NOTE 1. ORGANIZATION
Stein Roe Municipal Money Market Fund, Stein Roe Intermediate Municipals Fund, Stein Roe Managed
Municipals Fund and Stein Roe High-Yield Municipals Fund (the "Funds") are series of Liberty-Stein Roe
Municipal Trust (the "Trust"), formerly Stein Roe Municipal Trust, an open-end management investment company
organized as a Massachusetts business trust. Stein Roe Municipal Money Market Fund and Stein Roe High-
Yield Municipals Fund invest substantially all of their assets in SR&F Municipal Money Market Portfolio and
SR&F High-Yield Municipals Portfolio (the "Portfolios"), respectively.
The Portfolios are series of SR&F Base Trust, a Massachusetts common law trust organized under an
Agreement and Declaration of Trust dated August 23, 1993. SR&F High-Yield Municipals Portfolio commenced
operations on February 2, 1998. At commencement, Stein Roe High-Yield Municipals Fund contributed
$335,711 in securities and other assets to SR&F High-Yield Municipals Portfolio in exchange for beneficial
ownership of the Portfolio. On February 4, 1998, Stein Roe Advisor High-Yield Municipals Fund contributed
cash of $100 to the Portfolio. The Portfolios allocate income, expenses, realized and unrealized gains and losses
to each investor on a daily basis, based on methods approved by the Internal Revenue Service. At June 30, 2000
Stein Roe Municipal Money Market Fund owned 88.5% of SR&F Municipal Money Market Portfolio; and
Stein Roe High-Yield Municipals Fund owned 99.9% of SR&F High-Yield Municipals Portfolio.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Funds and Portfolios. These policies are in
conformity with generally accepted accounting principles, which require management to make estimates and
assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accoun