STEINROE INVESTMENT TRUST, 485APOS, 1996-05-02

STEINROE INVESTMENT TRUST
485APOS, 1996-05-02

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1933 Act Registration No. 33-11351
1940 Act File No. 811-4978

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER

THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 33 [X]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 35 [X]

STEIN ROE INVESTMENT TRUST

P. O. Box 804058, Chicago, Illinois 60680
Telephone Number: 1-800-338-2550

Jilaine Hummel Bauer Cameron S. Avery
Executive Vice-President Bell, Boyd & Lloyd
& Secretary Three First National Plaza
Stein Roe Investment Trust Suite 3200
One South Wacker Drive 70 W. Madison Street
Chicago, Illinois 60606 Chicago, Illinois 60602
(Agents for Service)

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

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on July 1, 1996 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485

Registrant has elected to register pursuant to Rule 24f-2 an
indefinite number of shares of beneficial interest of the
following series: Stein Roe Growth & Income Fund, Stein Roe
Balanced Fund, Stein Roe Growth Stock Fund, Stein Roe
Capital Opportunities Fund, Stein Roe Special Fund, Stein
Roe International Fund, Stein Roe Young Investor Fund, and
Stein Roe Special Venture Fund. The Rule 24f-2 Notice for
the fiscal year ended September 30, 1995 was filed on
November 29, 1995.

<PAGE>
STEIN ROE INVESTMENT TRUST
CROSS REFERENCE SHEET

Item
No. Caption

Part A (Prospectus of Growth & Income Funds and Growth Funds)
1 Front cover
2 Fee Table; Summary
3 (a) Financial Highlights
(b) Financial Highlights
(c) Investment Return
(d) Financial Highlights
4 Organization and Description of Shares; The Funds; How the
Funds Invest; Restrictions on the Funds' Investments; Risks
and Investment Considerations; Portfolio Investments and
Strategies; Summary--Investment Risks
5 (a) Management of the Funds--Trustees and Investment Adviser
(b) Management of the Funds--Trustees and Investment Adviser,
Fees and Expenses
(c) Management of the Funds--Portfolio Managers
(d) Inapplicable
(e) Management of the Funds--Transfer Agent
(f) Management of the Funds--Fees and Expenses; Financial
Highlights
(g) Inapplicable
5A Inapplicable
6 (a) Organization and Description of Shares; see Statement of
Additional Information--General Information and History
(b) Inapplicable
(c) Organization and Description of Shares
(d) Organization and Description of Shares
(e) Summary
(f) Distributions and Income Taxes; Shareholder Services
(g) Distributions and Income Taxes
(h) Inapplicable
7 How to Purchase Shares
(a) Management of the Funds--Distributor
(b) How to Purchase Shares--Purchase Price and Effective Date;
Net Asset Value
(c) Inapplicable
(d) How to Purchase Shares
(e) Inapplicable
(f) Inapplicable
8 (a) How to Redeem Shares; Shareholder Services
(b) How to Purchase Shares--Purchases Through Third Parties
(c) How to Redeem Shares--General Redemption Policies
(d) How to Redeem Shares--Special Redemption Privileges,
General Redemption Policies
9 Inapplicable

Part A (Defined Contribution Plans Prospectuses)
1 Front cover
2 (a) Fee Table
(b) Inapplicable
(c) Inapplicable
3 (a) Financial Highlights
(b) Financial Highlights
(c) Investment Return
(d) Financial Highlights
4 Organization and Description of Shares; The Fund; How the
Fund Invests; Restrictions on the Fund's Investments; Risks
and Investment Considerations; Portfolio Investments and
Strategies
5 (a) Management of the Fund--Trustees and Investment Adviser
(b) Management of the Fund--Trustees and Investment Adviser,
Fees and Expenses
(c) Management of the Fund--Portfolio Managers
(d) Inapplicable
(e) Management of the Fund--Transfer Agent
(f) Management of the Fund--Fees and Expenses; Financial
Highlights
(g) Inapplicable
5A Inapplicable
6 (a) Organization and Description of Shares; see Statement of
Additional Information--General Information and History
(b) Inapplicable
(c) Organization and Description of Shares
(d) Organization and Description of Shares
(e) For More Information
(f) Distributions and Income Taxes
(g) Distributions and Income Taxes
(h) Inapplicable
7 How to Purchase Shares
(a) Management of the Fund--Distributor
(b) How to Purchase Shares; Net Asset Value
(c) Inapplicable
(d) How to Purchase Shares
(e) Inapplicable
(f) Inapplicable
8 (a) How to Redeem Shares
(b) Inapplicable
(c) Inapplicable
(d) Inapplicable
9 Inapplicable

Part A (Prospectuses of Stein Roe International Fund
and Stein Roe Young Investor Fund)
1 Front cover
2 Fee Table; Summary
3 (a) Financial Highlights
(b) Inapplicable
(c) Investment Return
(d) Financial Highlights
4 Organization and Description of Shares; The Fund;
[International Fund ] How the Fund Invests; [Young Investor
Fund] Investment Policies; [International Fund]
Restrictions on the Fund's Investments; [Young Investor
Fund] Investment Restrictions; Portfolio Investments and
Strategies; Risks and Investment Considerations; Summary--
Investment Risks
5 (a) Management of the Fund--Trustees and Investment Adviser
(b) Management of the Fund--Trustees and Investment Adviser,
Fees and Expenses
(c) Management of the Fund--Portfolio Managers
(d) Inapplicable
(e) Management of the Fund--Transfer Agent
(f) Management of the Fund--Fees and Expenses; Financial
Highlights
(g) Inapplicable
5A Inapplicable
6 (a) Organization and Description of Shares; see Statement of
Additional Information--General Information and History
(b) Inapplicable
(c) Organization and Description of Shares
(d) Organization and Description of Shares
(e) Summary
(f) Distributions and Income Taxes; Shareholder Services
(g) Distributions and Income Taxes
(h) Inapplicable
7 How to Purchase Shares
(a) Management of the Fund--Distributor
(b) How to Purchase Shares--Purchase Price and Effective Date;
Net Asset Value
(c) Inapplicable
(d) How to Purchase Shares
(e) Inapplicable
(f) Inapplicable
8 (a) How to Redeem Shares; Shareholder Services
(b) How to Purchase Shares
(c) How to Redeem Shares--General Redemption Policies
(d) How to Redeem Shares--Special Redemption Privileges,
General Redemption Policies
9 Inapplicable

Part B (Statements of Additional Information)
10 Cover page
11 Table of Contents
12 General Information and History
13 Investment Policies; Portfolio Investments and Strategies;
Investment Restrictions
14 Management
15(a) Inapplicable
(b) Principal Shareholders
(c) Principal Shareholders
16(a) Investment Advisory Services; Management; see prospectus:
Management of the Fund[s]
(b) Investment Advisory Services
(c) Inapplicable
(d) Investment Advisory Services
(e) Inapplicable
(f) Inapplicable
(g) Inapplicable
(h) Custodian; Independent Public Accountants
(i) Transfer Agent
17(a) Portfolio Transactions
(b) Inapplicable
(c) Portfolio Transactions
(d) Portfolio Transactions
(e) Inapplicable
18 General Information and History
19(a) Purchases and Redemptions; see prospectus: How to Purchase
Shares, How to Redeem Shares, Shareholder Services
(b) Purchases and Redemptions; see prospectus: Net Asset Value
(c) Purchases and Redemptions
20 Additional Income Tax Considerations; Portfolio Investments
and Strategies--Taxation of Options and Futures
21(a) Distributor
(b) Inapplicable
(c) Inapplicable
22(a) Inapplicable
(b) Investment Performance
23 Financial Statements

Part C
24 Financial Statements and Exhibits
25 Persons Controlled By or Under Common Control with Registrant
26 Number of Holders of Securities
27 Indemnification
28 Business and Other Connections of Investment Adviser
29 Principal Underwriters
30 Location of Accounts and Records
31 Management Services
32 Undertakings

<PAGE> 1

GROWTH & INCOME FUND (formerly named SteinRoe Prime Equities)
seeks to provide both growth of capital and current income.

BALANCED FUND (formerly named Stein Roe Total Return Fund) seeks
long-term growth of capital and current income, consistent with
reasonable investment risk.

GROWTH STOCK FUND seeks long-term capital appreciation by
investing in common stock and other equity-type securities.

SPECIAL FUND seeks capital appreciation by investing in securities
that are considered to have limited downside risk relative to
their potential for above-average growth, including securities of
undervalued, underfollowed, or out-of-favor companies.

SPECIAL VENTURE FUND seeks long-term capital appreciation by
investing primarily in a diversified portfolio of equity
securities of entrepreneurially managed companies. The Fund
emphasizes investments in financially strong small and medium-
sized companies, based principally on management appraisal and
stock valuation.

CAPITAL OPPORTUNITIES FUND seeks long-term capital appreciation by
investing in aggressive growth companies.

Each Fund is a "no-load" fund. There are no sales or redemption
charges, and the Funds have no 12b-1 plans. The Funds are series
of the STEIN ROE INVESTMENT TRUST.

This prospectus contains information you should know before
investing in the Funds. Please read it carefully and retain it
for future reference.

A Statement of Additional Information dated July 1, 1996,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information and the most recent financial
statements may be obtained without charge by writing to the
Secretary at P. O. Box ___, Chicago, Illinois 60680, or by calling
800-338-2550.

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

The date of this prospectus is July 1, 1996.

<PAGE> 2

TABLE OF CONTENTS

Page
Summary .................................2
Fee Table ..............................5
Financial Highlights ....................6
The Funds ..............................13
How the Funds Invest ...................14
Growth & Income Fund....................14
Balanced Fund...........................14
Growth Stock Fund.......................14
Special Fund............................15
Special Venture Fund....................15
Capital Opportunities Fund..............15
Portfolio Investments and Strategies ...16
Restrictions on the Funds' Investments..19
Risks and Investment Considerations.....20
How to Purchase Shares .................21
By Check ...............................21
By Wire.................................22
By Electronic Transfer .................23
By Exchange ............................23
Purchase Price and Effective Date ......23
Conditions of Purchase .................23
Purchases Through Third Parties.........23
How to Redeem Shares ...................24
By Written Request .....................24
By Exchange ............................24
Special Redemption Privileges ..........24
General Redemption Policies ............26
Shareholder Services ...................27
Net Asset Value ........................29
Distributions and Income Taxes .........30
Investment Return ......................31
Management of the Funds ................31
Organization and Description of Shares..34
Certificate of Authorization............36

SUMMARY

The mutual funds described in this prospectus are series of the
Stein Roe Investment Trust, an open-end diversified management
investment company. Each Fund is a "no-load" fund. There are no
sales or redemption charges. (See The Funds and Organization and
Description of Shares.) This prospectus is not a solicitation in
any jurisdiction in which the Funds are not registered for sale.

INVESTMENT OBJECTIVES AND POLICIES. GROWTH & INCOME FUND seeks to
provide both growth of capital and current income. It is designed
for investors seeking a diversified portfolio of securities that
fers the opportunity for long-term growth of capital while

<PAGE> 3
also providing a steady stream of income. In seeking to meet this
objective, the Fund invests primarily in well-established
companies whose common stocks are believed to have both the
potential to appreciate in value and to pay dividends to
shareholders.

BALANCED FUND seeks long-term growth of capital and current
income, consistent with reasonable investment risk. The Fund's
assets are allocated among equities, debt securities, and cash.
The portfolio manager determines those allocations using the
Adviser's investment strategists' views regarding economic,
market, and other factors relative to investment opportunities.

GROWTH STOCK FUND seeks long-term capital appreciation by normally
investing at least 65% of its total assets in common stocks and
other equity-type securities that the Adviser believes to have
long-term appreciation possibilities.

SPECIAL FUND invests in securities selected for possible capital
appreciation. Particular emphasis is placed on securities that
are considered to have limited downside risk relative to their
potential for above-average growth--including securities of
undervalued, underfollowed or out-of-favor companies, and
companies that are low-cost producers of goods or services,
financially strong, or run by well-respected managers. The Fund's
investments may include securities of seasoned, established
companies that appear to have appreciation potential, as well as
securities of relatively small, new companies; securities with
limited marketability; new issues of securities; securities of
companies that, in the Adviser's opinion, will benefit from
management change, new technology, new product or service
development, or change in demand; and other securities that the
Adviser believes have capital appreciation possibilities.

SPECIAL VENTURE FUND seeks long-term capital appreciation by
investing primarily in a diversified portfolio of equity
securities of entrepreneurially managed companies that the Adviser
believes represent special opportunities. The Fund emphasizes
investments in financially strong small and medium-sized
companies, based principally on management appraisal and stock
valuation.

CAPITAL OPPORTUNITIES FUND seeks long-term capital appreciation by
investing in aggressive growth companies. An aggressive growth
company, in general, is one that appears to have the ability to
increase its earnings at an above-average rate. These may include
securities of smaller emerging companies as well as securities of
well-seasoned companies of any size that offer strong earnings
growth potential. Such companies may benefit from new products or
services, technological developments, or changes in management.

There can be no guarantee that the Funds will achieve their
investment objectives. Please see How the Funds Invest and
Portfolio Investments and Strategies for further information.

INVESTMENT RISKS. Growth & Income Fund is designed for long-term
investors who desire to participate in the stock market with
moderate investment risk while seeking to limit market volatility.
Balanced Fund is designed for long-term investors who can accept
the fluctuations in portfolio value and other risks associated
with seeking long-term capital appreciation through investments in
securities. Growth Stock Fund and

<PAGE> 4
Special Fund are designed for long-term investors who desire to
participate in the stock market with more investment risk and
volatility than the stock market in general, but with less
investment risk and volatility than aggressive capital
appreciation funds. Special Venture Fund is designed for long-
term investors who want greater return potential than is available
from the stock market in general, and who are willing to tolerate
the greater investment risk and market volatility associated with
investments in small and medium-sized companies. Capital
Opportunities Fund is an aggressive growth fund and is designed
for long-term investors who can accept the fluctuations in
portfolio value and other risks associated with seeking long-term
capital appreciation through investments in common stocks.

Since the Funds may invest in foreign securities, investors should
understand and consider carefully the risks involved in foreign
investing. Investing in foreign securities involves certain
considerations involving both risks and opportunities not
typically associated with investing in U.S. securities. Such
risks include fluctuations in foreign currency exchange rates,
possible imposition of exchange controls, less complete financial
information, political instability, less liquidity, and greater
price volatility.

Please see How the Funds Invest, Portfolio Investments and
Strategies, and Risks and Investment Considerations for further
information.

PURCHASES. The minimum initial investment for each Fund is
$2,500, and additional investments must be at least $100 (only $50
for purchases by electronic transfer). Shares may be purchased by
check, by bank wire, by electronic transfer, or by exchange from
another Stein Roe Fund. For more detailed information, see How to
Purchase Shares.

REDEMPTIONS. For information on redeeming Fund shares, including
the special redemption privileges, see How to Redeem Shares.

NET ASSET VALUE. The purchase and redemption price of a Fund's
shares is its net asset value per share. The net asset value is
determined as of the close of trading on the New York Stock
Exchange. (For more detailed information, see Net Asset Value.)

DISTRIBUTIONS. Dividends for Growth & Income Fund and Balanced
Fund are normally declared and paid quarterly, and dividends for
the other Funds are normally declared and paid annually.
Distributions will be reinvested into your Fund account unless you
elect to have them paid in cash, deposited by electronic transfer
into your bank checking account, or invested in another Stein Roe
Fund account. (See Distributions and Income Taxes and Shareholder
Services.)

ADVISER AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") provides administrative, management, and investment
advisory services to the Funds. For a description of the Adviser
and the fees paid by the Funds, see Management of the Funds.

If you have any additional questions about the Funds, please feel
free to discuss them with an account representative by calling
800-338-2550.

<PAGE> 5
FEE TABLE

<TABLE>
<CAPTION>
Growth & Growth Special Capital
Income Balanced Stock Special Venture Opportunities
Fund Fund Fund Fund Fund Fund
------- -------- ----- ------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None None None None None None
Sales Load Imposed on
Reinvested Dividends None None None None None None
Deferred Sales Load None None None None None None
Redemption Fees* None None None None None None
Exchange Fees None None None None None None
ANNUAL FUND OPERATING EXPENSES
(after expense reimbursement in
the case of Special Venture
Fund; as a percentage of average
net assets)
Management and Administrative
Fees (after expense reimbursement
in the case of Special Venture
Fund and Special Fund) 0.75% 0.70% 0.75% 0.84% 0.48% 0.90%
12b-1 Fees None None None None None None
Other Expenses 0.40% 0.37% 0.33% 0.32% 0.77% 0.35%
----- ----- ----- ----- ----- -----
Total Fund Operating Expenses
(after expense reimbursement in
the case of Special Venture Fund
and Special Fund) 1.15% 1.07% 1.08% 1.16% 1.25% 1.25%
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
</TABLE>
- --------------
*There is a $3.50 charge for wiring redemption proceeds to your bank.

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

1 year 3 years 5 years 10 years
------ ------- -------- ---------
Growth & Income Fund $12 $37 $63 $140
Balanced Fund 11 34 59 131
Growth Stock Fund 11 34 60 132
Special Fund 12 37 64 142
Special Venture Fund 13 40 69 151
Capital Opportunities Fund 13 40 69 151

The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in a Fund. The Funds' transfer agency
fees were changed effective May 1, 1995, and changes in management
and administrative fees became effective on September 1, 1995, for
all Funds except Special Venture Fund. The above table
illustrates expenses that would have been borne by investors in
the last fiscal year assuming that the fee changes had been in
effect for the entire year; in the case, of Special Venture Fund,
which had less than one year of operation for the reporting
period, the expenses have been adjusted for the transfer agency
fee increase and annualized.

From time to time, the Adviser may voluntarily absorb certain
expenses of a Fund. The Adviser has agreed to voluntarily waive
its management fee and absorb the expenses of Special Venture Fund
to the extent that such fees and expenses on an annualized basis
exceed 1.25% of its annual average net assets through January 31,
1997, subject to earlier termination by the Adviser on 30 days'
notice. Any such absorption will temporarily lower the Fund's
overall expense ratio and increase its overall return to
investors. Absent such expense undertaking, Management and
Administrative Fees and Total Fund

<PAGE> 6
Operating Expenses for Special Venture Fund would have been 0.90%
and 1.67%, respectively. (Also see Management of the Funds--Fees
and Expenses.)

For Special Fund for the 12 months ending June 30, 1997, the
Adviser has agreed to reduce its fee by subtracting 0.5% from the
applicable annual rate of management fee. Absent that waiver, the
Management and Administrative Fees would have been ___% and Total
Fund Operating Expenses would have been ___%.

For purposes of the Examples above, the figures assume that the
percentage amounts listed for the respective Funds under Annual
Fund Operating Expenses remain the same in each of the periods;
that all income dividends and capital gain distributions are
reinvested in additional Fund shares; and that, for purposes of
management fee breakpoints, net assets remain at the same level as
in the most recently completed fiscal year.

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

FINANCIAL HIGHLIGHTS

The tables below reflect the results of operations of the Funds on
a per-share basis for the periods shown. Information for periods
after December 31, 1987, for Balanced Fund and the tables for the
other Funds have been audited by Arthur Andersen LLP, independent
public accountants, except for the six months ended March 31,
1996, which is unaudited. All of the auditors' reports were
unqualified. These tables should be read in conjunction with the
respective Fund's financial statements and notes thereto. The
Funds' annual report, which may be obtained from the Trust without
charge upon request, contains additional performance information.

<PAGE> 7

BALANCED FUND
<TABLE>
<CAPTION>
Nine Six
Months Months
Years Ended Ended Ended
December 31, Sept. 30, Years Ended September 30, March 31,
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $21.37 $25.04 $25.07 $22.25 $22.66 $25.41 $21.68 $26.08 $26.91 $27.57 $25.78 $27.82
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 1.41 1.33 1.32 0.97 1.37 1.28 1.32 1.31 1.26 1.15 1.33 ------
Net realized and
unrealized gains
(losses) on investments 3.87 2.75 (1.06) 0.45 3.10 (2.92) 4.85 1.48 2.37 (1.06) 2.22 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 5.28 4.08 0.26 1.42 4.47 (1.64) 6.17 2.79 3.63 0.09 3.55 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ----- ------
DISTRIBUTIONS
Net investment income (1.42) (1.35) (1.63) (0.90) (1.34) (1.36) (1.26) (1.34) (1.30) (1.17) (1.23) ------
Net realized capital
gains (0.19) (2.70) (1.45) (0.11) (0.38) (0.73) (0.51) (0.62) (1.67) (0.71) (0.28) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (1.61) (4.05) (3.08) (1.01) (1.72) (2.09) (1.77) (1.96) (2.97) (1.88) (1.51) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $25.04 $25.07 $22.25 $22.66 $25.41 $21.68 $26.08 $26.91 $27.57 $25.78 $27.82 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratio of expenses to
average net assets 0.77% 0.79% 0.80% *0.87% 0.90% 0.88% 0.87% 0.85% 0.81% 0.83% 0.87% ------
Ratio of net investment
income to average net
assets 6.30% 5.21% 5.12% *5.68% 5.83% 5.36 5.50% 4.94% 4.69% 4.53% 5.14% ------
Portfolio turnover rate 100% 108% 86% 85% 93% 75% 71% 59% 53% 29% 45% ------
Total return 25.78% 17.11% 0.74% 6.51% 20.76% (6.86%) 29.67% 11.13% 14.57% 0.36% 14.49% ------
Net assets, end of
period (000 omitted) $128,676 $149,831 $140,279 $134,225 $144,890 $124,592 $150,689 $173,417 $222,292 $229,274 $228,560 ------
</TABLE>

<PAGE> 8

GROWTH & INCOME FUND
<TABLE>
<CAPTION>
Six
Months
Period Ended Ended
Sept. 30, Years Ended September 30, March 31,
1987 (a) 1988 1989 1990 1991 1992 1993 1994 1995 1996
------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $10.00 $10.49 $ 8.88 $11.34 $10.49 $12.27 $13.42 $14.83 $14.54 $16.65
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.05 0.17 0.22 0.26 0.26 0.19 0.17 0.18 0.34 ------
Net realized and
unrealized gains
(losses) on investments 0.47 (1.64) 2.46 (0.85) 2.17 1.49 2.16 0.40 2.56 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 0.52 (1.47) 2.68 (0.59) 2.43 1.68 2.33 0.58 2.90 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS
Net investment income (0.03) (0.14) (0.22) (0.26) (0.29) (0.18) (0.16) (0.16) (0.20) ------
Net realized capital
gains -- -- -- -- (0.36) (0.35) (0.76) (0.71) (0.59) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.03) (0.14) (0.22) (0.26) (0.65) (0.53) (0.92) (0.87) (0.79) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $10.49 $ 8.88 $11.34 $10.49 $12.27 $13.42 $14.83 $14.54 $16.65 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratio of net expenses
to average net
assets (b) *1.91% 1.47% 1.24% 1.08% 1.00% 0.97% 0.88% 0.90% 0.96% ------
Ratio of net investment
income to average net
assets (c) *1.43% 2.03% 2.28% 2.40% 2.27% 1.46% 1.23% 1.18% 1.78% ------
Portfolio turnover rate 32% 105% 63% 51% 48% 40% 50% 85% 70% ------
Total return 5.20% (13.90%) 30.63% (5.25%) 24.12% 14.00% 17.98% 4.03% 21.12% ------
Net assets, end of
period (000 omitted) $22,863 $23,002 $32,562 $43,446 $54,820 $70,724 $100,365 $129,680 $139,539 ------
</TABLE>

<PAGE> 9

GROWTH STOCK FUND
<TABLE>
<CAPTION>
Nine Six
Months Months
Years Ended Ended Ended
December 31, Sept. 30, Years Ended September 30, March 31,
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $14.04 $17.43 $16.97 $14.67 $14.60 $19.05 $17.90 $22.79 $24.65 $24.89 $23.58 $26.13
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.31 0.26 0.24 0.19 0.34 0.39 0.33 0.18 0.15 0.13 0.12 ------
Net realized and
unrealized gains (losses)
on investments 3.38 2.75 0.46 (0.11) 4.51 (1.17) 5.90 3.01 1.14 0.41 5.60 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 3.69 3.01 0.70 0.08 4.85 (0.78) 6.23 3.19 1.29 0.54 5.72 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS
Net investment income (0.30) (0.25) (0.29) (0.15) (0.34) (0.37) (0.42) (0.16) (0.10) (0.12) (0.15) ------
Net realized capital gains -- (3.22) (2.71) -- (0.06) -- (0.92) (1.17) (0.95) (1.73) (3.02) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.30) (3.47) (3.00) (0.15) (0.40) (0.37) (1.34) (1.33) (1.05) (1.85) (3.17) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $17.43 $16.97 $14.67 $14.60 $19.05 $17.90 $22.79 $24.65 $24.89 $23.58 $26.13 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratio of expenses to
average net assets 0.67% 0.67% 0.65% *0.76% 0.77% 0.73% 0.79% 0.92% 0.93% 0.94% 0.99% ------
Ratio of net investment
income to average net
assets 1.89% 1.34% 1.25% *1.62% 2.05% 2.03% 1.63% 0.75% 0.59% 0.50% 0.56% ------
Portfolio turnover rate 114% 137% 143% 84% 47% 40% 34% 23% 29% 27% 36% ------
Total return 26.35% 16.91% 5.57% 0.54% 33.86% (4.17%) 36.64% 14.37% 5.09% 2.10% 28.18% ------
Net assets, end
of period (000 omitted) $224,371 $226,604 $232,658 $195,641 $206,476 $206,031 $291,767 $372,758 $373,921 $321,502 $360,336 ------
</TABLE>

<PAGE> 10

SPECIAL FUND
<TABLE>
<CAPTION>
Nine Six
Months Months
Years Ended Ended Ended
December 31, Sept. 30, Years Ended September 30, March 31,
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD $14.88 $18.41 $16.95 $12.83 $15.12 $20.79 $16.64 $19.87 $20.90 $25.04 $23.54 $25.26
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
INCOME FROM INVEST-
MENT OPERATIONS
Net investment
income 0.25 0.35 0.23 0.14 0.36 0.42 0.34 0.21 0.17 0.15 0.13 -------
Net realized and
unrealized gains
(losses) on
investments 4.01 2.33 0.12 2.16 5.58 (2.10) 4.55 1.50 5.31 0.33 3.05 -------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total from invest-
ment operations 4.26 2.68 0.35 2.30 5.94 (1.68) 4.89 1.71 5.48 0.48 3.18 -------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
DISTRIBUTIONS
Net investment
income (0.19) (0.34) (0.57) (0.01) (0.21) (0.39) (0.34) (0.37) (0.18) (0.21) (0.15) -------
Net realized capital
gains (0.54) (3.80) (3.90) -- (0.06) (2.08) (1.32) (0.31) (1.16) (1.77) (1.31) -------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total distribu-
tions (0.73) (4.14) (4.47) (0.01) (0.27) (2.47) (1.66) (0.68) (1.34) (1.98) (1.46) -------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
NET ASSET VALUE,
END OF PERIOD $18.41 $16.95 $12.83 $15.12 $20.79 $16.64 $19.87 $20.90 $25.04 $23.54 $25.26 -------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Ratio of expenses
to average net
assets 0.92% 0.92% 0.96% *0.99% 0.96% 1.02% 1.04% 0.99% 0.97% 0.96% 1.02% -------
Ratio of net
investment income
to average net
assets 2.07% 1.75% 1.32% *1.31% 2.12% 2.33% 2.11% 0.99% 0.92% 0.91% 0.56% -------
Portfolio turnover
rate 96% 116% 103% 42% 85% 70% 50% 40% 42% 58% 41% -------
Total return 29.41% 14.70% 4.27% 17.94% 40.00% (8.78%) 32.18% 8.96% 27.35% 2.02% 14.60% -------
Net assets, end of
period (000
omitted) $278,082 $253,693 $187,997 $224,628 $322,056 $361,065 $587,259 $626,080 $1,076,818 $1,243,885 $1,201,469 -------
</TABLE>

<PAGE> 11

SPECIAL VENTURE FUND Six
Period Ended Months Ended
Sept. 30, 1995 (a) March 31, 1996
------------------ --------------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $12.60
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.01 ------
Net realized and unrealized gains on investments 2.67 ------
------ ------
Total from investment operations 2.68 ------
------ ------
DISTRIBUTIONS
Net investment income (0.03) ------
Net realized capital gains (0.05) ------
------ ------
Total distributions (0.08) ------
------ ------
NET ASSET VALUE, END OF PERIOD $12.60 ------
------ ------
------ ------
Ratio of net expenses to average net assets (b) *1.25% ------
Ratio of net investment income to average
net assets (c) *0.12% ------
Portfolio turnover rate 84% ------
Total return 26.96% ------
Net assets, end of period (000 omitted) $60,533 ------

<PAGE> 12

CAPITAL OPPORTUNITIES FUND (D)
<TABLE>
<CAPTION>
Nine Six
Months Months
Years Ended Ended Ended
December 31, Sept. 30, Years Ended September 30, March 31,
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD $ 9.69 $11.91 $13.38 $10.62 $10.78 $14.58 $ 7.32 $11.00 $11.56 $15.44 $15.79 $21.69
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income 0.10 0.03 0.03 0.03 0.05 0.06 0.11 0.06 0.01 0.02 0.01 ------
Net realized and
unrealized gains
(losses) on investments 2.27 1.97 0.62 0.13 3.86 (4.72) 3.73 0.60 3.91 0.34 5.91 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations 2.37 2.00 0.65 0.16 3.91 (4.66) 3.84 0.66 3.92 0.36 5.92 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
DISTRIBUTIONS
Net investment income (0.15) (0.10) (0.05) -- (0.05) (0.06) (0.08) (0.10) (0.04) (0.01) (0.02) ------
Net realized capital
gains -- (0.43) (3.36) -- (0.06) (2.54) (0.08) -- -- -- -- ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions (0.15) (0.53) (3.41) -- (0.11) (2.60) (0.16) (0.10) (0.04) (0.01) (0.02) ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD $11.91 $13.38 $10.62 $10.78 $14.58 $ 7.32 $11.00 $11.56 $15.44 $15.79 $21.69 ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Ratio of expenses to
average net assets 0.95% 0.95% 0.95% *1.01% 1.09% 1.14% 1.18% 1.06% 1.06% 0.97% 1.05% ------
Ratio of net investment
income to average
net assets 0.94% 0.19% 0.18% *0.34% 0.42% 0.43% 1.19% 0.42% 0.09% 0.04% 0.08% ------
Portfolio turnover rate 90% 116% 133% 164% 245% 171% 69% 46% 55% 46% 60% ------
Total return 24.58% 16.77% 9.38% 1.51% 36.68% (37.51%) 53.51% 5.99% 34.01% 2.31% 37.46% ------
Net assets, end of
period (000 omitted) $176,099 $191,415 $171,973 $194,160 $272,805 $86,342 $129,711 $118,726 $153,101 $175,687 $242,381 ------
</TABLE>

<PAGE> 13

*Annualized.
**Unaudited.
(a) From the commencement of operations: March 23, 1987 for Growth
& Income Fund and October 17, 1994 for Special Venture Fund.
(b) If the Funds had paid all of their expenses and there had been
no reimbursement by the Adviser, this ratio would have been
2.49% for the period ended September 30, 1987 and 1.09% for
the year ended September 30, 1990 for Growth & Income Fund;
and 2.87% for the period ended September 30, 1995 and ___% for
the period ended March 31, 1996 for Special Venture Fund.
(c) Computed giving effect to the Adviser's expense limitation
undertaking.
(d) For Capital Opportunities Fund, all per share amounts and
Average Shares Outstanding During Period on the debt table
reflect a two-for-one stock split effective August 25, 1995.
(e) For the periods indicated below, bank borrowing activity was
as follows:

Debt
outstanding Average debt Average shares Average
at end of outstanding outstanding debt per
Period period (in during period during period during
Ended thousands) (in thousands) (in thousands) period
- ------------ ----------- ------------ -------------- --------
Balanced
Fund
12/31/86 $-- 2 5,506 $0.0004
Growth Stock
Fund
12/31/85 -- 5 13,977 0.0004
9/30/89 -- 124 11,745 0.0106
Special Fund
12/31/86 -- 203 15,251 0.0133
Capital
Opportunities
Fund
12/31/85 -- 43 17,050 0.0026
12/31/86 -- 55 13,906 0.0039
12/31/87 -- 292 16,008 0.0183
9/30/88 -- 56 17,206 0.0033
9/30/89 -- 422 16,066 0.0263
9/30/90 200 1,042 15,944 0.0654

The Funds had no bank borrowings during any other periods.

THE FUNDS

The mutual funds offered by this prospectus are STEIN ROE GROWTH &
INCOME FUND ("Growth & Income Fund"), STEIN ROE BALANCED FUND
("Balanced Fund"), STEIN ROE GROWTH STOCK FUND ("Growth Stock
Fund"), STEIN ROE SPECIAL FUND ("Special Fund"), STEIN ROE SPECIAL
VENTURE FUND ("Special Venture Fund"), and STEIN ROE CAPITAL
OPPORTUNITIES FUND ("Capital Opportunities Fund") (collectively,
the "Funds"). Each of the Funds is a no-load, diversified "mutual
fund." Mutual funds sell their own shares to investors and use
the money they receive to invest in a portfolio of securities such
as common stocks. A mutual fund allows you to pool your money
with that of other investors in order to obtain professional
investment management. Mutual funds generally make it possible
for you to obtain greater diversification of your investments and
simplify your recordkeeping. The Funds do not impose commissions
or charges when shares are purchased or redeemed.

The Funds are series of the Stein Roe Investment Trust (the
"Trust"), an open-end management investment company, which is
authorized to issue shares of beneficial interest in separate
series. Each series represents interests in a separate portfolio
of securities and other assets, with its own investment objectives
and policies.

Stein Roe & Farnham Incorporated (the "Adviser") provides
investment advisory, administrative, and bookkeeping and
accounting services to the Funds. The Adviser also manages and
provides investment advisory services for several other no-load
mutual

<PAGE> 14
funds with different investment objectives, including equity
funds, international funds, taxable and tax-exempt bond funds, and
money market funds. To obtain prospectuses and other information
on any of those mutual funds, please call 800-338-2550.

HOW THE FUNDS INVEST

The Funds invest as described below. Further information on
portfolio investments and strategies may be found under Portfolio
Investments and Strategies in this prospectus and in the Statement
of Additional Information.

GROWTH & INCOME FUND.
This Fund's investment objective is to provide both growth of
capital and current income. It is designed for investors seeking
a diversified portfolio of securities that offers the opportunity
for long-term growth of capital while also providing a steady
stream of income.

In seeking to meet this objective, the Fund invests primarily in
well-established companies whose common stocks are believed to
have both the potential to appreciate in value and to pay
dividends to shareholders.

BALANCED FUND.
This Fund seeks long-term growth of capital and current income,
consistent with reasonable investment risk. The Fund's assets are
allocated among equities, debt securities, and cash. The
portfolio manager determines those allocations using the Adviser's
investment strategists' views regarding economic, market, and
other factors relative to investment opportunities.

GROWTH STOCK FUND.
This Fund's investment objective is long-term capital
appreciation, which it attempts to achieve by normally investing
at least 65% of its total assets in common stocks and other
equity-type securities (such as preferred stocks, securities
convertible into or exchangeable for common stocks, and warrants
or rights to purchase common stocks) that, in the opinion of the
Adviser, have long-term appreciation possibilities.

<PAGE> 15
SPECIAL FUND.
This Fund's investment objective is to invest in securities
selected for capital appreciation. Particular emphasis is placed
on securities that are considered to have limited downside risk
relative to their potential for above-average growth--including
securities of undervalued, underfollowed or out-of-favor
companies, and companies that are low-cost producers of goods or
services, financially strong, or run by well-respected managers.
The Fund may invest in securities of seasoned, established
companies that appear to have appreciation potential, as well as
securities of relatively small, new companies. In addition, it
may invest in securities with limited marketability; new issues of
securities; securities of companies that, in the Adviser's
opinion, will benefit from management change, new technology, new
product or service development, or change in demand; and other
securities that the Adviser believes have capital appreciation
possibilities. However, the Fund does not currently intend to
invest, nor has it invested in the past fiscal year, more than 5%
of its net assets in any of these types of securities. Securities
of smaller, newer companies may be subject to greater price
volatility than securities of larger, well-established companies.
In addition, many smaller companies are less well known to the
investing public and may not be as widely followed by the
investment community. Although the Fund invests primarily in
common stocks, it may also invest in other equity-type securities,
including preferred stocks and securities convertible into equity
securities.

SPECIAL VENTURE FUND.
This Fund seeks long-term capital appreciation by investing
primarily in a diversified portfolio of common stocks and other
equity-type securities (such as preferred stocks, securities
convertible or exchangeable for common stocks, and warrants or
rights to purchase common stocks) of entrepreneurially managed
companies that the Adviser believes represent special
opportunities. The Fund emphasizes investments in financially
strong small and medium-sized companies, based principally on
management appraisal and stock valuation. The Adviser considers
"small" and "medium-sized" companies to be those with market
capitalizations of less than $1 billion and $1 to $3 billion,
respectively.

In both its initial and ongoing appraisals of a company's
management, the Adviser seeks to know both the principal owners
and senior management and to assess their business judgment and
strategies through personal visits. The Adviser favors companies
whose management has an owner/operator, risk-averse orientation
and a demonstrated ability to create wealth for investors.
Attractive company characteristics include unit growth, favorable
cost structures or competitive positions, and financial strength
that enables management to execute business strategies under
difficult conditions. A company is attractively valued when its
stock can be purchased at a meaningful discount to the value of
the underlying business.

CAPITAL OPPORTUNITIES FUND.
This Fund's investment objective is long-term capital
appreciation, which it attempts to achieve by investing in
selected companies that, in the opinion of the Adviser, offer
opportunities for capital appreciation.

<PAGE> 16
The Fund pursues its objective by investing in aggressive growth
companies. An aggressive growth company, in general, is one that
appears to have the ability to increase its earnings at an above-
average rate. These may include securities of smaller emerging
companies as well as securities of well-seasoned companies of any
size that offer strong earnings growth potential. Such companies
may benefit from new products or services, technological
developments, or changes in management. Securities of smaller
companies may be subject to greater price volatility than
securities of larger companies. In addition, many smaller
companies are less well known to the investing public and may not
be as widely followed by the investment community. Although it
invests primarily in common stocks, the Fund may invest in all
types of equity securities, including preferred stocks and
securities convertible into common stocks.

PORTFOLIO INVESTMENTS AND STRATEGIES

DEBT SECURITIES. In pursuing its investment objective, each Fund
may invest in debt securities of corporate and governmental
issuers. Investments in debt securities by Growth & Income Fund,
Balanced Fund, and Growth Stock Fund are limited to those that are
rated within the four highest grades (generally referred to as
"investment grade") assigned by a nationally recognized
statistical rating organization. Investments in unrated debt
securities are limited to those deemed to be of comparable quality
by the Adviser. Securities in the fourth highest grade may
possess speculative characteristics, and changes in economic
conditions are more likely to affect the issuer's capacity to pay
interest and repay principal. If the rating of a security held by
a Fund is lost or reduced below investment grade, the Fund is not
required to dispose of the security--the Adviser will, however,
consider that fact in determining whether that Fund should
continue to hold the security. Special Venture Fund, Capital
Opportunities Fund, and Special Fund may invest up to 35% of their
net assets in debt securities, but do not expect to invest more
than 5% of their net assets in debt securities that are rated
below investment grade.

The risks inherent in debt securities depend primarily on the term
and quality of the obligations in a Fund's portfolio as well as on
market conditions. A decline in the prevailing levels of interest
rates generally increases the value of debt securities.
Conversely, an increase in rates usually reduces the value of debt
securities. Securities that are rated below investment grade are
considered predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal according to the
terms of the obligation, and therefore carry greater investment
risk, including the possibility of issuer default and bankruptcy.
When the Adviser determines that adverse market or economic
conditions exist and considers a temporary defensive position
advisable, the Funds may invest without limitation in high-quality
fixed income securities or hold assets in cash or cash
equivalents.

CONVERTIBLE SECURITIES. By investing in convertible securities, a
Fund obtains the right to benefit from the capital appreciation
potential in the underlying stock upon exercise of the conversion
right, while earning higher current income than would be available
if the stock were purchased directly. In determining whether to
purchase a convertible, the Adviser will consider substantially
the same criteria that would be considered in purchasing the
underlying stock. Although convertible securities purchased by a
Fund are frequently rated investment grade, the Funds also may
purchase unrated securities

<PAGE> 17
or securities rated below investment grade if the securities meet
the Adviser's other investment criteria. Convertible securities
rated below investment grade:

- - Tend to be more sensitive to interest rate and economic changes;
- - May be obligations of issuers who are less creditworthy than
issuers of higher quality convertible securities;
- - May be more thinly traded due to the fact that such securities
are less well known to investors than either common stock or
conventional debt securities. As a result, the Adviser's own
investment research and analysis tends to be more important than
other factors in the purchase of such securities.

FOREIGN SECURITIES. Each Fund may invest in foreign securities.
Other than American Depositary Receipts (ADRs), foreign debt
securities denominated in U.S. dollars, and securities guaranteed
by a U.S. person, each Fund is limited to investing no more than
25% of its total assets in foreign securities. (See Risks and
Investment Considerations.) The Funds may invest in sponsored or
unsponsored ADRs. In addition to, or in lieu of, such direct
investment, a Fund may construct a synthetic foreign position by
(a) purchasing a debt instrument denominated in one currency,
generally U.S. dollars; and (b) concurrently entering into a
forward contract to deliver a corresponding amount of that
currency in exchange for a different currency on a future date and
at a specified rate of exchange. Because of the availability of a
variety of highly liquid U.S. dollar debt instruments, a synthetic
foreign position utilizing such U.S. dollar instruments may offer
greater liquidity than direct investment in foreign currency debt
instruments. In connection with the purchase of foreign
securities, the Funds may contract to purchase an amount of
foreign currency sufficient to pay the purchase price of the
securities at the settlement date. Such a contract involves the
risk that the value of the foreign currency may decline relative
to the value of the dollar prior to the settlement date--this risk
is in addition to the risk that the value of the foreign security
purchased may decline. The Funds also may enter into foreign
currency contracts as a hedging technique to limit or reduce
exposure to currency fluctuations. In addition, the Funds may use
options and futures contracts, as described below, to limit or
reduce exposure to currency fluctuations.

As of September 30, 1995, the Funds' holdings of foreign
companies, as a percentage of net assets, were as follows: Growth
& Income Fund, 4.4% (1.5% in foreign securities and 2.9% in ADRs),
Balanced Fund, 5.2% (1.0% in foreign securities and 4.2% in ADRs),
Growth Stock Fund, 6.3% (1.2% in foreign securities and 5.1% in
ADRs), Special Fund, 7.5% (6.0% in foreign securities and 1.5% in
ADRs); Special Venture Fund, 4.9% (4.9% in foreign securities and
none in ADRs); and Capital Opportunities Fund, 2.5% (none in
foreign securities and 2.5% in ADRs).

LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES. Each Fund may make loans of its portfolio securities
to broker-dealers and banks subject to certain restrictions
described in the Statement of Additional Information. Each Fund
may invest in securities purchased on a when-issued or delayed-
delivery basis. Although the payment terms of these securities
are established at the time the Fund enters into the commitment,
the securities may be delivered and paid for a month or more after
the date of purchase, when their value may have changed. A Fund
will make such

<PAGE> 18
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.

PORTFOLIO TURNOVER. Although the Funds do not purchase securities
with a view to rapid turnover, there are no limitations on the
length of time portfolio securities must be held, and the
portfolio turnover rate may vary significantly from year to year.
Under normal circumstances, Special Venture Fund expects to
experience moderate portfolio turnover with an investment time
horizon of three to five years, but its portfolio turnover is not
expected to exceed 100%. At times, Special Fund and Capital
Opportunities Fund may invest for short-term capital appreciation.
Flexibility of investment and emphasis on capital appreciation may
involve greater portfolio turnover than that of mutual funds that
have the objectives of income or maintenance of a balanced
investment position. A high rate of portfolio turnover may result
in increased transaction expenses and the realization of capital
gains and losses. (See Financial Highlights and Distributions and
Income Taxes.) Growth Stock Fund, Special Fund, Special Venture
Fund, and Capital Opportunities Fund are not intended to be
income-producing investments, although they may produce varying
amounts of income.

DERIVATIVES. Consistent with its objective, each Fund may invest
in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, floating rate instruments, and other instruments that
securitize assets of various types ("Derivatives"). In each case,
the value of the instrument or security is "derived" from the
performance of an underlying asset or a "benchmark" such as a
security index, an interest rate, or a currency. No Fund expects
to invest more than 5% of its net assets in any type of Derivative
except for options, futures contracts, and futures options.

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

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

In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuation, each Fund may: (1)
purchase and write both call options and put options on
securities, indexes and foreign currencies; (2) enter into
interest rate, index and foreign currency futures contracts; (3)
write options on such futures contracts; and (4) purchase other
types of forward or investment contracts linked to individual
securities, indexes or other benchmarks. A Fund may write a call
or put option only if the option is covered. As the writer of a
covered call option, a Fund foregoes, during the option's life,
the

<PAGE> 19
opportunity to profit from increases in market value of the
security covering the call option above the sum of the premium and
the exercise price of the call. There can be no assurance that a
liquid market will exist when a Fund seeks to close out a
position. In addition, because futures positions may require low
margin deposits, the use of futures contracts involves a high
degree of leverage and may result in losses in excess of the
amount of the margin deposit.

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

RESTRICTIONS ON THE FUNDS' INVESTMENTS

No Fund will invest more than 5% of its assets in the securities
of any one issuer. This restriction applies only to 75% of a
Fund's portfolio, but does not apply to securities of the U.S.
Government or repurchase agreements for such securities, and would
not prevent a Fund from investing all of its assets in shares of
another investment company having the identical investment
objective.

No Fund will acquire more than 10% of the outstanding voting
securities of any one issuer. Each Fund may, however, invest all
of its assets in shares of another investment company having the
identical investment objective.

No Fund may make loans except that it may (1) purchase money
market securities and enter into repurchase agreements; (2)
acquire publicly-distributed or privately-placed debt
securities; (3) lend its portfolio securities under certain
conditions; and (4) participate in an interfund lending program
with other Stein Roe Funds. No Fund may borrow money, except
for non-leveraging, temporary, or emergency purposes or in
connection with participation in the interfund lending program.
Neither a Fund's aggregate borrowings (including reverse
repurchase agreements) nor a Fund's aggregate loans at any one
time may exceed 33 1/3% of its total assets.

The Funds may invest in repurchase agreements,/1/ provided that no
Fund will invest more than 15% of its net assets in repurchase
agreements maturing in more than seven days, and any other
illiquid securities.

The policies summarized in the first three paragraphs under this
section (except for the first and second paragraphs as they relate
to Special Fund) and the policy with respect
- ----------------
/1/ A repurchase agreement involves a sale of securities to a Fund
in which the seller agrees to repurchase the securities at a
higher price, which includes an amount representing interest on
the purchase price, within a specified time. In the event of
bankruptcy of the seller, the Fund could experience both losses
and delays in liquidating its collateral.
- ----------------
<PAGE> 20
to concentration of investments in any one industry described
under Risks and Investment Considerations are fundamental policies
and, as such, can be changed only with the approval of a "majority
of the outstanding voting securities" of a Fund as defined in the
Investment Company Act of 1940. The Funds' investment objectives
are non-fundamental and, as such, may be changed by the Board of
Trustees without shareholder approval. Any such change may result
in a Fund having an investment objective different from the
objective the shareholder considered appropriate at the time of
investment in the Fund. All of the investment restrictions are
set forth in the Statement of Additional Information.

RISKS AND INVESTMENT CONSIDERATIONS

All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. Growth & Income Fund is
designed for long-term investors who desire to participate in the
stock market with moderate investment risk while seeking to limit
market volatility. Balanced Fund is designed for long-term
investors who can accept the fluctuations in portfolio value and
other risks associated with seeking long-term capital appreciation
through investments in securities. Growth Stock Fund and Special
Fund are designed for long-term investors who desire to
participate in the stock market with more investment risk and
volatility than the stock market in general, but with less
investment risk and volatility than aggressive capital
appreciation funds. Special Venture Fund is designed for long-
term investors who want greater return potential than is available
from the stock market in general, and who are willing to tolerate
the greater investment risk and market volatility associated with
investments in small and medium-sized companies. Capital
Opportunities Fund is an aggressive growth fund and is designed
for long-term investors who can accept the fluctuations in
portfolio value and other risks associated with seeking long-term
capital appreciation through investments in common stocks. Of
course, there can be no guarantee that a Fund will achieve its
objective.

Securities of small and medium-sized companies may be subject to
greater price volatility than securities of larger companies and
tend to have a lower degree of market liquidity. They also may be
more sensitive to changes in economic and business conditions, and
may react differently than securities of larger companies. In
addition, such companies are less well known to the investing
public and may not be as widely followed by the investment
community.

Debt securities rated in the fourth highest grade may have some
speculative characteristics, and changes in economic conditions or
other circumstances may lead to a weakened capacity of the issuers
of such securities to make principal and interest payments.
Securities rated below investment grade may possess speculative
characteristics, and changes in economic conditions are more
likely to affect the issuer's capacity to pay interest or repay
principal.

Although Growth & Income Fund, Balanced Fund, Special Fund,
Special Venture Fund, and Capital Opportunities Fund do not
attempt to reduce or limit risk through wide industry
diversification of investment, they usually allocate their
investments among a number of different industries rather than
concentrating in a particular industry or group of industries.
Growth Stock Fund seeks to reduce risk by investing in a

<PAGE> 21
diversified portfolio, but this does not eliminate all risk. No
Fund, however, will invest more than 25% of the total value of its
assets (at the time of investment) in the securities of companies
in any one industry. (See How the Funds Invest.)

Investment in foreign securities may represent a greater degree of
risk (including risk related to exchange rate fluctuations, tax
provisions, exchange and currency controls, and expropriation of
assets) than investment in securities of domestic issuers. Other
risks of foreign investing include less complete financial
information on issuers; less market liquidity; more market
volatility; less developed and regulated markets; and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.

MASTER FUND/FEEDER FUND OPTION. Rather than invest in securities
directly, each Fund may in the future seek to achieve its
investment objective by pooling its assets with assets of other
mutual funds managed by the Adviser for investment in another
investment company having the same investment objective and
substantially the same investment policies and restrictions as the
Fund. The purpose of such an arrangement is to achieve greater
operational efficiencies and to reduce costs. It is expected that
any such investment company would be managed by the Adviser in
substantially the same manner as the Fund. Shareholders of a Fund
will be given at least 30 days' prior notice of any such
investment, although they will not be entitled to vote on the
action. Such investment would be made only if the Trustees
determine it to be in the best interests of the Fund and its
shareholders.

HOW TO PURCHASE SHARES

You may purchase shares of any of the Funds by check, by wire, by
electronic transfer, or by exchange from your account with another
Stein Roe Fund. The initial purchase minimum per Fund account is
$2,500; the minimum for Uniform Gifts/Transfers to Minors Act
("UGMA") accounts is $1,000; the minimum for accounts established
under an automatic investment plan (i.e., Regular Investments,
Dividend Purchase Option, or Automatic Exchange Plan) is $1,000
for regular accounts and $500 for UGMA accounts; and the minimum
per account for Stein Roe IRAs is $500. The initial purchase
minimum is waived for shareholders who participate in the Stein
Roe Counselor [SERVICE MARK] and Stein Roe Counselor Preferred
[SERVICE MARK] programs and for clients of the Adviser.
Subsequent purchases must be at least $100, or at least $50 if you
purchase by electronic transfer. If you wish to purchase shares
to be held by a tax-sheltered retirement plan sponsored by the
Adviser, you must obtain special forms for those plans. (See
Shareholder Services.)

BY CHECK. To make an initial purchase of shares of a Fund by
check, please complete and sign the Application and mail it,
together with a check made payable to Stein Roe Funds, to SteinRoe
Services Inc. at P.O. Box 8900, Boston, Massachusetts 02205.
Participants in the Stein Roe Counselor [SERVICE MARK] Program
should send orders to SteinRoe Services Inc. at P.O. Box ____,
Chicago, Illinois 60680.

<PAGE> 22
You may make subsequent investments by submitting a check along
with either the stub from your Fund account confirmation statement
or a note indicating the amount of the purchase, your account
number, and the name in which your account is registered. Each
individual check submitted for purchase must be at least $100, and
the Trust generally will not accept cash, drafts, third party
checks, or checks drawn on banks outside the United States.
Should an order to purchase shares of a Fund be cancelled because
your check does not clear, you will be responsible for any
resulting loss incurred by that Fund.

BY WIRE. You also may pay for shares by instructing your bank to
wire federal funds (monies of member banks within the Federal
Reserve System) to the Funds at the First National Bank of Boston.
Your bank may charge you a fee for sending the wire. If you are
opening a new account by wire transfer, you must first telephone
the Trust to request an account number and furnish your social
security or other tax identification number. Neither the Funds
nor the Trust will be responsible for the consequences of delays,
including delays in the banking or Federal Reserve wire systems.
Your bank must include the full name(s) in which your account is
registered and your Fund account number, and should address its
wire as follows:

First National Bank of Boston
ABA Routing No. 011000390
Boston, Massachusetts
Attention: Custody
Fund No. ___; Stein Roe _____ Fund
Account of (exact name(s) in registration)
Shareholder Account No. ________

Fund Numbers:
____--Growth & Income Fund
____--Balanced Fund
____--Growth Stock Fund
____--Special Fund
____--Special Venture Fund
____--Capital Opportunities Fund

Participants in the Stein Roe Counselor [SERVICE MARK] program
should address their wire instructions as follows:

State Street Bank & Trust Company
ABA Routing No. 011000028
Boston, Massachusetts
Attention: Custody
Fund No. ___; Stein Roe _____ Fund
Account of (exact name(s) in registration)
Shareholder Account No. ________

Fund Numbers:
7111--Growth & Income Fund
7105--Balanced Fund
7103--Growth Stock Fund
7106--Special Fund
7125--Special Venture Fund

<PAGE> 23
7104--Capital Opportunities Fund

BY ELECTRONIC TRANSFER. You also may make subsequent investments
by an electronic transfer of funds from your bank checking
account. Electronic transfer allows you to make purchases at your
request ("Special Investments") by calling 800-338-2550 or at pre-
scheduled intervals ("Regular Investments"). (See Shareholder
Services.) Electronic transfer purchases are subject to a $50
minimum and a $100,000 maximum. You may not open a new account
through electronic transfer. Should an order to purchase shares
of a Fund be cancelled because your electronic transfer does not
clear, you will be responsible for any resulting loss incurred by
that Fund.

BY EXCHANGE. You may purchase shares by exchange of shares from
another Stein Roe Fund account either by phone (if the Telephone
Exchange Privilege has been established on the account from which
the exchange is being made), by mail, in person, or automatically
at regular intervals (if you have elected Automatic Exchanges).
Restrictions apply; please review the information on the Exchange
Privilege under How to Redeem Shares--By Exchange.

PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of a Fund's
shares is made at that Fund's net asset value (see Net Asset
Value) next determined after receipt of payment as follows:

A purchase by check or wire transfer is made at the net asset
value next determined after the Fund receives the check or wire
transfer of funds in payment of the purchase.

A purchase by electronic transfer is made at the net asset value
next determined after the Fund receives the electronic transfer
from your bank. A Special Electronic Transfer Investment order
received by telephone on a business day before 3:00 p.m., Central
time, is effective on the next business day.

CONDITIONS OF PURCHASE. Each purchase order for a Fund must be
accepted by an authorized officer of the Trust in Chicago and is
not binding until accepted and entered on the books of that Fund.
Once your purchase order has been accepted, you may not cancel or
revoke it; you may, however, redeem the shares. The Trust
reserves the right not to accept any purchase order that it
determines not to be in the best interest of the Trust or of a
Fund's shareholders. The Trust also reserves the right to waive
or lower its investment minimums for any reason. The Trust does
not issue certificates for shares.

PURCHASES THROUGH THIRD PARTIES. You may purchase (or redeem)
shares through investment dealers, banks, or other financial
institutions. These institutions may charge for their services or
place limitations on the extent to which you may use the services
offered by the Trust. There are no charges or limitations imposed
by the Trust, other than those described in this prospectus, if
shares are purchased (or redeemed) directly from the Trust.

Some financial institutions that maintain nominee accounts with
the Funds for their clients for whom they hold Fund shares charge
an annual fee of up to 0.25% of the average net assets held in
such accounts for accounting, servicing, and distribution services

<PAGE> 24
they provide with respect to the underlying Fund shares. Such
fees are paid by the Adviser.

HOW TO REDEEM SHARES

BY WRITTEN REQUEST. You may redeem all or a portion of your
shares of a Fund by submitting a written request in "good order"
to SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205. Participants in the Stein Roe Counselor [SERVICE MARK]
Program should send redemption requests to SteinRoe Services Inc.
at P.O. Box ____, Chicago, Illinois 60680. A redemption request
will be considered to have been received in good order if the
following conditions are satisfied:

(1) The request must be in writing, and must indicate the number
of shares or dollar amount to be redeemed and identify the
shareholder's account number;
(2) The request must be signed by the shareholder(s) exactly as
the shares are registered;
(3) The request must be accompanied by any certificates for the
shares, either properly endorsed for transfer, or accompanied by a
stock assignment properly endorsed exactly as the shares are
registered;
(4) The signatures on either the written redemption request or
the certificates (or the accompanying stock power) must be
guaranteed (a signature guarantee is not a notarization, but is a
widely accepted way to protect you and the Funds by verifying your
signature);
(5) Corporations and associations must submit with each request a
completed Certificate of Authorization included in this prospectus
(or a form of resolution acceptable to the Trust); and
(6) The request must include other supporting legal documents as
required from organizations, executors, administrators, trustees,
or others acting on accounts not registered in their names.

BY EXCHANGE. You may redeem all or any portion of your Fund
shares and use the proceeds to purchase shares of any other Stein
Roe Fund offered for sale in your state if your signed, properly
completed Application is on file. AN EXCHANGE TRANSACTION IS A
SALE AND PURCHASE OF SHARES FOR FEDERAL INCOME TAX PURPOSES AND
MAY RESULT IN CAPITAL GAIN OR LOSS. Before exercising the
Exchange Privilege, you should obtain the prospectus for the Stein
Roe Fund in which you wish to invest and read it carefully. The
registration of the account to which you are making an exchange
must be exactly the same as that of the Fund account from which
the exchange is made and the amount you exchange must meet any
applicable minimum investment of the Stein Roe Fund being
purchased. An exchange may be made by following the redemption
procedure described above under By Written Request and indicating
the Stein Roe Fund to be purchased--a signature guarantee normally
is not required. (See also the discussion below of the Telephone
Exchange Privilege and Automatic Exchanges.)

<PAGE> 25
when completing your Application. In addition, a signature
guarantee may be required to establish a Privilege after you open
your account. If you establish both the Telephone Redemption by
Wire Privilege and the Electronic Transfer Privilege, the bank
account that you designate for both Privileges must be the same.

You may not use any of the Special Redemption Privileges if you
hold certificates for any of your Fund shares. The Telephone
Redemption by Check Privilege, Telephone Redemption by Wire
Privilege, and Special Electronic Transfer Redemptions are not
available to redeem shares held by a tax-sheltered retirement plan
sponsored by the Adviser. (See also General Redemption Policies.)

Telephone Exchange Privilege. You may use the Telephone Exchange
Privilege to exchange an amount of $50 or more from your account
by calling 800-338-2550 or by sending a telegram; new accounts
opened by exchange are subject to the $2,500 initial purchase
minimum. GENERALLY, YOU WILL BE LIMITED TO FOUR TELEPHONE
EXCHANGE ROUND-TRIPS PER YEAR AND THE FUNDS MAY REFUSE REQUESTS
FOR TELEPHONE EXCHANGES IN EXCESS OF FOUR ROUND-TRIPS (A ROUND-
TRIP BEING THE EXCHANGE OUT OF A FUND INTO ANOTHER STEIN ROE FUND,
AND THEN BACK TO THAT FUND). In addition, the Trust's general
redemption policies apply to redemptions of shares by Telephone
Exchange. (See General Redemption Policies.)

The Trust reserves the right to suspend or terminate, at any time
and without prior notice, the use of the Telephone Exchange
Privilege by any person or class of persons. The Trust believes
that use of the Telephone Exchange Privilege by investors
utilizing market-timing strategies adversely affects the Funds.
THEREFORE, THE TRUST GENERALLY WILL NOT HONOR REQUESTS FOR
TELEPHONE EXCHANGES BY SHAREHOLDERS IDENTIFIED BY THE TRUST AS
"MARKET-TIMERS." Moreover, the Trust reserves the right to
suspend, limit, modify, or terminate, at any time and without
prior notice, the Telephone Exchange Privilege in its entirety.
Because such a step would be taken only if the Board of Trustees
believes it would be in the best interests of the Funds, the Trust
expects that it would provide shareholders with prior written
notice of any such action unless the resulting delay in the
suspension, limitation, modification, or termination of the
Telephone Exchange Privilege would adversely affect the Funds. IF
THE TRUST WERE TO SUSPEND, LIMIT, MODIFY, OR TERMINATE THE
TELEPHONE EXCHANGE PRIVILEGE, A SHAREHOLDER EXPECTING TO MAKE A
TELEPHONE EXCHANGE MIGHT FIND THAT AN EXCHANGE COULD NOT BE
PROCESSED OR THAT THERE MIGHT BE A DELAY IN THE IMPLEMENTATION OF
THE EXCHANGE. (See How to Redeem Shares--By Exchange.) During
periods of volatile economic and market conditions, you may have
difficulty placing your exchange by telephone.

Automatic Exchanges. You may use the Automatic Exchange Privilege
to automatically redeem a fixed amount from your Fund account for
investment in another Stein Roe Fund account on a regular basis.

Telephone Redemption by Check Privilege. You may use the
Telephone Redemption by Check Privilege to redeem an amount of
$1,000 or more from your account by calling 800-338-2550. The
proceeds will be sent by check to your registered address. The
Telephone Redemption by Check Privilege is not available to redeem
shares held by a tax-sheltered retirement plan sponsored by the
Adviser.

<PAGE> 26
Telephone Redemption by Wire Privilege. You may use this
Privilege to redeem shares from your account ($1,000 minimum;
$100,000 maximum) by calling 800-338-2550. The proceeds will be
transmitted by wire to your account at a commercial bank
previously designated by you that is a member of the Federal
Reserve System. The fee for wiring proceeds (currently $3.50 per
transaction) will be deducted from the amount wired.

Electronic Transfer Privilege. You may redeem shares by calling
800-338-2550 and requesting an electronic transfer ("Special
Redemption") of the proceeds to a checking account previously
designated by you at a bank that is a member of the Automated
Clearing House. You may also request electronic transfers at
scheduled intervals ("Automatic Redemptions"--see Shareholder
Services). Electronic transfers are subject to a $50 minimum and
a $100,000 maximum. A Special Redemption request received by
telephone after 3:00 p.m., Central time, is deemed received on the
next business day.

GENERAL REDEMPTION POLICIES. You may not cancel or revoke your
redemption order once instructions have been received and
accepted. The Trust cannot accept a redemption request that
specifies a particular date or price for redemption or any special
conditions. Please telephone the Trust if you have any questions
about requirements for a redemption before submitting your
request. If you wish to redeem shares held by a tax-sheltered
retirement plan sponsored by the Adviser, special procedures of
those plans apply to such redemptions. (See Shareholder Services-
- -Tax-Sheltered Retirement Plans.) The Trust reserves the right to
require a properly completed Application before making payment for
shares redeemed.

The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received. (See Net Asset Value.) Because the
redemption price you receive depends upon that Fund's net asset
value per share at the time of redemption, it may be more or less
than the price you originally paid for the shares and may result
in a realized capital gain or loss.

The Trust will generally mail payment for shares redeemed within
seven days after proper instructions are received. However, the
Trust normally intends to pay proceeds of a Telephone Redemption
paid by wire on the next business day. If you attempt to redeem
shares within 15 days after they have been purchased by check or
electronic transfer, the Trust may delay payment of the redemption
proceeds to you until it can verify that payment for the purchase
of those shares has been (or will be) collected. To reduce such
delays, the Trust recommends that your purchase be made by federal
funds wire through your bank.

Generally, you may not use the Exchange Privilege or any Special
Redemption Privilege to redeem shares purchased by check (other
than certified or cashiers' checks) or electronic transfer until
15 days after their date of purchase.

The Trust reserves the right to suspend, limit, modify, or
terminate, at any time without prior notice, any Privilege or its
use in any manner by any person or class.

<PAGE> 27
instructions furnished thereunder if they reasonably believe that
such instructions are genuine. The Funds employ procedures
reasonably designed to confirm that instructions communicated by
telephone under any Special Redemption Privilege or the Special
Electronic Transfer Redemption Privilege are genuine. Use of any
Special Redemption Privilege or the Special Electronic Transfer
Redemption Privilege authorizes the Funds and their transfer agent
to tape-record all instructions to redeem. In addition, callers
are asked to identify the account number and registration, and may
be required to provide other forms of identification. Written
confirmations of transactions are mailed promptly to the
registered address; a legend on the confirmation requests that the
shareholder review the transactions and inform the Fund
immediately if there is a problem. If a Fund does not follow
reasonable procedures for protecting shareholders against loss on
telephone transactions, it may be liable for any losses due to
unauthorized or fraudulent instructions.

The Trust reserves the right to redeem shares in any account and
send the proceeds to the owner if the shares in the account do not
have a value of at least $1,000. A shareholder would be notified
that his account is below the minimum and would be allowed 30 days
to increase the account before the redemption is processed.

Shares in any account you maintain with a Fund or any of the other
Stein Roe Funds may be redeemed to the extent necessary to
reimburse any Stein Roe Fund for any loss it sustains that is
caused by you (such as losses from uncollected checks and
electronic transfers for the purchase of shares, or any Stein Roe
Fund liability under the Internal Revenue Code provisions on
backup withholding).

SHAREHOLDER SERVICES

REPORTING TO SHAREHOLDERS. You will receive a confirmation
statement reflecting each of your purchases and redemptions of
shares of a Fund, as well as periodic statements detailing
distributions made by that Fund. Shares purchased by reinvestment
of dividends, by cross-reinvestment of dividends from another
Fund, or through an automatic investment plan will be confirmed to
you quarterly. In addition, the Trust will send you semiannual
and annual reports showing Fund portfolio holdings and will
provide you annually with tax information.

FUNDS-ON-CALL [REGISTERED MARK] 24-HOUR INFORMATION SERVICE. To
access the Stein Roe Funds-on-Call [registered mark] automated
telephone service, just call 800-338-2550 on any touch-tone
telephone and follow the recorded instructions. Funds-on-Call
[registered mark] provides yields, prices, latest dividends,
account balances, last transaction, and other information 24 hours
a day, seven days a week.

FUNDS-ON-CALL [REGISTERED MARK] AUTOMATED TELEPHONE TRANSACTIONS.
If you have established the Funds-on-Call [registered mark]
transaction privilege (Funds-on-Call [registered mark] Application
will be required), you may initiate Special Investments and
Redemptions, Telephone Exchanges, and Telephone Redemptions by
Check 24 hours a day, seven days a week by calling 800-338-2550 on
a touch-tone telephone. These transactions are subject to the
terms and conditions of the individual privileges. (See How to
Purchase Shares and How to Redeem Shares.)

<PAGE> 28
STEIN ROE COUNSELOR [SERVICE MARK] PROGRAM. The Stein Roe
Counselor [SERVICE MARK] and Stein Roe Counselor Preferred
[SERVICE MARK] programs are professional investment advisory
services available to shareholders. These programs are designed
to provide investment guidance in helping investors to select a
portfolio of Stein Roe Funds. The Stein Roe Counselor Preferred
[SERVICE MARK] program, which automatically adjusts client
portfolios among the Stein Roe Funds, has a fee of up to 1% of
assets.

TAX-SHELTERED RETIREMENT PLANS. Booklets describing the following
programs and special forms necessary for establishing them are
available on request. You may use all of the Stein Roe Funds,
except those investing primarily in tax-exempt securities, in
these plans. Please read the prospectus for each fund in which
you plan to invest before making your investment.

Individual Retirement Accounts ("IRAs") for employed persons and
their non-employed spouses.

Prototype Money Purchase Pension and Profit Sharing Plans for
self-employed individuals, partnerships, and corporations.

Simplified Employee Pension Plans permitting employers to provide
retirement benefits to their employees by utilizing IRAs while
minimizing administration and reporting requirements.

SPECIAL SERVICES. The following special services are available to
shareholders. Please call 800-338-2550 or write the Trust for
additional information and forms.

Dividend Purchase Option--to diversify your Fund investments by
having distributions from one Fund account automatically invested
in another Stein Roe Fund account. Before establishing this
option, you should obtain and read carefully the prospectus of the
Stein Roe Fund into which you wish to have your distributions
invested. The account from which distributions are made must be
of sufficient size to allow each distribution to usually be at
least $25. The account into which distributions are to be
invested may be opened with an initial investment of only $1,000.

Automatic Dividend Deposit (electronic transfer)--to have income
dividends and capital gain distributions deposited directly into
your bank checking account.

Telephone Redemption by Check Privilege ($1,000 minimum) and
Telephone Exchange Privilege ($50 minimum)--established
automatically when you open your account unless you decline them
on your Application. (See How to Redeem Shares--Special
Redemption Privileges.)

Telephone Redemption by Wire Privilege--to redeem shares from your
account by phone and have the proceeds transmitted by wire to your
checking account ($1,000 minimum; $100,000 maximum).

Special Redemption Option (electronic transfer)--to redeem shares
at any time and have the proceeds deposited directly to your bank
checking account ($50 minimum; $100,000 maximum).

<PAGE> 29
Regular Investments (electronic transfer)--to purchase Fund shares
at regular intervals directly from your bank checking account ($50
minimum; $100,000 maximum).

Special Investments (electronic transfer)--to purchase Fund shares
by telephone and pay for them by electronic transfer of funds from
your checking account ($50 minimum; $100,000 maximum).

Automatic Exchange Plan--to automatically redeem a fixed dollar
amount from your Fund account and invest it in another Stein Roe
Fund account on a regular basis ($50 minimum; $100,000 maximum).

Automatic Redemptions (electronic transfer)--to have a fixed
dollar amount redeemed and sent at regular intervals directly to
your bank checking account ($50 minimum; $100,000 maximum).

Systematic Withdrawals--to have a fixed dollar amount, declining
balance, or fixed percentage of your account redeemed and sent at
regular intervals by check to you or another payee.

NET ASSET VALUE

The purchase and redemption price of each Fund's shares is its net
asset value per share. The net asset value of a share of each
Fund is determined as of the close of trading on the New York
Stock Exchange ("NYSE") (currently 3:00 p.m., Central time) by
dividing the difference between the values of the Fund's assets
and liabilities by the number of shares outstanding. Net asset
value will not be determined on days when the NYSE is closed
unless, in the judgment of the Board of Trustees, the net asset
value of a Fund should be determined on any such day, in which
case the determination will be made at 3:00 p.m., Central time.

Each security traded on a national stock exchange is valued at its
last sale price on that exchange on the day of valuation or, if
there are no sales that day, at the latest bid quotation. Each
over-the-counter security for which the last sale price on the day
of valuation is available from NASDAQ is valued at that price.
All other over-the-counter securities for which reliable
quotations are available are valued at the latest bid quotation.

Long-term straight-debt obligations are valued at a fair value
using a procedure determined in good faith by the Board of
Trustees. Pricing services approved by the Board provide
valuations (some of which may be "readily available market
quotations"). These valuations are reviewed by the Adviser. If
the Adviser believes that a valuation received from the service
does not represent a fair value, it values the obligation using a
method that the Board believes represents fair value. The Board
may approve the use of other pricing services and any pricing
service used may employ electronic data processing techniques,
including a so-called "matrix" system, to determine valuations.
Securities convertible into stocks are valued at the latest
valuation from a principal market maker. Other assets and
securities are valued by a method that the Board believes
represents fair value.

<PAGE> 30
DISTRIBUTIONS AND INCOME TAXES

DISTRIBUTIONS. Income dividends for Growth & Income Fund and
Balanced Fund are normally declared and paid quarterly; and income
dividends for Growth Stock Fund, Special Fund, Special Venture
Fund, and Capital Opportunities Fund are normally declared and
paid annually. Each Fund intends to distribute by the end of each
calendar year at least 98% of any net capital gains realized from
the sale of securities during the twelve-month period ended
October 31 in that year. Therefore, an additional dividend may be
declared near year end. The Funds intend to distribute any
undistributed net investment income and net realized capital gains
in the following year.

All of your income dividends and capital gain distributions will
be reinvested in additional shares unless you elect to have
distributions either (1) paid by check; (2) deposited by
electronic transfer into your bank checking account; (3) applied
to purchase shares in your account with another Stein Roe Fund; or
(4) applied to purchase shares in a Stein Roe Fund account of
another person. (See Shareholder Services.) Reinvestment into
the same Fund account normally occurs one business day after the
record date. Investment of distributions into another Stein Roe
Fund account occurs on the payable date. If you choose to receive
your distributions in cash, your distribution check normally will
be mailed approximately 15 days after the record date. The Trust
reserves the right to reinvest the proceeds and future
distributions in additional Fund shares if checks mailed to you
for distributions are returned as undeliverable or are not
presented for payment within six months.

INCOME TAXES. Your distributions will be taxable to you, under
income tax law, whether received in cash or reinvested in
additional shares. For federal income tax purposes, any
distribution that is paid in January but was declared in the prior
calendar year is deemed paid in the prior calendar year.

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

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

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

For federal income tax purposes, each Fund is treated as a
separate taxable entity distinct from the other series of the
Trust.

This discussion of taxation is not intended to be a full
discussion of income tax laws and their effect on shareholders.
You may wish to consult your own tax advisor. The foregoing
information applies to U.S. shareholders. Foreign shareholders
should consult their tax advisors as to the tax consequences of
ownership of Fund shares.

<PAGE> 31
BACKUP WITHHOLDING. The Trust may be required to withhold federal
income tax ("backup withholding") from certain payments to you,
generally redemption proceeds. Backup withholding may be required
if:
- - You fail to furnish your properly certified social security or
other tax identification number;
- - You fail to certify that your tax identification number is
correct or that you are not subject to backup withholding due to
the underreporting of certain income;
- - The Internal Revenue Service informs the Trust that your tax
identification number is incorrect.

These certifications are contained in the Application that you
should complete and return when you open an account. The Funds
must promptly pay to the IRS all amounts withheld. Therefore, it
is usually not possible for a Fund to reimburse you for amounts
withheld. You may, however, claim the amount withheld as a credit
on your federal income tax return.

INVESTMENT RETURN

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

Comparison of a Fund's total return with alternative investments
should consider differences between the Fund and the alternative
investments, the periods and methods used in calculation of the
return being compared, and the impact of taxes on alternative
investments. Of course, past performance is not necessarily
indicative of future results.

MANAGEMENT OF THE FUNDS

TRUSTEES AND ADVISER. The Board of Trustees of the Trust has
overall management responsibility for the Trust and the Funds.
See the Statement of Additional Information for the names of and
additional information about the trustees and officers. The
Funds' Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
Funds, subject to the direction of the Board of Trustees. The
Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940.

The Adviser was organized in 1986 to succeed to the business of
Stein Roe & Farnham, a partnership that had advised and managed
mutual funds since 1949. The Adviser is a wholly owned subsidiary
of Liberty Financial Companies, Inc. ("Liberty Financial"), which
in turn is a majority owned indirect subsidiary of Liberty Mutual
Insurance Company.

<PAGE> 32

PORTFOLIO MANAGERS. Daniel K. Cantor has been portfolio manager
of Growth & Income Fund since 1995. He is a senior vice president
of the Adviser, which he joined in 1985. A chartered financial
analyst, he received a B.A. degree from the University of
Rochester in 1981 and an M.B.A. from the Wharton School of the
University of Pennsylvania in 1985. As of December 31, 1995, Mr.
Cantor was responsible for managing $152 million in mutual fund
assets. Jeffrey C. Kinzel has been associate manager of this Fund
since April, 1996. Mr. Kinzel received a B.A. from Northwestern
University (1979), a J.D. from the University of Michigan Law
School (1983), and an M.B.A. from the Wharton School of the
University of Pennsylvania (1991). Mr. Kinzel is a vice president
and intermediate research analyst with the Adviser. Before
joining the Adviser in 1991 as an equity research analyst, Mr.
Kinzel was employed by Butler and Binion; Miller, Canfield,
Paddock and Stone; and 1838 Investment Advisers.

Harvey B. Hirschhorn has been portfolio manager of Balanced Fund
since April, 1996. He is executive vice president and director of
research services of the Adviser, which he joined in 1973. He
received an A.B. degree from Rutgers College in 1971 and an M.B.A.
from the University of Chicago in 1973, and is a chartered
financial analyst. Mr. Hirschhorn was responsible for managing
$512 million in mutual fund assets at December 31, 1995. William
Garrison and Sandra Knight are associate portfolio managers of
Balanced Fund. Mr. Garrison joined the Adviser in 1989. He
received his A.B. from Princeton University in 1988. Ms. Knight
is a vice president and senior quantitative research analyst with
the Adviser, which she joined in 1991. She earned a B.S. degree
from Lawrence Technological University (1984) and an M.B.A. from
Loyola University of Chicago (1991).

Growth Stock Fund is managed by Erik P. Gustafson, who has managed
the Fund since 1994. Mr. Gustafson is a senior vice president and
senior portfolio manager with the Adviser, which he joined in
1992. From 1989 to 1992 he was an attorney with Fowler, White,
Burnett, Hurley, Banick & Strickroot. He holds a B.A. from the
University of Virginia (1985) and M.B.A. and J.D. degrees (1989)
from Florida State University. Mr. Gustafson was responsible for
managing $554 million in mutual fund assets at December 31, 1995.
David P. Brady has been associate portfolio manager of Growth
Stock Fund since April, 1996. A vice president of the Adviser and
the Trust, Mr. Brady joined the Adviser in 1993, and was an equity
investment analyst with State Farm Mutual Automobile Insurance
Company from 1986 to 1993.

Gloria J. Santella and Eric S. Maddix are co-portfolio managers of
Capital Opportunities Fund. Ms. Santella has been portfolio
manager since October, 1994, and had previously been co-portfolio
manager of the Fund since March, 1991. Ms. Santella is a vice-
president of the Trust and a senior vice president of the Adviser,
having been associated with the Adviser since 1979. She received
her B.B.A. from Loyola University in 1979 and M.B.A. from the
University of Chicago in 1983. As of December 31, 1995, she
managed $332 million in mutual fund assets. Mr. Maddix became co-
portfolio manager of the Fund in 1996, and was previously its
associate portfolio manager. Mr. Maddix is a vice president of
the Adviser, which he joined in 1987. He received his B.B.A.
degree from Iowa State University in 1986 and his M.B.A. from the
University of Chicago in 1992.

<PAGE> 33
E. Bruce Dunn and Richard B. Peterson have been co-portfolio
managers of Special Fund since 1991 and of Special Venture Fund
since its inception in 1994. Each is a vice-president of the
Trust and a senior vice president of the Adviser. Mr. Dunn has
been associated with the Adviser since 1964. He received his A.B.
degree from Yale University in 1956 and his M.B.A. from Harvard
University in 1958 and is a chartered investment counselor. Mr.
Peterson, who began his investment career at Stein Roe & Farnham
in 1965 after graduating with a B.A. from Carleton College in 1962
and the Woodrow Wilson School at Princeton University in 1964 with
a Masters in Public Administration, rejoined the Adviser in 1991
after 15 years of equity research and portfolio management
experience with State Farm Investment Management Corporation. As
of December 31, 1995, Messrs. Dunn and Peterson were responsible
for co-managing $1.3 billion in mutual fund assets.

FEES AND EXPENSES.

In return for its services, the Adviser receives monthly fees from
each Fund. The investment advisory agreement relating to the
Special Venture Fund was replaced on July 1, 1996 with an
administrative agreement and a management agreement; the
investment advisory agreements relating to the other Funds were
replaced on September 1, 1995. Under the terminated advisory
agreements, the annual fees, based on average net assets, were:
for Special Venture Fund, .90%; for Growth & Income Fund, .6% of
the first $100 million, .55% of the next $100 million, and .5%
thereafter; for Balanced Fund, .625% of the first $100 million and
0.5 of 1% above that amount; for Growth Stock Fund, .75% of the
first $250 million, .70% of the next $250 million, and .60%
thereafter; and for Special Fund and Capital Opportunities Fund,
.75%. The current fee schedules are as follows:

Management Administrative Total
Fund Fee Fee Fees
- --------------------- -------------- -------------- ---------------
Growth & Income Fund, .60% up to $500, .15% up to $500, .75% up to $500,
Growth Stock Fund .55% next $500, .125% next $500, .675% next $500,
. .50% thereafter .10% thereafter .60% thereafter

Balanced Fund .55% up to $500, .15% up to $500, .70% up to $500
.50% next $500, .125% next $500, .625% next $500,
.45% thereafter .10% thereafter .55% thereafter

Special Fund; .75% up to $500, .15% up to $500, .90% up to $500,
Capital Opportunities .70% next $500, .125% next $500, .825% next $500,
Fund .65% next $500, .10% next $500, .75% next $500,
Special Venture Fund .75% .15% .90%

The fees for Special Venture Fund, Special Fund, and Capital
Opportunities Fund are higher than those paid by most mutual
funds. For the year ended September 30, 1995, the fees for Growth
& Income Fund, Growth Stock Fund, Balanced Fund, Special Fund, and
Capital Opportunities Fund amounted to .60%, .74%, .57%, .76%, and
.75% of average net assets, respectively; and the fee for Special
Venture Fund, after the Fund's expense limitation described under
Fee Table, amounted to .48% of average net assets.

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

<PAGE> 34
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
transactions for each Fund. In doing so, the Adviser seeks to
obtain the best combination of price and execution, which involves
a number of judgmental factors.

TRANSFER AGENT. SteinRoe Services Inc., One South Wacker Drive,
Chicago, Illinois 60606, a wholly owned subsidiary of Liberty
Financial, is the agent of the Trust for the transfer of shares,
disbursement of dividends, and maintenance of shareholder
accounting records.

DISTRIBUTOR. The shares of each Fund are offered for sale through
Liberty Securities Corporation ("Distributor") without any sales
commissions or charges to the Funds or to their shareholders. The
Distributor is a wholly owned subsidiary of Liberty Financial.
The business address of the Distributor is 600 Atlantic Avenue,
Boston, Massachusetts 02210; however, all Fund correspondence
(including purchase and redemption orders) should be mailed to
SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205, except for participants in the Stein Roe Counselor [SERVICE
MARK] Program, who should send orders to SteinRoe Services Inc. at
P.O. Box ____,Chicago, Illinois 60680. All distribution and
promotional expenses are paid by the Adviser, including payments
to the Distributor for sales of Fund shares.

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

ORGANIZATION AND DESCRIPTION OF SHARES

The Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
January 8, 1987, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either the
Trust's shareholders or its trustees. The Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, eight series are authorized and
outstanding.

Under Massachusetts law, shareholders of a Massachusetts business
trust such as the Trust could, in some circumstances, be held
personally liable for unsatisfied obligations of the trust. The
Declaration of Trust provides that persons extending credit to,
contracting with, or having any claim against, the Trust or any
particular Fund shall look only to the assets of the Trust or of
the respective Fund for payment under such credit, contract or
claim, and that the shareholders, Trustees and officers of the
Trust shall have no personal liability therefor. The Declaration
of Trust requires that notice of such disclaimer of liability be
given in each contract, instrument or undertaking executed or made
on behalf of the Trust. The Declaration of Trust provides for
indemnification of any shareholder against any loss and expense
arising from personal liability solely by reason of being or
having been a shareholder. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is
believed to be remote, because it

<PAGE> 35
would be limited to circumstances in which the disclaimer was
inoperative and the Trust was unable to meet its obligations.

The risk of a particular Fund incurring financial loss on account
of unsatisfied liability of another Fund of the Trust is also
believed to be remote, because it would be limited to claims to
which the disclaimer did not apply and to circumstances in which
the other Fund was unable to meet its obligations.

<PAGE> 36

CERTIFICATE OF AUTHORIZATION (FOR USE BY CORPORATIONS AND
ASSOCIATIONS ONLY)

A corporation or association must complete this Certificate and
submit it with the Fund Application, each written redemption,
transfer or exchange request, and each request to terminate or
change any of the Privileges or special service elections.

If the entity submitting the Certificate is an association, the
word "association" shall be deemed to appear each place the word
"corporation" appears. If the officer signing this Certificate is
named as an authorized person, another officer must countersign
the Certificate. If there is no other officer, the person signing
the Certificate must have his signature guaranteed. If you are
not sure whether you are required to complete this Certificate,
call the office of the Stein Roe Funds, 800-338-2550 toll-free.

The undersigned hereby certifies that he is the duly elected
Secretary of _________________________________________
(Name of Corporation/Association)

(the "Corporation") and that the following individual(s):

Authorized Persons

- -------------------------- ----------------------------
Name Title

is (are) duly authorized by resolution or otherwise to act on
behalf of the Corporation in connection with the Corporation's
ownership of shares of any mutual fund managed by Stein Roe &
Farnham Incorporated (individually, the "Fund" and collectively,
the "Funds") including, without limitation, furnishing any such
Fund and its transfer agent with instructions to transfer or
redeem shares of that Fund payable to any person or in any manner,
or to redeem shares of that Fund and apply the proceeds of such
redemption to purchase shares of another Fund (an "exchange"), and
to execute any necessary forms in connection therewith.

Unless a lesser number is specified, all of the Authorized Persons
must sign written instructions. Number of signatures required:
________.

If the undersigned is the only person authorized to act on behalf
of the Corporation, the undersigned certifies that he is the sole
shareholder, director, and officer of the Corporation and that the
Corporation's Charter and Bylaws provide that he is the only
person authorized to so act.

Unless expressly declined on the Application (or other form
acceptable to the Funds), the undersigned further certifies that
the Corporation has authorized by resolution or otherwise the
establishment of the Telephone Exchange and Telephone Redemption
by Check Privileges for the Corporation's account with any Fund
offering any such Privilege. If elected on the Application (or
other form acceptable to the Funds), the undersigned also
certifies that the Corporation has similarly authorized
establishment of the Electronic Transfer, Telephone Redemption by
Wire, and Check-Writing Privileges for the Corporation's account
with any Fund offering said Privileges. The undersigned has
further authorized each Fund and its transfer agent to honor any
written, telephonic, or telegraphic instructions furnished
pursuant to any such Privilege by any person believed by the Fund
or its transfer agent or their agents, officers, directors,
trustees, or employees to be authorized to act on behalf of the
Corporation and agrees that neither the Fund nor its transfer
agent, their agents, officers, directors, trustees, or employees
will be liable for any loss, liability, cost, or expense for
acting upon any such instructions.

These authorizations shall continue in effect until five business
days after the Fund and its transfer agent receive written notice
from the Corporation of any change.

IN WITNESS WHEREOF, I have hereunto subscribed my name as
Secretary and affixed the seal of this Corporation this ____ day
of _________________, 19___.

<PAGE> 37
-------------------------
Secretary
-------------------------
Signature Guarantee*
*Only required if the person signing
the Certificate is the only person
named as "Authorized Person."
CORPORATE
SEAL
HERE

<PAGE> 38

[STEIN ROE MUTUAL FUNDS LOGO]

The Stein Roe Funds
Stein Roe Government Reserves Fund
Stein Roe Cash Reserves Fund
Stein Roe Limited Maturity Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Income Fund
Stein Roe Municipal Money Market Fund
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Balanced Fund
Stein Roe Growth & Income Fund
Stein Roe Growth Stock Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund
Stein Roe Capital Opportunities Fund
Stein Roe International Fund
Stein Roe Young Investor Fund

800-338-2550

In Chicago, visit our Fund Center
at One South Wacker Drive

Liberty Securities Corporation, Distributor

<PAGE>

STEIN ROE INVESTMENT TRUST

STEIN ROE INTERNATIONAL FUND

THE FEBRUARY 1, 1996 DATE OF THIS PROSPECTUS IS NULL AND VOID.
THE NEW DATE OF THIS PROSPECTUS IS JULY 1, 1996

SUPPLEMENT

NEW AGREEMENTS. On July 1, 1996, the investment advisory
agreement with Stein Roe & Farnham Incorporated (the "Adviser")
relating to the Fund was replaced with an administrative agreement
and a management agreement. The new fee schedule (which does not
result in a fee increase) calls for a management fee at an annual
rate of .85% of average daily net assets and an administrative fee
of .15%, for a total annual fee of 1% of average net assets.

INTERFUND LENDING PROGRAM. On June 18, 1996, the Fund's
shareholders approved changes in the Fund's investment
restrictions regarding borrowing and lending to permit the Fund to
participate in an interfund lending program with other mutual
funds managed by the Adviser. The third paragraph under
Restrictions on the Funds' Investments (page 11 of the Prospectus)
is revised to read as follows:

"The Fund may not make loans except that it may (1) purchase
money market securities and enter into repurchase agreements;
(2) acquire publicly-distributed or privately-placed debt
securities; (3) lend its portfolio securities under certain
conditions; and (4) participate in an interfund lending program
with other Stein Roe Funds. The Fund may not borrow money,
except for non-leveraging, temporary, or emergency purposes or
in connection with participation in the interfund lending
program. Neither the Fund's aggregate borrowings (including
reverse repurchase agreements) nor the Fund's aggregate loans
at any one time may exceed 33 1/3% of its total assets."

FINANCIAL HIGHLIGHTS. The per share data (for a share
outstanding throughout the period) contained in the section
Financial Highlights (page 5 of the Prospectus) is updated by
adding the following unaudited financial information for the six
months ended March 31, 1996:

NET ASSET VALUE, BEGINNING OF PERIOD..........
Income from Investment Operations
Net investment income.........................
Net realized and unrealized gains (losses)
on investments...........................
Total from investment operations..............
Distributions from net investment income......
NET ASSET VALUE, END OF PERIOD................
Ratio of net expenses to average net
assets (a)..................................
Ratio of net investment income to average
net assets (b) ............................
Portfolio turnover rate.......................
Total return (b)..............................
Net assets, end of period (000 omitted).......
_______________
*Annualized.
**Not annualized.

NEW ADDRESS FOR ORDERS. Effective July 1, 1996, orders for
purchases and redemptions of Fund shares should be mailed to
SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205. Participants in the Stein Roe Counselor [service mark]
Program should send orders to SteinRoe Services Inc. at P.O. Box
____,Chicago, Illinois 60680.

The Statement of Additional Information and the most recent
financial statements may be obtained without charge by writing to
the Secretary of the Trust at P. O. Box ___, Chicago, Illinois
60680, or by calling 800-338-2550.

NEW INSTRUCTIONS FOR PURCHASES BY WIRE TRANSFER. Effective
July 1, 1996, wire transfers for the purchase of Fund shares
should be addressed as follows:

First National Bank of Boston
ABA Routing No. 011000390
Boston, Massachusetts
Attention: Custody
Fund No. ___; Stein Roe International Fund
Account of (exact name(s) in registration)
Shareholder Account No. ________

Participants in the Stein Roe Counselor [service mark]
program should continue to use the wire instructions in
the Prospectus under How to Purchase Shares--By Wire for wire
purchases.
_________________________________

<PAGE>

INTERNATIONAL FUND

The Fund seeks long-term growth of capital by investing in a
diversified portfolio of foreign securities.

The Fund is a "no-load" fund. There are no sales or redemption
charges, and the Fund has no 12b-1 plan. The Fund is a series of
the STEIN ROE INVESTMENT TRUST.

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

The date of this prospectus is February 1, 1996.

<PAGE>
TABLE OF CONTENTS
Page
Summary..................................2
Fee Table ..............................4
Financial Highlights.....................5
The Fund ................................6
How the Fund Invests ....................6
Portfolio Investments and Strategies.....7
Restrictions on the Fund's Investments..11
Risks and Investment Considerations.....12
How to Purchase Shares .................14
By Check ...........................15
By Wire ............................15
By Electronic Transfer .............15
By Exchange ........................16
Purchase Price and Effective Date ..16
Conditions of Purchase .............16
Purchases Through Third Parties.....16
How to Redeem Shares ...................17
By Written Request .................17
By Exchange ........................17
Special Redemption Privileges ......18
General Redemption Policies ........19
Shareholder Services ...................21
Net Asset Value ........................23
Distributions and Income Taxes .........24
Investment Return ......................26
Management of the Fund .................26
Organization and Description of Shares..28
Certificate of Authorization............29

SUMMARY

The Stein Roe International Fund (the "Fund") is a series of the
Stein Roe Investment Trust, an open-end diversified management
investment company. The Fund is a "no-load" fund. There are no
sales or redemption charges. (See The Fund and Organization and
Description of Shares.) This prospectus is not a solicitation in any
jurisdiction in which the Fund is not registered for sale.

INVESTMENT OBJECTIVE AND POLICIES. The Fund seeks long-term
growth of capital by investing primarily in a diversified
portfolio of foreign securities. The Fund invests primarily in
equity securities. Under normal market conditions, the Fund will
invest at least 65% of its total assets (taken at market value) in
foreign securities of at least three countries outside the United
States. The Fund diversifies its investments among several
countries and does not concentrate investments in any particular
industry.

There can be no guarantee that the Fund will achieve its
investment objective. Please see How the Fund Invests and
Portfolio Investments and Strategies for further information.

INVESTMENT RISKS. The Fund is intended for long-term investors
who can accept the risks entailed in investing in foreign
securities.

Since the Fund invests primarily in foreign securities, investors
should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities involves
certain considerations involving both risks and opportunities not
typically associated with investing in U.S. securities. Such
risks include fluctuations in exchange rates on foreign
currencies, less public information, less government supervision,
less liquidity, and greater price volatility.

Please see How the Fund Invests, Portfolio Investments and
Strategies, and Risks and Investment Considerations for further
information.

PURCHASES. The minimum initial investment for the Fund is $2,500
and additional investments must be at least $100 (only $50 for
purchases by electronic transfer). Shares may be purchased by
check, by bank wire, by electronic transfer, or by exchange from
another Stein Roe Fund. For more detailed information, see How to
Purchase Shares.

REDEMPTIONS. For information on redeeming Fund shares, including
the special redemption privileges, see How to Redeem Shares.

NET ASSET VALUE. The purchase and redemption price of the Fund's
shares is its net asset value per share. The net asset value is
determined as of the close of trading on the New York Stock
Exchange. (For more detailed information, see Net Asset Value.)

DISTRIBUTIONS. Dividends for the Fund are normally declared and
paid annually. Distributions will be reinvested into your Fund
account unless you elect to have them paid in cash, deposited by
electronic transfer into your bank checking account, or invested
in another Stein Roe Fund account. (See Distributions and Income
Taxes and Shareholder Services.)

ADVISER AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") provides management and investment advisory
services to the Fund. For a description of the Adviser and the
advisory fees paid by the Fund, see Management of the Fund.

If you have any additional questions about the Fund, please feel
free to discuss them with an account representative by calling
800-338-2550.

FEE TABLE

SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None*
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES (as a percentage
of average net assets)
Management Fees 1.00%
12b-1 Fees None
Other Expenses 0.65%
-----
Total Fund Operating Expenses 1.65%
-----
-----
- -------------
* There is a $3.50 charge for wiring redemption proceeds to your bank.

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

1 year 3 years 5 years 10 years
------ ------- ------- ---------
$17 $52 $90 $195

The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in the Fund. The table is based on
expenses incurred in the last fiscal year, except that it has been
adjusted to reflect changes in the Fund's transfer agency services
and fees. From time to time, the Adviser may voluntarily absorb
certain expenses of the Fund. The Adviser has agreed to
voluntarily waive its management fee and absorb the expenses of
the Fund to the extent that such fees and expenses on an
annualized basis exceed 1.65% of its annual average net assets
from May 1, 1995 through January 31, 1997, subject to earlier
termination by the Adviser on 30 days' notice. Any such
absorption will temporarily lower the Fund's overall expense ratio
and increase its overall return to investors. The Fund's expenses
were not limited during the period since they did not exceed the
limitation. (Also see Management of the Fund--Fees and Expenses.)

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

FINANCIAL HIGHLIGHTS

Period Ended Year Ended
Sept. 30, Sept. 30,
1994 (a) 1995
------------ ---------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.61
------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.03 0.12
Net realized and unrealized gains (losses)
on investments and foreign currency
transactions 0.58 (0.26)
------ ------
Total from investment operations 0.61 (0.14)
------ ------
DISTRIBUTIONS
Net investment income -- (0.05)
Net realized capital gains -- (0.17)
------ ------
Total distributions -- (0.22)
------ ------
NET ASSET VALUE, END OF PERIOD $10.61 $10.25
------ ------
------ ------
Ratio of net expenses to average net assets *1.61% 1.59%
Ratio of net investment income to average
net assets *0.61% 1.41%
Portfolio turnover rate 48% 59%
Total return 6.10% (1.28%)
Net assets, end of period (000 omitted) $74,817 $83,020
- -----------
*Annualized.
(a) From commencement of operations on March 1, 1994.

THE FUND

The STEIN ROE INTERNATIONAL FUND (the "Fund") is a no-load,
diversified "mutual fund." Mutual funds sell their own shares to
investors and use the money they receive to invest in a portfolio
of securities such as common stocks. A mutual fund allows you to
pool your money with that of other investors in order to obtain
professional investment management. Mutual funds generally make
it possible for you to obtain greater diversification of your
investments and simplify your recordkeeping. The Fund does not
impose commissions or charges when shares are purchased or
redeemed.

The Fund is a series of the Stein Roe Investment Trust (the
"Trust"), an open-end management investment company, which is
authorized to issue shares of beneficial interest in separate
series. Each series represents interests in a separate portfolio
of securities and other assets, with its own investment objectives
and policies.

Stein Roe & Farnham Incorporated (the "Adviser") provides
investment advisory, administrative, and bookkeeping and
accounting services to the Fund. The Adviser also manages and
provides investment advisory services for several other no-load
mutual funds with different investment objectives, including
equity funds, taxable and tax-exempt bond funds, and money market
funds. To obtain prospectuses and other information on any of
those mutual funds, please call 800-338-2550.

HOW THE FUND INVESTS

The Fund invests as described below and may also employ investment
techniques described under Portfolio Investments and Strategies
in this prospectus.

The Fund's investment objective is to seek long-term growth of
capital by investing primarily in a diversified portfolio of
foreign securities. Current income is not a primary factor in the
selection of portfolio securities. The Fund invests primarily in
common stocks and other equity-type securities (such as preferred
stocks, securities convertible or exchangeable for common stocks,
and warrants or rights to purchase common stocks). The Fund may
invest in securities of smaller emerging companies as well as
securities of well-seasoned companies of any size. Smaller
companies, however, involve higher risks in that they typically
have limited product lines, markets, and financial or management
resources. In addition, the securities of smaller companies may
trade less frequently and have greater price fluctuation than
larger companies, particularly those operating in countries with
developing markets.

The Fund diversifies its investments among several countries and
does not concentrate investments in any particular industry. In
pursuing its objective, the Fund varies the geographic allocation
and types of securities in which it invests based on the Adviser's
continuing evaluation of economic, market, and political trends
throughout the world. While the Fund has not established limits
on geographic asset distribution, it ordinarily invests in the
securities markets of at least three countries outside the United
States, including but not limited to Western European countries
(such as Belgium, France, Germany, Ireland, Italy, The
Netherlands, the countries of Scandinavia, Spain, Switzerland, and
the United Kingdom); countries in the Pacific Basin (such as
Australia, Hong Kong, Japan, Malaysia, the Philippines, Singapore,
and Thailand); and countries in the Americas (such as Argentina,
Brazil, Chile, and Mexico).

Under normal market conditions, the Fund will invest at least 65%
of its total assets (taken at market value) in foreign securities.
If, however, investments in foreign securities appear to be
relatively unattractive in the judgment of the Adviser because of
current or anticipated adverse political or economic conditions,
the Fund may hold cash or invest any portion of its assets in
securities of the U.S. Government and equity and debt securities
of U.S. companies, as a temporary defensive strategy. To meet
liquidity needs, the Fund may also hold cash in domestic and
foreign currencies and invest in domestic and foreign money market
securities (including repurchase agreements and foreign money
market positions).

In the past the U.S. Government has from time to time imposed
restrictions, through taxation and other methods, on foreign
investments by U.S. investors such as the Fund. If such
restrictions should be reinstated, it might become necessary for
the Fund to invest all or substantially all of its assets in U.S.
securities. In such an event, the Fund would review its
investment objective and policies to determine whether changes are
appropriate.

The Fund may purchase foreign securities in the form of American
Depositary Receipts (ADRs), European Depositary Receipts (EDRs),
or other securities representing underlying shares of foreign
issuers. The Fund may invest in sponsored or unsponsored ADRs.
(For a description of ADRs and EDRs, see the Statement of
Additional Information.)

PORTFOLIO INVESTMENTS AND STRATEGIES

DERIVATIVES. Consistent with its objective, the Fund may invest
in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, forward contracts,
securities collateralized by underlying pools of mortgages or
other receivables, floating rate instruments, and other
instruments that securitize assets of various types
("Derivatives"). In each case, the value of the instrument or
security is "derived" from the performance of an underlying asset
or a "benchmark" such as a security index, an interest rate, or a
currency. The Fund does not expect to invest more than 5% of its
net assets in any type of Derivative except for options, futures
contracts, futures options, and forward contracts.

In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, the Fund may: (1)
purchase and write both call options and put options on
securities, indexes and foreign currencies; (2) enter into
interest rate, index and foreign currency futures contracts; (3)
write options on such futures contracts; and (4) purchase other
types of forward or investment contracts linked to individual
securities, indexes, or other benchmarks. The Fund may write a
call or put option only if the option is covered. As the writer
of a covered call option, the Fund foregoes, during the option's
life, the opportunity to profit from increases in market value of
the security covering the call option above the sum of the premium
and the exercise price of the call. There can be no assurance
that a liquid market will exist when the Fund seeks to close out a
position. In addition, because futures positions may require low
margin deposits, the use of futures contracts involves a high
degree of leverage and may result in losses in excess of the
amount of the margin deposit.

DEBT SECURITIES. In pursuing its investment objective, the Fund
may invest up to 35% of its total assets in debt securities.
Investments in debt securities are limited to those that are rated
within the four highest grades (generally referred to as
"investment grade") assigned by a nationally recognized
statistical rating organization. Investments in unrated debt
securities are limited to those deemed to be of comparable quality
by the Adviser. Securities in the fourth highest grade may
possess speculative characteristics. If the rating of a security
held by the Fund is lost or reduced below investment grade, the
Fund is not required to dispose of the security--the Adviser will,
however, consider that fact in determining whether the Fund should
continue to hold the security. The risks inherent in debt securities
depend primarily on the term and quality of the obligations in the
Fund's portfolio, as well as on market conditions. A decline in the
prevailing levels of interest rates generally increases the value of
debt securities. Conversely, an increase in rates usually reduces the
value of debt securities.

SETTLEMENT TRANSACTIONS. When the Fund enters into a contract
for the purchase or sale of a foreign portfolio security, it
usually is required to settle the purchase transaction in the
relevant foreign currency or receive the proceeds of the sale in
that currency. In either event, the Fund is obliged to acquire or
dispose of an appropriate amount of foreign currency by selling or
buying an equivalent amount of U.S. dollars. At or near the time
of the purchase or sale of the foreign portfolio security, the
Fund may wish to lock in the U.S. dollar value of a transaction at
the exchange rate or rates then prevailing between the U.S. dollar
and the currency in which the security is denominated. Known as
"transaction hedging," this may be accomplished by purchasing or
selling such foreign securities on a "spot," or cash, basis.
Transaction hedging also may be accomplished on a forward basis,
whereby the Fund purchases or sells a specific amount of foreign
currency, at a price set at the time of the contract, for receipt
or delivery at either a specified date or at any time within a
specified time period. In so doing, the Fund will attempt to
insulate itself against possible losses and gains resulting from a
change in the relationship between the U.S. dollar and the foreign
currency during the period between the date the security is
purchased or sold and the date on which payment is made or
received. Similar transactions may be entered into by using other
currencies if the Fund seeks to move investments denominated in
one currency to investments denominated in another.

CURRENCY HEDGING. Most of the Fund's portfolio will be invested
in foreign securities. As a result, in addition to the risk of
change in the market value of portfolio securities, the value of
the portfolio in U.S. dollars is subject to fluctuations in the
exchange rate between the foreign currencies and the U.S. dollar.
When, in the opinion of the Adviser, it is desirable to limit or
reduce exposure in a foreign currency to moderate potential
changes in the U.S. dollar value of the portfolio, the Fund may
enter into a forward currency exchange contract to sell or buy
such foreign currency (or another foreign currency that acts as a
proxy for that currency)--through the contract, the U.S. dollar
value of certain underlying foreign portfolio securities can be
approximately matched by an equivalent U.S. dollar liability.
This technique is known as "currency hedging." By locking in a
rate of exchange, currency hedging is intended to moderate or
reduce the risk of change in the U.S. dollar value of the Fund's
portfolio only during the period of the forward contract. Forward
contracts usually are entered into with banks and broker-dealers;
are not exchange traded; and while they are usually less than one
year, may be renewed. A default on the contract would deprive the
Fund of unrealized profits or force the Fund to cover its
commitments for purchase or sale of currency, if any, at the
current market price.

Neither type of foreign currency transaction will eliminate
fluctuations in the prices of the Fund's portfolio securities or
prevent loss if the price of such securities should decline. In
addition, such forward currency exchange contracts will diminish
the benefit of the appreciation in the U.S. dollar value of that
foreign currency. (For further information on forward foreign currency
exchange transactions, see the Statement of Additional Information.)

PORTFOLIO TURNOVER. Although the Fund does not purchase
securities with a view to rapid turnover, there are no limitations
on the length of time portfolio securities must be held.
Accordingly, the portfolio turnover rate may vary significantly
from year to year, but is not expected to exceed 100% under normal
market conditions. Flexibility of investment and emphasis on
capital appreciation may involve greater portfolio turnover than
that of mutual funds that have the objectives of income or
maintenance of a balanced investment position. A high rate of
portfolio turnover may result in increased transaction expenses
and the realization of capital gains and losses. (See
Distributions and Income Taxes.) The Fund is not intended to be
an income-producing investment.

OTHER TECHNIQUES. The Fund may invest in securities purchased on
a when-issued or delayed-delivery basis. Although the payment
terms of these securities are established at the time the Fund
enters into the commitment, the securities may be delivered and
paid for a month or more after the date of purchase, when their
value may have changed. The Fund will make such commitments only
with the intention of actually acquiring the securities, but may
sell the securities before settlement date if it is deemed
advisable for investment reasons. The Fund may utilize spot and
forward foreign exchange transactions to reduce the risk caused by
exchange rate fluctuations between one currency and another when
securities are purchased or sold on a when-issued basis. It may
also invest in synthetic money market instruments. The Fund may
invest in repurchase agreements, provided that it will not invest
more than 15% of its net assets in repurchase agreements maturing
in more than seven days and any other illiquid securities. (See
the Statement of Additional Information.)

RESTRICTIONS ON THE FUND'S INVESTMENTS

The Fund will not invest more than 5% of its assets in the
securities of any one issuer. This restriction applies only to
75% of the Fund's portfolio, but does not apply to securities of
the U.S. Government or repurchase agreements for such securities,
and would not prevent the Fund from investing all of its assets in
shares of another investment company having the identical
investment objective.

The Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer. It may, however, invest all of its
assets in shares of another investment company having the
identical investment objective.

The Fund may invest in repurchase agreements, /1/ provided that
the Fund will not invest more than 15% of its net assets in
repurchase agreements maturing in more than seven days, and any
other illiquid securities.
- -----------------
/1/ A repurchase agreement involves a sale of securities to the
Fund in which the seller agrees to repurchase the securities at a
higher price, which includes an amount representing interest on
the purchase price, within a specified time. In the event of
bankruptcy of the seller, the Fund could experience both losses
and delays in liquidating its collateral.
- -----------------

The policies summarized in the first three paragraphs of this
section and the policy with respect to concentration of
investments in any one industry described under Risks and
Investment Considerations are fundamental policies and, as such,
can be changed only with the approval of a "majority of the
outstanding voting securities" of the Fund as defined in the
Investment Company Act of 1940. The Fund's investment objective
is non-fundamental and, as such, may be changed by the Board of
Trustees without shareholder approval. Any such change may result
in the Fund having an investment objective different from the
objective the shareholder considered appropriate at the time of
investment in the Fund. All of the investment restrictions are
set forth in the Statement of Additional Information.

Nothing in the investment restrictions outlined here shall be
deemed to prohibit the Fund from purchasing the securities of any
issuer pursuant to the exercise of subscription rights distributed
to the Fund by the issuer. No such purchase may be made if, as a
result, the Fund will no longer be a diversified investment
company as defined in the Investment Company Act of 1940 or if the
Fund will fail to meet the diversification requirements of the
Internal Revenue Code.

RISKS AND INVESTMENT CONSIDERATIONS

All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. THE FUND IS INTENDED
FOR LONG-TERM INVESTORS WHO CAN ACCEPT THE RISKS ENTAILED IN
INVESTING IN FOREIGN SECURITIES. Of course, there can be no
guarantee that the Fund will achieve its objective.

Although the Fund does not attempt to reduce or limit risk through
wide industry diversification of investment, the Fund usually
allocates its investments among a number of different industries
rather than concentrating in a particular industry or group of
industries. The Fund will not, however, invest more than 25% of
its total assets (at the time of investment) in the securities of
companies in any one industry.

FOREIGN INVESTING. The Fund provides long-term investors with an
opportunity to invest a portion of their assets in a diversified
portfolio of foreign securities. Non-U.S. investments may be
attractive because they increase diversification, as compared to a
portfolio comprised solely of U.S. investments. In addition, many
foreign economies have, from time to time, grown faster than the
U.S. economy, and the returns on investments in these countries
have exceeded those of similar U.S. investments--there can be no
assurance, however, that these conditions will continue.
International diversification allows the Fund and an investor to
achieve greater diversification and to take advantage of changes
in foreign economies and market conditions.

Investors should understand and consider carefully the greater
risks involved in foreign investing. Investing in foreign
securities--positions which are generally denominated in
foreign currencies--and utilization of forward foreign currency
exchange contracts involve certain considerations comprising both
risks and opportunities not typically associated with investing in
U.S. securities. These considerations include: fluctuations in
exchange rates of foreign currencies; possible imposition of
exchange control regulations or currency restrictions that would
prevent cash from being brought back to the United States; less
public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers,
and issuers of securities; lack of uniform accounting, auditing,
and financial reporting standards; lack of uniform settlement
periods and trading practices; less liquidity and frequently
greater price volatility in foreign markets than in the United
States; possible imposition of foreign taxes; possible investment
in the securities of companies in developing as well as developed
countries; and sometimes less advantageous legal, operational, and
financial protections applicable to foreign sub-custodial
arrangements. These risks are greater for emerging market
countries.

Although the Fund will try to invest in companies and governments
of countries having stable political environments, there is the
possibility of expropriation or confiscatory taxation, seizure or
nationalization of foreign bank deposits or other assets,
establishment of exchange controls, the adoption of foreign
government restrictions, and other adverse political, social or
diplomatic developments that could affect investment in these
nations.

The price of securities of small, rapidly growing companies is
expected to fluctuate more widely than the general market due to
the difficulty in assessing financial prospects of companies
developing new products or operating in countries with developing
markets.

The strategy for selecting investments will be based on various
criteria. A company proposed for investment should have a good
market position in a fast-growing segment of the economy, strong
management, preferably a leading position in its business,
prospects of superior financial returns, ability to self-finance,
and securities available for purchase at a reasonable market
valuation. Because of the foreign domicile of such companies,
however, information on some of the above factors may be
difficult, if not impossible, to obtain.

To the extent portfolio securities are issued by foreign issuers
or denominated in foreign currencies, the Fund's investment
performance is affected by the strength or weakness of the U.S.
dollar against these currencies. If the dollar falls relative to
the Japanese yen, for example, the dollar value of a yen-
denominated stock held in the portfolio will rise even though the
price of the stock remains unchanged. Conversely, if the dollar
rises in value relative to the yen, the dollar value of the yen-
denominated stock will fall. (See the discussion of portfolio and
transaction hedging under Portfolio Investments and Strategies.)

MASTER FUND/FEEDER FUND OPTION. Rather than invest in securities
directly, the Fund may in the future seek to achieve its
investment objective by pooling its assets with assets of other
mutual funds managed by the Adviser for investment in another
investment company having the same investment objective and
substantially the same investment policies and restrictions as the
Fund. The purpose of such an arrangement is to achieve greater
operational efficiencies and to reduce costs. It is expected that
any such investment company would be managed by the Adviser in
substantially the same manner as the Fund. Shareholders of the
Fund will be given at least 30 days' prior notice of any such
investment, although they will not be entitled to vote on the
action. Such investment would be made only if the Trustees
determine it to be in the best interests of the Fund and its
shareholders.

HOW TO PURCHASE SHARES

You may purchase Fund shares by check, by wire, by electronic
transfer, or by exchange from your account with another Stein Roe
Fund. The initial purchase minimum per Fund account is $2,500;
the minimum for Uniform Gifts/Transfers to Minors Act ("UGMA")
accounts is $1,000; the minimum for accounts established under an
automatic investment plan (i.e., Regular Investments, Dividend
Purchase Option, or the Automatic Exchange Plan) is $1,000 for
regular accounts and $500 for UGMA accounts; and the minimum per
account for Stein Roe IRAs is $500. The initial purchase minimum
is waived for shareholders who participate in the Stein Roe
Counselor [SERVICE MARK] and Stein Roe Counselor Preferred
[SERVICE MARK] programs and for clients of the Adviser.
Subsequent purchases must be at least $100, or at least $50 if you
purchase by electronic transfer. If you wish to purchase shares
to be held by a tax-sheltered retirement plan sponsored by the
Adviser, you must obtain special forms for those plans. (See
Shareholder Services.)

BY CHECK. To make an initial purchase of shares of the Fund by
check, please complete and sign the Application and mail it,
together with a check made payable to Stein Roe Funds, to P.O. Box
804058, Chicago, Illinois 60680.

You may make subsequent investments by submitting a check along
with either the stub from your Fund account confirmation statement
or a note indicating the amount of the purchase, your account
number, and the name in which your account is registered. Each
individual check submitted for purchase must be at least $100, and
the Trust generally will not accept cash, drafts, third party
checks, or checks drawn on banks outside the United States.
Should an order to purchase shares of the Fund be cancelled
because your check does not clear, you will be responsible for any
resulting loss incurred by the Fund.

BY WIRE. You also may pay for shares by instructing your bank to
wire federal funds (monies of member banks within the Federal
Reserve System) to the Fund's custodian bank. Your bank may
charge you a fee for sending the wire. If you are opening a new
account by wire transfer, you must first telephone the Trust to
request an account number and furnish your social security or
other tax identification number. Neither the Fund nor the Trust
will be responsible for the consequences of delays, including
delays in the banking or Federal Reserve wire systems. Your bank
must include the full name(s) in which your account is registered
and your Fund account number, and should address its wire as
follows:

State Street Bank & Trust Company
ABA Routing No. 011000028
Boston, Massachusetts
Attention: Custody
Fund No. 7123; Stein Roe International Fund
Account of (exact name(s) in registration)
Shareholder Account No. _________

BY ELECTRONIC TRANSFER. You may also make subsequent investments
by an electronic transfer of funds from your bank checking
account. Electronic transfer allows you to make purchases at your
request ("Special Investments") by calling 800-338-2550 or at pre-
scheduled intervals ("Regular Investments"). (See Shareholder
Services.) Electronic transfer purchases are subject to a $50
minimum and a $100,000 maximum. You may not open a new account
through electronic transfer. Should an order to purchase shares
of the Fund be cancelled because your electronic transfer does not
clear, you will be responsible for any resulting loss incurred by
the Fund.

PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of the Fund's
shares is made at the Fund's net asset value (see Net Asset Value)
next determined after receipt of payment as follows:

A purchase by check or wire transfer is made at the net asset
value next determined after the Fund receives the check or wire
transfer of funds in payment of the purchase.

A purchase by electronic transfer is made at the net asset value
next determined after the Fund receives the electronic transfer
from your bank. A Special Electronic Transfer Investment order
received by telephone on a business day before 2:00 p.m., Central
time, is effective on the next business day.

CONDITIONS OF PURCHASE. Each purchase order for the Fund must be
accepted by an authorized officer of the Trust in Chicago and is
not binding until accepted and entered on the books of the Fund.
Once your purchase order has been accepted, you may not cancel or
revoke it; you may, however, redeem the shares. The Trust
reserves the right not to accept any purchase order that it
determines not to be in the best interests of the Trust or of the
Fund's shareholders. The Trust also reserves the right to waive
or lower its investment minimums for any reason.

PURCHASES THROUGH THIRD PARTIES.
You may purchase (or redeem) shares through investment dealers,
banks, or other financial institutions. These institutions may
charge for their services or place limitations on the extent to
which you may use the services offered by the Trust. There are no
charges or limitations imposed by the Trust, other than those
described in this prospectus, if shares are purchased (or
redeemed) directly from the Trust.

Some financial institutions that maintain nominee accounts with
the Fund for their clients for whom they hold Fund shares charge
an annual fee of up to 0.25% of the average net assets held in
such accounts for accounting, servicing, and distribution services
they provide with respect to the underlying Fund shares. Such
fees are paid by the Adviser.

HOW TO REDEEM SHARES

BY WRITTEN REQUEST. You may redeem all or a portion of your
shares of the Fund by submitting a written request in "good order"
to the Trust at P.O. Box 804058, Chicago, Illinois 60680. A
redemption request will be considered to have been received in
good order if the following conditions are satisfied:

(1) The request must be in writing, and must indicate the number
of shares or dollar amount to be redeemed and identify the
shareholder's account number;
(2) The request must be signed by the shareholder(s) exactly as
the shares are registered;
(3) The signatures on the written redemption request must be
guaranteed (a signature guarantee is not a notarization, but is a
widely accepted way to protect you and the Fund by verifying your
signature);
(4) Corporations and associations must submit with each request a
completed Certificate of Authorization included in this prospectus
(or a form of resolution acceptable to the Trust); and
(5) The request must include other supporting legal documents as
required from organizations, executors, administrators, trustees,
or others acting on accounts not registered in their names.

SPECIAL REDEMPTION PRIVILEGES. The Telephone Exchange Privilege
and the Telephone Redemption by Check Privilege will be
established automatically for you when you open your account
unless you decline these Privileges on your Application. Other
Privileges must be specifically elected. If you do not want the
Telephone Exchange and Redemption Privileges, check the box(es)
under the section "Telephone Redemption Options" when completing
your Application. In addition, a signature guarantee may be
required to establish a Privilege after you open your account. If
you establish both the Telephone Redemption by Wire Privilege and the
Electronic Transfer Privilege, the bank account that you designate
for both Privileges must be the same.

The Telephone Redemption by Check Privilege, Telephone Redemption
by Wire Privilege, and Special Electronic Transfer Redemptions are
not available to redeem shares held by a tax-sheltered retirement
plan sponsored by the Adviser. (See also General Redemption
Policies.)

Telephone Exchange Privilege. You may use the Telephone Exchange
Privilege to exchange an amount of $50 or more from your account
by calling 800-338-2550 or by sending a telegram; new accounts
opened by exchange are subject to the initial purchase minimum for
the Fund being purchased. GENERALLY, YOU WILL BE LIMITED TO FOUR
TELEPHONE EXCHANGE ROUND-TRIPS PER YEAR AND THE FUND MAY REFUSE
REQUESTS FOR TELEPHONE EXCHANGES IN EXCESS OF FOUR ROUND-TRIPS (A
ROUND-TRIP BEING THE EXCHANGE OUT OF THE FUND INTO ANOTHER STEIN
ROE FUND, AND THEN BACK TO THE FUND). In addition, the Trust's
general redemption policies apply to redemptions of shares by
Telephone Exchange. (See General Redemption Policies.)

The Trust reserves the right to suspend or terminate, at any time
and without prior notice, the use of the Telephone Exchange
Privilege by any person or class of persons. The Trust believes
that use of the Telephone Exchange Privilege by investors
utilizing market-timing strategies adversely affects the Fund.
THEREFORE, THE TRUST GENERALLY WILL NOT HONOR REQUESTS FOR
TELEPHONE EXCHANGES BY SHAREHOLDERS IDENTIFIED BY THE TRUST AS
"MARKET-TIMERS." Moreover, the Trust reserves the right to
suspend, limit, modify, or terminate, at any time and without
prior notice, the Telephone Exchange Privilege in its entirety.
Because such a step would be taken only if the Board of Trustees
believes it would be in the best interests of the Fund, the Trust
expects that it would provide shareholders with prior written
notice of any such action unless the resulting delay in the
suspension, limitation, modification, or termination of the
Telephone Exchange Privilege would adversely affect the Fund. IF
THE TRUST WERE TO SUSPEND, LIMIT, MODIFY, OR TERMINATE THE
TELEPHONE EXCHANGE PRIVILEGE, A SHAREHOLDER EXPECTING TO MAKE A
TELEPHONE EXCHANGE MIGHT FIND THAT AN EXCHANGE COULD NOT BE
PROCESSED OR THAT THERE MIGHT BE A DELAY IN THE IMPLEMENTATION OF
THE EXCHANGE. (See How to Redeem Shares--By Exchange.) During
periods of volatile economic and market conditions, you may have
difficulty placing your exchange by telephone.

Automatic Exchanges. You may use the Automatic Exchange Privilege
to automatically redeem a fixed amount from your Fund account for
investment in another Stein Roe Fund account on a regular basis.

Telephone Redemption by Wire Privilege. You may use this Privilege
to redeem shares from your account ($1,000 minimum; $100,000 maximum)
by calling 800-338-2550. The proceeds will be transmitted by wire
to your account at a commercial bank previously designated by you
that is a member of the Federal Reserve System. The fee for
wiring proceeds (currently $3.50 per transaction) will be deducted
from the amount wired.

Electronic Transfer Privilege. You may redeem shares by calling
800-338-2550 and requesting an electronic transfer ("Special
Redemption") of the proceeds to a checking account previously
designated by you at a bank that is a member of the Automated
Clearing House. You may also request electronic transfers at
scheduled intervals ("Automatic Redemptions"--see Shareholder
Services). Electronic transfers are subject to a $50 minimum and
a $100,000 maximum. A Special Redemption request received by
telephone after 2:00 p.m., Central time, is deemed received on the
next business day.

The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received. (See Net Asset Value.) Because the
redemption price you receive depends upon the Fund's net asset
value per share at the time of redemption, it may be more or less
than the price you originally paid for the shares and may result
in a realized capital gain or loss.

The Trust reserves the right to suspend, limit, modify, or
terminate, at any time and without prior notice, any Privilege or
its use in any manner by any person or class.

Neither the Trust, its transfer agent, nor their respective
officers, trustees, directors, employees, or agents will be
responsible for the authenticity of instructions provided under
the Privileges, nor for any loss, liability, cost or expense for
acting upon instructions furnished thereunder if they reasonably
believe that such instructions are genuine. The Fund employs
procedures reasonably designed to confirm that instructions
communicated by telephone under any Special Redemption Privilege
or the Special Electronic Transfer Redemption Privilege are genuine.
Use of any Special Redemption Privilege or the Special Electronic
Transfer Redemption Privilege authorizes the Fund and its transfer
agent to tape-record all instructions to redeem. In addition, callers
are asked to identify the account number and registration, and may be
required to provide other forms of identification. Written
confirmations of transactions are mailed promptly to the registered
address; a legend on the confirmation requests that the shareholder
review the transactions and inform the Fund immediately if there is a
problem. If the Fund does not follow reasonable procedures for protecting
shareholders against loss on telephone transactions, it may be liable
for any losses due to unauthorized or fraudulent instructions.

Shares in any account you maintain with the Fund or any of the
other Stein Roe Funds may be redeemed to the extent necessary to
reimburse any Stein Roe Fund for any loss it sustains that is
caused by you (such as losses from uncollected checks and
electronic transfers for the purchase of shares, or any Stein Roe
Fund liability under the Internal Revenue Code provisions on
backup withholding).

SHAREHOLDER SERVICES

REPORTING TO SHAREHOLDERS. You will receive a confirmation
statement reflecting each of your purchases and redemptions of
shares of the Fund, as well as periodic statements detailing
distributions made by the Fund. Shares purchased by reinvestment
of dividends, by cross-reinvestment of dividends from another
Fund, or through an automatic investment plan will be confirmed to
you quarterly. In addition, the Trust will send you semiannual
and annual reports showing Fund portfolio holdings and will
provide you annually with tax information.

FUNDS-ON-CALL [REGISTERED] 24-HOUR INFORMATION SERVICE. To
access the Stein Roe Funds-on-Call [registered] automated
telephone service, just call 800-338-2550 on any touch-tone
telephone and follow the recorded instructions. Funds-on-Call
[registered] provides yields, prices, latest dividends, account
balances, last transaction, and other information 24 hours a day,
seven days a week.

FUNDS-ON-CALL [REGISTERED] AUTOMATED TELEPHONE TRANSACTIONS. If
you have established the Funds-on-Call [registered] transaction
privilege (Funds-on-Call [registered] Application will be
required), you may initiate Special Investments and Redemptions,
Telephone Exchanges, and Telephone Redemptions by Check 24 hours a
day, seven days a week by calling 800-338-2550 on a touch-tone
telephone. These transactions are subject to the terms and
conditions of the individual privileges. (See How to Purchase
Shares and How to Redeem Shares.)

STEIN ROE COUNSELOR [SERVICE MARK] PROGRAM. The Stein Roe
Counselor [SERVICE MARK] and Stein Roe Counselor Preferred
[SERVICE MARK] programs are professional investment advisory
services available to shareholders. These programs are designed
to provide investment guidance in helping investors to select a
portfolio of Stein Roe Funds. The Stein Roe Counselor Preferred
[SERVICE MARK] program, which automatically adjusts client portfolios
among the Stein Roe Funds, has a fee of up to 1% of assets.

Individual Retirement Accounts ("IRAs") for employed persons and
their non-employed spouses.

Prototype Money Purchase Pension and Profit Sharing Plans for
self-employed individuals, partnerships, and corporations.

Simplified Employee Pension Plans permitting employers to provide
retirement benefits to their employees by utilizing IRAs while
minimizing administration and reporting requirements.

SPECIAL SERVICES. The following special services are available to
shareholders. Please call 800-338-2550 or write the Trust for
additional information and forms.

Automatic Dividend Deposit (electronic transfer)--to have income
dividends and capital gain distributions deposited directly into
your bank checking account.

Telephone Redemption by Wire Privilege--to redeem shares from your
account by phone and have the proceeds transmitted by wire to your
checking account ($1,000 minimum; $100,000 maximum).

Special Redemption Option (electronic transfer)--to redeem shares
at any time and have the proceeds deposited directly to your bank
checking account ($50 minimum; $100,000 maximum).

Regular Investments (electronic transfer)--to purchase Fund shares
at regular intervals directly from your bank checking account ($50
minimum; $100,000 maximum).

Special Investments (electronic transfer)--to purchase Fund shares
by telephone and pay for them by electronic transfer of funds from
your checking account ($50 minimum; $100,000 maximum).

Automatic Exchange Plan--to automatically redeem a fixed dollar
amount from your Fund account and invest it in another Stein Roe
Fund account on a regular basis ($50 minimum; $100,000 maximum).

Automatic Redemptions (electronic transfer)--to have a fixed
dollar amount redeemed and sent at regular intervals directly to
your bank checking account ($50 minimum; $100,000 maximum).

Systematic Withdrawals--to have a fixed dollar amount, declining
balance, or fixed percentage of your account redeemed and sent at
regular intervals by check to you or another payee.

NET ASSET VALUE

The purchase and redemption price of the Fund's shares is its net
asset value per share. The net asset value of a share of the Fund
is determined as of the close of trading on the New York Stock
Exchange ("NYSE") (currently 3:00 p.m., Central time) by dividing
the difference between the values of the Fund's assets and
liabilities by the number of shares outstanding. Net asset value
will not be determined on days when the NYSE is closed unless, in
the judgment of the Board of Trustees, the net asset value of the
Fund should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Central time.

In computing the net asset value of the Fund, the values of
portfolio securities are generally based upon market quotations.
Depending upon local convention or regulation, these market
quotations may be the last sale price, last bid or asked price, or
the mean between the last bid and asked prices as of, in each
case, the close of the appropriate exchange or other designated
time. Trading in securities on European and Far Eastern
securities exchanges and over-the-counter markets is normally
completed at various times before the close of business on each
day on which the NYSE is open. Trading of these securities may
not take place on every NYSE business day. In addition, trading
may take place in various foreign markets on Saturdays or on other
days when the NYSE is not open and on which the Fund's net asset
value is not calculated. Therefore, such calculation does not
take place contemporaneously with the determination of the prices
of many of the portfolio securities used in such calculation and
the value of the Fund's portfolio may be significantly affected on
days when shares of the Fund may not be purchased or redeemed.

DISTRIBUTIONS AND INCOME TAXES

DISTRIBUTIONS. Income dividends for the Fund are normally
declared and paid annually. The Fund intends to distribute by the
end of each calendar year at least 98% of any net capital gains
realized from the sale of securities during the twelve-month
period ended October 31 in that year. The Fund intends to
distribute any undistributed net investment income and net
realized capital gains in the following year.

U.S. FEDERAL INCOME TAXES. Your distributions will be taxable to
you, under income tax law, whether received in cash or reinvested
in additional shares. For federal income tax purposes, any
distribution that is paid in January but was declared in the prior
calendar year is deemed paid in the prior calendar year.

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

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

For federal income tax purposes, the Fund is treated as a separate
taxable entity distinct from the other series of the Trust.

FOREIGN INCOME TAXES. Investment income received by the Fund from
sources within foreign countries may be subject to foreign income
taxes withheld at the source. The United States has entered into
tax treaties with many foreign countries that entitle the Fund to
a reduced rate of tax or exemption from tax on such income. It is
impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested
within various countries will fluctuate and the extent to which
tax refunds will be recovered is uncertain. The Fund intends to
operate so as to qualify for treaty-reduced tax rates where
applicable.

To the extent that the Fund is liable for foreign income taxes
withheld at the source, the Fund also intends to operate so as to
meet the requirements of the U.S. Internal Revenue Code to "pass
through" to the Fund's shareholders foreign income taxes paid, but
there can be no assurance that the Fund will be able to do so.

This discussion of U.S. and foreign taxation is not intended to be
a full discussion of income tax laws and their effect on
shareholders. You may wish to consult your own tax advisor. The
foregoing information applies to U.S. shareholders. Foreign
shareholders should consult their tax advisors as to the tax
consequences of ownership of Fund shares.

BACKUP WITHHOLDING. The Trust may be required to withhold federal
income tax ("backup withholding") from certain payments to you,
generally redemption proceeds. Backup withholding may be required
if:

- - You fail to furnish your properly certified social security or
other tax identification number;
- - You fail to certify that your tax identification number is
correct or that you are not subject to backup withholding due to
the underreporting of certain income;
- - The Internal Revenue Service informs the Trust that your tax
identification number is incorrect.

These certifications are contained in the Application that you
should complete and return when you open an account. The Fund
must promptly pay to the IRS all amounts withheld. Therefore, it
is usually not possible for the Fund to reimburse you for amounts
withheld. You may, however, claim the amount withheld as a
credit on your federal income tax return.

INVESTMENT RETURN

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

Comparison of the Fund's total return with alternative investments
should consider differences between the Fund and the alternative
investments, the periods and methods used in calculation of the
return being compared, and the impact of taxes on alternative
investments. Of course, past performance is not necessarily
indicative of future results.

MANAGEMENT OF THE FUND

TRUSTEES AND ADVISERS. The Board of Trustees of the Trust has
overall management responsibility for the Trust and the Fund. See
the Statement of Additional Information for the names of and
additional information about the trustees and officers. The
Fund's Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
Fund, subject to the direction of the Board of Trustees. The
Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940. The Adviser was organized in
1986 to succeed to the business of Stein Roe & Farnham, a
partnership that had advised and managed mutual funds since
1949. The Adviser is a wholly owned indirect subsidiary of
Liberty Financial Companies, Inc. ("Liberty Financial"), which in
turn is a majority owned indirect subsidiary of Liberty Mutual
Insurance Company.

PORTFOLIO MANAGERS. Bruno Bertocci and David P. Harris, co-
portfolio managers of the Fund, joined the Adviser in 1995,
as senior vice president and vice president, respectively, to
create Stein Roe Global Capital Management, a dedicated
global and international equity management unit. Messrs.
Bertocci and Harris are also employed by Colonial Management
Associates, Inc., a subsidiary of Liberty Financial, as vice
presidents, effective January, 1996.

Prior to joining the Adviser, Mr. Bertocci was a senior
global equity portfolio manager with Rockefeller & Co.
("Rockefeller") from 1983 to 1995. While at Rockefeller, he
served as portfolio manager for the Fund, when Rockefeller
was the Fund's sub-adviser. Mr. Bertocci managed
Rockefeller's London office from 1987 to 1989 and its Hong
Kong office from 1989 to 1990. Prior to working at
Rockefeller, he served for three years at T. Rowe Price
Associates. Mr. Bertocci is a graduate of Oberlin College
and holds an M.B.A. from Harvard University.

Mr. Harris was a portfolio manager with Rockefeller from 1990
to 1995. After earning a bachelor's degree from the
University of Michigan, he was an actuarial associate for
GEICO before returning to school to earn an M.B.A. from
Cornell University.

FEES AND EXPENSES. In return for its services, the Adviser
receives a monthly fee from the Fund, computed and accrued daily,
at an annual rate of 1% of average net assets. This fee is higher
than the fees paid by most mutual funds. Please refer to the Fee
Table for a description of the Fund's expense limitation.

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

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

DISTRIBUTOR. The shares of the Fund are offered for sale through
Liberty Securities Corporation ("Distributor") without any sales
commissions or charges to the Fund or to its shareholders. The
Distributor is a wholly owned subsidiary of Liberty Financial.
The business address of the Distributor is 600 Atlantic Avenue,
Boston, Massachusetts 02210; however, all Fund correspondence
(including purchase and redemption orders) should be mailed to the
Trust at P.O. Box 804058, Chicago, Illinois 60680. All
distribution and promotional expenses are paid by the Adviser,
including payments to the Distributor for sales of Fund shares.

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

ORGANIZATION AND DESCRIPTION OF SHARES

<PAGE>
CERTIFICATE OF AUTHORIZATION (FOR USE BY CORPORATIONS AND
ASSOCIATIONS ONLY)

The undersigned hereby certifies that he is the duly elected
Secretary of _________________________________________
(Name of Corporation/Association)
(the "Corporation") and that the following individual(s):

Authorized Persons

- -------------------------- ----------------------------
Name Title

- -------------------------- ----------------------------
Name Title
is (are) duly authorized by resolution or otherwise to act on
behalf of the Corporation in connection with the Corporation's
ownership of shares of any mutual fund managed by Stein Roe &
Farnham Incorporated (individually, the "Fund" and collectively,
the "Funds") including, without limitation, furnishing any such
Fund and its transfer agent with instructions to transfer or
redeem shares of that Fund payable to any person or in any manner,
or to redeem shares of that Fund and apply the proceeds of such
redemption to purchase shares of another Fund (an "exchange"), and
to execute any necessary forms in connection therewith.

Unless a lesser number is specified, all of the Authorized Persons
must sign written instructions. Number of signatures required:
________.

These authorizations shall continue in effect until five business
days after the Fund and its transfer agent receive written notice
from the Corporation of any change.

IN WITNESS WHEREOF, I have hereunto subscribed my name as
Secretary and affixed the seal of this Corporation this ____ day
of _________________, 19___.

-------------------------
Secretary
-------------------------
Signature Guarantee*
*Only required if the person signing
the Certificate is the only person
named as "Authorized Person."
CORPORATE
SEAL
HERE

<PAGE>

[STEIN ROE FUNDS LOGO]

The Stein Roe Funds
Stein Roe Government Reserves Fund
Stein Roe Cash Reserves Fund
Stein Roe Limited Maturity Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Income Fund
Stein Roe Municipal Money Market Fund
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Total Return Fund
Stein Roe Growth & Income Fund
Stein Roe Growth Stock Fund
Stein Roe Capital Opportunities Fund
Stein Roe Special Fund
Stein Roe International Fund
Stein Roe Young Investor Fund
Stein Roe Special Venture Fund

P.O. Box 804058
Chicago, Illinois 60680
800-338-2550

In Chicago, visit our Fund Center
at One South Wacker Drive

Liberty Securities Corporation, Distributor
IN296

<PAGE>

STEIN ROE INVESTMENT TRUST

STEIN ROE YOUNG INVESTOR FUND

THE FEBRUARY 1, 1996 DATE OF THIS PROSPECTUS IS NULL AND VOID.
THE NEW DATE OF THIS PROSPECTUS IS JULY 1, 1996

SUPPLEMENT

INTERFUND LENDING PROGRAM. On June 18, 1996, the Fund's
shareholders approved changes in the Fund's investment
restrictions regarding borrowing and lending to permit the Fund to
participate in an interfund lending program with other mutual
funds managed by the Adviser. The fourth paragraph under
Restrictions on the Funds' Investments is revised to read as
follows:

PORTFOLIO MANAGER CHANGE. Arthur J. McQueen has joined Erik
P. Gustafson and David P. Brady as a co-portfolio manager of Young
Investor Fund. Mr. McQueen earned a B.S. from Villanova
University (1980) and an M.B.A. from the Wharton School of the
University of Pennsylvania (1987). Mr. McQueen is a senior vice
president and senior research analyst with Stein Roe & Farnham
Incorporated, which he joined in 1987. He was previously employed
by Citibank and GTE.

FINANCIAL HIGHLIGHTS. The per share data (for a share
outstanding throughout the period) contained in the section
Financial Highlights is updated by adding the following unaudited
financial information for the six months ended March 31, 1996:

NET ASSET VALUE, BEGINNING OF PERIOD.........
Income from Investment Operations
Net investment income........................
Net realized and unrealized gains (losses)
on investments.............................
Total from investment operations.............
Distributions from net investment income.....
NET ASSET VALUE, END OF PERIOD...............
Ratio of net expenses to average net
assets (a).................................
Ratio of net investment income to average
net assets (b) ...........................
Portfolio turnover rate......................
Total return (b) ............................
Net assets, end of period (000 omitted)......
_______________
*Annualized.
**Not annualized.
(a) If the Fund had paid all of its expenses and there had been
no reimbursement of expenses by the Adviser, for the period
ended March 31, 1996, this ratio would have been ___%.
(b) Computed giving effect to the Adviser's expense limitation
undertaking.

NEW INSTRUCTIONS FOR PURCHASES BY WIRE TRANSFER. Effective
July 1, 1996, wire transfers for the purchase of Fund shares
should be addressed as follows:

First National Bank of Boston
ABA Routing No. 011000390
Boston, Massachusetts
Attention: Custody
Fund No. ___; Stein Roe Young Investor Fund
Account of (exact name(s) in registration)
Shareholder Account No. ________

Participants in the Stein Roe Counselor [service mark]
program should continue to use the instructions in the Prospectus
under How to Purchase Shares--By Wire for wire purchases.
__________________________

<PAGE>
YOUNG INVESTOR FUND

The Fund's objective is long-term capital appreciation. The Fund
invests in securities of companies that affect the lives of
children or teenagers. The Fund is also intended to be a fun,
educational experience for young investors and their parents.

The Fund is a "no-load" fund. There are no sales or redemption
charges, and the Fund has no 12b-1 plan. The Fund is a series of
the STEIN ROE INVESTMENT TRUST, an open-end management investment
company.

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

If you have any questions about new Fund accounts, please call
800-403-KIDS (800-403-5437); for existing accounts, shareholders
should call 800-338-2550.

The date of this prospectus is February 1, 1996.

<PAGE>
TABLE OF CONTENTS
Page
Summary .................................2
Fee Table ..............................3
Financial Highlights.....................4
The Fund ............................... 4
Investment Policies .....................5
Portfolio Investments and Strategies.....5
Investment Restrictions................ .7
Risks and Investment Considerations.... .8
How to Purchase Shares ..................9
By Check .............................9
By Wire ..............................9
By Electronic Transfer...............10
By Exchange .........................10
Purchase Price and Effective Date ...10
Conditions of Purchase ..............10
Purchases Through Third Parties......10
How to Redeem Shares ...................11
By Written Request ..................11
By Exchange .........................11
Special Redemption Privileges .......11
General Redemption Policies .........13
Shareholder Services ...................14
Net Asset Value ........................15
Distributions and Income Taxes .........16
Investment Return ......................17
Management of the Fund .................17
Organization and Description of Shares..19

SUMMARY

STEIN ROE YOUNG INVESTOR FUND (the "Fund") is a series of the
Stein Roe Investment Trust, an open-end diversified management
investment company. The Fund is a "no-load" fund. There are no
sales or redemption charges. (See The Fund and Organization and
Description of Shares.) This prospectus is not a solicitation in any
jurisdiction in which the Fund is not registered for sale.

INVESTMENT OBJECTIVES AND POLICIES.
The Fund's investment objective is long-term capital appreciation.
It seeks to achieve its objective by investing primarily in common
stocks and other equity-type securities that Stein Roe believes to
have long-term appreciation potential. The Fund invests primarily
in securities of companies that appeal to or affect the lives of
children or teenagers. It is designed for long-term investors,
particularly children and teenagers.

In addition to the Fund's investment objective and policies, the
Fund also has an educational objective. It seeks to teach
children and teenagers about the Fund, basic economic principles,
and personal finance through a variety of educational materials
prepared and paid for by the Fund.

There can be no guarantee that the Fund will achieve its
investment objective. Please see Investment Policies and
Portfolio Investments and Strategies for further information.

<PAGE>
INVESTMENT RISKS.
The Fund is designed for long-term investors who are willing to
accept the investment risk and volatility of equity-type
securities in general, as well as the specific types of equity
securities emphasized by the Fund. By investing in companies
whose products or services appeal to young investors, the Fund
emphasizes various consumer goods sectors. Since the Fund may
invest in foreign securities, investors should understand and
consider carefully the risks involved in foreign investing.
Investing in foreign securities involves certain considerations
involving both risks and opportunities not typically associated
with investing in U.S. securities. Please see Investment
Policies, Portfolio Investments and Strategies, and Risks and
Investment Considerations for further information.

PURCHASES.
The minimum initial investment for the Fund is $2,500; the minimum
investment for Uniform Gifts/ Transfers to Minors Act accounts is
$1,000. Additional investments must be at least $50. Shares may
be purchased by check, by bank wire, by electronic transfer, or by
exchange from another Stein Roe Fund. For more detailed
information, see How to Purchase Shares.

REDEMPTIONS.
For information on redeeming Fund shares, including the special
redemption privileges, see How to Redeem Shares.

NET ASSET VALUE.
The purchase and redemption price of the Fund's shares is its net
asset value per share. The net asset value is determined as of
the close of trading on the New York Stock Exchange. (For more
detailed information, see Net Asset Value.)

DISTRIBUTIONS.
Dividends are normally declared and paid annually. Distributions
will be reinvested into your Fund account unless you elect to have
them paid in cash, deposited by electronic transfer into your bank
checking account, or invested in another Stein Roe Fund account.
(See Distributions and Income Taxes and Shareholder Services.)

MANAGEMENT AND FEES.
Stein Roe & Farnham Incorporated ("Stein Roe") provides management
and investment advisory services to the Fund. For a description
of Stein Roe and its fees, see Management of the Fund.

If you have any additional questions about the Fund, please feel
free to discuss them with an account representative by calling
800-338-2550.

FEE TABLE

SHAREHOLDER TRANSACTION EXPENSES
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None*
Exchange Fees None
ANNUAL FUND OPERATING EXPENSES (after expense
reimbursement; as a percentage of average net assets)
Management and Administrative Fees (after
expense reimbursement) None
12b-1 Fees None
Other Expenses (after expense reimbursement) 1.25%
-----
Total Fund Operating Expenses (after expense
reimbursement) 1.25%
-----
-----
- -----------
*There is a $3.50 charge for wiring redemption proceeds to your bank.

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

1 year 3 years 5 years 10 years
------ ------- ------- --------
$13 $40 $69 $151

The purpose of the Fee Table is to assist you in understanding the
various costs and expenses that you will bear directly or
indirectly as an investor in the Fund. The table is based upon
actual expenses incurred in the last fiscal year, except that it
has been adjusted to reflect changes in the Fund's transfer agency
services and fees. From time to time, the Adviser may voluntarily
absorb certain expenses of the Fund. Stein Roe has agreed to
voluntarily waive its management fee and absorb the expenses of
the Fund to the extent that such fees and expenses on an
annualized basis exceed 1.25% of its annual average net assets
from February 1, 1996 through January 31, 1997, subject to earlier
termination by the Adviser on 30 days' notice (previously, Stein
Roe had undertaken to reimburse the Fund for expenses in excess of
0.99%). Any such absorption will temporarily lower the Fund's
overall expense ratio and increase its overall return to
investors. Absent the expense undertaking, Management and
Administrative Fees, Other Expenses, and Total Fund Operating
Expenses would have been 0.76%, 2.11%, and 2.87%, respectively.
(Also see Management of the Fund--Fees and Expenses.)

For purposes of the Example above, the figures assume that the
percentage amounts listed for the Fund under Annual Fund Operating
Expenses remain the same in each of the periods; that all income
dividends and capital gain distributions are reinvested in
additional Fund shares; and that, for purposes of management fee
breakpoints, net assets remain at the same level as in the most
recently completed fiscal year.

FINANCIAL HIGHLIGHTS

Period Ended Year Ended
Sept. 30, Sept. 30,
1994 (a) 1995
-------------- ----------
NET ASSET VALUE, BEGINNING OF PERIOD $10.00 $10.24
------ -------
Income from investment operations
Net investment income 0.03 0.06
Net realized and unrealized gains on investments 0.21 4.07
Total from investment operations 0.24 4.13
------ -------
Distributions from net investment income -- (0.08)
------ -------
NET ASSET VALUE, END OF PERIOD $10.24 $14.29
------ -------
------ -------
Ratio of net expenses to average net assets (b) *0.99% 0.99%
Ratio of net investment income to average
net assets (c) *1.07% 0.47%
Portfolio turnover rate **12% 55%
Total return **2.40% 40.58%
Net assets, end of period (000 omitted) $8,176 $31,401
________________________________
*Annualized.
**Not annualized.
(a) From commencement of operations on April 29, 1994.
(b) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by the investment adviser, this
ratio would have been 4.58% for the period ended September 30,
1994 and 2.87% for the year ended September 30, 1995.
(c) Computed giving effect to the investment adviser's expense
limitation undertaking.

THE FUND

The Fund is a no-load
mutual fund

STEIN ROE YOUNG INVESTOR FUND (the "Fund") is a no-load,
diversified "mutual fund." Mutual funds sell their own shares to
investors and use the money they receive to invest in a
portfolio of securities such as common stocks. A mutual fund
allows you to pool your money with that of other investors in
order to obtain professional investment management. Mutual funds
generally make it possible for you to obtain greater
diversification of your investments and simplify your
recordkeeping. The Fund does not impose commissions or charges
when shares are purchased or redeemed.

The Fund is managed
by Stein Roe & Farnham
Stein Roe & Farnham Incorporated ("Stein Roe") provides investment
advisory, administrative, and bookkeeping and accounting services
to the Fund. Stein Roe also manages and
provides investment advisory services for several other no-load
mutual funds with different investment objectives, including
equity funds, international funds, taxable and tax-exempt bond
funds, and money market funds. To obtain prospectuses and
other information on any of those mutual funds, please call 800-
338-2550.

INVESTMENT POLICIES

The Fund invests primarily
in equity securities

The Fund's investment objective is long-term capital appreciation.
It seeks to achieve its objective by investing primarily in common
stocks and other equity-type securities that, in the opinion of
Stein Roe, have long-term appreciation potential.

The Fund invests in
companies that affect
the lives of children
or teenagers

Under normal circumstances, at least 65% of the Fund's total
assets will be invested in securities of companies that, in the
opinion of Stein Roe, directly or through one or more
subsidiaries, affect the lives of children or teenagers. Such
companies may include companies that produce products or services
that children or teenagers use, are aware of, or could potentially
have an interest in.

Although the Fund invests primarily in common stocks and other
equity-type securities (such as preferred stocks, securities
convertible into or exchangeable for common stocks, and warrants
or rights to purchase common stocks), it may invest up to 35% of
its total assets in debt securities. The Fund may invest in
securities of smaller emerging companies as well as securities of
well-seasoned companies of any size. Smaller companies, however,
involve higher risks in that they typically have limited product
lines, markets, and financial or management resources. In
addition, the securities of smaller companies may trade less
frequently and have greater price fluctuation than larger
companies, particularly those operating in countries with
developing markets. The Fund may also employ investment
techniques described elsewhere in this prospectus. (See Risks and
Investment Considerations and Fees and Expenses.)

The Fund is intended to
be a fun, educational
experience for young investors
and their parents

In addition to the Fund's investment objective and policies, the
Fund also has an educational objective. The Fund will seek to
educate its shareholders by providing educational materials
regarding personal finance and investing as well as materials on
the Fund and its portfolio holdings.

PORTFOLIO INVESTMENTS AND STRATEGIES

The Fund may invest in
"investment grade" debt
securities

In pursuing its investment objective, the Fund may invest in debt
securities. A debt security is an obligation of a borrower to
make payments of principal and interest to the holder of the
security. To the extent the Fund invests in debt securities, such
holdings will be subject to interest rate risk and credit risk.
Interest rate risk is the risk that the value of a portfolio will
fluctuate in response to changes in interest rates. Generally,
the debt component of a portfolio will tend to decrease in value
when interest rates rise and increase in value when interest rates
fall. Credit risk is the risk that an issuer will be unable to make
principal and interest payments when due. Investments in debt securities
are limited to those that are rated within the four highest grades
(generally referred to as "investment grade") assigned by a nationally
recognized statistical rating organization. Investments in unrated debt
securities are limited to those deemed to be of comparable quality by
Stein Roe. Securities rated within the fourth highest grade may possess
speculative characteristics. If the rating of a security held by the
Fund is lost or reduced below investment grade, the Fund is not required
to dispose of the security--Stein Roe will, however, consider that
fact in determining whether the Fund should continue to hold the
security. When Stein Roe considers a temporary defensive position
advisable, the Fund may invest without limitation in high-quality
fixed income securities, or hold assets in cash or cash
equivalents.

The Fund may invest up
to 25% of its assets in
foreign securities, which
may entail a greater degree
of risk than domestic securities

The Fund may invest up to 25% of its total assets in foreign
securities. (See Risks and Investment Considerations.) In
addition to, or in lieu of, such direct investment, the Fund may
construct a synthetic foreign position by (a) purchasing a debt
instrument denominated in one currency, generally U.S. dollars;
and (b) concurrently entering into a forward contract to deliver a
corresponding amount of that currency in exchange for a different
currency on a future date and at a specified rate of exchange.
Because of the availability of a variety of highly liquid U.S.
dollar debt instruments, a synthetic foreign position utilizing
such U.S. dollar instruments may offer greater liquidity than
direct investment in foreign currency debt instruments. In
connection with the purchase of foreign securities, the Fund may
contract to purchase an amount of foreign currency sufficient to
pay the purchase price of the securities at the settlement date.
Such a contract involves the risk that the value of the foreign
currency may decline relative to the value of the dollar prior to
the settlement date--this risk is in addition to the risk that the
value of the foreign security purchased may decline.

The Fund may make loans of its portfolio securities to broker-
dealers and banks and enter into reverse repurchase agreements
subject to certain restrictions described in the Statement of
Additional Information. The Fund may invest in securities
purchased on a when-issued or delayed-delivery basis. Although
the payment terms of these securities are established at the time
the Fund enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase,
when their value may have changed. The Fund will make such
commitments only with the intention of actually acquiring the
securities, but may sell the securities before settlement date if
it is deemed advisable for investment reasons.

The Fund may invest
in "derivative products"

Consistent with its objective, the Fund may invest in a broad
array of financial instruments and securities, including
conventional, exchange-traded and non-exchange-traded
options, futures contracts, futures options, forward contracts,
securities collateralized by underlying pools of mortgages or
other receivables, floating rate instruments, and other
instruments that securitize assets of various types
("Derivatives"). In each case, the value of the instrument or
security is "derived" from the performance of an underlying asset
or a "benchmark" such as a security index, or an interest rate.
The Fund does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
and futures options.

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

INVESTMENT RESTRICTIONS

The Fund will seek to
limit the impact of any
one investment on the
portfolio

The Fund will not invest more than 5% of its assets in the
securities of any one issuer. This restriction applies only to
75% of the Fund's portfolio, but does not apply to securities of
the U.S.Government or repurchase agreements for such securities,
and would not prevent the Fund from investing all of its assets in
shares of another investment company having the identical investment
objective.

The Fund will not invest more than 25% of its total assets (at the
time of investment) in the securities of companies in any one
industry.

The Fund may invest in repurchase agreements, /1/ provided that
it will not invest more than 5% of its net assets in repurchase
agreements maturing in more than seven days, and any other
illiquid securities. An investment in illiquid securities could
involve relatively greater risks and costs to the Fund.
- -----------------
/1/ A repurchase agreement involves a sale of securities to the
Fund in which the seller agrees to repurchase the securities at a
higher price, which includes an amount representing interest on
the purchase price, within a specified time. In the event of
bankruptcy of the seller, the Fund could experience both losses
and delays in liquidating its collateral.
- ------------------

The investment restrictions described in the first three paragraphs
of this section are fundamental policies and, as such, can be
changed only with the approval of a "majority of the outstanding
voting securities" as defined in the Investment Company Act of
1940. The investment objective is non-fundamental and, as such,
may be changed by the Board of Trustees without shareholder
approval. Any such change may result in the Fund having an
investment objective different from the objective the shareholder
considered appropriate at the time of investment in the Fund. All
of the investment restrictions are set forth in the Statement of
Additional Information.

RISKS AND INVESTMENT CONSIDERATIONS

The Fund is designed for
long-term investors who
desire to participate in
the stock market and places
an emphasis on companies that
appeal to young investors.
These investors can accept
more investment risk and
volatility than the stock
market in general but want
less investment risk and
volatility than aggressive
capital appreciation funds

All investments, including those in mutual funds, have risks. No
investment is suitable for all investors. The Fund is designed
for long-term investors who desire to participate in the stock
market and places an emphasis on companies that appeal to young
investors. These investors can accept more investment risk and
volatility than the stock market in general but want less
investment risk and volatility than aggressive capital
appreciation funds. Of course, there can be no guarantee that the
Fund will achieve its objective. The Fund is also designed to be
a fun, educational experience for young investors and their
parents.

While the Fund seeks to reduce risk by investing in a diversified
portfolio, diversification does not eliminate all risk. The Fund
will not, however, invest more than 25% of the total value of its
assets (at the time of investment) in the securities of companies
in any one industry. By investing in companies whose products or
services appeal to young investors, the Fund emphasizes various
consumer goods sectors.

Although the Fund does not purchase securities with a view to
rapid turnover, there are no limitations on the length of time
portfolio securities must be held. Accordingly, the portfolio
turnover rate may vary significantly from year to year, but is not
expected to exceed 100% under normal market conditions. A high
rate of portfolio turnover may result in increased transaction
expenses and the realization of capital gains and losses. (See
Distributions and Income Taxes.) The Fund is not intended to be
an income-producing investment, although it may produce income.

Investment in foreign securities may represent a greater degree of
risk (including risk related to exchange rate fluctuations, tax
provisions, exchange and currency controls, and expropriation of
assets) than investment in securities of domestic issuers. Other
risks of foreign investing include less complete financial
information on issuers, less market liquidity, more market
volatility, less developed and regulated markets, and greater
political instability. In addition, various restrictions by
foreign governments on investments by non-residents may apply,
including imposition of exchange controls and withholding taxes on
dividends, and seizure or nationalization of investments owned by
non-residents. Foreign investments also tend to involve higher
transaction and custody costs.

MASTER/FEEDER OPTION.
Rather than investing in securities directly, the Fund may in the
future seek to achieve its investment objective by pooling its
assets with assets of other mutual funds managed by Stein Roe for
investment in another investment company having the same
investment objective and substantially the same investment
policies and restrictions as the Fund. The purpose of such an
arrangement is to achieve greater operational efficiencies and to
reduce costs. It is expected that any such investment company
would be managed by Stein Roe in substantially the same manner as
the Fund. Shareholders of the Fund will be given at least 30
days' prior notice of any such investment, although they will not
be entitled to vote on the action. Such investment would be made
only if the Trustees determine it to be in the best interests of
the Fund and its shareholders.

HOW TO PURCHASE SHARES
$2,500 minimum investment;
$1,000 for UGMA accounts

You may purchase Fund shares by check, by wire, by electronic
transfer, or by exchange from your account with another Stein Roe
Fund. The initial purchase minimum per Fund account is
$2,500; the minimum for Uniform Gifts/Transfers to Minors Act
accounts is $1,000; the minimum for accounts established under an
automatic investment plan of at least $50 per month (i.e., Regular
Investments or the Automatic Exchange Plan) is $100 through June
30, 1996, after which time it will be $500; and the minimum per
account for Stein Roe IRAs is $500. The initial purchase minimum
is waived for shareholders who participate in the Stein Roe
Counselor [SERVICE MARK] and Stein Roe Counselor Preferred
[SERVICE MARK] programs and for clients of Stein Roe. Subsequent
purchases must be at least $50. (See Shareholder Services.)

BY CHECK.
You may purchase shares
by check, by wire, by
electronic transfer, or
by exchange

To make an initial purchase of shares of the Fund by check, please
complete and sign the Application and mail it, together with a
check made payable to Stein Roe Funds, to P.O. Box 804058,
Chicago, Illinois 60680.

You may make subsequent investments by submitting a check along
with either the stub from your Fund account confirmation statement
or a note indicating the amount of the purchase, your account
number, and the name in which your account is registered. Each
individual check submitted for purchase must be at least $50, and
the Trust generally will not accept cash, drafts, third party
checks, or checks drawn on banks outside the United States.
Should an order to purchase shares of the Fund be cancelled
because your check does not clear, you will be responsible for any
resulting loss incurred by the Fund.

BY WIRE.
You also may pay for shares by instructing your bank to wire
federal funds (monies of member banks within the Federal Reserve
System) to the Fund's custodian bank. Your bank may charge you a
fee for sending the wire. If you are opening a new account by
wire transfer, you must first telephone the Trust to request an
account number and furnish your social security or other tax
identification number. Neither the Fund nor the Trust will be
responsible for the consequences of delays, including delays in
the banking or Federal Reserve wire systems. Your bank
must include the full name(s) in which your account is registered
and your Fund account number, and should address its wire as
follows:

State Street Bank and Trust Company
ABA Routing No. 011000028
Boston, Massachusetts
Attention: Custody
Fund No. 7124; Stein Roe Young Investor Fund
Account of (exact name(s) in registration)
Shareholder Account No. ___________

BY ELECTRONIC TRANSFER.
You may also make subsequent investments by an electronic transfer
of funds from your bank checking account. Electronic transfer
allows you to make purchases at your request ("Special
Investments") by calling 800-338-2550 or at pre-scheduled
intervals ("Regular Investments"). (See Shareholder Services.)
Electronic transfer purchases are subject to a $50 minimum and a
$100,000 maximum. You may not open a new account through
electronic transfer. Should an order to purchase shares of the
Fund be cancelled because your electronic transfer does not clear,
you will be responsible for any resulting loss incurred by the
Fund.

BY EXCHANGE.
You may purchase shares by exchange of shares from another Stein
Roe Fund account either by phone (if the Telephone Exchange
Privilege has been established on the account from which the
exchange is being made), by mail, in person, or automatically at
regular intervals (if you have elected Automatic Exchanges).
Restrictions apply; please review the information on the Exchange
Privilege under How to Redeem Shares--By Exchange.

PURCHASE PRICE AND EFFECTIVE DATE.
Purchases are made at net
asset value

Each purchase of the Fund's shares is made at the Fund's net asset
value (see Net Asset Value) next determined after receipt of
payment as follows:

A purchase by check or wire transfer is made at the net asset
value next determined after the Fund receives the check or wire
transfer of funds in payment of the purchase.

A purchase by electronic transfer is made at the net asset value
next determined after the Fund receives the electronic transfer
from your bank. A Special Electronic Transfer Investment order
received by telephone on a business day before 2:00 p.m., Central
time, is effective on the next business day.

CONDITIONS OF PURCHASE.
Each purchase order for the Fund must be accepted by an authorized
officer of the Trust in Chicago and is not binding until
accepted and entered on the books of the Fund. Once your purchase
order has been accepted, you may not cancel or revoke it; you may,
however, redeem the shares. The Trust reserves the right not to
accept any purchase order that it determines not to be in the best
interests of the Trust or of the Fund's shareholders. The Trust
also reserves the right to waive or lower its investment minimums
for any reason.

PURCHASES THROUGH THIRD PARTIES.
You may purchase (or redeem) shares through investment dealers,
banks, or other financial institutions. These institutions may
charge for their services or place limitations on the extent to
which you may use the services offered by the Trust. There are no
charges or limitations imposed by the Trust, other than those
described in this prospectus, if shares are purchased (or
redeemed) directly from the Trust.

HOW TO REDEEM SHARES

BY WRITTEN REQUEST.
To make sure your
redemption request is
in "good order," please
read this section carefully

You may redeem all or a portion of your shares of the Fund by
submitting a written request in "good order" to the Trust at P.O.
Box 804058, Chicago, Illinois 60680. A redemption request will be
considered to have been received in good order if the following
conditions are satisfied:

(1) The request must be in writing, and must indicate the number
of shares or dollar amount to be redeemed and identify the
shareholder's account number;
(2) The request must be signed by the shareholder(s) exactly as
the shares are registered;
(3) The signatures on the written redemption request must be
guaranteed (a signature guarantee is not a notarization, but is a
widely accepted way to protect you and the Fund by verifying your
signature);
(4) The request must include other supporting legal documents as
required from organizations, executors, administrators, trustees,
or others acting on accounts not registered in their names.

BY EXCHANGE.
You may exchange shares
of the Fund for shares of
any other Stein Roe Fund
qualified for sale to
residents of your state

You may redeem all or any portion of your Fund shares and use the
proceeds to purchase shares of any other Stein Roe Fund offered
for sale in your state if your signed, properly completed
Application is on file.

An exchange transaction is a sale and purchase of shares for
federal income tax purposes and may result in capital gain or
loss. Before exercising the Exchange Privilege, you should obtain
the prospectus for the Stein Roe Fund in which you wish to invest
and read it carefully. The registration of the account to which
you are making an exchange must be exactly the same as that of the
Fund account from which the exchange is made and the amount you
exchange must meet any applicable minimum investment of the Stein
Roe Fund being purchased. An exchange may be made by following
the redemption procedure described above under By Written Request
and indicating the Stein Roe Fund to be purchased--a signature
guarantee normally is not required. (See also the discussion
below of the Telephone Exchange Privilege and Automatic
Exchanges.)

SPECIAL REDEMPTION PRIVILEGES.
Telephone Redemption
Privileges will be established
for you automatically

The Telephone Exchange Privilege and the Telephone Redemption by
Check Privilege will be established automatically for you when you
open your account unless you decline these Privileges on your
Application. Other Privileges must be
specifically elected. If you do not want the Telephone Exchange
and Redemption Privileges, check the box(es) under the section
"Telephone Redemption Options" when completing your Application.
In addition, a signature guarantee may be required to establish a
Privilege after you open your account. If you establish both the
Telephone Redemption by Wire Privilege and the Electronic Transfer
Privilege, the bank account that you designate for both Privileges
must be the same.

Telephone Exchange Privilege. You may use the Telephone Exchange
Privilege to exchange an amount of $50 or more from your account
by calling 800-338-2550 or by sending a telegram; new accounts
opened by exchange are subject to the $2,500 initial purchase
minimum. GENERALLY, YOU WILL BE LIMITED TO FOUR TELEPHONE
EXCHANGE ROUND-TRIPS PER YEAR AND THE FUND MAY REFUSE REQUESTS FOR
TELEPHONE EXCHANGES IN EXCESS OF FOUR ROUND-TRIPS (A ROUND-TRIP
BEING THE EXCHANGE OUT OF THE FUND INTO ANOTHER STEIN ROE FUND,
AND THEN BACK TO THE FUND). In addition, the Trust's general
redemption policies apply to redemptions of shares by Telephone
Exchange. (See General Redemption Policies.)

Restrictions on
Special Redemption
Privileges apply

The Trust reserves the right to suspend or terminate, at any time
and without prior notice, the use of the Telephone Exchange
Privilege by any person or class of persons. The Trust believes
that use of the Telephone Exchange Privilege by investors
utilizing market-timing strategies adversely affects the Fund.
THEREFORE, THE TRUST GENERALLY WILL NOT HONOR REQUESTS FOR
TELEPHONE EXCHANGES BY SHAREHOLDERS IDENTIFIED BY THE TRUST AS
"MARKET-TIMERS." Moreover, the Trust reserves the right to
suspend, limit, modify, or terminate, at any time and without
prior notice, the Telephone Exchange Privilege in its entirety.
Because such a step would be taken only if the Board of Trustees
believes it would be in the best interests of the Fund, the Trust
expects that it would provide shareholders with prior written
notice of any such action unless the resulting delay in the
suspension, limitation, modification, or termination of the
Telephone Exchange Privilege would adversely affect the Fund. If
the Trust were to suspend, limit, modify, or terminate the
Telephone Exchange Privilege, a shareholder expecting to make a
Telephone Exchange might find that an exchange could not be
processed or that there might be a delay in the implementation of
the exchange. (See How to Redeem Shares--By Exchange.) During
periods of volatile economic and market conditions, you may have
difficulty placing your exchange by telephone.

Automatic Exchanges. You may use the Automatic Exchange Privilege
to automatically redeem a fixed amount from your Fund account for
investment in another Stein Roe Fund account on a regular basis.

Telephone Redemption by Wire Privilege. You may use this Privilege to
redeem shares from your account ($1,000 miminum; $100,000 maximum) by
calling 800-338-2550. The proceeds will be transmitted by wire
to your account at a commercial bank previously designated by you
that is a member of the Federal Reserve System. The fee for
wiring proceeds (currently $3.50 per transaction) will be deducted
from the amount wired.

Electronic Transfer Privilege. You may redeem shares by calling
800-338-2550 and requesting an electronic transfer ("Special
Redemption") of the proceeds to a checking account previously
designated by you at a bank that is a member of the Automated
Clearing House. You may also request electronic transfers at
scheduled intervals ("Automatic Redemptions"--see Shareholder
Services). Electronic transfers are subject to a $50 minimum and
a $100,000 maximum. A Special Redemption request received by
telephone after 2:00 p.m., Central time, is deemed received on the
next business day.

GENERAL REDEMPTION POLICIES.
Please read the General
Redemption Policies carefully

You may not cancel or revoke your redemption order once
instructions have been received and accepted. The Trust cannot
accept a redemption request that specifies a particular date or
price for redemption or any special conditions. Please telephone
the Trust if you have any questions about requirements for a
redemption before submitting your request. The Trust reserves the
right to require a properly completed Application before making
payment for shares redeemed.

The price at which your redemption order will be executed is the
net asset value next determined after proper redemption
instructions are received. (See Net Asset Value.) Because the
redemption price you receive depends upon the Fund's net asset
value per share at the time of redemption, it may be more or less
than the price you originally paid for the shares and may result
in a realized capital gain or loss.

The Trust reserves the right at any time without prior notice to
suspend, limit, modify, or terminate any Privilege or its use in
any manner by any person or class.

Neither the Trust, its transfer agent, nor their respective
officers, trustees, directors, employees, or agents will be
responsible for the authenticity of instructions provided under
the Privileges, nor for any loss, liability, cost or expense for
acting upon instructions furnished thereunder if they reasonably
believe that such instructions are genuine. The Fund employs
procedures reasonably designed to confirm that instructions
communicated by telephone under any Special Redemption Privilege
or the Special Electronic Transfer Redemption Privilege are
genuine. Use of any Special Redemption Privilege or the Special
Electronic Transfer Redemption Privilege authorizes the Fund and its
transfer agent to tape-record all instructions to redeem. In addition,
callers are asked to identify the account number and registration, and
may be required to provide other forms of identification. Written
confirmations of transactions are mailed promptly to the registered
address; a legend on the confirmation requests that the shareholder
review the transactions and inform the Fund immediately if there is a
problem. If the Fund does not follow reasonable procedures for
protecting shareholders against loss on telephone transactions, it
may be liable for any losses due to unauthorized or fraudulent
instructions.

SHAREHOLDER SERVICES

REPORTING TO SHAREHOLDERS.
You will receive
quarterly communications
from the Fund

You will receive a confirmation statement reflecting each of your
purchases and redemptions of shares of the Fund. Shares purchased
by reinvestment of dividends, by cross-reinvestment of dividends from
another Fund, or through an automatic investment plan will be
confirmed to you quarterly. The Trust will send you quarterly
materials on the Fund and its portfolio holdings, will send you
semiannual and annual reports, and will provide you annually with
tax information.

FUNDS-ON-CALL [REGISTERED] 24-HOUR INFORMATION SERVICE.
Funds-on-Call [registered]
allows you to have 24-hour
access to information

To access the Stein Roe Funds-on-Call [registered] automated
telephone service, just call 800-338-2550 on any touch-tone
telephone and follow the recorded instructions. Funds-on-Call
[registered] provides yields, prices, latest dividends, account
balances, last
transaction, and other information 24 hours a day, seven days a
week.

FUNDS-ON-CALL [REGISTERED] AUTOMATED TELEPHONE TRANSACTIONS.
If you have established the Funds-on-Call [registered] transaction
privilege (Funds-on-Call [registered] Application will be
required), you may initiate Special Investments and Redemptions,
Telephone Exchanges, and Telephone Redemptions by Check 24 hours a day,
seven days a week by calling 800-338-2550 on a touch-tone telephone.
These transactions are subject to the terms and conditions of the
individual privileges. (See How to Purchase Shares and How to Redeem
Shares.)

STEIN ROE COUNSELOR [SERVICE MARK] PROGRAM.
The Stein Roe Counselor [SERVICE MARK] and Stein Roe Counselor
Preferred [SERVICE MARK] programs are professional investment
advisory services available to shareholders. These programs are
designed to provide investment guidance in helping investors to
select a portfolio of Stein Roe Funds. The Stein Roe Counselor
Preferred [SERVICE MARK] program, which automatically adjusts
client portfolios among the Stein Roe Funds, has a fee of up to 1%
of assets.

TAX-SHELTERED RETIREMENT PLAN.
Booklets describing the Individual Retirement Account ("IRA")
program and special forms necessary for establishing it are
available on request. IRAs are available for employed persons and
their non-employed spouses. You may use all of the Stein Roe
Funds, except those investing primarily in tax-exempt securities,
in the plan. Please read the prospectus for each fund in which
you plan to invest before making your investment.

SPECIAL SERVICES.
The Fund offers special
services to meet your needs

The following special services are available to shareholders.
Please call 800-338-2550 or write the Trust for additional
information and forms.