LIBERTY STEIN ROE FUNDS INVESTMENT TRUST, 485APOS, 1999-11-18

LIBERTY STEIN ROE FUNDS INVESTMENT TRUST
485APOS, 1999-11-18

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<PAGE>

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 62 [X]

and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 63 [X]

LIBERTY-STEIN ROE FUNDS INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)

One Financial Center, Boston, Massachusetts 02111
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 1-800-338-2550

Heidi J. Walter Cameron S. Avery
Vice-President & Secretary Bell, Boyd & Lloyd
Liberty-Stein Roe Funds Suite 3300
Investment Trust Three First National Plaza
One South Wacker Drive 70 W. Madison Street
Chicago, Illinois 60606 Chicago, Illinois 60602
(Name and Address of Agents for Service)

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

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

Registrant has previously elected to register pursuant to Rule
24f-2 an indefinite number of shares of beneficial interest of
the following series: Stein Roe Advisor Select Growth &
Income Fund, Stein Roe Balanced Fund, Stein Roe Growth Stock
Fund, Stein Roe Capital Opportunities Fund, Stein Roe
Disciplined Stock Fund, Stein Roe International Fund, Stein
Roe Young Investor Fund, Stein Roe Midcap Growth Fund, Stein
Roe Large Company Focus Fund, Stein Roe Asia Pacific Fund,
Stein Roe Small Company Growth Fund, and Stein Roe Advisor
Growth Investor Fund.

This amendment to the Registration Statement has also been
signed by SR&F Base Trust.

<PAGE>

The prospectuses and statements of additional information
relating to the series of Stein Roe Investment Trust
designated Stein Roe Balanced Fund, Stein Roe Growth Stock
Fund, Stein Roe Capital Opportunities Fund, Stein Roe
Disciplined Stock Fund, Stein Roe International Fund, Stein
Roe Young Investor Fund, Stein Roe Midcap Growth Fund, Stein
Roe Large Company Focus Fund, Stein Roe Asia Pacific Fund, and
Stein Roe Small Company Growth Fund are not affected by the
filing of this Post-Effective Amendment No. 62.

<PAGE>

STEIN ROE ADVISOR SELECT GROWTH & INCOME FUND
Prospectus, November 19, 1999

Class Z Shares

Advised by Stein Roe & Farnham Incorporated

The following eligible institutional investors may purchase Class
Z shares: (i) any retirement plan with aggregate assets of at
least $5 million at the time of purchase of Class Z shares and
which purchases shares directly from Liberty Funds Distributor,
Inc., the Fund's distributor, or through a third-party broker-
dealer; (ii) any registered investment adviser purchasing shares
for its clients; (iii) any insurance company, trust company or
bank purchasing shares for its own account; (iv) any endowment,
investment company or foundation; and (v) any trustee of Liberty-
Stein Roe Funds Investment Trust, any employee of Stein Roe &
Farnham Incorporated, or any of its affiliates, or any member of
the immediate family of any trustee or employee.

TABLE OF CONTENTS

THE FUND.......................2
Investment Goals...............2
Primary Investment Strategies..2
Primary Investment Risks.......2
Performance History............3
Your Expenses..................5

YOUR ACCOUNT...................6
How to Buy Shares..............6
How to Exchange Shares.........7
How to Sell Shares.............7
Other Information About Your
Account......................8

MANAGING THE FUND.............11
Investment Advisor............11
Portfolio Manager.............11

OTHER INVESTMENT
STRATEGIES AND RISKS..........12

FINANCIAL HIGHLIGHTS..........14

The Securities and Exchange Commission has not approved or
disapproved these securities or determined whether this prospectus
is truthful or complete. Anyone who tells you otherwise is
committing a crime.

NOT FDIC INSURED MAY LOSE VALUE
NO BANK GUARANTEE

<PAGE>

THE FUND

INVESTMENT GOALS
The Fund seeks to provide both growth of capital and current
income.

[Callout]
DEFINING CAPITALIZATION
In this prospectus, we refer frequently to market capitalization
as a means to distinguish among companies based on their size. A
company's market capitalization is simply its stock price
multiplied by the number of shares of stock it has issued and
outstanding. In the financial markets, companies generally are
sorted into one of three capitalization-based categories: large
capitalization (large cap); medium capitalization (midcap); or
small capitalization (small cap). In defining a company's market
capitalization, we use capitalization-based categories as defined
by Lipper, Inc.

According to Lipper, Inc., as of October 1999, large-cap companies
had market capitalizations greater than $8.2 billion, midcap
companies had market capitalizations between $1.9 and $8.2 billion
and small-cap companies had market capitalizations less than $1.9
billion. These amounts are subject to change.

[/callout]

PRIMARY INVESTMENT STRATEGIES

The Fund invests all of its assets in SR&F Growth & Income
Portfolio as part of a master fund/feeder fund structure. The
Portfolio invests primarily in common stocks of well-established
companies having large-market capitalizations. The Portfolio may
also invest in companies having midsized market capitalizations.
The Portfolio may invest up to 25% of its assets in foreign
stocks. To select investments for the Portfolio, the portfolio
manager looks for common stocks that have the potential to
increase in price and to pay dividends. The portfolio manager
focuses on the stocks of companies that have experienced
management; broad, highly diversified product lines; deep
financial resources; easy access to credit; and a history of
paying dividends.

The portfolio manager may sell a portfolio holding if the security
reaches the portfolio manager's price target or if the company has
a deterioration of fundamentals such as failing to meet key
operating benchmarks. The portfolio manager may also sell a
portfolio holding to fund redemptions.

PRIMARY INVESTMENT RISKS
There are two basic risks for all mutual funds that invest in
stocks: management risk and market risk. These risks may cause
you to lose money when you sell your shares.

[Callout]
WHAT ARE MARKET AND MANAGEMENT RISKS?
Management risk means that Stein Roe's stock selections and other
investment decisions might produce losses or cause the Fund to
underperform when compared to other funds with similar goals.
Market risk means that security prices in a market, sector or
industry may move down. Downward movements will reduce the value
of your investment. Because of management and market risk, there
is no guarantee that the Fund will achieve its investment goal or
perform favorably compared with competing funds.
[/callout]

Because the Portfolio invests in stocks, the price of the Fund's
shares-its net asset value per share (NAV)-fluctuates daily in
response to changes in the market value of the securities.

Foreign securities are subject to special risks. Foreign stock
markets, especially in countries with developing stock markets,
can be extremely volatile. The liquidity of foreign securities
may be more limited than domestic securities, which means that the
Portfolio may at times be unable to sell them at desirable prices.
Fluctuations in currency exchange rates impact the value of
foreign securities. Brokerage commissions, custodial fees, and
other fees are generally higher for foreign investments. In
addition, foreign governments may impose withholding taxes which
would reduce the amount of income available to distribute to
shareholders. Other risks include: possible delays in settlement
of transactions; less publicly available information about
companies; the impact of political, social or diplomatic events;
and possible seizure, expropriation or nationalization of the
company or its assets.

An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency. It is not a complete investment program
and you can lose money by investing in the Fund.

Information on other securities and risks appears under "Other
Investment Strategies and Risks."

PERFORMANCE HISTORY

The bar chart below shows changes in the Fund's performance from
year to year by illustrating the Fund's calendar year total
returns for its Class S shares. The Fund did not have separate
classes of shares prior to November 19, 1999; on that date, the
Fund's outstanding shares were reclassified as Class S shares.
The performance table following the bar chart shows how the Fund's
average annual total returns for Class S shares compare with those
of a broad measure of market performance for 1 year, 5 years and
10 years. The chart and table are intended to illustrate some of
the risks of investing in the Fund by showing the changes in the
Fund's performance. All returns include the reinvestment of
dividends and distributions. As with all mutual funds, past
performance does not predict the Fund's future performance.

[callout]
UNDERSTANDING PERFORMANCE
Calendar-year total return shows the Fund's Class S share
performance for each of the last ten complete calendar years. It
includes the effects of Fund expenses.

Average annual total return is a measure of the Fund's Class S
share performance over the past one-year, five-year and ten-year
periods. It includes the effects of Fund expenses.

The Fund's return is compared to the S&P 500 Index, an unmanaged
broad-based measure of market performance. Unlike the Fund,
indices are not investments, do not incur fees or expenses, and
are not professionally managed. It is not possible to invest
directly in indices.
[/callout]

[bar chart]
Calendar-Year Total Returns (Class S)*
35%
30% 31.00% 32.42% 30.15%
25% 25.71%
20% 21.81%
15% 19.54%
10% 10.01% 12.86%
5%
0%
- -5% -1.72% -0.14%
- -10%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
[/bar chart]

The Fund's year-to-date total return through September 30, 1999,
was 1.25%.
For period shown in bar chart:
Best quarter: 4th quarter 1998, +17.91%
Worst quarter: 3rd quarter 1990, -12.06%

*Class S shares are not offered in this prospectus. Class S
shares would have substantially similar annual returns because the
shares are invested in the same portfolio of securities and the
annual returns would differ only to the extent that the classes do
not have the same expenses.

AVERAGE ANNUAL TOTAL RETURNS-FOR PERIODS ENDED DECEMBER 31, 1998
1 Year 5 Years 10 Years
Growth & Income Fund, Class S (%) 19.54 18.93 17.55
S&P 500 Index (%) 28.60 24.05 19.19

<PAGE>

YOUR EXPENSES

The table below describes the fees and expenses you may pay when
you buy, hold and sell shares of the Fund. Expenses are one of
several factors to consider before you invest in a mutual fund.

[Callout]
UNDERSTANDING EXPENSES
Shareholder Fees are paid directly by shareholders to the Fund's
distributor.

Annual Fund Operating Expenses are deducted from the Fund. They
include management fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.

Example Expenses helps you compare the cost of investing in the
Fund to the cost of investing in other mutual funds. This example
reflects expenses of both the Fund and the Portfolio. It uses the
following hypothetical conditions:
* $10,000 initial investment
* 5% return for each year
* Fund operating expenses remain the same
* Redemption at the end of each time period

[/callout]

Annual Fund Operating Expenses(1) (2)
(deducted directly from fund assets)
Class Z

Management fee (%)(3) 0.75
Distribution and service (12b-1) fees (%) None
Other expenses (%) 0.33
Total annual fund operating expenses (%) 1.08

Example Expenses (your actual costs may be higher or lower)
Class 1 Year 3 Years 5 Years 10 Years
Class Z $110 $342 $593 $1,313

<PAGE>

YOUR ACCOUNT

HOW TO BUY SHARES

Your financial advisor can help you establish an appropriate
investment portfolio, buy shares and monitor your investments.
When the Fund receives your purchase request in "good form," your
shares will be bought at the next calculated NAV. In "good form"
means that you placed your order with your brokerage firm or your
payment has been received and your application is complete,
including all necessary signatures.

Sales Charges
Your purchases of Class Z shares generally are at NAV, which is
the value of a Fund share excluding any sales charge, and are not
subject to an initial sales charge when you purchase or a
contingent deferred sales charge when you sell shares of the Fund.
The following eligible institutional investors may purchase Class
Z shares: (i) any retirement plan with aggregate assets of at
least $5 million at the time of purchase of Class Z shares and
which purchases shares directly from Liberty Funds Distributor,
Inc., the Fund's distributor, or through a third-party broker-
dealer; (ii) any registered investment adviser purchasing shares
for its clients; (iii) any insurance company, trust company or
bank purchasing shares for its own account; (iv) any endowment,
investment company or foundation; and (v) any trustee of Liberty-
Stein Roe Funds Investment Trust, any employee of Stein Roe &
Farnham Incorporated, or any of its affiliates, or any member of
the immediate family of any trustee or employee.

Outlined below are various options for buying shares:

METHOD INSTRUCTIONS
- ------------------------------------------------------------------
Through your
financial advisor Your financial advisor can help you establish
your account and buy Fund shares on your behalf.

By check
(new account) For new accounts, send a completed application and
check made payable to the Fund to the transfer
agent, SteinRoe Services Inc., c/o Liberty Funds
Services, Inc., P.O. Box 1722, Boston, MA 02105-
1722.

By check
(existing account) For existing accounts, fill out and return the
additional investment stub included in your
quarterly statement, or send a letter of
instruction, including your Fund name and account
number with a check made payable to the Fund to
SteinRoe Services Inc., c/o Liberty Funds
Services, Inc., P.O. Box 1722, Boston, MA 02105-
1722.

By exchange You or your financial advisor may acquire shares
by exchanging shares you own in one fund for
shares of the same class of the Fund at no
additional cost. To exchange by telephone, call
1-800-422-3737.

By wire You may purchase shares by wiring money from your
bank account to your fund account. To wire funds
to your fund account, call 1-800-422-3737 to
obtain a control number and the wiring
instructions.

By electronic
funds transfer You may purchase shares by electronically
transferring money from your bank account to your
fund account by calling 1-800-422-3737. Your
money may take up to two business days to be
invested. You must set up this feature prior to
your telephone request. Be sure to complete the
appropriate section of the application.

Automatic
investment plan You can make monthly or quarterly investments
automatically from your bank account to your fund
account. You can select a pre-authorized amount
to be sent via electronic funds transfer. Be sure
to complete the appropriate section of the
application for this feature.

By dividend
diversification You may automatically invest dividends distributed
by one fund into the same class of shares of
another fund at no additional sales charge. To
invest your dividends in another fund, call 1-800-
345-6611.

CHOOSING A SHARE CLASS The Fund offers one class of shares in
this prospectus-Class Z shares, which are available to
institutional and other investors at net asset value without a
sales charge or 12b-1 fee. The Fund also offers Classes A, B, C,
and S shares through separate prospectuses.

HOW TO EXCHANGE SHARES

You may exchange your shares for shares of the same share class of
another fund distributed by Liberty Funds Distributor, Inc. at the
next-determined NAV. Unless your account is part of a tax-
deferred retirement plan, an exchange is a taxable event.
Therefore, you may realize a gain or a loss for tax purposes. The
Fund may terminate your exchange privilege if Stein Roe determines
that your exchange activity is likely to adversely impact its
ability to manage the Fund. To exchange by telephone, call 1-800-
422-3737.

HOW TO SELL SHARES
Your financial advisor can help you determine if and when you
should sell your shares. You may sell shares of the Fund on any
regular business day that the New York Stock Exchange (NYSE) is
open.

When the Fund receives your sales request in "good form," shares
will be sold at the next calculated price. In "good form" means
that money used to purchase your shares is fully collected. When
selling shares by letter of instruction, "good form" means (i)
your letter has complete instructions, the proper signatures and
signature guarantees, (ii) you have included any certificates for
shares to be sold, and (iii) any other required documents are
attached. For additional documentation required for sales by
corporations, agents, fiduciaries and surviving joint owners,
please call 1-800-345-6611. Retirement Plan accounts have special
requirements; please call 1-800-799-7526 for more information.

The Fund will generally send proceeds from the sale to you within
seven days (usually on the next business day after your request is
received in good form). However, if you purchased your shares by
check, the Fund may delay the sale of your shares for up to 15
days after your purchase to protect against checks that are
returned. No interest will be paid on uncashed redemption checks.

Outlined below are the various options for selling shares:

METHOD INSTRUCTIONS
- ----------------------------------------------------------------
Through your
financial advisor You may call your financial advisor to place
your sell order. To receive the current trading
day's price, your financial advisor firm must
receive your request prior to the close of the
NYSE, usually 4:00 p.m. Eastern time.

By exchange You or your financial advisor may sell shares by
exchanging from the Fund into the same share class
of another fund at no additional cost. To
exchange by telephone, call 1-800-422-3737.

By telephone You or your financial advisor may sell shares by
telephone and request that a check be sent to your
address of record by calling 1-800-422-3737 unless
you have notified the Fund of an address change
within the previous 30 days. The dollar limit for
telephone sales is $100,000 in a 30-day period.
You do not need to set up this feature in advance
of your call. Certain restrictions apply to
retirement accounts. For details, call 1-800-345-
6611.

By mail You may send a signed letter of instruction or
stock power form along with any certificates to be
sold to the address below. In your letter of
instruction, note your fund's name, share class,
account number, and the dollar value or number of
shares you wish to sell. All account owners must
sign the letter, and signatures must be guaranteed
by either a bank, a member firm of a national
stock exchange or another eligible guarantor
institution. Additional documentation is required
for sales by corporations, agents, fiduciaries,
surviving joint owners and individual retirement
account (IRA) owners. For details, call 1-800-
345-6611.

Mail your letter of instruction to SteinRoe
Services Inc., c/o Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.

By wire You may sell shares and request that the proceeds
be wired to your bank. You must set up this
feature prior to your telephone request. Be sure
to complete the appropriate section of the account
application for this feature.

By electronic
funds transfer You may sell shares and request that the proceeds
be electronically transferred to your bank.
Proceeds may take up to two business days to be
received by your bank. You must set up this
feature prior to your request. Be sure to
complete the appropriate section of the account
application for this feature.

OTHER INFORMATION ABOUT YOUR ACCOUNT
HOW THE FUND'S SHARE PRICE IS DETERMINED The price of the Fund's
shares is based on its NAV. The NAV is determined at the close of
regular session trading on the NYSE, usually 4:00 p.m. Eastern
time on each business day that the NYSE is open (typically Monday
through Friday).

When you request a transaction, it will be processed at the NAV
next determined after your request is received in good form by the
Distributor. In most cases, in order to receive that day's price,
the Distributor must receive your order before that day's
transactions are processed. If you request a transaction through
your financial advisor's firm, the firm must receive your order by
the close of trading on the NYSE to receive that day's price.

To calculate NAV on a given day, we value each stock listed or
traded on a stock exchange at its latest sale price on that day.
If there are no sales that day, we value the security at the most
recently quoted bid price. We value each over-the-counter
security or National Association of Securities Dealers Automated
Quotation (Nasdaq) security as of the last sale price for that
day. We value all other over-the-counter securities that have
reliable quotes at the latest quoted bid price.

We value long-term debt obligations and securities convertible
into common stock at fair value. Pricing services provide the
Fund with the value of the securities. When the price of a
security is not available, including days when we determine that
the sale or bid price of the security does not reflect that
security's market value, we value the security at a fair value
determined in good faith under procedures established by the Board
of Trustees.

We value a security at fair value when events have occurred after
the last available market price and before the close of the NYSE
that materially affect the security's price. In the case of
foreign securities, this could include events occurring after the
close of the foreign market and before the close of the NYSE.

The Portfolio's foreign securities may trade on days when the NYSE
is closed. We will not price shares on days that the NYSE is
closed for trading. You will not be able to purchase or redeem
shares until the next NYSE-trading day.

You can find the daily prices of some share classes for the Fund
in most major daily newspapers. You can find daily prices for all
share classes by visiting the Fund's web site at
www.libertyfunds.com.

ACCOUNT FEES If your account value falls below $1,000 (other
than as a result of depreciation in share value), you may be
subject to an annual account fee of $10. This fee is deducted
from the account in June each year. Approximately 60 days prior
to the fee date, the Fund's transfer agent will send you written
notification of the upcoming fee. If you add money to your
account and bring the value above $1,000 prior to the fee date,
the fee will not be deducted.

DIVIDENDS, DISTRIBUTIONS, AND TAXES The Fund has the potential
to make the following distributions:

TYPES OF DISTRIBUTIONS
- ----------------------------------------------------------------
Dividend income Represents interest and dividends earned from
securities held by the Portfolio
- -----------------------------------------------------------------
Capital gains Represents long-term capital gains on sales of
securities held for more than 12 months and
short-term capital gains, which are gains on
sales of securities held by the Portfolio for a
12-month period or less.

[Callout]
UNDERSTANDING FUND DISTRIBUTIONS
The Fund earns income from the securities the Portfolio holds.
The Fund also may experience capital gains and losses on sales of
the Portfolio's securities. The Fund distributes substantially
all of its net investment income and capital gains to
shareholders. As a shareholder, you are entitled to a portion of
the Fund's income and capital gains based on the number of shares
you own at the time these distributions are declared.
[/callout]

DISTRIBUTION OPTIONS Income dividends are declared and paid
quarterly. Any capital gains are distributed at least annually.
You can choose one of the options listed in the table below for
these distributions when you open your account.(1) To change your
distribution option call 1-800-345-6611.

Distribution Options
- ------------------------------------------------------------------
Reinvest all distributions in additional shares of your current
fund
- ------------------------------------------------------------------
Reinvest all distributions in shares of another fund
- ------------------------------------------------------------------
Receive dividends in cash (see options below) and reinvest capital
gains(2)
- ------------------------------------------------------------------
Receive all distributions in cash (with one of the following
options)(2):
* send the check to your address of record
* send the check to a third party address
* transfer the money to your bank via electronic funds transfer

(1) If you do not indicate on your application your preference for
handling distributions, the Fund will automatically reinvest
all distributions in additional shares of the Fund.
(2) Distributions of $10 or less will automatically be reinvested
in additional Fund shares. If you elect to receive
distributions by check and the check is returned as
undeliverable, or if you do not cash a distribution check
within six months of the check date, the distribution will be
reinvested in additional shares of the Fund.

TAX CONSEQUENCES Regardless of whether you receive your
distributions in cash or reinvest them in additional Fund shares,
all Fund distributions are subject to federal income tax.
Depending on the state where you live, distributions may also be
subject to state and local income taxes.

In general, any distributions of dividends, interest, and short-
term capital gains distributions are taxable as ordinary income.
Distributions of long-term capital gains are generally taxable as
such, regardless of how long you have held your Fund shares. You
will be provided with information each year regarding the ordinary
income and capital gains distributed to you for the previous year
and any portion of your distribution which is exempt from state
and local taxes. Your investment in the Fund may have additional
personal tax implications. Please consult your tax advisor on
federal, state, local or other applicable tax laws.

In addition to the dividends and capital gains distributions made
by the Fund, you may realize a capital gain or loss when selling
and exchanging shares of the Fund. Such transactions may be
subject to federal, state, local, and foreign income tax.

<PAGE>

MANAGING THE FUND

INVESTMENT ADVISOR

Stein Roe & Farnham Incorporated (Stein Roe), located at One South
Wacker Drive, Suite 3500, Chicago, Illinois 60606, is the Fund's
investment advisor. In its duties as investment advisor, Stein
Roe runs the Fund's day-to-day business, including placing all
orders for the purchase and sale of portfolio securities for the
Portfolio. Stein Roe has been an investment advisor since 1932.
As of September 30, 1999, Stein Roe managed over $29.7 billion in
assets.

Stein Roe's mutual funds and institutional investment advisory
businesses are part of a larger business unit known as Liberty
Funds Group (LFG) that includes several separate legal entities.
LFG includes certain affiliates of Stein Roe, including Colonial
Management Associates, Inc. (Colonial). The LFG business unit is
managed by a single management team. Colonial and other LFG
entities also share personnel, facilities, and systems with Stein
Roe that may be used in providing administrative or operational
services to the Fund. Colonial is a registered investment
adviser. Stein Roe also has a wealth management business that is
not part of LFG and is managed by a different team. Stein Roe and
the other entities that make up LFG are subsidiaries of Liberty
Financial Companies, Inc.

For the fiscal year ended September 30, 1999, the Fund paid 0.75%
of average net assets in fees to Stein Roe.

Stein Roe may use the services of AlphaTrade, Inc., an affiliated
broker-dealer, when buying or selling equity securities for the
Portfolio, pursuant to procedures adopted by the Board of
Trustees.

PORTFOLIO MANAGER
Daniel K. Cantor has been portfolio manager of the Portfolio since
its inception in 1997 and has been manager of the Fund since 1995.
He has been portfolio manager of Stein Roe Disciplined Stock Fund
since May 1999. He joined Stein Roe in 1985 as an equity analyst
and served as an advisor to Stein Roe Private Capital Management
from 1992 to 1995. Mr. Cantor is a senior vice president. A
chartered financial analyst, he received a B.A. degree from the
University of Rochester and an M.B.A. degree from the Wharton
School of the University of Pennsylvania.

<PAGE>

OTHER INVESTMENT STRATEGIES AND RISKS

The first portion of this prospectus describes the Fund's
principal investment strategy and principal investment risks. In
seeking to meet its investment goals, the Portfolio also may
invest in other securities and use other investment techniques.
The Portfolio may elect not to buy any of these other securities
or use any of these other investment techniques. The Portfolio
may not always achieve its investment goal.

This section describes other securities and techniques, and risks
associated with them. The Statement of Additional Information
contains additional information about the Fund's securities and
investment techniques (including other securities and techniques)
and the risks associated with them. Such risks could cause you to
lose money by investing in the Fund or could cause the Fund's
total return to decrease. The Statement of Additional Information
also contains the Fund's fundamental and non-fundamental
investment policies.

The Board of Trustees can change the Fund's investment objective
without shareholder approval.

FUTURES
The Portfolio uses futures to gain exposure to groups of stocks or
individual issuers. A future is an agreement to buy or sell a
specific amount of a financial instrument or physical commodity
for an agreed-upon price at a certain time in the future. The
Portfolio uses futures to invest cash pending direct investments
in stocks and to enhance its return. These investments are
efficient since they typically cost less than direct investments
in the underlying securities. However, the Fund can lose money if
the portfolio manager does not correctly anticipate the market
movements of those underlying securities.

PORTFOLIO TURNOVER

There are no limits on turnover. Turnover may vary significantly
from year to year. Stein Roe does not expect it to exceed 100%
under normal conditions. The Portfolio generally intends to
purchase securities for long-term investment although, to a
limited extent, it may purchase securities in anticipation of
relatively short-term price gains. Portfolio turnover typically
produces capital gains or losses resulting in tax consequences for
Fund investors. It also increases transaction expenses, which
reduce the Fund's return.

TEMPORARY DEFENSIVE POSITIONS

When Stein Roe believes that a temporary defensive position is
necessary, the Portfolio may invest, without limit, in high-
quality debt securities or hold assets in cash and cash
equivalents. Stein Roe is not required to take a temporary
defensive position, and market conditions may prevent such an
action. The Fund may not achieve its investment objective if the
Portfolio takes a temporary defensive position.

INTERFUND LENDING PROGRAM
The Fund and Portfolio may lend money to and borrow money from
other funds advised by Stein Roe. They will do so when Stein Roe
believes such lending or borrowing is necessary and appropriate.
Borrowing costs will be the same as or lower than the costs of a
bank loan.

MASTER/FEEDER STRUCTURE
Unlike mutual funds that directly acquire and manage their own
portfolio of securities, the Fund is a "feeder" fund in a
"master/feeder" structure. This means that the Fund invests its
assets in a larger "master" portfolio of securities, which has
investment objectives and policies substantially identical to
those of the Fund. The investment performance of the Fund depends
upon the investment performance of the Portfolio. If the
investment policies of the Portfolio and the Fund became
inconsistent, the Board of Trustees of the Fund can decide what
actions to take. Actions the Board of Trustees may recommend
include withdrawal of the Fund's assets from the Portfolio. For
more information on the master/feeder fund structure, see the
Statement of Additional Information.

YEAR 2000 COMPLIANCE
Like other investment companies, financial and business
organizations and individuals around the world, the Fund could be
adversely affected if the computer systems used by Stein Roe,
other service providers, and the issuers in which the Portfolio
invests do not properly process and calculate date-related
information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 problem." The Fund's service
providers are taking steps that they believe are reasonably
designed to address the Year 2000 problem, including working with
vendors who furnish services, software and systems to the Fund, to
provide that date-related information and data can be properly
processed after January 1, 2000. Many of the Fund's service
providers and vendors are in the process of making Year 2000
modifications to their software and systems and believe that such
modifications will be completed on a timely basis prior to January
1, 2000. In addition, Year 2000 readiness is one of the factors
considered by Stein Roe in its ongoing assessment of issuers in
which the Portfolio invests, to the extent that information is
readily available. However, no assurances can be given that the
Fund will not be adversely affected by these matters.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand
the financial performance of the Fund (formerly named Stein Roe
Growth & Income Fund). Information is shown for the Fund's last
five fiscal years. The fiscal year runs from October 1 to
September 30. Certain information reflects financial results for
a single Fund share. The total returns in the table represent the
rate that you would have earned (or lost) on an investment in the
Fund (assuming reinvestment of all dividends and distributions).
The information for 1999 has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the Fund's financial statements, is included in the
annual report. Arthur Andersen LLP audited the Fund's financial
statements for the years 1995 through 1998. You can request a
free annual report by calling 1-800-426-3750.

<TABLE>
<CAPTION>
Year ended September 30,
Class S 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value-Beginning of period ($) 22.45 22.91 18.39 16.65 14.54

Income from Investment Operations ($)
Net investment income 0.22 0.24 0.30 0.27 0.34
Net gains on securities (both realized
and unrealized) 4.10 0.55 5.15 3.22 2.56
Total income from investment operations 4.32 0.79 5.45 3.49 2.90

Less Distributions
Dividends (from net investment income) (0.22) (0.28) (0.28) (0.32) (0.20)
Dividends (in excess of net investment
income) (0.03) - - - -
Distributions (from capital gains) (0.38) (0.97) (0.65) (1.43) (0.59)
Total Distributions (0.63) (1.25) (0.93) (1.75) (0.79)
Net asset value-End of period ($) 26.14 22.45 22.91 18.39 16.65

Total return (%) 19.39 3.45 30.81 22.67 21.12

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000
omitted) ($) 375,789 351,052 337,466 204,387 139,539
Ratio of net expenses to average
net assets (%) 1.06(b) 1.07 1.13 1.18 0.96
Ratio of net investment income to
average net assets (%) 0.79(b) 1.02 1.52 1.65 1.78
Portfolio turnover rate (%) (a) 7 11 2 13 70
<FN>
(a) For 1995 through 1997, this is the turnover rate of the Fund
prior to commencement of operations of the Portfolio. For the
period from the commencement of operations of the Portfolio,
February 3, 1997 to September 30, 1997, the portfolio turnover
rate for the Portfolio was 7%.
(b) During the year ended September 30, 1999, the Fund
experienced a one-time reduction in its expenses of 0.04% as a
result of expenses accrued in a prior period. The Fund's
ratios disclosed above reflect the actual rate at which
expenses were incurred throughout the current fiscal year
without the reduction.
</TABLE>

<PAGE>

FOR MORE INFORMATION

You can get more information about the Fund's investments in the
Fund's semi-annual and annual reports to shareholders. The annual
report contains a discussion of the market conditions and
investment strategies that significantly affected the Fund's
performance over its last fiscal year.

You may wish to read the Statement of Additional Information for
more information on the Fund and the securities in which it
invests. The Statement of Additional Information is incorporated
into this prospectus by reference, which means that it is
considered to be part of this prospectus.

You can get free copies of reports and the Statement of Additional
Information, request other information and discuss your questions
about the Fund by writing or calling the Fund's distributor at:

Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com

Text-only versions of all Fund documents can be viewed online or
downloaded from the SEC at www.sec.gov.

You can review and copy information about the Fund by visiting the
following location and you can obtain copies, upon payment of a
duplicating fee, by writing the:

Public Reference Room
Securities and Exchange Commission
Washington, DC, 20549-6009

Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.

Investment Company Act file number:
Liberty-Stein Roe Funds Investment Trust: 811-4978

* Stein Roe Advisor Select Growth & Income Fund

[LOGO] LIBERTY
ALL-STAR - COLONIAL - CRABBE HUSON - NEWPORT - STEIN ROE
ADVISOR
Liberty Funds Distributor, Inc. (c) 1999
One Financial Center, Boston, MA 02111-2621, 1-800-426-
3750
www.libertyfunds.com

- ------------------------------------------------------------------

<PAGE>

STEIN ROE ADVISOR GROWTH INVESTOR FUND
Prospectus, November 19, 1999

Class Z Shares

Advised by Stein Roe & Farnham Incorporated

TABLE OF CONTENTS

THE FUND.......................2
Investment Goals...............2
Primary Investment Strategies..2
Primary Investment Risks.......2
Performance History............3
Your Expenses..................5

YOUR ACCOUNT...................6
How to Buy Shares..............6
How to Exchange Shares.........7
How to Sell Shares.............7
Other Information About Your
Account......................8

MANAGING THE FUND.............11
Investment Advisor............11
Portfolio Managers............11

OTHER INVESTMENT
STRATEGIES AND RISKS..........12

FINANCIAL HIGHLIGHTS..........14

NOT FDIC INSURED MAY LOSE VALUE
NO BANK GUARANTEE

<PAGE>

THE FUND

INVESTMENT GOALS
The Fund seeks long-term growth.

PRIMARY INVESTMENT STRATEGIES

The Fund invests all its assets in SR&F Growth Investor Portfolio
as part of a master fund/feeder fund structure. The Portfolio
invests primarily in common stocks believed to have long-term
growth potential. Under normal market conditions, the Portfolio
invests at least 65% of its total assets in common stocks of
companies that Stein Roe believes have long-term growth potential.
The Portfolio may invest in companies of any size including
smaller, emerging companies. It emphasizes companies in the
technology sector, including computer software, computer hardware,
semiconductors and Internet infrastructure companies, and various
consumer goods sectors, including personal care products,
pharmaceuticals and food products. The Portfolio may invest up to
25% of its assets in foreign stocks.

To select investments for the portfolio, the portfolio managers
look for companies that are market leaders with growing market
share in their respective industries. The managers also look for
companies with strong financial balance sheets and experienced
management teams.

The portfolio managers may sell a portfolio holding if the company
has a deterioration of fundamentals such as lower revenues or
earnings growth. The portfolio managers may also sell a portfolio
holding to fund redemptions.

PRIMARY INVESTMENT RISKS
There are two basic risks for all mutual funds that invest in
stocks: management risk and market risk. These risks may cause
you to lose money when you sell your shares.

Because the Portfolio invests in stocks, the price of the Fund's
shares-its net asset value per share (NAV)-fluctuates daily in
response to changes in the market value of the securities.

Due to its focus on companies in the technology sector and various
consumer goods sectors, the Fund may perform differently than the
stock market. Financial, economic, business, political, and other
developments affecting the technology or consumer goods sectors
will have a greater effect on the Fund. The value of technology-
related companies is particularly vulnerable to rapidly changing
technology, extensive government regulation, and relatively high
costs of obsolescence caused by technological advances, which are
higher than in other industry sectors. Shares of a small company
may pose greater risks than shares of a large company due to
narrow product lines, limited financial resources, less depth in
management or a limited trading market for its stock.

Information on other securities and risks appears under "Other
Investment Strategies and Risks."

PERFORMANCE HISTORY

The bar chart below shows the historical performance of Stein Roe
Young Investor Fund, a separate feeder fund of the Portfolio. The
performance table following the bar chart shows how the average
annual total returns of Stein Roe Young Investor Fund compare with
those of a broad measure of market performance for the past year
and since inception. Performance for Young Investor Fund is not
restated to reflect the higher gross annual operating expenses of
Growth Investor Fund. If those gross annual operating expenses
were reflected, performance of Young Investor Fund would be lower.
The chart and table are intended to illustrate some of the risks
of investing in the Fund by showing the changes in performance.
All returns include the reinvestment of dividends and
distributions. As with all mutual funds, past performance of
Young Investor Fund does not predict the future performance of
Growth Investor Fund. Performance results include the effect of
expense reduction arrangements. If these arrangements were not in
place, then the performance results would have been lower.

[callout]
UNDERSTANDING PERFORMANCE
Calendar-year total return shows Young Investor Fund's performance
since inception.

Average annual total return is a measure of Young Investor Fund's
share performance over the past year and since inception. Growth
Investor Fund commenced operations on March 31, 1999. The Fund's
historical performance for all periods is the performance of Young
Investor Fund and has not been restated to reflect the higher
gross annual operating expenses of Growth Investor Fund.

Young Investor Fund's return is compared to the S&P 500 Index, an
unmanaged broad-based measure of market performance. Unlike Young
Investor Fund, indices are not investments, do not incur fees or
expenses, and are not professionally managed. It is not possible
to invest directly in indices.

[/callout]

[bar chart]
Calendar-Year Total Returns
45%
40%
35% 39.79% 35.10%
30%
25% 26.28%
20%
15% 17.65%
10%
5%
0%
- -5%
1995 1996 1997 1998
[/bar chart]

For period shown in bar chart:

Best quarter: 4th quarter 1998, +20.82%
Worst quarter: 3rd quarter 1998, -16.46%

The year-to-date total return through September 30, 1999, was
2.84%. The year-to-date total return through September 30, 1999,
is comprised of the Portfolio's performance through March 31, 1999
and the performance of Growth Investor Fund from March 31, 1999,
through September 30, 1999.

Average Annual Total Returns -
for periods ended December 31, 1998
1 yr Since Inception
April 29, 1994
- ----------------------------------------------------

Young Investor Fund (%) 17.65 26.62
S&P 500 Index (%) 28.60 26.66

YOUR EXPENSES

The table below describes the fees and expenses you may pay when
you buy, hold and sell shares of the Fund. Expenses are one of
several factors to consider before you invest in a mutual fund.

[Callout]
UNDERSTANDING EXPENSES
Shareholder Fees are paid directly by shareholders to the Fund's
distributor.

Annual Fund Operating Expenses are deducted from the Fund. They
include management fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.

Example Expenses helps you compare the cost of investing in the
Fund to the cost of investing in other mutual funds. This example
reflects expenses of both the Fund and the Portfolio. Expense
reimbursements are in effect for the first year in the periods
below. It uses the following hypothetical conditions:
* $10,000 initial investment
* 5% return for each year
* Fund operating expenses remain the same
* Redemption at the end of each time period

[/callout]

Annual Fund Operating Expenses(1) (2)(deducted directly from Fund
assets)

Class Z
Management fee(3) (%) 0.73
Distribution and service (12b-1) fees (%) None
Other expenses(4) (%) 1.63
Total annual fund operating expenses (%) 2.36
Expense reimbursement (4)(%) 1.26
Net expenses (%) 1.10

(1) There is a $7.50 charge for wiring sale proceeds to your bank.
(2) Annual fund operating expenses consist of Fund expenses plus
the Fund's share of the expenses of the Portfolio. Fund
expenses include management fees and administrative costs such
as furnishing the Fund with offices and providing tax and
compliance services.
(3) Management fee includes both the management fee and the
administrative fee charged to the Fund.
(4) The Fund's advisor will reimburse the Fund if its annual
ordinary operating expenses exceed 1.10% of average daily net
assets. This commitment expires on January 31, 2001. A
reimbursement lowers the expense ratio and increases overall
return to investors.

Example Expenses (your actual costs may be higher or lower)
Class 1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------
Class Z $112 $616 $1,146 $2,599

<PAGE>

YOUR ACCOUNT

HOW TO BUY SHARES

Outlined below are various options for buying shares:

HOW TO EXCHANGE SHARES

Outlined below are the various options for selling shares:

By exchange You or your financial advisor may sell shares by
exchanging from the Fund into the same share class
of another fund at no additional cost. To
exchange by telephone, call 1-800-422-3737.

Mail your letter of instruction to SteinRoe
Services Inc., c/o Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.

DIVIDENDS, DISTRIBUTIONS, AND TAXES The Fund has the potential
to make the following distributions:

[Callout]
UNDERSTANDING FUND DISTRIBUTIONS

The Fund earns income from the securities the Portfolio holds.
The Fund also may experience capital gains and losses on sales of
the Portfolio's securities. The Fund distributes substantially
all of its net investment income and capital gains to
shareholders. As a shareholder, you are entitled to a portion of
the Fund's income and capital gains based on the number of shares
you own at the time these distributions are declared.
[/callout]

DISTRIBUTION OPTIONS Income dividends are declared and paid
annually. Any capital gains are distributed at least annually.
You can choose one of the options listed in the table below for
these distributions when you open your account.(1) To change your
distribution option call 1-800-345-6611.

<PAGE>

MANAGING THE FUND

INVESTMENT ADVISOR

For the period ended September 30, 1999, the Fund paid 0.72% of
average net assets in fees to Stein Roe.

Stein Roe may use the services of AlphaTrade, Inc., an affiliated
broker-dealer, when buying or selling equity securities for the
Portfolio, pursuant to procedures adopted by the Board of
Trustees.

PORTFOLIO MANAGERS
Erik P. Gustafson has been co-portfolio manager of the Portfolio
and manager of SR&F Growth Stock Portfolio since their inception
in 1997 and has managed Stein Roe Growth Stock Fund since 1994 and
Stein Roe Young Investor Fund since 1995. Mr. Gustafson joined
Stein Roe in 1992 as a portfolio manager for privately managed
accounts and is a senior vice president. He holds a B.A. degree
from the University of Virginia and M.B.A. and J.D. degrees from
Florida State University.

David P. Brady is co-portfolio manager of the Portfolio. He
joined Stein Roe in 1993 as an associate portfolio manager of
Stein Roe Special Fund. He currently is a senior vice president
and has been portfolio manager of Young Investor Fund since March
1995 and portfolio manager of Stein Roe Large Company Focus Fund
since June 1998. He holds a B.S. in finance, graduating Magna Cum
Laude, from the University of Arizona and an M.B.A. from the
University of Chicago.

<PAGE>

OTHER INVESTMENT STRATEGIES AND RISKS

The Board of Trustees can change the Fund's investment objective
without shareholder approval.

PORTFOLIO TURNOVER

TEMPORARY DEFENSIVE POSITIONS

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand
the financial performance of the Fund (formerly named Stein Roe
Growth Investor Fund). Information is shown for the period of the
Fund's operations. The fiscal year runs from October 1 to
September 30. Certain information reflects financial results for
a single Fund share. The total returns in the table represent the
rate that you would have earned (or lost) on an investment in the
Fund (assuming reinvestment of all dividends and distributions).
This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with the Fund's
financial statements, is included in the annual report. You can
request a free annual report by calling 1-800-426-3750.

Period ended
September 30,
Class S 1999(a)
- ----------------------------------------------------------------
Net asset value-Beginning of period ($) 10.00

Income from Investment Operations ($)
Net investment loss (0.02)
Net losses on securities (both realized
and unrealized) (0.53)
Total income from investment operations (0.55)

Less Distributions
Dividends (from net investment income) -
Distributions (from capital gains) -
Total Distributions -

Net asset value-End of period ($) 9.45

Total return (%) (5.50)(d)(e)

RATIOS/SUPPLEMENTAL DATA:
Net assets at end of period (000 omitted) ($) 11,329
Ratio of net expenses to average net assets (%) 1.10(b)(c)
Ratio of net investment loss to average net
assets (%) (0.34)(b)(d)
Portfolio turnover rate (%) 24(f)

(a) From commencement of operations on March 31, 1999.
(b) Annualized.
(c) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by Stein Roe, this ratio would have
been 2.34% (annualized).
(d) Computed with the effect of Stein Roe's expense reimbursement.
(e) Not annualized.
(f) Represents the portfolio turnover rate for the Portfolio for
the year ended September 30, 1999.

<PAGE>

FOR MORE INFORMATION

You can get free copies of reports and the Statement of Additional
Information, request other information and discuss your questions
about the Fund by writing or calling the Fund's distributor at:

Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com

Text-only versions of all Fund documents can be viewed online or
downloaded from the SEC at www.sec.gov.

You can review and copy information about the Fund by visiting the
following location and you can obtain copies, upon payment of a
duplicating fee, by writing the:

Public Reference Room
Securities and Exchange Commission
Washington, DC, 20549-6009

Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.

Investment Company Act file number:
Liberty-Stein Roe Funds Investment Trust: 811-4978

* Stein Roe Advisor Growth Investor Fund

- -----------------------------------------------------------------

<PAGE>

STEIN ROE ADVISOR SELECT GROWTH & INCOME FUND
Prospectus, November 19, 1999

Class A, B and C Shares

Advised by Stein Roe & Farnham Incorporated

TABLE OF CONTENTS

THE FUND.......................2
Investment Goals...............2
Primary Investment Strategies..2
Primary Investment Risks.......2
Performance History............3
Your Expenses..................4

YOUR ACCOUNT...................7
How to Buy Shares..............7
Sales Charges..................8
How to Exchange Shares........11
How to Sell Shares............11
Distribution and Service Fees.12
Other Information About
Your Account................12

MANAGING THE FUND.............15
Investment Advisor............15
Portfolio Manager.............15

OTHER INVESTMENT
STRATEGIES AND RISKS..........16

FINANCIAL HIGHLIGHTS..........18

NOT FDIC INSURED MAY LOSE VALUE
NO BANK GUARANTEE

<PAGE>

THE FUND

INVESTMENT GOALS
The Fund seeks to provide both growth of capital and current
income.

[/callout]

PRIMARY INVESTMENT STRATEGIES

PRIMARY INVESTMENT RISKS
There are two basic risks for all mutual funds that invest in
stocks: management risk and market risk. These risks may cause
you to lose money when you sell your shares.

Because the Portfolio invests in stocks, the price of the Fund's
shares-its net asset value per share (NAV)-fluctuates daily in
response to changes in the market value of the securities.

Information on other securities and risks appears under "Other
Investment Strategies and Risks."

PERFORMANCE HISTORY

[callout]
UNDERSTANDING PERFORMANCE

Calendar-year total return shows the Fund's Class S share
performance for each of the last ten complete calendar years. It
includes the effects of Fund expenses.

Average annual total return is a measure of the Fund's Class S
share performance over the past one-year, five-year and ten-year
periods. It includes the effects of Fund expenses.

The Fund's year-to-date total return through September 30, 1999,
was 1.25%.
For period shown in bar chart:

Best quarter: 4th quarter 1998, +17.91%
Worst quarter: 3rd quarter 1990, -12.06%

AVERAGE ANNUAL TOTAL RETURNS-FOR PERIODS ENDED DECEMBER 31, 1998
1 Year 5 Years 10 Years
Growth & Income Fund, Class S (%) 19.54 18.93 17.55
S&P 500 Index (%) 28.60 24.05 19.19

YOUR EXPENSES

The table below describes the fees and expenses you may pay when
you buy, hold and sell shares of the Fund. Expenses are one of
several factors to consider before you invest in a mutual fund.

[Callout]
UNDERSTANDING EXPENSES

Shareholder Fees are paid directly by shareholders to the Fund's
distributor.

Annual Fund Operating Expenses are deducted from the Fund. They
include management fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.

[/callout]

Shareholder Fees (paid directly from your investment)
Class A Class B Class C
- ------------------------------------------------------------------

Maximum sales charge (load) imposed
on purchases (as a percentage of
offering price) 5.75 0.00 0.00
Maximum deferred sales charge (load)
(as a percentage of the lower of
the offering price or sale price) 1.00(1) 5.00 1.00
Redemption fee(2) (as a percentage
of amount redeemed, if applicable) None None None

Annual Fund Operating Expenses (deducted directly from Fund
assets)(3)
Class A Class B Class C
- ------------------------------------------------------------------
Management fee(4)(%) 0.75 0.75 0.75
Distribution and service (12b-1)
fees (%) 0.35 1.00 1.00
Other expenses (%) 0.33 0.33 0.33
Total annual fund operating expenses (%) 1.43 2.08 2.08

Example Expenses (your actual costs may be higher or lower)
Class 1 Year 3 Years 5 Years 10 Years
- -------------------------------- ------ ------- ------- --------
Class A $712 $1,000 $1,310 $2,185
Class B: sold all your shares
at the end of the period $711 $951 $1,317 $2,240
did not sell your shares $211 $651 $1,117 $2,240
Class C: sold all your shares at
the end of the period $311 $651 $1,117 $2,406
did not sell your shares $211 $651 $1,117 $2,406

*Class B shares will automatically convert to Class A shares in
eight years. The ten-year expense example reflects for Class B
share expenses for eight years and Class A share expenses for two
years.

<PAGE>

YOUR ACCOUNT

HOW TO BUY SHARES

Your financial advisor can help you establish an appropriate
investment portfolio, buy shares and monitor your investments.
When the Fund receives your purchase request in "good form," your
shares will be bought at the next calculated public offering
price. In "good form" means that you placed your order with your
brokerage firm or your payment has been received and your
application is complete, including all necessary signatures.

[Callout]
INVESTMENT MINIMUMS (1)
Initial Investment $1,000
Subsequent Investments $50
Automatic Investment Plan $50
Retirement Plans $25
[/callout]
(1) The Fund reserves the right to change the investment minimums.
The Fund also reserves the right to refuse a purchase order
for any reason, including if it believes that doing so would
be in the best interest of the Fund and its shareholders.

Outlined below are various options for buying shares:

SALES CHARGES

You may be subject to an initial sales charge when you purchase or
a contingent deferred sales charge (CDSC) when you sell shares of
the Fund. These sales charges are described below. In some
circumstances these sales charges are waived, as described below
and in the Statement of Additional Information.

<Callout>
CHOOSING A SHARE CLASS
The Fund offers three classes of shares in this prospectus-Class
A, B and C. Each share class has its own sales charge and expense
structure. Determining which share class is best for you depends
on the dollar amount you are investing and the number of years for
which you are willing to invest. Purchases of $250,000 or more
but less than $1 million can be made only in Class A or Class C
shares. Purchases of $1 million or more are automatically
invested in Class A shares. Based on your personal situation,
your investment advisor can help you decide which class of shares
makes the most sense for you.

The Fund also offers Class S and Z shares, which are available
only to other investors through separate prospectuses.
</callout>

CLASS A SHARES Your purchases of Class A shares generally are at
the public offering price. This price includes a sales charge
that is based on the amount of your investment. The sales charge
is the commission paid to the financial advisor firm on the sale
of Class A shares. The sales charge you pay on additional
investments is based on the total amount of your purchase and the
current value of your account. The amount of the sales charge
differs depending on the amount you invest as shown in the table
below.

Class A Sales Charges
- ------------------------------------------------------------------
Amount of Purchase As a % of As a % of % of public
the public net offering price
offering amount retained by
price invested financial
advisor firm
- ------------------------------------------------------------------
Less than $50,000 5.75 6.10 5.00
$ 50,000 to less than $100,000 4.50 4.71 3.75
$100,000 to less than $250,000 3.50 3.63 2.75
$250,000 to less than $500,000 2.50 2.56 2.00
$500,000 to less than $1,000,000 2.00 2.04 1.75
$1,000,000 or more(1) 0.00 0.00 0.00

(1) Class A shares bought without an initial sales charge in
accounts aggregating between $1 million and $5 million at the
time of purchase may be subject to a 1% CDSC if the shares are
sold within 18 months of the time of purchase. Class A share
purchases that bring your account value above $1 million are
subject to a 1% CDSC if redeemed within 18 months of their
purchase date. The 18-month period begins on the first day of
the month following each purchase.

For Class A share purchases of $1 million or more, financial
advisors receive a commission from Liberty Funds Distributor, Inc.
(Distributor) as follows:

Purchases Over $1 Million
- ---------------------------------------------------------------
Amount Purchased Commission %

First $3 million 1.00
Next $2 million 0.50
Over $5 million 0.25 (1)

(1) Paid over 12 months but only to the extent the shares remain
outstanding.

REDUCED SALES CHARGES FOR LARGER INVESTMENTS There are two ways
for you to pay a lower sales charge when purchasing Class A
shares. The first is through Rights of Accumulation. If the
combined value of the Fund accounts maintained by you, your spouse
or your minor children reaches a discount level (according to the
chart on the previous page), your next purchase will receive the
lower sales charge. The second is by signing a Statement of
Intent within 90 days of your purchase. By doing so, you would be
able to pay the lower sales charge on all purchases by agreeing to
invest a total of at least $50,000 within 13 months. If your
Statement of Intent purchases are not completed within 13 months,
you will be charged the applicable sales charge on the amount you
had invested to that date. In addition, certain investors may
purchase shares at a reduced sales charge or NAV, which is the
value of a Fund share excluding any sales charges. See the
Statement of Additional Information for a description of these
situations.

<CALLOUT>
UNDERSTANDING CONTINGENT DEFERRED SALES CHARGES

Certain investments in Class A, B and C shares are subject to a
CDSC. You will pay the CDSC only on shares you sell within a
certain amount of time after purchase. The CDSC generally
declines each year until there is no charge for selling shares.
The CDSC is applied to the NAV at the time of purchase or sale,
whichever is lower. For purposes of calculating the CDSC, the
start of the holding period is the month-end of the month in which
the purchase is made. Shares you purchase with reinvested
dividends or capital gains are not subject to a CDSC. When you
place an order to sell shares, the Fund will automatically sell
first those shares not subject to a CDSC and then those you have
held the longest. This policy helps reduce and possibly eliminate
the potential impact of the CDSC.
</CALLOUT>

CLASS B SHARES Your purchases of Class B shares are at the
Fund's NAV. Class B shares have no front-end sales charge, but
carry a CDSC, that is imposed only on shares sold prior to the
completion of the periods shown in the chart below. The CDSC
generally declines each year and eventually disappears over time.
Class B shares automatically convert to Class A shares after eight
years. The Distributor pays the financial advisor firm an up-
front commission of 5.00% on sales of Class B shares.

Class B Sales Charges
- -----------------------------------------------------------
Holding period after purchase % deducted when
shares are sold
- -----------------------------------------------------------
Through the end of the first year 5.00
Through the end of the second year 4.00
Through the end of the third year 3.00
Through the end of the fourth year 3.00
Through the end of the fifth year 2.00
Through the end of the sixth year 1.00
Longer than six years 0.00

CLASS C SHARES Like Class B shares, your purchases of Class C
shares are at the Fund's NAV. Although Class C shares have no
front-end sales charge, they carry a CDSC of 1% that is applied to
shares sold within the first year after they are purchased. After
holding shares for one year, you may sell them at any time without
paying a CDSC. Class C shares do not convert into Class A shares.
The Distributor pays the financial advisor firm an up-front
commission of 1.00% on sales of Class C shares.

Class C Sales Charges
- ----------------------------------------------------------------
Years after purchase % deducted when shares are sold
- ----------------------------------------------------------------
Through first year 1.00
Longer than one year 0.00

HOW TO EXCHANGE SHARES

You may exchange your shares for shares of the same share class of
another fund distributed by Liberty Funds Distributor, Inc. at the
next-determined NAV. If your shares are subject to a CDSC, you
will not be charged a CDSC upon the exchange. However, when you
sell the shares acquired through the exchange, the shares sold may
be subject to a CDSC, depending upon when you originally purchased
the shares you exchanged. For purposes of computing the CDSC, the
length of time you have owned your shares will be computed from
the date of your original purchase and the applicable CDSC will be
the CDSC of the original Fund. Unless your account is part of a
tax-deferred retirement plan, an exchange is a taxable event.
Therefore, you may realize a gain or a loss for tax purposes. The
Fund may terminate your exchange privilege if Stein Roe determines
that your exchange activity is likely to adversely impact its
ability to manage the Fund. To exchange by telephone, call 1-800-
422-3737.

Outlined below are the various options for selling shares:

By exchange You or your financial advisor may sell shares by
exchanging from the Fund into the same share class
of another fund at no additional cost. To
exchange by telephone, call 1-800-422-3737.

Mail your letter of instruction to SteinRoe
Services Inc., c/o Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.

DISTRIBUTION AND SERVICE FEES
The Fund has adopted a plan under Rule 12b-1 that permits it to
pay marketing and other fees to support the sale and distribution
of Class A, B and C shares and the services provided to you by
your financial advisor. These annual distribution and service
fees may equal up to 0.35% for Class A shares and 1.00% for each
of Class B and Class C shares and are paid out of the assets of
these classes. Over time, these fees will increase the cost of
your shares and may cost you more than paying other types of sales
charges.(1)

(1) Class B shares automatically convert to Class A shares after
eight years, eliminating a portion of the distribution and service
fee upon conversion.

When you request a transaction, it will be processed at the NAV
(plus any applicable sales charge) next determined after your
request is received in good form by the Distributor. In most
cases, in order to receive that day's price, the Distributor must
receive your order before that day's transactions are processed.
If you request a transaction through your financial advisor's
firm, the firm must receive your order by the close of trading on
the NYSE to receive that day's price.

SHARE CERTIFICATES Share certificates are not available for
Class B and C shares. Certificates will be issued for Class A
shares only if requested. If you decide to hold share
certificates, you will not be able to sell your shares until you
have endorsed your certificates and returned them to the
Distributor.

DIVIDENDS, DISTRIBUTIONS, AND TAXES The Fund has the potential
to make the following distributions:

[Callout]
UNDERSTANDING FUND DISTRIBUTIONS

<PAGE>

MANAGING THE FUND

INVESTMENT ADVISOR

For the fiscal year ended September 30, 1999, the Fund paid 0.75%
of average net assets in fees to Stein Roe.

Stein Roe may use the services of AlphaTrade, Inc., an affiliated
broker-dealer, when buying or selling equity securities for the
Portfolio, pursuant to procedures adopted by the Board of
Trustees.

<PAGE>

OTHER INVESTMENT STRATEGIES AND RISKS

The Board of Trustees can change the Fund's investment objective
without shareholder approval.

PORTFOLIO TURNOVER

TEMPORARY DEFENSIVE POSITIONS

<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Year ended September 30,
Class S 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Net asset value-Beginning of period ($) 22.45 22.91 18.39 16.65 14.54

Total return (%) 19.39 3.45 30.81 22.67 21.12

<PAGE>

FOR MORE INFORMATION

You can get free copies of reports and the Statement of Additional
Information, request other information and discuss your questions
about the Fund by writing or calling the Fund's distributor at:

Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com

Text-only versions of all Fund documents can be viewed online or
downloaded from the SEC at www.sec.gov.

You can review and copy information about the Fund by visiting the
following location and you can obtain copies, upon payment of a
duplicating fee, by writing the:

Public Reference Room
Securities and Exchange Commission
Washington, DC, 20549-6009

Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.

Investment Company Act file number:
Liberty-Stein Roe Funds Investment Trust: 811-4978

* Stein Roe Advisor Select Growth & Income Fund

- -----------------------------------------------------------------

<PAGE>

STEIN ROE ADVISOR GROWTH INVESTOR FUND
Prospectus, November 19, 1999

Class A, B and C Shares

Advised by Stein Roe & Farnham Incorporated

TABLE OF CONTENTS

THE FUND.......................2
Investment Goals...............2
Primary Investment Strategies..2
Primary Investment Risks.......2
Performance History............3
Your Expenses..................5

MANAGING THE FUND.............15
Investment Advisor............15
Portfolio Managers............15

OTHER INVESTMENT
STRATEGIES AND RISKS..........16

FINANCIAL HIGHLIGHTS..........18

NOT FDIC INSURED MAY LOSE VALUE
NO BANK GUARANTEE

<PAGE>

THE FUND

INVESTMENT GOALS
The Fund seeks long-term growth.

PRIMARY INVESTMENT STRATEGIES

PRIMARY INVESTMENT RISKS
There are two basic risks for all mutual funds that invest in
stocks: management risk and market risk. These risks may cause
you to lose money when you sell your shares.

Because the Portfolio invests in stocks, the price of the Fund's
shares-its net asset value per share (NAV)-fluctuates daily in
response to changes in the market value of the securities.

Information on other securities and risks appears under "Other
Investment Strategies and Risks."

PERFORMANCE HISTORY

[callout]
UNDERSTANDING PERFORMANCE

Calendar-year total return shows the Young Investor Fund's
performance since inception.

Average annual total return is a measure of Young Investor Fund's
share performance over the past year and since inception. Growth
Investor Fund commenced operations on March 31, 1999. The Fund's
historical performance for all periods is the performance of Young
Investor Fund and has not been restated The Fund's historical
performance for all periods is the performance of Young Investor
Fund and has not been restated to reflect the higher gross annual
operating expenses of Growth Investor Fund.

[bar chart]
Calendar-Year Total Returns
45%
40%
35% 39.79% 35.10%
30%
25% 26.28%
20%
15% 17.65%
10%
5%
0%
- -5%
1995 1996 1997 1998

For period shown in bar chart:
Best quarter: 4th quarter 1998, +20.82%
Worst quarter: 3rd quarter 1998, -16.46%

Average Annual Total Returns -
for periods ended December 31, 1998
1 yr Since Inception
April 29, 1994
- ----------------------------------------------------
Young Investor Fund (%) 17.65 26.62
S&P 500 Index (%) 28.60 26.66

YOUR EXPENSES

The table below describes the fees and expenses you may pay when
you buy, hold and sell shares of the Fund. Expenses are one of
several factors to consider before you invest in a mutual fund.

[CALLOUT]
UNDERSTANDING EXPENSES
Shareholder Fees are paid directly by shareholders to the Fund's
distributor.

Annual Fund Operating Expenses are deducted from the Fund. They
include management fees, 12b-1 fees, brokerage costs, and
administrative costs including pricing and custody services.

Example Expenses helps you compare the cost of investing in the
Fund to the cost of investing in other mutual funds. This example
reflects expenses of both the Fund and the Portfolio. Expense
reimbursements are in effect for the first year in the periods
below. It uses the following hypothetical conditions:
* $10,000 initial investment
* 5% return for each year
* Fund operating expenses remain the same
* redemption at the end of each time period

[/callout]

Shareholder Fees (paid directly from your investment)
Class A Class B Class C
- ------------------------------------------------------------------

Annual Fund Operating Expenses (deducted directly from Fund
assets)(3)
Class A Class B Class C
- ------------------------------------------------------------------
Management fee(4) (%) 0.73 0.73 0.73
Distribution and service (12b-1) fees (%) 0.35 1.00 1.00
Other expenses (5) (%) 1.63 1.63 1.63
Total annual fund operating expenses (%) 2.71 3.36 3.36
Expense reimbursement (5)(%) 1.26 1.26 1.26
Net expenses (%) 1.45 2.10 2.10

(1) This charge applies only to purchases of $1 million to $5
million if shares obtained through these purchases are
redeemed within 18 months of purchase.
(2) There is a $7.50 charge for wiring sale proceeds to your bank.
(3) Annual fund operating expenses consist of Fund expenses plus
the Fund's share of the expenses of the Portfolio. Fund
expenses include management fees and administrative costs such
as furnishing the Fund with offices and providing tax and
compliance services.
(4) Management fee includes both the management fee and the
administrative fee charged to the Fund.
(5) The Fund's advisor will reimburse the Fund if its annual
ordinary operating expenses exceed 1.10% of average daily net
assets. This commitment expires on January 31, 2001. A
reimbursement lowers the expense ratio and increases overall
return to investors.

Example Expenses (your actual costs may be higher or lower)
Class 1 Year 3 Years 5 Years 10 Years
- -------------------------------- ------ ------- ------- --------
Class A $714 $1,255 $1,821 $3,354
Class B: sold all your shares at
the end of the period $713 $1,216 $1,842 $3,416
did not sell your shares $213 $916 $1,642 $3,416
Class C: sold all your shares at
the end of the period $313 $916 $1,642 $3,564
did not sell your shares $213 $916 $1,642 $3,564

*Class B shares will automatically covert to Class A shares in
eight years. The ten-year expense example for Class B shares
reflects Class B share expenses for eight years and Class A share
expenses for two years.

<PAGE>

YOUR ACCOUNT

HOW TO BUY SHARES

Your financial advisor can help you establish an appropriate
investment portfolio, buy shares and monitor your investments.
When the Fund receives your purchase request in "good form," your
shares will be bought at the next calculated public offering
price. In "good form" means that you placed your order with your
brokerage firm or your payment has been received and your
application is complete, including all necessary signatures.

Outlined below are various options for buying shares:

SALES CHARGES

You may be subject to an initial sales charge when you purchase,
or a contingent deferred sales charge (CDSC) when you sell shares
of the Fund. These sales charges are described below. In some
circumstances these sales charges are waived, as described below
and in the Statement of Additional Information.

<CALLOUT>
CHOOSING A SHARE CLASS
The Fund offers three classes of shares in this prospectus-Class
A, B and C. Each share class has its own sales charge and expense
structure. Determining which share class is best for you depends
on the dollar amount you are investing and the number of years for
which you are willing to invest. Purchases of $250,000 or more
but less than $1 million can be made only in Class A or Class C
shares. Purchases of $1 million or more are automatically
invested in Class A shares. Based on your personal situation,
your investment advisor can help you decide which class of shares
makes the most sense for you.

The Fund also offers Class S and Z shares, which are available
only to other investors through separate prospectuses.
</CALLOUT>

For Class A share purchases of $1 million or more, financial
advisors receive a commission from Liberty Funds Distributor, Inc.
(Distributor) as follows:

Purchases Over $1 Million
- ---------------------------------------------------------------
Amount Purchased Commission %

First $3 million 1.00
Next $2 million 0.50
Over $5 million 0.25 (1)

(1) Paid over 12 months but only to the extent the shares remain
outstanding.

<CALLOUT>
UNDERSTANDING CONTINGENT DEFERRED SALES CHARGES

HOW TO EXCHANGE SHARES

Outlined below are the various options for selling shares:

By exchange You or your financial advisor may sell shares by
exchanging from the Fund into the same share class
of another fund at no additional cost. To
exchange by telephone, call 1-800-422-3737.

Mail your letter of instruction to SteinRoe
Services Inc., c/o Liberty Funds Services, Inc.,
P.O. Box 1722, Boston, MA 02105-1722.

(1) Class B shares automatically convert to Class A shares after
eight years, eliminating a portion of the distribution and service
fee upon conversion.

DIVIDENDS, DISTRIBUTIONS, AND TAXES The Fund has the potential
to make the following distributions:

[Callout]
UNDERSTANDING FUND DISTRIBUTIONS

<PAGE>

MANAGING THE FUND

INVESTMENT ADVISOR

For the period ended September 30, 1999, the Fund paid 0.72% of
average net assets in fees to Stein Roe.

Stein Roe may use the services of AlphaTrade, Inc., an affiliated
broker-dealer, when buying or selling equity securities for the
Portfolio, pursuant to procedures adopted by the Board of
Trustees.

<PAGE>

OTHER INVESTMENT STRATEGIES AND RISKS

The Board of Trustees can change the Fund's investment objective
without shareholder approval.

PORTFOLIO TURNOVER

TEMPORARY DEFENSIVE POSITIONS

<PAGE>

FINANCIAL HIGHLIGHTS

Period ended
September 30,
Class S 1999(a)
- ----------------------------------------------------------------
Net asset value-Beginning of period ($) 10.00

Income from Investment Operations ($)
Net investment loss (0.02)
Net losses on securities (both realized
and unrealized) (0.53)
Total income from investment operations (0.55)

Less Distributions
Dividends (from net investment income) -
Distributions (from capital gains) -
Total Distributions -

Net asset value-End of period ($) 9.45

Total return (%) (5.50)(d)(e)

<PAGE>
FOR MORE INFORMATION

You can get free copies of reports and the Statement of Additional
Information, request other information and discuss your questions
about the Fund by writing or calling the Fund's distributor at:

Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111-2621
1-800-426-3750
www.libertyfunds.com

Text-only versions of all Fund documents can be viewed online or
downloaded from the SEC at www.sec.gov.

You can review and copy information about the Fund by visiting the
following location and you can obtain copies, upon payment of a
duplicating fee, by writing the:

Public Reference Room
Securities and Exchange Commission
Washington, DC, 20549-6009

Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330.

Investment Company Act file number:
Liberty-Stein Roe Funds Investment Trust: 811-4978

* Stein Roe Advisor Growth Investor Fund

- -----------------------------------------------------------------

<PAGE>

Statement of Additional Information Dated November 19, 1999

LIBERTY-STEIN ROE FUNDS INVESTMENT TRUST
One Financial Center, Boston, MA 02111
800-338-2550

Stein Roe Advisor Select Growth & Income Fund
Stein Roe Advisor Growth Investor Fund

Class A, B, C, and Z Shares

This Statement of Additional Information ("SAI") is not a
prospectus, but provides additional information that should be
read in conjunction with the Funds' prospectuses dated November
19, 1999, and any supplements thereto ("Prospectus"). Financial
statements, which are contained in the Funds' September 30, 1999,
Annual Reports, are incorporated by reference into this SAI. The
Prospectus and Annual Reports may be obtained at no charge by
telephoning 800-338-2550.

TABLE OF CONTENTS
Page

General Information and History.............................2
Investment Policies.........................................4
Portfolio Investments and Strategies........................4
Investment Restrictions....................................20
Additional Investment Considerations.......................22
Management.................................................23
Financial Statements.......................................26
Principal Shareholders.....................................27
Investment Advisory and Other Services.....................27
Distributor................................................29
Transfer Agent.............................................31
Purchases and Redemptions..................................31
Custodian..................................................40
Independent Accountants....................................41
Portfolio Transactions.....................................41
Additional Income Tax Considerations.......................47
Investment Performance.....................................47
Master Fund/Feeder Fund: Structure and Risk Factors........51
Appendix-Ratings...........................................53

<PAGE>

GENERAL INFORMATION AND HISTORY

Stein Roe Advisor Select Growth & Income Fund and Stein Roe
Advisor Growth Investor Fund (referred to collectively as "the
Funds"), are separate series of Liberty-Stein Roe Funds Investment
Trust (the "Trust"). On February 1, 1996, the name of the Trust
was changed to separate "SteinRoe" into two words. The name of
the Trust was changed from "Stein Roe Investment Trust" to
"Liberty-Stein Roe Funds Investment Trust" on October 18, 1999.

Stein Roe Advisor Select Growth & Income Fund ("Growth &
Income Fund") was named "Stein Roe Growth & Income Fund" prior to
November 2, 1999 and was named "SteinRoe Prime Equities" prior to
February 1, 1996. Growth & Income Fund commenced operations on
March 24, 1987.

Stein Roe Advisor Growth Investor Fund ("Growth Investor
Fund") commenced operations on March 31, 1999. It was named
"Stein Roe Growth Investor Fund" prior to November 2, 1999.

Each Fund offers five classes of shares-Classes A, B, C, Z,
and S. On November 19, 1999, the outstanding shares of Growth &
Income Fund and Growth Investor Fund were converted into Class S,
and Classes A, B, C and Z commenced. The Funds did not have
separate classes prior to that date. This SAI describes Classes
A, B, C and Z of Growth & Income Fund and of Growth Investor Fund.

The Trust is a Massachusetts business trust organized under
an Agreement and Declaration of Trust ("Declaration of Trust")
dated Jan. 8, 1987, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either the
Trust's shareholders or its trustees. The Trust may issue an
unlimited number of shares, in one or more series, each with one
or more classes, as the Board may authorize. Currently, 12 series
are authorized and outstanding. Each series invests in a separate
portfolio of securities and other assets, with its own objectives
and policies.

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

Each share of a series (or class thereof) is entitled to
participate pro rata in any dividends and other distributions
declared by the Board on shares of that series (or class thereof),
and all shares of a series (or class thereof) have equal rights in
the event of liquidation of that series (or class thereof). Each
whole share (or fractional share) outstanding on the record date
established in accordance with the By-Laws shall be entitled to a
number of votes on any matter on which it is entitled to vote
equal to the net asset value of the share (or fractional share) in
United States dollars determined at the close of business on the
record date (for example, a share having a net asset value of
$10.50 would be entitled to 10.5 votes). As a business trust, the
Trust is not required to hold annual shareholder meetings.
However, special meetings may be called for purposes such as
electing or removing trustees, changing fundamental policies, or
approving an investment advisory contract. If requested to do so
by the holders of at least 10% of its outstanding shares, the
Trust will call a special meeting for the purpose of voting upon
the question of removal of a trustee or trustees and will assist
in the communications with other shareholders as if the Trust were
subject to Section 16(c) of the Investment Company Act of 1940.
All shares of all series of the Trust are voted together in the
election of trustees. On any other matter submitted to a vote of
shareholders, shares are voted in the aggregate and not by
individual series, except that shares are voted by individual
series when required by the Investment Company Act of 1940 or
other applicable law, or when the Board of Trustees determines
that the matter affects only the interests of one or more series,
in which case shareholders of the unaffected series are not
entitled to vote on such matters.

Special Considerations Regarding Master Fund/Feeder Fund Structure

Rather than invest in securities directly, the Funds seek to
achieve their objectives by pooling their assets with those of
other investment companies for investment in a master fund having
the identical investment objective and substantially the same
investment policies as its feeder funds. The purpose of such an
arrangement is to achieve greater operational efficiencies and
reduce costs. Each feeder Fund invests all of its assets in a
separate master fund that is a series of SR&F Base Trust, as
follows:

Feeder Fund Master Fund
- ----------------------------------------------------------------
Growth & Income Fund SR&F Growth & Income Portfolio ("Growth &
Income Portfolio")
Growth Investor Fund SR&F Growth Investor Portfolio ("Growth
Investor Portfolio")

The master funds are referred to collectively as the
"Portfolios." For more information, please refer to Master
Fund/Feeder Fund: Structure and Risk Factors.

Stein Roe & Farnham Incorporated ("Stein Roe") provides
administrative and accounting and recordkeeping services to the
Funds and Portfolios and investment management services to the
Portfolio.

INVESTMENT POLICIES

The Trust and SR&F Base Trust are open-end management
investment companies. The Funds and the Portfolios are
diversified, as that term is defined in the Investment Company Act
of 1940.

The investment objectives and policies are described in the
Prospectus under The Funds. In pursuing its objective, a
Portfolio may also employ the investment techniques described
under Portfolio Investments and Strategies in this SAI. The
investment objective is a nonfundamental policy and may be changed
by the Board of Trustees without the approval of a "majority of
the outstanding voting securities."/1/
- ----------------------
/1/ A "majority of the outstanding voting securities" means the
approval of the lesser of (i) 67% or more of the shares at a
meeting if the holders of more than 50% of the outstanding shares
are present or represented by proxy or (ii) more than 50% of the
outstanding shares.
- ----------------------

PORTFOLIO INVESTMENTS AND STRATEGIES

Unless otherwise noted, for purposes of discussion under
Portfolio Investments and Strategies, the term "Fund" refers to
each Fund and each Portfolio.

Debt Securities

In pursuing its investment objective, each Fund may invest in
debt securities of corporate and governmental issuers. 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, while an
increase in rates usually reduces the value of those securities.

Investments in debt securities by Growth & Income Portfolio
are limited to those that are within the four highest grades
(generally referred to as "investment grade") assigned by a
nationally recognized statistical rating organization or, if
unrated, deemed to be of comparable quality by Stein Roe. Growth
Investor Portfolio may invest up to 35% of its 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 Fund also does not have a current intention to invest more
than 5% of its total assets in investment grade debt securities.

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, but Stein Roe will consider
that fact in determining whether that Fund should continue to hold
the security.

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 Stein Roe determines that adverse market or economic
conditions exist and considers a temporary defensive position
advisable, a Fund may invest without limitation in high-quality
fixed income securities or hold assets in cash or cash
equivalents.

Derivatives

Consistent with its objective, a 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.

Derivatives are most often used to manage investment risk or
to create an investment position indirectly because using them is
more efficient or less costly than direct investment that cannot
be readily established directly due to portfolio size, cash
availability, or other factors. They also may be used in an
effort to enhance portfolio returns.

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

No Fund currently intends to invest more than 5% of its net
assets in any type of Derivative except for options, futures
contracts, and futures options. (See Options and Futures below.)

Some mortgage-backed debt securities are of the "modified
pass-through type," which means the interest and principal
payments on mortgages in the pool are "passed through" to
investors. During periods of declining interest rates, there is
increased likelihood that mortgages will be prepaid, with a
resulting loss of the full-term benefit of any premium paid by the
Fund on purchase of such securities; in addition, the proceeds of
prepayment would likely be invested at lower interest rates.

Mortgage-backed securities provide either a pro rata interest
in underlying mortgages or an interest in collateralized mortgage
obligations ("CMOs") that represent a right to interest and/or
principal payments from an underlying mortgage pool. CMOs are not
guaranteed by either the U.S. Government or by its agencies or
instrumentalities, and are usually issued in multiple classes each
of which has different payment rights, prepayment risks, and yield
characteristics. Mortgage-backed securities involve the risk of
prepayment on the underlying mortgages at a faster or slower rate
than the established schedule. Prepayments generally increase
with falling interest rates and decrease with rising rates but
they also are influenced by economic, social, and market factors.
If mortgages are prepaid during periods of declining interest
rates, there would be a resulting loss of the full-term benefit of
any premium paid by the Fund on purchase of the CMO, and the
proceeds of prepayment would likely be invested at lower interest
rates.

Non-mortgage asset-backed securities usually have less
prepayment risk than mortgage-backed securities, but have the risk
that the collateral will not be available to support payments on
the underlying loans that finance payments on the securities
themselves.

Floating rate instruments provide for periodic adjustments in
coupon interest rates that are automatically reset based on
changes in amount and direction of specified market interest
rates. In addition, the adjusted duration of some of these
instruments may be materially shorter than their stated
maturities. To the extent such instruments are subject to
lifetime or periodic interest rate caps or floors, such
instruments may experience greater price volatility than debt
instruments without such features. Adjusted duration is an
inverse relationship between market price and interest rates and
refers to the approximate percentage change in price for a 100
basis point change in yield. For example, if interest rates
decrease by 100 basis points, a market price of a security with an
adjusted duration of 2 would increase by approximately 2%.

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, Stein Roe will consider substantially the same
criteria that would be considered in purchasing the underlying
stock. While convertible securities purchased by a Fund are
frequently rated investment grade, a Fund may purchase unrated
securities or securities rated below investment grade if the
securities meet Stein Roe's other investment criteria.
Convertible securities rated below investment grade (a) tend to be
more sensitive to interest rate and economic changes, (b) may be
obligations of issuers who are less creditworthy than issuers of
higher quality convertible securities, and (c) may be more thinly
traded due to such securities being less well known to investors
than investment grade convertible securities, common stock or
conventional debt securities. As a result, Stein Roe's own
investment research and analysis tend to be more important in the
purchase of such securities than other factors.

Foreign Securities

Each Fund may invest up to 25% of its total assets in foreign
securities, which may entail a greater degree of risk (including
risks relating to exchange rate fluctuations, tax provisions, or
expropriation of assets) than investment in securities of domestic
issuers. For this purpose, foreign securities do not include
American Depositary Receipts (ADRs) or securities guaranteed by a
United States person. ADRs are receipts typically issued by an
American bank or trust company evidencing ownership of the
underlying securities. A Fund may invest in sponsored or
unsponsored ADRs. In the case of an unsponsored ADR, a Fund is
likely to bear its proportionate share of the expenses of the
depositary and it may have greater difficulty in receiving
shareholder communications than it would have with a sponsored
ADR. No Fund intends to invest, nor during the past fiscal year
has any Fund invested, more than 5% of its net assets in
unsponsored ADRs.

As of Sept. 30, 1999, holdings of foreign companies, as a
percentage of net assets, were as follows: Growth & Income
Portfolio, 0.6% (none in foreign securities and 0.6% in ADRs); and
Growth Investor Portfolio, none.

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

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

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

Currency Exchange Transactions. Currency exchange
transactions may be conducted either on a spot (i.e., cash) basis
at the spot rate for purchasing or selling currency prevailing in
the foreign exchange market or through forward currency exchange
contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at
a specified future date (or within a specified time period) and
price set at the time of the contract. Forward contracts are
usually entered into with banks and broker-dealers, are not
exchange traded, and are usually for less than one year, but may
be renewed.

The Funds' foreign currency exchange transactions are limited
to transaction and portfolio hedging involving either specific
transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward contracts with respect to specific
receivables or payables of a Fund arising in connection with the
purchase and sale of its portfolio securities. Portfolio hedging
is the use of forward contracts with respect to portfolio security
positions denominated or quoted in a particular foreign currency.
Portfolio hedging allows the Fund to limit or reduce its exposure
in a foreign currency by entering into a forward contract to sell
such foreign currency (or another foreign currency that acts as a
proxy for that currency) at a future date for a price payable in
U.S. dollars so that the value of the foreign-denominated
portfolio securities can be approximately matched by a foreign-
denominated liability. A Fund may not engage in portfolio hedging
with respect to the currency of a particular country to an extent
greater than the aggregate market value (at the time of making
such sale) of the securities held in its portfolio denominated or
quoted in that particular currency, except that a Fund may hedge
all or part of its foreign currency exposure through the use of a
basket of currencies or a proxy currency where such currencies or
currency act as an effective proxy for other currencies. In such
a case, a Fund may enter into a forward contract where the amount
of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket
hedging technique may be more efficient and economical than
entering into separate forward contracts for each currency held in
a Fund. No Fund may engage in "speculative" currency exchange
transactions.

At the maturity of a forward contract to deliver a particular
currency, a Fund may either sell the portfolio security related to
such contract and make delivery of the currency, or it may retain
the security and either acquire the currency on the spot market or
terminate its contractual obligation to deliver the currency by
purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same
amount of the currency.

It is impossible to forecast with absolute precision the
market value of portfolio securities at the expiration of a
forward contract. Accordingly, it may be necessary for a Fund to
purchase additional currency on the spot market (and bear the
expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver
and if a decision is made to sell the security and make delivery
of the currency. Conversely, it may be necessary to sell on the
spot market some of the currency received upon the sale of the
portfolio security if its market value exceeds the amount of
currency a Fund is obligated to deliver.

If a Fund retains the portfolio security and engages in an
offsetting transaction, the Fund will incur a gain or a loss to
the extent that there has been movement in forward contract
prices. If a Fund engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between
a Fund's entering into a forward contract for the sale of a
currency and the date it enters into an offsetting contract for
the purchase of the currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward
prices increase, a Fund will suffer a loss to the extent the price
of the currency it has agreed to purchase exceeds the price of the
currency it has agreed to sell. A default on the contract would
deprive the Fund of unrealized profits or force the Fund to cover
its commitments for purchase or sale of currency, if any, at the
current market price.

Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Such
transactions also preclude the opportunity for gain if the value
of the hedged currency should rise. Moreover, it may not be
possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the devaluation level it
anticipates. The cost to a Fund of engaging in currency exchange
transactions varies with such factors as the currency involved,
the length of the contract period, and prevailing market
conditions. Since currency exchange transactions are usually
conducted on a principal basis, no fees or commissions are
involved.

Swaps, Caps, Floors and Collars

A Fund may enter into swaps and may purchase or sell related
caps, floors and collars. A Fund would enter into these
transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio, to protect
against currency fluctuations, as a duration management technique
or to protect against any increase in the price of securities it
purchases at a later date. The Funds intend to use these
techniques as hedges and not as speculative investments and will
not sell interest rate income stream a Fund may be obligated to
pay.

A swap agreement is generally individually negotiated and
structured to include exposure to a variety of different types of
investments or market factors. Depending on its structure, a swap
agreement may increase or decrease a Fund's exposure to changes in
the value of an index of securities in which the Fund might
invest, the value of a particular security or group of securities,
or foreign currency values. Swap agreements can take many
different forms and are known by a variety of names. A Fund may
enter into any form of swap agreement if Stein Roe determines it
is consistent with its investment objective and policies.

A swap agreement tends to shift a Fund's investment exposure
from one type of investment to another. For example, if a Fund
agrees to exchange payments in dollars at a fixed rate for
payments in a foreign currency the amount of which is determined
by movements of a foreign securities index, the swap agreement
would tend to increase exposure to foreign stock market movements
and foreign currencies. Depending on how it is used, a swap
agreement may increase or decrease the overall volatility of a
Fund's investments and its net asset value.

The performance of a swap agreement is determined by the
change in the specific currency, market index, security, or other
factors that determine the amounts of payments due to and from a
Fund. If a swap agreement calls for payments by a Fund, the Fund
must be prepared to make such payments when due. If the
counterparty's creditworthiness declines, the value of a swap
agreement would be likely to decline, potentially resulting in a
loss. A Fund will not enter into any swap, cap, floor or collar
transaction unless, at the time of entering into such transaction,
the unsecured long-term debt of the counterparty, combined with
any credit enhancements, is rated at least A by Standard & Poor's
or Moody's Investors Service, Inc. or has an equivalent rating
from a nationally recognized statistical rating organization or is
determined to be of equivalent credit quality by Stein Roe.

The purchase of a cap entitles the purchaser to receive
payments on a notional principal amount from the party selling the
cap to the extent that a specified index exceeds a predetermined
interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from
the party selling such floor to the extent that a specified index
falls below a predetermined interest rate or amount. A collar is
a combination of a cap and floor that preserves a certain return
within a predetermined range of interest rates or values.

At the time a Fund enters into swap arrangements or purchases
or sells caps, floors or collars, liquid assets of the Fund having
a value at least as great as the commitment underlying the
obligations will be segregated on the books of the Fund and held
by the custodian throughout the period of the obligation.

Lending of Portfolio Securities

Subject to restriction (5) under Investment Restrictions in
this SAI, a Fund may lend its portfolio securities to broker-
dealers and banks. Any such loan must be continuously secured by
collateral in cash or cash equivalents maintained on a current
basis in an amount at least equal to the market value of the
securities loaned by the Fund. The Fund would continue to receive
the equivalent of the interest or dividends paid by the issuer on
the securities loaned, and would also receive an additional return
that may be in the form of a fixed fee or a percentage of the
collateral. The Fund would have the right to call the loan and
obtain the securities loaned at any time on notice of not more
than five business days. The Fund would not have the right to
vote the securities during the existence of the loan but would
call the loan to permit voting of the securities if, in Stein
Roe's judgment, a material event requiring a shareholder vote
would otherwise occur before the loan was repaid. In the event of
bankruptcy or other default of the borrower, the Fund could
experience both delays in liquidating the loan collateral or
recovering the loaned securities and losses, including (a)
possible decline in the value of the collateral or in the value of
the securities loaned during the period while the Fund seeks to
enforce its rights thereto, (b) possible subnormal levels of
income and lack of access to income during this period, and (c)
expenses of enforcing its rights. No Fund loaned portfolio
securities during the fiscal year ended Sept. 30, 1999 nor does it
currently intend to loan more than 5% of its net assets.

Repurchase Agreements

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

When-Issued and Delayed-Delivery Securities; Reverse Repurchase
Agreements

A Fund may purchase securities on a when-issued or delayed-
delivery basis. Although the payment and interest terms of these
securities are established at the time a 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 make such commitments only with the intention of
actually acquiring the securities, but may sell the securities
before settlement date if Stein Roe deems it advisable for
investment reasons. No Fund had during its last fiscal year, nor
does any Fund currently intend to have, commitments to purchase
when-issued securities in excess of 5% of its net assets.

A Fund may enter into reverse repurchase agreements with
banks and securities dealers. A reverse repurchase agreement is a
repurchase agreement in which a Fund is the seller of, rather than
the investor in, securities and agrees to repurchase them at an
agreed-upon time and price. Use of a reverse repurchase agreement
may be preferable to a regular sale and later repurchase of
securities because it avoids certain market risks and transaction
costs. No Fund entered into reverse repurchase agreements during
the fiscal year ended Sept. 30, 1999.

At the time a Fund enters into a binding obligation to
purchase securities on a when-issued basis or enters into a
reverse repurchase agreement, liquid assets (cash, U.S. Government
securities or other "high-grade" debt obligations) of the Fund
having a value at least as great as the purchase price of the
securities to be purchased will be segregated on the books of the
Fund and held by the custodian throughout the period of the
obligation. The use of these investment strategies, as well as
borrowing under a line of credit as described below, may increase
net asset value fluctuation.

Short Sales "Against the Box"

A Fund may sell securities short against the box; that is,
enter into short sales of securities that it currently owns or has
the right to acquire through the conversion or exchange of other
securities that it owns at no additional cost. A Fund may make
short sales of securities only if at all times when a short
position is open it owns at least an equal amount of such
securities or securities convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the
securities sold short, at no additional cost.

In a short sale against the box, a Fund does not deliver from
its portfolio the securities sold. Instead, the Fund borrows the
securities sold short from a broker-dealer through which the short
sale is executed, and the broker-dealer delivers such securities,
on behalf of the Fund, to the purchaser of such securities. The
Fund is required to pay to the broker-dealer the amount of any
dividends paid on shares sold short. Finally, to secure its
obligation to deliver to such broker-dealer the securities sold
short, the Fund must deposit and continuously maintain in a
separate account with its custodian an equivalent amount of the
securities sold short or securities convertible into or
exchangeable for such securities at no additional cost. A Fund is
said to have a short position in the securities sold until it
delivers to the broker-dealer the securities sold. A Fund may
close out a short position by purchasing on the open market and
delivering to the broker-dealer an equal amount of the securities
sold short, rather than by delivering portfolio securities.

Short sales may protect a Fund against the risk of losses in
the value of its portfolio securities because any unrealized
losses with respect to such portfolio securities should be wholly
or partially offset by a corresponding gain in the short position.
However, any potential gains in such portfolio securities should
be wholly or partially offset by a corresponding loss in the short
position. The extent to which such gains or losses are offset
will depend upon the amount of securities sold short relative to
the amount the Fund owns, either directly or indirectly, and, in
the case where the Fund owns convertible securities, changes in
the conversion premium.

Short sale transactions involve certain risks. If the price
of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund
will incur a loss and if the price declines during this period,
the Fund will realize a short-term capital gain. Any realized
short-term capital gain will be decreased, and any incurred loss
increased, by the amount of transaction costs and any premium,
dividend or interest which the Fund may have to pay in connection
with such short sale. Certain provisions of the Internal Revenue
Code may limit the degree to which a Fund is able to enter into
short sales. There is no limitation on the amount of a Fund's
assets that, in the aggregate, may be deposited as collateral for
the obligation to replace securities borrowed to effect short
sales and allocated to segregated accounts in connection with
short sales. The Portfolios do not currently expect that more
than 5% of total assets would be involved in short sales against
the box.

Rule 144A Securities

A Fund may purchase securities that have been privately
placed but that are eligible for purchase and sale under Rule 144A
under the Securities Act of 1933. That Rule permits certain
qualified institutional buyers, such as a Fund, to trade in
privately placed securities that have not been registered for sale
under the 1933 Act. Stein Roe, under the supervision of the Board
of Trustees, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the restriction of investing
no more than 15% of its net assets in illiquid securities. A
determination of whether a Rule 144A security is liquid or not is
a question of fact. In making this determination, Stein Roe will
consider the trading markets for the specific security, taking
into account the unregistered nature of a Rule 144A security. In
addition, Stein Roe could consider the (1) frequency of trades and
quotes, (2) number of dealers and potential purchasers, (3) dealer
undertakings to make a market, and (4) nature of the security and
of marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of
transfer). The liquidity of Rule 144A securities would be
monitored and if, as a result of changed conditions, it is
determined that a Rule 144A security is no longer liquid, the
Fund's holdings of illiquid securities would be reviewed to
determine what, if any, steps are required to assure that the Fund
does not invest more than 15% of its assets in illiquid
securities. Investing in Rule 144A securities could have the
effect of increasing the amount of a Fund's assets invested in
illiquid securities if qualified institutional buyers are
unwilling to purchase such securities. No Fund expects to invest
as much as 5% of its total assets in Rule 144A securities that
have not been deemed to be liquid by Stein Roe.

Line of Credit

Subject to restriction (6) under Investment Restrictions in
this SAI, a Fund may establish and maintain a line of credit with
a major bank in order to permit borrowing on a temporary basis to
meet share redemption requests in circumstances in which temporary
borrowing may be preferable to liquidation of portfolio
securities.

Interfund Borrowing and Lending Program

Pursuant to an exemptive order issued by the Securities and
Exchange Commission, a Fund may lend money to and borrow money
from other mutual funds advised by Stein Roe. A Fund will borrow
through the program when borrowing is necessary and appropriate
and the costs are equal to or lower than the costs of bank loans.

Portfolio Turnover

Although the Funds do not purchase securities with a view to
rapid turnover, there are no limitations on the length of time
that portfolio securities must be held. Portfolio turnover can
occur for a number of reasons such as general conditions in the
securities markets, more favorable investment opportunities in
other securities, or other factors relating to the desirability of
holding or changing a portfolio investment. Because of the Funds'
flexibility of investment and emphasis on growth of capital, they
may have greater portfolio turnover than that of mutual funds that
have primary objectives of income or maintenance of a balanced
investment position. The future turnover rate may vary greatly
from year to year. A high rate of portfolio turnover in a Fund,
if it should occur, would result in increased transaction
expenses, which must be borne by that Fund. High portfolio
turnover may also result in the realization of capital gains or
losses and, to the extent net short-term capital gains are
realized, any distributions resulting from such gains will be
considered ordinary income for federal income tax purposes.

Options on Securities and Indexes

A Fund may purchase and sell put options and call options on
securities, indexes or foreign currencies in standardized
contracts traded on recognized securities exchanges, boards of
trade, or similar entities, or quoted on Nasdaq. A Fund may
purchase agreements, sometimes called cash puts, that may
accompany the purchase of a new issue of bonds from a dealer.

An option on a security (or index) is a contract that gives
the purchaser (holder) of the option, in return for a premium, the
right to buy from (call) or sell to (put) the seller (writer) of
the option the security underlying the option (or the cash value
of the index) at a specified exercise price at any time during the
term of the option (normally not exceeding nine months). The
writer of an option on an individual security or on a foreign
currency has the obligation upon exercise of the option to deliver
the underlying security or foreign currency upon payment of the
exercise price or to pay the exercise price upon delivery of the
underlying security or foreign currency. Upon exercise, the
writer of an option on an index is obligated to pay the difference
between the cash value of the index and the exercise price
multiplied by the specified multiplier for the index option. (An
index is designed to reflect specified facets of a particular
financial or securities market, a specific group of financial
instruments or securities, or certain economic indicators.)

A Fund will write call options and put options only if they
are "covered." For example, in the case of a call option on a
security, the option is "covered" if the Fund owns the security
underlying the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or,
if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its
custodian) upon conversion or exchange of other securities held in
its portfolio.

If an option written by a Fund expires, the Fund realizes a
capital gain equal to the premium received at the time the option
was written. If an option purchased by a Fund expires, the Fund
realizes a capital loss equal to the premium paid.

Prior to the earlier of exercise or expiration, an option may
be closed out by an offsetting purchase or sale of an option of
the same series (type, exchange, underlying security or index,
exercise price, and expiration). There can be no assurance,
however, that a closing purchase or sale transaction can be
effected when a Fund desires.

A Fund will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the
premium received from writing the option, or, if it is more, the
Fund will realize a capital loss. If the premium received from a
closing sale transaction is more than the premium paid to purchase
the option, the Fund will realize a capital gain or, if it is
less, the Fund will realize a capital loss. The principal factors
affecting the market value of a put or a call option include
supply and demand, interest rates, the current market price of the
underlying security or index in relation to the exercise price of
the option, the volatility of the underlying security or index,
and the time remaining until the expiration date.

A put or call option purchased by a Fund is an asset of the
Fund, valued initially at the premium paid for the option. The
premium received for an option written by a Fund is recorded as a
deferred credit. The value of an option purchased or written is
marked-to-market daily and is valued at the closing price on the
exchange on which it is traded or, if not traded on an exchange or
no closing price is available, at the mean between the last bid
and asked prices.

Risks Associated with Options on Securities and Indexes.
There are several risks associated with transactions in options.
For example, there are significant differences between the
securities markets, the currency markets, and the options markets
that could result in an imperfect correlation between these
markets, causing a given transaction not to achieve its
objectives. A decision as to whether, when and how to use options
involves the exercise of skill and judgment, and even a well-
conceived transaction may be unsuccessful to some degree because
of market behavior or unexpected events.

There can be no assurance that a liquid market will exist
when a Fund seeks to close out an option position. If a Fund were
unable to close out an option that it had purchased on a security,
it would have to exercise the option in order to realize any
profit or the option would expire and become worthless. If a Fund
were unable to close out a covered call option that it had written
on a security, it would not be able to sell the underlying
security until the option expired. As the writer of a covered
call option on a security, a Fund foregoes, during the option's
life, the opportunity to profit from increases in the market value
of the security covering the call option above the sum of the
premium and the exercise price of the call.

If trading were suspended in an option purchased or written
by a Fund, the Fund would not be able to close out the option. If
restrictions on exercise were imposed, the Fund might be unable to
exercise an option it has purchased.

Futures Contracts and Options on Futures Contracts

A Fund may use interest rate futures contracts, index futures
contracts, and foreign currency futures contracts. An interest
rate, index or foreign currency futures contract provides for the
future sale by one party and purchase by another party of a
specified quantity of a financial instrument or the cash value of
an index/2/ at a specified price and time. A public market exists
in futures contracts covering a number of indexes (including, but
not limited to: the Standard & Poor's 500 Index, the Value Line
Composite Index, and the New York Stock Exchange Composite Index)
as well as financial instruments (including, but not limited to:
U.S. Treasury bonds, U.S. Treasury notes, Eurodollar certificates
of deposit, and foreign currencies). Other index and financial
instrument futures contracts are available and it is expected that
additional futures contracts will be developed and traded.
- ---------------------
/2/ A futures contract on an index is an agreement pursuant to
which two parties agree to take or make delivery of an amount of
cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at
which the index contract was originally written. Although the
value of a securities index is a function of the value of certain
specified securities, no physical delivery of those securities is
made.
- ---------------------

A Fund may purchase and write call and put futures options.
Futures options possess many of the same characteristics as
options on securities, indexes and foreign currencies (discussed
above). A futures option gives the holder the right, in return
for the premium paid, to assume a long position (call) or short
position (put) in a futures contract at a specified exercise price
at any time during the period of the option. Upon exercise of a
call option, the holder acquires a long position in the futures
contract and the writer is assigned the opposite short position.
In the case of a put option, the opposite is true. A Fund might,
for example, use futures contracts to hedge against or gain
exposure to fluctuations in the general level of stock prices,
anticipated changes in interest rates or currency fluctuations
that might adversely affect either the value of the Fund's
securities or the price of the securities that the Fund intends to
purchase. Although other techniques could be used to reduce or
increase that Fund's exposure to stock price, interest rate and
currency fluctuations, the Fund may be able to achieve its
exposure more effectively and perhaps at a lower cost by using
futures contracts and futures options.

A Fund will only enter into futures contracts and futures
options that are standardized and traded on an exchange, board of
trade, or similar entity, or quoted on an automated quotation
system.

The success of any futures transaction depends on accurate
predictions of changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should
those predictions be incorrect, the return might have been better
had the transaction not been attempted; however, in the absence of
the ability to use futures contracts, Stein Roe might have taken
portfolio actions in anticipation of the same market movements
with similar investment results but, presumably, at greater
transaction costs.

When a purchase or sale of a futures contract is made by a
Fund, the Fund is required to deposit with its custodian (or
broker, if legally permitted) a specified amount of cash or U.S.
Government securities or other securities acceptable to the broker
("initial margin"). The margin required for a futures contract is
set by the exchange on which the contract is traded and may be
modified during the term of the contract. The initial margin is
in the nature of a performance bond or good faith deposit on the
futures contract, which is returned to the Fund upon termination
of the contract, assuming all contractual obligations have been
satisfied. A Fund expects to earn interest income on its initial
margin deposits. A futures contract held by a Fund is valued
daily at the official settlement price of the exchange on which it
is traded. Each day the Fund pays or receives cash, called
"variation margin," equal to the daily change in value of the
futures contract. This process is known as "marking-to-market."
Variation margin paid or received by a Fund does not represent a
borrowing or loan by the Fund but is instead settlement between
the Fund and the broker of the amount one would owe the other if
the futures contract had expired at the close of the previous day.
In computing daily net asset value, a Fund will mark-to-market its
open futures positions.

A Fund is also required to deposit and maintain margin with
respect to put and call options on futures contracts written by
it. Such margin deposits will vary depending on the nature of the
underlying futures contract (and the related initial margin
requirements), the current market value of the option, and other
futures positions held by the Fund.

Although some futures contracts call for making or taking
delivery of the underlying securities, usually these obligations
are closed out prior to delivery by offsetting purchases or sales
of matching futures contracts (same exchange, underlying security
or index, and delivery month). If an offsetting purchase price is
less than the original sale price, the Fund engaging in the
transaction realizes a capital gain, or if it is more, the Fund
realizes a capital loss. Conversely, if an offsetting sale price
is more than the original purchase price, the Fund engaging in the
transaction realizes a capital gain, or if it is less, the Fund
realizes a capital loss. The transaction costs must also be
included in these calculations.

Risks Associated with Futures

There are several risks associated with the use of futures
contracts and futures options. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in
the futures contract. In trying to increase or reduce market
exposure, there can be no guarantee that there will be a
correlation between price movements in the futures contract and in
the portfolio exposure sought. In addition, there are significant
differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a
given transaction not to achieve its objectives. The degree of
imperfection of correlation depends on circumstances such as:
variations in speculative market demand for futures, futures
options and the related securities, including technical influences
in futures and futures options trading and differences between the
securities market and the securities underlying the standard
contracts available for trading. For example, in the case of
index futures contracts, the composition of the index, including
the issuers and the weighting of each issue, may differ from the
composition of the Fund's portfolio, and, in the case of interest
rate futures contracts, the interest rate levels, maturities, and
creditworthiness of the issues underlying the futures contract may
differ from the financial instruments held in the Fund's
portfolio. A decision as to whether, when and how to use futures
contracts involves the exercise of skill and judgment, and even a
well-conceived transaction may be unsuccessful to some degree
because of market behavior or unexpected stock price or interest
rate trends.

Futures exchanges may limit the amount of fluctuation
permitted in certain futures contract prices during a single
trading day. The daily limit establishes the maximum amount that
the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of the current
trading session. Once the daily limit has been reached in a
futures contract subject to the limit, no more trades may be made
on that day at a price beyond that limit. The daily limit governs
only price movements during a particular trading day and therefore
does not limit potential losses because the limit may work to
prevent the liquidation of unfavorable positions. For example,
futures prices have occasionally moved to the daily limit for
several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of positions and subjecting
some holders of futures contracts to substantial losses. Stock
index futures contracts are not normally subject to such daily
price change limitations.

There can be no assurance that a liquid market will exist at
a time when a Fund seeks to close out a futures or futures option
position. The Fund would be exposed to possible loss on the
position during the interval of inability to close, and would
continue to be required to meet margin requirements until the
position is closed. In addition, many of the contracts discussed
above are relatively new instruments without a significant trading
history. As a result, there can be no assurance that an active
secondary market will develop or continue to exist.

Limitations on Options and Futures

If other options, futures contracts, or futures options of
types other than those described herein are traded in the future,
a Fund may also use those investment vehicles, provided the Board
of Trustees determines that their use is consistent with the
Fund's investment objective.

A Fund will not enter into a futures contract or purchase an
option thereon if, immediately thereafter, the initial margin
deposits for futures contracts held by that Fund plus premiums
paid by it for open futures option positions, less the amount by
which any such positions are "in-the-money,"/3/ would exceed 5% of
the Fund's total assets.
- ------------------
/3/ A call option is "in-the-money" if the value of the futures
contract that is the subject of the option exceeds the exercise
price. A put option is "in-the-money" if the exercise price
exceeds the value of the futures contract that is the subject of
the option.
- ------------------

When purchasing a futures contract or writing a put option on
a futures contract, a Fund must maintain with its custodian (or
broker, if legally permitted) cash or cash equivalents (including
any margin) equal to the market value of such contract. When
writing a call option on a futures contract, the Fund similarly
will maintain with its custodian cash or cash equivalents
(including any margin) equal to the amount by which such option is
in-the-money until the option expires or is closed out by the
Fund.

A Fund may not maintain open short positions in futures
contracts, call options written on futures contracts or call
options written on indexes if, in the aggregate, the market value
of all such open positions exceeds the current value of the
securities in its portfolio, plus or minus unrealized gains and
losses on the open positions, adjusted for the historical relative
volatility of the relationship between the portfolio and the
positions. For this purpose, to the extent the Fund has written
call options on specific securities in its portfolio, the value of
those securities will be deducted from the current market value of
the securities portfolio.

In order to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid being deemed a "commodity pool
operator," a Fund will use commodity futures or commodity options
contracts solely for bona fide hedging purposes within the meaning
and intent of Regulation 1.3(z), or, with respect to positions in
commodity futures and commodity options contracts that do not come
within the meaning and intent of 1.3(z), the aggregate initial
margin and premiums required to establish such positions will not
exceed 5% of the fair market value of the assets of a Fund, after
taking into account unrealized profits and unrealized losses on
any such contracts it has entered into [in the case of an option
that is in-the-money at the time of purchase, the in-the-money
amount (as defined in Section 190.01(x) of the Commission
Regulations) may be excluded in computing such 5%].

Taxation of Options and Futures

If a Fund exercises a call or put option that it holds, the
premium paid for the option is added to the cost basis of the
security purchased (call) or deducted from the proceeds of the
security sold (put). For cash settlement options and futures
options exercised by a Fund, the difference between the cash
received at exercise and the premium paid is a capital gain or
loss.

If a call or put option written by a Fund is exercised, the
premium is included in the proceeds of the sale of the underlying
security (call) or reduces the cost basis of the security
purchased (put). For cash settlement options and futures options
written by a Fund, the difference between the cash paid at
exercise and the premium received is a capital gain or loss.

Entry into a closing purchase transaction will result in
capital gain or loss. If an option written by a Fund was in-the-
money at the time it was written and the security covering the
option was held for more than the long-term holding period prior
to the writing of the option, any loss realized as a result of a
closing purchase transaction will be long-term. The holding
period of the securities covering an in-the-money option will not
include the period of time the option is outstanding.

If a Fund writes an equity call option/4/ other than a
"qualified covered call option," as defined in the Internal
Revenue Code, any loss on such option transaction, to the extent
it does not exceed the unrealized gains on the securities covering
the option, may be subject to deferral until the securities
covering the option have been sold.
- -------------
/4/ An equity option is defined to mean any option to buy or sell
stock, and any other option the value of which is determined by
reference to an index of stocks of the type that is ineligible to
be traded on a commodity futures exchange (e.g., an option
contract on a sub-index based on the price of nine hotel-casino
stocks). The definition of equity option excludes options on
broad-based stock indexes (such as the Standard & Poor's 500
index).
- -------------

A futures contract held until delivery results in capital
gain or loss equal to the difference between the price at which
the futures contract was entered into and the settlement price on
the earlier of delivery notice date or expiration date. If a Fund
delivers securities under a futures contract, the Fund also
realizes a capital gain or loss on those securities.

For federal income tax purposes, a Fund generally is required
to recognize as income for each taxable year its net unrealized
gains and losses as of the end of the year on futures, futures
options and non-equity options positions ("year-end mark-to-
market"). Generally, any gain or loss recognized with respect to
such positions (either by year-end mark-to-market or by actual
closing of the positions) is considered to be 60% long-term and
40% short-term, without regard to the holding periods of the
contracts. However, in the case of positions classified as part
of a "mixed straddle," the recognition of losses on certain
positions (including options, futures and futures options
positions, the related securities and certain successor positions
thereto) may be deferred to a later taxable year. Sale of futures
contracts or writing of call options (or futures call options) or
buying put options (or futures put options) that are intended to
hedge against a change in the value of securities held by a Fund:
(1) will affect the holding period of the hedged securities; and
(2) may cause unrealized gain or loss on such securities to be
recognized upon entry into the hedge.

If a Fund were to enter into a short index future, short
index futures option or short index option position and the Fund's
portfolio were deemed to "mimic" the performance of the index
underlying such contract, the option or futures contract position
and the Fund's stock positions would be deemed to be positions in
a mixed straddle, subject to the above-mentioned loss deferral
rules.

In order for a Fund to continue to qualify for federal income
tax treatment as a regulated investment company, at least 90% of
its gross income for a taxable year must be derived from
qualifying income; i.e., dividends, interest, income derived from
loans of securities, and gains from the sale of securities or
foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts). Any net gain
realized from futures (or futures options) contracts will be
considered gain from the sale of securities and therefore be
qualifying income for purposes of the 90% requirement.

Each Fund distributes to shareholders annually any net
capital gains that have been recognized for federal income tax
purposes (including year-end mark-to-market gains) on options and
futures transactions. Such distributions are combined with
distributions of capital gains realized on the Fund's other
investments, and shareholders are advised of the nature of the
payments.

The Taxpayer Relief Act of 1997 (the "Act") imposed
constructive sale treatment for federal income tax purposes on
certain hedging strategies with respect to appreciated securities.
Under these rules, taxpayers will recognize gain, but not loss,
with respect to securities if they enter into short sales of
"offsetting notional principal contracts" (as defined by the Act)
or futures or "forward contracts" (as defined by the Act) with
respect to the same or substantially identical property, or if
they enter into such transactions and then acquire the same or
substantially identical property. These changes generally apply
to constructive sales after June 8, 1997. Furthermore, the
Secretary of the Treasury is authorized to promulgate regulations
that will treat as constructive sales certain transactions that
have substantially the same effect as short sales, offsetting
notional principal contracts, and futures or forward contracts to
deliver the same or substantially similar property.

INVESTMENT RESTRICTIONS

The Funds and the Portfolios operate under the following
investment restrictions. No Fund or Portfolio may:

(1) with respect to 75% of its total assets, invest more than
5% of its total assets, taken at market value at the time of a
particular purchase, in the securities of a single issuer, except
for securities issued or guaranteed by the U. S. Government or any
of its agencies or instrumentalities or repurchase agreements for
such securities, and [Funds only] except that all or substantially
all of the assets of the Fund may be invested in another
registered investment company having the same investment objective
and substantially similar investment policies as the Fund;

(2) acquire more than 10%, taken at the time of a particular
purchase, of the outstanding voting securities of any one issuer,
[Funds only] except that all or substantially all of the assets of
the Fund may be invested in another registered investment company
having the same investment objective and substantially similar
investment policies as the Fund;

(3) act as an underwriter of securities, except insofar as it
may be deemed an underwriter for purposes of the Securities Act of
1933 on disposition of securities acquired subject to legal or
contractual restrictions on resale, [Funds only] except that all
or substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment
objective and substantially similar investment policies as the
Fund;

(4) purchase or sell real estate (although it may purchase
securities secured by real estate or interests therein, or
securities issued by companies which invest in real estate or
interests therein), commodities, or commodity contracts, except
that it may enter into (a) futures and options on futures and (b)
forward contracts;

(5) make loans, although it may (a) lend portfolio securities
and participate in an interfund lending program with other Stein
Roe Funds and Portfolios provided that no such loan may be made
if, as a result, the aggregate of such loans would exceed 33 1/3%
of the value of its total assets (taken at market value at the
time of such loans); (b) purchase money market instruments and
enter into repurchase agreements; and (c) acquire publicly
distributed or privately placed debt securities;

(6) borrow except that it may (a) borrow for nonleveraging,
temporary or emergency purposes, (b) engage in reverse repurchase
agreements and make other borrowings, provided that the
combination of (a) and (b) shall not exceed 33 1/3% of the value
of its total assets (including the amount borrowed) less
liabilities (other than borrowings) or such other percentage
permitted by law, and (c) enter into futures and options
transactions; it may borrow from banks, other Stein Roe Funds and
Portfolios, and other persons to the extent permitted by
applicable law;

(7) invest in a security if more than 25% of its total assets
(taken at market value at the time of a particular purchase) would
be invested in the securities of issuers in any particular
industry, except that this restriction does not apply to
securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, and [Funds only] except that all or
substantially all of the assets of the Fund may be invested in
another registered investment company having the same investment
objective and substantially similar investment policies as the
Fund; or

(8) issue any senior security except to the extent permitted
under the Investment Company Act of 1940.

The above restrictions are fundamental policies and may not
be changed without the approval of a "majority of the outstanding
voting securities" as defined above. Each Fund is also subject to
the following non-fundamental restrictions and policies, which may
be changed by the Board of Trustees. None of the following
restrictions shall prevent a Fund from investing all or
substantially all of its assets in another investment company
having the same investment objective and substantially the same
investment policies as the Fund. No Fund or Portfolio may:

(a) invest in any of the following: (i) interests in oil,
gas, or other mineral leases or exploration or development
programs (except readily marketable securities, including but not
limited to master limited partnership interests, that may
represent indirect interests in oil, gas, or other mineral
exploration or development programs); (ii) puts, calls, straddles,
spreads, or any combination thereof (except that it may enter into
transactions in options, futures, and options on futures); (iii)
shares of other open-end investment companies, except in
connection with a merger, consolidation, acquisition, or
reorganization; and (iv) limited partnerships in real estate
unless they are readily marketable;

(b) invest in companies for the purpose of exercising control
or management;

(c) purchase more than 3% of the stock of another investment
company or purchase stock of other investment companies equal to
more than 5% of its total assets (valued at time of purchase) in
the case of any one other investment company and 10% of such
assets (valued at time of purchase) in the case of all other
investment companies in the aggregate; any such purchases are to
be made in the open market where no profit to a sponsor or dealer
results from the purchase, other than the customary broker's
commission, except for securities acquired as part of a merger,
consolidation or acquisition of assets;

(d) invest more than 5% of its net assets (valued at time of
purchase) in warrants, nor more than 2% of its net assets in
warrants that are not listed on the New York or American Stock
Exchange;

(e) write an option on a security unless the option is issued
by the Options Clearing Corporation, an exchange, or similar
entity;

(f) invest more than 25% of its total assets (valued at time
of purchase) in securities of foreign issuers (other than
securities represented by American Depositary Receipts (ADRs) or
securities guaranteed by a U.S. person);

(g) purchase a put or call option if the aggregate premiums
paid for all put and call options exceed 20% of its net assets
(less the amount by which any such positions are in-the-money),
excluding put and call options purchased as closing transactions;

(h) purchase securities on margin (except for use of short-
term credits as are necessary for the clearance of transactions),
or sell securities short unless (i) it owns or has the right to
obtain securities equivalent in kind and amount to those sold
short at no added cost or (ii) the securities sold are "when
issued" or "when distributed" securities which it expects to
receive in a recapitalization, reorganization, or other exchange
for securities it contemporaneously owns or has the right to
obtain and provided that transactions in options, futures, and
options on futures are not treated as short sales;

(i) invest more than 5% of its total assets (taken at market
value at the time of a particular investment) in restricted
securities, other than securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933;

(j) invest more than 15% of its net assets (taken at market
value at the time of a particular investment) in illiquid
securities, including repurchase agreements maturing in more than
seven days.

ADDITIONAL INVESTMENT CONSIDERATIONS

Stein Roe seeks to provide superior long-term investment
results through a disciplined, research-intensive approach to
investment selection and prudent risk management. In working to
take sensible risks and make intelligent investments it has been
guided by three primary objectives which it believes are the
foundation of a successful investment program. These objectives
are preservation of capital, limited volatility through managed
risk, and consistent above-average returns as appropriate for the
particular client or managed account. Because every investor's
needs are different, Stein Roe mutual funds are designed to
accommodate different investment objectives, risk tolerance
levels, and time horizons. In selecting a mutual fund, investors
should ask the following questions:

What are my investment goals?
It is important to a choose a fund that has investment objectives
compatible with your investment goals.

What is my investment time frame?
If you have a short investment time frame (e.g., less than three
years), a mutual fund that seeks to provide a stable share price,
such as a money market fund, or one that seeks capital
preservation as one of its objectives may be appropriate. If you
have a longer investment time frame, you may seek to maximize your
investment returns by investing in a mutual fund that offers
greater yield or appreciation potential in exchange for greater
investment risk.

What is my tolerance for risk?
All investments, including those in mutual funds, have risks which
will vary depending on investment objective and security type.
However, mutual funds seek to reduce risk through professional
investment management and portfolio diversification.

In general, equity mutual funds emphasize long-term capital
appreciation and tend to have more volatile net asset values than
bond or money market mutual funds. Although there is no guarantee
that they will be able to maintain a stable net asset value of
$1.00 per share, money market funds emphasize safety of principal
and liquidity, but tend to offer lower income potential than bond
funds. Bond funds tend to offer higher income potential than
money market funds but tend to have greater risk of principal and
yield volatility.

MANAGEMENT

The Board of Trustees of the Trust has overall management
responsibility for the Trust and the Fund. The following table
sets forth certain information with respect to the trustees and
officers of the Trust:

Name, Age; Address; Position(s) held with the Trust. Principal
occupation(s) during past five years

William D. Andrews, 52; One South Wacker Drive, Chicago, IL 60606
(4); Executive Vice-President. Executive vice president of Stein
Roe

John A. Bacon Jr., 72; 4N640 Honey Hill Road, Box 296, Wayne, IL
60184 (3)(4). Trustee; Private investor

Christine Balzano, 34; 245 Summer Street, Boston, MA 02210; Vice-
President. Senior vice president of Liberty Funds Services, Inc.;
formerly vice president and assistant vice president

William W. Boyd, 72; 2900 Golf Road, Rolling Meadows, IL 60008
(2)(3)(4); Trustee. Chairman and director of Sterling Plumbing
(manufacturer of plumbing products)

David P. Brady, 35; One South Wacker Drive, Chicago, IL 60606
(4); Vice-President. Senior vice president of Stein Roe since
March 1998; vice president of Stein Roe from Nov. 1995 to March
1998; portfolio manager for Stein Roe since 1993

Daniel K. Cantor, 40; 1330 Avenue of the Americas, New York, NY
10019 (4); Vice-President. Senior vice president of Stein Roe

Kevin M. Carome, 43; One Financial Center, Boston, MA 02111 (4);
Executive Vice-President; Assistant Secretary. Senior vice
president, legal, Liberty Funds Group LLC (an affiliate of Stein
Roe) since Jan. 1999; general counsel and secretary of Stein Roe
since Jan. 1998; associate general counsel and vice president of
Liberty Financial Companies, Inc. (the indirect parent of Stein
Roe) through Jan. 1999

J. Kevin Connaughton, 35; 245 Summer Street, Boston, MA 02210 (4);
Vice-President; Treasurer. Vice president of Colonial Management
Associates, Inc. ("CMA") , since February 1998; senior tax
manager, Coopers & Lybrand, LLP from April 1996 to January 1998;
vice president, 440 Financial Group/First Data Investor Services
Group prior thereto

Lindsay Cook, 47; 600 Atlantic Avenue, Boston, MA 02210 (1)(2)(4);
Trustee. Executive vice president of Liberty Financial Companies,
Inc. since March 1997; senior vice president prior thereto

Michael G. Fisher, 30; 245 Summer Street, Boston, MA 02210 (4);
Vice-President. Tax manager with Liberty Funds Group since Oct.
1998; tax manager with PricewaterhouseCoopers LLC prior thereto

William M. Garrison, 33; One South Wacker Drive, Chicago, IL
60606; Vice-President. Vice president of Stein Roe since Feb.
1998; associate portfolio manager for Stein Roe since August 1994

Stephen E. Gibson, 46; One Financial Center, Boston, MA 02111 (4);
President. Vice chairman of Stein Roe since Aug. 1998; chairman,
CEO, president and director of Liberty Funds Group since Dec.
1998; chairman of the Colonial Group from July 1998 to Dec. 1998;
president of the Colonial Group from Dec. 1996 to Dec. 1998;
chairman of Colonial Management Associates, Inc. since Dec. 1998;
CEO, president and director of Colonial Management Associates
since July 1996; managing director of Putnam Financial Services
from June 1992 through June 1996

Erik P. Gustafson, 35; One South Wacker Drive, Chicago, IL 60606
(4); Vice-President. Senior portfolio manager of Stein Roe;
senior vice president of Stein Roe since April 1996; vice
president of Stein Roe prior thereto

Douglas A. Hacker, 43; P.O. Box 66100, Chicago, IL 60666 (3) (4);
Trustee. Senior vice president and chief financial officer of
UAL, Inc. (airline)

Loren A. Hansen, 51; One South Wacker Drive, Chicago, IL 60606
(4); Executive Vice-President. Chief investment officer/equity of
CMA since 1997; executive vice president of Stein Roe since Dec.
1995; vice president of The Northern Trust (bank) prior thereto

Harvey B. Hirschhorn, 49; One South Wacker Drive, Chicago, IL
60606 (4); Vice-President. Executive vice president, senior
portfolio manager, and chief economist and investment strategist
of Stein Roe; director of research of Stein Roe, 1991 to 1995

Timothy J. Jacoby, 47; One Financial Center, Boston, MA 02111 (4);
Senior Vice-President. Fund treasurer for Liberty Funds Group LLC
since Sept. 1996 and chief financial officer since Aug. 1997;
senior vice president of Fidelity Investments prior thereto

Janet Langford Kelly, 41; One Kellogg Square, Battle Creek, MI
49016 (3)(4); Trustee. Executive vice president-corporate
development, general counsel and secretary of Kellogg Company
since Sept. 1999; senior vice president, secretary and general
counsel of Sara Lee Corporation (branded, packaged, consumer-
products manufacturer) from 1995 to Aug. 1999; partner of Sidley &
Austin (law firm) prior thereto

Gail D. Knudsen, 37; 245 Summer Street, Boston, MA 02210 (4);
Vice-President; Controller. Vice president and assistant
controller of CMA

Lynn C. Maddox, 58; One South Wacker Drive, Chicago, IL 60606;
Vice-President. Senior vice president of Stein Roe

Mary D. McKenzie, 45; One Financial Center, Boston, MA 02111 (4);
Vice-President. President of Liberty Funds Services, Inc.

Arthur J. McQueen, 41; One South Wacker Drive, Chicago, IL 60606;
Vice-President. Senior vice president of Stein Roe

Charles R. Nelson, 57; Department of Economics, University of
Washington, Seattle, WA 98195 (3)(4); Trustee. Van Voorhis
Professor of Political Economy, Department of Economics of the
University of Washington

Nicholas S. Norton, 40; 12100 East Iliff Avenue, Aurora, CO 80014
(4); Vice-President. Senior vice president of Liberty Funds
Services, Inc. since Aug. 1999; vice president of Scudder Kemper,
Inc. from May 1994 to Aug. 1999

Nicolette D. Parrish, 50; One South Wacker Drive, Chicago, IL
60606 (4); Vice-President; Assistant Secretary. Senior legal
assistant and assistant secretary of Stein Roe

Thomas C. Theobald, 62; Suite 1300, 222 West Adams Street,
Chicago, IL 60606 (3)(4); Trustee. Managing director, William
Blair Capital Partners (private equity fund)

Heidi J. Walter, 32; One South Wacker Drive, Chicago, IL 60606
(4); Vice-President; Secretary. Vice president of Stein Roe since
March 1998; senior legal counsel for Stein Roe since Feb. 1998;
legal counsel for Stein Roe March 1995 to Jan. 1998; associate
with Beeler Schad & Diamond, PC (law firm) prior thereto

_________________________
(1) Trustee who is an "interested person" of the Trust and of
Stein Roe, as defined in the Investment Company Act of 1940.
(2) Member of the Executive Committee of the Board of Trustees,
which is authorized to exercise all powers of the Board with
certain statutory exceptions.
(3) Member of the Audit Committee of the Board, which makes
recommendations to the Board regarding the selection of
auditors and confers with the auditors regarding the scope and
results of the audit.
(4) This person holds the corresponding officer or trustee
position with SR&F Base Trust.

Certain of the trustees and officers of the Trust are
trustees or officers of other investment companies managed by
Stein Roe; and some of the officers are also officers of Liberty
Funds Distributor, Inc., the Fund's distributor.

Officers and trustees affiliated with Stein Roe serve without
any compensation from the Trust. In compensation for their
services to the Trust, trustees who are not "interested persons"
of the Trust or Stein Roe are paid an annual retainer plus an
attendance fee for each meeting of the Board or standing committee
thereof attended. The Trust has no retirement or pension plan.
The following table sets forth compensation paid during the fiscal
year ended Sept. 30, 1999 to each of the trustees:

Compensation from the
Stein Roe Fund Complex*
-----------------------
Aggregate Compensation Total Average
Name of Trustee from the Trust Compensation Per Series
- ------------------- -------------------- ------------ ----------
Thomas W. Butch** -0- -0- -0-
Lindsay Cook -0- -0- -0-
John A. Bacon Jr.** $25,500 $117,850 $2,562
William W. Boyd 22,450 104,100 2,263
Douglas A. Hacker 20,650 93,900 2,041
Janet Langford Kelly 22,450 103,400 2,248
Charles R. Nelson 22,450 103,900 2,259
Thomas C. Theobald 22,450 103,400 2,248
_______________
*At Sept. 30, 1999, the Stein Roe Fund Complex consisted of 12
series of the Trust, one series of Liberty-Stein Roe Funds
Trust, four series of Liberty-Stein Roe Funds Municipal Trust,
four series of Liberty-Stein Roe Funds Income Trust, five series
of Liberty-Stein Roe Advisor Trust, five series of SteinRoe
Variable Investment Trust, 12 portfolios of SR&F Base Trust,
Liberty-Stein Roe Advisor Floating Rate Fund, Liberty-Stein Roe
Institutional Floating Rate Income Fund, and Stein Roe Floating
Rate Limited Liability Company.
**Mr. Butch served as a trustee until Nov. 3, 1998; Mr. Bacon was
elected a trustee effective Nov. 3, 1998.

FINANCIAL STATEMENTS

Please refer to the September 30, 1999 Financial Statements
(management discussion, statements of assets and liabilities and
schedules of investments as of September 30, 1999 and the
statements of operations, changes in net assets, financial
highlights, and notes thereto) and the report of independent
accountants contained in the September 30, 1999 Annual Report.
The Financial Statements and the report of independent accountants
are incorporated herein by reference. The Annual Report may be
obtained at no charge by telephoning 800-338-2550.

PRINCIPAL SHAREHOLDERS

As of August 31, 1999, the only persons known by the Trust to
own of record or "beneficially" 5% or more of the outstanding
shares of a Fund within the definition of that term as contained
in Rule 13d-3 under the Securities Exchange Act of 1934 were as
follows:

Approximate % of
Outstanding
Name and Address Fund Shares Held
- ----------------------- ---------------------- ----------------

U.S. Bank National Growth & Income Fund 15.40%
Association (1) Growth Investor Fund 37.77%
410 N. Michigan Avenue
Chicago, IL 60611

Charles Schwab & Co. Growth & Income Fund 31.00%
Inc. Special Custody
Account for the
Exclusive Benefit of
Customers (2)
Attn Mutual Funds
101 Montgomery Street
San Francisco., CA 94104-4122
____________________________________
(1) Shares held as custodian.
(2) Shares held for accounts of customers.

The following table shows shares of the Funds held by the
categories of persons indicated as of August 31, 1999, and in each
case the approximate percentage of outstanding shares represented:

Clients of Stein Roe Trustees and
in their Client Accounts* Officers
------------------------ -------------------
Shares Held Percent Shares Held Percent
----------- ------- ----------- -------
Growth & Income Fund 2,386,627 16.33% 21,095 **
Growth Investor Fund 51,668 4.50% 3,511 **

_________________________
*Stein Roe may have discretionary authority over such shares and,
accordingly, they could be deemed to be owned "beneficially" by
Stein Roe under Rule 13d-3. However, Stein Roe disclaims actual
beneficial ownership of such shares.
**Represents less than 1% of the outstanding shares.

INVESTMENT ADVISORY AND OTHER SERVICES

Stein Roe & Farnham Incorporated provides investment
management services to each Portfolio and administrative services
to each Fund and each Portfolio. Stein Roe is a wholly owned
subsidiary of SteinRoe Services Inc. ("SSI"), the Fund's transfer
agent, which is a wholly owned subsidiary of Liberty Financial
Companies, Inc. ("Liberty Financial"), which is a majority owned
subsidiary of Liberty Corporate Holdings, Inc., which is a wholly
owned subsidiary of LFC Holdings, Inc., which is a wholly owned
subsidiary of Liberty Mutual Equity Corporation, which is a wholly
owned subsidiary of Liberty Mutual Insurance Company. Liberty
Mutual Insurance Company is a mutual insurance company,
principally in the property/casualty insurance field, organized
under the laws of Massachusetts in 1912.

The directors of Stein Roe are Kenneth R. Leibler and C.
Allen Merritt, Jr. Mr. Leibler is President and Chief Executive
Officer of Liberty Financial; and Mr. Merritt is Chief Operating
Officer of Liberty Financial. The business address of Messrs.
Leibler and Merritt is 600 Atlantic Avenue, Boston, MA 02210.

Stein Roe Counselor [service mark] is a professional
investment advisory service offered by Stein Roe to Fund
shareholders. Stein Roe Counselor [service mark] is designed to
help shareholders construct Fund investment portfolios to suit
their individual needs. Based on information shareholders provide
about their financial goals and objectives in response to a
questionnaire, Stein Roe's investment professionals create
customized portfolio recommendations. Shareholders participating
in Stein Roe Counselor [service mark] are free to self direct
their investments while considering Stein Roe's recommendations.
In addition to reviewing shareholders' goals and objectives
periodically and updating portfolio recommendations to reflect any
changes, Stein Roe provides shareholders participating in these
programs with dedicated representatives. Other distinctive
services include specially designed account statements with
portfolio performance and transaction data, asset allocation
planning tools, newsletters, customized website content, and
regular investment, economic and market updates. A $50,000
minimum investment is required to participate in the program.

In return for its services, Stein Roe is entitled to receive
a monthly administrative fee from each Fund and a monthly
management fee from each non-feeder Fund and each Portfolio. The
table below shows the annual rates of such fees as a percentage of
average net assets (shown in millions), gross fees paid for the
three most recent fiscal years, and any expense reimbursements by
Stein Roe:

<TABLE>
<CAPTION>
Year Year Year
Current Rates Ended Ended Ended
Fund/Portfolio Type (dollars shown in millions) 9/30/99 9/30/98 9/30/97
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Growth & Income
Fund Management N/A N/A N/A $ 484,689
Administrative .15% up to $500, .125%
next $500, .10% thereafter $ 616,797 $ 545,089 422,974
Growth & Income
Portfolio Management .60% up to $500, .55%
next $500, .50% thereafter 2,496,760 2,187,961 1,191,730
Growth Investor
Fund Administrative .15% up to $500, .125%
next $500, .10% thereafter 5,752 N/A N/A
Growth Investor
Portfolio Management .60% up to $500, .55%
next $500, .50% thereafter 5,415,558 3,758,114 1,567,638
</TABLE>

Stein Roe provides office space and executive and other
personnel to the Funds, and bears any sales or promotional
expenses. Each Fund pays all expenses other than those paid by
Stein Roe, including but not limited to printing and postage
charges, securities registration and custodian fees, and expenses
incidental to its organization.

The administrative agreement provides that Stein Roe shall
reimburse the Fund to the extent that total annual expenses of the
Fund (including fees paid to Stein Roe, but excluding taxes,
interest, commissions and other normal charges incident to the
purchase and sale of portfolio securities, and expenses of
litigation to the extent permitted under applicable state law)
exceed the applicable limits prescribed by any state in which
shares of the Fund are being offered for sale to the public;
provided, however, Stein Roe is not required to reimburse a Fund
an amount in excess of fees paid by the Fund under that agreement
for such year. In addition, in the interest of further limiting
expenses of a Fund, Stein Roe may voluntarily waive its fees
and/or absorb certain expenses, as described under The Funds-Your
Expenses in the Prospectus. Any such reimbursement will enhance
the yield of such Fund.

Each management agreement provides that neither Stein Roe,
nor any of its directors, officers, stockholders (or partners of
stockholders), agents, or employees shall have any liability to
the Trust or any shareholder of the Trust for any error of
judgment, mistake of law or any loss arising out of any
investment, or for any other act or omission in the performance by
Stein Roe of its duties under the agreement, except for liability
resulting from willful misfeasance, bad faith or gross negligence
on its part in the performance of its duties or from reckless
disregard by it of its obligations and duties under the agreement.

Any expenses that are attributable solely to the
organization, operation, or business of a series of the Trust are
paid solely out of the assets of that series. Any expenses
incurred by the Trust that are not solely attributable to a
particular series are apportioned in such manner as Stein Roe
determines is fair and appropriate, unless otherwise specified by
the Board of Trustees.

Bookkeeping and Accounting Agreement

Pursuant to a separate agreement with the Trust, Stein Roe
receives a fee for performing certain bookkeeping and accounting
services. For such services, Stein Roe receives an annual fee of
$25,000 per series plus .0025 of 1% of average net assets over $50
million. During the fiscal years ended Sept. 30, 1997, 1998 and
1999, Stein Roe received aggregate fees of $315,067, $358,936 and
$354,273, respectively, from the Trust for services performed
under this Agreement.

DISTRIBUTOR

Shares of the Funds are distributed by Liberty Funds
Distributor, Inc. (the "Distributor"), One Financial Center,
Boston, MA 02111, an indirect subsidiary of Liberty Financial,
under a Distribution Agreement. The Distribution Agreement
continues in effect from year to year, provided such continuance
is approved annually (i) by a majority of the trustees or by a
majority of the outstanding voting securities of the Trust, and
(ii) by a majority of the trustees who are not parties to the
Agreement or interested persons of any such party ("independent
trustees"). The Distributor has no obligation, as underwriter, to
buy Fund shares, and purchases shares only upon receipt of orders
from authorized financial service firms or investors. The Trust
has agreed to pay all expenses in connection with registration of
its shares with the Securities and Exchange Commission and
auditing and filing fees in connection with registration of its
shares under the various state blue sky laws and assumes the cost
of preparation of prospectuses and other expenses.

12b-1 Plans, Contingent Deferred Sales Charges, and Conversion of
Shares

The trustees of the Trust have adopted a plan pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Plan").
The Plan provides that, as compensation for personal service
and/or the maintenance of shareholder accounts, the Distributor
receives a service fee at an annual rate not to exceed 0.25% of
net assets attributed to each class of shares other than Class Z
and S shares. The Plan also provides that as compensation for the
promotion and distribution of shares of a Fund including its
expenses related to sale and promotion of Fund shares, the
Distributor receives from the Fund a fee at an annual rate not
exceeding 0.10% of the average net assets attributed to Class A
shares, and 0.75% of the average net assets attributed to each of
its Class B and Class C shares. The Plan further provides that,
as compensation for services and/or distribution, the Distributor
receives a fee at an annual rate not to exceed 0.25% of the
average net assets attributable to Class Z and S shares. At this
time, the Distributor has voluntarily agreed to limit the Class A
distribution fee to 0.05% annually. The Distributor may terminate
this voluntary limitation without shareholder approval. Class B
shares automatically convert to Class A shares approximately eight
years after the Class B shares are purchased. Class C, Class K,
and Class Z shares do not convert. The Distributor generally pays
this amount to institutions that distribute Fund shares and
provide services to the Funds and their shareholders. Those
institutions may use the payments for, among other purposes,
compensating employees engaged in sales and/or shareholder
servicing. The amount of fees paid by a Fund during any year may
be more or less than the cost of distribution or other services
provided to the Fund. NASD rules limit the amount of annual
distribution fees that may be paid by a mutual fund and impose a
ceiling on the cumulative sales charges paid. The Trust's Plan
complies with those rules.

The trustees believe that the Plan could be a significant
factor in the growth and retention of Fund assets resulting in a
more advantageous expense ratio and increased investment
flexibility which could benefit each class of shareholders. The
Plan will continue in effect from year to year so long as
continuance is specifically approved at least annually by a vote
of the trustees, including the independent trustees. The Plan may
not be amended to increase the fee materially without approval by
a vote of a majority of the outstanding voting securities of the
relevant class of shares and all material amendments of the Plan
must be approved by the trustees in the manner provided in the
foregoing sentence. The Plan may be terminated at any time by a
vote of a majority of the independent trustees or by a vote of a
majority of the outstanding voting securities of the relevant
Class of shares.

Each Fund offers five classes of shares (Class A, Class B,
Class C, Class Z, and Class S). The Funds may in the future offer
other classes of shares. Class Z and S shares are offered at net
asset value, subject to a Rule 12b-1 fee. Class A shares are
offered at net asset value plus a front-end sales charge to be
imposed at the time of purchase and are subject to a Rule 12b-1
fee. Class B shares are offered at net asset value subject to a
Rule 12b-1 fee and a declining contingent deferred sales charge on
redemptions made within six years of purchase. Class C shares are
offered at net asset value, subject to a Rule 12b-1 fee and a
contingent deferred sales charge on redemptions made within one
year of purchase. The contingent deferred sales charges are
described in the Prospectus.

No contingent deferred sales charge will be imposed on shares
derived from reinvestment of distributions or amounts representing
capital appreciation. In determining the applicability and rate
of any contingent deferred sales charge, it will be assumed that a
redemption is made first of shares representing capital
appreciation, next of shares representing reinvestment of
distributions, and finally of other shares held by the shareholder
for the longest time.

Eight years after the end of the month in which a Class B
share is purchased, such shares and a pro-rated portion of any
shares issued on the reinvestment of distributions will be
automatically invested into Class A shares of that Fund having an
equal value, which are not subject to the distribution or service
fee.

TRANSFER AGENT

SteinRoe Services Inc. ("SSI"), One South Wacker Drive,
Chicago, IL 60606, is the agent of the Trust for the transfer of
shares, disbursement of dividends, and maintenance of shareholder
accounting records. For performing these services, SSI receives
fees from each Fund based on an annual rate of 0.22% of average
net assets of Class S shares and 0.236% of Class A, B, C, and Z
shares. The Trust believes the charges by SSI to the Funds are
comparable to those of other companies performing similar
services. (See Investment Advisory and Other Services.) Under a
separate agreement, SSI also provides certain investor accounting
services to the Portfolios.

Some financial services firms ("FSF") or other intermediaries
having special selling arrangements with the Distributor,
including certain bank trust departments, wrap fee programs and
retirement plan service providers ("Intermediaries") that maintain
nominee accounts with the Funds for their clients who are Fund
shareholders, may be paid a fee from SSI for shareholder servicing
and accounting services they provide with respect to the
underlying Fund shares.

PURCHASES AND REDEMPTIONS

Purchases and redemptions are discussed in the Prospectus
under the heading Your Account, and that information is
incorporated herein by reference. It is the responsibility of any
investment dealers, banks, or other institutions, including
retirement plan service providers, through whom you purchase or
redeem shares to establish procedures insuring the prompt
transmission to the Trust of any order.

The Funds will accept unconditional orders for shares to be
executed at the public offering price based on the net asset value
per share next determined after the order is received in good
order. The public offering price is the net asset value plus the
applicable sales charge, if any. In the case of orders for
purchase of shares placed through FSFs or Intermediaries, the
public offering price will be determined on the day the order is
placed in good order, but only if the FSF or Intermediary receives
the order prior to the time at which shares are valued and
transmits it to the Fund before that day's transactions are
processed. If the FSF or Intermediary fails to transmit before
the Fund processes that day's transactions, the customer's
entitlement to that day's closing price must be settled between
the customer and the FSF or Intermediary. If the FSF or
Intermediary receives the order after the time at which the Fund
values its shares, the price will be based on the net asset value
determined as of the close of the NYSE on the next day it is open.
If funds for the purchase of shares are sent directly to the
Transfer Agent, they will be invested at the public offering price
next determined after receipt in good order. Payment for shares
of the Fund must be in U.S. dollars; if made by check, the check
must be drawn on a U.S. bank.

Each Fund receives the entire net asset value of shares sold.
For Class A shares, which are subject to an initial sales charge,
the Distributor's commission is the sales charge shown in the
Prospectus less any applicable FSF or Intermediary discount. The
FSF or Intermediary discount is the same for all FSFs or
Intermediaries, except that the Distributor retains the entire
sales charge on any sales made to a shareholder who does not
specify an FSF or Intermediary on the application, and except that
the Distributor may from time to time reallow additional amounts
to all or certain FSFs or Intermediaries. The Distributor
generally retains 100% of any asset-based sales charge
(distribution fee) or contingent deferred sales charge. Such
charges generally reimburse the Distributor for any up-front
and/or ongoing commissions paid to FSFs or Intermediaries.

Checks presented for the purchase of Fund shares which are
returned by the purchaser's bank will subject the purchaser to a
$15 service fee for each check returned.

The Transfer Agent acts as the shareholder's agent whenever
it receives instructions to carry out a transaction on the
shareholder's account. Upon receipt of instructions that shares
are to be purchased for a shareholder's account, the designated
FSF or Intermediary will receive the applicable sales commission.
Shareholders may change FSFs or Intermediaries at any time by
written notice to the Transfer Agent, provided the new FSF or
Intermediary has a sales agreement with the Distributor.

Determination of Net Asset Value

The net asset value per share for each Class is determined as
of the close of business (normally 3 p.m., Central time, or 4
p.m., Eastern time) on days on which the New York Stock Exchange
(the "NYSE") is open for trading. The NYSE is regularly closed on
Saturdays and Sundays and on New Year's Day, the third Monday in
January, the third Monday in February, Good Friday, the last
Monday in May, Independence Day, Labor Day, Thanksgiving, and
Christmas. If one of these holidays falls on a Saturday or
Sunday, the NYSE will be closed on the preceding Friday or the
following Monday, respectively. Net asset value will not be
determined on days when the NYSE is closed unless, in the judgment
of the Board of Trustees, net asset value of a Fund should be
determined on any such day, in which case the determination will
be made at 3 p.m., Central time.

A Portfolio may invest in securities that are listed
primarily on foreign exchanges that are open and allow trading on
days on which the Funds do not determine net asset value. This
may significantly affect the net asset value of a Fund's
redeemable securities on days when an investor cannot redeem such
securities. Debt securities generally are valued by a pricing
service which determines valuations based upon market transactions
for normal, institutional-size trading units of similar
securities. However, in circumstances where such prices are not
available or where Stein Roe deems it appropriate to do so, an
over-the-counter or exchange bid quotation is used. Securities
listed on an exchange or on Nasdaq are valued at the last sale
price. Listed securities for which there were no sales during the
day and unlisted securities are valued at the last quoted bid
price. Options are valued at the last sale price or in the
absence of a sale, the mean between the last quoted bid and
offering prices. Short-term obligations with a maturity of 60
days or less are valued at amortized cost pursuant to procedures
adopted by the Board of Trustees. The values of foreign
securities quoted in foreign currencies are translated into U.S.
dollars at the exchange rate for that day. Positions for which
there are no such valuations and other assets are valued at fair
value as determined in good faith under the direction of the Board
of Trustees.

Generally, trading in certain securities (such as foreign
securities) is substantially completed each day at various times
prior to the close of the NYSE. Trading on certain foreign
securities markets may not take place on all NYSE business days,
and trading on some foreign securities markets takes place on days
that are not NYSE business days and on which net asset value is
not calculated. The values of these securities used in
determining net asset value are computed as of such times. Also,
because of the amount of time required to collect and process
trading information as to large numbers of securities issues, the
values of certain securities (such as convertible bonds, U.S.
government securities, and tax-exempt securities) are determined
based on market quotations collected earlier in the day at the
latest practicable time prior to the close of the NYSE.
Occasionally, events affecting the value of such securities may
occur between such time and the close of the NYSE which will not
be reflected in the computation of the net asset value. If events
materially affecting the value of such securities occur during
such period, then these securities will be valued at their fair
value following procedures approved by the Board of Trustees.

The Trust intends to pay all redemptions in cash and is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or one percent of the net assets of the Trust during any
90-day period for any one shareholder. However, redemptions in
excess of such limit may be paid wholly or partly by a
distribution in kind of securities. If redemptions were made in
kind, the redeeming shareholders might incur transaction costs in
selling the securities received in the redemptions.

Due to the relatively high cost of maintaining smaller
accounts, the Trust may deduct $10 (payable to the Transfer Agent)
from accounts valued at less than $1,000 unless the account value
has dropped below $1,000 solely as a result of share depreciation.
An investor will be notified that the value of his account is less
than that minimum and allowed at least 60 days to bring the value
of the account up to at least $1,000 before the fee is deducted.
The Agreement and Declaration of Trust also authorizes the Trust
to redeem shares under certain other circumstances as may be
specified by the Board of Trustees.

The Trust reserves the right to suspend or postpone
redemptions of Fund shares during any period when: (a) trading on
the NYSE is restricted, as determined by the Securities and
Exchange Commission, or the NYSE is closed for other than
customary weekend and holiday closings; (b) the Securities and
Exchange Commission has by order permitted such suspension; or (c)
an emergency, as determined by the Securities and Exchange
Commission, exists, making disposal of portfolio securities or
valuation of net assets of a Fund not reasonably practicable.

Special Purchase Programs/Investor Services

The following special purchase programs/investor services may
be changed or eliminated at any time.

Fundamatic Program (Classes A, B and C only). As a
convenience to investors, Class A, B and C shares of the Funds may
be purchased through the Colonial Fundamatic Program.
Preauthorized monthly bank drafts or electronic funds transfer for
a fixed amount of at least $50 are used to purchase Fund shares at
the public offering price next determined after the Transfer Agent
receives the proceeds from the draft (normally the 5th or 20th of
each month, or the next business day thereafter). If your
Fundamatic purchase is by electronic funds transfer, you may
request the Fundamatic purchase for any day. Further information
and application forms are available from FSFs or Intermediaries or
from the Distributor.

Tax-Sheltered Retirement Plans (Classes A, B and C only).
The Distributor offers prototype tax-qualified plans, including
IRAs and pension and profit-sharing plans for individuals,
corporations, employees and the self-employed. The minimum
initial investment for a retirement account sponsored by the
Distributor is $25. The First National Bank of Boston is the
trustee of the Distributor's prototype plans and charges a $10
annual fee. Detailed information concerning these retirement
plans and copies of the retirement plans are available from the
Distributor.

Participants in other prototype retirement plans (other than
IRAs) also are charged a $10 annual fee unless the plan maintains
an omnibus account with the Transfer Agent. Participants in
prototype plans offered by the Distributor (other than IRAs) who
liquidate the total value of their account will also be charged a
$15 close-out processing fee payable to the Transfer Agent. The
fee is in addition to any applicable contingent deferred sales
charge. The fee will not apply if the participant uses the
proceeds to open an IRA Rollover account in any fund, or if the
plan maintains an omnibus account.

Consultation with a competent financial and tax advisor
regarding these plans and consideration of the suitability of Fund
shares as an investment under the Employee Retirement Income
Security Act of 1974 or otherwise is recommended.

Telephone Address Change Services. By calling the Transfer
Agent, shareholders, beneficiaries or their FSF or Intermediary of
record may change an address on a recorded telephone line.
Confirmations of address change will be sent to both the old and
the new addresses. Telephone redemption privileges are suspended
for 30 days after an address change is effected.

Colonial Cash Connection. Dividends and any other
distributions, including Systematic Withdrawal Plan (SWP)
payments, on Class A, Class B or Class C shares may be
automatically deposited to a shareholder's bank account via
electronic funds transfer. Shareholders wishing to avail
themselves of this electronic transfer procedure should complete
the appropriate sections of the Application.

Programs for Reducing or Eliminating Sales Charges

Right of Accumulation and Statement of Intent (Class A shares
only). Reduced sales charges on Class A shares can be effected by
combining a current purchase with prior purchases of Class A, B,
C, T, and Z shares of other funds managed by Colonial Management
Associates, Inc. or distributed by the Distributor (such funds
hereinafter referred to as "Colonial Funds"). The applicable
sales charged is based on the combined total of: (1) the current
purchase and (2) the value at the public offering price at the
close of business on the previous day of all Colonial Funds' Class
A shares held by the shareholder (except shares of any Colonial
money market fund, unless such shares were acquired by exchange
from Class A shares of another Colonial Fund other than a money
market fund and Class B, C, T and Z shares).

The Distributor must be promptly notified of each purchase
which entitles a shareholder to a reduced sales charge. Such
reduced sales charge will be applied upon confirmation of the
shareholder's holdings by the Transfer Agent. A Colonial Fund may
terminate or amend this right of Accumulation.

Any person may qualify for reduced sales charges on purchase
of Class A shares made within a 13-month period pursuant to a
Statement of Intent ("Statement"). A shareholder may include, as
an accumulation credit toward the completion of such Statement,
the value of all Class A, B, C, T and Z shares held by the
shareholder on the date of the Statement in the Trust's Funds and
Colonial Funds (except shares of any Colonial money market fund,
unless such shares were acquired by exchange from Class A shares
of another non-money market Colonial Fund). The value is
determined at the public offering price on the date of the
Statement. Purchases made through reinvestment of distributions
do not count toward satisfaction of the Statement.

During the term of a Statement, the Transfer Agent will hold
shares in escrow to secure payment of the higher sales charge
applicable to Class A shares actually purchased. Dividends and
capital gains will be paid on all escrowed shares and these shares
will be released when the amount indicated has been purchased. A
Statement does not obligate the investor to buy or the Fund to
sell the amount of the Statement.

If a shareholder exceeds the amount of the Statement and
reaches an amount which would qualify for a further quantity
discount, a retroactive price adjustment will be made at the time
of expiration of the Statement. The resulting difference in
offering price will purchase additional shares for the
shareholder's account at the then-current applicable offering
price. As a part of this adjustment, the FSF or Intermediary
shall return to the Distributor the excess commission previously
paid during the 13-month period.

If the amount of the Statement is not purchased, the
shareholder shall remit to the Distributor an amount equal to the
difference between the sales charge paid and the sales charge that
should have been paid. If the shareholder fails within 20 days
after a written request to pay such difference in sales charge,
the Transfer Agent will redeem that number of escrowed Class A
shares equal to such difference. The additional amount of FSF or
Intermediary discount from the applicable offering price shall be
remitted to the shareholder's FSF or Intermediary of record.

Additional information about and the terms of Statements of
Intent are available from your FSF or Intermediary or from the
Transfer Agent at 1-800-345-6611.

Reinstatement Privilege. An investor who has redeemed Fund
shares may, upon request, reinstate within one year a portion or
all of the proceeds of such sale in shares of the same class of
that Fund at the net asset value next determined after the
Transfer Agent receives a written reinstatement request and
payment. Any contingent deferred sales charge paid at the time of
the redemption will be credited to the shareholder upon
reinstatement. The period between the redemption and the
reinstatement will not be counted in aging the reinstated shares
for purposes of calculating any contingent deferred sales charge
or conversion date. Investors who desire to exercise this
privilege should contact their FSF or Intermediary or the
Distributor. Shareholders may exercise this privilege an
unlimited number of times. Exercise of this privilege does not
alter the federal income tax treatment of any capital gains
realized on the prior sale of Fund shares, but to the extent any
such shares were sold at a loss, some or all of the loss may be
disallowed for tax purposes. Consult your tax advisor.

Shareholders may reinvest all or a portion of a recent cash
distribution without a sales charge. A shareholder request must
be received within 30 calendar days of the distribution. A
shareholder may exercise this privilege only once. No charge is
currently made for reinvestment.

Privileges of Adviser Employees, FSFs or Intermediaries
(Class A shares only). Class A shares may be sold at net asset
value to the following individuals whether currently employed or
retired: Trustees of funds advised or administered by Stein Roe
or an affiliate of Stein Roe; directors, officers and employees of
Stein Roe or an affiliate of Stein Roe, including the Transfer
Agent and the Distributor; registered representatives and
employees of FSFs or Intermediaries (including their affiliates)
that are parties to dealer agreements or other sales arrangements
with the Distributor; and such persons' families and their
beneficial accounts.

Sponsored Arrangements (Class A shares only). Class A shares
may be purchased at reduced or no sales charge pursuant to
sponsored arrangements, which include programs under which an
organization makes recommendations to, or permits group
solicitation of, its employees, members or participants in
connection with the purchase of Fund shares on an individual
basis. The amount of the sales charge reduction will reflect the
anticipated reduction in sales expense associated with sponsored
arrangements. The reduction in sales expense, and therefore the
reduction in sales charge, will vary depending on factors such as
the size and stability of the organization's group, the term of
the organization's existence and certain characteristics of the
members of its group. The Fund reserves the right to revise the
terms of or to suspend or discontinue sales pursuant to sponsored
plans at any time.

Class A shares may also be purchased at reduced or no sales
charge by clients of dealers, brokers or registered investment
advisers that have entered into agreements with the Distributor
pursuant to which the Fund is included as an investment option in
programs involving fee-based compensation arrangements.

Waiver of Contingent Deferred Sales Charges (Class A accounts
in excess of $1,000,000, and Classes B and C). Contingent
deferred sales charges may be waived on redemptions in the
following situations with the proper documentation:

1. Death. Contingent deferred sales charges may be waived on
redemptions within one year following the death of (i) the sole
shareholder on an individual account, (ii) a joint tenant where
the surviving joint tenant is the deceased's spouse, or (iii) the
beneficiary of a Uniform Gifts to Minors Act ("UGMA"), Uniform
Transfers to Minors Act ("UTMA") or other custodial account. If,
upon the occurrence of one of the foregoing, the account is
transferred to an account registered in the name of the deceased's
estate, the contingent deferred sales charge will be waived on any
redemption from the estate account occurring within one year after
the death. If the shares are not redeemed within one year of the
death, they will remain subject to the applicable contingent
deferred sales charge, when redeemed from the transferee's
account. If the account is transferred to a new registration and
then a redemption is requested, the applicable contingent deferred
sales charge will be charged.

2. Systematic Withdrawal Plan (SWP). Contingent deferred sales
charges may be waived on redemptions occurring pursuant to a
monthly, quarterly or semiannual SWP established with the Transfer
Agent, to the extent the redemptions do not exceed, on an annual
basis, 12% of the account's value, so long as at the time of the
first SWP redemption the account had distributions reinvested for
a period at least equal to the period of the SWP (e.g., if it is a
quarterly SWP, distributions must have been reinvested at least
for the three month period prior to the first SWP redemption);
otherwise contingent deferred sales charges will be charged on SWP
redemptions until this requirement is met; this requirement does
not apply to Class B or C accounts if the SWP is set up at the
time the account is established, and distributions are being
reinvested. See below under How to Sell Shares-Systematic
Withdrawal Plan.

3. Disability. Contingent deferred sales charges may be waived
on redemptions occurring within one year after the sole
shareholder on an individual account or a joint tenant on a
spousal joint tenant account becomes disabled (as defined in
Section 72(m)(7) of the Internal Revenue Code). To be eligible
for such waiver, (i) the disability must arise after the purchase
of shares and (ii) the disabled shareholder must have been under
age 65 at the time of the initial determination of disability. If
the account is transferred to a new registration and then a
redemption is requested, the applicable contingent deferred sales
charge will be charged.

4. Death of a trustee. Contingent deferred sales charges may be
waived on redemptions occurring upon dissolution of a revocable
living or grantor trust following the death of the sole trustee
where (i) the grantor of the trust is the sole trustee and the
sole life beneficiary, (ii) death occurs following the purchase
and (iii) the trust document provides for dissolution of the trust
upon the trustee's death. If the account is transferred to a new
registration (including that of a successor trustee), the
applicable contingent deferred sales charge will be charged upon
any subsequent redemption.

5. Returns on excess contributions. Contingent deferred sales
charges may be waived on redemptions required to return excess
contributions made to retirement plans or IRAs, so long as the FSF
or Intermediary agrees to return the applicable portion of any
commission paid by the Distributor.

6. Qualified Retirement Plans. Contingent deferred sales charges
may be waived on redemptions required to make distributions from
qualified retirement plans following (i) normal retirement (as
stated in the plan document) or (ii) separation from service. For
shares purchased in a prototype 401K plan after Sept. 1, 1997,
contingent deferred sales charges will not be waived upon
separation from service except if such plan is held in an omnibus
account. Contingent deferred sales charges also will be waived on
SWP redemptions made to make required minimum distributions from
qualified retirement plans that have invested in a Fund for at
least two years.

The contingent deferred sales charge also may be waived where
the FSF or Intermediary agrees to return all or an agreed upon
portion of the commission earned on the sale of the shares being
redeemed.

How to Sell ("Redeem") Shares

Shares may be sold on any day the NYSE is open, either
directly to a Fund or through an FSF or Intermediary. Sale
proceeds generally are sent within seven days (usually on the next
business day after your request is received in good form).
However, for shares recently purchased by check, the Fund will
delay sending proceeds for 15 days in order to protect the Fund
against financial losses and dilution in net asset value caused by
dishonored purchase payment checks. To avoid delays in payment,
investors are advised to purchase shares unconditionally, such as
by certified check or other immediately available funds.

To sell shares directly to a Fund, send a signed letter of
instruction to the Transfer Agent. The sale price is the net
asset value next determined (less any applicable contingent
deferred sales charge) after the Fund or an FSF or Intermediary
receives the request in proper form. Signatures must be
guaranteed by a bank, a member firm of a national stock exchange
or another eligible guarantor institution. Additional
documentation is required for sales by corporations, agents,
fiduciaries, surviving joint owners and IRA holders. Call the
Transfer Agent for more information at (800) 345-6611.

FSFs and Intermediaries must receive requests before the time
at which Fund shares are valued to receive that day's price, are
responsible for furnishing all necessary documentation to the
Transfer Agent and may charge for this service.

Systematic Withdrawal Plan (Class A, B and C shares). If a
shareholder's account balance is at least $5,000, the shareholder
may establish a SWP. A specified dollar amount or percentage of
the then-current net asset value of the shareholder's investment
in the Fund designated by the shareholder will be paid monthly,
quarterly or semiannually to a designated payee. The amount or
percentage the shareholder specifies generally may not, on an
annualized basis, exceed 12% of the value, as of the time the
shareholder makes the election of the shareholder's investment.
Withdrawals from Class B and C shares under a SWP will be treated
as redemptions of shares purchased through the reinvestment of
Fund distributions, or, to the extent such shares in the
shareholder's account are insufficient to cover plan payments, as
redemptions from the earliest purchased Fund shares in the
shareholder's account. No contingent deferred sales charges apply
to a redemption pursuant to a SWP of 12% or less, even if, after
giving effect to the redemption, the shareholder's account balance
is less than the shareholder's base amount. Qualified plan
participants who are required by Internal Revenue Code regulation
to withdraw more than 12%, on an annual basis, of the value of
their Class B or C share account may do so but will be subject to
a contingent deferred sales charge ranging from 1% to 5% of the
excess over 12%. If a shareholder wishes to participate in a SWP,
the shareholder must elect to have all income dividends and other
distributions payable in Fund shares rather than in cash.

A shareholder or its FSF or Intermediary of record may
establish a SWP account by telephone on a recorded line. However,
SWP checks will be payable only to the shareholder and sent to the
address of record. SWPs from retirement accounts cannot be
established by telephone.

Purchasing additional shares (other than through dividend and
distribution reinvestment) while receiving SWP payments is
ordinarily disadvantageous because of duplicative sales charges.
For this reason, a shareholder may not maintain a plan for the
accumulation of shares of a Fund (other than through the
reinvestment of dividends) and a SWP at the same time.

SWP payments are made through share redemptions, which may
result in a gain or loss for tax purposes, may involve the use of
principal and may eventually use up all of the shares in a
shareholder's account.

A Fund may terminate a shareholder's SWP if the shareholder's
account balance falls below $5,000 due to any transfer or
liquidation of shares other than pursuant to the SWP. SWP
payments will be terminated on receiving satisfactory evidence of
the death or incapacity of a shareholder. Until this evidence is
received, the Transfer Agent will not be liable for any payment
made in accordance with the provisions of a SWP.

The cost of administering SWPs for the benefit of
shareholders who participate in them is borne by the Funds as an
expense of all shareholders.

Shareholders whose positions are held in "street name" by
certain FSFs or Intermediaries may not be able to participate in a
SWP. If a shareholder's Fund shares are held in "street name,"
the shareholder should consult his or her FSF or Intermediary to
determine whether he or she may participate in a SWP.

Telephone Redemptions. Telephone redemption privileges are
described in the Prospectus.

Non-Cash Redemptions. For redemptions of any single
shareholder within any 90-day period exceeding the lesser of
$250,000 or 1% of a Fund's net asset value, the Fund may make the
payment or a portion of the payment with portfolio securities held
by the Fund instead of cash, in which case the redeeming
shareholder may incur brokerage and other costs in selling the
securities received.

How to Exchange Shares

With respect to Class A, Class B and Class C shares,
exchanges at net asset value may be made among shares of the same
class of any other fund that is a series of the Trust or of most
Colonial Funds. With respect to Class A shares, for a period of
90 days following the purchase of shares, exchanges at net asset
value may be made among Class A shares of Colonial Municipal Money
Market Fund or Colonial Government Money Market Fund (or its
successor). Thereafter, exchanges at net asset value may be made
among Class A shares of any other fund that is a series of the
Trust or of most Colonial Funds. For more information on the
Colonial Funds, see your FSF or Intermediary or call (800) 345-
6611.

With respect to Class K, Class Z, and Class S shares,
exchanges at net asset value may be made among shares of the same
class of any other fund that is a series of the Trust. Shares may
be exchanged on the basis of the net asset value per share at the
time of exchange and only one "round-trip" exchange of Class C
shares may be made per three-month period, measured from the date
of the initial purchase. Before exchanging into another fund, you
should obtain the prospectus for the fund in which you wish to
invest and read it carefully. Prospectuses of Colonial Funds are
available by calling (800) 426-3750. Consult the Transfer Agent
before requesting an exchange.

By calling the Transfer Agent, shareholders or their FSF or
Intermediary of record may exchange among accounts with identical
registrations, provided that the shares are held on deposit.
During periods of unusual market changes and/or shareholder
activity, shareholders may experience delays in contacting the
Transfer Agent by telephone to exercise the telephone exchange
privilege. Because an exchange involves a redemption and
reinvestment in another fund, completion of an exchange may be
delayed under unusual circumstances, such as if a Fund suspends
repurchases or postpones payment for Fund shares being exchanged
in accordance with federal securities law. The Transfer Agent
will also make exchanges upon receipt of a written exchange
request. If the shareholder is a corporation, partnership, agent,
or surviving joint owner, the Transfer Agent will require
customary additional documentation.

A loss to a shareholder may result from an unauthorized
transaction reasonably believed to have been authorized. No
shareholder is obligated to use the telephone to execute
transactions.

In all cases, the shares to be exchanged must be registered
on the records of the Fund in the name of the shareholder desiring
to exchange.

An exchange is a capital sale transaction for federal income
tax purposes. The exchange privilege may be revised, suspended or
terminated at any time.

CUSTODIAN

State Street Bank and Trust Company (the "Bank"), 225
Franklin Street, Boston, MA 02101, is the custodian for the Trust
and SR&F Base Trust. It is responsible for holding all securities
and cash, receiving and paying for securities purchased,
delivering against payment securities sold, receiving and
collecting income from investments, making all payments covering
expenses, and performing other administrative duties, all as
directed by authorized persons. The Bank does not exercise any
supervisory function in such matters as purchase and sale of
portfolio securities, payment of dividends, or payment of
expenses.

Portfolio securities purchased in the U.S. are maintained in
the custody of the Bank or of other domestic banks or
depositories. Portfolio securities purchased outside of the U.S.
are maintained in the custody of foreign banks and trust companies
that are members of the Bank's Global Custody Network and foreign
depositories ("foreign sub-custodians"). Each of the domestic and
foreign custodial institutions holding portfolio securities has
been approved by the Board of Trustees in accordance with
regulations under the Investment Company Act of 1940.

Each Board of Trustees reviews, at least annually, whether it
is in the best interests of each Fund, each Portfolio, and their
shareholders to maintain assets in each of the countries in which
a Fund or Portfolio invests with particular foreign sub-custodians
in such countries, pursuant to contracts between such respective
foreign sub-custodians and the Bank. The review includes an
assessment of the risks of holding assets in any such country
(including risks of expropriation or imposition of exchange
controls), the operational capability and reliability of each such
foreign sub-custodian, and the impact of local laws on each such
custody arrangement. Each Board of Trustees is aided in its
review by the Bank, which has assembled the network of foreign
sub-custodians, as well as by Stein Roe and counsel. However,
with respect to foreign sub-custodians, there can be no assurance
that a Fund and the value of its shares will not be adversely
affected by acts of foreign governments, financial or operational
difficulties of the foreign sub-custodians, difficulties and costs
of obtaining jurisdiction over or enforcing judgments against the
foreign sub-custodians, or application of foreign law to the
foreign sub-custodial arrangements. Accordingly, an investor
should recognize that the non-investment risks involved in holding
assets abroad are greater than those associated with investing in
the United States.

The Funds and the Portfolios may invest in obligations of the
Bank and may purchase or sell securities from or to the Bank.

INDEPENDENT ACCOUNTANTS

The independent accountants for the Funds and the Portfolios
are PricewaterhouseCoopers LLP, 160 Federal Street, Boston, MA
02110. The accountants audit and report on the annual financial
statements and provide tax return preparation services and
assistance and consultation in connection with the review of
various SEC filings.

PORTFOLIO TRANSACTIONS

Stein Roe places the orders for the purchase and sale of
portfolio securities and options and futures contracts for its
clients, including private clients and mutual fund clients
("Clients"). Stein Roe's overriding objective in selecting
brokers and dealers to effect portfolio transactions is to seek
the best combination of net price and execution. The best net
price, giving effect to brokerage commissions, if any, is an
important factor in this decision; however, a number of other
judgmental factors may also enter into the decision. These
factors include Stein Roe's knowledge of negotiated commission
rates currently available and other current transaction costs; the
nature of the security being purchased or sold; the size of the
transaction; the desired timing of the transaction; the activity
existing and expected in the market for the particular security;
confidentiality; the execution, clearance and settlement
capabilities of the broker or dealer selected and others
considered; Stein Roe's knowledge of the financial condition of
the broker or dealer selected and such other brokers and dealers;
and Stein Roe's knowledge of actual or apparent operation problems
of any broker or dealer.

Recognizing the value of these factors, Stein Roe may cause a
Client to pay a brokerage commission in excess of that which
another broker may have charged for effecting the same
transaction. Stein Roe has established internal policies for the
guidance of its trading personnel, specifying minimum and maximum
commissions to be paid for various types and sizes of transactions
and effected for Clients in those cases where Stein Roe has
discretion to select the broker or dealer by which the transaction
is to be executed. Stein Roe has discretion for all trades of the
Funds. Transactions which vary from the guidelines are subject to
periodic supervisory review. These guidelines are reviewed and
periodically adjusted, and the general level of brokerage
commissions paid is periodically reviewed by Stein Roe.
Evaluations of the reasonableness of brokerage commissions, based
on the factors described in the preceding paragraph, are made by
Stein Roe's trading personnel while effecting portfolio
transactions. The general level of brokerage commissions paid is
reviewed by Stein Roe, and reports are made annually to the Board
of Trustees.

Stein Roe maintains and periodically updates a list of
approved brokers and dealers which, in Stein Roe's judgment, are
generally capable of providing best price and execution and are
financially stable. Stein Roe's traders are directed to use only
brokers and dealers on the approved list, except in the case of
Client designations of brokers or dealers to effect transactions
for such Clients' accounts. Stein Roe generally posts certain
Client information on the "Alert" broker database system as a
means of facilitating the trade affirmation and settlement
process.

It is Stein Roe's practice, when feasible, to aggregate for
execution as a single transaction orders for the purchase or sale
of a particular security for the accounts of several Clients, in
order to seek a lower commission or more advantageous net price.
The benefit, if any, obtained as a result of such aggregation
generally is allocated pro rata among the accounts of Clients
which participated in the aggregated transaction. In some
instances, this may involve the use of an "average price"
execution wherein a broker or dealer to which the aggregated order
has been given will execute the order in several separate
transactions during the course of a day at differing prices and,
in such case, each Client participating in the aggregated order
will pay or receive the same price and commission, which will be
an average of the prices and commissions for the several separate
transactions executed by the broker or dealer.

Stein Roe sometimes makes use of an indirect electronic
access to the New York Stock Exchange's "SuperDOT" automated
execution system, provided through a NYSE member floor broker, W&D
Securities, Inc., a subsidiary of Jeffries & Co., Inc.,
particularly for the efficient execution of smaller orders in NYSE
listed equities. Stein Roe sometimes uses similar arrangements
through Billings & Co., Inc. and Driscoll & Co., Inc., floor
broker members of the Chicago Stock Exchange, for transactions to
be executed on that exchange. In using these arrangements, Stein
Roe must instruct the floor broker to refer the executed
transaction to another brokerage firm for clearance and
settlement, as the floor brokers do not deal with the public.
Transactions of this type sometimes are referred to as "step-in"
or "step-out" transactions. The brokerage firm to which the
executed transaction is referred may include, in the case of
transactions effected through W&D Securities, brokerage firms
which provide Stein Roe investment research or related services.

Stein Roe places certain trades for the Funds through its
affiliate AlphaTrade, Inc. ("ATI"). ATI is a wholly owned
subsidiary of Colonial Management Associates, Inc. ATI is a fully
disclosed introducing broker that limits its activities to
electronic execution of transactions in listed equity securities.
The Funds pay ATI a commission for these transactions. The Funds
have adopted procedures consistent with Investment Company Act
Rule 17e-1 governing such transactions. Certain of Stein Roe's
officers also serve as officers, directors and/or employees of
ATI.

Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking
best execution and such other policies as the trustees of the
Funds may determine, Stein Roe may consider sales of shares of
each of the Funds as a factor in the selection of broker-dealers
to execute such mutual fund securities transactions.

Investment Research Products and Services Furnished by Brokers and
Dealers

Stein Roe engages in the long-standing practice in the money
management industry of acquiring research and brokerage products
and services ("research products") from broker-dealer firms in
return directing trades for Client accounts to those firms. In
effect, Stein Roe is using the commission dollars generated from
these Client accounts to pay for these research products. The
money management industry uses the term "soft dollars" to refer to
this industry practice. Stein Roe may engage in soft dollar
transactions on trades for those Client accounts for which Stein
Roe has the discretion to select the broker-dealers.

The ability to direct brokerage for a Client account belongs
to the Client and not to Stein Roe. When a Client grants Stein
Roe the discretion to select broker-dealers for Client trades,
Stein Roe has a duty to seek the best combination of net price and
execution. Stein Roe faces a potential conflict of interest with
this duty when it uses Client trades to obtain soft dollar
products. This conflict exists because Stein Roe is able to use
the soft dollar products in managing its Client accounts without
paying cash ("hard dollars") for the product. This reduces Stein
Roe's expenses.

Moreover, under a provision of the federal securities laws
applicable to soft dollars, Stein Roe is not required to use the
soft dollar product in managing those accounts that generate the
trade. Thus, the Client accounts that generate the brokerage
commission used to acquire the soft dollar product may not benefit
directly from that product. In effect, those accounts are cross
subsidizing Stein Roe's management of the other accounts that do
benefit directly from the product. This practice is explicitly
sanctioned by a provision of the Securities Exchange Act of 1934,
which creates a "safe harbor" for soft dollar transactions
conducted in a specified manner. Although it is inherently
difficult, if not impossible, to document, Stein Roe believes that
over time most, if not all, Clients benefit from soft dollar
products such that cross subsidizations even out.

Stein Roe attempts to reduce or eliminate this conflict by
directing Client trades for soft dollar products only if Stein Roe
concludes that the broker-dealer supplying the product is capable
of providing a combination of the best net price and execution on
the trade. As noted above, the best net price, while significant,
is one of a number of judgmental factors Stein Roe considers in
determining whether a particular broker is capable of providing
the best net price and execution. Stein Roe may cause a Client
account to pay a brokerage commission in a soft dollar trade in
excess of that which another broker-dealer might have charged for
the same transaction.

Stein Roe acquires two types of soft dollar research
products: (i) proprietary research created by the broker-dealer
firm executing the trade and (ii) other products created by third
parties that are supplied to Stein Roe through the broker-dealer
firm executing the trade.

Proprietary research consists primarily of traditional
research reports, recommendations and similar materials produced
by the in house research staffs of broker-dealer firms. This
research includes evaluations and recommendations of specific
companies or industry groups, as well as analyses of general
economic and market conditions and trends, market data, contacts
and other related information and assistance. Stein Roe's
research analysts periodically rate the quality of proprietary
research produced by various broker-dealer firms. Based on these
evaluations, Stein Roe develops target levels of commission
dollars on a firm-by-firm basis. Stein Roe attempts to direct
trades to each firm to meet these targets.

Stein Roe also uses soft dollars to acquire products created
by third parties that are supplied to Stein Roe through broker-
dealers executing the trade (or other broker-dealers who "step in"
to a transaction and receive a portion of the brokerage commission
for the trade). These products include the following:

* Database Services-comprehensive databases containing current
and/or historical information on companies and industries.
Examples include historical securities prices, earnings
estimates, and SEC filings. These services may include software
tools that allow the user to search the database or to prepare
value-added analyses related to the investment process (such as
forecasts and models used in the portfolio management process).
* Quotation/Trading/News Systems-products that provide real time
market data information, such as pricing of individual
securities and information on current trading, as well as a
variety of news services.
* Economic Data/Forecasting Tools-various macro economic
forecasting tools, such as economic data and economic and
political forecasts for various countries or regions.
* Quantitative/Technical Analysis-software tools that assist in
quantitative and technical analysis of investment data.
* Fundamental Industry Analysis-industry-specific fundamental
investment research.
* Fixed Income Security Analysis-data and analytical tools that
pertain specifically to fixed income securities. These tools
assist in creating financial models, such as cash flow
projections and interest rate sensitivity analyses, that are
relevant to fixed income securities.
* Other Specialized Tools-other specialized products, such as
specialized economic consulting analyses and attendance at
investment oriented conferences.

Many third-party products include computer software or on-
line data feeds. Certain products also include computer hardware
necessary to use the product.

Certain of these third party services may be available
directly from the vendor on a hard dollar basis. Others are
available only through broker-dealer firms for soft dollars.
Stein Roe evaluates each product to determine a cash ("hard
dollars") value of the product to Stein Roe. Stein Roe then on a
product-by-product basis targets commission dollars in an amount
equal to a specified multiple of the hard dollar value to the
broker-dealer that supplies the product to Stein Roe. In general,
these multiples range from 1.25 to 1.85 times the hard dollar
value. Stein Roe attempts to direct trades to each firm to meet
these targets. (For example, if the multiple is 1.5:1.0, assuming
a hard dollar value of $10,000, Stein Roe will target to the
broker-dealer providing the product trades generating $15,000 in
total commissions.)

The targets that Stein Roe establishes for both proprietary
and for third party research products typically will reflect
discussions that Stein Roe has with the broker-dealer providing
the product regarding the level of commissions it expects to
receive for the product. However, these targets are not binding
commitments, and Stein Roe does not agree to direct a minimum
amount of commissions to any broker-dealer for soft dollar
products. In setting these targets, Stein Roe makes a
determination that the value of the product is reasonably
commensurate with the cost of acquiring it. These targets are
established on a calendar year basis. Stein Roe will receive the
product whether or not commissions directed to the applicable
broker-dealer are less than, equal to or in excess of the target.
Stein Roe generally will carry over target shortages and excesses
to the next year's target. Stein Roe believes that this practice
reduces the conflicts of interest associated with soft dollar
transactions, since Stein Roe can meet the non-binding
expectations of broker-dealers providing soft dollar products over
flexible time periods. In the case of third party products, the
third party is paid by the broker-dealer and not by Stein Roe.
Stein Roe may enter into a contract with the third party vendor to
use the product. (For example, if the product includes software,
Stein Roe will enter into a license to use the software from the
vendor.)

In certain cases, Stein Roe uses soft dollars to obtain
products that have both research and non-research purposes.
Examples of non-research uses are administrative and marketing
functions. These are referred to as "mixed use" products. As of
the date of this SAI, Stein Roe acquires two mixed use products.
These are (i) a fixed income security data service and (ii) a
mutual fund performance ranking service. In each case, Stein Roe
makes a good faith evaluation of the research and non-research
uses of these services. These evaluations are based upon the time
spent by Firm personnel for research and non-research uses. Stein
Roe pays the provider in cash ("hard dollars") for the non-
research portion of its use of these products.

Stein Roe may use research obtained from soft dollar trades
in the management of any of its discretionary accounts. Thus,
consistent with industry practice, Stein Roe does not require that
the Client account that generates the trade receive any benefit
from the soft dollar product obtained through the trade. As noted
above, this may result in cross subsidization of soft dollar
products among Client accounts. As noted therein, this practice
is explicitly sanctioned by a provision of the Securities Exchange
Act of 1934, which creates a "safe harbor" for soft dollar
transactions conducted in a specified manner.

In certain cases, Stein Roe will direct a trade to one
broker-dealer with the instruction that it execute the trade and
pay over a portion of the commission from the trade to another
broker-dealer who provides Stein Roe with a soft dollar research
product. The broker-dealer executing the trade "steps out" of a
portion of the commission in favor of the other broker-dealer
providing the soft dollar product. Stein Roe may engage in step
out transactions in order to direct soft dollar commissions to a
broker-dealer which provides research but may not be able to
provide best execution. Brokers who receive step out commissions
typically are brokers providing a third party soft dollar product
that is not available on a hard dollars basis. Stein Roe has not
engaged in step out transactions as a manner of compensating
broker-dealers that sell shares of investment companies managed by
Stein Roe.

The table below shows information on brokerage commissions
paid by the Funds and the Portfolios (brokerage commissions were
paid by the Fund prior to Feb. 3, 1997 and by its related
Portfolio since that date):

Growth & Growth
Income Investor
Portfolio Portfolio
Total amount of brokerage commissions paid
during fiscal year ended 9/30/99 $84,072 $2,204,246
Amount of commissions paid to brokers or
dealers who supplied research services
to Stein Roe 62,736 509,746
Total dollar amount involved in such
transactions (000 omitted) 160,775 1,334,432
Amount of commissions paid to brokers
or dealers that were allocated to
such brokers or dealers by the Fund's
portfolio manager because of research
services provided to the Fund 4,200 105,800
Total dollar amount involved in such
transactions (000 omitted) 17,996 88,249
Total amount of brokerage commissions
paid during fiscal year ended 9/30/98 100,196 807,008
Total amount of brokerage commissions
paid during fiscal year ended 9/30/97 120,469 512,584

Each Trust has arranged for its custodian to act as a
soliciting dealer to accept any fees available to the custodian as
a soliciting dealer in connection with any tender offer for
portfolio securities. The custodian will credit any such fees
received against its custodial fees. In addition, the Board of
Trustees has reviewed the legal developments pertaining to and the
practicability of attempting to recapture underwriting discounts
or selling concessions when portfolio securities are purchased in
underwritten offerings. However, the Board has been advised by
counsel that recapture by a mutual fund currently is not permitted
under the Rules of the Association of the National Association of
Securities Dealers.

During the last fiscal year, certain Funds and Portfolios
held securities issued by one or more of their regular broker-
dealers or the parent of such broker-dealers that derive more than
15% of gross revenue from securities-related activities. Such
holdings were as follows at Sept. 30, 1999:

Fund/Portfolio Broker-Dealer Value of Securities
Held (in thousands)
- -----------------------------------------------------------------
Growth & Income Associates Corp.
Portfolio of North America $18,430

Growth Investor Citigroup, Inc. 23,100
Portfolio The Goldman Sachs Group Inc. 10,034

ADDITIONAL INCOME TAX CONSIDERATIONS

Each Fund and Portfolio intends to qualify under Subchapter M
of the Internal Revenue Code and to comply with the special
provisions of the Internal Revenue Code that relieve it of federal
income tax to the extent of its net investment income and capital
gains currently distributed to shareholders.

Because dividend and capital gains distributions reduce net
asset value, a shareholder who purchases shares shortly before a
record date will, in effect, receive a return of a portion of his
investment in such distribution. The distribution would
nonetheless be taxable to him, even if the net asset value of
shares were reduced below his cost. However, for federal income
tax purposes the shareholder's original cost would continue as his
tax basis.

Each Fund expects that less than 100% of its dividends will
qualify for the deduction for dividends received by corporate
shareholders.

To the extent a Fund invests in foreign securities, it may be
subject to withholding and other taxes imposed by foreign
countries. Tax treaties between certain countries and the United
States may reduce or eliminate such taxes. Investors may be
entitled to claim U.S. foreign tax credits with respect to such
taxes, subject to certain provisions and limitations contained in
the Code. Specifically, if more than 50% of the Fund's total
assets at the close of any fiscal year consist of stock or
securities of foreign corporations, the Fund may file an election
with the Internal Revenue Service pursuant to which shareholders
of the Fund will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their
pro rata shares of foreign income taxes paid by the Fund even
though not actually received, (ii) treat such respective pro rata
shares as foreign income taxes paid by them, and (iii) deduct such
pro rata shares in computing their taxable incomes, or,
alternatively, use them as foreign tax credits, subject to
applicable limitations, against their United States income taxes.
Shareholders who do not itemize deductions for federal income tax
purposes will not, however, be able to deduct their pro rata
portion of foreign taxes paid by the Fund, although such
shareholders will be required to include their share of such taxes
in gross income. Shareholders who claim a foreign tax credit may
be required to treat a portion of dividends received from the Fund
as separate category income for purposes of computing the
limitations on the foreign tax credit available to such
shareholders. Tax-exempt shareholders will not ordinarily benefit
from this election relating to foreign taxes. Each year, the
Funds will notify shareholders of the amount of (i) each
shareholder's pro rata share of foreign income taxes paid by the
Fund and (ii) the portion of Fund dividends which represents
income from each foreign country, if the Fund qualifies to pass
along such credit.

INVESTMENT PERFORMANCE

A Fund may quote certain total return figures from time to
time. A "Total Return" on a per share basis is the amount of
dividends distributed per share plus or minus the change in the
net asset value per share for a period. A "Total Return
Percentage" may be calculated by dividing the value of a share at
the end of a period 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 computed by finding the average annual
compounded rate that would equate a hypothetical initial amount
invested of $1,000 to the ending redeemable value.

n
Average Annual Total Return is computed as follows: ERV = P(1+T)

Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period at the
end of the period (or fractional portion).

For example, for a $1,000 investment in a Fund, the "Total
Return," the "Total Return Percentage," and the "Average Annual
Total Return" at Sept. 30, 1999 were:

TOTAL RETURN AVERAGE ANNUAL
TOTAL RETURN PERCENTAGE TOTAL RETURN
------------ ------------- --------------
Growth & Income Fund
1 year $1,193 19.39% 19.39%
5 years 2,399 140.05 19.13
10 years 3,948 294.98 14.72

Growth Investor Fund
Life of Fund* 945 (5.50) (5.50)
_________
*Since inception on March 31, 1999.

Investment performance figures assume reinvestment of all
dividends and distributions and do not take into account any
federal, state, or local income taxes which shareholders must pay
on a current basis. They are not necessarily indicative of future
results. The performance of a Fund is a result of conditions in
the securities markets, portfolio management, and operating
expenses. Although investment performance information is useful
in reviewing a Fund's performance and in providing some basis for
comparison with other investment alternatives, it should not be
used for comparison with other investments using different
reinvestment assumptions or time periods.

A Fund may note its mention or recognition in newspapers,
magazines, or other media from time to time. However, the Funds
assume no responsibility for the accuracy of such data.
Newspapers and magazines which might mention the Funds include,
but are not limited to, the following:

Architectural Digest
Arizona Republic
Atlanta Constitution
Atlantic Monthly
Associated Press
Barron's
Bloomberg
Boston Globe
Boston Herald
Business Week
Chicago Tribune
Chicago Sun-Times
Cleveland Plain Dealer
CNBC
CNN
Crain's Chicago Business
Consumer Reports
Consumer Digest
Dow Jones Investment Advisor
Dow Jones Newswire
Fee Advisor
Financial Planning
Financial World
Forbes
Fortune
Fund Action
Fund Marketing Alert
Gourmet
Individual Investor
Investment Dealers' Digest
Investment News
Investor's Business Daily
Kiplinger's Personal Finance Magazine
Knight-Ridder
Lipper Analytical Services
Los Angeles Times
Louis Rukeyser's Wall Street
Money
Money on Line
Morningstar
Mutual Fund Market News
Mutual Fund News Service
Mutual Funds Magazine
Newsday
Newsweek
New York Daily News
The New York Times
No-Load Fund Investor
Pension World
Pensions and Investment
Personal Investor
Physicians Financial News
Jane Bryant Quinn (syndicated column)
Reuters
The San Francisco Chronicle
Securities Industry Daily
Smart Money
Smithsonian
Strategic Insight
Street.com
Time
Travel & Leisure
USA Today
U.S. News & World Report
Value Line
The Wall Street Journal
The Washington Post
Working Women
Worth
Your Money

In advertising and sales literature, a Fund may compare its
performance with that of other mutual funds, indexes or averages
of other mutual funds, indexes of related financial assets or
data, and other competing investment and deposit products
available from or through other financial institutions. The
composition of these indexes or averages differs from that of the
Funds. Comparison of a Fund to an alternative investment should
be made with consideration of differences in features and expected
performance. All of the indexes and averages noted below will be
obtained from the indicated sources or reporting services, which
the Funds believe to be generally accurate. All of the Funds may
compare their performance to the Consumer Price Index (All Urban),
a widely recognized measure of inflation. Each Fund's performance
may be compared to the following indexes or averages:

Dow-Jones Industrial Average New York Stock Exchange Composite
Index
Standard & Poor's 500 Stock American Stock Exchange Composite
Index Index
Standard & Poor's 400 Nasdaq Composite
Industrials Nasdaq Industrials
Russell 2000 Index
Wilshire 5000

(These indexes are widely (These indexes generally reflect
recognized indicators of the performance of stocks traded
general U.S. stock market in the indicated markets.)
results.)

In addition, the Funds may compare performance to the
indicated benchmarks:

Benchmark Fund(s)
- ------------------------------------------------------------------
Lipper Equity Fund Average Both Funds
Lipper General Equity Fund Average Both Funds
Lipper Growth & Income Fund Average Growth & Income Fund
Lipper Growth & Income Fund Index Growth & Income Fund
Lipper Growth Fund Average Growth Investor Fund
Lipper Growth Fund Index Growth Investor Fund
Morningstar All Equity Funds Average Both Funds
Morningstar Domestic Stock Average Both Funds
Morningstar Equity Fund Average Both Funds
Morningstar Growth & Income Fund Average Growth & Income Fund
Morningstar Growth Fund Average Growth Investor Fund
Morningstar Hybrid Fund Average Growth Investor Fund
Morningstar Total Fund Average Both Funds
Morningstar U.S. Diversified Average Growth Investor Fund

Lipper Growth Fund Index reflects the net asset value
weighted total return of the largest thirty growth funds and
thirty growth and income funds, respectively, as calculated and
published by Lipper. The Lipper and Morningstar averages are
unweighted averages of total return performance of mutual funds as
classified, calculated, and published by these independent
services that monitor the performance of mutual funds. The Funds
may also use comparative performance as computed in a ranking by
Lipper or category averages and rankings provided by another
independent service. Should Lipper or another service reclassify
a Fund to a different category or develop (and place a Fund into)
a new category, that Fund may compare its performance or ranking
with those of other funds in the newly assigned category, as
published by the service.

A Fund may also cite its rating, recognition, or other
mention by Morningstar or any other entity. Morningstar's rating
system is based on risk-adjusted total return performance and is
expressed in a star-rating format. The risk-adjusted number is
computed by subtracting a fund's risk score (which is a function
of the fund's monthly returns less the 3-month T-bill return) from
its load-adjusted total return score. This numerical score is
then translated into rating categories, with the top 10% labeled
five star, the next 22.5% labeled four star, the next 35% labeled
three star, the next 22.5% labeled two star, and the bottom 10%
one star. A high rating reflects either above-average returns or
below-average risk, or both.

Of course, past performance is not indicative of future
results.
________________

To illustrate the historical returns on various types of
financial assets, the Funds may use historical data provided by
Ibbotson Associates, Inc. ("Ibbotson"), a Chicago-based investment
firm. Ibbotson constructs (or obtains) very long-term (since
1926) total return data (including, for example, total return
indexes, total return percentages, average annual total returns
and standard deviations of such returns) for the following asset
types:

Common stocks
Small company stocks
Long-term corporate bonds
Long-term government bonds
Intermediate-term government bonds
U.S. Treasury bills
Consumer Price Index
_____________________

A Fund may also use hypothetical returns to be used as an
example in a mix of asset allocation strategies. One such example
is reflected in the chart below, which shows the effect of tax
deferral on a hypothetical investment. This chart assumes that an
investor invested $2,000 a year on January 1, for any specified
period, in both a Tax-Deferred Investment and a Taxable
Investment, that both investments earn either 6%, 8% or 10%
compounded annually, and that the investor withdrew the entire
amount at the end of the period. (A tax rate of 39.6% is applied
annually to the Taxable Investment and on the withdrawal of
earnings on the Tax-Deferred Investment.)

TAX-DEFERRED INVESTMENT VS. TAXABLE INVESTMENT

Interest
Rate 3% 5% 7% 9%
- --------------------------------------------
Compound-
ing
Years Tax-Deferred Investment
- ---- ------------------------------------
30 $82,955 $108,031 $145,856 $203,239
25 65,164 80,337 101,553 131,327
20 49,273 57,781 68,829 83,204
15 35,022 39,250 44,361 50,540
10 22,184 23,874 25,779 27,925
5 10,565 10,969 11,393 11,840
1 2,036 2,060 2,085 2,109

Interest
Rate 3% 5% 7% 9%
- -------------------------------------------
Compound-
ing
Years Taxable Investment
- ---- ----------------------------------
30 $80,217 $98,343 $121,466 $151,057
25 63,678 75,318 89,528 106,909
20 48,560 55,476 63,563 73,028
15 34,739 38,377 42,455 47,025
10 22,106 23,642 25,294 27,069
5 10,557 10,943 11,342 11,754
1 2,036 2,060 2,085 2,109

Dollar Cost Averaging. Dollar cost averaging is an
investment strategy that requires investing a fixed amount of
money in Fund shares at set intervals. This allows you to
purchase more shares when prices are low and fewer shares when
prices are high. Over time, this tends to lower your average cost
per share. Like any investment strategy, dollar cost averaging
can't guarantee a profit or protect against losses in a steadily
declining market. Dollar cost averaging involves uninterrupted
investing regardless of share price and therefore may not be
appropriate for every investor.

From time to time, a Fund may offer in its advertising and
sales literature to send an investment strategy guide, a tax
guide, or other supplemental information to investors and
shareholders. It may also mention the Stein Roe Counselor
[service mark] program and asset allocation and other investment
strategies.

MASTER FUND/FEEDER FUND: STRUCTURE AND RISK FACTORS

Each of Fund (which are series of the Trust, an open-end
management investment company) seeks to achieve its objective by
investing all of its assets in 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 Investment Advisory and Other
Services. Each feeder Fund bears its proportionate share of the
expenses of its master Portfolio.

Stein Roe 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
Aug. 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 the 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 the 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 nonfundamental 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. 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 in a
Portfolio. 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 the 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. 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.
Stein Roe may provide administrative or other services to one or
more of such investors.

APPENDIX-RATINGS

RATINGS IN GENERAL

A rating of a rating service represents the service's opinion
as to the credit quality of the security being rated. However,
the ratings are general and are not absolute standards of quality
or guarantees as to the creditworthiness of an issuer.
Consequently, Stein Roe believes that the quality of debt
securities invests should be continuously reviewed and that
individual analysts give different weightings to the various
factors involved in credit analysis. A rating is not a
recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a
particular investor. When a security has received a rating from
more than one service, each rating should be evaluated
independently. Ratings are based on current information furnished
by the issuer or obtained by the rating services from other
sources which they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability
of such information, or for other reasons.

The following is a description of the characteristics of
ratings of corporate debt securities used by Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's ("S&P").

RATINGS BY MOODY'S

Aaa. Bonds rated Aaa are judged to be the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or an exceptionally stable margin and principal is secure.
Although the various protective elements are likely to change,
such changes as can be visualized are more unlikely to impair the
fundamentally strong position of such bonds.

Aa. Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long-term risks appear somewhat larger than in Aaa bonds.

A. Bonds rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Baa. Bonds rated Baa are considered as medium grade obligations;
i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba. Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B. Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.

Caa. Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.

Ca. Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.

NOTE: Moody's applies numerical modifiers 1, 2, and 3 in
each generic rating classification from Aa through B in its
corporate bond rating system. The modifier 1 indicates that the
security ranks in the higher end of its generic rating category;
the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic
rating category.

RATINGS BY S&P

AAA. Debt rated AAA has the highest rating. Capacity to pay
interest and repay principal is extremely strong.

AA. Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in
small degree.

A. Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
debt in higher rated categories.

BBB. Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this
category than for debt in higher rated categories.

BB, B, CCC, CC, and C. Debt rated BB, B, CCC, CC, or C is
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with
the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

C1. This rating is reserved for income bonds on which no interest
is being paid.

D. Debt rated D is in default, and payment of interest and/or
repayment of principal is in arrears. The D rating is also used
upon the filing of a bankruptcy petition if debt service payments
are jeopardized.

NOTES:
The ratings from AA to CCC may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within the
major rating categories. Foreign debt is rated on the same basis
as domestic debt measuring the creditworthiness of the issuer;
ratings of foreign debt do not take into account currency exchange
and related uncertainties.

The "r" is attached to highlight derivative, hybrid, and certain
other obligations that S&P believes may experience high volatility
or high variability in expected returns due to non-credit risks.
Examples of such obligations are: securities whose principal or
interest return is indexed to equities, commodities, or
currencies; certain swaps and options; and interest only and
principal only mortgage securities. The absence of an "r" symbol
should not be taken as an indication that an obligation will
exhibit no volatility or variability in total return.
_______________________

<PAGE>

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS [Note: As used herein, the term "PEA"
refers to a post-effective amendment to the Registration
Statement of the Registrant on Form N-1A under the Securities
Act of 1933, No. 33-11351.]

(a) Restated Agreement and Declaration of Trust dated 8/17/99
as amended on 10/18/99. (Exhibit (a) to PEA #61.)*

(b)(1) By-Laws of Registrant as amended through February
3, 1993. (Exhibit 2 to PEA #34).*
(2) Amendment to By-Laws dated February 4, 1998.
(Exhibit 2(a) to PEA #45.)*

(d)(1) Management Agreement between Registrant and Stein Roe
& Farnham Incorporated dated 8/15/95, as amended
through 2/2/99. (Exhibit (d)(1) to PEA #58.)*
(2) Management Agreement between SR&F Base Trust and Stein
Roe & Farnham Incorporated dated 8/15/95, as amended
through 6/28/99. (Exhibit (d)(2) to PEA #59.)*
(3) Sub-Advisory Agreement among Registrant, Stein Roe &
Farnham Incorporated, and Newport Pacific Management,
Inc. dated 8/3/99 relating to the series Stein Roe
Asia Pacific Fund.(Exhibit (d)(3) to PEA #59.)*

(e)(1) Underwriting Agreement between Registrant and Liberty
Funds Distributor, Inc. dated 8/4/99. (Exhibit (e)(1)
to PEA #59.)*
(2) Specimen copy of selected dealer agreement. (Exhibit
6(b) to PEA #40.)*

(f) None.

(g) Custodian Contract between Registrant and State Street
Bank and Trust Company dated 3/3/87, as amended through
5/8/95.(Exhibit 8 to PEA #31.)*

(h)(1) Restated Transfer Agency Agreement between Registrant and
SteinRoe Services Inc. dated 8/1/95 as amended through
3/31/99. (Exhibit(h)(1) to PEA #58.)*
(2) Accounting and Bookkeeping Agreement between Registrant
and Stein Roe & Farnham Incorporated dated 8/3/99.
(Exhibit (h)(2) to PEA #59.)*
(3) Administrative Agreement between Registrant and Stein Roe
& Farnham Incorporated 8/15/95 as amended through 6/28/99.
(Exhibit (h)(3) to PEA #59.)*
(4) Sub-Transfer Agent Agreement with Liberty Funds Services,
Inc. (formerly named Colonial Investors Service Center)
dated 7/3/96, as amended through 3/31/99. (Exhibit (h)(4)
to PEA #58.)*

(i)(1) Opinions and consents of Ropes & Gray. (Exhibit
10(a) to PEA #34).*
(2) Opinions and consents of Bell, Boyd & Lloyd with
respect to SteinRoe Prime Equities (now named Stein
Roe Growth & Income Fund), Stein Roe Capital
Opportunities Fund, Stein Roe Special Fund,
SteinRoe Stock Fund (now named Stein Roe Growth
Stock Fund), SteinRoe Total Return Fund (now named
Stein Roe Balanced Fund), Stein Roe International
Fund, Stein Roe Young Investor Fund, and Stein Roe
Special Venture Fund. (Exhibit 10(b) to PEA #34).*
(3) Opinion and consent of Bell, Boyd & Lloyd with
respect to Stein Roe Growth Opportunities Fund.
(Exhibit 10(d) to PEA #39.)*
(4) Opinion and consent of Bell, Boyd & Lloyd with
respect to Stein Roe Large Company Focus Fund.
(Exhibit 10(e) to PEA #45.)*
(5) Opinion and consent of Bell, Boyd & Lloyd with
respect to Stein Roe Asia Pacific Fund. (Exhibit
10(f) to PEA #46.)*
(6) Opinion and consent of Bell, Boyd & Lloyd with
respect to Stein Roe Small Company Growth Fund.
(Exhibit (i)(6) to PEA #54.)*

(j)(1) Consent of Arthur Andersen LLP.
(2) Consent of Bell, Boyd & Lloyd. (Exhibit j(3) to PEA
#49.)*
(3) Consent of Morningstar, Inc. (Exhibit 11(b) to PEA
#34).*

(k) None.

(l) Inapplicable.

(m) Rule 12b-1 Plan.

(n) Rule 18f-3 Plan.

(o) (Miscellaneous.) Mutual Fund Application. (Exhibit (o)
to PEA #59.)*
- ------
*Incorporated by reference.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT.

The Registrant does not consider that it is directly or
indirectly controlling, controlled by, or under common control
with other persons within the meaning of this Item. See
"Investment Advisory and Other Services," "Management," and
"Transfer Agent" in the Statement of Additional Information,
each of which is incorporated herein by reference.

ITEM 25. INDEMNIFICATION.

Article Tenth of the Agreement and Declaration of Trust of
Registrant (Exhibit (a)), which Article is incorporated herein
by reference, provides that Registrant shall provide
indemnification of its trustees and officers (including each
person who serves or has served at Registrant's request as a
director, officer, or trustee of another organization in which
Registrant has any interest as a shareholder, creditor or
otherwise) ("Covered Persons") under specified circumstances.

Section 17(h) of the Investment Company Act of 1940 ("1940
Act") provides that neither the Agreement and Declaration of
Trust nor the By-Laws of Registrant, nor any other instrument
pursuant to which Registrant is organized or administered,
shall contain any provision which protects or purports to
protect any trustee or officer of Registrant against any
liability to Registrant or its shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. In accordance with
Section 17(h) of the 1940 Act, Article Tenth shall not protect
any person against any liability to Registrant or its
shareholders to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of
his office.

Unless otherwise permitted under the 1940 Act,

(i) Article Tenth does not protect any person against
any liability to Registrant or to its shareholders to which he
would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office;

(ii) in the absence of a final decision on the merits by
a court or other body before whom a proceeding was brought
that a Covered Person was not liable by reason of willful
misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office,
no indemnification is permitted under Article Tenth unless a
determination that such person was not so liable is made on
behalf of Registrant by (a) the vote of a majority of the
trustees who are neither "interested persons" of Registrant,
as defined in Section 2(a)(19) of the 1940 Act, nor parties to
the proceeding ("disinterested, non-party trustees"), or (b)
an independent legal counsel as expressed in a written
opinion; and

(iii) Registrant will not advance attorneys' fees or
other expenses incurred by a Covered Person in connection with
a civil or criminal action, suit or proceeding unless
Registrant receives an undertaking by or on behalf of the
Covered Person to repay the advance (unless it is ultimately
determined that he is entitled to indemnification) and (a) the
Covered Person provides security for his undertaking, or (b)
Registrant is insured against losses arising by reason of any
lawful advances, or (c) a majority of the disinterested, non-
party trustees of Registrant or an independent legal counsel
as expressed in a written opinion, determine, based on a
review of readily available facts (as opposed to a full trial-
type inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to
indemnification.

Any approval of indemnification pursuant to Article Tenth does
not prevent the recovery from any Covered Person of any amount
paid to such Covered Person in accordance with Article Tenth
as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have
acted in good faith in the reasonable belief that such Covered
Person's action was in, or not opposed to, the best interests
of Registrant or to have been liable to Registrant or its
shareholders by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved
in the conduct of such Covered Person's office.

Article Tenth also provides that its indemnification
provisions are not exclusive.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers,
and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officer, or controlling person
of Registrant in the successful defense of any action, suit,
or proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issue.

Registrant, its trustees and officers, its investment adviser,
the other investment companies advised by Stein Roe & Farnham
Incorporated, and persons affiliated with them are insured
against certain expenses in connection with the defense of
actions, suits, or proceedings, and certain liabilities that
might be imposed as a result of such actions, suits, or
proceedings. Registrant will not pay any portion of the
premiums for coverage under such insurance that would (1)
protect any trustee or officer against any liability to
Registrant or its shareholders to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in
the conduct of his office or (2) protect its investment
adviser or principal underwriter, if any, against any
liability to Registrant or its shareholders to which such
person would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence, in the
performance of its duties, or by reason of its reckless
disregard of its duties and obligations under its contract or
agreement with the Registrant; for this purpose the Registrant
will rely on an allocation of premiums determined by the
insurance company.

Pursuant to the indemnification agreement among the
Registrant, its transfer agent and its investment adviser
dated July 1, 1995, the Registrant, its trustees, officers and
employees, its transfer agent and the transfer agent's
directors, officers and employees are indemnified by
Registrant's investment adviser against any and all losses,
liabilities, damages, claims and expenses arising out of any
act or omission of the Registrant or its transfer agent
performed in conformity with a request of the investment
adviser that the transfer agent and the Registrant deviate
from their normal procedures in connection with the issue,
redemption or transfer of shares for a client of the
investment adviser.

Registrant, its trustees, officers, employees and
representatives and each person, if any, who controls the
Registrant within the meaning of Section 15 of the Securities
Act of 1933 are indemnified by the distributor of Registrant's
shares (the "distributor"), pursuant to the terms of the
distribution agreement, which governs the distribution of
Registrant's shares, against any and all losses, liabilities,
damages, claims and expenses arising out of the acquisition of
any shares of the Registrant by any person which (i) may be
based upon any wrongful act by the distributor or any of the
distributor's directors, officers, employees or
representatives or (ii) may be based upon any untrue or
alleged untrue statement of a material fact contained in a
registration statement, prospectus, statement of additional
information, shareholder report or other information covering
shares of the Registrant filed or made public by the
Registrant or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statement therein not misleading if such statement or omission
was made in reliance upon information furnished to the
Registrant by the distributor in writing. In no case does the
distributor's indemnity indemnify an indemnified party against
any liability to which such indemnified party would otherwise
be subject by reason of willful misfeasance, bad faith, or
negligence in the performance of its or his duties or by
reason of its or his reckless disregard of its or his
obligations and duties under the distribution agreement.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISER.

Stein Roe & Farnham Incorporated ("Stein Roe"), the investment
adviser, is a wholly owned subsidiary of SteinRoe Services Inc.
("SSI"), which in turn is a wholly owned subsidiary of Liberty
Financial Companies, Inc., which is a majority owned subsidiary
of Liberty Corporation Holdings, Inc., which is a wholly owned
subsidiary of LFC Holdings, Inc., which in turn is a subsidiary
of Liberty Mutual Equity Corporation, which in turn is a
subsidiary of Liberty Mutual Insurance Company. Stein Roe acts
as investment adviser to individuals, trustees, pension and
profit-sharing plans, charitable organizations, and other
investors. In addition to Registrant, it also acts as
investment adviser to other investment companies having
different investment policies.

For a two-year business history of officers and directors of
Stein Roe, please refer to the Form ADV of Stein Roe &
Farnham Incorporated and to the section of the statement of
additional information (Part B) entitled "Investment Advisory
and Other Services."

Certain directors and officers of Stein Roe also serve and have
during the past two years served in various capacities as
officers, directors, or trustees of SSI, of Colonial Management
Associates, Inc. (which is a subsidiary of Liberty Financial
Companies, Inc.), and of the Registrant and other investment
companies managed by Stein Roe. (The listed entities are located
at One Financial Center, Boston, MA 02111, except for SteinRoe
Services Inc. which is located at One South Wacker Drive,
Chicago, IL 60606, and SteinRoe Variable Investment Trust and
Liberty Variable Investment Trust, which are located at Federal
Reserve Plaza, Boston, MA 02210.) A list of such capacities is
given below.

POSITION FORMERLY
HELD WITHIN
CURRENT POSITION PAST TWO YEARS
------------------- --------------
STEINROE SERVICES INC.
Gary A. Anetsberger Vice President
Kevin M. Carome Assistant Clerk
Kenneth J. Kozanda Vice President; Treasurer
Kenneth R. Leibler Director
Karl J. Maurer Comptroller
C. Allen Merritt, Jr. Director; Vice President
Heidi J. Walter Vice President; Secretary

COLONIAL MANAGEMENT ASSOCIATES, INC.
Ophelia L. Barsketis Senior Vice President
Kevin M. Carome Senior Vice President
William M. Garrison Vice President
Stephen E. Gibson President
Loren A. Hansen Senior Vice President
Clare M. Hounsell Vice President
Timothy J. Jacoby Senior Vice President
Deborah A. Jansen Senior Vice President
North T. Jersild Vice President
Yvonne T. Shields Vice President

SR&F BASE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
David P. Brady Vice-President
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
Stephen E. Gibson President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Jane M. Naeseth Vice-President
Maureen G. Newman Vice-President
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY-STEIN ROE FUNDS INCOME TRUST; LIBERTY-STEIN ROE FUNDS
INSTITUTIONAL TRUST; AND LIBERTY-STEIN ROE FUNDS TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
Kevin M. Carome Executive VP; Asst. Secy. VP
Stephen E. Gibson President
Loren A. Hansen Executive Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Lynn C. Maddox Vice-President
Jane M. Naeseth Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY-STEIN ROE FUNDS INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
David P. Brady Vice-President
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
William M. Garrison Vice-President
Stephen E. Gibson President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY-STEIN ROE ADVISOR TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
David P. Brady Vice-President
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
Stephen E. Gibson President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Maureen G. Newman Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY-STEIN ROE FUNDS MUNICIPAL TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
Kevin M. Carome Executive VP; Asst. Secy. VP
Joanne T. Costopoulos Vice-President
Stephen E. Gibson President
Loren A. Hansen Executive Vice-President
Brian M. Hartford Vice-President
William C. Loring Vice-President
Lynn C. Maddox Vice-President
Maureen G. Newman Vice-President
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary

STEINROE VARIABLE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
Kevin M. Carome Executive VP; Asst. Secy. VP
William M. Garrison Vice President
Stephen E. Gibson President
Erik P. Gustafson Vice President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice President
Michael T. Kennedy Vice President
Jane M. Naeseth Vice President
William M. Wadden IV Vice President
Heidi J. Walter Vice President

LIBERTY-STEIN ROE ADVISOR FLOATING RATE FUND; LIBERTY-STEIN ROE
INSTITUTIONAL FLOATING RATE INCOME FUND, STEIN ROE FLOATING RATE
LIMITED LIABILITY COMPANY
William D. Andrews Executive Vice-President
Gary A. Anetsberger Sr. V-P;
Treasurer;
Controller
Kevin M. Carome Executive VP; Asst. Secy. VP
Stephen E. Gibson President
Brian W. Good Vice-President
James R. Fellows Vice-President
Loren A. Hansen Executive Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY VARIABLE INVESTMENT TRUST
Ophelia L. Barsketis Vice President
Deborah A. Jansen Vice President
Kevin M. Carome Vice President

ITEM 27. PRINCIPAL UNDERWRITERS.

Registrant's principal underwriter, Liberty Funds Distributor,
Inc., a subsidiary of Colonial Management Associates, Inc.,
acts as underwriter to Liberty Funds Trust I, Liberty Funds Trust
II, Liberty Funds Trust III, Liberty Funds Trust IV, Liberty
Funds Trust V, Liberty Funds Trust VI, Liberty Funds Trust VII,
Liberty Funds Trust IX, Liberty-Stein Roe Funds Investment Trust,
Liberty-Stein Roe Funds Income Trust, Liberty-Stein Roe Funds
Municipal Trust, Liberty-Stein Roe Advisor Trust, Liberty-Stein
Roe Funds Institutional Trust, Liberty-Stein Roe Funds Trust,
Liberty-Stein Roe Advisor Floating Rate Fund, Liberty-Stein Roe
Institutional Floating Rate Income Fund, and SteinRoe Variable
Investment Trust. The table below lists the directors and
officers of Liberty Funds Distributor, Inc.

Position and Offices Positions and
Name and Principal with Principal Offices with
Business Address* Underwriter Registrant
- -------------------- --------------------- -------------
Anderson, Judith Vice President None
Anetsberger, Gary A. Senior Vice President Senior V-P;
Treasurer
Babbitt, Debra VP & Compliance Officer None
Ballou, Rick Senior Vice President None
Bartlett, John Managing Director None
Blakeslee, James Senior Vice President None
Blumenfeld, Alex Vice President None
Bozek, James Senior Vice President None
Brown, Beth Vice President None
Burtman, Tracy Vice President None
Campbell, Patrick Vice President None
Chrzanowski, Daniel Vice President None
Clapp, Elizabeth A. Managing Director None
Conlin, Nancy L. Director; Clerk None
Davey, Cynthia Sr. Vice President None
Desilets, Marian H. Vice President None
Devaney, James Senior Vice President None
DiMaio, Steve Vice President None
Downey, Christopher Vice President None
Dupree, Robert Vice President None
Emerson, Kim P. Senior Vice President None
Erickson, Cynthia G. Senior Vice President None
Evans, C. Frazier Managing Director None
Feldman, David Managing Director None
Fifield, Robert Vice President None
Gariepy, Tom Vice President None
Gauger, Richard Vice President None
Gerokoulis, Stephen A. Senior Vice President None
Gibson, Stephen E. Director; Chairman of Board None
Goldberg, Matthew Senior Vice President None
Gupta, Neeti Vice President None
Geunard, Brian Vice President None
Harrington, Tom Sr. Vice President None
Hodgkins, Joseph Sr. Vice President None
Hussey, Robert Senior Vice President None
Iudice, Jr., Philip Treasurer and CFO None
Jones, Cynthia Vice President None
Jones, Jonathan Vice President None
Kelley, Terry M. Vice President None
Kelson, David W. Senior Vice President None
Libutti, Chris Vice President None
Martin, John Senior Vice President None
Martin, Peter Vice President None
McCombs, Gregory Senior Vice President None
McKenzie, Mary Vice President None
Menchin, Catherine Senior Vice President None
Miller, Anthony Vice President None
Moberly, Ann R. Senior Vice President None
Morse, Jonathan Vice President None
Nickodemus, Paul Vice President None
O'Shea, Kevin Managing Director None
Piken, Keith Vice President None
Place, Jeffrey Managing Director None
Powell, Douglas Vice President None
Predmore, Tracy Vice President None
Quirk, Frank Vice President None
Raftery-Arpino, Linda Senior Vice President None
Ratto, Gregory Vice President None
Reed, Christopher B. Senior Vice President None
Riegel, Joyce B. Vice President None
Robb, Douglas Vice President None
Sandberg, Travis Vice President None
Santosuosso, Louise Senior Vice President None
Schulman, David Senior Vice President None
Shea, Terence Vice President None
Sideropoulos, Lou Vice President None
Sinatra, Peter Vice President None
Smith, Darren Vice President None
Soester, Trisha Vice President None
Studer, Eric Vice President None
Sweeney, Maureen Vice President None
Tambone, James Chief Executive Officer None
Tasiopoulos, Lou President None
VanEtten, Keith H. Senior Vice President None
Walter, Heidi J. Vice President V-P & Secy.
Wess, Valerie Senior Vice President None
Young, Deborah Vice President None
- ---------
* The address of Ms. Riegel, Ms. Walter, and Mr. Anetsberger
is One South Wacker Drive, Chicago, IL 60606. The address of
each other director and officer is One Financial Center, Boston, MA 02111.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

Registrant maintains the records required to be maintained by
it under Rules 31a-1(a), 31a-1(b), and 31a-2(a) under the
Investment Company Act of 1940 at its principal executive
offices at One Financial Center, Boston, MA 02111.
Certain records, including records relating to Registrant's
shareholders and the physical possession of its securities,
may be maintained pursuant to Rule 31a-3 at the main office of
Registrant's transfer agent or custodian.

ITEM 29. MANAGEMENT SERVICES.

None.

ITEM 30. UNDERTAKINGS.

None.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has duly
caused this amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 19th day of
November, 1999.

LIBERTY-STEIN ROE FUNDS
INVESTMENT TRUST

By STEPHEN E. GIBSON
Stephen E. Gibson
President

Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates
indicated:

Signature Title Date
- ------------------------ ------------------- --------------
STEPHEN E. GIBSON President Nov. 18, 1999
Stephen E. Gibson
Principal Executive Officer

TIMOTHY J. JACOBY Senior Vice- Nov. 18, 1999
Timothy J. Jacoby President
Principal Financial Officer

GAIL D. KNUDSEN Controller Nov. 18, 1999
Gail D. Knudsen
Principal Accounting Officer

JOHN A. BACON JR. Trustee Nov. 18, 1999
John A. Bacon Jr.

WILLIAM W. BOYD Trustee Nov. 18, 1999
William W. Boyd

LINDSAY COOK Trustee Nov. 18, 1999
Lindsay Cook

DOUGLAS A. HACKER Trustee Nov. 18, 1999
Douglas A. Hacker

JANET LANGFORD KELLY Trustee Nov. 18, 1999
Janet Langford Kelly

CHARLES R. NELSON Trustee Nov. 18, 1999
Charles R. Nelson

THOMAS C. THEOBALD Trustee Nov. 18, 1999
Thomas C. Theobald

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, undersigned has duly
caused this amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Chicago and State of Illinois on the 19th day of
November, 1999.

SR&F BASE TRUST

By STEPHEN E. GIBSON
Stephen E. Gibson
President

Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates
indicated:

Signature Title Date
- ------------------------ ------------------- --------------
STEPHEN E. GIBSON President Nov. 18, 1999
Stephen E. Gibson
Principal Executive Officer

TIMOTHY J. JACOBY Senior Vice- Nov. 18, 1999
Timothy J. Jacoby President
Principal Financial Officer

GAIL D. KNUDSEN Controller Nov. 18, 1999
Gail D. Knudsen
Principal Accounting Officer

JOHN A. BACON JR. Trustee Nov. 18, 1999
John A. Bacon Jr.

WILLIAM W. BOYD Trustee Nov. 18, 1999
William W. Boyd

LINDSAY COOK Trustee Nov. 18, 1999
Lindsay Cook

DOUGLAS A. HACKER Trustee Nov. 18, 1999
Douglas A. Hacker

JANET LANGFORD KELLY Trustee Nov. 18, 1999
Janet Langford Kelly

CHARLES R. NELSON Trustee Nov. 18, 1999
Charles R. Nelson

THOMAS C. THEOBALD Trustee Nov. 18, 1999
Thomas C. Theobald

<PAGE>

LIBERTY-STEIN ROE FUNDS INVESTMENT TRUST
INDEX TO EXHIBITS FILED WITH THIS AMENDMENT

Exhibit
Number Description
- ------- ------------
(j)(2) Consent of Arthur Andersen LLP

(m) Rule 12b-1 Plan

(n) Rule 18f-1 Plan

<PAGE>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of
our report dated November 16, 1998, and to all references to our
Firm included in or made a part of this Registration Statement on
Form N-1A of the Stein Roe Investment Trust (comprising the Stein
Roe Growth & Income Fund).

ARTHUR ANDERSEN LLP
Arthur Andersen LLP

Chicago, Illinois
November 11, 1999

<PAGE>
Stein Roe Mutual Funds
Rule 12b-1 Distribution Plan

Each Massachusetts Business Trust (Trust) designated in
Appendix 1 as revised from time to time, acting severally, adopts
as of August 3, 1999, the following distribution plan (the Plan)
pursuant to Rule 12b-1 (the Rule) under the Investment Company Act
of 1940 (Act) on behalf of each Fund in that Trust for the purpose
of providing personal service and/or the maintenance of
shareholder accounts and to facilitate the distribution of shares
of the Funds.

I. Plans Applying to Class A, B and C Shares

Each Fund having Class A, B or C Shares shall pay a service
fee at the annual rate of 0.25% of the net assets of its Class A,
B and C Shares, and a distribution fee at the annual rate of 0.10%
of the average daily net assets of its Class A Shares and 0.75% of
the average daily net assets of its Class B and C Shares.

II. Payments of Fees Under the Plan

Each Fund shall make all payments of service and distribution
fees under this Plan to Liberty Funds Distributor, Inc. (LFDI)
monthly, on the 20th day of each month or, if such day is not a
business day, on the next business day thereafter. No Fund shall
pay, nor shall LFDI be entitled to receive, any amount under this
Plan if such payment would result in LFDI receiving amounts in
excess of those permitted by applicable law or by rules of the
National Association of Securities Dealers, Inc.

III. Use of Fees.

LFDI may pay part or all of the service and distribution fees
it receives from a Fund as commissions to financial service firms
that sell Fund Shares or as reimbursements to financial service
firms or other entities that provide shareholder services to
record or beneficial owners of shares (including third-party
administrators of qualified plans). This provision does not
obligate LFDI to make any such payments nor limit the use that
LFDI may make of the fees it receives.

IV. Reporting

LFDI shall provide to the Trust's Trustees, and the Trustees
shall review, at least quarterly, reports setting forth all Plan
expenditures, and the purposes for those expenditures. Amounts
payable under this paragraph are subject to any limitations on
such amounts prescribed by applicable laws or rules.

V. Other Payments Authorized

Payments by the Trust to LFDI and its affiliates other than
as set forth in Section I which may be indirect financing of
distribution costs are authorized by this Plan.

VI. Continuation; Amendment; Termination

This Plan shall continue in effect with respect to a Class of
Shares only so long as specifically approved for that Class at
least annually as provided in the Rule. The Plan may not be
amended to increase materially the service fee or distribution fee
with respect to a Class of Shares without such shareholder
approval as is required by the Rule and any applicable orders of
the Securities and Exchange Commission, and all material
amendments of the Plan must be approved in the manner described in
the Rule. The Plan may be terminated with respect to any Class of
Shares at any time as provided in the Rule without payment of any
penalty. The continuance of the Plan shall be effective only if
the selection and nomination of the Trust's Trustees who are not
interested persons (as defined under the Act) of the Trust is
effected by such non-interested Trustees as required by the Rule.

Approved by the Trustees as of the date
set forth above:

By: HEIDI J. WALTER
Heidi J. Walter, Secretary For Each
Trust

<PAGE>
APPENDIX 1

Stein Roe Investment Trust
Stein Roe International Fund
Stein Roe Growth & Income Fund
Stein Roe Balanced Fund
Stein Roe Growth Stock Fund
Stein Roe Disciplined Stock Fund
Stein Roe Young Investor Fund
Stein Roe Growth Investor Fund
Stein Roe Capital Opportunities Fund
Stein Roe Midcap Growth Fund
Stein Roe Small Company Growth Fund
Stein Roe Asia Pacific Fund
Stein Roe Large Company Focus Fund

Stein Roe Income Trust
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

Stein Roe Municipal Trust
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund

Stein Roe Advisor Floating Rate Fund

STEIN ROE INCOME TRUST
STEIN ROE INVESTMENT TRUST
STEIN ROE MUNICIPAL TRUST
STEIN ROE ADVISOR FLOATING RATE FUND

Plan pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940

Effective August 3, 1999

Each Series (each a "Stein Roe Fund") of Stein Roe Income Trust,
Stein Roe Investment Trust, and Stein Roe Municipal Trust, (each a
"Trust") as set forth in Schedule I and Stein Roe Advisor Floating
Rate Fund ("Floating Rate Fund") may from time to time issue one
or more of the following classes of shares as authorized by the
Board of Trustees and as provided for herein: Class A shares,
Class B shares, Class C shares and Class Z shares. Each class is
subject to such investment minimums and other conditions of
eligibility as set forth in the Stein Roe Funds or Floating Rate
Fund's prospectus and statement of additional information as from
time to time in effect. The differences in expenses among these
classes of shares and the conversion and exchange features of each
class of shares, are set forth below. These differences are
subject to change, to the extent permitted by law and by the
Declaration of Trust and By-laws of the Trusts and the Floating
Rate Fund, by action of the Board of Trustees.

CLASS A SHARES

Class A shares of the Stein Roe Funds and Floating Rate Fund are
offered at net asset value ("NAV") plus the initial sales charges
described in the Stein Roe Funds and Floating Rate Fund's
prospectus and statement of additional information as from time to
time in effect. Initial sales charges may not exceed 6.50%, and
may be reduced or waived as permitted by Rule 22d-1 under the
Investment Company Act of 1940 ( the "1940 Act") and as described
in the Stein Roe Funds and Floating Rate Fund's prospectus and
statement of additional information from time to time in effect.

Purchases of $1 million to $5 million of Class A shares that are
redeemed within 18 months from purchase are subject to a
contingent deferred sales charge ("CDSC") of 0.50% of either the
purchase price or the NAV of the shares redeemed, whichever is
less. Purchases in excess of $5 million of Class A shares that
are redeemed within 18 months from purchase are subject to a CDSC
of 0.50% only on assets redeemed below the $5 million level. The
CDSC may be reduced or waived as permitted by Rule 6c-10 under the
1940 Act and as described in the Stein Roe Funds and Floating Rate
Fund's prospectus and statement of additional information as from
time to time in effect.

Class A shares pay distribution and service fees pursuant to a
plan adopted pursuant to Rule 12b-1 under the 1940 Act ("12b-1
Plan") as described in the Stein Roe Funds and Floating Rate
Fund's prospectus and statement of additional information in
effect from time to time. Such fees may be in amounts up to but
may not exceed, respectively, 0.10% and 0.25% per annum of the
average daily net assets attributable to such class.

Class A shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Floating
Rate Fund's prospectus and statement of additional information in
effect from time to time. Total transfer agency fees, including
such service component, may not exceed 0.30% of average annual net
assets attributable to the class.

Class A shares of the Stein Roe Funds and Floating Rate Fund may
be exchanged, at the holder's option, for Class A shares of most
other funds ("Liberty Funds") distributed by Liberty Funds
Distributor, Inc. ("LFD") or its successor without the payment of
a sales charge, except that if shares of any Stein Roe Fund,
Floating Rate Fund, Advisor Fund or non-money market Liberty Fund
are exchanged within five months after purchase for shares of
another Stein Roe Fund, Floating Rate Fund, Advisor Fund or
Liberty Fund with a higher sales charge, then the difference
in sales charges must be paid on the exchange.

In addition, Class A shares of Stein Roe Funds or Floating Rate
Fund may be exchanged, at the holder's option, for Class A shares
of any other Liberty Fund offering Class A shares, without the
payment of a CDSC. The holding period for determining the CDSC
will include the holding period of the shares exchanged. If the
Class A shares received in the exchange are subsequently redeemed,
the amount of the CDSC, if any, will be determined by the schedule
of the Liberty Fund in which the original investment was made.

CLASS B SHARES

Class B shares are offered at NAV, without an initial sales
charge. Class B shares that are redeemed within the period of
time after purchase (not more than 8 years) specified in each
Stein Roe Funds or Floating Rate Fund's prospectus and statement
of additional information as from time to time in effect are
subject to a CDSC of up to 3% of either the purchase price or the
NAV of the shares redeemed, whichever is less; such percentage may
be lower for certain Funds and declines the longer the shares are
held, all as described in the Stein Roe Funds or Floating Rate
Fund's prospectus and statement of additional information as from
time to time in effect. Class B shares purchased with reinvested
distributions are not subject to a CDSC. The CDSC is subject to
reduction or waiver in certain circumstances, as permitted by Rule
6c-10 under the 1940 Act and as described in the Stein Roe Funds
or Floating Rate Fund's prospectus and statement of additional
information as from time to time in effect.

Class B shares pay distribution and service fees pursuant to a
12b-1 Plan as described in Stein Roe Funds or Floating Rate Fund's
prospectus and statement of additional information in effect from
time to time. Such fees may be in amounts up to but may not
exceed, respectively, 0.75% and 0.25% per annum of the average
daily net assets attributable to such class.

Class B shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees, including such service component, may not
exceed 0.30% of average annual net assets attributable to the
class.

Class B shares automatically convert to Class A shares of the same
Stein Roe Fund or Floating Rate Fund eight years after purchase,
except that Class B shares purchased through the reinvestment of
dividends and other distributions on Class B shares convert to
Class A shares proportionally to the amount of Class B shares
otherwise being converted.

Class B shares of Stein Roe Funds and Floating Rate Fund may be
exchanged, at the holder's option, for Class B shares of any other
Liberty Fund offering Class B shares, without the payment of a
CDSC. The holding period for determining the CDSC and the
conversion to Class A shares will include the holding period of
the shares exchanged. If the Class B shares received in the
exchange are subsequently redeemed, the amount of the CDSC, if
any, will be determined by the schedule of the Liberty Fund in
which the original investment was made.

CLASS C SHARES

Class C shares are offered at NAV without an initial sales charge.
Class C shares that are redeemed within up to three years from
purchase may be subject to a CDSC of 1% of either the purchase
price or the NAV of the shares redeemed, whichever is less. Class
C shares purchased with reinvested dividends are not subject to a
CDSC. The CDSC may be reduced or waived in certain circumstances
as permitted by Rule 6c-10 under the 1940 Act and as described in
the Stein Roe Funds or Floating Rate Fund's prospectus and
statement of additional information as from time to time in
effect.

Class C shares pay distribution and service fees pursuant to a
12b-1 Plan as described in the Stein Roe Funds or Floating Rate
Fund's prospectus and statement of additional information in
effect from time to time. Such fees may be in amounts up to but
may not exceed, respectively, 0.75% and 0.25% per annum of the
average daily net assets attributable to such class.

Class C shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees, including such service component, may not
exceed 0.30% of average annual net assets attributable to the
class.

Class C shares of Stein Roe Funds or Floating Rate Fund may be
exchanged, at the holder's option, for Class C shares of any other
Liberty Fund offering Class C shares, without the payment of a
CDSC. The holding period for determining the CDSC will include
the holding period of the shares exchanged. If the Class C shares
received in the exchange are subsequently redeemed, the amount of
the CDSC, if any, will be determined by the schedule of the
Liberty Fund in which the original investment was made. Only one
exchange of any Liberty Fund, Class C shares may be made in any
three month period. For this purpose, an exchange into a Liberty
Fund and a prior or subsequent exchange out of a Liberty Fund
constitutes an "exchange."

CLASS S SHARES

Class S shares are offered at NAV, without an initial sales
charge, 12b-1 fee or CDSC. Class S shares of Stein Roe Funds may
be exchanged for any other Stein Roe Class S shares or for shares
of any Stein Roe no-load fund.

Class S shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees may not exceed 0.30% of average annual net
assets attributable to the class.

CLASS Z SHARES

Class Z shares are offered at NAV, without an initial sales
charge, 12b-1 fee or CDSC. Class Z shares of a Liberty Fund may
be exchanged for the Class A or Class Z shares of another Fund
unless such exchange is limited by a Fund's prospectus.

Class Z shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees may not exceed 0.30% of average annual net
assets attributable to the class.

<PAGE>
Schedule I

Stein Roe Income Trust
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

Stein Roe Municipal Trust
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund