STEINROE VARIABLE INVESTMENT TRUST, 485BPOS, 2000-06-01

STEINROE VARIABLE INVESTMENT TRUST
485BPOS, 2000-06-01

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File No. 33-14954
File No. 811-5199
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 19 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 21 [X]

STEINROE VARIABLE INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)

One Financial Center, Boston, MA 02111
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code:
(617) 722-6000

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

[X] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485

Kevin M. Carome Cameron S. Avery
Executive Vice President & Secy. Bell, Boyd & Lloyd
SteinRoe Variable Investment Trust Three First National Plaza
One Financial Center 70 W. Madison Street, Suite 3300
Boston, MA 02111 Chicago, Illinois 60602

(Name and Address of Agents for Service)

The Registrant has registered an indefinite number of shares of beneficial
interest of all existing and subsequently created Series of the Trust under the
Securities Act of 1933 pursuant to Rule 24f-2.

<PAGE>

STEINROE VARIABLE
INVESTMENT TRUST
PROSPECTUS

JUNE 1, 2000

- Stein Roe Balanced Fund, Variable Series
- Stein Roe Growth Stock Fund, Variable Series
- Stein Roe Small Company Growth Fund, Variable Series
- Stein Roe Mortgage Securities Fund, Variable Series

CLASS B SHARES

* * * *

Trust shares are available only through variable annuity contracts and variable
life insurance policies of participating insurance companies.

* * * *

This prospectus must be accompanied by a prospectus for your variable annuity
contract or variable life insurance policy. Retain both prospectuses for future
reference.

* * * *

Although trust shares have been registered with the Securities and Exchange
Commission, the Commission has not approved any shares offered in this
prospectus or determined whether this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.

------------------------------ --------------------------------------------
NOT FDIC-INSURED MAY LOSE VALUE
NO BANK GUARANTEE
------------------------------ --------------------------------------------

<PAGE>

<TABLE>
<S> <C>
THE TRUST...............................................................................................3

THE FUNDS...............................................................................................3
Each Fund section contains the following information specific to that Fund:
investment goal, primary investment strategy, primary investment risks,
and performance history
Stein Roe Balanced Fund, Variable Series..........................................................4
Stein Roe Growth Stock Fund, Variable Series......................................................7
Stein Roe Small Company Growth Fund, Variable Series..............................................9
Stein Roe Mortgage Securities Fund, Variable Series..............................................11

OTHER INVESTMENTS AND RISKS............................................................................14

TRUST MANAGEMENT ORGANIZATIONS.........................................................................16
The Trustees.....................................................................................16
The Adviser: Stein Roe & Farnham Incorporated....................................................16
Portfolio Managers...............................................................................16
Rule 12b-1 Plan..................................................................................17
Mixed and Shared Funding.........................................................................17

FINANCIAL HIGHLIGHTS...................................................................................19

SHAREHOLDER INFORMATION................................................................................23
</TABLE>

<PAGE>

THE TRUST

SteinRoe Variable Investment Trust (Trust) includes five separate mutual funds
(Funds), each with its own investment goal and strategies. This prospectus
contains information about four of the Funds in the Trust:

- Stein Roe Balanced Fund, Variable Series
- Stein Roe Growth Stock Fund, Variable Series
- Stein Roe Small Company Growth Fund, Variable Series
- Stein Roe Mortgage Securities Fund, Variable Series

Other Funds may be added or deleted from time to time. Each Fund offers two
classes of shares - Class A and Class B shares. Each share class has its own
expense structure.

The Trust's Funds are investment options under variable annuity contracts (VA
contracts) and variable life insurance policies (VLI policies) issued by life
insurance companies (Participating Insurance Companies). Some (but not all)
Participating Insurance Companies are affiliated with the investment adviser to
the Funds. Participating Insurance Companies invest in the Funds through
separate accounts that they set up for that purpose. Owners of VA contracts and
VLI policies invest in sub-accounts of those separate accounts through
instructions they give to their insurance company.

The prospectuses of the Participating Insurance Companies' separate accounts
describe which Funds are available to the purchasers of their own VA contracts
and VLI policies.

THE FUNDS

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.

<PAGE>

INVESTMENT GOAL--STEIN ROE BALANCED FUND, VARIABLE SERIES
--------------------------------------------------------------------------------
Stein Roe Balanced Fund, Variable Series, seeks high total investment return.

PRIMARY INVESTMENT STRATEGY
--------------------------------------------------------------------------------
The Fund allocates its investments among common stocks and securities
convertible into common stocks, bonds and cash. The Fund invests primarily in
well-established companies that have large market capitalizations. The portfolio
manager may invest in a company because it has a history of steady to improving
sales or earnings growth that the portfolio manager believes can be sustained.
He also may invest in a company because he believes its stock is priced
attractively compared to the value of its assets. The Fund may invest up to 25%
of its assets in foreign stocks.

The Fund also invests at least 25% of its assets in bonds. The Fund purchases
bonds that are "investment grade"--that is, within the four highest investment
grades assigned by a nationally recognized statistical rating organization. The
Fund may invest in unrated bonds if the portfolio manager believes that the
securities are investment-grade quality. To select debt securities for the Fund,
the portfolio manager considers a bond's expected income together with its
potential for price gains or losses.

The portfolio manager sets the Fund's asset allocation between stocks, bonds and
cash. The portfolio manager may change the allocation from time to time based
upon economic, market and other factors that affect investment opportunities.

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 and bonds:
management risk and market risk. For bonds, market risk is primarily a factor of
interest rate changes. These risks may cause you to lose money by investing in
the Fund.

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.

Because the Fund invests in stocks and bonds, 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 stocks and bonds.

FOREIGN 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

<PAGE>

more limited than domestic securities, which means that the Fund 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.

DEBT SECURITIES

The Fund's investments in debt securities, generally bonds, 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 values 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.

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 A shares. The
performance table following the bar chart shows how the Fund's average annual
returns compare with those of a broad measure of market performance for one
year, five years and 10 years. We compare the Fund to the S&P 500 Index and the
Lehman Brothers Government/Corporate Bond Index, which are broad-based measures
of market performance. 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. Performance results include any expense reduction
arrangements. If these arrangements were not in place, then the performance
results would have been lower. Any reduction arrangements may be discontinued at
any time. The Fund's performance results do not reflect the cost of insurance
and separate account charges which are imposed under your VA contract or VLI
policy.

<PAGE>

CALENDAR-YEAR TOTAL RETURNS(1)

[Bar Graph]
1999 12.53%
1998 12.54%
1997 16.82%
1996 15.63%
1995 25.43%
1994 -3.19%
1993 9.29%
1992 7.53%
1991 27.93%
1990 -0.69%

Best quarter: 4th quarter 1999, +12.39%
Worst quarter: 3rd quarter 1990, -10.04%

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS

<S> <C> <C> <C> <C>
Stein Roe Balanced Fund, Variable Series(1) 12.53% 16.50% 11.99%
S&P 500 Index* 21.03% 28.54% 18.19%
Lehman Brothers Government/ Corporate Bond Index* -2.15% 7.61% 7.65%
</TABLE>

--------
*The S&P 500 Index and the Lehman Brothers Government/Corporate Bond Index are
unmanaged groups of stocks that differ from the Fund's composition; they are not
available for direct investment.

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

(1) Because the Class B shares have not completed a full calendar year, the bar
chart and average annual total returns shown is for Class A shares, the oldest
existing fund class.

<PAGE>

INVESTMENT GOAL--STEIN ROE GROWTH STOCK FUND, VARIABLE SERIES
--------------------------------------------------------------------------------
Stein Roe Growth Stock Fund, Variable Series, seeks long-term growth of capital.

PRIMARY INVESTMENT STRATEGY
--------------------------------------------------------------------------------
The Fund invests primarily in the common stocks of companies with large market
capitalizations. The Fund emphasizes the technology, financial services, health
care, and global consumer franchise sectors. The Fund may invest up to 25% of
its assets in foreign stocks. To select investments for the Fund, the portfolio
manager considers companies that he believes will generate earnings growth over
the long term regardless of the economic environment.

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 by investing in
the Fund.

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 stocks.

The Portfolio's emphasis on certain market sectors may increase volatility in
the Fund's NAV. If sectors that the Portfolio invests in do not perform well,
the Fund's NAV could decrease.

FOREIGN 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. 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.

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 A shares. The
performance table following

<PAGE>

the bar chart shows how the Fund's average annual returns compare with those of
a broad measure of market performance for one year, five years and 10 years. We
compare the Fund to the S&P 500 Index, a broad-based measure of market
performance. 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.
Performance results include any expense reduction arrangements. If these
arrangements were not in place, then the performance results would have been
lower. Any reduction arrangements may be discontinued at any time. The Fund's
performance results do not reflect the cost of insurance and separate account
charges which are imposed under your VA contract or VLI policy.

CALENDAR-YEAR TOTAL RETURNS(2)

[Bar Graph]
1999 36.94%
1998 27.91%
1997 32.28%
1996 21.28%
1995 37.73%
1994 -6.35%
1993 4.97%
1992 6.63%
1991 48.03%
1990 -1.65%

Best quarter: 4th quarter 1998, +26.43%
Worst quarter: 3rd quarter 1990, -17.42%

1 YEAR 5 YEARS 10 YEARS

Stein Roe Growth Stock Fund, Variable Series(2) 36.94% 31.08% 19.43%
S&P 500 Index* 21.03% 28.54% 18.19%

--------
*The S&P 500 Index is an unmanaged group of stocks that differs from the Fund's
composition; it is not available for direct investment.

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

(2) Because the Class B shares have not completed a full calendar year, the bar
chart and average annual total returns shown is for Class A shares, the oldest
existing fund class.

<PAGE>

INVESTMENT GOAL--STEIN ROE SMALL COMPANY GROWTH FUND, VARIABLE SERIES
--------------------------------------------------------------------------------
Stein Roe Small Company Growth Fund, Variable Series, seeks long-term growth of
capital.

PRIMARY INVESTMENT STRATEGY
--------------------------------------------------------------------------------
Under normal market conditions, the Fund invests at least 65% of its assets in
common stocks of small-cap companies. The Fund may invest in new issuers during
periods when new issues are being brought to market. The Fund may also invest in
midcap companies. The Fund invests in companies that compete within large and
growing markets and that have the ability to grow their market share. To find
companies with these growth characteristics, the portfolio manager seeks out
companies that are--or, in the portfolio manager's judgment, have the potential
to be--a market share leader within their respective industry. He also looks for
companies with strong management teams that participate in the ownership of the
companies.

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 by investing in
the Fund.

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 stocks.

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.

PERFORMANCE HISTORY
--------------------------------------------------------------------------------

<PAGE>

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. Performance results
include any expense reduction arrangements. If these arrangements were not in
place, then the performance results would have been lower. Any reduction
arrangements may be discontinued at any time. The Fund's performance results do
not reflect the cost of insurance and separate account charges which are imposed
under your VA contract or VLI policy.

CALENDAR YEAR TOTAL RETURNS(3)

[Bar Graph]
1999 48.02%
1998 -17.30%
1997 7.81%
1996 26.94%
1995 11.75%
1994 1.19%
1993 35.68%
1992 14.48%
1991 37.25%
1990 -8.91%

Best quarter: 4th quarter 1999, +35.39%
Worst quarter: 3rd quarter 1990, -21.18%

1 YEAR 5 YEARS 10 YEARS

Stein Roe Small Company Growth Fund, Variable 48.02% 13.36% 13.91%
Series(3)
S&P SmallCap 600 Index* 12.41% 17.05% 13.04%

--------
*The S&P SmallCap 600 Index is an unmanaged group of stocks that differs from
the Fund's composition; it is not available for direct investment.

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

(3) Because the Class B shares have not completed a full calendar year, the bar
chart and average annual total returns shown is for Class A shares, the oldest
existing fund class.

<PAGE>

INVESTMENT GOAL--STEIN ROE MORTGAGE SECURITIES FUND, VARIABLE SERIES
--------------------------------------------------------------------------------
Stein Roe Mortgage Securities Fund, Variable Series, seeks the highest possible
level of current income, consistent with safety of principal and maintenance of
liquidity.

PRIMARY INVESTMENT STRATEGY
--------------------------------------------------------------------------------

Under normal market conditions, the Stein Roe Mortgage Securities Fund, Variable
Series invests at least 65% of its total assets in the following types of
securities:

- Mortgage securities and mortgage-related (home equity, home
improvement and manufactured housing) asset-backed securities;
- U.S. government securities, including U.S. treasuries and securities of
various U.S. government agencies;
- Agency pass-throughs;
- Agency and whole-loan collateralized mortgage obligations (CMOs); and
- Commercial mortgage-backed securities.

The Fund has wide flexibility to vary its allocation among different types of
mortgage securities, U.S. government securities and the securities of
non-governmental issuers based on the portfolio managers' judgment of which
types of securities will outperform the others. In selecting investments for the
Fund, Stein Roe considers a security's expected income together with its
potential to rise or fall in price.

To select investments for the Fund, the portfolio managers looks for securities
within these sectors that balance the potential for the highest yield and
relative value with the prospects for incremental capital appreciation. The
portfolio managers usually focus on securities rated AA or higher. However, the
Fund may invest in securities rated investment grade (BBB) or higher. The Fund
also may invest in unrated securities if Stein Roe believes the security is
comparable in quality to a security that is rated at least investment grade.

TYPES OF MORTGAGE SECURITIES

Mortgage securities represent ownership interests in large, diversified pools of
individual home mortgage loans. Sponsors pool together mortgages of similar
rates and terms and offer them as a

<PAGE>

security to investors. The monthly payments of principal and interest made by
homeowners are in turn passed through to the mortgage investor.

The Fund invests in three major sectors of the mortgage securities universe.
Most mortgage securities are pooled together and structured as pass-throughs.
Monthly payments of principal and interest from the underlying mortgage loans
backing the pool are collected by a service and "passed through" regularly to
the investor. Pass-throughs can have a fixed or an adjustable rate. The majority
of pass-through securities are issued by three agencies: Ginnie Mae, Fannie Mae,
and Freddie Mac.

Collateralized mortgage obligations (CMOs) are backed by either agency or whole
loan pass-throughs, which carry either fixed or adjustable rate interest rates.
Tailored to meet investor demand, CMOs redirect principal and interest flows,
thereby shifting prepayment risk to investors that are most suited to bear such
risk. Typically, principal prepayments are paid sequentially to separate
"tranches," which create mortgage securities of short-, medium- and long-term
maturities. The Fund may buy CMOs of any maturity tranch, depending upon the
portfolio manager's judgment regarding which tranch at the time offers the best
relative value.

Asset-backed securities are securities backed by various types of loans such as
credit card, auto and home-equity loans. The Fund generally invests in
"mortgage-related" asset-backed securities, which are backed by residential
first and second lien home equity, home improvement and manufactured housing
loans.

Commercial mortgage-backed securities are secured by loans to office buildings,
multi-family apartment buildings and shopping centers. These loans usually
contain prepayment penalties which provide protection from refinancing in a
declining interest rate environment.

PRIMARY INVESTMENT RISKS
--------------------------------------------------------------------------------
The primary risks of investing in the Fund are described below. There are many
circumstances (that are not described here) which could cause you to lose money
by investing in the Fund or prevent the Fund from achieving its goals.

Interest rate risk is the risk of a decline in the price of a mortgage security
when interest rates rise. In general, if interest rates rise, mortgage security
prices fall; and if interest rates fall, mortgage security prices rise. Interest
rate risk is generally greater for securities with longer maturities. Changes in
the values of securities will not affect the amount of income the Fund receives
but will affect the value of the Fund's shares.

Prepayment risk is the possibility that, as interest rates fall, homeowners are
more likely to refinance their home mortgages. When mortgages are refinanced,
the principal on mortgage-backed securities is paid earlier than expected. In an
environment of declining interest rates, early return of principal from
prepayments must be reinvested at lower interest rates, reducing the expected
total rate of return for mortgage securities. During periods of rising interest
rates, mortgage securities have a high risk of declining in price. This is
because higher rates lead to slower prepayments, effectively extending the
expected maturity of the bond at a time when interest rates are rising.
Prepayment risk applies to generally all mortgage securities, regardless of
whether they represent interests in pools of fixed or adjustable interest rate
loans. The

<PAGE>

potential impact of prepayment on the price of a mortgage-backed security may be
difficult to predict and result in greater volatility than other types of fixed
income securities.

Because the Fund may invest in securities issued by private entities, it can at
times be exposed to default risk. To protect against these risks, the securities
generally have some type of credit enhancement, usually a senior/subordinated
structure. The portfolio manager attempts to assure that the amount of credit
enhancement in each holding subject to default is commensurate with the credit
rating assigned from the rating agencies. There can be no assurance that the
amount of credit support will be sufficient to fully cover losses stemming from
defaults of the underlying loans.

Management risk, which exists in varying amounts in all mutual funds, refers to
the possibility that the portfolio manager may fail to anticipate these
movements or risks, or effectively execute the Fund's strategy.

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 A shares. The
performance table following the bar chart shows how the Fund's average annual
returns compare with those of a broad measure of market performance for one
year, five years and 10 years. We compare the Fund to the Lehman Mortgage-Backed
Securities Index, a broad-based measure of market performance. 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. Performance results
include any expense reduction arrangements. If these arrangements were not in
place, then the performance results would have been lower. Any reduction
arrangements may be discontinued at any time. The Fund's performance results do
not reflect the cost of insurance and separate account charges which are imposed
under your VA contract or VLI policy.

CALENDAR-YEAR TOTAL RETURNS(4)

[Bar Graph]
1999 1.08%
1998 6.80%
1997 9.04%
1996 4.70%
1995 15.74%
1994 -1.47%
1993 6.26%
1992 5.96%
1991 14.48%
1990 9.10%

Best quarter: 3rd quarter 1991, +5.13%
Worst quarter: 1st quarter 1994, -1.77%

1 YEAR 5 YEARS 10 YEARS

Stein Roe Mortgage Securities Fund, Variable 1.08% 7.34% 7.04%
Series(4)
Lehman Mortgage-Backed Securities Index* 1.86% 7.98% 7.78%

--------
*The Lehman Mortgage-Backed Securities Index is an unmanaged group of securities
that differs from the Fund's composition; it is not available for direct
investment.

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

(4) Because the Class B shares have not completed a full calendar year, the bar
chart and average annual total returns shown is for Class A shares, the oldest
existing fund class.

<PAGE>

OTHER INVESTMENTS AND RISKS

The first portion of this prospectus describes each Fund's principal investment
strategy and principal investment risks. In seeking to meet its investment
goals, a Fund also may invest in other securities and use other investment
techniques. A Fund may elect not to buy any of these other securities or use any
of these other investment techniques. A 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 a 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 a Fund or could cause a Fund's total
return to decrease. The SAI also contains a Fund's fundamental and
non-fundamental investment policies.

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

FUTURES AND OPTIONS

Balanced Fund uses futures to gain exposure to groups of stocks or individual
issuers. The Fund uses futures to invest cash pending direct investments in
stocks and to enhance their return. It also uses futures and options on futures
to decrease equity exposure or to adjust interest rate duration of the Fund's
fixed-income security holdings. The Fund uses options on securities to earn
additional income or to hedge against price erosion in the underlying security
for the intermediate term. 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. Futures and options 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.

SHORT SALES

Balanced Fund and Small Company Growth Fund may make short sales of securities.
Short selling involves the sale of borrowed securities. When the Fund thinks the
price of a stock will decline, it borrows the stock and then sells the borrowed
stock. When the Fund has to return the borrowed stock, it tries to buy the stock
at a lower price. If the Fund is successful, it has a capital gain. If the Fund
is unsuccessful and buys the stock at a higher price than the price at which it
sold the stock, the Fund has a capital loss. The Fund's capital gains and losses
may result in federal income tax consequences to the Fund's shareholders. Short
selling involves certain risks. The Fund could have a loss if the borrowed
security increases in value and if the purchased security declines in value.

PORTFOLIO TURNOVER

The Funds do not have limits on portfolio turnover. Turnover may vary
significantly from year to year. Stein Roe does not expect it to exceed 100%
(150% in the case of Small Company Growth Fund) under normal conditions. The
Funds generally intend to purchase securities for long-term investment although,
to a limited extent, they may purchase securities (including

<PAGE>

securities purchased in initial public offerings) in anticipation of relatively
short-term price gains. Portfolio turnover increases transaction expenses, which
reduce a Fund's return.

TEMPORARY DEFENSIVE POSITIONS

When Stein Roe believes that a temporary defensive position is necessary, a Fund
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. A Fund may
not achieve its investment objective if it takes a defensive position.

<PAGE>

TRUST MANAGEMENT ORGANIZATIONS

THE TRUSTEES

The business of the Trust and the Funds is supervised by the Trust's Board of
Trustees. The SAI contains names of and biographical information on the
Trustees.

THE ADVISER: STEIN ROE & FARNHAM INCORPORATED

Stein Roe & Farnham Incorporated, One South Wacker Drive, Chicago, IL 60606,
manages the day-to-day operations of the Funds. Stein Roe has advised and
managed mutual funds since 1949. As of December 31, 1999, Stein Roe managed more
than $30.1 billion in assets. For the 1999 fiscal year, the Trust paid Stein Roe
management and administrative fees at the following annual rates of the average
daily net assets of the specified Fund:

Stein Roe Balanced Fund, Variable Series 0.60%
Stein Roe Growth Stock Fund, Variable Series 0.65%
Stein Roe Small Company Growth Fund, Variable Series 0.65%
Stein Roe Mortgage Securities Fund, Variable Series 0.55%

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 a Fund's portfolio, pursuant to
procedures adopted by the Board of Trustees.

PORTFOLIO MANAGERS

STEIN ROE BALANCED FUND, VARIABLE SERIES. Harvey B. Hirschhorn has been
portfolio manager of Balanced Fund since 1996. He joined Stein Roe in 1973 and
is executive vice president and chief economist and investment strategist.

STEIN ROE GROWTH STOCK FUND, VARIABLE SERIES. Erik P. Gustafson is portfolio
manager of Growth Stock Fund and has managed Stein Roe Growth Stock Fund and
Stein Roe Young Investor Fund since 1994. Mr. Gustafson joined Stein Roe in 1992
as a portfolio manager for privately managed accounts and is a senior vice
president.

STEIN ROE SMALL COMPANY GROWTH FUND, VARIABLE SERIES. William M. Garrison has
been portfolio manager of Small Company Growth Fund since October 1998. Mr.
Garrison is a vice

<PAGE>

president of Stein Roe, which he joined in 1989. He has been an associate
portfolio manager of the Stein Roe Balanced Fund since 1995 and has been an
equity research analyst with Stein Roe since 1993.

STEIN ROE MORTGAGE SECURITIES FUND, VARIABLE SERIES. Leslie W. Finnemore, a
senior vice president of Stein Roe, is a co-manager of the Stein Roe Mortgage
Securities Fund, Variable Series as of June, 2000. Ms. Finnemore has served as
manager or co-manager of various other taxable income funds for Stein Roe and
its affiliate, Colonial, since 1987.

Michael Bissonnette, a senior vice president of Stein Roe, is a co-manager of
the Stein Roe Mortgage Securities Fund, Variable Series as of June, 2000. Mr.
Bisonnette also serves as a manager or co-manager of various other taxable
income funds for Stein Roe and its affiliate, Colonial, since June, 1999. Mr.
Bissonnette was a portfolio manager at APAM, Inc. from June, 1998 to June, 1999
and a portfolio manager at Caxton Corporation from July, 1996 to June, 1998.
From June, 1993 to June, 1996, Mr. Bissonnette served as a portfolio manager of
fixed-income funds and a vice president of Colonial.

RULE 12b-1 PLAN

The Trust has adopted a plan for and on behalf of the Funds' Class B shares in
accordance with Rule 12b-1 (Plan) under the Investment Company Act of 1940. The
Plan allows the Funds to pay fees for the sale and distribution of their Class B
shares. Under the Plan, each Fund pays the distributor a distribution fee of
0.25% of the average daily net assets attributable to the Funds' Class B shares.
Because these fees are an ongoing expense, over time they increase the cost of
an investment and the shares may cost more than shares that are not subject to a
distribution fee.

MIXED AND SHARED FUNDING

As described above, the Trust serves as a funding medium for VA
contracts and VLI policies of Participating Insurance Companies, so-called mixed
and shared funding. As of the date of this Prospectus, the Participating
Insurance Companies are Keyport Life Insurance Company (Keyport), Independence
Life & Annuity Company (a wholly owned subsidiary of Keyport) (Independence),
American Benefit Life Insurance Company (also a wholly owned subsidiary of
Keyport) (American Benefit), Liberty Life Assurance Company of Boston (an
affiliate of Liberty Mutual Insurance Company) (Liberty Life), and, with respect
to Small Company Growth Fund, Transamerica Occidental Life Insurance Company,
First Transamerica Life Insurance Company, Great-West Life & Annuity Insurance
Company and Providian Life and Health Insurance Company. Keyport is an indirect
wholly owned subsidiary of Liberty Financial Companies, Inc. (LFC). As of March
31, 2000, approximately 71.30% of the combined voting power of LFC's outstanding
voting stock was held by Liberty Mutual Insurance Company (Liberty Mutual). One
or more of the Funds may from time to time become funding

<PAGE>

vehicles for VA contracts or VLI policies of other Participating Insurance
Companies, including other entities not affiliated with Keyport, LFC or Liberty
Mutual.

The interests of owners of VA contracts and VLI policies could diverge
based on differences in state regulatory requirements, changes in the tax laws
or other unanticipated developments. The Trust does not foresee any such
differences or disadvantages at this time. However, the Trustees will monitor
for such developments to identify any material irreconcilable conflicts and to
determine what action, if any, should be taken in response to such conflicts. If
such a conflict were to occur, one or more separate accounts might be required
to withdraw its investments in one or more Funds or shares of another Fund may
be substituted. This might force a Fund to sell securities at disadvantageous
prices.

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables that follow are intended to help you understand
the Funds' financial information for the last five fiscal years. Because the
Class B shares commenced investment operations on June 1, 2000, the Financial
Highlights shown are for the Funds' Class A shares, the oldest existing Fund
class. The total returns in the table represent the return that investors earned
assuming that they reinvested all dividends and distributions. Certain
information in the tables reflects the financial results for a single Fund
share. This information is included in the Funds' financial statements, which,
for the year ended December 31, 1999, have been audited by
PricewaterhouseCoopers LLP, independent accountants, whose reports, along with
the financial statements, are included in the Funds' annual report, which is
available upon request. KPMG LLP audited the financial statements for the years
1995 through 1998. The Funds' total returns presented below do not reflect the
cost of insurance and other company separate account charges which vary with the
VA contracts or VLI policies.

STEIN ROE BALANCED FUND, VARIABLE SERIES

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................ $ 17.14 $ 16.81 $ 16.28 $ 14.08 $ 12.18
-------- -------- -------- -------- --------
Net investment income (a)......................... 0.28 0.48 0.53 0.57 0.48
Net realized and unrealized gains on investments.
Total from investment operations.................. 2.02 1.96 2.49 2.20 3.09
------- -------- -------- -------- --------
Less distributions:
From net investment income..................... (0.47) (0.51) (0.56) -- (0.48)
From net realized gains ....................... (0.89) (1.12) (1.40) -- (0.71)
-------- -------- -------- -------- --------
Total distributions............................... (1.36) (1.63) (1.96) -- (1.19)
-------- -------- -------- -------- --------
Net asset value, end of year...................... $ 17.80 $ 17.14 $ 16.81 $ 16.28 $ 14.08
======== ======== ======== ======== ========
TOTAL RETURN:
Total investment return (b)....................... 12.53% 12.54% 16.82% 15.63% 25.43%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s).................... $425,005 $361,823 $325,033 $299,184 $277,014
Ratio of expenses to average net assets (c)....... 0.63%(d) 0.65% 0.66% 0.67% 0.66%
Ratio of net investment income to average net
Portfolio turnover ratio ......................... 43% 61% 44% 76% 66%
</TABLE>

<PAGE>

STEIN ROE GROWTH STOCK FUND, VARIABLE SERIES

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................. $ 43.53 $ 36.13 $ 28.61 $ 23.59 $ 18.11
-------- -------- -------- -------- --------
Net investment income (loss) (a)................... (0.03) 0.08 0.10 0.13 0.15
Net realized and unrealized gains on investments...
Total from investment operations................... 15.76 9.62 8.94 5.02 6.83
-------- -------- -------- -------- --------
Less distributions:
From net investment income...................... (0.08) (0.10) (0.12) -- (0.15)
From net realized gains ........................ (1.28) (2.12) (1.30) -- (1.20)
-------- -------- -------- -------- --------
Total distributions................................ (1.36) (2.22) (1.42) -- (1.35)
-------- -------- -------- -------- ---------
Net asset value, end of year....................... $ 57.93 $ 43.53 $ 36.13 $ 28.61 $ 23.59
======== ======== ======== ======== ========
TOTAL RETURN:
Total investment return (b)........................ 36.94% 27.91% 32.28% 21.28% 37.73%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s)..................... $403,836 $271,584 $213,399 $161,879 $136,834
Ratio of expenses to average net assets (c)........ 0.67% 0.70% 0.71% 0.73% 0.74%
Ratio of net investment income (loss) to average
Portfolio turnover ratio .......................... 70% 40% 28% 35% 41%
</TABLE>

<PAGE>

STEIN ROE SMALL COMPANY GROWTH FUND, VARIABLE SERIES(a)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year................... $ 13.62 $ 18.00 $ 20.73 $ 16.33 $ 14.74
-------- -------- -------- -------- --------
Net investment income (loss) (b)..................... (0.03) (0.04) 0.01 0.04 0.04
Net realized and unrealized gains (losses) on
Total from investment operations..................... 6.54 (2.81) 1.26 4.40 1.73
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income.............. -- -- (0.03) -- (0.04)
Distributions from net realized gains on
Total distributions.................................. -- (1.57) (3.99) -- (0.14)
-------- -------- -------- -------- ---------
Net asset value, end of year......................... $ 20.16 $ 13.62 $ 18.00 $ 20.73 $ 16.33
======== ======== ======== ======== ========
TOTAL RETURN:
Total investment return (c).......................... 48.02% (17.30)% 7.81% 26.94% 11.75%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s)....................... $139,849 $131,929 $200,590 $196,216 $143,248
Ratio of expenses to average net assets (d).......... 0.72%(e) 0.75% 0.73% 0.75% 0.76%
Ratio of net investment gain (loss) to average net
Portfolio turnover ratio............................. 110% 103% 93% 100% 132%
</TABLE>

(a) The name of the Fund was changed on May 5, 1999, from Stein Roe Special
Venture Fund, Variable Series.
(b) Per share data was calculated using average shares outstanding during the
period.
(c) Total return at net asset value assuming all distributions reinvested.
(d) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(e) During the year ended December 31, 1999, the Fund experienced a one-time
reduction in its expenses of five basis points 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.

<PAGE>

STEIN ROE MORTGAGE SECURITIES FUND, VARIABLE SERIES

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of year............ $ 10.79 $ 10.73 $ 9.84 $ 10.16 $ 9.28
-------- -------- -------- -------- --------
Net investment income (a)..................... 0.66 0.55 0.68 0.78 0.57
Net realized and unrealized gains (losses) on
Total from investment operations.............. 0.11 0.69 0.89 0.48 1.46
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income....... (0.55) (0.63) -- (0.80) (0.58)
-------- -------- -------- -------- --------
Net asset value, end of year.................. $ 10.35 $ 10.79 $ 10.73 $ 9.84 $ 10.16
======== ======== ======== ======== ========
TOTAL RETURN:
Total investment return (b)................... 1.08% 6.80% 9.04% 4.70% 15.74%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000s)................ $105,898 $ 96,693 $ 77,173 $ 76,009 $101,778
Ratio of expenses to average net assets (c)... 0.64%(d) 0.70% 0.70% 0.70%(e) 0.69%
Ratio of net investment income to average net
Portfolio turnover ratio (g).................. 28% 8% 29% 72% 112%
</TABLE>

(a) Per share data was calculated using average shares outstanding during the
period.
(b) Total return at net asset value assuming all distributions reinvested.
(c) The benefits derived from custody credits and directed brokerage
arrangements had no impact.
(d) During the year ended December 31, 1999, the Fund experienced a one-time
reduction in its expenses of three basis points 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 reduction.
(e) If the Fund had paid all of its expenses and there had been no
reimbursement from Stein Roe, this ratio would have been 0.72% for the year
ended December 31, 1996.
(f) Computed giving effect to Stein Roe's expense limitation undertaking.
(g) Portfolio turnover includes dollar roll transactions.

<PAGE>

SHAREHOLDER INFORMATION

PURCHASES AND REDEMPTIONS

The Participating Insurance Companies place daily orders to purchase and redeem
shares of the Funds. These orders generally reflect the net effect of
instructions they receive from holders of their VA contracts and VLI policies
and certain other terms of those contracts and policies. The Trust issues and
redeems shares at NAV without imposing any selling commission, sales load or
redemption charge. Shares generally are sold and redeemed at their NAV next
determined after receipt of purchase or redemption requests from Participating
Insurance Companies. The right of redemption may be suspended or payment
postponed whenever permitted by applicable law and regulations.

HOW A FUND'S SHARE PRICE IS DETERMINED

Each Fund's share price is its NAV next determined. Each Fund determines the NAV
for each share class by dividing each class's total net assets by the number of
that class's total net assets by the number of that class's shares outstanding.
We determine NAV at the close of regular trading on the New York Stock Exchange
(NYSE)--normally 4 p.m. New York time.

To calculate the 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 Funds 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. A Fund's foreign securities may trade on days when the NYSE is

<PAGE>

closed. We will not price shares on days that the NYSE is closed for trading and
Participating Insurance Companies may not purchase or redeem shares.

DIVIDENDS AND DISTRIBUTIONS

Each Fund intends to declare and distribute, as dividends or capital gains
distributions, at least annually, substantially all of its net investment income
and net profits realized from the sale of portfolio securities, if any, to its
shareholders (Participating Insurance Companies' separate accounts). The net
investment income of each Fund consists of all dividends or interest received by
such Fund, less expenses (including the investment advisory and administrative
fees). Income dividends will be declared and distributed annually in the case of
each Fund other than Money Market Fund. With respect to Money Market Fund, the
dividends are declared daily and are reinvested monthly in shares of Money
Market Fund at the NAV per share of $1. All net short-term and long-term capital
gains of each Fund, net of carry-forward losses, if any, realized during the
fiscal year, are declared and distributed periodically, no less frequently than
annually. All dividends and distributions are reinvested in additional shares of
the Fund at NAV, as of the record date for the distributions.

TAXES

For information regarding applicable taxes, please see the prospectus relating
to your Participating Insurance Company's separate account.

OTHER CLASS OF SHARES

The Funds also offer an additional class of shares, Class A shares, which are
not available in this prospectus. Your particular VA contract or VLI policy may
not offer these shares.

<PAGE>

FOR MORE INFORMATION
--------------------------------------------------------------------------------

Adviser: Stein Roe & Farnham Incorporated

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

You may wish to read the Funds' Statement of Additional Information (SAI) for
more information on a Fund and the securities in which it invests. The SAI 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 the annual report and the SAI, request other
information and discuss your questions about the Funds by writing:

Liberty Funds Distributor, Inc.
One Financial Center
Boston, MA 02111
(800) 426-3750

or by calling or writing the Participating Insurance Company which issued your
variable annuity contract or variable life insurance policy.

Information about the Funds (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 Funds
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: 811-05199

<PAGE>

STEINROE VARIABLE INVESTMENT TRUST

One Financial Center, Boston, Massachusetts 02111

STATEMENT OF ADDITIONAL INFORMATION

Dated May 1, 2000, Revised June 1, 2000

This Statement of Additional Information (SAI) is not a prospectus, but
provides additional information which should be read in conjunction with the
Trust's Prospectus dated May 1, 2000 and June 1, 2000 and any supplement
thereto. Financial statements, which are contained in the Funds' December 31,
1999, Annual Report, are incorporated by reference into this SAI. The Prospectus
and Annual Report may be obtained at no charge by calling Liberty Funds
Distributor, Inc. (LFD) at (800) 426-3750, or by contacting the applicable
Participating Insurance Company, or the broker-dealers offering certain variable
annuity contracts or variable life insurance policies issued by the
Participating Insurance Company.

TABLE OF CONTENTS

Page

General Information and History.....................................2
Investment Restrictions.............................................4
Portfolio Turnover..................................................7
Purchases and Redemptions...........................................8
Trustees and Officers...............................................8
Management Arrangements............................................11
Trust Charges and Expenses.........................................12
Underwriters.......................................................14
Code of Ethics.....................................................15
Custodian..........................................................15
Portfolio Transactions.............................................16
Net Asset Value....................................................23
Taxes..............................................................24
Investment Performance.............................................25
Record Shareholders................................................27
Independent Accountants and Financial Statements...................28
Appendix A - Investment Techniques and Securities..................29

<PAGE>

GENERAL INFORMATION AND HISTORY

The SteinRoe Variable Investment Trust (the Trust) commenced operations
on January 1, 1989. The Trust is an open-end, diversified management investment
company currently consisting of five Funds with differing investment objectives,
policies and restrictions. Currently, the Trust consists of Stein Roe Small
Company Growth Fund, Variable Series (Small Company Growth Fund), Stein Roe
Growth Stock Fund, Variable Series (Growth Stock Fund), Stein Roe Balanced Fund,
Variable Series (Balanced Fund), Stein Roe Mortgage Securities Fund, Variable
Series (Mortgage Securities Fund) and Stein Roe Money Market Fund, Variable
Series (Money Market Fund) (individually referred to as a Fund, or by the
defined name indicated, or collectively as the Funds). Prior to May 5, 1999,
Small Company Growth Fund was named Stein Roe Special Venture Fund, Variable
Series. Prior to November 15, 1997, Stein Roe Special Venture Fund was named
Capital Appreciation Fund, Growth Stock Fund was named Managed Growth Stock
Fund, Balanced Fund was named Managed Assets Fund, Mortgage Securities Fund was
named Mortgage Securities Income Fund, and Money Market Fund was named Cash
Income Fund.

The Trust issues shares of beneficial interest in each Fund that
represent interests in a separate portfolio of securities and other assets. The
Trust is permitted to offer separate series and different classes of shares. The
Trust currently offers two separate classes of shares, Class A shares and Class
B shares. Class B shares differ from Class A shares solely in that Class B
shares have a fee pursuant to Rule 12b-1 of the Investment Company Act of 1940
which is used for certain shareholder services and distribution expenses. Sales
of shares of each class are made without a sales charge at each Fund's per share
net asset value. The Trust may add or delete Funds and/or classes from time to
time. The Trust is the funding vehicle for variable annuity contracts (VA
contracts) and variable life insurance policies (VLI policies) offered by the
separate accounts of life insurance companies (Participating Insurance
Companies).

The Trust was organized under an Agreement and Declaration of Trust
(Declaration of Trust) as a Massachusetts business trust on June 9, 1987. The
Declaration of Trust may be amended by a vote of either the Trust's shareholders
or the Board. The Trust is authorized to issue an unlimited number of shares of
beneficial interest without par value, in one or more series, each with one or
more classes, as the Board may authorize. Each Fund is a separate series of the
Trust.

Each share of a Fund is entitled to participate pro rata in any
dividends and other distributions declared by the Board with respect to that
Fund, and all shares of a Fund have equal rights in the event of liquidation of
that Fund.

Shareholders of a Fund are entitled to one vote for each share of that
Fund held on any matter presented to shareholders. Shares of the Funds will vote
separately as individual series when required by the 1940 Act or other
applicable law or when the Board determines that the matter affects only the
interests of one or more Funds, such as,

<PAGE>

for example, a proposal to approve an amendment to that Fund's Advisory
Agreement, but shares of all the Funds vote together, to the extent required by
the 1940 Act, in the election or selection of Trustees and independent
accountants.

The shares do not have cumulative voting rights, which means that the
holders of more than 50% of the shares of the Funds voting for the election of
Trustees can elect all of the Trustees, and, in such event, the holders of the
remaining shares will not be able to elect any Trustees.

The Funds are not required by law to hold regular annual meetings of
their shareholders and do not intend to do so. However, special meetings may be
called for purposes such as electing or removing Trustees or changing
fundamental policies.

The Trust is required to hold a shareholders' meeting to elect Trustees
to fill vacancies in the event that less than a majority of Trustees were
elected by shareholders. Trustees may also be removed by the vote of two-thirds
of the outstanding shares at a meeting called at the request of shareholders
whose interests represent 10% or more of the outstanding shares.

Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable for the obligations of the
Trust. However, the Trust's Declaration of Trust disclaims liability of the
shareholders, the Trustees, or officers of the Trust for acts or obligations of
the Trust, which are binding only on the assets and property of the Trust (or
the applicable Fund thereof) and requires that notice of such disclaimer be
given in each agreement, obligation, or contract entered into or executed by the
Trust or the Board. The Declaration of Trust provides for indemnification out of
the Trust's assets (or the applicable Fund) for all losses and expenses of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is believed to be remote because it is limited to circumstances in
which the disclaimer is inoperative and the Trust itself is unable to meet its
obligations. The risk to any one Fund of sustaining a loss on account of
liabilities incurred by another Fund also is believed to be remote.

<PAGE>

INVESTMENT RESTRICTIONS

Each Fund operates under the investment restrictions listed below.
Restrictions numbered (i) through (viii) are fundamental policies which may not
be changed for a Fund without approval of a majority of the outstanding voting
shares of a Fund, defined as the lesser of the vote of (a) 67% of the shares of
a Fund at a meeting where more than 50% of the outstanding shares are present in
person or by proxy or (b) more than 50% of the outstanding shares of a Fund.
Other restrictions are not fundamental policies and may be changed with respect
to a Fund by the Trustees without shareholder approval.

The following investment restrictions apply to each Fund except as
otherwise indicated. A Fund may not:

(i) with respect to 75% of the value of the total assets of a Fund, invest
more than 5% of the value of its total assets, taken at market value at
the time of a particular purchase, in the securities of any one issuer,
except (a) securities issued or guaranteed by the U.S. government or
its agencies or instrumentalities, and (b) [with respect to Money
Market Fund only] certificates of deposit, bankers' acceptances and
repurchase agreements;

(ii) purchase securities of any one issuer if more than 10% of the
outstanding voting securities of such issuer would at the time be held
by the Fund;

(iii) 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;

<PAGE>

(iv) 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: (i) securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, (ii) [with
respect to Money Market Fund only] certificates of deposit and bankers'
acceptances and repurchase agreements or (iii) [as to Money Market Fund
only] securities of issuers in the financial services industry;

(v) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, and 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);

(vi) purchase securities on margin (except for use of short-term credits as
are necessary for the clearance of transactions), make short sales of
securities, or participate on a joint or a joint and several basis in
any trading account in securities (except in connection with
transactions in options, futures, and options on futures);

(vii) make loans, but this restriction shall not prevent a Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations
which are publicly distributed, or from investing up to an aggregate of
15% of its total assets (taken at market value at the time of each
purchase) in parts of issues of bonds, debentures or other obligations
of a type privately placed with financial institutions, (b) investing
in repurchase agreements, or (c) lending portfolio securities, provided
that it may not lend securities if, as a result, the aggregate value of
all securities loaned would exceed 15% of its total assets (taken at
market value at the time of such loan); or

(viii) borrow, except that it may (a) borrow up to 33 1/3% of its total assets
from banks, taken at market value at the time of such borrowing, as a
temporary measure for extraordinary or emergency purposes, but not to
increase portfolio income (the total of reverse repurchase agreements
and such borrowings will not exceed 33 1/3% of its total assets, and
the Fund will not purchase additional securities when its borrowings,
less proceeds receivable from sales of portfolio securities, exceed 5%
of its total assets) and (b) enter into transactions in options,
futures, and options on futures.

Each Fund is also subject to the following restrictions and policies,
which are not fundamental and may be changed by the Trustees without shareholder
approval. A Fund may not:

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

(b) purchase more than 3% of the stock of another investment company; or
purchase stock of other investment companies equal to more than 5% of the
Fund's total assets (valued at time of purchase) in the case of any one
other investment company and 10% of such assets (valued at the time of
purchase) in the case of all other investment

<PAGE>

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;

(c) mortgage, pledge, hypothecate or in any manner transfer, as security for
indebtedness, any securities owned or held by it, except as may be
necessary in connection with (i) permitted borrowings and (ii) options,
futures and options on futures;

(d) issue senior securities, except to the extent permitted by the Investment
Company Act of 1940 (including permitted borrowings);

(e) purchase portfolio securities for the Fund from, or sell portfolio
securities to, any of the officers and directors or Trustees of the Trust
or of its investment adviser;

(f) 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 Exchanges;

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

(h) buy or sell an option on a security, a futures contract or an option on a
futures contract unless the option, the futures contract or the option on
the futures contract is offered through the facilities of a recognized
securities association or listed on a recognized exchange or similar
entity;

(i) 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; or

(j) invest more than 15% [except as to Money Market Fund, 10%] of the Fund's
net assets (taken at market value at the time of each purchase) in illiquid
securities including repurchase agreements maturing in more than seven
days.

Further, as to Money Market Fund with respect to 100% of its assets,
SEC rules prohibit the Fund from investing more than 5% of its assets, taken at
market value at the time of purchase, in the securities of any one issuer;
provided that (i) the Fund may invest more than 5% of its assets in securities
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
and (ii) the Fund may invest more than 5% of its assets for a period of up to
three business days after the purchase thereof (but not more than 25% of its
assets) in the securities of any one first-tier issuer (as determined by
Securities and Exchange Commission rules); provided, further, that the Fund may
not make more than one investment in accordance with this exception at any one
time.

Under normal market conditions, Money Market Fund will invest at least
25% of its assets in securities of issuers in the financial services industry.
This policy may cause

<PAGE>

the Fund to be more adversely affected by changes in market or economic
conditions and other circumstances affecting the financial services industry.
The financial services industry includes issuers that, according to the
Directory of Companies Required to File Annual Reports with the Securities and
Exchange Commission (the Commission), are in the following categories: state
banks; national banks; savings and loan holding companies; personal credit
institutions; business credit institutions; mortgage-backed securities; finance
services; security and commodity brokers, dealers and services; life, accident
and health insurance carriers; fire, marine, casualty and surety insurance
carriers; insurance agents, brokers and services.

ADDITIONAL VOLUNTARY RESTRICTIONS PERTAINING TO SMALL COMPANY GROWTH FUND

Small Company Growth Fund also is subject to the following additional
restrictions and policies under certain applicable insurance laws pertaining to
variable annuity contract separate accounts. These policies and restrictions are
not fundamental and may be changed by the Trustees without shareholder approval:

The borrowing limits for the Fund are (1) 10% of net asset value when
borrowing for any general purpose and (2) 25% of net asset value when borrowing
as a temporary measure to facilitate redemptions. For this purpose, net asset
value is the market value of all investments or assets owned less outstanding
liabilities of the Fund at the time that any new or additional borrowing is
undertaken.

The Fund also will be subject to the following diversification
guidelines pertaining to investments in foreign securities:

1. The Fund will be invested in a minimum of five different foreign countries
at all times when it holds investments in foreign securities. However, this
minimum is reduced to four when foreign country investments comprise less
than 80% of the Fund's net asset value; to three when less than 60% of such
value; to two when less than 40%, and to one when less than 20%.

2. Except as set forth in item 3 below, the Fund will have no more than 20% of
its net asset value invested in securities of issuers located in any one
foreign country.

3. The Fund may have an additional 15% of its value invested in securities of
issuers located in any one of the following countries: Australia, Canada,
France, Japan, the United Kingdom or Germany.

If a percentage limit with respect to any of the foregoing fundamental
and non-fundamental policies is satisfied at the time of investment or
borrowing, a later increase or decrease in a Fund's assets will not constitute a
violation of the limit.

<PAGE>

PORTFOLIO TURNOVER

The portfolio turnover of each Fund will vary from year to year.
Although no Fund will trade in securities for short-term profits, when
circumstances warrant securities may be sold without regard to the length of
time held. Portfolio turnover for each Fund (other than Money Market Fund) is
shown under "FINANCIAL HIGHLIGHTS" in the Prospectus.

A 100% turnover rate would occur if all of the securities in the
portfolio were sold and either repurchased or replaced within one year. The
Funds pay brokerage commissions in connection with options and futures
transactions and effecting closing purchase or sale transactions, as well as for
the purchases and sales of other portfolio securities other than fixed income
securities, for which the Funds pay dealer spreads. If a Fund writes a
substantial number of call or put options (on securities or indexes) or engages
in the use of futures contracts or options on futures contracts (all referred to
as "Collateralized Transactions"), and the market prices of the securities
underlying the Collateralized Transactions move inversely to the Collateralized
Transaction, there may be a very substantial turnover of the portfolios.

PURCHASES AND REDEMPTIONS

Purchases and redemptions are discussed in the Prospectus under the
heading "SHAREHOLDER INFORMATION."

Each Fund's net asset value is determined on days on which the New York
Stock Exchange (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 Trustees, the net asset
value of a Fund should be determined on any such day, in which case the
determination will be made at 4 p.m., Eastern time.

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

<PAGE>

TRUSTEES AND OFFICERS

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

<TABLE>
<CAPTION>
NAME, AGE AT POSITION(S) HELD PRINCIPAL OCCUPATION(S)
MAY 1, 2000; ADDRESS WITH THE TRUST DURING PAST FIVE YEARS

<S> <C> <C>
William D. Andrews, 52; Executive Vice President Executive vice president of Stein Roe
One South Wacker Drive,
Chicago, IL 60606

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

Christine Balzano, 35; Vice President Senior vice president of Liberty Funds Services, Inc.;
245 Summer Street, formerly vice president and assistant vice president
Boston, MA 02210

William W. Boyd, 73; Trustee Chairman and director of Sterling Plumbing (manufacturer
2900 Golf Road, Rolling of plumbing products)
Meadows, IL 60008 (2)(3)

Kevin M. Carome, 44; Executive Vice Senior vice president, legal, Liberty Funds Group LLC
One Financial Center, President; Secretary (an affiliate of Stein Roe) since Jan. 1999; general
Boston, MA 02111 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

Denise E. Chasmer, 31; Vice President Employee of Liberty Funds Services, Inc. and assistant
12100 East Iliff Avenue, vice president of Stein Roe since Nov. 1999; manager
Aurora, CO 80014 with Scudder Kemper Investments from Oct. 1995 to Nov.
1999; assistant manager with Scudder Kemper prior thereto

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

Lindsay Cook, 48; Trustee Executive vice president of Liberty Financial Companies,
600 Atlantic Avenue, Inc. since March 1997; senior vice president prior
Boston, MA 02210 (1)(2) thereto

Michael G. Fisher, 30; Assistant Treasurer Tax manager with Liberty Funds Group since Oct. 1998;
245 Summer Street, tax manager with PricewaterhouseCoopers LLP prior thereto
Boston, MA 02210
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
William M. Garrison, 34; Vice President Vice president of Stein Roe since Feb. 1998; associate
One South Wacker Drive, portfolio manager for Stein Roe since August 1994
Chicago, IL 60606

Stephen E. Gibson, 46; President Vice chairman of Stein Roe since Aug. 1998; chairman,
One Financial Center, CEO, president and director of Liberty Funds Group since
Boston, MA 02111 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
prior thereto

Erik P. Gustafson, 36; Vice President Senior portfolio manager of Stein Roe; senior vice One
South Wacker Drive, president of Stein Roe since April 1996; vice president
Chicago, IL 60606 of Stein Roe prior thereto

Douglas A. Hacker, 44; Trustee Executive vice president and chief financial officer of
P.O. Box 66100, UAL, Inc. (airline) since July 1999; senior vice
Chicago, IL 60666 (3) president and chief financial officer of UAL, Inc. prior
thereto

Loren A. Hansen, 52; Executive Vice President Chief investment officer/equity of CMA since 1997;
One South Wacker Drive, Chicago, executive vice president of Stein Roe since Dec. 1995;
IL 60606 vice president of The Northern Trust (bank) prior thereto

Harvey B. Hirschhorn, 50; Vice President Executive vice president, senior portfolio
One South Wacker Drive, manager, and chief economist and investment strategist of
Chicago, IL 60606 Stein Roe; director of research of Stein Roe, 1991 to 1995

Janet Langford Kelly, 42; Trustee Executive vice president-corporate development, general
One Kellogg Square, counsel and secretary of Kellogg Company since Sept.
Battle Creek, MI 49016 (3) 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; Vice President; Vice president and assistant controller of CMA
245 Summer Street, Controller
Boston, MA 02210

Mary Dillon McKenzie, 46; Vice President President of Liberty Funds Services, Inc.
One Financial Center, Boston, MA
02111

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

<PAGE>

<TABLE>
<S> <C> <C>
Jane M. Naeseth, 50; Vice President Senior vice president of Stein Roe
One South Wacker Drive
Chicago, IL 60606

Nicholas S. Norton, 40; Vice President Senior vice president of Liberty Funds Services, Inc.
12100 East Iliff Avenue, Aurora, since Aug. 1999; vice president of Scudder Kemper, Inc.
CO 80014 prior thereto

Vincent P. Pietropaolo, 34; Assistant Secretary Vice president and counsel, Liberty Funds Group LLC
One Financial Center, Boston, MA since Dec. 1999; associate - investment management
02111 practice group, Morgan, Lewis and Bockius, LLP from Oct.
1998 to Dec. 1999; legal specialist - federal regulatory
group, Putnam Investments from April 1997 to Oct. 1998;
independent contracting attorney from June 1996 to March
1997; student at Quinnipiac College School of Law prior
thereto

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

William M. Wadden IV, 41; Vice President Vice president of Stein Roe since June 1995; executive
One South Wacker Drive vice president of CSI Asset Management, Inc. prior
Chicago, IL 60606 thereto
</TABLE>
-------------------------
(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.

As noted above certain Trustees and officers of the Trust also hold
positions with Stein Roe, LFC and/or their affiliates. Certain of the Trustees
and officers of the Trust are trustees or officers of other investment companies
managed by Stein Roe.

COMPENSATION OF TRUSTEES

The table set forth below presents certain information regarding the
fees paid to the Trustees for their services in such capacity during the year
ended December 31, 1999, and total fees paid to them by all other investment
companies affiliated with the Trust. The Trustees are paid an annual retainer
plus an attendance fee for each meeting of the Board or standing committee
thereof attended. Trustees do not receive any pension or retirement benefits
from the Trust. No officers of the Trust or other individuals who are affiliated
with the Trust receive any compensation from the Trust for services provided to
it.

<PAGE>

<TABLE>
<CAPTION>
Compensation from the Stein Roe
Fund Complex(1)
-----------------------------------
Aggregate Compensation Total Average Per
Name of Trustee from the Trust Compensation Series
--------------------------------- --------------------------------- ------------------- --------------
<S> <C> <C> <C>
Thomas W. Butch (2) -0- -0- -0-
Lindsay Cook -0- -0- -0-
John A. Bacon Jr. $12,700 $103,450 $2,299
William W. Boyd 13,200 109,950 2,443
Douglas A. Hacker 10,900 93,950 2,088
Janet Langford Kelly 12,700 103,450 2,299
Charles R. Nelson 13,200 108,050 2,401
Thomas C. Theobald 12,700 103,450 2,299
</TABLE>
---------------
(1) At December 31, 1999, the Stein Roe Fund Complex consisted of five series
of the Trust, 12 series of Liberty-Stein Roe Funds Investment 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,
four series of Liberty-Stein Roe Advisor 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.
(2) Mr. Butch served as an affiliated trustee through October 31, 1999.

MANAGEMENT ARRANGEMENTS

As described in the Prospectus, the portfolio of each Fund is managed
by Stein Roe & Farnham Incorporated (Stein Roe). Each Fund has its own Advisory
Agreement with Stein Roe. Stein Roe is a wholly owned direct subsidiary of
SteinRoe Services Inc., which in turn is a wholly owned direct subsidiary of
LFC. LFC, in turn, is a majority owned indirect subsidiary of Liberty Mutual.

The sole director of Stein Roe is C. Allen Merritt, Jr. Mr. Merritt is
Chief Operating Officer of LFC. His business address is Federal Reserve Plaza,
600 Atlantic Avenue, Boston, Massachusetts 02210.

Stein Roe, at its own expense, provides office space, facilities and
supplies, equipment and personnel for the performance of its functions under
each Fund's Advisory Agreement and pays all compensation of the Trustees,
officers and employees who are employees of Stein Roe.

Each Fund's Advisory 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
Fund for any error or 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 Advisory Agreement, except for liability resulting from
willful misfeasance, bad faith or gross negligence on the part of Stein Roe in
the performance of its duties or from reckless disregard by Stein Roe of its
obligations and duties under the Advisory Agreement.

<PAGE>

Under an Administration Agreement with the Trust, Stein Roe provides
each Fund with administrative services, excluding investment advisory services.
Specifically, Stein Roe is responsible for preparing financial statements,
providing office space and equipment in connection with the maintenance of the
headquarters of the Trust, preparing and filing required reports and tax
returns, arrangements for meetings, maintenance of the Trust's corporate books
and records, communication with shareholders, providing internal legal services
and oversight of custodial, accounting and other services provided to the Funds
by others. The Administration Agreement provides that Stein Roe may, in its
discretion, arrange for administrative services to be provided to the Trust by
LFC or any of LFC's majority or greater owned subsidiaries.

Under separate agreements, Stein Roe also acts as the agent of the
Funds for the transfer of shares, disbursement of dividends and maintenance of
shareholder account records, and provides certain pricing and other
recordkeeping services to the Funds. The Trust believes that the charges by the
Administrator to the Trust for these services are comparable to those of other
companies performing similar services.

TRUST CHARGES AND EXPENSES

All charges and expenses shown are for Class A shares.

MANAGEMENT FEES:

Each Fund pays Stein Roe an annual advisory fee based on the following
schedule. Fees are computed and accrued daily and paid monthly. During each year
in the three-year period ended December 31, 1999, pursuant to the Advisory
Agreements, each Fund paid Stein Roe management fees as follows:

<TABLE>
<CAPTION>
Annual Fee Rate
(as a percent of
average net assets) 1999 1998 1997
------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Small Company Growth Fund 0.50% $ 569,580 $ 810,605 $1,001,641
Growth Stock Fund 0.50 1,583,203 1,177,442 959,376
Balanced Fund 0.45 1,749,012 1,503,385 1,147,148
Mortgage Securities Fund 0.40 405,687 337,593 296,763
Money Market Fund 0.35 462,410 281,246 273,501
</TABLE>

ADMINISTRATIVE EXPENSES:

Each Fund pays Stein Roe an annual administrative fee. Fees are
computed and accrued daily and paid monthly at an annual rate of 0.15% of
average net assets. During each year in the three-year period ended December 31,
1999, pursuant to the Administration Agreement, each Fund paid Stein Roe or an
affiliate thereof administrative fees as follows:

1999 1998 1997
---- ---- ----

<PAGE>

Small Company Growth Fund $170,856 $243,182 $300,492
Growth Stock Fund 474,944 353,233 287,813
Balanced Fund 588,899 495,128 472,383
Mortgage Securities Fund 153,092 126,597 111,286
Money Market Fund 197,888 121,428 101,786

ACCOUNTING AND BOOKKEEPING EXPENSES:

The Trust pays Stein Roe an additional fee for accounting and
bookkeeping services in the annual amount of $25,000 plus .0025% of average
daily net assets in excess of $50 million. For the years 1999, 1998 and 1997,
the Trust paid Stein Roe fees of $146,470, $141,081 and $139,826, respectively,
for these services.

In addition, during each such year each Fund paid Stein Roe or an
affiliate thereof $7,500 for transfer agent services.

EXPENSE LIMITATION:

Stein Roe has agreed to reimburse all expenses, including management
fees, but excluding interest, taxes, 12b-1, brokerage and extraordinary expenses
of the Funds as follows through April 30, 2001:

FUND EXPENSES EXCEEDING
----- ------------------
Small Company Growth Fund 0.80% of average net assets
Growth Stock Fund 0.80% of average net assets
Balanced Fund 0.75% of average net assets
Mortgage Securities Fund 0.70% of average net assets
Money Market Fund 0.65% of average net assets

For the period from June 1, 2000 through April 30, 2001, LFD agrees to
reimburse the Funds for the following portions of the Class B share 12b-1
service fee expenses, incurred by each Fund when the total operating expenses of
each fund is in excess of the following percentages of average daily net asset
value per annum:

<TABLE>
<CAPTION>
Reimburse Total operating
service fee in expense limit:
Fund: excess of:

<S> <C> <C>
Stein Roe Balanced Fund, Variable Series 0.15% 0.90%
Stein Roe Growth Stock Fund, Variable Series 0.15% 0.95%
Stein Roe Mortgage Securities Fund, Variable Series 0.20% 0.90%
</TABLE>

<PAGE>

UNDERWRITERS

LFD, One Financial Center, Boston, MA 02111, serves as the principal
underwriter of the Trust. LFD, is a subsidiary of LFC. The Trustees have
approved a Distribution Plan and Agreement (Plan) pursuant to Rule 12b-1 under
the 1940 Act for the Class B shares of the Funds. Under the Plan, the Funds pay
the distributor a monthly distribution fee at the aggregate annual rate of up to
0.25% of each Fund's Class B share's average daily net assets. The distributor
has agreed to waive the fee for some of the Funds to an amount so that the
expenses of these Funds do not exceed the limits as described above under
Expense Limitation. The distributor may use the entire amount of such fees to
defray the cost of commissions and service fees paid to financial service firms
(FSFs) and for certain other purposes. Since the distribution fees are payable
regardless of the amount of the distributor's expenses, the distributor may
realize a profit from the fees.

The Plan authorizes any other payments by the Funds to the distributor and its
affiliates (including the Advisor) to the extent that such payments might be
construed to be indirect financing of the distribution of fund shares.

The Trustees believe 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 Fund's 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
Trustees who are not interested persons of the Trust and have no direct or
indirect financial interest in the operation of the Plan or in any agreements
related to the Plan (Independent Trustees), cast in person at a meeting called
for the purpose of voting on the Plan. The Plan may not be amended to increase
the fee materially without approval by 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 vote of a majority
of the Independent Trustees or by vote of a majority of the outstanding voting
securities of the relevant Fund's shares, on 60 days' written notice to the
distributor. The continuance of the Plan will only be effective if the selection
and nomination of the Trustees who are not interested persons of the Trust is
effected by such disinterested Trustees.

CODE OF ETHICS

The Funds, the Advisor and LFD have adopted Codes of Ethics pursuant to the
requirements of the Act. These Codes of Ethics permit personnel subject to the
Codes to invest in security is, including securities that may be purchased or
held by the Funds.

<PAGE>

CUSTODIAN

State Street Bank and Trust Company (the Bank), 225 Franklin Street,
Boston, Massachusetts 02110, is the custodian for the Trust. It is responsible
for holding all securities and cash of each Fund, receiving and paying for
securities purchased, delivering against payment securities sold, receiving and
collecting income from investments, making all payments covering expenses of the
Trust, 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 of the Funds. Portfolio securities purchased in the U.S. are maintained
in the custody of the Bank or other domestic banks or depositories. Portfolio
securities purchased outside of the U.S. are maintained in the custody of
foreign banks and trust companies who are members of the Bank's Global Custody
Network and foreign depositories (foreign sub-custodians).

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 a Fund's foreign subcustodial arrangements. Accordingly, an
investor should recognize that the noninvestment risks involved in holding
assets abroad are greater than those associated with investing in the U.S.

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

PORTFOLIO TRANSACTIONS

Stein Roe & Farnham Incorporated ("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 and its affiliate Colonial Management Associates, Inc. ("Colonial")
maintain a single, unified trading operation for trading equity securities.
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.

<PAGE>

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 (and, when feasible, Colonial 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

<PAGE>

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 COMBINATION OF NET PRICE
AND 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

<PAGE>

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.

<PAGE>

- 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 may use soft dollars to obtain products
that have both research and non-research purposes. Examples of non-research uses
are administrative

<PAGE>

and marketing functions. These are referred to as "mixed use" products. 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.

As stated above, Stein Roe's overriding objective in effecting
portfolio transactions for the Funds is to seek to obtain the best combination
of price and execution. However, consistent with the provisions of the Rules of
Conduct of the National Association of Securities Dealers, Inc., Stein Roe may,
in selecting broker-dealers to effect portfolio transactions for the Funds, and
where more than one broker-dealer is believed capable of providing the best
combination of net price and execution with respect to a particular transaction,
select a broker-dealer in recognition of its sales of VA contracts or VLI
policies offered by Participating Insurance Companies. Except as described in
the next following sentence, neither the Trust nor any Fund nor Stein Roe has
entered into any agreement with, or made any commitment to, any unaffiliated
broker-dealer which would bind Stein Roe, the Trust or any Fund to compensate
any such broker-dealer, directly or indirectly, for sales of VA contracts or VLI
policies. Stein Roe has entered into arrangements with sponsors of programs for
the sale of VA contracts issued by Participating Insurance Companies which are
not affiliates of Stein Roe pursuant to which Stein Roe pays the sponsor from
Stein Roe's fee for managing Small Company Growth Fund an amount in respect of
Small Company Growth Fund's assets allocable to Small Company Growth Fund shares
held in separate accounts of such unaffiliated Participating Insurance Companies
in respect of VA contracts issued by such entities and sold through such
arrangements. Stein Roe does not cause the Trust or any

<PAGE>

Fund to pay brokerage commissions higher than those obtainable from other
broker-dealers in recognition of such sales of VA contracts or VLI policies.

In light of the fact that Stein Roe may also provide advisory services
to the Participating Insurance Companies, and to other advisory accounts that
may or may not be registered investment companies, securities of the same issuer
may be included, from time to time, in the portfolios of the Funds and these
other entities where it is consistent with their respective investment
objectives. If these entities desire to buy or sell the same portfolio security
at about the same time, combined purchases and sales may be made, and in such
event the security purchased or sold normally will be allocated at the average
price and as nearly as practicable on a pro-rata basis in proportion to the
amounts desired to be purchased or sold by each entity. While it is possible
that in certain instances this procedure could adversely affect the price or
number of shares involved in the Funds' transactions, it is believed that the
procedure generally contributes to better overall execution of the Funds'
portfolio transactions.

Because Stein Roe's personnel may also provide investment advisory
services to the Participating Insurance Companies and other advisory clients, it
may be difficult to quantify the relative benefits received by the Trust and
these other entities from research provided by broker-dealers.

The Trust has arranged for the Bank, as its custodian, to act as a
soliciting dealer to accept any fees available to the Bank as a soliciting
dealer in connection with any tender offer for a Fund's portfolio securities.
The Bank will credit any such fees received against its custodial fees. However,
the Board has been advised by counsel that recapture by a mutual fund currently
is not permitted under the Rules of Conduct of the National Association of
Securities Dealers, Inc.

The Trust's purchases and sales of securities not traded on securities
exchanges generally are placed by Stein Roe with market makers for these
securities on a net basis, without any brokerage commissions being paid by the
Trust. Net trading does involve, however, transaction costs. Included in prices
paid to underwriters of portfolio securities is the spread between the price
paid by the underwriter to the issuer and the price paid by the purchasers. Each
Fund's purchases and sales of portfolio securities in the over-the-counter
market usually are transacted with a broker-dealer on a net basis without any
brokerage commission being paid by such Fund, but do reflect the spread between
the bid and asked prices. Stein Roe may also transact purchases of some
portfolio securities directly with the issuers.

With respect to a Fund's purchases and sales of portfolio securities
transacted with a broker or dealer on a net basis, Stein Roe may also consider
the part, if any, played by the broker or dealer in bringing the security
involved to Stein Roe's attention, including investment research related to the
security and provided to the Fund.

<PAGE>

The table below shows information on brokerage commissions paid by
Small Company Growth Fund, Growth Stock Fund and Balanced Fund during the
periods indicated. Mortgage Securities Fund and Money Market Fund did not pay
commissions on any of their transactions.

<TABLE>
GROWTH SMALL COMPANY
STOCK FUND GROWTH FUND BALANCED FUND
------------ ------------- -------------
<S> <C> <C> <C>
Total amount of brokerage commissions paid during fiscal year $ 313,982 $ 189,736 $ 251,359
ended 12/31/99.................................................
Amount of commissions paid to brokers or dealers who supplied 176,705 127,859 191,996
Total dollar amount involved in such transactions:................ 115,483,614 137,410,527 617,975,254
Total amount of brokerage commissions paid during fiscal year
Total brokerage fees paid during fiscal year ended 12/31/97....... 421,740 89,691 294,537
</TABLE>

NET ASSET VALUE

The net asset value of the shares of each of the Funds is determined by
dividing the total assets of each Fund, less all liabilities (including accrued
expenses), by the total number of shares outstanding.

The valuation of Money Market Fund's securities is based upon their
amortized cost, which does not take into account unrealized gains or losses.
This method involves initially valuing an instrument at its cost and thereafter
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. While this method provides certainty in valuation, it may result
in periods during which value, as determined by amortized cost, is higher or
lower than the price Money Market Fund would receive if it sold the security.
During periods of declining interest rates, the quoted yield on shares of Money
Market Fund may tend to be higher than a like computation made by a fund with
identical investments utilizing a method of valuation based upon market prices
and estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by the Fund resulted in a lower aggregate portfolio value
on a particular day, a prospective investor in Money Market Fund would be able
to obtain a somewhat higher yield if he purchased shares of Money Market Fund on
that day than would result from investment in a fund utilizing solely market
values, and existing investors in Money Market Fund would receive less
investment income. The converse would apply in a period of rising interest
rates.

The proceeds received by each Fund for each purchase or sale of its
shares, and all income, earnings, profits and proceeds thereof, subject only to
the rights of creditors, will be specifically allocated to such Fund, and
constitute the underlying assets of that Fund. The underlying assets of each
Fund will be segregated on the books of account, and will

<PAGE>

be charged with the liabilities in respect to such Fund and with a share of the
general liabilities of the Trust.

TAXES

Each Fund has elected to be treated and to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986
(Code). As a result of such election, for any tax year in which a Fund meets the
investment limitations and the distribution, diversification and other
requirements referred to below, that Fund will not be subject to federal income
tax, and the income of the Fund will be treated as the income of its
shareholders. Under current law, since the shareholders are life insurance
company "segregated asset accounts," they will not be subject to income tax
currently on this income to the extent such income is applied to increase the
values of VA contracts and VLI policies.

Among the conditions for qualification and avoidance of taxation at the
Trust level, Subchapter M imposes investment limitations, distribution
requirements, and requirements relating to the diversification of investments.
The requirements of Subchapter M may affect the investments made by each Fund.
Any of the applicable diversification requirements could require a sale of
assets of a Fund that would affect the net asset value of the Fund.

Pursuant to the requirements of Section 817(h) of the Code, the only
shareholders of the Trust and its Funds will be Participating Insurance
Companies and their separate accounts that fund VA contracts, VLI policies and
other variable insurance contracts. The prospectus that describes a particular
VA contract or VLI policy discusses the taxation of both separate accounts and
the owner of such contract or policy.

Each Fund intends to comply with the requirements of Section 817(h) and
the related regulations issued thereunder by the Treasury Department. These
provisions impose certain diversification requirements affecting the securities
in which the Funds may invest and other limitations. The diversification
requirements of Section 817(h) of the Code are in addition to the
diversification requirements under Subchapter M and the Investment Company Act
of 1940. The consequences of failure to meet the requirements of Section 817(h)
could result in taxation of the Participating Insurance Companies offering the
VA contracts and VLI policies and immediate taxation of all owners of the
contracts and policies to the extent of appreciation on investment under the
contracts. The Trust believes it is in compliance with these requirements.

The Secretary of the Treasury may issue additional rulings or
regulations that will prescribe the circumstances in which an owner of a
variable insurance contract's control of the investments of a segregated asset
account may cause such owner, rather than the insurance company, to be treated
as the owner of the assets of a segregated asset account. It is expected that
such regulations would have prospective application. However, if a

<PAGE>

ruling or regulation were not considered to set forth a new position, the ruling
or regulation could have retroactive effect.

The Trust therefore may find it necessary, and reserves the right to
take action to assure, that a VA contract or VLI policy continues to qualify as
an annuity or insurance contract under federal tax laws. The Trust, for example,
may be required to alter the investment objectives of any Fund or substitute the
shares of one Fund for those of another. No such change of investment objectives
or substitution of securities will take place without notice to the contract and
policy owners with interests invested in the affected Fund and without prior
approval of the Securities and Exchange Commission, or the approval of a
majority of such owners, to the extent legally required.

To the extent a Fund invests in foreign securities, investment income
received by the Fund from sources within foreign countries may be subject to
foreign income taxes withheld at the source. The United States has entered into
tax treaties with many foreign countries which entitle a Fund to a reduced rate
of tax or exemption from tax on such income. Gains and losses from foreign
currency dispositions, foreign-currency denominated debt securities and payables
or receivables, and foreign currency forward contracts are subject to special
tax rules that generally cause them to be recharacterized as ordinary income and
losses, and may affect the timing and amount of the Fund's recognition of
income, gain or loss.

It is impossible to determine the effective rate of foreign tax in
advance since the amount of a Fund's assets, if any, to be invested within
various countries will fluctuate and the extent to which tax refunds will be
recovered is uncertain. The Funds intend to operate so as to qualify for
treaty-reduced tax rates where applicable.

The preceding is a brief summary of some relevant tax considerations.
This discussion is not intended as a complete explanation or a substitute for
careful tax planning and consultation with individual tax advisors.

INVESTMENT PERFORMANCE

Money Market Fund may quote a "Current Yield" or "Effective Yield" from
time to time. The Current Yield is an annualized yield based on the actual total
return for a seven-day period. The Effective Yield is an annualized yield based
on a daily compounding of the Current Yield. These yields are each computed by
first determining the "Net Change in Account Value" for a hypothetical account
having a share balance of one share at the beginning of a seven-day period
(Beginning Account Value), excluding capital changes. The Net Change in Account
Value will always equal the total dividends declared with respect to the
account, assuming a constant net asset value of $1.00.

The yields are then computed as follows:

<PAGE>

<TABLE>
<S> <C> <C>
Net Change in Account Value 365
------------------------------------------ -------
Current Yield = Beginning Account Value x 7

[1 + Net Change in Account Value]365/7
--------------------------------------------------------
Effective Yield = Beginning Account Value - 1

For example, the yield of Money Market Fund for the seven-day period
ended December 31, 1999, were:

$.001108493 365
------------------------------- -------
Current Yield = $1.00 x 7 = 5.78%

[1+$.001108493]365/7
-------------------------------
Effective Yield = $1.00 - 1 = 5.95%
</TABLE>

In addition to fluctuations reflecting changes in net income of Money
Market Fund resulting from changes in income earned on its portfolio securities
and in its expenses, Money Market Fund's yield also would be affected if the
Fund were to restrict or supplement its dividends in order to maintain its net
asset value at $1.00. Portfolio changes resulting from net purchases or net
redemptions of Money Market Fund shares may affect yield. Accordingly, Money
Market Fund's yield may vary from day to day and the yield stated for a
particular past period is not a representation as to its future yield. Money
Market Fund's yield is not guaranteed and its principal is not insured; however,
the Fund will attempt to maintain its net asset value per share at $1.00.

Each of the Funds may quote total return figures from time to time.
Total return on a per share basis is the amount of dividends received per share
plus or minus the change in the net asset value per share for a given period.
Total return percentage may be calculated by dividing the value of a share at
the end of a given period by the value of the share at the beginning of the
period and subtracting one.

Average Annual Total Return is computed as follows:

ERV = P(1+T)n

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 the Funds Class A shares, the
"Total Return," the "Total Return Percentage," and the "Average Annual Total
Return" for the life of the Funds (from January 1, 1989 to December 31, 1999)
were:

<PAGE>

TOTAL TOTAL RETURN AVERAGE ANNUAL
FUND RETURN PERCENTAGE TOTAL RETURN
---- ------ ------------ --------------
Small Company Growth Fund $3,679 267.85% 13.91%
Growth Stock Fund 5,906 490.55 19.43
Balanced Fund 3,102 210.24 11.99
Mortgage Securities Fund 1,974 97.44 7.04
Money Market Fund 1,628 62.81 4.99

The figures contained in this "Investment Performance" section assume
reinvestment of all dividends and distributions. 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 information such as that shown above 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. The Funds'
total returns do not reflect the cost of insurance and other insurance company
separate account charges which vary with the VA contracts and VLI policies
offered through the separate accounts of the Participating Insurance Companies.

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. Any
comparison of a Fund to an alternative investment should consider differences in
features and expected performance.

RECORD SHAREHOLDERS

All the shares of the Funds are held of record by sub-accounts of
separate accounts of Participating Insurance Companies on behalf of the owners
of VLI policies and VA contracts, or by the general account of Keyport. At
December 31, 1999 the general account of Keyport owned of record approximately
27% of the outstanding shares of all the Funds. At all meetings of shareholders
of the Funds each Participating Insurance Company will vote the shares held of
record by sub-accounts of its separate accounts only in accordance with the
instructions received from the VLI policy and VA contract owners on behalf of
whom such shares are held. All such shares as to which no instructions are
received (as well as, in the case of Keyport, all shares held by its general
account) will be voted in the same proportion as shares as to which instructions
are received (with Keyport's general account shares being voted in the
proportions determined by instructing owners of Keyport VLI policies and VA
contracts). Accordingly, each Participating Insurance Company disclaims
beneficial ownership of the shares of the Funds held of record by the
sub-accounts of its separate accounts (or, in the case of Keyport, its general
account). The Trust has not been informed that any Participating Insurance
Company

<PAGE>

knows of any owner of a VA contract or VLI policy which on March 31, 2000 owned
beneficially 5% or more of the outstanding shares of any Fund.

INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS

The independent accountants for the Funds are PricewaterhouseCoopers
LLP, 160 Federal Street, Boston, MA 02110. The independent accountants audit and
report on the annual financial statements and provide tax return review services
and assistance and consultation in connection with the review of various SEC
filings. The financial statements of the Trust and reports of independent
accountants appearing in the December 31, 1999, annual report of the Trust are
incorporated in this SAI by reference.

<PAGE>

APPENDIX A
INVESTMENT TECHNIQUES AND SECURITIES

MONEY MARKET INSTRUMENTS

Each of the Funds may invest in money market instruments to the extent
and of the type and quality described in the Prospectus.

CERTIFICATES OF DEPOSIT

Certificates of deposit are receipts issued by a bank in exchange for
the deposit of funds. The issuer agrees to pay the amount deposited plus
interest to the bearer of the receipt on the date specified on the Certificate.
The Certificate usually can be traded in the secondary market prior to maturity.

Certificates of deposit will be limited to U.S. dollar-denominated
certificates of banks (U.S. or foreign) having total assets of at least $1
billion, or the equivalent in other currencies, as of the date of their most
recently published financial statements and of branches of such banks (U.S. or
foreign).

The Funds will not acquire time deposits or obligations issued by the
International Bank for Reconstruction and Development, the Asian Development
Bank or the Inter-American Development Bank.

BANKERS' ACCEPTANCES

Bankers' acceptances typically arise from short term credit
arrangements designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise.

The draft is then "accepted" by the bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.

Bankers' acceptances acquired by the Funds must be payable in U.S.
dollars and have been accepted by banks having total assets at the time of
purchase in excess of $1 billion, or the equivalent in other currencies, and of
branches of such banks (U.S. or foreign).

<PAGE>

MORTGAGE-BACKED SECURITIES

MORTGAGE PASS-THROUGH CERTIFICATES

A Mortgage Pass-Through Certificate is a Mortgage-Backed Security
representing a participation interest in mortgage loans or a beneficial
undivided interest in a specified pool containing mortgage loans.

The aggregate dollar balance of the mortgage loans (or participation
interests) in a specified pool is generally identical to the balance of the
Mortgage Pass-Through Certificate held by the Certificate holder. As the balance
in the mortgage pool is paid down by scheduled payments of principal and
interest and by prepayments or other early or unscheduled recoveries of
principal, the balance of the Mortgage Pass-Through Certificate is paid down
correspondingly as all such payments are "passed through" to the Certificate
holder (in this case, to the Funds). The average interest rate payable on the
mortgage loans, the "coupon rate," is somewhat higher than the "pass-through
rate" payable under the Mortgage Pass-Through Certificate. The difference
between the coupon rate and the pass-through rate is generally paid to the
servicer of the mortgage loans as servicing compensation. Servicing includes
collecting payments, remitting payments to the Certificate holders, holding and
disbursing escrow funds for payment of taxes and insurance premiums,
periodically inspecting the properties, and servicing foreclosures in the event
of unremedied defaults.

Under the terms of the Certificate, the due date for passing through
funds to the Certificate holders is some specified period after the payment date
on the mortgage loans. The regular pass-through installment is paid on the due
date by the entity servicing the mortgage pool, in most cases regardless of
whether or not it has been collected from the borrower.

A particular mortgage pool will consist of mortgage loans of one of the
following types: fixed interest mortgage loans with a maturity of not more than
30 years; adjustable interest rate mortgage loans (that is, where the interest
rate is not fixed but varies in accordance with a formula or an index) with a
maturity of not more than 40 years; shared appreciation mortgage loans with a
maturity of not more than 30 years; growing equity mortgage loans (where the
monthly payment of principal increases in amount and the maturity may be less
than 30 years); graduated payment mortgage loans (where the amount of the
scheduled monthly payments at the beginning of the loan term are insufficient to
fully amortize the loan and the monthly payment amount therefore increases after
a specified period or periods); second mortgages with fixed or adjustable rates
with a maturity of not more than 30 years; graduated payment adjustable rate
mortgage loans; and other alternative mortgage instruments which may combine
some of the characteristics listed above. For example, graduated payment,
graduated equity, and shared appreciation mortgage loans can have a fixed or
variable interest rate. In addition, new types of mortgage loans may be created
in the future, and as Mortgage Pass-Through Certificates representing interests
in pools of new types of mortgage loans are developed

<PAGE>

and offered to investors, the Fund will, consistent with its investment policies
and objective, consider investing in such Certificates.

Certain Mortgage Pass-Through Certificates purchased will represent
interests in mortgage pools containing graduated payment adjustable rate
mortgage loans or "GPARMs." These are adjustable interest rate mortgage loans
with a graduated payment feature. The scheduled monthly payment amount on this
type of loan at the beginning of the loan term is insufficient to fully amortize
the loan; that is, the scheduled payments are insufficient to pay off the entire
loan during the term. Because the monthly mortgage payments during the early
years of graduated payment mortgage loans may not even be sufficient to pay the
current interest due, GPARMs may involve negative amortization; that is, the
unpaid principal balance of the mortgage loan may increase because any unpaid
balance of the interest due will be added to the principal amount of the
mortgage loan. GPARMs also involve increases in the payment amount, because at
one or more times during the early years of the loan term, the monthly mortgage
payments (principal and interest) increase to a level that will fully amortize
the loan. The monthly payment amount may also be increased (or decreased) to
reflect changes in the interest rate. In addition, the loan term may be
lengthened or shortened from time to time, corresponding to an increase or
decrease in the interest rate.

GNMA Certificates

GNMA Certificates represent part ownership of a pool of mortgage loans.
These loans (issued by lenders such as mortgage bankers, commercial banks and
savings and loan associations) are either insured by the Federal Housing
Administration (FHA) or the Farmers Home Administration (FMHA), or guaranteed by
the Veterans Administration (VA). A "pool" or group of such mortgages is
assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. Government. GNMA is also empowered to borrow without
limitation from the Treasury, if necessary, to make any payments required under
its guarantee. GNMA Certificates differ from bonds issued without a sinking fund
in that principal is paid back monthly by the borrower over the term of the loan
rather than returned in a lump sum at maturity. GNMA Certificates are called
"modified pass-through" securities because both interest and principal payments,
including prepayments (net of fees paid to the issuer and GNMA), are passed
through to the holder of the Certificate regardless of whether or not the
mortgagor actually makes the payment.

The average life of GNMA Certificates is likely to be substantially
less than the original maturity of the mortgage pools underlying the securities.
Prepayments of principal by mortgagors and mortgage foreclosures will usually
result in the return of the greatest part of principal invested well before the
maturity of the mortgages in the pool. (Note: Due to the GNMA guarantee,
foreclosures impose little risk to principal investment.) As prepayment rates of
individual mortgage pools vary widely, it is not possible to accurately predict
the average life of a particular issue of GNMA Certificates.

<PAGE>

The coupon rate or interest on GNMA Certificates is lower than the
interest rate paid on the VA-guaranteed or FHA-insured mortgages underlying the
Certificates, but only by the amount of a relatively modest fee paid to GNMA and
the issuer.

The coupon rate by itself, however, does not indicate the yield which
will be earned on the Certificates for the following reasons:

1. Certificates may be issued at a premium or discount, rather than at par;
2. After issuance, Certificates may trade in the secondary market at a premium
or discount;
3. Interest is earned monthly, rather than semiannually as for traditional
bonds, and monthly compounding has the effect of raising the effective
yield earned on GNMA Certificates; and
4. The actual yield of each GNMA Certificate is influenced by the prepayment
experience of the mortgage pool underlying the Certificate; that is, if
mortgagors pay off their mortgages early, the principal returned to
Certificate holders may be reinvested at more or less favorable rates.

Since the inception of the GNMA mortgage-backed securities program in
1970, the amount of GNMA Certificates outstanding has grown rapidly. The size of
the market and the active participation in the secondary market by securities
dealers and many types of investors make the GNMA Certificates highly liquid
instruments. Valuations of GNMA Certificates are readily available from
securities dealers and depend on, among other things, the level of market rates,
the Certificate's coupon rate and the prepayment experience of the pool of
mortgages backing each Certificate.

FNMA Certificates

The Federal National Mortgage Association (FNMA) is a corporation
organized and existing under the laws of the U.S. and issues FNMA Certificates
under the authority contained in the Federal National Mortgage Association
Charter Act. FNMA Certificates are Mortgage Pass-Through Certificates issued and
guaranteed by FNMA. The obligations of FNMA under its guaranty are obligations
solely of FNMA and are not backed by, nor entitled to, the full faith and credit
of the U.S.

Each FNMA Certificate represents a fractional undivided interest in a
pool of conventional, FHA-insured or VA-guaranteed mortgage loans purchased or
formed by FNMA. The mortgage loans are either provided from FNMA's own portfolio
or are purchased from primary lenders that satisfy certain criteria developed by
FNMA, including depth of mortgage origination experience, servicing experience
and financial capacity.

When the mortgage loans are not provided from FNMA's own portfolio,
FNMA may purchase an entire loan pool from a single lender and issue
Certificates backed by the

<PAGE>

pool alone. Alternatively, FNMA may package a pool made up of loans purchased
from a number of lenders. The mortgage loans are held by FNMA in its capacity as
trustee pursuant to the terms of a trust indenture for the benefit of the
Certificate holders.

Each FNMA mortgage pool will consist of mortgage loans evidenced by
promissory notes on one-family or two-to-four family residential properties.
Mortgage loans with varying interest rates may be included in a single pool.
Currently, substantially all FNMA mortgage pools consist of fixed interest rate
and growing equity mortgage loans, although FNMA mortgage pools may also consist
of adjustable interest rate mortgage loans or other types of mortgage loans.
Loans with varying loan-to-value ratios may be included in a single pool, but
each conventional mortgage loan with a loan-to-value ratio which exceeds 80%
must be insured against default and the mortgage insurance must insure that
portion of the loan balance which exceeds 75% of the property value. The maximum
loan term is 40 years. Each mortgage loan must conform to FNMA's published
requirements or guidelines with respect to maximum principal amount,
loan-to-value ratio, underwriting standards and hazard insurance coverage.

Pursuant to the trust indenture, FNMA is responsible for servicing and
administering the mortgage loans in a pool but contracts with the lender (the
seller of the mortgage loans, or seller/servicer), or another eligible servicing
institution, to perform such functions under the supervision of FNMA. The
servicers are obligated to perform diligently all services and duties customary
to the servicing of mortgages as well as those specifically prescribed by the
FNMA Seller/Servicer Guide. FNMA has the right to remove servicers for cause.

The pass-through rate on the FNMA Certificates is not greater than the
lowest annual interest rate borne by an underlying mortgage loan in the pool,
less a specified minimum annual percentage of the outstanding principal balance.
The fee to FNMA representing compensation for servicing and for FNMA's guaranty
(out of which FNMA will compensate seller/servicers) is, for each underlying
mortgage loan, the difference between the interest rate on the mortgage loan and
the pass-through rate.

The minimum size of a FNMA pool is $1 million of mortgage loans.
Registered holders purchase Certificates in amounts not less than $25,000.

FHLMC Certificates

The Federal Home Loan Mortgage Corporation (FHLMC) is a corporate
instrumentality of the U.S. created pursuant to an act of Congress on July 24,
1970, primarily for the purpose of increasing availability of mortgage credit
for the financing of then urgently needed housing. It seeks to provide an
enhanced degree of liquidity for residential mortgage investors primarily by
assisting in the development of secondary markets for conventional mortgage
loans. FHLMC obtains its funds by selling mortgages and interests therein (such
as Mortgage Pass-Through Certificates), and by issuing debentures and otherwise
borrowing funds.

<PAGE>

FHLMC Certificates represent undivided interests in specified groups of
conventional mortgage loans and/or participation interests therein underwritten
and owned by FHLMC. FHLMC periodically forms groups of whole mortgage loans
and/or participations in connection with its continuing sales program.
Typically, at least 95% of the aggregate principal balance of the mortgage loans
in a group consists of single-family mortgage loans and not more than 5%
consists of multi-family loans. The FHLMC Certificates are issued in fully
registered form only, in original unpaid principal balances of $25,000,
$100,000, $200,000, $500,000, $1 million and $5 million. The FHLMC Certificates
are not guaranteed by the U.S. or by any Federal Home Loan Bank and do not
constitute a debt or obligation of the U.S. or any Federal Home Loan Bank.

FHLMC guarantees to each registered holder of a FHLMC Certificate the
timely payment of interest accruing at the application certificate rate on the
unpaid principal balance outstanding on the mortgage loans to the extent of such
holder's percentage of participation therein. FHLMC also guarantees to each
registered holder of a FHLMC Certificate collection of all principal on the
mortgage loans without any offset or deduction, to the extent of such holder's
pro rata share. Pursuant to these guaranties, FHLMC indemnifies holders of FHLMC
Certificates against any reduction in principal by reason of charges for
property repairs, maintenance and foreclosure.

To permit a measure of marketability for holders of FHLMC Certificates,
FHLMC has provided since June 20, 1975, and expects to continue to provide, bid
quotations for outstanding FHLMC Certificates. Informational bid quotations are
available daily on Telerate Financial Information Network or from FHLMC's
regional offices.

Non-Governmental Mortgage Pass-Through Certificates

A Non-Governmental Mortgage Pass-Through Certificate is a security
issued by a mortgage banker, financial institution or other entity and
represents an undivided interest in a mortgage pool consisting of a number of
mortgage loans secured by single-family residential properties. Non-Governmental
Certificates do not represent an interest in or obligation of the issuing or
servicing entity. The mortgage loans in a pool are held in trust by a qualified
bank. These private (or conventional) mortgages are not insured by the VA, FHA
or any other governmental agency. In some cases, private commercial insurance or
other credit support may apply.

A typical mortgage pool consists of from 100 to 1000 individual
mortgage loans. The aggregate dollar balance of the mortgage loans in a pool
will be generally at least $5 million. These pools contain mortgage loans
originated, serviced and otherwise administered by an affiliate of the sponsor
of the pool.

It is expected that each of the underlying mortgage loans will have a
loan-to-value ratio at origination (based on an independent appraisal of the
mortgage property obtained by the originator of the loan) of 90% or less.
Generally, the amount of the mortgage loans

<PAGE>

in excess of 80% of such appraised value will be insured with a private
mortgagor insurer. In some instances, other mechanisms, such as a bank letter of
credit or senior/subordinated class structures, are used in place of mortgage
guaranty insurance but serve a similar credit support function.

The entities originating and servicing the underlying mortgage loans
generally advance to Certificate holders any principal and interest payments not
collected from the mortgagors. However, the obligations, if any, to make those
advances are limited only to those amounts that are reimbursable under the
mortgage guaranty insurance policy.

The property securing each of the mortgage loans in a mortgage pool
will be covered by standard hazard insurance policies insuring against losses
due to various causes, including fire, lightning and windstorm. The amount of
each policy is at least equal to the lesser of the outstanding principal balance
of the mortgage loan or the maximum insurable value of the improvements securing
the mortgage loan. Since certain other physical risks (including earthquakes,
mudflows and floods) are not otherwise insured against, the institution
originating and servicing the loans typically purchases a special hazard
insurance policy for each mortgage pool to cover such risks. The special hazard
insurance generally is in the amount of 1% of the aggregate principal balances
of the mortgage loans in each mortgage pool, or the sum of the balance of the
two largest mortgage loans in the mortgage pool, whichever is greater, at the
time of formation of the mortgage pool.

Any hazard losses not covered by either the standard hazard policies or
the special hazard insurance policy will not be insured against and,
accordingly, will be borne by the Fund and therefore by the Fund's shareholders.

The pooling and servicing agreement for a Non-Governmental Certificate
generally permits, but does not require, the entity originating and servicing
the mortgage loans to repurchase from the mortgage pool all remaining mortgage
loans. The right to repurchase typically is subject to the aggregate principal
balances of the mortgage loans at the time of repurchase being less than 20% of
the aggregate principal balances of the mortgage loans at the time of issuance
of the Certificate.

REAL ESTATE MORTGAGE INVESTMENT CONDUITS (REMICS)

A REMIC is an entity formed either as a partnership, corporation or
trust which holds a fixed pool of mortgages and issues multiple classes of
interests at varying maturities entitling holders to receive specified principal
amounts and interest payments at fixed rates.

Timely payment of principal and interest from a REMIC will be dependent
upon risks associated with the underlying mortgage loans held by the REMIC.
These risks include the potential for delinquency and default by mortgagors,
fluctuating interest rates, inflation and reduced market demand for qualified
market loans.

<PAGE>

EQUIPMENT TRUST CERTIFICATES

Balanced Fund may invest in Equipment Trust Certificates.

Equipment Trust Certificates are a mechanism for financing the purchase
of transportation equipment, such as railroad cars and locomotives, trucks,
airplanes and oil tankers.

Under an Equipment Trust Certificate, the equipment is used as the
security for the debt and title to the equipment is vested in a trustee. The
trustee leases the equipment to the user; i.e., the railroad, airline, trucking
or oil company. At the same time, Equipment Trust Certificates in an aggregate
amount equal to a certain percentage of the equipment's purchase price are sold
to lenders. The trustee pays the proceeds from the sale of Certificates to the
manufacturer. In addition, the company using the equipment makes an initial
payment of rent equal to the balance of the purchase price to the trustee, which
the trustee also pays to the manufacturer. The trustee collects lease payments
from the company and uses the payments to pay interest and principal on the
Certificates. At maturity, the Certificates are redeemed and paid, the equipment
is sold to the company and the lease is terminated.

Generally, these Certificates are regarded as obligations of the
company that is leasing the equipment and are shown as liabilities in its
balance sheet as a capitalized lease in accordance with generally accepted
accounting principals. However, the company does not own the equipment until all
the Certificates are redeemed and paid. In the event the company defaults under
its lease, the trustee terminates the lease. If another lessee is available, the
trustee leases the equipment to another user and makes payments on the
Certificates from new lease rentals.

OPTIONS, FUTURES AND OTHER DERIVATIVES

Except for Money Market Fund, each Fund may purchase and write both
call options and put options on securities, indexes and foreign currencies, and
enter into interest rate, index and foreign currency futures contracts and
options on such futures contracts (futures options) in order to achieve its
investment objective, to provide additional revenue, or to hedge against changes
in security prices, interest rates or currency exchange rates. A Fund also may
use other types of options, futures contracts, futures options, and other types
of forward or investment contracts linked to individual securities, interest
rates, foreign currencies, indices or other benchmarks (derivative products)
currently traded or subsequently developed and traded, provided the Trustees
determine that their use is consistent with the Fund's investment objective.

<PAGE>

OPTIONS

A Fund may purchase and write both put 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 also may purchase agreements, sometimes called cash puts, which may
accompany the purchase of a new issue of bonds from a dealer that the Fund might
buy as a temporary defensive measure.

An option on a security (or index or foreign currency) is a contract
that gives the purchase (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 or a specified
quantity of the foreign currency) 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 other 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 upon conversion or exchange of other securities held in its
portfolio (or, if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its custodian).

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, currency 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, currency or index in relation
to

<PAGE>

the exercise price of the option, the volatility of the underlying security,
currency or index, and the time remaining until expiration.

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

There are several risks associated with transactions in options. For
example, there are significant differences between the securities and 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, 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
or a foreign currency, it would not be able to sell the underlying security or
currency unless 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. As the writer
of a covered call option on a foreign currency, the Fund foregoes, during the
option's life, the opportunity to profit from appreciation of the currency
covering 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.
Except to the extent that a call option on an index written by the Fund is
covered by an option on the same index purchased by the Fund, movements in the
index may result in a loss to the Fund; however, such losses may be mitigated by
changes in the value of the Fund's portfolio securities during the period the
option was outstanding.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

A Fund may use interest rate, index 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, the

<PAGE>

cash value of an index(1) or a specified quantity of a foreign currency 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
Stock Index, the Value Line Composite Index and the New York Stock Exchange
Composite Index), certain financial instruments (including, but not limited to:
U.S. Treasury bonds, U.S. Treasury notes and 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.

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 a 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.

To the extent required by regulatory authorities having jurisdiction
over a Fund, such Fund will limit its use of futures contracts and futures
options to hedging transactions. For example, a Fund might use futures contracts
to hedge against or gain exposure to fluctuations in the general level of stock
prices or anticipated changes in interest rates or currency exchange rates which
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 that Fund's exposure to stock price and interest rate
and currency fluctuations, the Fund may be able to hedge 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 Stein Roe correctly
predicting changes in the level and direction of stock prices, interest rates,
currency exchange rates and other factors. Should those predictions be
incorrect, a Fund's 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.

-------------------------
(1) 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.

<PAGE>

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 contact 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.

The 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 property, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying property 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. There can be no
guarantee that there will be a correlation between price movements in the
hedging vehicle and in the portfolio securities being hedged. In addition, there
are significant differences between the securities and the currency markets and
the 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 or

<PAGE>

currencies, including technical influences in futures and futures options
trading and differences between the Fund's investments being hedged and the
securities or currencies 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 security price, interest rate or currency exchange 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 long-term
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

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,"(2)
would exceed 5% of the Fund's total assets.

-------------------------
(2) 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.

<PAGE>

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 (CFTC)
Regulation 4.5 and thereby avoid being deemed a "commodity pool operator," each
Fund will use commodity futures or commodity options contracts solely for bona
fide hedging purposes within the meaning and intent of CFTC 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 CFTC Regulation
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 CFTC Regulations) may be excluded in computing such 5%].

TAXATION OF OPTIONS AND FUTURES

If a Fund exercises a call or put option 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

<PAGE>

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(3) 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.

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

-------------------------
(3) 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 Stock Index).

<PAGE>

securities, and gains from the sale of securities or foreign currencies, or
other income (including but not limited to gains from options and futures
contracts). In addition, gains realized on the sale or other disposition of
securities held for less than three months must be limited to less than 30% of
the Fund's annual gross income. 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. In order to
avoid realizing excessive gains on securities held less than three months, the
Fund may be required to defer the closing out of certain positions beyond the
time when it would otherwise be advantageous to do so.

WARRANTS

Each Fund except Money Market Fund may invest in warrants; however, not
more than 5% of a Fund's assets (at the time of purchase) will be invested in
warrants, other than warrants acquired in units or attached to other securities.
Warrants purchased must be listed on a national stock exchange or the Nasdaq
system. Warrants are speculative in that they have no voting rights, pay no
dividends, and have no right with respect to the assets of the corporation
issuing them. Warrants basically are options to purchase equity securities at a
specific price valid for a specific period of time. They do not represent
ownership of the securities, but only the right to buy them. Warrants differ
from call options in that warrants are issued by the issuer of the security that
may be purchased on their exercise, whereas call options may be written or
issued by anyone. The prices of warrants do not necessarily move parallel to the
prices of the underlying securities.

"WHEN-ISSUED" SECURITIES AND COMMITMENT AGREEMENTS

Each Fund may purchase and sell securities on a when-issued and
delayed-delivery basis.

When-issued or delayed-delivery transactions arise when securities are
purchased or sold by the Funds with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield to the Funds at the time of entering into the transaction. However, yields
available in the market when delivery takes place may be higher than the yields
on securities to be delivered. When the Funds engage in when-issued and
delayed-delivery transactions, the Funds rely on the buyer or seller, as the
case may be, to consummate the sale. Failure to do so may result in the Funds
missing the opportunity to obtain a price or yield considered to be
advantageous. When-issued and delayed-delivery transactions may be expected to
occur a month or more before delivery is due. However, no payment or delivery is
made by the Funds until they receive payment or delivery from the other party to
the transaction. A separate account of liquid assets equal to the value of such
purchase commitments will be maintained with the Trust's custodian until payment
is made and will not be available to meet redemption requests. When-issued and
delayed-delivery agreements are subject to risks from changes in value based
upon changes in the level of interest rates and other market factors, both
before and after delivery. The Funds do not accrue any income on

<PAGE>

such securities prior to their delivery. To the extent a Fund engages in
when-issued and delayed-delivery transactions, it will do so for the purpose of
acquiring portfolio securities consistent with its investment objectives and
policies and not for the purpose of investment leverage.

Most Mortgage Pass-Through Certificates (especially FNMA and
Non-Governmental Certificates), whether they represent interests in pools of
fixed or adjustable interest rate mortgage loans, may be purchased pursuant to
the terms of firm commitment or standby commitment agreements. Under the terms
of these agreements, a Fund will bind itself to accept delivery of a Mortgage
Pass-Through Certificate at some future settlement date (typically three to six
months from the date of the commitment agreement) at a stated price. The standby
commitment agreements create an additional risk for a Fund because the other
party to the standby agreement generally will not be obligated to deliver the
security, but the Fund will be obligated to accept it if delivered. Depending on
market conditions (particularly on the demand for, and supply of, Mortgage
Pass-Through Certificates), the Fund may receive a commitment fee for assuming
this obligation. If prevailing market interest rates increase during the period
between the date of the agreement and the settlement date, the other party can
be expected to deliver the security and, in effect, pass any decline in value to
the Fund. If the value of the security increases after the agreement is made,
however, the other party is unlikely to deliver the security. In other words, a
decrease in the value of the securities to be purchased under the terms of
standby commitment agreements will likely result in the delivery of the
security, and therefore such decrease will be reflected in the Fund's net asset
value. However, any increase in the value of the securities to be purchased will
likely result in the non-delivery of the security and, therefore, such increase
will not affect the net asset value unless and until the Fund actually obtains
the security.

RESTRICTED SECURITIES

Restricted securities are acquired through private placement
transactions, directly from the issuer or from security holders, generally at
higher yields or on terms more favorable to investors than comparable publicly
traded securities. Privately placed securities are not readily marketable and
ordinarily can be sold only in privately negotiated transactions to a limited
number of purchasers or in public offerings made pursuant to an effective
registration statement under the Securities Act of 1933. Private or public sales
of such securities by a Fund may involve significant delays and expense. Private
sales require negotiations with one or more purchasers and generally produce
less favorable prices than the sale of comparable unrestricted securities.
Public sales generally involve the time and expense of preparing and processing
a registration statement under the Securities Act of 1933 and may involve the
payment of underwriting commissions; accordingly, the proceeds may be less than
the proceeds from the sale of securities of the same class which are freely
marketable.

<PAGE>

PART C
OTHER INFORMATION

ITEM 23. EXHIBITS

(a) Amended and Restated Agreement and Declaration of Trust dated May 22, 2000

(b) (1) By-Laws as amended and Restated through October 5, 1988. (3)
(2) Amendment dated February 8, 2000 to By-Laws. (6)

(d) (1) Fund Advisory Agreement, dated May 1, 1993, between the Trust on
behalf of the Capital Appreciation Fund (now named Stein Roe Small
Company Growth Fund, Variable Series) and Stein Roe & Farnham
Incorporated. (3)
(2) Fund Advisory Agreement, dated May 1, 1993, between the Trust on
behalf of the Managed Growth Stock Fund (now named Stein Roe Growth
Stock Fund, Variable Series) and Stein Roe & Farnham Incorporated. (3)
(3) Fund Advisory Agreement, dated May 1, 1993, between the Trust on
behalf of the Managed Assets Fund (now named Stein Roe Balanced Fund,
Variable Series) and Stein Roe & Farnham Incorporated. (3)
(4) Fund Advisory Agreement, dated May 1, 1993, between the Trust on
behalf of the Mortgage Securities Income Fund (now named SteinRoe
Mortgage Securities Fund, Variable Series) and Stein Roe & Farnham
Incorporated. (3)
(5) Fund Advisory Agreement, dated December 9, 1988, between the Trust on
behalf of the Cash Income Fund (now named Stein Roe Money Market Fund,
Variable Series) and Stein Roe & Farnham Incorporated. (3)
(6) Expense Reimbursement Agreement, dated June 1, 2000, between the Trust
on behalf of the SR Balanced Fund, VS, SR Growth Stock Fund, VS, SR
Mortgage Securities Fund, VS and Liberty Funds Distributor, Inc.

(e) Underwriting Agreement between the Trust and Liberty Funds Distributor,
Inc. dated August 3, 1999. (6)

(f) None

(g) (1) Custodian Contract dated December 31, 1988 between the Trust and State
Street Bank and Trust Company. (4)
(2) First Amendment to Custodian Contract dated February 23, 1989. (4)
(3) Second Amendment to Custodian Contract dated January 23, 1993. (4)

(h) (1) Administration Agreement dated as of January 3, 1995 between the
Trust, on behalf of each of its Funds, and Stein Roe & Farnham
Incorporated. (4)
(2) Transfer Agency Agreement dated as of November 3, 1998 among the
Trust, Liberty Funds Services, Inc., and

<PAGE>

SteinRoe Services Inc. (5)
(3) Accounting and Bookkeeping Agreement dated as of August 3, 1999
between the Trust, on behalf of each of its Funds, and Stein Roe
Farnham Incorporated. (6)
(4) Amended and Restated Participation Agreement dated April 3, 1998 among
the Trust, Keyport Life Insurance Company and Keyport Financial
Services Corp. (3)
(5) Participation Agreement dated as of October 1, 1993 among the Trust,
Keyport Financial Services Corp. and Independence Life Annuity Company
(formerly "Crown America Life Insurance Company"). (4)
(6) Participation Agreement dated as of April 15, 1994 among the Trust, on
behalf of the Capital Appreciation Fund, Transamerica Occidental Life
Insurance Company, Stein Roe & Farnham Incorporated and Charles Schwab
& Co., Inc. (4)
(7) Participation Agreement dated as of December 1, 1994 among the Trust,
on behalf of the Capital Appreciation Fund, First Transamerica Life
Insurance Company, Stein Roe & Farnham Incorporated and Charles Schwab
& Co., Inc. (4)
(8) Participation Agreement among the Trust, on behalf of the Capital
Appreciation Fund, Great-West Life & Annuity Insurance Company, Stein
Roe & Farnham Incorporated and Charles Schwab & Co., Inc. (2)
(9) Participation Agreement among the Trust, on behalf of the Capital
Appreciation Fund, Providian Life and Health Insurance Company and
Stein Roe & Farnham Incorporated (2)
(10) Participation Agreement dated May 8, 1998 among the Trust, Keyport
Benefit Life Insurance Company, and Keyport Financial Services Corp.
(4)
(11) Participation Agreement dated June 1, 1998 among the Trust, Stein Roe
& Farnham Incorporated, and Great-West Life & Annuity Insurance
Company. (6)

(i) Opinion and consent of counsel as to the legality of the securities being
registered. (3)

(j) (1) Consent of PricewaterhouseCoopers LLP, independent accountants.
(2) Consent of KPMG LLP, independent accountants.
(3) Opinion of KPMG LLP, independent accountants.(7)

(k) Not applicable.

(1) Not applicable.

(m) (1) Rule 12b-1 Distribution Plan
(2) Rule 12b-1 Inter-Distributor Agreement
(3) 12b-1 Plan Implementing Agreement between the Registrant and Liberty
Funds Distributor, Inc.

(n) Not applicable.

(o) Rule 18f-3 Plan

(p) (1) Code of Ethics of Stein Roe and Farnham Incorporated and the Funds -
filed as Exhibit (p) (5) in Part C, Item 23 of Post-Effective
Amendment No. 20 to the Registration Statement on Form N-1A of Liberty
Variable Investment

<PAGE>

Trust (File Nos. 33-59216 and 811-7556), filed with the Commission on
or about March 31, 2000, and is hereby incorporated by reference and
made a part of this Registration Statement

(p) (2) Code of Ethics of Liberty Funds Distributor, Inc. - filed as Exhibit
(p) (3) in Part C, Item 23 of Post-Effective Amendment No. 19 to the
Registration Statement on Form N-1A of Liberty Variable Investment
Trust (File Nos. 33-59216 and 811-7556), filed with the Commission on
or about March 16, 2000, and is hereby incorporated by reference and
made a part of this Registration Statement

----------------------
(1) Incorporated by Reference to Post-Effective Amendment No. 11 to this
Registration Statement, filed April 1996.
(2) Incorporated by References to Post-Effective Amendment No. 12 to this
Registration Statement, filed April 1997.
(3) Incorporated by Reference to Post-Effective Amendment No. 13 to this
Registration Statement filed April 1998.
(4) Incorporated by Reference to Post-Effective Amendment No. 14 to this
Registration Statement filed May 1998.
(5) Incorporated by Reference to Post-Effective Amendment No. 16 to this
Registration Statement filed April 1999.
(6) Incorporated by Reference to Post-Effective Amendment No. 17 to this
Registration Statement filed March 2000.
(7) Incorporated by Reference to Post-Effective Amendment No. 18 to this
Registration Statement filed April 2000.

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

Shares of the Trust registered pursuant to this Registration Statement
will be offered and sold to Keyport Life Insurance Company ("Keyport"), a stock
life insurance company organized under the laws of Rhode Island, and to certain
of its separate investment accounts and the respective separate investment
accounts of Liberty Life Assurance Company of Boston ("Liberty Life"), a stock
life insurance company organized as a Massachusetts corporation, Independence
Life & Annuity Company, a stock life insurance company organized under the laws
of Rhode Island ("Independence") and American Benefit Life Insurance Company, a
stock life insurance company organized under the laws of New York. As described
below, Keyport, Liberty Life, Independence and American Benefit are under common
control. The purchasers of insurance contracts and policies issued in connection
with such accounts will have the right to instruct Keyport, Liberty Life,
Independence and American Benefit with respect to the voting of the Registrant's
shares held by their respective separate accounts. Subject to such voting
instruction rights, Keyport, Liberty Life, Independence, American Benefit and
their respective separate accounts directly control the Registrant. In addition,
shares of Stein Roe Special Venture Fund, Variable Series currently are sold to
certain separate accounts of four insurance companies not affiliated with
Keyport, and shares of any of the Funds may in the future be sold to separate
accounts of other unaffiliated insurance companies.

Liberty Funds Distributor, Inc. the Trust's principal underwriter,
Stein Roe & Farnham Incorporated, the Trust's

<PAGE>

investment manager ("Stein Roe"), Keyport, Independence are and American Benefit
each wholly owned indirect subsidiaries of Liberty Financial Companies, Inc.
("LFC"), Boston, Massachusetts. As of December 31, 1999, Liberty Mutual
Insurance Company ("LMIC"), Boston, Massachusetts, owned, indirectly,
approximately 71.48% of the combined voting power of the outstanding voting
stock LFC (with the balance being publicly held). Liberty Life is a 90%-owned
subsidiary of LMIC.

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 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.

To the extent required 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

<PAGE>

(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 advance, 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 1933 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 1933 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, 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

<PAGE>

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.

In addition, Stein Roe maintains investment advisory professional
liability insurance to insure it, for the benefit of the Trust and its
non-interested trustees, against loss arising out of any error, omission, or
breach of any duty owed to the Trust or the Fund by the investment advisor.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Stein Roe is a direct wholly owned subsidiary of SteinRoe Services Inc.
("SSI"), which in turn, is a direct wholly owned subsidiary of LFC. LFC, as
stated in Item 24 above, is an indirect majority owned subsidiary of LMIC. Stein
Roe acts as investment adviser to individuals, trustees, pension and
profit-sharing plans, charitable organizations, and other investors. In addition
to the Registrant, it also acts as investment adviser to other no-load 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 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 the Registrant or other investment companies managed by Stein Roe.

ITEM 27. PRINCIPAL UNDERWRITERS

(a) Liberty Funds Distributor, Inc. (LFDI), a subsidiary of Colonial Management
Associates, Inc., is the Registrant's principal underwriter. LFDI acts in
such capacity for each series of 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 Variable Investment Trust, Liberty-Stein Roe Advisor Trust, Stein
Roe Income Trust, Stein Roe Municipal Trust, Stein Roe Investment Trust,
Stein Roe Floating Rate Income Fund, Stein Roe Institutional Floating Rate
Income Fund, SteinRoe Variable Investment Trust and Stein Roe Trust.

<PAGE>

(b) The table below lists each director or officer of the principal underwriter
named in the answer to Item 21.

(1) (2) (3)

Position and Offices Positions and
Name and Principal with Principal Offices with
Business Address* Underwriter Registrant
------------------------- -------------------- -------------
Anderson, Judith V.P. None

Babbitt, Debra V.P. and None
Comp. Officer

Bartlett, John Managing Director None

Bertrand, Thomas V.P. None

Blakeslee, James Sr. V.P. None

Blumenfeld, Alex V.P. None

Bozek, James Sr. V.P. None

Brown, Beth V.P. None

Burtman, Tracy V.P. None

Carroll, Sean V.P. None

Campbell, Patrick V.P. None

Chrzanowski, V.P. None
Daniel

Clapp, Elizabeth A. Managing Director None

Claiborne, Doug V.P. None

Conley, Brook V.P. None

Conlin, Nancy L. Dir; Clerk Secretary

Costello, Matthew V.P. None

Couto, Scott V.P. None

Davey, Cynthia Sr. V.P. None

Desilets, Marian V.P. Asst. Sec

Devaney, James Sr. V.P. None

<PAGE>

DiMaio, Stephen V.P. None

Downey, Christopher V.P. None

Dupree, Robert V.P. None

Emerson, Kim P. Sr. V.P. None

Erickson, Cynthia G. Sr. V.P. None

Evans, C. Frazier Managing Director None

Evitts, Stephen V.P. None

Feldman, David Managing Director None

Feloney, Joseph V.P. None

Fifield, Robert V.P. None

Fisher, James V.P. None

Fragasso, Philip Managing Director None

Gentile, Russell V.P. None

Gerokoulis, Sr. V.P. None
Stephen A.

Gibson, Stephen E. Director; Chairman President
of the Board

Goldberg, Matthew Sr. V.P. None

Grace, Anthony V.P. None

Gubala, Jeffrey V.P. None

Guenard, Brian V.P. None

Harrington, Tom Sr. V.P. None

Hodgkins, Joseph Sr. V.P. None

Huennekens, James V.P. None

Hussey, Robert Sr. V.P. None

Iudice, Jr., Philip Treasurer and CFO None

Ives, Curt V.P. None

Jones, Cynthia V.P. None

<PAGE>

Kelley, Terry M. V.P. None

Kelson, David W. Sr. V.P. None

Lewis, Blair V.P. None

Lichtenberg, Susyn V.P. None

Lynch, Andrew Managing Director None

Lynn, Jerry V.P. None

Marsh, Curtis Sr. V.P. None

Martin, John Sr. V.P. None

Martin, Peter V.P. None

McCombs, Gregory Sr. V.P. None

McKenzie, Mary V.P. None

Menchin, Catherine Sr. V.P. None

Miller, Anthony V.P. None

Moberly, Ann R. Sr. V.P. None

Morse, Jonathan V.P. None

Nickodemus, Paul V.P. None

O'Shea, Kevin Managing Director None

Palombo, Joseph R. Director Vice
President

Perullo, Deborah V.P. None

Piken, Keith V.P. None

Place, Jeffrey Managing Director None

Powell, Douglas V.P. None

Raftery-Arpino, Linda Sr. V.P. None

Ratto, Gregory V.P. None

Reed, Christopher B. Sr. V.P. None

Riegel, Joyce V.P. None

Robb, Douglas V.P. None

<PAGE>

Santosuosso, Louise Sr. V.P. None

Schulman, David Sr. V.P. None

Scully-Power, Adam V.P None

Shea, Terence V.P None

Sideropoulos, Lou V.P None

Sinatra, Peter V.P None

Smith, Darren V.P None

Soester, Trisha V.P None

Studer, Eric V.P None

Sweeney, Maureen V.P None

Tambone, James CEO; Co-President None

Tasiopoulos, Lou Co-President None

Torrisi, Susan V.P. None

Vail, Norman V.P. None

VanEtten, Keith H. Sr. V.P. None

Warfield, James V.P. None

Warnock, Laura V.P. None

Wess, Valerie Sr. V.P. None

White, John V.P. None

Young, Deborah V.P. None

--------------------------
* The address for each individual is One Financial Center, Boston, MA 02111.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

Persons maintaining physical possession of accounts, books and other
documents required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder include Registrant's Secretary,
Kevin M. Carome; Stein Roe & Farnham Incorporated, Registrant's investment
adviser and administrator; Registrant's transfer and dividend disbursing agent,
Liberty Funds Services, Inc.; Registrant's principal underwriter, Liberty Funds
Distributor, Inc.; and Registrant's

<PAGE>

custodian, State Street Bank and Trust Company. The address of the Registrant,
the Secretary, the transfer agent, and the underwriter is One Financial Center
Boston, MA 02210-2214; the address of Stein Roe & Farnham Incorporated is One
South Wacker Drive, Chicago, IL 60606; and the address of State Street Bank and
Trust Company is 225 Franklin Street, Boston, MA 02110.

ITEM 29. MANAGEMENT SERVICES

Pursuant to an Administration Agreement with the Registrant on behalf
of all the Funds dated as of January 3, 1995, Stein Roe provides each of the
Funds with administrative services. These services include the provision of
office space and equipment and facilities in connection with the maintenance of
the Registrant's headquarters, preparation and filing of required reports,
arrangements for meetings, maintenance of the Registrant's corporate books and
records, communication with shareholders, and oversight of custodial, accounting
and other services provided to the Funds by others. Stein Roe pays all
compensation of the Registrant's trustees, officers and employees who are
employees of Stein Roe. Stein Roe may, in its discretion, arrange for such
services to be provided by LFC or any of its subsidiaries.

Under separate agreements, Stein Roe also acts as the agent of the
Funds for the transfer of shares, disbursement of dividends and maintenance of
shareholder account records and for pricing and bookkeeping services.

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 certifies that it meets all of
the requirements for effectiveness of this registration statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago and the State of Illinois, on
the 1st day of June, 2000.

STEINROE VARIABLE 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 June 1, 2000
Stephen E. Gibson
Principal Executive Officer

J. KEVIN CONNAUGHTON Treasurer June 1, 2000
J. Kevin Connaughton
Principal Financial Officer

GAIL D. KNUDSEN Controller June 1, 2000
Gail D. Knudsen
Principal Accounting Officer

JOHN A. BACON JR. Trustee June 1, 2000
John A. Bacon Jr.

WILLIAM W. BOYD Trustee June 1, 2000
William W. Boyd

LINDSAY COOK Trustee June 1, 2000
Lindsay Cook

DOUGLAS A. HACKER Trustee June 1, 2000
Douglas A. Hacker

JANET LANGFORD KELLY Trustee June 1, 2000
Janet Langford Kelly

CHARLES R. NELSON Trustee June 1, 2000
Charles R. Nelson

THOMAS C. THEOBALD Trustee June 1, 2000
Thomas C. Theobald

<PAGE>

EXHIBIT LIST
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<S> <C>
(a) Amended and Restated Agreement and Declaration of Trust dated May 22, 2000

(d) (6) Expense Reimbursement Agreement, dated June 1, 2000, between the Trust
on behalf of the SR Balanced Fund, VS, SR Growth Stock Fund, VS, SR
Mortgage Securities Fund, VS and Liberty Funds Distributor, Inc.

(j) (1) Consent of PricewaterhouseCoopers LLP

(j) (2) Consent of KPMG LLP

(m) (1) Rule 12b-1 Distribution Plan
(2) Rule 12b-1 Inter-Distributor Agreement
(3) 12b-1 Plan Implementing Agreement between the Registrant and Liberty
Funds Distributor, Inc.

(o) Rule 18f-3 Plan
</TABLE>