File No. 33-11351
Rule 497(e)
<PAGE>
Stein Roe Growth Stock Fund
a series of Stein Roe Investment Trust
Supplement to Prospectus dated February 3, 1997
As of October 15, 1997, Stein Roe Growth Stock Fund (the
"Fund") will be closed to purchases by new investors except
for purchases by eligible investors as described below.
If you are already a shareholder of the Fund, you may
continue to add to your Fund account or open another account
with the Fund.
In addition, you may open a new account if:
- - you are a shareholder of any other Stein Roe Fund, having
purchased shares directly from Stein Roe, as of October 15,
1997 and you are opening a new account by exchange or by
dividend reinvestment as described in the prospectus;
- - you are a client of the Fund's investment adviser, Stein
Roe & Farnham Incorporated (the "Adviser");
- - you are a trustee of Stein Roe Investment Trust; an
employee of the Adviser, or any of its affiliated
companies; or a member of the immediate family of any
trustee or employee;
- - you purchase shares (i) under an asset allocation program
sponsored by a financial advisor, broker-dealer, bank,
trust company or other intermediary or (ii) from certain
financial advisors who charge a fee for services and who,
as of October 15, 1997, have one or more clients who were
Fund shareholders; or
- - you purchase shares for an employee benefit plan, the
records for which are maintained by a trust company or
third party administrator under an investment program with
the Fund.
If you have questions about your eligibility to purchase shares of the
Fund, please call 800-338-2550.
This Supplement is Dated August 21, 1997
<PAGE>
<PAGE>
STEIN ROE INVESTMENT TRUST
Stein Roe Special Fund
Stein Roe Special Venture Fund
Supplement to February 3, 1997 Prospectus
________________
Gerry M. Sandel has been named the portfolio manager of
Stein Roe Special Fund and senior vice president and
principal of the Adviser, each as of July 7, 1997.
Prior to joining the Adviser in July 1997, Mr. Sandel
was portfolio manager of the Marshall Mid-Cap Value Fund and
its predecessor fund and vice president of M&I Investment
Management Corporation since October 1993. Prior thereto,
Mr. Sandel was vice president of Acorn Asset Management
Corporation. A chartered financial analyst, Mr. Sandel
earned a bachelor's degree in 1977 from the University of
Southern Mississippi and a master's degree in 1984 from the
American Graduate School.
Richard B. Peterson, who has co-managed Special Fund
since 1991, now will dedicate his time to co-managing Special
Venture Fund. Mr. Peterson will continue to be available to
work with Mr. Sandel during the transition period.
Also as of July 7, 1997, John S. McLandsborough has been
named co-portfolio manager, along with Mr. Peterson, of
Special Venture Fund. Prior to joining the Adviser in April
1996, Mr. McLandsborough was an equity research analyst with
CS First Boston from June 1994 until January 1996 and with
National City Bank of Cleveland prior thereto. Mr.
McLandsborough, a chartered financial analyst, earned a
bachelor's degree in finance in 1989 from Miami University
and a master's degree in 1992 from Indiana University.
This Supplement is Dated June 26, 1997
<PAGE>
Stein Roe Capital Opportunities Fund
a series of Stein Roe Investment Trust
Supplement to Prospectus dated February 3, 1997
_____________________
Stein Roe Capital Opportunities Fund (the "Fund") will
open to new investors on March 31, 1997.
The Fund was closed to new investors for several months
(as described in the prospectus at page 27) in order to
facilitate management of the Fund's portfolio. The closing
was prompted by very large net cash inflow that, if it had
continued, might have hindered effective portfolio
management.
The Adviser intends to continue to monitor the Fund's
cash inflow, and the Fund reserves the right to re-close to
new investors without prior notice if its Board of Trustees
determines it advisable to do so.
This Supplement is Dated March 24, 1997
<PAGE>
STEIN ROE MUTUAL FUNDS
Prospectus
February 3, 1997
Growth & Income Funds
Balanced Fund
Growth & Income Fund
Growth Funds
Growth Stock Fund
Special Fund
Special Venture Fund
Capital Opportunities Fund
[logo] STEIN ROE MUTUAL FUNDS
Building Wealth for Generations
<PAGE>
GROWTH & INCOME FUND* seeks to provide both growth of capital and
current income.
BALANCED 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 stocks 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. THIS FUND IS CLOSED TO
PURCHASES BY NEW INVESTORS EXCEPT FOR PURCHASES BY ELIGIBLE
INVESTORS AS DESCRIBED UNDER HOW TO PURCHASE SHARES.
*EACH OF GROWTH & INCOME FUND, BALANCED FUND, GROWTH STOCK
FUND, SPECIAL FUND, AND SPECIAL VENTURE FUND SEEKS TO ACHIEVE
ITS OBJECTIVE BY INVESTING ALL OF ITS NET INVESTABLE ASSETS IN
A CORRESPONDING PORTFOLIO OF SR&F BASE TRUST THAT HAS THE SAME
INVESTMENT OBJECTIVE AND SUBSTANTIALLY THE SAME INVESTMENT
POLICIES AS THE FUND. (SEE SPECIAL CONSIDERATIONS REGARDING
MASTER FUND/FEEDER FUND STRUCTURE.)
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 and the Portfolios are series of
SR&F Base Trust. Each Trust is a diversified open-end management
investment company.
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 February 3, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. This
prospectus is available electronically by using Stein Roe's
Internet address: http://www. steinroe.com. You can get a free
paper copy of the prospectus, the Statement of Additional
Information, and the most recent financial statements by calling
800-338-2550 or by writing to Stein Roe Funds, Suite 3200, One
South Wacker Drive, Chicago, Illinois 60606.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 3, 1997.
<PAGE>
TABLE OF CONTENTS
Page
Summary ..............................3
Fee Table ...........................6
Financial Highlights .................8
The Funds ...........................16
Investment Policies .................17
Growth & Income Fund................17
Balanced Fund.......................17
Growth Stock Fund...................18
Special Fund........................18
Special Venture Fund................19
Capital Opportunities Fund..........19
Portfolio Investments and Strategies 20
Investment Restrictions .............24
Risks and Investment Considerations..25
How to Purchase Shares ..............27
Capital Opportunities Fund Accounts.27
By Check............................28
By Wire.............................29
By Electronic Transfer .............29
By Exchange ........................30
Conditions of Purchase .............30
Purchases Through Third Parties.....30
Purchase Price and Effective Date ..30
How to Redeem Shares ................31
By Written Request .................31
By Exchange ........................32
Special Redemption Privileges ......32
General Redemption Policies ........34
Shareholder Services ................35
Net Asset Value .....................37
Distributions and Income Taxes ......38
Investment Return ...................40
Management...........................40
Organization and Description of
Shares............................45
Special Considerations Regarding
Master Fund/Feeder Fund Structure...45
Certificate of Authorization.........49
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 shares of the Funds are not qualified
for sale.
INVESTMENT OBJECTIVES AND POLICIES. Each Fund other than Capital
Opportunities Fund has converted to the master fund/feeder fund
structure, under which it seeks to achieve its objective by
investing all of its net investable assets in a corresponding
Portfolio of SR&F Base Trust that has the same investment
objective and substantially the same investment policies as the
Fund.
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 offers the opportunity
for long-term growth of capital while also providing a steady
stream of income. Growth & Income Portfolio, in which Growth &
Income Fund invests, 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. Balanced
Portfolio, in which Balanced Fund invests, allocates its
investments among equities, debt securities, and cash. The
portfolio manager determines those allocations based on the views
of the Adviser's investment strategists regarding economic,
market, and other factors relative to investment opportunities.
GROWTH STOCK FUND seeks long-term capital appreciation. Growth
Stock Portfolio, in which Growth Stock Fund invests, normally
invests 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 seeks capital appreciation. Special Portfolio, in
which Special Fund invests, places particular emphasis 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.
Its 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.
Special Venture Portfolio, in which Special Venture Fund invests,
invests primarily in a diversified portfolio of equity securities
of entrepreneurially managed companies that the Adviser believes
represent special opportunities. It emphasizes investments in
financially strong small and medium-sized companies, based
principally on appraisal of their management and stock valuations.
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 and the Portfolios will
achieve their investment objectives. Please see Investment
Policies 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 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 and the Portfolios 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 Investment Policies, 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. Capital Opportunities Fund is closed to
purchases by new investors except for purchases by eligible
investors. 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 in additional Fund shares unless
you elect to have them paid in cash, deposited by electronic
transfer into your bank account, or invested in shares of another
Stein Roe Fund. (See Distributions and Income Taxes and
Shareholder Services.)
ADVISER AND FEES. Stein Roe & Farnham Incorporated (the
"Adviser") provides administrative, investment management, and
bookkeeping and accounting services to the Funds and the
Portfolios. For a description of the Adviser and its fees, see
Management.
If you have any additional questions about the Funds, please feel
free to discuss them with an account representative by calling
800-338-2550.
FEE TABLE
Capital
Growth & Growth Special Oppor-
Income Balanced Stock Special Venture tunities
Fund Fund Fund Fund Fund Fund
----- --------- ----- ------- ------- --------
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 fee
waiver in the case
of Special Fund;
as a percentage of
average net assets)
Management and Admin-
istrative Fees (after
fee waiver in the
case of Special Fund) 0.75% 0.70% 0.75% 0.80% 0.90% 0.85%
12b-1 Fees None None None None None None
Other Expenses 0.43% 0.35% 0.33% 0.34% 0.44% 0.37%
----- ----- ----- ----- ----- ------
Total Fund Operating
Expenses (after fee
waiver in the case
of Special Fund) 1.18% 1.05% 1.08% 1.14% 1.34% 1.22%
===== ===== ===== ===== ===== ======
___________________
* There is a $7.00 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 $65 $143
Balanced Fund 11 33 58 128
Growth Stock Fund 11 34 60 132
Special Fund 12 36 63 138
Special Venture Fund 14 42 73 161
Capital Opportunities Fund 12 39 67 148
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 table is based on
expenses incurred in the last fiscal year.
For Special Fund for the 12 months ending June 30, 1997, the
Adviser has agreed to reduce the portion of Special Fund's fee
payable by Special Portfolio by subtracting 0.05% from the
applicable annual rate of management fee. Absent that waiver,
Special Fund's proportionate share of Special Portfolio's
Management Fee and Special Fund's Administrative Fees (combined)
and Total Operating Expenses would be 0.85% and 1.19%,
respectively. An expense waiver for Special Venture Fund expired
on January 31, 1997.
Funds participating in the master fund/feeder fund structure
("feeder Funds") pay the Adviser an administrative fee based on
the Fund's average daily net assets, and each Portfolio pays the
Adviser a management fee based on its average daily net assets.
The expenses of both the feeder Funds and Portfolios are
summarized in the Fee Table. (The fees are described under
Management.) Each feeder Fund bears its proportionate share of
the fees and expenses of the corresponding Portfolio. The
trustees of Investment Trust have considered whether the annual
operating expenses of each feeder Fund, including its share of the
expenses of the Portfolio, would be more or less than if the
feeder Fund invested directly in the securities held by the
Portfolio, and concluded that the feeder Funds' expenses would not
be greater in such case.
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
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 and have been audited by
Arthur Andersen LLP, independent public accountant. 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 Investment Trust without charge upon request,
contains additional performance information.
Balanced Fund
<TABLE>
<CAPTION>
Nine
Months
Years Ended Ended
December 31, Sept.30, Years Ended September 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period..... $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...... 1.33 1.32 0.97 1.37 1.28 1.32 1.31 1.26 1.15 1.33 1.00
Net realized and
unrealized gains
(losses) on investments... 2.75 (1.06) 0.45 3.10 (2.92) 4.85 1.48 2.37 (1.06) 2.22 2.96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............... 4.08 0.26 1.42 4.47 (1.64) 6.17 2.79 3.63 0.09 3.55 3.96
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
Net investment income..... (1.35) (1.63) (0.90) (1.34) (1.36) (1.26) (1.34) (1.30) (1.17) (1.23) (1.01)
Net realized capital
gains ................... (2.70) (1.45) (0.11) (0.38) (0.73) (0.51) (0.62) (1.67) (0.71) (0.28) (0.70)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions....... (4.05) (3.08) (1.01) (1.72) (2.09) (1.77) (1.96) (2.97) (1.88) (1.51) (1.71)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period.............. $25.07 $22.25 $22.66 $25.41 $21.68 $26.08 $26.91 $27.57 $25.78 $27.82 $30.07
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Ratio of net expenses to
average net assets....... 0.79% 0.80% *0.87% 0.90% 0.88% 0.87% 0.85% 0.81% 0.83% 0.87% 1.05%
Ratio of net investment
income to average
net assets............... 5.21% 5.12% *5.68% 5.83% 5.36% 5.50% 4.94% 4.69% 4.53% 5.14% 3.45%
Portfolio turnover rate.... 108% 86% 85% 93% 75% 71% 59% 53% 29% 45% 87%
Average commissions
(per share)............. -- -- -- -- -- -- -- -- -- -- $0.0537
Total return............. 17.11% 0.74% 6.51% 20.76% (6.86%) 29.67% 11.13% 14.57% 0.36% 14.49% 14.83%
Net assets, end of
period (000 omitted). $149,831 $140,279 $134,225 $144,890 $124,592 $150,689 $173,417 $222,292 $229,274 $228,560 $231,063
</TABLE>
Growth & Income Fund
<TABLE>
<CAPTION>
Period
Ended
Sept. 30, Years Ended September 30,
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 0.27
Net realized and un-
realized gains (losses)
on investments.......... 0.47 (1.64) 2.46 (0.85) 2.17 1.49 2.16 0.40 2.56 3.22
-------- ------ ------ ------ ------ ------ ------- ------ ------ ------
Total from investment
operations............... 0.52 (1.47) 2.68 (0.59) 2.43 1.68 2.33 0.58 2.90 3.49
-------- ------ ------ ------ ------ ------ ------- ------ ------ ------
Distributions
Net investment income... (0.03) (0.14) (0.22) (0.26) (0.29) (0.18) (0.16) (0.16) (0.20) (0.32)
Net realized capital
gains................... -- -- -- -- (0.36) (0.35) (0.76) (0.71) (0.59) (1.43)
-------- ------ ------ ------ ------ ------ ------- ------ ------ ------
Total distributions.... (0.03) (0.14) (0.22) (0.26) (0.65) (0.53) (0.92) (0.87) (0.79) (1.75)
-------- ------ ------ ------ ------ ------ ------- ------ ------ ------
Net Asset Value, End
of Period.............. $10.49 $ 8.88 $11.34 $10.49 $12.27 $13.42 $14.83 $14.54 $16.65 $18.39
======== ====== ====== ====== ====== ====== ======= ====== ====== ======
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% 1.18%
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% 1.65%
Portfolio turnover rate.... 32% 105% 63% 51% 48% 40% 50% 85% 70% 13%
Average commissions
(per share).............. -- -- -- -- -- -- -- -- -- $0.0683
Total return............. 5.20% (13.90%) 30.63% (5.25%) 24.12% 14.00% 17.98% 4.03% 21.12% 22.67%
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 $204,387
</TABLE>
GROWTH STOCK FUND
<TABLE>
<CAPTION>
Nine
Months
Years Ended Ended
December 31, Sept.30, Years Ended September 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $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..... 0.26 0.24 0.19 0.34 0.39 0.33 0.18 0.15 0.13 0.12 0.08
Net realized and un-
realized gains (losses)
on investments........... 2.75 0.46 (0.11) 4.51 (1.17) 5.90 3.01 1.14 0.41 5.60 5.01
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.............. 3.01 0.70 0.08 4.85 (0.78) 6.23 3.19 1.29 0.54 5.72 5.09
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
Net investment income.... (0.25) (0.29) (0.15) (0.34) (0.37) (0.42) (0.16) (0.10) (0.12) (0.15) (0.10)
Net realized capital
gains................... (3.22) (2.71) -- (0.06) -- (0.92) (1.17) (0.95) (1.73) (3.02) (2.33)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions..... (3.47) (3.00) (0.15) (0.40) (0.37) (1.34) (1.33) (1.05) (1.85) (3.17) (2.43)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period...............$16.97 $14.67 $14.60 $19.05 $17.90 $22.79 $24.65 $24.89 $23.58 $26.13 $28.79
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Ratio of net expenses to
average net assets.......0.67% 0.65% *0.76% 0.77% 0.73% 0.79% 0.92% 0.93% 0.94% 0.99% 1.08%
Ratio of net investment
income to average
net assets...............1.34% 1.25% *1.62% 2.05% 2.03% 1.63% 0.75% 0.59% 0.50% 0.56% 0.32%
Portfolio turnover rate... 137% 143% 84% 47% 40% 34% 23% 29% 27% 36% 39%
Average commissions
(per share)............ -- -- -- -- -- -- -- -- -- -- $0.0528
Total return.............16.91% 5.57% 0.54% 33.86% (4.17%) 36.64% 14.37% 5.09% 2.10% 28.18% 21.04%
Net assets, end of
period (000 omitted)..$226,604 $232,658 $195,641 $206,476 $206,031 $291,767 $372,758 $373,921 $321,502 $360,336 $417,964
</TABLE>
Special Fund
<TABLE>
<CAPTION>
Nine
Months
Years Ended Ended
December 31, Sept.30, Years Ended September 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period... $18.41 $16.95 $12.83 $15.12 $20.79 $16.64 $19.87 $20.90 $25.04 $23.54 $25.26
------ ------ ------ ------ ------ ------ ------ ------- ------- ------ ------
Income from Investment
Operations
Net investment income... 0.35 0.23 0.14 0.36 0.42 0.34 0.21 0.17 0.15 0.13 0.01
Net realized and un-
realized gains (losses)
on investments...........2.33 0.12 2.16 5.58 (2.10) 4.55 1.50 5.31 0.33 3.05 4.14
------ ------ ------ ------ ------ ------ ------ ------- ------- ------ ------
Total from investment
operations.............. 2.68 0.35 2.30 5.94 (1.68) 4.89 1.71 5.48 0.48 3.18 4.15
------ ------ ------ ------ ------ ------ ------ ------- ------- ------ ------
Distributions
Net investment income... (0.34) (0.57) (0.01) (0.21) (0.39) (0.34) (0.37) (0.18) (0.21) (0.15) (0.11)
Net realized capital
gains.................. (3.80) (3.90) -- (0.06) (2.08) (1.32) (0.31) (1.16) (1.77) (1.31) (1.91)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------ ------
Total distributions.... (4.14) (4.47) (0.01) (0.27) (2.47) (1.66) (0.68) (1.34) (1.98) (1.46) (2.02)
------ ------ ------ ------ ------ ------ ------ ------- ------- ------ ------
Net Asset Value, End
of Period..............$16.95 $12.83 $15.12 $20.79 $16.64 $19.87 $20.90 $25.04 $23.54 $25.26 $27.39
====== ====== ====== ====== ====== ====== ====== ======= ======= ====== ======
Ratio of net expenses to
average net assets..... 0.92% 0.96% *0.99% 0.96% 1.02% 1.04% 0.99% 0.97% 0.96% 1.02% 1.18%
Ratio of net investment
income to average
net assets............. 1.75% 1.32% *1.31% 2.12% 2.33% 2.11% 0.99% 0.92% 0.91% 0.56% 0.03%
Portfolio turnover rate 116% 103% 42% 85% 70% 50% 40% 42% 58% 41% 32%
Average commissions
(per share)............ . -- -- -- -- -- -- -- -- -- -- $0.0482
Total return........ .. 14.70% 4.27% 17.94% 40.00% (8.78%) 32.18% 8.96% 27.35% 2.02% 14.60% 17.89%
Net assets, end
of period
(000 omitted)..... . $253,693 $187,997 $224,628 $322,056 $361,065 $587,259 $626,080 $1,076,818 $1,243,885 $1,201,469 $1,158,498
</TABLE>
Special Venture Fund
Period Ended Year Ended
Sept. 30, Sept. 30,
1995(a) 1996
------ ------
Net Asset Value, Beginning of Period......$10.00 $12.60
------ ------
Income from Investment Operations
Net investment income.(loss)............... 0.01 (0.02)
Net realized and unrealized gains on
investments............................... 2.67 3.86
------ ------
Total from investment operations.......... 2.68 3.84
------ ------
Distributions
Net investment income..................... (0.03) --
Net realized capital gains............... (0.05) (0.57)
------ ------
Total distributions...................... (0.08) (0.57)
------ ------
Net Asset Value, End of Period........... $12.60 $15.87
====== ======
Ratio of net expenses to average net
assets (b)............................. *1.25% 1.25%
Ratio of net investment income to average
net assets (c).......................... *0.12% (2.19%)
Portfolio turnover rate.................... 84% 72%
Average commissions (per share).......... -- $0.0378
Total return .............................26.96% 31.81%
Net assets, end of period (000 omitted)..$60,533 $144,528
Capital Opportunities
Fund (d)
<TABLE>
<CAPTION>
Nine
Months
Years Ended Ended
December 31, Sept.30, Years Ended September 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value,
Beginning of Period..... $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.
(loss).................... 0.03 0.03 0.03 0.05 0.06 0.11 0.06 0.01 0.02 0.01 (0.06)
Net realized and un-
realized gains (losses)
on investments............ 1.97 0.62 0.13 3.86 (4.72) 3.73 0.60 3.91 0.34 5.91 10.41
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............... 2.00 0.65 0.16 3.91 (4.66) 3.84 0.66 3.92 0.36 5.92 10.35
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
Net investment income..... (0.10) (0.05) -- (0.05) (0.06) (0.08) (0.10) (0.04) (0.01) (0.02) (0.01)
Net realized capital
gains.................... (0.43) (3.36) -- (0.06) (2.54) (0.08) -- -- -- -- (0.99)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions...... (0.53) (3.41) -- (0.11) (2.60) (0.16) (0.10) (0.04) (0.01) (0.02) (1.00)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period............... $13.38 $10.62 $10.78 $14.58 $ 7.32 $11.00 $11.56 $15.44 $15.79 $21.69 $31.04
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Ratio of net expenses to
average net assets....... 0.95% 0.95% *1.01% 1.09% 1.14% 1.18% 1.06% 1.06% 0.97% 1.05% 1.22%
Ratio of net investment
income to average
net assets............... 0.19% 0.18% *0.34% 0.42% 0.43% 1.19% 0.42% 0.09% 0.04% 0.08% (0.40%)
Portfolio turnover rate... 116% 133% 164% 245% 171% 69% 46% 55% 46% 60% 22%
Average commissions
(per share)............ -- -- -- -- -- -- -- -- -- -- $0.0555
Total return............ 16.77% 9.38% 1.51% 36.68% (37.51%) 53.51% 5.99% 34.01% 2.31% 37.46% 49.55%
Net assets, end of
period (000 omitted).. $191,415 $171,973 $194,160 $272,805 $86,342 $129,711 $118,726 $153,101 $175,687 $242,381 $1,684,538
</TABLE>
- ------------
*Annualized.
(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 1.34% for the year ended September
30, 1996 for Special Venture Fund.
(c) Computed giving effect to the Adviser's fee waiver.
(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 debt
at end of outstanding outstanding per share
period (in during period during period during
Period Ended thousands) (in thousands) (in thousands) period
- ------------- ---------- -------------- ------------- ------------
Balanced Fund
12/31/86 $-- 2 5,506 $0.0004
Growth Stock Fund
9/30/89 -- 124 11,745 0.0106
Special Fund
12/31/86 -- 203 15,251 0.0133
Capital Oppor-
tunities Fund
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
("Investment 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
management, administrative, and bookkeeping and accounting
services to the Funds and the Portfolios. The Adviser also
manages and provides investment advisory services for several
other mutual funds with different investment objectives, including
other 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.
On February 3, 1997, each of Growth & Income Fund, Balanced Fund,
Growth Stock Fund, Special Fund and Special Venture Fund became a
"feeder fund"--that is, it invested all of its assets in a "master
fund" that has an investment objective identical to that of the
Fund. Each master fund is a series of SR&F Base Trust ("Base
Trust") (each master fund is referred to as a "Portfolio").
Before converting to a feeder fund, each Fund invested its assets
in a diversified group of securities. Under the "master
fund/feeder fund structure," a feeder fund and one or more feeder
funds pool their assets in a master portfolio that has the same
investment objective and substantially the same investment
policies as the feeder funds. The purpose of such an arrangement
is to achieve greater operational efficiencies and reduce costs.
The assets of each Portfolio are managed by the Adviser in the
same manner as the assets of the feeder fund were managed before
conversion to the master fund/feeder fund structure. (For more
information, see Special Considerations Regarding Master
Fund/Feeder Fund Structure.)
INVESTMENT POLICIES
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.
The investment objective of GROWTH & INCOME FUND is to provide
both growth of capital and current income. Growth & Income Fund
invests all of its net investable assets in SR&F Growth & Income
Portfolio ("Growth & Income Portfolio"). Growth & Income Fund 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. Growth &
Income Portfolio 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.
Although it may invest in a broad range of securities (including
common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, and warrants or rights to purchase
common stocks), normally Growth & Income Portfolio emphasizes
investments in equity securities of companies having market
capitalizations in excess of $1 billion. Securities of these
well-established companies are believed to be generally less
volatile than those of companies with smaller capitalizations
because companies with larger capitalizations tend to have
experienced management; broad, highly diversified product lines;
deep resources; and easy access to credit.
The investment objective of BALANCED FUND is to seek long-term
growth of capital and current income, consistent with reasonable
investment risk. Balanced Fund invests all of its net investable
assets in SR&F Balanced Portfolio ("Balanced Portfolio").
Balanced Portfolio allocates its investments among equities, debt
securities, and cash. The portfolio manager determines those
allocations based on the views of the Adviser's investment
strategists regarding economic, market, and other factors relative
to investment opportunities.
The equity portion of the investment portfolio is invested
primarily in well-established companies having market
capitalizations in excess of $1 billion. Fixed-income senior
securities will make up at least 25% of Balanced Portfolio's total
assets. Investments in debt securities are limited to those that
are within the four highest grades (generally referred to as
"investment grade") assigned by a nationally recognized
statistical rating organization or, if unrated, determined by the
Adviser to be of comparable quality.
The investment objective of GROWTH STOCK FUND is long-term capital
appreciation. Growth Stock Fund invests all of its net investable
assets in SR&F Growth Stock Portfolio ("Growth Stock Portfolio").
Growth Stock Portfolio attempts to achieve the objective 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.
The investment objective of SPECIAL FUND is to invest in
securities selected for capital appreciation. Special Fund
invests all of its net investable assets in SR&F Special Portfolio
("Special Portfolio"). 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.
Special Portfolio 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, Special Portfolio
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 Special
Portfolio invests primarily in common stocks, it may also invest
in other equity-type securities, including preferred stocks and
securities convertible into equity securities.
The investment objective of SPECIAL VENTURE FUND is to seek long-
term capital appreciation. Special Venture Fund invests all of
its net investable assets in SR&F Special Venture Portfolio
("Special Venture Portfolio"). Special Venture Portfolio invests
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. Special Venture Portfolio emphasizes investments
in financially strong small and medium-sized companies, based
principally on appraisal of their management and stock valuations.
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'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.
Capital Opportunities 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, Capital
Opportunities Fund may invest in all types of equity securities,
including preferred stocks and securities convertible into common
stocks.
PORTFOLIO INVESTMENTS AND STRATEGIES
For purposes of discussion under Portfolio Investments and
Strategies, the term "Fund" also means "Portfolio."
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
Portfolio, Balanced Portfolio, and Growth Stock Portfolio 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 Portfolio, Capital Opportunities Fund,
and Special Portfolio 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 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 debt 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 debt 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, 1996, the Funds' holdings of foreign
companies, as a percentage of net assets, were as follows: Growth
& Income Fund, 3.2% (0.7% in foreign securities and 2.5% in ADRs);
Balanced Fund, 13.6% (11.3% in foreign securities and 2.3% in
ADRs); Growth Stock Fund, 5.0% (1.4% in foreign securities and
3.6% in ADRs); Special Fund, 6.9% (6.5% in foreign securities and
0.4% in ADRs); Special Venture Fund, 7.0% (3.5% in foreign
securities and 3.5% in ADRs); and Capital Opportunities Fund, 3.1%
(none in foreign securities and 3.1% 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 participate in an interfund lending program, 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 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 Portfolio 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 Portfolio 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 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.
INVESTMENT RESTRICTIONS
No Fund or Portfolio will invest more than 5% of its assets in the
securities of any one issuer. This restriction applies only to
75% of an investment portfolio, but does not apply to securities
of the U.S. Government or repurchase agreements /1/ 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.
- -----------------
/1/ A repurchase agreement involves a sale of securities to a Fund
or Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, the Fund or
Portfolio could experience both losses and delays in liquidating
its collateral.
- -----------------
No Fund or Portfolio 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 or Portfolio may make loans except that it may (1)
purchase money market instruments 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 and Portfolios. No Fund or Portfolio
may borrow money, except for non-leveraging, temporary, or
emergency purposes or in connection with participation in the
interfund lending program. Neither aggregate borrowings
(including reverse repurchase agreements) nor aggregate loans at
any one time may exceed 33 1/3% of the value of total assets.
Additional securities may not be purchased when borrowings, less
proceeds receivable from sales of portfolio securities, exceed
5% of total assets.
The Funds and Portfolios may invest in repurchase agreements,
provided that none will invest more than 15% of its net assets in
illiquid securities, including repurchase agreements maturing in
more than seven days.
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 Special Portfolio) 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 a Fund as defined in the
Investment Company Act of 1940. The investment objectives of the
Funds and the Portfolios are non-fundamental and, as such, may be
changed by the Board of Trustees without shareholder approval,
subject, however, to at least 30 days' advance written notice to
shareholders. 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 Portfolio, Balanced Portfolio, Special
Portfolio, Special Venture Portfolio, 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 Portfolio seeks to reduce risk by investing in a
diversified portfolio, but this does not eliminate all risk. No
Fund or Portfolio, 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 Investment Policies.)
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; different accounting, auditing, and
financial reporting standards; different settlement practices;
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.
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 Personal Counselor
[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.)
CAPITAL OPPORTUNITIES FUND ACCOUNTS. CAPITAL OPPORTUNITIES FUND
IS CLOSED TO PURCHASES (INCLUDING EXCHANGES) BY NEW INVESTORS
EXCEPT FOR PURCHASES BY ELIGIBLE INVESTORS AS DESCRIBED BELOW.
Investment Trust has taken this step to facilitate management of
the Fund's portfolio. If you are already a shareholder of Capital
Opportunities Fund, you may continue to add to your account or
open another account with the Fund in your name. In addition, you
may open a new account if:
- - you participate in Stein Roe Counselor [SERVICE MARK] or Stein
Roe Personal Counselor [SERVICE MARK] or another investment
advisory service sponsored by the Adviser;
- - you are a trustee of Investment Trust; an employee of the
Adviser, or any of its affiliated companies; or a member of the
immediate family of any trustee or employee;
- - you are a client of the Adviser and, in the judgment of the
Adviser, your proposed investment in Capital Opportunities Fund
would not adversely affect the Adviser's ability to manage the
Fund effectively;
- - the Board of Trustees of Investment Trust determines that your
proposed investment in Capital Opportunities Fund would not
adversely affect the Adviser's ability to manage the Fund
effectively;
- - you purchased shares under an asset allocation program sponsored
by a financial advisor, broker-dealer, bank, trust company, or
other intermediary under an investment program with Capital
Opportunities Fund as of September 30, 1996;
- - you purchase shares for an individual retirement account or an
employee benefit plan, the records for which are maintained by a
trust company or plan administrator under an investment program
with Capital Opportunities Fund as of September 30, 1996.
The Board of Trustees of Investment Trust concluded that
permitting the additional investments described above would not
adversely affect the ability of the Adviser to manage Capital
Opportunities Fund effectively. If you have questions about your
eligibility to purchase shares of Capital Opportunities Fund,
please call 800-338-2550.
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 Mutual Funds, to
SteinRoe Services Inc. at P.O. Box 8900, Boston, Massachusetts
02205. Participants in the Stein Roe Counselor [SERVICE MARK] or
Personal Counselor [SERVICE MARK] Programs should send orders to
SteinRoe Services Inc. at P.O. Box 803938, 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
Investment Trust generally will not accept cash, drafts, third or
fourth 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 call 800-
338-2550 to request an account number and furnish your social
security or other tax identification number. Neither the Funds
nor Investment 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
Boston, Massachusetts
ABA Routing No. 011000390
Attention: SteinRoe Services Inc.
Fund No. ___; Stein Roe _____ Fund
Account of (exact name(s) in registration)
Shareholder Account No. ________
Fund Numbers:
11--Growth & Income Fund
31--Balanced Fund
32--Growth Stock Fund
34--Special Fund
16--Special Venture Fund
33--Capital Opportunities Fund
Participants in the Stein Roe Counselor [SERVICE MARK] and
Personal Counselor [SERVICE MARK] Programs should address their
wires as follows:
First National Bank of Boston
Boston, Massachusetts
ABA Routing No. 011000390
Attention: SteinRoe Services Inc.
Fund No. ___; Stein Roe _____ Fund
Account of (exact name(s) in registration)
Counselor Account No. ________
BY ELECTRONIC TRANSFER. You also may make subsequent investments
by an electronic transfer of funds from your bank 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 the Automatic Exchange
Privilege). Restrictions apply; please review the information on
the Exchange Privilege under How to Redeem Shares--By Exchange.
CONDITIONS OF PURCHASE. Each purchase order for a Fund must be
accepted by an authorized officer of Investment Trust or its
authorized agent 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. Investment Trust reserves the right not to
accept any purchase order that it determines not to be in the best
interest of Investment Trust or of a Fund's shareholders.
Investment Trust also reserves the right to waive or lower its
investment minimums for any reason. Investment Trust does not
issue certificates for shares.
PURCHASES THROUGH THIRD PARTIES. You may purchase (or redeem)
shares through broker-dealers, banks, or other intermediaries
("Intermediaries"). These Intermediaries may charge for their
services or place limitations on the extent to which you may use
the services offered by Investment Trust. There are no charges or
limitations imposed by Investment Trust, other than those
described in this prospectus, if shares are purchased (or
redeemed) directly from Investment Trust.
Some Intermediaries 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 they provide
with respect to the underlying Fund shares. The Adviser and the
Funds' transfer agent share in the expense of these fees, and the
Adviser pays all sales and promotional expenses.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of a Fund's
shares made directly with the Fund is made at that Fund's net
asset value (see Net Asset Value) next determined after receipt of
an order in good form, including 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
instruction received by telephone on a business day before 3:00
p.m., central time, is effective on the next business day.
Each purchase of Fund shares through an Intermediary that is an
authorized agent of Investment Trust for the receipt of orders is
made at the net asset value next determined after the receipt of
the order by the Intermediary.
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 803938, 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 Investment
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 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. 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.
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, Investment Trust's
general redemption policies apply to redemptions of shares by
Telephone Exchange. (See General Redemption Policies.)
Investment 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. Investment
Trust believes that use of the Telephone Exchange Privilege by
investors utilizing market-timing strategies adversely affects the
Funds. THEREFORE, INVESTMENT TRUST GENERALLY WILL NOT HONOR
REQUESTS FOR TELEPHONE EXCHANGES BY SHAREHOLDERS IDENTIFIED BY
INVESTMENT TRUST AS "MARKET-TIMERS." Moreover, Investment 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, Investment 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 INVESTMENT 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.
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 $7.00 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 bank 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. Investment Trust cannot accept a redemption request
that specifies a particular date or price for redemption or any
special conditions. Please call 800-338-2550 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.) Investment
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.
Investment Trust will generally mail payment for shares redeemed
within seven days after proper instructions are received.
However, Investment 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, Investment 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, Investment Trust
recommends that your purchase be made by federal funds wire
through your bank.
Generally, you may not use 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.
Investment 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.
Neither Investment 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 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.
Investment 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, Investment Trust will send you
semiannual and annual reports showing portfolio holdings and will
provide you annually with tax information.
FUNDS-ON-CALL [REGISTERED] AUTOMATED TELEPHONE SERVICE. To
access Stein Roe Funds-on-Call [registered], 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. You also may use
Funds-on-Call [registered] to make Special Investments and
Redemptions, Telephone Exchanges, and Telephone Redemptions by
Check. 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 Personal Counselor [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 Personal Counselor [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 Investment 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 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
bank 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
account ($50 minimum; $100,000 maximum).
Regular Investments (electronic transfer)--to purchase Fund shares
at regular intervals directly from your bank 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 bank 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 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 its 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
Portfolio allocates net asset value, income, and expenses among
its feeder funds in proportion to their respective interests in
the Portfolio.
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 and securities convertible
into stocks 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. Other assets and
securities are valued by a method that the Board believes
represents fair value.
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 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. Investment
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
Investment Trust.
This discussion of taxation is not intended to be a full
discussion of income tax laws and their effect on shareholders.
You may wish to consult your own tax advisor. The foregoing
information applies to U.S. shareholders. Foreign shareholders
should consult their tax advisors as to the tax consequences of
ownership of Fund shares.
BACKUP WITHHOLDING. Investment 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 Investment 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
TRUSTEES AND ADVISER. The Board of Trustees of Investment Trust
and the Board of Base Trust have overall management responsibility
for the Funds and the Portfolios, respectively. See the Statement
of Additional Information for the names of and additional
information about the trustees and officers. Since Investment
Trust and Base Trust have the same trustees, the trustees have
adopted conflict of interest procedures to monitor and address
potential conflicts between the interests of the Funds and the
Portfolios.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing the
Funds and the Portfolios, subject to the direction of the
respective 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.
In approving the use of a single combined prospectus, the Boards
considered the possibility that one Fund or Portfolio might be
liable for misstatements in the prospectus regarding information
concerning another Fund or Portfolio.
PORTFOLIO MANAGERS. Daniel K. Cantor has been portfolio manager
of Growth & Income Portfolio since its inception in 1997 and had
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, 1996, Mr. Cantor was responsible for managing $241 million in
mutual fund net assets. Jeffrey C. Kinzel is associate portfolio
manager. 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 the law firm of Butler and Binion; the law firm of
Miller, Canfield, Paddock and Stone; and 1838 Investment Advisers.
Harvey B. Hirschhorn has been portfolio manager of Balanced
Portfolio since its inception in 1997 and had been portfolio
manager of Balanced Fund since April, 1996. He is executive vice
president and chief economist and investment strategist 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 $557 million in mutual
fund net assets at December 31, 1996. William Garrison and Sandra
Knight are associate portfolio managers. Mr. Garrison joined the
Adviser in 1989. He received his A.B. from Princeton University
(1988) and an M.B.A. from the University of Chicago (1995). 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).
Erik P. Gustafson has been portfolio of Growth Stock Portfolio
since its inception in 1997 and had managed Growth Stock 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 from Florida State
University (1989). Mr. Gustafson was responsible for managing
$877 million in mutual fund net assets at December 31, 1996.
David P. Brady is associate portfolio manager. Mr. Brady is a
vice president of the Adviser, which he 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 since March, 1991. Ms. Santella is a senior vice
president of the Adviser, having been associated with it since
1979. She received her B.B.A. from Loyola University (1979) and
M.B.A. from the University of Chicago (1983). Mr. Maddix became
co-portfolio manager 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 (1986) and his M.B.A. from the University of
Chicago (1992). As of December 31, 1996, Ms. Santella and Mr.
Maddix co-managed $1.4 billion in mutual fund net assets.
E. Bruce Dunn and Richard B. Peterson have been co-portfolio
managers of Special Portfolio and Special Venture Portfolio since
their inception in 1997 and had been portfolio managers of Special
Fund since 1991 and of Special Venture Fund since its inception in
1994. Each is 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 (1956) and his M.B.A. from
Harvard University (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
(1962) and the Woodrow Wilson School at Princeton University
(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 Corp.
As of December 31, 1996, Messrs. Dunn and Peterson were
responsible for co-managing $1.5 billion in mutual fund net
assets.
FEES AND EXPENSES. In return for its services, the Adviser is
entitled to receive a management fee from each Portfolio, a
management fee from Capital Opportunities Fund, and an
administrative fee from each Fund. Prior to the conversion to the
master fund/feeder fund structure on February 3, 1997, management
fees were paid by each Fund. The annual rates, as a percentage of
average net assets (dollar amounts shown in millions), are as
follows:
Fund Management Fee Administrative Fee
- ----------------------- ------------------- -------------------
Growth & Income Fund;
Growth Stock Fund N/A .15% up to $500,
.125% next $500,
.10% thereafter
Growth & Income Portfolio;
Growth Stock Portfolio .60% up to $500, N/A
.55% next $500,
.50% thereafter
Balanced Fund N/A .15% up to $500,
.125% next $500,
.10% thereafter
Balanced Portfolio .55% up to $500, N/A
.50% next $500,
.45% thereafter
Special Fund N/A .15% up to $500,
.125% next $500,
.10% next $500,
.075% thereafter
Special Portfolio .75% up to $500, N/A
.70% next $500,
.65% next $500,
.60% thereafter
Capital Opportunities
Fund .75% up to $500, .15% up to $500,
.70% next $500, .125% next $500,
.65% next $500, .10% next $500,
.60% thereafter .075% thereafter
Special Venture Fund N/A .15%
Special Venture Portfolio.75% N/A
For the year ended September 30, 1996, the fees for Growth &
Income Fund, Balanced Fund, Growth Stock Fund, Special Fund, and
Capital Opportunities Fund amounted to 1.18%, 1.05%, 1.08%, 1.18%,
and 1.22% of average net assets, respectively; and the fee for
Special Venture Fund, after the fee waiver in effect during that
period, amounted to 1.25% of average net assets.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to the Funds and the
Portfolios, including computation of net asset value and
calculation of net income and capital gains and losses on
disposition of assets.
PORTFOLIO TRANSACTIONS. The Adviser places the orders for the
purchase and sale of portfolio securities and options and futures
transactions. 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 Investment 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 803938, 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 and the Portfolios. 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
Investment 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 Investment
Trust's shareholders or its trustees. Investment Trust may issue
an unlimited number of shares, in one or more series as the Board
may authorize. Currently, nine series are authorized and
outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Investment 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, Investment
Trust or any particular series shall look only to the assets of
Investment Trust or of the respective series for payment under
such credit, contract or claim, and that the shareholders,
trustees and officers of Investment 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 Investment
Trust. The Declaration of Trust provides for indemnification of
any shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Investment Trust was unable to meet its
obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Investment
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
SPECIAL CONSIDERATIONS REGARDING MASTER FUND/FEEDER FUND STRUCTURE
Commencing February 3, 1997, each of Growth & Income Fund,
Balanced Fund, Growth Stock Fund, Special Fund, and Special
Venture Fund (which are series of Investment Trust, an open-end
management investment company) seeks to achieve its objective by
investing all of its assets in shares of another mutual fund
having an investment objective identical to that of the Fund. The
shareholders of each Fund approved this policy of permitting a
Fund to act as a feeder fund by investing in a Portfolio. Please
refer to Investment Policies, Portfolio Investments and
Strategies, and Investment Restrictions for a description of the
investment objectives, policies, and restrictions of the Funds and
the Portfolios. The management fees and expenses of the Funds and
the Portfolios are described under the Fee Table and Management.
Each feeder Fund bears its proportionate share of the expenses of
its master Portfolio.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
Each Portfolio is a separate series of SR&F Base Trust ("Base
Trust"), a Massachusetts common law trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
August 23, 1993. The Declaration of Trust of Base Trust provides
that a Fund and other investors in a Portfolio will be liable for all
obligations of that Portfolio that are not satisfied by the
Portfolio. However, the risk of a Fund incurring financial loss
on account of such liability is limited to circumstances in which
liability was inadequately insured and a Portfolio was unable to
meet its obligations. Accordingly, the Trustees of Investment
Trust believe that neither the Funds nor their shareholders will
be adversely affected by reason of a Fund's investing in a
Portfolio.
The Declaration of Trust of Base Trust provides that a Portfolio
will terminate 120 days after the withdrawal of a Fund or any
other investor in the Portfolio, unless the remaining investors
vote to agree to continue the business of the Portfolio. The
trustees of Investment Trust may vote a Fund's interests in a
Portfolio for such continuation without approval of the Fund's
shareholders.
The common investment objectives of the Funds and the Portfolios
are non-fundamental and may be changed without shareholder
approval, subject, however, to at least 30 days' advance written
notice to a Fund's shareholders.
The fundamental policies of each Fund and the corresponding
fundamental policies of its master Portfolio can be changed only
with shareholder approval. If a Fund, as a Portfolio investor, is
requested to vote on a change in a fundamental policy of a
Portfolio or any other matter pertaining to the Portfolio (other
than continuation of the business of the Portfolio after
withdrawal of another investor), the Fund will solicit proxies
from its shareholders and vote its interest in the Portfolio for
and against such matters proportionately to the instructions to
vote for and against such matters received from Fund shareholders.
A Fund will vote shares for which it receives no voting
instructions in the same proportion as the shares for which it
receives voting instructions. If there are other investors in a
Portfolio, there can be no assurance that any matter receiving a
majority of votes cast by Fund shareholders will receive a
majority of votes cast by all investors. If other investors hold
a majority interest in a Portfolio, they could have voting control
over that Portfolio.
In the event that a Portfolio's fundamental policies were changed
so as to be inconsistent with those of the corresponding Fund, the
Board of Trustees of Investment Trust would consider what action
might be taken, including changes to the Fund's fundamental
policies, withdrawal of the Fund's assets from the Portfolio and
investment of such assets in another pooled investment entity, or
the retention of an investment adviser to invest those assets
directly in a portfolio of securities. Any of these actions would
require the approval of a Fund's shareholders. A Fund's inability
to find a substitute master fund or comparable investment
management could have a significant impact upon its shareholders'
investments. Any withdrawal of a Fund's assets could result in a
distribution in kind of portfolio securities (as opposed to a cash
distribution) to the Fund. Should such a distribution occur, the
Fund would incur brokerage fees or other transaction costs in
converting such securities to cash. In addition, a distribution
in kind could result in a less diversified portfolio of
investments for the Fund and could affect the liquidity of the
Fund.
Each investor in a Portfolio, including a Fund, may add to or
reduce its investment in the Portfolio on each day the NYSE is
open for business. The investor's percentage of the aggregate
interests in the Portfolio will be computed as the percentage
equal to the fraction (i) the numerator of which is the beginning
of the day value of such investor's investment in the Portfolio on
such day plus or minus, as the case may be, the amount of any
additions to or withdrawals from the investor's investment in the
Portfolio effected on such day; and (ii) the denominator of which
is the aggregate beginning of the day net asset value of the
Portfolio on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate
investments in the Portfolio by all investors in the Portfolio.
The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio as of the close
of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in a Portfolio, but members of
the general public may not invest directly in the Portfolio.
Other investors in a Portfolio are not required to sell their
shares at the same public offering price as a Fund, might incur
different administrative fees and expenses than the Fund, and
might charge a sales commission. Therefore, Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in a
Portfolio. Investment by such other investors in a Portfolio
would provide funds for the purchase of additional portfolio
securities and would tend to reduce the operating expenses as a
percentage of the Portfolio's net assets. Conversely, large-scale
redemptions by any such other investors in a Portfolio could
result in untimely liquidations of the Portfolio's security
holdings, loss of investment flexibility, and increases in the
operating expenses of the Portfolio as a percentage of its net
assets. As a result, a Portfolio's security holdings may become
less diverse, resulting in increased risk.
Information regarding other investors in a Portfolio may be
obtained by writing to SR&F Base Trust at Suite 3200, One South
Wacker Drive, Chicago, IL 60606, or by calling 800-338-2550. The
Adviser may provide administrative or other services to one or
more of such investors.
<PAGE>
Stein Roe Mutual Funds
Certificate of Authorization
for use by corporations and associations only
Corporations or associations 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 a Stein Roe account representative at 800-338-2550 .
The undersigned hereby certifies that he is the duly elected
Secretary of ________________________________ (the "Corporation")
(name of Corporation/Association)
and that the following individual(s):
AUTHORIZED PERSONS
____________________ ________________________
Name Title
____________________ ________________________
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:
________.
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 By-laws 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___.
___________________________
Secretary
___________________________
Signature Guarantee*
*Only required if the person
signing the Certificate is the
only person named as
"Authorized Person."
CORPORATE
SEAL
HERE
<PAGE>
The Stein Roe Mutual Funds
Stein Roe Government Reserves Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Income Fund
Stein Roe High Yield 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 Young Investor Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund
Stein Roe Capital Opportunities Fund
Stein Roe International Fund
Stein Roe Emerging Markets Fund
Stein Roe Mutual Funds
P. O. Box 8900
Boston, Massachusetts 02205-8900
Financial Advisors call: 1-800-322-0593
Shareholders call 1-800-338-2550
http://www.steinroe.com
In Chicago, visit our Fund Center at One South Wacker Drive,
Suite 3200
Liberty Securities Corporation, Distributor
Member, SIPC
<PAGE>
Stein Roe Growth Stock Fund
a series of Stein Roe Investment Trust
Supplement to Prospectus dated February 3, 1997
As of October 15, 1997, Stein Roe Growth Stock Fund (the
"Fund") will be closed to purchases by new investors except
for purchases by eligible investors as described below.
If you are already a shareholder of the Fund, you may
continue to add to your Fund account or open another account
with the Fund.
In addition, you may open a new account if:
- - you are a shareholder of any other Stein Roe Fund, having
purchased shares directly from Stein Roe, as of October 15,
1997 and you are opening a new account by exchange or by
dividend reinvestment as described in the prospectus;
- - you are a client of the Fund's investment adviser, Stein
Roe & Farnham Incorporated (the "Adviser");
- - you are a trustee of Stein Roe Investment Trust; an
employee of the Adviser, or any of its affiliated
companies; or a member of the immediate family of any
trustee or employee;
- - you purchase shares (i) under an asset allocation program
sponsored by a financial advisor, broker-dealer, bank,
trust company or other intermediary or (ii) from certain
financial advisors who charge a fee for services and who,
as of October 15, 1997, have one or more clients who were
Fund shareholders; or
- - you purchase shares for an employee benefit plan, the
records for which are maintained by a trust company or
third party administrator under an investment program with
the Fund.
If you have questions about your eligibility to purchase shares of the Fund,
please call 800-338-2550.
This Supplement is Dated August 21, 1997
<PAGE>
<PAGE>
[STEIN ROE MUTUAL FUNDS LOGO]
PROSPECTUS
DEFINED CONTRIBUTION PLANS
STEIN ROE GROWTH STOCK FUND
The investment objective of Growth Stock Fund is to provide long-
term capital appreciation. Growth Stock Fund invests all of its
net investable assets in shares of SR&F Growth Stock Portfolio,
which has the same investment objective and substantially the same
investment policies as Growth Stock Fund. (See Special
Considerations Regarding Master Fund/Feeder Fund Structure.)
Growth Stock Portfolio invests in common stocks and other equity-
type securities.
This prospectus relates only to shares of Growth Stock Fund
purchased through eligible employer-sponsored defined contribution
plans ("defined contribution plans").
Growth Stock Fund is a "no-load" fund. There are no sales or
redemption charges, and Growth Stock Fund has no 12b-1 plan.
Growth Stock Fund is a series of the Stein Roe Investment Trust
and Growth Stock Portfolio is a series of SR&F Base Trust. Each
Trust is a diversified open-end management investment company.
This prospectus contains information you should know before
investing in Growth Stock Fund. Please read it carefully and
retain it for future reference.
A Statement of Additional Information dated February 3, 1997,
containing more detailed information, has been filed with the
Securities and Exchange Commission and (together with any
supplements thereto) is incorporated herein by reference. The
Statement of Additional Information and the most recent financial
statements may be obtained without charge by writing to the Stein
Roe Mutual Funds at Suite 3200, One South Wacker Drive, Chicago,
IL 60606 or by calling 800-322-1130. The Statement of Additional
Information contains information relating to other series of the
Stein Roe Investment Trust that may not be available as investment
vehicles for your defined contribution plan.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 3, 1997
TABLE OF CONTENTS
Page
Fee Table ..............................2
Financial Highlights....................2
The Fund................................3
Investment Policies.....................4
Portfolio Investments and Strategies....4
Investment Restrictions.................6
Risks and Investment Considerations ....7
How to Purchase Shares..................7
How to Redeem Shares ...................7
Net Asset Value ........................8
Distributions and Income Taxes..........8
Investment Return.......................9
Management .............................9
Organization and Description of Shares.10
Special Considerations Regarding
Master Fund/Feeder Fund Structure....11
For More Information ..................12
<PAGE>
__________________________
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 and Administrative Fees 0.75%
12b-1 Fees None
Other Expenses 0.33%
-----
Total Operating Expenses 1.08%
======
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
------ ------- ------- --------
$11 $34 $60 $132
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 Growth Stock Fund. The table is
based upon actual expenses incurred in the last fiscal year.
Growth Stock Fund pays the Adviser an administrative fee based on
the Fund's average daily net assets, and Growth Stock Portfolio
pays the Adviser a management fee based on its average daily net
assets. The expenses of both Growth Stock Fund and Growth Stock
Portfolio are summarized in the Fee Table. (The fees are
described under Management.) Growth Stock Fund bears its
proportionate share of Portfolio expenses. The trustees of
Investment Trust have considered whether the annual operating
expenses of Growth Stock Fund, including its share of the expenses
of Growth Stock Portfolio, would be more or less than if Growth
Stock Fund invested directly in the securities held by Growth
Stock Portfolio, and concluded that Growth Stock Fund's expenses
would not be greater in such case.
For purposes of the Example above, the figures assume that the
percentage amounts listed for Growth Stock 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 Growth Stock Fund shares; and that, for purposes of
fee breakpoints, Growth Stock Fund's net assets remain at the same
level as in the most recently completed fiscal year. The figures
in the Example are not necessarily indicative of past or future
expenses, and actual expenses may be greater or less than those
shown. Although information such as that shown in the Example and
Fee Table is useful in reviewing Growth Stock 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. The example does not
reflect any charges or expenses related to your employer's plan.
__________________________
FINANCIAL HIGHLIGHTS
The table below reflects the results of operations of Growth Stock
Fund for the periods shown on a per-share basis and has been
audited by Arthur Andersen LLP, independent public accountants.
This table should be read in conjunction with Growth Stock Fund's
financial statements and notes thereto. Growth Stock Fund's
annual report, which may be obtained from Investment Trust without
charge upon request, contains additional performance information.
<TABLE>
<CAPTION>
Nine
Months
Years Ended Ended
December 31, Sept.30, Years Ended September 30,
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $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..... 0.26 0.24 0.19 0.34 0.39 0.33 0.18 0.15 0.13 0.12 0.08
Net realized and un-
realized gains (losses)
on investments........... 2.75 0.46 (0.11) 4.51 (1.17) 5.90 3.01 1.14 0.41 5.60 5.01
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations.............. 3.01 0.70 0.08 4.85 (0.78) 6.23 3.19 1.29 0.54 5.72 5.09
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Distributions
Net investment income.... (0.25) (0.29) (0.15) (0.34) (0.37) (0.42) (0.16) (0.10) (0.12) (0.15) (0.10)
Net realized capital
gains................... (3.22) (2.71) -- (0.06) -- (0.92) (1.17) (0.95) (1.73) (3.02) (2.33)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions..... (3.47) (3.00) (0.15) (0.40) (0.37) (1.34) (1.33) (1.05) (1.85) (3.17) (2.43)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End
of Period...............$16.97 $14.67 $14.60 $19.05 $17.90 $22.79 $24.65 $24.89 $23.58 $26.13 $28.79
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Ratio of net expenses to
average net assets.......0.67% 0.65% *0.76% 0.77% 0.73% 0.79% 0.92% 0.93% 0.94% 0.99% 1.08%
Ratio of net investment
income to average
net assets...............1.34% 1.25% *1.62% 2.05% 2.03% 1.63% 0.75% 0.59% 0.50% 0.56% 0.32%
Portfolio turnover rate... 137% 143% 84% 47% 40% 34% 23% 29% 27% 36% 39%
Average commissions
(per share)............ -- -- -- -- -- -- -- -- -- -- $0.0528
Total return.............16.91% 5.57% 0.54% 33.86% (4.17%) 36.64% 14.37% 5.09% 2.10% 28.18% 21.04%
Net assets, end of
period (000 omitted)..$226,604 $232,658 $195,641 $206,476 $206,031 $291,767 $372,758 $373,921 $321,502 $360,336 $417,964
</TABLE>
*Annualized
(a) For the periods indicated below, bank borrowing activity was
as follows:
Debt
outstanding Average debt Average shares Average debt
at end of outstanding outstanding per share
period (in during period during period during
Period Ended thousands) (in thousands) (in thousands) period
- ------------- ---------- -------------- ------------- ------------
9/30/89 -- 124 11,745 0.0106
Growth Stock Fund had no bank borrowings during any other periods.
__________________________
THE FUND
STEIN ROE GROWTH STOCK FUND ("Growth Stock 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. Growth Stock Fund
does not impose commissions or charges when shares are purchased
or redeemed.
Growth Stock Fund is a series of the STEIN ROE INVESTMENT TRUST
("Investment 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 management, administrative, and bookkeeping and
accounting services to Growth Stock Fund and Growth Stock
Portfolio. The Adviser also manages several other mutual funds
with different investment objectives, including other equity
funds, international funds, taxable and tax-exempt bond funds, and
money market funds. To obtain prospectuses and other information
on opening a regular account in any of these mutual funds, please
call 800-338-2550.
On February 3, 1997, Growth Stock Fund became a "feeder fund"--
that is, it invested all of its assets in SR&F Growth Stock
Portfolio ("Growth Stock Portfolio"), a "master fund" that has an
investment objective identical to that of Growth Stock Fund.
Growth Stock Portfolio is a series of SR&F Base Trust ("Base
Trust"). Before converting to a feeder fund, Growth Stock Fund
invested its assets in a diversified group of securities. Under
the "master fund/feeder fund structure," a feeder fund and one or
more feeder funds pool their assets in a master portfolio that has
the same investment objective and substantially the same
investment policies as the feeder funds. The purpose of such an
arrangement is to achieve greater operational efficiencies and
reduce costs. The assets of Growth Stock Portfolio, Growth Stock
Fund's master fund, are managed by the Adviser in the same manner
as the assets of Growth Stock Fund were managed before conversion
to the master fund/feeder fund structure. (For more information,
see Special Considerations Regarding Master Fund/Feeder Fund
Structure.)
__________________________
INVESTMENT POLICIES
The investment objective of Growth Stock Fund is long-term capital
appreciation. Growth Stock Fund invests all of its net investable
assets in Growth Stock Portfolio, which has the same investment
objective and substantially the same investment policies as Growth
Stock Fund. Growth Stock Portfolio attempts to achieve this
objective by normally investing at least 65% of its total assets
in common stock 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.
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.
__________________________
PORTFOLIO INVESTMENTS AND STRATEGIES
DEBT SECURITIES.
In pursuing its investment objective, Growth Stock Portfolio may
invest up to 35% of its total assets in debt securities of
corporate and governmental issuers. Investment in debt securities
is limited to those that are rated within the four highest grades
(generally referred to as investment grade). 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 Growth Stock Portfolio is lost or
reduced below investment grade, Growth Stock Portfolio is not
required to dispose of the security--the Adviser will, however,
consider that fact in determining whether Growth Stock Portfolio
should continue to hold the security. When the Adviser deems a
temporary defensive position advisable, Growth Stock Portfolio may
invest, without limitation, in high-quality fixed income
securities, or hold assets in cash or cash equivalents.
FOREIGN SECURITIES.
Growth Stock Portfolio may invest in foreign securities. Other
than American Depositary Receipts (ADRs), foreign debt securities
denominated in U.S. dollars, or securities guaranteed by a U.S.
person, Growth Stock Portfolio is limited to investing no more
than 25% of its total assets in foreign securities. (See Risks
and Investment Considerations.) Growth Stock Portfolio may invest
in sponsored or unsponsored ADRs. In addition to, or in lieu of,
such direct investment, Growth Stock Portfolio may construct a
synthetic foreign debt 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 debt 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, Growth Stock
Portfolio 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. Growth Stock Portfolio also may enter into foreign
currency contracts as a hedging technique to limit or reduce
exposure to currency fluctuations. In addition, Growth Stock
Portfolio may use options and futures contracts, as described
below, to limit or reduce exposure to currency fluctuations. As
of September 30, 1996, Growth Stock Fund's holdings of foreign
companies, as a percentage of net assets, were 5.0% (1.4% in
foreign securities and 3.6% in ADRs).
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES.
Growth Stock Portfolio 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 Growth Stock
Portfolio 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. Growth Stock Portfolio 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.
Growth Stock Portfolio may make loans of its portfolio securities
to broker-dealers and banks subject to certain restrictions
described in the Statement of Additional Information. It may also
participate in an interfund lending program, subject to certain
restrictions described in the Statement of Additional Information.
DERIVATIVES
Consistent with its objective, Growth Stock Portfolio may invest
in a broad array of financial instruments and securities,
including conventional exchange-traded and non-exchange-traded
options, futures contracts, futures options, securities
collateralized by underlying pools of mortgages or other
receivables, 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. Growth Stock
Portfolio does not expect to invest more than 5% of its net assets
in any type of Derivative except for options, futures contracts,
and futures options.
Derivatives are most often used to manage investment risk or to
create an investment position indirectly because they are more
efficient or less costly than direct investment. They also may be
used in an effort to enhance portfolio returns.
The successful use of Derivatives depends on the Adviser's ability
to correctly predict changes in the levels and directions of
movements in security prices, interest rates and other market
factors affecting the Derivative itself or the value of the
underlying asset or benchmark. In addition, correlations in the
performance of an underlying asset to a Derivative may not be well
established. Finally, privately negotiated and over-the-counter
Derivatives may not be as well regulated and may be less
marketable than exchange-traded Derivatives. For additional
information on Derivatives, please refer to the Statement of
Additional Information.
In seeking to achieve its desired investment objective, provide
additional revenue, or to hedge against changes in security
prices, interest rates or currency fluctuations, Growth Stock
Portfolio 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. Growth Stock
Portfolio may write a call or put option only if the option is
covered. As the writer of a covered call option, Growth Stock
Portfolio foregoes, during the option's life, the opportunity to
profit from increases in market value of the security covering the
call option above the sum of the premium and the exercise price of
the call. There can be no assurance that a liquid market will
exist when Growth Stock Portfolio 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.
Growth Stock Portfolio may sell short securities it owns or has
the right to acquire without further consideration, a technique
called selling short "against the box." Short sales against the
box may protect Growth Stock Portfolio 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.
PORTFOLIO TURNOVER.
Although Growth Stock Portfolio does not purchase securities with
a view to rapid turnover, there are no limitations on the length
of time portfolio securities must be held. The turnover rate may
vary significantly from year to year. 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
is not intended to be an income-producing investment, although it
may produce varying amounts of income.
__________________________
INVESTMENT RESTRICTIONS
Neither Growth Stock Fund nor Growth Stock Portfolio will invest
more than 5% of its assets in the securities of any one issuer.
This restriction applies only to 75% of the investment portfolio,
but does not apply to securities of the U.S. Government or
repurchase agreements /1/ for such securities, and would not
prevent Growth Stock Fund from investing all of its assets in
shares of another investment company having the identical
investment objective.
- -------------------
/1/ A repurchase agreement involves a sale of securities to Growth
Stock Portfolio in which the seller agrees to repurchase the
securities at a higher price, which includes an amount
representing interest on the purchase price, within a specified
time. In the event of bankruptcy of the seller, Growth Stock
Portfolio could experience both losses and delays in liquidating
its collateral.
- ------------------
Neither Growth Stock Fund nor Growth Stock Portfolio will acquire
more than 10% of the outstanding voting securities of any one
issuer. Growth Stock Fund may, however, invest all of its assets
in shares of another investment company having the identical
investment objective.
Neither Growth Stock Fund nor Growth Stock Portfolio may make
loans except that each may (1) purchase money market instruments
and enter into repurchase agreements; (2) acquire publicly-
distributed or privately-placed debt securities; (3) lend its
portfolio securities under certain conditions; and (4) participate
in an interfund lending program with other Stein Roe Funds and
Portfolios. Neither may borrow money, except for non-leveraging,
temporary, or emergency purposes or in connection with
participation in the interfund lending program. Neither aggregate
borrowings (including reverse repurchase agreements) nor aggregate
loans at any one time may exceed 33 1/3% of the value of total
assets. Additional securities may not be purchased when
borrowings, less proceeds receivable from sales of portfolio
securities, exceed 5% of total assets.
Growth Stock Fund and Growth Stock Portfolio may invest in
repurchase agreements, provided that neither will invest more than
15% of its net assets in illiquid securities, including repurchase
agreements maturing in more than seven days.
The policies summarized in the first three paragraphs under 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" as defined in the Investment
Company Act of 1940. The common investment objective of Growth
Stock Fund and Growth Stock Portfolio is non-fundamental and, as
such, may be changed by the Board of Trustees without shareholder
approval, subject, however, to at least 30 days' advance written
notice to Growth Stock Fund's shareholders. Any such change may
result in Growth Stock Fund having an investment objective
different from the objective the shareholder considered
appropriate at the time of investment in Growth Stock 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 Stock Fund is
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. Growth
Stock Portfolio seeks to reduce risk by investing in a diversified
portfolio, but this does not eliminate all risk. It may,
however, under abnormal circumstances, invest up to 25% of net
assets in a particular industry or group of industries. There can
be no guarantee that Growth Stock Fund will achieve its objective.
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, different accounting, auditing and
financial reporting standards, different settlement practices,
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.
__________________________
HOW TO PURCHASE SHARES
All shares must be purchased through your employer's defined
contribution plan. For more information about how to purchase
shares of Growth Stock Fund through your employer or limitations
on the amount that may be purchased, please consult your employer.
Shares are sold to eligible defined contribution plans at Growth
Stock Fund's net asset value (see Net Asset Value) next determined
after receipt of an order in good form, including receipt of
payment by Growth Stock Fund. Each purchase of Growth Stock Fund
shares through a broker-dealer, bank, or other intermediary
("Intermediary") that is an authorized agent of Investment Trust
for the receipt of orders is made at the net asset value next
determined after the receipt of the order by the Intermediary.
Each purchase order for Growth Stock Fund must be accepted by an
authorized officer of Investment Trust or its authorized agent and
is not binding until accepted and entered on the books of Growth
Stock Fund. Once your purchase order has been accepted, you may
not cancel or revoke it; you may, however, redeem the shares.
Investment Trust reserves the right not to accept any purchase
order that it determines not to be in the best interest of
Investment Trust or of Growth Stock Fund's shareholders.
Shares purchased by reinvestment of dividends will be confirmed
quarterly. All other purchases and redemptions will be confirmed
as transactions occur.
__________________________
HOW TO REDEEM SHARES
Subject to restrictions imposed by your employer's plan, Growth
Stock Fund shares may be redeemed any day the New York Stock
Exchange is open. For more information about how to redeem your
shares of Growth Stock Fund through your employer's plan,
including any charges that may be imposed by the plan, please
consult with your employer.
EXCHANGE PRIVILEGE.
Subject to your plan's restrictions, you may redeem all or any
portion of your Growth Stock Fund shares and use the proceeds to
purchase shares of any other Stein Roe Fund available through your
employer's defined contribution plan. (An exchange is commonly
referred to as a "transfer.") 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. Contact your
plan administrator for instructions on how to exchange your shares
or to obtain prospectuses of other Stein Roe Funds available
through your plan. Growth Stock Fund reserves the right to
suspend, limit, modify, or terminate the Exchange Privilege or its
use in any manner by any person or class; shareholders would be
notified of such a change.
GENERAL REDEMPTION POLICIES.
Redemption instructions may not be cancelled or revoked once they
have been received and accepted by Investment Trust. Investment
Trust cannot accept a redemption request that specifies a
particular date or price for redemption or any special conditions.
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 Growth Stock 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.
__________________________
NET ASSET VALUE
The purchase and redemption price of Growth Stock Fund's shares is
its net asset value per share. The net asset value of a share of
Growth Stock Fund is determined as of the close of trading on the
New York Stock Exchange (currently 3:00 p.m., central time) by
dividing the difference between the values of its assets and
liabilities by the number of shares outstanding. Net asset value
will not be determined on days when the Exchange is closed unless,
in the judgment of the Board of Trustees, the net asset value
should be determined on any such day, in which case the
determination will be made at 3:00 p.m., central time. Growth
Stock Portfolio allocates net asset value, income, and expenses to
Growth Stock Fund and any other of its feeder funds in proportion
to their respective interests in Growth Stock Portfolio.
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 and securities convertible
into stocks 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. Other assets and
securities are valued by a method that the Board believes
represents fair value.
__________________________
DISTRIBUTIONS AND INCOME TAXES
DISTRIBUTIONS.
Income dividends are normally declared and paid annually. Growth
Stock 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. Growth Stock Fund intends to distribute any undistributed
net investment income and net realized capital gains in the
following year.
The terms of your plan will govern how you may receive
distributions from Growth Stock Fund. Generally, dividend and
capital gains distributions will be reinvested in additional
shares of Growth Stock Fund.
INCOME TAXES.
Growth Stock Fund intends to qualify as a "regulated investment
company" for federal income tax purposes and to meet all other
requirements that are necessary for it to be relieved of federal
taxes on income and gain it distributes. Growth Stock Fund will
distribute substantially all of its ordinary income and net
capital gains on a current basis. Generally, Growth Stock Fund
distributions are taxable as ordinary income, except that any
distributions of net long-term capital gains will be taxed as
such. However, distributions by Growth Stock Fund to employer-
sponsored defined contribution plans that qualify for tax-exempt
treatment under federal income tax laws will not be taxable.
Special tax rules apply to investments through such plans. You
should consult your tax advisor to determine the suitability of
Growth Stock Fund as an investment through such a plan and the tax
treatment of distributions (including distributions of amounts
attributable through an investment in Growth Stock Fund) from such
a plan. This section is not intended to be a full discussion of
income tax laws and their effect on shareholders.
__________________________
INVESTMENT RETURN
The total return from an investment in Growth Stock 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 Growth Stock Fund's total return with alternative
investments should consider differences between Growth Stock 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. Growth Stock Fund's total return does
not reflect any charges or expenses related to your employer's
plan. Of course, past performance is not necessarily indicative
of future results.
__________________________
MANAGEMENT
TRUSTEES AND INVESTMENT ADVISER.
The Board of Trustees of Investment Trust and the Board of Base
Trust have overall management responsibility for Growth Stock Fund
and Growth Stock Portfolio, respectively. See the Statement of
Additional Information for the names of and additional information
about the trustees and officers. Since Investment Trust and Base
Trust have the same trustees, the trustees have adopted conflict
of interest procedures to monitor and address potential conflicts
between the interests of Growth Stock Fund and Growth Stock
Portfolio.
The Adviser, Stein Roe & Farnham Incorporated, One South Wacker
Drive, Chicago, Illinois 60606, is responsible for managing Growth
Stock Fund and Growth Stock Portfolio, subject to the direction of
the respective 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.
Erik P. Gustafson has been portfolio manager of Growth Stock
Portfolio since its inception in 1997. He had been manager of
Growth Stock Fund since 1994. Mr. Gustafson is a vice president
of the Adviser, having joined it in 1992. From 1989 to 1992 he
was an attorney with Fowler, White, Burnett, Hurley, Banick &
Strickroot. He holds a B.A. from the University of Virginia
(1985) and M.B.A. and J.D. degrees from Florida State University
(1989). As of December 31, 1996, Ms. Gustafson was responsible
for managing $877 million in mutual fund net assets. David P.
Brady is associate portfolio manager. Mr. Brady, who joined the
Adviser in 1993, was an equity investment analyst with State Farm
Mutual Automobile Insurance Company from 1986 to 1993. A
chartered financial analyst, Mr. Brady earned a B.S. in Finance,
graduating Magna Cum Laude, from the University of Arizona (1986),
and an M.B.A. from the University of Chicago (1989).
FEES AND EXPENSES.
In return for its services, the Adviser is entitled to receive a
management fee from Growth Stock Portfolio based on an annual rate
of 60% of the first $500 million of average net assets, .55% of
the next $500 million, and .50% thereafter; and an administrative
fee from Growth Stock Fund based on an annual rate of .15% of the
first $500 million of average net assets, .125% of the next $500
million, and .10% thereafter. Prior to conversion to the master
fund/feeder fund structure on February 3, 1997, the management fee
was paid by Growth Stock Fund. For the year ended September 30,
1996, the fees for Growth Stock Fund amounted to 1.08% of average
net assets.
Under a separate agreement with each Trust, the Adviser provides
certain accounting and bookkeeping services to Growth Stock Fund
and Growth Stock Portfolio including computation of net asset
value and calculation of net income and capital gains and losses
on disposition of assets.
PORTFOLIO TRANSACTIONS.
The Adviser places the orders for the purchase and sale of
portfolio securities and options and futures transactions. 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 Investment Trust for the transfer of shares, disbursement
of dividends, and maintenance of shareholder accounting records.
DISTRIBUTOR.
The shares of Growth Stock Fund are offered for sale through
Liberty Securities Corporation ("Distributor") without any sales
commissions or charges to Growth Stock 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 Growth
Stock Fund correspondence (including purchase and redemption
orders) should be mailed to SteinRoe Services Inc. at P.O. Box
8900, Boston, Massachusetts 02205. 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 Growth
Stock Fund and Growth Stock Portfolio. 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.)
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ORGANIZATION AND DESCRIPTION OF SHARES
Investment 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 Investment
Trust's shareholders or its trustees. Investment Trust may issue
an unlimited number of shares, in one or more series as the Board
may authorize. Currently, nine series are authorized and
outstanding.
Under Massachusetts law, shareholders of a Massachusetts business
trust such as Investment 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, Investment
Trust or any particular series shall look only to the assets of
Investment Trust or of the respective series for payment under
such credit, contract or claim, and that the shareholders,
trustees and officers of Investment 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 Investment
Trust. The Declaration of Trust provides for indemnification of
any shareholder against any loss and expense arising from personal
liability solely by reason of being or having been a shareholder.
Thus, the risk of a shareholder incurring financial loss on
account of shareholder liability is believed to be remote, because
it would be limited to circumstances in which the disclaimer was
inoperative and Investment Trust was unable to meet its
obligations.
The risk of a particular series incurring financial loss on
account of unsatisfied liability of another series of Investment
Trust is also believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.
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SPECIAL CONSIDERATIONS REGARDING
MASTER FUND/FEEDER FUND STRUCTURE
Commencing February 3, 1997, Growth Stock Fund, which is an open-
end management investment company, seeks to achieve its objective
by investing all of its assets in shares of another mutual fund
having an investment objective identical to that of Growth Stock
Fund. The shareholders of Growth Stock Fund approved this policy
of permitting Growth Stock Fund to act as a feeder fund by
investing in Growth Stock Portfolio. Please refer to Investment
Policies, Portfolio Investments and Strategies, and Investment
Restrictions for a description of the investment objectives,
policies, and restrictions of Growth Stock Fund and Growth Stock
Portfolio. The management fees and expenses of Growth Stock Fund
and Growth Stock Portfolio are described under the Fee Table and
Management. Growth Stock Fund bears its proportionate share of
Growth Stock Portfolio's expenses.
The Adviser has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.
Growth Stock Portfolio is a separate series of SR&F Base Trust
("Base Trust"), a Massachusetts common law trust organized under
an Agreement and Declaration of Trust ("Declaration of Trust")
dated August 23, 1993. The Declaration of Trust of Base Trust
provides that Growth Stock Fund and other investors in Growth
Stock Portfolio will be liable for all obligations of Growth Stock
Portfolio that are not satisfied by Growth Stock Portfolio.
However, the risk of Growth Stock Fund incurring financial loss on
account of such liability is limited to circumstances in which
liability was inadequately insured and Growth Stock Portfolio was
unable to meet its obligations. Accordingly, the Trustees of
Investment Trust believe that neither Growth Stock Fund nor its
shareholders will be adversely affected by reason of Growth Stock
Fund's investing in Growth Stock Portfolio.
The Declaration of Trust of Base Trust provides that Growth Stock
Portfolio will terminate 120 days after the withdrawal of Growth
Stock Fund or any other investor in Growth Stock Portfolio, unless
the remaining investors vote to agree to continue the business of
Growth Stock Portfolio. The Trustees of Investment Trust may vote
Growth Stock Fund's interests in Growth Stock Portfolio for such
continuation without approval of Growth Stock Fund's shareholders.
The common investment objective of Growth Stock Fund and Growth
Stock Portfolio is non-fundamental and may be changed without
shareholder approval, subject, however, to at least 30 days'
advance written notice to Growth Stock Fund's shareholders.
The fundamental policies of Growth Stock Fund and the
corresponding fundamental policies of Growth Stock Portfolio can
be changed only with shareholder approval. If Growth Stock Fund,
as a Portfolio investor, is requested to vote on a change in a
fundamental policy of Growth Stock Portfolio or any other matter
pertaining to Growth Stock Portfolio (other than continuation of
the business of Growth Stock Portfolio after withdrawal of another
investor), Growth Stock Fund will solicit proxies from its
shareholders and vote its interest in Growth Stock Portfolio for
and against such matters proportionately to the instructions to
vote for and against such matters received from Fund shareholders.
Growth Stock Fund will vote shares for which it receives no voting
instructions in the same proportion as the shares for which it
receives voting instructions. If there are other investors in
Growth Stock Portfolio, there can be no assurance that any matter
receiving a majority of votes cast by Fund shareholders will
receive a majority of votes cast by all investors. If other
investors hold a majority interest in Growth Stock Portfolio, they
could have voting control over Growth Stock Portfolio.
In the event that Growth Stock Portfolio's fundamental policies
were changed so as to be inconsistent with those of Growth Stock
Fund, the Board of Trustees of Investment Trust would consider
what action might be taken, including changes to Growth Stock
Fund's fundamental policies, withdrawal of Growth Stock Fund's
assets from Growth Stock Portfolio and investment of such assets
in another pooled investment entity, or the retention of an
investment adviser to invest those assets directly in a portfolio
of securities. Any of these actions would require the approval of
Growth Stock Fund's shareholders. Growth Stock Fund's inability
to find a substitute master fund or comparable investment
management could have a significant impact upon its shareholders'
investments. Any withdrawal of Growth Stock Fund's assets could
result in a distribution in kind of portfolio securities (as
opposed to a cash distribution) to Growth Stock Fund. Should such
a distribution occur, Growth Stock Fund would incur brokerage fees
or other transaction costs in converting such securities to cash.
In addition, a distribution in kind could result in a less
diversified portfolio of investments for Growth Stock Fund and
could affect the liquidity of Growth Stock Fund.
Each investor in Growth Stock Portfolio, including Growth Stock
Fund, may add to or reduce its investment in Growth Stock
Portfolio on each day the NYSE is open for business. The
investor's percentage of the aggregate interests in Growth Stock
Portfolio will be computed as the percentage equal to the fraction
(i) the numerator of which is the beginning of the day value of
such investor's investment in Growth Stock Portfolio on such day
plus or minus, as the case may be, the amount of any additions to
or withdrawals from the investor's investment in Growth Stock
Portfolio effected on such day; and (ii) the denominator of which
is the aggregate beginning of the day net asset value of Growth
Stock Portfolio on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate
investments in Growth Stock Portfolio by all investors in Growth
Stock Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in
Growth Stock Portfolio as of the close of business.
Base Trust may permit other investment companies and/or other
institutional investors to invest in Growth Stock Portfolio, but
members of the general public may not invest directly in Growth
Stock Portfolio. Other investors in Growth Stock Portfolio are
not required to sell their shares at the same public offering
price as Growth Stock Fund, might incur different administrative
fees and expenses than Growth Stock Fund, and might charge a sales
commission. Therefore, Growth Stock Fund shareholders might have
different investment returns than shareholders in another
investment company that invests exclusively in Growth Stock
Portfolio. Investment by such other investors in Growth Stock
Portfolio would provide funds for the purchase of additional
portfolio securities and would tend to reduce the operating
expenses as a percentage of Growth Stock Portfolio's net assets.
Conversely, large-scale redemptions by any such other investors in
Growth Stock Portfolio could result in untimely liquidations of
Growth Stock Portfolio's security holdings, loss of investment
flexibility, and increases in the operating expenses of Growth
Stock Portfolio as a percentage of Growth Stock Portfolio's net
assets. As a result, Growth Stock Portfolio's security holdings
may become less diverse, resulting in increased risk.
Information regarding other investors in Growth Stock Portfolio
may be obtained by writing to SR&F Base Trust at Suite 3200, One
South Wacker Drive, Chicago, IL 60606, or by calling 800-338-2550.
The Adviser may provide administrative or other services to one or
more of such investors.
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FOR MORE INFORMATION
Contact a Stein Roe Retirement Plan Representative at 800-322-1130
for more information about Growth Stock Fund.
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