STEIN ROE INTERMEDIATE BOND FUND
STEIN ROE HIGH YIELD FUND
STEIN ROE INCOME FUND
(together, the "Funds")
SUPPLEMENT TO PROSPECTUSES DATED NOVEMBER 1, 1999
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As of July 14, 2000, the current shares of the Funds will be redesignated Class
S shares. Like the existing shares from which they are being converted, these
Class S shares are no-load shares carrying no sales charge or 12b-1 fee.
HIGH YIELD FUND
The section of the prospectus entitled "Principal Investment Strategy" is
replaced with the following:
PrincipalInvestment Strategy High Yield Fund invests all of its assets in SR&F
High Yield Portfolio as part of a master fund/feeder fund structure.
The Portfolio invests at least 65% of total assets in high-yield,
high-risk debt securities. These securities are rated at the time of
purchase:
o below BBB by Standard & Poor's,
o below Baa by Moody's Investors Service, Inc.,
o with a comparable rating by another nationally recognized rating
agency, or
o unrated securities that Stein Roe believes to be of comparable
quality.
The Portfolio may invest in any type of debt securities, including
corporate bonds and mortgage-backed and asset-backed securities.
The Portfolio seeks to achieve capital appreciation through purchasing
bonds that increase in market value. In addition, to a limited extent,
the Portfolio may seek capital appreciation by using hedging techniques
such as futures and options.
Although the Fund will invest primarily in debt securities, the Fund
may invest in equity securities to seek capital appreciation. Equity
securities include common stocks, preferred stocks, warrants and debt
securities convertible into common stocks.
In determining whether to buy or sell securities, the portfolio manager
evaluates relative values of the various types of securities in which
the Fund can invest (e.g., the relative value of corporate debt
securities versus mortgage-backed securities under prevailing market
conditions), relative values of various rating categories (e.g.,
relative values of higher-rated securities versus lower-rated
securities under prevailing market conditions), and individual issuer
characteristics. The portfolio manager may be required to sell
portfolio investments to fund redemptions. The Portfolio may invest in
securities of any maturity
The section of the prospectus entitled "Other Investments and Risks" is
supplemented with the following:
Initial Public Offerings
High Yield Portfolio may invest a portion of its assets in certain
types of equity securities including securities offered during a
company's initial public offering (IPO). An IPO is the sale of a
company's securities to the public for the first time. The market price
of a security the Portfolio buys in an IPO may change substantially
from the price the Portfolio paid, soon after the IPO ends. In the
short term, this change may significantly increase or decrease the
Fund's total return, and therefore its performance history, after an
IPO investment. This is especially so when the Fund's assets are small.
However, should the Fund's assets increase, the results of an IPO
investment will not cause the Fund's performance history to change as
much. Although companies can be any size or age at the time of their
IPO, they are often smaller in size and have a limited operating
history which could create greater market volatility for the
securities. The Advisor intends to limit the Portfolio's IPO
investments to issuers whose debt securities the Portfolio already
owns, or issuers which the Advisor has specially researched before the
IPO. The Portfolio does not intend to invest more than 5% of its assets
in IPO's and does not intend to buy them for the purpose of immediately
selling (also known as flipping) the security after its public offering
S09-36/116C-0700 July 14, 2000
