File No. 33-11351
Rule 497(e)
<PAGE>
Stein Roe Asia Pacific Fund
Prospectus
February 1, 2000
Revised May 1, 2000
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.
<PAGE>
1 The Fund
Investment Goal
Principal Investment Strategy
Principal Investment Risks
Fund Performance
Your Expenses
12 Financial Highlights
14 Your Account
Purchasing Shares
Opening an Account
Determining Share Price (NAV)
Selling Shares
Exchanging Shares
Reporting to Shareholders
Dividends and Distributions
27 Other Investments and Risks
32 The Fund's Management
Investment Adviser
Portfolio Managers
Master/Feeder Fund Structure
Please keep this prospectus as your reference manual.
<PAGE>
THE FUND
ASIA PACIFIC FUND
INVESTMENT GOAL Stein Roe Asia Pacific Fund seeks long-term
growth.
PRINCIPAL INVESTMENT STRATEGY Under normal conditions, Asia
Pacific Fund invests at least 65% of its total assets in stocks of
mid- and large-capitalization companies located in Asia and the
Pacific Basin. The Pacific Basin countries the Fund invests in
include Australia and New Zealand. The Asian countries the Fund
invests in include Japan, Hong Kong/China, Singapore, South Korea,
Taiwan, Thailand, Indonesia and the Philippines. The Fund may
invest up to 35% of its total assets in equity and debt securities
of corporate issuers of any market capitalization or size and
governmental issuers located anywhere in the world, including the
United States.
The Fund will consider an issuer of securities to be located in
the Pacific Basin if: (i) it is organized under the laws of a
country in the Pacific Basin and has a principal office in a
country in the Pacific Basin, (ii) it derives 50% or more of its
total revenues from business in the Pacific Basin, or (iii) its
equity securities are traded principally on a securities exchange
in the Pacific Basin.
Defining capitalization. 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 they are defined by Lipper, Inc.
According to Lipper, Inc. as of December 1999, large-cap companies
had market capitalizations greater than $9.0 billion, midcap
companies had market capitalizations between $2.2 and $9.0
billion, and small-cap companies had market capitalizations less
than $2.2 billion. These amounts are subject to change.
The Fund invests in growth companies that the portfolio managers
believe have long-term growth prospects and quality management.
Growth companies are those companies which the portfolio managers
believe have above average growth potential. The portfolio
managers measure the growth potential of a company using cash
earnings and reserves.
The portfolio managers may sell a security if there is a
deterioration in a company's fundamentals or a change to a
company's management strategy, or if the portfolio managers
identify a different company with more attractive growth
prospects. The portfolio managers may also be required to sell
portfolio investments to fund redemptions.
PRINCIPAL INVESTMENT RISKS There are two basic risks for all
mutual funds that invest in stocks: management risk and market
risk. These risks tend to be greater when investing overseas.
These risks may cause you to lose money by investing in the Fund.
[Callout]
WHAT ARE MARKET AND MANAGEMENT RISKS?
Management risk means that the portfolio managers' 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.
[End callout]
Because the Fund invests in stocks, the price of its 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
Fund may at times be unable to sell them at desirable prices. In
addition, foreign governments may impose withholding taxes which
would reduce the amount of income available to distribute to
shareholders.
Currency exchange rates will affect the U.S. dollar value of the
Fund's foreign stocks. Most of the stocks the Fund owns are
traded and settled in a foreign currency. The Fund also incurs
costs when it buys and sells foreign currencies. If the foreign
currency loses value against the dollar, the Fund's investment may
be worth less in dollar terms even if the stock's value has grown
in local terms. In addition, foreign security transactions may be
more costly due to higher brokerage and custodial costs.
The prices of foreign securities may fluctuate substantially more
than the prices of U.S. securities because the price of a foreign
stock may depend on issues other than the performance of the
particular company. Foreign stocks, especially those of emerging
markets, are subject to political and economic risks such as
possible delays in settlement; the existence of less liquid
markets; the unavailability of reliable information about issuers;
the existence of exchange control regulations; political and
economic instability; immature economic structures; different
legal and accounting systems; and the possible seizure,
expropriation or nationalization of a company or its assets. In
some foreign markets, there may not be protection or legal
recourse against failure by other parties to complete
transactions.
Emerging markets are subject to additional risk. The risks of
foreign investments are typically increased in less developed
countries, which are sometimes referred to as "emerging markets."
For example, political, and economic structures in these countries
may be new and developing rapidly, which may cause instability.
These countries are also more likely to experience high levels of
inflation, deflation or currency devaluations, which could hurt
their economies and securities markets.
Because the Fund's investments are concentrated in Asia and the
Pacific Basin, the Fund is susceptible to regional risk. Events
in any one country may impact the other countries or the region as
a whole. As a result, events in the region will generally have a
greater effect on the Fund than if the Fund were more
geographically diversified, which may result in greater losses and
volatility. In the past, the markets in each of these Asian
countries have suffered significant downturns and volatility.
Increased social or political unrest in some or all of these
countries could cause further economic and market uncertainty.
Small- and medium-cap companies. The securities the Fund
purchases may involve certain special risks. Small- and medium-
sized companies and new issuers often have limited product lines,
operating histories, markets, or financial resources. They also
may depend heavily on a small management group. Small-cap
companies in particular are more likely to fail or prove unable to
grow. Their securities may trade less frequently, in smaller
volumes, and fluctuate more sharply in price than securities of
larger companies.
Debt securities. The Fund will invest in high quality debt
securities for defensive purposes. The Fund's investments in debt
securities, generally bonds, convertible bonds and sovereign debt,
expose the Fund to interest rate risk. Interest rate risk is the
risk of a change in the price of a bond when interest rates
increase or decrease. In general, if interest rates rise, bond
prices fall; and if interest rates fall, bond prices rise.
Changes in the value of bonds will not affect the amount of income
the Fund receives from them but will affect the value of the
Fund's shares. Interest rate risk is generally greater for bonds
having longer maturities.
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.
For more information on the Fund's investment techniques, please
refer to "Other Investments and Risks."
Who Should Invest in Asia Pacific Fund?
You may want to invest in Asia Pacific Fund if you:
* are interested in investing in companies in Asia and the Pacific
Basin and can tolerate the greater share price volatility that
accompanies international investing
* want a regional overseas fund that is diversified among
countries and companies
* are a long-term investor and can afford to potentially lose
money on your investment
Asia Pacific Fund is not appropriate for investors who:
* want to avoid volatility or possible losses
* are saving for a short-term period
* need regular current income
FUND PERFORMANCE The following charts show the Fund's
performance for the calendar year ended December 31, 1999. The
returns include the reinvestment of dividends and distributions.
As with all mutual funds, past performance is no guarantee of
future results.
Annual Total Returns
This chart shows the Fund's total return for calendar year 1999.
It provides an indication of the risks of investing in the Fund.
[bar chart]
ANNUAL TOTAL RETURN
100% 105.00%
80%
60%
40%
20%
10%
0%
- -10%
1999
[ ] Asia Pacific Fund
[end bar chart]
Best quarter: 4th quarter 1999, +37.22%
Worst quarter: 1st quarter 1999, -7.55%
Average Annual Total Returns
Average annual total returns measure the Fund's performance over
time. We compare the Fund's returns with returns for the MSCI
Pacific Index. We show returns for calendar years to be
consistent with the way other mutual funds report performance in
their prospectuses. This provides an indication of the risks of
investing in the Fund.
AVERAGE ANNUAL TOTAL RETURNS
Periods ending December 31, 1999
1 yr Since Inception
- ---------------------------------------------------------------
(October 19, 1998)
Asia Pacific Fund 105.00% 92.89%
MSCI Pacific Index* 57.63% 56.96%
*The MSCI Pacific Index is an unmanaged group of Pacific Basin
stocks that differs from the Fund's composition; it is not
available for direct investment. Since inception performance
for the Index is from October 31, 1998 through December 31,
1999.
YOUR EXPENSES This table shows fees and expenses you may pay if
you buy and hold shares of the Fund. You do not pay any sales
charge when you purchase or sell your shares. However, you pay
various other indirect expenses because the Fund pays fees and
other expenses that reduce your investment return.
SHAREHOLDER FEES(a)
(expenses that are deducted from your account)
Redemption fee (as a percentage of amount redeemed) 1.00%
ANNUAL FUND OPERATING EXPENSES(b)
(expenses that are deducted from Fund assets)
Management fees(c) 1.10%
Distribution (12b-1) fees None
Other expenses 2.95%
Total annual fund operating expenses 4.05%
Expense reimbursement(d) (2.05%)
Net expenses 2.00%
(a) A 1% redemption fee, retained by the Fund, is imposed only on
redemptions of Fund shares held less than 90 days. There is a
$7 charge for wiring redemption proceeds to your bank. A fee
of $5 per quarter may be charged to accounts that fall below
the required minimum balance.
(b) Fund expenses include management fees and administrative costs
such as furnishing the Fund with offices and providing tax and
compliance services.
(c) Management fees includes both the management fee and the
administrative fee charged to the Fund.
(d) Stein Roe will reimburse the Fund if its annual ordinary
operating expenses exceed 2.00% of average daily net assets.
This commitment expires on January 31, 2001. After
reimbursement, management fees will be 0.00% and other
expenses will be 2.00%. A reimbursement lowers the expense
ratio and increases overall return to investors.
Expense Example
This example compares the cost of investing in the Fund to the
cost of investing in other mutual funds. It uses the same
hypothetical assumptions that other funds use in their
prospectuses:
* $10,000 initial investment
* 5% return each year
* the Fund's operating expenses remain constant as a percent of
net assets
* redemption at the end of each time period
Your actual costs may be higher or lower because in reality fund
returns and operating expenses change. Expense reimbursements are
in effect for the first year in the periods below. Expenses based
on these assumptions are:
EXPENSE EXAMPLE
1 yr 3 yrs 5 yrs 10 yrs
- -----------------------------------------------------------------
Asia Pacific Fund $203 $1,045 $1,904 $4,122
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FINANCIAL HIGHLIGHTS
The financial highlights table explains the Fund's financial
performance. Consistent with other mutual funds, we show
information for the period of the Fund's operations. The Fund's
fiscal year runs from October 1 to September 30. The total return
in the table represents the return that investors earned assuming
that they reinvested all dividends and distributions. Certain
information in the table reflects the financial results for a
single Fund share. This information is included in the Fund's
financial statements which have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the financial statements, appears in the Fund's annual
report. To request an annual report, please call 800-338-2550.
Asia Pacific Fund
PER SHARE DATA
Period ended
September 30,
1999(b)
- ------------------------------------------------------------------
Net asset value, beginning of period $10.000
Income from investment operations
Net investment income (a)(c) 0.011
Net gains on securities (both realized and unrealized) 6.019
Total from investment operations 6.030
Net asset value, end of period $16.030
Total return (d)(e) 60.30%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $4,006
Ratio of net expenses to average net assets (f)(g) 2.00%
Ratio of net investment income to average net
assets(f)(g) 0.10%
Fees and expenses waived or borne by Stein Roe (f)(g) 2.05%
Portfolio turnover rate 31%
(a) Net of fees and expenses waived or borne by Stein
Roe which amounted to: 0.23%
(b) From commencement of operations on October 19, 1998.
(c) Per share data was calculated using average shares
outstanding during the period.
(d) Had Stein Roe not waived or reimbursed a portion of
expenses, total return would have been reduced.
(e) Not annualized.
(f) The benefits derived from custody credits and directed
brokerage arrangements had an impact of 0.05% and $0.006 per
share.
(g) Annualized.
<PAGE>
YOUR ACCOUNT
PURCHASING SHARES You will not pay a sales charge when you
purchase Fund shares. Your purchases are made at the NAV next
determined after the Fund receives your check, wire transfer or
electronic transfer. If the Fund receives your check, wire
transfer or electronic transfer after the close of regular trading
on the New York Stock Exchange (NYSE)-normally 4 p.m. Eastern
time-your purchase is effective on the next business day.
Purchases through Third Parties
If you purchase Fund shares through certain broker-dealers, banks
or other intermediaries (intermediaries), they may charge a fee
for their services. They may also place limits on your ability to
use services the Fund offers. There are no charges or limitations
if you purchase shares directly from the Fund, except those fees
described in this prospectus.
If an intermediary is an agent or designee of the Fund, orders are
processed at the NAV next calculated after the intermediary
receives the order. The intermediary must segregate any orders it
receives after the close of regular trading on the NYSE and
transmit those orders separately for execution at the NAV next
determined.
Conditions of Purchase
An order to purchase Fund shares is not binding unless and until
an authorized officer, agent or designee of the Fund accepts it.
Once we accept your purchase order, you may not cancel or revoke
it; however, you may redeem your shares. The Fund may reject any
purchase order if it determines that the order is not in the best
interests of the Fund and its shareholders. The Fund may waive or
lower its investment minimums for any reason. If you participate
in the Stein Roe Counselor [service mark] program or are a client
of Stein Roe Private Capital Management, the minimum initial
investment is determined by those programs.
ACCOUNT MINIMUMS
Minimum to Minimum Minimum
Type of Account Open an Account Addition Balance
- ------------------------------------------------------------
Regular $2,500 $100 $1,000
Custodial (UGMA/UTMA) $1,000 $100 $1,000
Automatic Investment Plan $1,000 $50 -
Roth and Traditional IRA $500 $50 $500
Educational IRA $500 $50* $500
*Maximum $500 contribution per calendar year per child.
Opening an Account
OPENING OR ADDING TO AN ACCOUNT
Opening an Account BY MAIL:
Complete the application.
Make check payable to Stein Roe Mutual Funds.
Mail application and check to:
SteinRoe Services Inc.
P.O. Box 8900
Boston, MA 02205
BY WIRE:
Mail your application to the address listed on
the left, then call 800-338-2550 to obtain an
account number. Include your Social Security
Number. To wire funds, use the instructions
below.
Adding to an Account BY MAIL:
Make check payable to Stein Roe Mutual Funds.
Be sure to write your account number on the
check.
Fill out investment slip (stub from your
statement or confirmation) or include a note
indicating the amount of your purchase, your
account number, and the name in which your
account is registered.
Mail check with investment slip or note to the
address above.
BY WIRE:
Wire funds to:
First National Bank of Boston
ABA: 011000390
Attn: SSI, Account No. 560-99696
Fund No.22; Stein Roe Asia Pacific Fund
Your name (exactly as in the registration).
Fund account number.
OPENING OR ADDING TO AN ACCOUNT
Opening an Account BY ELECTRONIC FUNDS TRANSFER:
You cannot open a new account via electronic
transfer.
BY EXCHANGE:
By mail, phone, automatically (be
sure to elect the Automatic Exchange Privilege
on your application).
THROUGH AN INTERMEDIARY;
Contact your financial professional.
Adding to an Account BY ELECTRONIC FUNDS TRANSFER;
Call 800-338-2550 to make your purchase. To
set up prescheduled purchases, be sure to
elect the Automatic Investment Plan (Stein Roe
Asset [SERVICE MARK] Builder) option on your
application.
BY EXCHANGE:
By mail, phone, automatically (be
sure to elect the Automatic Exchange Privilege
on your application).
THROUGH AN INTERMEDIARY:
Contact your financial professional.
All checks must be made payable in U. S. dollars and drawn on U.S.
banks. Money orders and third-party checks will not be accepted.
DETERMINING SHARE PRICE (NAV) The Fund's share price is its NAV
next determined. NAV is the difference between the values of the
Fund's assets and liabilities divided by the number of Fund shares
outstanding. We determine NAV at the close of regular trading on
the NYSE-normally 4 p.m. Eastern time. If you place an order
after that time, you receive the share price determined on the
next business day.
In computing the net asset value, the values of portfolio
securities are generally based upon market quotations. Depending
upon local convention or regulation, these market quotations may
be the last sale price, last bid or asked price, or the mean
between the last bid and asked prices as of, in each case, the
close of the appropriate exchange or other designated time.
Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed at
various times before the close of business on each day that the
NYSE is open. Trading of these securities may not take place on
every NYSE business-day. Foreign securities may trade on days
when the NYSE is closed. We will not price shares on days the
NYSE is closed for trading. You will not be able to purchase or
redeem shares until the next NYSE-trading day.
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 a foreign market and before the close of the NYSE.
SELLING SHARES You may sell your shares any day the Fund is open
for business. Please follow the instructions below.
SELLING SHARES
BY MAIL: Send a letter of instruction, in English, including
your account number and the dollar value or number
of shares you wish to sell. Sign the request
exactly as the account is registered. Be sure to
include a signature guarantee. All supporting legal
documents as required from executors, trustees,
administrators, or others acting on accounts not
registered in their names, must accompany the
request. We will mail the check to your registered
address.
BY PHONE: This feature is automatically added to your account
unless you decline it on your application. Call
800-338-2550 to redeem an amount of $1,000 or more.
We will mail a check to your registered address.
BY WIRE: Fill out the appropriate areas of the account
application for this feature. Proceeds of $1,000 or
more ($100,000 maximum) may be wired to your
predesignated bank account. Call 800-338-2550 to
give instructions to Stein Roe. There is a $7
charge for wiring redemption proceeds to your bank.
BY ELECTRONIC TRANSFER: Fill out the appropriate areas of the
account application for this feature. To request an
electronic transfer (not less than $50; not more
than $100,000), call 800-338-2550. We will transfer
your sale proceeds electronically to your bank. The
bank must be a member of the Automated Clearing
House.
BY EXCHANGE: Call 800-338-2550 to exchange any portion of your
Fund shares for shares in any other Stein Roe no-
load fund.
BY AUTOMATIC EXCHANGE: Fill out the appropriate areas of the
account application for this feature. Redeem a
fixed amount on a regular basis (not less than $50
per month; not more than $100,000) from a Fund for
investment in another Stein Roe no-load fund.
What You Need to Know When Selling Shares
Once we receive and accept your order to sell shares, you may not
cancel or revoke it. We cannot accept an order to sell that
specifies a particular date or price or any other special
conditions. If you have any questions about the requirements for
selling your shares, please call 800-338-2550 before submitting
your order.
The Fund redeems shares at the NAV next determined after an order
has been accepted. We mail the proceeds within seven days after
the sale. The Fund normally pays wire redemption or electronic
transfer proceeds on the next business day.
We will not pay sale proceeds until your shares are paid for. If
you attempt to sell shares purchased by check or electronic
transfer within 15 days of the purchase date, we will delay
sending the sale proceeds until we can verify that those shares
are paid for. You may avoid this delay by purchasing shares by a
federal funds wire.
We use procedures reasonably designed to confirm that telephone
instructions are genuine. These include recording the
conversation, testing the identity of the caller by asking for
account information, and sending prompt written confirmation of
the transaction to the shareholder of record. If these procedures
are followed, the Fund and its service providers will not be
liable for any losses due to unauthorized or fraudulent
instructions.
If the amount you redeem is in excess of the lesser of (1)
$250,000 or (2) 1% of the Fund's net assets, the Fund may pay the
redemption "in kind." This is payment in portfolio securities
rather than cash. If this occurs, you may incur transaction costs
when you sell the securities.
Redemption Fee
The Fund charges a 1% redemption fee on sales of Fund shares that
you have held less than 90 days. The fee is retained by the Fund
for the benefit of the remaining shareholders. The fee is waived
for shares purchased through certain retirement plans, including
401(k) plans, 403(b) plans, 457 plans, Keogh accounts, and Stein
Roe Profit Sharing and Money Purchase Pension Plans. The fee
waiver may not apply to shares purchased through an intermediary
maintaining an omnibus account with the Fund. Before purchasing
shares, please check with your account representative concerning
the availability of the waiver. The fee waiver does not apply to
IRA and SEP-IRA accounts. The redemption fee is intended to
encourage long-term investment in the Fund, to avoid transaction
and other expenses caused by early redemptions, and to facilitate
portfolio management. The fee does not benefit Stein Roe in any
way. The Fund may modify the terms of, terminate, or waive this
fee at any time.
Involuntary Redemption
If your account value falls below $1,000, the Fund may redeem your
shares and send the proceeds to the registered address. You will
receive notice 30 days before this happens. If your account falls
below $10, the Fund may redeem your shares without notice to you.
Low Balance Fee
Due to the expense of maintaining accounts with low balances, if
your account balance falls below $2,000 ($800 for custodial
accounts), you will be charged a low balance fee of $5 per
quarter. The low balance fee does not apply to: (1) shareholders
whose accounts in the Stein Roe Funds total $50,000 or more; (2)
Stein Roe IRAs; (3) other Stein Roe prototype retirement plans;
(4) accounts with automatic investment plans (unless regular
investments have been discontinued); or (5) omnibus or nominee
accounts. The Fund can waive the fee, at its discretion, in the
event of significant market corrections.
EXCHANGING SHARES You may exchange Fund shares for shares of
other Stein Roe no-load funds. Call 800-338-2550 to request a
prospectus and application for the fund you wish to exchange into.
Please be sure to read the prospectus carefully before you
exchange your shares.
The account you exchange into must be registered exactly the same
as the account you exchange from. You must meet all investment
minimum requirements for the fund you wish to exchange into before
we can process your exchange transaction.
An exchange is a redemption and purchase of shares for tax
purposes, and you may realize a gain or a loss when you exchange
Fund shares for shares of another fund.
We may change, suspend or eliminate the exchange service after
notification to you.
Generally, we limit you to four telephone exchanges "roundtrips"
per year. A roundtrip is an exchange out of the Fund into another
Stein Roe no-load fund and then back to the Fund.
REPORTING TO SHAREHOLDERS To reduce the volume of mail you
receive, only one copy of certain materials, such as shareholder
reports, will be mailed to your household (same address). Please
call 800-338-2550 if you want to receive additional copies free of
charge. This policy may not apply if you purchase shares through
an intermediary.
DIVIDENDS AND DISTRIBUTIONS The Fund distributes, at least once
a year, virtually all of its net investment income and net
realized capital gains.
A dividend from net investment income represents the income the
Fund earns from dividends and interest paid on its investments,
after payment of the Fund's expenses.
A capital gain is the increase in value of a security that the
Fund holds. The gain is "unrealized" until the security is sold.
Each realized capital gain is either short term or long term
depending on whether the Fund held the security for one year or
less or more than one year, regardless of how long you have held
your Fund shares.
When the Fund makes a distribution of income or capital gains, the
distribution is automatically invested in additional shares of the
Fund unless you elect on the account application to have
distributions paid by check.
[callout]
OPTIONS FOR RECEIVING DISTRIBUTION AND REDEMPTION PROCEEDS:
* by check
* by electronic transfer into your bank account
* a purchase of shares of another Stein Roe fund
* a purchase of shares in a Stein Roe fund account of another
person
[/callout]
If you elect to receive distributions by check and a distribution
check is returned to the Fund as undeliverable, or if you do not
present a distribution check for payment within six months, we
will change the distribution option on your account and reinvest
the proceeds of the check in additional shares of the Fund. You
will not receive any interest on amounts represented by uncashed
distribution or redemption checks.
Tax Consequences
You are subject to federal income tax on both dividends and
capital gains distributions whether you elect to receive them in
cash or reinvest them in additional Fund shares. If the Fund
declares a distribution in December, but does not pay it until
after December 31, you will be taxed as if the distribution were
paid in December. Stein Roe will process your distributions and
send you a statement for tax purposes each year showing the source
of distributions for the preceding year.
TRANSACTION TAX STATUS
- ----------------------------------------------------------------
Income dividend Ordinary income
Short-term capital gain distribution Ordinary income
Long-term capital gain distribution Capital gain
Sale of shares owned one year or less Gain is ordinary income;
loss is subject to special
rules
Sale of shares owned more than one year Capital gain or loss
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 Fund shares. Such transactions may be subject to
federal income tax.
This tax information provides only a general overview. It does
not apply if you invest in a tax-deferred retirement account such
as an IRA. Please consult your own tax advisor about the tax
consequences of an investment in the Fund.
<PAGE>
OTHER INVESTMENTS 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 Fund also may invest in
other securities and use other investment techniques. The Fund
may elect not to buy any of these other securities or use any of
these other investment techniques. The Fund may not always
achieve its investment goal.
This section describes other securities and techniques, and risks
associated with them. The Statement of Additional Information
(SAI) 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 SAI 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.
COUNTRY ALLOCATION The Pacific Basin countries that the Fund
invests in include Australia and New Zealand. The Asian countries
the Fund invests in include Japan, Hong Kong/China, Singapore,
South Korea, Taiwan, Malaysia, Thailand, Indonesia, and the
Philippines. The Fund considers an issuer of securities to be
located in the Pacific Basin if:
* it is organized under the laws of a country in the Pacific Basin
and has a principal office in a country in the Pacific Basin,
* it derives 50% or more of its total revenues from business in
the Pacific Basin, or
* its equity securities are traded principally on a securities
exchange in the Pacific Basin.
As of September 30, 1999, the Fund had more than 5% of its total
assets in each of the following countries:
Country Allocation
Countries Percentage of
Total Assets
---------------------------------
Japan 37.7%
Hong Kong/China 42.8%
Singapore 13.8%
FOREIGN CURRENCY TRANSACTIONS The Fund engages in a variety of
foreign currency transactions. It may buy and sell foreign
currencies in the spot market (commodities market in which goods
are sold for cash and delivered immediately). The Fund may also
buy or sell forward contracts (buy or sell currency on a
prespecified date in the future). It may buy and sell foreign
currency futures contracts. It also may buy and sell options on
foreign currencies and foreign currency futures. The Fund uses
these transactions for two primary purposes. First, it may seek
to lock in a particular foreign exchange rate for the settlement
of a purchase or sale of a foreign security or for the receipt of
interest, principal or dividend payments on a foreign security it
holds. Second, it may seek to hedge against a decline in the
value, in U.S. dollars or in another currency, of a foreign
currency in which its securities are denominated. These hedging
techniques limit the potential gain from currency value increases.
ADRS AND EDRS. The Fund may purchase American Depositary
Receipts (ADRs) and European Depositary Receipts (EDRs). ADRs are
securities guaranteed by a United States person and are receipts
typically issued by an American bank or trust company evidencing
ownership of the underlying securities. The Fund may invest in
sponsored or unsponsored ADRs. In the case of an unsponsored ADR,
the investor 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. EDRs are securities representing underlying shares
of foreign issuers. Positions in these securities are not
necessarily denominated in the same currency as the common stocks
into which they may be converted. EDRs are European receipts
evidencing a similar arrangement. Generally, ADRs, in registered
form, are designed for the U.S. securities markets and EDRs, in
bearer form, are designed for use in European securities markets.
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 Fund
generally intends to purchase securities for long-term investment
although, to a limited extent, it may purchase securities
(including securities purchased in initial public offerings) 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 Fund may hold cash
or invest any portion of its assets in securities of the U.S.
government and equity and debt securities of U.S. companies, as a
temporary defensive strategy. To meet liquidity needs, it may
also hold cash in domestic and foreign currencies and invest in
domestic and foreign money market securities (including repurchase
agreements and foreign money market positions). 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 it takes a temporary defensive
position.
INTERFUND LENDING PROGRAM The Fund may lend money to and borrow
money from other funds advised by Stein Roe. It 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.
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THE FUND'S MANAGEMENT
INVESTMENT ADVISER Stein Roe & Farnham Incorporated (Stein Roe),
One South Wacker Drive, Chicago, IL 60606, manages the day-to-day
operations of the Fund. Stein Roe (and its predecessor) has
advised and managed mutual funds since 1949. For the fiscal year
ended September 30, 1999, the Fund paid to Stein Roe aggregate
fees of 0.00% of average net assets, after reimbursement of
expenses by Stein Roe.
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 Funds. 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.
Stein Roe may use the services of AlphaTrade Inc., an affiliated
broker-dealer, when buying or selling equity securities for the
Fund's portfolio, pursuant to procedures adopted by the Board of
Trustees.
The Fund's sub-adviser is Newport Pacific Management, Inc., 580
California Street, Suite 1960, San Francisco, CA 94104. Newport
is subject to the overall supervision of Stein Roe and provides
the Fund with investment advisory services, including portfolio
management. Newport is registered as an investment adviser under
the Investment Advisers Act of 1940 and specializes in investing
in the Pacific region. It is an affiliate of Stein Roe. For its
services as sub-adviser, Stein Roe pays Newport an annual fee of
0.55% of the Fund's average net assets. As of September 30, 1999,
Newport managed approximately $1 billion in assets, all of which
were invested in foreign securities.
PORTFOLIO MANAGERS Thomas R. Tuttle, Christopher Legallet, and
David Smith have been co-portfolio managers of the Fund since its
inception in 1998.
Mr. Tuttle is senior vice president of Newport. Mr. Tuttle has
been affiliated with Newport since 1983 and has managed other
funds or accounts since that time. He received a B.S. degree from
Williams College.
Mr. Legallet is a senior vice president of Newport. He joined
Newport in 1997 and has managed other funds and accounts since
that time. Prior to his affiliation with Newport, Mr. Legallet
was a Managing Director of Jupiter Tyndall (Asia) Ltd. in Hong
Kong, serving as lead manager for investment in Asia since 1992.
He received his B.A. and M.B.A. degrees from UCLA.
Mr. Smith is a senior vice president of Newport, which he joined
in 1994 and has managed other funds and accounts for Newport since
that time. He also manages the portion of the portfolios of
Newport's private clients invested in Japan as well as analyzing
North Asian markets. He has 29 years of experience in the
investment business as a money manager, institutional broker, and
investment banker. Mr. Smith graduated from San Francisco State
University with a degree in finance and economics.
MASTER/FEEDER FUND STRUCTURE The Fund could convert into a
"feeder" fund in a "master/feeder" structure at some future date.
This means that all of the Fund's assets would be invested in a
larger "master" portfolio of securities that has investment
objectives and policies substantially identical to those of the
Fund.
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FOR MORE INFORMATION
You can obtain more information about the Fund's investments in
its semiannual and annual reports to investors. These reports
discuss the market conditions and investment strategies that
affected the Fund's performance over the past six months and year.
You may wish to read the Fund's SAI for more information. The SAI
is incorporated into this prospectus by reference, which means
that it is considered to be part of this prospectus and you are
deemed to have been told of its contents.
To obtain free copies of the Fund's semiannual and annual reports,
latest quarterly profile, or the SAI or to request other
information about the Fund, write or call:
Stein Roe Mutual Funds
One Financial Center
Boston, MA 02111-2621
800-338-2550
www.steinroe.com
Information about the Fund (including the SAI) can be reviewed and
copied at the Public Reference Room of the Securities and Exchange
Commission (SEC) in Washington, D.C. Information on the Public
Reference Room may be obtained by calling the SEC at 202-942-8090.
Reports and other information about the Fund are available on the
EDGAR database on the SEC's Internet site at http://www.sec.gov.
Copies of this information may be obtained, after paying a
duplicating fee, by electronic request at the following E-mail
address: [email protected] or by writing the SEC's Public
Reference Section, Washington, D.C. 20549-0102.
Investment Company Act file number of Liberty-Stein Roe Funds
Investment Trust: 811-04978
LIBERTY FUNDS DISTRIBUTOR, INC.
S22-01/083B-0400
