<PAGE>
File No. 33-11351
Rule 497(e)
STEINROE INVESTMENT TRUST
STEINROE YOUNG INVESTOR FUND
SUPPLEMENT TO FEBRUARY 1, 1995 PROSPECTUS
_________________________
PORTFOLIO MANAGERS. Effective March 17, 1995, the portfolio
managers of SteinRoe Young Investor Fund are Erik P. Gustafson,
David P. Brady, and Eric S. Maddix. Mr. Brady is a Portfolio
Manager with Stein Roe & Farnham Incorporated ("SteinRoe"), which
he joined in 1993. From 1986 to 1993, Mr. Brady was an Equity
Investment Analyst with State Farm Mutual Automobile Insurance
Company. A Chartered Financial Analyst, he earned a B.S. in
Finance, graduating Magna Cum Laude, from the University of
Arizona in 1986, and earned an M.B.A. from the University of
Chicago in 1989. Mr. Maddix joined SteinRoe in 1987 as a
Portfolio Manager. He received his B.B.A. degree from Iowa State
University in 1986 and his M.B.A. from the University of Chicago
in 1992. Please refer to the section of the prospectus entitled
Management of the Fund for further information about Mr.
Gustafson.
FEE CHANGES. On April 19, 1995, the Board of Trustees of
SteinRoe Investment Trust voted to replace the Fund's current
investment advisory agreement, which provides for both portfolio
management and administrative services, with separate new
agreements for such services, subject to approval by the Fund's
shareholders at a special meeting scheduled for August 15, 1995.
If approved by shareholders, the new agreements will become
effective on September 1, 1995.
The provision of portfolio management and administrative
services under separate agreements will facilitate any future
conversion of the Fund into a Master Fund/Feeder Fund structure.
(See discussion under Risks and Investment Considerations in the Prospectus.)
Upon a conversion, the assets of the Fund would be
invested in a "master fund" having an investment objective and
policies identical to those of the Fund. The Fund's portfolio
management agreement would be terminated, and thereafter portfolio
management services would be provided by SteinRoe to the "master
fund" under a management agreement with an identical fee schedule
and substantially identical terms as those of the proposed
portfolio management agreement.
Although the total fees payable by the Fund under the
proposed new agreements would be higher than the fees payable
under the current agreement, the Board of Trustees believes the
fees are reasonable and competitive. In addition, SteinRoe's
current undertaking to reimburse the Fund for expenses in excess
of 0.99 of 1% of average net assets would remain in effect. The
current and proposed fee schedules are stated below at annual
rates as a percentage of average daily net assets:
Current Fee Schedule
(dollar amounts Proposed Fee Schedule
in millions) (dollar amounts in millions)
- ------------------ --------------------------------------------------
Management and Management Administrative Total
Administrative Fee Fee Fee Fees
- ------------------ -------------- -------------- ---------------
.75% up to $250, .60% up to $500, .20% up to $500, .80% up to $500,
.70% next $250, .55% next $500, .15% next $500, .70% next $500,
.60% thereafter .50% thereafter .125% thereafter .625% thereafter
MINIMUM INVESTMENT REDUCED. Effective June 22, 1995, the
minimum amount that must be invested to open an account under an
automatic investment plan has been reduced from $500 to $100.
(See How to Purchase Shares.)
The Date of this Supplement is June 22, 1995
YI3
</R/
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[SteinRoe Mutual Funds logo]
Young Investor Fund
The Fund's objective is long-term capital appreciation. The Fund
invests in securities of companies that affect the lives of
children or teenagers. The Fund is also intended to be a fun,
educational experience for young investors and their parents.
The Fund is a "no-load" fund. There are no sales or redemption
charges, and the Fund has no 12b-1 plan. The Fund is a series of
the SteinRoe Investment Trust, an open-end management investment
company.
This prospectus contains information you should know before
investing in the Fund. Please read it carefully and retain it for
future reference.
If you have any questions about new Fund accounts, please call 1-
800-403-KIDS (1-800-403-5437); for existing accounts, shareholders
should call 1-800-338-2550.
A Statement of Additional Information dated February 1, 1995,
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 the
Secretary at the address shown on the back cover or by calling the
Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 1, 1995.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary ...........................2
Fee Table ........................3
Financial Highlights...............4
The Fund ..........................4
Investment Policies ...............5
Portfolio Investments and
Strategies.......................5
Investment Restrictions............7
Risks and Investment
Considerations....................8
How to Purchase Shares ............9
By Check .......................9
By Wire ........................9
By Electronic Transfer..........9
By Exchange ...................10
Purchase Price and
Effective Date .............10
Conditions of Purchase ........10
Purchases Through Third
Parties.....................10
How to Redeem Shares .............11
By Written Request ............11
By Exchange ...................11
Special Redemption Privileges .11
General Redemption Policies ...12
Shareholder Services .............14
Net Asset Value ..................15
Distributions and Income Taxes ...16
Investment Return ................17
Management of the Fund ...........17
Organization and Description of
Shares..........................19
SUMMARY
SteinRoe Young Investor Fund (the "Fund") is a series of the
SteinRoe Investment Trust, an open-end diversified management
investment company. The Fund is a "no-load" fund. There are no
sales or redemption charges. (See The Fund and Organization and
Description of Shares.)
Investment Objectives and Policies.
The Fund's investment objective is long-term capital appreciation.
It seeks to achieve its objective by investing primarily in common
stocks and other equity-type securities that SteinRoe believes to
have long-term appreciation potential. The Fund invests primarily
in securities of companies that appeal to or affect the lives of
children or teenagers. It is designed for long-term investors,
particularly children and teenagers.
In addition to the Fund's investment objective and policies, the
Fund also has an educational objective. It seeks to teach
children and teenagers about the Fund, basic economic principles,
and personal finance through a variety of educational materials
prepared and paid for by the Fund.
There can be no guarantee that the Fund will achieve its
investment objective. Please see Investment Policies and
Portfolio Investments and Strategies for further information.
Investment Risks.
The Fund is designed for long-term investors who are willing to
accept the investment risk and volatility of equity-type
securities in general as well as the specific types of equity
securities emphasized by the Fund. By investing in companies
whose products or services appeal to young investors, the Fund
emphasizes various consumer goods sectors. Since the Fund may
invest in foreign securities, investors should understand and
consider carefully the risks involved in foreign investing.
Investing in foreign securities involves certain considerations
involving both risks and opportunities not typically associated
with investing in U.S. securities. Please see Investment
Policies, Portfolio Investments and Strategies, and Risks and
Investment Considerations for further information.
Purchases.
The minimum initial investment for the Fund is $2,500; the minimum
investment for Uniform Gifts/ Transfers to Minors Act accounts is
$1,000. Additional investments must be at least $50. Shares may
be purchased by check, by bank wire, by electronic transfer, or by
exchange from another SteinRoe Fund. For more detailed
information, see How to Purchase Shares.
Redemptions.
For information on redeeming Fund shares, including the special
redemption privileges, see How to Redeem Shares.
<PAGE> 3
Net Asset Value.
The purchase and redemption price of the Fund's shares is its net
asset value per share. The net asset value is determined as of
the close of trading on the New York Stock Exchange. (For more
detailed information, see Net Asset Value.)
Distributions.
Dividends are normally declared and paid annually. Distributions
will be reinvested into your Fund account unless you elect to have
them paid in cash, deposited by electronic transfer into your bank
checking account, or invested in another SteinRoe Fund account.
(See Distributions and Income Taxes and Shareholder Services.)
Management and Fees.
Stein Roe & Farnham Incorporated ("SteinRoe") provides management
and investment advisory services to the Fund. For a description
of SteinRoe and advisory fees, see Management of the Fund.
If you have any additional questions about the Fund, please feel
free to discuss them with a relationship manager by calling 1-800-
338-2550.
FEE TABLE
Shareholder Transaction Expense
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.75%
12b-1 Fees None
Other Expenses (after reimbursement
of expenses) 0.24%
-----
Total Fund Operating Expenses (after
reimbursement of expenses) 0.99%
-----
-----
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
------ -------
$10 $32
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 the Fund. The table is based upon
actual expenses incurred in the last fiscal year. In addition,
SteinRoe has undertaken to reimburse the Fund for expenses in
excess of 0.99% of average net assets through January 31, 1996,
subject to earlier termination by SteinRoe on 30 days' notice.
Absent such expense undertaking, Other Expenses and Total Fund
Operating Expenses would have been 3.83% and 4.58%, respectively.
(Also see Management of the Fund--Fees and Expenses.)
For purposes of the Example above, the figures assume that the
percentage amounts listed for the Fund under Annual Fund Operating
Expenses remain the same in each of the periods, that all income
dividends and capital gain distributions are reinvested in
additional Fund shares, and that, for purposes of management fee
breakpoints, net assets remain at the same level as in the most
recently completed fiscal year.
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 above
is useful in reviewing the 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.
<PAGE> 4
Financial Highlights
The table below reflects the results of operations of the Fund on
a per-share basis for the period shown and has been audited by
Arthur Andersen LLP, independent public accountants. The
auditors' report was unqualified. The table should be read in
conjunction with the Fund's financial statements and notes
thereto. The Fund's annual report, which may be obtained from the
Trust upon request without charge, contains additional performance
information.
Period Ended
Sept. 30, 1994(a)
----------------
Net Asset Value, Beginning of Period $10.00
------
Income from Investment Operations
Net investment income .03
Net realized and unrealized gains on
investments .21
------
Total from investment operations .24
------
Net Asset Value, End of Period $10.24
------
------
Ratio of expenses to average net assets (b) *0.99%
Ratio of net investment income to average
net assets (c) *1.07%
Portfolio turnover rate **12%
Total return **2.40%
Net assets, end of period (000 omitted) $8,176
________________
*Annualized.
**Not annualized.
(a) From commencement of operations on April 29, 1994.
(b) Computed giving effect to the investment adviser's expense
limitation undertaking.
(c) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the investment adviser, this ratio
would have been 4.58% for the period ended September 30, 1994.
THE FUND
The Fund is a no-load mutual fund.
SteinRoe Young Investor Fund (the "Fund") is a no-load,
diversified "mutual fund." Mutual funds sell their own shares to
investors and use the money they receive to invest in a portfolio
of securities such as common stocks. A mutual fund allows you to
pool your money with that of other investors in order to obtain
professional investment management. Mutual funds generally make
it possible for you to obtain greater diversification of your
investments and simplify your recordkeeping. The Fund does not
impose commissions or charges when shares are purchased or
redeemed.
The Fund is a series of the SteinRoe Investment Trust (the
"Trust"), an open-end management investment company, which is
authorized to issue shares of beneficial interest in separate
series. Each series represents interests in a separate portfolio
of securities and other assets, with its own investment objectives
and policies.
The Fund is managed by Stein Roe & Farnham.
Stein Roe & Farnham Incorporated ("SteinRoe") provides investment
advisory, administrative, and bookkeeping and accounting services
to the Fund. SteinRoe also manages and provides investment
advisory services for several other no-load mutual funds with
different investment objectives, including equity funds,
international funds, taxable and tax-exempt bond funds, and money
market funds. To obtain prospectuses and other information on any
of those mutual funds, please call 1-800-338-2550.
<PAGE> 5
INVESTMENT POLICIES
The Fund invests primarily in equity securities.
The Fund's investment objective is long-term capital appreciation.
It seeks to achieve its objective by investing primarily in common
stocks and other equity-type securities that, in the opinion of
SteinRoe, have long-term appreciation potential.
The Fund invests in companies that affect the lives of children or
teenagers.
Under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of companies that, in the
opinion of SteinRoe, directly or through one or more subsidiaries,
affect the lives of children or teenagers. Such companies may
include companies that produce products or services that children
or teenagers use, are aware of, or could potentially have an
interest in.
Although the Fund invests primarily in common stocks and other
equity-type securities (such as preferred stocks, securities
convertible into or exchangeable for common stocks, and warrants
or rights to purchase common stocks), it may invest up to 35% of
its total assets in debt securities. The Fund may invest in
securities of smaller emerging companies as well as securities of
well-seasoned companies of any size. Smaller companies, however,
involve higher risks in that they typically have limited product
lines, markets, and financial or management resources. In
addition, the securities of smaller companies may trade less
frequently and have greater price fluctuation than larger
companies, particularly those operating in countries with
developing markets. The Fund may also employ investment
techniques described elsewhere in this prospectus. (See Risks and
Investment Considerations and Fees and Expenses.)
The Fund is intended to be a fun, educational experience for young
investors and their parents.
In addition to the Fund's investment objective and policies, the
Fund also has an educational objective. The Fund will seek to
educate its shareholders by providing educational materials
regarding personal finance and investing as well as materials on
the Fund and its portfolio holdings.
PORTFOLIO INVESTMENTS AND STRATEGIES
The Fund may invest in "investment grade" debt securities.
In pursuing its investment objective, the Fund may invest in debt
securities. A debt security is an obligation of a borrower to
make payments of principal and interest to the holder of the
security. To the extent the Fund invests in debt securities, such
holdings will be subject to interest rate risk and credit risk.
Interest rate risk is the risk that the value of a portfolio will
fluctuate in response to changes in interest rates. Generally,
the debt component of a portfolio will tend to decrease in value
when interest rates rise and increase in value when interest rates
fall. Credit risk is the risk that an issuer will be unable to
make principal and interest payments when due. Investments in
debt securities are limited to those that are within the four
highest grades (generally referred to as "investment grade")
assigned by a nationally recognized statistical rating
organization or, if unrated, deemed to be of comparable quality by
SteinRoe. Securities in the fourth highest grade may possess
speculative characteristics. If the rating of a security held by
the Fund is lost or reduced below investment grade, the Fund is
not required to dispose of the security, but SteinRoe will
consider that fact in determining whether the Fund should continue
to hold the security. When SteinRoe considers a temporary
defensive position advisable, the Fund may invest
<PAGE> 6
without limitation in high-quality fixed-income securities, or
hold assets in cash or cash equivalents.
The Fund may invest up to 25% of its assets in foreign securities,
which may entail a greater degree of risk than domestic
securities.
The Fund may invest up to 25% of its total assets in foreign
securities. (See Risks and Investment Considerations.) In
addition to, or in lieu of, such direct investment, a Fund 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, the Fund may contract to purchase an amount of foreign
currency sufficient to pay the purchase price of the securities at
the settlement date; such a contract involves the risk that the
value of the foreign currency may decline relative to the value of
the dollar prior to the settlement date, which risk is in addition
to the risk that the value of the foreign security purchased may
decline.
The Fund may make loans of its portfolio securities to broker-
dealers and banks and enter into reverse repurchase agreements
subject to certain restrictions described in the Statement of
Additional Information. The Fund may invest in securities
purchased on a when-issued or delayed-delivery basis. Although
the payment terms of these securities are established at the time
the Fund enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase,
when their value may have changed. The Fund will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.
The Fund may invest in "derivative products."
Consistent with its objective, the Fund may invest in a broad
array of financial instruments and securities, including
conventional, exchange-traded and non-exchange traded options,
futures contracts, futures options, forward contracts, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, or an interest rate. The Fund does not expect to
invest more than 5% of its net assets in any type of Derivative
except for options, futures contracts, and futures options.
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. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on SteinRoe'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
<PAGE> 7
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
The Fund may purchase and write both call options and put options
on securities, indexes and foreign currencies, enter into interest
rate, index and foreign currency futures contracts and options on
such futures contracts, and purchase other types of forward or
investment contracts linked to individual securities, indexes, or
other benchmarks in order to achieve its desired investment
objective, provide additional revenue, or to hedge against changes
in security prices, interest rates or currency fluctuations. The
Fund may write a call or put option only if the option is covered.
As the writer of a covered call option, the Fund 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 the Fund
seeks to close out a position. In addition, 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.
INVESTMENT RESTRICTIONS
The Fund will seek to limit the impact of any one investment on
the portfolio.
The Fund will not (i) with respect to 75% of its total assets,
invest more than 5% of its total assets in the securities of any
one issuer (except that this restriction does not apply to
securities of the U.S. Government and repurchase agreements for
such securities, and except the Fund may invest all of its assets
in shares of another investment company having the identical
investment objective); (ii) invest more than 25% of its total
assets (at the time of investment) in the securities of companies
in any one industry; (iii) acquire more than 10% of the
outstanding voting securities of any one issuer; or (iv) borrow
money, except as a temporary measure for extraordinary or
emergency purposes, and then the aggregate borrowings at any one
time (including any reverse repurchase agreements and dollar
rolls) may not exceed 33 1/3% of its total assets (at market).
The Fund will not purchase additional securities when its
borrowings, less proceeds receivable from sales of portfolio
securities, exceed 5% of total assets. The Fund may invest in
repurchase agreements, /1/ provided that it will not invest more than
5% of its net assets in repurchase agreements maturing in more
than seven days, and any other illiquid securities. An investment
in illiquid securities could involve relatively greater risks or
costs to the Fund.
Investment restrictions (i) through (iv) above are fundamental
policies and, as such, can be changed only with the approval of a
"majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940. The investment objective is non-
fundamental and, as such, may be changed by the Board of Trustees
without shareholder approval. Any such change may result in the
Fund having an investment objective different from the objective
the shareholder considered
- ------------------
/1/ A sale of securities to the Fund 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, the
Fund could experience both losses and delays in liquidating its
collateral.
<PAGE> 8
appropriate at the time of investment in the Fund. All of the
investment restrictions are set forth in the Statement of
Additional Information.
RISKS AND INVESTMENT CONSIDERATIONS
The Fund is designed for long-term investors who desire to
participate in the stock market with an emphasis on companies that
appeal to young investors, with more investment risk and
volatility than the stock market in general but with less
investment risk and volatility than aggressive capital
appreciation funds.
All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. The Fund is designed
for long-term investors who desire to participate in the stock
market with an emphasis on companies that appeal to young
investors, with more investment risk and volatility than the stock
market in general but with less investment risk and volatility
than aggressive capital appreciation funds. Of course, there can
be no guarantee that the Fund will achieve its objective. The
Fund is also designed to be a fun, educational experience for
young investors and their parents.
The Fund seeks to reduce risk by investing in a diversified
portfolio, but this does not eliminate all risk. However, the
Fund will not invest more than 25% of the total value of its
assets (at the time of investment) in the securities of companies
in any one industry. By investing in companies whose products or
services appeal to young investors, the Fund emphasizes various
consumer goods sectors.
Although the Fund does not purchase securities with a view to
rapid turnover, there are no limitations on the length of time
portfolio securities must be held. Accordingly, the portfolio
turnover rate may vary significantly from year to year, but is not
expected to exceed 100% under normal market conditions. A high
rate of portfolio turnover may result in increased transaction
expenses and the realization of capital gains and losses. (See
Distributions and Income Taxes.) The Fund is not intended to be
an income-producing investment, although it may produce income.
Investment in foreign securities may represent a greater degree of
risk (including risk related to exchange rate fluctuations, tax
provisions, exchange and currency controls, and expropriation of
assets) than investment in securities of domestic issuers. Other
risks of foreign investing include less complete financial
information on issuers, 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 non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Master/Feeder Option.
Rather than investing in securities directly, the Fund may in the
future seek to achieve its investment objective by pooling its
assets with assets of other mutual funds managed by SteinRoe for
investment in another investment company having the same
investment objective and substantially the same investment
policies and restrictions as the Fund. The purpose of such an
arrangement is to achieve greater operational efficiencies and to
reduce costs. It is expected that any such investment company
would be managed by SteinRoe in substantially the same manner as
the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment, although they will not
be
<PAGE> 9
entitled to vote on the action. Such investment would be made
only if the Trustees determine it to be in the best interests of
the Fund and its shareholders.
HOW TO PURCHASE SHARES
$2,500 minimum investment; $1,000 for UGMA accounts.
You may purchase Fund shares by check, by wire, by electronic
transfer, or by exchange from your account with another SteinRoe
Fund. The initial purchase minimum per Fund account is $2,500;
the minimum for Uniform Gifts/Transfers to Minors Act accounts is
$1,000; the minimum for accounts established under an automatic
investment plan of at least $50 per month (i.e., Regular
Investments or the Automatic Exchange Plan) is $500; and the
minimum per account for SteinRoe IRAs is $500. The initial
purchase minimum is waived for shareholders who participate in the
SteinRoe Counselor [service mark] and SteinRoe Counselor Preferred
[service mark] programs and for clients of SteinRoe. Subsequent
purchases must be at least $50. (See Shareholder Services.)
By Check.
You may purchase shares by check, by wire, by electronic transfer,
or by exchange.
To make an initial purchase of shares of the Fund by check, please
complete and sign the Application and mail it to P.O. Box 804058,
Chicago, Illinois 60680, together with a check made payable to
SteinRoe Funds.
You may make subsequent investments by submitting a check along
with either the stub from your Fund account confirmation statement
or a note indicating the amount of the purchase, your account
number, and the name in which your account is registered. Each
individual check submitted for purchase must be at least $50, and
the Trust generally will not accept cash, drafts, third party
checks, or checks drawn on banks outside of the United States.
Should an order to purchase shares of the Fund be cancelled
because your check does not clear, you will be responsible for any
resulting loss incurred by the Fund.
By Wire.
You may also pay for shares by instructing your bank to wire
Federal funds (monies of member banks within the Federal Reserve
System) to the Fund's custodian bank. Your bank may charge you a
fee for sending the wire. If you are opening a new account by
wire transfer, you must first telephone the Trust to request an
account number and furnish your social security or other tax
identification number. Neither the Fund nor the Trust will be
responsible for the consequences of delays, including delays in
the banking or Federal Reserve wire systems. Your bank must
include the full name(s) in which your account is registered and
your Fund account number, and should address its wire as follows:
State Street Bank and Trust Company
Boston, Massachusetts
Attention: Custody
Fund No. 7124; SteinRoe Young Investor Fund
Account of (exact name(s) in registration)
Shareholder Account No. ___________
By Electronic Transfer.
You may also make subsequent investments by an electronic transfer
of funds from your bank checking account. Electronic transfer
allows you to make purchases at your request ("Special
Investments") by calling 1-
<PAGE> 10
800-338-2550 or at pre-scheduled intervals ("Regular
Investments"). (See Shareholder Services.) Electronic transfer
purchases are subject to a $50 minimum and a $100,000 maximum.
You may not open a new account through electronic transfer.
Should an order to purchase shares of the Fund be cancelled
because your electronic transfer does not clear, you will be
responsible for any resulting loss incurred by the Fund.
By Exchange.
You may purchase shares by exchange of shares from another
SteinRoe Fund account either by phone (if the Telephone Exchange
Privilege has been established on the account from which the
exchange is being made), by mail, in person, or automatically at
regular intervals (if you have elected Automatic Exchanges).
Restrictions apply; please review the information on the Exchange
Privilege under How to Redeem Shares--By Exchange.
Purchase Price and Effective Date.
Purchases are made at net asset value.
Each purchase of the Fund's shares is made at the Fund's net asset
value (see Net Asset Value) next determined after receipt of
payment as follows:
A purchase by check or wire transfer is made at the net asset
value next determined after receipt by the Fund of the check or
wire transfer of funds in payment of the purchase.
A purchase by electronic transfer is made at the net asset value
next determined after the Fund receives the electronic transfer
from your bank. A Special Electronic Transfer Investment order
received by telephone on a business day before 2:00 p.m., Chicago
time, is effective on the next business day.
Conditions of Purchase.
Each purchase order for the Fund must be accepted by an authorized
officer of the Trust in Chicago and is not binding until accepted
and entered on the books of the Fund. Once your purchase order
has been accepted, you may not cancel or revoke it; however, you
may redeem the shares. The Trust reserves the right not to accept
any purchase order that it determines not to be in the best
interest of the Trust or of the Fund's shareholders. The Trust
also reserves the right to waive or lower its investment minimums
for any reason.
Purchases Through Third Parties.
You may purchase (or redeem) shares through investment dealers,
banks, or other financial institutions. These institutions may
charge for their services or place limitations on the extent to
which you may use the services offered by the Trust. There are no
charges or limitations imposed by the Trust (other than those
described in this prospectus) if shares are purchased (or
redeemed) directly from the Trust.
Some financial institutions that maintain nominee accounts with
the Fund for their clients for whom they hold Fund shares charge
an annual fee of up to 0.25% of the average net assets held in
such accounts for accounting, servicing, and distribution services
they provide with respect to the underlying Fund shares. The Fund
may pay a portion of those fees not to exceed the fees and
expenses the Fund would pay to its transfer agent if the shares
held in nominee name were registered on the
<PAGE> 11
Fund's books in the individual names of the beneficial owners of
such shares. The balance of such fees are paid by SteinRoe.
HOW TO REDEEM SHARES
By Written Request.
To make sure your redemption request is in "good order," please
carefully read this section.
You may redeem all or a portion of your shares of the Fund by
submitting a written request in "good order" to the Trust at P.O.
Box 804058, Chicago, Illinois 60680. A redemption request will be
considered to have been received in good order if the following
conditions are satisfied:
(1) the request must be in writing, indicate the number of shares
or dollar amount to be redeemed, and identify the shareholder's
account number;
(2) the request must be signed by the shareholder(s) exactly as
the shares are registered;
(3) the signatures on the written redemption request must be
guaranteed (a signature guarantee is not a notarization, but is a
widely accepted way to protect you and the Fund by verifying your
signature);
(4) other supporting legal documents may be required from
organizations, executors, administrators, trustees, or others
acting on accounts not registered in their names.
By Exchange.
You may exchange shares of the Fund for shares of any other
SteinRoe Fund qualified for sale to residents of your state.
You may redeem all or any portion of your Fund shares and use the
proceeds to purchase shares of any other SteinRoe Fund offered for
sale in your state if your signed, properly completed Application
is on file.
An exchange transaction is a sale and purchase of shares for
Federal income tax purposes and may result in capital gain or
loss. Before exercising the Exchange Privilege, you should obtain
the prospectus for the SteinRoe Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
Fund account from which the exchange is made and the amount you
exchange must meet any applicable minimum investment of the
SteinRoe Fund being purchased. An exchange may be made by
following the redemption procedure described above under By
Written Request and indicating the SteinRoe Fund to be purchased,
except that a signature guarantee normally is not required. (See
also the discussion below of the Telephone Exchange Privilege and
Automatic Exchanges.)
Special Redemption Privileges.
Telephone Redemption Privileges will be established for you
automatically.
The Telephone Exchange Privilege and the Telephone Redemption by
Check Privilege will be established automatically for you when you
open your account unless you decline these Privileges on your
Application. Other Privileges must be specifically elected. If
you do not want the Telephone Exchange and Redemption Privileges,
check the box(es) under the section "Telephone Redemption Options"
when completing your Application. In addition, a signature
guarantee may be required to establish a Privilege after you open
your account.
<PAGE> 12
Telephone Exchange Privilege. You may use the Telephone Exchange
Privilege to exchange an amount of $1,000 or more from your
account by calling 1-800-338-2550 or by sending a telegram; new
accounts opened by exchange are subject to the $2,500 initial
purchase minimum. Generally, you will be limited to four
Telephone Exchange round-trips per year and the Fund may refuse
requests for Telephone Exchanges in excess of four round-trips (a
round-trip being the exchange out of the Fund into another
SteinRoe Fund, and then back to the Fund). Also, the Trust's
general redemption policies apply to redemptions of shares by
Telephone Exchange. (See General Redemption Policies.)
Restrictions on Special Redemption Privileges apply.
The Trust reserves the right at any time without prior notice to
suspend or terminate the use of the Telephone Exchange Privilege
by any person or class of persons. The Trust believes that use of
the Telephone Exchange Privilege by investors utilizing market-
timing strategies adversely affects the Fund. Therefore, the
Trust generally will not honor requests for Telephone Exchanges by
shareholders identified by the Trust as "market-timers."
Moreover, the Trust reserves the right at any time without prior
notice to suspend, limit, modify, or terminate the Telephone
Exchange Privilege in its entirety. Because such a step would be
taken only if the Board of Trustees believes it would be in the
best interests of the Fund, the Trust expects that it would
provide shareholders with prior written notice of any such action
unless the resulting delay in the suspension, limitation,
modification, or termination of the Telephone Exchange Privilege
would adversely affect the Fund. If the Trust were to suspend,
limit, modify, or terminate the Telephone Exchange Privilege, a
shareholder expecting to make a Telephone Exchange might find that
an exchange could not be processed or that there might be a delay
in the implementation of the exchange. (See How to Redeem Shares-
- -By Exchange.) During periods of volatile economic and market
conditions, you may have difficulty placing your exchange by
telephone.
Automatic Exchanges. You may use the Automatic Exchange Privilege
to automatically redeem a fixed amount from your Fund account for
investment in another SteinRoe Fund account on a regular basis.
Telephone Redemption by Check Privilege. You may use the
Telephone Redemption by Check Privilege to redeem an amount of
$1,000 or more from your account by calling 1-800-338-2550. The
proceeds will be sent by check to your registered address.
Electronic Transfer Privilege. You may redeem shares by calling
1-800-338-2550 and requesting an electronic transfer ("Special
Redemption") of the proceeds to a checking account previously
designated by you at a bank that is a member of the Automated
Clearing House or at scheduled intervals ("Automatic Redemptions"-
- -see Shareholder Services). Electronic transfers are subject to a
$50 minimum and a $100,000 maximum. A Special Redemption request
received by telephone after 2:00 p.m., Chicago time, is deemed
received on the next business day.
General Redemption Policies.
Please read carefully the General Redemption Policies.
You may not cancel or revoke your redemption order once
instructions have been received and accepted. The Trust cannot
accept a redemption request that specifies a particular date or
price for redemption or any special conditions. Please telephone
the Trust if you have any
<PAGE> 13
questions about requirements for a redemption before submitting
your request. The Trust reserves the right to require a properly
completed Application before making payment for shares redeemed.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received. (See Net Asset Value.) Because the
redemption price you receive depends upon the Fund's net asset
value per share at the time of redemption, it may be more or less
than the price you originally paid for the shares and may result
in a realized capital gain or loss.
The Trust will generally mail payment for shares redeemed within
seven days after proper instructions are received. If you attempt
to redeem shares within 15 days after they have been purchased by
check or electronic transfer, the Trust may delay payment of the
redemption proceeds to you until it can verify that payment for
the purchase of those shares has been (or will be) collected. To
reduce such delays, the Trust recommends that your purchase be
made by Federal funds wire through your bank.
Generally, you may not use the Exchange Privilege or any Special
Redemption Privilege to redeem shares purchased by check (other
than certified or cashiers' checks) or electronic transfer until
15 days after their date of purchase.
The Trust reserves the right at any time without prior notice to
suspend, limit, modify, or terminate any Privilege or its use in
any manner by any person or class.
Neither the Trust, its transfer agent, nor their respective
officers, trustees, directors, employees, or agents will be
responsible for the authenticity of instructions provided under
the Privileges, nor for any loss, liability, cost or expense for
acting upon instructions furnished thereunder if they reasonably
believe that such instructions are genuine. The Fund employs
procedures reasonably designed to confirm that instructions
communicated by telephone under any Special Redemption Privilege
or the Special Electronic Transfer Redemption Privilege are
genuine. Use of any Special Redemption Privilege or the Special
Electronic Transfer Redemption Privilege authorizes the Fund and
its transfer agent to tape-record all instructions to redeem. In
addition, callers are asked to identify the account number and
registration, and may be required to provide other forms of
identification. Written confirmations of transactions are mailed
promptly to the registered address; a legend on the confirmation
requests the shareholder to review the transactions and inform the
Fund immediately if there is a problem. If the Fund does not
follow reasonable procedures for protecting shareholders against
loss on telephone transactions, it may be liable for any losses
due to unauthorized or fraudulent instructions.
The Trust reserves the right to redeem shares in any account and
send the proceeds to the owner if the shares in the account do not
have a value of at least $1,000. A shareholder would be notified
that his account is below the minimum and allowed 30 days to
increase the account before the redemption is processed.
Shares in any account you maintain with the Fund or any of the
other SteinRoe Funds may be redeemed to the extent necessary to
reimburse
<PAGE> 14
any SteinRoe Fund for any loss it sustains that is caused by you
(such as losses from uncollected checks and electronic transfers
for the purchase of shares or any SteinRoe Fund liability under
the Internal Revenue Code provisions on backup withholding).
SHAREHOLDER SERVICES
Reporting to Shareholders.
You will receive quarterly communications from the Fund.
You will receive a confirmation statement reflecting each of your
purchases and redemptions of shares of the Fund. Shares purchased
by reinvestment of dividends, by cross-reinvestment of dividends
from another Fund, or pursuant to an automatic investment plan
will be confirmed to you quarterly. The Trust will send you
quarterly materials on the Fund and its portfolio holdings, will
send you semiannual and annual reports, and will provide you
annually with tax information.
Funds-on-Call [registered mark] 24-Hour Information Service.
Funds-on-Call [registered mark] allows you to have 24-hour access
to information.
To access the SteinRoe Funds-on-Call [registered mark] automated
telephone service, just call 1-800-338-2550 on any touch-tone
telephone and follow the recorded instructions. Funds-on-Call
[registered mark] provides yields, prices, latest dividends,
account balances, last transaction, and other information 24 hours
a day, seven days a week.
Funds-on-Call [registered mark] Automated Telephone Transactions.
If you have established the Funds-on-Call [registered mark]
transaction privilege (Funds-on-Call [registered mark] Application
will be required), you may initiate Special Investments and
Redemptions, Telephone Exchanges, and Telephone Redemptions by
Check 24 hours a day, seven days a week by calling 1-800-338-2550
on a touch-tone telephone. These transactions are subject to the
terms and conditions of the individual privileges. (See How to
Purchase Shares and How to Redeem Shares.)
SteinRoe Counselor [service mark] Program.
The SteinRoe Counselor [service mark] and SteinRoe Counselor
Preferred [service mark] programs are professional investment
advisory services available to shareholders. These programs are
designed to provide investment guidance in helping investors to
select a portfolio of SteinRoe Funds. The SteinRoe Counselor
Preferred [service mark] program, which automatically adjusts
client portfolios among the SteinRoe Funds, has a fee of up to 1%
of assets.
Tax-Sheltered Retirement Plan.
Booklets describing the Individual Retirement Account ("IRA")
program and special forms necessary for establishing it are
available on request. IRAs are available for employed persons and
their non-employed spouses. You may use all of the SteinRoe
Funds, except those investing primarily in tax-exempt securities,
in the plan. Please read the prospectus for each fund in which
you plan to invest before making your investment.
Special Services.
The Fund offers special services to meet your needs.
The following special services are available to shareholders.
Please call 1-800-338-2550 or write the Trust for additional
information and forms.
Dividend Purchase Option--to diversify your Fund investments by
having distributions from one Fund account automatically invested
in another SteinRoe Fund account. Before establishing this
option, you
<PAGE> 15
should obtain and read carefully the prospectus of the SteinRoe
Fund into which you wish to have your distributions invested. The
account from which distributions are made must be of sufficient
size that each distribution will usually be at least $25.
Automatic Dividend Deposit (electronic transfer)--to have income
dividends and capital gain distributions deposited directly into
your bank checking account.
Telephone Redemption by Check Privilege and Telephone Exchange
Privilege--established automatically when you open your account
unless you decline them on your Application ($1,000 minimum).
(See How to Redeem Shares--Special Redemption Privileges.)
Special Redemption Option (electronic transfer)--to redeem shares
at any time and have the proceeds deposited directly to your bank
checking account ($50 minimum; $100,000 maximum).
Regular Investments (electronic transfer)--to purchase Fund shares
at regular intervals directly from your bank checking account ($50
minimum; $100,000 maximum).
Special Investments (electronic transfer)--to purchase Fund shares
by telephone and pay for them by electronic transfer of funds from
your checking account ($50 minimum; $100,000 maximum).
Automatic Exchange Plan--to automatically redeem a fixed dollar
amount from your Fund account and invest it in another SteinRoe
Fund account on a regular basis ($50 minimum; $100,000 maximum).
Automatic Redemptions (electronic transfer)--to have a fixed
dollar amount redeemed and sent at regular intervals directly to
your bank checking account ($50 minimum; $100,000 maximum).
Systematic Withdrawals--to have a fixed dollar amount, declining
balance, or fixed percentage of your account redeemed and sent at
regular intervals by check to you or another payee.
NET ASSET VALUE
The Fund's net asset value is calculated daily.
The purchase and redemption price of the Fund's shares is its net
asset value per share. The net asset value of a share of the Fund
is determined as of the close of trading on the New York Stock
Exchange ("NYSE") (currently 3:00 p.m., Chicago time) by dividing
the difference between the values of the Fund's assets and
liabilities by the number of shares outstanding. 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 the
Fund should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Chicago time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation is available from NASDAQ is valued at that price.
All other over-the-counter securities
<PAGE> 16
for which reliable quotations are available are valued at the
latest bid quotation.
DISTRIBUTIONS AND INCOME TAXES
Distributions.
Income dividends are normally declared and paid annually. The
Fund intends to distribute by the end of each calendar year at
least 98% of any net capital gains realized from the sale of
securities during the twelve-month period ended October 31 in that
year. The Fund intends to distribute any undistributed net
investment income and net realized capital gains in the following
year.
Dividends and capital gains will be reinvested automatically
unless you elect another option.
All of your income dividends and capital gain distributions will
be reinvested in additional shares unless you elect to have
distributions either (1) paid by check, (2) deposited by
electronic transfer into your bank checking account, (3) applied
to purchase shares in your account with another SteinRoe Fund, or
(4) applied to purchase shares in a SteinRoe Fund account of
another person. (See Shareholder Services.) Reinvestment into
the same Fund account normally occurs one business day after the
record date. Investment of distributions into another SteinRoe
Fund account occurs on the payable date. If you choose to receive
your distributions in cash, your distribution check normally will
be mailed approximately 15 days after the record date. The Trust
reserves the right to reinvest the proceeds and future
distributions in additional Fund shares if checks mailed to you
for distributions are returned as undeliverable or are not
presented for payment within six months.
Income Taxes.
Fund distributions will be taxable to you.
Your distributions will be taxable to you, under income tax law,
whether received in cash or reinvested in additional shares. For
Federal income tax purposes, any distribution that is paid in
January but was declared in the prior calendar year is deemed paid
in the prior calendar year.
You will be subject to Federal income tax at ordinary rates on
income dividends and distributions of net short-term capital gain.
Distributions of net long-term capital gain will be taxable to you
as long-term capital gain regardless of the length of time you
have held your shares.
You will be advised annually as to the source of distributions for
tax purposes. If you are not subject to tax on your income, you
may not be required to pay tax on these amounts.
If you redeem shares of the Fund held for six months or less, any
loss on the sale of those shares will be a long-term capital loss
to the extent of any distributions of long-term capital gain you
have received with respect to those shares.
For Federal income tax purposes, the Fund is treated as a separate
taxable entity distinct from the other series of the Trust.
This discussion of taxation is not intended to be a full
discussion of income tax laws and their effect on shareholders.
You may wish to consult your own tax advisor. The foregoing
information applies to U.S.
<PAGE> 17
shareholders. Foreign shareholders should consult their tax
advisors as to the tax consequences of ownership of Fund shares.
Backup Withholding.
If you fail to provide a tax identification number, you will be
subject to backup withholding.
If (a) you fail to (i) furnish your properly certified social
security or other tax identification number or (ii) certify that
your tax identification number is correct or that you are not
subject to backup withholding due to the underreporting of certain
income, or (b) the Internal Revenue Service informs the Trust that
your tax identification number is incorrect, the Trust may be
required to withhold Federal income tax ("backup withholding")
from certain payments (including redemption proceeds) to you.
These certifications are contained in the Application that you
should complete and return when you open an account. The Fund
must promptly pay to the IRS all amounts withheld. Therefore, it
is usually not possible for the Fund to reimburse you for amounts
withheld. However, you may claim the amount withheld as a credit
on your Federal income tax return.
INVESTMENT RETURN
The Fund's performance is usually quoted as an average annual
total return, which is a historical figure and is not intended to
be indicative of future results.
The total return from an investment in the Fund is measured by the
distributions received (assuming reinvestment of dividends and
capital gains) plus or minus the change in the net asset value per
share for a given period. A total return percentage may be
calculated by dividing the value of a share at the end of the
period (including reinvestment of distributions) by the value of
the share at the beginning of the period and subtracting one.
For a given period, an average annual total return may be
calculated by finding the average annual compounded rate that
would equate a hypothetical $1,000 investment to the ending
redeemable value.
Comparison of the Fund's total return with alternative investments
should consider differences between the Fund and the alternative
investments, the periods and methods used in calculation of the
return being compared, and the impact of taxes on alternative
investments. Of course, past performance is not necessarily
indicative of future results.
MANAGEMENT OF THE FUND
Trustees and Adviser.
The Board of Trustees supervises the Fund and SteinRoe.
The Board of Trustees of the Trust has overall management
responsibility for the Trust and the Fund. See the Statement of
Additional Information for the names of and additional information
about the trustees and officers. Stein Roe & Farnham
Incorporated, One South Wacker Drive, Chicago, Illinois 60606, is
responsible for managing the investment portfolio and the business
affairs of the Fund and the Trust, subject to the direction of the
Board. SteinRoe is registered as an investment adviser under the
Investment Advisers Act of 1940.
SteinRoe (and its predecessor) has advised and managed mutual
funds since 1949. SteinRoe is a wholly-owned indirect subsidiary
of Liberty Financial Companies, Inc., which in turn is a wholly-
owned indirect subsidiary of Liberty Mutual Insurance Company.
<PAGE> 18
Portfolio Managers.
The Fund's portfolio is managed by Ken Corba and Erik Gustafson.
The Fund is managed by Kenneth W. Corba and Erik P. Gustafson.
Mr. Corba is a chartered financial analyst who joined SteinRoe in
1984 and is a senior vice president of SteinRoe. He received his
B.A.and M.B.A. degrees from the University of Michigan in 1975 and
1984, respectively. Mr. Gustafson is a vice president of the
Adviser, having joined it in 1992. From 1989 to 1992 he was an
attorney with Fowler, White, Burnett, Hurley, Banick & Strickroot.
He holds a B.A. from the University of Virginia (1985) and M.B.A.
and J.D. degrees (1989) from Florida State University.
Fees and Expenses.
SteinRoe receives an advisory fee from the Fund.
In return for its services, SteinRoe receives a monthly fee from
the Fund, computed and accrued daily, based on its average net
assets. The annualized fee is 0.75 of 1% up to $250 million, 0.70
of 1% of the next $250 million of average net assets, and 0.60 of
1% thereafter. This rate of fee is higher than that paid by many
mutual funds. Pursuant to the expense undertaking described
below, SteinRoe reimbursed the Fund $82,109 for the period from
April 29, 1994 (commencement of operations) to September 30, 1994,
resulting in a net payment by SteinRoe of $64,954.
Because of the Fund's educational objective, the Fund's expenses
may be higher.
Because the Fund also has as an objective being an educational
experience for investors, the Fund's non-advisory expenses may be
higher than other mutual funds because of regular educational and
other reporting to shareholders.
Under a separate agreement with the Trust, SteinRoe provides
certain accounting and bookkeeping services to the Fund, including
computation of its net asset value and calculation of its net
income and capital gains and losses on disposition of Fund assets.
SteinRoe is subsidizing the Fund's expenses so as not to exceed
0.99 of 1%.
SteinRoe has undertaken to reimburse the Fund to the extent that
its annual expenses exceed 0.99 of 1% of its average net assets
through January 31, 1996, subject to earlier termination by
SteinRoe on 30 days' notice.
Portfolio Transactions.
SteinRoe places the orders for the purchase and sale of portfolio
securities and options and futures transactions for the Fund. In
doing so, SteinRoe 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 indirect subsidiary of Liberty
Financial Companies, Inc., which in turn is a wholly-owned
indirect subsidiary of Liberty Mutual Insurance Company, is the
agent of the Trust for the transfer of shares, disbursement of
dividends, and maintenance of shareholder accounting records.
Distributor.
The Fund's shares are offered through Liberty Securities
Corporation.
The shares of the Fund are offered for sale through Liberty
Securities Corporation ("Distributor") without any sales
commissions or charges to the Fund or to its shareholders. The
Distributor is a wholly-owned indirect subsidiary of Liberty
Mutual. The business address of the Distributor is 600 Atlantic
Avenue, Boston, Massachusetts 02210; however, all Fund
correspondence (including purchase and redemption orders)
<PAGE> 19
should be mailed to the Trust at P.O. Box 804058, Chicago,
Illinois 60680. All distribution and promotional expenses are
paid by SteinRoe, including payments to the Distributor for sales
of Fund shares.
Custodian.
State Street Bank and Trust Company (the "Bank"), 225 Franklin
Street, Boston, Massachusetts 02101, is the custodian for the
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
The Fund is part of a Massachusetts business trust.
The Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
January 8, 1987, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either the
Trust's shareholders or its trustees. The Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, eight series are authorized and
outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as the Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of the trust. The
Declaration of Trust provides that persons extending credit to,
contracting with, or having any claim against, the Trust or any
particular series shall look only to the assets of the Trust or of
the respective series for payment under such credit, contract or
claim, and that the shareholders, Trustees and officers of the
Trust shall have no personal liability therefor. The Declaration
of Trust requires that notice of such disclaimer of liability be
given in each contract, instrument or undertaking executed or made
on behalf of the Trust. The Declaration of Trust provides for
indemnification of any shareholder against any loss and expense
arising from personal liability solely by reason of being or
having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the
Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of the Trust is
also believed to be remote, because it would be limited to claims
to which the disclaimer did not apply and to circumstances in
which the other series was unable to meet its obligations.
<PAGE> 20
[STEINROE MUTUAL FUNDS LOGO]
The SteinRoe Funds
SteinRoe Government Reserves
SteinRoe Cash Reserves
SteinRoe Limited Maturity Income Fund
SteinRoe Government Income Fund
SteinRoe Intermediate Bond Fund
SteinRoe Income Fund
SteinRoe Municipal Money Market Fund
SteinRoe Intermediate Municipals
SteinRoe Managed Municipals
SteinRoe High-Yield Municipals
SteinRoe Total Return Fund
SteinRoe Prime Equities
SteinRoe Growth Stock Fund
SteinRoe Capital Opportunities Fund
SteinRoe Special Fund
SteinRoe International Fund
SteinRoe Young Investor Fund
SteinRoe Special Venture Fund
SteinRoe Young Investor Fund
Prospectus
February 1, 1995
P.O. Box 804058
Chicago, Illinois 60680
In Chicago, visit our Fund Center
at One South Wacker Drive
Liberty Securities Corporation, Distributor
08011
<PAGE>
STEINROE INVESTMENT TRUST
STEINROE YOUNG INVESTOR FUND
SUPPLEMENT TO FEBRUARY 1, 1995 PROSPECTUS
_________________________
PORTFOLIO MANAGERS. Effective March 17, 1995, the portfolio
managers of SteinRoe Young Investor Fund are Erik P. Gustafson,
David P. Brady, and Eric S. Maddix. Mr. Brady is a Portfolio
Manager with Stein Roe & Farnham Incorporated ("SteinRoe"), which
he joined in 1993. From 1986 to 1993, Mr. Brady was an Equity
Investment Analyst with State Farm Mutual Automobile Insurance
Company. A Chartered Financial Analyst, he earned a B.S. in
Finance, graduating Magna Cum Laude, from the University of
Arizona in 1986, and earned an M.B.A. from the University of
Chicago in 1989. Mr. Maddix joined SteinRoe in 1987 as a
Portfolio Manager. He received his B.B.A. degree from Iowa State
University in 1986 and his M.B.A. from the University of Chicago
in 1992. Please refer to the section of the prospectus entitled
Management of the Fund for further information about Mr.
Gustafson.
FEE CHANGES. On April 19, 1995, the Board of Trustees of
SteinRoe Investment Trust voted to replace the Fund's current
investment advisory agreement, which provides for both portfolio
management and administrative services, with separate new
agreements for such services, subject to approval by the Fund's
shareholders at a special meeting scheduled for August 15, 1995.
If approved by shareholders, the new agreements will become
effective on September 1, 1995.
The provision of portfolio management and administrative
services under separate agreements will facilitate any future
conversion of the Fund into a Master Fund/Feeder Fund structure.
(See discussion under Risks and Investment Considerations in the Prospectus.)
Upon a conversion, the assets of the Fund would be
invested in a "master fund" having an investment objective and
policies identical to those of the Fund. The Fund's portfolio
management agreement would be terminated, and thereafter portfolio
management services would be provided by SteinRoe to the "master
fund" under a management agreement with an identical fee schedule
and substantially identical terms as those of the proposed
portfolio management agreement.
Although the total fees payable by the Fund under the
proposed new agreements would be higher than the fees payable
under the current agreement, the Board of Trustees believes the
fees are reasonable and competitive. In addition, SteinRoe's
current undertaking to reimburse the Fund for expenses in excess
of 0.99 of 1% of average net assets would remain in effect. The
current and proposed fee schedules are stated below at annual
rates as a percentage of average daily net assets:
Current Fee Schedule
(dollar amounts Proposed Fee Schedule
in millions) (dollar amounts in millions)
- ------------------ --------------------------------------------------
Management and Management Administrative Total
Administrative Fee Fee Fee Fees
- ------------------ -------------- -------------- ---------------
.75% up to $250, .60% up to $500, .20% up to $500, .80% up to $500,
.70% next $250, .55% next $500, .15% next $500, .70% next $500,
.60% thereafter .50% thereafter .125% thereafter .625% thereafter
MINIMUM INVESTMENT REDUCED. Effective June 22, 1995, the
minimum amount that must be invested to open an account under an
automatic investment plan has been reduced from $500 to $100.
(See How to Purchase Shares.)
The Date of this Supplement is June 22, 1995
YI3
<PAGE> 1
[SteinRoe Mutual Funds logo]
Young Investor Fund
The Fund's objective is long-term capital appreciation. The Fund
invests in securities of companies that affect the lives of
children or teenagers. The Fund is also intended to be a fun,
educational experience for young investors and their parents.
The Fund is a "no-load" fund. There are no sales or redemption
charges, and the Fund has no 12b-1 plan. The Fund is a series of
the SteinRoe Investment Trust, an open-end management investment
company.
This prospectus contains information you should know before
investing in the Fund. Please read it carefully and retain it for
future reference.
If you have any questions about new Fund accounts, please call 1-
800-403-KIDS (1-800-403-5437); for existing accounts, shareholders
should call 1-800-338-2550.
A Statement of Additional Information dated February 1, 1995,
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 the
Secretary at the address shown on the back cover or by calling the
Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 1, 1995.
<PAGE> 2
TABLE OF CONTENTS
Page
Summary ...........................2
Fee Table ........................4
Financial Highlights...............5
The Fund ..........................5
Investment Policies ...............6
Portfolio Investments and
Strategies.......................7
Investment Restrictions............9
Risks and Investment
Considerations...................10
How to Purchase Shares ...........11
By Check ......................12
By Wire .......................12
By Electronic Transfer.........12
By Exchange ...................13
Purchase Price and
Effective Date .............13
Conditions of Purchase ........13
Purchases Through Third
Parties.....................13
How to Redeem Shares .............14
By Written Request ............14
By Exchange ...................14
Special Redemption Privileges .15
General Redemption Policies ...16
Shareholder Services .............18
Net Asset Value ..................19
Distributions and Income Taxes ...20
Investment Return ................21
Management of the Fund ...........22
Organization and Description of
Shares..........................24
SUMMARY
SteinRoe Young Investor Fund (the "Fund") is a series of the
SteinRoe Investment Trust, an open-end diversified management
investment company. The Fund is a "no-load" fund. There are no
sales or redemption charges. (See The Fund and Organization and
Description of Shares.)
Investment Objectives and Policies.
The Fund's investment objective is long-term capital appreciation.
It seeks to achieve its objective by investing primarily in common
stocks and other equity-type securities that SteinRoe believes to
have long-term appreciation potential. The Fund invests primarily
in securities of companies that appeal to or affect the lives of
children or teenagers. It is designed for long-term investors,
particularly children and teenagers.
In addition to the Fund's investment objective and policies, the
Fund also has an educational objective. It seeks to teach
children and teenagers about the Fund, basic economic principles,
and personal finance through a variety of educational materials
prepared and paid for by the Fund.
There can be no guarantee that the Fund will achieve its
investment objective. Please see Investment Policies and
Portfolio Investments and Strategies for further information.
<PAGE> 3
Investment Risks.
The Fund is designed for long-term investors who are willing to
accept the investment risk and volatility of equity-type
securities in general as well as the specific types of equity
securities emphasized by the Fund. By investing in companies
whose products or services appeal to young investors, the Fund
emphasizes various consumer goods sectors. Since the Fund may
invest in foreign securities, investors should understand and
consider carefully the risks involved in foreign investing.
Investing in foreign securities involves certain considerations
involving both risks and opportunities not typically associated
with investing in U.S. securities. Please see Investment
Policies, Portfolio Investments and Strategies, and Risks and
Investment Considerations for further information.
Purchases.
The minimum initial investment for the Fund is $2,500; the minimum
investment for Uniform Gifts/ Transfers to Minors Act accounts is
$1,000. Additional investments must be at least $50. Shares may
be purchased by check, by bank wire, by electronic transfer, or by
exchange from another SteinRoe Fund. For more detailed
information, see How to Purchase Shares.
Redemptions.
For information on redeeming Fund shares, including the special
redemption privileges, see How to Redeem Shares.
Net Asset Value.
The purchase and redemption price of the Fund's shares is its net
asset value per share. The net asset value is determined as of
the close of trading on the New York Stock Exchange. (For more
detailed information, see Net Asset Value.)
Distributions.
Dividends are normally declared and paid annually. Distributions
will be reinvested into your Fund account unless you elect to have
them paid in cash, deposited by electronic transfer into your bank
checking account, or invested in another SteinRoe Fund account.
(See Distributions and Income Taxes and Shareholder Services.)
Management and Fees.
Stein Roe & Farnham Incorporated ("SteinRoe") provides management
and investment advisory services to the Fund. For a description
of SteinRoe and advisory fees, see Management of the Fund.
If you have any additional questions about the Fund, please feel
free to discuss them with a relationship manager by calling 1-800-
338-2550.
<PAGE> 4
FEE TABLE
Shareholder Transaction Expense
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.75%
12b-1 Fees None
Other Expenses (after reimbursement
of expenses) 0.24%
-----
Total Fund Operating Expenses (after
reimbursement of expenses) 0.99%
-----
-----
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
------ -------
$10 $32
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 the Fund. The table is based upon
actual expenses incurred in the last fiscal year. In addition,
SteinRoe has undertaken to reimburse the Fund for expenses in
excess of 0.99% of average net assets through January 31, 1996,
subject to earlier termination by SteinRoe on 30 days' notice.
Absent such expense undertaking, Other Expenses and Total Fund
Operating Expenses would have been 3.83% and 4.58%, respectively.
(Also see Management of the Fund--Fees and Expenses.)
For purposes of the Example above, the figures assume that the
percentage amounts listed for the Fund under Annual Fund Operating
Expenses remain the same in each of the periods, that all income
dividends and capital gain distributions are reinvested in
additional Fund shares, and that, for purposes of management fee
breakpoints, net assets remain at the same level as in the most
recently completed fiscal year.
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 above
is useful in reviewing the Fund's expenses and in providing a
basis for comparison with other
<PAGE> 5
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 the Fund on
a per-share basis for the period shown and has been audited by
Arthur Andersen LLP, independent public accountants. The
auditors' report was unqualified. The table should be read in
conjunction with the Fund's financial statements and notes
thereto. The Fund's annual report, which may be obtained from the
Trust upon request without charge, contains additional performance
information.
Period Ended
Sept. 30, 1994(a)
----------------
Net Asset Value, Beginning of Period $10.00
------
Income from Investment Operations
Net investment income .03
Net realized and unrealized gains on
investments .21
------
Total from investment operations .24
------
Net Asset Value, End of Period $10.24
------
------
Ratio of expenses to average net assets (b) *0.99%
Ratio of net investment income to average
net assets (c) *1.07%
Portfolio turnover rate **12%
Total return **2.40%
Net assets, end of period (000 omitted) $8,176
________________
*Annualized.
**Not annualized.
(a) From commencement of operations on April 29, 1994.
(b) Computed giving effect to the investment adviser's expense
limitation undertaking.
(c) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the investment adviser, this ratio
would have been 4.58% for the period ended September 30, 1994.
THE FUND
SteinRoe Young Investor Fund (the "Fund") is a no-load,
diversified "mutual fund." Mutual funds sell their own shares to
investors and use the money they receive to invest in a portfolio
of securities such as common stocks. A mutual fund allows you to
pool your money with that of other investors in order to obtain
professional investment management. Mutual funds generally make
it possible for you to obtain greater diversification of your
investments and simplify your recordkeeping. The Fund does not
impose commissions or charges when shares are purchased or
redeemed.
<PAGE> 6
The Fund is a series of the SteinRoe Investment Trust (the
"Trust"), an open-end management investment company, which is
authorized to issue shares of beneficial interest in separate
series. Each series represents interests in a separate portfolio
of securities and other assets, with its own investment objectives
and policies.
Stein Roe & Farnham Incorporated ("SteinRoe") provides investment
advisory, administrative, and bookkeeping and accounting services
to the Fund. SteinRoe also manages and provides investment
advisory services for several other no-load mutual funds with
different investment objectives, including equity funds,
international funds, taxable and tax-exempt bond funds, and money
market funds. To obtain prospectuses and other information on any
of those mutual funds, please call 1-800-338-2550.
INVESTMENT POLICIES
The Fund's investment objective is long-term capital appreciation.
It seeks to achieve its objective by investing primarily in common
stocks and other equity-type securities that, in the opinion of
SteinRoe, have long-term appreciation potential.
Under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of companies that, in the
opinion of SteinRoe, directly or through one or more subsidiaries,
affect the lives of children or teenagers. Such companies may
include companies that produce products or services that children
or teenagers use, are aware of, or could potentially have an
interest in.
Although the Fund invests primarily in common stocks and other
equity-type securities (such as preferred stocks, securities
convertible into or exchangeable for common stocks, and warrants
or rights to purchase common stocks), it may invest up to 35% of
its total assets in debt securities. The Fund may invest in
securities of smaller emerging companies as well as securities of
well-seasoned companies of any size. Smaller companies, however,
involve higher risks in that they typically have limited product
lines, markets, and financial or management resources. In
addition, the securities of smaller companies may trade less
frequently and have greater price fluctuation than larger
companies, particularly those operating in countries with
developing markets. The Fund may also employ investment
techniques described elsewhere in this prospectus. (See Risks and
Investment Considerations and Fees and Expenses.)
In addition to the Fund's investment objective and policies, the
Fund
<PAGE> 7
also has an educational objective. The Fund will seek to educate
its shareholders by providing educational materials regarding
personal finance and investing as well as materials on the Fund
and its portfolio holdings.
PORTFOLIO INVESTMENTS AND STRATEGIES
In pursuing its investment objective, the Fund may invest in debt
securities. A debt security is an obligation of a borrower to
make payments of principal and interest to the holder of the
security. To the extent the Fund invests in debt securities, such
holdings will be subject to interest rate risk and credit risk.
Interest rate risk is the risk that the value of a portfolio will
fluctuate in response to changes in interest rates. Generally,
the debt component of a portfolio will tend to decrease in value
when interest rates rise and increase in value when interest rates
fall. Credit risk is the risk that an issuer will be unable to
make principal and interest payments when due. Investments in
debt securities are limited to those that are within the four
highest grades (generally referred to as "investment grade")
assigned by a nationally recognized statistical rating
organization or, if unrated, deemed to be of comparable quality by
SteinRoe. Securities in the fourth highest grade may possess
speculative characteristics. If the rating of a security held by
the Fund is lost or reduced below investment grade, the Fund is
not required to dispose of the security, but SteinRoe will
consider that fact in determining whether the Fund should continue
to hold the security. When SteinRoe considers a temporary
defensive position advisable, the Fund may invest without
limitation in high-quality fixed-income securities, or hold assets
in cash or cash equivalents.
The Fund may invest up to 25% of its total assets in foreign
securities. (See Risks and Investment Considerations.) In
addition to, or in lieu of, such direct investment, a Fund 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
<PAGE> 8
with the purchase of foreign securities, the Fund may contract to
purchase an amount of foreign currency sufficient to pay the
purchase price of the securities at the settlement date; such a
contract involves the risk that the value of the foreign currency
may decline relative to the value of the dollar prior to the
settlement date, which risk is in addition to the risk that the
value of the foreign security purchased may decline.
The Fund may make loans of its portfolio securities to broker-
dealers and banks and enter into reverse repurchase agreements
subject to certain restrictions described in the Statement of
Additional Information. The Fund may invest in securities
purchased on a when-issued or delayed-delivery basis. Although
the payment terms of these securities are established at the time
the Fund enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase,
when their value may have changed. The Fund will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.
Consistent with its objective, the Fund may invest in a broad
array of financial instruments and securities, including
conventional, exchange-traded and non-exchange traded options,
futures contracts, futures options, forward contracts, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, or an interest rate. The Fund does not expect to
invest more than 5% of its net assets in any type of Derivative
except for options, futures contracts, and futures options.
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. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on SteinRoe'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
<PAGE> 9
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.
The Fund may purchase and write both call options and put options
on securities, indexes and foreign currencies, enter into interest
rate, index and foreign currency futures contracts and options on
such futures contracts, and purchase other types of forward or
investment contracts linked to individual securities, indexes, or
other benchmarks in order to achieve its desired investment
objective, provide additional revenue, or to hedge against changes
in security prices, interest rates or currency fluctuations. The
Fund may write a call or put option only if the option is covered.
As the writer of a covered call option, the Fund 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 the Fund
seeks to close out a position. In addition, 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.
INVESTMENT RESTRICTIONS
The Fund will not (i) with respect to 75% of its total assets,
invest more than 5% of its total assets in the securities of any
one issuer (except that this restriction does not apply to
securities of the U.S. Government and repurchase agreements for
such securities, and except the Fund may invest all of its assets
in shares of another investment company having the identical
investment objective); (ii) invest more than 25% of its total
assets (at the time of investment) in the securities of companies
in any one industry; (iii) acquire more than 10% of the
outstanding voting securities of any one issuer; or (iv) borrow
money, except as a temporary measure for extraordinary or
emergency purposes, and then the aggregate borrowings at any one
time (including any reverse repurchase agreements and dollar
rolls) may not exceed 33 1/3% of its total assets (at market).
The Fund will not purchase additional securities when its
borrowings, less proceeds receivable from sales of portfolio
securities, exceed 5% of total assets. The Fund may invest in
<PAGE> 10
repurchase agreements, /1/ provided that it will not invest more than
5% of its net assets in repurchase agreements maturing in more
than seven days, and any other illiquid securities. An investment
in illiquid securities could involve relatively greater risks or
costs to the Fund.
Investment restrictions (i) through (iv) above are fundamental
policies and, as such, can be changed only with the approval of a
"majority of the outstanding voting securities" as defined in the
Investment Company Act of 1940. The investment objective is non-
fundamental and, as such, may be changed by the Board of Trustees
without shareholder approval. Any such change may result in the
Fund having an investment objective different from the objective
the shareholder considered
RISKS AND INVESTMENT CONSIDERATIONS
All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. The Fund is designed
for long-term investors who desire to participate in the stock
market with an emphasis on companies that appeal to young
investors, with more investment risk and volatility than the stock
market in general but with less investment risk and volatility
than aggressive capital appreciation funds. Of course, there can
be no guarantee that the Fund will achieve its objective. The
Fund is also designed to be a fun, educational experience for
young investors and their parents.
The Fund seeks to reduce risk by investing in a diversified
portfolio,
but this does not eliminate all risk. However, the Fund will not
invest more than 25% of the total value of its assets (at the time
of investment) in the securities of companies in any one industry.
By investing in companies whose products or services appeal to
young investors, the Fund emphasizes various consumer goods
sectors.
Although the Fund does not purchase securities with a view to
rapid turnover, there are no limitations on the length of time
portfolio securities must be held. Accordingly, the portfolio
turnover rate may vary significantly from year to year, but is not
expected to exceed 100% under normal market conditions. A high
rate of portfolio turnover may
- ------------------
/1/ A sale of securities to the Fund 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, the
Fund could experience both losses and delays in liquidating its
collateral.appropriate at the time of investment in the Fund. All
of the investment restrictions are set forth in the Statement of
Additional Information.
<PAGE> 11
result in increased transaction expenses and the realization of
capital gains and losses. (See Distributions and Income Taxes.)
The Fund is not intended to be an income-producing investment,
although it may produce income.
Investment in foreign securities may represent a greater degree of
risk (including risk related to exchange rate fluctuations, tax
provisions, exchange and currency controls, and expropriation of
assets) than investment in securities of domestic issuers. Other
risks of foreign investing include less complete financial
information on issuers, 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 non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.
Master/Feeder Option.
Rather than investing in securities directly, the Fund may in the
future seek to achieve its investment objective by pooling its
assets with assets of other mutual funds managed by SteinRoe for
investment in another investment company having the same
investment objective and substantially the same investment
policies and restrictions as the Fund. The purpose of such an
arrangement is to achieve greater operational efficiencies and to
reduce costs. It is expected that any such investment company
would be managed by SteinRoe in substantially the same manner as
the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment, although they will not
be entitled to vote on the action. Such investment would be made
only if the Trustees determine it to be in the best interests of
the Fund and its shareholders.
HOW TO PURCHASE SHARES
You may purchase Fund shares by check, by wire, by electronic
transfer, or by exchange from your account with another SteinRoe
Fund. The initial purchase minimum per Fund account is $2,500;
the minimum for Uniform Gifts/Transfers to Minors Act accounts is
$1,000; the minimum for accounts established under an automatic
investment plan of at least $50 per month (i.e., Regular
Investments or the Automatic Exchange Plan) is $500; and the
minimum per account for SteinRoe IRAs is $500. The initial
purchase minimum is waived for shareholders who participate in the
<PAGE> 12
SteinRoe Counselor [service mark] and SteinRoe Counselor Preferred
[service mark] programs and for clients of SteinRoe. Subsequent
purchases must be at least $50. (See Shareholder Services.)
By Check.
To make an initial purchase of shares of the Fund by check, please
complete and sign the Application and mail it to P.O. Box 804058,
Chicago, Illinois 60680, together with a check made payable to
SteinRoe Funds.
You may make subsequent investments by submitting a check along
with either the stub from your Fund account confirmation statement
or a note indicating the amount of the purchase, your account
number, and the name in which your account is registered. Each
individual check submitted for purchase must be at least $50, and
the Trust generally will not accept cash, drafts, third party
checks, or checks drawn on banks outside of the United States.
Should an
<PAGE> 13
order to purchase shares of the Fund be cancelled because your
check does not clear, you will be responsible for any resulting
loss incurred by the Fund.
By Wire.
You may also pay for shares by instructing your bank to wire
Federal funds (monies of member banks within the Federal Reserve
System) to the Fund's custodian bank. Your bank may charge you a
fee for sending the wire. If you are opening a new account by
wire transfer, you must first telephone the Trust to request an
account number and furnish your social security or other tax
identification number. Neither the Fund nor the Trust will be
responsible for the consequences of delays, including delays in
the banking or Federal Reserve wire systems. Your bank must
include the full name(s) in which your account is registered and
your Fund account number, and should address its wire as follows:
State Street Bank and Trust Company
Boston, Massachusetts
Attention: Custody
Fund No. 7124; SteinRoe Young Investor Fund
Account of (exact name(s) in registration)
Shareholder Account No. ___________
By Electronic Transfer.
You may also make subsequent investments by an electronic transfer
of funds from your bank checking account. Electronic transfer
allows you to make purchases at your request ("Special
Investments") by calling 1-800-338-2550 or at pre-scheduled
intervals ("Regular Investments"). (See Shareholder Services.)
Electronic transfer purchases are subject to a $50 minimum and a
$100,000 maximum. You may not open a new account through
electronic transfer. Should an order to purchase shares of the
Fund be cancelled because your electronic transfer does not clear,
you will be responsible for any resulting loss incurred by the
Fund.
By Exchange.
You may purchase shares by exchange of shares from another
SteinRoe Fund account either by phone (if the Telephone Exchange
Privilege has been established on the account from which the
exchange is being made), by mail, in person, or automatically at
regular intervals (if you have elected Automatic Exchanges).
Restrictions apply; please review the information on the Exchange
Privilege under How to Redeem Shares--By Exchange.
Purchase Price and Effective Date.
Each purchase of the Fund's shares is made at the Fund's net asset
value (see Net Asset Value) next determined after receipt of
payment as follows:
A purchase by check or wire transfer is made at the net asset
value next determined after receipt by the Fund of the check or
wire transfer of funds in payment of the purchase.
A purchase by electronic transfer is made at the net asset value
next determined after the Fund receives the electronic transfer
from your bank. A Special Electronic Transfer Investment order
received by telephone on a business day before 2:00 p.m., Chicago
time, is effective on the next business day.
Conditions of Purchase.
Each purchase order for the Fund must be accepted by an authorized
officer of the Trust in Chicago and is not binding until accepted
and entered on the books of the Fund. Once your purchase order
has been accepted, you may not cancel or revoke it; however, you
may redeem the shares. The Trust reserves the right not to accept
any purchase order that it determines not to be in the best
interest of the Trust or of the Fund's shareholders. The Trust
also reserves the right to waive or lower its investment minimums
for any reason.
Purchases Through Third Parties.
You may purchase (or redeem) shares through investment dealers,
banks, or other financial institutions. These institutions may
charge for their services or place limitations on the extent to
which you may use the services offered by the Trust. There are no
charges or limitations imposed by the Trust (other than those
described in this prospectus) if shares are purchased (or
redeemed) directly from the Trust.
Some financial institutions that maintain nominee accounts with
the Fund for their clients for whom they hold Fund shares charge
an annual fee of up to 0.25% of the average net assets held in
such accounts for accounting, servicing, and distribution services
<PAGE> 14
they provide with respect to the underlying Fund shares. The Fund
may pay a portion of those fees not to exceed the fees and
expenses the Fund would pay to its transfer agent if the shares
held in nominee name were registered on the Fund's books in the
individual names of the beneficial owners of such shares. The
balance of such fees are paid by SteinRoe.
HOW TO REDEEM SHARES
By Written Request.
You may redeem all or a portion of your shares of the Fund by
submitting a written request in "good order" to the Trust at P.O.
Box 804058, Chicago, Illinois 60680. A redemption request will be
considered to have been received in good order if the following
conditions are satisfied:
(1) the request must be in writing, indicate the number of shares
or dollar amount to be redeemed, and identify the shareholder's
account number;
(2) the request must be signed by the shareholder(s) exactly as
the shares are registered;
(3) the signatures on the written redemption request must be
guaranteed (a signature guarantee is not a notarization, but is a
widely accepted way to protect you and the Fund by verifying your
signature);
(4) other supporting legal documents may be required from
organizations, executors, administrators, trustees, or others
acting on accounts not registered in their names.
By Exchange.
You may redeem all or any portion of your Fund shares and use the
proceeds to purchase shares of any other SteinRoe Fund offered for
sale in your state if your signed, properly completed Application
is on file.
An exchange transaction is a sale and purchase of shares for
Federal income tax purposes and may result in capital gain or
loss. Before exercising the Exchange Privilege, you should obtain
the prospectus for the SteinRoe Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
Fund account from which the exchange is made and the amount you
exchange must meet any applicable minimum investment of the
SteinRoe Fund being purchased. An exchange may be made by
following the redemption procedure described above under By
Written Request and indicating the SteinRoe Fund to be purchased,
except that a signature guarantee normally is not required. (See
also the discussion below of the Telephone Exchange Privilege and
Automatic Exchanges.)
<PAGE> 15
Special Redemption Privileges.
The Telephone Exchange Privilege and the Telephone Redemption by
Check Privilege will be established automatically for you when you
open your account unless you decline these Privileges on your
Application. Other Privileges must be specifically elected. If
you do not want the Telephone Exchange and Redemption Privileges,
check the box(es) under the section "Telephone Redemption Options"
when completing your Application. In addition, a signature
guarantee may be required to establish a Privilege after you open
your account.Telephone Exchange Privilege. You may use the
Telephone Exchange Privilege to exchange an amount of $1,000 or
more from your account by calling 1-800-338-2550 or by sending a
telegram; new accounts opened by exchange are subject to the
$2,500 initial purchase minimum. Generally, you will be limited
to four Telephone Exchange round-trips per year and the Fund may
refuse requests for Telephone Exchanges in excess of four round-
trips (a round-trip being the exchange out of the Fund into
another SteinRoe Fund, and then back to the Fund). Also, the
Trust's general redemption policies apply to redemptions of shares
by Telephone Exchange. (See General Redemption Policies.)
The Trust reserves the right at any time without prior notice to
suspend or terminate the use of the Telephone Exchange Privilege
by any person or class of persons. The Trust believes that use of
the Telephone Exchange Privilege by investors utilizing market-
timing strategies adversely affects the Fund. Therefore, the
Trust generally will not honor requests for Telephone Exchanges by
shareholders identified by the Trust as "market-timers."
Moreover, the Trust reserves the right at any time without prior
notice to suspend, limit, modify, or terminate the Telephone
Exchange Privilege in its entirety. Because such a step would be
taken only if the Board of Trustees believes it would be in the
best interests of the Fund, the Trust expects that it would
provide shareholders with prior written notice of any such action
unless the resulting delay in the suspension, limitation,
modification, or termination of the Telephone Exchange Privilege
would adversely affect the Fund. If the Trust were to suspend,
limit, modify, or terminate the Telephone Exchange Privilege, a
shareholder expecting to make a Telephone Exchange might find that
an exchange could not be processed or that there might be a delay
in the implementation of the exchange. (See How to Redeem Shares-
- -
<PAGE> 16
By Exchange.) During periods of volatile economic and market
conditions, you may have difficulty placing your exchange by
telephone.
Automatic Exchanges. You may use the Automatic Exchange Privilege
to automatically redeem a fixed amount from your Fund account for
investment in another SteinRoe Fund account on a regular basis.
Telephone Redemption by Check Privilege. You may use the
Telephone Redemption by Check Privilege to redeem an amount of
$1,000 or more from your account by calling 1-800-338-2550. The
proceeds will be sent by check to your registered address.
Electronic Transfer Privilege. You may redeem shares by calling
1-800-338-2550 and requesting an electronic transfer ("Special
Redemption") of the proceeds to a checking account previously
designated by you at a bank that is a member of the Automated
Clearing House or at scheduled intervals ("Automatic Redemptions"-
- -see Shareholder Services). Electronic transfers are subject to a
$50 minimum and a $100,000 maximum. A Special Redemption request
received by telephone after 2:00 p.m., Chicago time, is deemed
received on the next business day.
General Redemption Policies.
You may not cancel or revoke your redemption order once
instructions have been received and accepted. The Trust cannot
accept a redemption request that specifies a particular date or
price for redemption or any special conditions. Please telephone
the Trust if you have any questions about requirements for a
redemption before submitting your request. The Trust reserves the
right to require a properly completed Application before making
payment for shares redeemed.
The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received. (See Net Asset Value.) Because the
redemption price you receive depends upon the Fund's net asset
value per share at the time of redemption, it may be more or less
than the price you originally paid for the shares and may result
in a realized capital gain or loss.
The Trust will generally mail payment for shares redeemed within
seven days after proper instructions are received. If you attempt
to redeem shares within 15 days after they have been purchased by
check or electronic transfer, the Trust may delay payment of the
redemption proceeds to you until it can verify that payment for
the purchase of those shares has been (or will be) collected. To
reduce such delays, the Trust recommends that your
<PAGE> 17
purchase be made by Federal funds wire through your bank.
Generally, you may not use the Exchange Privilege or any Special
Redemption Privilege to redeem shares purchased by check (other
than certified or cashiers' checks) or electronic transfer until
15 days after their date of purchase.
The Trust reserves the right at any time without prior notice to
suspend, limit, modify, or terminate any Privilege or its use in
any manner by any person or class.
Neither the Trust, its transfer agent, nor their respective
officers, trustees, directors, employees, or agents will be
responsible for the authenticity of instructions provided under
the Privileges, nor for any loss, liability, cost or expense for
acting upon instructions furnished thereunder if they reasonably
believe that such instructions are genuine. The Fund employs
procedures reasonably designed to confirm that instructions
communicated by telephone under any Special Redemption Privilege
or the Special Electronic Transfer Redemption Privilege are
genuine. Use of any Special Redemption Privilege or the Special
Electronic Transfer Redemption Privilege authorizes the Fund and
its transfer agent to tape-record all instructions to redeem. In
addition, callers are asked to identify the account number and
registration, and may be required to provide other forms of
identification. Written confirmations of transactions are mailed
promptly to the registered address; a legend on the confirmation
requests the shareholder to review the transactions and inform the
Fund immediately if there is a problem. If the Fund does not
follow reasonable procedures for protecting shareholders against
loss on telephone transactions, it may be liable for any losses
due to unauthorized or fraudulent instructions.
The Trust reserves the right to redeem shares in any account and
send the proceeds to the owner if the shares in the account do not
have a value of at least $1,000. A shareholder would be notified
that his account is below the minimum and allowed 30 days to
increase the account before the redemption is processed.
Shares in any account you maintain with the Fund or any of the
other SteinRoe Funds may be redeemed to the extent necessary to
reimburse any SteinRoe Fund for any loss it sustains that is
caused by you (such as losses from uncollected checks and
electronic transfers for the purchase of shares or any SteinRoe
Fund liability under the Internal Revenue Code provisions on
backup withholding).
<PAGE> 18
SHAREHOLDER SERVICES
Reporting to Shareholders.
You will receive a confirmation statement reflecting each of your
purchases and redemptions of shares of the Fund. Shares purchased
by reinvestment of dividends, by cross-reinvestment of dividends
from another Fund, or pursuant to an automatic investment plan
will be confirmed to you quarterly. The Trust will send you
quarterly materials on the Fund and its portfolio holdings, will
send you semiannual and annual reports, and will provide you
annually with tax information.
Funds-on-Call [registered mark] 24-Hour Information Service.
To access the SteinRoe Funds-on-Call [registered mark] automated
telephone service, just call 1-800-338-2550 on any touch-tone
telephone and follow the recorded instructions. Funds-on-Call
[registered mark] provides yields, prices, latest dividends,
account balances, last transaction, and other information 24 hours
a day, seven days a week.
Funds-on-Call [registered mark] Automated Telephone Transactions.
If you have established the Funds-on-Call [registered mark]
transaction privilege (Funds-on-Call [registered mark] Application
will be required), you may initiate Special Investments and
Redemptions, Telephone Exchanges, and Telephone Redemptions by
Check 24 hours a day, seven days a week by calling 1-800-338-2550
on a touch-tone telephone. These transactions are subject to the
terms and conditions of the individual privileges. (See How to
Purchase Shares and How to Redeem Shares.)
SteinRoe Counselor [service mark] Program.
The SteinRoe Counselor [service mark] and SteinRoe Counselor
Preferred [service mark] programs are professional investment
advisory services available to shareholders. These programs are
designed to provide investment guidance in helping investors to
select a portfolio of SteinRoe Funds. The SteinRoe Counselor
Preferred [service mark] program, which automatically adjusts
client portfolios among the SteinRoe Funds, has a fee of up to 1%
of assets.
Tax-Sheltered Retirement Plan.
Booklets describing the Individual Retirement Account ("IRA")
program and special forms necessary for establishing it are
available on request. IRAs are available for employed persons and
their non-employed spouses. You may use all of the SteinRoe
Funds, except those investing primarily in tax-exempt securities,
in the plan. Please read the prospectus for each fund in which
you plan to invest before making your investment.
Special Services.
The following special services are available to shareholders.
Please call 1-800-338-2550 or write the Trust for additional
information and forms.
<PAGE> 19
Dividend Purchase Option--to diversify your Fund investments by
having distributions from one Fund account automatically invested
in another SteinRoe Fund account. Before establishing this
option, you should obtain and read carefully the prospectus of the
SteinRoe Fund into which you wish to have your distributions
invested. The account from which distributions are made must be
of sufficient size that each distribution will usually be at least
$25.
Automatic Dividend Deposit (electronic transfer)--to have income
dividends and capital gain distributions deposited directly into
your bank checking account.
Telephone Redemption by Check Privilege and Telephone Exchange
Privilege--established automatically when you open your account
unless you decline them on your Application ($1,000 minimum).
(See How to Redeem Shares--Special Redemption Privileges.)
Special Redemption Option (electronic transfer)--to redeem shares
at any time and have the proceeds deposited directly to your bank
checking account ($50 minimum; $100,000 maximum).
Regular Investments (electronic transfer)--to purchase Fund shares
at regular intervals directly from your bank checking account ($50
minimum; $100,000 maximum).
Special Investments (electronic transfer)--to purchase Fund shares
by telephone and pay for them by electronic transfer of funds from
your checking account ($50 minimum; $100,000 maximum).
Automatic Exchange Plan--to automatically redeem a fixed dollar
amount from your Fund account and invest it in another SteinRoe
Fund account on a regular basis ($50 minimum; $100,000 maximum).
Automatic Redemptions (electronic transfer)--to have a fixed
dollar amount redeemed and sent at regular intervals directly to
your bank checking account ($50 minimum; $100,000 maximum).
Systematic Withdrawals--to have a fixed dollar amount, declining
balance, or fixed percentage of your account redeemed and sent at
regular intervals by check to you or another payee.
NET ASSET VALUE
The purchase and redemption price of the Fund's shares is its net
asset value per share. The net asset value of a share of the Fund
is determined as of the close of trading on the New York Stock
Exchange ("NYSE") (currently 3:00 p.m., Chicago time) by dividing
the difference between the values of the Fund's assets and
liabilities by the number of shares outstanding. Net asset value
will not be determined on days when
<PAGE> 20
the NYSE is closed unless, in the judgment of the Board of
Trustees, the net asset value of the Fund should be determined on
any such day, in which case the determination will be made at 3:00
p.m., Chicago time.
Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation is available from NASDAQ is valued at that price.
All other over-the-counter securities for which reliable
quotations are available are valued at the latest bid quotation.
DISTRIBUTIONS AND INCOME TAXES
Distributions.
Income dividends are normally declared and paid annually. The
Fund intends to distribute by the end of each calendar year at
least 98% of any net capital gains realized from the sale of
securities during the twelve-month period ended October 31 in that
year. The Fund intends to distribute any undistributed net
investment income and net realized capital gains in the following
year.
All of your income dividends and capital gain distributions will
be reinvested in additional shares unless you elect to have
distributions either (1) paid by check, (2) deposited by
electronic transfer into your bank checking account, (3) applied
to purchase shares in your account with another SteinRoe Fund, or
(4) applied to purchase shares in a SteinRoe Fund account of
another person. (See Shareholder Services.) Reinvestment into
the same Fund account normally occurs one business day after the
record date. Investment of distributions into another SteinRoe
Fund account occurs on the payable date. If you choose to receive
your distributions in cash, your distribution check normally will
be mailed approximately 15 days after the record date. The Trust
reserves the right to reinvest the proceeds and future
distributions in additional Fund shares if checks mailed to you
for distributions are returned as undeliverable or are not
presented for payment within six months.
Income Taxes.
Your distributions will be taxable to you, under income tax law,
whether received in cash or reinvested in additional shares. For
Federal income tax purposes, any distribution that is paid in
January but was declared in the prior calendar year is deemed paid
in the prior calendar year.
You will be subject to Federal income tax at ordinary rates on
income dividends and distributions of net short-term capital
<PAGE> 21
gain. Distributions of net long-term capital gain will be taxable
to you as long-term capital gain regardless of the length of time
you have held your shares.
You will be advised annually as to the source of distributions for
tax purposes. If you are not subject to tax on your income, you
may not be required to pay tax on these amounts.
If you redeem shares of the Fund held for six months or less, any
loss on the sale of those shares will be a long-term capital loss
to the extent of any distributions of long-term capital gain you
have received with respect to those shares.
For Federal income tax purposes, the Fund is treated as a separate
taxable entity distinct from the other series of the Trust.
This discussion of taxation is not intended to be a full
discussion of income tax laws and their effect on shareholders.
You may wish to consult your own tax advisor. The foregoing
information applies to U.S. shareholders. Foreign shareholders
should consult their tax advisors as to the tax consequences of
ownership of Fund shares.
Backup Withholding.
If (a) you fail to (i) furnish your properly certified social
security or other tax identification number or (ii) certify that
your tax identification number is correct or that you are not
subject to backup withholding due to the underreporting of certain
income, or (b) the Internal Revenue Service informs the Trust that
your tax identification number is incorrect, the Trust may be
required to withhold Federal income tax ("backup withholding")
from certain payments (including redemption proceeds) to you.
These certifications are contained in the Application that you
should complete and return when you open an account. The Fund
must promptly pay to the IRS all amounts withheld. Therefore, it
is usually not possible for the Fund to reimburse you for amounts
withheld. However, you may claim the amount withheld as a credit
on your Federal income tax return.
INVESTMENT RETURN
The total return from an investment in the Fund is measured by the
distributions received (assuming reinvestment of dividends and
capital gains) 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
<PAGE> 22
that would equate a hypothetical $1,000 investment to the ending
redeemable value.
Comparison of the Fund's total return with alternative investments
should consider differences between the Fund and the alternative
investments, the periods and methods used in calculation of the
return being compared, and the impact of taxes on alternative
investments. Of course, past performance is not necessarily
indicative of future results.
MANAGEMENT OF THE FUND
Trustees and Adviser.
The Board of Trustees of the Trust has overall management
responsibility for the Trust and the Fund. See the Statement of
Additional Information for the names of and additional information
about the trustees and officers. Stein Roe & Farnham
Incorporated, One South Wacker Drive, Chicago, Illinois 60606, is
responsible for managing the investment portfolio and the business
affairs of the Fund and the Trust, subject to the direction of the
Board. SteinRoe is registered as an investment adviser under the
Investment Advisers Act of 1940.
SteinRoe (and its predecessor) has advised and managed mutual
funds since 1949. SteinRoe is a wholly-owned indirect subsidiary
of Liberty Financial Companies, Inc., which in turn is a wholly-
owned indirect subsidiary of Liberty Mutual Insurance Company.
Portfolio Managers.
The Fund is managed by Kenneth W. Corba and Erik P. Gustafson.
Mr. Corba is a chartered financial analyst who joined SteinRoe in
1984 and is a senior vice president of SteinRoe. He received his
B.A.and M.B.A. degrees from the University of Michigan in 1975 and
1984, respectively. Mr. Gustafson is a vice president of the
Adviser, having joined it in 1992. From 1989 to 1992 he was an
attorney with Fowler, White, Burnett, Hurley, Banick & Strickroot.
He holds a B.A. from the University of Virginia (1985) and M.B.A.
and J.D. degrees (1989) from Florida State University.
Fees and Expenses.
In return for its services, SteinRoe receives a monthly fee from
the Fund, computed and accrued daily, based on its average net
assets. The annualized fee is 0.75 of 1% up to $250 million, 0.70
of 1% of the next $250 million of average net assets, and 0.60 of
1% thereafter. This rate of fee is higher than that paid by many
mutual funds. Pursuant to the expense undertaking described
below, SteinRoe reimbursed the Fund $82,109 for the period from
April 29, 1994 (commencement of operations) to September 30, 1994,
resulting in a net payment by SteinRoe of $64,954.
<PAGE> 23
Because the Fund also has as an objective being an educational
experience for investors, the Fund's non-advisory expenses may be
higher than other mutual funds because of regular educational and
other reporting to shareholders.
Under a separate agreement with the Trust, SteinRoe provides
certain accounting and bookkeeping services to the Fund, including
computation of its net asset value and calculation of its net
income and capital gains and losses on disposition of Fund assets.
SteinRoe has undertaken to reimburse the Fund to the extent that
its annual expenses exceed 0.99 of 1% of its average net assets
through January 31, 1996, subject to earlier termination by
SteinRoe on 30 days' notice.
Portfolio Transactions.
SteinRoe places the orders for the purchase and sale of portfolio
securities and options and futures transactions for the Fund. In
doing so, SteinRoe 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 indirect subsidiary of Liberty
Financial Companies, Inc., which in turn is a wholly-owned
indirect subsidiary of Liberty Mutual Insurance Company, is the
agent of the Trust for the transfer of shares, disbursement of
dividends, and maintenance of shareholder accounting records.
Distributor.
The shares of the Fund are offered for sale through Liberty
Securities Corporation ("Distributor") without any sales
commissions or charges to the Fund or to its shareholders. The
Distributor is a wholly-owned indirect subsidiary of Liberty
Mutual. The business address of the Distributor is 600 Atlantic
Avenue, Boston, Massachusetts 02210; however, all Fund
correspondence (including purchase and redemption orders) should
be mailed to the Trust at P.O. Box 804058, Chicago, Illinois
60680. All distribution and promotional expenses are paid by
SteinRoe, including payments to the Distributor for sales of Fund
shares.
Custodian.
State Street Bank and Trust Company (the "Bank"), 225 Franklin
Street, Boston, Massachusetts 02101, is the custodian for the
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.)
<PAGE> 24
ORGANIZATION AND DESCRIPTION OF SHARES
The Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
January 8, 1987, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either the
Trust's shareholders or its trustees. The Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, eight series are authorized and
outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as the Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of the trust. The
Declaration of Trust provides that persons extending credit to,
contracting with, or having any claim against, the Trust or any
particular series shall look only to the assets of the Trust or of
the respective series for payment under such credit, contract or
claim, and that the shareholders, Trustees and officers of the
Trust shall have no personal liability therefor. The Declaration
of Trust requires that notice of such disclaimer of liability be
given in each contract, instrument or undertaking executed or made
on behalf of the Trust. The Declaration of Trust provides for
indemnification of any shareholder against any loss and expense
arising from personal liability solely by reason of being or
having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
believed to be remote, because it would be limited to
circumstances in which the disclaimer was inoperative and the
Trust was unable to meet its obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of the Trust is
also believed to be remote, because it would be limited to claims
to which the disclaimer did not apply and to circumstances in
which the other series was unable to meet its obligations.
<PAGE> 25
[STEINROE MUTUAL FUNDS LOGO]
The SteinRoe Funds
SteinRoe Government Reserves
SteinRoe Cash Reserves
SteinRoe Limited Maturity Income Fund
SteinRoe Government Income Fund
SteinRoe Intermediate Bond Fund
SteinRoe Income Fund
SteinRoe Municipal Money Market Fund
SteinRoe Intermediate Municipals
SteinRoe Managed Municipals
SteinRoe High-Yield Municipals
SteinRoe Total Return Fund
SteinRoe Prime Equities
SteinRoe Growth Stock Fund
SteinRoe Capital Opportunities Fund
SteinRoe Special Fund
SteinRoe International Fund
SteinRoe Young Investor Fund
SteinRoe Special Venture Fund
P.O. Box 804058
Chicago, Illinois 60680
In Chicago, visit our Fund Center at One South Wacker Drive, 32nd
Floor
Liberty Securities Corporation, Distributor
08011
