
securities laws. Because there may be relatively few potential
purchasers for such investments, especially under adverse market
or economic conditions or in the event of adverse changes in the
financial condition of the issuer, a Fund could find it more
difficult to sell such securities when Stein Roe believes it is
advisable to do so or may be able to sell such securities only at
prices lower than if such securities were more widely held. At
times, it may also be more difficult to determine the fair value
of such securities for purposes of computing net asset value.

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 Portfolios, to trade in
privately placed securities that have not been registered for sale
under the 1933 Act. Stein Roe, under the supervision of the Board
of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the restriction of investing
no more than 15% of 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, Stein Roe will
consider the trading markets for the specific security, taking
into account the unregistered nature of a Rule 144A security. In
addition, Stein Roe 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
Portfolios' 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 5% 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 Stein Roe.

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 it 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 its 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 a 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. No Portfolio will invest
more than 5% of its total assets in short sales against the box.

Standby Commitments

Each Portfolio may obtain standby commitments when purchasing
securities. A standby commitment gives the holder the right to
sell the underlying security to the seller at an agreed-upon price
on certain dates or within a specified period. High-Yield
Municipals Portfolio will acquire standby commitments solely to
facilitate portfolio liquidity and not with a view to exercising
them at a time when the exercise price may exceed the current
value of the underlying securities. If the exercise price of a
standby commitment held by High-Yield Municipals Portfolio should
exceed the current value of the underlying securities, High-Yield
Municipals Portfolio may refrain from exercising the standby
commitment in order to avoid causing the issuer of the standby
commitment to sustain a loss and thereby jeopardizing the
Portfolio's business relationship with the issuer. High-Yield
Municipals Portfolio will enter into standby commitments only with
banks and securities dealers that, in the opinion of Stein Roe,
present minimal credit risks. However, if a securities dealer or
bank is unable to meet its obligation to repurchase the security
when High-Yield Municipals Portfolio exercises a standby
commitment, it might be unable to recover all or a portion of any
loss sustained from having to sell the security elsewhere.
Standby commitments will be valued at zero in determining High-
Yield Municipals Portfolio's net asset value.

Standby commitment agreements create an additional risk for
Intermediate Bond Portfolio because the other party to the standby
agreement generally will not be obligated to deliver the security,
but the Portfolio will be obligated to accept it if delivered.
Depending on market conditions, the Portfolio may receive a
commitment fee for assuming this obligation. If prevailing market
interest rates increase during the period between the date of the
agreement and the settlement date, the other party can be expected
to deliver the security and, in effect, pass any decline in value
to the Portfolio. If the value of the security increases after
the agreement is made, however, the other party is unlikely to
deliver the security. In other words, a decrease in the value of
the securities to be purchased under the terms of a standby
commitment agreement will likely result in the delivery of the
security, and, therefore, such decrease will be reflected in net
asset value. However, any increase in the value of the securities
to be purchased will likely result in the non-delivery of the
security and, therefore, such increase will not affect the net
asset value unless and until the Portfolio actually obtains the
security.

Taxable Securities

Assets of High-Yield Municipals Portfolio that are not
invested in Municipal Securities may be held in cash or invested
in short-term taxable investments such as: (1) U.S. Government
bills, notes and bonds; (2) obligations of agencies and
instrumentalities of the U.S. Government (including obligations
not backed by the full faith and credit of the U.S. Government);
(3) other money market instruments such as certificates of deposit
and bankers' acceptances of domestic banks having total assets in
excess of $1 billion, and corporate commercial paper rated Prime-1
by Moody's or A-1 by S&P at the time of purchase, or, if unrated,
issued or guaranteed by an issuer with outstanding debt rated Aa
or better by Moody's or AA or better by S&P; and (4) repurchase
agreements with banks and securities dealers. High-Yield
Municipals Portfolio limits repurchase agreements to those that
are short-term, subject to its restriction (g) under Investment
Restrictions (although the underlying securities may not be short-
term).

Tender Option Bonds; Trust Receipts

High-Yield Municipals Portfolio may purchase tender option
bonds and trust receipts. A tender option bond is a Municipal
Security (generally held pursuant to a custodial arrangement)
having a relatively long maturity and bearing interest at a fixed
rate substantially higher than prevailing short-term tax-exempt
rates, that has been coupled with the agreement of a third party,
such as a bank, broker-dealer or other financial institution,
pursuant to which such institution grants the security holders the
option, at periodic intervals, to tender their securities to the
institution and receive the face value thereof. As consideration
for providing the option, the financial institution receives
periodic fees equal to the difference between the Municipal
Security's fixed coupon rate and the rate, as determined by a
remarketing or similar agent at or near the commencement of such
period, that would cause the securities, coupled with the tender
option, to trade at par on the date of such determination. Thus,
after payment of this fee, the security holder effectively holds a
demand obligation that bears interest at the prevailing short-term
tax-exempt rate. Stein Roe will consider on an ongoing basis the
creditworthiness of the issuer of the underlying Municipal
Securities, of any custodian, and of the third-party provider of
the tender option. In certain instances and for certain tender
option bonds, the option may be terminable in the event of a
default in payment of principal or interest on the underlying
Municipal Securities and for other reasons. High-Yield Municipals
Portfolio does not intend to invest more than 10% of net assets in
tender option bonds and trust receipts.

When-Issued and Delayed-Delivery Securities; Forward Commitments

Each Portfolio may purchase securities on a when-issued or
delayed-delivery basis, and High-Yield Municipals Portfolio may
purchase forward commitments. 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 Stein Roe 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.

Securities purchased by Intermediate Bond Portfolio on a when-
issued or delayed-delivery basis are sometimes done on a "dollar
roll" basis. Dollar roll transactions consist of the sale by the
Portfolio of securities with a commitment to purchase similar but
not identical securities, generally at a lower price at a future
date. A dollar roll may be renewed after cash settlement and
initially may involve only a firm commitment agreement by the
Portfolio to buy a security. A dollar roll transaction involves
the following risks: if the broker-dealer to whom the Portfolio
sells the security becomes insolvent, the Portfolio's right to
purchase or repurchase the security may be restricted; the value
of the security may change adversely over the term of the dollar
roll; the security which the Portfolio is required to repurchase
may be worth less than a security which the Portfolio originally
held; and the return earned by the Portfolio with the proceeds of
a dollar roll may not exceed transaction costs.

At the time a Portfolio enters into a binding obligation to
purchase securities on a when-issued basis, liquid assets (cash,
U.S. Government or other "high grade" debt obligations) of the
Portfolio having a value of 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.

Foreign Securities

Intermediate Bond Portfolio 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 does 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 Portfolio
may invest in sponsored or unsponsored ADRs. In the case of an
unsponsored ADR, the Portfolio is likely to bear its proportionate
share of the expenses of the depository and it may have greater
difficulty in receiving shareholder communications than it would
have with a sponsored ADR. ADRs are receipts typically issued by
an American bank or trust company evidencing ownership of the
underlying securities. Generally, ADRs, in registered form, are
designed for the U.S. securities markets.

With respect to portfolio securities that 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. 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 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, 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.

Intermediate Bond Portfolio's 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 the 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. The
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 the 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, the 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
the Portfolio. The Portfolio may not engage in "speculative"
currency exchange transactions.

At the maturity of a forward contract to deliver a particular
currency, Intermediate Bond Portfolio may either sell the 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
Intermediate Bond 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 a portfolio security if its
market value exceeds the amount of currency the Portfolio is
obligated to deliver.

If Intermediate Bond 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 the 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 the 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, the
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 Intermediate Bond 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 the 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.

Intermediate Bond Portfolio may also construct a synthetic
foreign position by entering into a swap arrangement. A swap is a
contractual agreement between two parties to exchange cash flows-
at the time of the swap agreement and again at maturity, and, with
some swaps, at various intervals through the period of the
agreement. The use of swaps to construct a synthetic foreign
position would generally entail the swap of interest rates and
currencies. A currency swap is a contractual arrangement between
two parties to exchange principal amounts in different currencies
at a predetermined foreign exchange rate. An interest rate swap
is a contractual agreement between two parties to exchange
interest payments on identical principal amounts. An interest
rate swap may be between a floating and a fixed rate instrument, a
domestic and a foreign instrument, or any other type of cash flow
exchange. A currency swap generally has the same risk
characteristics as a forward currency contract, and all types of
swaps have counter-party risk. Depending on the facts and
circumstances, swaps may be considered illiquid. Illiquid
securities usually have greater investment risk and are subject to
greater price volatility. The net amount of the excess, if any,
of the Portfolio's obligations over which it is entitled to
receive with respect to an interest rate or currency swap will be
accrued daily and liquid assets (cash, U.S. Government securities,
or other "high grade" debt obligations) of the Portfolio having a
value at least equal to such accrued excess will be segregated on
the books of the Portfolio and held by the Custodian for the
duration of the swap. The Portfolio may also construct a
synthetic foreign position by purchasing an instrument whose
return is tied to the return of the desired foreign position. An
investment in these "principal exchange rate linked securities"
(often called PERLS) can produce a return similar to a direct
investment in a foreign security.

Options on Securities and Indexes

Each Portfolio may purchase and sell put options and call
options on securities, indexes or-in the case of Intermediate Bond
Portfolio-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 and
index futures contracts, and Intermediate Bond Portfolio may use
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.
- ------------------

A Portfolio 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.

A 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 accurate
predictions of changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should
those predictions be incorrect, the return might have been better
had the transaction not been attempted; however, in the absence of
the ability to use futures contracts, Stein Roe 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.

A 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 investment 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). 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.

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.

The Taxpayer Relief Act of 1997 (the "Act") imposed
constructive sale treatment for federal income tax purposes on
certain hedging strategies with respect to appreciated securities.
Under these rules, taxpayers will recognize gain, but not loss,
with respect to securities if they enter into short sales of
"offsetting notional principal contracts" (as defined by the Act)
or futures or "forward contracts" (as defined by the Act) with
respect to the same or substantially identical property, or if
they enter into such transactions and then acquire the same or
substantially identical property. These changes generally apply
to constructive sales after June 8, 1997. Furthermore, the
Secretary of the Treasury is authorized to promulgate regulations
that will treat as constructive sales certain transactions that
have substantially the same effect as short sales, offsetting
notional principal contracts, and futures or forward contracts to
deliver the same or substantially similar property.

INVESTMENT RESTRICTIONS

Fundamental policies may be changed only with the approval of
a "majority of the outstanding voting securities," as defined in
the Investment Company Act of 1940. Nonfundamental investment
restrictions, which may be required by various laws and
administrative positions, may be changed by the Board of Trustees
without a vote of shareholders.

The following investment restrictions (other than material
within brackets) are fundamental policies of Advisor High-Yield
Municipals Fund and High-Yield Municipals Portfolio. Neither the
Fund nor the Portfolio may:

(1) invest in a security if, with respect to 75% of its assets, as
a result of such investment, more than 5% of its total assets
(taken at market value at the time of investment) would be
invested in the securities of any one issuer (for this
purpose, the issuer(s) of a security being deemed to be only
the entity or entities whose assets or revenues are subject to
the principal and interest obligations of the security), other
than obligations issued or guaranteed by the U.S. Government
or by its agencies or instrumentalities or repurchase
agreements for such securities, and [Fund 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 [Fund and Portfolio] [however, in the
case of a guarantor of securities (including an issuer of a
letter of credit), the value of the guarantee (or letter of
credit) may be excluded from this computation if the aggregate
value of securities owned by it and guaranteed by such
guarantor (plus any other investments in securities issued by
the guarantor) does not exceed 10% of its total assets];/5/
(2) purchase any securities on margin, except for use of short-
term credit necessary for clearance of purchases and sales of
portfolio securities (this restriction does not apply to
securities purchased on a when-issued or delayed-delivery
basis or to reverse repurchase agreements), but it may make
margin deposits in connection with futures and options
transactions;
(3) make loans, although it may (a) 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; (b) purchase money market instruments and
enter into repurchase agreements; and (c) acquire publicly
distributed or privately placed debt securities;
(4) borrow except that it may (a) borrow for nonleveraging,
temporary or emergency purposes and (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; it may borrow from banks, other Stein Roe
Funds and Portfolios, and other persons to the extent
permitted by applicable law;
(5) mortgage, pledge, hypothecate or in any manner transfer, as
security for indebtedness, any securities owned or held by it
except (a) as may be necessary in connection with borrowings
mentioned in (iv) above, and (b) it may enter into futures and
options transactions;
(6) invest more than 25% of its total assets (taken at market
value at the time of each investment) in securities of non-
governmental issuers whose principal business activities are
in the same industry, [Fund 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;
(7) purchase portfolio securities from, or sell portfolio
securities to, any of the officers, directors, or trustees of
the Trust or of its investment adviser;
(8) purchase or sell commodities or commodities contracts or oil,
gas, or mineral programs, except that it may enter into
futures and options transactions;
(9) issue any senior security except to the extent permitted under
the Investment Company Act of 1940.
- ------------
/5/ In the case of a security that is insured as to payment of
principal and interest, the related insurance policy is not deemed
a security, nor is it subject to this investment restriction.
- ------------

The following are the nonfundamental restrictions of Advisor
High-Yield Municipals Fund and High-Yield Municipals Portfolio.
None of the following restrictions shall prevent Advisor High-
Yield Municipals Fund from investing all or substantially all of
its assets in another investment company having the same
investment objective and substantially similar investment policies
as the Fund. Neither the Fund nor the Portfolio may:

(a) own more than 10% of the outstanding voting securities of an
issuer;
(b) invest in companies for the purpose of exercising control or
management;
(c) make investments in the securities of other investment
companies, except in connection with a merger, consolidation,
or reorganization;
(d) purchase or sell real estate (other than Municipal Securities
or money market securities secured by real estate or interests
therein or such securities issued by companies which invest in
real estate or interests therein);
(e) act as an underwriter of securities, except that it may
participate as part of a group in bidding, or bid alone, for
the purchase of Municipal Securities directly from an issuer
for its own portfolio;
(f) sell securities short unless (1) it owns or has the right to
obtain securities equivalent in kind and amount to those sold
short at no added cost or (2) the securities sold are "when
issued" or "when distributed" securities which it expects to
receive in a recapitalization, reorganization, or other
exchange for securities it contemporaneously owns or has the
right to obtain and provided that it may purchase standby
commitments and securities subject to a demand feature
entitling it to require sellers of securities to the Fund to
repurchase them upon demand and that transactions in options,
futures, and options on futures are not treated as short
sales;
(g) 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;
(h) purchase shares of other open-end investment companies, except
in connection with a merger, consolidation, acquisition, or
reorganization
(i) invest more than 5% of its net assets (valued at time of
investment) in warrants, nor more than 2% of its net assets in
warrants that are not listed on the New York or American Stock
Exchange;
(j) write an option on a security unless the option is issued by
the Options Clearing Corporation, an exchange, or similar
entity; or
(k) write 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.

Following are the fundamental investment restrictions of
Advisor Intermediate Bond Fund and Intermediate Bond Portfolio.
Neither the Fund nor the Portfolio may:

(1) invest in a security if, as a result of such investment, more
than 25% of its total assets (taken at market value at the
time of such investment) would be invested in the securities
of issuers in any particular industry, except that this
restriction does not apply to U.S. Government Securities, and
[Fund 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) invest in a security if, with respect to 75% of its assets, as
a result of such investment, more than 5% of its total assets
(taken at market value at the time of such investment) would
be invested in the securities of any one issuer, except that
this restriction does not apply to U.S. Government Securities
or repurchase agreements for such securities and [Fund 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) invest in a security if, as a result of such investment, it
would hold more than 10% (taken at the time of such
investment) of the outstanding voting securities of any one
issuer, [Fund 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);
(5) purchase or sell commodities or commodities contracts or oil,
gas or mineral programs, except that it may enter into (i)
futures and options on futures and (ii) forward contracts;
(6) purchase securities on margin, except for use of short-term
credit necessary for clearance of purchases and sales of
portfolio securities, but it may make margin deposits in
connection with transactions in options, futures, and options
on futures;
(7) 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;
(8) borrow except that it may (a) borrow for nonleveraging,
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;

(9) act as an underwriter of securities, except insofar as it may
be deemed to be an "underwriter" for purposes of the
Securities Act of 1933 on disposition of securities acquired
subject to legal or contractual restrictions on resale, [Fund
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

(10) issue any senior security except to the extent permitted
under the Investment Company Act of 1940.

Following are the non-fundamental investment restrictions of
Advisor Intermediate Bond Fund and Intermediate Bond Portfolio.
None of the following restrictions shall prevent Advisor
Intermediate Bond Fund from investing all or substantially all of
its assets in another investment company having the same
investment objective and substantially similar investment policies
as the Fund. Neither the Fund nor the Portfolio may:

(A) invest for the purpose of exercising control or management;
(B) purchase more than 3% of the stock of another investment
company or purchase stock of other investment companies equal
to more than 5% of 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;/6/
(C) purchase portfolio securities from, or sell portfolio
securities to, any of the officers and directors or trustees
of the Trust or of its investment adviser;
(D) purchase shares of other open-end investment companies, except
in connection with a merger, consolidation, acquisition, or
reorganization;
(E) invest more than 5% of its net assets (valued at time of
investment) in warrants, nor more than 2% of its net assets in
warrants which are not listed on the New York or American
Stock Exchange;
(F) 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;
(G) write an option on a security unless the option is issued by
the Options Clearing Corporation, an exchange, or similar
entity;
(H) invest in limited partnerships in real estate unless they are
readily marketable;
(I) 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 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;
(J) invest more than 15% 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;

(K) invest more than 15% of its net assets (taken at market value
at the time of a particular investment) in illiquid
securities/7/, including repurchase agreements maturing in
more than seven days.

- ------------------
/6/ The Funds have been informed that the staff of the Securities
and Exchange Commission takes the position that the issuers of
certain CMOs and certain other collateralized assets are
investment companies and that subsidiaries of foreign banks may be
investment companies for purposes of Section 12(d)(1) of the
Investment Company Act of 1940, which limits the ability of one
investment company to invest in another investment company.
Accordingly, the Funds intend to operate within the applicable
limitations under Section 12(d)(1)(A) of that Act.

/7/ In the judgment of Stein Roe, Private Placement Notes, which
are issued pursuant to Section 4(2) of the Securities Act of 1933,
generally are readily marketable even though they are subject to
certain legal restrictions on resale. As such, they are not
treated as being subject to the limitation on illiquid securities.

- ------------------

ADDITIONAL INVESTMENT CONSIDERATIONS

Stein Roe seeks to provide superior long-term investment
results through a disciplined, research-intensive approach to
investment selection and prudent risk management. In working to
take sensible risks and make intelligent investments, 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, Stein Roe 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.

Additional Risks Relating to Municipal Securities

The federal bankruptcy statutes relating to the debts of
political subdivisions and authorities of states of the United
States provide that, in certain circumstances, such subdivisions
or authorities may be authorized to initiate bankruptcy
proceedings without prior notice to or consent of creditors, which
proceedings could result in material and adverse changes in the
rights of holders of their obligations.

Lawsuits challenging the validity under state constitutions
of present systems of financing public education have been
initiated or adjudicated in a number of states, and legislation
has been introduced to effect changes in public school financing
in some states. In other instances there have been lawsuits
challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or federal law which could
ultimately affect the validity of those Municipal Securities or
the tax-free nature of the interest thereon. In addition, from
time to time proposals have been introduced in Congress to
restrict or eliminate the federal income tax exemption for
interest on Municipal Securities, and similar proposals may be
introduced in the future. Some of the past proposals would have
applied to interest on Municipal Securities issued before the date
of enactment, which would have adversely affected their value to a
material degree. If such proposals are enacted, the availability
of Municipal Securities for investment by the High-Yield
Municipals Portfolio and the value of its investment portfolio
would be affected and, in such an event, the Portfolio and Advisor
High-Yield Municipals Fund would reevaluate its investment
objectives and policies.

Because High-Yield Municipals Portfolio may invest in
industrial development bonds, Advisor High-Yield Municipals Fund
may not be an appropriate investment for "substantial users" of
facilities financed by industrial development bonds or for
"related persons of substantial users."

In addition, High-Yield Municipals Portfolio invests in
Municipal Securities issued after the effective date of the Tax
Reform Act of 1986 (the "1986 Act"), which may be subject to
retroactive taxation if they fail to continue to comply after
issuance with certain requirements imposed by the 1986 Act.

Although the banks and securities dealers from which the
Portfolio may acquire repurchase agreements and standby
commitments, and the entities from which it may purchase
participation interests in Municipal Securities, will be those
that Stein Roe believes to be financially sound, there can be no
assurance that they will be able to honor their obligations.

MANAGEMENT

The Board of Trustees of the Trust has overall management
responsibility for the Trust and the Funds. The following table
sets forth certain information with respect to the trustees and
officers of the Trust:

<TABLE>
<CAPTION>
Position(s) held Principal occupation(s)
Name, Age with the Trust during past five years
- ------------------ ------------------------ ---------------------------
<S> <C> <C>
William D. Andrews, 52 (4) Executive Vice-President Executive vice president of Stein Roe

Gary A. Anetsberger, 43(4) Senior Vice-President; Chief financial officer and chief administrative
Treasurer officer of the Mutual Funds division of Stein Roe;
senior vice president of Stein Roe since April 1996;
vice president of Stein Roe prior thereto

John A. Bacon Jr.,72(3)(4) Trustee Private investor

William W. Boyd, 72 Trustee Chairman and director of Sterling Plumbing
(2) (3) (4) (manufacturer of plumbing products)

David P. Brady, 35 (4) Vice-President Senior vice president of Stein Roe since March 1998;
vice president of Stein Roe from Nov. 1995 to March
1998; portfolio manager for Stein Roe since 1993

Thomas W. Butch, 42 (4) President President of the Mutual Funds division of Stein Roe
since March 1998; senior vice president of Stein Roe
prior thereto

Daniel K. Cantor, 40 (4) Vice-President Senior vice president of Stein Roe

Kevin M. Carome, 43 (4) Executive Vice-President; Senior vice president, legal, Liberty Funds Group LLC
Assistant Secretary (an affiliate of Stein Roe) since Jan. 1999; general
counsel and secretary of Stein Roe since Jan. 1998;
associate general counsel and vice president of
Liberty Financial Companies, Inc. (the indirect parent
of Stein Roe) through Jan. 1999

J. Kevin Connaughton,35(4) Vice-President Vice president of Colonial Management Associates, Inc.
("CMA"), since February 1998; senior tax manager,
Coopers & Lybrand, LLP from April 1996 to January,
1998; vice president, 440 Financial Group/First Data
Investor Services Group prior thereto

Lindsay Cook, 47 (1)(2)(4) Trustee Executive vice president of Liberty Financial
Companies, Inc. since March 1997; senior vice
president prior thereto

Erik P. Gustafson, 36 (4) Vice-President Senior portfolio manager of Stein Roe; senior vice
president of Stein Roe since April 1996; vice
president of Stein Roe prior thereto

Douglas A. Hacker, 44 Trustee Senior vice president and chief financial officer of
(3) (4) UAL, Inc. (airline)

Loren A. Hansen, 51 (4) Executive Vice-President Chief investment officer of CMA ("CMA") since 1997;
executive vice president of Stein Roe since Dec. 1995;
vice president of The Northern Trust (bank) prior
thereto

James P. Haynie, 37 (4) Vice-President Vice President of Stein Roe since Oct. 1998; Vice
President of CMA

Harvey B. Hirschhorn,49(4) Vice-President Executive vice president, senior portfolio manager,
and chief economist and investment strategist of Stein
Roe; director of research of Stein Roe, 1991 to 1995

Timothy J. Jacoby, 47 (4) Vice-President Fund treasurer for Liberty Funds Group LLC since Sept.
1996 and chief financial officer since Aug. 1997;
senior vice president of Fidelity Investments prior
thereto

Janet Langford Kelly, 41 Trustee Senior vice president, secretary and general counsel
(3) (4) of Sara Lee Corporation (branded, packaged, consumer-
products manufacturer) since 1995; partner of Sidley &
Austin (law firm) prior thereto

Michael T. Kennedy, 37 (4) Vice-President Senior vice president of Stein Roe

Gail D. Knudsen, 37 (4) Vice-President Vice president and assistant controller of CMA

Stephen F. Lockman, 38 (4) Vice-President Senior vice president, portfolio manager, and credit
analyst of Stein Roe

Lynn C. Maddox, 58 Vice-President Senior vice president of Stein Roe

Arthur J. McQueen, 41 Vice-President Senior vice president of Stein Roe

Charles R. Nelson,57(3)(4) Trustee Van Voorhis Professor of Political Economy, Department
of Economics of the University of Washington

Maureen G. Newman, 40 (4) Vice-President Vice President of Stein Roe since Nov. 1998; portfolio
manager and vice president of CMA since May 1996;
portfolio manager and bond analyst at Fidelity
Investments prior thereto

Nicolette D. Parrish, 49 Vice-President; Senior legal assistant and assistant secretary of
(4) Assistant Secretary Stein Roe

Gita R. Rao, 39 (4) Vice-President Vice President of Stein Roe since Oct. 1998; vice
president and portfolio manager for CMA since 1995;
global equity research analyst at Fidelity Management
& Research Company prior thereto

Michael E. Rega, 39 (4) Vice-President Vice President of Stein Roe since Oct. 1998; Vice
President of CMA since 1996

Janet B. Rysz, 44 (4) Assistant Secretary Senior legal assistant and assistant secretary of
Stein Roe

Thomas C. Theobald, 62 Trustee Managing director, William Blair Capital Partners
(3) (4) (private equity fund)

Sharlene A. Thomas, 37 (4) Vice-President Assistant vice president of mutual fund sales &
service of Stein Roe since Feb. 1999; manager of
mutual fund sales & services of Stein Roe from March
1997 to Feb. 1999; account executive with Stein Roe's
Counselor department prior thereto

Heidi J. Walter, 32 (4) Vice-President; Secretary Vice president of Stein Roe since March 1998; senior
legal counsel for Stein Roe since Feb. 1998; legal
counsel for Stein Roe from March 1995 to Jan. 1998;
associate with Beeler Schad & Diamond, PC (law firm)
prior thereto
<FN>
_________________________
(1) Trustee who is an "interested person" of the Trust and of
Stein Roe, 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 SR&F Base Trust.
</TABLE>

Certain of the trustees and officers of the Trust are
trustees or officers of other investment companies managed by
Stein Roe. Mr. Anetsberger, Mr. Butch, and Ms. Walter are also
officers of Liberty Funds Distributor, Inc., the Funds'
distributor. The address of Mr. Bacon is 4N640 Honey Hill Road,
Box 296, Wayne, IL 60184; that of Mr. Boyd is 2900 Golf Road,
Rolling Meadows, IL 60008; that of Mr. Cook is 600 Atlantic
Avenue, Boston, MA 02210; that of Mr. Hacker is P.O. Box 66100,
Chicago, IL 60666; that of Ms. Kelly is Three First National
Plaza, Chicago, IL 60602; that of Mr. Nelson is Department of
Economics, University of Washington, Seattle, WA 98195; that of
Mr. Theobald is Suite 1300, 222 West Adams Street, Chicago, IL
60606; that of Mr. Cantor is 1330 Avenue of the Americas, New
York, NY 10019; that of Ms. Knudsen, Ms. Newman, Ms. Rao, and
Messrs. Connaughton, Haynie, Jacoby, and Rega is One Financial
Center, Boston, MA 02111; and that of the other officers is One
South Wacker Drive, Chicago, IL 60606.

Officers and trustees affiliated with Stein Roe serve without
any compensation from the Trust. In compensation for their
services to the Trust, trustees who are not "interested persons"
of the Trust or Stein Roe are paid an annual retainer plus an
attendance fee for each meeting of the Board or standing committee
thereof attended. The Trust has no retirement or pension plan.
The following table sets forth compensation paid to the trustees
during the year ended June 30, 1999:

Compensation from the
Stein Roe Fund Complex*
-----------------------
Aggregate Compensation Total Average
Name of Trustee from the Trust Compensation Per Series
- ------------------- -------------------- ------------ ----------
Thomas W. Butch** -0- -0- -0-
Lindsay Cook -0- -0- -0-
John A. Bacon Jr.** $10,800 $101,150 $2,199
William W. Boyd 9,300 102,300 2,224
Douglas A. Hacker 8,300 87,700 1,907
Janet Langford Kelly 8,300 97,200 2,113
Charles R. Nelson 9,300 102,100 2,220
Thomas C. Theobald 8,300 97,200 2,113
_______________
*At June 30, 1999, the Stein Roe Fund Complex consisted of five
series of the Trust, one series of Stein Roe Trust, four series
of Stein Roe Municipal Trust, 12 series of Stein Roe Investment
Trust, four series of Stein Roe Income Trust, five series of
SteinRoe Variable Investment Trust, 12 portfolios of SR&F Base
Trust, Stein Roe Floating Rate Income Fund, Stein Roe
Institutional Floating Rate Income Fund, and Stein Roe Floating
Rate Limited Liability Company.
**Mr. Butch served as a trustee until Nov. 3, 1998 and Mr. Bacon
was elected a trustee effective Nov. 3, 1998.

FINANCIAL STATEMENTS

Please refer to the June 30, 1999 Financial Statements
(statements of assets and liabilities and schedules of investments
as of June 30, 1999 and the statements of operations, changes in
net assets, and notes thereto) and the report of independent
auditors contained in the June 30, 1999 Annual Report of the
Funds. The Financial Statements and the report of independent
auditors (but no other material from the Annual Report) are
incorporated herein by reference. The Annual Report may be
obtained at no charge by telephoning Retirement Services at 800-
322-1130 or Advisor/Broker Services at 800-322-0593.

PRINCIPAL SHAREHOLDERS

As of July 31, 1999, the only persons known by the Trust to
own of record or "beneficially" 5% or more of the outstanding
shares of any Fund within the definition of that term as contained
in Rule 13d-3 under the Securities Exchange Act of 1934 were as
follows:

Approximate % of
Outstanding
Name and Address Fund Shares Held
- ----------------------- ---------------------- ----------------
Ugo Ciarlo & Lillian Advisor Intermediate 8.6%
Ciarlo, JT TEN Bond Fund
35 Frost Road
Waterbury, CT 06705

Henry Wendrich Advisor Intermediate 10.3%
c/o Robert Denison POA Bond Fund
91 Ranchwood Drive
West Haven, CT 06516

Newtown Square Fire Advisor Intermediate 7.8%
Company Bond Fund
Commonwealth Bank CSA
P. O. Box 453
Newtown Square, PA 19073

Claire L. Degray Advisor Intermediate 5.9%
139 Avery Heights Bond Fund
Hartford, CT 06106

Stein Roe & Farnham Advisor Intermediate
Incorporated Bond Fund 6.6%
One South Wacker Drive Advisor High-Yield
Chicago, IL 60606 Municipals Fund 17.8%

Mae H. Colby Advisor High-Yield 33.2%
25 Oakville Avenue Municipals Fund
Waterbury, CT 06708

Rosemary Czuj Advisor High-Yield
P. O. Box 305 Municipals Fund 9.5%
Marlborough, CT 06447

INVESTMENT ADVISORY AND OTHER SERVICES

Stein Roe & Farnham Incorporated provides administrative
services to each Fund and Portfolio and portfolio management
services to each Portfolio. Stein Roe is a wholly owned
subsidiary of SteinRoe Services Inc., which is a wholly owned
subsidiary of Liberty Financial Companies, Inc. ("Liberty
Financial"), which is a majority owned subsidiary of Liberty
Corporate Holdings, which is a wholly 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 Stein Roe are Kenneth R. Leibler, C. Allen
Merritt, Jr., and Thomas W. Butch. Mr. Leibler is President and
Chief Executive Officer of Liberty Financial; Mr. Merritt is Chief
Operating Officer of Liberty Financial; and Mr. Butch is President
of Stein Roe's Mutual Funds division. The business address of
Messrs. Leibler and Merritt is Federal Reserve Plaza, Boston, MA
02210; and that of Mr. Butch is One South Wacker Drive, Chicago,
IL 60606.

Stein Roe and its predecessor have been providing investment
advisory services since 1932. Stein Roe acts as investment
adviser to wealthy individuals, trustees, pension and profit
sharing plans, charitable organizations, and other institutional
investors. As of June 30, 1999, Stein Roe managed over $22.2
billion in assets: over $6.3 billion in equities and over $15.9
billion in fixed income securities (including $1 billion in
municipal securities). The $22.2 billion in managed assets
included over $9.2 billion held by mutual funds managed by Stein
Roe (approximately 15% of the mutual fund assets were held by
clients of Stein Roe). These mutual funds were owned by over
282,000 shareholders. The $9.2 billion in mutual fund assets
included over $679 million in over 42,000 IRA accounts. In
managing those assets, Stein Roe utilizes a proprietary computer-
based information system that maintains and regularly updates
information for approximately 7,500 companies. Stein Roe also
monitors over 1,400 issues via a proprietary credit analysis
system. At June 30, 1999, Stein Roe employed 18 research analysts
and 54 account managers. The average investment-related
experience of these individuals was 17 years.

In return for its services, Stein Roe is entitled to receive
a monthly administrative fee from each Fund and a monthly
management fee from each Portfolio. The table below shows the
annual rates of such fees as a percentage of average net assets
(shown in millions), gross fees paid for the two most recent
fiscal years, and any expense reimbursements by Stein Roe:

<TABLE>
<CAPTION>
Current Rates (as a % Year Ended Period Ended
Fund/Portfolio Type (of average net assets) 6/30/99 6/30/98
- -------------------- ------------- ------------------------ ---------- ----------
<S> <C> <C> <C> <C>
Advisor Intermediate Administrative
Bond Fund fee .150% $ 5,292 $ 459
Reimbursement Expenses exceeding 1.00% 100,481 29,064
Intermediate Bond
Portfolio Management fee .350% 1,577,465 595,616
Advisor High-Yield Administrative
Municipals Fund fee .150% up to $100 million,
.125% next $100 million,
.100% thereafter 2,887 285
Reimbursement Expenses exceeding 1.10% 93,733 28,793
High-Yield Municipals
Portfolio Management fee .450% up to $100 million,
.425% next $100 million,
.400% thereafter 1,399,418 579,690
</TABLE>

Stein Roe 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
Stein Roe, including but not limited to printing and postage
charges, securities registration and custodian fees, and expenses
incidental to its organization.

The administrative agreement provides that Stein Roe shall
reimburse each Fund to the extent that total annual expenses of
the Fund (including fees paid to Stein Roe, 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, Stein Roe 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, Stein Roe may waive its fees and/or absorb
certain expenses for a Fund. Any such reimbursement will enhance
the yield of such Fund.

The management agreement provides that neither Stein Roe, nor
any of its directors, officers, stockholders (or partners of
stockholders), agents, or employees shall have any liability to
the Trust or any shareholder 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 Stein Roe 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 series of the Trust are paid solely
out of the assets of that series. Any expenses incurred by the
Trust that are not solely attributable to a particular series are
apportioned in such manner as Stein Roe determines is fair and
appropriate, unless otherwise specified by the Board of Trustees.

Bookkeeping and Accounting Agreement

Pursuant to a separate agreement with the Trust, Stein Roe
receives a fee for performing certain bookkeeping and accounting
services. For these services, Stein Roe receives an annual fee of
$25,000 per series plus .0025 of 1% of average net assets over $50
million. During the fiscal years ended June 30, 1999 and 1998,
Stein Roe received $50,000 and $38,060, respectively, from the
Funds for services provided under this agreement.

CUSTODIAN

State Street Bank and Trust Company (the "Bank"), 225 Franklin
Street, Boston, Massachusetts 02101, is the custodian for the
Trust and SR&F 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 Bank 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 interests of Intermediate Bond Fund and
its shareholders for Intermediate Bond Portfolio 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. Each 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
Stein Roe and counsel. However, with respect to foreign sub-
custodians, there can be no assurance that the 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 Bank and may
purchase or sell securities from or to the Bank.

INDEPENDENT AUDITORS

The independent auditors for each Fund and each Portfolio are
Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116. The
independent auditors 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 the
Trusts.

DISTRIBUTOR

Shares of Funds are distributed by Liberty Funds Distributor,
Inc. (the "Distributor"), an indirect subsidiary of Liberty
Financial, under a Distribution Agreement. 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 the
Trust, and (ii) by a majority of the trustees who are not parties
to the Agreement or interested persons of any such party
("independent trustees"). The Distributor has no obligation, as
underwriter, to buy Fund shares, and purchases shares only upon
receipt of orders from authorized Intermediaries. The 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.

Each Fund offers one class of shares (Class K) and may in the
future offer other classes of shares. Class K shares are offered
at net asset value, subject to a Rule 12b-1 fee.

The trustees of the 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 personal service
and/or the maintenance of shareholder accounts, the Distributor
receives a service fee at an annual rate not to exceed 0.25% of
net assets attributed to each class of shares other than Class K
shares. The Plan also provides that as compensation for the
promotion and distribution of shares of the Funds including its
expenses related to sale and promotion of Fund shares, the
Distributor receives from each Fund a fee at an annual rate of not
exceeding 0.10% of the average net assets attributed to Class A
shares, and 0.75% of the average net assets attributed to each of
its Class B and Class C shares. The Plan further provides that,
as compensation for services and/or distribution, the Distributor
receives a fee at an annual rate of 0.25% of 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. Class B shares automatically convert to
Class A shares approximately eight years after the Class B shares
are purchased. Class C and Class K shares do not convert. The
Distributor generally pays this amount to institutions that
distribute Fund shares and provide services to the Funds and their
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 the Funds
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 sales charges paid.
The Trust's Plan complies with those rules.

The trustees believe that the 12b-1 Plan could be a
significant factor in the growth and retention of Fund assets
resulting in a more advantageous expense ratio and increased
investment flexibility which could benefit each class of
shareholders. The 12b-1 Plan will continue in effect from year to
year so long as continuance is specifically approved at least
annually by a vote of the trustees, including the independent
trustees. The 12b-1 Plan may not be amended to increase the fee
materially without approval by a vote of a majority of the
outstanding voting securities of the relevant class of shares and
all material amendments of the Plans must be approved by the
trustees in the manner provided in the foregoing sentence. The
12b-1 Plan may be terminated at any time by a vote of a majority
of the independent trustees or by a vote of a majority of the
outstanding voting securities of the relevant Class of shares.

TRANSFER AGENT AND SHAREHOLDER SERVICING

Liberty Funds Services, Inc. (the "Transfer Agent"), P.O. Box
1722, Boston, MA 02105, an indirect subsidiary of Liberty
Financial, is the agent of the Trust for the transfer of shares,
disbursement of dividends, and maintenance of shareholder
accounting records. For performing these services, the Transfer
Agent receives from each Fund a fee based on the following annual
rates:

Class K Shares
--------------
Account maintenance and trade processing 0.05%
Client services 0.25%
Total 0.30%

The Trust believes the charges by the Transfer Agent to the Funds
are comparable to those of other companies performing similar
services.

Some Intermediaries that maintain nominee accounts with the
Funds for their clients who are Fund shareholders may be paid a
fee from the Transfer Agent for shareholder servicing and
accounting services they provide with respect to the underlying
Fund shares.

PURCHASES AND REDEMPTIONS

Purchases and redemptions are discussed in the Prospectus
under the heading Your Account, and that information is
incorporated herein by reference. It is the responsibility of any
broker-dealers, bank trust departments, asset allocation programs
sponsored by Stein Roe, wrap fee programs, and other retirement
plan service providers ("Intermediaries"), through whom you
purchase or redeem shares to establish procedures insuring the
prompt transmission to the Trust of any such purchase order.

Each Fund will accept unconditional orders for shares to be
executed at the public offering price based on the net asset value
per share next determined after the order is received in good
order. The public offering price is the net asset value plus the
applicable sales charge, if any. In the case of orders for
purchase of shares placed through Intermediaries, the public
offering price will be determined on the day the order is placed
in good order, but only if the Intermediary receives the order
prior to the time at which shares are valued and transmits it to a
Fund before that day's transactions are processed or at such other
times as agreed by the parties. If the Intermediary fails to
transmit before the Fund processes that day's transactions, the
customer's entitlement to that day's closing price must be settled
between the customer and the Intermediary. If the Intermediary
receives the order after the time at which a Fund values its
shares, the price will be based on the net asset value determined
as of the close of the NYSE on the next day it is open. If funds
for the purchase of shares are sent directly to the Transfer
Agent, they will be invested at the public offering price next
determined after receipt in good order. Payment for shares must
be in U.S. dollars; if made by check, the check must be drawn on a
U.S. bank.

The net asset value per share for each Fund 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 January, 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., Central time.

The 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 the 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, the 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 the Trust to redeem
shares under certain other circumstances as may be specified by
the Board of Trustees.

The Trust reserves the right to suspend or postpone
redemptions of shares of the Funds 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 a Fund not reasonably practicable.

PORTFOLIO TRANSACTIONS

Stein Roe places the orders for the purchase and sale of
portfolio securities and options and futures contracts for its
clients, including private clients and mutual fund clients
("Clients").

Purchases and sales of portfolio securities for Intermediate
Bond Portfolio are ordinarily transacted with the issuer or with a
primary market maker acting as principal or agent for the
securities on a net basis, with no brokerage commission being paid
by the Portfolio. Transactions placed through dealers reflect the
spread between the bid and asked prices. Occasionally, a
Portfolio may make purchases of underwritten issues at prices that
include underwriting discounts or selling concessions.

Portfolio securities for High-Yield Municipals Portfolio are
purchased both in underwritings and in the over-the-counter
market. Included in the price paid to an underwriter of a
portfolio security is the spread between the price paid by the
underwriter to the issuer and the price paid by the purchaser.
Purchases and sales of portfolio securities in the over-the-
counter market usually are transacted with a broker or dealer on a
net basis, without any brokerage commission being paid, but do
reflect the spread between the bid and asked prices. Stein Roe
may also transact purchases of portfolio securities directly with
the issuers.

Stein Roe's overriding objective in selecting brokers and
dealers to effect portfolio transactions is to seek the best
combination of net price and execution. The best net price,
giving effect to brokerage commissions, if any, is an important
factor in this decision; however, a number of other judgmental
factors may also enter into the decision. These factors include
Stein Roe's knowledge of negotiated commission rates currently
available and other current transaction costs; the nature of the
security being purchased or sold; the size of the transaction; the
desired timing of the transaction; 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
considered; Stein Roe's knowledge of the financial condition of
the broker or dealer selected and such other brokers and dealers;
and Stein Roe's knowledge of actual or apparent operation problems
of any broker or dealer.

Recognizing the value of these factors, Stein Roe may cause a
Client to pay a brokerage commission in excess of that which
another broker may have charged for effecting the same
transaction. Stein Roe has established internal policies for the
guidance of its trading personnel, specifying minimum and maximum
commissions to be paid for various types and sizes of transactions
and effected for Clients in those cases where Stein Roe has
discretion to select the broker or dealer by which the transaction
is to be executed. Stein Roe has discretion for all trades of the
Portfolios. Transactions which vary from the guidelines are
subject to periodic supervisory review. These guidelines are
reviewed and periodically adjusted, and the general level of
brokerage commissions paid is periodically reviewed by Stein Roe.
Evaluations of the reasonableness of brokerage commissions, based
on the factors described in the preceding paragraph, are made by
Stein Roe's trading personnel while effecting portfolio
transactions. The general level of brokerage commissions paid is
reviewed by Stein Roe, and reports are made annually to the Board
of Trustees.

Stein Roe maintains and periodically updates a list of
approved brokers and dealers which, in Stein Roe's judgment, are
generally capable of providing best price and execution and are
financially stable. Stein Roe's traders are directed to use only
brokers and dealers on the approved list, except in the case of
Client designations of brokers or dealers to effect transactions
for such Clients' accounts. Stein Roe generally posts certain
Client information on the "Alert" broker database system as a
means of facilitating the trade affirmation and settlement
process.

It is Stein Roe's practice, when feasible, to aggregate for
execution as a single transaction orders for the purchase or sale
of a particular security for the accounts of several Clients, in
order to seek a lower commission or more advantageous net price.
The benefit, if any, obtained as a result of such aggregation
generally is allocated pro rata among the accounts of Clients
which participated in the aggregated transaction. In some
instances, this may involve the use of an "average price"
execution wherein a broker or dealer to which the aggregated order
has been given will execute the order in several separate
transactions during the course of a day at differing prices and,
in such case, each Client participating in the aggregated order
will pay or receive the same price and commission, which will be
an average of the prices and commissions for the several separate
transactions executed by the broker or dealer.

Stein Roe sometimes makes use of an indirect electronic
access to the New York Stock Exchange's "SuperDOT" automated
execution system, provided through a NYSE member floor broker, W&D
Securities, Inc., a subsidiary of Jeffries & Co., Inc.,
particularly for the efficient execution of smaller orders in NYSE
listed equities. Stein Roe sometimes uses similar arrangements
through Billings & Co., Inc. and Driscoll & Co., Inc., floor
broker members of the Chicago Stock Exchange, for transactions to
be executed on that exchange. In using these arrangements, Stein
Roe must instruct the floor broker to refer the executed
transaction to another brokerage firm for clearance and
settlement, as the floor brokers do not deal with the public.
Transactions of this type sometimes are referred to as "step-in"
or "step-out" transactions. The brokerage firm to which the
executed transaction is referred may include, in the case of
transactions effected through W&D Securities, brokerage firms
which provide Stein Roe investment research or related services.

Stein Roe places certain trades for the Portfolios through
its affiliate AlphaTrade, Inc. ("ATI"). ATI is a wholly owned
subsidiary of Colonial Management Associates, Inc. ATI is a fully
disclosed introducing broker that limits its activities to
electronic execution of transactions in listed equity securities.
The Portfolios pay ATI a commission for these transactions. The
Funds and the Portfolios have adopted procedures consistent with
Investment Company Act Rule 17e-1 governing such transactions.
Certain of Stein Roe's officers also serve as officers, directors
and/or employees of ATI.

Consistent with the Rules of Fair Practice of National
Securities Dealers, Inc. and subject to seeking best executing and
such other policies as the trustees of the Funds may determine,
Stein Roe may consider sales of shares of the Funds as a factor in
the selection of broker-dealers to execute such mutual fund
securities transactions.

Investment Research Products and Services Furnished by Brokers and
Dealers

Stein Roe engages in the long-standing practice in the money
management industry of acquiring research and brokerage products
and services ("research products") from broker-dealer firms in
return directing trades for Client accounts to those firms. In
effect, Stein Roe is using the commission dollars generated from
these Client accounts to pay for these research products. The
money management industry uses the term "soft dollars" to refer to
this industry practice. Stein Roe may engage in soft dollar
transactions on trades for those Client accounts for which Stein
Roe has the discretion to select the brokers-dealer.

The ability to direct brokerage for a Client account belongs
to the Client and not to Stein Roe. When a Client grants Stein
Roe the discretion to select broker-dealers for Client trades,
Stein Roe has a duty to seek the best combination of net price and
execution. Stein Roe faces a potential conflict of interest with
this duty when it uses Client trades to obtain soft dollar
products. This conflict exists because Stein Roe is able to use
the soft dollar products in managing its Client accounts without
paying cash ("hard dollars") for the product. This reduces Stein
Roe's expenses.

Moreover, under a provision of the federal securities laws
applicable to soft dollars, Stein Roe is not required to use the
soft dollar product in managing those accounts that generate the
trade. Thus, the Client accounts that generate the brokerage
commission used to acquire the soft dollar product may not benefit
directly from that product. In effect, those accounts are cross
subsidizing Stein Roe's management of the other accounts that do
benefit directly from the product. This practice is explicitly
sanctioned by a provision of the Securities Exchange Act of 1934,
which creates a "safe harbor" for soft dollar transactions
conducted in a specified manner. Although it is inherently
difficult, if not impossible, to document, Stein Roe believes that
over time most, if not all, Clients benefit from soft dollar
products such that cross subsidizations even out.

Stein Roe attempts to reduce or eliminate this conflict by
directing Client trades for soft dollar products only if Stein Roe
concludes that the broker-dealer supplying the product is capable
of providing a combination of the best net price and execution on
the trade. As noted above, the best net price, while significant,
is one of a number of judgmental factors Stein Roe considers in
determining whether a particular broker is capable of providing
the best net price and execution. Stein Roe may cause a Client
account to pay a brokerage commission in a soft dollar trade in
excess of that which another broker-dealer might have charged for
the same transaction.

Stein Roe acquires two types of soft dollar research
products: (i) proprietary research created by the broker-dealer
firm executing the trade and (ii) other products created by third
parties that are supplied to Stein Roe through the broker-dealer
firm executing the trade.

Proprietary research consists primarily of traditional
research reports, recommendations and similar materials produced
by the in house research staffs of broker-dealer firms. This
research includes evaluations and recommendations of specific
companies or industry groups, as well as analyses of general
economic and market conditions and trends, market data, contacts
and other related information and assistance. Stein Roe's
research analysts periodically rate the quality of proprietary
research produced by various broker-dealer firms. Based on these
evaluations, Stein Roe develops target levels of commission
dollars on a firm-by-firm basis. Stein Roe attempts to direct
trades to each firm to meet these targets.

Stein Roe also uses soft dollars to acquire products created
by third parties that are supplied to Stein Roe through broker-
dealers executing the trade (or other broker-dealers who "step in"
to a transaction and receive a portion of the brokerage commission
for the trade). These products include the following:

* Database Services-comprehensive databases containing current
and/or historical information on companies and industries.
Examples include historical securities prices, earnings
estimates, and SEC filings. These services may include software
tools that allow the user to search the database or to prepare
value-added analyses related to the investment process (such as
forecasts and models used in the portfolio management process).
* Quotation/Trading/News Systems-products that provide real time
market data information, such as pricing of individual
securities and information on current trading, as well as a
variety of news services.
* Economic Data/Forecasting Tools-various macro economic
forecasting tools, such as economic data and economic and
political forecasts for various countries or regions.
* Quantitative/Technical Analysis-software tools that assist in
quantitative and technical analysis of investment data.
* Fundamental Industry Analysis-industry-specific fundamental
investment research.
* Fixed Income Security Analysis-data and analytical tools that
pertain specifically to fixed income securities. These tools
assist in creating financial models, such as cash flow
projections and interest rate sensitivity analyses, that are
relevant to fixed income securities.
* Other Specialized Tools-other specialized products, such as
specialized economic consulting analyses and attendance at
investment oriented conferences.

Many third-party products include computer software or on-
line data feeds. Certain products also include computer hardware
necessary to use the product.

Certain of these third party services may be available
directly from the vendor on a hard dollar basis. Others are
available only through broker-dealer firms for soft dollars.
Stein Roe evaluates each product to determine a cash ("hard
dollars") value of the product to Stein Roe. Stein Roe then on a
product-by-product basis targets commission dollars in an amount
equal to a specified multiple of the hard dollar value to the
broker-dealer that supplies the product to Stein Roe. In general,
these multiples range from 1.25 to 1.85 times the hard dollar
value. Stein Roe attempts to direct trades to each firm to meet
these targets. (For example, if the multiple is 1.5:1.0, assuming
a hard dollar value of $10,000, Stein Roe will target to the
broker-dealer providing the product trades generating $15,000 in
total commissions.)

The targets that Stein Roe establishes for both proprietary
and for third party research products typically will reflect
discussions that Stein Roe has with the broker-dealer providing
the product regarding the level of commissions it expects to
receive for the product. However, these targets are not binding
commitments, and Stein Roe does not agree to direct a minimum
amount of commissions to any broker-dealer for soft dollar
products. In setting these targets, Stein Roe makes a
determination that the value of the product is reasonably
commensurate with the cost of acquiring it. These targets are
established on a calendar year basis. Stein Roe will receive the
product whether or not commissions directed to the applicable
broker-dealer are less than, equal to or in excess of the target.
Stein Roe generally will carry over target shortages and excesses
to the next year's target. Stein Roe believes that this practice
reduces the conflicts of interest associated with soft dollar
transactions, since Stein Roe can meet the non-binding
expectations of broker-dealers providing soft dollar products over
flexible time periods. In the case of third party products, the
third party is paid by the broker-dealer and not by Stein Roe.
Stein Roe may enter into a contract with the third party vendor to
use the product. (For example, if the product includes software,
Stein Roe will enter into a license to use the software from the
vendor.)

In certain cases, Stein Roe uses soft dollars to obtain
products that have both research and non-research purposes.
Examples of non-research uses are administrative and marketing
functions. These are referred to as "mixed use" products. As of
the date of this SAI, Stein Roe acquires two mixed use products.
These are (i) a fixed income security data service and (ii) a
mutual fund performance ranking service. In each case, Stein Roe
makes a good faith evaluation of the research and non-research
uses of these services. These evaluations are based upon the time
spent by Firm personnel for research and non-research uses. Stein
Roe pays the provider in cash ("hard dollars") for the non-
research portion of its use of these products.

Stein Roe may use research obtained from soft dollar trades
in the management of any of its discretionary accounts. Thus,
consistent with industry practice, Stein Roe does not require that
the Client account that generates the trade receive any benefit
from the soft dollar product obtained through the trade. As noted
above, this may result in cross subsidization of soft dollar
products among Client accounts. As noted therein, this practice
is explicitly sanctioned by a provision of the Securities Exchange
Act of 1934, which creates a "safe harbor" for soft dollar
transactions conducted in a specified manner.

In certain cases, Stein Roe will direct a trade to one
broker-dealer with the instruction that it execute the trade and
pay over a portion of the commission from the trade to another
broker-dealer who provides Stein Roe with a soft dollar research
product. The broker-dealer executing the trade "steps out" of a
portion of the commission in favor of the other broker-dealer
providing the soft dollar product. Stein Roe may engage in step
out transactions in order to direct soft dollar commissions to a
broker-dealer which provides research but may not be able to
provide best execution. Brokers who receive step out commissions
typically are brokers providing a third party soft dollar product
that is not available on a hard dollars basis. Stein Roe has not
engaged in step out transactions as a manner of compensating
broker-dealers that sell shares of investment companies managed by
Stein Roe.

The Trust has 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.

The Board 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. The Board has been advised
by counsel that recapture by a mutual fund currently is not
permitted under the Rules of the Association of the National
Association of Securities Dealers ("NASD"). Therefore, except
with respect to purchases by High-Yield Municipals Portfolio of
municipal securities which are not subject to NASD Rules, the
Portfolios will not attempt to recapture underwriting discounts or
selling concessions.

Intermediate Bond Portfolio paid $8,957 and $______ in
commissions on futures transactions during the period ended June
30, 1998 and 1999, respectively.

During the last fiscal year, Intermediate Bond Portfolio held
securities issued by one or more of its regular broker-dealers or
the parent of such broker-dealers that derive more than 15% of
gross revenue from securities-related activities. Such holdings
were as follows at June 30, 1999:

Broker-Dealer Value of Securities Held
(in thousands)
------------- ------------------------

ADDITIONAL INCOME TAX CONSIDERATIONS

Each Fund intends to qualify under Subchapter M of the
Internal Revenue Code and 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 none of its dividends will qualify for
the deduction for dividends received by corporate shareholders.

Advisor High-Yield Municipals Fund. This Fund intends to
distribute substantially all of its income, tax-exempt and
taxable, including any net realized capital gains, and thereby be
relieved of any federal income tax liability to the extent of such
distributions. The Fund intends to retain for its shareholders
the tax-exempt status with respect to tax-exempt income received.
The distributions will be designated as "exempt-interest
dividends," taxable ordinary income, and capital gains. High-
Yield Municipals Portfolio may also invest in Municipal Securities
the interest on which is subject to the federal alternative
minimum tax. The source of exempt-interest dividends on a state-
by-state basis and the federal income tax status of all
distributions will be reported to shareholders annually. Such
report will allocate income dividends between tax-exempt, taxable
income, and alternative minimum taxable income in approximately
the same proportions as its total income during the year.
Accordingly, income derived from each of these sources may vary
substantially in any particular distribution period from the
allocation reported to shareholders annually. The proportion of
such dividends that constitutes taxable income will depend on the
relative amounts of assets invested in taxable securities, the
yield relationships between taxable and tax-exempt securities, and
the period of time for which such securities are held. High-Yield
Municipals Portfolio may, under certain circumstances, temporarily
invest its assets so that less than 80% of gross income during
such temporary period will be exempt from federal income taxes.
(See Investment Policies.)

Because capital gain distributions reduce net asset value, if
a shareholder purchases shares shortly before a record date he
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.

Because the taxable portion investment income of Advisor
High-Yield Municipals Fund consists primarily of interest, none of
its dividends, whether or not treated as "exempt-interest
dividends," will qualify under the Internal Revenue Code for the
dividends received deduction available to corporations.

Interest on indebtedness incurred or continued by
shareholders to purchase or carry shares of Advisor High-Yield
Municipals Fund is not deductible for federal income tax purposes.
Under rules applied by the Internal Revenue Service to determine
whether borrowed funds are used for the purpose of purchasing or
carrying particular assets, the purchase of shares may, depending
upon the circumstances, be considered to have been made with
borrowed funds even though the borrowed funds are not directly
traceable to the purchase of shares.

If you redeem at a loss shares of Advisor High-Yield
Municipals Fund held for six months or less, that loss will not be
recognized for federal income tax purposes to the extent of
exempt-interest dividends you have received with respect to those
shares. If any such loss exceeds the amount of the exempt-
interest dividends you received, that excess loss will be treated
as a long-term capital loss to the extent you receive any long-
term capital gain distribution with respect to those shares.

Persons who are "substantial users" (or persons related
thereto) of facilities financed by industrial development bonds
should consult their own tax advisors before purchasing shares.
Such persons may find investment in Advisor High-Yield Municipals
Fund unsuitable for tax reasons. Corporate investors may also
wish to consult their own tax advisors before purchasing shares.
In addition, certain property and casualty insurance companies,
financial institutions, and United States branches of foreign
corporations may be adversely affected by the tax treatment of the
interest on Municipal Securities.

INVESTMENT PERFORMANCE

A Fund may quote yield figures from time to time. The
"Yield" of a Fund is computed by dividing the net investment
income per share earned during a 30-day period (using the average
number of shares entitled to receive dividends) by the net asset
value per share on the last day of the period. The Yield formula
provides for semiannual compounding which assumes that net
investment income is earned and reinvested at a constant rate and
annualized at the end of a six-month period. A "Tax-Equivalent
Yield" is computed by dividing the portion of the Yield that is
tax-exempt by one minus a stated income tax rate and adding the
product to that portion, if any, of the Yield that is not tax-
exempt.

6
The Yield formula is as follows: YIELD = 2[((a-b/cd) +1) -
1].

Where: a = dividends and interest earned during the period
(For this purpose, the Fund will recalculate the
yield to maturity based on market value of each
portfolio security on each business day on which net
asset value is calculated.)
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the ending net asset value of the Fund for the
period.

For example, the Yields of the Funds for the 30-day period
ended June 30, 1999, were:

Advisor Intermediate Bond Fund: Yield = 6.75%
Advisor High-Yield Municipals Fund: Yield = 4.33%;
Tax-Equivalent Yield = 7.17% (assuming 39.6% tax rate)

_____________________

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).

For example, for a $1,000 investment in a Fund, the "Total
Return," the "Total Return Percentage," and the "Average Annual
Total Return" at June 30, 1999, were:

TOTAL RETURN AVERAGE ANNUAL
TOTAL RETURN PERCENTAGE TOTAL RETURN
------------ ------------- --------------
Advisor Intermediate
Bond Fund
Life of Fund* $1,049 4.92% 4.92%

Advisor High-Yield
Municipals Fund
Life of Fund* 1,040 4.01 4.01
________
*Life of Fund is from Feb. 4, 1998.

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. 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.

A Fund may 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
Atlantic Monthly
Associated Press
Barron's
Bloomberg
Boston Globe
Boston Herald
Business Week
Chicago Tribune
Chicago Sun-Times
Cleveland Plain Dealer
CNBC
CNN
Crain's Chicago Business
Consumer Reports
Consumer Digest
Dow Jones Investment Advisor
Dow Jones Newswire
Fee Advisor
Financial Planning
Financial World
Forbes
Fortune
Fund Action
Fund Marketing Alert
Gourmet
Individual Investor
Investment Dealers' Digest
Investment News
Investor's Business Daily
Kiplinger's Personal Finance Magazine
Knight-Ridder
Lipper Analytical Services
Los Angeles Times
Louis Rukeyser's Wall Street
Money
Money on Line
Morningstar
Mutual Fund Market News
Mutual Fund News Service
Mutual Funds Magazine
Newsday
Newsweek
New York Daily News
The New York Times
No-Load Fund Investor
Pension World
Pensions and Investment
Personal Investor
Physicians Financial News
Jane Bryant Quinn (syndicated column)
Reuters
The San Francisco Chronicle
Securities Industry Daily
Smart Money
Smithsonian
Strategic Insight
Street.com
Time
Travel & Leisure
USA Today
U.S. News & World Report
Value Line
The Wall Street Journal
The Washington Post
Working Women
Worth
Your Money

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.

All of the Funds may compare their performance to the
Consumer Price Index (All Urban), a widely recognized measure of
inflation.

In addition, the Funds may compare performance as indicated
below:

Benchmark Fund(s)
- ------------------------------------------------------------------
Lehman Aggregate Index Advisor Intermediate Bond
Fund
Lehman Brothers Municipal Bond Index Advisor High-Yield
Municipals Fund
Lehman Government/Corporate Index Advisor Intermediate Bond
Fund
Lehman Intermediate Government/
Corporate Index Advisor Intermediate Bond
Fund
Lipper All Long-Term Fixed Income
Funds Average Advisor Intermediate Bond
Fund
Lipper Corporate Bond Funds
(A Rated) Average Advisor Intermediate Bond
Fund
Lipper High-Yield Municipal Bond
Funds Average Advisor High-Yield
Municipals Fund
Lipper Intermediate-Term (5-10 Year)
Investment Grade Debt Funds Average Advisor Intermediate Bond
Fund
Lipper Long-Term Taxable Bond
Funds Average Advisor Intermediate Bond
Fund
Lipper Municipal Bond Fund Average Advisor High-Yield
Municipals Fund
Merrill Lynch Corporate and
Government Master Index Advisor Intermediate Bond
Fund
Morningstar All Long-Term Fixed Income
Funds Average Advisor Intermediate Bond
Fund
Morningstar Corporate Bond (High
Quality) Average Advisor Intermediate Bond
Fund
Morningstar Long-Term Tax-Exempt
Fund Average Advisor High-Yield
Municipals Fund
Morningstar Long-Term Taxable Bond
Funds Average Advisor Intermediate Bond
Fund
Morningstar Municipal Bond (High-
Yield) Funds Average Advisor High-Yield
Municipals Fund
Salomon Brothers Broad Investment
Grade Bond Index Advisor Intermediate Bond
Fund

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 Jan. 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.)

<TABLE>
<CAPTION>
TAX-DEFERRED INVESTMENT VS. TAXABLE INVESTMENT
Interest
Rate 3% 5% 7% 9% 3% 5% 7% 9%
- --------------------------------------------------------------------------------
Com-
pound-
ing
Years Tax-Deferred Investment Taxable Investment
- ---- ------------------------------------ ------------------------------------

Another example of hypothetical returns is reflected in the chart
below, which shows the effect of tax-exempt investing on a
hypothetical investment. Tax-exempt income, however, may be
subject to state and local taxes and the federal alternative
minimum tax. Marginal tax brackets are based on 1993 federal tax
rates and are subject to change. "Joint Return" is based on two
exemptions and "Single return" is based on one exemption. The
results would differ for different numbers of exemptions.

TAX-EQUIVALENT YIELDS
A taxable
investment must yield the following
Taxable Income (thousands) Marginal to equal a tax-exempt yield of:
- ----------------------------- Tax -----------------------
- -----------
Joint Return Single Return Bracket 4% 5% 6% 7% 8%
- -------------- ------------- -------- ---- ---- ---- ----- -----
$0.0 - 36.9 $0.0 - 22.1 15% 4.71 5.88 7.06 8.24 9.41
$36.9 - 89.2 $22.1 - 53.5 28% 5.56 6.94 8.33 9.72 11.11
$89.2 - 140.0 $53.5 - 115.0 31% 5.80 7.25 8.70 10.14 11.59
$140.0 - 250.0 $115.0 - 250.0 36% 6.25 7.81 9.38 10.94 12.50
$250.0+ $250.0+ 39.6% 6.62 8.28 9.93 11.59 13.25

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.

MASTER FUND/FEEDER FUND: STRUCTURE AND RISK FACTORS

Each Fund (which are series of the Trust, 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 the Fund. The
shareholders of each Fund approved this policy of permitting a
Fund to act as a feeder fund by investing in a Portfolio. Please
refer to Investment Policies, Portfolio Investments and
Strategies, and Investment Restrictions for a description of the
investment objectives, policies, and restrictions of the Funds and
the Portfolios. The management fees and expenses of the Funds and
the Portfolios are described under Investment Advisory and Other
Services. Each feeder Fund bears its proportionate share of the
expenses of its master Portfolio.

Stein Roe has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.

Each 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 a Fund and other investors in a Portfolio will be liable for
all obligations of that Portfolio that are not satisfied by the
Portfolio. However, the risk of a Fund incurring financial loss
on account of such liability is limited to circumstances in which
liability was inadequately insured and a Portfolio was unable to
meet its obligations. Accordingly, the trustees of the Trust
believe that neither the Funds nor their shareholders will be
adversely affected by reason of a Fund's investing in a Portfolio.

The Declaration of Trust of Base Trust provides that a
Portfolio will terminate 120 days after the withdrawal of a Fund
or any other investor in the Portfolio, unless the remaining
investors vote to agree to continue the business of the Portfolio.
The trustees of the Trust may vote a Fund's interests in a
Portfolio for such continuation without approval of the Fund's
shareholders.

The common investment objectives of the Funds and the
Portfolios are nonfundamental and may be changed without
shareholder approval, subject, however, to at least 30 days'
advance written notice to a Fund's shareholders.

The fundamental policies of each Fund and the corresponding
fundamental policies of its master Portfolio can be changed only
with shareholder approval. If a Fund, as a Portfolio investor, is
requested to vote on a change in a fundamental policy of a
Portfolio or any other matter pertaining to the Portfolio (other
than continuation of the business of the Portfolio after
withdrawal of another investor), the Fund will solicit proxies
from its shareholders and vote its interest in the Portfolio for
and against such matters proportionately to the instructions to
vote for and against such matters received from Fund shareholders.
A 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 investors in a
Portfolio. If other investors hold a majority interest in a
Portfolio, they could have voting control over that Portfolio.

In the event that a Portfolio's fundamental policies were
changed so as to be inconsistent with those of the corresponding
Fund, the Board of Trustees of the Trust would consider what
action might be taken, including changes to the Fund's fundamental
policies, withdrawal of the Fund's assets from the Portfolio and
investment of such assets in another pooled investment entity, or
the retention of an investment adviser to invest those assets
directly in a portfolio of securities. A 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 a Fund's assets could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution)
to the Fund. Should such a distribution occur, the 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 the Fund
and could affect the liquidity of the Fund.

Each investor in a Portfolio, including a Fund, may add to or
reduce its investment in the Portfolio on each day the NYSE is
open for business. The investor's percentage of the aggregate
interests in the 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 the 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 the
Portfolio effected on such day; and (ii) the denominator of which
is the aggregate beginning of the day net asset value of the
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 the Portfolio by all investors in the Portfolio.
The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio as of the close
of business.

Base Trust may permit other investment companies and/or other
institutional investors to invest in a Portfolio, but members of
the general public may not invest directly in the Portfolio.
Other investors in a Portfolio are not required to sell their
shares at the same public offering price as a Fund, might incur
different administrative fees and expenses than the Fund, and
might charge a sales commission. Therefore, Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in a
Portfolio. Investment by such other investors in a Portfolio
would provide funds for the purchase of additional portfolio
securities and would tend to reduce the operating expenses as a
percentage of the Portfolio's net assets. Conversely, large-scale
redemptions by any such other investors in a Portfolio could
result in untimely liquidations of the Portfolio's security
holdings, loss of investment flexibility, and increases in the
operating expenses of the Portfolio as a percentage of its net
assets. As a result, a Portfolio's security holdings may become
less diverse, resulting in increased risk.

Information regarding other investors in a Portfolio may be
obtained by writing to SR&F Base Trust at Suite 3200, One South
Wacker Drive, Chicago, IL 60606, or by calling 800-338-2550.
Stein Roe may provide administrative or other services to one or
more of such investors.

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, Stein Roe believes that the quality of
debt securities 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 that 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. Stein Roe, through
independent analysis, attempts to discern variations in credit
ratings of the published services, and to anticipate changes in
credit ratings. The following is a description of the
characteristics of certain ratings used by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's ("S&P"), and Fitch
IBCA.

Ratings by Moody's
Corporate and Municipal Bonds: Aaa. Bonds rated Aaa are
judged to be of 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 by an exceptionally
stable margin and principal is secure. Although the various
protective elements are likely to change, such changes as can be
visualized are most 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 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.

C. Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.

Conditional Ratings. Municipal bonds for which the security
depends upon the completion of some act or the fulfillment of some
condition are rated conditionally. These are bonds secured by (a)
earnings of projects under construction, (b) earnings of projects
unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other
limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or
elimination of basis of condition.

Note: Moody's applies numerical modifiers 1, 2, and 3 in the
Aa through B classifications of its municipal bond rating system
and in the Aa through Caa classifications of 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.

Municipal Notes: MIG 1. This designation denotes best
quality. There is present strong protection by established cash
flows, superior liquidity support or demonstrated broad-based
access to the market for refinancing.

MIG 2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.

MIG 3. This designation denotes favorable quality. All
security elements are accounted for but there is lacking the
undeniable strength of the preceding grades. Liquidity and cash
flow protection may be narrow and market access for refinancing is
likely to be less well established.

Demand Feature of Variable Rate Demand Securities: Moody's
may assign a separate rating to the demand feature of a variable
rate demand security. Such a rating may include:

VMIG 1. This designation denotes best quality. There is
present strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market
for refinancing.

VMIG 2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.

VMIG 3. This designation denotes favorable quality. All
security elements are accounted for but there is lacking the
undeniable strength of the preceding grades. Liquidity and cash
flow protection may be narrow and market access for refinancing is
likely to be less well established.

Commercial Paper: Moody's employs the following three
designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers:

Prime-1 Highest Quality
Prime-2 Higher Quality
Prime-3 High Quality

If an issuer represents to Moody's that its Commercial Paper
obligations are supported by the credit of another entity or
entities, Moody's, in assigning ratings to such issuers, evaluates
the financial strength of the indicated affiliated corporations,
commercial banks, insurance companies, foreign governments, or
other entities, but only as one factor in the total rating
assessment.

Ratings by S&P:
Corporate and Municipal Bonds: AAA. Bonds rated AAA have
the highest rating. Capacity to pay interest and repay principal
is extremely strong.

AA. Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated
issues only in small degree.

A. Bonds rated A have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher-rated categories.

BBB. Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest. Whereas they normally
exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay principal and interest for bonds in this
category than for bonds 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. The rating C1 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 also is
issued upon the filing of a bankruptcy petition if debt service
payments are jeopardized.

NOTE: 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 ratings 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.

Provisional Ratings. The letter "p" indicates that the
rating of a municipal bond is provisional. A provisional rating
assumes the successful completion of the project being financed by
the debt being rated and indicates that payment of debt service
requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however,
although addressing credit quality subsequent to completion of the
project, makes no comment on the likelihood of, or the risk of
default upon failure of, such completion. The investor should
exercise his own judgment with respect to such likelihood and
risk.

Municipal Notes: SP-1. Notes rated SP-1 have very strong or
strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are
designated as SP-1+.

SP-2. Notes rated SP-2 have satisfactory capacity to pay
principal and interest.

Notes due in three years or less normally receive a note
rating. Notes maturing beyond three years normally receive a bond
rating, although the following criteria are used in making that
assessment:

* Amortization schedule (the larger the final maturity
relative to other maturities, the more likely the issue will be
rated as a note).

* Source of payment (the more dependent the issue is on the
market for its refinancing, the more likely it will be rated as a
note).

Demand Feature of Variable Rate Demand Securities: S&P
assigns dual ratings to all long-term debt issues that have as
part of their provisions a demand feature. The first rating
addresses the likelihood of repayment of principal and interest as
due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the
long-term maturity and the commercial paper rating symbols are
usually used to denote the put (demand) option (for example,
AAA/A-1+). Normally, demand notes receive note rating symbols
combined with commercial paper symbols (for example, SP-1+/A-1+).

Commercial Paper: A. Issues assigned this highest rating
are regarded as having the greatest capacity for timely payment.
Issues in this category are further refined with the designations
1, 2, and 3 to indicate the relative degree to safety.

A-1. This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety
characteristics are designed A-1+.

Ratings By Fitch IBCA
Investment Grade Bond Ratings
Fitch IBCA investment grade bond ratings provide a guide to
investors in determining the credit risk associated with a
particular security. The ratings represent Fitch IBCA's
assessment of the issuer's ability to meet the obligations of a
specific debt or preferred issue in a timely manner. The rating
takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and
prospective financial condition and operating performance of the
issuer and any guarantor, as well as the economic and political
environment that might affect the issuer's future financial
strength and credit quality.

Fitch IBCA ratings do not reflect any credit enhancement that
may be provided by insurance policies or financial guaranties
unless otherwise indicated.

Fitch IBCA ratings are not recommendations to buy, sell, or
hold any security. Ratings do not comment on the adequacy of
market price, the suitability of any security for a particular
investor, or the tax-exempt nature or taxability of payments made
in respect of any security. Fitch IBCA ratings are based on
information obtained from issuers, other obligors, underwriters,
their experts, and other sources Fitch IBCA believes to be
reliable. Fitch IBCA does not audit or verify the truth or
accuracy of such information. Ratings may be changed, suspended,
or withdrawn as a result of changes in, or the unavailability of,
information or for other reasons.

AAA. Bonds and preferred stock considered to be investment
grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and/or dividends and
repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA. Bonds and preferred stock considered to be investment
grade and of very high credit quality. The obligor's ability to
pay interest and/or dividends and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bond and
preferred rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+.

A. Bonds and preferred stock considered to be investment
grade and of high quality. The obligor's ability to pay interest
and/or dividends and repay principal is considered to be strong,
but may be more vulnerable to adverse changes in economic
conditions and circumstances than debt or preferred securities
with higher ratings.

BBB. Bonds and preferred stock considered to be investment
grade and of satisfactory credit quality. The obligor's ability
to pay interest or dividends and repay principal is considered to
be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on
these securities and, therefore, impair timely payment. The
likelihood that the ratings of these bonds or preferred will fall
below investment grade is higher than for securities with higher
ratings.

BB. Bonds are considered speculative. The obligor's ability
to pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.

B. Bonds are considered highly speculative. While bonds in
this class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of
the issue.

CCC. Bonds have certain identifiable characteristics which,
if not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic
environment.

CC. Bonds are minimally protected. Default in payment of
interest and/or principal seems probable over time.

C. Bonds are in imminent default in payment of interest or
principal.

DDD, DD, and D. Bonds are in default on interest and/or
principal payments. Such bonds are extremely speculative and
should be valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the
highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) or Minus (-). Plus and minus signs are used with a
rating symbol to indicate the relative position of a credit within
the rating category. Plus and minus signs, however, are not used
in the AAA, DDD, DD or D categories.

NR. Indicates that Fitch IBCA does not rate the specific
issue.

Conditional. A conditional rating is premised on the
successful completion of a project or the occurrence of a specific
event.

Suspended. A rating is suspended when Fitch IBCA deems the
amount of information available from the issuer to be inadequate
for rating purposes.

Withdrawn. A rating will be withdrawn when an issue matures
or is called or refinanced, and, at Fitch IBCA's discretion, when
an issuer fails to furnish proper and timely information.

FitchAlert. Ratings are placed on FitchAlert to notify
investors of an occurrence that is likely to result in a rating
change and the likely direction of such change. These are
designated as "Positive," indicating a potential upgrade,
"Negative," for potential downgrade, or "Evolving," where ratings
may be raised or lowered. FitchAlert is relatively short-term and
should be resolved within 12 months.

Ratings Outlook. An outlook is used to describe the most
likely direction of any rating change over the intermediate term.
It is described as "Positive" or "Negative." The absence of a
designation indicates a stable outlook.

Short-Term Ratings
F-1+. Exceptionally Strong Credit Quality. Issues assigned
this rating are regarded as having the strongest degree of
assurance for timely payment.

F-1. Very Strong Credit Quality. Issues assigned this
rating reflect an assurance of timely payment only slightly less
in degree than issues rated F-1+.

F-2. Good Credit Quality. Issues assigned this rating have
a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F-1+ and
F-1 ratings.

F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could
cause these securities to be rated below investment grade.

F-S. Weak Credit Quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.

D. Default. Issues assigned this rating are in actual or
imminent payment default.
________________________

<PAGE>

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS [Note: As used herein, the term "Registration
Statement" refers to the Registration Statement of the
Registrant on Form N-1A under the Securities Act of 1933, No.
333-17255. The terms "Pre-Effective Amendment" and "PEA"
refer, respectively, to a pre-effective amendment and a post-
effective amendment to the Registration Statement.]

(a) Agreement and Declaration of Trust as amended through Feb. 12,
1999. (Exhibit (a) to PEA #10.)*

(b)(1) By-Laws of Registrant. (Exhibit 2 to Registration
Statement.)*
(2) Amendment to By-Laws dated 2/4/98. (Exhibit 2(b)
to PEA #8.)*

(d) None.

(e)(1) Underwriting agreement between Registrant and
Liberty Funds Distributor, Inc. dated 8/4/99.
(Exhibit (e)(1) to PEA #11.)*
(2) Selling agreement. (Exhibit 6(c) to PEA #2.)*

(f) None.

(g) Custodian contract between Registrant and State Street Bank and
Trust Company dated 2/13/97. (Exhibit 8 to PEA #1.)*

(h)(1) Transfer agency agreement between Registrant and Liberty
Funds Services, Inc. (formerly named Colonial Investors
Service Center, Inc.) dated 10/15/97 as amended through
12/15/98. (Exhibit (h)(1) to PEA #11.)*
(2) Administrative agreement between Registrant and Stein
Roe & Farnham Incorporated dated 2/14/97 as amended
through 6/28/99. (Exhibit (h)(2) to PEA #11.)*
(3) Accounting and bookkeeping agreement between Registrant
and Stein Roe & Farnham Incorporated dated 8/3/99.
(Exhibit (h)(3) to PEA #11.)*

(i)(1) Opinion and consent of Bell, Boyd & Lloyd relating to
Stein Roe Advisor Growth & Income Fund, Stein Roe Advisor
International Fund, Stein Roe Advisor Young Investor Fund,
Stein Roe Advisor Balanced Fund, and Stein Roe Advisor
Growth Stock Fund Exhibit 10 to Pre-Effective Amendment
#1.)*
(2) Opinion and consent of Bell, Boyd & Lloyd with respect to
Stein Roe Advisor High-Yield Municipals Fund, Stein Roe
Advisor Intermediate Bond Fund, and Stein Roe Advisor Income
Fund. (Exhibit 10(b) to PEA #5.)*

(j) Consent of Ernst & Young LLP.

(k) None.

(l) Inapplicable.

(m) Amended Rule 12b-1 plan dated 12/12/98. (Exhibit (m) to
PEA #10.)*

(n) Amended Rule 18f-3 plan dated 2/4/98. (Exhibit (n) to
PEA #10.)*
- -----------
*Incorporated by reference.

ITEM 24. 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
and Other Services," "Management," and "Transfer Agent" in the
Statement of Additional Information, each of which is incorporated
herein by reference.

ITEM 25. INDEMNIFICATION.

Article VIII of the Agreement and Declaration of Trust of
Registrant (Exhibit a), 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
willful 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
willful 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 willful 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 willful 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 willful 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
willful 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 willful 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 willful 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 willful 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 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 the
distribution agreement.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Stein Roe & Farnham Incorporated ("Stein Roe"), the investment
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 Liberty Corporation Holdings, Inc., which is a wholly 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. Stein Roe 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
Stein Roe, 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
and Other Services."

Certain directors and officers of Stein Roe also serve and have
during the past two years served in various capacities as
officers, directors, or trustees of SSI, of Colonial Management
Associates, Inc. (which is a subsidiary of Liberty Financial
Companies, Inc.), and of the Registrant and other investment
companies managed by SteinRoe. (The listed entities are located
at One South Wacker Drive, Chicago, Illinois 60606, except for
Colonial Management Associates, Inc., which is located at One
Financial Center, Boston, MA 02111, and SteinRoe Variable
Investment Trust and Liberty Variable Investment Trust, which
are located at Federal Reserve Plaza, Boston, MA 02210.) 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
Thomas W. Butch President; Director; Chmn. Vice President
Kevin M. Carome Assistant Clerk
Kenneth J. Kozanda Vice President; Treasurer
Kenneth R. Leibler Director
Karl J. Maurer Comptroller
C. Allen Merritt, Jr. Director; Vice President
Heidi J. Walter Vice President; Secretary

COLONIAL MANAGEMENT ASSOCIATES, INC.
Ophelia L. Barsketis Senior Vice President
Kevin M. Carome Senior Vice President
William M. Garrison Vice President
Loren A. Hansen Senior Vice President
Clare M. Hounsell Vice President
James P. Haynie Senior Vice President
Timothy J. Jacoby Senior Vice President
Deborah A. Jansen Senior Vice President
North T. Jersild Vice President
Yvonne T. Shields Vice President

SR&F BASE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
David P. Brady Vice-President
Thomas W. Butch President Executive V-P;
Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Jane M. Naeseth Vice-President
Maureen G. Newman Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary

STEIN ROE INCOME TRUST; STEIN ROE INSTITUTIONAL TRUST; AND
STEIN ROE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Kevin M. Carome Executive VP; Asst. Secy. VP
Loren A. Hansen Executive Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Lynn C. Maddox Vice-President
Jane M. Naeseth Vice-President
Heidi J. Walter Vice-President; Secretary

STEIN ROE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
David P. Brady Vice-President
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
William M. Garrison Vice-President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY-STEIN ROE ADVISOR TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
David P. Brady Vice-President
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Maureen G. Newman Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
Heidi J. Walter Vice-President; Secretary

STEIN ROE MUNICIPAL TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President Exec. V-P;
V-P; Trustee
Kevin M. Carome Executive VP; Asst. Secy. VP
Joanne T. Costopoulos Vice-President
Loren A. Hansen Executive Vice-President
Brian M. Hartford Vice-President
William C. Loring Vice-President
Lynn C. Maddox Vice-President
Maureen G. Newman Vice-President
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary

STEINROE VARIABLE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President
Kevin M. Carome Executive VP; Asst. Secy. VP
William M. Garrison Vice President
Erik P. Gustafson Vice President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice President
Michael T. Kennedy Vice President
Jane M. Naeseth Vice President
William M. Wadden IV Vice President
Heidi J. Walter Vice President

STEIN ROE FLOATING RATE INCOME TRUST; STEIN ROE INSTITUTIONAL
FLOATING RATE INCOME TRUST, STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President; Trustee or Manager
Kevin M. Carome Executive VP; Asst. Secy. VP
Brian W. Good Vice-President
James R. Fellows Vice-President
Loren A. Hansen Executive Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY VARIABLE INVESTMENT TRUST
Ophelia L. Barsketis Vice President
Deborah A. Jansen Vice President
Kevin M. Carome Vice President

ITEM 27. PRINCIPAL UNDERWRITERS.

Registrant's principal underwriter, Liberty Funds Distributor,
Inc., a subsidiary of Colonial Management Associates, Inc.,
acts as underwriter to Liberty Funds Trust I, Liberty Funds Trust
II, Liberty Funds Trust III, Liberty Funds Trust IV, Liberty
Funds Trust V, Liberty Funds Trust VI, Liberty Funds Trust VII,
Liberty Funds Trust IX, Stein Roe Investment Trust, Stein Roe
Income Trust, Stein Roe Municipal Trust, Liberty-Stein Roe
Advisor Trust, Stein Roe Institutional Trust, Stein Roe Trust,
Stein Roe Floating Rate Income Fund, Stein Roe Institutional
Floating Rate Income Fund, and SteinRoe Variable Investment
Trust. The table below lists the directors and officers of
Liberty Funds Distributor, Inc.

Position and Offices Positions and
Name and Principal with Principal Offices with
Business Address* Underwriter Registrant
- -------------------- --------------------- -------------
Anderson, Judith Vice President None
Anetsberger, Gary A. Senior Vice President Senior V-P;
Treasurer
Babbitt, Debra VP & Compliance Officer None
Ballou, Rick Senior Vice President None
Bartlett, John Managing Director None
Blakeslee, James Senior Vice President None
Blumenfeld, Alex Vice President None
Bozek, James Senior Vice President None
Brown, Beth Vice President None
Burtman, Tracy Vice President None
Butch, Thomas W. Senior Vice President President
Campbell, Patrick Vice President None
Chrzanowski, Daniel Vice President None
Clapp, Elizabeth A. Managing Director None
Conlin, Nancy L. Director; Clerk None
Davey, Cynthia Sr. Vice President None
Desilets, Marian H. Vice President None
Devaney, James Senior Vice President None
DiMaio, Steve Vice President None
Downey, Christopher Vice President None
Dupree, Robert Vice President None
Emerson, Kim P. Senior Vice President None
Erickson, Cynthia G. Senior Vice President None
Evans, C. Frazier Managing Director None
Feldman, David Managing Director None
Fifield, Robert Vice President None
Gariepy, Tom Vice President None
Gauger, Richard Vice President None
Gerokoulis, Stephen A. Senior Vice President None
Gibson, Stephen E. Director; Chairman of Board None
Goldberg, Matthew Senior Vice President None
Gupta, Neeti Vice President None
Geunard, Brian Vice President None
Harrington, Tom Sr. Vice President None
Harris, Carla L. Vice President None
Hodgkins, Joseph Sr. Vice President None
Hussey, Robert Senior Vice President None
Iudice, Jr., Philip Treasurer and CFO None
Jones, Cynthia Vice President None
Jones, Jonathan Vice President None
Kelley, Terry M. Vice President None
Kelson, David W. Senior Vice President None
Libutti, Chris Vice President None
Martin, John Senior Vice President None
Martin, Peter Vice President None
McCombs, Gregory Senior Vice President None
McKenzie, Mary Vice President None
Menchin, Catherine Senior Vice President None
Miller, Anthony Vice President None
Moberly, Ann R. Senior Vice President None
Morse, Jonathan Vice President None
Nickodemus, Paul Vice President None
O'Shea, Kevin Managing Director None
Piken, Keith Vice President None
Place, Jeffrey Managing Director None
Powell, Douglas Vice President None
Predmore, Tracy Vice President None
Quirk, Frank Vice President None
Raftery-Arpino, Linda Senior Vice President None
Ratto, Gregory Vice President None
Reed, Christopher B. Senior Vice President None
Riegel, Joyce B. Vice President None
Robb, Douglas Vice President None
Sandberg, Travis Vice President None
Santosuosso, Louise Senior Vice President None
Schulman, David Senior Vice President None
Shea, Terence Vice President None
Sideropoulos, Lou Vice President None
Sinatra, Peter Vice President None
Smith, Darren Vice President None
Soester, Trisha Vice President None
Studer, Eric Vice President None
Sweeney, Maureen Vice President None
Tambone, James Chief Executive Officer None
Tasiopoulos, Lou President None
VanEtten, Keith H. Senior Vice President None
Walter, Heidi J. Vice President V-P & Secy.
Wess, Valerie Senior Vice President None
Young, Deborah Vice President None
- ---------
* The address of Ms. Harris, Ms. Riegel, Ms. Walter, and Messrs.
Anetsberger and Butch is One South Wacker Drive, Chicago, IL
60606. The address of each other director and officer is One
Financial Center, Boston, MA 02111.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

Registrant maintains the records required to be maintained by it
under Rules 31a-1(a), 31a-1(b), and 31a-2(a) under the
Investment Company Act of 1940 at its principal executive
offices at One South Wacker Drive, Chicago, Illinois 60606.
Certain records, including records relating to Registrant's
shareholders and the physical possession of its securities, may
be maintained pursuant to Rule 31a-3 at the main office of
Registrant's transfer agent or custodian.

ITEM 29. MANAGEMENT SERVICES.
None.

ITEM 30. UNDERTAKINGS.
None.

<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 24th day of August, 1999.

LIBERTY-STEIN ROE ADVISOR TRUST

By THOMAS W. BUTCH
Thomas W. Butch
President

Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated:

Signature Title* Date
- ------------------------ --------------------- --------------
THOMAS W. BUTCH President August 24, 1999
Thomas W. Butch
Principal Executive Officer

GARY A. ANETSBERGER Senior Vice- August 24, 1999
Gary A. Anetsberger President; Treasurer
Principal Financial Officer

PATRICIA J. JUDGE Controller August 24, 1999
Patricia J. Judge
Principal Accounting Officer

JOHN A. BACON JR. Trustee August 24, 1999
John A. Bacon Jr.

WILLIAM W. BOYD Trustee August 24, 1999
William W. Boyd

LINDSAY COOK Trustee August 24, 1999
Lindsay Cook

DOUGLAS A. HACKER Trustee August 24, 1999
Douglas A. Hacker

JANET LANGFORD KELLY Trustee August 24, 1999
Janet Langford Kelly

CHARLES R. NELSON Trustee August 24, 1999
Charles R. Nelson

THOMAS C. THEOBALD Trustee August 24, 1999
Thomas C. Theobald

*Each person signing this amendment is signing in his or her
indicated capacity with the Registrant and also in the same
capacity with SR&F Base Trust.

<PAGE>

STEIN ROE ADVISOR TRUST
INDEX TO EXHIBITS FILED WITH THIS AMENDMENT

Exhibit
Number Description
- ------- -------------

(j) Consent of Ernst & Young LLP

CONSENT OF INDEPENDENT AUDITORS

We consent to the references to our firm under the captions
"Financial Highlights" and "Independent Auditors" and to the
incorporation by reference of our reports dated August 11, 1999
with respect to Stein Roe Advisor High-Yield Municipals Fund, SR&F
High-Yield Municipals Portfolio, Stein Roe Advisor Intermediate
Bond Fund and SR&F Intermediate Bond Portfolio in the Registration
Statement (Form N-1A) and related Statement of Additional
Information of Liberty-Stein Roe Advisor Trust, filed with the
Securities and Exchange Commission in this Post-Effective
Amendment No. 12 to the Registration Statement under the
Securities Act of 1933 (Registration No. 333-17255) and in this
Amendment No. 14 to the Registration Statement under the
Investment Company Act of l940 (Registration No. 811-07955).

ERNST & YOUNG LLP

Boston, Massachusetts
August 11, 1999