<PAGE> 
   
Prospectus Nov. 5, 1997
Stein Roe Mutual Funds
    

Stein Roe Institutional High Yield Fund

       

Institutional High Yield Fund seeks total return by investing for 
a high level of current income and capital growth.  Institutional 
High Yield Fund seeks to achieve its objective by investing all of 
its net investable assets in SR&F High Yield Portfolio, which has 
the same investment objective and substantially the same 
investment policies as Institutional High Yield Fund.  High Yield 
Portfolio invests primarily in high-yield, high-risk medium- and 
lower-quality debt securities.  Lower-quality securities, commonly 
known as "junk bonds," are subject to a greater risk with regard 
to payment of interest and return of principal than higher-rated 
bonds.  Investors should carefully consider the risks associated 
with junk bonds before investing.  (See Investment Policies, Risks 
and Investment Considerations, Master Fund/Feeder Fund:  Structure 
and Risk Factors, and Appendix.)

     Institutional High Yield Fund is a "no-load" fund.  There are 
no sales or redemption charges, and the Fund has no 12b-1 plan.  
Institutional High Yield Fund is a series of the Stein Roe 
Institutional Trust and High Yield Portfolio is a series of SR&F 
Base Trust.  Each Trust is an open-end management investment 
company.

     Shares of Institutional High Yield Fund are available 
primarily through Intermediaries who provide accounting, 
recordkeeping, and other services to investors and who hold Fund 
shares in omnibus accounts for their clients.  (See How to 
Purchase Shares.)

     This prospectus contains information you should know before 
investing in Institutional High Yield Fund.  Please read it 
carefully and retain it for future reference.

     A Statement of Additional Information dated Nov. 5, 1997, 
containing more detailed information, has been filed with the 
Securities and Exchange Commission and (together with any 
supplements thereto) is incorporated herein by reference.  The 
Statement of Additional Information and the most recent financial 
statements may be obtained without charge by writing to Stein Roe 
Funds, Suite 3200, One South Wacker Drive, Chicago, Illinois 
60606, or by calling Stein Roe Advisor and Dealer Services at 800-
322-0593.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE 
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND 
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS 
PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL 
OFFENSE.


TABLE OF CONTENTS

                                        Page
Summary...................................2
Fee Table................................ 4
Financial Highlights......................5
The Fund..................................5
Investment Policies.......................6
Portfolio Investments and Strategies......8
Investment Restrictions............ .... 13
Risks and Investment Considerations..... 14
How to Purchase Shares...................15
How to Redeem Shares.................... 15
Net Asset Value......................... 16
Distributions and Income Taxes...........17
Investment Return........................18
Management.............................. 18
Organization and Description of Shares...20
Master Fund/Feeder Fund: Structure
   and Risk Factors......................20
For More Information.................... 23
Appendix.................................23


SUMMARY

Stein Roe Institutional High Yield Fund ("Institutional High Yield 
Fund") is a series of the Stein Roe Institutional Trust, an open-
end management investment company organized as a Massachusetts 
business trust.  Institutional High Yield Fund offers 
institutional investors the advantage of a "no-load" fund, with 
Stein Roe & Farnham Incorporated and its affiliates providing 
customized services as investment adviser, administrator, transfer 
agent, and distributor.  (See The Fund and Organization and 
Description of Shares.)  This prospectus is not a solicitation in 
any jurisdiction in which shares of Institutional High Yield Fund 
are not qualified for sale.

Investment Objective and Policies.  Institutional High Yield Fund 
invests all of its net investable assets in SR&F High Yield 
Portfolio ("High Yield Portfolio").  High Yield Portfolio invests 
in a diversified portfolio of securities in accordance with the 
identical investment objective and substantially the same 
investment policies as those of Institutional High Yield Fund.  
High Yield Portfolio seeks total return by investing for a high 
level of current income and capital growth.  High Yield Portfolio 
invests primarily in high-yield, high-risk medium- and lower-
quality debt securities.  Medium-quality debt securities, although 
considered investment grade, may have some speculative 
characteristics.  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." 

     For a more detailed discussion of the investment objective 
and policies, please see Investment Policies and Portfolio 
Investments and Strategies.  There is, of course, no assurance 
that Institutional High Yield Fund and High Yield Portfolio will 
achieve their common investment objective.

Investment Risks.  The risks inherent in Institutional High Yield 
Fund depend primarily upon the term and quality of the obligations 
in the investment portfolio of High Yield Portfolio, as well as on 
market conditions.  Interest rate fluctuations will affect the 
Fund's net asset value and, therefore, the total return from an 
investment in Institutional High Yield Fund.  Interest rate 
fluctuations will affect income on variable rate securities and on 
securities purchased as other portfolio securities mature.  Since 
yields on debt securities available for purchase vary over time, 
no specific yield on shares of Institutional High Yield Fund can 
be assured.  Institutional High Yield Fund is designed for 
investors who can accept the heightened level of risk and 
principal fluctuation inherent in a portfolio that invests at 
least 65% of its assets in medium- and lower-quality debt 
securities.  High Yield Portfolio may invest in foreign 
securities, which may entail a greater degree of risk than 
investing in securities of domestic issuers.  Please see 
Investment Restrictions and Risks and Investment Considerations 
for further information.

Purchases and Redemptions.  Fund shares are available primarily 
through pension plan administrators, broker-dealers, or other 
intermediaries (each an "Intermediary"), who provide accounting, 
recordkeeping, and other services to investors and who hold Fund 
shares in omnibus accounts for their clients.  For additional 
information on purchasing (buying) and redeeming (selling) shares, 
see How to Purchase Shares and How to Redeem Shares.

Distributions.  Dividends are declared each business day and are 
paid monthly.  Dividends will be reinvested in additional shares 
of Institutional High Yield Fund unless the Intermediary holding 
the omnibus account elects to receive them in cash.  (See 
Distributions and Income Taxes.)

Management and Fees.  Stein Roe & Farnham Incorporated (the 
"Adviser") is investment adviser to High Yield Portfolio.  In 
addition, it provides administrative services to Institutional 
High Yield Fund and High Yield Portfolio.  For a description of 
the Adviser and its fees, see Management.


FEE TABLE

Shareholder Transaction Expenses     
Sales Load Imposed on Purchases..........................None
Sales Load Imposed on Reinvested Dividends...............None
Deferred Sales Load......................................None
Redemption Fees..........................................None
Exchange Fees............................................None

Annual Fund Operating Expenses (after fee waiver; 
  as a percentage of average net assets)
Management and Administrative Fees (after fee waiver)....0.50%
12b-1 Fees...............................................None
Other Expenses (after fee waiver)........................0.10%
                                                         -----
Total Fund Operating Expenses (after fee waiver).........0.60%
                                                         =====

Example.
You would pay the following expenses on a $1,000 investment 
assuming (1) 5% annual return; and (2) redemption at the end of 
each time period:

                        1 year     3 years
                        ------     -------
                          $6         $19

     The purpose of the Fee Table is to assist you in 
understanding the various costs and expenses that you will bear 
directly or indirectly as an investor in Institutional High Yield 
Fund.  The information in the table is based upon an estimate of 
expenses assuming net assets of $50 million.  The figures assume 
that the percentage amounts listed under Annual Fund Operating 
Expenses remain the same during each of the periods and that all 
income dividends and capital gains distributions are reinvested in 
additional Fund shares.

     From time to time, the Adviser may voluntarily waive a 
portion of its fees and absorb certain expenses payable by 
Institutional High Yield Fund and the Fund's pro rata share of the 
fees and expenses payable by High Yield Portfolio.  The Adviser 
has agreed to voluntarily waive such fees and absorb such expenses 
to the extent the ordinary operating expenses of Institutional 
High Yield Fund exceed 0.60% of its annual average net assets.  
This commitment expires on Oct. 31, 1999, subject to earlier 
review and possible termination by the Adviser on 30 days' notice 
to the Fund.  Absent such expense undertaking, the estimated 
Management and Administrative Fees, Other Expenses and Total Fund 
Operating Expenses would be 0.65%, 0.38% and 1.03%, respectively.  
Any such reimbursement will lower Institutional High Yield Fund's 
overall expense ratio and increase its overall return to 
investors.  (Also see Management--Fees and Expenses.)

     Institutional High Yield Fund pays the Adviser an 
administrative fee based on its average daily net assets and High 
Yield Portfolio pays the Adviser a management fee based on its 
average daily net assets.  The Fee Table summarizes the expenses 
of both Institutional High Yield Fund and High Yield Portfolio.  
Fees and expenses are described under Management.  Institutional 
High Yield Fund bears its proportionate share of Portfolio 
expenses.  The Trustees of Institutional Trust have considered 
whether the annual operating expenses of Institutional High Yield 
Fund, including its proportionate share of the fees and expenses 
of High Yield Portfolio, would be more or less than if 
Institutional High Yield Fund invested directly in the securities 
held by High Yield Portfolio, and concluded that Institutional 
High Yield Fund's expenses would not be materially greater in such 
case.

     The figures in the Example are not necessarily indicative of 
past or future expenses, and actual expenses may be greater or 
less than those shown.  Although information such as that shown in 
the Example and Fee Table is useful in reviewing Institutional 
High Yield Fund's expenses and in providing a basis for comparison 
with other mutual funds, it should not be used for comparison with 
other investments using different assumptions or time periods.


FINANCIAL HIGHLIGHTS

The table below reflects the results of operations of 
Institutional High Yield Fund on a per-share basis and has been 
audited by Ernst & Young LLP, independent auditors.  The auditors' 
report related to information for this period was unqualified.  
The table should be read in conjunction with the Fund's financial 
statements and notes thereto.  The annual report may be obtained 
from Institutional Trust without charge upon request. 

                                               Period Ended
                                             June 30, 1997 (a)
                                             -----------------
Net Asset Value, Beginning of Period              $10.00
Income from Investment Operations     
Net investment income                               0.44
Net realized and unrealized gains on investments    0.31
                                                  ------
Total from investment operations                    0.75
Distributions from net investment income           (0.44)
                                                  ------
Net Asset Value, End of Period                    $10.31
                                                  ======
Ratio of expenses to average net assets (b)   ..  *0.72%
Ratio of net investment income to average net  
   assets (c) ................................    *8.86%
Total return (c) ............................    **7.70%
Net assets, end of period (000 omitted)............ $107
- --------------
*Annualized.
**Not Annualized.
(a) From commencement of operations on Jan. 3, 1997.
(b) If Institutional High Yield Fund had paid all of its expenses 
    and there had been no reimbursement of expenses by the 
    Adviser, this ratio would have been 171.3% for the period 
    ended June 30, 1997.
(c) Computed giving effect to the Adviser's fee waiver.


THE FUND

Stein Roe Institutional High Yield Fund ("Institutional High Yield 
Fund") is a no-load "mutual fund."  Institutional High Yield Fund 
does not impose commissions or charges when shares are purchased 
or redeemed.  Institutional High Yield Fund is a series of the 
Stein Roe Institutional Trust ("Institutional Trust"), an open-end 
management investment company, which is authorized to issue shares 
of beneficial interest in separate series.  

     Stein Roe & Farnham Incorporated (the "Adviser") provides 
portfolio management services to High Yield Portfolio and 
administrative services to Institutional High Yield Fund and High 
Yield Portfolio. 

     Rather than invest in securities directly, Institutional High 
Yield Fund seeks to achieve its investment objective by using the 
"master fund/feeder fund" structure.  Under that structure, 
Institutional High Yield Fund and other investment companies with 
the same investment objective invest their assets in another 
investment company having the same investment objective and 
substantially the same investment policies as Institutional High 
Yield Fund.  The purpose of such an arrangement is to achieve 
greater operational efficiencies and reduce costs.  Institutional 
High Yield Fund invests all of its net investable assets in SR&F 
High Yield Portfolio ("High Yield Portfolio"), which is a series 
of SR&F Base Trust ("Base Trust").  (See Master Fund/Feeder Fund:  
Structure and Risk Factors.)  


INVESTMENT POLICIES

Institutional High Yield Fund and High Yield Portfolio each seek 
total return by investing for a high level of current income and 
capital growth.  Further information on portfolio investments and 
strategies may be found under Portfolio Investments and Strategies 
in this prospectus and in the Statement of Additional Information.  
Institutional High Yield Fund seeks to achieve its objective by 
investing all of its assets in High Yield Portfolio.  The 
investment policies of High Yield Portfolio are substantially 
identical to those of Institutional High Yield Fund. 

     High Yield Portfolio invests principally in high-yield, high-
risk medium- and lower-quality debt securities.  The medium- and 
lower-quality debt securities in which High Yield Portfolio 
invests normally offer a current yield or yield to maturity that 
is significantly higher than the yield from securities rated in 
the three highest categories assigned by rating services such as 
Standard & Poor's Corporation ("S&P") and Moody's Investors 
Service, Inc. ("Moody's").  

     Under normal circumstances, at least 65% of High Yield 
Portfolio's assets will be invested in high-yield, high-risk 
medium- and lower-quality debt securities rated lower than Baa by 
Moody's and lower than BBB by S&P, or equivalent ratings as 
determined by other rating agencies, or unrated securities that 
the Adviser determines to be of comparable quality.  Medium-
quality debt securities, although considered investment grade, 
have some speculative characteristics.  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.  Some issuers of debt securities choose not to have 
their securities rated by a rating service, and High Yield 
Portfolio may invest in unrated securities that the Adviser has 
researched and believes are suitable for investment.  High Yield 
Portfolio may invest in debt obligations that are in default, but 
such obligations are not expected to exceed 10% of High Yield 
Portfolio's assets.  

     High Yield Portfolio may invest up to 35% of its total assets 
in other securities including, but not limited to, pay-in-kind 
bonds, securities issued in private placements, bank loans, zero 
coupon bonds, foreign securities, convertible securities, futures, 
and options.  High Yield Portfolio may also invest in higher-
quality debt securities.  Under normal market conditions, however, 
High Yield Portfolio is unlikely to emphasize higher-quality debt 
securities since generally they offer lower yields than medium- 
and lower-quality debt securities with similar maturities.  High 
Yield Portfolio may also invest in common stocks and securities 
that are convertible into common stocks, such as warrants.

     Investment in medium- or lower-quality debt securities 
involves greater investment risk, including the possibility of 
issuer default or bankruptcy.  High Yield 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 (see Risks and Investment 
Considerations) 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.

     Achievement of the investment objective will be more 
dependent on the Adviser's credit analysis than would be the case 
if High Yield 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, the 
Adviser 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 High Yield Portfolio may have greater 
difficulty selling its portfolio securities.  (See Net Asset 
Value.)  The market value of these securities and their liquidity 
may be affected by adverse publicity and investor perceptions.

     For the fiscal year ended June 30, 1997, High Yield 
Portfolio's investment portfolio was invested, on average, as 
follows:  high-quality short-term instruments, 3.2%; BBB, 1.3%; 
BB, 25.0%; B, 64.1%; and unrated, 6.4%.  The ratings are based on 
a dollar-weighted average, computed monthly, and reflect the 
higher of S&P or Moody's ratings.  The ratings do not necessarily 
reflect the current or future composition of High Yield Portfolio.


PORTFOLIO INVESTMENTS AND STRATEGIES

Foreign Securities.  High Yield Portfolio may invest in foreign 
securities, but will not invest in a foreign security if, as a 
result of such investment, more than 25% of its total assets would 
be invested in foreign securities.  For purposes of this 
restriction, foreign debt securities do not include securities 
represented by American Depositary Receipts ("ADRs"), foreign debt 
securities denominated in U.S. dollars, or securities guaranteed 
by a U.S. person such as a corporation domiciled in the United 
States that is a parent or affiliate of the issuer of the 
securities being guaranteed.  High Yield Portfolio may invest in 
sponsored or unsponsored ADRs.  In addition to, or in lieu of, 
such direct investment, High Yield Portfolio may construct a 
synthetic foreign position by (a) purchasing a debt instrument 
denominated in one currency, generally U.S. dollars; and (b) 
concurrently entering into a forward contract to deliver a 
corresponding amount of that currency in exchange for a different 
currency on a future date and at a specified rate of exchange.  
Because of the availability of a variety of highly liquid U.S. 
dollar debt instruments, a synthetic foreign position utilizing 
such U.S. dollar instruments may offer greater liquidity than 
direct investment in foreign currency debt instruments.  In 
connection with the purchase of foreign securities, High Yield 
Portfolio may contract to purchase an amount of foreign currency 
sufficient to pay the purchase price of the securities at the 
settlement date.  (See Risks and Investment Considerations.)

Derivatives.  Consistent with its objective, High Yield 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, and other instruments, the value of which is 
"derived" from the performance of an underlying asset or a 
"benchmark" such as a security index, an interest rate, or a 
currency ("Derivatives").  High Yield Portfolio does not expect to 
invest more than 5% of its net assets in any type of Derivative 
except options, futures contracts, and futures options.

     Derivatives are most often used to manage investment risk or 
to create an investment position indirectly because they are more 
efficient or less costly than direct investment.  They also may be 
used in an effort to enhance portfolio returns.

     The successful use of Derivatives depends on the Adviser's 
ability to correctly predict changes in the levels and directions 
of movements in security prices, interest rates and other market 
factors affecting the Derivative itself or the value of the 
underlying asset or benchmark.  In addition, correlations in the 
performance of an underlying asset to a Derivative may not be well 
established.  Finally, privately negotiated and over-the-counter 
Derivatives may not be as well regulated and may be less 
marketable than exchange-traded Derivatives.  For additional 
information on Derivatives, please refer to the Statement of 
Additional Information.

     Mortgage and Other Asset-Backed Debt Securities.  High Yield 
Portfolio may invest in securities secured by mortgages or other 
assets such as automobile or home improvement loans and credit 
card receivables.  These instruments may be issued or guaranteed 
by the U.S. Government or by its agencies or instrumentalities or 
by private entities such as commercial, mortgage and investment 
banks and financial companies or financial subsidiaries of 
industrial companies.

     Securities issued by GNMA represent an interest in a pool of 
mortgages insured by the Federal Housing Administration or the 
Farmers Home Administration, or guaranteed by the Veterans 
Administration.  Securities issued by FNMA and FHLMC, U.S. 
Government-sponsored corporations, also represent an interest in a 
pool of mortgages.

     The timely payment of principal and interest on GNMA 
securities is guaranteed by GNMA and backed by the full faith and 
credit of the U.S. Treasury.  FNMA guarantees full and timely 
payment of interest and principal on FNMA securities.  FHLMC 
guarantees timely payment of interest and ultimate collection of 
principal on FHLMC securities.  FNMA and FHLMC securities are not 
backed by the full faith and credit of the U.S. Treasury.

     Mortgage-backed debt securities, such as those issued by 
GNMA, FNMA, and FHLMC, are of the "modified pass-through type," 
which means the interest and principal payments on mortgages in 
the pool are "passed through" to investors.  Mortgage-backed 
securities provide either a pro rata interest in underlying 
mortgages or an interest in collateralized mortgage obligations 
("CMOs"), which 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 of 
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 High Yield Portfolio on purchase of the security, and the 
proceeds of prepayment would likely be invested at lower interest 
rates.  High Yield Portfolio tends to invest in CMOs of classes 
known as planned amortization classes ("PACs") which have 
prepayment protection features tending to make them less 
susceptible to price volatility.

     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 which finance payments on the securities 
themselves.  Therefore, greater emphasis is placed on the credit 
quality of the security issuer and the guarantor, if any.

     Asset-backed securities tend to experience greater price 
volatility than straight debt securities.

     REMICs.  High Yield 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.

     Floating Rate Instruments.  High Yield Portfolio may also 
invest in floating rate instruments which 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%.  High 
Yield Portfolio does not intend to invest more than 5% of its net 
assets in floating rate instruments.

     Futures and Options.  High Yield Portfolio may purchase and 
write both call options and put options on securities, indexes and 
foreign currencies, and enter into interest rate, index and 
foreign currency futures contracts.  High Yield Portfolio may also 
write options on such futures contracts and purchase other types 
of forward or investment contracts linked to individual 
securities, indexes or other benchmarks, consistent with its 
investment objective, in order to provide additional revenue, or 
to hedge against changes in security prices, interest rates, or 
currency fluctuations.  High Yield Portfolio may write a call or 
put option only if the option is covered.  As the writer of a 
covered call option, High Yield Portfolio foregoes, during the 
option's life, the opportunity to profit from increases in market 
value of the security covering the call option above the sum of 
the premium and the exercise price of the call.  There can be no 
assurance that a liquid market will exist when High Yield 
Portfolio seeks to close out a position.  Because of low margin 
deposits required, the use of futures contracts involves a high 
degree of leverage, and may result in losses in excess of the 
amount of the margin deposit.

Lending of Portfolio Securities.  Subject to certain restrictions, 
High Yield Portfolio may lend 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 High Yield Portfolio.  High Yield 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.  High Yield 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.  
In the event of bankruptcy or other default of the borrower, High 
Yield 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.  High Yield 
Portfolio may participate in an interfund lending program subject 
to certain restrictions described in the Statement of Additional 
Information.

When-Issued and Delayed-Delivery Securities; Standby Commitments.  
High Yield Portfolio's assets may include securities purchased on 
a when-issued or delayed-delivery basis.  Although the payment and 
interest terms of these securities are established at the time the 
purchaser 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.  High Yield Portfolio makes 
such commitments only with the intention of actually acquiring the 
securities, but may sell the securities before settlement date if 
the Adviser deems it advisable for investment reasons.  Securities 
purchased in this manner involve a risk of loss if the value of 
the security purchased declines before the settlement date.

     When-issued or delayed-delivery securities may sometimes be 
purchased on a "dollar roll" basis, meaning that High Yield 
Portfolio will sell securities with a commitment to purchase 
similar, but not identical, securities at a future date.  
Generally, the securities are repurchased at a price lower than 
the sales price.  Dollar roll transactions involve the risk of 
restrictions on the Portfolio's ability to repurchase the security 
if the counterparty becomes insolvent; an adverse change in the 
price of the security during the period of the roll or that the 
value of the security repurchased will be less than the security 
sold; and transaction costs exceeding the return earned by High 
Yield Portfolio on the sales proceeds of the dollar roll. 

     High Yield Portfolio may also invest in securities purchased 
on a standby commitment basis, which is a delayed-delivery 
agreement in which High Yield Portfolio binds itself to accept 
delivery of a security at the option of the other party to the 
agreement.

PIK and Zero Coupon Bonds.  High Yield Portfolio may invest up to 
20% of its total assets in zero coupon bonds and bonds the 
interest on which is payable in kind ("PIK 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 High 
Yield 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.  

Short Sales Against the Box.  High Yield Portfolio may sell short 
securities it owns or has the right to acquire without further 
consideration, a technique called selling short "against the box."  
Short sales against the box may protect against the risk of losses 
in the value of its portfolio securities because any unrealized 
losses with respect to such securities should be wholly or partly 
offset by a corresponding gain in the short position.  However, 
any potential gains in such securities should be wholly or 
partially offset by a corresponding loss in the short position.  
Short sales against the box may be used to lock in a profit on a 
security when, for tax reasons or otherwise, the Adviser does not 
want to sell the security.  For a more complete explanation, 
please refer to the Statement of Additional Information.

Rule 144A Securities.  High Yield Portfolio may purchase 
securities that have been privately placed but that are eligible 
for purchase and sale under Rule 144A under the 1933 Act.  That 
Rule permits certain qualified institutional buyers, such as the 
Portfolio, to trade in privately placed securities that have not 
been registered for sale under the 1933 Act.  The Adviser, under 
the supervision of the Board of Trustees, will consider whether 
securities purchased under Rule 144A are illiquid and thus subject 
to the restriction of investing no more than 10% 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, the Adviser will consider the trading markets for 
the specific security, taking into account the unregistered nature 
of a Rule 144A security.  In addition, the Adviser could consider 
the (1) frequency of trades and quotes, (2) number of dealers and 
potential purchasers, (3) dealer undertakings to make a market, 
and (4) nature of the security and of marketplace trades (e.g., 
the time needed to dispose of the security, the method of 
soliciting offers, and the mechanics of transfer).  The liquidity 
of Rule 144A securities would be monitored and if, as a result of 
changed conditions, it is determined that a Rule 144A security is 
no longer liquid, High Yield Portfolio's holdings of illiquid 
securities would be reviewed to determine what, if any, steps are 
required to assure that the Portfolio does not invest more than 
10% of its assets in illiquid securities.  Investing in Rule 144A 
securities could have the effect of increasing the amount of 
assets invested in illiquid securities if qualified institutional 
buyers are unwilling to purchase such securities.  High Yield 
Portfolio does not expect to invest as much as 5% of its total 
assets in Rule 144A securities that have not been deemed to be 
liquid by the Adviser.

Portfolio Turnover.  In attempting to attain its objective, High 
Yield Portfolio may sell portfolio securities without regard to 
the period of time they have been held.  Further, the Adviser may 
purchase and sell securities for the investment portfolio with a 
view to maximizing current return, even if portfolio changes would 
cause the realization of capital gains.  Although the average 
stated maturity of High Yield Portfolio will be from five to ten 
years, the Adviser may adjust the average effective maturity of 
the investment portfolio from time to time, depending on its 
assessment of the relative yields available on securities of 
different maturities and its expectations of future changes in 
interest rates.  As a result, the turnover rate of High Yield 
Portfolio may vary from year to year.  The turnover rate for High 
Yield Portfolio may exceed 100%, but is not expected to exceed 
200% under normal market conditions.  A high rate of portfolio 
turnover may result in increased transaction expenses and the 
realization of capital gains (which may be taxable) or losses.  
(See Distributions and Income Taxes.)


INVESTMENT RESTRICTIONS

Each of Institutional High Yield Fund and High Yield Portfolio is 
diversified as that term is defined in the Investment Company Act 
of 1940.

     Neither Institutional High Yield Fund nor High Yield 
Portfolio may invest in a security if, as a result of such 
investment: (1) with respect to 75% of its assets, more than 5% of 
its total assets would be invested in the securities of any one 
issuer, except for U.S. Government Securities or repurchase 
agreements /1/ for such securities; or (2) 25% or more of its 
total assets would be invested in the securities of a group of 
issuers in the same industry, except that this restriction does 
not apply to U.S. Government Securities.  Notwithstanding these 
limitations, Institutional High Yield Fund may invest all of its 
assets in another investment company (such as High Yield 
Portfolio) having the identical investment objective under a 
master fund/feeder fund structure.
- ----------
/1/ A repurchase agreement involves a sale of securities to High 
Yield Portfolio with the concurrent agreement of the seller (bank 
or securities dealer) to repurchase the securities at the same 
price plus an amount equal to an agreed-upon interest rate within 
a specified time.  In the event of a bankruptcy or other default 
of a seller of a repurchase agreement, the Portfolio could 
experience both delays in liquidating the underlying securities 
and losses.  The Portfolio may not invest more than 10% of its net 
assets in repurchase agreements maturing in more than seven days 
and other illiquid securities.
- ----------

     Neither Institutional High Yield Fund nor High Yield 
Portfolio may make loans except that each may (1) purchase money 
market instruments and enter into repurchase agreements; (2) 
acquire publicly distributed or privately placed debt securities; 
(3) lend portfolio securities under certain conditions; and (4) 
participate in an interfund lending program with other Stein Roe 
Funds and Portfolios.  Neither may borrow money, except for 
nonleveraging, temporary, or emergency purposes or in connection 
with participation in the interfund lending program.  Neither the 
aggregate borrowings (including reverse repurchase agreements) nor 
the aggregate loans at any one time may exceed 33 1/3% of the 
value of total assets.  Additional securities may not be purchased 
when borrowings, less proceeds receivable from sales of portfolio 
securities, exceed 5% of total assets.

     The policies set forth in the second and third paragraphs 
under Investment Restrictions (but not the footnote) are 
fundamental policies of Institutional High Yield Fund and High 
Yield Portfolio./2/  The Statement of Additional Information 
contains all of the investment restrictions.
- ----------------
/2/ A fundamental policy may be changed only with the approval of 
a "majority of the outstanding voting securities" as defined in 
the Investment Company Act.
- ----------------


RISKS AND INVESTMENT CONSIDERATIONS

The risks inherent in Institutional High Yield Fund depend 
primarily upon the term and quality of the obligations in High 
Yield Portfolio's investment portfolio, as well as on market 
conditions.  Although High Yield Portfolio seeks to reduce risk by 
investing in a diversified portfolio, this does not eliminate all 
risk.  Institutional High Yield Fund is designed for investors who 
can accept the heightened level of risk and principal fluctuation 
which might result from a portfolio that invests at least 65% of 
its assets in medium- and lower-quality debt securities.  

     The market value of securities in the investment portfolio 
tends to vary inversely with the level of interest rates.  As a 
result, interest rate fluctuations may affect net asset value.  
(Because yields on debt securities available for purchase vary 
over time, no specific yield on shares of Institutional High Yield 
Fund can be assured.)  In addition, if the bonds in the investment 
portfolio contain call, prepayment or redemption provisions, 
during a period of declining interest rates, these securities are 
likely to be redeemed, and High Yield Portfolio may have to 
replace the security with a lower yielding security, resulting in 
a decreased return for investors.

     Investments in foreign securities, including ADRs, represent 
both risks and opportunities not typically associated with 
investments in domestic issuers.  Risks of foreign investing 
include currency risk, less complete financial information on 
issuers, different accounting, auditing and financial reporting 
standards, different settlement practices, less market liquidity, 
more market volatility, less well-developed and regulated markets, 
and greater political instability.  In addition, various 
restrictions by foreign governments on investments by nonresidents 
may apply, including imposition of exchange controls and 
withholding taxes on dividends, and seizure or nationalization of 
investments owned by nonresidents.  Foreign investments also tend 
to involve higher transaction and custody costs.

     High Yield Portfolio may enter into foreign currency forward 
contracts and use options and futures contracts, as described 
elsewhere in this prospectus, to limit or reduce foreign currency 
risk.

     There can be no assurance that Institutional High Yield Fund 
or High Yield Portfolio will achieve its objective, nor can High 
Yield Portfolio assure that payments of interest and principal on 
portfolio securities will be made when due.  If, after purchase by 
High Yield Portfolio, the rating of a portfolio security is lost 
or reduced, High Yield Portfolio would not be required to sell the 
security, but the Adviser would consider such a change in deciding 
whether to retain the security in the investment portfolio.

     The investment objective of Institutional High Yield Fund and 
High Yield Portfolio is not fundamental and may be changed by the 
respective Board of Trustees without a vote of shareholders.


HOW TO PURCHASE SHARES

Fund shares are available primarily through pension plan 
administrators, broker-dealers, or other intermediaries (each an 
"Intermediary") who provide accounting, recordkeeping, and other 
services to investors and who hold Fund shares in omnibus accounts 
for their clients.  Shares may also be available to clients of the 
Adviser if, in the judgment of the Adviser, the sale of shares to 
such clients would not adversely affect the Fund or its 
shareholders.  The initial purchase minimum is $250,000 and the 
minimum subsequent investment is $10,000.  Institutional Trust 
reserves the right to waive or lower its investment minimum for 
any reason.  Investors may be charged a fee if they effect 
transactions in Fund shares through a broker or agent.  The 
Adviser and Institutional High Yield Fund do not recommend, 
endorse, or receive compensation from any Intermediary.  

     Each Intermediary will establish its own procedures 
applicable to its clients for the purchase of Institutional High 
Yield Fund shares in its account, including minimum initial and 
additional investments and the acceptable methods of payment for 
shares.  Shares are purchased at the net asset value next 
determined after receipt of your order by the Fund's transfer 
agent.  Net asset value is calculated as of the close of the New 
York Stock Exchange ("NYSE"), generally 3:00 p.m., central time.  
Your Intermediary may be closed on days when the NYSE is open.  As 
a result, prices for Fund shares may be significantly affected on 
days when you have no access to your Intermediary to buy shares.  
An Intermediary, who accepts orders that are processed at the net 
asset value next determined after receipt of the order by the 
Intermediary, accepts such orders as agent of the Fund.  The 
Intermediary is required to segregate any orders received on a 
business day after the close of regular session trading on the New 
York Stock Exchange and transmit those orders separately for 
execution at the net asset value next determined after that 
business day.

     Institutional High Yield Fund will not issue a certificate 
for your shares.

     Any purchase of shares must be paid for in U.S. dollars.  
Institutional High Yield Fund has the right to suspend the 
offering of its shares for a period of time.  Institutional High 
Yield Fund also has the right to accept or reject a purchase order 
in its sole discretion, including certain purchase orders using an 
exchange of shares.  


HOW TO REDEEM SHARES

If you purchased shares through an Intermediary, you can redeem 
(sell) all or some of your Fund shares only through an account 
with that Intermediary and in accordance with procedures 
established by the Intermediary applicable to its clients for the 
redemption of Fund shares.  Shares are redeemed at the net asset 
value next calculated after a redemption order is received and 
accepted by the Fund's transfer agent.  Your Intermediary may be 
closed on days when the NYSE is open.  As a result, prices for 
Institutional High Yield Fund shares may be significantly affected 
on days when you have no access to your Intermediary to redeem 
shares.

     Redemption proceeds will be paid to Intermediaries as agreed 
with Institutional High Yield Fund, but in any case within seven 
calendar days.  Institutional High Yield Fund may suspend 
redemptions or postpone payments on days when the NYSE is closed 
(other than weekends and holidays), when trading on the NYSE is 
restricted, or as permitted by the Securities and Exchange 
Commission.

     Institutional Trust reserves the right to redeem shares in 
any account and send the proceeds to the appropriate Intermediary 
if shares in that account do not have a value of at least 
$250,000.  An Intermediary would be notified that its account is 
below the minimum and would be allowed 30 days to increase the 
account before the redemption is processed.

     For information regarding exchanging shares of Institutional 
High Yield Fund for shares of another Stein Roe Fund, please see 
the Statement of Additional Information.


NET ASSET VALUE

The purchase and redemption price of Institutional High Yield 
Fund's shares is its net asset value per share.  Institutional 
High Yield Fund determines the net asset value of its shares as of 
the close of trading on the NYSE (currently 3:00 p.m., central 
time) by dividing the difference between the values of its assets 
and liabilities by the number of shares outstanding.  High Yield 
Portfolio allocates net asset value, income, and expenses to 
Institutional High Yield Fund and any other of its feeder funds in 
proportion to their respective interests in High Yield Portfolio.

     Net asset value will not be determined on days when the NYSE 
is closed unless, in the judgment of the Board of Trustees, the 
net asset value of Institutional High Yield Fund should be 
determined on any such day, in which case the determination will 
be made at 3:00 p.m., central time.

     Securities for which market quotations are readily available 
at the time of valuation are valued on that basis.  Long-term 
straight-debt securities for which market quotations are not 
readily available are valued at a fair value based on valuations 
provided by pricing services approved by the Board, which may 
employ electronic data processing techniques, including a matrix 
system, to determine valuations.  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 the Adviser based on quotations for comparable 
securities.  Other assets and securities held by High Yield 
Portfolio for which these valuation methods do not produce a fair 
value are valued by a method that the Board believes will 
determine a fair value.


DISTRIBUTIONS AND INCOME TAXES

Distributions.  Income dividends are declared each business day, 
paid monthly, and confirmed at least quarterly.  Institutional 
High Yield Fund intends to distribute by the end of each calendar 
year at least 98% of any net capital gains realized from the sale 
of securities during the 12-month period ended October 31 in that 
year.  It intends to distribute any undistributed net investment 
income and net realized capital gains in the following year.

     All income dividends and capital gains distributions paid on 
shares in an account will be reinvested in additional shares 
unless the Intermediary or other account holder elects to have 
distributions paid in cash.  Reinvestment normally occurs on the 
payable date.  Institutional Trust reserves the right to reinvest 
the proceeds and future distributions in additional shares of 
Institutional High Yield Fund if checks for distributions mailed 
to the account holder are returned as undeliverable or are not 
presented for payment within six months.

Income Taxes.  Distributions to shareholders will be taxable, 
under income tax law, whether received in cash or reinvested in 
additional shares.  For federal income tax purposes, any 
distribution that is paid in Jan. but was declared in the prior 
calendar year is deemed paid in the prior calendar year.

     Shareholders will be subject to federal income tax at 
ordinary rates on income dividends and distributions of net short-
term capital gains.  Distributions of net long-term capital gains 
will be taxable to you as long-term capital gains regardless of 
the length of time you have held your shares.

     Shareholders will be advised annually as to the source of 
distributions.  If you are not subject to tax on your income, you 
will not be required to pay tax on these amounts.

     If a shareholder realizes a loss on the sale or exchange of 
Fund shares held for six months or less, the short-term loss is 
recharacterized as long-term to the extent of any long-term 
capital gains distributions received with respect to those shares.

     The Taxpayer Relief Act of 1997 (the "Act") reduced from 28% 
to 20% the maximum tax rate on long-term capital gains.  This 
reduced rate generally applies to securities held for more than 18 
months and sold after July 28, 1997, and securities held for more 
than one year and sold between May 6, 1997 and July 29, 1997.

     For federal income tax purposes, Institutional High Yield 
Fund is treated as a separate taxable entity distinct from any 
other series of the Institutional Trust.  It intends to qualify 
for the special tax treatment afforded regulated investment 
companies under Subchapter M of the Internal Revenue Code, so that 
it will be relieved of federal income tax on that part of its net 
investment income and net capital gains that is distributed to 
shareholders.

     This section is not intended to be a full discussion of 
income tax laws and their effect on shareholders.  You may wish to 
consult your own tax advisor.


INVESTMENT RETURN

The total return from an investment in Institutional High Yield 
Fund is measured by the distributions received (assuming 
reinvestment) plus or minus the change in the net asset value per 
share for a given period.  A total return percentage may be 
calculated by dividing the value of a share at the end of the 
period (including reinvestment of distributions) by the value of 
the share at the beginning of the period and subtracting one.  For 
a given period, an average annual total return may be calculated 
by finding the average annual compounded rate that would equate a 
hypothetical $1,000 investment to the ending redeemable value.

     The yield of Institutional High Yield Fund is calculated by 
dividing its net investment income per share (a hypothetical 
figure as defined in the SEC rules) during a 30-day period 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.

     Comparison of Institutional High Yield Fund's yield or total 
return with those of alternative investments should consider 
differences between Institutional High Yield Fund and the 
alternative investments, the periods and methods used in 
calculation of the return being compared, and the impact of taxes 
on alternative investments.  Yield figures are not based on actual 
dividends paid.  Past performance is not necessarily indicative of 
future results.  To obtain current yield or total return 
information, you may call 800-322-0593.


MANAGEMENT

Trustees and Investment Adviser.  The Board of Trustees of the 
Institutional Trust has overall management responsibility for 
Institutional Trust and Institutional High Yield Fund; the Board 
of Base Trust has overall management responsibility for High Yield 
Portfolio.  See Management in the Statement of Additional 
Information for the names of and other information about the 
trustees and officers.  Since Institutional Trust and Base Trust 
have the same trustees, the trustees have adopted conflict of 
interest procedures to monitor and address potential conflicts 
between the interests of Institutional High Yield Fund and High 
Yield Portfolio.

     The Adviser, Stein Roe & Farnham Incorporated, One South 
Wacker Drive, Chicago, Illinois 60606, is responsible for managing 
the investment portfolio of High Yield Portfolio and the business 
affairs of Institutional High Yield Fund, High Yield Portfolio, 
Institutional Trust, and Base Trust, subject to the direction of 
the respective Board.  The Adviser is registered as an investment 
adviser under the Investment Advisers Act of 1940.  The Adviser 
and its predecessor have advised and managed mutual funds since 
1949.  The Adviser is a wholly owned indirect subsidiary of 
Liberty Financial Companies, Inc. ("Liberty Financial"), which in 
turn is a majority owned indirect subsidiary of Liberty Mutual 
Insurance Company.

Portfolio Manager.  Stephen F. Lockman has been portfolio manager 
of High Yield Portfolio since Mar. 1997.  Associate portfolio 
manager of Stein Roe Income Fund since October 1995 and of High 
Yield Portfolio since its inception in Nov. 1996, Mr. Lockman 
joined the Adviser in Jan. 1994.  As a senior research analyst for 
the Adviser's fixed income department from 1994 to 1997, Mr. 
Lockman has broad expertise in the fixed income markets, with 
specialties in the high yield sector and the aerospace, 
broadcasting, entertainment, insurance, mining/metals, 
paper/forest products, printing, publishing and real estate 
industries.  In addition, he served as the fixed income 
department's sovereign debt analyst from 1994 to 1997, evaluating 
securities for its more than $1 billion portfolio of dollar-
denominated foreign investments.  Mr. Lockman previously served as 
portfolio manager for the Illinois State Board of Investment from 
1987 to 1994, and as a trust investment officer for LaSalle 
National Bank from 1983 to 1987.  A chartered financial analyst, 
Mr. Lockman earned a bachelor's degree in 1983 from the University 
of Illinois and a master's degree in 1986 from DePaul University.  
As of June 30, 1997, he was responsible for managing $415 million 
in mutual fund net assets for the Adviser.

Fees and Expenses.  The Adviser is entitled to receive a monthly 
administrative fee from Institutional High Yield Fund, computed 
and accrued daily, at an annual rate of .150% of the first $500 
million of average net assets and .125% thereafter; and a monthly 
management fee from High Yield Portfolio, computed and accrued 
daily, at an annual rate of .500% of the first $500 million of 
average net assets and .475% thereafter.  However, as noted above 
under Fee Table, the Adviser may voluntarily waive a portion of 
its fees.  For the fiscal year ended June 30, 1997, Institutional 
High Yield Fund's administrative fee, in addition to its pro rata 
portion of High Yield Portfolio's management fees, was 0.50% of 
average net assets, after the fee waiver.

     Under a separate agreement with each Trust, the Adviser 
provides certain accounting and bookkeeping services to 
Institutional High Yield Fund and High Yield Portfolio including 
computation of net asset value and calculation of net income and 
capital gains and losses on disposition of assets.

Portfolio Transactions.  The Adviser places the orders for the 
purchase and sale of portfolio securities and options and futures 
contracts.  In doing so, the Adviser seeks to obtain the best 
combination of price and execution, which involves a number of 
judgmental factors.

Transfer Agent.  SteinRoe Services Inc. ("SSI"), One South Wacker 
Drive, Chicago, Illinois 60606, a wholly owned subsidiary of 
Liberty Financial, is the agent of Institutional Trust for the 
transfer of shares, disbursement of dividends, and maintenance of 
shareholder accounting records.

Distributor.  Shares of Institutional High Yield Fund are 
currently distributed by Liberty Securities Corporation, 100 
Manhattanville Road, Purchase, New York 10577.  On Jan. 1, 1998, 
Liberty Financial Investments, Inc. (formerly named Colonial 
Investment Services, Inc.), One Financial Center, Boston, 
Massachusetts 02111, will become the distributor.  Liberty 
Securities Corporation and Liberty Financial Investments, Inc. are 
subsidiaries of Liberty Financial.  

     Fund shares are offered for sale without any sales 
commissions or charges to the Fund or to its shareholders.  All 
distribution and promotional expenses are paid by the Adviser, 
including payments to a distributor for sales of Fund shares.  All 
Fund correspondence (including purchase and redemption orders) 
should be mailed to SteinRoe Services Inc. at P.O. Box 8900, 
Boston, Massachusetts 02205.  

Custodian.  State Street Bank and Trust Company (the "Bank"), 225 
Franklin Street, Boston, Massachusetts 02101, is the custodian for 
Institutional High Yield Fund.  Foreign securities are maintained 
in the custody of foreign banks and trust companies that are 
members of the Bank's Global Custody Network or foreign 
depositories used by such members.  (See Custodian in the 
Statement of Additional Information.)


ORGANIZATION AND DESCRIPTION OF SHARES

Institutional 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 
Institutional Trust's shareholders or its trustees.  Institutional 
Trust may issue an unlimited number of shares, in one or more 
series as the Board may authorize.  Currently, Institutional High 
Yield Fund is the only series authorized and outstanding.

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


MASTER FUND/FEEDER FUND:  STRUCTURE AND RISK FACTORS

Institutional High Yield Fund, an open-end management investment 
company, seeks to achieve its objective by investing all of its 
assets in another mutual fund having an investment objective 
identical to that of Institutional High Yield Fund.  The initial 
shareholder of Institutional High Yield Fund approved this policy 
of permitting Institutional High Yield Fund to act as a feeder 
fund by investing in High Yield Portfolio.  Please refer to 
Investment Policies, Portfolio Investments and Strategies, and 
Investment Restrictions for a description of the investment 
objectives, policies, and restrictions of Institutional High Yield 
Fund and High Yield Portfolio.  The management and expenses of 
both Institutional High Yield Fund and High Yield Portfolio are 
described under Fee Table and Management.  Institutional High 
Yield Fund bears its proportionate share of Portfolio expenses.

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

     SR&F High Yield 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 Institutional High Yield Fund and other 
investors in High Yield Portfolio will each be liable for all 
obligations of High Yield Portfolio that are not satisfied by High 
Yield Portfolio.  However, the risk of Institutional High Yield 
Fund incurring financial loss on account of such liability is 
limited to circumstances in which both inadequate insurance 
existed and High Yield Portfolio itself were unable to meet its 
obligations.  Accordingly, the trustees of Institutional Trust 
believe that neither Institutional High Yield Fund nor its 
shareholders will be adversely affected by reason of Institutional 
High Yield Fund's investing in High Yield Portfolio.  

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

     The common investment objective of Institutional High Yield 
Fund and High Yield Portfolio is non-fundamental and may be 
changed without shareholder approval, subject, however, to at 
least 30 days' advance written notice to Institutional High Yield 
Fund's shareholders.

     The fundamental policies of Institutional High Yield Fund and 
the corresponding fundamental policies of the Portfolio can be 
changed only with shareholder approval.

     If Institutional High Yield Fund, as a Portfolio investor, is 
requested to vote on a proposed change in fundamental policy of 
High Yield Portfolio or any other matter pertaining to High Yield 
Portfolio (other than continuation of the business of High Yield 
Portfolio after withdrawal of another investor), Institutional 
High Yield Fund will solicit proxies from its shareholders and 
vote its interest in High Yield Portfolio for and against such 
matters proportionately to the instructions to vote for and 
against such matters received from Fund shareholders.  
Institutional High Yield 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 
High Yield Portfolio investors.  If other investors hold a 
majority interest in High Yield Portfolio, they could have voting 
control over High Yield Portfolio.  

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

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

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

     Information regarding any other investors in High Yield 
Portfolio may be obtained by writing to SR&F Base Trust, Suite 
3200, One South Wacker Drive, Chicago, Illinois 60606 or by 
calling 800-338-2550.  The Adviser may provide administrative or 
other services to one or more of such investors.


FOR MORE INFORMATION

Contact Stein Roe Advisor and Dealer Services at 800-322-0593 for 
more information about Institutional High Yield Fund.


APPENDIX--RATINGS

     Ratings In General.  A rating of a rating service represents 
the service's opinion as to the credit quality of the security 
being rated.  However, the ratings are general and are not 
absolute standards of quality or guarantees as to the 
creditworthiness of an issuer.  Consequently, the Adviser believes 
that the quality of debt securities in which High Yield Portfolio 
invests should be continuously reviewed and that individual 
analysts give different weightings to the various factors involved 
in credit analysis.  A rating is not a recommendation to purchase, 
sell or hold a security because it does not take into account 
market value or suitability for a particular investor.  When a 
security has received a rating from more than one service, each 
rating should be evaluated independently.  Ratings are based on 
current information furnished by the issuer or obtained by the 
rating services from other sources 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.

     The following is a description of the characteristics of 
ratings used by Moody's Investors Service, Inc. ("Moody's") and 
Standard & Poor's Corporation ("S&P").

Corporate Bond Ratings
     Ratings By Moody's.  Aaa.  Bonds rated Aaa are judged to be 
the best quality.  They carry the smallest degree of investment 
risk and are generally referred to as "gilt edge."  Interest 
payments are protected by a large or an exceptionally stable 
margin and principal is secure.  Although the various protective 
elements are likely to change, such changes as can be visualized 
are more unlikely to impair the fundamentally strong position of 
such bonds.

     Aa.  Bonds rated Aa are judged to be of high quality by all 
standards.  Together with the Aaa group they comprise what are 
generally known as high grade bonds.  They are rated lower than 
the best bonds because margins of protection may not be as large 
as in Aaa bonds or fluctuation of protective elements may be of 
greater amplitude or there may be other elements present which 
make the long-term risks appear somewhat larger than in Aaa bonds.

     A.  Bonds rated A possess many favorable investment 
attributes and are to be considered as upper medium grade 
obligations.  Factors giving security to principal and interest 
are considered adequate, but elements may be present which suggest 
a susceptibility to impairment sometime in the future.

     Baa.  Bonds rated Baa are considered as medium grade 
obligations; i.e., they are neither highly protected nor poorly 
secured.  Interest payments and principal security appear adequate 
for the present but certain protective elements may be lacking or 
may be characteristically unreliable over any great length of 
time.  Such bonds lack outstanding investment characteristics and 
in fact have speculative characteristics as well.

     Ba.  Bonds which are rated Ba are judged to have speculative 
elements; their future cannot be considered as well assured.  
Often the protection of interest and principal payments may be 
very moderate and thereby not well safeguarded during both good 
and bad times over the future.  Uncertainty of position 
characterizes bonds in this class.

     B.  Bonds which are rated B generally lack characteristics of 
the desirable investment.  Assurance of interest and principal 
payments or of maintenance of other terms of the contract over any 
long period of time may be small.

     Caa.  Bonds which are rated Caa are of poor standing.  Such 
issues may be in default or there may be present elements of 
danger with respect to principal or interest.

     Ca.  Bonds which are rated Ca represent obligations which are 
speculative in a high degree.  Such issues are often in default or 
have other marked shortcomings.

     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.

     NOTE:  Moody's applies numerical modifiers 1, 2, and 3 in 
each generic rating classification from Aa through B in its 
corporate bond rating system.  The modifier 1 indicates that the 
security ranks in the higher end of its generic rating category; 
the modifier 2 indicates a mid-range ranking; and the modifier 3 
indicates that the issue ranks in the lower end of its generic 
rating category.

     Ratings By S&P.  AAA.  Debt rated AAA has the highest rating.  
Capacity to pay interest and repay principal is extremely strong.

     AA.  Debt rated AA has a very strong capacity to pay interest 
and repay principal and differs from the highest rated issues only 
in small degree.

     A.  Debt rated A has a strong capacity to pay interest and 
repay principal although it is somewhat more susceptible to the 
adverse effects of changes in circumstances and economic 
conditions than debt in higher rated categories.

     BBB.  Debt rated BBB is regarded as having an adequate 
capacity to pay interest and repay principal.  Whereas it normally 
exhibits adequate protection parameters, adverse economic 
conditions or changing circumstances are more likely to lead to a 
weakened capacity to pay interest and repay principal for debt in 
this category than for debt in higher rated categories.

     BB, B, CCC, CC, and C.  Debt rated BB, B, CCC, CC, or C is 
regarded, on balance, as predominantly speculative with respect to 
capacity to pay interest and repay principal in accordance with 
the terms of the obligation.  BB indicates the lowest degree of 
speculation and C the highest degree of speculation.  While such 
debt will likely have some quality and protective characteristics, 
these are outweighed by large uncertainties or major risk 
exposures to adverse conditions.

     C1.  This rating is reserved for income bonds on which no 
interest is being paid.

     D.  Debt rated D is in default, and payment of interest 
and/or repayment of principal is in arrears.  The D rating is also 
used upon the filing of a bankruptcy petition if debt service 
payments are jeopardized.

     NOTES:  The ratings from AA to CCC may be modified by the 
addition of a plus (+) or minus (--) sign to show relative 
standing within the major rating categories.  Foreign debt is 
rated on the same basis as domestic debt measuring the 
creditworthiness of the issuer; ratings of foreign debt do not 
take into account currency exchange and related uncertainties.

     The "r" is attached to highlight derivative, hybrid, and 
certain other obligations that S&P believes may experience high 
volatility or high variability in expected returns due to non-
credit risks.  Examples of such obligations are: securities whose 
principal or interest return is indexed to equities, commodities, 
or currencies; certain swaps and options; and interest only and 
principal only mortgage securities.  The absence of an "r" symbol 
should not be taken as an indication that an obligation will 
exhibit no volatility or variability in total return.

Commercial Paper Ratings
     Ratings By Moody's.  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.  A brief description of the applicable rating 
symbols and their meaning follows:

     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 of safety.

     A-1.  This designation indicates that the degree of safety 
regarding timely payment is very strong.  Those issues determined 
to possess overwhelming safety characteristics will be denoted 
with a plus (+) sign designation.

Stein Roe Mutual Funds
P.O. Box 8900
Boston, Massachusetts 02205-8900
Financial Advisors call: 1-800-322-0593
Shareholders call: 1-800-338-2550
http:/www.steinroe.com

Liberty Securities Corporation, Distributor
Member SIPC


<PAGE> 

    Statement of Additional Information Dated Nov. 5, 1997

               STEIN ROE INSTITUTIONAL TRUST

         Stein Roe Institutional High Yield Fund

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


     This Statement of Additional Information is not a prospectus 
but provides additional information that should be read in 
conjunction with the Prospectus dated Nov. 5, 1997 and any 
supplements thereto.  The Prospectus may be obtained at no charge 
by telephoning Stein Roe Advisor and Dealer Services at 800-322-
0593.

                         TABLE OF CONTENTS
                                                      Page

General Information and History   ....................  2
Investment Policies  ............................... .  3
Portfolio Investments and Strategies................... 5
Investment Restrictions................................21
Additional Investment Considerations...................24
Purchases and Redemptions..............................25
Management.............................................26
Financial Statements...................................29
Principal Shareholders.................................30
Investment Advisory Services...........................30
Distributor............................................32
Transfer Agent.........................................32
Custodian..............................................32
Independent Auditors...................................33
Portfolio Transactions.................................33
Additional Income Tax Considerations...................35
Investment Performance.................................35


                 GENERAL INFORMATION AND HISTORY

     Stein Roe Institutional High Yield Fund ("Institutional High 
Yield Fund") is a series of the Stein Roe Institutional Trust 
("Institutional Trust").  Institutional High Yield Fund invests 
all of its net investable assets in SR&F High Yield Portfolio 
("High Yield Portfolio"), which is a series of SR&F Base Trust 
("Base Trust").

     Currently Institutional High Yield Fund is the only series of 
Institutional Trust authorized and outstanding.  Each share of a 
series, without par value, is entitled to participate pro rata in 
any dividends and other distributions declared by the Board on 
shares of that series, and all shares of a series have equal 
rights in the event of liquidation of that series.  Each whole 
share (or fractional share) outstanding on the record date 
established in accordance with the By-Laws shall be entitled to a 
number of votes on any matter on which it is entitled to vote 
equal to the net asset value of the share (or fractional share) in 
United States dollars determined at the close of business on the 
record date (for example, a share having a net asset value of 
$10.50 would be entitled to 10.5 votes).  As a business trust, 
Institutional 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, Institutional 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 required by Section 16(c) of the Investment 
Company Act of 1940.  All shares of Institutional Trust are voted 
together in the election of trustees.  On any other matter 
submitted to a vote of shareholders, shares are voted by 
individual series and not in the aggregate, except that shares are 
voted in the aggregate when required by the Investment Company Act 
of 1940 or other applicable law.  When the Board of Trustees 
determines that the matter affects only the interests of one or 
more series, shareholders of the unaffected series are not 
entitled to vote on such matters.

     Stein Roe & Farnham Incorporated (the "Adviser") provides 
administrative and accounting and recordkeeping services to 
Institutional High Yield Fund and High Yield Portfolio and 
provides investment advisory services to High Yield Portfolio.

Special Considerations Regarding Master Fund/Feeder Fund Structure

     Rather than invest in securities directly, Institutional High 
Yield Fund seeks to achieve its objective by pooling its assets 
with those of other investment companies for investment in another 
mutual fund having the same investment objective and substantially 
the same investment policies.  The purpose of such an arrangement 
is to achieve greater operational efficiencies and reduce costs.  
For more information, please refer to the Prospectus under the 
caption Master Fund/Feeder Fund: Structure and Risk Factors.


                       INVESTMENT POLICIES

     The following information supplements the discussion of the 
investment objective and policies of Institutional High Yield Fund 
and High Yield Portfolio described in the Prospectus.  In pursuing 
its objective, High Yield Portfolio will invest as described below 
and may employ the investment techniques described in the 
Prospectus and in this Statement of Additional Information under 
Portfolio Investments and Strategies.  The investment objective is 
a non-fundamental policy and may be changed by the Board of 
Trustees without the approval of a "majority of the outstanding 
voting securities."/1/
- -----------------
/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.
- ---------------- 

     Institutional High Yield Fund seeks to achieve its objective 
by investing all of its assets in High Yield Portfolio.  The 
investment objective and policies of Institutional High Yield Fund 
and High Yield Portfolio are substantially identical.  High Yield 
Portfolio seeks total return by investing for a high level of 
current income and capital growth.  

     High Yield Portfolio invests principally in high-yield, high-
risk medium- and lower-quality debt securities.  The medium- and 
lower-quality debt securities in which High Yield Portfolio 
invests normally offer a current yield or yield to maturity that 
is significantly higher than the yield from securities rated in 
the three highest categories assigned by rating services such as 
Standard & Poor's Corporation ("S&P") and Moody's Investors 
Service, Inc. ("Moody's").

     Under normal circumstances, at least 65% of High Yield 
Portfolio's assets will be invested in high-yield, high-risk 
medium- and lower-quality debt securities rated lower than Baa by 
Moody's and lower than BBB by S&P, or equivalent ratings as 
determined by other rating agencies, or unrated securities that 
the Adviser determines to be of comparable quality.  Medium-
quality debt securities, although considered investment grade, 
have some speculative characteristics.  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." Some issuers of debt 
securities choose not to have their securities rated by a rating 
service, and High Yield Portfolio may invest in unrated securities 
that the Adviser has researched and believes are suitable for 
investment.  High Yield Portfolio may invest in debt obligations 
that are in default, but such obligations are not expected to 
exceed 10% of High Yield Portfolio's assets.  

     High Yield Portfolio may invest up to 35% of its total assets 
in other securities including, but not limited to, pay-in-kind 
bonds, securities issued in private placements, bank loans, zero 
coupon bonds, foreign securities, convertible securities, futures, 
and options.  High Yield Portfolio may also invest in higher-
quality debt securities.  Under normal market conditions, however, 
High Yield Portfolio is unlikely to emphasize higher-quality debt 
securities since generally they offer lower yields than medium- 
and lower-quality debt securities with similar maturities.  High 
Yield Portfolio may also invest in common stocks and securities 
that are convertible into common stocks, such as warrants.

     Investment in medium- or lower-quality debt securities 
involves greater investment risk, including the possibility of 
issuer default or bankruptcy.  High Yield 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.

     Achievement of the investment objective will be more 
dependent on the Adviser's credit analysis than would be the case 
if High Yield 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, the 
Adviser 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.

     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.  

     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 High Yield 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.


               PORTFOLIO INVESTMENTS AND STRATEGIES

Derivatives

     Consistent with its objective, High Yield 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, and other instruments the value of which is "derived" 
from the performance of an underlying asset or a "benchmark" such 
as a security index, an interest rate, or a currency 
("Derivatives").

     Derivatives are most often used to manage investment risk or 
to create an investment position indirectly because it is more 
efficient or less costly than direct investment that cannot be 
readily established directly due to portfolio size, cash 
availability, or other factors.  They also may be used in an 
effort to enhance portfolio returns.

     The successful use of Derivatives depends on the Adviser's 
ability to correctly predict changes in the levels and directions 
of movements in security prices, interest rates and other market 
factors affecting the Derivative itself or the value of the 
underlying asset or benchmark.  In addition, correlations in the 
performance of an underlying asset to a Derivative may not be well 
established.  Finally, privately negotiated and over-the-counter 
Derivatives may not be as well regulated and may be less 
marketable than exchange-traded Derivatives.

     High Yield Portfolio does not intend to invest more than 5% 
of its assets in any type of Derivative except for options, 
futures contracts, and futures options.

Mortgage and Other Asset-Backed Securities

     High Yield Portfolio may invest in securities secured by 
mortgages or other assets such as automobile or home improvement 
loans and credit card receivables.  These instruments may be 
issued or guaranteed by the U.S. Government or by its agencies or 
instrumentalities or by private entities such as commercial, 
mortgage and investment banks and financial companies or financial 
subsidiaries of industrial companies.

     Mortgage-backed securities provide either a pro rata interest 
in underlying mortgages or an interest in collateralized mortgage 
obligations ("CMOs") which 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 High Yield Portfolio on purchase of the CMO, 
and the proceeds of prepayment would likely be invested at lower 
interest rates.  High Yield Portfolio intends to invest in CMOs of 
classes known as planned amortization classes ("PACs") which have 
prepayment protection features tending to make them less 
susceptible to price volatility.

     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 which finance payments on the securities 
themselves.  Therefore, greater emphasis is placed on the credit 
quality of the security issuer and the guarantor, if any.

REMICs

     High Yield 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.

Floating Rate Instruments

     High Yield Portfolio may also invest in floating rate 
instruments which 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%.  High Yield Portfolio does not intend to invest 
more than 5% of its net assets in floating rate instruments.

Lending of Portfolio Securities

     Subject to restriction (7) under Investment Restrictions, 
High Yield 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 High Yield Portfolio.  High Yield 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.  High Yield 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.  
In the event of bankruptcy or other default of the borrower, High 
Yield 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 it 
seeks to enforce its rights thereto, (b) possible subnormal levels 
of income and lack of access to income during this period, and (c) 
expenses of enforcing its rights.

Repurchase Agreements

     High Yield Portfolio may invest in repurchase agreements, 
provided that it will not invest more than 10% 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 High Yield 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, High 
Yield Portfolio could experience both losses and delays in 
liquidating its collateral.

When-Issued and Delayed-Delivery Securities; Reverse Repurchase 
Agreements; Standby Commitments

     High Yield Portfolio may purchase instruments on a when-
issued or delayed-delivery basis.  Although payment terms are 
established at the time High Yield Portfolio enters into the 
commitment, the instruments may be delivered and paid for some 
time after the date of purchase, when their value may have changed 
and the yields available in the market may be greater.  High Yield 
Portfolio will make such commitments only with the intention of 
actually acquiring the instruments, but may sell them before 
settlement date if it is deemed advisable for investment reasons.  
Securities purchased in this manner involve risk of loss if the 
value of the security purchased declines before settlement date.

     High Yield Portfolio may purchase securities on a when-issued 
or delayed-delivery basis, as described in the Prospectus.  High 
Yield Portfolio makes such commitments only with the intention of 
actually acquiring the securities, but may sell the securities 
before settlement date if the Adviser deems it advisable for 
investment reasons.  Securities purchased on a when-issued or 
delayed-delivery basis are sometimes done on a "dollar roll" 
basis.  Dollar roll transactions consist of the sale by High Yield 
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 High 
Yield Portfolio to buy a security.  A dollar roll transaction 
involves the following risks: if the broker-dealer to whom High 
Yield Portfolio sells the security becomes insolvent, High Yield 
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 High Yield 
Portfolio is required to repurchase may be worth less than a 
security which it originally held; and the return earned by High 
Yield Portfolio with the proceeds of a dollar roll may not exceed 
transaction costs.

     High Yield Portfolio may enter into reverse repurchase 
agreements with banks and securities dealers.  A reverse 
repurchase agreement is a repurchase agreement in which High Yield 
Portfolio is the seller of, rather than the investor in, 
securities and agrees to repurchase them at an agreed-upon time 
and price.  Use of a reverse repurchase agreement may be 
preferable to a regular sale and later repurchase of securities 
because it avoids certain market risks and transaction costs.

     At the time High Yield Portfolio enters into a binding 
obligation to purchase securities on a when-issued basis or enters 
into a reverse repurchase agreement, liquid assets (cash, U.S. 
Government or other "high grade" debt obligations) of High Yield 
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 High Yield Portfolio and held by the custodian throughout the 
period of the obligation.  The use of these investment strategies, 
as well as borrowing under a line of credit as described below, 
may increase net asset value fluctuation.

     Standby commitment agreements create an additional risk for 
High Yield Portfolio because the other party to the standby 
agreement generally will not be obligated to deliver the security, 
but High Yield Portfolio will be obligated to accept it if 
delivered.  Depending on market conditions, High Yield 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 High Yield 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 High Yield Portfolio's 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 High Yield Portfolio actually obtains 
the security.

Short Sales Against the Box

     High Yield 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.  High Yield 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, High Yield Portfolio does 
not deliver from its portfolio the securities sold.  Instead, High 
Yield 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 High Yield 
Portfolio, to the purchaser of such securities.  High Yield 
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, High Yield 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.  High 
Yield Portfolio is said to have a short position in the securities 
sold until it delivers to the broker-dealer the securities sold.  
High Yield 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 High Yield 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 High Yield Portfolio owns, either 
directly or indirectly, and, in the case where High Yield 
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 High Yield Portfolio replaces the borrowed 
security, High Yield Portfolio will incur a loss and if the price 
declines during this period, High Yield 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 
High Yield Portfolio may have to pay in connection with such short 
sale.  Certain provisions of the Internal Revenue Code may limit 
the degree to which High Yield Portfolio is able to enter into 
short sales.  There is no limitation on the amount of High Yield 
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.  High Yield Portfolio currently 
expects that no more than 5% of its total assets would be involved 
in short sales against the box.

Line of Credit

     Subject to restriction (8) under Investment Restrictions, 
High Yield Portfolio may establish and maintain a line of credit 
with a major bank in order to permit borrowing on a temporary 
basis to meet share redemption requests in circumstances in which 
temporary borrowing may be preferable to liquidation of portfolio 
securities.

Interfund Borrowing and Lending Program

     Pursuant to an exemptive order issued by the Securities and 
Exchange Commission, Institutional High Yield Fund has received 
permission to lend money to, and borrow money from, other mutual 
funds advised by the Adviser.  Institutional High Yield Fund will 
borrow through the program when borrowing is necessary and 
appropriate and the costs are equal to or lower than the costs of 
bank loans.

PIK and Zero Coupon Bonds

     High Yield 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").  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 High Yield 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 debt securities, please refer to the Appendix to the 
Prospectus.  The rated debt securities described under Investment 
Policies include securities given a rating conditionally by 
Moody's or provisionally by S&P.  If the rating of a security is 
withdrawn or reduced, High Yield Portfolio is not required to sell 
the security, but the Adviser will consider such fact in 
determining whether to continue to hold the security.  To the 
extent that the ratings accorded by Moody's or S&P for debt 
securities may change as a result of changes in such 
organizations, or changes in their rating systems, High Yield 
Portfolio will attempt to use comparable ratings as standards for 
its investments in debt securities in accordance with its 
investment policies.

Foreign Securities

     High Yield Portfolio may invest up to 25% of total assets 
(taken at market value at the time of investment) in securities of 
foreign issuers that are not publicly traded in the United States 
("foreign securities").  For purposes of these limits, foreign 
securities do not include securities represented by American 
Depositary Receipts ("ADRs"), securities denominated in U.S. 
dollars, or securities guaranteed by U.S. persons.  Investment in 
foreign securities may involve a greater degree of risk (including 
risks relating to exchange fluctuations, tax provisions, or 
expropriation of assets) than does investment in securities of 
domestic issuers.

     High Yield Portfolio may invest in both "sponsored" and 
"unsponsored" ADRs.  In a sponsored ADR, the issuer typically pays 
some or all of the expenses of the depositary and agrees to 
provide its regular shareholder communications to ADR holders.  An 
unsponsored ADR is created independently of the issuer of the 
underlying security.  The ADR holders generally pay the expenses 
of the depositary and do not have an undertaking from the issuer 
of the underlying security to furnish shareholder communications.  
High Yield Portfolio does not expects to invest as much as 5% of 
its total assets in unsponsored ADRs.

     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 investment 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 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 High Yield 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.

     High Yield Portfolio's foreign currency exchange transactions 
are limited to transaction and portfolio hedging involving either 
specific transactions or portfolio positions, except to the extent 
described below under Synthetic Foreign Positions.  Transaction 
hedging is the purchase or sale of forward contracts with respect 
to specific receivables or payables of High Yield 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 High 
Yield 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.  High Yield 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 
High Yield 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, High Yield 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 High Yield 
Portfolio.  High Yield Portfolio may not engage in "speculative" 
currency exchange transactions.

     At the maturity of a forward contract to deliver a particular 
currency, High Yield Portfolio may either sell the portfolio 
security related to such contract and make delivery of the 
currency, or it may retain the security and either acquire the 
currency on the spot market or terminate its contractual 
obligation to deliver the currency by purchasing an offsetting 
contract with the same currency trader obligating it to purchase 
on the same maturity date the same amount of the currency.

     It is impossible to forecast with absolute precision the 
market value of portfolio securities at the expiration of a 
forward contract.  Accordingly, it may be necessary for High Yield 
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 it is obligated to 
deliver and if a decision is made to sell the security and make 
delivery of the currency.  Conversely, it may be necessary to sell 
on the spot market some of the currency received upon the sale of 
the portfolio security if its market value exceeds the amount of 
currency High Yield Portfolio is obligated to deliver.

     If High Yield Portfolio retains the portfolio security and 
engages in an offsetting transaction, High Yield Portfolio will 
incur a gain or a loss to the extent that there has been movement 
in forward contract prices.  If High Yield 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 High Yield 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, High Yield 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, High Yield 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 High Yield Portfolio of unrealized profits 
or force High Yield 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 High Yield Portfolio to hedge against a devaluation 
that is so generally anticipated that High Yield Portfolio is not 
able to contract to sell the currency at a price above the 
devaluation level it anticipates.  The cost to High Yield 
Portfolio of engaging in currency exchange transactions varies 
with such factors as the currency involved, the length of the 
contract period, and prevailing market conditions.  Since currency 
exchange transactions are usually conducted on a principal basis, 
no fees or commissions are involved.

     Synthetic Foreign Positions.  High Yield Portfolio may invest 
in debt instruments denominated in foreign currencies.  In 
addition to, or in lieu of, such direct investment, High Yield 
Portfolio may construct a synthetic foreign position by (a) 
purchasing a debt instrument denominated in one currency, 
generally U.S. dollars, and (b) concurrently entering into a 
forward contract to deliver a corresponding amount of that 
currency in exchange for a different currency on a future date and 
at a specified rate of exchange.  Because of the availability of a 
variety of highly liquid U.S. dollar debt instruments, a synthetic 
foreign position utilizing such U.S. dollar instruments may offer 
greater liquidity than direct investment in foreign currency debt 
instruments.  The results of a direct investment in a foreign 
currency and a concurrent construction of a synthetic position in 
such foreign currency, in terms of both income yield and gain or 
loss from changes in currency exchange rates, in general should be 
similar, but would not be identical because the components of the 
alternative investments would not be identical.

     High Yield 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 High Yield 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 High Yield Portfolio 
having a value at least equal to such accrued excess will be 
segregated on the books of High Yield Portfolio and held by the 
custodian for the duration of the swap.

     High Yield 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 similar return to a direct investment in a foreign 
security.

Rule 144A Securities

     High Yield 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 High Yield Portfolio, to trade in 
privately placed securities that have not been registered for sale 
under the 1933 Act.  The Adviser, under the supervision of the 
Board of Trustees, will consider whether securities purchased 
under Rule 144A are illiquid and thus subject to High Yield 
Portfolio's restriction of investing no more than 10% of its net 
assets in illiquid securities.  A determination of whether a Rule 
144A security is liquid or not is a question of fact.  In making 
this determination, the Adviser will consider the trading markets 
for the specific security, taking into account the unregistered 
nature of a Rule 144A security.  In addition, the Adviser could 
consider the (1) frequency of trades and quotes, (2) number of 
dealers and potential purchasers, (3) dealer undertakings to make 
a market, and (4) nature of the security and of marketplace trades 
(e.g., the time needed to dispose of the security, the method of 
soliciting offers, and the mechanics of transfer).  The liquidity 
of Rule 144A securities would be monitored and if, as a result of 
changed conditions, it is determined that a Rule 144A security is 
no longer liquid, High Yield Portfolio's holdings of illiquid 
securities would be reviewed to determine what, if any, steps are 
required to assure that High Yield Portfolio does not invest more 
than 10% of its assets in illiquid securities.  Investing in Rule 
144A securities could have the effect of increasing the amount of 
assets invested in illiquid securities if qualified institutional 
buyers are unwilling to purchase such securities.  High Yield 
Portfolio does not expect to invest as much as 5% of its total 
assets in Rule 144A securities that have not been deemed to be 
liquid by the Adviser.

Portfolio Turnover

     The turnover rate for High Yield Portfolio in the future may 
vary greatly from year to year, and when portfolio changes are 
deemed appropriate due to market or other conditions, such 
turnover rate may be greater than might otherwise be anticipated.  
A high rate of portfolio turnover may result in increased 
transaction expenses and the realization of capital gains or 
losses.  Distributions of any net realized gains are subject to 
federal income tax.  (See Risks and Investment Considerations and 
Distributions and Income Taxes in the Prospectus, and Additional 
Income Tax Considerations in this Statement of Additional 
Information.)

Options on Securities and Indexes

     High Yield Portfolio may purchase and may sell both put 
options and call options on debt or other securities or indexes in 
standardized contracts traded on national securities exchanges, 
boards of trade, or similar entities, or quoted on Nasdaq, and 
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.  The writer of an option on an individual 
security has the obligation upon exercise of the option to deliver 
the underlying security upon payment of the exercise price or to 
pay the exercise price upon delivery of the underlying security.  
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.)

     High Yield Portfolio will write call options and put options 
only if they are "covered."  In the case of a call option on a 
security, the option is "covered" if High Yield 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 High Yield Portfolio expires, High 
Yield Portfolio realizes a capital gain equal to the premium 
received at the time the option was written.  If an option 
purchased by High Yield Portfolio expires, it 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 High Yield Portfolio desires.

     High Yield 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, it will realize a capital loss.  If the premium received 
from a closing sale transaction is more than the premium paid to 
purchase the option, High Yield Portfolio will realize a capital 
gain or, if it is less, it 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 High Yield Portfolio is an 
asset of High Yield Portfolio, valued initially at the premium 
paid for the option.  The premium received for an option written 
by High Yield 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 on 
securities and on indexes.  For example, there are significant 
differences between the securities markets and 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 High Yield Portfolio seeks to close out an option position.  
If High Yield 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 High Yield 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, High Yield 
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 by High 
Yield Portfolio, it would not be able to close out the option.  If 
restrictions on exercise were imposed, High Yield Portfolio might 
be unable to exercise an option it has purchased.  

Futures Contracts and Options on Futures Contracts

     High Yield Portfolio may use interest rate futures contracts 
and index futures contracts.  An interest rate or index 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 as well as the following financial instruments: U.S. 
Treasury bonds; U.S. Treasury notes; GNMA Certificates; three-
month U.S. Treasury bills; 90-day commercial paper; bank 
certificates of deposit; Eurodollar certificates of deposit; and 
foreign currencies.  It is expected that other 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.
- ------------

     High Yield Portfolio may purchase and write call and put 
futures options.  Futures options possess many of the same 
characteristics as options on securities and indexes (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.  High Yield 
Portfolio might, for example, use futures contracts to hedge 
against or gain exposure to fluctuations in the general level of 
security prices, anticipated changes in interest rates or currency 
fluctuations that might adversely affect either the value of its 
securities or the price of the securities that it intends to 
purchase.  Although other techniques could be used to reduce 
exposure to security price, interest rate and currency 
fluctuations, High Yield Portfolio may be able to achieve its 
exposure more effectively and perhaps at a lower cost by using 
futures contracts and futures options.

     High Yield Portfolio will only enter into futures contracts 
and futures options that are standardized and traded on an 
exchange, board of trade, or similar entity, or quoted on an 
automated quotation system.

     The success of any futures transaction depends on the Adviser 
correctly predicting changes in the level and direction of 
security prices, interest rates, currency exchange rates and other 
factors.  Should those predictions be incorrect, High Yield 
Portfolio's return might have been better had the transaction not 
been attempted; however, in the absence of the ability to use 
futures contracts, the Adviser might have taken portfolio actions 
in anticipation of the same market movements with similar 
investment results but, presumably, at greater transaction costs.

     When a purchase or sale of a futures contract is made, High 
Yield 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 that is returned to High Yield Portfolio upon 
termination of the contract, assuming all contractual obligations 
have been satisfied.  High Yield Portfolio expects to earn 
interest income on its initial margin deposits.  A futures 
contract held by High Yield Portfolio is valued daily at the 
official settlement price of the exchange on which it is traded.  
Each day High Yield 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 High Yield Portfolio does not 
represent a borrowing or loan by High Yield Portfolio but is 
instead settlement between High Yield Portfolio and the broker of 
the amount one would owe the other if the futures contract had 
expired at the close of the previous trading day.  In computing 
daily net asset value, High Yield Portfolio will mark-to-market 
its open futures positions.

     High Yield 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 High Yield 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, High Yield Portfolio realizes a 
capital gain, or if it is more, it realizes a capital loss.  
Conversely, if an offsetting sale price is more than the original 
purchase price, High Yield Portfolio realizes a capital gain, or 
if it is less, it 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 as hedging techniques.  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 debt securities, including technical 
influences in futures trading and futures options and differences 
between the financial instruments and the instruments underlying 
the standard contracts available for trading in such respects as 
interest rate levels, maturities, and creditworthiness of issuers.  
A decision as to whether, when and how to hedge 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 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.

     There can be no assurance that a liquid market will exist at 
a time when High Yield Portfolio seeks to close out a futures or a 
futures option position.  High Yield 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, 
High Yield Portfolio may also use those investment vehicles, 
provided the Board of Trustees determines that their use is 
consistent with the investment objective.

     High Yield Portfolio will not enter into a futures contract 
or purchase an option thereon if, immediately thereafter, the 
initial margin deposits for futures contracts held 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 
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 on a 
futures contract, High Yield 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, 
High Yield 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 High Yield Portfolio.

     High Yield 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 High Yield 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," High Yield 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 High Yield 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 High Yield 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 High Yield 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 High Yield 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 High Yield 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 High Yield 
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.

     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 High 
Yield Portfolio delivers securities under a futures contract, it 
also realizes a capital gain or loss on those securities.

     For federal income tax purposes, High Yield 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 
options, futures and futures 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 High 
Yield 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.

     In order for High Yield 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, and 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.  

     Institutional High Yield 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

     Institutional High Yield Fund and High Yield Portfolio 
operate under the following investment restrictions.  
Institutional High Yield Fund and High Yield Portfolio may not:

     (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 [Institutional 
High Yield 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 [Institutional High 
Yield 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, 
[Institutional High Yield 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, 
[Institutional High Yield 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.

     The above restrictions are fundamental policies and may not 
be changed without the approval of a "majority of the outstanding 
voting securities" of the Fund or High Yield Portfolio, as 
previously defined herein.  The policy on the scope of 
transactions involving lending of portfolio securities to broker-
dealers and banks (as set forth herein under Portfolio Investments 
and Strategies) is also a fundamental policy.

     Institutional High Yield Fund and High Yield Portfolio are 
also subject to the following restrictions and policies that may 
be changed by the Board of Trustees.  None of the following 
restrictions shall prevent Institutional High Yield 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.  Unless 
otherwise indicated, Institutional High Yield Fund and High Yield 
Portfolio may not:

     (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;/4/
- ------------
/4/ Stein Roe 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, High Yield Portfolio intends to operate within the 
applicable limitations under Section 12(d)(1)(A) of that Act.
- ------------

     (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 10% of its net assets (taken at market 
value at the time of a particular investment) in illiquid 
securities /5/, including repurchase agreements maturing in more 
than seven days.
- -----------------
/5/ In the judgment of the Adviser, 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

     The Adviser seeks to provide superior long-term investment 
results through a disciplined, research-intensive approach to 
investment selection and prudent risk management.  In working to 
build wealth for generations, it has been guided by three primary 
objectives which it believes are the foundation of a successful 
investment program.  These objectives are preservation of capital, 
limited volatility through managed risk, and consistent above-
average returns, as appropriate for the particular client or 
managed account.

     Because every investor's needs are different, Stein Roe 
mutual funds are designed to accommodate different investment 
objectives, risk tolerance levels, and time horizons.  In 
selecting a mutual fund, investors should ask the following 
questions:

What are my investment goals?
It is important to a choose a fund that has investment objectives 
compatible with your investment goals.

What is my investment time frame?
If you have a short investment time frame (e.g., less than three 
years), a mutual fund that seeks to provide a stable share price, 
such as a money market fund, or one that seeks capital 
preservation as one of its objectives may be appropriate.  If you 
have a longer investment time frame, you may seek to maximize your 
investment returns by investing in a mutual fund that offers 
greater yield or appreciation potential in exchange for greater 
investment risk.

What is my tolerance for risk?
All investments, including those in mutual funds, have risks which 
will vary depending on investment objective and security type.  
However, mutual funds seek to reduce risk through professional 
investment management and portfolio diversification.

     In general, equity mutual funds emphasize long-term capital 
appreciation and tend to have more volatile net asset values than 
bond or money market mutual funds.  Although there is no guarantee 
that they will be able to maintain a stable net asset value of 
$1.00 per share, money market funds emphasize safety of principal 
and liquidity, but tend to offer lower income potential than bond 
funds.  Bond funds tend to offer higher income potential than 
money market funds but tend to have greater risk of principal and 
yield volatility.  

     In addition, the Adviser believes that investment in a high 
yield fund provides an opportunity to diversify an investment 
portfolio because the economic factors that affect the performance 
of high-yield, high-risk debt securities differ from those that 
affect the performance of high-quality debt securities or equity 
securities.


                PURCHASES AND REDEMPTIONS

     Purchases and redemptions are discussed in the Prospectus 
under the headings How to Purchase Shares, How to Redeem Shares, 
and Net Asset Value, and that information is incorporated herein 
by reference.  The Prospectus discloses that shares may be 
purchased (or redeemed) through investment dealers, banks, or 
other intermediaries.  It is the responsibility of any such 
intermediary to establish procedures insuring the prompt 
transmission to Institutional Trust of any such purchase order.  
The state of Texas has asked that mutual funds disclose in their 
Statement of Additional Information, as a reminder to any such 
intermediary, that it must be registered as a dealer in Texas.

     Through an account with an Intermediary, a shareholder may be 
able to exchange shares of Institutional High Yield Fund for 
shares of another Stein Roe Fund.  Each Intermediary will 
establish its own exchange policy and procedures for its accounts.  
Shares are exchanged at the next price calculated on a day the 
NYSE is open, after an exchange order is received and accepted by 
an Intermediary.

- - Shares can be exchanged only between accounts registered in the 
  same name, address, and taxpayer ID number of the Intermediary.
- - An exchange can be made only into a Stein Roe Fund whose shares 
  are eligible for sale in the state where the Intermediary is 
  located.
- - An exchange may have tax consequences.
- - Institutional High Yield Fund may refuse any exchange orders 
  from any Intermediary if for any reason they are not deemed to 
  be in the best interests of the Fund and its shareholders.
- - Institutional High Yield Fund may impose other restrictions on 
  the exchange privilege, or modify or terminate the privilege, 
  but will try to give each Intermediary advance notice whenever 
  it can reasonably do so.

     Institutional High Yield Fund's net asset value 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 Jan., the third 
Monday in Feb., 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 Institutional High Yield Fund should be determined on any such 
day, in which case the determination will be made at 3:00 p.m., 
central time.

     Institutional Trust reserves the right to suspend or postpone 
redemptions of shares of its series 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 series not reasonably practicable.

     Institutional Trust intends to pay all redemptions in cash 
and is obligated to redeem shares of its series solely in cash up 
to the lesser of $250,000 or one percent of the net assets of 
Institutional High Yield Fund 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, Institutional 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 $100,000.  An investor 
will be notified that the value of his account is less than the 
minimum and allowed at least 30 days to bring the value of the 
account up to at least $100,000 before the redemption is 
processed.  The Agreement and Declaration of Trust also authorizes 
Institutional Trust to redeem shares under certain other 
circumstances as may be specified by the Board of Trustees.


                             MANAGEMENT

     The following table sets forth certain information with 
respect to trustees and officers of Institutional Trust:

<TABLE>
<CAPTION>
                          POSITION(S) HELD WITH    PRINCIPAL OCCUPATION(S)
NAME                 AGE  INSTITUTIONAL TRUST      DURING PAST FIVE YEARS
<S>                  <C> <C>                       <C>

William D. Andrews   50  Executive Vice-President  Executive vice president of Stein Roe & Farnham 
  (4)                                              Incorporated (the "Adviser")

Gary A. Anetsberger  41  Senior Vice-President     Chief financial officer of the Mutual Funds division of the 
  (4)                                              Adviser; senior vice president of the Adviser since Apr. 
                                                   1996; vice president of the Adviser prior thereto

Timothy K. Armour    49  President; Trustee        President of the Mutual Funds division of the Adviser 
  (1)(2)(4)                                        and director of the Adviser 
      
Jilaine Hummel Bauer 42  Executive Vice-President; General counsel and secretary (since Nov. 1995) and 
  (4)                    Secretary                 senior vice president of the Adviser 
      
Kenneth L. Block     77  Trustee                   Chairman Emeritus of A. T. Kearney, Inc. (international 
  (3)(4)                                           management consultants)
      
William W. Boyd      70  Trustee                   Chairman and director of Sterling Plumbing Group, Inc. 
  (3)(4)                                           (manufacturer of plumbing products)
      
Thomas W. Butch (4)  40  Executive Vice-President  Senior vice president of the Adviser since Sept. 1994; 
                                                   first vice president, corporate communications, of 
                                                   Mellon Bank Corporation prior thereto
      
Lindsay Cook (1)(4)  45  Trustee                   Executive vice president of Liberty Financial 
                                                   Companies, Inc. (the indirect parent of the Adviser) 
                                                   since Mar. 1997; senior vice president prior thereto
      
Philip J. Crosley    51  Vice-President            Senior vice president of the Adviser since Feb. 1996; 
                                                   vice president, institutional sales -  advisor sales, 
                                                   Invesco Funds Group prior thereto
      
Douglas A. Hacker    42  Trustee                   Senior vice president and chief financial officer of 
  (3)(4)                                           United Airlines, since July 1994; senior vice president 
                                                   - finance, United Airlines, Feb. 1993 to July 1994; 
                                                   vice president, American Airlines prior thereto

   
Loren A. Hansen (4)  49  Executive Vice-President  Executive vice president of the Adviser since Dec., 1995; 
                                                   vice president of The Northern Trust (bank) prior thereto
    

Janet Langford Kelly 39  Trustee                   Senior vice president, secretary and general counsel of 
  (3)(4)                                           Sara Lee Corporation (branded, packaged, consumer-
                                                   products manufacturer), since 1995; partner, Sidley & 
                                                   Austin (law firm) prior thereto
      
Michael T. Kennedy   35  Vice-President            Senior vice president of the Adviser since Oct. 1994; 
                                                   vice president of the Adviser prior thereto
      
Stephen F. Lockman   36  Vice-President            Senior vice president, portfolio manager, and credit 
                                                   analyst of the Adviser; portfolio manager for Illinois 
                                                   State Board of Investment prior thereto
      
Lynn C. Maddox       56  Vice-President            Senior vice president of the Adviser
      
Anne E. Marcel       39  Vice-President            Vice president of the Adviser since Apr. 1996; manager, 
                                                   mutual fund sales & services of the Adviser since Oct. 
                                                   1994; supervisor of the Counselor Department of the 
                                                   Adviser prior thereto
      
Francis W. Morley    77  Trustee                   Chairman of Employer Plan Administrators and 
  (2)(3)(4)                                        Consultants Co. (designer, administrator, and 
                                                   communicator of employee benefit plans)
      
Jane M. Naeseth      47  Vice-President            Senior vice president of the Adviser
      
Charles R. Nelson    55  Trustee                   Van Voorhis Professor of Political Economy of the 
   (3)(4)                                          University of Washington
      
Nicolette D. Parrish 47 Vice-President;            Senior compliance administrator and assistant secretary 
  (4)                   Assistant Secretary        of the Adviser since Nov. 1995; senior legal assistant 
                                                   for the Adviser prior thereto
      
Sharon R. Robertson  35  Controller                Accounting manager for the Adviser's Mutual Funds 
  (4)                                              division
      
Janet B. Rysz (4)    42  Assistant Secretary       Senior compliance administrator and assistant secretary 
                                                   of the Adviser
      
Thomas C. Theobald   60  Trustee                   Managing director, William Blair Capital Partners (
   (3)(4)                                          private equity fund) since 1994; chief executive 
                                                   officer and chairman of the Board of Directors of 
                                                   Continental Bank Corporation, 1987-1994
      
Scott E. Volk (4)    26  Treasurer                 Financial reporting manager for the Adviser's Mutual 
                                                   Funds division since Oct. 1997; senior auditor with 
                                                   Ernst & Young LLP from Sept. 1993 to Apr. 1996 and 
                                                   from Oct. 1996 to Sept. 1997; financial analyst with 
                                                   John Nuveen & Company Inc. from May 1996 to Sept. 1996; 
                                                   full-time student prior to Sept. 1993

Heidi J. Walter (4)  30  Vice-President            Legal counsel for the Adviser since Mar. 1995; 
                                                   associate with Beeler Schad & Diamond PC (law firm) 
                                                   prior thereto
      
Stacy H. Winick (4)  32  Vice-President            Senior legal counsel for the Adviser since Oct. 1996; 
                                                   associate of Bell, Boyd & Lloyd (law firm) from June 
                                                   1993 to Sept. 1996; associate of Debevoise & Plimpton 
                                                   (law firm) prior thereto
      
Hans P. Ziegler (4)  56  Executive Vice-President  Chief executive officer of the Adviser since May 1994; 
                                                   president of the Investment Counsel division of the 
                                                   Adviser from July 1993 to June 1994; president and 
                                                   chief executive officer, Pitcairn Financial Management 
                                                   Group prior thereto
      
Margaret O. Zwick    31  Assistant Treasurer       Project manager for the Adviser's Mutual Funds division 
  (4)                                              since Apr. 1997; compliance manager, Aug. 1995 to Apr. 
                                                   1997; compliance accountant, Jan. 1995 to July 1995; 
                                                   section manager, Jan. 1994 to Jan. 1995; supervisor 
                                                   prior thereto
<FN>
______________________
(1) Trustee who is an "interested person" of Institutional Trust 
    and of the Adviser, as defined in the Investment Company Act 
    of 1940.
(2) Member of the Executive Committee of the Board of Trustees, 
    which is authorized to exercise all powers of the Board with 
    certain statutory exceptions.
(3) Member of the Audit Committee of the Board, which makes 
    recommendations to the Board regarding the selection of 
    auditors and confers with the auditors regarding the scope and 
    results of the audit.
(4) This person holds the corresponding officer or trustee 
    position with Base Trust.
</TABLE>

     Certain of the trustees and officers of Institutional Trust 
and of Base Trust are trustees or officers of other investment 
companies managed by the Adviser.  Mr. Armour, Ms. Bauer, Mr. 
Cook, and Ms. Walter are also vice presidents of Institutional 
High Yield Fund's current distributor, Liberty Securities Corporation.  
The address of Mr. Block is 11 Woodley Road, Winnetka, Illinois 
60093; that of Mr. Boyd is 2900 Golf Road, Rolling Meadows, 
Illinois 60008; that of Mr. Cook is 600 Atlantic Avenue, Boston, 
MA 02210; that of Mr. Hacker is P.O. Box 66100, Chicago, IL 60666; 
that of Ms. Kelly is Three First National Plaza, Chicago, Illinois 
60602; that of Mr. Morley is 20 North Wacker Drive, Suite 2275, 
Chicago, Illinois 60606; that of Mr. Nelson is Department of 
Economics, University of Washington, Seattle, Washington 98195; 
that of Mr. Theobald is Suite 3300, 222 West Adams Street, 
Chicago, IL 60606; and that of the officers is One South Wacker 
Drive, Chicago, Illinois 60606.

     Officers and trustees affiliated with the Adviser serve 
without any compensation from Institutional Trust.  In 
compensation for their services to Institutional Trust, trustees 
who are not "interested persons" of Institutional Trust or the 
Adviser are paid an annual retainer of $8,000 (divided equally 
among the series of Institutional Trust) plus an attendance fee 
from each series for each meeting of the Board or standing 
committee thereof attended at which business for the series is 
conducted.  The attendance fees (other than for a Nominating 
Committee or Compensation Committee meeting) are based on each 
series' net assets as of the preceding Dec. 31.  For a series with 
net assets of less than $50 million, the fee is $50 per meeting; 
with $51 to $250 million, the fee is $200 per meeting; with $251 
million to $500 million, $350; with $501 million to $750 million, 
$500; with $751 million to $1 billion, $650; and with over $1 
billion in net assets, $800.  For Institutional High Yield Fund 
and any other series of Institutional Trust participating in the 
master fund/feeder fund structure, the trustees' attendance fees 
are paid solely by the master portfolio.  Each non-interested 
trustee also receives $500 from Institutional Trust for attending 
each meeting of the Nominating Committee and the Compensation 
Committee.  Institutional Trust has no retirement or pension plan.  
The following table sets forth compensation paid to the trustees 
during the fiscal year ended June 30, 1997:

                                                Total Compensation
                      Aggregate Compensation    from the Stein 
Name of Trustee       from Institutional Trust  Roe Fund Complex*
- --------------------  -----------------------   ------------------
Timothy K. Armour            -0-                      -0-
Lindsay Cook                 -0-                      -0-
Kenneth L. Block           $4,000                  $70,693
William W. Boyd             4,000                   80,593
Douglas A. Hacker           4,000                   76,593
Janet Langford Kelly        4,000                   51,600
Francis W. Morley           4,000                   76,943
Charles R. Nelson           4,000                   80,593
Thomas C. Theobald          4,000                   76,593
________________
 * At June 30, 1997, the Stein Roe Fund Complex consisted of one 
series of Institutional Trust, six series of Stein Roe Income 
Trust, four series of Stein Roe Municipal Trust, ten series of 
Stein Roe Investment Trust, seven series of Stein Roe Advisor 
Trust, one series of Stein Roe Trust, and nine series of Base 
Trust. 


                       FINANCIAL STATEMENTS

     Please refer to the June 30, 1997 Financial Statements 
(balance sheets and schedule of investments as of June 30, 1997 
and the statements of operations, changes in net assets, and notes 
thereto) and the report of independent auditors contained in the 
June 30, 1997 Annual Report of Institutional Trust.  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 800-338-2550.


                    PRINCIPAL SHAREHOLDERS

     As of Oct. 31, 1997, Institutional High Yield Fund had only 
one shareholder, Stein Roe & Farnham Incorporated, which held 
10,686 shares.  


                   INVESTMENT ADVISORY SERVICES

     Stein Roe & Farnham Incorporated provides administrative 
services to Institutional High Yield Fund and High Yield Portfolio 
and portfolio management services to High Yield Portfolio.  The 
Adviser is a wholly owned subsidiary of SteinRoe Services Inc. 
("SSI"), Institutional High Yield Fund's transfer agent, which is 
a wholly owned subsidiary of Liberty Financial Companies, Inc. 
("Liberty Financial"), which is a majority owned subsidiary of LFC 
Holdings, Inc., which is a wholly owned subsidiary of Liberty 
Mutual Equity Corporation, which is a wholly owned subsidiary of 
Liberty Mutual Insurance Company.  Liberty Mutual Insurance 
Company is a mutual insurance company, principally in the 
property/casualty insurance field, organized under the laws of 
Massachusetts in 1912.

     The directors of the Adviser are Kenneth R. Leibler, Harold 
W. Cogger, C. Allen Merritt, Jr., Timothy K. Armour, and Hans P. 
Ziegler.  Mr. Leibler is President and Chief Executive Officer of 
Liberty Financial; Mr. Cogger is Executive Vice President of 
Liberty Financial; Mr. Merritt is Executive Vice President and 
Treasurer of Liberty Financial; Mr. Armour is President of the 
Adviser's Mutual Funds division; and Mr. Ziegler is Chief 
Executive Officer of the Adviser.  The business address of Messrs. 
Leibler, Cogger, and Merritt is Federal Reserve Plaza, Boston, 
Massachusetts 02210; and that of Messrs. Armour and Ziegler is One 
South Wacker Drive, Chicago, Illinois 60606.

     The Adviser and its predecessor have been providing 
investment advisory services since 1932.  The Adviser acts as 
investment adviser to wealthy individuals, trustees, pension and 
profit sharing plans, charitable organizations, and other 
institutional investors.  As of June 30, 1997, the Adviser managed 
over $28 billion in assets: over $9 billion in equities and over 
$19 billion in fixed income securities (including $1.7 billion in 
municipal securities).  The $28 billion in managed assets included 
over $7.9 billion held by open-end mutual funds managed by the 
Adviser (approximately 15% of the mutual fund assets were held by 
clients of the Adviser).  These mutual funds were owned by over 
259,000 shareholders.  The $7.9 billion in mutual fund assets 
included over $766 million in over 50,000 IRA accounts.  In 
managing those assets, the Adviser utilizes a proprietary 
computer-based information system that maintains and regularly 
updates information for approximately 7,000 companies.  The 
Adviser also monitors over 1,400 issues via a proprietary credit 
analysis system.  At June 30, 1997, the Adviser employed 16 
research analysts and 55 account managers.  The average 
investment-related experience of these individuals was 24 years.

     Please refer to the descriptions of the Adviser, the 
management and administrative agreements, fees, expense 
limitations, and transfer agency services under Management and Fee 
Table in the Prospectus, which is incorporated herein by 
reference.  The table below shows gross fees paid and any expense 
reimbursements by the Adviser:

                              Type of Payment   Year Ended 6/30/97
                              ----------------- ------------------
Institutional High Yield Fund Administrative fee     $       76
                              Reimbursement              86,221
High Yield Portfolio          Management fee             52,997

     The Adviser provides office space and executive and other 
personnel to Institutional High Yield Fund and bears any sales or 
promotional expenses.  Institutional High Yield Fund pays all 
expenses other than those paid by the Adviser, including but not 
limited to printing and postage charges and securities 
registration and custodian fees and expenses incidental to its 
organization.

     Institutional High Yield Fund's administrative agreement 
provides that the Adviser shall reimburse the Fund to the extent 
that its total annual expenses (including fees paid to the 
Adviser, but excluding taxes, interest, brokers' 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 Institutional High 
Yield Fund are being offered for sale to the public; however, such 
reimbursement for any fiscal year will not exceed the amount of 
the fees paid by Institutional High Yield Fund under that 
agreement for such year.  In addition, in the interest of further 
limiting Institutional High Yield Fund's expenses, the Adviser may 
voluntarily waive its management fee and/or absorb certain its 
expenses, as described in the Prospectus under Fee Table.  Any 
such reimbursements will enhance the yield of the Fund.

     High Yield Portfolio's management agreement provides that 
neither the Adviser nor any of its directors, officers, 
stockholders (or partners of stockholders), agents, or employees 
shall have any liability to Base Trust or any shareholder of High 
Yield Portfolio for any error of judgment, mistake of law or any 
loss arising out of any investment, or for any other act or 
omission in the performance by the Adviser of its duties under the 
agreement, except for liability resulting from willful 
misfeasance, bad faith or gross negligence on the Adviser's part 
in the performance of its duties or from reckless disregard by the 
Adviser of the Adviser's obligations and duties under that 
agreement.

     Any expenses that are attributable solely to the 
organization, operation, or business of Institutional High Yield 
Fund shall be paid solely out of that Fund's assets.  Any expenses 
incurred by Institutional Trust that are not solely attributable 
to a particular series are apportioned in such manner as the 
Adviser determines is fair and appropriate, unless otherwise 
specified by the Board of Trustees.

Bookkeeping and Accounting Agreement

     Pursuant to separate agreements with Advisor Trust and Base 
Trust, the Adviser receives a fee for performing certain 
bookkeeping and accounting services.  For services provided to 
Institutional High Yield Fund, the Adviser receives an annual fee 
of $25,000 plus .0025 of 1% of average net assets over $50 
million.  During the fiscal year ended June 30, 1997, the Adviser 
received aggregate fees of $11,895 from Institutional Trust for 
services performed under this agreement.


                            DISTRIBUTOR

     Shares of Institutional High Yield Fund are currently 
distributed by Liberty Securities Corporation, 100 Manhattanville 
Road, Purchase, NY 10577.  On Jan. 1, 1998, Liberty Financial 
Investments (formerly named Colonial Investment Services, Inc.), 
One Financial Center, Boston, MA 02111, will become the 
distributor under a new Distribution Agreement.  Liberty 
Securities Corporation and Liberty Financial Investments, Inc. are 
subsidiaries of Liberty Financial.

     The Distribution Agreement continues in effect from year to 
year, provided such continuance is approved annually (1) by a 
majority of the trustees or by a majority of the outstanding 
voting securities of Institutional Trust, and (2) by a majority of 
the trustees who are not parties to the Agreement or interested 
persons of any such party.  Institutional Trust has agreed to pay 
all expenses in connection with registration of its shares with 
the Securities and Exchange Commission and auditing and filing 
fees in connection with registration of its shares under the 
various state blue sky laws and assumes the cost of preparation of 
prospectuses and other expenses.

     As agent, the distributor offers Fund shares to investors in 
states where the shares are qualified for sale, at net asset 
value, without sales commissions or other sales load to the 
investor.  No sales commission or "12b-1" payment is paid by 
Institutional High Yield Fund.  The distributor offers shares only 
on a best-efforts basis.


                        TRANSFER AGENT

     SSI performs certain transfer agency services for 
Institutional Trust, as described under Management in the 
Prospectus.  For performing these services, SSI receives from 
Institutional High Yield Fund a fee based on an annual rate of .05 
of 1% of its average daily net assets.  The Board of Trustees 
believes the charges by SSI are comparable to those of other 
companies performing similar services.  (See Investment Advisory 
Services.)  Under a separate agreement, SSI provides certain 
investor accounting services to High Yield Portfolio.

 
                          CUSTODIAN

     State Street Bank and Trust Company (the "Bank"), 225 
Franklin Street, Boston, Massachusetts 02101, is the custodian for 
Institutional Trust and Base Trust.  It is responsible for holding 
all securities and cash, receiving and paying for securities 
purchased, delivering against payment securities sold, receiving 
and collecting income from investments, making all payments 
covering expenses, and performing other administrative duties, all 
as directed by authorized persons.  The 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.

     Each Board of Trustees reviews, at least annually, whether it 
is in the best interests of Institutional High Yield Fund, High 
Yield Portfolio, and their shareholders to maintain assets in each 
custodial institution.  However, with respect to foreign sub-
custodians, there can be no assurance that it, 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 the 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.

     Institutional High Yield Fund and High Yield Portfolio may 
invest in obligations of the Bank and may purchase or sell 
securities from or to the Bank.


                     INDEPENDENT AUDITORS

     The independent auditors for Institutional Trust and High 
Yield Portfolio are Ernst & Young LLP, 233 South Wacker Drive, 
Chicago, Illinois 60606.  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 applicable Trust.

 
                    PORTFOLIO TRANSACTIONS

     The Adviser places the orders for the purchase and sale of 
portfolio securities and options and futures contracts for High 
Yield Portfolio.  Purchases and sales of portfolio securities 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 High Yield 
Portfolio.  Transactions placed through dealers reflect the spread 
between the bid and asked prices.  Occasionally, High Yield 
Portfolio may make purchases of underwritten issues at prices that 
include underwriting discounts or selling concessions.

     The Adviser's overriding objective in effecting portfolio 
transactions is to seek to obtain the best combination of price 
and execution.  The best net price, giving effect to transaction 
charges, if any, and other costs, normally is an important factor 
in this decision, but a number of other judgmental factors may 
also enter into the decision.  These include: the Adviser's 
knowledge of current transaction costs; the nature of the security 
being traded; the size of the transaction; the desired timing of 
the trade; the activity existing and expected in the market for 
the particular security; confidentiality; the execution, clearance 
and settlement capabilities of the broker or dealer selected and 
others that are considered; the Adviser's knowledge of the 
financial stability of the broker or dealer selected and such 
other brokers or dealers; and the Adviser's knowledge of actual or 
apparent operational problems of any broker or dealer.  
Recognizing the value of these factors, High Yield Portfolio may 
incur a transaction charge in excess of that which another broker 
or dealer may have charged for effecting the same transaction.  
Evaluations of the reasonableness of the costs of portfolio 
transactions, based on the foregoing factors, are made on an 
ongoing basis by the Adviser's staff and reports are made annually 
to the Board of Trustees.

     With respect to issues of securities involving brokerage 
commissions, when more than one broker or dealer is believed to be 
capable of providing the best combination of price and execution 
with respect to a particular portfolio transaction for High Yield 
Portfolio, the Adviser often selects a broker or dealer that has 
furnished it with research products or services such as research 
reports, subscriptions to financial publications and research 
compilations, compilations of securities prices, earnings, 
dividends and similar data, and computer databases, quotation 
equipment and services, research-oriented computer software and 
services, and services of economic and other consultants.  
Selection of brokers or dealers is not made pursuant to an 
agreement or understanding with any of the brokers or dealers; 
however, the Adviser uses an internal allocation procedure to 
identify those brokers or dealers who provide it with research 
products or services and the amount of research products or 
services they provide, and endeavors to direct sufficient 
commissions generated by its clients' accounts in the aggregate, 
including High Yield Portfolio, to such brokers or dealers to 
ensure the continued receipt of research products or services the 
Adviser feels are useful.  In certain instances, the Adviser 
receives from brokers and dealers products or services which are 
used both as investment research and for administrative, 
marketing, or other non-research purposes.  In such instances, the 
Adviser makes a good faith effort to determine the relative 
proportions of such products or services which may be considered 
as investment research.  The portion of the costs of such products 
or services attributable to research usage may be defrayed by the 
Adviser (without prior agreement or understanding, as noted above) 
through brokerage commissions generated by transactions of clients 
(including High Yield Portfolio), while the portion of the costs 
attributable to non-research usage of such products or services is 
paid by the Adviser in cash.  No person acting on behalf of High 
Yield Portfolio is authorized, in recognition of the value of 
research products or services, to pay a price in excess of that 
which another broker or dealer might have charged for effecting 
the same transaction.  The Adviser may also receive research in 
connection with selling concessions and designations in fixed 
price offerings in which High Yield Portfolio participates.  
Research products or services furnished by brokers and dealers 
through whom transactions are effected may be used in servicing 
any or all of the clients of the Adviser and not all such research 
products or services are used in connection with the management of 
High Yield Portfolio.

     For the fiscal year ended June 30, 1997, High Yield Portfolio 
paid no brokerage commissions on futures transactions or on any 
other transactions.

     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").


             ADDITIONAL INCOME TAX CONSIDERATIONS

     Institutional High Yield Fund and High Yield Portfolio intend 
to comply with the special provisions of the Internal Revenue Code 
that relieve it of federal income tax to the extent of net 
investment income and capital gains currently distributed to 
shareholders.

     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.

     Institutional High Yield Fund expects that none of its 
dividends will qualify for the deduction for dividends received by 
corporate shareholders.


                      INVESTMENT PERFORMANCE

     Institutional High Yield Fund may quote yield figures from 
time to time.  "Yield" 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.  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.

                                                         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 Institutional High 
               Yield Fund for the period.

For example, the Yield of Institutional High Yield Fund for the 30-day 
period ended June 30, 1997 was 9.36%.
                  _____________________

     Institutional High Yield Fund may quote total return figures 
from time to time.  A "Total Return" on a per share basis is the 
amount of dividends received 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 (including reinvestment of distributions) by 
the value of the share at the beginning of the period and 
subtracting one.

                                                                n
Average Annual Total Return is computed as follows: ERV = P(1+T)

 Where:   P  =  a hypothetical initial payment of $1,000
          T  =  average annual total return
          n  =  number of years
        ERV  =  ending redeemable value of a hypothetical $1,000 
                payment made at the beginning of the period at the 
                end of the period (or fractional portion thereof).

     For example, for a $1,000 investment in Institutional High 
Yield Fund, the "Total Return," the "Total Return Percentage," and 
the "Average Annual Total Return" at June 30, 1997 were:

                 Total      Total Return      Average Annual
                 Return      Percentage        Total Return
                 -------    ------------      ---------------
   Life of Fund*  $1,077       7.70%              7.70%
   _______  
   *Since commencement of operations on Jan. 2, 1997.

     Investment performance figures assume reinvestment of all 
dividends and distributions and do not take into account any 
federal, state, or local income taxes which shareholders must pay 
on a current basis.  They are not necessarily indicative of future 
results.  The performance of Institutional High Yield Fund is a 
result of conditions in the securities markets, portfolio 
management, and operating expenses.  Although investment 
performance information is useful in reviewing Institutional High 
Yield Fund's performance and in providing some basis for 
comparison with other investment alternatives, it should not be 
used for comparison with other investments using different 
reinvestment assumptions or time periods.

     In advertising and sales literature, Institutional High Yield 
Fund may compare its yield and 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 Institutional High Yield.  
Comparison of Institutional High Yield 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 
Institutional Trust believes to be generally accurate.  
Institutional High Yield Fund may also note its mention in 
newspapers, magazines, or other media from time to time.  However, 
Institutional Trust assumes no responsibility for the accuracy of 
such data.  Newspapers and magazines that might mention 
Institutional High Yield Fund include, but are not limited to, the 
following:

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

     Institutional High Yield Fund may compare its performance to 
the Consumer Price Index (All Urban), a widely-recognized measure 
of inflation.

     The performance of Institutional High Yield Fund may be 
compared to the following benchmarks:

            CS First Boston High Yield Index
            ICD High Yield Index
            Lehman High Yield Bond Index
            Lehman High Yield Corporate Bond Index
            Merrill Lynch High-Yield Master Index
            Morningstar Corporate Bond (General) Average
            Salomon Brothers Extended High Yield Market Index
            Salomon Brothers High Yield Market Index

     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.  Institutional High Yield 
Fund may also use comparative performance as computed in a ranking 
by these services or category averages and rankings provided by 
another independent service.  Should these services reclassify 
Institutional High Yield Fund to a different category or develop 
(and place it into) a new category, it may compare its performance 
or rank against other funds in the newly-assigned category (or the 
average of such category) as published by the service.

     In advertising and sales literature, Institutional High Yield 
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 its 
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, Institutional High Yield Fund 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
                      ____________________

     Institutional High Yield 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.)

                   TAX-DEFERRED INVESTMENT VS. TAXABLE INVESTMENT

INTEREST RATE     6%     8%        10%        6%          8%        10%
Compounding
Years           Tax-Deferred Investment          Taxable Investment        
30          $124,992  $171,554   $242,340  $109,197   $135,346   $168,852
25            90,053   115,177    150,484    82,067     97,780    117,014
20            62,943    75,543     91,947    59,362     68,109     78,351
15            41,684    47,304     54,099    40,358     44,675     49,514
10            24,797    26,820     29,098    24,453     26,165     28,006
5             11,178    11,613     12,072    11,141     11,546     11,965
1              2,072     2,096      2,121     2,072      2,096      2,121

     Average Life Calculations.  From time to time, Institutional 
High Yield Fund may quote an average life figure for its 
portfolio.  Average life is the weighted average period over which 
the Adviser expects the principal to be paid, and differs from 
stated maturity in that it estimates the effect of expected 
principal prepayments and call provisions.  With respect to GNMA 
securities and other mortgage-backed securities, average life is 
likely to be substantially less than the stated maturity of the 
mortgages in the underlying pools.  With respect to obligations 
with call provisions, average life is typically the next call date 
on which the obligation reasonably may be expected to be called.  
Securities without prepayment or call provisions generally have an 
average life equal to their stated maturity.

     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.
                       ___________________



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