[PHOTO OF CAPITOL BUILDING]
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LIBERTY TAX-EXEMPT MONEY MARKET FUND Annual Report
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June 30, 2000
<PAGE>
President's Message
Dear Shareholders:
You may have noticed that your Fund has a new name. Beginning July 14, the names
of our funds changed to include Liberty. Rest assured, the investment objective
and strategies employed by the Fund's managers are not affected by this name
change. We believe the new name better reflects that your Fund is part of the
Liberty Funds, a diverse family of funds representing a wide selection of
investment styles and specialized money management. The goal of all Liberty
funds is to help you reach for financial freedom -- however you define it.
Consumer confidence remained high and spending was strong, posting near-record
sales in certain industries during the 12-month period ending June 30, 2000.
The U.S. economy continued its steady growth through the second half of 1999,
and though it has shown signs of slowing in the first two quarters of 2000, may
not have stabilized sufficiently to satisfy the Federal Reserve Board (the
Fed).
As always, the most influential factor in the bond market was the actions of
the Fed. Fueled by fears of inflation resulting from rapid economic growth, the
Fed raised interest rates five times during the period, increasing them from 5%
to 6.5%. As bond prices declined in the face of rising interest rates, bond
performance was negatively affected.
However, the demand for municipal bonds has increased in the last few months.
This was driven in part by their relatively high taxable-equivalent yields. In
addition, the rising stock market has enabled many investors to increase their
wealth and subsequently look for tax-exempt income.
We remain confident that municipal bonds can be a rewarding asset class for
tax-sensitive investors. The following report will provide you with more
specific information about your Fund's performance and the strategies used
during the period. I thank you for choosing Liberty Tax Exempt Money Market
Fund and for giving us the opportunity to serve your investment needs.
Sincerely,
/s/ Stephen E. Gibson
Stephen E. Gibson
President
August 18, 2000
Because economic and market conditions change frequently, there can be no
assurance that the trends described in this report will continue or come to
pass.
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Not FDIC May Lose Value
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Insured No Bank Guarantee
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<PAGE>
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Highlights
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> Objective (1)
Liberty Tax-Exempt Money Market Fund seeks maximum current income exempt
from federal income tax. The Fund attempts to maintain relative
stability and liquidity by investing principally in a diversified
portfolio of short-term municipal securities.
> Interest rates continued to rise.
Beginning in June of last year, the Federal Reserve Board (the Fed)
began to raise interest rates in an effort to slow rapid economic growth
and preempt inflationary pressure. In fact, the Fed raised interest
rates a total of five times during the period. This trend made it wise
to proceed cautiously with purchases.
> Taxpayers seeking liquidity benefited the Fund.
The yearly trend of taxpayers liquidating assets to provide needed cash
during tax time continued into May this year. This affected the variable
rate securities market because issuers raised rates to attract buyers.
The Fund was well-positioned to take advantage of these rate increases.
> Maintaining liquidity and shortening maturity served as a backdrop
for the period.
During the period, we spent much of the time remaining liquid in
anticipation of tightening by the Fed. We exercised caution in
purchasing, allowing the average maturity of the Portfolio to gradually
decrease. In keeping with this strategy, the bulk of investing during
the period involved variable-rate securities, which are purchased at par
and vary in interest rate. These gave the Fund daily and weekly
liquidity.
> Portfolio management continues to proceed with caution.
For the next few months, we will continue to exercise caution. With the
possibility that the Fed will raise rates again in August balanced by a
slowing in economic growth, we feel that the most prudent course of
action is to wait and see what August brings. As always, however, we
have our eyes open for attractive purchases that we believe should
benefit the Fund.
/s/ Veronica Wallace
Veronica M. Wallace, a vice president of Stein Roe & Farnham, Inc.,
is portfolio manager of Liberty Tax-Exempt Money Market Fund.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Portfolio Breakdown(2) Portfolio Maturity(2)
(as of 6/30/00) (as of 6/30/00)
................................ ............................................
Variable-Rate Notes ............ 77.7% 0-29 days .......................... 79.3%
Tax-Exempt Bonds ............... 8.7% 30-89 days ......................... 4.2%
Other Tax Exempts .............. 6.7% 90-179 days ........................ 8.7%
Put Bonds ...................... 3.9% 180-299 days ....................... 1.5%
Tax-Anticipation Notes ......... 1.6% 300-375 days ....................... 6.3%
Commercial Paper ............... 1.4%
</TABLE>
(1) The Fund pursues its objective by investing all of its assets in the SR&F
Municipal Money Market Portfolio (Portfolio), a municipal money market fund
with the same investment objective as the Fund.
(2) Portfolio breakdown and maturity weightings are calculated as a percentage
of total value of the SR&F Municipal Money Market Portfolio. Because it is
actively managed, there can be no guarantee the Portfolio will continue to
hold or invest in these securities in the future, or maintain these
maturity weightings.
An investment in the Fund is not insured or guaranteed by the U.S. government.
There can be no assurance that the $1.00 net asset value per share will be
maintained.
[BEGIN SIDE BAR]
12-month distributions
declared per share
<TABLE>
<S> <C>
Class A $ .032
Class B $ .022
Class C $ .028
</TABLE>
7-day yields on 6/30/00(3)
<TABLE>
<S> <C>
Class A 3.86%
Class B 2.85%
Class C 3.45%
</TABLE>
7-day taxable-equivalent yields on 6/30/00(4)
<TABLE>
<S> <C>
Class A 6.39%
Class B 4.72%
Class C 5.71%
</TABLE>
30-day yields on 6/30/00(3)
<TABLE>
<S> <C>
Class A 3.66%
Class B 2.68%
Class C 3.27%
</TABLE>
(3) If the Advisor or its affiliates had not waived certain Fund expenses, the
7-day and 30-day yields would have been 3.17% and 2.97% for Class A shares,
2.16% and 1.99% for Class B shares, and 2.16% and 1.98% for Class C shares.
(4) Taxable-equivalent SEC yields are based on the combined maximum effective
43.2% federal and state income tax rate. This tax rate does not reflect the
phase out of exemptions or the reduction of otherwise allowable deductions
which occur when Adjusted Gross Income exceeds certain levels.
[END SIDE BAR]
1
<PAGE>
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SR&F Municipal Money Market Portfolio--Investment Portfolio
--------------------------------------------------------------------------------
June 30, 2000 (In thousands)
<TABLE>
<CAPTION>
Municipal Securities -- (102.6%) Par Value
------------------------------------------------------------------
<S> <C> <C>
Alabama (1.3%)
Huntsville:
Series 1998 D, 4.000% 11/1/00 $ 600 $ 600
Series 1998 A, 4.000% 11/1/00 1,000 1,000
--------
1,600
--------
Arizona (1.8%)
Phoenix Industrial Development
Authority, Spring Air Mattress Co.,
Series 1999, VRDB 5.000% 4/1/19 (a) 1,870 1,870
Scottsdale, Series 1992 C, 7.750% 7/1/00 450 450
--------
2,320
--------
California (0.8%)
California Higher Education Loan Authority,
Series 1994 A, 4.700% 7/1/05 (a) 1,000 1,000
--------
Colorado (4.1%)
Colorado Springs, Catalano Family LLP,
Series 1998, VRDB 4.950% 7/1/18 (a) 1,145 1,145
Colorado State, 5.000% 6/27/01 1,000 1,006
Lowry Economic Redevelopment
Authority, Series 1998 B, VRDB
4.700% 12/1/20 1,000 1,000
SBC Metropolitan District Colorado,
4.000% 12/7/29 2,000 2,000
--------
5,151
--------
District of Columbia (0.8%)
District of Columbia Housing Finance
Agency, Series 2000 E, 4.600% 7/23/01 1,000 1,000
--------
Georgia (2.1%)
Douglas County, Series 1995,
4.375% 11/1/00 400 400
Gwinnett County Development Authority,
Price Co., Inc., Series 1995, VRDB
4.950% 06/1/10 (a) 2,200 2,200
--------
2,600
--------
Idaho (0.8%)
State Housing & Finance Association,
Balmoral Apartments Project,
Series 2000, 4.800% 5/1/32 1,000 1,000
--------
Illinois (25.0%)
ABN Amro Munitops Certificates,
Series 1998-14, VRDB 4.800%
10/4/06 (b) 1,000 1,000
Chicago, Archer Court Apartments,
Series 1999 B, 4.820% 6/1/19 1,010 1,010
Chicago, Crane Carton Co.,
Series 1992, 4.850% 6/1/12 2,150 2,150
Chicago, De LaSalle Institute,
Series 1997, 4.850% 4/1/27 900 900
Chicago, Midway Airport, VRDB
Series 1999, 3.600% 1/1/29 1,960 1,960
Chicago, PS Greetings, Inc.,
Series 1999, 4.900% 5/1/24 1,420 1,420
</TABLE>
<TABLE>
<CAPTION>
Par Value
-------------------------------------------------------------------
<S> <C> <C>
Chicago Single Family Mortgage,
Series 2000 B, 4.400% 3/1/01 $1,000 $ 1,000
Chicago, Stockyards Redevelopment Project,
VRDB Series 199 A, 4.850% 12/1/11 1,470 1,470
De Kalb County Community United
School, District No.428,
Series 1999, 4.100% 12/1/00 1,205 1,205
Glendale Heights, Judy LLC IDR
Series 1998, VRDB 4.950% 8/1/28 (a) 1,540 1,540
Illinois Development Finance Authority:
Wheaton Academy, Series 1998,
4.800% 10/1/28 1,000 1,000
Rest Haven Illiana Christian
Convalescent Home, Series 1997,
4.800% 1/1/27 1,000 1,000
Illinois Educational Facilities Authority,
Aurora University, Series 1989,
4.850% 1/1/09 1,400 1,400
Illinois Health Facilities Authority,
University of Chicago, Series 1985 A,
4.150% 8/1/15 1,000 1,000
Lake County Community College District
No.532, Series 1999 B, 9.000% 11/1/00 805 818
Melrose Park, Ninos Enterprises, Inc.,
Series 1999, VRDB 5.000% 12/1/24 3,500 3,500
Morton, Morton Welding Co., Inc.,
Series 1996 A, VRDB 5.050% 4/1/16 (a) 870 870
Northbrook Park District, Series 1999 A,
4.850% 11/1/00 300 300
Palatine, Series 1998, 4.800% 12/1/28 1,000 1,000
Phillips Brothers, Inc., Series 1998,
4.950% 6/1/18 (a) 1,350 1,350
Quad Cities Regional Economic
Development Authority Revenue,
Steel Warehouse, Series 1998,
VRDB 4.950% 12/1/13 (a) 2,200 2,200
Sauget, Monsanto Co., Series 1996,
4.900% 9/1/14 2,200 2,200
Springfield IDR, Oak Terrace Joint
Venture LP, Series 1999,
4.800% 12/1/25 1,000 1,000
------
31,293
------
Indiana (10.7%)
Elkhart, Adorn, Inc., Series 1995, VRDB
5.100% 8/1/05 1,200 1,200
Franklin, Lakeview Apartments,
Series 1994, VRDB 4.830% 9/1/30 (a) 2,789 2,789
Indiana Development Finance Authority,
Carr Metal Products, Inc., Series 1999,
VRDB 5.250% 1/1/09 1,300 1,300
Indiana University, Series 1990 G,
7.000% 8/1/10 300 314
Kokomo, Village Community Partners IV
L.P., Series 1995, VRDB 4.830% 9/1/30 (a) 2,940 2,940
</TABLE>
2 See Notes to Financial Statements.
<PAGE>
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SR&F Municipal Money Market Portfolio--Investment Portfolio
--------------------------------------------------------------------------------
June 30, 2000 (In thousands)
<TABLE>
<CAPTION>
Municipal Securities (continued) Par Value
---------------------------------------------------------------
<S> <C> <C>
Marion County, Indiana Weslyan
University, Series 2000 VRDB,
4.850% 6/1/30 $1,500 $ 1,500
Plymouth, Hillcrest Apartments,
Series 1998 A, VRDB 4.900% 4/1/28 (a) 1,000 1,000
St. Joseph County, Pine Oaks,
Series 1997 A, VRDB, 4.900% 6/1/27 2,365 2,365
------
13,408
------
Iowa (12.1%)
American Institute of Business,
Series 1998, 4.850% 11/1/13 1,700 1,700
Clinton, IDR Sethness Products Co.,
Series 1996, VRDB 4.850% 09/1/11 (a) 3,700 3,700
Dallas Center Grimes Community School
District, Series 2000, 5.000% 5/1/01 260 261
Iowa Higher Education Loan Authority,
St. Ambrose University:
Series 1995, VRDB 4.875% 2/1/05 1,100 1,100
Series 1999, VRDB 4.750% 10/1/09 295 295
Iowa School Corp. Warrants,
Series 2000-2001 A, 5.500% 6/22/01 1,000 1,009
Muscatine County, Monsanto Co.,
Series 1992, VRDB 4.900% 10/1/07 2,100 2,100
Scott County, Nichols Aluminum Project,
Series 1999, VRDB 4.900% 6/1/14 2,800 2,800
Woodbury County, Siouxland Medical
Educational Foundation, Series 1996,
VRDB 4.800% 11/1/16 2,150 2,150
------
15,115
------
Kansas (1.1%)
Kansas City Industrial Development
Authority, Lanter Co., Series 1987 A,
VRDB 4.950% 2/1/03 515 515
Olathe, Garmin International, Inc.,
Series 1995, VRDB 3.450% 1/1/25 (a) 800 800
------
1,315
------
Kentucky (3.4%)
Covington, Whitle Castle Distributing,
Inc., Series 1991, VRDB
4.950% 4/1/06 (a) 2,830 2,830
Shelby County, Roll Forming Corp.,
Series 1996, VRDB 4.950% 4/1/16 (a) 1,460 1,460
------
4,290
------
Louisiana (0.4%)
State Housing Finance Agency,
Series 2000 C, 5.250% 6/1/01 500 500
======
Maryland (1.1%)
Anne Arundel County, Baltimore Gas &
Electric Co., Series 1988,
4.250% 12/1/18 (a) 1,000 1,000
Baltimore, Series 2000 A, 4.750% 7/1/01 365 366
------
1,366
------
</TABLE>
<TABLE>
<CAPTION>
Par Value
----------------------------------------------------------------
<S> <C> <C>
Michigan (2.8%)
ABN Amro Munitops Certificates,
Series 1998-13, VRDB 4.770% 10/4/06 (b) $2,000 $2,000
Kentwood, Series 2000, 4.350% 5/1/01 495 495
Municipal Bond Authority,
Series 2000B-1, 5.000% 7/2/01 1,000 1,006
------
3,501
------
Minnesota (0.8%)
State Housing Finance Authority,
Series 2000, 4.350% 5/1/01 1,000 1,000
------
Missouri (2.8%)
Jefferson County Industrial Development
Authority, Sinclair & Rush, Inc.,
Series 1994 A, VRDB 4.950% 11/1/09 (a) 3,445 3,445
------
Montana (1.2%)
State, Series 2000 D, 5.250% 8/1/00 1,460 1,461
------
New Mexico (0.8%)
State, Series 1995 B, 4.400% 7/1/00 1,000 1,000
------
Nevada (0.8%)
State, Series 1990, 7.000% 8/1/05 1,000 1,032
------
Ohio (0.9%)
Environment Improvement Authority,
U.S. Steel Corp. Project, VRDB
4.540% 12/1/01 400 400
Hancock County, Crystal Glen
Apartments Project, Series 1998 B,
VRDB 4.950% 1/1/31 (a) 750 750
------
1,150
------
Pennsylvania (1.9%)
Bucks County Industrial Development
Authority, USX Corp., 4.250% 11/1/17 1,000 1,000
Quakertown General Authority,
Series 1996 A, VRDB 3.200% 7/1/26 1,428 1,428
------
2,428
------
South Carolina (1.9%)
Newberry County, Series 1999,
4.250% 9/1/00 310 310
South Carolina Economic Development
Authority, Specialty Equipment Co.,
Inc., Series 1995, 3.600% 11/1/10 (a) 2,045 2,046
------
2,356
------
South Dakota (0.2%)
State Health & Educational Facilities
Authority, Prince of Peace Hospital,
Series 1993, 4.600% 7/1/00 260 260
------
Tennessee (3.5%)
Rutherford County Industrial
Development Board, Farmers CoOp
Project, Series B, VRDB 4.950% 11/1/14 1,000 1,000
Wilson County Industrial Development
Board, Briskin Manufacturing Co.,
Series 1999, VRDB 5.000% 7/1/29 3,355 3,355
------
4,355
------
</TABLE>
See Notes to Financial Statements. 3
<PAGE>
--------------------------------------------------------------------------------
SR&F Municipal Money Market Portfolio--Investment Portfolio
--------------------------------------------------------------------------------
June 30, 2000 (In thousands)
<TABLE>
<CAPTION>
Municipal Securities (continued) Par Value
----------------------------------------------------------------
<S> <C> <C>
Texas (7.4%)
Brownsville Industrial Development
Corp., Tella Tool & Manufacturing Co.,
Series 2000, VRDB 4.950% 6/1/20 $1,300 $1,300
Fort Bend County Industrial Development
Corp., W.W. Grainger, Inc.,
Series 1989, VRDB 4.900% 12/1/02 1,110 1,110
Garland, Series 1992 B, 5.700% 8/15/00 400 401
Grand Prairie Industrial Development
Authority, Series 1986, VRDB
5.150% 12/1/11 900 900
Gulf Coast Waste Disposal Authority:
Amoco Oil Co., Series 1997,
4.900% 1/1/26 (a) 100 100
Monsanto Co., Series 1994,
4.900% 4/1/13 900 900
Monsanto Co., Series 1996,
4.900% 7/1/01 (a) 300 300
Harris County General Obligations
Corporate Notes Series:
4.500% 8/3/00 750 750
4.650% 8/3/00 100 100
Harris County Industrial Development
Authority, Precision General, Inc.,
Series 1991, VRDB 4.950% 10/1/16 (a) 2,060 2,060
Robertson County Industrial
Development Corp., Sanderson Farms,
Inc., Series 1995, 4.900% 11/1/05 300 300
Texas State, Series 1999 A, VRDB 4.500%
8/31/00 1,000 1,001
------
9,222
------
Utah (0.6%)
Utah Municipal Power Agency,
Series 1993 A, 4.900% 7/1/00 750 750
------
Washington (1.7%)
King County School District No. 414,
Series 1990, 7.000% 12/1/02 1,000 1,014
Washington State Housing Finance
Commission, Hamilton Place Senior
Living, Series 1996 A, VRDB
4.850% 07/1/28 (a) 1,110 1,110
------
2,124
------
</TABLE>
<TABLE>
<CAPTION>
Par Value
---------------------------------------------------------------------
<S> <C> <C>
Wisconsin (9.2%)
Chase, Belgiosio Cheese, Inc., Series 1998,
VRDB 4.950% 04/1/11 (a) $1,000 $ 1,000
Chippewa Falls Area Unified School
District, Series 2000, 5.850% 4/1/01 215 216
Fond du Lac, Brenner Tank, Inc.,
Series 1994, VRDB 4.950% 11/1/04 (a) 2,125 2,125
Holland, White Clover Dairy, Inc.,
Series 1994, VRDB 4.950% 5/1/05 (a) 2,275 2,275
Kenosha, Monarch Plastics, Inc.,
Series 1994, VRDB 4.950% 12/1/09 (a) 1,750 1,750
Monroe Joint Venture, Inc., Series 2000,
4.900% 1/1/30 500 500
Outagamie County, Series 1999,
4.000% 10/1/00 365 365
Racine, Series 1999 B, 4.600% 12/1/00 690 692
Wisconsin State Health & Educational
Facilities Authority, Grace Lutheran
Foundation, Series 1999, VRDB
4.950% 7/1/14 2,555 2,555
--------
11,478
--------
West Virginia (0.6%)
State, Series 1992, 5.500% 4/1/01 800 807
--------
Total Municipal Securities
(cost of $128,327) 128,327
--------
Other Assets & Liabilities, Net (-2.6)% (3,248)
--------
Net Asset (100.0%) $125,079
========
</TABLE>
Notes to Investment Portfolio:
(a) Security is subject to federal alternative minimum tax. At June 30, 2000,
the aggregate value of these securities represents 36.0% of net assets.
(b) Represents private placement securities issued under Rule 144A, which are
exempt from the registration of the Securities Act of 1933. These
securities are generally issued to qualified institutional buyers, such as
the Portfolio, and any resale by the Portfolio must be an exempt
transaction, normally to other qualified institutional investors. At June
30, 2000, the aggregate value of the Portfolio's private placement
securities was $3,000 which represented 2.4% of net assets.
(c) At June 30, 2000, the cost of investments for financial reporting and
federal tax purposes was identical.
Variable rate demand bonds (VRDB) are securities whose yields are periodically
reset at levels that are generally comparable to tax-exempt commercial paper.
These securities are payable on demand within seven calendar days and normally
incorporate an irrevocable letter of credit or line of credit with a major
bank.
<TABLE>
<S> <C>
Acronym Name
--------- -------------------------------
IDR Industrial Development Revenue
</TABLE>
4 See Notes to Financial Statements.
<PAGE>
--------------------------------------------------------------------------------
SR&F Municipal Money Market Portfolio--Statement of Assets and Liabilities
--------------------------------------------------------------------------------
June 30, 2000
(in thousands)
<TABLE>
<S> <C> <C>
Assets
Investments, at market value (cost of $128,327) $128,327
Receivable for investments sold $1,210
Interest receivable 896
Cash 10
Other 27 2,143
------ --------
Total Assets 130,470
--------
Liabilities
Payable for investments purchased 5,163
Accrued:
Management fees 26
Bookkeeping fees 2
Transfer agent fees 1
Other 199
------
Total Liabilities 5,391
--------
Net assets applicable to investors'
beneficial interest $125,079
========
</TABLE>
--------------------------------------------------------------------------------
SR&F Municipal Money Market Portfolio--Statement of Operations
--------------------------------------------------------------------------------
For the Year Ended June 30, 2000
(in thousands)
<TABLE>
<S> <C> <C>
Investment Income
Interest $5,062
------
Expenses
Management fees $316
Bookkeeping fees 27
Audit fees 16
Trustees' fees 17
Custodian fees 6
Legal fees 2
Transfer agent fees 6
----
Total expenses 390
------
Net investment income 4,672
------
Realized and Unrealized Loss on
Investments
Net realized loss on investments (9)
Net change in unrealized appreciation/
depreciation on investment (3)
------
Net loss (12)
------
Net Increase in Net Assets Resulting
from Operations $4,660
======
</TABLE>
See Notes to Financial Statements. 5
<PAGE>
--------------------------------------------------------------------------------
SR&F Municipal Money Market Portfolio--Statement of Changes in Net Assets
--------------------------------------------------------------------------------
(all amounts in thousands)
<TABLE>
<CAPTION>
Year ended June 30,
-----------------------------
Operations 2000 1999
-------------------------------------------------------------------------
<S> <C> <C>
Net investment income $ 4,672 $ 4,189
Net realized loss on investments (9) --
Net change in unrealized appreciation/
depreciation on investments (3) --
--------- ----------
Net increase in net assets resulting from
operations 4,660 4,189
--------- ----------
Transactions in Investors' Beneficial Interest
Contributions 104,696 101,419
Withdrawals (118,326) (103,577)
--------- ----------
Net decrease from transactions in
investors' beneficial interest (13,630) (2,158)
--------- ----------
Net increase (decrease) in net assets (8,970) 2,031
Total Net Assets
Beginning of period 134,049 132,018
--------- ----------
End of period $ 125,079 $ 134,049
========= ==========
</TABLE>
--------------------------------------------------------------------------------
SR&F Municipal Money Market Portfolio--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period ended
Years ended June 30, June 30,
------------------------------------------------- ---------------
2000 1999 1998 1997 1996 (a)
----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Selected Ratios
Ratios of net expenses to average net assets 0.30% 0.30% 0.34% 0.32% 0.30%(b)
Ratio of net investment income to average net assets 3.57% 3.07% 3.41% 3.36% 3.50%(b)
</TABLE>
(a) From commencement of operations on September 28, 1995.
(b) Annualized.
6 See Notes to Financial Statements.
<PAGE>
--------------------------------------------------------------------------------
SR&F Municipal Money Market Portfolio--Notes to Financial Statements
--------------------------------------------------------------------------------
June 30, 2000
Note 1. Organization
SR&F Municipal Money Market Portfolio (the "Portfolio") is a separate series of
SR&F Base Trust, a Massachusetts common law 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
investment objective of the Portfolio is to seek maximum current tax-free
income consistent with capital preservation and maintenance of liquidity.
The Portfolio allocates income, expenses and realized gains and losses to each
investor on a daily basis, based on methods approved by the Internal Revenue
Service. At June 30, 2000, Liberty Tax-Exempt Money Market Fund (formerly
Colonial Municipal Money Market Fund) owned 11.5% of the Portfolio.
Note 2. Significant Accounting Policies
The following summarizes the significant accounting policies of the Portfolio.
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 accounted for on trade date. Interest income,
including discount accretion and premium amortization, is recorded daily on the
accrual basis. Realized gains or losses from investment transactions are
reported on an identified cost basis.
Security Valuations:
Municipal securities are valued at amortized cost, which approximates market
value. This method involves valuing an instrument at cost on the purchase date
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 and does not take into account unrealized securities
gains or losses. Other assets are valued at fair value as determined in good
faith by or under the direction of the Board of Trustees.
Federal Income Taxes:
No provision is made for federal income taxes because the Portfolio is treated
as a partnership for federal income tax purposes and all of its income is
allocated to its owners based on methods approved by the Internal Revenue
Service.
Note 3. Portfolio Composition
The Portfolio invests in municipal securities including, but not limited to,
general obligation bonds, revenue bonds and escrowed bonds (which are bonds
that have been refinanced, the proceeds of which have been invested in U.S.
Government or agency obligations and set aside to pay off the original issue at
the first call date or maturity). The Portfolio's investments include certain
municipal securities that are insured by private insurers who guarantee the
payment of principal and interest in the event of default.
The Portfolio's investments include certain short-term securities that are
backed by bank letters of credit used to provide liquidity to the issuer and/or
additional security in the event of default by the issuer. At June 30, 2000,
72.8% of the Portfolio's investments was backed by bank letters of credit. See
the Portfolio's Investment Portfolio for additional information on portfolio
composition.
Note 4. Trustees Fees and Transactions With Affiliates
Management and Administrative Fees:
The Portfolio pays monthly management fees to Stein Roe & Farnham Incorporated
(the "Advisor"), an indirect, majority-owned subsidiary of Liberty Mutual
Insurance Company, for its services as investment advisor and manager. The
management fee for the Portfolio is computed at an annual rate of 0.25% of
average daily net assets.
Bookkeeping Fee:
The Advisor provides bookkeeping and pricing services for a monthly fee equal
to $25,000 annually plus 0.0025% annually of the Fund's average net assets.
Certain officers and trustees of the Trust are also officers of the Advisor.
Compensation is paid to trustees not affiliated with the Advisor. No
remuneration was paid to any other trustee or officer of the Trust who is
affiliated with the Advisor.
Note 5. Line of Credit
SR&F Base Trust (the "Trust") participates in an unsecured line of credit
agreement provided by the custodian bank consisting of two components. The
committed line of credit entitles the Trust to borrow from the custodian at any
time upon notice from the Trust. The uncommitted line of credit permits the
Trust to borrow from the custodian at the custodian's sole discretion. The
aggregate borrowings available to the Trust for the committed and uncommitted
lines of credit are $200 million and $100 million, respectively. Borrowings may
be made to temporarily finance the repurchase of Fund shares. Interest is charge
to each Trust and, ultimately, each Fund based on its borrowings at a rate equal
to the Federal Funds Rate plus 5% per year. In addition, a commitment fee of
0.10% per annum on each Fund's borrowings shall be paid quarterly by each Fund
based on the relative asset size of each Fund. For the year ended June 30, 2000,
the Trust had no borrowings under the agreement.
7
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Statement of Assets and Liabilities
--------------------------------------------------------------------------------
June 30, 2000
(in thousands except for per share amounts)
<TABLE>
<S> <C> <C>
Assets
Investment in Portfolio, at value $14,331
Expense reimbursement due from
Advisor $8
Other 6 14
-- -------
Total Assets 14,345
Liabilities
Payable for:
Fund shares repurchased 24
Distributions 10
Accrued:
Administration fees 3
Bookkeeping fees 2
Transfer agent fees 2
Other 44
--
Total Liabilities 85
-------
Net Assets $14,260
-------
Net asset value:
Class A ($13,362/13,362) $ 1.00(a)
-------
Class B ($677/677) $ 1.00(a)
-------
Class C ($221/221) $ 1.00(a)
-------
Composition of Net Assets
Paid in Capital $14,260
=======
</TABLE>
(a) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
8 See Notes to Financial Statements.
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Statement of Operations
--------------------------------------------------------------------------------
For the Year Ended June 30, 2000
(in thousands)
<TABLE>
<S> <C> <C>
Investment Income
Interest income allocated from Portfolio $580
----
Expenses
Expenses allocated from Portfolio $ 45
Administration fee 37
Service fee -- Class B, Class C 3
Distribution fee -- Class B 8
Distribution fee -- Class C 2
Transfer agent fee 37
Bookkeeping fee 18
Trustees' fee 6
Audit fee 18
Legal fee 7
Registration fee 32
Reports to shareholders 10
Other 4
-----
227
Fees and expenses waived or borne by the
Administrator (103)
Fees waived by the Distributor - Class C (2) 122
----- ----
Net Investment Income $458
----
</TABLE>
See Notes to Financial Statements. 9
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Statement of Changes in Net Assets
--------------------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Year Ended Year Ended
June 30, June 30,
Increase (Decrease) in Net Assets 2000 1999
--------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 458 $ 379
Distributions:
From net investment income -- Class A (429) (357)
From net investment income -- Class B (20) (18)
From net investment income -- Class C (8) (5)
-------- --------
1 (1)
Fund Share Transactions:
Receipts for shares sold -- Class A 64,316 10,827
Value of distributions reinvested -- Class A 352 331
Cost of shares repurchased -- Class A (63,911) (14,943)
-------- --------
757 (3,785)
-------- --------
Receipts for shares sold -- Class B 1,854 1,734
Value of distributions reinvested -- Class B 15 16
Cost of shares repurchased -- Class B (2,291) (1,921)
-------- --------
(422) (171)
-------- --------
Receipts for shares sold -- Class C 558 105
Value of distributions reinvested -- Class C 6 5
Cost of shares repurchased -- Class C (521) (107)
-------- --------
43 3
-------- --------
Net Increase (Decrease) from Fund Share
Transactions 378 (3,953)
-------- --------
Total Increase (Decrease) 379 (3,954)
Net Assets
Beginning of period 13,881 17,835
-------- --------
End of period (net of overdistributed
net investment income of none and
$1, respectively) $ 14,260 $ 13,881
-------- --------
Number of Fund Shares
Sold -- Class A 64,316 10,827
Issued for distributions reinvested -- Class A 352 331
Repurchased -- Class A (63,911) (14,943)
-------- --------
757 (3,785)
-------- --------
Sold -- Class B 1,854 1,734
Issued for distributions reinvested -- Class B 15 16
Repurchased -- Class B (2,291) (1,921)
-------- --------
(422) (171)
-------- --------
Sold -- Class C 558 105
Issued for distributions reinvested -- Class C 6 5
Repurchased -- Class C (521) (108)
-------- --------
43 2
-------- --------
</TABLE>
10 See Notes to Financial Statements.
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Notes to Financial Statements
--------------------------------------------------------------------------------
June 30, 2000
Note 1. Accounting Policies
Organization:
Liberty Tax-Exempt Money Market Fund (formerly Colonial Municipal Money Market
Fund) (the Fund), a series of Liberty Funds Trust IV, formerly Colonial Trust
IV, is a non-diversified portfolio of a Massachusetts business trust registered
under the Investment Company Act of 1940, as amended, as an open-end,
management investment company. The Fund invests all of its investable assets in
interests in the SR&F Municipal Money Market Portfolio (the Portfolio), a
Massachusetts common law trust, having the same investment objective as the
Fund. The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio (11.5% at June 30,
2000). The performance of the Fund is directly affected by the performance of
the Portfolio.
The financial statements of the Portfolio, including the portfolio of
investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. The Fund may issue an
unlimited number of shares. The Fund offers three classes of shares: Class A,
Class B and Class C shares. Class A shares are sold at net asset value (NAV). A
1.00% contingent deferred sales charge is assessed on redemptions made within
eighteen months on an original purchase of $1 million to $5 million. Class B
shares are subject to an annual distribution fee and a contingent deferred
sales charge. Class B shares will convert to Class A shares as follows:
<TABLE>
<CAPTION>
Original purchase Converts to Class A shares
<S> <C>
Less than $250,000 8 years
$250,000 to less than $500,000 4 years
$500,000 to less than $1,000,000 3 years
</TABLE>
Class C shares are subject to a contingent deferred sales charge on redemptions
made within one year after purchase and an annual service and distribution fee.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Fund in the preparation of its
financial statements.
Security valuation and transactions:
Valuation of securities by the Portfolio is discussed in Note 1 of the
Portfolio's Notes to Financial Statements which are included elsewhere in this
report.
Determination of class net asset values and financial highlights:
All income, expenses (other than the Class B and Class C service and
distribution fees), and realized and unrealized gains (losses), are allocated
to each class proportionately on a daily basis for purposes of determining the
net asset value of each class.
Class B and Class C per share data and ratios are calculated by adjusting the
net investment income per share data and ratios for the entire period by the
service fee and distribution fee applicable to Class B and Class C shares only.
Federal income taxes:
Consistent with the Fund's policy to qualify as a regulated investment company
and to distribute all of its taxable income, no federal income tax has been
accrued.
Distributions to shareholders:
The Fund declares and records distributions daily and pays monthly.
Note 2. Fees and Compensation Paid to Affiliates
Administrator:
Colonial Management Associates, Inc. (the Administrator) provides accounting
and other services and office facilities for a monthly fee equal to 0.25%
annually of the Fund's average net assets.
Bookkeeping fee:
The Administrator provides bookkeeping and pricing services for a monthly fee
equal to $18,000 annually plus 0.0233% of the Fund's average net assets over
$50 million.
Transfer agent:
Liberty Funds Services, Inc. (the Transfer Agent), an affiliate of the
Administrator, provides shareholder services for a monthly fee equal to 0.20%
annually of the Fund's average net assets and receives reimbursement for
certain out-of-pocket expenses.
Effective January 1, 2000, the Transfer Agent fee was changed to a fee
comprised of 0.07% annually of average net assets plus charges based on the
number of shareholder accounts and transactions. The Transfer agent continues
to receive reimbursement for certain out of pocket expenses through December
31, 1999.
Underwriting discounts, service and distribution fees:
Liberty Distributor, Inc. (the Distributor), a subsidiary of the Administrator,
is the Fund's principal underwriter. During the year ended June 30, 2000, the
Fund has been advised that the Distributor received contingent deferred sales
charges (CDSC) of none, $8,406 and none on Class A, Class B and Class C share
redemptions, respectively.
The Fund has adopted a 12b-1 plan which requires the payment of a service fee
to the Distributor equal to 0.25% annually of Class B and Class C net assets as
of the 20th of each month. The plan also requires the payment of a distribution
fee to the Distributor equal to 0.75% annually of the average net assets
attributable to Class B and Class C shares. The Distributor has voluntarily
agreed to waive a portion of the Class C share distribution fee so that it does
not exceed 0.15% annually.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
Expense limits:
The Administrator has agreed, until further notice, to waive fees and bear
certain Fund expenses to the extent that total expenses (inclusive of the
Fund's proportionate share of the Portfolio's expenses and exclusive of service
and distribution fees, commissions, taxes, and extraordinary expenses, if any)
exceed 0.75% annually of the Fund's average net assets.
Other:
The Fund pays no compensation to its officers, all of whom are employees of the
Administrator.
11
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Notes to Financial Statements (continued)
--------------------------------------------------------------------------------
June 30, 2000
The Fund's Trustees may participate in a deferred compensation plan which may
be terminated at any time. Obligations of the plan will be paid solely out of
the Fund's assets.
Change in Independent Auditor (Unaudited):
Based on the recommendation of the Audit Committee of the Fund on June 18,
1999, the Board of Trustees determined not to retain PricewaterhouseCoopers LLP
as the Fund's independent auditor and voted to appoint Ernst & Young LLP for
the fiscal year ended June 30, 2000. During the two most recent fiscal years,
PricewaterhouseCoopers LLP's audit reports contained no adverse opinion or
disclaimer of opinion; nor were its reports qualified or modified as to
uncertainty, audit scope, or accounting principle. Further, in connection with
its audits for the two most recent fiscal years and through August 11, 1999,
there were no disagreements between the Fund and PricewaterhouseCoopers LLP on
any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which if not resolved to the
satisfaction of PricewaterhouseCoopers LLP would have caused it to make
reference to the disagreements in its report in the financial statements for
such years.
12
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Financial Highlights
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended
June 30, 2000
-------------
Class A
----------------------------------------------------------------------------------------------------
<S> <C>
Net asset value, Beginning of period $ 1.000
-------
Income from Investment Operations:
Net investment income (a)(b) 0.032
Less Distributions Declared to Shareholders:
From net investment income (0.032)
-------
Net asset value, End of period $ 1.000
=======
Total return (d)(e) 3.20%
=======
Ratios to Average Net Assets
Expenses (b) 0.75%
Fees and expenses waived or borne by the Administrator (b) 0.69%
Net investment income (b) 3.15%
Net assets at end of period (000) $13,362
(a) Net of fees and expenses waived or borne by the Administrator which amounted to: $ 0.007
(b) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(c) Net of fees waived by the Distributor which amounted to $0.006 per share
and 0.60%.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Had the Distributor not waived or reimbursed a portion of expenses, total
return would have been reduced.
<CAPTION>
Year ended June 30, 2000
---------------------------------
Class B Class C
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, Beginning of period $ 1.000 $ 1.000
------- -------
Income from Investment Operations:
Net investment income (a)(b) 0.022 0.028(c)
Less Distributions Declared to Shareholders:
From net investment income (0.022) (0.028)
------- -------
Net asset value, End of period $ 1.000 $ 1.000
======= =======
Total return (d)(e) 2.17% 2.78%(f)
======= =======
Ratios to Average Net Assets
Expenses (b) 1.75% 1.15%(c)
Fees and expenses waived or borne by the Administrator (b) 0.69% 0.69%
Net investment income (b) 2.15% 2.75%(c)
Net assets at end of period (000) $ 677 $ 221
(a) Net of fees and expenses waived or borne by the Administrator which amounted to: $ 0.007 $ 0.007
(b) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(c) Net of fees waived by the Distributor which amounted to $0.006 per share
and 0.60%.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Had the Distributor not waived or reimbursed a portion of expenses, total
return would have been reduced.
</TABLE>
--------------------------------------------------------------------------------
Federal Income Tax Information (unaudited)
For the taxable year June 30, 2000, 100% of distributions from net investment
income qualify as exempt-interest dividends for federal income tax purposes.
13
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended
June 30, 1999
-------------
Class A
----------------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $ 1.000
-------
Income from Investment Operations:
Net investment income (a)(b) 0.026
Less Distribution Declared to Shareholders:
From net investment income (0.026)
-------
Net Asset Value, End of Period $ 1.000
=======
Total return (d)(e) 2.68%
=======
Ratios to Average Net Assets
Expenses (b) 0.75%
Fees and expenses waived or borne by the Administrator (b) 0.75%
Net investment income (b) 2.66%
Net assets at end of period (000) $12,604
(a) Net of fees and expenses waived or borne by the Administrator which amounted to: $ 0.007
(b) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(c) Net of fees waived by the Distributor which amounted to $0.006 per share
and 0.60%.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Had the Distributor not waived or reimbursed a portion of expenses, total
return would have been reduced.
<CAPTION>
Year ended June 30, 1999
--------------------------------
Class B Class C
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000
-------- -------
Income from Investment Operations:
Net investment income (a)(b) 0.016 0.022(c)
Less Distribution Declared to Shareholders:
From net investment income (0.016) (0.022)
-------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000
======== =======
Total return (d)(e) 1.65% 2.27%(f)
======== =======
Ratios to Average Net Assets
Expenses (b) 1.75% 1.15%(c)
Fees and expenses waived or borne by the Administrator (b) 0.75% 0.75%
Net investment income (b) 1.66% 2.26%(c)
Net assets at end of period (000) $ 1,099 $ 178
(a) Net of fees and expenses waived or borne by the Administrator which amounted to: $ 0.007 $ 0.007
(b) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(c) Net of fees waived by the Distributor which amounted to $0.006 per share
and 0.60%.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(f) Had the Distributor not waived or reimbursed a portion of expenses, total
return would have been reduced.
</TABLE>
14
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended
June 30, 1998
-------------
Class A
----------------------------------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period $ 1.000
-------
Income from Investment Operations:
Net investment income (a)(c) 0.030
Less Distributions Declared to Shareholders:
From net investment income (0.030)
-------
Net Asset Value, End of Period $ 1.000
=======
Total return (e)(f) 3.03%
=======
Ratios to Average Net Assets
Expenses (c) 0.75%
Fees and expenses waived or borne by the Administrator (c) 0.70%
Net investment income (c) 3.02%
Net assets at end of period (000) $16,389
(a) Net of fees and expenses waived or borne by the Administrator which amounted to: $ 0.007
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(d) Net of fees waived by the Distributor which amounted to $0.005 per share
and 0.60% (annualized).
(e) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(f) Had the Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(g) Had the Distributor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(h) Not annualized.
(i) Annualized.
<CAPTION>
Year ended June 30, 1998
-----------------------------------------
Class B Class C (b)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000
------- -------
Income from Investment Operations:
Net investment income (a)(c) 0.023 0.024(d)
Less Distributions Declared to Shareholders:
From net investment income (0.023) (0.024)
------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000
======= =======
Total return (e)(f) 2.31% 2.40%(g)(h)
======= =======
Ratios to Average Net Assets
Expenses (c) 1.48% 1.15%(d)(i)
Fees and expenses waived or borne by the Administrator (c) 0.70% 0.70%(i)
Net investment income (c) 2.29% 2.62%(d)(i)
Net assets at end of period (000) $ 1,270 $ 176
(a) Net of fees and expenses waived or borne by the Administrator which amounted to: $ 0.007 $ 0.007
(b) Class C shares were initially offered on August 1, 1997. Per share amounts
reflect activity from that date.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(d) Net of fees waived by the Distributor which amounted to $0.005 per share
and 0.60% (annualized).
(e) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(f) Had the Administrator not waived or reimbursed a portion of expenses, total
return would have been reduced.
(g) Had the Distributor not waived or reimbursed a portion of expenses, total
return would have been reduced.
(h) Not annualized.
(i) Annualized.
</TABLE>
15
<PAGE>
--------------------------------------------------------------------------------
Liberty Tax-Exempt Money Market Fund--Financial Highlights (continued)
--------------------------------------------------------------------------------
Selected data for a share of each class outstanding throughout each period are
as follows:
<TABLE>
<CAPTION>
Year ended June 30,
---------------------------
1997
---------------------------
Class A Class B
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000
------- -------
Income from Investment Operations:
Net investment income (a)(c) 0.029 0.021
Less Distributions Declared to Shareholders:
From net investment income (0.029) (0.021)
------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000
======= =======
Total return (d)(e) 2.98% 2.12%
======= =======
Ratios to Average Net Assets
Expenses (c) 0.75% 1.66%
Fees and expenses waived or borne by the Administrator (c) 0.46% 0.46%
Net investment income (c) 2.94% 2.03%
Net assets at end of period (000) $18,450 $ 1,203
(a) Net of fees and expenses waived or borne by the Advisor/Administrator which amounted
to: $ 0.005 $ 0.005
(b) Effective September 28, 1995, SR&F became the investment Advisor of the
Fund.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
<CAPTION>
Year ended June 30,
---------------------------
1996(b)
---------------------------
Class A Class B
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period $ 1.000 $ 1.000
------- -------
Income from Investment Operations:
Net investment income (a)(c) 0.030 0.020
Less Distributions Declared to Shareholders:
From net investment income (0.030) (0.020)
------- -------
Net Asset Value, End of Period $ 1.000 $ 1.000
======= =======
Total return (d)(e) 3.04% 2.02%
======= =======
Ratios to Average Net Assets
Expenses (c) 0.75% 1.75%
Fees and expenses waived or borne by the Administrator (c) 0.84% 0.84%
Net investment income (c) 3.00% 2.00%
Net assets at end of period (000) $19,676 $ 1,235
(a) Net of fees and expenses waived or borne by the Advisor/Administrator which amounted
to: $ 0.008 $ 0.008
(b) Effective September 28, 1995, SR&F became the investment Advisor of the
Fund.
(c) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
SR&F Municipal Money Market Portfolio.
(d) Total return at net asset value assuming all distributions reinvested and
no contingent deferred sales charge.
(e) Had the Advisor/Administrator not waived or reimbursed a portion of
expenses, total return would have been reduced.
</TABLE>
16
<PAGE>
--------------------------------------------------------------------------------
Report of Ernst & Young LLP, Independent Auditors
--------------------------------------------------------------------------------
To the Shareholders, Holders of Investors' Beneficial Interests and Board of
Trustees of Liberty Funds Trust IV and SR&F Base Trust
Liberty Tax-Exempt Money Market Fund
SR&F Municipal Money Market Portfolio
We have audited the accompanying statement of assets and liabilities of Liberty
Tax-Exempt Money Market Fund (formerly, Colonial Municipal Money Market Fund, a
series of Liberty Funds Trust IV), as of June 30, 2000, and the related
statement of operations, statement of changes in net assets and the financial
highlights for the year then ended, and the accompanying statement of assets
and liabilities, including the portfolio of investments, of SR&F Municpal Money
Market Portfolio (a series of SR&F Base Trust) as of June 30, 2000, and the
related statement of operations for the year then ended, the statements of
changes in net assets for each of the two years then ended and the financial
highlights for each of the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Trusts'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The statement of
changes in net assets for the period ended June 30, 1999, and the financial
highlights for each of the four years in the period then ended for the Liberty
Tax-Exempt Money Market Fund were audited by other auditors whose report dated
August 11, 1999 expressed an unqualified opinion on that financial statement
and those financial highlights.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of June 30, 2000, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
aforementioned series of Liberty Funds Trust IV and SR&F Base Trust at June 30,
2000, the results of their operations, the changes in their net assets, and
their financial highlights for each of the periods referred to above, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernest + Young LLP
Boston, Massachusetts
August 18, 2000
17
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
Trustees & Transfer Agent
Tom Bleasdale
Retired (formerly Chairman of the Board and Executive Officer, Shore Bank &
Trust Company)
Lora S. Collins
Attorney (formerly Attorney, Kramer, Levin, Naftalis & Frankel)
James E. Grinnell
Private Investor (formerly Senior Vice President-Operations, The Rockport
Company)
Richard W. Lowry
Private Investor (formerly Chairman and Chief Executive Officer, U.S. Plywood
Corporation)
Salvatore Macera
Private Investor (formerly Executive Vice President of Itek Corp. and President
of Itek Optical & Electronic Industries, Inc.)
William E. Mayer
Partner, Park Avenue Equity Partners (formerly Dean, College of Business and
Management, University of Maryland; Dean, Simon Graduate School of Business,
University of Rochester; Chairman and Chief Executive Officer, CS First Boston
Merchant Bank; and President and Chief Executive Officer, The First Boston
Corporation)
James L. Moody, Jr.
Retired (formerly Chairman of the Board, Chief Executive Officer and Director
Hannaford Bros. Co.)
John J. Neuhauser
Academic Vice President and Dean of Faculties, Boston College (former Dean,
Boston College School of Management)
Thomas E. Stitzel
Business Consultant and Chartered Financial Analyst (formerly Professor of
Finance, College of Business, Boise State University), Chartered Financial
Analyst
Anne-Lee Verville
Consultant (formerly General Manager, Global Education Industry, and President,
Applications Solutions Division, IBM Corporation)
--------------------------------------------------------------------------------
Important Information About This Report
The Transfer Agent for Liberty Tax-Exempt Money Market Fund is:
Liberty Funds Services, Inc.
P.O. Box 1722
Boston, MA 02105-1722
1-800-345-6611
The Fund mails one shareholder report to each shareholder address. If you would
like more than one report, please call 1-800-426-3750 and additional reports
will be sent to you. This report has been prepared for shareholders of Liberty
Tax-Exempt Money Market Fund.
This report may also be used as sales literature when preceded or accompanied by
the current prospectus which provides details of sales charges, investment
objectives and operating policies of the Fund and with the most recent copy of
the Liberty Funds Performance Update.
Annual Report:
Liberty Tax-Exempt Money Market Fund
<PAGE>
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Choose Liberty
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Because no single investment manager can be all things to all investors.(SM)
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LIBERTY
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FUNDS
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ALL-STAR Institutional money management approach for individual investors.
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COLONIAL Fixed income and value style equity investing.
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CRABBE A contrarian approach to fixed income and equity investing.
HUSON
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NEWPORT A leader in international investing.(SM)
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STEIN ROE Innovative solutions for growth and income investing.
ADVISOR
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[LOGO: KEYPORT] A leading provider of innovative annuity products.
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Liberty's mutual funds are offered by prospectus through Liberty Funds
Distributor, Inc.
Before you invest, consult your financial advisor.
Your financial advisor can help you develop a long-term plan for reaching your
financial goals.
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LIBERY TAX-EXEMPT MONEY MARKET FUND Annual Report
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[LOGO] LIBERTY
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FUNDS
ALL-STAR - COLONIAL - CRABBE HUSON - NEWPORT - STEIN ROE ADVISOR
776-02/253C-0700 (8/00) 00/1412
