Note 1. Organization of the SR&F Municipal Money Market Portfolio
The SR&F Municipal Money Market Portfolio (the "Portfolio") is a separate series of the SR&F Base Trust, a
Massachusetts common trust organized under an Agreement and Declaration of Trust dated August 23, 1993.
The Declaration of Trust permits the Trustees to issue non-transferable interests in the Portfolio. The Portfolio
allocates net asset value, income and expenses based on respective percentage ownership of each investor on a
daily basis. At December 31, 1996, Stein Roe Municipal Money Market Fund and Colonial Municipal Money
Market Fund owned 85.5 percent and 14.5 percent, respectively.
Note 2. Significant Accounting Policies
The following are the significant accounting policies of 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"), each a series of the Stein Roe Municipal Trust (a Massachusetts business trust), and SR&F
Municipal Money Market Portfolio (the "Portfolio"), a series of the SR&F Base Trust (a Massachusetts business
trust). The policies are in conformity with generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from those estimates.
All securities are valued as of December 31, 1996. Municipal securities are valued at a fair value using a
procedure determined in good faith by the Board of Trustees, which has authorized the use of bid valuations
provided by a pricing service, except for the Portfolio. Municipal securities of the Portfolio are value