SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Stein Roe Investment Trust
(Name of Registrant as Specified In Its Charter)
______________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-
6(i)(2), or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
_______________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined).
______________________________________________________________
(4) Proposed maximum aggregate value of transaction:
______________________________________________________________
(5) Total fee paid:
_______________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2 ) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
____________________________________________________
<PAGE> 1
Preliminary copy--
NOTICE OF MEETING OF SHAREHOLDERS--JUNE 18, 1996
STEIN ROE INVESTMENT TRUST STEIN ROE INCOME TRUST
Stein Roe Growth & Income Fund Stein Roe Income Fund
Stein Roe International Fund Stein Roe Government Income Fund
Stein Roe Young Investor Fund Stein Roe Intermediate Bond Fund
Stein Roe Special Venture Fund Stein Roe Cash Reserves Fund
Stein Roe Balanced Fund Stein Roe Government Reserves Fund
(formerly named Stein Roe Total Stein Roe Limited Maturity Income
Return Fund) Fund
Stein Roe Growth Stock Fund
Stein Roe Capital Opportunities Fund
Stein Roe Special Fund
STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund
Stein Roe Managed Municipals Fund
- - This tells you when and where the meeting will be held and what
matters will be voted on.
A meeting of the shareholders of each Fund named above will be
held on June 18, 1996, at 10:00 a.m. Chicago time at the office of
the Funds, Suite 3300, One South Wacker Drive, Chicago, Illinois
60606, for the following purposes:
1. (a) For shareholders of each Fund: To elect a Board of
Trustees.
(b) For shareholders of Stein Roe Municipal Money Market Fund
only: To authorize the Fund to cast votes for the election
of a Board of Trustees of SR&F Base Trust.
2. (a) For shareholders of each Fund: To amend the Fund's
fundamental investment restriction regarding borrowing.
(b) For shareholders of Stein Roe Municipal Money Market Fund
only: To authorize the Fund to vote for approval of a
similar amendment to the fundamental restrictions of SR&F
Municipal Money Market Portfolio.
3. (a) For shareholders of each Fund: To amend the Fund's
fundamental investment restriction regarding lending.
(b) For shareholders of Stein Roe Municipal Money Market Fund
only: To authorize the Fund to vote for approval of a
similar amendment to the fundamental restrictions of SR&F
Municipal Money Market Portfolio.
4. For shareholders of each of Stein Roe International Fund, Stein
Roe Special Venture Fund, Stein Roe Intermediate Municipals Fund,
Stein Roe High-Yield Municipals Fund, Stein Roe Managed Municipals
Fund, and each Fund of Stein Roe Income Trust only: To approve or
disapprove the following agreements relating to the Fund between
the Trust and Stein Roe & Farnham Incorporated (the "Adviser")
that would replace the Fund's present Investment Advisory
Agreement:
(a) an Administrative Agreement; and
(b) a Management Agreement.
<PAGE> 2
5. For shareholders of each of Stein Roe International Fund, Stein
Roe Special Venture Fund, Stein Roe Intermediate Municipals Fund,
Stein Roe High-Yield Municipals Fund, Stein Roe Managed Municipals
Fund, and each Fund of Stein Roe Income Trust only: To approve or
disapprove a Management Agreement between SR&F Base Trust and the
Adviser that would replace the proposed Management Agreement
between the Trust and the Adviser if and when the Fund converted
to a master/feeder fund structure (this structure would permit the
Fund to pool its assets with other funds that have the same
investment objective, with the combined assets being managed by
the Adviser).
6. To act on such other business as may properly come before the
meeting.
THE BOARD OF TRUSTEES OF EACH TRUST STRONGLY RECOMMENDS THAT YOU
VOTE IN FAVOR OF EACH PROPOSAL. PLEASE MARK, DATE, SIGN AND MAIL
THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED SO YOUR VOTE MAY BE
CAST AT THE MEETING.
BY THE TRUSTEES: Timothy K. Armour Francis W. Morley
Kenneth L. Block Charles R. Nelson
William W. Boyd Gordon R. Worley
Lindsay Cook
May 1, 1996
<PAGE> 3
PROXY STATEMENT
- - THIS DOCUMENT GIVES YOU INFORMATION YOU NEED IN ORDER TO VOTE ON
THE MATTERS COMING BEFORE THE MEETING. IF YOU HAVE ANY QUESTIONS,
PLEASE CALL US AT OUR TOLL-FREE NUMBER, 800-338-2550.
- - WHO IS ASKING FOR MY VOTE?
The trustees of Stein Roe Investment Trust ("Investment Trust"),
Stein Roe Income Trust ("Income Trust"), and Stein Roe Municipal
Trust ("Municipal Trust") (referred to collectively as the
"Trusts"), who are responsible for overseeing each of the Funds
that is a series of the respective Trusts, have asked that you
vote on several matters. The vote will be formally taken at a
June 18 meeting of shareholders. You may vote in person at that
meeting or--as most shareholders do--return the attached proxy
card, indicating your vote, in advance of the meeting.
Rather than investing directly in portfolio securities, Stein Roe
Municipal Money Market Fund is a feeder fund (see "Master
Fund/Feeder Fund Structure" on page 3) that invests all of its
assets in the SR&F Municipal Money Market Portfolio (the
"Portfolio"), a series of SR&F Base Trust ("Base Trust"). The
Fund, as a Portfolio investor, has been requested by Base Trust to
vote on the election of trustees of Base Trust and on changes in
the Portfolio's fundamental restrictions that are identical to
those being proposed for the Fund. Therefore, the Fund is also
soliciting proxies from its shareholders on these matters relating
to Base Trust.
- - WHO IS ELIGIBLE TO VOTE?
Shareholders of record of each Fund at the close of business on
April 17, 1996, are entitled to notice of, and to vote at, the
meeting. Each share of a Fund is entitled to a number of votes on
any matter relating to that Fund that comes before the meeting
equal to the dollar net asset value of the share as of the record
date for the meeting. Each Fund's outstanding shares and its net
asset value per share on the record date were:
No. of Net Asset
Shares Value Per
Fund Outstanding Share
- ----------------------------------- ----------- ---------
Stein Roe Growth & Income Fund
Stein Roe International Fund
Stein Roe Young Investor Fund
Stein Roe Special Venture Fund
Stein Roe Balanced Fund
Stein Roe Growth Stock Fund
Stein Roe Capital Opportunities Fund
Stein Roe Special Fund
Stein Roe Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Reserves Fund
Stein Roe Limited Maturity Income Fund
Stein Roe Intermediate Municipals Fund
<PAGE> 4
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund
Stein Roe Managed Municipals Fund
If you are a shareholder of more than one Fund, you will receive a
separate proxy for each Fund, and you should complete and return
each proxy you receive. Your completed and signed proxy will be
voted in accordance with your instructions. If you sign the
proxy, but do not fill in a vote, your shares will be voted in
accordance with the trustees' recommendations.
- - WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON?
The following table shows what proposals are to be voted on by the
shareholders of the respective Funds:
FUND WHOSE SHAREHOLDERS
ARE ENTITLED TO VOTE PROPOSAL
- ---------------------------- ----------------------------------
Each Fund............... .......1(a) Election of trustees
Municipal Money Market Fund... .1(b) Election of Trustees of Base
Trust
Each Fund ................... ..2(a) Restriction on borrowing
Municipal Money Market Fund.... 2(b) Authorize similar changes to
Base Trust
Each Fund.................. ....3(a) Restriction on lending
Municipal Money Market Fund .. 3(b) Authorize similar changes to
Base Trust
International Fund, Young Investor
Fund, Income Fund, Government
Income Fund, Intermediate Bond
Fund, Cash Reserves Fund,
Government Reserves Fund,
Limited Maturity Income Fund,
Intermediate Municipals Fund,
High-Yield Municipals Fund,
Managed Municipals Fund .........4-5 Management and advisory
agreements with the Adviser;
management agreement with
Base Trust
- - HOW CAN I GET MORE INFORMATION ABOUT THE FUNDS?
A copy of each Fund's annual report has previously been mailed to
shareholders. IF YOU WOULD LIKE TO HAVE COPIES OF A FUND'S MOST
RECENT ANNUAL AND SEMIANNUAL REPORTS SENT TO YOU FREE OF CHARGE,
PLEASE CALL US TOLL-FREE AT 800-338-2550 OR WRITE TO THE STEIN ROE
FUNDS AT P.O. BOX 804058, CHICAGO, ILLINOIS 60680.
- - HOW DO THE TRUSTEES RECOMMEND THAT I VOTE?
The trustees recommend that you vote shares of each Fund that you
own:
1. FOR the election of all nominees as trustees;
2. FOR the amendments to investment restrictions;
<PAGE> 5
3. FOR approval of the management and administrative agreements
between the Trust and Stein Roe & Farnham Incorporated (the
"Adviser") and the management agreement between the Adviser and
SR&F Base Trust.
1. ELECTION OF TRUSTEES
Pursuant to the Trusts' By-Laws, three of the current trustees of
each Trust are scheduled to retire from the Board by December 31,
1997. In order to facilitate the transition of Board
responsibilities, it is proposed that the Board be expanded from
seven to nine members. The Nominating Committee has proposed a
slate including seven nominees who are currently trustees and
two nominees who are standing for election for the first time.
In addition to voting for trustees of Municipal Trust,
shareholders of Stein Roe Municipal Money Market Fund are voting
to direct the Fund to cast votes for or against election of an
identical slate for the Board of Trustees of Base Trust.
Each of the nine candidates nominated for election will serve as a
trustee of each Trust until the next meeting of shareholders of
the Trust called for the purpose of electing trustees and until a
successor is elected and qualified or until death, retirement,
resignation, or removal. The persons named in the enclosed proxy
intend to vote at the meeting in favor of the election of the
nominees named below as the trustees of each Trust. All nominees,
except Mr. Hacker and Mr. Theobald, are currently trustees of each
Trust.
A shareholder using the enclosed proxy may vote for all or any of
the nominees or withhold his or her vote from all or any of such
nominees. If the proxy is properly executed but unmarked, it will
be voted in favor of all nominees. If, for any reason, any
nominee shall become unavailable for election, the proxy holders
may, but will not be bound to, vote for a substitute nominee.
- - WHO ARE THE TRUSTEES AND NOMINEES?
TIMOTHY K. ARMOUR. President, Mutual Funds division, and
Director, the Adviser, since June, 1992; Senior Vice President and
Director of Marketing, Citibank, Illinois, 1989 to 1992. Age 47.
Member of the Executive Committee, Nominating Committee, and
Pricing Committee of each Trust.*
KENNETH L. BLOCK. Chairman Emeritus, A. T. Kearney, Inc.
(international management consultants). Age 75. Member of the
Audit Committee of each Trust.
WILLIAM W. BOYD. Chairman and Director, Sterling Plumbing Group,
Inc. (manufacturer of plumbing products) since 1992; President and
Chief Executive Officer prior thereto. Also a director of
Cummins-Allison Corp. (manufacturer of currency counting
equipment), Kohler Company (manufacturer of plumbing products),
and Market Facts, Inc. (market research); and chairman of the
Board of Trustees, Elmhurst College. Age 69. Member of the Audit
Committee and Nominating Committee of each Trust.
<PAGE> 6
LINDSAY COOK. Senior Vice President, Liberty Financial Companies,
Inc. (the indirect parent of the Adviser). Also a Vice President
of Liberty Securities Corporation, the Funds' distributor. Age
44.*
DOUGLAS A. HACKER. Senior Vice President and Chief Financial
Officer, United Airlines, since July, 1994; Senior Vice President-
- -Finance, United Airlines, February, 1993 to July, 1994; Vice
President--Corporate & Fleet Planning, American Airlines, 1991 to
February, 1993. Also a Director of the Steppenwolf Theatre
Company and a Trustee of Providence-St. Mel School. Age 40.
FRANCIS W. MORLEY. Chairman, Employer Plan Administrators and
Consultants Co. (designer, administrator, and communicator of
employee benefit plans). Age 75. Member of the Audit Committee
of each Trust and of the Executive Committee and Pricing Committee
of Income Trust and Municipal Trust.
CHARLES R. NELSON. Van Voorhis Professor of Political Economy,
University of Washington. Also serves as a consultant on economic
and statistical matters. Age 53. Member of the Audit Committee
and Nominating Committee of each Trust.
THOMAS C. THEOBALD. Managing Partner, William Blair Capital
Partners (private equity fund) since 1994; Chief Executive Officer
and Chairman of the Board of Directors of Continental Bank
Corporation, 1987-1994. Also a director of following public
companies: Xerox Corporation, Anixter International (distributes
network support equipment), Enron Global Power & Pipelines (owns
electric plans and pipelines in developing countries), and
Peregrine Asia Growth Fund (mutual fund). Director or partner of
following private companies: GFTA (software developer), Kleinwort
Benson Holdings (holding company for several American subsidiaries
of London-based Kleinwort Benson), and LaSalle Income & Growth
Properties (private real estate investment trust). Also a Trustee
of Mutual Life Insurance Company of New York and Northwestern
University. Age 58.
GORDON R. WORLEY. Private investor. Age 76. Member of the Audit
Committee of each Trust and of the Executive Committee and Pricing
Committee of Investment Trust.
*Messrs. Armour and Cook are interested persons of each Trust and
of the Adviser, as defined in the Investment Company Act of 1940
(the "Investment Company Act"), by reason of their relationships
with the Adviser.
Messrs. Block, Morley, Nelson, and Worley have been trustees of
Income Trust since 1986, of Municipal Trust and Investment Trust
since 1987, and of Base Trust since 1993. Messrs. Armour, Boyd,
and Cook have been trustees of Income Trust, Municipal Trust and
Base Trust since October, 1994 and of Investment Trust since
January, 1995.
- - HOW OFTEN DO THE TRUSTEES MEET?
The Board of each Trust currently has four committees. The
Executive Committee has authority, with some exceptions, to
exercise the powers of the Board of Trustees
<PAGE> 7
between Board meetings. The Audit Committee makes recommendations
regarding the selection of auditors, reviews with the auditors the
reports issued by the auditors and the financial statements, confers
with the auditors regarding the results of the audit and the adequacy
of the accounting procedures and controls, and considers related
matters. The Nominating Committee, which functions only in an
advisory capacity, reviews and recommends to the full Board candidates
for election to the Board. The Pricing Committee determines a fair
value of the portfolio securities in cases where the Adviser believes
that a market quotation or valuation obtained using an approved pricing
methodology does not represent a fair value.
During the fiscal year ended June 30, 1995, for Income Trust,
Municipal Trust and Base Trust, and the fiscal year ended
September 30, 1995, for Investment Trust, the Boards and
their committees met the following number of times:
Investment Income Municipal Base
Trust Trust Trust Trust
----------- -------- --------- -------
Board of Trustees 6 6 6 6
Executive Committee 2 0 1 0
Audit Committee 2 3 3 1
Nominating Committee 0 1 1 1
Pricing Committee 2 0 0 0
Each incumbent trustee attended at least 75% of the aggregate of
all meetings of each Board and its committees on which he served
during the period.
- - WHAT ARE THE TRUSTEES PAID?
As compensation for their services, trustees of Investment Trust,
Income Trust, and Municipal Trust who are not "interested persons"
of a Trust or the Adviser are paid an annual retainer of $8,000
per Trust (divided equally among the Funds of the Trust) plus an
attendance fee from each Fund for each meeting of the Board or
committee thereof attended at which business for that Fund is
conducted. The attendance fees (other than for a Nominating
Committee meeting) are based on each Fund's net assets as of the
preceding December 31. For a Fund with net assets of less than
$251 million, the fee is $200 per meeting; with $251 million to
$500 million, $350; with $501 million to $750 million, $500; with
$750 million to $1 billion, $650; and with over $1 billion in net
assets, $800. Each non-interested trustee also receives an
aggregate of $500 for attending each meeting of the Nominating
Committee for each Trust. Non-interested trustees of Base Trust
do not receive an annual retainer, but are paid an attendance fee
for each meeting of a Portfolio using on the same schedule as for
the Funds. Trustees who are "interested persons" receive no
compensation from any Trust.
The following table shows aggregate compensation received by each
non-interested trustee during the fiscal year ended June 30, 1995
from Income Trust, Municipal Trust and Base Trust, and during the
fiscal year ended September 30, 1995 from Investment Trust. The
trustees do not receive any pension or retirement benefits from
any Trust.
<PAGE> 8
Total
Name of Investment Income Municipal Base Compensation
Trustee Trust Trust Trust Trust from Complex
- ---------------- -------- -------- --------- ------ ------------
Kenneth L. Block $26,800 $23,350 $20,950 $1,700 $72,800
William W. Boyd* 22,050 15,900 13,800 800 52,550
Francis W. Morley 26,200 23,350 22,500 1,700 73,750
Charles R. Nelson 28,550 23,350 20,950 1,700 74,550
Gordon R. Worley 26,200 23,350 20,950 1,700 72,200
___________
*Mr. Boyd became a trustee of Income Trust, Municipal Trust and
Base Trust in October, 1994 and of Investment Trust in January,
1995.
- - SHARE OWNERSHIP BY TRUSTEES
The following table shows certain information regarding the
beneficial ownership of shares of each Fund as of March 29, 1996
by the nominees, the trustees, and all trustees and officers of
each Trust as a group. The information on the table is based on
information obtained from the nominees, trustees and officers, as
determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934. Accordingly, all of the shares over which
such person, directly or indirectly, had or shared voting or
investment power have been deemed beneficially owned. The
aggregate number of shares of each Fund over which the trustees
and officers as a group, directly or indirectly, had or shared
voting or investment power amounted to 1.2% of International
Fund and less than 1% of each other Fund.
<TABLE>
<CAPTION>
Fund Mr. Mr. Mr. Mr. Mr. Mr. Dr. Mr. Mr. As a
(1) Armour Block Boyd Cook Hacker Morley Nelson Theobald Worley Group (2)
- ---- ------ ----- ------ ----- ------ ------ ------ -------- ------ ----------
<C> <S> <S> <S> <S> <S> <S> <S> <S> <S> <S>
A 438 0 0 969 0 7,551 0 0 14,803 27,034
B 3,920 33,348 0 1,452 0 0 0 0 4,417 132,007
C 326 0 0 261 0 0 0 0 0 1,662
D 279 12,975 0 867 0 0 1,752 0 928 71,280
E 0 0 0 0 0 1,177 1,043 0 0 9,000
F 422 23,616 0 947 0 958 1,509 0 0 52,071
G 2,056 15,159 0 1,434 0 0 0 0 0 100,041
H 2,609 29,105 1,991 1,215 0 401 1,032 17,452 12,048 161,047
I 692 12,984 0 0 0 0 10,398 0 0 53,572
J 0 0 0 0 0 0 0 0 0 29,075
K 0 11,078 0 0 0 11,066 7,753 0 0 68,698
L 3,397 7,153 0 0 0 11,112 10,890 0 3,775 1,170,637
M 0 0 32,694 0 0 404,650 0 0 0 437,973
N 1,403 0 0 0 0 0 11,461 0 0 37,760
O 0 52,913 51,781 0 0 0 0 0 46,847 171,116
P 0 0 11,299 3,632 0 0 0 0 18,818 53,028
Q 0 0 0 0 0 0 0 0 0 502,140
R 0 21,424 0 0 0 0 0 0 23,931 69,826
</TABLE>
(1) Key for Funds:
A Growth & Income Fund J Government Income Fund
B International Fund K Intermediate Bond Fund
C Young Investor Fund L Cash Reserves Fund
D Special Venture Fund M Government Reserves Fund
E Balanced Fund N Limited Maturity Income Fund
F Growth Stock Fund O Intermediate Municipals Fund
G Capital Opportunities Fund P High-Yield Municipals Fund
H Special Fund Q Municipal Money Market Fund
I Income Fund R Managed Municipals Fund
<PAGE> 9
(2) Holdings of all current trustees and officers as a group (31
persons for Investment Trust, 25 persons for Income Trust, and 24
persons for Municipal Trust).
THE BOARDS OF TRUSTEES RECOMMEND THAT SHAREHOLDERS FOR THE
ELECTION OF EACH NOMINEE AS TRUSTEE.
2. AMENDMENT OF:
(A) EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
BORROWING, AND
(B) [FOR SHAREHOLDERS OF STEIN ROE MUNICIPAL MONEY FUND ONLY] A
SIMILAR RESTRICTION FOR THE PORTFOLIO OF BASE TRUST
When available cash is not sufficient to meet shareholder
redemptions, it may be advantageous for a Fund to borrow money for
a short time instead of raising cash by selling portfolio
securities, which could be disruptive to the Fund's portfolio
investment strategy. In addition to borrowing from banks for
extraordinary or emergency purposes, the fundamental policies of
the Funds are proposed to be amended to permit one Fund to borrow
cash from another Stein Roe Fund. The trustees believe that a
Fund needing cash may be able to obtain lower interest rates on
short-term borrowings through an interfund lending program and
that the Fund lending cash may be able to obtain a rate of return
competitive with interest rates on alternative short-term
investments. Thus, interfund lending would be permitted only if
the terms are at least as favorable as the terms each Fund could
otherwise negotiate with a third party and if the transaction is
conducted in accordance with certain conditions set forth in an
exemptive order obtained from the Securities and Exchange
Commission (the "SEC") by the Funds. The amended fundamental
policy would continue to limit a Fund's borrowing to no more than
33 1/3% of its total assets, including borrowings for temporary or
emergency purposes, reverse repurchase agreements, and any other
investment or transaction that may involve borrowing consistent
with the Fund's investment objective. The Board of each Trust has
directed that this Proposal be submitted to shareholders of each
Fund for approval or disapproval. In addition, the Board of
Municipal Trust has recommended that shareholders of Stein Roe
Municipal Money Market Fund authorize approval of an identical
amendment to the Portfolio's restriction on borrowing.
- - CURRENT AND PROPOSED RESTRICTIONS
The Funds' current fundamental investment restrictions with
respect to borrowing are as follows:
Growth & Income Fund, International Fund, Young Investor Fund,
Special Venture Fund, Balanced Fund, Growth Stock Fund, Capital
Opportunities Fund, and Special Fund: "[The Fund may not] borrow,
except that it may (a) borrow up to 33 1/3% of its total assets,
taken at market value at the time of such borrowing, as a
temporary measure for extraordinary or emergency purposes, but not
to
<PAGE> 10
increase portfolio income (the total of reverse repurchase
agreements /1/ and such borrowings will not exceed 33 1/3% of its
total assets, and the Fund will not purchase additional securities
when its borrowings, less proceeds receivable from sales of
portfolio securities, exceed 5% of its total assets) and (b) enter
into transactions in options, futures, and options on futures."
Income Fund, Government Income Fund, Intermediate Bond Fund, and
Limited Maturity Income Fund: "[The Fund may not] borrow, except
that it may (i) borrow up to 33 1/3% of its total assets, taken at
market value at the time of such borrowing, as a temporary measure
for extraordinary or emergency purposes but not to increase
portfolio income (the total of reverse repurchase agreements and
such borrowings will not exceed 33 1/3% of its total assets and it
will not purchase additional securities at a time when its
borrowings exceed 5% of its total assets) and (ii) enter into
transactions in options, futures, and options on futures."
Cash Reserves Fund and Government Reserves Fund: "[The Fund may
not] borrow, except that it may borrow up to 33 1/3% of its total
assets, taken at market value at the time of such borrowing, as a
temporary measure for extraordinary or emergency purposes but not
to increase portfolio income (such borrowings will not exceed 33
1/3% of its total assets and it will not purchase additional
securities at a time when its borrowings exceed 5% of its total
assets)."
Municipal Money Market Fund and the Portfolio: "[The
Fund/Portfolio may not] borrow, except that the Fund may borrow up
to 33 1/3% of its total assets, taken at current value at the time
of such borrowing, from banks as a temporary measure for
extraordinary or emergency purposes but not to increase portfolio
income (the total of reverse repurchase agreements and such
borrowings will not exceed 33 1/3% of the Fund's total assets and
the Fund will not purchase additional securities at a time when
its borrowings, less proceeds receivable from sales of portfolio
securities, exceed 5% of its total assets)."
Intermediate Municipals Fund, High-Yield Municipals Fund, and
Managed Municipals Fund: "[The Fund may not] borrow, except that
the Fund may (a) borrow up to 33 1/3% of its total assets, taken
at current value at the time of such borrowing, from banks as a
temporary measure for extraordinary or emergency purposes but not
to increase portfolio income (the total of reverse repurchase
agreements and such borrowings will not exceed 33 1/3% of the
Fund's total assets and the Fund will not purchase additional
securities at a time when its borrowings, less proceeds receivable
from sales of portfolio securities, exceed 5% of its total
assets), and (b) enter into futures and options transactions."
- ------------
/1/ In a repurchase agreement, a Fund purchases securities from a
bank or broker-dealer with the agreement that the bank or broker-
dealer will repurchase the securities at a later date. Reverse
repurchase agreements are ordinary repurchase agreements in which
a Fund is the seller of rather than the purchaser of securities
and agrees to repurchase them at an agreed-upon time and price.
Reverse repurchase agreements can avoid certain market risks and
transaction costs associated with an outright sale and repurchase.
Reverse repurchase agreements, however, may be viewed as
borrowings and may increase a Fund's net asset value fluctuation.
- --------------
<PAGE> 11
As amended, the fundamental investment restriction on
borrowing would be as follows for Cash Reserves Fund,
Government Reserves Fund, Municipal Money Market Fund, and
the Portfolio:
"[The Fund/Portfolio may not] borrow except that it may
(a) borrow for non-leveraging, temporary or emergency
purposes and (b) engage in reverse repurchase agreements and
make other borrowings, provided that the combination of (a)
and (b) shall not exceed 33 1/3% of the value of its
total assets (including the amount borrowed) less liabilities
(other than borrowings) or such other percentage permitted by
law; it may borrow from banks, other Stein Roe Funds, and
other persons to the extent permitted by applicable law."
As amended, the fundamental investment restriction on
borrowing would be as follows for the other Funds:
"[The Fund may not] borrow except that the Fund may (a)
borrow for non-leveraging, temporary or emergency purposes,
(b) engage in reverse repurchase agreements and make other
borrowings, provided that the combination of (a) and (b)
shall not exceed 33 1/3% of the value of the Fund's total
assets (including the amount borrowed) less liabilities
(other than borrowings) or such other percentage permitted by
law, and (c) enter into futures and options transactions; the
Fund may borrow from banks, other Stein Roe Funds, and other
persons to the extent permitted by applicable law."
- - BORROWING FROM OTHER STEIN ROE FUNDS AS PART OF THE INTERFUND
LENDING PROGRAM
Currently, the Funds of Municipal Trust and SR&F Municipal Money
Market Portfolio may borrow money only from banks. When a Fund
borrows money from banks, it typically pays interest on the
borrowing at a rate higher than the rate available from
investments in repurchase agreements. If the proposed amendment
(and the amendment relating to the restriction on lending, as
discussed below) is approved, eligible Stein Roe Funds would be
permitted to participate in the interfund lending program to allow
the Stein Roe Funds, pursuant to a master loan agreement, to lend
available cash to, and borrow from, other Stein Roe Funds. Each
lending Fund could lend available cash to another Stein Roe Fund
only when the "interfund rate" was higher than repurchase
agreement rates or rates on other comparable short-term
investments. Each borrowing Fund could borrow through the
interfund lending program only when the interfund rate was lower
than available bank loan rates.
In determining to recommend the proposed amendment to shareholders
for approval, the trustees of each Trust considered the possible
risks to a Fund from participation in the interfund lending
program. The Adviser does not view the difference in rates
available on bank borrowings and repurchase agreements or other
short-term investments as reflecting a material difference in the
quality of the risk of the transactions, but rather as an
indication of the ability of banks to earn a higher rate of
interest on loans than they pay on repurchase agreements or other
short-term investments. There is a risk that a lending Fund could
experience a delay in obtaining prompt repayment of a loan and,
unlike repurchase agreements,
<PAGE> 12
the lending Fund would not necessarily have received collateral for
its loan, although it could require that collateral be provided as a
condition for making a loan. A delay in obtaining prompt payment
could cause a lending Fund to miss an investment opportunity or to
incur costs to borrow money to replace the delayed payment. There is
also a risk that a borrowing Fund could have a loan recalled by
another Fund on one day's notice. In these circumstances, the
borrowing Fund might have to borrow from a bank at a higher interest
cost if money to lend were not available from another Stein Roe Fund.
The trustees of each Trust believe that the benefits to the Funds of
that Trust from participation in the program outweigh any possible
risks that may result from such participation.
In order to permit the Stein Roe Funds to engage in interfund
borrowing and lending transactions, regulatory approval was
required from the SEC because the transactions may be considered
to be between affiliated parties, which normally are prohibited by
the Investment Company Act. If the amendment is approved by
shareholders of a Fund, the interfund lending program would be
implemented only to the extent permitted by rule or by order of
the SEC and to the extent that the transactions were otherwise
consistent with the investment objectives and limitations of each
participating Stein Roe Fund.
Shareholders are being asked to approve an amendment to each
Fund's fundamental policy on borrowing in this Proposal.
Shareholders are also being asked to vote separately on a
corresponding amendment to each Fund's fundamental policy on
lending. If both amendments are adopted, a Fund, subject to its
investment objectives and policies, will be able to participate in
the interfund lending program either as a lender or as a borrower.
If only one of the two Proposals is adopted, then the Fund's
participation in the interfund lending program will be confined to
the approved activity.
The Trustees believe that the proposed amendments will benefit the
Funds by facilitating their flexibility to use the most cost-
effective alternative to satisfy borrowing requirements.
- - OTHER CHANGES
The other proposed changes in the fundamental borrowing
restrictions would: (1) allow the Funds of the Municipal Trust and
the SR&F Municipal Money Market Portfolio to borrow from persons
other than banks; (2) allow Cash Reserves Fund and Government
Reserves Fund to purchase reverse repurchase agreements; and (3)
allow all Stein Roe Funds to engage in other transactions that may
involve borrowing.
Although not specifically referred to in the proposed new policy,
the Funds (other than Cash Reserves Fund, Government Reserves
Fund, and Municipal Money Market Fund) would continue to be able
to enter into transactions in options, futures, and options on
futures. A Fund would not use its increased flexibility to borrow
to engage in transactions that could result in leveraging a Fund.
All activities of the Funds are, of course, subject to the
Investment Company Act and the rules and regulations thereunder as
well as various state securities laws.
<PAGE> 13
THE BOARDS OF TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR
PROPOSAL 2.
3. AMENDMENT OF:
(A) EACH FUND'S FUNDAMENTAL INVESTMENT RESTRICTION REGARDING
THE MAKING OF LOANS, AND
(B) [FOR SHAREHOLDERS OF STEIN ROE MUNICIPAL MONEY FUND ONLY]
A SIMILAR RESTRICTION FOR THE PORTFOLIO OF BASE TRUST
The Board of Trustees has proposed a corresponding amendment to
each Fund's fundamental investment restriction relating to making
loans in order to permit the Fund to participate as a lender in
the interfund lending program involving the Stein Roe Funds and to
make certain other clarifying changes. The nature of this program
and the benefits and risks associated with the Funds'
participation are set forth under Proposal 2 beginning on page
9. Shareholders of each Fund are being asked to consider
separately the Fund's participation in the interfund lending
program as a borrower and as a lender. The Board of each Trust
has directed that this Proposal be submitted to shareholders of
each Fund for approval or disapproval. In addition, the Board of
Municipal Trust has recommended that shareholders of Stein Roe
Municipal Money Market Fund authorize approval of an identical
amendment to the Portfolio's restriction on lending.
- - CURRENT AND PROPOSED RESTRICTIONS
The Funds' current investment restrictions are as follows:
Growth & Income Fund, International Fund, Young Investor Fund,
Special Venture Fund, Balanced Fund, Growth Stock Fund, Capital
Opportunities Fund, and Special Fund: "[The Fund may not] make
loans, but this restriction shall not prevent the Fund from (a)
buying a part of an issue of bonds, debentures, or other
obligations which are publicly distributed, or from investing up
to an aggregate of 15% of its total assets (taken at market value
at the time of each purchase) in parts of issues of bonds,
debentures or other obligations of a type privately placed with
financial institutions, (b) investing in repurchase agreements, or
(c) lending portfolio securities, provided that it may not lend
securities if, as a result, the aggregate value of all securities
loaned would exceed 33% of its total assets (taken at market value
at the time of such loan)."
Income Fund, Government Income Fund, Intermediate Bond Fund, and
Limited Maturity Income Fund: "[The Fund may not] make loans to
other persons, except that it reserves freedom of action,
consistent with its other investment policies and restrictions, to
(i) invest up to 100% of its net assets in debt obligations,
including those which are either publicly offered or of a type
customarily purchased by institutional investors, even though the
purchase of such debt obligations may be deemed to be the making
of loans, (ii) enter into repurchase agreements and (iii) lend
portfolio securities, provided that it may not lend securities if,
as a result, the
<PAGE> 14
aggregate value of all securities loaned would exceed 33% of its
total assets (taken at market value at the time of such loan)."
Cash Reserves Fund: "[The Fund may not] make loans to other
persons, provided that it may purchase money market securities or
enter into repurchase agreements."
Government Reserves Fund: "[The Fund may not] make loans to other
persons, provided that, as described [under its investment
policies], it may purchase instruments and may enter into
repurchase agreements."
Intermediate Municipals Fund, High-Yield Municipals Fund,
Municipal Money Market Fund, Managed Municipals Fund, and the
Portfolio: "[The Fund/Portfolio may not] make loans to other
persons, except that the Fund may invest up to 100% of its assets
in debt obligations, including money market instruments."
As amended, the fundamental investment restriction on loans would
be as follows for Growth & Income Fund, International Fund, Young
Investor Fund, Special Venture Fund, Balanced Fund, Growth Stock
Fund, Capital Opportunities Fund, Special Fund, Income Fund,
Government Income Fund, Intermediate Bond Fund, and Limited
Maturity Income Fund:
"[The Fund may not] make loans, although the Fund may (a) lend
portfolio securities and participate in an interfund lending program
with other Stein Roe Funds provided that no such loan may be made if,
as a result, the aggregate of such loans would exceed 33 1/3% of the
value of the Fund's total assets (taken at market value at the time
of such loans); (b) purchase money market instruments and enter into
repurchase agreements; and (c) acquire publicly-distributed or
privately-placed debt securities."
As amended, the fundamental investment restriction on loans would
be as follows for Cash Reserves Fund, Government Reserves Fund,
Intermediate Municipals Fund, High-Yield Municipals Fund,
Municipal Money Market Fund, Managed Municipals Fund, and the
Portfolio:
"[The Fund/Portfolio may not] make loans, although it
may (a) participate in an interfund lending program with
other Stein Roe Funds provided that no such loan may be made if,
as a result, the aggregate of such loans would exceed 33 1/3% of
the value of its total assets; (b) purchase money market
instruments and enter into repurchase agreements; and (c) acquire
publicly-distributed or privately-placed debt securities."
- - OTHER MATTERS
The proposed restriction omits the private placement
limitation in the current lending restriction of the Funds
of Investment Trust. Under that limitation, none of those
Funds may invest more than 15% of its net assets in privately
placed debt securities. However, each of those Funds has a
non-fundamental restriction that limits the Fund's
investments in illiquid securities to 15% of the Fund's net
assets. Cash Reserves Fund, Government Reserves Fund, and
Municipal Money Market
<PAGE> 15
Fund, in accordance with Rule 2a-7 under the Investment
Company Act, will continue to purchase only money market
instruments.
THE BOARDS OF TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR
PROPOSAL 3.
4 AND 5. APPROVAL OF PROPOSED AGREEMENTS (FOR SHAREHOLDERS OF
STEIN ROE INTERNATIONAL FUND, STEIN ROE SPECIAL VENTURE FUND,
STEIN ROE INCOME FUND, STEIN ROE GOVERNMENT INCOME FUND, STEIN ROE
INTERMEDIATE BOND FUND, STEIN ROE CASH RESERVES FUND, STEIN ROE
GOVERNMENT RESERVES FUND, STEIN ROE LIMITED MATURITY INCOME FUND,
STEIN ROE INTERMEDIATE MUNICIPALS FUND, STEIN ROE HIGH-YIELD
MUNICIPALS FUND, AND STEIN ROE MANAGED MUNICIPALS FUND [REFERRED
TO HEREIN AS THE "APPLICABLE FUNDS"])
- - WHAT ARE THE TERMS OF THE PRESENT AGREEMENTS?
Currently each Trust, on behalf of each Applicable Fund, has an
Investment Advisory Agreement (the "Present Agreement") with the
Adviser. Under the Present Agreement the Adviser furnishes to
each Applicable Fund both portfolio management services and
administrative services and related facilities required in
connection with the Fund's operations. The Present Agreements for
Stein Roe International Fund and Stein Roe Special Venture Fund
are dated February 1, 1995 and were approved by shareholders on
January 17, 1995. The Present Agreements for Stein Roe Income
Fund, Stein Roe Government Income Fund, Stein Roe Intermediate
Bond Fund, Stein Roe Limited Maturity Income Fund, Stein Roe
Intermediate Municipals Fund, Stein Roe High-Yield Municipals
Fund, Stein Roe Managed Municipals Fund, are dated November 1,
1994 and were approved by shareholders on October 25, 1994. The
Present Agreements for Stein Roe Cash Reserves Fund and Stein Roe
Government Reserves Fund are dated November 1, 1995; they were
approved by shareholders on October 25, 1994 and were amended by
the Board of Trustees of Income Trust on November 1, 1995.
Continuance of each Present Agreement was approved by the Board of
Trustees on April 17, 1996.
- - WHY ARE THE PROPOSED AGREEMENTS BEING RECOMMENDED?
Proposals 4(a) and (b) request that shareholders of each
Applicable Fund approve the replacement of the Fund's Present
Agreement with a separate Management Agreement and Administrative
Agreement between the Trust and the Adviser relating to the
Applicable Fund; Proposal 5 seeks approval of a Management
Agreement between the Adviser and SR&F Base Trust (these three
agreements are referred to as the "Proposed Agreements").
Shareholders will vote separately on each Proposed Agreement.
The Proposed Agreements for each Applicable Fund provides for
substantially the same services as furnished under the Present
Agreements, and are being recommended to facilitate the possible
conversion of the Fund at some future time into a "feeder" fund in
a "master/feeder fund" structure, as explained below. The forms
of the Proposed Agreements are attached to this proxy statement as
Appendices A, B, and C. Further information about the Trusts and
services provided to the Funds
<PAGE> 16
by the Adviser and its affiliates may be found under "Further
Information about the Trusts and the Adviser" on page 23.
MASTER/FEEDER FUND STRUCTURE
- - WHAT IS A MASTER/FEEDER FUND STRUCTURE?
Under a master/feeder fund structure, the assets of mutual funds
with common investment objectives and substantially the same
investment policies are pooled together and, rather than being
managed separately, are "fed" into a combined pool for portfolio
management purposes. The individual funds are known as "feeder"
funds and the pool is known as a "master" fund.
- - WHY IS THIS ADVANTAGEOUS?
Generally, it is believed that the larger the pool of assets being
managed, the more efficiently and cost-effectively it can be run.
Because a master fund pools the assets of multiple feeder funds,
it provides an effective means of creating large asset pools.
- - DOES THIS MEAN MY FUND WILL CONVERT IMMEDIATELY TO A FEEDER
FUND?
By asking you to approve the Proposed Agreements, the trustees are
asking that you grant them the ability to convert your Fund to a
"master/feeder fund" structure when and if, in their view, it
makes sense to do so at some point in the future. Obviously, the
timing of any such conversion would depend upon the existence of
opportunities to pool assets with those of other feeder funds.
So, while the trustees believe converting to a master/feeder fund
structure would be desirable given the right opportunity, there
are no formal plans to effect such a conversion of any Applicable
Fund. Approval of the Proposed Agreements would provide the
trustees the ability to move opportunistically when the right
opportunity comes about. You would receive at least 30 days'
advance notice if your Fund were to be converted.
- - IF MY FUND DOES CONVERT TO A FEEDER FUND, IS THERE ANY INCREASED
COST TO THE FUND OR TO ME?
The primary motivation for considering a master/feeder fund
structure is to seek to achieve the operating and expense
economies that can be gained by managing larger pools of assets.
The trustees' decision to convert your Fund would be based upon
their belief that it would be in the best interests of both the
Fund and its shareholders.
- - WHAT OTHER CHANGES WOULD RESULT FROM IMPLEMENTING A
MASTER/FEEDER FUND STRUCTURE?
The other changes are mostly technical and legal in nature. To
put it as simply as possible, moving to a master/feeder fund
structure would require termination of the Management Agreement in
place at that time between the Investment Trust and the Adviser
relating to your Fund, and replacing it with a new Management
Agreement relating to the master fund in which your Fund would
invest. This new Management Agreement would be between the
Adviser and the Base Trust, which
<PAGE> 17
was created to offer mutual funds serving as the master funds in a
master/feeder fund structure. As a result, you are being asked to
approve for your Applicable Fund three new agreements:
- - an Administrative Agreement between the Trust and the Adviser;
- - a Management Agreement between the Trust and the Adviser; and
- - a Management Agreement between Base Trust and the Adviser for
the master fund in which the Fund would invest.
The Administrative Agreement would become effective July l, l996,
and would remain in place whether or not your Fund converts to the
master/feeder fund structure. The Management Agreement between
the Trust and the Adviser would become effective on July l, l996,
and would remain in place for your Fund unless and until your Fund
were converted into a master/feeder fund structure. If your Fund
were converted into a master/feeder fund structure, the Management
Agreement between the Trust and the Adviser relating to your Fund
would be terminated and replaced by the Management Agreement
between Base Trust and the Adviser relating to the master fund in
which your Fund would then invest.
- - WOULD MY FUND BE MANAGED ANY DIFFERENTLY UNDER A MASTER/FEEDER
FUND STRUCTURE?
No. The master fund in which the assets of your Fund would be
invested would have the identical investment objective and
substantially the same investment policies as your Fund. This
means that the assets of the master fund would be invested in the
same types of securities in which your Fund is currently
authorized to invest.
- - ADDITIONAL INFORMATION ABOUT THE MASTER/FEEDER FUND STRUCTURE.
Under a master/feeder fund structure, instead of investing
directly in a portfolio of securities, a Fund would invest
substantially all of its assets in a portfolio (the Fund's "master
fund") of Base Trust having the same investment objective and
substantially the same investment policies as the Fund. The
Adviser would continue to manage the investment portfolio at the
master fund level, where Fund assets would be pooled with assets
of other institutional investors having common investment
objectives and policies. The Trusts and Base Trust each have the
same trustees.
A Fund may withdraw its investment in a master fund at any time if
its Board of Trustees determines that it is in the best interests
of the shareholders of the Fund to do so or if the investment
policies or restrictions of the master fund were changed so that
they were inconsistent with the policies and restrictions of the
Fund. Upon any such withdrawal, the Board of Trustees of that
Trust would consider what action might be taken, including the
investment of all of the assets of the Fund in another pooled
investment entity having substantially the same investment
objectives and policies as the Fund or the investment of the
Fund's assets directly in accordance with its investment objective
and policies. If another pooled investment vehicle with
substantially the same investment objectives and policies could
not be found, the shareholders of the Fund would not be able to
derive the benefits of the master/feeder fund structure.
<PAGE> 18
IF YOU HAVE ANY QUESTIONS ABOUT THE MASTER/FEEDER FUND STRUCTURE,
PLEASE CALL US AT OUR TOLL-FREE NUMBER, 800-338-2550.
- - HOW ARE THE FEES OF THE ADVISER BEING CHANGED?
The Proposed Agreements for each Applicable Fund will replace that
Fund's Present Agreement, BUT DO NOT CALL FOR ANY INCREASE IN
AGGREGATE FEES PAID TO THE ADVISER. The following table shows the
aggregate fees paid to the Adviser under each Fund's Present
Agreement during its last fiscal year; the annual rate of fees
payable under the Present Agreements and the Proposed Agreements
as a percentage of average net assets; and the net assets of each
Fund as of March 31, 1996:
<TABLE>
<CAPTION>
CURRENT FEE
SCHEDULE NET
AGGREGATE (DOLLAR AMOUNTS ASSETS
FEES PAID IN MILLIONS) PROPOSED FEE SCHEDULE AT
TO ADVISER MANAGEMENT AND (DOLLAR AMOUNTS IN MILLIONS) 3/31/96
DURING LAST ADMINISTRATIVE MANAGEMENT ADMINISTRATIVE TOTAL IN
FUND FISCAL YEAR FEE FEE FEE FEES MILLIONS)
- ----------- ----------- ---------------- --------------- ------------------ -------------- ----------
<C> <S> <S> <S> <S> <S> <S>
International
Fund $ 732,347 1.00% .850% .150% 1.00% $113,591
Special
Venture
Fund 295,409 .900% .750% .150% .900% 93,301
Income Fund 1,011,101 .650% up to $100, .500% up to $100, .150% up to $100, .650% up to $100,
.600% thereafter .475% thereafter .125% thereafter .600% thereafter 302,798
Government
Income
Fund 253,463 .600% up to $100, .450% up to $100, .150% up to $100, .600% up to $100, 34,211
.550% thereafter .425% thereafter .125% thereafter .550% thereafter
Intermediate
Bond Fund 1,491,075 .500% .350% .150% .500% 308,611
Cash Reserves
Fund 2,648,885 .500% up to $500, .250% 250% up to $500, .500% up to $500, 492,184
.450% next $500, .200% next $500, .450% next $500,
.400% thereafter . .150% thereafter .400% thereafter
Government
Reserves
Fund 513,808 .500% up to $500, .250% .250% up to $500, .500% up to $500, 71,633
.450% next $500, .200% next $500, .450% next $500,
.400% thereafter .150% thereafter .400% thereafter
Limited
Maturity
Income Fund 172,301 .600% up to $100, .450% up to $100, .150% up to $100, .600% up to $100, 32,922
.550% next $100, .425% next $100, .125% next $100, .550% next $100,
.500% thereafter .400% thereafter .100% thereafter .500% thereafter
Intermediate
Municipals
Fund 1,248,808 .600% up to $100, .450% up to $100, .150% up to $100, .600% up to $100, 214,398
.550% next $100, .425% next $100, .125% next $100, .550% next $100,
.500% thereafter .400% thereafter .100% thereafter .500% thereafter
High-Yield
Municipals
Fund 1,587,995 .600% up to $100, .450% up to $100, .150% up to $100, .600% up to $100, 274,003
.550% next $100, .425% next $100, .125% next $100, .550% next $100,
.500% thereafter .400% thereafter .100% thereafter .500% thereafter
Managed
Municipals
Fund 3,392,060 .600% up to $100, .450% up to $100, .150% up to $100, .600% up to $100, 612,535
.550% next $100, .425% next $100, .125% next $100, .550% next $100,
.500% next $800, .400% next $800, .100% next $800, .500% next $800,
.450% thereafter .375% thereafter .075% thereafter .450% thereafter
</TABLE>
- - WHAT DO MANAGEMENT AND ADMINISTRATIVE FEES PAY FOR?
The fees paid to the Adviser compensate it for the services that
the Adviser provides in conducting the day-to-day operations of a
Fund (or of a Fund's master fund). These services include:
providing personnel, equipment and office facilities necessary for
managing the investment portfolio and related research; compliance
services; preparing reports to shareholders; complying with state
and federal tax
<PAGE> 19
and legal requirements relating to maintaining the
Trust as a Massachusetts business trust and as a registered open-
end investment company; making arrangements and preparation of
materials for meetings of the Board of Trustees and of
shareholders; calculating and paying Fund expenses and income and
capital gain distributions to shareholders; overseeing third party
service providers to the Trust; and handling other related
business affairs of the Fund.
The Present Agreement for each Fund provides that the Adviser
shall reimburse the Trust to the extent that the total expenses of
the Fund (excluding taxes, interest, all commissions and other
normal charges incident to the purchase and sale of portfolio
securities, and extraordinary charges such as litigation costs,
but including fees paid to the Adviser) for any fiscal year of the
Fund exceed the applicable limits prescribed by any state in which
shares of the Fund are being offered for sale; however, the
reimbursement for any year shall not exceed the Adviser's fees
under the agreement for that year. The Fund's Proposed
Administrative Agreement (but not the Proposed Management
Agreement) contains a similar provision. The Trusts believe that
at the present time, the most restrictive state limits are those
imposed by California, which are 2-1/2% of the first $30 million
of average net assets, 2% of the next $70 million, and 1-1/2%
thereafter. In addition, the Adviser has agreed to voluntarily
absorb the expenses of certain Funds to the extent that they
exceed a certain percentage of the Funds' average annual net
assets as follows:
Expense
Fund Limitation Expiration*
------------------------- ------------ -----------
International Fund 1.65% 01/31/97
Special Venture Fund 1.25% 01/31/97
Income Fund 0.82% 10/31/98
Government Income Fund 1.00% 10/31/96
Intermediate Bond Fund 0.70% 10/31/96
Government Reserves Fund 0.70% 10/31/96
Limited Maturity Income Fund 0.65% 10/31/96
Intermediate Municipals Fund 0.70% 10/31/96
____________________________
*Each expense undertaking is subject to earlier termination by the
Adviser on 30 days' notice, except for that relating to Income
Fund. Prior to November 1, 1995, the Adviser undertook to
reimburse Limited Maturity Income Fund for expenses in excess of
0.45%.
- - WHAT FACTORS DID THE TRUSTEES CONSIDER IN APPROVING THE PROPOSED
AGREEMENTS?
In considering the Proposed Agreements, the trustees recognized
the potential economic advantage to each Fund and its shareholders
of being able to readily convert the Fund to a master/feeder fund
structure by having separate Administrative and Management
Agreements.
In connection with approval of the specific terms of the Proposed
Agreements, the trustees placed primary emphasis upon the nature
and quality of the services to be provided by the Adviser under
each agreement, including the relative complexity of managing each
Fund, and a comparison of recent investment performance, fees and
other expenses payable by each Fund under the Proposed Agreements
and actual (and pro forma) expense ratios, with those of similar
funds managed by other
<PAGE> 20
investment advisers. The mutual fund comparative study was prepared
at the request of the trustees by Lipper Analytical Services, an
independent analytical service that specializes in the mutual fund
industry.
The trustees also considered, among other things, information
provided by the Adviser regarding the profitability to the Adviser
under both the Present and the Proposed Agreements and under
separate agreements relating to bookkeeping and accounting and
transfer agency services furnished to each Fund by the Adviser or
one of its affiliates. In addition, the trustees considered
benefits to the Adviser and its affiliates resulting from their
relationship with each Fund. Those considerations were made
without regard to the costs incurred by the Adviser and its
affiliates in connection with the distribution of Fund shares.
On April 16, 1996, the trustees, including the five trustees who
are not "interested persons" of the Adviser, unanimously approved
the Proposed Agreements and recommended that the shareholders
approve the agreements.
- - ADDITIONAL INFORMATION ON THE PRESENT AND PROPOSED AGREEMENTS
The only material differences between each Fund's Present
Agreement and the Proposed Agreements considered together are that
(a) the Administrative Agreement provides for the Adviser to
furnish administrative services and facilities to the Fund under a
separate contract and not under the Fund's Present Agreement and
(b) the Management Agreement relating to Base Trust provides for
the Adviser to furnish portfolio management services to the Fund's
master fund (in which the Fund would invest substantially all of
its assets), instead of furnishing such services directly to the
Fund. In addition, each Proposed Agreement reflects a new
effective date and a new date stated for termination in the
absence of annual approval of continuation after the initial term.
The current term of each Fund's Present Agreement expires on June
30, 1996. The initial term of each Management Agreement will not
be longer than two years. Each Administrative Agreement will
continue until it is terminated by either or both parties. Each
Present Agreement and each Management Agreement provides that it
may be continued after its initial term from year to year only so
long as its continuance is approved annually (a) by the vote of a
majority of the non-interested trustees of the Trust, cast in
person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees of the Trust or by a
vote of a "majority" of the outstanding shares of the Fund, as
defined below. In addition, each of those agreements would
terminate in the event of its assignment and may be terminated
without penalty by the Board of Trustees of the Trust, or by a
vote of a majority of the outstanding shares of the Fund on 60
days' written notice to the Adviser, or by the Adviser at any time
on 60 days' written notice to the Trust./2/
- ---------------
/2/ In the case of a Fund that has been converted into a feeder
fund, continuation or termination of the Management Agreement for
that Fund's Master Fund would instead require approval of the
Trustees of Base Trust or the shareholders of the Fund's Master
Fund. The Adviser could terminate that Agreement by 60 days'
written notice to Base Trust.
- ------------------------
<PAGE> 21
- - WHAT HAPPENS IF SHAREHOLDERS DO NOT APPROVE THE PROPOSED
AGREEMENTS?
The trustees believe it is in the best interests of each Fund and
its shareholders for the Proposed Agreements to be approved.
However, if a Fund's shareholders do not approve both the
Administrative Agreement and the Management Agreement between the
applicable Trust and the Adviser, neither agreement will take
effect and the Fund's Present Agreement will continue in effect.
If the shareholders of a Fund approve the Proposed Agreements
relating to the Fund between the applicable Trust and the Adviser
but do not approve the Management Agreement between the Base Trust
and the Adviser relating to that Fund's master fund, the Fund
would not be able to readily convert into a master/feeder fund
structure.
THE BOARDS RECOMMEND THAT SHAREHOLDERS VOTE FOR PROPOSALS 4 AND 5.
FURTHER INFORMATION ABOUT VOTING AND THE SHAREHOLDER MEETING
VOTING REQUIREMENTS. All Funds in a Trust vote together on
matters that affect the Trust as a whole, such as the election of
Trustees. The Board of Trustees of each Trust has determined that
Proposals 2, 3, 4, and 5 affect only the individual interests of
the shareholders of each respective Fund and, therefore, that
shareholders of each Fund should vote separately on each of those
Proposals. In such cases, shareholders may vote only on matters
that concern the Funds in which they held shares as of the record
date. Each share is entitled to a number of votes on any matter
that comes before the meeting equal to the net asset value of the
share as of the record date of the meeting.
With respect to proposals relating to the Portfolio of Base Trust,
Stein Roe Municipal Money Market Fund will vote its interest in
the Portfolio for and against such matters proportionately to the
instructions to vote for and against such matters received from
Fund shareholders. The Fund will vote shares for which it
receives no voting instructions in the same proportion as the
shares for which it receives voting instructions. There can be no
assurance that any matter receiving a majority of votes cast by
Fund shareholders will receive a majority of votes cast by all
Portfolio investors.
Approval of each of the items in Proposals 2, 3, 4, and 5 with
respect to a Fund (or the Portfolio) requires a "yes" vote of a
"majority" of the outstanding shares of the Fund (or the
Portfolio) as defined in the Investment Company Act. For this
purpose, this means the lesser of (a) 67% of the shares of the
Fund (or the Portfolio) present at the meeting, in person or by
proxy, if the holders of more than 50% of the outstanding shares
of the Fund (or the Portfolio) are present, or (b) more than 50%
of the outstanding shares of the Fund (or the Portfolio).
QUORUM AND METHOD OF TABULATION. Although 30% of the shares of a
Fund entitled to vote, present in person or represented by proxy,
constitutes a quorum for the transaction of business by that
Fund's shareholders at the meeting, the affirmative vote of a
"majority" of the shares entitled to vote, as defined above, is
necessary to approve Proposals 2, 3, 4, and 5.
<PAGE> 22
For purposes of determining the approval of a Proposal,
abstentions will have the same effect as voting against the
Proposal. "Broker non-votes" (shares held by brokers or nominees
as to which (i) instructions have not been received from the
beneficial owners or the persons entitled to vote and (ii) the
broker or nominee does not have the discretionary voting power on
a particular matter) will also have the same effect as voting
against the Proposal.
OTHER BUSINESS. The trustees do not know of any other business to
be brought before the meeting. However, if any other matters
properly come before the meeting, it is their intention that
proxies that do not contain specific restrictions to the contrary
will be voted on such matters in accordance with the judgment of
the persons named as proxies in the enclosed form of proxy.
SOLICITATION OF PROXIES. In addition to soliciting proxies by
mail, the trustees and employees of the Adviser may solicit
proxies in person or by telephone but will not be additionally
compensated therefor. The Trusts may also arrange to have votes
recorded by telephone. The telephone voting procedure is designed
to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their
instructions and to confirm that their instructions have been
properly recorded. Persons holding shares as nominees will upon
request be reimbursed for their reasonable expenses in soliciting
instructions from their principals. The Trusts may engage D.F.
King & Co., Inc. to render proxy solicitation services at a fee
estimated at $75,000. The expenses of the meeting or any
adjournment thereof and of any proxy solicitation will be borne by
the Funds.
REVOCATION OF PROXIES. Proxies, including proxies given by
telephone, may be revoked at any time before they are voted by a
written revocation received by the Secretary of the applicable
Trust, by properly executing a later-dated proxy, or by attending
the meeting and voting in person.
DATE FOR RECEIPT OF SHAREHOLDERS' PROPOSALS FOR SUBSEQUENT
MEETINGS OF SHAREHOLDERS. The Agreement and Declaration of Trust
of each Trust does not provide for annual meetings of
shareholders, and the Trust does not currently intend to hold such
a meeting in 1997. Shareholder proposals for inclusion in the
proxy statement for any subsequent meeting must be received by the
Trust within a reasonable period of time prior to any such
meeting. Shareholders wishing to submit the name of a candidate
for consideration by the Nominating Committee should submit their
recommendations to the Secretary of the applicable Trust.
ADJOURNMENT. If sufficient votes in favor of a Proposal for any
Fund set forth in the Notice of the Meeting are not received by
the time scheduled for the meeting, the persons named as proxies
may propose adjournments of the meeting for a period or periods of
not more than 60 days in the aggregate to permit further
solicitation of proxies with respect to the Proposal. Any
adjournment will require the affirmative vote of a majority of the
votes cast on the question in person or by proxy at the session of
the meeting to be adjourned. The persons named as proxies will
vote in favor of such adjournment those proxies that they are
entitled to vote in
<PAGE> 23
favor of the Proposal. They will vote against any such adjournment
those proxies required to be voted against the Proposal.
FURTHER INFORMATION ABOUT THE TRUSTS AND THE ADVISER
THE ADVISER. Stein Roe & Farnham Incorporated is a wholly-owned
subsidiary of SteinRoe Services Inc. ("SSI"), the Trusts' transfer
agent, which is a wholly-owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty Financial"), which is a majority-owned
subsidiary of Liberty Mutual Equity Corporation ("Liberty
Equity"), which is a wholly-owned subsidiary of Liberty Mutual
Insurance Company ("Liberty Mutual"). Liberty Mutual is a mutual
insurance company, principally in the property/casualty insurance
field. The address of the Adviser and of SSI is One South Wacker
Drive, Chicago, Illinois 60606; the address of Liberty Financial
and Liberty Equity is Federal Reserve Plaza, Boston, Massachusetts
02210; and the address of Liberty Mutual is 175 Berkeley Street,
Boston, Massachusetts 02117.
The directors of the Adviser are Kenneth R. Leibler, C. Allen
Merritt, Jr., Timothy K. Armour, N. Bruce Callow and Hans P.
Ziegler. Mr. Leibler is president and chief executive officer of
Liberty Financial; Mr. Merritt is senior vice president and
treasurer of Liberty Financial; Mr. Armour is president of the
Adviser's Mutual Funds division; Mr. Callow is president of the
Adviser's Investment Counsel division; and Mr. Ziegler is chief
executive officer of the Adviser.
MANAGEMENT AND ADMINISTRATIVE AGREEMENTS. Proposal 4 contains
information relating to the current investment advisory agreements
of Funds for which new agreements have been proposed. The
shareholders of the remaining Stein Roe Funds have previously
approved the replacement of their investment advisory agreements
with management and administrative agreements. The fees payable
under those agreements are as follows:
FEE SCHEDULE NET ASSETS AT
(DOLLAR AMOUNTS IN MILLIONS) 3/31/96 (IN
FUND MANAGEMENT FEE ADMINISTRATIVE FEE TOTAL FEES MILLIONS)
- ------------- ---------------- ------------------ ------------- -----------
Growth &
Income Fund* .60% up to $500, .15% up to $500, .75% up to $500, $ 165,969
.55% next $500, .125% next $500, .675% next $500,
.50% thereafter .100% thereafter .60% thereafter
Young
Investor
Fund * .60% up to $500, .20% up to $500, .80% up to $500, 67,994
.55% next $500, .15% next $500, .70% next $500,
.50% thereafter .125% thereafter .625% thereafter
Balanced
Fund* .55% up to $500, .15% up to $500, .70% up to $500, 231,670
.50% next $500, .125% next $500, .625% next $500,
.45% thereafter .100% thereafter .55% thereafter
Growth Stock
Fund* .60% up to $500, .15% up to $500, .75% up to $500, 389,793
.55% next $500, .125% next $500, .675% next $500,
.50% thereafter .100% thereafter .60% thereafter
Capital Oppor-
tunities
Fund* .75% up to $500, .15% up to $500, .90% up to $500, 681,657
.70% next $500, .125% next $500, .825% next $500,
.65% next $500, .100% next $500, .75% next $500,
.60% thereafter .075% thereafter .675% thereafter
<PAGE> 24
Special Fund* .75% up to $500, .15% up to $500, .90% up to $500, 1,124,161
.70% next $500, .125% next $500, .825% next $500,
.65% next $500, .100% next $500, .75% next $500,
.60% thereafter .075% thereafter .675% thereafter
Municipal Money
Market Fund N/A** .25 % up to $500, .25 % up to $500, 137,992
.20% next $500, .20% next $500,
.15% thereafter .15% thereafter
- -----------------
*This Fund's investment advisory agreement was replaced by the
management agreement and administrative agreement on September
1, 1995.
**On September 28, 1995, Municipal Money Market Fund became a
feeder fund, investing all of its assets in the SR&F Municipal
Money Market Portfolio ("Portfolio"), a series of Base Trust.
Under the Management Agreement between the Adviser and Base
Trust, the Adviser receives from the Portfolio a monthly
portfolio management fee, computed and accrued daily, based on
the Portfolio's average net assets, at the annual rate of .25 of
1%.
In addition, the Adviser has agreed to voluntarily absorb the
expenses of (a) Young Investor Fund to the extent that they exceed
a 1.25% of average annual net assets through January 31, 1997, and
(b) Municipal Money Market Fund to the extent that they exceed a
0.70% of average annual net assets through October 31, 1996. Each
expense undertaking is subject to earlier termination by the
Adviser on 30 days' notice, except for that relating to Income
Fund. Prior to February 1, 1996, the limit for Young Investor
Fund was 0.99 of 1%.
SHAREHOLDER SERVICES. SSI is the agent of each Trust for the
transfer of shares, disbursement of dividends, maintenance of
shareholder accounting records and shareholder servicing. Prior
to May 1, 1995, the fee SSI received from each Fund for performing
these services was calculated on the basis of the number of
shareholder accounts and the number of various types of
transactions in shareholder accounts. Effective May 1, 1995, the
trustees approved an amendment to each Trust's agreement with SSI
to (a) explicitly provide for certain administrative and
shareholder services furnished by SSI, (b) transfer responsibility
to SSI for payment of certain out-of-pocket expenses previously
paid for by the Funds (aggregating approximately $1 million in the
1994 calendar year), and (c) replace a fee schedule based on
transaction activity and number of shareholder accounts with a
schedule under which each Fund is charged a monthly fee at an
annual rate based on average daily net assets shown in the
following table. The following table shows for each Fund (a)
annual transfer agency fees payable as a percentage of average net
assets, (b) payments made to SSI for services rendered during the
last fiscal year (ending June 30, 1995 for Funds of the Income
Trust and Municipal Trust and September 30, 1995 for Funds of the
Investment Trust), and (c) pro forma payments that would have been
made (net of certain Fund out-of-pocket expenses now being assumed
by SSI) if the current fee schedules had been in effect throughout
the applicable fiscal year:
<PAGE> 25
Fee Fees Pro-Forma
Fund Schedule Paid Fees
- ---------------------------------- -------- -------- ---------
Stein Roe Growth & Income Fund 0.22% $177,635 $ 245,216
Stein Roe International Fund 0.22% 94,514 139,914
Stein Roe Young Investor Fund 0.22% 85,123 4,994
Stein Roe Special Venture Fund 0.22% 57,453 61,815
Stein Roe Balanced Fund 0.22% 312,020 440,503
Stein Roe Growth Stock Fund 0.22% 442,339 645,206
Stein Roe Capital Opportunities Fund 0.22% 280,457 387,019
Stein Roe Special Fund 0.22% 1,648,983 2,429,153
Stein Roe Income Fund 0.15% 105,994 191,636
Stein Roe Government Income Fund 0.15% 47,036 36,346
Stein Roe Intermediate Bond Fund 0.15% 216,933 363,281
Stein Roe Cash Reserves Fund 0.14% 815,963 615,411
Stein Roe Government Reserves Fund 0.14% 81,530 124,208
Stein Roe Limited Maturity Income Fund 0.15% 34,222 21,365
Stein Roe Intermediate Municipals Fund 0.15% 123,245 274,694
Stein Roe High-Yield Municipals Fund 0.15% 212,135 345,506
Stein Roe Municipal Money Market Fund 0.14% 163,540 199,609
Stein Roe Managed Municipals Fund 0.15% 405,369 818,119
BOOKKEEPING AND ACCOUNTING. The Adviser performs certain
bookkeeping and accounting services for each Fund pursuant to a
separate agreement with each Trust. For those services the
Adviser receives an annual fee of $25,000 plus .0025 of 1% of
average net assets of the Fund over $50 million. For services
performed under these agreement, the Adviser received aggregate
fees of $114,498 and $74,004 from Income Trust and Municipal
Trust, respectively, for the fiscal year ended June 30, 1995, and
fees of $192,479 from Investment Trust for the fiscal year ended
September 30, 1995.
DISTRIBUTOR. Shares of each Fund are offered for sale through
Liberty Securities Corporation (the "Distributor"), without any
sales commissions or charges to the Fund or its shareholders. The
Distributor is a wholly-owned indirect subsidiary of Liberty
Mutual whose address is 600 Atlantic Avenue, Boston, Massachusetts
02210. The Adviser bears all sales and promotional expenses,
including payments to the Distributor for the sales of Fund
shares. The Adviser also makes payments to other broker-dealers,
banks and institutions for the sales of Fund shares held through
those institutions. Each Trust pays all expenses in connection
with registration of its shares with the SEC and auditing and
filing fees in connection with registration of its shares under
the various state blue sky laws and assumes the cost of
preparation of prospectuses and other expenses.
INDEPENDENT PUBLIC ACCOUNTANTS. The trustees of Investment Trust
have selected Arthur Andersen & Co. LLP as independent public
accountants for the Trust for the current fiscal year, and the
trustees of Income Trust and Municipal Trust have selected Ernst &
Young LLP as independent auditors for the current fiscal year. No
representative of either accounting firm is expected to be present
at the shareholder meeting.
<PAGE> 26
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of each Fund's portfolio securities and options
and futures contracts.
Purchases and sales of portfolio securities for the Funds of
Income Trust are ordinarily transacted with the issuer or with a
primary market maker acting as principal or agent for the
securities on a net basis, with no brokerage commission being paid
by a Fund. Transactions placed through dealers reflect the spread
between the bid and asked prices. Occasionally, a Fund may make
purchases of underwritten issues at prices that include
underwriting discounts or selling concessions.
Portfolio securities for the Funds of Municipal Trust are
purchased both in underwritings and in the over-the-counter
market. Included in the price paid to an underwriter of a
portfolio security is the spread between the price paid by the
underwriter to the issuer and the price paid by the purchaser.
Purchases and sales of portfolio securities in the over-the-
counter market usually are transacted with a broker or dealer on a
net basis, without any brokerage commission being paid by a Fund
or Portfolio, but do reflect the spread between the bid and asked
prices. The Adviser may also transact purchases of portfolio
securities directly with the issuers.
The Adviser's overriding objective in effecting portfolio
transactions is to seek to obtain the best combination of price
and execution. The best net price, giving effect to brokerage
commissions, if any, and other transaction costs, normally is an
important factor in this decision, but a number of other
judgmental factors may also enter into the decision. These
include: the Adviser's knowledge of negotiated commission rates
currently available and other current transaction costs; the
nature of the security being traded; the size of the transaction;
the desired timing of the trade; the activity existing and
expected in the market for the particular security;
confidentiality; the execution, clearance and settlement
capabilities of the broker or dealer selected and others which are
considered; the Adviser's knowledge of the financial stability of
the broker or dealer selected and such other brokers or dealers;
and the Adviser's knowledge of actual or apparent operational
problems of any broker or dealer. Recognizing the value of these
factors, a Fund may pay a brokerage commission in excess of that
which another broker or dealer may have charged for effecting the
same transaction. Evaluations of the reasonableness of brokerage
commissions, based on the foregoing factors, are made on an
ongoing basis by the Adviser's staff while effecting portfolio
transactions. The general level of brokerage commissions paid is
reviewed by the Adviser, and reports are made annually to the
Board of Trustees.
With respect to issues of securities involving brokerage
commissions, when more than one broker or dealer is believed to be
capable of providing the best combination of price and execution
with respect to a particular portfolio transaction for a Fund, the
Adviser often selects a broker or dealer that has furnished it
with research products or services such as research reports,
subscriptions to financial publications and research compilations,
compilations of securities prices, earnings, dividends, and
similar data, and computer data bases, quotation equipment and
services, research-oriented computer software and services, and
services of economic and other consultants. Selection of brokers
or dealers is not made pursuant to an
<PAGE> 27
agreement or understanding with any of the brokers or dealers;
however, the Adviser uses an internal allocation procedure to
identify those brokers or dealers who provide it with research
products or services and the amount of research products or
services they provide, and endeavors to direct sufficient
commissions generated by its clients' accounts in the aggregate,
including the Funds, to such brokers or dealers to ensure the
continued receipt of research products or services the Adviser
feels are useful. In certain instances, the Adviser receives from
brokers and dealers products or services that are used both as
investment research and for administrative, marketing, or other
non-research purposes. In such instances, the Adviser makes a
good faith effort to determine the relative proportions of such
products or services which may be considered as investment
research. The portion of the costs of such products or services
attributable to research usage may be defrayed by the Adviser
(without prior agreement or understanding, as noted above) through
brokerage commissions generated by transactions by clients
(including the Funds), while the portions of the costs
attributable to non-research usage of such products or services is
paid by the Adviser in cash. No person acting on behalf of a Fund
is authorized, in recognition of the value of research products or
services, to pay a commission in excess of that which another
broker or dealer might have charged for effecting the same
transaction. Research products or services furnished by brokers
and dealers may be used in servicing any or all of the clients of
the Adviser and not all such research products or services are used
in connection with the management of the Funds.
With respect to a Fund's purchases and sales of portfolio
securities transacted with a broker or dealer on a net basis, the
Adviser may also consider the part, if any, played by the broker
or dealer in bringing the security involved to the Adviser's
attention, including investment research related to the security
and provided to the Fund.
The Boards of Income Trust and Municipal Trust have reviewed the
legal developments pertaining to and the practicability of
attempting to recapture underwriting discounts or selling
concessions when portfolio securities are purchased in
underwritten offerings. The Board has been advised by counsel
that recapture by a mutual fund currently is not permitted under
the Rules of Fair Practice of the National Association of
Securities Dealers ("NASD"). Therefore, except with respect to
purchases by the Income Fund of municipal securities which are not
subject to NASD Rules, the Funds will not attempt to recapture
underwriting discounts or selling concessions. If the Income Fund
were to purchase municipal securities, it would attempt to
recapture selling concessions included in prices paid by the
Income Fund in underwritten offerings; however, the Adviser would
not be able to negotiate discounts from the fixed offering price
for those issuers for which there is a strong demand, and will not
allow the failure to obtain a discount to prejudice its ability to
purchase an issue for the Income Fund.
OFFICERS OF THE TRUSTS. The following persons are officers of the
Trusts:
<PAGE> 28
<TABLE>
<CAPTION?
Position(s) Held Position Held
Name Age with the Trust(s) with the Adviser
- --------------------- -- ---------------------------------- ------------------------
<C> <S> <S> <S>
Gary A. Anetsberger 40 Senior Vice-President of each Trust Vice President
Timothy K. Armour 47 President of each Trust President, Mutual Funds
division
Jilaine Hummel 40 Executive Vice-President General Counsel, Senior
Bauer and Secretary of each Vice President, and Secretary
Trust
Ann H. Benjamin 38 Vice-President of Income Trust Senior Vice President
Bruno Bertocci 41 Vice-President of Investment Trust Senior Vice President
David P. Brady 32 Vice-President of Investment Trust Vice President
Thomas W. Butch 39 Vice-President of each Trust Senior Vice President
N. Bruce Callow 50 Executive Vice-President of President, Investment
each Trust Counsel division
Daniel K. Cantor 36 Vice-President of Investment Trust Senior Vice President
Joanne T. Costopoulos 49 Vice-President of Municipal Trust Vice President
E. Bruce Dunn 62 Vice-President of Investment Trust Senior Vice President
Erik P. Gustafson 32 Vice-President of Investment Trust Vice President
David P. Harris 31 Vice-President of Investment Trust Vice President
Philip D. Hausken 38 Vice-President of each Trust Vice President; Corporate Counsel
Harvey B. Hirschhorn 46 Vice-President of Investment Trust Executive Vice President
Michael T. Kennedy 34 Vice-President of Income Trust Senior Vice President
Stephen P. Lautz 39 Vice-President of each Trust Vice President
Steven P. Luetger 42 Vice-President of Income Trust Senior Vice President
Eric S. Maddix 32 Vice-President of Investment Trust Vice President
Lynn C. Maddox 55 Vice-President of each Trust Senior Vice President
Anne E. Marcel 38 Vice-President of each Trust Manager, Mutual Fund Sales and Services
M. Jane McCart 40 Vice-President of Municipal Trust Senior Vice President
Jane M. Naeseth 46 Vice-President of Income Trust Senior Vice President
Nicolette D. Parrish 46 Vice-President and Assistant Senior Compliance Administrator;
Secretary of each Trust Assistant Secretary
Richard B. Peterson 55 Vice-President of Investment Trust Senior Vice President
Sharon R. Robertson 34 Controller of each Trust Accounting Manager
Janet B. Rysz 40 Assistant Secretary of each Trust Senior Compliance Administrator;
Assistant Secretary
Gloria J. Santella 38 Vice-President of Investment Trust Senior Vice President
Thomas P. Sorbo 35 Vice-President of each Trust Senior Vice President
Veronica M. Wallace 49 Vice-President of Municipal Trust Trader in taxable money market
instruments
Hans P. Ziegler 55 Executive Vice-President of Chief Executive Officer
each Trust
Margaret O. Zwick 29 Treasurer of each Trust Compliance Manager
</TABLE>
SHAREHOLDINGS. As of March 29, 1996, the following persons were
known to own beneficially 5% or more of the outstanding shares of
a Fund, as determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934:
<PAGE> 29
APPROXIMATE
PERCENTAGE OF
OUTSTANDING
NAME AND ADDRESS FUND SHARES HELD
- --------------------- ---------------------- -------------
The Northern Trust Co. Income Fund 25.98%
F/B/O Liberty Mutual Special Venture Fund 13.59%
Daily Valuation
Transitions
P.O. Box 92956
Chicago, IL 60675
Dunspaugh-Dalton Government Income Fund 6.41%
Foundation, Inc.
9040 Sunset Drive
Miami, FL 33173
Keyport Life Insurance Young Investor Fund 9.64%
Company
Federal Reserve Plaza
600 Atlantic Avenue
Boston, MA 02210
<PAGE> 30
APPENDIX A
ADMINISTRATIVE AGREEMENT
BETWEEN
STEIN ROE ______ TRUST
AND
STEIN ROE & FARNHAM INCORPORATED
STEIN ROE ______ TRUST, a Massachusetts business trust
registered under the Securities Act of 1933 ("1933 Act") and the
Investment Company Act of 1940 ("1940 Act") (the "Trust"), hereby
appoints STEIN ROE & FARNHAM INCORPORATED, a Delaware corporation,
of Chicago, Illinois ("Administrator"), to furnish certain
administrative services with respect to the Trust and the series
of the Trust listed in Schedule A hereto, as such schedule may be
amended from time to time (each such series hereinafter referred
to as "Fund").
The Trust and Administrator hereby agree that:
1. ADMINISTRATIVE SERVICES. Subject to the terms of this
Agreement and the supervision and control of the Trust's Board of
Trustees ("Trustees"), Administrator shall provide the following
services with respect to the Trust:
(a) Preparation and maintenance of the Trust's registration
statement with the Securities and Exchange Commission ("SEC");
(b) Preparation and periodic updating of the prospectus and
statement of additional information for the Fund
("Prospectus");
(c) Preparation, filing with appropriate regulatory authorities,
and dissemination of various reports for the Fund, including
but not limited to semiannual reports to shareholders under
Section 30(d) of the 1940 Act, annual and semiannual reports
on Form N-SAR, and notices pursuant to Rule 24f-2;
(d) Arrangement for all meetings of shareholders, including the
collection of all information required for preparation of
proxy statements, the preparation and filing with appropriate
regulatory agencies of such proxy statements, the supervision
of solicitation of shareholders and shareholder nominees in
connection therewith, tabulation (or supervision of the
tabulation) of votes, response to all inquiries regarding such
meetings from shareholders, the public and the media, and
preparation and retention of all minutes and all other records
required to be kept in connection with such meetings;
(e) Maintenance and retention of all Trust charter documents and
the filing of all documents required to maintain the Trust's
status as a Massachusetts business trust and as a registered
open-end investment company;
(f) Arrangement and preparation and dissemination of all materials
for meetings of the Board of Trustees and committees thereof
and preparation and retention of all minutes and other records
thereof;
(g) Preparation and filing of the Trust's Federal, state, and
local income tax returns and calculation of any tax required
to be paid in connection therewith;
(h) Calculation of all Trust and Fund expenses and arrangement for
the payment thereof;
(i) Calculation of and arrangement for payment of all income,
capital gain, and other distributions to shareholders of each
Fund;
<PAGE> 31
(j) Determination, after consultation with the officers of the
Trust, of the jurisdictions in which shares of beneficial
interest of each Fund ("Shares") shall be registered or
qualified for sale, or may be sold pursuant to an exemption
from such registration or qualification, and preparation and
maintenance of the registration or qualification of the Shares
for sale under the securities laws of each such jurisdiction;
(k) Provision of the services of persons who may be appointed as
officers of the Trust by the Board of Trustees (it is agreed
that some person or persons may be officers of both the Trust
and the Administrator, and that the existence of any such dual
interest shall not affect the validity of this Agreement
except as otherwise provided by specific provision of
applicable law);
(l) Preparation and, subject to approval of the Trust's Chief
Financial Officer, dissemination of the Trust's and each
Fund's quarterly financial information to the Board of
Trustees and preparation of such other reports relating to the
business and affairs of the Trust and each Fund as the
officers and Board of Trustees may from time to time
reasonably request;
(m) Administration of the Trust's Code of Ethics and periodic
reporting to the Board of Trustees of Trustee and officer
compliance therewith;
(n) Provision of internal legal, accounting, compliance, audit,
and risk management services and periodic reporting to the
Board of Trustees with respect to such services;
(o) Negotiation, administration, and oversight of third party
services to the Trust including, but not limited to, custody,
tax, transfer agency, disaster recovery, audit, and legal
services;
(p) Negotiation and arrangement for insurance desired or required
of the Trust and administering all claims thereunder;
(q) Response to all inquiries by regulatory agencies, the press,
and the general public concerning the business and affairs of
the Trust, including the oversight of all periodic inspections
of the operations of the Trust and its agents by regulatory
authorities and responses to subpoenas and tax levies;
(r) Handling and resolution of any complaints registered with the
Trust by shareholders, regulatory authorities, and the general
public;
(s) Monitoring legal, tax, regulatory, and industry developments
related to the business affairs of the Trust and communicating
such developments to the officers and Board of Trustees as
they may reasonably request or as the Administrator believes
appropriate;
(t) Administration of operating policies of the Trust and
recommendation to the officers and the Board of Trustees of
the Trust of modifications to such policies to facilitate the
protection of shareholders or market competitiveness of the
Trust and Fund and to the extent necessary to comply with new
legal or regulatory requirements;
(u) Responding to surveys conducted by third parties and reporting
of Fund performance and other portfolio information; and
(v) Filing of claims, class actions involving portfolio
securities, and handling administrative matters in connection
with the litigation or settlement of such claims.
<PAGE> 32
2. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In
connection with the services to be provided by Administrator under
this Agreement, Administrator may, to the extent it deems
appropriate, and subject to compliance with the requirements of
applicable laws and regulations and upon receipt of approval of
the trustees, make use of (i) its affiliated companies and their
directors, trustees, officers, and employees and (ii)
subcontractors selected by Administrator, provided that
Administrator shall supervise and remain fully responsible for the
services of all such third parties in accordance with and to the
extent provided by this Agreement. All costs and expenses
associated with services provided by any such third parties shall
be borne by Administrator or such parties.
3. INSTRUCTIONS, OPINIONS OF COUNSEL, AND SIGNATURES. At
any time Administrator may apply to a duly authorized agent of
Trust for instructions regarding the Trust, and may consult
counsel for the Trust or its own counsel, in respect of any matter
arising in connection with this Agreement, and it shall not be
liable for any action taken or omitted by it in good faith in
accordance with such instructions or with the advice or opinion of
such counsel. Administrator shall be protected in acting upon any
such instruction, advice, or opinion and upon any other paper or
document delivered by the Trust or such counsel believed by
Administrator to be genuine and to have been signed by the proper
person or persons and shall not be held to have notice of any
change of authority of any officer or agent of the Trust, until
receipt of written notice thereof from the Trust.
4. EXPENSES BORNE BY TRUST. Except to the extent expressly
assumed by Administrator herein or under a separate agreement
between the Trust and Administrator and except to the extent
required by law to be paid by Administrator, the Trust shall pay
all costs and expenses incidental to its organization, operations
and business. Without limitation, such costs and expenses shall
include but not be limited to:
(a) All charges of depositories, custodians and other agencies for
the safekeeping and servicing of its cash, securities, and
other property;
(b) All charges for equipment or services used for obtaining price
quotations or for communication between Administrator or the
Trust and the custodian, transfer agent or any other agent
selected by the Trust;
(c) All charges for investment advisory, portfolio management, and
accounting services provided to the Trust by the
Administrator, or any other provider of such services;
(d) All charges for services of the Trust's independent auditors
and for services to the Trust by legal counsel;
(e) All compensation of Trustees, other than those affiliated with
Administrator, all expenses incurred in connection with their
services to the Trust, and all expenses of meetings of the
Trustees or committees thereof;
(f) All expenses incidental to holding meetings of shareholders,
including printing and of supplying each record-date
shareholder with notice and proxy solicitation material, and
all other proxy solicitation expenses;
(g) All expenses of printing of annual or more frequent revisions
of the Trust's prospectus(es) and of supplying each then-
existing shareholder with a copy of a revised prospectus;
<PAGE> 33
(h) All expenses related to preparing and transmitting
certificates representing the Trust's shares;
(i) All expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Trustees;
(j) All brokers' commissions and other normal charges incident to
the purchase, sale, or lending of Fund securities;
(k) All taxes and governmental fees payable to Federal, state or
other governmental agencies, domestic or foreign, including
all stamp or other transfer taxes;
(l) All expenses of registering and maintaining the registration
of the Trust under the 1940 Act and, to the extent no
exemption is available, expenses of registering the Trust's
shares under the 1933 Act, of qualifying and maintaining
qualification of the Trust and of the Trust's shares for sale
under securities laws of various states or other jurisdictions
and of registration and qualification of the Trust under all
other laws applicable to the Trust or its business activities;
(m) All interest on indebtedness, if any, incurred by the Trust or
a Fund; and
(n) All fees, dues and other expenses incurred by the Trust in
connection with membership of the Trust in any trade
association or other investment company organization.
5. ALLOCATION OF EXPENSES BORNE BY TRUST. Any expenses
borne by the Trust that are attributable solely to the
organization, operation or business of a Fund shall be paid solely
out of Fund assets. Any expense borne by the Trust which is not
solely attributable to a Fund, nor solely to any other series of
shares of the Trust, shall be apportioned in such manner as
Administrator determines is fair and appropriate, or as otherwise
specified by the Board of Trustees.
6. EXPENSES BORNE BY ADMINISTRATOR. Administrator at its
own expense shall furnish all executive and other personnel,
office space, and office facilities required to render the
services set forth in this Agreement. However, Administrator
shall not be required to pay or provide any credit for services
provided by the Trust's custodian or other agents without
additional cost to the Trust.
In the event that Administrator pays or assumes any expenses
of the Trust or a Fund not required to be paid or assumed by
Administrator under this Agreement, Administrator shall not be
obligated hereby to pay or assume the same or similar expense in
the future; provided that nothing contained herein shall be deemed
to relieve Administrator of any obligation to the Trust or a Fund
under any separate agreement or arrangement between the parties.
7. ADMINISTRATION FEE. For the services rendered,
facilities provided, and charges assumed and paid by Administrator
hereunder, the Trust shall pay to Administrator out of the assets
of each Fund fees at the annual rate for such Fund as set forth in
Schedule B to this Agreement. For each Fund, the administrative
fee shall accrue on each calendar day, and shall be payable
monthly on the first business day of the next succeeding calendar
month. The daily fee accrual shall be computed by multiplying the
fraction of one divided by the number of days in the calendar year
by the applicable annual rate of fee, and multiplying this product
by the net assets of the Fund, determined in the manner
established by the Board of Trustees, as of the close of business
<PAGE> 34
on the last preceding business day on which the Fund's net asset
value was determined.
8. STATE EXPENSE LIMITATION. If for any fiscal year of a
Fund, its aggregate operating expenses ("Aggregate Operating
Expenses") exceed the applicable percentage expense limit imposed
under the securities law and regulations of any state in which
Shares of the Fund are qualified for sale (the "State Expense
Limit"), the Administrator shall pay such Fund the amount of such
excess. For purposes of this State Expense Limit, Aggregate
Operating Expenses shall (a) include (i) any fees or expense
reimbursements payable to Administrator pursuant to this Agreement
and (ii) to the extent the Fund invests all or a portion of its
assets in another investment company registered under the 1940
Act, the pro rata portion of that company's operating expenses
allocated to the Fund, and (iii) any compensation payable to
Administrator pursuant to any separate agreement relating to the
Fund's investment operations and portfolio management, but (b)
exclude any interest, taxes, brokerage commissions, and other
normal charges incident to the purchase, sale or loan of
securities, commodity interests or other investments held by the
Fund, litigation and indemnification expense, and other
extraordinary expenses not incurred in the ordinary course of
business. Except as otherwise agreed to by the parties or unless
otherwise required by the law or regulation of any state, any
reimbursement by Administrator to a Fund under this section shall
not exceed the administrative fee payable to Administrator by the
Fund under this Agreement.
Any payment to a Fund by Administrator hereunder shall be
made monthly, by annualizing the Aggregate Operating Expenses for
each month as of the last day of the month. An adjustment for
payments made during any fiscal year of the Fund shall be made on
or before the last day of the first month following such fiscal
year of the Fund if the Annual Operating Expenses for such fiscal
year (i) do not exceed the State Expense Limitation or (ii) for
such fiscal year there is no applicable State Expense Limit.
9. NON-EXCLUSIVITY. The services of Administrator to the
Trust hereunder are not to be deemed exclusive and Administrator
shall be free to render similar services to others.
10. STANDARD OF CARE. Neither Administrator, nor any of its
directors, officers or stockholders, agents or employees shall be
liable to the Trust, any Fund, or its shareholders for any action
taken or thing done by it or its subcontractors or agents on
behalf of the Trust or the Fund in carrying out the terms and
provisions of this Agreement if done in good faith and without
negligence or misconduct on the part of Administrator, its
subcontractors, or agents.
11. INDEMNIFICATION. The Trust shall indemnify and hold
Administrator and its controlling persons, if any, harmless from
any and all claims, actions, suits, losses, costs, damages, and
expenses, including reasonable expenses for counsel, incurred by
it in connection with its acceptance of this Agreement, in
connection with any action or omission by it or its agents or
subcontractors in the performance of its duties hereunder to the
Trust, or as a result of acting upon any instruction believed by
it to have been executed by a duly authorized agent of the Trust
or as a result of acting upon
<PAGE> 35
information provided by the Trust in form and under policies agreed
to by Administrator and the Trust, provided that: (i) to the extent
such claims, actions, suits, losses, costs, damages, or expenses
relate solely to a particular Fund or group of Funds, such
indemnification shall be only out of the assets of that Fund or
group of Funds; (ii) this indemnification shall not apply to actions
or omissions constituting negligence or misconduct of Administrator
or its agents or subcontractors, including but not limited to
willful misfeasance, bad faith, or gross negligence in the
performance of their duties, or reckless disregard of their
obligations and duties under this Agreement; and (iii) Administrator
shall give the Trust prompt notice and reasonable opportunity to
defend against any such claim or action in its own name or in the
name of Administrator.
Administrator shall indemnify and hold harmless the Trust
from and against any and all claims, demands, expenses and
liabilities which such Trust may sustain or incur arising out of,
or incurred because of, the negligence or misconduct of
Administrator or its agents or subcontractors, provided that such
Trust shall give Administrator prompt notice and reasonable
opportunity to defend against any such claim or action in its own
name or in the name of such Trust.
12. EFFECTIVE DATE, AMENDMENT, AND TERMINATION. This
Agreement shall become effective as to any Fund as of the
effective date for that Fund specified in Schedule A hereto and,
unless terminated as hereinafter provided, shall remain in effect
with respect to such Fund thereafter from year to year so long as
such continuance is specifically approved with respect to that
Fund at least annually by a majority of the Trustees who are not
interested persons of Trust or Administrator.
As to any Trust or Fund of that Trust, this Agreement may be
modified or amended from time to time by mutual agreement between
the Administrator and the Trust and may be terminated by
Administrator or Trust by at least sixty (60) days' written notice
given by the terminating party to the other party. Upon
termination as to any Fund, the Trust shall pay to Administrator
such compensation as may be due under this Agreement as of the
date of such termination and shall reimburse Administrator for its
costs, expenses, and disbursements payable under this Agreement to
such date. In the event that, in connection with a termination, a
successor to any of the duties or responsibilities of
Administrator hereunder is designated by the Trust by written
notice to Administrator, upon such termination Administrator shall
promptly, and at the expense of the Trust or Fund with respect to
which this Agreement is terminated, transfer to such successor all
relevant books, records, and data established or maintained by
Administrator under this Agreement and shall cooperate in the
transfer of such duties and responsibilities, including provision,
at the expense of such Fund, for assistance from Administrator
personnel in the establishment of books, records, and other data
by such successor.
13. ASSIGNMENT. Any interest of Administrator under this
Agreement shall not be assigned either voluntarily or
involuntarily, by operation of law or otherwise, without the prior
written consent of Trust.
14. BOOKS AND RECORDS. Administrator shall maintain, or
oversee the maintenance by such other persons as may from time to
time be approved by the Board of Trustees
<PAGE> 36
to maintain, the books, documents, records, and data required to be
kept by the Trust under the 1940 Act, the laws of the Commonwealth
of Massachusetts or such other authorities having jurisdiction over
the Trust or the Fund or as may otherwise be required for the proper
operation of the business and affairs of the Trust or the Fund
(other than those required to be maintained by any investment
adviser retained by the Trust on behalf of a Fund in accordance with
Section 15 of the 1940 Act).
Administrator will periodically send to the Trust all books,
documents, records, and data of the Trust and each of its Funds
listed in Schedule A that are no longer needed for current
purposes or required to be retained as set forth herein.
Administrator shall have no liability for loss or destruction of
said books, documents, records, or data after they are returned to
such Trust.
Administrator agrees that all such books, documents, records,
and data which it maintains shall be maintained in accordance with
Rule 31a-3 of the 1940 Act and that any such items maintained by
it shall be the property of the Trust. Administrator further
agrees to surrender promptly to the Trust any such items it
maintains upon request, provided that the Administrator shall be
permitted to retain a copy of all such items. Administrator
agrees to preserve all such items maintained under Rule 31a-1 for
the period prescribed under Rule 31a-2 of the 1940 Act.
Trust shall furnish or otherwise make available to
Administrator such copies of the financial statements, proxy
statements, reports, and other information relating to the
business and affairs of each Fund of the Trust as Administrator
may, at any time or from time to time, reasonably require in order
to discharge its obligations under this Agreement.
15. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any
obligation of Trust hereunder shall be binding only upon the
assets of Trust (or the applicable Fund thereof) and shall not be
binding upon any Trustee, officer, employee, agent or shareholder
of Trust. Neither the authorization of any action by the Trustees
or shareholders of Trust nor the execution of this Agreement on
behalf of Trust shall impose any liability upon any Trustee or any
shareholder.
16. USE OF ADMINISTRATOR'S NAME. The Trust may use its name
and the names of its Funds listed in Schedule A or any other name
derived from the name "Stein Roe & Farnham" only for so long as
this Agreement or any extension, renewal, or amendment hereof
remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of
Administrator as it relates to the services it has agreed to
furnish under this Agreement. At such time as this Agreement or
any extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, Trust will cease to use
any name derived from the name "Stein Roe & Farnham" or otherwise
connected with Administrator, or with any organization which shall
have succeeded to Administrator's business herein described.
17. REFERENCES AND HEADINGS. In this Agreement and in any
such amendment, references to this Agreement and all expressions
such as "herein," "hereof," and
<PAGE> 37
"hereunder" shall be deemed to refer to this Agreement as amended
or affected by any such amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof
or control or affect the meaning, construction or effect of this
Agreement. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
Dated: _______________
STEINROE _________ TRUST
By ___________________________
Attest:
____________________________
STEIN ROE & FARNHAM INCORPORATED
By ___________________________
Attest:
____________________________
<PAGE> 38
ADMINISTRATIVE AGREEMENT
SCHEDULE A
The Funds of the Trust currently subject to this Agreement are as
follows:
STEIN ROE INVESTMENT TRUST
Effective Date
Stein Roe Growth & Income Fund 9/1/95
Stein Roe Young Investor Fund 9/1/95
Stein Roe Balanced Fund 9/1/95
Stein Roe Growth Stock Fund 9/1/95
Stein Roe Capital Opportunities Fund 9/1/95
Stein Roe Special Fund 9/1/95
Stein Roe International Fund
Stein Roe Special Venture Fund
Dated:
STEIN ROE INCOME TRUST
Effective Date
Stein Roe Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Reserves Fund
Stein Roe Limited Maturity Income Fund
Dated:
STEIN ROE MUNICIPAL TRUST
Effective Date
Stein Roe Municipal Money Market Fund 9/27/95
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Dated:
<PAGE> 39
ADMINISTRATIVE AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be
calculated with respect to each Fund in accordance with the
following schedule applicable to average daily net assets of the
Fund:
STEIN ROE INVESTMENT TRUST
Fund Administrative Fee Schedule B1
Stein Roe Young Investor Fund 0.200% of first $500 million,
0.150% of next $500 million,
0.125% thereafter
Fund Administrative Fee Schedule B2
Stein Roe Growth Stock Fund 0.150% of first $500 million,
Stein Roe Growth & Income Fund 0.125 of next $500 million,
Stein Roe Balanced Fund 0.100% thereafter
Fund Administrative Fee Schedule B3
Stein Roe Special Fund 0.150% of first $500 million,
Stein Roe Capital Opportunities 0.125% of next $500 million,
Fund 0.100% of next $500 million,
0.075% thereafter
Fund Administrative Fee Schedule B4
Stein Roe International Fund 0.150%
Stein Roe Special Venture Fund
Dated:
STEIN ROE INCOME TRUST
Fund Administrative Fee Schedule
Stein Roe Cash Reserves Fund 0.250% of first $500 million
Stein Roe Government Reserves Fund 0.200% of next $500 million,
0.150% thereafter
Fund Administrative Fee Schedule
Stein Roe Income Fund 0.150% of first $100 million,
Stein Roe Government Income Fund 0.125% thereafter
Fund Administrative Fee Schedule
Stein Roe Intermediate Bond Fund 0.150%
Fund Administrative Fee Schedule
Stein Roe Limited Maturity Income 0.150% of first $100 million,
Fund 0.125% of next $100 million,
0.100% thereafter
Dated:
<PAGE> 40
STEIN ROE MUNICIPAL TRUST
Fund Administrative Fee Schedule
Stein Roe Municipal Money 0.250% of first $500 million,
Market Fund 0.200% of next $500 million,
0.150% thereafter
Fund Administrative Fee Schedule
SteinRoe Intermediate Municipals 0.150% of first $100 million,
Fund 0.125% of next $100 million,
Stein Roe High-Yield Municipals 0.100% thereafter
Fund
Fund Administrative Fee Schedule
Stein Roe Managed Municipals Fund 0.150% of first $100 million,
0.125% of next $100 million,
0.100% of next $800 million,
0.075% thereafter
Dated:
<PAGE> 41
APPENDIX B
MANAGEMENT AGREEMENT
BETWEEN
STEIN ROE _________ TRUST
AND
STEIN ROE & FARNHAM INCORPORATED
STEIN ROE _______ TRUST, a Massachusetts business trust
registered under the Investment Company Act of 1940 ("1940 Act")
as an open-end diversified management investment company
("Trust"), hereby appoints STEIN ROE & FARNHAM INCORPORATED, a
Delaware corporation registered under the Investment Advisers Act
of 1940 as an investment adviser, of Chicago, Illinois
("Manager"), to furnish investment advisory and portfolio
management services with respect to the portion of its assets
represented by the shares of beneficial interest issued in each
series listed in Schedule A hereto, as such schedule may be
amended from time to time (each such series hereinafter referred
to as "Fund"). Trust and Manager hereby agree that:
1. INVESTMENT MANAGEMENT SERVICES. Manager shall manage the
investment operations of Trust and each Fund, subject to the terms
of this Agreement and to the supervision and control of Trust's
Board of Trustees ("Trustees"). Manager agrees to perform, or
arrange for the performance of, the following services with
respect to each Fund:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets,
and individual securities, commodities and indices as it may
deem necessary or useful in discharging its responsibilities
hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) Trust's agreement
and declaration of trust and by-laws; (ii) the Fund's
investment objectives, policies, and restrictions as set forth
in written documents furnished by the Trust to Manager; (iii)
all securities, commodities, and tax laws and regulations
applicable to the Fund and Trust; and (iv) any other written
limits or directions furnished by the Trustees to Manager;
(c) unless otherwise directed by the Trustees, to determine from
time to time securities, commodities, interests or other
investments to be purchased, sold, retained or lent by the
Fund, and to implement those decisions, including the
selection of entities with or through which such purchases,
sales or loans are to be effected;
(d) to use reasonable efforts to manage the Fund so that it will
qualify as a regulated investment company under subchapter M
of the Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting
rights, rights to consent to Trust or Fund action, and any
other rights pertaining to Trust or the Fund shall be
exercised;
(f) to make available to Trust promptly upon request all of the
Fund's records and ledgers and any reports or information
reasonably requested by the Trust; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the
services provided pursuant to this Agreement.
<PAGE> 42
Except as otherwise instructed from time to time by the
Trustees, with respect to execution of transactions for Trust on
behalf of a Fund, Manager shall place, or arrange for the
placement of, all orders for purchases, sales, or loans with
issuers, brokers, dealers or other counterparties or agents
selected by Manager. In connection with the selection of all such
parties for the placement of all such orders, Manager shall
attempt to obtain most favorable execution and price, but may
nevertheless in its sole discretion as a secondary factor,
purchase and sell portfolio securities from and to brokers and
dealers who provide Manager with statistical, research and other
information, analysis, advice, and similar services. In
recognition of such services or brokerage services provided by a
broker or dealer, Manager is hereby authorized to pay such broker
or dealer a commission or spread in excess of that which might be
charged by another broker or dealer for the same transaction if
the Manager determines in good faith that the commission or spread
is reasonable in relation to the value of the services so
provided.
Trust hereby authorizes any entity or person associated with
Manager that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a Fund
to the extent permitted by and in accordance with Section 11(a) of
the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.
Trust hereby consents to the retention by such entity or person of
compensation for such transactions in accordance with Rule 11a-2-
2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the same
type to be sold or purchased for Trust or one or more Funds in
order to obtain best execution or lower brokerage commissions. In
such event, Manager shall allocate the shares so purchased or
sold, as well as the expenses incurred in the transaction, in a
manner it considers to be equitable and fair and consistent with
its fiduciary obligations to Trust, the Funds, and Manager's other
customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of Trust and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent Trust in any way.
2. ADMINISTRATIVE SERVICES. Manager shall supervise the
business and affairs of Trust and each Fund and shall provide such
services and facilities as may be required for effective
administration of Trust and Funds as are not provided by employees
or other agents engaged by Trust; provided that Manager shall not
have any obligation to provide under this Agreement any such
services which are the subject of a separate agreement or
arrangement between Trust and Manager, any affiliate of Manager,
or any third party administrator ("Administrative Agreements").
3. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In
connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and
subject to compliance with the requirements of applicable laws and
regulations and upon receipt of written approval of the Trustees,
make use of (i) its affiliated companies and their directors,
trustees, officers, and employees and (ii) subcontractors selected
by Manager, provided that Manager shall supervise and
<PAGE> 43
remain fully responsible for the services of all such third parties
in accordance with and to the extent provided by this Agreement.
All costs and expenses associated with services provided by any such
third parties shall be borne by Manager or such parties.
4. EXPENSES BORNE BY TRUST. Except to the extent expressly
assumed by Manager herein or under a separate agreement between
Trust and Manager and except to the extent required by law to be
paid by Manager, Manager shall not be obligated to pay any costs
or expenses incidental to the organization, operations or business
of the Trust. Without limitation, such costs and expenses shall
include but not be limited to:
(a) all charges of depositories, custodians and other agencies for
the safekeeping and servicing of its cash, securities, and
other property;
(b) all charges for equipment or services used for obtaining price
quotations or for communication between Manager or Trust and
the custodian, transfer agent or any other agent selected by
Trust;
(c) all charges for administrative and accounting services
provided to Trust by Manager, or any other provider of such
services;
(d) all charges for services of Trust's independent auditors and
for services to Trust by legal counsel;
(e) all compensation of Trustees, other than those affiliated with
Manager, all expenses incurred in connection with their
services to Trust, and all expenses of meetings of the
Trustees or committees thereof;
(f) all expenses incidental to holding meetings of holders of
units of interest in the Trust ("Unitholders"), including
printing and of supplying each record-date Unitholder with
notice and proxy solicitation material, and all other proxy
solicitation expense;
(g) all expenses of printing of annual or more frequent revisions
of Trust prospectus(es) and of supplying each then-existing
Unitholder with a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting
certificates representing Trust shares;
(i) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident to
the purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or
other governmental agencies, domestic or foreign, including
all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the registration
of Trust under the 1940 Act and, to the extent no exemption is
available, expenses of registering Trust's shares under the
1933 Act, of qualifying and maintaining qualification of Trust
and of Trust's shares for sale under securities laws of
various states or other jurisdictions and of registration and
qualification of Trust under all other laws applicable to
Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by Trust or a
Fund; and
(n) all fees, dues and other expenses incurred by Trust in
connection with membership of Trust in any trade association
or other investment company organization.
<PAGE> 44
5. ALLOCATION OF EXPENSES BORNE BY TRUST. Any expenses
borne by Trust that are attributable solely to the organization,
operation or business of a Fund shall be paid solely out of Fund
assets. Any expense borne by Trust which is not solely
attributable to a Fund, nor solely to any other series of shares
of Trust, shall be apportioned in such manner as Manager
determines is fair and appropriate, or as otherwise specified by
the Board of Trustees.
6. EXPENSES BORNE BY MANAGER. Manager at its own expense
shall furnish all executive and other personnel, office space, and
office facilities required to render the investment management and
administrative services set forth in this Agreement. Manager
shall pay all expenses of establishing, maintaining, and servicing
the accounts of Unitholders in each Fund listed in Exhibit A.
However, Manager shall not be required to pay or provide any
credit for services provided by Trust's custodian or other agents
without additional cost to Trust.
In the event that Manager pays or assumes any expenses of
Trust or a Fund not required to be paid or assumed by Manager
under this Agreement, Manager shall not be obligated hereby to pay
or assume the same or similar expense in the future; provided that
nothing contained herein shall be deemed to relieve Manager of any
obligation to Trust or a Fund under any separate agreement or
arrangement between the parties.
7. MANAGEMENT FEE. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, Trust
shall pay to Manager out of the assets of each Fund fees at the
annual rate for such Fund as set forth in Schedule B to this
Agreement. For each Fund, the management fee shall accrue on each
calendar day, and shall be payable monthly on the first business
day of the next succeeding calendar month. The daily fee accrual
shall be computed by multiplying the fraction of one divided by
the number of days in the calendar year by the applicable annual
rate of fee, and multiplying this product by the net assets of the
Fund, determined in the manner established by the Board of
Trustees, as of the close of business on the last preceding
business day on which the Fund's net asset value was determined.
8. RETENTION OF SUB-ADVISER. Subject to obtaining the
initial and periodic approvals required under Section 15 of the
1940 Act, Manager may retain one or more sub-advisers at Manager's
own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to Trust
or one or more Funds. Retention of a sub-adviser shall in no way
reduce the responsibilities or obligations of Manager under this
Agreement, and Manager shall be responsible to Trust and its Funds
for all acts or omissions of any sub-adviser in connection with
the performance of Manager's duties hereunder.
9. NON-EXCLUSIVITY. The services of Manager to Trust
hereunder are not to be deemed exclusive and Manager shall be free
to render similar services to others.
10. STANDARD OF CARE. Neither Manager, nor any of its
directors, officers, stockholders, agents or employees shall be
liable to Trust or its Unitholders for any error of judgment,
mistake of law, loss arising out of any investment, or any other
act or omission in the performance by Manager of its duties under
this Agreement, except for loss
<PAGE> 45
or liability resulting from willful misfeasance, bad faith or gross
negligence on Manager's part or from reckless disregard by Manager of
its obligations and duties under this Agreement.
11. AMENDMENT. This Agreement may not be amended as to
Trust or any Fund without the affirmative votes (a) of a majority
of the Board of Trustees, including a majority of those Trustees
who are not "interested persons" of Trust or of Manager, voting in
person at a meeting called for the purpose of voting on such
approval, and (b) of a "majority of the outstanding shares" of
Trust or, with respect to an amendment affecting an individual
Fund, a "majority of the outstanding shares" of that Fund. The
terms "interested persons" and "vote of a majority of the
outstanding shares" shall be construed in accordance with their
respective definitions in the 1940 Act and, with respect to the
latter term, in accordance with Rule 18f-2 under the 1940 Act.
12. EFFECTIVE DATE AND TERMINATION. This Agreement shall
become effective as to any Fund as of the effective date for that
Fund specified in Schedule A hereto. This Agreement may be
terminated at any time, without payment of any penalty, as to any
Fund by the Board of Trustees of Trust, or by a vote of a majority
of the outstanding shares of that Fund, upon at least sixty (60)
days' written notice to Manager. This Agreement may be terminated
by Manager at any time upon at least sixty (60) days' written
notice to Trust. This Agreement shall terminate automatically in
the event of its "assignment" (as defined in the 1940 Act).
Unless terminated as hereinbefore provided, this Agreement shall
continue in effect with respect to any Fund until the end of the
initial term applicable to that Fund specified in Schedule A and
thereafter from year to year only so long as such continuance is
specifically approved with respect to that Fund at least annually
(a) by a majority of those Trustees who are not interested persons
of Trust or of Manager, voting in person at a meeting called for
the purpose of voting on such approval, and (b) by either the
Board of Trustees of Trust or by a "vote of a majority of the
outstanding shares" of the Fund.
13. OWNERSHIP OF RECORDS; INTERPARTY REPORTING. All records
required to be maintained and preserved by Trust pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable
laws or regulations which are maintained and preserved by Manager
on behalf of Trust and any other records the parties mutually
agree shall be maintained by Manager on behalf of Trust are the
property of Trust and shall be surrendered by Manager promptly on
request by Trust; provided that Manager may at its own expense
make and retain copies of any such records.
Trust shall furnish or otherwise make available to Manager
such copies of the financial statements, proxy statements,
reports, and other information relating to the business and
affairs of each Unitholder in a Fund as Manager may, at any time
or from time to time, reasonably require in order to discharge its
obligations under this Agreement.
Manager shall prepare and furnish to Trust as to each Fund
statistical data and other information in such form and at such
intervals as Trust may reasonably request.
<PAGE> 46
14. NON-LIABILITY OF TRUSTEES AND UNITHOLDERS. Any
obligation of Trust hereunder shall be binding only upon the
assets of Trust (or the applicable Fund thereof) and shall not be
binding upon any Trustee, officer, employee, agent or Unitholder
of Trust. Neither the authorization of any action by the Trustees
or Unitholders of Trust nor the execution of this Agreement on
behalf of Trust shall impose any liability upon any Trustee or any
Unitholder.
15. USE OF MANAGER'S NAME. Trust may use the name "Stein
Roe ____ Trust" and the Fund names listed in Schedule A or any
other name derived from the name "Stein Roe & Farnham" only for so
long as this Agreement or any extension, renewal, or amendment
hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of Manager
as investment adviser. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, Trust will cease to use
any name derived from the name "Stein Roe & Farnham" or otherwise
connected with Manager, or with any organization which shall have
succeeded to Manager's business as investment adviser.
16. REFERENCES AND HEADINGS. In this Agreement and in any
such amendment, references to this Agreement and all expressions
such as "herein," "hereof," and "hereunder" shall be deemed to
refer to this Agreement as amended or affected by any such
amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this Agreement.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
Dated: ________________
STEINROE _________ TRUST
By ___________________________
Attest:
____________________________
STEIN ROE & FARNHAM INCORPORATED
By ___________________________
Attest:
____________________________
<PAGE> 47
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of the Trust currently subject to this Agreement are as
follows:
STEIN ROE INVESTMENT TRUST
Effective End of
Date Initial Term
--------- ------------
Stein Roe Growth & Income Fund 9/1/95 6/30/97
Stein Roe Young Investor Fund 9/1/95 6/30/97
Stein Roe Balanced Fund 9/1/95 6/30/97
Stein Roe Growth Stock Fund 9/1/95 6/30/97
Stein Roe Capital Opportunities Fund 9/1/95 6/30/97
Stein Roe Special Fund 9/1/95 6/30/97
Stein Roe International Fund
Stein Roe Special Venture Fund
Dated: __________
STEIN ROE INCOME TRUST
Effective End of
Date Initial Term
--------- ------------
Stein Roe Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Reserves Fund
Stein Roe Limited Maturity Income Fund
Dated: __________
STEIN ROE MUNICIPAL TRUST
Effective End of
Date Initial Term
--------- ------------
Stein Roe Municipal Money Market Fund 9/28/95 6/30/97
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Dated:________
<PAGE> 48
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be
calculated in accordance with the following schedules applicable
to average daily net assets of the Funds:
STEIN ROE INVESTMENT TRUST
Schedule B1 (Stein Roe Capital Opportunities Fund, Stein Roe
Special Fund)
0.750% on first $500 million of average daily net assets
0.700% on next $500 million of average daily net assets
0.650% on next $500 million of average daily net assets
0.600% thereafter
Schedule B2 (Stein Roe Growth Stock Fund, Stein Roe Young Investor
Fund, Stein Roe Growth & Income Fund)
0.600% on first $500 million of average daily net assets
0.550% on next $500 million of average daily net assets
0.500% thereafter
Schedule B3 (Stein Roe Balanced Fund)
0.550% on first $500 million of average daily net assets
0.500% on next $500 million of average daily net assets
0.450% on average daily net assets in excess of $1 billion
Schedule B4 (Stein Roe Special Venture Fund)
0.750% of average daily net assets
Schedule B5 (Stein Roe International Fund)
0.850% of average daily net assets
Dated ___________________________
STEIN ROE INCOME TRUST
Schedule (Stein Roe Cash Reserves Fund, Stein Roe Government
Reserves Fund)
0.250% of average daily net assets
Schedule (Stein Roe Income Fund)
0.500% on first $100 million of average daily net assets
0.475% thereafter
Schedule (Stein Roe Government Income Fund)
0.450% on first $100 million of average daily net assets
0.425% thereafter
Schedule (Stein Roe Intermediate Bond Fund)
0.350% of average daily net assets
<PAGE> 49
Schedule (Stein Roe Limited Maturity Income Fund)
0.450% on first $100 million of average daily net assets
0.425% on next $100 million of average daily net assets
0.400% thereafter
Dated ___________________________
STEIN ROE MUNICIPAL TRUST
Schedule (Stein Roe Intermediate Municipals Fund, Stein Roe High-
Yield Municipals Fund)
0.450% on first $100 million of average daily net assets
0.425% on next $100 million of average daily net assets
0.400% thereafter
Schedule (Stein Roe Managed Municipals Fund)
0.450% on first $100 million of average daily net assets
0.425% on next $100 million of average daily net assets
0.400% on next $800 million of average net assets
0.375% thereafter
Dated ___________________________
<PAGE> 50
APPENDIX C
MANAGEMENT AGREEMENT
BETWEEN
SR&F BASE TRUST
AND
STEIN ROE & FARNHAM INCORPORATED
SR&F BASE TRUST, a Massachusetts common law trust registered
under the Investment Company Act of 1940 ("1940 Act") as an open-
end diversified management investment company ("Trust"), hereby
appoints STEIN ROE & FARNHAM INCORPORATED, a Delaware corporation
registered under the Investment Advisers Act of 1940 as an
investment adviser, of Chicago, Illinois ("Manager"), to furnish
investment advisory and portfolio management services with respect
to the portion of its assets represented by the shares of
beneficial interest issued in each series listed in Schedule A
hereto, as such schedule may be amended from time to time (each
such series hereinafter referred to as "Portfolio"). Trust and
Manager hereby agree that:
1. INVESTMENT MANAGEMENT SERVICES. Manager shall manage the
investment operations of Trust and each Portfolio, subject to the
terms of this Agreement and to the supervision and control of
Trust's Board of Trustees ("Trustees"). Manager agrees to
perform, or arrange for the performance of, the following services
with respect to each Portfolio:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets,
and individual securities, commodities and indices as it may
deem necessary or useful in discharging its responsibilities
hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) Trust's agreement
and declaration of trust and by-laws; (ii) the Portfolio's
investment objectives, policies, and restrictions as set forth
in written documents furnished by the Trust to Manager; (iii)
all securities, commodities, and tax laws and regulations
applicable to the Portfolio and Trust; and (iv) any other
written limits or directions furnished by the Trustees to
Manager;
(c) unless otherwise directed by the Trustees, to determine from
time to time securities, commodities, interests or other
investments to be purchased, sold, retained or lent by the
Portfolio, and to implement those decisions, including the
selection of entities with or through which such purchases,
sales or loans are to be effected;
(d) to use reasonable efforts to manage the Portfolio so that it
will qualify as a regulated investment company under
subchapter M of the Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting
rights, rights to consent to Trust or Portfolio action, and
any other rights pertaining to Trust or the Portfolio shall be
exercised;
(f) to make available to Trust promptly upon request all of the
Portfolio's records and ledgers and any reports or information
reasonably requested by the Trust; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the
services provided pursuant to this Agreement.
<PAGE> 51
Except as otherwise instructed from time to time by the
Trustees, with respect to execution of transactions for Trust on
behalf of a Portfolio, Manager shall place, or arrange for the
placement of, all orders for purchases, sales, or loans with
issuers, brokers, dealers or other counterparties or agents
selected by Manager. In connection with the selection of all such
parties for the placement of all such orders, Manager shall
attempt to obtain most favorable execution and price, but may
nevertheless in its sole discretion as a secondary factor,
purchase and sell Portfolio securities from and to brokers and
dealers who provide Manager with statistical, research and other
information, analysis, advice, and similar services. In
recognition of such services or brokerage services provided by a
broker or dealer, Manager is hereby authorized to pay such broker
or dealer a commission or spread in excess of that which might be
charged by another broker or dealer for the same transaction if
the Manager determines in good faith that the commission or spread
is reasonable in relation to the value of the services so
provided.
Trust hereby authorizes any entity or person associated with
Manager that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a
Portfolio to the extent permitted by and in accordance with
Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. Trust hereby consents to the retention by
such entity or person of compensation for such transactions in
accordance with Rule 11a-2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders
for its other customers together with any securities of the same
type to be sold or purchased for Trust or one or more Portfolios
in order to obtain best execution or lower brokerage commissions.
In such event, Manager shall allocate the shares so purchased or
sold, as well as the expenses incurred in the transaction, in a
manner it considers to be equitable and fair and consistent with
its fiduciary obligations to Trust, the Portfolios, and Manager's
other customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of Trust and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent Trust in any way.
2. ADMINISTRATIVE SERVICES. Manager shall supervise the
business and affairs of Trust and each Portfolio and shall provide
such services and facilities as may be required for effective
administration of Trust and Portfolios as are not provided by
employees or other agents engaged by Trust; provided that Manager
shall not have any obligation to provide under this Agreement any
such services which are the subject of a separate agreement or
arrangement between Trust and Manager, any affiliate of Manager,
or any third party administrator ("Administrative Agreements").
3. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In
connection with the services to be provided by Manager under this
Agreement, Manager may, to the extent it deems appropriate, and
subject to compliance with the requirements of applicable laws and
regulations and upon receipt of written approval of the Trustees,
make use of (i) its affiliated companies and their directors,
trustees, officers, and employees and (ii)
<PAGE> 52
subcontractors selected by Manager, provided that Manager shall
supervise and remain fully responsible for the services of all
such third parties in accordance with and to the extent provided
by this Agreement. All costs and expenses associated with services
provided by any such third parties shall be borne by Manager or
such parties.
4. EXPENSES BORNE BY TRUST. Except to the extent expressly
assumed by Manager herein or under a separate agreement between
Trust and Manager and except to the extent required by law to be
paid by Manager, Manager shall not be obligated to pay any costs
or expenses incidental to the organization, operations or business
of the Trust. Without limitation, such costs and expenses shall
include but not be limited to:
(a) all charges of depositories, custodians and other agencies for
the safekeeping and servicing of its cash, securities, and
other property;
(b) all charges for equipment or services used for obtaining price
quotations or for communication between Manager or Trust and
the custodian, transfer agent or any other agent selected by
Trust;
(c) all charges for administrative and accounting services
provided to Trust by Manager, or any other provider of such
services;
(d) all charges for services of Trust's independent auditors and
for services to Trust by legal counsel;
(e) all compensation of Trustees, other than those affiliated with
Manager, all expenses incurred in connection with their
services to Trust, and all expenses of meetings of the
Trustees or committees thereof;
(f) all expenses incidental to holding meetings of holders of
units of interest in the Trust ("Unitholders"), including
printing and of supplying each record-date Unitholder with
notice and proxy solicitation material, and all other proxy
solicitation expense;
(g) all expenses of printing of annual or more frequent revisions
of Trust prospectus(es) and of supplying each then-existing
Unitholder with a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting
certificates representing Trust shares;
(i) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident to
the purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or
other governmental agencies, domestic or foreign, including
all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the registration
of Trust under the 1940 Act and, to the extent no exemption is
available, expenses of registering Trust's shares under the
1933 Act, of qualifying and maintaining qualification of Trust
and of Trust's shares for sale under securities laws of
various states or other jurisdictions and of registration and
qualification of Trust under all other laws applicable to
Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by Trust or a
Portfolio; and
(n) all fees, dues and other expenses incurred by Trust in
connection with membership of Trust in any trade association
or other investment company organization.
<PAGE> 53
5. ALLOCATION OF EXPENSES BORNE BY TRUST. Any expenses
borne by Trust that are attributable solely to the organization,
operation or business of a Portfolio shall be paid solely out of
Portfolio assets. Any expense borne by Trust which is not solely
attributable to a Portfolio, nor solely to any other series of
shares of Trust, shall be apportioned in such manner as Manager
determines is fair and appropriate, or as otherwise specified by
the Board of Trustees.
6. EXPENSES BORNE BY MANAGER. Manager at its own expense
shall furnish all executive and other personnel, office space, and
office facilities required to render the investment management and
administrative services set forth in this Agreement. Manager
shall pay all expenses of establishing, maintaining, and servicing
the accounts of Unitholders in each Portfolio listed in Exhibit A.
However, Manager shall not be required to pay or provide any
credit for services provided by Trust's custodian or other agents
without additional cost to Trust.
In the event that Manager pays or assumes any expenses of
Trust or a Portfolio not required to be paid or assumed by Manager
under this Agreement, Manager shall not be obligated hereby to pay
or assume the same or similar expense in the future; provided that
nothing contained herein shall be deemed to relieve Manager of any
obligation to Trust or a Portfolio under any separate agreement or
arrangement between the parties.
7. MANAGEMENT FEE. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder, Trust
shall pay to Manager out of the assets of each Portfolio fees at
the annual rate for such Portfolio as set forth in Schedule B to
this Agreement. For each Portfolio, the management fee shall
accrue on each calendar day, and shall be payable monthly on the
first business day of the next succeeding calendar month. The
daily fee accrual shall be computed by multiplying the fraction of
one divided by the number of days in the calendar year by the
applicable annual rate of fee, and multiplying this product by the
net assets of the Portfolio, determined in the manner established
by the Board of Trustees, as of the close of business on the last
preceding business day on which the Portfolio's net asset value
was determined.
8. RETENTION OF SUB-ADVISER. Subject to obtaining the
initial and periodic approvals required under Section 15 of the
1940 Act, Manager may retain one or more sub-advisers at Manager's
own cost and expense for the purpose of furnishing one or more of
the services described in Section 1 hereof with respect to Trust
or one or more Portfolios. Retention of a sub-adviser shall in no
way reduce the responsibilities or obligations of Manager under
this Agreement, and Manager shall be responsible to Trust and its
Portfolios for all acts or omissions of any sub-adviser in
connection with the performance of Manager's duties hereunder.
9. NON-EXCLUSIVITY. The services of Manager to Trust
hereunder are not to be deemed exclusive and Manager shall be free
to render similar services to others.
10. STANDARD OF CARE. Neither Manager, nor any of its
directors, officers, stockholders, agents or employees shall be
liable to Trust or its Unitholders for any error of judgment,
mistake of law, loss arising out of any investment, or any other
act or
<PAGE> 54
omission in the performance by Manager of its duties under
this Agreement, except for loss or liability resulting from
willful misfeasance, bad faith or gross negligence on Manager's
part or from reckless disregard by Manager of its obligations and
duties under this Agreement.
11. AMENDMENT. This Agreement may not be amended as to
Trust or any Portfolio without the affirmative votes (a) of a
majority of the Board of Trustees, including a majority of those
Trustees who are not "interested persons" of Trust or of Manager,
voting in person at a meeting called for the purpose of voting on
such approval, and (b) of a "majority of the outstanding shares"
of Trust or, with respect to an amendment affecting an individual
Portfolio, a "majority of the outstanding shares" of that
Portfolio. The terms "interested persons" and "vote of a majority
of the outstanding shares" shall be construed in accordance with
their respective definitions in the 1940 Act and, with respect to
the latter term, in accordance with Rule 18f-2 under the 1940 Act.
12. EFFECTIVE DATE AND TERMINATION. This Agreement shall
become effective as to any Portfolio as of the effective date for
that Portfolio specified in Schedule A hereto. This Agreement may
be terminated at any time, without payment of any penalty, as to
any Portfolio by the Board of Trustees of Trust, or by a vote of a
majority of the outstanding shares of that Portfolio, upon at
least sixty (60) days' written notice to Manager. This Agreement
may be terminated by Manager at any time upon at least sixty (60)
days' written notice to Trust. This Agreement shall terminate
automatically in the event of its "assignment" (as defined in the
1940 Act). Unless terminated as hereinbefore provided, this
Agreement shall continue in effect with respect to any Portfolio
until the end of the initial term applicable to that Portfolio
specified in Schedule A and thereafter from year to year only so
long as such continuance is specifically approved with respect to
that Portfolio at least annually (a) by a majority of those
Trustees who are not interested persons of Trust or of Manager,
voting in person at a meeting called for the purpose of voting on
such approval, and (b) by either the Board of Trustees of Trust or
by a "vote of a majority of the outstanding shares" of the
Portfolio.
13. OWNERSHIP OF RECORDS; INTERPARTY REPORTING. All records
required to be maintained and preserved by Trust pursuant to the
provisions of rules or regulations of the Securities and Exchange
Commission under Section 31(a) of the 1940 Act or other applicable
laws or regulations which are maintained and preserved by Manager
on behalf of Trust and any other records the parties mutually
agree shall be maintained by Manager on behalf of Trust are the
property of Trust and shall be surrendered by Manager promptly on
request by Trust; provided that Manager may at its own expense
make and retain copies of any such records.
Trust shall furnish or otherwise make available to Manager
such copies of the financial statements, proxy statements,
reports, and other information relating to the business and
affairs of each Unitholder in a Portfolio as Manager may, at any
time or from time to time, reasonably require in order to
discharge its obligations under this Agreement.
Manager shall prepare and furnish to Trust as to each
Portfolio statistical data and other information in such form and
at such intervals as Trust may reasonably request.
<PAGE> 55
14. NON-LIABILITY OF TRUSTEES AND UNITHOLDERS. Any
obligation of Trust hereunder shall be binding only upon the
assets of Trust (or the applicable Portfolio thereof) and shall
not be binding upon any Trustee, officer, employee, agent or
Unitholder of Trust. Neither the authorization of any action by
the Trustees or Unitholders of Trust nor the execution of this
Agreement on behalf of Trust shall impose any liability upon any
Trustee or any Unitholder.
15. USE OF MANAGER'S NAME. Trust may use the name "SR&F
Base Trust" and the Portfolio names listed in Schedule A or any
other name derived from the name "Stein Roe & Farnham" only for so
long as this Agreement or any extension, renewal, or amendment
hereof remains in effect, including any similar agreement with any
organization which shall have succeeded to the business of Manager
as investment adviser. At such time as this Agreement or any
extension, renewal or amendment hereof, or such other similar
agreement shall no longer be in effect, Trust will cease to use
any name derived from the name "Stein Roe & Farnham" or otherwise
connected with Manager, or with any organization which shall have
succeeded to Manager's business as investment adviser.
16. REFERENCES AND HEADINGS. In this Agreement and in any
such amendment, references to this Agreement and all expressions
such as "herein," "hereof," and "hereunder" shall be deemed to
refer to this Agreement as amended or affected by any such
amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this Agreement.
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
Dated: _______________, 19__.
SSR&F BASE TRUST
By ___________________________
Attest:
____________________________
STEIN ROE & FARNHAM INCORPORATED
By ___________________________
Attest:
____________________________
<PAGE> 56
SR&F BASE TRUST
MANAGEMENT AGREEMENT
SCHEDULE A
The Series of SR&F Base Trust currently subject to this Agreement
are as follows:
Effective End of
Date Initial Term
--------- ------------
Equity Portfolios:
Capital Appreciation Portfolio I (Special)
Capital Appreciation Portfolio II
(Capital Opportunities)
Growth Portfolio I (Young Investor)
Growth Portfolio II (Growth Stock)
Growth Portfolio III (Growth & Income Fund)
Balanced Portfolio
Bond Portfolios:
Income Portfolio
Government Income Portfolo
Intermediate Bond Portfolio
Limited Maturity Income Portfolio
Money Market Portfolios
Cash Reserves Portfolio
Government Reserves Portfolio
Municipal Portfolios:
Municipal Money Market Portfolio 9/28/95 6/30/97
Intermediate Municipals Portfolio
High-Yield Municipals Portfolio
Managed Municipals Portfolio
Dated: _____________
<PAGE> 57
SR&F BASE TRUST
MANAGEMENT AGREEMENT
SCHEDULE B
Compensation pursuant to Section 7 of this Agreement shall be
calculated in accordance with the following schedules applicable
to average daily net assets of the Portfolio:
Schedule B1 (Capital Appreciation Portfolios I and II)
0.750% on first $500 million
0.700% on next $500 million
0.650% on next $500 million
0.600% thereafter
Schedule B2 (Growth Portfolios I, II, and III)
0.600% on first $500 million
0.550% on next $500 million
0.500% thereafter
Schedule B3 (Balanced Portfolio)
0.550% on first $500 million of average daily net assets
0.500% on next $500 million of average daily net assets
0.450% on average daily net assets in excess of $1 billion
Schedule B4 (Special Venture Portfolio)
0.750% of average daily net assets
Schedule B5 (International Portfolio)
0.850% of average daily net assets
Schedule (Cash Reserves Portfolio, Government Reserves Portfolio)
0.250% of average daily net assets
Schedule (Income Portfolio)
0.500% on first $100 million of average daily net assets
0.475% thereafter
Schedule (Government Income Portfolio)
0.450% on first $100 million of average daily net assets
0.425% thereafter
Schedule (Intermediate Bond Portfolio)
0.350% of average daily net assets
Schedule (Limited Maturity Income Portfolio)
0.450% on first $100 million of average daily net assets
0.425% on next $100 million of average daily net assets
0.400% thereafter
<PAGE> 58
Schedule (Municipal Money Market Portfolio)
0.250% of average net assets
Schedule (Intermediate Municipals Portfolio, High-Yield Municipals
Portfolio)
0.450% on first $100 million of average daily net assets
0.425% on next $100 million of average daily net assets
0.400% thereafter
Schedule (Managed Municipals Portfolo)
0.450% on first $100 million of average daily net assets
0.425% on next $100 million of average daily net assets
0.400% on next $800 million of average net assets
0.375% thereafter
Dated ___________________________
<PAGE>
Preliminary copy--
STEIN ROE GROWTH & INCOME FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESTMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2 and 3.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Growth & Income Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
<PAGE>
Preliminary copy--
STEIN ROE INTERNATIONAL FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2, 3, 4, and 5.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe International Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
4. To approve each of the following agreements between
the Trust and Stein Roe & Farnham Incorporated
("Adviser") relating to the Fund:
[ ] [ ] [ ] A. Administrative Agreement
[ ] [ ] [ ] B. Management Agreement
[ ] [ ] [ ] 5. To approve a Management Agreement between SR&F Base
Trust and the Adviser relating to the Fund if and when
the Fund converts to a master fund/feeder fund
structure.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
<PAGE>
Preliminary copy--
STEIN ROE YOUNG INVESTOR FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESTMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2 and 3.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Young Investor Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
Preliminary copy--
STEIN ROE SPECIAL VENTURE FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2, 3, 4, and 5.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Special Venture Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
4. To approve each of the following agreements between
the Trust and Stein Roe & Farnham Incorporated
("Adviser") relating to the Fund:
[ ] [ ] [ ] A. Administrative Agreement
[ ] [ ] [ ] B. Management Agreement
[ ] [ ] [ ] 5. To approve a Management Agreement between SR&F Base
Trust and the Adviser relating to the Fund if and when
the Fund converts to a master fund/feeder fund
structure.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
<PAGE>
Preliminary copy--
STEIN ROE TOTAL RETURN FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESTMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2 and 3.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Total Return Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
Preliminary copy--
STEIN ROE GROWTH STOCK FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESTMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2 and 3.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Growth Stock Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
Preliminary copy--
STEIN ROE CAPITAL OPPORTUNITIES FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESTMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2 and 3.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Capital Opportunities Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
Preliminary copy--
STEIN ROE SPECIAL FUND
SPECIAL MEETING OF SHAREHOLDERS OF JUNE 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
OF STEIN ROE INVESTMENT TRUST
Please vote, sign, date, and detach the lower portion of this
card and return it in the envelope provided. You shares will be
voted as indicated by your mark. If you make no mark, your
shares will be voted as recommended by the Board. The Board of
Trustees recommends voting FOR the election of trustees and FOR
Proposals 2 and 3.
(1) For election as trustees, the nominees are:
(A) Timothy K. Armour (B) Kenneth L. Block (C) William W. Boyd
(D) Lindsay Cook (E) Douglas A. Hacker (F) Francis W. Morley
(G) Charles R. Nelson (H) Thomas C. Theobald (I) Gordon R. Worley
To vote, mark an X in blue or black ink in the appropriate box
on the proxy card below. Keep this portion for your records.
- --------------------------------------------------------------
(Detach here and return this portion only)
Stein Roe Special Fund
To withhold authority to vote on any individual nominee, mark
appropriate box below
VOTE ON TRUSTEES
WITH- FOR
FOR HOLD ALL
ALL ALL EXCEPT (A) (B) (C) (D) (E) (F) (G) (H) (I)
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
VOTE ON PROPOSALS
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. To amend the Fund's fundamental investment
restriction regarding borrowing.
[ ] [ ] [ ] 3. To amend the Fund's fundamental investment
restriction regarding lending.
_________________________ ____________________________________
SIGNATURE DATE SIGNATURE (JOINT OWNER) DATE
Please sign name(s) as printed above. Where shares are
registered with joint owners, all joint owners should sign.
Persons signing as executor, administrator, trustee, or other
representative should give full title as such.
<PAGE>
By signing and dating on the reverse side, you authorize Gary A.
Anetsberger, Timothy K. Armour, and Jilaine Hummel Bauer, or any
of them, each with power of substitution, to vote your shares of
the Fund at the scheduled meeting of shareholders of the Fund
and at any adjournment of the meeting. They shall vote as
recommended by the Board unless otherwise indicated on the
reverse side, and in their discretion upon such other business
as may properly come before the meeting.
