STEIN ROE MUNICIPAL TRUST, 485APOS, 1999-08-19

STEIN ROE MUNICIPAL TRUST
485APOS, 1999-08-19

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<PAGE>

1933 Act Registration No. 2-99356
1940 Act File No. 811-4367

SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Post-Effective Amendment No. 27 [X]

and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 28 [X]

STEIN ROE MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)

One South Wacker Drive, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: 1-800-338-2550

Heidi J. Walter Cameron S. Avery
Vice-President and Secretary Bell, Boyd & Lloyd
Stein Roe Municipal Trust Three First National Plaza
One South Wacker Drive 70 W. Madison Street, Suite 3300
Chicago, Illinois 60606 Chicago, Illinois 60602
(Name and Address of Agents for Service)

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

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on November 1, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485

Registrant has elected to register pursuant to Rule 24f-2 an
indefinite number of shares of beneficial interest of the
following series: Stein Roe Intermediate Municipals Fund, Stein
Roe Municipal Money Market Fund, Stein Roe Managed Municipals
Fund, and Stein Roe High-Yield Municipals Fund.

This amendment to the Registration Statement has also been
signed by SR&F Base Trust as it relates to Stein Roe Municipal
Money Market Fund and Stein Roe High-Yield Municipals Fund.

Stein Roe Tax-Exempt Bond Funds

Municipal Money Market Fund
Intermediate Municipals Fund
Managed Municipals Fund
High-Yield Municipals Fund

Prospectus
Nov. 1, 1999

The Securities and Exchange Commission has not approved or
disapproved these securities or determined whether this prospectus
is truthful or complete. Anyone who tells you otherwise is
committing a crime.

Each fund section contains the following information specific to
that fund: investment goal; principal investment strategy;
principal investment risks; fund performance; and your expenses.

Please keep this prospectus as your reference manual.

<PAGE>

3 Municipal Money Market Fund

7 Intermediate Municipals Fund

12 Managed Municipals Fund

16 High-Yield Municipals Fund

21 Financial Highlights

25 Your Account
Purchasing Shares
Opening an Account
Determining Share Price (NAV)
Selling Shares
Exchanging Shares
Reporting to Shareholders
Dividends and Distributions

31 Other Investments and Risks
Hedging Strategies
Asset-Backed Securities
Municipal Lease Obligations
When-Issued Securities and Forward Commitments
Zero Coupon Securities
Inverse Floating Rate Obligations
Alternative Minimum Tax
Portfolio Turnover
Temporary Defensive Positions
Interfund Lending Program

33 The Funds' Management
Investment Adviser
Portfolio Managers
Master/Feeder Fund Structure
Year 2000 Readiness

<PAGE>

THE FUNDS
MUNICIPAL MONEY MARKET FUND

INVESTMENT GOAL Stein Roe Municipal Money Market Fund seeks
maximum current income exempt from federal income tax, consistent
with capital preservation and the maintenance of liquidity.

[Callout]
UNDERSTANDING TAX-EXEMPT SECURITIES
Tax-exempt bonds are issued by state and local governments for
various public purposes. A tax-exempt bond, like a bond issued by
a corporation or the U.S. government, obligates the issuer to pay
the bondholder a fixed or variable amount of interest
periodically, and to repay the principal value of the bond on a
specific maturity date. Unlike taxable bonds, tax-exempt bonds
pay interest that is exempt from federal income taxes and, in some
cases, also from state and local taxes. As a result, the pre-tax
yields on tax-exempt bonds are generally lower than the yields on
taxable bonds with similar maturities. Depending on your tax
bracket, however, the after-tax return (that is, the gross return
minus the effect of taxes on investment income) may be equal to or
better than those provided by taxable bonds. Generally, the
higher your tax bracket, the more likely it is that tax-exempt
bonds (and tax-exempt bond funds) may be appropriate for you.
Tax-exempt bond funds may be appropriate for investors in high tax
brackets who seek current income that is free from federal income
tax.
[End callout]

PRINCIPAL INVESTMENT STRATEGY Municipal Money Market Fund
invests all of its assets in SR&F Municipal Money Market Portfolio
as part of a master fund/feeder fund structure. The Portfolio
invests principally in high-quality, tax-exempt money market
securities. Money market funds are subject to strict rules that
require them to buy individual securities that have remaining
maturities of 13 months or less, maintain an average dollar-
weighted portfolio maturity of 90 days or less, and buy only high-
quality, dollar-denominated obligations.

At least 80% of the Portfolio's investments will produce income
that is exempt from federal income tax, except during periods that
the portfolio manager believes require a temporary defensive
position for the protection of shareholders.

PRINCIPAL INVESTMENT RISKS The primary risks of investing in the
Fund are described below. There are many circumstances (including
others not described here) that could cause you to lose money by
investing in the Fund or that could cause the Fund's total return
or yield to decrease.

An investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your
investment at $1 per share, it is possible to lose money by
investing in the Fund. Additionally, the Fund's yield will vary
as the short-term securities in its portfolio mature and the
proceeds are reinvested in securities with different interest
rates.

Market risk is the risk that the price of a security held by the
Portfolio will fall due to changing market, economic, or political
conditions. Market risk includes interest rate risk. Interest
rate risk is the risk of a change in the price of a security when
interest rates increase or decline. In general, if interest rates
rise, securities prices fall; and if interest rates fall,
securities prices rise. Changes in the values of bonds usually
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.

Issuer risk is the possibility that changes in the financial
condition of the issuer of a security, changes in general economic
conditions, or changes in economic conditions that affect the
issuer may impact the issuer's ability to make timely payment of
interest or principal. This could result in decreases in the
price of the security.

Tax-exempt bonds are subject to special risk. Changes in tax laws
or adverse determinations by the Internal Revenue Service may make
the income from some of these bonds taxable. Bonds that are
backed by the issuer's taxing authority, known as general
obligations, may depend partially on legislative appropriation
and/or aid from other governments. These bonds may be vulnerable
to legal limits on a government's power to raise revenue or
increase taxes. Other tax-exempt bonds, known as special revenue
obligations, are payable from revenues earned by a particular
project or other revenue source. These bonds are subject to
greater risk of default than general obligations because investors
can look only to the revenue generated by the project or private
company, rather than to the credit of the state or local
government issuer of the bonds.

For more information on the Portfolio's investment techniques,
please refer to "Other Investments and Risks."

Who Should Invest in the Fund?

You may want to invest in Municipal Money Market Fund if you:
* want a relatively stable and liquid investment producing income
which is largely exempt from federal income taxes
* are in a tax bracket that makes tax-exempt investing appropriate
for you
* are saving for a short-term investment or creating an emergency
fund
* want to diversify your investment portfolio with cash-equivalent
investments and minimize your federal income taxes
* want the ability to write checks on your account

Municipal Money Market Fund is not appropriate for investors who:
* want high return potential
* are not interested in generating current income

Year-by-Year Total Returns

Year-by-year calendar returns show the Fund's volatility over a
period of time. This chart illustrates performance differences
for each calendar year and provides an indication of the risks of
investing in the Fund.

YEAR-BY-YEAR TOTAL RETURNS
6%
5% 5.94% 5.41%
4%
3% 3.84% 3.36% 3.00% 3.12%
2% 2.39% 2.27% 2.95%
0% 1.86%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
[ ] Municipal Money Market Fund

The Fund's year-to-date total return through Sept. 30, 1999, was
___%.

Best quarter: 2nd quarter 1989, +1.57%
Worst quarter: 1st quarter 1994, +0.43%

Average Annual Total Returns

Average annual total returns measure the Fund's performance over
time. We compare the Fund's returns with inflation as measured by
the U.S. Consumer Price Index. We show returns for calendar years
to be consistent with the way other mutual funds report
performance in their prospectuses. This allows you to accurately
compare similar mutual fund investments and provides an indication
of the risks of investing in the Fund.

AVERAGE ANNUAL TOTAL RETURNS
Periods ending Dec. 31, 1998
----------------------------
1 yr 5 yr 10 yr
Municipal Money Market Fund 2.95% 2.94% 3.41%
U.S. Consumer Price Index* 1.61% 2.37% 3.12%

*The U.S. Consumer Price Index is the federal government's
measure of retail inflation. It differs from the Fund's
composition and is not available for investment.

The seven-day current yield for the Fund for the period ended Dec.
31, 1998, was ___%. For current yield information, please call
800-338-2550.

YOUR EXPENSES This table shows fees and expenses you may pay if
you buy and hold shares of the Fund. You do not pay any sales
charge when you purchase or sell your shares.(a) However, you pay
various other indirect expenses because the Fund or the Portfolio
pays fees and other expenses that reduce your investment return.

ANNUAL FUND OPERATING EXPENSES (b)
(expenses that are deducted from Fund assets)
Management fees(c) 0.50%
Distribution (12b-1) fees None
Other expenses 0.29%
Total annual fund operating expenses (d) 0.79%
Expense reimbursement (0.09%)
Net expenses 0.70%

(a) There is a $7 charge for wiring redemption proceeds to your
bank. A fee of $5 per quarter may be charged to accounts that
fall below the required minimum balance.
(b) Annual fund operating expenses consist of Fund expenses plus
the Fund's share of the expenses of the Portfolio. Fund
expenses include management fees and administrative costs such
as furnishing the Fund with offices and providing tax and
compliance services.
(c) Management fees include both the management fee and the
administrative fee charged to the Fund.
(d) Stein Roe will reimburse the Fund if its annual ordinary
operating expenses exceed .70% of average daily net assets.
This commitment expires on Oct. 31, 2000. After
reimbursement, management fees will be 0.41%. A reimbursement
lowers the expense ratio and increases overall return to
investors.

Expense Example

This example compares the cost of investing in the Fund to the
cost of investing in a similar mutual fund. It uses the same
hypothetical assumptions that other funds use in their
prospectuses:

* $10,000 initial investment
* 5% total return each year
* the Fund's operating expenses remain constant as a percent of
net assets
* redemption at the end of each time period

Your actual costs may be higher or lower because in reality fund
returns and operating expenses change. Expenses based on these
assumptions are:

EXPENSE EXAMPLE
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------
Municipal Money Market Fund $72 $224 $390 $871

<PAGE>

THE FUNDS
INTERMEDIATE MUNICIPALS FUND

INVESTMENT GOAL Stein Roe Intermediate Municipals Fund seeks a
high level of after-tax total return, consistent with the
preservation of capital

PRINCIPAL INVESTMENT STRATEGY Intermediate Municipals Fund
invests primarily in "intermediate-term" tax-exempt bonds.
"Intermediate term" means the bonds generally have a weighted-
average life range of three to 10 years. At least 75% of the
Fund's investments in tax-exempt securities are at the time of
purchase:

* rated at least BBB by Standard & Poor's, a division of The
McGraw-Hill Companies, Inc.,
* rated at least Baa by Moody's Investors Service, Inc.,
* given a comparable rating by another nationally recognized
rating agency,
* unrated securities that Stein Roe believes to be of comparable
quality, or
* backed by the full faith and credit or guarantee of the U.S.
government.

The Fund may also invest up to 25% of its assets in lower-rated
debt securities. These securities are sometimes referred to as
"junk bonds" and are rated at the time of purchase:

* below BBB by Standard & Poor's,
* below Baa by Moody's Investors Service, Inc., or
* with a comparable rating by another nationally recognized rating
agency.

At least 80% of the Fund's investments will produce income that is
exempt from federal income tax, except during periods that the
portfolio manager believes require a temporary defensive position
for the protection of shareholders.

The price of the Fund's shares-its net asset value per share
(NAV)-can fluctuate daily in response to changes in the market
value of the bonds it owns.

Market risk is the risk that the price of a security held by the
Fund will fall due to changing market, economic, or political
conditions. Market risk includes interest rate risk. Interest
rate risk is the risk of a change in the price of a bond when
interest rates increase or decline. In general, if interest rates
rise, bond prices fall; and if interest rates fall, bond prices
rise. Changes in the values of bonds usually 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.

Lower-rated debt securities are sometimes referred to as "junk
bonds." Lower-rated debt securities involve greater risk of loss
due to issuer risk and are less liquid, especially during periods
of economic uncertainty or change, than higher-quality debt
securities. Medium-quality debt securities, although considered
investment grade, may have some speculative characteristics.

An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

For more information on the Fund's investment techniques, please
refer to "Other Investments and Risks."

Who Should Invest in the Fund?

You may want to invest in Intermediate Municipals Fund if you:
* want income that is exempt from federal income tax and are
looking for a higher level of return potential than generally
offered by municipal money market funds in exchange for
increased levels of risk
* are in a tax bracket that makes tax-exempt investing appropriate
for you
* are a long-term investor looking to diversify your investment
portfolio by investing in tax-exempt securities

Intermediate Municipals Fund is not appropriate for investors who:
* are saving for a short-term investment
* want to avoid volatility or possible losses
* are not interested in generating current income

FUND PERFORMANCE The following charts show the Fund's
performance for the past 10 years through Dec. 31, 1998. The
returns include the reinvestment of dividends and distributions.
As with all mutual funds, past performance is no guarantee of
future results.

Year-by-Year Total Returns

YEAR-BY-YEAR TOTAL RETURNS
12% 12.93%
10% 10.67% 11.06%
8% 8.16%
6% 7.48% 7.63% 7.50%
4% 4.16% 5.46%
2%
0%
- -5% -3.36%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
[ ] Intermediate Municipals Fund

The Fund's year-to-date total return through Sept. 30, 1999, was
___%.

Best quarter: 1st quarter 1995, +4.73%
Worst quarter: 1st quarter 1994, -4.24%

Average Annual Total Returns

Average annual total returns measure the Fund's performance over
time. We compare the Fund's returns with returns for the Lehman
Brothers 10-Year Municipal Bond Index, which is a broad-based
measure of market performance. We show returns for calendar years
to be consistent with the way other mutual funds report
performance in their prospectuses. This allows you to accurately
compare similar mutual fund investments and provides an indication
of the risks of investing in the Fund.

AVERAGE ANNUAL TOTAL RETURNS
Periods ending Dec. 31, 1998
----------------------------
1 yr 5 yr 10 yr
Intermediate Municipals Fund 5.46% 5.20% 7.08%
Lehman Brothers 10-Year
Municipal Bond Index* 6.76% 6.35% 8.33%

*The Lehman Brothers 10-Year Municipal Bond Index is an
unmanaged group of securities that differs from the Fund's
composition; it is not available for direct investment.

YOUR EXPENSES This table shows fees and expenses you may pay if
you buy and hold shares of the Fund. You do not pay any sales
charge when you purchase or sell your shares.(a) However, you pay
various other indirect expenses because the Fund pays fees and
other expenses that reduce your investment return.

ANNUAL FUND OPERATING EXPENSES (b)
(expenses that are deducted from Fund assets)
Management fees(c) 0.47%
Distribution (12b-1) fees None
Other expenses 0.29%
Total annual fund operating expenses (d) 0.76%
Expense reimbursement (0.06%)
Net expenses 0.70%

(a) There is a $7 charge for wiring redemption proceeds to your
bank. A fee of $5 per quarter may be charged to accounts that
fall below the required minimum balance.
(b) Fund expenses include management fees and administrative costs
such as furnishing the Fund with offices and providing tax and
compliance services.
(c) Management fees include both the management fee and the
administrative fee charged to the Fund.
(d) Stein Roe will reimburse the Fund if its annual ordinary
operating expenses exceed .70% of average daily net assets.
This commitment expires on Oct. 31, 2000. After
reimbursement, management fees will be 0.41%. A reimbursement
lowers the expense ratio and increases overall return to
investors.

Expense Example

This example compares the cost of investing in the Fund to the
cost of investing in a similar mutual fund. It uses the same
hypothetical assumptions that other funds use in their
prospectuses:
* $10,000 initial investment
* 5% total return each year
* the Fund's operating expenses remain constant as a percent of
net assets
* redemption at the end of each time period

Your actual costs may be higher or lower because in reality fund
returns and operating expenses change. Expenses based on these
assumptions are:

EXPENSE EXAMPLE
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------
Intermediate Municipals Fund $72 $224 $390 $871

<PAGE>

THE FUNDS
MANAGED MUNICIPALS FUND

INVESTMENT GOAL Stein Roe Managed Municipals Fund seeks a high
level of seeks a high level of after-tax total return consistent
with prudent risk, including current income exempt from federal
income tax and long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY Under normal market conditions,
the Fund invests primarily in tax-exempt bonds that are investment
grade. These securities are rated:

* at least BBB by Standard & Poor's,
* at least Baa by Moody's Investors Service, Inc., or
* with a comparable rating by another nationally recognized rating
agency.

The portfolio manager may purchase bonds of any maturity. The
Fund may invest up to 35% of its assets in any combination of the
following bonds (not including pre-refunded bonds): (1) bonds
rated below investment grade by a national rating agency and (2)
bonds that are not rated, provided that the Fund's total
investments in unrated bonds may not exceed 25%.

The price of the Fund's shares-its net asset value per share
(NAV)-can fluctuate daily in response to changes in the market
value of the bonds it owns.

Lower-rated debt securities are sometimes referred to as "junk
bonds." Lower-rated risk debt securities involve greater risk of
loss due to issuer risk and are less liquid, especially during
periods of economic uncertainty or change, than higher-quality
debt securities. Medium-quality debt securities, although
considered investment grade, may have some speculative
characteristics.

An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

For more information on the Fund's investment techniques, please
refer to "Other Investments and Risks."

Who Should Invest in the Fund?

You may want to invest in Managed Municipals Fund if you:
* want the higher return and income potential offered by high-
yield bonds, but want to balance their greater risk with a
substantial portion of the Fund invested in investment-grade
bonds
* are in a tax bracket that makes tax-exempt investing appropriate
for you
* want income that is exempt from federal income tax
* want a balance between return potential and capital preservation
* are a long-term investor looking to diversify your portfolio by
investing in fixed-income securities

Managed Municipals Fund is not appropriate for investors who:
* are saving for a short-term investment
* want to avoid volatility or possible losses
* are not interested in generating current income

Year-by-Year Total Returns

YEAR-BY-YEAR TOTAL RETURNS
16% 16.63%
14%
12%
10% 10.62% 11.88% 11.25%
8% 8.29% 9.31%
6% 6.97%
4% 5.50%
2% 3.77%
0%
- -5% -5.37%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
[ ] Managed Municipals Fund

The Fund's year-to-date total return through Sept. 30, 1999, was
___%.

Best quarter: 1st quarter 1995, +6.42%
Worst quarter: 1st quarter 1994, -5.24%

Average Annual Total Returns

Average annual total returns measure the Fund's performance over
time. We compare the Fund's returns with returns for the Lehman
Brothers Municipal Bond Index, which is a broad-based measure of
market performance. We show returns for calendar years to be
consistent with the way other mutual funds report performance in
their prospectuses. This allows you to accurately compare similar
mutual fund investments and provides an indication of the risks of
investing in the Fund.

AVERAGE ANNUAL TOTAL RETURNS
Periods ending Dec. 31, 1998
----------------------------
1 yr 5 yr 10 yr
Managed Municipals Fund 5.50% 5.72% 7.73%
Lehman Brothers Municipal
Bond Index* 6.48% 6.22% 8.22%

*The Lehman Brothers Municipal Bond Index is an unmanaged
group of securities that differs from the Fund's composition;
it is not available for direct investment.

YOUR EXPENSES This table shows fees and expenses you may pay if
you buy and hold shares of the Fund. You do not pay any sales
charge when you purchase or sell your shares.(a) However, you pay
various other indirect expenses because the Fund pays fees and
other expenses that reduce your investment return.

ANNUAL FUND OPERATING EXPENSES (b)
(expenses that are deducted from Fund assets)
Management fees(c) 0.52%
Distribution (12b-1) fees None
Other expenses 0.20%
Total annual fund operating expenses 0.72%

Expense Example

Your actual costs may be higher or lower because in reality fund
returns and operating expenses change. Expenses based on these
assumptions are:

EXPENSE EXAMPLE
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------
Managed Municipals Fund $74 $230 $400 $894

<PAGE>

THE FUNDS
HIGH-YIELD MUNICIPALS FUND

INVESTMENT GOAL Stein Roe High-Yield Municipals Fund seeks a
high level of after-tax total return including current income
exempt from ordinary federal income tax and for long-term
appreciation.

PRINCIPAL INVESTMENT STRATEGY High-Yield Municipals Fund invests
all of its assets in SR&F High-Yield Municipals Portfolio as part
of a master fund/feeder fund structure. Under normal market
conditions, at least 80% of the Portfolio's total assets will be
invested in tax-exempt securities. In the event that tax-exempt
securities are not available, the Portfolio may invest up to 20%
of its total assets in high-quality taxable money market
instruments. The portfolio manager may purchase bonds of any
maturity.

In selecting municipal securities for the Portfolio, the portfolio
manager invests primarily in medium or lower-rated tax-exempt
securities. These securities are at the time of purchase:

* rated BBB or below by Standard & Poor's,
* rated Baa or below by Moody's Investors Service, Inc.,
* given a comparable rating by another nationally recognized
rating agency, or
* unrated securities that Stein Roe believes to be of comparable
quality.

Lower-rated securities are sometimes referred to as "junk bonds."

The Portfolio may invest any or all of its assets in high-quality
tax-exempt securities under the following conditions:

* the portfolio manager believes that the difference in returns
between higher-quality and lower-quality securities is narrow,
or
* the portfolio manager expects increased volatility in interest
rates.

Investment in higher-quality securities may reduce the Fund's
current income.

The price of the Fund's shares-its net asset value per share
(NAV)-can fluctuate daily in response to changes in the market
value of the bonds it owns.

Market risk is the risk that the price of a security held by the
Portfolio will fall due to changing market, economic, or political
conditions. Market risk includes interest rate risk. Interest
rate risk is the risk of a change in the price of a bond when
interest rates increase or decline. In general, if interest rates
rise, bond prices fall; and if interest rates fall, bond prices
rise. Changes in the values of bonds usually will not affect the
amount of income the Fund receives from them but will affect the
value of the Fund's shares. Interest rate risk is generally
greater for bonds having longer maturities.

An economic downturn could severely disrupt the high-yield market
and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest. In
addition, lower-quality bonds are less sensitive to interest rate
changes than higher-quality instruments and generally are more
sensitive to adverse economic changes or individual corporate
developments. During a period of adverse economic changes,
including a period of rising interest rates, issuers of such bonds
may experience difficulty in servicing their principal and
interest payment obligations.

An investment in the Fund is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

For more information on the Portfolio's investment techniques,
please refer to "Other Investments and Risks."

Who Should Invest in the Fund?

You may want to invest in High-Yield Municipals Fund if you:
* want income that is exempt from federal income tax and want the
higher return potential associated with investing in lower-rated
debt securities and can tolerate the high level of risk
associated with such securities
* are in a tax bracket that makes tax-exempt investing appropriate
for you
* are a long-term investor and are looking to diversify your
investment portfolio with tax-exempt lower-rated debt securities

High-Yield Municipals Fund is not appropriate for investors who:
* are saving for a short-term investment
* want a relatively low-risk fixed-income investment
* want to avoid volatility or possible losses
* are not interested in generating current income

Year-by-Year Total Returns

YEAR-BY-YEAR TOTAL RETURNS
18%
15% 17.72%
12%
9% 11.43% 9.84% 10.64% 9.53%
6% 7.63%
3% 5.35% 4.48% 5.28%
0%
- -5% -4.03%
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
[ ] High-Yield Municipals Fund

The Fund's year-to-date total return through Sept. 30, 1999, was
___%.

Best quarter:1st quarter 1995, +7.00%
Worst quarter: 1st quarter 1994, -5.11%

Average Annual Total Returns

AVERAGE ANNUAL TOTAL RETURNS
Periods ending Dec. 31, 1998
1 yr 5 yr 10 yr
-------------------------
High-Yield Municipals Fund 5.28% 6.36% 7.65%
Lehman Brothers Municipal
Bond Index* 6.48% 6.22% 8.22%

*The Lehman Brothers Municipal Bond Index is an unmanaged
group of securities that differs from the Fund's composition;
it is not available for direct investment.

ANNUAL FUND OPERATING EXPENSES (b)
(expenses that are deducted from Fund assets)
Management fees(c) 0.55%
Distribution (12b-1) fees None
Other expenses 0.22%
Total annual fund operating expenses 0.77%

Expense Example

Your actual costs may be higher or lower because in reality fund
returns and operating expenses change. Expenses based on these
assumptions are:

EXPENSE EXAMPLE
1 yr 3 yrs 5 yrs 10 yrs
-----------------------------------
High-Yield Municipals Fund $78 $244 $425 $948

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables explain the Funds' financial
performance. Consistent with other mutual funds, we show
information for the last five fiscal years. Each Fund's fiscal
year runs from July 1 to June 30. 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. Ernst & Young LLP, independent auditors, audits this
information and issues a report that appears in the Funds' annual
report along with the financial statements. To request a Fund's
annual report, please call 800-338-2550.

Municipal Money Market Fund
PER SHARE DATA
<TABLE>
<CAPTION>
For years ending June 30,
1999 1998 1997 1996 1995
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Income from investment operations
Net investment income .027 .031 .030 .031 .030
Dividends (from net investment
income) (.027) (.031) (.030) (.031) (.030)
Net asset value, end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Total return (a) 2.73% 3.10% 3.04% 3.13% 3.02%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted) $119,032 $115,279 $118,424 $120,432 $146,704
Ratio of net expenses to average
net assets(b) 0.70% 0.70% 0.70% 0.70% 0.70%
Ratio of net investment income
to average net assets(a) 2.69% 3.06% 2.98% 3.09% 2.96%
</TABLE>

<PAGE>

Intermediate Municipals Fund
PER SHARE DATA
<TABLE>
<CAPTION>
For years ending June 30,
1999 1998 1997 1996 1995
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 11.57 $ 11.38 $ 11.22 $ 11.16 $ 11.00
Income from investment operations
Net investment income .54 .54 .55 .55 .53
Net gains on securities (both
realized and unrealized) (.30) .22 .22 .06 .16
Total income from investment
operations .24 .76 .77 .61 .69
Less distributions
Dividends (from net investment
income) (.54) (.54) (.55) (.55) (.53)
Distributions (from capital gains) (.04) (.03) (.06) - -
Total distributions (.58) (.57) (.61) (.55) (.53)
Net asset value, end of period $ 11.23 $ 11.57 $ 11.38 $ 11.22 $ 11.16
Total return (a) 2.08% 6.84% 7.07% 5.47% 6.59%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted) $168,896 $195,651 $196,006 $204,726 $212,489
Ratio of net expenses to average
net assets(b) 0.70% 0.70% 0.70% 0.70% 0.74%
Ratio of net investment income
to average net assets(a) 4.85% 4.70% 4.84% 4.82% 4.94%
Portfolio turnover rate 48% 29% 44% 66% 67%
</TABLE>

<PAGE>

Managed Municipals Fund
PER SHARE DATA
<TABLE>
<CAPTION>
For years ending June 30,
1999 1998 1997 1996 1995
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 9.38 $ 9.11 $ 8.85 $ 8.79 $ 8.70
Income from investment operations
Net investment income .47 .48 .48 .48 .51
Net gains on securities (both
realized and unrealized) (.31) .27 .26 .06 .09
Total income from investment
operations .16 .75 .74 .54 .60
Less distributions
Dividends (from net investment
income) (.47) (.48) (.48) (.48) (.51)
Net asset value, end of period $ 9.07 $ 9.38 $ 9.11 $ 8.85 $ 8.79
Total return 1.67% 8.37% 8.56% 6.24% 7.12%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted) $538,322 $583,138 $582,366 $606,359 $629,730
Ratio of net expenses to
average net assets 0.72% 0.72% 0.73% 0.72% 0.65%
Ratio of net investment income
to average net assets 5.02% 5.14% 5.31% 5.41% 5.85%
Portfolio turnover rate 17% 12% 16% 40% 33%
</TABLE>

<PAGE>

High-Yield Municipals Fund
PER SHARE DATA
<TABLE>
<CAPTION>
For years ending June 30,
1999 1998 1997 1996 1995
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $ 11.97 $ 11.67 $ 11.40 $ 11.31 $ 11.06
Income from investment operations
Net investment income .63 .65 .72 .67 .66
Net gains on securities (both
realized and unrealized) (.24) .30 .27 .09 .25
Total income from investment
operations .38 .95 .99 .76 .91
Less distributions
Dividends (from net investment
income) (.64) (.65) (.72) (.67) (.66)
Net asset value, end of period $ 11.71 $ 11.97 $ 11.67 $ 11.40 $ 11.31
Total return 3.18% 8.32% 8.91% 6.83% 8.54%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted) $298,301 $341,780 $306,070 $282,956 $281,155
Ratio of net expenses to average
net assets 0.77% 0.75% 0.77% 0.85% 0.86%
Ratio of net investment income
to average net assets 5.26% 5.48% 6.20% 5.86% 5.98%
Portfolio turnover rate N/A 8%(c) 11% 34% 23%
</TABLE?

(a) Computed with the effect of Stein Roe's expense reimbursement.
(b) If the Fund had paid all of its expenses and there had been no
reimbursement of expenses by Stein Roe, this ratio would have
been 0.79%, 0.86%, 0.86%, 0.84% and 0.78% for the years ended
June 30, 1999, 1998, 1997, 1996 and 1995, respectively, for
Municipal Money Market Fund; and 0.79%, 0.81%, 0.82%, 0.81%
and 0.76% for the years ended June 30, 1999, 1998, 1997, 1996
and 1995, respectively, for Intermediate Municipals Fund.
(c) Prior to commencement of operations of the Portfolio.

<PAGE>

YOUR ACCOUNT

PURCHASING SHARES You may purchase Fund shares without a sales
charge. Your purchases are made at the NAV next determined after
the Fund receives your check, wire transfer or electronic
transfer. If a Fund receives your check, wire transfer or
electronic transfer after the close of regular trading on the New
York Stock Exchange (NYSE)-normally 3 p.m. Central time-your
purchase is effective on the next business day.

Purchases through Third Parties

If you purchase Fund shares through certain broker-dealers, banks
or other intermediaries (intermediaries), they may charge a fee
for their services. They may also place limits on your ability to
use services the Funds offer. There are no charges or limitations
if you purchase shares directly from a Fund, except those fees
described in this prospectus.

If an intermediary is an agent or designee of the Funds, orders
are processed at the NAV next calculated after the intermediary
receives the order. The intermediary must segregate any orders it
receives after the close of regular trading on the NYSE and
transmit those orders separately for execution at the NAV next
determined.

Conditions of Purchase

An order to purchase Fund shares is not binding unless and until
an authorized officer, agent or designee of the Fund accepts it.
Once we accept your purchase order, you may not cancel or revoke
it; however, you may redeem your shares. A Fund may reject any
purchase order if it determines that the order is not in the best
interests of the Fund and its investors. A Fund may waive or
lower its investment minimums for any reason. If you participate
in the Stein Roe Counselor [SERVICE MARK] program or are a client
of Stein Roe Private Capital Management, the minimum initial
investment is determined by those programs.

ACCOUNT MINIMUMS
Minimum to Minimum Minimum
Type of Account Open an Account Addition Balance
- ------------------------------------------------------------
Regular $2,500 $100 $1,000
Custodial (UGMA/UTMA) $1,000 $100 $1,000
Automatic Investment Plan $1,000 $50 -
Roth and Traditional IRA $500 $50 $500
Educational IRA $500 $50* $500

*Maximum $500 contribution per calendar year per child.

Opening an Account

OPENING OR ADDING TO AN ACCOUNT

Opening an Account BY MAIL:
Complete the application.
Make check payable to Stein Roe Mutual Funds.

Mail application and check to:
SteinRoe Services Inc.
P.O. Box 8900
Boston, MA 02205

BY WIRE:
Mail your application to the address listed on
the left, then call 800-338-2550 to obtain an
account number. Include your Social Security
Number. To wire funds, use the instructions
below.

Adding to an Account BY MAIL:
Make check payable to Stein Roe Mutual Funds.
Be sure to write your account number on the
check.

Fill out investment slip (stub from your
statement or confirmation) or include a note
indicating the amount of your purchase, your
account number, and the name in which your
account is registered.

Mail check with investment slip or note to the
address above.

BY WIRE:
Wire funds to:
First National Bank of Boston
ABA: 011000390
Attn: SSI, Account No. 560-99696
Fund No. __; Stein Roe ____ Fund
Your name (exactly as in the registration).
Fund account number.

Fund Numbers:
30-Municipal Money Market Fund
08-Intermediate Municipals Fund
37-Managed Municipals Fund
28-High-Yield Municipals Fund

OPENING OR ADDING TO AN ACCOUNT

Opening an Account BY ELECTRONIC FUNDS TRANSFER:
You cannot open a new account via electronic
transfer.

BY EXCHANGE:
By mail, phone, in person or automatically (be
sure to elect the Automatic Exchange Privilege
on your application).

THROUGH AN INTERMEDIARY;
Contact your financial professional.

Adding to an Account BY ELECTRONIC FUNDS TRANSFER;
Call 800-338-2550 to make your purchase. To
set up prescheduled purchases, be sure to
elect the Automatic Investment Plan (Stein Roe
Asset [SERVICE MARK] Builder) option on your
application.

BY EXCHANGE:
By mail, phone, in person or automatically (be
sure to elect the Automatic Exchange Privilege
on your application).

THROUGH AN INTERMEDIARY:
Contact your financial professional.

All checks must be made payable in U.S. dollars and drawn on U.S.
banks. Money orders and third-party checks will not be accepted.

Determining Share Price (NAV) A Fund's share price is its NAV
next determined. NAV is the difference between the values of a
Fund's assets and liabilities divided by the number of shares
outstanding. We determine NAV at the close of regular trading on
the NYSE-normally 3 p.m. Central time. If you place an order
after that time, you receive the share price determined on the
next business day.

Securities held by Intermediate Municipals Fund, Managed
Municipals Fund, and High-Yield Municipals Portfolio are valued
based on valuations provided by a pricing service. 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.

Municipal Money Market Fund attempts to maintain its NAV at $1 per
share. We value portfolio securities held by Municipal Money
Market Portfolio based on their amortized cost, which does not
take into account unrealized gains or losses. The extent of any
deviation between the NAV based upon market quotations or
equivalents and $1 per share based on amortized cost will be
examined by the Board. If such deviation were to exceed 1/2 of
1%, the Board would consider what action, if any, should be taken,
including selling portfolio securities, increasing, reducing, or
suspending distributions or redeeming shares in kind. Securities
and other assets for which this valuation method does not produce
a fair value are valued at a fair value determined in good faith
by the Board.

Selling Shares You may sell your shares any day the Funds are
open for business. Please follow the instructions below.

SELLING SHARES
BY MAIL: Send a letter of instruction, in English, including
your account number and the dollar value or number of
shares you wish to sell. Sign the request exactly as
the account is registered. Be sure to include a
signature guarantee. All supporting legal documents
as required from executors, trustees, administrators,
or others acting on accounts not registered in their
names, must accompany the request. We will mail the
check to your registered address.

BY PHONE: This feature is automatically added to your account
unless you decline it on your application. Call 800-
338-2550 to redeem an amount of $1,000 or more. We
will mail a check to your registered address.

BY WIRE: Fill out the appropriate areas of the account
application for this feature. Proceeds of $1,000 or
more ($100,000 maximum) may be wired to your
predesignated bank account. Call 800-338-2550 to
give instructions to Stein Roe. There is a $7 charge
for wiring redemption proceeds to your bank.

BY ELECTRONIC TRANSFER: Fill out the appropriate areas of the
account application for this feature. To request an
electronic transfer (not less than $50; not more than
$100,000), call 800-338-2550. We will transfer your
sale proceeds electronically to your bank. The bank
must be a member of the Automated Clearing House.

BY EXCHANGE: Call 800-338-2550 to exchange any portion of your
Fund shares for shares in any other Stein Roe no-load
fund.

BY AUTOMATIC EXCHANGE: Fill out the appropriate areas of the
account application for this feature. Redeem a fixed
amount on a regular basis (not less than $50 per
month; not more than $100,000) from a Fund for
investment in another Stein Roe no-load fund.

BY CHECK WRITING: (Municipal Money Market Fund accounts only)
Complete the appropriate section of the account
application for this feature. You may redeem shares
of Municipal Money Market Fund by writing checks
(minimum $50) that are drawn against a special
checking account the Fund has with the First National
Bank of Boston.

What You Need to Know When Selling Shares

Once we receive and accept your order to sell shares, you may not
cancel or revoke it. We cannot accept an order to sell that
specifies a particular date or price or any other special
conditions. If you have any questions about the requirements for
selling your shares, please call 800-338-2550 before submitting
your order.

A Fund redeems shares at the NAV next determined after an order
has been accepted. We mail proceeds within seven days after the
sale. The Funds normally pay wire redemption or electronic
transfer proceeds on the next business day.

We will not pay sale proceeds until your shares are paid for. If
you attempt to sell shares purchased by check or electronic
transfer within 15 days of the purchase date, we will delay
sending the sale proceeds until we can verify that those shares
are paid for. You may avoid this delay by purchasing shares by a
federal funds wire.

We use procedures reasonably designed to confirm that telephone
instructions are genuine. These include recording the
conversation, testing the identity of the caller by asking for
account information, and sending prompt written confirmation of
the transaction to the shareholder of record. If these procedures
are followed, the Fund and its service providers will not be
liable for any losses due to unauthorized or fraudulent
instructions.

If the amount you redeem is large enough to affect a Fund's
operation, the Fund may pay the redemption "in kind." This is
payment in portfolio securities rather than cash. If this occurs,
you may incur transaction costs when you sell the securities.

Involuntary Redemption

If your account value falls below $1,000, the Fund may redeem your
shares and send the proceeds to the registered address. You will
receive notice 30 days before this happens. If your account falls
below $10, the Fund may redeem your shares without notice to you.

Low Balance Fee

Due to the expense of maintaining accounts with low balances, if
your account balance falls below $2,000 ($800 for custodial
accounts), you will be charged a low balance fee of $5 per
quarter. The low balance fee does not apply to: (1) shareholders
whose accounts in the Stein Roe Funds total $50,000 or more; (2)
Stein Roe IRAs; (3) other Stein Roe prototype retirement plans;
(4) accounts with automatic investment plans (unless regular
investments have been discontinued); or (5) omnibus or nominee
accounts. A Fund can waive the fee, at its discretion, in the
event of significant market corrections.

EXCHANGING SHARES You may exchange Fund shares for shares of
other Stein Roe no-load funds. Call 800-338-2550 to request a
prospectus and application for the fund you wish to exchange into.
Please be sure to read the prospectus carefully before you
exchange your shares.

The account you exchange into must be registered exactly the same
as the account you exchange from. You must meet all investment
minimum requirements for the fund you wish to exchange into before
we can process your exchange transaction.

An exchange is a redemption and purchase of shares for tax
purposes, and you may realize a gain or a loss when you exchange
Fund shares for shares of another fund.

We may change, suspend or eliminate the exchange service after
notification to you.

Generally, we limit you to four telephone exchanges "roundtrips"
per year. A roundtrip is an exchange out of a Fund into another
Stein Roe no-load fund and then back to that Fund.

REPORTING TO SHAREHOLDERS To reduce the volume of mail you
receive, only one copy of certain materials, such as prospectuses
and shareholder reports, will be mailed to your household (same
address). Please call 800-338-2550 if you want to receive
additional copies free of charge. This policy may not apply if
you purchase shares through an intermediary.

DIVIDENDS AND DISTRIBUTIONS Income dividends are declared each
business day, paid monthly, and confirmed at least quarterly.
Each Fund distributes, at least once a year, virtually all of its
net realized capital gains.

A dividend from net investment income represents the income a Fund
earns from dividends and interest paid on its investments, after
payment of the Fund's expenses.

A capital gain is the increase in value of a security that the
Fund holds. The gain is "unrealized" until the security is sold.
Each realized capital gain is either short term or long term
depending on whether the Fund held the security for one year or
less or more than one year, regardless of how long you have held
your Fund shares.

When a Fund makes a distribution of income or capital gains, the
distribution is automatically invested in additional shares of
that Fund unless you elect on the account application to have
distributions paid by check.

[callout]
OPTIONS FOR RECEIVING DISTRIBUTION AND REDEMPTION PROCEEDS:
* by check
* by electronic transfer into your bank account
* a purchase of shares of another Stein Roe fund
* a purchase of shares in a Stein Roe fund account of another
person
[/callout]

If you elect to receive distributions by check and a distribution
check is returned to a Fund as undeliverable, or if you do not
present a distribution check for payment within six months, we
will change the distribution option on your account and reinvest
the proceeds of the check in additional shares of that Fund. You
will not receive any interest on amounts represented by uncashed
distribution or redemption checks.

Tax Consequences

For federal income tax purposes, distributions of net investment
income by a Fund, whether in cash or additional securities, will
ordinarily constitute tax-exempt income. Ordinarily,
distributions to shareholders from gains realized by a Fund on the
sale or exchange of investments will be taxable to shareholders.
In addition, an investment in a Fund may result in liability for
federal AMT both for individuals and corporate shareholders. You
will be provided with information each year regarding the amount
of ordinary income and capital gains distributed to you for the
previous year and any portion of your distributions that is exempt
from state and local taxes. Your investment in a Fund may have
additional personal tax implications. Please consult your tax
advisor on state, local or other applicable taxes.
In addition to the dividends and capital gains distributions made
by a Fund, you may realize a capital gain or loss when selling and
exchanging Fund shares. Such transactions may be subject to
federal income tax.

<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 certain of those other securities and
techniques, and certain 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. The SAI also contains a Fund's fundamental and non-
fundamental investment policies.

The Board of Trustees can change a Fund's investment objective and
its non-fundamental investment policies without shareholder
approval.

HEDGING STRATEGIES Managed Municipals Fund, Intermediate
Municipals Fund, and High-Yield Municipals Portfolio may enter
into a number of hedging strategies, including those that employ
futures and options, to gain or reduce exposure to particular
securities or markets. These strategies, which are commonly
referred to as derivatives, involve the use of financial
instruments whose values depend on, or are derived from, the value
of an underlying security or an index. The Funds and the
Portfolio may use these strategies to adjust their sensitivity to
changes in interest rates or for other hedging purposes
(attempting to offset a potential loss in one position by
establishing an interest in an opposite position). Derivative
strategies involve the risk that they may exaggerate a loss,
potentially losing more money than the actual cost of the
derivative, or limit a potential gain. Also, with some derivative
strategies there is the risk that the other party to the
transaction may fail to honor its contract terms, causing a loss
to the Funds or the Portfolio.

ASSET-BACKED SECURITIES Each Fund may invest in asset-backed
securities, which are interests in pools of debt securities.
These securities are subject to prepayment risk, which is the
possibility that the underlying debt may be refinanced or prepaid
prior to maturity during periods of declining interest rates. In
an environment of declining interest rates, asset-backed
securities may offer less potential for gain than other debt
securities. During periods of rising interest rates, asset-backed
securities have a high risk of declining in price because the
declining prepayment rates effectively increase the maturity of
the securities. In addition, the potential impact of prepayment
on the price of an asset-backed security may be difficult to
predict and result in greater volatility.

MUNICIPAL LEASE OBLIGATIONS Municipal lease obligations are
revenue bonds backed by leases or installment purchase contracts
for property or equipment. Lease obligations may not be backed by
the issuing municipality, and a Fund or Portfolio may have limited
recourse in the event of a default or termination.

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS When-issued
securities and forward commitments are securities that are
purchased prior to the date they are actually issued or delivered.
These securities involve the risk that they may fall in value by
the time they are actually issued or that the other party may fail
to honor the contract terms.

ZERO COUPON SECURITIES Managed Municipals Fund, Intermediate
Municipals Fund, and High-Yield Municipals Portfolio may invest in
zero coupon securities. These securities do not pay interest in
cash on a current basis, but instead accrue over the life of the
bond. As a result, these securities are issued at a deep
discount. The value of these securities may fluctuate more than
similar securities that pay interest periodically. Although these
securities pay no interest to holders prior to maturity, interest
on these securities is reported as income to the Fund and
distributed to its shareholders.

INVERSE FLOATING RATE OBLIGATIONS The Funds may invest in
inverse floating rate obligations representing interests in tax-
exempt bonds. These securities carry interest rates that vary
inversely to changes in market interest rates. Such securities
have investment characteristics similar to investment leverage.
Their market values are subject to greater risks of fluctuation
than securities bearing a fixed rate of interest, which may lead
to greater fluctuation in the value of a Fund's shares.

ALTERNATIVE MINIMUM TAX The interest income distributed by the
Funds from certain tax-exempt bonds may be subject to the federal
AMT for individuals and corporations. Each Fund is permitted to
invest all of its assets in bonds subject to the AMT. Consult
your tax advisor for more information.

PORTFOLIO TURNOVER There are no limits on turnover. Turnover
may vary significantly from year to year. Stein Roe does not
expect it to exceed 100% under normal conditions. Portfolio
turnover typically produces capital gains or losses resulting in
tax consequences for Fund investors. It also 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 or Portfolio 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.

INTERFUND LENDING PROGRAM The Funds and Portfolios may lend
money to and borrow money from other funds advised by Stein Roe.
They will do so when Stein Roe believes such lending or borrowing
is necessary and appropriate. Borrowing costs will be the same as
or lower than the costs of a bank loan.

<PAGE>

THE FUNDS' MANAGEMENT

INVESTMENT ADVISER Stein Roe & Farnham Incorporated, One South
Wacker Drive, Chicago, IL 60606, manages the day-to-day operations
of the Funds and Portfolios. Stein Roe (and its predecessor) has
advised and managed mutual funds since 1949. For the fiscal year
ended June 30, 1999, the Funds paid to Stein Roe the following
aggregate fees (as a percent of average net assets):

Fund Fee
Municipal Money Market Fund 0.50%
Intermediate Municipals Fund 0.47%
Managed Municipals Fund 0.52%
High-Yield Municipals Fund 0.55%

Stein Roe's mutual funds and institutional investment advisory
businesses are part of a larger business unit that includes
several separate legal entities known as Liberty Funds Group
(LFG). 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.

PORTFOLIO MANAGERS

Municipal Money Market Fund

Veronica M. Wallace has been portfolio manager of Municipal Money
Portfolio since 1995. Ms. Wallace is a vice president of Stein
Roe and was formerly a trader in taxable money market instruments
for Stein Roe. As of June 30, 1999, she was responsible for
managing $120 million in mutual fund net assets.

Intermediate Municipals Fund

Joanne T. Costopoulos has been portfolio manager of Intermediate
Municipals since 1991. She is a senior vice president of Stein
Roe, which she joined in 1982, and was responsible for managing
$170 million in mutual fund net assets as of June 30, 1999. In
her previous position as a head trader in the fixed-income area,
she traded tax-exempt securities for both institutional and
individual investment portfolios. She received her B.A. in
business administration from Elmhurst College.

Managed Municipals Fund

William C. Loring and Brian M. Hartford have been co-portfolio
managers of Managed Municipals since November 1998. They are
jointly employed as senior vice presidents by Colonial and Stein
Roe. They have co-managed the Colonial Tax-Exempt Fund since May
1997. Mr. Loring has also managed the Colonial Intermediate Bond
Fund since 1993. Mr. Hartford has a bachelor's degree in finance
and investment from Babson College and is a chartered financial
analyst. Mr. Loring has a bachelor's degree from Bowdoin College.
Messrs. Loring and Hartford have managed various other Colonial
tax-exempt funds since 1986 and 1993, respectively. As of June 30,
1999, they were responsible for managing $539 million in mutual
fund net assets.

High-Yield Municipals Fund

Maureen G. Newman has been portfolio manager of High-Yield
Municipals Portfolio since November 1998. She is jointly employed
by as a senior vice president by Colonial and Stein Roe. She has
managed tax-exempt funds for Colonial since May 1996. Prior to
joining Colonial, Ms. Newman was a portfolio manager and bond
analyst at Fidelity Investments from May 1985 to May 1996. Ms.
Newman has a bachelor's degree in economics from Boston College
and a master's degree from Babson College. She is a chartered
financial analyst. As of June 30, 1999, she was responsible for
managing $299 million in mutual fund net assets.

MASTER/FEEDER FUND STRUCTURE Unlike mutual funds that directly
acquire and manage their own portfolios of securities, Municipal
Money Market Fund and High-Yield Municipals Fund are "feeder"
funds in a "master/feeder" structure. This means that the Fund
invests its assets in a larger "master" portfolio of securities
(the Fund's corresponding Portfolio) that has an investment
objective and policies substantially identical to those of the
Fund. The investment performance of a Fund depends upon the
investment performance of its Portfolio. If the investment
policies of a Fund and its Portfolio became inconsistent, the
Board of Trustees of the Fund can decide what actions to take.
Actions the Board of Trustees may recommend include withdrawal of
the Fund's assets from the Portfolio. For more information on the
master/feeder fund structure, see the SAI.

YEAR 2000 READINESS Like other investment companies, financial
and business organizations and individuals around the world, the
Funds could be adversely affected if the computer systems used by
Stein Roe, other service providers and the issuers in which the
Funds invest do not properly process and calculate date-related
information and data from and after Jan. 1, 2000. This is
commonly known as the "Year 2000 Problem." The Funds' service
providers are taking steps that they believe are reasonably
designed to address the Year 2000 problem, including communicating
with vendors who furnish services, software and systems to the
Funds to provide that date-related information and data can be
properly processed after Jan. 1, 2000. Many Fund service
providers and vendors, including the Funds' service providers, are
in the process of making Year 2000 modifications to their software
and systems and believe that such modifications will be completed
on a timely basis prior to Jan. 1, 2000. In addition, Year 2000
readiness is one of the factors considered by Stein Roe in its
ongoing assessment of issuers in which the Funds invest, to the
extent that information is readily available. However, no
assurances can be given that the Funds will not be adversely
affected by these matters.

<PAGE>

FOR MORE INFORMATION

You can obtain more information about the Funds' investments in
their semiannual and annual reports to investors. These reports
discuss the market conditions and investment strategies that
affected the Funds' performance over the past six months and year.

You may wish to read the Funds' SAI for more information. The SAI
is incorporated into this prospectus by reference, which means
that it is considered to be part of this prospectus and you are
deemed to have been told of its contents.

To obtain free copies of the Funds' semiannual and annual reports,
latest quarterly profile, or the SAI or to request other
information about the Funds, write or call:

Stein Roe Mutual Funds
One South Wacker Drive
Suite 3200
Chicago, IL 60606
800-338-2550
www.steinroe.com

Text-only versions of all Fund documents can be viewed online or
downloaded from the SEC at www.sec.gov. You can also obtain
copies by visiting the SEC's Public Reference Room in Washington,
DC, by calling 800-SEC-0330, or by sending your request and the
appropriate fee to the SEC's public reference section, Washington,
DC 20549-6009.

Liberty Funds Distributor, Inc.

Investment Company Act file number of Stein Roe Municipal Trust:
811-4367

Statement of Additional Information Dated Nov. 1, 1999

STEIN ROE MUNICIPAL TRUST
Stein Roe Municipal Money Market Fund
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund

Suite 3200, One South Wacker Drive, Chicago, IL 60606
800-338-2550

This Statement of Additional Information (SAI) is not a
prospectus but provides additional information that should be read
in conjunction with the Prospectus dated Nov. 1, 1999, and any
supplements thereto. Financial statements, which are contained in
the Funds' Annual Report, are incorporated by reference into this
SAI. The Prospectus and Annual Report may be obtained at no
charge by telephoning 800-338-2550.

TABLE OF CONTENTS
Page

General Information and History...............................2
Investment Policies...........................................4
Portfolio Investments and Strategies..........................4
Investment Restrictions......................................17
Additional Investment Considerations.........................19
Purchases and Redemptions....................................22
Management...................................................26
Financial Statements.........................................29
Principal Shareholders.......................................29
Investment Advisory and Other Services.......................30
Distributor..................................................32
Transfer Agent...............................................33
Custodian....................................................33
Independent Auditors.........................................33
Portfolio Transactions.......................................33
Additional Income Tax Considerations.........................39
Investment Performance.......................................40
Additional Information on Net Asset Value-Municipal
Money Fund................................................47
Master Fund/Feeder Fund: Structure and Risk Factors..........48
Glossary.....................................................50
Appendix-Ratings.............................................53

<PAGE>

GENERAL INFORMATION AND HISTORY

The following mutual funds are separate series of Stein Roe
Municipal Trust (the "Trust"):

Stein Roe Municipal Money Market Fund ("Municipal Money
Fund")
Stein Roe Intermediate Municipals Fund ("Intermediate
Municipals Fund")
Stein Roe Managed Municipals Fund ("Managed Municipals
Fund")
Stein Roe High-Yield Municipals Fund ("High-Yield
Municipals Fund")

Each series of the Trust invests in a separate portfolio of
securities and other assets, with its own objectives and policies.
The series of the Trust are referred to collectively as "the
Funds." The name of the Trust and each of its series was changed
on Nov. 1, 1995 to separate "SteinRoe" into two words.

The Trust is a Massachusetts business trust organized under
an Agreement and Declaration of Trust ("Declaration of Trust")
dated Oct. 6, 1987, which provides that each shareholder shall be
deemed to have agreed to be bound by the terms thereof. The
Declaration of Trust may be amended by a vote of either the
Trust's shareholders or its trustees. The Trust may issue an
unlimited number of shares, in one or more series as the Board may
authorize. Currently, four series are authorized and outstanding.
Each series invests in a separate portfolio of securities and
other assets, with its own objectives and policies.

Under Massachusetts law, shareholders of a Massachusetts
business trust such as the Trust could, in some circumstances, be
held personally liable for unsatisfied obligations of the trust.
The Declaration of Trust provides that persons extending credit
to, contracting with, or having any claim against the Trust or any
particular series shall look only to the assets of the Trust or of
the respective series for payment under such credit, contract or
claim, and that the shareholders, trustees and officers shall have
no personal liability therefor. The Declaration of Trust requires
that notice of such disclaimer of liability be given in each
contract, instrument or undertaking executed or made on behalf of
the Trust. The Declaration of Trust provides for indemnification
of any shareholder against any loss and expense arising from
personal liability solely by reason of being or having been a
shareholder. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is believed to be remote,
because it would be limited to circumstances in which the
disclaimer was inoperative and the Trust was unable to meet its
obligations. The risk of a particular series incurring financial
loss on account of unsatisfied liability of another series of the
Trust also is believed to be remote, because it would be limited
to claims to which the disclaimer did not apply and to
circumstances in which the other series was unable to meet its
obligations.

Each share of a series, without par value, is entitled to
participate pro rata in any dividends and other distributions
declared by the Board on shares of that series, and all shares of
a series have equal rights in the event of liquidation of that
series. Each whole share (or fractional share) outstanding on the
record date established in accordance with the By-Laws shall be
entitled to a number of votes on any matter on which it is
entitled to vote equal to the net asset value of the share (or
fractional share) in United States dollars determined at the close
of business on the record date (for example, a share having a net
asset value of $10.50 would be entitled to 10.5 votes). As a
business trust, the Trust is not required to hold annual
shareholder meetings. However, special meetings may be called for
purposes such as electing or removing trustees, changing
fundamental policies, or approving an investment advisory
contract. If requested to do so by the holders of at least 10% of
its outstanding shares, the Trust will call a special meeting for
the purpose of voting upon the question of removal of a trustee or
trustees and will assist in the communications with other
shareholders as if the Trust were subject to Section 16(c) of the
Investment Company Act of 1940. All shares of all series of the
Trust are voted together in the election of trustees. On any
other matter submitted to a vote of shareholders, shares are voted
in the aggregate and not by individual series, except that shares
are voted by individual series when required by the Investment
Company Act of 1940 or other applicable law, or when the Board of
Trustees determines that the matter affects only the interests of
one or more series, in which case shareholders of the unaffected
series are not entitled to vote on such matters.

Special Considerations Regarding Master Fund/Feeder Fund Structure

Rather than invest in securities directly, each Fund may seek
to achieve its objective by pooling its assets with those of other
investment companies for investment in another mutual fund having
the same investment objective and substantially the same
investment policies as its feeder funds. The purpose of such an
arrangement is to achieve greater operational efficiencies and
reduce costs. Such investment would be subject to determination
by the trustees that it was in the best interests of the Fund and
its shareholders, and shareholders would receive advance notice of
any such change. Two Funds currently operate under the master
fund/feeder fund structure. Each invests all of its net
investable assets in a separate master fund that is a series of
SR&F Base Trust, as follows:

Master/Feeder
Feeder Fund Master Fund Status Established
- ------------------------------------------------------------------
Municipal Money Fund SR&F Municipal Money
Market Portfolio ("Municipal
Money Portfolio") Sept. 28, 1995

High-Yield Municipals SR&F High-Yield Municipals
Fund Portfolio ("High-Yield
Municipals Portfolio") Feb. 2, 1998

The master funds are series of SR&F Base Trust and are referred to
collectively as the "Portfolios." For more information, please
refer to Master Fund/Feeder Fund: Structure and Risk Factors.

Stein Roe & Farnham Incorporated ("Stein Roe") is responsible
for the business affairs of the Trusts and serves as investment
adviser to Intermediate Municipals Fund, Managed Municipals Fund,
Municipal Money Portfolio, and High-Yield Municipals Portfolio.
It also provides administrative and bookkeeping and accounting
services to the Funds and Portfolios.

INVESTMENT POLICIES

The Trust and SR&F Base Trust are open-end management
investment companies. The Funds and the Portfolios are
diversified, as that term is defined in the Investment Company Act
of 1940.

The investment objectives and policies are described in the
Prospectus under The Funds. In pursuing its objective, a Fund or
Portfolio may also employ the investment techniques described
under Portfolio Investments and Strategies in this SAI. The
investment objective is a nonfundamental policy and may be changed
by the Board of Trustees without the approval of a "majority of
the outstanding voting securities" (see definition in the
Glossary).

PORTFOLIO INVESTMENTS AND STRATEGIES

The following investment policies and techniques have been
adopted by each Fund or Portfolio as indicated. Unless otherwise
noted, for purposes of discussion under Portfolio Investments and
Strategies, Investment Restrictions, and Additional Investment
Considerations, the term "the Fund" refers to each Fund and each
Portfolio.

Taxable Securities

Assets of each Fund that are not invested in Municipal
Securities may be held in cash or invested in short-term taxable
investments/1/ such as: (1) U.S. Government bills, notes and
bonds; (2) obligations of agencies and instrumentalities of the
U.S. Government (including obligations not backed by the full
faith and credit of the U.S. Government); (3) in the case of
Intermediate Municipals Fund and High-Yield Municipals Portfolio,
other money market instruments, and in the case of Municipal Money
Portfolio and Managed Municipals Fund, other money market
instruments such as certificates of deposit and bankers'
acceptances of domestic banks having total assets in excess of $1
billion, and corporate commercial paper rated Prime-1 by Moody's
or A-1 by S&P at the time of purchase, or, if unrated, issued or
guaranteed by an issuer with outstanding debt rated Aa or better
by Moody's or AA or better by S&P; and (4) repurchase agreements
(defined in the Glossary) with banks and, for all Funds except
Managed Municipals Fund, securities dealers. Municipal Money
Portfolio limits repurchase agreements to those that are short-
term, subject to item (g) under Investment Restrictions (although
the underlying securities may not be short-term). Managed
Municipals Fund limits repurchase agreements to those in which the
underlying collateral consists of securities that the Fund may
purchase directly.
- -----------------
/1/ In the case of Municipal Money Fund, Municipal Money
Portfolio, and Managed Municipals Fund, the policies described in
this paragraph are fundamental.
- -----------------

AMT Securities

Although the Funds currently limit their investments in
Municipal Securities to those the interest on which is exempt from
the regular federal income tax, each Fund may invest 100% of its
total assets in Municipal Securities the interest on which is
subject to the federal alternative minimum tax ("AMT").

Private Placements

Each Fund may invest in securities that are purchased in
private placements (including privately placed securities eligible
for purchase and sale under Rule 144A of the Securities Act of
1933 ["1933 Act"]) and, accordingly, are subject to restrictions
on resale as a matter of contract or under federal securities
laws. Because there may be relatively few potential purchasers
for such investments, especially under adverse market or economic
conditions or in the event of adverse changes in the financial
condition of the issuer, a Fund could find it more difficult to
sell such securities when Stein Roe believes it is advisable to do
so or may be able to sell such securities only at prices lower
than if such securities were more widely held. At times, it may
also be more difficult to determine the fair value of such
securities for purposes of computing a Fund's net asset value.

Rule 144A Securities

Rule 144A permits certain qualified institutional buyers,
such as the Funds, to trade in privately placed securities that
have not been registered for sale under the 1933 Act. Stein Roe,
under the supervision of the Board of Trustees, will consider
whether securities purchased under Rule 144A are illiquid and thus
subject to the Funds' restriction of investing no more than 10% of
its net assets in illiquid securities for all Funds other than
High-Yield Municipals Portfolio and no more than 15% for that
Fund. A determination of whether a Rule 144A security is liquid
or not is a question of fact. In making this determination, Stein
Roe will consider the trading markets for the specific security,
taking into account the unregistered nature of a Rule 144A
security. In addition, Stein Roe could consider the (1) frequency
of trades and quotes, (2) number of dealers and potential
purchasers, (3) dealer undertakings to make a market, and (4)
nature of the security and of marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting
offers, and the mechanics of transfer). The liquidity of Rule
144A securities would be monitored and if, as a result of changed
conditions, it is determined that a Rule 144A security is no
longer liquid, a Fund's holdings of illiquid securities would be
reviewed to determine what, if any, steps are required to assure
that the Fund does not invest more than 10% of its assets in
illiquid securities for all Funds other than High-Yield Municipals
Portfolio and no more than 15% for that Fund. Investing in Rule
144A securities could have the effect of increasing the amount of
a Fund's assets invested in illiquid securities if qualified
institutional buyers are unwilling to purchase such securities.
No Fund expects to invest as much as 5% of its total assets in
Rule 144A securities that have not been deemed to be liquid by
Stein Roe.

Standby Commitments

Each Fund may obtain standby commitments when it purchases
Municipal Securities. A standby commitment gives the holder the
right to sell the underlying security to the seller at an agreed-
upon price on certain dates or within a specified period. A Fund
will acquire standby commitments solely to facilitate portfolio
liquidity and not with a view to exercising them at a time when
the exercise price may exceed the current value of the underlying
securities. If the exercise price of a standby commitment held by
a Fund should exceed the current value of the underlying
securities, a Fund may refrain from exercising the standby
commitment in order to avoid causing the issuer of the standby
commitment to sustain a loss and thereby jeopardizing the Fund's
business relationship with the issuer. A Fund will enter into
standby commitments only with banks and securities dealers that,
in the opinion of Stein Roe, present minimal credit risks.
However, if a securities dealer or bank is unable to meet its
obligation to repurchase the security when a Fund exercises a
standby commitment, the Fund might be unable to recover all or a
portion of any loss sustained from having to sell the security
elsewhere. Standby commitments will be valued at zero in
determining each Fund's net asset value. The Trust has received
an opinion of Bell, Boyd & Lloyd, counsel to the Trust, that
interest earned by the Funds on Municipal Securities will continue
to be exempt from the regular federal income tax regardless of the
fact that the Fund holds standby commitments with respect to such
Municipal Securities.

Participation Interests

Each Fund may purchase participation interests in all or part
of specific holdings of Municipal Securities, but does not intend
to do so unless the tax-exempt status of those participation
interests or certificates of participation is confirmed to the
satisfaction of the Board of Trustees, which may include
consideration of an opinion of counsel as to the tax-exempt
status. Each participation interest would meet the prescribed
quality standards of the Fund or be backed by an irrevocable
letter of credit or guarantee of a bank that meets the prescribed
quality standards of the Fund. (See Investment Policies.) Some
participation interests are illiquid securities.

Each Fund may also purchase participations in lease
obligations or installment purchase contract obligations
(hereinafter collectively called "lease obligations") of municipal
authorities or entities. Although lease obligations do not
constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation is
ordinarily backed by the municipality's covenant to budget for,
appropriate, and make the payments due under the lease obligation.
However, certain lease obligations contain "non-appropriation"
clauses which provide that the municipality has no obligation to
make lease or installment purchase payments in future years unless
money is appropriated for such purpose on a yearly basis. In
addition to the "non-appropriation" risk, these securities
represent a relatively new type of financing that has not yet
developed the depth of marketability associated with more
conventional bonds. Although "non-appropriation" lease
obligations are secured by leased property, disposition of the
property in the event of foreclosure might prove difficult.

The Board of Trustees has delegated to Stein Roe the
responsibility to determine the credit quality of participation
interests. The determinations concerning the liquidity and
appropriate valuation of a municipal lease obligation, as with any
other municipal security, are made based on all relevant factors.
These factors may include, among others: (1) the frequency of
trades and quotes for the obligation; (2) the number of dealers
willing to purchase or sell the security and the number of other
potential buyers; (3) the willingness of dealers to undertake to
make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of
transfer.

When-Issued and Delayed-Delivery Securities; Forward Commitments

Each Fund may purchase securities on a when-issued or
delayed-delivery basis or purchase forward commitments, as
described in the Prospectus. A Fund makes such commitments only
with the intention of actually acquiring the securities, but may
sell the securities before settlement date if it is deemed
advisable for investment reasons. Securities purchased in this
manner involve a risk of loss if the value of the security
purchased declines before settlement date.

At the time a Fund enters into a binding obligation to
purchase securities on a when-issued basis, liquid assets (cash,
U.S. Government or other "high grade" debt obligations) of the
Fund having a value of at least as great as the purchase price of
the securities to be purchased will be segregated on the books of
the Fund and held by the custodian throughout the period of the
obligation.

Short Sales Against the Box

Each Fund may sell securities short against the box; that is,
enter into short sales of securities that it currently owns or has
the right to acquire through the conversion or exchange of other
securities that it owns at no additional cost. A Fund may make
short sales of securities only if at all times when a short
position is open it owns at least an equal amount of such
securities or securities convertible into or exchangeable for
securities of the same issue as, and equal in amount to, the
securities sold short, at no additional cost.

In a short sale against the box, a Fund does not deliver from
its portfolio the securities sold. Instead, the Fund borrows the
securities sold short from a broker-dealer through which the short
sale is executed, and the broker-dealer delivers such securities,
on behalf of the Fund, to the purchaser of such securities. The
Fund is required to pay to the broker-dealer the amount of any
dividends paid on shares sold short. Finally, to secure its
obligation to deliver to such broker-dealer the securities sold
short, the Fund must deposit and continuously maintain in a
separate account with its custodian an equivalent amount of the
securities sold short or securities convertible into or
exchangeable for such securities at no additional cost. A Fund is
said to have a short position in the securities sold until it
delivers to the broker-dealer the securities sold. A Fund may
close out a short position by purchasing on the open market and
delivering to the broker-dealer an equal amount of the securities
sold short, rather than by delivering portfolio securities.

Short sales may protect a Fund against the risk of losses in
the value of its portfolio securities because any unrealized
losses with respect to such portfolio securities should be wholly
or partially offset by a corresponding gain in the short position.
However, any potential gains in such portfolio securities should
be wholly or partially offset by a corresponding loss in the short
position. The extent to which such gains or losses are offset
will depend upon the amount of securities sold short relative to
the amount the Fund owns, either directly or indirectly, and, in
the case where the Fund owns convertible securities, changes in
the conversion premium.

Short sale transactions involve certain risks. If the price
of the security sold short increases between the time of the short
sale and the time a Fund replaces the borrowed security, the Fund
will incur a loss and if the price declines during this period,
the Fund will realize a short-term capital gain. Any realized
short-term capital gain will be decreased, and any incurred loss
increased, by the amount of transaction costs and any premium,
dividend or interest which the Fund may have to pay in connection
with such short sale. Certain provisions of the Internal Revenue
Code may limit the degree to which a Fund is able to enter into
short sales. There is no limitation on the amount of each Fund's
assets that, in the aggregate, may be deposited as collateral for
the obligation to replace securities borrowed to effect short
sales and allocated to segregated accounts in connection with
short sales. No Fund currently expects that more than 5% of its
total assets would be involved in short sales against the box.

Repurchase Agreements

Each Fund may invest in repurchase agreements, provided that
it will not invest more than 15% (High-Yield Municipals Portfolio)
or 10% (Managed Municipals Fund, Intermediate Municipals Fund, and
Municipal Money Portfolio) of net assets in repurchase agreements
maturing in more than seven days and any other illiquid
securities. A repurchase agreement is a sale of securities to a
Fund in which the seller agrees to repurchase the securities at a
higher price, which includes an amount representing interest on
the purchase price, within a specified time. In the event of
bankruptcy of the seller, a Fund could experience both losses and
delays in liquidating its collateral.

Borrowings; Reverse Repurchase Agreements

Subject to restriction (iv) under Investment Restrictions,
each Fund may establish and maintain a line of credit with a major
bank in order to permit borrowing on a temporary basis to meet
share redemption requests in circumstances in which temporary
borrowing may be preferable to liquidation of portfolio
securities.

Each Fund may also enter into reverse repurchase agreements
(defined in the Glossary) with banks and securities dealers. Use
of a reverse repurchase agreement may be preferable to a regular
sale and later repurchase of the securities because it avoids
certain market risks and transaction costs. The Funds did not
enter into reverse repurchase agreements during the last year and
have no present intention to do so.

A Fund's reverse repurchase agreements and any other
borrowings may not exceed 33 1/3% of its total assets, and the
Fund may not purchase additional securities when its borrowings,
less proceeds receivable from the sale of portfolio securities,
exceed 5% of its total assets.

Rated Securities

The rated securities described under Investment Policies
above for each Fund except for Municipal Money Portfolio include
obligations given a rating conditionally by Moody's or
provisionally by S&P.

Except with respect to Municipal Securities with a demand
feature (see the definition of "short-term" in the Glossary)
acquired by Municipal Money Portfolio, the fact that the rating of
a Municipal Security held by a Fund may be lost or reduced below
the minimum level applicable to its original purchase by a Fund
does not require that obligation to be sold, but Stein Roe will
consider such fact in determining whether that Fund should
continue to hold the obligation. In the case of Municipal
Securities with a demand feature acquired by Municipal Money
Portfolio, if the quality of such a security falls below the
minimum level applicable at the time of acquisition, the Fund must
dispose of the security within a reasonable period of time either
by exercising the demand feature or by selling the security in the
secondary market, unless the Board of Trustees determines that it
is in the best interests of the Fund and its shareholders to
retain the security.

To the extent that the ratings accorded by Moody's, S&P, or
Fitch IBCA for Municipal Securities may change as a result of
changes in such organizations, or changes in their rating systems,
each Fund will attempt to use comparable ratings as standards for
its investments in Municipal Securities in accordance with its
investment policies. The Board of Trustees is required to review
such ratings with respect to Municipal Money Portfolio.

Zero Coupon Bonds

Each of Intermediate Municipals Fund, Managed Municipals
Fund, and High-Yield Municipals Portfolio may invest in zero
coupon bonds. A zero coupon bond is a bond that does not pay
interest for its entire life. The market prices of zero coupon
bonds are affected to a greater extent by changes in prevailing
levels of interest rates and thereby tend to be more volatile in
price than securities that pay interest periodically. In
addition, because a Fund accrues income with respect to these
securities prior to the receipt of such interest, it may have to
dispose of portfolio securities under disadvantageous
circumstances in order to obtain cash needed to pay income
dividends in amounts necessary to avoid unfavorable tax
consequences.

Tender Option Bonds; Trust Receipts

Each Fund may purchase tender option bonds and trust
receipts. A tender option bond is a Municipal Security (generally
held pursuant to a custodial arrangement) having a relatively long
maturity and bearing interest at a fixed rate substantially higher
than prevailing short-term tax-exempt rates, that has been coupled
with the agreement of a third party, such as a bank, broker-dealer
or other financial institution, pursuant to which such institution
grants the security holders the option, at periodic intervals, to
tender their securities to the institution and receive the face
value thereof. As consideration for providing the option, the
financial institution receives periodic fees equal to the
difference between the Municipal Security's fixed coupon rate and
the rate, as determined by a remarketing or similar agent at or
near the commencement of such period, that would cause the
securities, coupled with the tender option, to trade at par on the
date of such determination. Thus, after payment of this fee, the
security holder effectively holds a demand obligation that bears
interest at the prevailing short-term tax-exempt rate. Stein Roe
will consider on an ongoing basis the creditworthiness of the
issuer of the underlying Municipal Securities, of any custodian,
and of the third-party provider of the tender option. In certain
instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or
interest on the underlying Municipal Securities and for other
reasons. A Fund may invest up to 10% of net assets in tender
option bonds and trust receipts.

Interfund Borrowing and Lending Program

Pursuant to an exemptive order issued by the Securities and
Exchange Commission, the Funds may lend money to and borrow money
from other mutual funds advised by Stein Roe. A Fund will borrow
through the program when borrowing is necessary and appropriate
and the costs are equal to or lower than the costs of bank loans.

Portfolio Turnover

Although the Funds do not purchase securities with a view
toward rapid turnover, there are no limitations on the length of
time that portfolio securities must be held. As a result, the
turnover rate may vary from year to year. A high rate of
portfolio turnover, if it should occur, may result in the
realization of capital gains or losses, and, to the extent net
short-term capital gains are realized, any distributions resulting
from such gains will be considered ordinary income for federal
income tax purposes.

Options

Each of Intermediate Municipals Fund, Managed Municipals
Fund, and High-Yield Municipals Portfolio is permitted to purchase
and to write both call options and put options on debt or other
securities or indexes in standardized contracts traded on U.S.
securities exchanges, boards of trade, or similar entities, or
quoted on Nasdaq, and agreements, sometimes called cash puts, that
may accompany the purchase of a new issue of bonds from a dealer.

Currently there are no publicly-traded options on individual
tax-exempt securities. However, it is anticipated that such
instruments may become available in the future.

An option is a contract that gives the purchaser (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 an index) at a
specified exercise price at any time during the term of the option
(normally not exceeding nine months). The writer of the option
has the obligation upon exercise of the option to deliver the
underlying security upon payment of the exercise price or to pay
the exercise price upon delivery of the underlying security. 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 economic
indicators.)

A Fund is permitted to write call options and put options
only if they are "covered." 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 (or if
additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its
custodian) upon conversion or exchange of other securities held in
its portfolio.

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 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 or index in relation to the exercise price of
the option, the volatility of the underlying security or index and
the time remaining until the expiration date.

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 on securities and on
indexes. For example, there are significant differences between
the securities markets and 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 on a security,
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, it would not be able to sell the underlying
security until the option expired. As the writer of a covered
call option, 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.

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 had purchased.

Futures Contracts and Options on Futures Contracts

Each of Intermediate Municipals Fund, Managed Municipals
Fund, and High-Yield Municipals Portfolio may enter into interest
rate futures contracts and index futures contracts. An interest
rate or index futures contract provides for the future sale by one
party and purchase by another party of a specified quantity of a
financial instrument or the cash value of an index (such as The
Bond Buyer Municipal Bond Index)/2/ at a specified price and time.
A public market exists in futures contracts covering a number of
indexes as well as the following financial instruments: U.S.
Treasury bonds; U.S. Treasury notes; Government National Mortgage
Association certificates; three-month U.S. Treasury bills; 90-day
commercial paper; bank certificates of deposit; and Eurodollar
certificates of deposit. It is expected that other futures
contracts will be developed and traded. A Fund will engage in
transactions involving new futures contracts (or options thereon)
if, in the opinion of the Board of Trustees, they are appropriate
instruments for the Fund.

- --------------
/2/ 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. The Bond Buyer Municipal Bond Index is based on The Bond
Buyer index of 40 actively-traded long-term general obligation and
revenue bonds carrying at least an A rating by Moody's or S&P.
- --------------

Each Fund may purchase and write call options and put options
on futures contracts (futures options). Futures options possess
many of the same characteristics as options on securities and
indexes (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. For example, a Fund might use futures contracts
to hedge against anticipated changes in interest 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 interest rate 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.

The success of any futures technique depends on accurate
predictions of changes in the level and direction of interest
rates and other factors. Should those predictions be incorrect,
the 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.

A Fund will only enter into futures contracts and futures
options that are standardized and traded on a U.S. exchange, board
of trade or similar entity, or quoted on an automated quotation
system.

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 contract 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 that is returned to the Fund upon termination of
the contract, assuming all contractual obligations have been
satisfied. Each 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 trading day. In computing daily net asset value,
each Fund will mark to market its open futures positions.

A 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 securities, usually these obligations
are closed out prior to delivery by offsetting purchases or sales,
as the case may be, of matching futures contracts (same exchange,
underlying security or index, and delivery month). If an
offsetting purchase price is less than the original sale price,
the Fund 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 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
as hedging techniques. A purchase or sale of a futures contract
may result in losses in excess of the amount invested in the
futures contract. In trying to increase or reduce market
exposure, there can be no guarantee that there will be a
correlation between price movements in the futures contract and in
the portfolio exposure sought. In addition, there are significant
differences between the securities and 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 debt securities, including technical influences in
futures and futures options trading and differences between the
financial instruments and the instruments underlying the standard
contracts available for trading in such respects as interest rate
levels, maturities, and creditworthiness of issuers. A decision
as to whether, when and how to hedge 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 interest 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.

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 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

If options, futures contracts, or futures options of types
other than those described herein or in the prospectus are traded
in the future, each of Intermediate Municipals Fund, Managed
Municipals Fund, and High-Yield Municipals Portfolio may also use
those investment vehicles, provided the Board of Trustees
determines that their use is consistent with the Fund's investment
objective.

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 the Fund plus premiums paid
by it for open futures option positions, less the amount by which
any such options are "in-the-money" (as defined in the Glossary),
would exceed 5% of the Fund's total assets.

When purchasing a futures contract or writing a put 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 contracts. When
writing a call option on a futures contract, a Fund similarly will
maintain 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 a 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
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 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 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 Commission Regulations) may be excluded in computing such
5%].

Taxation of Options and Futures

If a Fund exercises a call or put option that 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 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.

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 options, futures and futures 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.

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 securities, and gains from the sale of securities or
foreign currencies or other income (including but not limited to
gains from options, futures, or forward contracts). 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.

Each Fund distributes to shareholders annually any net
capital gains that have been recognized for federal income tax
purposes (including year-end mark-to-market gains) on options and
futures transactions. Such distributions are combined with
distributions of capital gains realized on the Fund's other
investments and shareholders will be advised of the nature of the
payments.

The Taxpayer Relief Act of 1997 (the "Act") imposed
constructive sale treatment for federal income tax purposes on
certain hedging strategies with respect to appreciated securities.
Under these rules, taxpayers will recognize gain, but not loss,
with respect to securities if they enter into short sales of
"offsetting notional principal contracts" (as defined by the Act)
or futures or "forward contracts" (as defined by the Act) with
respect to the same or substantially identical property, or if
they enter into such transactions and then acquire the same or
substantially identical property. These changes generally apply
to constructive sales after June 8, 1997. Furthermore, the
Secretary of the Treasury is authorized to promulgate regulations
that will treat as constructive sales certain transactions that
have substantially the same effect as short sales, offsetting
notional principal contracts, and futures or forward contracts to
deliver the same or substantially similar property.

INVESTMENT RESTRICTIONS

The Funds and Portfolios operate under the following
investment restrictions. Restrictions that are fundamental
policies, as indicated below, may not be changed without the
approval of a "majority of the outstanding voting securities" (as
defined in the Glossary). A Fund or Portfolio may not:

(i) invest in a security if, with respect to 75% of its
assets, as a result of such investment, more than 5% of its total
assets (taken at market value at the time of investment) would be
invested in the securities of any one issuer (for this purpose,
the issuer(s) of a security being deemed to be only the entity or
entities whose assets or revenues are subject to the principal and
interest obligations of the security), other than obligations
issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities or repurchase agreements for such securities,
and [Funds only] except that all or substantially all of the
assets of the Fund may be invested in another registered
investment company having the same investment objective and
substantially similar investment policies as the Fund [however, in
the case of a guarantor of securities (including an issuer of a
letter of credit), the value of the guarantee (or letter of
credit) may be excluded from this computation if the aggregate
value of securities owned by it and guaranteed by such guarantor
(plus any other investments in securities issued by the guarantor)
does not exceed 10% of its total assets];/3/ /4/
- ----------------------
/3/ In the case of a security that is insured as to payment of
principal and interest, the related insurance policy is not deemed
a security, nor is it subject to this investment restriction.
/4/ Notwithstanding the foregoing, and in accordance with Rule 2a-
7 of the Investment Company Act of 1940 (the "Rule"), Municipal
Money Fund and Municipal Money Portfolio will not, immediately
after the acquisition of any security (other than a Government
Security or certain other securities as permitted under the Rule),
invest more than 5% of its total assets in the securities of any
one issuer; provided, however, that each may invest up to 25% of
its total assets in First Tier Securities (as that term is defined
in the Rule) of a single issuer for a period of up to three
business days after the purchase thereof.
- ----------------------

(ii) purchase any securities on margin, except for use of
short-term credit necessary for clearance of purchases and sales
of portfolio securities (this restriction does not apply to
securities purchased on a when-issued or delayed-delivery basis or
to reverse repurchase agreements), [Intermediate Municipals Fund,
Managed Municipals Fund, High-Yield Municipals Fund, and High-
Yield Municipals Portfolio only] but it may make margin deposits
in connection with futures and options transactions;

(iii) make loans, although it may (a) participate in an
interfund lending program with other Stein Roe Funds and
Portfolios provided that no such loan may be made if, as a result,
the aggregate of such loans would exceed 33 1/3% of the value of
its total assets; (b) purchase money market instruments and enter
into repurchase agreements; and (c) acquire publicly distributed
or privately placed debt securities;

(iv) borrow except that it may (a) borrow for nonleveraging,
temporary or emergency purposes and (b) engage in reverse
repurchase agreements and make other borrowings, provided that the
combination of (a) and (b) shall not exceed 33 1/3% of the value
of its total assets (including the amount borrowed) less
liabilities (other than borrowings) or such other percentage
permitted by law; it may borrow from banks, other Stein Roe Funds
and Portfolios, and other persons to the extent permitted by
applicable law;

(v) mortgage, pledge, hypothecate or in any manner transfer,
as security for indebtedness, any securities owned or held by it
except (a) as may be necessary in connection with borrowings
mentioned in (iv) above, and [Intermediate Municipals Fund,
Managed Municipals Fund, High-Yield Municipals Fund, and High-
Yield Municipals Portfolio only] (b) it may enter into futures and
options transactions;

(vi) invest more than 25% of its total assets (taken at
market value at the time of each investment) in securities of non-
governmental issuers whose principal business activities are in
the same industry, [Funds only] except that all or substantially
all of the assets of the Fund may be invested in another
registered investment company having the same investment objective
and substantially similar investment policies as the Fund;

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

(viii) purchase or sell commodities or commodities contracts
or oil, gas, or mineral programs, [Intermediate Municipals Fund,
Managed Municipals Fund, High-Yield Municipals Fund and High-Yield
Municipals Portfolio only] except that it may enter into futures
and options transactions;

(ix) [Municipal Money Fund only] purchase any securities
other than those described under Investment Policies-Municipal
Money Fund, and under Portfolio Investments and Strategies;
[Managed Municipals Fund only] purchase any securities other than
those described under Investment Policies-Managed Municipals Fund
and under Portfolio Investments and Strategies; or

(x) issue any senior security except to the extent permitted
under the Investment Company Act of 1940.

The above restrictions (other than material within brackets)
are fundamental policies of the Funds and Portfolios. The Funds
and Portfolios have also adopted the following restrictions that
may be required by various laws and administrative positions.
These restrictions are not fundamental. None of the following
restrictions shall prevent Municipal Money Fund, Intermediate
Municipals Fund, Managed Municipals Fund, or High-Yield Municipals
Fund from investing all or substantially all of its assets in
another investment company having the same investment objective
and substantially similar investment policies as the Fund. No
Fund or Portfolio may:

(a) own more than 10% of the outstanding voting securities of
an issuer;

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

(c) make investments in the securities of other investment
companies, except in connection with a merger, consolidation, or
reorganization;

(d) purchase or sell real estate (other than Municipal
Securities or money market securities secured by real estate or
interests therein or such securities issued by companies which
invest in real estate or interests therein);

(e) act as an underwriter of securities, except that it may
participate as part of a group in bidding, or bid alone, for the
purchase of Municipal Securities directly from an issuer for its
own portfolio;

(f) sell securities short unless (1) it owns or has the right
to obtain securities equivalent in kind and amount to those sold
short at no added cost or (2) the securities sold are "when
issued" or "when distributed" securities which it expects to
receive in a recapitalization, reorganization, or other exchange
for securities it contemporaneously owns or has the right to
obtain and provided that it may purchase standby commitments and
securities subject to a demand feature entitling it to require
sellers of securities to the Fund to repurchase them upon demand
by the Fund [Intermediate Municipals Fund, Managed Municipals
Fund, High-Yield Municipals Fund, and High-Yield Municipals
Portfolio only] and that transactions in options, futures, and
options on futures are not treated as short sales;

(g) [Municipal Money Fund, Municipal Money Portfolio,
Intermediate Municipals Fund, and Managed Municipals Fund only]
invest more than 10% of its net assets (taken at market value at
the time of a particular investment) in illiquid securities,
including repurchase agreements maturing in more than seven days;
[High-Yield Municipals Fund and High-Yield Municipals Portfolio
only] invest more than 15% of its net assets (taken at market
value at the time of a particular investment) in illiquid
securities, including repurchase agreements maturing in more than
seven days;

(h) purchase shares of other open-end investment companies,
except in connection with a merger, consolidation, acquisition, or
reorganization;

(i) invest more than 5% of its net assets (valued at time of
investment) in warrants, nor more than 2% of its net assets in
warrants that are not listed on the New York or American Stock
Exchange;

(j) [Intermediate Municipals Fund, Managed Municipals Fund,
High-Yield Municipals Fund, and High-Yield Municipals Portfolio
only] write an option on a security unless the option is issued by
the Options Clearing Corporation, an exchange, or similar entity;

(k) [Intermediate Municipals Fund, Managed Municipals Fund,
High-Yield Municipals Fund, and High-Yield Municipals Portfolio
only] 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.

ADDITIONAL INVESTMENT CONSIDERATIONS

Medium-quality Municipal Securities are obligations of
municipal issuers that, in the opinion of Stein Roe, possess
adequate, but not outstanding, capacities to service the
obligations. Lower-quality Municipal Securities are obligations
of issuers that are considered predominantly speculative with
respect to the issuer's capacity to pay interest and repay
principal according to the terms of the obligation and, therefore,
carry greater investment risk, including the possibility of issuer
default and bankruptcy, and are commonly referred to as "junk
bonds." The characteristics attributed to medium- and lower-
quality obligations by Stein Roe are much the same as those
attributed to medium- and lower-quality obligations by rating
services (see the Appendix to the Prospectus). Because many
issuers of medium- and lower-quality Municipal Securities choose
not to have their obligations rated by a rating agency, many of
the obligations in the Fund's portfolio may be unrated.

Investment in medium- or lower-quality debt securities
involves greater investment risk, including the possibility of
issuer default or bankruptcy. An economic downturn could severely
disrupt this market and adversely affect the value of outstanding
bonds and the ability of the issuers to repay principal and
interest. During a period of adverse economic changes, including
a period of rising interest rates, issuers of such bonds may
experience difficulty in servicing their principal and interest
payment obligations.

Medium- and lower-quality debt securities tend to be less
marketable than higher-quality debt securities because the market
for them is less broad. The market for unrated debt securities is
even narrower. During periods of thin trading in these markets,
the spread between bid and asked prices is likely to increase
significantly, and the Fund may have greater difficulty selling
its portfolio securities.

The federal bankruptcy statutes relating to the debts of
political subdivisions and authorities of states of the United
States provide that, in certain circumstances, such subdivisions
or authorities may be authorized to initiate bankruptcy
proceedings without prior notice to or consent of creditors, which
proceedings could result in material and adverse changes in the
rights of holders of their obligations.

Lawsuits challenging the validity under state constitutions
of present systems of financing public education have been
initiated or adjudicated in a number of states, and legislation
has been introduced to effect changes in public school financing
in some states. In other instances there have been lawsuits
challenging the issuance of pollution control revenue bonds or the
validity of their issuance under state or federal law which could
ultimately affect the validity of those Municipal Securities or
the tax-free nature of the interest thereon. In addition, from
time to time proposals have been introduced in Congress to
restrict or eliminate the federal income tax exemption for
interest on Municipal Securities, and similar proposals may be
introduced in the future. Some of the past proposals would have
applied to interest on Municipal Securities issued before the date
of enactment, which would have adversely affected their value to a
material degree. If such proposals are enacted, the availability
of Municipal Securities for investment by the Funds and the value
of the Funds' portfolios would be affected and, in such an event,
the Funds would reevaluate their investment objectives and
policies.

Because the Funds may invest in industrial development bonds,
the Funds' shares may not be an appropriate investment for
"substantial users" of facilities financed by industrial
development bonds or for "related persons of substantial users."

In addition, the Funds invest in Municipal Securities issued
after the effective date of the Tax Reform Act of 1986 (the "1986
Act"), which may be subject to retroactive taxation if they fail
to continue to comply after issuance with certain requirements
imposed by the 1986 Act.

Although the banks and securities dealers from which a Fund
may acquire repurchase agreements and standby commitments, and the
entities from which a Fund may purchase participation interests in
Municipal Securities, will be those that Stein Roe believes to be
financially sound, there can be no assurance that they will be
able to honor their obligations to the Fund.

* * * * *

Stein Roe seeks to provide superior long-term investment
results through a disciplined, research-intensive approach to
investment selection and prudent risk management. In working to
take sensible risks and make intelligent investments, it has been
guided by three primary objectives which it believes are the
foundation of a successful investment program. These objectives
are preservation of capital, limited volatility through managed
risk, and consistent above-average returns, as appropriate for the
particular client or managed account.

Because every investor's needs are different, Stein Roe
mutual funds are designed to accommodate different investment
objectives, risk tolerance levels, and time horizons. In
selecting a mutual fund, investors should ask the following
questions:

What are my investment goals?
It is important to a choose a fund that has investment objectives
compatible with your investment goals.

What is my investment time frame?
If you have a short investment time frame (e.g., less than three
years), a mutual fund that seeks to provide a stable share price,
such as a money market fund, or one that seeks capital
preservation as one of its objectives may be appropriate. If you
have a longer investment time frame, you may seek to maximize your
investment returns by investing in a mutual fund that offers
greater yield or appreciation potential in exchange for greater
investment risk.

What is my tolerance for risk?
All investments, including those in mutual funds, have risks which
will vary depending on investment objective and security type.
However, mutual funds seek to reduce risk through professional
investment management and portfolio diversification.

In general, equity mutual funds emphasize long-term capital
appreciation and tend to have more volatile net asset values than
bond or money market mutual funds. Although there is no guarantee
that they will be able to maintain a stable net asset value of
$1.00 per share, money market funds emphasize safety of principal
and liquidity, but tend to offer lower income potential than bond
funds. Bond funds tend to offer higher income potential than
money market funds but tend to have greater risk of principal and
yield volatility.

In addition, Stein Roe believes that investment in a high
yield fund provides an opportunity to diversify an investment
portfolio because the economic factors that affect the performance
of high-yield, high-risk debt securities differ from those that
affect the performance of high-quality debt securities or equity
securities.

PURCHASES AND REDEMPTIONS

Purchases Through Third Parties

You may purchase (or redeem) shares through certain broker-
dealers, banks, or other intermediaries ("Intermediaries"). The
state of Texas has asked that investment companies disclose in
their SAIs, as a reminder to any such bank or institution, that it
must be registered as a securities dealer in Texas.
Intermediaries may charge for their services or place limitations
on the extent to which you may use the services offered by the
Trust. It is the responsibility of any such Intermediary to
establish procedures insuring the prompt transmission to the Trust
of any such purchase order. An Intermediary, who accepts orders
that are processed at the net asset value next determined after
receipt of the order by the Intermediary, accepts such orders as
authorized agent or designee of the Fund. The Intermediary is
required to segregate any orders received on a business day after
the close of regular session trading on the New York Stock
Exchange and transmit those orders separately for execution at the
net asset value next determined after that business day.

Some Intermediaries that maintain nominee accounts with the
Funds for their clients for whom they hold Fund shares charge an
annual fee of up to 0.35% of the average net assets held in such
accounts for accounting, servicing, and distribution services they
provide with respect to the underlying Fund shares. Stein Roe and
the Funds' transfer agent share in the expense of these fees, and
Stein Roe pays all sales and promotional expenses.

Net Asset Value

The net asset value of each Fund is determined on days on
which the New York Stock Exchange (the "NYSE") is open for regular
session 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 Board of
Trustees, net asset value of a Fund should be determined on any
such day, in which case the determination will be made at 3 p.m.,
Central time. Please refer to Your Account-Determining Share
Price in the Prospectuses for additional information on how the
purchase and redemption price of Fund shares is determined.

General Redemption Policies

The Trust intends to pay all redemptions in cash and is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or one percent of the net assets during any 90-day period
for any one shareholder. However, redemptions in excess of such
limit may be paid wholly or partly by a distribution in kind of
securities. If redemptions were made in kind, the redeeming
shareholders might incur transaction costs in selling the
securities received in the redemptions.

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

You may not cancel or revoke your redemption order once
instructions have been received and accepted. The Trust cannot
accept a redemption request that specifies a particular date or
price for redemption or any special conditions. Please call 800-
338-2550 if you have any questions about requirements for a
redemption before submitting your request. The Trust reserves the
right to require a properly completed application before making
payment for shares redeemed.

The Trust will generally mail payment for shares redeemed
within seven days after proper instructions are received.
However, the Trust normally intends to pay proceeds of a Telephone
Redemption paid by wire on the next business day. If you attempt
to redeem shares within 15 days after they have been purchased by
check or electronic transfer, the Trust will delay payment of the
redemption proceeds to you until it can verify that payment for
the purchase of those shares has been (or will be) collected. To
reduce such delays, the Trust recommends that your purchase be
made by federal funds wire through your bank.

Generally, you may not use any Special Redemption Privilege
to redeem shares purchased by check (other than certified or
cashiers' checks) or electronic transfer until 15 days after their
date of purchase. The Trust reserves the right at any time
without prior notice to suspend, limit, modify, or terminate any
Privilege or its use in any manner by any person or class.

Neither the Trust, its transfer agent, nor their respective
officers, trustees, directors, employees, or agents will be
responsible for the authenticity of instructions provided under
the Privileges, nor for any loss, liability, cost or expense for
acting upon instructions furnished thereunder if they reasonably
believe that such instructions are genuine. The Funds employ
procedures reasonably designed to confirm that instructions
communicated by telephone under any Special Redemption Privilege
or the Special Electronic Transfer Redemption Privilege are
genuine. Use of any Special Redemption Privilege or the Special
Electronic Transfer Redemption Privilege authorizes the Funds and
their transfer agent to tape-record all instructions to redeem.
In addition, callers are asked to identify the account number and
registration, and may be required to provide other forms of
identification. Written confirmations of transactions are mailed
promptly to the registered address; a legend on the confirmation
requests that the shareholder review the transactions and inform
the Fund immediately if there is a problem. If the Funds do not
follow reasonable procedures for protecting shareholders against
loss on telephone transactions, it may be liable for any losses
due to unauthorized or fraudulent instructions.

Shares in any account you maintain with a Fund or any of the
other Stein Roe Funds may be redeemed to the extent necessary to
reimburse any Stein Roe Fund for any loss you cause it to sustain
(such as loss from an uncollected check or electronic transfer for
the purchase of shares, or any liability under the Internal
Revenue Code provisions on backup withholding).

The Trust reserves the right to suspend or terminate, at any
time and without prior notice, the use of the Telephone Exchange
Privilege by any person or class of persons. The Trust believes
that use of the Telephone Exchange Privilege by investors
utilizing market-timing strategies adversely affects the Funds.
Therefore, regardless of the number of telephone exchange round-
trips made by an investor, the Trust generally will not honor
requests for Telephone Exchanges by shareholders identified by the
Trust as "market-timers" if the officers of the Trust determine
the order not to be in the best interests of the Trust or its
shareholders. The Trust generally identifies as a "market-timer"
an investor whose investment decisions appear to be based on
actual or anticipated near-term changes in the securities markets
other than for investment considerations. Moreover, the Trust
reserves the right to suspend, limit, modify, or terminate, at any
time and without prior notice, the Telephone Exchange Privilege in
its entirety. Because such a step would be taken only if the
Board of Trustees believes it would be in the best interests of
the Funds, the Trust expects that it would provide shareholders
with prior written notice of any such action unless the resulting
delay in the suspension, limitation, modification, or termination
of the Telephone Exchange Privilege would adversely affect the
Funds. If the Trust were to suspend, limit, modify, or terminate
the Telephone Exchange Privilege, a shareholder expecting to make
a Telephone Exchange might find that an exchange could not be
processed or that there might be a delay in the implementation of
the exchange. During periods of volatile economic and market
conditions, you may have difficulty placing your exchange by
telephone.

The Telephone Exchange Privilege and the Telephone Redemption
by Check Privilege will be established automatically for you when
you open your account unless you decline these Privileges on your
application. Other Privileges must be specifically elected. A
signature guarantee may be required to establish a Privilege after
you open your account. If you establish both the Telephone
Redemption by Wire Privilege and the Electronic Transfer
Privilege, the bank account that you designate for both Privileges
must be the same. The Telephone Redemption by Check Privilege,
Telephone Redemption by Wire Privilege, and Special Electronic
Transfer Redemptions may not be used to redeem shares held by a
tax-sheltered retirement plan sponsored by Stein Roe.

Redemption Privileges

Exchange Privilege. You may redeem all or any portion of
your Fund shares and use the proceeds to purchase shares of any
other no-load Stein Roe Fund offered for sale in your state if
your signed, properly completed application is on file. An
exchange transaction is a sale and purchase of shares for federal
income tax purposes and may result in capital gain or loss.
Before exercising the Exchange Privilege, you should obtain the
prospectus for the no-load Stein Roe Fund in which you wish to
invest and read it carefully. The registration of the account to
which you are making an exchange must be exactly the same as that
of the Fund account from which the exchange is made and the amount
you exchange must meet any applicable minimum investment of the
no-load Stein Roe Fund being purchased.

Telephone Exchange Privilege. You may use the Telephone
Exchange Privilege to exchange an amount of $50 or more from your
account by calling 800-338-2550 or by sending a telegram; new
accounts opened by exchange are subject to the $2,500 initial
purchase minimum. Generally, you will be limited to four
Telephone Exchange round-trips per year and the Funds may refuse
requests for Telephone Exchanges in excess of four round-trips (a
round-trip being the exchange out of a Fund into another no-load
Stein Roe Fund, and then back to that Fund). In addition, the
Trust's general redemption policies apply to redemptions of shares
by Telephone Exchange.

Automatic Exchanges. You may use the Automatic Exchange
Privilege to automatically redeem a fixed amount from your Fund
account for investment in another no-load Stein Roe Fund account
on a regular basis ($50 minimum; $100,000 maximum).

Telephone Redemption by Wire Privilege. You may use this
Privilege to redeem shares from your account ($1,000 minimum;
$100,000 maximum) by calling 800-338-2550. The proceeds will be
transmitted by wire to your account at a commercial bank
previously designated by you that is a member of the Federal
Reserve System. The fee for wiring proceeds (currently $7.00 per
transaction) will be deducted from the amount wired.

Telephone Redemption by Check Privilege. You may use the
Telephone Redemption by Check Privilege to redeem an amount of
$1,000 or more from your account by calling 800-338-2550. The
proceeds will be sent by check to your registered address.

Electronic Transfer Privilege. You may redeem shares by
calling 800-338-2550 and requesting an electronic transfer
("Special Redemption") of the proceeds to a bank account
previously designated by you at a bank that is a member of the
Automated Clearing House. You may also request electronic
transfers at scheduled intervals ("Automatic Redemptions"). A
Special Redemption request received by telephone after 3 p.m.,
central time, is deemed received on the next business day. You
may purchase Fund shares directly from your bank account either at
regular intervals ("Regular Investments") or upon your request
("Special Investments"). Electronic transfers are subject to a
$50 minimum and a $100,000 maximum. You may also have income
dividends and capital gains distributions deposited directly into
your bank account ("Automatic Dividend Deposits").

Systematic Withdrawals. You may have a fixed dollar amount,
declining balance, or fixed percentage of your account redeemed
and sent at regular intervals by check to you or another payee.

Dividend Purchase Option. You may have distributions from
one Fund account automatically invested in another no-load Stein
Roe Fund account. Before establishing this option, you should
obtain and read the prospectus of the Stein Roe Fund into which
you wish to have your distributions invested. The account from
which distributions are made must be of sufficient size to allow
each distribution to usually be at least $25.

Check Writing Privilege. Although Municipal Money Fund does
not currently charge a fee to its shareholders for the use of the
special Check-Writing Redemption Privilege, the Fund pays for the
cost of printing and mailing checks to its shareholders and pays
charges of the bank for payment of each check. The Trust reserves
the right to establish a direct charge to shareholders for use of
the Privilege and both the Trust and the bank reserve the right to
terminate this service.

MANAGEMENT

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>
<TABLE>
<CAPTION>
Position(s) held Principal occupation(s)
Name with the Trust during past five years
- ------------------ ------------------------ ---------------------------
<S> <C> <C>
William D. Andrews, 51 Executive Vice-President Executive vice president of Stein Roe

Gary A. Anetsberger, 43(4) Senior Vice-President; Chief financial officer and
Treasurer chief administrative officer of the Mutual Funds
division of Stein Roe; senior vice president of Stein
Roe since April 1996; vice president of Stein Roe
prior thereto

John A. Bacon Jr., 72 Trustee Private investor
(3)(4)

William W. Boyd, 72 Trustee Chairman and director of
(2) (3) (4) Sterling Plumbing (manufacturer of plumbing products)

Thomas W. Butch, 42 (4) President President of the Mutual Funds division and director of
Stein Roe since March 1998; senior vice president of
Stein Roe prior thereto

Kevin M. Carome, 43 (4) Executive Vice-President; Senior vice president,
Assistant Secretary legal, Liberty Funds Group LLC (an affiliate of Stein
Roe) since Jan. 1999; general 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

J. Kevin Connaughton,35(4) Vice-President Vice president of Colonial Management Associates, Inc.
("CMA") , since February 1998; senior tax manager,
Coopers & Lybrand, LLP from April 1996 to January
1998; vice president, 440 Financial Group/First Data
Investor Services Group prior thereto

Lindsay Cook, 47 (1)(2)(4) Trustee Executive vice president of Liberty Financial
Companies, Inc. since March 1997; senior vice
president prior thereto

Joanne T. Costopoulos, 52 Vice-President Senior portfolio manager of Stein Roe; senior vice
president of Stein Roe since Nov. 1995; vice president
of Stein Roe prior thereto

Douglas A. Hacker,44(3)(4) Trustee Senior vice president and chief financial officer of
UAL, Inc. (airline)

Loren A. Hansen, 51 (4) Executive Vice-President Chief investment officer/equity of Colonial Management
Associates, Inc. since 1997; executive vice president
of Stein Roe since Dec. 1995; vice president of The
Northern Trust (bank) prior thereto

Brian M. Hartford, ___ Vice-President Employee of Stein Roe since Nov. 1998; vice president
of CMA since 1993

Timothy J. Jacoby, 47 (4) Vice-President Fund treasurer for Liberty Funds Group LLC since Sept.
1996 and chief financial officer since Aug. 1997;
senior vice president of Fidelity Investments prior
thereto

Janet Langford Kelly, 41 Trustee Senior vice president,
(3) (4) secretary and general counsel of Sara Lee Corporation
(branded, packaged, consumer-products manufacturer)
since 1995; partner, Sidley & Austin (law firm) prior
thereto

Gail D. Knudsen, 37 (4) Vice-President Vice president and assistant controller of CMA

William C. Loring, Jr.,49 Vice-President Vice president of Stein Roe since Nov. 1998; vice
president of CMA

Lynn C. Maddox, 58 Vice-President Senior vice president of Stein Roe

Charles R. Nelson,57(3)(4) Trustee Van Voorhis Professor of Political Economy of the
University of Washington

Maureen G. Newman, 40 (4) Vice-President Vice President of Stein Roe since Nov. 1998; portfolio
manager and vice president of CMA since May 1996;
portfolio manager and bond analyst at Fidelity
Investments prior thereto

Nicolette D. Parrish, 49 Vice-President; Senior legal assistant and
(4) Assistant Secretary assistant secretary of Stein Roe

Janet B. Rysz, 44 (4) Assistant Secretary Senior legal assistant and assistant secretary of
Stein Roe

Thomas C. Theobald, 62 Trustee Managing director, William
(3) (4) Blair Capital Partners (private equity fund)

Sharlene A. Thomas, 37 (4) Vice-President Assistant vice president of mutual fund sales &
service of Stein Roe since Feb. 1999; manager of
mutual fund sales & services of Stein Roe from March
1997 to Feb. 1999; account executive with Stein Roe's
Counselor department prior thereto

Veronica M. Wallace, 53(4) Vice-President Vice president of Stein Roe since March 1998;
portfolio manager for Stein Roe since Sept. 1995;
trader in taxable short-term instruments for Stein Roe
prior thereto

Heidi J. Walter, 32 (4) Vice-President; Secretary Vice president of Stein Roe since March 1998; senior
legal counsel for Stein Roe since Feb. 1998; legal
counsel for Stein Roe from March 1995 to Jan. 1998;
associate with Beeler Schad & Diamond, PC (law firm)
prior thereto
<FN>
____________________________
(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.
(4) This person also holds the corresponding officer or trustee
position with SR&F Base Trust.
</TABLE>

Certain of the trustees and officers of the Trust and SR&F
Base Trust are trustees or officers of other investment companies
managed by Stein Roe. Mr. Anetsberger, Mr. Butch, and Ms. Walter
are also officers of Liberty Funds Distributor, Inc., the Funds'
distributor. The address of Mr. Bacon is 4N640 Honey Hill Road,
Box 296, Wayne, IL 60184; that of Mr. Boyd is 2900 Golf Road,
Rolling Meadows, IL 60008; that of Mr. Cook is 600 Atlantic
Avenue, Boston, MA 02210; that of Mr. Hacker is P.O. Box 66100,
Chicago, IL 60666; that of Ms. Kelly is Three First National
Plaza, Chicago, IL 60602; that of Mr. Nelson is Department of
Economics, University of Washington, Seattle, WA 98195; that of
Mr. Theobald is Suite 1300, 222 West Adams Street, Chicago, IL
60606; that of Mr. Connaughton, Mr. Hartford, Mr. Jacoby, Ms.
Knudsen, Mr. Loring and Ms. Newman is One Financial Center,
Boston, MA 02111; and that of the officers is One South Wacker
Drive, Chicago, IL 60606.

Officers and trustees affiliated with Stein Roe serve without
any compensation from the Trust. In compensation for their
services to the Trust, trustees who are not "interested persons"
of the Trust or Stein Roe are paid an annual retainer plus an
attendance fee for each meeting of the Board or standing committee
thereof attended. The Trust has no retirement or pension plan.
The following table sets forth compensation paid during the fiscal
year ended June 30, 1999, to each of the trustees:

Compensation from the
Stein Roe Fund Complex*
-----------------------
Aggregate Compensation Total Average
Name of Trustee from the Trust Compensation Per Series
- ------------------- -------------------- ------------ ----------
Thomas W. Butch** -0- -0- -0-
Lindsay Cook -0- -0- -0-
John A. Bacon Jr.** $8,300 $101,150 $2,199
William W. Boyd 8,400 102,300 2,224
Douglas A. Hacker 7,300 87,700 1,907
Janet Langford Kelly 8,000 97,200 2,113
Charles R. Nelson 8,400 102,100 2,220
Thomas C. Theobald 8,000 97,200 2,113
_______________
* At June 30, 1999, the Stein Roe Fund Complex consisted of four
series of the Trust, one series of Stein Roe Trust, four series
of Stein Roe Income Trust, 12 series of Stein Roe Investment
Trust, five series of Liberty-Stein Roe Advisor Trust, five
series of SteinRoe Variable Investment Trust, 12 portfolios of
SR&F Base Trust, Stein Roe Floating Rate Income Fund, Stein Roe
Institutional Floating Rate Income Fund, and Stein Roe Floating
Rate Limited Liability Company.
**Mr. Butch served as a trustee until Nov. 3, 1998; Mr. Bacon was
elected a trustee effective Nov. 3, 1998.

FINANCIAL STATEMENTS

Please refer to the June 30, 1999 Financial Statements
(statements of assets and liabilities and schedules of investments
as of June 30, 1999 and the statements of operations, changes in
net assets, and notes thereto) and the report of independent
auditors contained in the June 30, 1999 Annual Report of the
Funds. The Financial Statements and the report of independent
auditors (but no other material from the Annual Report) are
incorporated herein by reference. The Annual Report may be
obtained at no charge by telephoning 800-338-2550.

PRINCIPAL SHAREHOLDERS

As of July 30, 1999, the only persons known by the Trust to
own of record or "beneficially" 5% or more of the outstanding
shares of any Fund within the definition of that term as contained
in Rule 13d-3 under the Securities Exchange Act of 1934 were as
follows:

Approximate %
of Outstanding
Name and Address Fund Shares Held
- ---------------------- ---------------------- --------------
U.S. Bank National Municipal Money Fund
Association* Intermediate Municipals Fund
410 N. Michigan Avenue Managed Municipals Fund
Chicago, IL 60611 High-Yield Municipals Fund

Charles Schwab & Co., Inc.** Intermediate Municipals Fund 13.1%
Attn: Mutual Fund Dept. High-Yield Municipals Fund 11.0%
101 Montgomery Street
San Francisco, CA 94104
______________
*Shares held as custodian.
**Shares held for accounts of customers.

The following table shows shares of the Funds as of July 30,
1999, held by the categories of persons indicated and in each case
the approximate percentage of outstanding shares represented:

Clients of Stein Roe
in their Client Accounts* Trustees and Officers
------------------------- ------------------
Shares Held Percent Shares Held Percent
---------- ------- ----------- -------
Municipal Money
Fund 39,009,300 34.0% **
Intermediate
Municipals Fund 5,345,643 36.9% **
Managed Municipals
Fund 14,087,083 23.9% **
High-Yield
Municipals Fund 6,342,710 25.2% **
_________________
*Stein Roe may have discretionary authority over such shares and,
accordingly, they could be deemed to be owned "beneficially" by
Stein Roe under Rule 13d-3. However, Stein Roe disclaims actual
beneficial ownership of such shares.
**Represents less than 1% of the outstanding shares.

INVESTMENT ADVISORY AND OTHER SERVICES

Stein Roe & Farnham Incorporated serves as investment adviser
to Intermediate Municipals Fund, Managed Municipals Fund, High-
Yield Municipals Portfolio, and Municipal Money Portfolio. Stein
Roe also provides administrative services to each Fund and
Portfolio. Stein Roe is a wholly owned subsidiary of SteinRoe
Services Inc. ("SSI"), the Funds' transfer agent, which is a
wholly owned subsidiary of Liberty Financial Companies, Inc.
("Liberty Financial"), which is a majority owned subsidiary of
Liberty Corporate Holdings, Inc., which is a wholly owned
subsidiary of LFC Holdings, Inc., which is a wholly owned
subsidiary of Liberty Mutual Equity Corporation, which is a wholly
owned subsidiary of Liberty Mutual Insurance Company. Liberty
Mutual Insurance Company is a mutual insurance company,
principally in the property/casualty insurance field, organized
under the laws of Massachusetts in 1912.

The directors of Stein Roe are Kenneth R. Leibler, C. Allen
Merritt, Jr., and Thomas W. Butch. Mr. Leibler is President and
Chief Executive Officer of Liberty Financial; Mr. Merritt is Chief
Operating Officer of Liberty Financial; and Mr. Butch is President
of Stein Roe's Mutual Funds division. The business address of
Messrs. Leibler and Merritt is Federal Reserve Plaza, Boston, MA
02210; and that of Mr. Butch is One South Wacker Drive, Chicago,
IL 60606.

Stein Roe and its predecessor have been providing investment
advisory services since 1932. Stein Roe acts as investment
adviser to wealthy individuals, trustees, pension and profit
sharing plans, charitable organizations, and other institutional
investors. As of June 30, 1999, Stein Roe managed over $22.2
billion in assets: over $6.3 billion in equities and over $15.9
billion in fixed income securities (including $1 billion in
municipal securities). The $22.2 billion in managed assets
included over $9.2 billion held by mutual funds managed by Stein
Roe (approximately 15% of the mutual fund assets were held by
clients of Stein Roe). These mutual funds were owned by over
282,000 shareholders. The $9.2 billion in mutual fund assets
included over $679 million in over 42,000 IRA accounts. In
managing those assets, Stein Roe utilizes a proprietary computer-
based information system that maintains and regularly updates
information for approximately 7,500 companies. Stein Roe also
monitors over 1,400 issues via a proprietary credit analysis
system. At June 30, 1999, Stein Roe employed 18 research analysts
and 54 account managers. The average investment-related
experience of these individuals was 17 years.

Stein Roe Counselor [SERVICE MARK] is a professional
investment advisory service offered by Stein Roe to Fund
shareholders. Stein Roe Counselor [SERVICE MARK] is designed to
help shareholders construct Fund investment portfolios to suit
their individual needs. Based on information shareholders provide
about their financial goals and objectives in response to a
questionnaire, Stein Roe's investment professionals create
customized portfolio recommendations. Shareholders participating
in Stein Roe Counselor [SERVICE MARK] are free to self direct
their investments while considering Stein Roe's recommendations.
In addition to reviewing shareholders' goals and objectives
periodically and updating portfolio recommendations to reflect any
changes, Stein Roe provides shareholders participating in these
programs with dedicated representatives. Other distinctive
services include specially designed account statements with
portfolio performance and transaction data, asset allocation
planning tools, newsletters, customized website content, and
regular investment, economic and market updates. A $50,000
minimum investment is required to participate in the program.

In return for its services, Stein Roe is entitled to receive
a monthly administrative fee from each Fund and a monthly
management fee from Intermediate Municipals Fund, Managed
Municipals Fund, and each Portfolio. The table below shows the
annual rates of such fees as a percentage of average net assets,
gross fees paid for the three most recent fiscal years, and any
expense reimbursements by Stein Roe:

<TABLE>
<CAPTION>
Fund/Portfolio

Current Rates Year Ended Year Ended Year Ended
Fund/Portfolio Type (dollars shown in millions) 6/30/99 6/30/98 6/30/97
- -------------------- ------------- --------------------------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Municipal Money Fund Administrative
fee .250% up to $500 million,
.200% next $500 million,
.150% thereafter $ 301,461 $ 308,403 $ 300,244
Reimbursement Expenses exceeding .70% 107,768 195,244 194,629
Municipal Money
Portfolio Management fee .250% 338,618 358,516 351,742
Intermediate Munici-
pals Fund Management fee .450% up to $100 million,
.425% next $100 million,
.400% thereafter 850,165 872,480 876,108
Administrative
fee .150% up to $100 million,
.125% next $100 million,
.100% thereafter 267,488 274,116 274,088
Reimbursement Expenses exceeding .70% 179,100 226,022 240,300
Managed Municipals
Fund Management fee .450% up to $100 million,
.425% next $100 million,
.400% next $800 million,
.375% thereafter 2,371,564 2,438,272 2,482,110
Administrative
fee .150% up to $100 million,
.125% next $100 million,
.100% next $800 million,
.075% thereafter 649,141 665,818 674,444
High-Yield Munici-
pals Fund Management fee - - 803,747 1,255,595
Administrative
fee .150% up to $100 million,
.125% next $100 million,
.100% thereafter 423,919 401,552 368,923
High-Yield Munici-
pals Portfolio Management fee .450% up to $100 million,
.425% next $100 million,
.400% thereafter 1,399,418 579,690 -
</TABLE>

Stein Roe provides office space and executive and other
personnel to the Funds and bears any sales or promotional
expenses. Each Fund pays all expenses other than those paid by
Stein Roe, including but not limited to printing and postage
charges, securities registration and custodian fees, and expenses
incidental to its organization.

The administrative agreement provides that Stein Roe shall
reimburse each Fund to the extent that total annual expenses of
the Fund (including fees paid to Stein Roe, but excluding taxes,
interest, brokers' commissions and other normal charges incident
to the purchase and sale of portfolio securities, and expenses of
litigation to the extent permitted under applicable state law)
exceed the applicable limits prescribed by any state in which the
shares of such Fund are being offered for sale to the public;
however, such reimbursement for any fiscal year will not exceed
the amount of the fees paid by the Fund under that agreement for
such year. In addition, in the interest of further limiting
expenses, from time to time, Stein Roe may waive its fees and/or
absorb certain expenses for a Fund. Any such reimbursements will
enhance the yield of such Fund.

Each management 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 (or Portfolio) for any
error of 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 agreement, except for liability
resulting from willful misfeasance, bad faith or gross negligence
on Stein Roe's part in the performance of its duties or from
reckless disregard by Stein Roe of its obligations and duties
under that agreement.

Any expenses that are attributable solely to the
organization, operation, or business of a series of the Trust are
paid solely out of the assets of that series. Any expenses
incurred by the Trust that are not solely attributable to a
particular series are apportioned in such a manner as Stein Roe
determines is fair and appropriate, unless otherwise specified by
the Board of Trustees.

Bookkeeping and Accounting Agreement

Pursuant to a separate agreement with the Trust, Stein Roe
receives a fee for performing certain bookkeeping and accounting
services. For these services, Stein Roe receives an annual fee of
$25,000 per Fund plus .0025 of 1% of average net assets over $50
million. During the fiscal years ended June 30, 1997, 1998 and
1999, Stein Roe received aggregate fees of $125,437, $125,832 and
$125,858, respectively, from the Trust for services performed
under this agreement.

DISTRIBUTOR

Shares of the Funds are distributed by Liberty Funds
Distributor, Inc. ("Distributor"), One Financial Center, Boston,
MA 02111, under a Distribution Agreement. The Distributor is a
subsidiary of Colonial Management Associates, Inc., which is an
indirect subsidiary of Liberty Financial. The Distribution
Agreement continues in effect from year to year, provided such
continuance is approved annually (1) by a majority of the trustees
or by a majority of the outstanding voting securities of the
Trust, and (2) by a majority of the trustees who are not parties
to the Agreement or interested persons of any such party. The
Trust has agreed to pay all expenses in connection with
registration of its shares with the Securities and Exchange
Commission and auditing and filing fees in connection with
registration of its shares under the various state blue sky laws
and assumes the cost of preparation of prospectuses and other
expenses.

As agent, the Distributor offers shares of the Funds to
investors in states where the shares are qualified for sale, at
net asset value, without sales commissions or other sales load to
the investor. No sales commission or "12b-1" payment is paid by
any Fund. The Distributor offers the Funds' shares only on a
best-efforts basis.

TRANSFER AGENT

SteinRoe Services Inc. ("SSI"), One South Wacker Drive,
Chicago, IL 60606, is the agent of the Trust for the transfer of
shares, disbursement of dividends, and maintenance of shareholder
accounting records. For performing these services, SSI receives
payments from Municipal Money Fund of 0.150% of average daily net
assets and payments from Intermediate Municipals Fund, Managed
Municipals Fund, and High-Yield Municipals Fund of 0.140% of
average daily net assets. The Board of Trustees believes the
charges by SSI are comparable to those of other companies
performing similar services. (See Investment Advisory and Other
Services.) Under a separate agreement, SSI also provides certain
investor accounting services to each Portfolio.

CUSTODIAN

State Street Bank and Trust Company, 225 Franklin Street,
Boston, MA 02101, is the custodian for the Trust and SR&F Base
Trust. It is responsible for holding all securities and cash,
receiving and paying for securities purchased, delivering against
payment securities sold, receiving and collecting income from
investments, making all payments covering expenses, and performing
other administrative duties, all as directed by authorized
persons. The custodian 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. The
Trusts have authorized the custodian to deposit certain portfolio
securities in central depository systems as permitted under
federal law. The Funds may invest in obligations of the custodian
and may purchase or sell securities from or to the custodian.

INDEPENDENT AUDITORS

The independent auditors for the Trust and each Portfolio are
Ernst & Young LLP, 200 Clarendon Street, Boston, MA 02116. The
independent auditors audit and report on the annual financial
statements, review certain regulatory reports and the federal
income tax returns, and perform other professional accounting,
auditing, tax and advisory services when engaged to do so by the
Trusts.

PORTFOLIO TRANSACTIONS

For the purposes of discussion under Portfolio Transactions,
the term "Fund" refers to Municipal Money Fund, Municipal Money
Portfolio, Intermediate Municipals Fund, Managed Municipals Fund,
High-Yield Municipals Fund, and High-Yield Municipals Portfolio.

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"). Portfolio securities are purchased both in
underwritings and in the over-the-counter market. The Funds paid
no commissions on futures transactions or any other transactions
during the past three fiscal years. Included in the price paid to
an underwriter of a portfolio security is the spread between the
price paid by the underwriter to the issuer and the price paid by
the purchaser. Purchases and sales of portfolio securities in the
over-the-counter market usually are transacted with a broker or
dealer on a net basis, without any brokerage commission being paid
by a Fund, but do reflect the spread between the bid and asked
prices. Stein Roe may also transact purchases of portfolio
securities directly with the issuers.

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.

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, 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 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 National
Securities Dealers, Inc. and subject to seeking best executing 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 brokers-dealer.

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 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.
* 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 uses soft dollars to obtain
products that have both research and non-research purposes.
Examples of non-research uses are administrative and marketing
functions. These are referred to as "mixed use" products. As of
the date of this SAI, Stein Roe acquires two mixed use products.
These are (i) a fixed income security data service and (ii) a
mutual fund performance ranking service. 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.

The Board of Trustees of each Trust has reviewed the legal
aspects and the practicability of attempting to recapture
underwriting discounts or selling concessions included in prices
paid by the Funds for purchases of Municipal Securities in
underwritten offerings. Each Fund attempts to recapture selling
concessions on purchases during underwritten offerings; however,
the Adviser will not be able to negotiate discounts from the fixed
offering price for those issues for which there is a strong
demand, and will not allow the failure to obtain a discount to
prejudice its ability to purchase an issue. Each Board
periodically reviews efforts to recapture concessions and whether
it is in the best interests of the Funds to continue to attempt to
recapture underwriting discounts or selling concessions.

ADDITIONAL INCOME TAX CONSIDERATIONS

Each Fund intends to qualify under Subchapter M of the
Internal Revenue Code and to comply with the special provisions of
the Internal Revenue Code that relieve it of federal income tax to
the extent of its net investment income and capital gains
currently distributed to shareholders. Throughout this section,
the term "Fund" also refers to a Portfolio.

Each Fund intends to distribute substantially all of its
income, tax-exempt and taxable, including any net realized capital
gains, and thereby be relieved of any federal income tax liability
to the extent of such distributions. Each Fund intends to retain
for its shareholders the tax-exempt status with respect to tax-
exempt income received by the Fund. The distributions will be
designated as "exempt-interest dividends," taxable ordinary
income, and capital gains. The Funds may also invest in Municipal
Securities the interest on which is subject to the federal
alternative minimum tax. The source of exempt-interest dividends
on a state-by-state basis and the federal income tax status of all
distributions will be reported to shareholders annually. Such
report will allocate income dividends between tax-exempt, taxable
income, and alternative minimum taxable income in approximately
the same proportions as that Fund's total income during the year.
Accordingly, income derived from each of these sources by a Fund
may vary substantially in any particular distribution period from
the allocation reported to shareholders annually. The proportion
of such dividends that constitutes taxable income will depend on
the relative amounts of assets invested in taxable securities, the
yield relationships between taxable and tax-exempt securities, and
the period of time for which such securities are held. Each Fund
may, under certain circumstances, temporarily invest its assets so
that less than 80% of gross income during such temporary period
will be exempt from federal income taxes. (See Investment
Policies.)

Because capital gains distributions reduce net asset value,
if a shareholder purchases shares shortly before a record date he
will, in effect, receive a return of a portion of his investment
in such distribution. The distribution would nonetheless be
taxable to him, even if the net asset value of shares were reduced
below his cost. However, for federal income tax purposes the
shareholder's original cost would continue as his tax basis.

Because the taxable portion of each Fund's investment income
consists primarily of interest, none of its dividends, whether or
not treated as "exempt-interest dividends," will qualify under the
Internal Revenue Code for the dividends received deduction
available to corporations.

Interest on indebtedness incurred or continued by
shareholders to purchase or carry shares of a Fund is not
deductible for federal income tax purposes. Under rules applied
by the Internal Revenue Service to determine whether borrowed
funds are used for the purpose of purchasing or carrying
particular assets, the purchase of shares may, depending upon the
circumstances, be considered to have been made with borrowed funds
even though the borrowed funds are not directly traceable to the
purchase of shares.

If you redeem at a loss shares of a Fund held for six months
or less, that loss will not be recognized for federal income tax
purposes to the extent of exempt-interest dividends you have
received with respect to those shares. If any such loss exceeds
the amount of the exempt-interest dividends you received, that
excess loss will be treated as a long-term capital loss to the
extent you receive any long-term capital gain distribution with
respect to those shares.

Persons who are "substantial users" (or persons related
thereto) of facilities financed by industrial development bonds
should consult their own tax advisors before purchasing shares.
Such persons may find investment in the Funds unsuitable for tax
reasons. Corporate investors may also wish to consult their own
tax advisors before purchasing shares. In addition, certain
property and casualty insurance companies, financial institutions,
and United States branches of foreign corporations may be
adversely affected by the tax treatment of the interest on
Municipal Securities.

INVESTMENT PERFORMANCE

Municipal Money Fund

Municipal Money Fund may quote a "Current Yield" or
"Effective Yield" or both 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. A "Tax-
Equivalent Yield" is computed by dividing the portion of the
"Yield" that is tax-exempt by one minus a stated income tax rate
and adding the product to that portion, if any, of the yield that
is not tax-exempt.

The Yields are then computed as follows:

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 Yields of Municipal Money Fund for the
seven-day period ended June 30, 1999, were:

$0.0005525479 365
------------- ---
Current Yield = $1.00 x 7 = 2.74%

[1+$0.000525479]365/7
---------------------
Effective Yield = $1.00 - 1 = 2.78%

Tax-Equivalent Current Yield = 4.53% (assuming 39.6% tax rate)
Tax-Equivalent Effective Yield = 4.60% (assuming 39.6% tax rate)

The average dollar-weighted portfolio maturity for the seven
days ended June 30, 1999, was 45 days.

In addition to fluctuations reflecting changes in net income
of the Fund, resulting from changes in its proportionate share of
Municipal Money Portfolio's investment income and expenses, the
Fund's yield also would be affected if the Fund or Municipal Money
Portfolio were to restrict or supplement their respective
dividends in order to maintain a net asset value at $1.00 per
share. Asset changes resulting from net purchases or net
redemptions may affect yield. Accordingly, the 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. The Fund's
yield is not assured and its principal is not insured; however,
the Fund will attempt to maintain its net asset value per share at
$1.00.

Comparison of the Fund's yield with those of alternative
investments (such as savings accounts, various types of bank
deposits, and other money market funds) should be made with
consideration of differences between the Fund and the alternative
investments, differences in the periods and methods used in the
calculation of the yields being compared, and the impact of income
taxes on alternative investments.

Intermediate Municipals Fund, Managed Municipals Fund, and High-
Yield Municipals Fund

Intermediate Municipals Fund, Managed Municipals Fund, and
High-Yield Municipals Fund may quote yield figures from time to
time. The "Yield" of a Fund is computed by dividing the net
investment income per share earned during a 30-day period (using
the average number of shares entitled to receive dividends) by the
net asset value per share on the last day of the period. The
Yield formula provides for semiannual compounding which assumes
that net investment income is earned and reinvested at a constant
rate and annualized at the end of a six-month period. A "Tax-
Equivalent Yield" is computed by dividing the portion of the Yield
that is tax-exempt by one minus a stated income tax rate and
adding the product to that portion, if any, of the Yield that is
not tax-exempt.

6
The Yield formula is as follows: YIELD = 2[((a-b/cd) +1) - 1]

Where: a = dividends and interest earned during the period.
(For this purpose, the Fund will recalculate the
yield to maturity based on market value of each
portfolio security on each business day on which net
asset value is calculated.)
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the ending net asset value of the Fund for the period.

For example, the Yields of the Funds for the 30-day period
ended June 30, 1999, were:

Intermediate Municipals Fund
Yield = 4.08%
Tax-Equivalent Yield = 6.75%
(assuming 39.6% tax rate)

Managed Municipals Fund
Yield = 4.67%
Tax-Equivalent Yield = 7.72%
(assuming 39.6% tax rate)

High-Yield Municipals Fund
Yield = 4.67%
Tax-Equivalent Yield = 7.73%
(assuming 39.6% tax rate)

All Funds

Each Fund may quote total return figures from time to time.
A "Total Return" on a per share basis is the amount of dividends
distributed per share plus or minus the change in the net asset
value per share for a period. A "Total Return Percentage" may be
calculated by dividing the value of a share at the end of a period
(including reinvestment of distributions) by the value of the
share at the beginning of the period and subtracting one. For a
given period, an "Average Annual Total Return" may be computed by
finding the average annual compounded rate that would equate a
hypothetical initial amount invested of $1,000 to the ending
redeemable value. A Fund may also quote tax-equivalent total
return figures or other tax-equivalent measures of performance.

n
Average Annual Total Return is computed as follows: ERV = P(1+T)

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 a Fund, the "Total
Return," the "Total Return Percentage," and the "Average Annual
Total Return" at June 30, 1999, were:

TOTAL RETURN AVERAGE ANNUAL
FUND TOTAL RETURN PERCENTAGE TOTAL RETURN
- --------------------- ------------ ------------ -------------
Municipal Money Fund
1 year $ 1,027 2.73% 2.73%
5 years 1,160 15.99 3.01
10 years 1,374 37.40 3.23

Intermediate Municipals Fund
1 year 1,028 2.08 2.08
5 years 1,313 31.28 5.59
10 years 1,878 87.83 6.51

Managed Municipals Fund
1 year 1,017 1.67 1.67
5 years 1,361 36.12 6.36
10 years 1,947 94.65 6.89

High-Yield Municipals Fund
1 year 1,032 3.18 3.18
5 years 1,412 41.17 7.14
10 years 1,962 96.17 6.97

Investment performance figures assume reinvestment of all
dividends and distributions, and do not take into account any
federal, state, or local income taxes which shareholders must pay
on a current basis. 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 investment performance information 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.

A Fund may note its mention in newspapers, magazines, or
other media from time to time. However, the Funds assume no
responsibility for the accuracy of such data. Newspapers and
magazines that might mention the Funds include, but are not
limited to, the following:

Architectural Digest
Arizona Republic
Atlanta Constitution
Atlantic Monthly
Associated Press
Barron's
Bloomberg
Boston Globe
Boston Herald
Business Week
Chicago Tribune
Chicago Sun-Times
Cleveland Plain Dealer
CNBC
CNN
Crain's Chicago Business
Consumer Reports
Consumer Digest
Dow Jones Investment Advisor
Dow Jones Newswire
Fee Advisor
Financial Planning
Financial World
Forbes
Fortune
Fund Action
Fund Marketing Alert
Gourmet
Individual Investor
Investment Dealers' Digest
Investment News
Investor's Business Daily
Kiplinger's Personal Finance Magazine
Knight-Ridder
Lipper Analytical Services
Los Angeles Times
Louis Rukeyser's Wall Street
Money
Money on Line
Morningstar
Mutual Fund Market News
Mutual Fund News Service
Mutual Funds Magazine
Newsday
Newsweek
New York Daily News
The New York Times
No-Load Fund Investor
Pension World
Pensions and Investment
Personal Investor
Physicians Financial News
Jane Bryant Quinn (syndicated column)
Reuters
The San Francisco Chronicle
Securities Industry Daily
Smart Money
Smithsonian
Strategic Insight
Street.com
Time
Travel & Leisure
USA Today
U.S. News & World Report
Value Line
The Wall Street Journal
The Washington Post
Working Women
Worth
Your Money

In advertising and sales literature, a Fund may compare its
yield and 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. Comparison of a Fund to an alternative investment
should be made with consideration of differences in features and
expected performance. All of the indexes and averages noted below
will be obtained from the indicated sources or reporting services,
which the Funds believe to be generally accurate.

All of the Funds may compare their performance to the
Consumer Price Index (All Urban), a widely-recognized measure of
inflation.

Municipal Money Fund

Municipal Money Fund may compare its yield to the average
yield of the following: Donoghue's Money Fund Averages(tm)-
Stockbroker and General Purpose categories; and the Lipper All
Short-Term Tax-Free Categories(tm).

Municipal Money Fund may also compare its tax-equivalent
yield to the average rate for the taxable fund category for the
aforementioned services. Should these services reclassify the
Fund into a different category or develop (and place the Fund
into) a new category, the Fund may compare its performance, rank,
or yield with those of other funds in the newly-assigned category
as published by the service.

Investors may desire to compare Municipal Money Fund's
performance and features to that of various bank products. The
Fund may compare its tax-equivalent yield to the average rates of
bank and thrift institution money market deposit accounts, Super
N.O.W. accounts, and certificates of deposit. The rates published
weekly by the BANK RATE MONITOR(c), a North Palm Beach (Florida)
financial reporting service, in its BANK RATE MONITOR(c) National
Index are averages of the personal account rates offered on the
Wednesday prior to the date of publication by one hundred leading
banks and thrift institutions in the top ten Consolidated Standard
Metropolitan Statistical Areas. Account minimums range upward
from $2,500 in each institution and compounding methods vary.
Super N.O.W. accounts generally offer unlimited checking, while
money market deposit accounts generally restrict the number of
checks that may be written. If more than one rate is offered, the
lowest rate is used. Rates are subject to change at any time
specified by the institution. Bank account deposits may be
insured. Shareholder accounts in the Fund are not insured. Bank
passbook savings accounts compete with money market mutual fund
products with respect to certain liquidity features but may not
offer all of the features available from a money market mutual
fund, such as check writing. Bank passbook savings accounts
normally offer a fixed rate of interest while the yield of the
Fund fluctuates. Bank checking accounts normally do not pay
interest but compete with money market mutual funds with respect
to certain liquidity features (e.g., the ability to write checks
against the account). Bank certificates of deposit may offer
fixed or variable rates for a set term. (Normally, a variety of
terms are available.) Withdrawal of these deposits prior to
maturity will normally be subject to a penalty. In contrast,
shares of the Fund are redeemable at the next determined net asset
value (normally, $1.00 per share) after a request is received,
without charge.

Intermediate Municipals Fund, Managed Municipals Fund, and High-
Yield Municipals Fund

Intermediate Municipals Fund, Managed Municipals Fund, and
High-Yield Municipals Fund may compare performance to the
benchmarks indicated below:

Benchmark Fund(s)
- ------------------------------------ --------------------------
Lehman Brothers Municipal Bond Index High-Yield Municipals
Fund, Managed Municipals
Fund
Lehman Brothers 10-Year Municipal Bond
Index Intermediate Municipals
Fund
Lehman Brothers 7-Year Municipal Bond
Index Intermediate Municipals
Fund
Lipper Intermediate (5-10 year)
Municipal Bond Funds Average Intermediate Municipals
Fund
Lipper General Municipal Bond Funds
Average Managed Municipals Fund
Lipper High-Yield Municipal Bond
Funds Average High-Yield Municipals Fund
Lipper Municipal Bond Fund Average Intermediate Municipals
Fund, Managed Municipals
Fund, High-Yield
Municipals Fund
Morningstar Municipal Bond (General)
Funds Average Managed Municipals Fund,
Intermediate Municipals
Fund
Morningstar Municipal Bond (High-
Yield) Funds Average High-Yield Municipals Fund
Morningstar Long-Term Tax-Exempt
Fund Average High-Yield Municipals
Fund, Intermediate
Municipals Fund, Managed
Municipals Fund

The Lipper and Morningstar averages are unweighted averages
of total return performance of mutual funds as classified,
calculated, and published by these independent services that
monitor the performance of mutual funds. The Funds may also use
comparative performance as computed in a ranking by those services
or category averages and rankings provided by another independent
service. Should these services reclassify a Fund to a different
category or develop (and place a Fund into) a new category, that
Fund may compare its performance or rank with those of other funds
in the newly-assigned category (or the average of such category)
as published by the service.

In advertising and sales literature, a Fund may also cite its
rating, recognition, or other mention by Morningstar or any other
entity. Morningstar's rating system is based on risk-adjusted
total return performance and is expressed in a star-rating format.
The risk-adjusted number is computed by subtracting a fund's risk
score (which is a function of its monthly returns less the 3-month
T-bill return) from its load-adjusted total return score. This
numerical score is then translated into rating categories, with
the top 10% labeled five star, the next 22.5% labeled four star,
the next 35% labeled three star, the next 22.5% labeled two star,
and the bottom 10% one star. A high rating reflects either above-
average returns or below-average risk, or both.

Investors may desire to compare a Fund's performance to that
of various bank products. A Fund may compare its tax-equivalent
yield to the average rates of bank and thrift institution
certificates of deposit. The rates published weekly by the BANK
RATE MONITOR(c), a North Palm Beach (Florida) financial reporting
service, in its BANK RATE MONITOR(c) National Index are averages
of the personal account rates offered on the Wednesday prior to
the date of publication by one hundred leading banks and thrift
institutions in the top ten Consolidated Standard Metropolitan
Statistical Areas. Bank account minimums range upward from $2,500
in each institution and compounding methods vary. Rates are
subject to change at any time specified by the institution. A
Fund's net asset value and investment return will vary. Bank
account deposits may be insured; Fund accounts are not insured.
Bank certificates of deposit may offer fixed or variable rates for
a set term. Withdrawal of these deposits prior to maturity will
normally be subject to a penalty. In contrast, shares of the Fund
are redeemable at the next determined net asset value after a
request is received, without charge.

Intermediate Municipals Fund, Managed Municipals Fund, and
High-Yield Municipals Fund may also compare their respective tax-
equivalent yields to the average rate for the taxable fund
category of the aforementioned services.

Of course, past performance is not indicative of future
results.
________________

To illustrate the historical returns on various types of
financial assets, the Funds may use historical data provided by
Ibbotson Associates, Inc. ("Ibbotson"), a Chicago-based investment
firm. Ibbotson constructs (or obtains) very long-term (since
1926) total return data (including, for example, total return
indexes, total return percentages, average annual total returns
and standard deviations of such returns) for the following asset
types:

Common stocks
Small company stock
Long-term corporate bonds
Long-term government bonds
Intermediate-term government bonds
U.S. Treasury bills
Consumer Price Index

A Fund may also use hypothetical returns to be used as an
example in a mix of asset allocation strategies. One such example
is reflected in the chart below, which shows the effect of tax-
exempt investing on a hypothetical investment. Tax-exempt income,
however, may be subject to state and local taxes and the federal
alternative minimum tax. Marginal tax brackets are based on 1993
federal tax rates and are subject to change. "Joint Return" is
based on two exemptions and "Single return" is based on one
exemption. The results would differ for different numbers of
exemptions.

TAX-EQUIVALENT YIELDS
A taxable
investment must yield the following
Taxable Income (thousands) Marginal to equal a tax-exempt yield of:
- ----------------------------- Tax -----------------------
- -----------
Joint Return Single Return Bracket 4% 5% 6% 7% 8%
- -------------- ------------- -------- ---- ---- ---- ----- -----
$0.0 - 36.9 $0.0 - 22.1 15% 4.71 5.88 7.06 8.24 9.41
$36.9 - 89.2 $22.1 - 53.5 28% 5.56 6.94 8.33 9.72 11.11
$89.2 - 140.0 $53.5 - 115.0 31% 5.80 7.25 8.70 10.14 11.59
$140.0 - 250.0 $115.0 - 250.0 36% 6.25 7.81 9.38 10.94 12.50
$250.0+ $250.0+ 39.6% 6.62 8.28 9.93 11.59 13.25

Dollar Cost Averaging. Dollar cost averaging is an
investment strategy that requires investing a fixed amount of
money in Fund shares at set intervals. This allows you to
purchase more shares when prices are low and fewer shares when
prices are high. Over time, this tends to lower your average cost
per share. Like any investment strategy, dollar cost averaging
can't guarantee a profit or protect against losses in a steadily
declining market. Dollar cost averaging involves uninterrupted
investing regardless of share price and therefore may not be
appropriate for every investor.

From time to time, a Fund may offer in its advertising and
sales literature to send an investment strategy guide, a tax
guide, or other supplemental information to investors and
shareholders. It may also mention the Stein Roe Counselor
[SERVICE MARK] and asset allocation and other investment
strategies.

ADDITIONAL INFORMATION ON NET ASSET VALUE-MUNICIPAL MONEY FUND

For purposes of discussion in this section, the term "Fund"
refers to Municipal Money Fund and to Municipal Money Portfolio.

Please refer to Net Asset Value in the Prospectus, which is
incorporated herein by reference. The Fund values its portfolio
by the "amortized cost method" by which it attempts to maintain
its net asset value at $1.00 per share. This involves 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. Although 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 the
Fund would receive if it sold the instrument. Other assets are
valued at a fair value determined in good faith by the Board of
Trustees.

In connection with the Fund's use of amortized cost and the
maintenance of per share net asset value of $1.00, the Trust has
agreed, with respect to the Fund: (i) to seek to maintain a
dollar-weighted average portfolio maturity appropriate to its
objective of maintaining relative stability of principal and not
in excess of 90 days; (ii) not to purchase a portfolio instrument
with a remaining maturity of greater than thirteen months (for
this purpose the Fund considers that an instrument has a maturity
of thirteen months or less if it is a "short-term" obligation as
defined in the Glossary); and (iii) to limit its purchase of
portfolio instruments to those instruments that are denominated in
U.S. dollars which the Board of Trustees determines present
minimal credit risks and that are of eligible quality as
determined by any major rating service as defined under SEC Rule
2a-7 or, in the case of any instrument that is not rated, of
comparable quality as determined by the Board.

The Fund has also agreed to establish procedures reasonably
designed to stabilize its price per share as computed for the
purpose of sales and redemptions at $1.00. Such procedures
include review of portfolio holdings by the Board of Trustees, at
such intervals as it deems appropriate, to determine whether the
net asset value calculated by using available market quotations or
market equivalents deviates from $1.00 per share based on
amortized cost. Calculations are made to compare the value of its
investments valued at amortized cost with market value. Market
values are obtained by using actual quotations provided by market
makers, estimates of market value, values from yield data obtained
from reputable sources for the instruments, values obtained from
Stein Roe's matrix, or values obtained from an independent pricing
service. Any such service might value the Fund's investments
based on methods which include consideration of: yields or prices
of Municipal Securities of comparable quality, coupon, maturity
and type; indications as to values from dealers; and general
market conditions. The service may also employ electronic data
processing techniques, a matrix system, or both to determine
valuations.

In connection with the use of the amortized cost method of
portfolio valuation to maintain net asset value at $1.00 per
share, the Fund might incur or anticipate an unusual expense,
loss, depreciation, gain or appreciation that would affect its net
asset value per share or income for a particular period. The
extent of any deviation between the Fund's net asset value based
upon available market quotations or market equivalents and $1.00
per share based on amortized cost will be examined by the Board of
Trustees as it deems appropriate. If such deviation exceeds 1/2
of 1%, the Board of Trustees will promptly consider what action,
if any, should be initiated. In the event the Board of Trustees
determines that a deviation exists that may result in material
dilution or other unfair results to investors or existing
shareholders, it will take such action as it considers appropriate
to eliminate or reduce to the extent reasonably practicable such
dilution or unfair results. Actions which the Board might take
include: selling portfolio instruments prior to maturity to
realize capital gains or losses or to shorten average portfolio
maturity; increasing, reducing, or suspending dividends or
distributions from capital or capital gains; or redeeming shares
in kind. The Board might also establish a net asset value per
share by using market values, as a result of which the net asset
value might deviate from $1.00 per share.

MASTER FUND/FEEDER FUND: STRUCTURE AND RISK FACTORS

Each of Municipal Money Fund and High-Yield Municipals Fund
(which are series of the Trust, an open-end management investment
company) seeks to achieve its objective by investing all of its
assets in another mutual fund having an investment objective
identical to that of the Fund. The shareholders of each Fund
approved this policy of permitting a Fund to act as a feeder fund
by investing in a Portfolio. Please refer to Investment Policies,
Portfolio Investments and Strategies, and Investment Restrictions
for a description of the investment objectives, policies, and
restrictions of the Funds and the Portfolios. The management fees
and expenses of the Funds and the Portfolios are described under
Investment Advisory and Other Services. Each feeder Fund bears
its proportionate share of the expenses of its master Portfolio.

Stein Roe has provided investment management services in
connection with other mutual funds employing the master
fund/feeder fund structure since 1991.

Each Portfolio is a separate series of SR&F Base Trust ("Base
Trust"), a Massachusetts common law trust organized under an
Agreement and Declaration of Trust ("Declaration of Trust") dated
Aug. 23, 1993. The Declaration of Trust of Base Trust provides
that a Fund and other investors in a Portfolio will be liable for
all obligations of that Portfolio that are not satisfied by the
Portfolio. However, the risk of a Fund incurring financial loss
on account of such liability is limited to circumstances in which
liability was inadequately insured and a Portfolio was unable to
meet its obligations. Accordingly, the trustees of the Trust
believe that neither the Funds nor their shareholders will be
adversely affected by reason of a Fund's investing in a Portfolio.

The Declaration of Trust of Base Trust provides that a
Portfolio will terminate 120 days after the withdrawal of a Fund
or any other investor in the Portfolio, unless the remaining
investors vote to agree to continue the business of the Portfolio.
The trustees of the Trust may vote a Fund's interests in a
Portfolio for such continuation without approval of the Fund's
shareholders.

The common investment objectives of the Funds and the
Portfolios are nonfundamental and may be changed without
shareholder approval, subject, however, to at least 30 days'
advance written notice to a Fund's shareholders.

The fundamental policies of each Fund and the corresponding
fundamental policies of its master Portfolio can be changed only
with shareholder approval. If a Fund, as a Portfolio investor, is
requested to vote on a change in a fundamental policy of a
Portfolio or any other matter pertaining to the Portfolio (other
than continuation of the business of the Portfolio after
withdrawal of another investor), the Fund will solicit proxies
from its shareholders and vote its interest in the Portfolio for
and against such matters proportionately to the instructions to
vote for and against such matters received from Fund shareholders.
A Fund will vote shares for which it receives no voting
instructions in the same proportion as the shares for which it
receives voting instructions. There can be no assurance that any
matter receiving a majority of votes cast by Fund shareholders
will receive a majority of votes cast by all investors in a
Portfolio. If other investors hold a majority interest in a
Portfolio, they could have voting control over that Portfolio.

In the event that a Portfolio's fundamental policies were
changed so as to be inconsistent with those of the corresponding
Fund, the Board of Trustees of the Trust would consider what
action might be taken, including changes to the Fund's fundamental
policies, withdrawal of the Fund's assets from the Portfolio and
investment of such assets in another pooled investment entity, or
the retention of an investment adviser to invest those assets
directly in a portfolio of securities. A Fund's inability to find
a substitute master fund or comparable investment management could
have a significant impact upon its shareholders' investments. Any
withdrawal of a Fund's assets could result in a distribution in
kind of portfolio securities (as opposed to a cash distribution)
to the Fund. Should such a distribution occur, the Fund would
incur brokerage fees or other transaction costs in converting such
securities to cash. In addition, a distribution in kind could
result in a less diversified portfolio of investments for the Fund
and could affect the liquidity of the Fund.

Each investor in a Portfolio, including a Fund, may add to or
reduce its investment in the Portfolio on each day the NYSE is
open for business. The investor's percentage of the aggregate
interests in the Portfolio will be computed as the percentage
equal to the fraction (i) the numerator of which is the beginning
of the day value of such investor's investment in the Portfolio on
such day plus or minus, as the case may be, the amount of any
additions to or withdrawals from the investor's investment in the
Portfolio effected on such day; and (ii) the denominator of which
is the aggregate beginning of the day net asset value of the
Portfolio on such day plus or minus, as the case may be, the
amount of the net additions to or withdrawals from the aggregate
investments in the Portfolio by all investors in the Portfolio.
The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio as of the close
of business.

Base Trust may permit other investment companies and/or other
institutional investors to invest in a Portfolio, but members of
the general public may not invest directly in the Portfolio.
Other investors in a Portfolio are not required to sell their
shares at the same public offering price as a Fund, might incur
different administrative fees and expenses than the Fund, and
might charge a sales commission. Therefore, Fund shareholders
might have different investment returns than shareholders in
another investment company that invests exclusively in a
Portfolio. Investment by such other investors in a Portfolio
would provide funds for the purchase of additional portfolio
securities and would tend to reduce the operating expenses as a
percentage of the Portfolio's net assets. Conversely, large-scale
redemptions by any such other investors in a Portfolio could
result in untimely liquidations of the Portfolio's security
holdings, loss of investment flexibility, and increases in the
operating expenses of the Portfolio as a percentage of its net
assets. As a result, a Portfolio's security holdings may become
less diverse, resulting in increased risk.

Information regarding other investors in a Portfolio may be
obtained by writing to SR&F Base Trust at Suite 3200, One South
Wacker Drive, Chicago, IL 60606, or by calling 800-338-2550.
Stein Roe may provide administrative or other services to one or
more of such investors.

GLOSSARY

In-the-money. A call option on a futures contract 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 on a futures
contract is "in-the-money" if the exercise price exceeds the value
of the futures contract that is the subject of the option.

Issuer. For purposes of diversification under the Investment
Company Act of 1940, identification of the issuer (or issuers) of
a Municipal Security depends on the terms and conditions of the
obligation. If the assets and revenues of an agency, authority,
instrumentality or other political subdivision are separate from
those of the government creating the subdivision and the
obligation is backed only by the assets and revenues of the
subdivision, such subdivision would be regarded as the sole
issuer. Similarly, if the obligation is backed only by the assets
and revenues of the non-governmental user, the non-governmental
user would be deemed to be the sole issuer. In addition, if the
bond is backed by the full faith and credit of the U.S.
Government, agencies or instrumentalities of the U.S. Government
or U.S. Government Securities, the U.S. Government or the
appropriate agency or instrumentality would be deemed to be the
sole issuer, and would not be subject to the 5% limitation
applicable to investments in a single issuer as described in
restriction number (i) under Investment Restrictions in this SAI.
If, in any case, the creating municipal government or another
entity guarantees an obligation or issues a letter of credit to
secure the obligation, the guarantee (or letter of credit) would
be considered a separate security issued by such government or
entity and would be separately valued and included in the issuer
limitation. In the case of Municipal Money Fund, Municipal Money
Portfolio and Intermediate Municipals Fund, guarantees and letters
of credit described in this paragraph from banks whose credit is
acceptable to these Funds are not restricted in amount by the
restriction against investing more than 25% of their total assets
in securities of non-governmental issuers whose principal business
activities are in the same industry.

Majority of the outstanding voting securities. As used in this
SAI, this term means the lesser of (i) 67% or more of the shares
at a meeting if the holders of more than 50% of the outstanding
shares of the Fund are present or represented by proxy or (ii)
more than 50% of the outstanding shares of the Fund.

Municipal Securities. Municipal Securities are debt obligations
issued by or on behalf of the governments of states, territories
or possessions of the United States, the District of Columbia and
their political subdivisions, agencies and instrumentalities, the
interest on which is generally exempt from the regular federal
income tax.

The two principal classifications of Municipal Securities are
"general obligation" and "revenue" bonds. "General obligation"
bonds are secured by the issuer's pledge of its faith, credit, and
taxing power for the payment of principal and interest. "Revenue"
bonds are usually payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from
the proceeds of a special excise tax or other specific revenue
source. Industrial development bonds are usually revenue bonds,
the credit quality of which is normally directly related to the
credit standing of the industrial user involved. Municipal
Securities may bear either fixed or variable rates of interest.
Variable rate securities bear rates of interest that are adjusted
periodically according to formulae intended to minimize
fluctuation in values of the instruments.

Within the principal classifications of Municipal Securities,
there are various types of instruments, including municipal bonds,
municipal notes, municipal leases, custodial receipts, and
participation certificates. Municipal notes include tax, revenue,
and bond anticipation notes of short maturity, generally less than
three years, which are issued to obtain temporary funds for
various public purposes. Municipal lease securities, and
participation certificates therein, evidence certain types of
interests in lease or installment purchases contract obligations
of a municipal authority or other entity. Custodial receipts
represent ownership in future interest or principal payments (or
both) on certain Municipal Securities and are underwritten by
securities dealers or banks. Some Municipal Securities may not be
backed by the faith, credit, and taxing power of the issuer and
may involve "non-appropriation" clauses which provide that the
municipal authority is not obligated to make lease or other
contractual payments, unless specific annual appropriations are
made by the municipality. Each Fund may invest more than 5% of
its net assets in municipal bonds and notes, but does not expect
to invest more than 5% of its net assets in the other Municipal
Securities described in this paragraph.

Some Municipal Securities are backed by (i) the full faith
and credit of the U.S. Government, (ii) agencies or
instrumentalities of the U.S. Government, or (iii) U.S. Government
Securities.

Repurchase Agreement. A repurchase agreement involves the sale of
securities to the Fund, with the concurrent agreement of the
seller to repurchase the securities at the same price plus an
amount equal to an agreed-upon interest rate, within a specified
time, usually less than one week, but, on occasion, at a later
time. In the event of a bankruptcy or other default of a seller
of a repurchase agreement, the Fund could experience both delays
in liquidating the underlying securities and losses, including:
(a) possible decline in the value of the collateral during the
period while the Fund seeks to enforce its rights thereto; (b)
possible subnormal levels of income and lack of access to income
during this period; and (c) expenses of enforcing its rights.

Reverse Repurchase Agreement. A reverse repurchase agreement is a
repurchase agreement in which the Fund is the seller of, rather
than the investor in, securities and agrees to repurchase them at
an agreed-upon time and price.

Short-term. This term, as used with respect to Municipal Money
Fund and Municipal Money Portfolio, refers to an obligation of one
of the following types, measured from the date of an investment by
the Fund in the obligation (regardless of the duration of the
obligation from the date of original issuance):

1. An obligation of the issuer to pay the entire principal and
accrued interest in no more than thirteen months;

2. An obligation (regardless of the duration before its maturity)
issued or guaranteed by the U.S. Government or by its agencies or
instrumentalities, bearing a variable rate of interest providing
for automatic establishment, no less frequently than annually, of
a new rate or successive new rates of interest by a formula, that
can reasonably be expected to have a market value approximating
its principal amount (a) whenever a new interest rate is
established, in the case of an obligation having a variable rate
of interest, or (b) at any time, in the case of an obligation
having a "floating rate of interest" that changes concurrently
with any change in an identified market interest rate to which it
is pegged;

3. Any other obligation (regardless of the duration before its
maturity) that: (a) has a demand feature entitling the holder to
receive from an issuer the entire principal [or, under the
circumstances described under Investment Policies-Municipal Money
Fund above, the issuer of a guarantee or a letter of credit with
respect to a participation interest in the obligation (acquired
from such issuer)], (i) at any time upon no more than thirty days'
notice or (ii) at specified intervals not exceeding thirteen
months and upon no more than thirty days' notice; (b)(i) has a
variable rate of interest that changes on set dates or (ii) has a
floating rate of interest (as defined in 2 above); and (c) can
reasonably be expected to have a market value approximating its
principal amount (i) whenever a new rate of interest is
established, in the case of an obligation having a variable rate
of interest, or (ii) at any time, in the case of an obligation
having a floating rate of interest; provided that, with respect to
each such obligation that is not rated eligible quality by Moody's
or S&P, the Board of Trustees has determined that the obligation
is of eligible quality; or

4. A repurchase agreement that is to be fully performed (or that
the Fund may require be performed) in not more than thirteen
months (regardless of the maturity of the obligation to which the
repurchase agreement relates).

Variable Rate Demand Security. This type of security is a
Variable Rate Security (as defined in the Prospectus under
Municipal Securities) which has a demand feature entitling the
purchaser to resell the security to the issuer of the demand
feature at an amount approximately equal to amortized cost or the
principal amount thereof, which may be more or less than the price
the Fund paid for it. The interest rate on a Variable Rate Demand
Security also varies either according to some objective standard,
such as an index of short-term tax-exempt rates, or according to
rates set by or on behalf of the issuer.

APPENDIX-RATINGS

Ratings in General. A rating of a rating service represents the
service's opinion as to the credit quality of the security being
rated. However, the ratings are general and are not absolute
standards of quality or guarantees as to the creditworthiness of
an issuer. Consequently, Stein Roe believes that the quality of
Municipal Securities should be continuously reviewed and that
individual analysts give different weightings to the various
factors involved in credit analysis. A rating is not a
recommendation to purchase, sell or hold a security, because it
does not take into account market value or suitability for a
particular investor. When a security has received a rating from
more than one service, each rating should be evaluated
independently. Ratings are based on current information furnished
by the issuer or obtained by the rating services from other
sources that they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability
of such information, or for other reasons. Stein Roe, through
independent analysis, attempts to discern variations in credit
ratings of the published services, and to anticipate changes in
credit ratings. The following is a description of the
characteristics of certain ratings used by Moody's Investors
Service, Inc. ("Moody's"), Standard & Poor's ("S&P"), and Fitch
IBCA.

Ratings by Moody's
Municipal Bonds: Aaa. Bonds rated Aaa are judged to be of the
best quality. They carry the smallest degree of investment risk
and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and
principal is secure. Although the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
bonds.

Aa. Bonds rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as large
as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which
make the long term risks appear somewhat larger than in Aaa bonds.

A. Bonds rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment sometime in the future.

Baa. Bonds rated Baa are considered medium grade obligations;
i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba. Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate, and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.

B. Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.

Caa. Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with
respect to principal or interest.

Ca. Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.

C. Bonds which are rated C are the lowest rated class of bonds,
and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.

Conditional Ratings. Bonds for which the security depends upon
the completion of some act or the fulfillment of some condition
are rated conditionally. These are bonds secured by (a) earnings
of projects under construction, (b) earnings of projects
unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other
limiting condition attaches. Parenthetical rating denotes
probable credit stature upon completion of construction or
elimination of basis of condition.

Note: Moody's applies numerical modifiers 1, 2, and 3 in the Aa
through B classifications of its municipal bond rating system and
in the Aa through Caa classifications of its corporate bond rating
system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.

Municipal Notes: MIG 1. This designation denotes best quality.
There is present strong protection by established cash flows,
superior liquidity support or demonstrated broad-based access to
the market for refinancing.

MIG 2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.

MIG 3. This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well established.

Demand Feature of Variable Rate Demand Securities: Moody's may
assign a separate rating to the demand feature of a variable rate
demand security. Such a rating may include:

VMIG 1. This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for
refinancing.

VMIG 2. This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding
group.

VMIG 3. This designation denotes favorable quality. All security
elements are accounted for but there is lacking the undeniable
strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is
likely to be less well established.

Commercial Paper: Moody's employs the following three
designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers:

Prime-1 Highest Quality
Prime-2 Higher Quality
Prime-3 High Quality

If an issuer represents to Moody's that its Commercial Paper
obligations are supported by the credit of another entity or
entities, Moody's, in assigning ratings to such issuers, evaluates
the financial strength of the indicated affiliated corporations,
commercial banks, insurance companies, foreign governments, or
other entities, but only as one factor in the total rating
assessment.

Corporate Bonds: The description of the applicable rating symbols
and their meanings is identical to that of its Municipal Bond
ratings as set forth above.

Ratings by S&P:
Municipal Bonds: AAA. Bonds rated AAA have the highest rating.
Capacity to pay interest and repay principal is extremely strong.

AA. Bonds rated AA have a very strong capacity to pay interest
and repay principal and differ from the higher rated issues only
in small degree.

A. Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher-rated categories.

BBB. Bonds rated BBB are regarded as having an adequate capacity
to pay principal and interest. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay principal and interest for bonds in this category
than for bonds in higher-rated categories.

BB, B, CCC, CC, and C. Debt rated BB, B, CCC, CC, or C is
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with
the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

C1. The rating C1 is reserved for income bonds on which no
interest is being paid.

D. Debt rated D is in default, and payment of interest and/or
repayment of principal is in arrears. The D rating also is issued
upon the filing of a bankruptcy petition if debt service payments
are jeopardized.

NOTE: The ratings from AA to CCC may be modified by the addition
of a plus (+) or minus (-) sign to show relative standing within
the major ratings categories.

Provisional Ratings. The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful
completion of the project being financed by the debt being rated
and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful and timely completion of
the project. This rating, however, although addressing credit
quality subsequent to completion of the project, makes no comment
on the likelihood of, or the risk of default upon failure of, such
completion. The investor should exercise his own judgment with
respect to such likelihood and risk.

Municipal Notes: SP-1. Notes rated SP-1 have very strong or
strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics are
designated as SP-1+.

SP-2. Notes rated SP-2 have satisfactory capacity to pay
principal and interest.

Notes due in three years or less normally receive a note rating.
Notes maturing beyond three years normally receive a bond rating,
although the following criteria are used in making that
assessment:

* Amortization schedule (the larger the final maturity relative to
other maturities, the more likely the issue will be rated as a
note).

* Source of payment (the more dependent the issue is on the market
for its refinancing, the more likely it will be rated as a
note).

Demand Feature of Variable Rate Demand Securities: S&P assigns
dual ratings to all long-term debt issues that have as part of
their provisions a demand feature. The first rating addresses the
likelihood of repayment of principal and interest as due, and the
second rating addresses only the demand feature. The long-term
debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols are usually used
to denote the put (demand) option (for example, AAA/A-1+).
Normally, demand notes receive note rating symbols combined with
commercial paper symbols (for example, SP-1+/A-1+).

Commercial Paper: A. Issues assigned this highest rating are
regarded as having the greatest capacity for timely payment.
Issues in this category are further refined with the designations
1, 2, and 3 to indicate the relative degree to safety.

A-1. This designation indicates that the degree of safety
regarding timely payment is either overwhelming or very strong.
Those issues determined to possess overwhelming safety
characteristics are designed A-1+.

Corporate Bonds: The description of the applicable rating symbols
and their meanings is substantially the same as its Municipal Bond
ratings set forth above.

RATINGS BY FITCH IBCA

Investment Grade Bond Ratings
Fitch IBCA investment grade bond ratings provide a guide to
investors in determining the credit risk associated with a
particular security. The ratings represent Fitch IBCA's
assessment of the issuer's ability to meet the obligations of a
specific debt or preferred issue in a timely manner. The rating
takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and
prospective financial condition and operating performance of the
issuer and any guarantor, as well as the economic and political
environment that might affect the issuer's future financial
strength and credit quality.

Fitch IBCA ratings do not reflect any credit enhancement that may
be provided by insurance policies or financial guaranties unless
otherwise indicated.

Fitch IBCA ratings are not recommendations to buy, sell, or hold
any security. Ratings do not comment on the adequacy of market
price, the suitability of any security for a particular investor,
or the tax-exempt nature or taxability of payments made in respect
of any security. Fitch IBCA ratings are based on information
obtained from issuers, other obligors, underwriters, their
experts, and other sources Fitch IBCA believes to be reliable.
Fitch IBCA does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a
result of changes in, or the unavailability of, information or for
other reasons.

AAA. Bonds and preferred stock considered to be investment grade
and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and/or dividends and
repay principal, which is unlikely to be affected by reasonably
foreseeable events.

AA. Bonds and preferred stock considered to be investment grade
and of very high credit quality. The obligor's ability to pay
interest and/or dividends and repay principal is very strong,
although not quite as strong as bonds rated AAA. Because bond and
preferred rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of
these issuers is generally rated F-1+.

A. Bonds and preferred stock considered to be investment grade
and of high quality. The obligor's ability to pay interest and/or
dividends and repay principal is considered to be strong, but may
be more vulnerable to adverse changes in economic conditions and
circumstances than debt or preferred securities with higher
ratings.

BBB. Bonds and preferred stock considered to be investment grade
and of satisfactory credit quality. The obligor's ability to pay
interest or dividends and repay principal is considered to be
adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on
these securities and, therefore, impair timely payment. The
likelihood that the ratings of these bonds or preferred will fall
below investment grade is higher than for securities with higher
ratings.

BB. Bonds are considered speculative. The obligor's ability to
pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial
alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.

B. Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest
reflects the obligor's limited margin of safety and the need for
reasonable business and economic activity throughout the life of
the issue.

CCC. Bonds have certain identifiable characteristics which, if
not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic
environment.

CC. Bonds are minimally protected. Default in payment of
interest and/or principal seems probable over time.

C. Bonds are in imminent default in payment of interest or
principal.

DDD, DD, and D. Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be
valued on the basis of their ultimate recovery value in
liquidation or reorganization of the obligor. DDD represents the
highest potential for recovery on these bonds, and D represents
the lowest potential for recovery.

Plus (+) or Minus (-). Plus and minus signs are used with a
rating symbol to indicate the relative position of a credit within
the rating category. Plus and minus signs, however, are not used
in the AAA, DDD, DD or D categories.

NR. Indicates that Fitch IBCA does not rate the specific issue.

Conditional. A conditional rating is premised on the successful
completion of a project or the occurrence of a specific event.

Suspended. A rating is suspended when Fitch IBCA deems the amount
of information available from the issuer to be inadequate for
rating purposes.

Withdrawn. A rating will be withdrawn when an issue matures or is
called or refinanced, and, at Fitch IBCA's discretion, when an
issuer fails to furnish proper and timely information.

FitchAlert. Ratings are placed on FitchAlert to notify investors
of an occurrence that is likely to result in a rating change and
the likely direction of such change. These are designated as
"Positive," indicating a potential upgrade, "Negative," for
potential downgrade, or "Evolving," where ratings may be raised or
lowered. FitchAlert is relatively short-term and should be
resolved within 12 months.

Ratings Outlook. An outlook is used to describe the most likely
direction of any rating change over the intermediate term. It is
described as "Positive" or "Negative." The absence of a
designation indicates a stable outlook.

Short-Term Ratings

F-1+. Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance
for timely payment.

F-1. Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in
degree than issues rated F-1+.

F-2. Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as for issues assigned F-1+ and
F-1 ratings.

F-3. Fair Credit Quality. Issues assigned this rating have
characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could
cause these securities to be rated below investment grade.

F-S. Weak Credit Quality. Issues assigned this rating have
characteristics suggesting a minimal degree of assurance for
timely payment and are vulnerable to near-term adverse changes in
financial and economic conditions.

D. Default. Issues assigned this rating are in actual or
imminent payment default.

____________________

<PAGE>

PART C. OTHER INFORMATION

ITEM 23. EXHIBITS
[Note: As used herein, the term "PEA" refers to a post-
effective amendment to the Registration Statement of the
Registrant under the Securities Act of 1933, No.
2-99356..]

(a)(1) Agreement and Declaration of Trust of Registrant as
amended through 10/25/94. (Exhibit 1 to PEA #18.)*
(2) Amendment to Agreement and Declaration of Trust dated
11/1/95. (Exhibit 1(b) to PEA #20.)*

(b)(1) By-Laws of Registrant as amended through 2/3/93.
(Exhibit 2 to PEA #21.)*
(2) Amendment to By-Laws dated 2/4/98. (Exhibit 2(b) to
PEA #26.)*

(d)(1) Management agreement between Registrant and Stein Roe &
Farnham Incorporated ("Stein Roe") relating to the series
designated Stein Roe Intermediate Municipals Fund and Stein
Roe Managed Municipals Fund dated 7/1/96 as amended through
2/2/98. (Exhibit 5 to PEA #26.)*
(2) Management Agreement between SR&F Base Trust and Stein
Roe dated 8/15/95, as amended through 6/28/99.

(e) Underwriting agreement between Registrant and Liberty Funds
Distributor, Inc. dated 8/4/99.

(f) None.

(g) Custodian contract between Registrant and State Street
Bank and Trust Company ("Bank") dated 12/31/87 as amended
through 5/8/95. (Exhibit 8 to PEA #18.)*

(h)(1) Administrative agreement between Registrant and Stein Roe
as amended through 7/1/96. (Exhibit 9(c) to PEA #21.)*
(2) Accounting and Bookkeeping Agreement between the Registrant
and Stein Roe dated 8/3/99.
(3) Restated transfer agency agreement between Registrant and
SteinRoe Services Inc. dated 8/1/95 as amended through
3/31/99.
(4) Sub-transfer agent agreement between SteinRoe Services
Inc. and Liberty Funds Services, Inc. (formerly named
Colonial Investors Service Center, Inc.) dated 7/3/96 as
amended through 3/31/99.

(i) Opinions and consents of Bell, Boyd & Lloyd and Ropes &
Gray with respect to the series of Registrant designated
SteinRoe Tax-Exempt Money Fund (now named Stein Roe
Municipal Money Market Fund), Stein Roe Intermediate
Municipals Fund, Stein Roe Managed Municipals Fund, and
Stein Roe High-Yield Municipals Fund. (Exhibit 10 to PEA
#21.)*

(j)(1) Opinion and consent of Bell, Boyd & Lloyd regarding
tax-exempt status of standby commitments. (Exhibit
11(a) to PEA #21.)*
(2) Consent of Morningstar, Inc. (Exhibit 11(b) to PEA #21.)*
(3) Consent of Ernst & Young LLP.

(k) None.

(l) Inapplicable.

(m) Rule 12b-1 Plan.

(n) Rule 18f-3 Plan.

(o) Mutual Funds Application.
_______________________________
*Incorporated by reference.

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

The Registrant does not consider that it is directly or indirectly
controlled by, or under common control with, other persons within
the meaning of this Item. See "Investment Advisory and Other
Services," "Management," "Distributor," and "Transfer Agent" in the
statement of additional information, each of which is
incorporated herein by reference.

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 a 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

(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 advances, 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 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 Act and will be governed by the final
adjudication of such issue.

Registrant, its trustees and officers, Stein Roe & Farnham
Incorporated ("Stein Roe"), 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 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 Stein Roe
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.

Pursuant to the indemnification agreement dated July 1, 1995,
among the Registrant, its transfer agent and Stein Roe,
Registrant, its trustees, officers and employees, its transfer
agent and the transfer agent's directors, officers and employees
are indemnified by Stein Roe against any and all losses,
liabilities, damages, claims and expenses arising out of any act
or omission of the Registrant or its transfer agent performed in
conformity with a request of Stein Roe that the transfer agent
and the Registrant deviate from their normal procedures in
connection with the issue, redemption or transfer of shares for a
client of Stein Roe.

Registrant, its trustees, officers, employees and representatives
and each person, if any, who controls the Registrant within the
meaning of Section 15 of the Securities Act of 1933 are
indemnified by the distributor of Registrant's shares (the
"distributor"), pursuant to the terms of the distribution
agreement, which governs the distribution of Registrant's shares,
against any and all losses, liabilities, damages, claims and
expenses arising out of the acquisition of any shares of the
Registrant by any person which (i) may be based upon any wrongful
act by the distributor or any of the distributor's directors,
officers, employees or representatives or (ii) may be based upon
any untrue or alleged untrue statement of a material fact
contained in a registration statement, prospectus, statement of
additional information, shareholder report or other information
covering shares of the Registrant filed or made public by the
Registrant or any amendment thereof or supplement thereto or
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement
therein not misleading if such statement or omission was made in
reliance upon information furnished to the Registrant by the
distributor in writing. In no case does the distributor's
indemnity indemnify an indemnified party against any liability to
which such indemnified party would otherwise be subject by reason
of willful misfeasance, bad faith, or negligence in the
performance of its or his duties or by reason of its or his
reckless disregard of its or his obligations and duties under the
distribution agreement.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Stein Roe & Farnham Incorporated ("Stein Roe"), the investment
adviser, is a wholly owned subsidiary of SteinRoe Services Inc.
("SSI"), which in turn is a wholly owned subsidiary of Liberty
Financial Companies, Inc., which is a majority owned subsidiary
of Liberty Corporation Holdings, Inc., which is a wholly owned
subsidiary of LFC Holdings, Inc., which in turn is a subsidiary
of Liberty Mutual Equity Corporation, which in turn is a
subsidiary of Liberty Mutual Insurance Company. Stein Roe acts
as investment adviser to individuals, trustees, pension and
profit-sharing plans, charitable organizations, and other
investors. In addition to Registrant, it also acts as
investment adviser to other investment 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
and Other 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 SSI, of Colonial Management
Associates, Inc. (which is a subsidiary of Liberty Financial
Companies, Inc.), and of the Registrant and other investment
companies managed by SteinRoe. (The listed entities are located
at One South Wacker Drive, Chicago, Illinois 60606, except for
Colonial Management Associates, Inc., which is located at One
Financial Center, Boston, MA 02111, and SteinRoe Variable
Investment Trust and Liberty Variable Investment Trust, which
are located at Federal Reserve Plaza, Boston, MA 02210.) A
list of such capacities is given below.

POSITION FORMERLY
HELD WITHIN
CURRENT POSITION PAST TWO YEARS
------------------ --------------
STEINROE SERVICES INC.
Gary A. Anetsberger Vice President
Thomas W. Butch President; Director; Chmn. Vice President
Kevin M. Carome Assistant Clerk
Kenneth J. Kozanda Vice President; Treasurer
Kenneth R. Leibler Director
Karl J. Maurer Comptroller
C. Allen Merritt, Jr. Director; Vice President
Heidi J. Walter Vice President; Secretary

COLONIAL MANAGEMENT ASSOCIATES, INC.
Ophelia L. Barsketis Senior Vice President
Kevin M. Carome Senior Vice President
William M. Garrison Vice President
Loren A. Hansen Senior Vice President
Clare M. Hounsell Vice President
James P. Haynie Senior Vice President
Timothy J. Jacoby Senior Vice President
Deborah A. Jansen Senior Vice President
North T. Jersild Vice President
Yvonne T. Shields Vice President

SR&F BASE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
David P. Brady Vice-President
Thomas W. Butch President Executive V-P;
Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Jane M. Naeseth Vice-President
Maureen G. Newman Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary

STEIN ROE INCOME TRUST; STEIN ROE INSTITUTIONAL TRUST; AND
STEIN ROE TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President Exec. VP;
VP; Trustee
Kevin M. Carome Executive VP; Asst. Secy. VP
Loren A. Hansen Executive Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Lynn C. Maddox Vice-President
Jane M. Naeseth Vice-President
Heidi J. Walter Vice-President; Secretary

STEIN ROE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
David P. Brady Vice-President
Thomas W. Butch President Exec. VP; VP;
Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
William M. Garrison Vice-President
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY-STEIN ROE ADVISOR TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
David P. Brady Vice-President
Thomas W. Butch President Exec. VP;
VP; Trustee
Daniel K. Cantor Vice-President
Kevin M. Carome Executive VP; Asst. Secy. VP
Erik P. Gustafson Vice-President
Loren A. Hansen Executive Vice-President
James P. Haynie Vice-President
Harvey B. Hirschhorn Vice-President
Michael T. Kennedy Vice-President
Stephen F. Lockman Vice-President
Lynn C. Maddox Vice-President
Arthur J. McQueen Vice-President
Maureen G. Newman Vice-President
Gita R. Rao Vice-President
Michael E. Rega Vice-President
Heidi J. Walter Vice-President; Secretary

STEIN ROE MUNICIPAL TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President Exec. VP;
VP; Trustee
Kevin M. Carome Executive VP; Asst. Secy. VP
Joanne T. Costopoulos Vice-President
Loren A. Hansen Executive Vice-President
Brian M. Hartford Vice-President
William C. Loring Vice-President
Lynn C. Maddox Vice-President
Maureen G. Newman Vice-President
Veronica M. Wallace Vice-President
Heidi J. Walter Vice-President; Secretary

STEINROE VARIABLE INVESTMENT TRUST
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President
Kevin M. Carome Executive VP; Asst. Secy. VP
William M. Garrison Vice President
Erik P. Gustafson Vice President
Loren A. Hansen Executive Vice-President
Harvey B. Hirschhorn Vice President
Michael T. Kennedy VP
Jane M. Naeseth Vice President
William M. Wadden IV Vice President
Heidi J. Walter Vice President

STEIN ROE FLOATING RATE INCOME TRUST; STEIN ROE INSTITUTIONAL
FLOATING RATE INCOME TRUST, STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY
William D. Andrews Executive Vice-President
Gary A. Anetsberger Senior V-P; Treasurer Controller
Thomas W. Butch President; Trustee or Manager
Kevin M. Carome Executive VP; Asst. Secy. VP
Brian W. Good Vice-President
James R. Fellows Vice-President
Loren A. Hansen Executive Vice-President
Heidi J. Walter Vice-President; Secretary

LIBERTY VARIABLE INVESTMENT TRUST
Ophelia L. Barsketis Vice President
Deborah A. Jansen Vice President
Kevin M. Carome Vice President

ITEM 27. PRINCIPAL UNDERWRITERS.

Registrant's principal underwriter, Liberty Funds Distributor,
Inc., a subsidiary of Colonial Management Associates, Inc.,
acts as underwriter to 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, Stein Roe Investment Trust, Stein Roe
Income Trust, Stein Roe Municipal Trust, Liberty-Stein Roe
Advisor Trust, Stein Roe Institutional Trust, Stein Roe Trust,
Stein Roe Floating Rate Income Fund, Stein Roe Institutional
Floating Rate Income Fund, and SteinRoe Variable Investment
Trust. The table below lists the directors and officers of
Liberty Funds Distributor, Inc.

Position and Offices Positions and
Name and Principal with Principal Offices with
Business Address* Underwriter Registrant
- -------------------- --------------------- -------------
Anderson, Judith Vice President None
Anetsberger, Gary A. Senior Vice President Senior V-P;
Treasurer
Babbitt, Debra VP & Compliance Officer None
Ballou, Rick Senior Vice President None
Bartlett, John Managing Director None
Blakeslee, James Senior Vice President None
Blumenfeld, Alex Vice President None
Bozek, James Senior Vice President None
Brown, Beth Vice President None
Burtman, Tracy Vice President None
Butch, Thomas W. Senior Vice President President
Campbell, Patrick Vice President None
Chrzanowski, Daniel Vice President None
Clapp, Elizabeth A. Managing Director None
Conlin, Nancy L. Director; Clerk None
Davey, Cynthia Sr. Vice President None
Desilets, Marian H. Vice President None
Devaney, James Senior Vice President None
DiMaio, Steve Vice President None
Downey, Christopher Vice President None
Dupree, Robert Vice President None
Emerson, Kim P. Senior Vice President None
Erickson, Cynthia G. Senior Vice President None
Evans, C. Frazier Managing Director None
Feldman, David Managing Director None
Fifield, Robert Vice President None
Gariepy, Tom Vice President None
Gauger, Richard Vice President None
Gerokoulis, Stephen A. Senior Vice President None
Gibson, Stephen E. Director; Chairman of Board None
Goldberg, Matthew Senior Vice President None
Gupta, Neeti Vice President None
Geunard, Brian Vice President None
Harrington, Tom Sr. Vice President None
Harris, Carla L. Vice President None
Hodgkins, Joseph Sr. Vice President None
Hussey, Robert Senior Vice President None
Iudice, Jr., Philip Treasurer and CFO None
Jones, Cynthia Vice President None
Jones, Jonathan Vice President None
Kelley, Terry M. Vice President None
Kelson, David W. Senior Vice President None
Libutti, Chris Vice President None
Martin, John Senior Vice President None
Martin, Peter Vice President None
McCombs, Gregory Senior Vice President None
McKenzie, Mary Vice President None
Menchin, Catherine Senior Vice President None
Miller, Anthony Vice President None
Moberly, Ann R. Senior Vice President None
Morse, Jonathan Vice President None
Nickodemus, Paul Vice President None
O'Shea, Kevin Managing Director None
Piken, Keith Vice President None
Place, Jeffrey Managing Director None
Powell, Douglas Vice President None
Predmore, Tracy Vice President None
Quirk, Frank Vice President None
Raftery-Arpino, Linda Senior Vice President None
Ratto, Gregory Vice President None
Reed, Christopher B. Senior Vice President None
Riegel, Joyce B. Vice President None
Robb, Douglas Vice President None
Sandberg, Travis Vice President None
Santosuosso, Louise Senior Vice President None
Schulman, David Senior Vice President None
Shea, Terence Vice President None
Sideropoulos, Lou Vice President None
Sinatra, Peter Vice President None
Smith, Darren Vice President None
Soester, Trisha Vice President None
Studer, Eric Vice President None
Sweeney, Maureen Vice President None
Tambone, James Chief Executive Officer None
Tasiopoulos, Lou President None
VanEtten, Keith H. Senior Vice President None
Walter, Heidi J. Vice President V-P & Secy.
Wess, Valerie Senior Vice President None
Young, Deborah Vice President None
- ---------
* The address of Ms. Harris, Ms. Riegel, Ms. Walter, and Messrs.
Anetsberger and Butch is One South Wacker Drive, Chicago, IL
60606. The address of each other director and officer is One
Financial Center, Boston, MA 02111.

Item 28. Location of Accounts and Records.

Registrant maintains the records required to be maintained by it
under Rules 31a-1(a), 31a-1(b), and 31a-2(a) under the
Investment Company Act of 1940 at its principal executive
offices at One South Wacker Drive, Chicago, Illinois 60606.
Certain records, including records relating to Registrant's
shareholders and the physical possession of its securities, may
be maintained pursuant to Rule 31a-3 at the main office of
Registrant's transfer agent or custodian.

ITEM 29. MANAGEMENT SERVICES.

None.

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 has duly caused this
amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of
Chicago and State of Illinois on the 19th day of August, 1999.

STEIN ROE MUNICIPAL TRUST

By THOMAS W. BUTCH
Thomas W. Butch
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
- ------------------------ --------------------- --------------
THOMAS W. BUTCH President August 19, 1999
Thomas W. Butch
Principal Executive Officer

GARY A. ANETSBERGER Senior Vice- August 19,1999
Gary A. Anetsberger President; Treasurer
Principal Financial Officer

PATRICIA J. JUDGE Controller August 19, 1999
Patricia J. Judge
Principal Accounting Officer

WILLIAM W. BOYD Trustee August 19, 1999
William W. Boyd

LINDSAY COOK Trustee August 19, 1999
Lindsay Cook

DOUGLAS A. HACKER Trustee August 19, 1999
Douglas A. Hacker

JANET LANGFORD KELLY Trustee August 19, 1999
Janet Langford Kelly

CHARLES R. NELSON Trustee August 19, 1999
Charles R. Nelson

THOMAS C. THEOBALD Trustee August 19, 1999
Thomas C. Theobald

*Each person signing this amendment is signing in his or her
indicated capacity with the Registrant and also in the same
capacity with SR&F Base Trust as it relates to the Stein Roe
Municipal Money Market Fund and Stein Roe High-Yield Municipals
Fund.

<PAGE>

STEIN ROE MUNICIPAL TRUST
INDEX TO EXHIBITS FILED WITH THIS AMENDMENT

Exhibit
Number Description
- ------- -----------

(d)(2) Management Agreement

(e) Underwriting Agreement

(h)(2) Accounting and Bookkeeping Agreement

(3) Restated Transfer Agency Agreement

(4) Sub-Transfer Agent Agreement

(j)(3) Consent of Ernst & Young LLP

(m) Rule 12b-1 Plan.

(n) Rule 18f-3 Plan.

(o) Mutual Fund Application

<PAGE>

MANAGEMENT AGREEMENT
BETWEEN
SR&F BASE TRUST AND
STEIN ROE & FARNHAM INCORPORATED

SR&F BASE TRUST, a Massachusetts common law trust
registered under the Investment Company Act of 1940 ("1940 Act")
as an open-end diversified management investment company
("Trust"), hereby appoints STEIN ROE & FARNHAM INCORPORATED, a
Delaware corporation registered under the Investment Advisers
Act of 1940 as an investment adviser, of Chicago, Illinois
("Manager"), to furnish investment advisory and portfolio
management services with respect to the portion of its assets
represented by the shares of beneficial interest issued in each
series listed in Schedule A hereto, as such schedule may be
amended from time to time (each such series hereinafter referred
to as "Portfolio"). Trust and Manager hereby agree that:

1. Investment Management Services. Manager shall manage
the investment operations of Trust and each Portfolio, subject
to the terms of this Agreement and to the supervision and
control of Trust's Board of Trustees ("Trustees"). Manager
agrees to perform, or arrange for the performance of, the
following services with respect to each Portfolio:

(a) to obtain and evaluate such information relating to
economies, industries, businesses, securities and commodities
markets, and individual securities, commodities and indices
as it may deem necessary or useful in discharging its
responsibilities hereunder;
(b) to formulate and maintain a continuing investment program in
a manner consistent with and subject to (i) Trust's agreement
and declaration of trust and by-laws; (ii) the Portfolio's
investment objectives, policies, and restrictions as set
forth in written documents furnished by the Trust to Manager;
(iii) all securities, commodities, and tax laws and
regulations applicable to the Portfolio and Trust; and (iv)
any other written limits or directions furnished by the
Trustees to Manager;
(c) unless otherwise directed by the Trustees, to determine from
time to time securities, commodities, interests or other
investments to be purchased, sold, retained or lent by the
Portfolio, and to implement those decisions, including the
selection of entities with or through which such purchases,
sales or loans are to be effected;
(d) to use reasonable efforts to manage the Portfolio so that it
will qualify as a regulated investment company under
subchapter M of the Internal Revenue Code of 1986, as
amended;
(e) to make recommendations as to the manner in which voting
rights, rights to consent to Trust or Portfolio action, and
any other rights pertaining to Trust or the Portfolio shall
be exercised;
(f) to make available to Trust promptly upon request all of the
Portfolio's records and ledgers and any reports or
information reasonably requested by the Trust; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the
services provided pursuant to this Agreement.

Except as otherwise instructed from time to time by the
Trustees, with respect to execution of transactions for Trust on
behalf of a Portfolio, Manager shall place, or arrange for the
placement of, all orders for purchases, sales, or loans with
issuers, brokers, dealers or other counterparties or agents
selected by Manager. In connection with the selection of all
such parties for the placement of all such orders, Manager shall
attempt to obtain most favorable execution and price, but may
nevertheless in its sole discretion as a secondary factor,
purchase and sell Portfolio securities from and to brokers and
dealers who provide Manager with statistical, research and other
information, analysis, advice, and similar services. In
recognition of such services or brokerage services provided by a
broker or dealer, Manager is hereby authorized to pay such
broker or dealer a commission or spread in excess of that which
might be charged by another broker or dealer for the same
transaction if the Manager determines in good faith that the
commission or spread is reasonable in relation to the value of
the services so provided.

Trust hereby authorizes any entity or person associated
with Manager that is a member of a national securities exchange
to effect any transaction on the exchange for the account of a
Portfolio to the extent permitted by and in accordance with
Section 11(a) of the Securities Exchange Act of 1934 and Rule
11a2-2(T) thereunder. Trust hereby consents to the retention by
such entity or person of compensation for such transactions in
accordance with Rule 11a-2-2(T)(a)(iv).

Manager may, where it deems to be advisable, aggregate
orders for its other customers together with any securities of
the same type to be sold or purchased for Trust or one or more
Portfolios in order to obtain best execution or lower brokerage
commissions. In such event, Manager shall allocate the shares
so purchased or sold, as well as the expenses incurred in the
transaction, in a manner it considers to be equitable and fair
and consistent with its fiduciary obligations to Trust, the
Portfolios, and Manager's other customers.

Manager shall for all purposes be deemed to be an
independent contractor and not an agent of Trust and shall,
unless otherwise expressly provided or authorized, have no
authority to act for or represent Trust in any way.

2. Administrative Services. Manager shall supervise the
business and affairs of Trust and each Portfolio and shall
provide such services and facilities as may be required for
effective administration of Trust and Portfolios as are not
provided by employees or other agents engaged by Trust; provided
that Manager shall not have any obligation to provide under this
Agreement any such services which are the subject of a separate
agreement or arrangement between Trust and Manager, any
affiliate of Manager, or any third party administrator
("Administrative Agreements").

3. Use of Affiliated Companies and Subcontractors. In
connection with the services to be provided by Manager under
this Agreement, Manager may, to the extent it deems appropriate,
and subject to compliance with the requirements of applicable
laws and regulations and upon receipt of written approval of the
Trustees, make use of (i) its affiliated companies and their
directors, trustees, officers, and employees and (ii)
subcontractors selected by Manager, provided that Manager shall
supervise and remain fully responsible for the services of all
such third parties in accordance with and to the extent provided
by this Agreement. All costs and expenses associated with
services provided by any such third parties shall be borne by
Manager or such parties.

4. Expenses Borne by Trust. Except to the extent
expressly assumed by Manager herein or under a separate
agreement between Trust and Manager and except to the extent
required by law to be paid by Manager, Manager shall not be
obligated to pay any costs or expenses incidental to the
organization, operations or business of the Trust. Without
limitation, such costs and expenses shall include but not be
limited to:

(a) all charges of depositories, custodians and other agencies
for the safekeeping and servicing of its cash, securities,
and other property;
(b) all charges for equipment or services used for obtaining
price quotations or for communication between Manager or
Trust and the custodian, transfer agent or any other agent
selected by Trust;
(c) all charges for administrative and accounting services
provided to Trust by Manager, or any other provider of such
services;
(d) all charges for services of Trust's independent auditors and
for services to Trust by legal counsel;
(e) all compensation of Trustees, other than those affiliated
with Manager, all expenses incurred in connection with their
services to Trust, and all expenses of meetings of the
Trustees or committees thereof;
(f) all expenses incidental to holding meetings of holders of
units of interest in the Trust ("Unitholders"), including
printing and of supplying each record-date Unitholder with
notice and proxy solicitation material, and all other proxy
solicitation expense;
(g) all expenses of printing of annual or more frequent
revisions of Trust prospectus(es) and of supplying each then-
existing Unitholder with a copy of a revised prospectus;
(h) all expenses related to preparing and transmitting
certificates representing Trust shares;
(i) all expenses of bond and insurance coverage required by law
or deemed advisable by the Board of Trustees;
(j) all brokers' commissions and other normal charges incident
to the purchase, sale, or lending of portfolio securities;
(k) all taxes and governmental fees payable to Federal, state or
other governmental agencies, domestic or foreign, including
all stamp or other transfer taxes;
(l) all expenses of registering and maintaining the registration
of Trust under the 1940 Act and, to the extent no exemption
is available, expenses of registering Trust's shares under
the 1933 Act, of qualifying and maintaining qualification of
Trust and of Trust's shares for sale under securities laws of
various states or other jurisdictions and of registration and
qualification of Trust under all other laws applicable to
Trust or its business activities;
(m) all interest on indebtedness, if any, incurred by Trust or a
Portfolio; and
(n) all fees, dues and other expenses incurred by Trust in
connection with membership of Trust in any trade association
or other investment company organization.

5. Allocation of Expenses Borne by Trust. Any expenses
borne by Trust that are attributable solely to the organization,
operation or business of a Portfolio shall be paid solely out of
Portfolio assets. Any expense borne by Trust which is not
solely attributable to a Portfolio, nor solely to any other
series of shares of Trust, shall be apportioned in such manner
as Manager determines is fair and appropriate, or as otherwise
specified by the Board of Trustees.

6. Expenses Borne by Manager. Manager at its own expense
shall furnish all executive and other personnel, office space,
and office facilities required to render the investment
management and administrative services set forth in this
Agreement. Manager shall pay all expenses of establishing,
maintaining, and servicing the accounts of Unitholders in each
Portfolio listed in Exhibit A. However, Manager shall not be
required to pay or provide any credit for services provided by
Trust's custodian or other agents without additional cost to
Trust.

In the event that Manager pays or assumes any expenses of
Trust or a Portfolio not required to be paid or assumed by
Manager under this Agreement, Manager shall not be obligated
hereby to pay or assume the same or similar expense in the
future; provided that nothing contained herein shall be deemed
to relieve Manager of any obligation to Trust or a Portfolio
under any separate agreement or arrangement between the parties.

7. Management Fee. For the services rendered, facilities
provided, and charges assumed and paid by Manager hereunder,
Trust shall pay to Manager out of the assets of each Portfolio
fees at the annual rate for such Portfolio as set forth in
Schedule B to this Agreement. For each Portfolio, the
management fee shall accrue on each calendar day, and shall be
payable monthly on the first business day of the next succeeding
calendar month. The daily fee accrual shall be computed by
multiplying the fraction of one divided by the number of days in
the calendar year by the applicable annual rate of fee, and
multiplying this product by the net assets of the Portfolio,
determined in the manner established by the Board of Trustees,
as of the close of business on the last preceding business day
on which the Portfolio's net asset value was determined.

8. Retention of Sub-Adviser. Subject to obtaining the
initial and periodic approvals required under Section 15 of the
1940 Act, Manager may retain one or more sub-advisers at
Manager's own cost and expense for the purpose of furnishing one
or more of the services described in Section 1 hereof with
respect to Trust or one or more Portfolios. Retention of a sub-
adviser shall in no way reduce the responsibilities or
obligations of Manager under this Agreement, and Manager shall
be responsible to Trust and its Portfolios for all acts or
omissions of any sub-adviser in connection with the performance
of Manager's duties hereunder.

9. Non-Exclusivity. The services of Manager to Trust
hereunder are not to be deemed exclusive and Manager shall be
free to render similar services to others.

10. Standard of Care. Neither Manager, nor any of its
directors, officers, stockholders, agents or employees shall be
liable to Trust or its Unitholders for any error of judgment,
mistake of law, loss arising out of any investment, or any other
act or omission in the performance by Manager of its duties
under this Agreement, except for loss or liability resulting
from willful misfeasance, bad faith or gross negligence on
Manager's part or from reckless disregard by Manager of its
obligations and duties under this Agreement.

11. Amendment. This Agreement may not be amended as to
Trust or any Portfolio without the affirmative votes (a) of a
majority of the Board of Trustees, including a majority of those
Trustees who are not "interested persons" of Trust or of
Manager, voting in person at a meeting called for the purpose of
voting on such approval, and (b) of a "majority of the
outstanding shares" of Trust or, with respect to an amendment
affecting an individual Portfolio, a "majority of the
outstanding shares" of that Portfolio. The terms "interested
persons" and "vote of a majority of the outstanding shares"
shall be construed in accordance with their respective
definitions in the 1940 Act and, with respect to the latter
term, in accordance with Rule 18f-2 under the 1940 Act.

12. Effective Date and Termination. This Agreement shall
become effective as to any Portfolio as of the effective date
for that Portfolio specified in Schedule A hereto. This
Agreement may be terminated at any time, without payment of any
penalty, as to any Portfolio by the Board of Trustees of Trust,
or by a vote of a majority of the outstanding shares of that
Portfolio, upon at least sixty (60) days' written notice to
Manager. This Agreement may be terminated by Manager at any
time upon at least sixty (60) days' written notice to Trust.
This Agreement shall terminate automatically in the event of its
"assignment" (as defined in the 1940 Act). Unless terminated as
hereinbefore provided, this Agreement shall continue in effect
with respect to any Portfolio until the end of the initial term
applicable to that Portfolio specified in Schedule A and
thereafter from year to year only so long as such continuance is
specifically approved with respect to that Portfolio at least
annually (a) by a majority of those Trustees who are not
interested persons of Trust or of Manager, voting in person at a
meeting called for the purpose of voting on such approval, and
(b) by either the Board of Trustees of Trust or by a "vote of a
majority of the outstanding shares" of the Portfolio.

13. Ownership of Records; Interparty Reporting. All
records required to be maintained and preserved by Trust
pursuant to the provisions of rules or regulations of the
Securities and Exchange Commission under Section 31(a) of the
1940 Act or other applicable laws or regulations which are
maintained and preserved by Manager on behalf of Trust and any
other records the parties mutually agree shall be maintained by
Manager on behalf of Trust are the property of Trust and shall
be surrendered by Manager promptly on request by Trust; provided
that Manager may at its own expense make and retain copies of
any such records.

Trust shall furnish or otherwise make available to Manager
such copies of the financial statements, proxy statements,
reports, and other information relating to the business and
affairs of each Unitholder in a Portfolio as Manager may, at any
time or from time to time, reasonably require in order to
discharge its obligations under this Agreement.

Manager shall prepare and furnish to Trust as to each
Portfolio statistical data and other information in such form
and at such intervals as Trust may reasonably request.

14. Non-Liability of Trustees and Unitholders. Any
obligation of Trust hereunder shall be binding only upon the
assets of Trust (or the applicable Portfolio thereof) and shall
not be binding upon any Trustee, officer, employee, agent or
Unitholder of Trust. Neither the authorization of any action by
the Trustees or Unitholders of Trust nor the execution of this
Agreement on behalf of Trust shall impose any liability upon any
Trustee or any Unitholder.

15. Use of Manager's Name. Trust may use the name "SR&F
Base Trust" and the Portfolio names listed in Schedule A or any
other name derived from the name "Stein Roe & Farnham" only for
so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar
agreement with any organization which shall have succeeded to
the business of Manager as investment adviser. At such time as
this Agreement or any extension, renewal or amendment hereof, or
such other similar agreement shall no longer be in effect, Trust
will cease to use any name derived from the name "Stein Roe &
Farnham" or otherwise connected with Manager, or with any
organization which shall have succeeded to Manager's business as
investment adviser.

16. References and Headings. In this Agreement and in any
such amendment, references to this Agreement and all expressions
such as "herein," "hereof," and "hereunder" shall be deemed to
refer to this Agreement as amended or affected by any such
amendments. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this
Agreement. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.

Dated: August 15, 1995

SR&F BASE TRUST

By: TIMOTHY K. ARMOUR, President
Attest:

JILAINE HUMMEL BAUER
Secretary
STEIN ROE & FARNHAM INCORPORATED

By: HANS P. ZIEGLER
Chief Executive Officer

Attest:

KEITH J. RUDOLF
Secretary

<PAGE>
SR&F BASE TRUST
MANAGEMENT AGREEMENT
SCHEDULE A

The Portfolios of SR&F Base Trust currently subject to this
Agreement are as follows:

Effective End of
Date Initial Term
----------- ------------

SR&F Municipal Money Market Portfolio 9/28/95 6/30/97
SR&F High Yield Portfolio 11/01/96 6/30/98
SR&F Growth & Income Portfolio 02/03/97 6/30/98
SR&F International Portfolio 02/03/97 6/30/98
SR&F Growth Investor Portfolio 02/03/97 6/30/98
SR&F Balanced Portfolio 02/03/97 6/30/98
SR&F Growth Stock Portfolio 02/03/97 6/30/98
SR&F Disciplined Stock Portfolio 02/03/97 6/30/98
SR&F Intermediate Bond Portfolio 02/02/98 6/30/99
SR&F Income Portfolio 02/02/98 6/30/99
SR&F High-Yield Municipals Portfolio 02/02/98 6/30/99
SR&F Cash Reserves Portfolio 03/02/98 6/30/99

Dated: June 28, 1999

SR&F BASE TRUST

By: THOMAS W. BUTCH
Thomas W. Butch
President
Attest:

NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary

STEIN ROE & FARNHAM INCORPORATED

By: THOMAS W. BUTCH
President, Mutual Funds Division
Attest:

NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary

<PAGE>
SR&F BASE TRUST
MANAGEMENT AGREEMENT
SCHEDULE B

Compensation pursuant to Section 7 of the SR&F Base Trust
Management Agreement shall be calculated in accordance with the
following schedule(s):

SR&F MUNICIPAL MONEY MARKET PORTFOLIO
0.250% of average net assets

SR&F INTERMEDIATE BOND PORTFOLIO
0.35% of average net assets

SR&F HIGH YIELD PORTFOLIO
0.500% on first $500 million,
0.475% thereafter

SR&F HIGH-YIELD MUNICIPALS PORTFOLIO
0.450% up to $100 million,
0.425% next $100 million,
0.400% thereafter

SR&F INCOME PORTFOLIO
0.50% up to $100 million,
0.475% thereafter

SR&F CASH RESERVES PORTFOLIO
0.250% up to $500 million,
0.225% thereafter

SR&F INTERNATIONAL PORTFOLIO
0.85% of average net assets

SR&F DISCIPLINED STOCK PORTFOLIO
0.75% up to $500 million,
0.70% next $500 million,
0.65% next $500 million,
0.60% thereafter

SR&F BALANCED PORTFOLIO
0.55% up to $500 million,
0.50% next $500 million,
0.45% thereafter

SR&F GROWTH & INCOME PORTFOLIO,
SR&F GROWTH INVESTOR PORTFOLIO, AND
SR&F GROWTH STOCK PORTFOLIO
0.60% up to $500 million,
0.55% next $500 million,
0.50% thereafter

Dated: June 28, 1999

SR&F BASE TRUST

By: THOMAS W. BUTCH
Thomas W. Butch
President
Attest:

NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary

STEIN ROE & FARNHAM INCORPORATED

By: THOMAS W. BUTCH
President, Mutual Funds Division
Attest:

NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary

<PAGE>
UNDERWRITING AGREEMENT BETWEEN
STEIN ROE INVESTMENT TRUST
STEIN ROE INCOME TRUST
STEIN ROE MUNICIPAL TRUST
AND LIBERTY FUNDS DISTRIBUTOR, INC.

THIS UNDERWRITING AGREEMENT ("Agreement"), made as of the 4th
day of August, 1999 by and between Stein Roe Investment Trust,
Stein Roe Income Trust, and Stein Roe Municipal Trust, each a
business trust organized and existing under the laws of the
Commonwealth of Massachusetts (hereinafter called the "Fund" or
"Funds"), and Liberty Funds Distributor, Inc., a corporation
organized and existing under the laws of the Commonwealth of
Massachusetts (hereinafter called the "Distributor").

WITNESSETH:

WHEREAS, the Funds are engaged in business as an open-end
management investment company registered under the Investment
Company Act of 1940, as amended ("ICA-40"); and

WHEREAS, the Distributor is registered as a broker-dealer
under the Securities Exchange Act of 1934, as amended ("SEA-34")
and the laws of each state (including the District of Columbia and
Puerto Rico) in which it engages in business to the extent such
law requires, and is a member of the National Association of
Securities Dealers ("NASD") (such registrations and membership are
referred to collectively as the "Registrations"); and

WHEREAS, the Funds desire the Distributor to act as the
distributor in the public offering of its Shares of beneficial
interest (hereinafter called "Shares");

WHEREAS, the Funds shall pay all charges of their transfer,
shareholder recordkeeping, dividend disbursing and redemption
agents, if any; all expenses of notices, proxy solicitation
material and reports to shareholders; all expenses of preparation
of annual or more frequent revisions of the Funds' Prospectus and
Statement of Additional Information ("SAI") and of supplying
copies thereof to shareholders; all expenses of registering and
maintaining the registration of the Funds under ICA-40 and of the
Funds' Shares under the Securities Act of 1933, as amended ("SA-
33"); all expenses of qualifying and maintaining qualification of
such Funds and of each Fund's Shares for sale under securities
laws of various states or other jurisdictions and of registration
and qualification of each Fund under all laws applicable to each
Fund or its business activities; and

WHEREAS, Stein Roe & Farnham Incorporated, investment adviser
to the Funds, or their affiliates, may pay expenses incurred in
the sale and promotion of the Funds except as provided in the
Funds' 12b-1 plan;

NOW, THEREFORE, in consideration of the premises and the
mutual promises hereinafter set forth, the parties hereto agree as
follows:

1. Appointment. The Funds appoint Distributor to act as
principal underwriter (as such term is defined in Sections
2(a)(29) of ICA-40) of its Shares for each series or class of the
Funds set forth on Schedule A hereto.

2. Delivery of Fund Documents. The Funds have furnished
Distributor with properly certified or authenticated copies of
each of the following in effect on the date hereof and shall
furnish Distributor from time to time properly certified or
authenticated copies of all amendments or supplements thereto:

(a) Agreement and Declaration of Trust;

(b) By-Laws;

(c) Resolutions of the Board of Trustees of the Funds
(hereinafter referred to as the "Board") selecting
Distributor as distributor and approving this form of
agreement and authorizing its execution.

The Funds shall furnish Distributor promptly with copies of
any registration statements filed by it with the Securities and
Exchange Commission ("SEC") under SA-33 or ICA-40, together with
any financial statements and exhibits included therein, and all
amendments or supplements thereto hereafter filed.

The Funds also shall furnish Distributor such other
certificates or documents which Distributor may from time to time,
in its discretion, reasonably deem necessary or appropriate in the
proper performance of its duties.

3. Distribution of Shares.

(a) Subject to the provisions of Paragraphs 6, 7, 10, 11, 12,
13 and 14 hereof, and to such minimum purchase and other
requirements as may from time to time be indicated in the
Funds' Prospectus, Distributor, acting as principal for
its own account and not as agent for the Funds, shall
have the right to purchase Shares from the Funds.
Distributor shall sell Shares only in accordance with the
Funds' Prospectus, on a "best efforts" basis.
Distributor shall purchase Shares from the Funds at a
price equal to the net asset value, shall sell Shares at
the public offering price as defined in Paragraph 8, and
shall retain all sales charges.

(b) The Funds shall pay all expenses associated with notices,
proxy solicitation material, the preparation of annual or
more frequent revisions to the Funds' Prospectus and SAI
and of printing and supplying the currently effective
Prospectus and SAI to shareholders, other than those
necessitated by Distributor's activities or rules and
regulations related to Distributor's activities where
such amendments or supplements result in expenses which
the Funds would not otherwise have incurred.

(c) The Distributor (or its affiliates) shall pay the costs
of printing and supplying all copies of the Prospectus
and SAI that it may reasonably request for use in
connection with the distribution of Shares. The
Distributor will also pay the expenses of the
preparation, excluding legal fees, and printing of all
amendments and supplements to the Funds' Prospectus and
SAI if the amendment or supplement arises from
Distributor's activities or rules and regulations related
to Distributor's activities and those expenses would not
otherwise have been incurred by the Funds. Distributor
will pay all expenses incurred by Distributor in
advertising, promoting and selling Fund Shares.

(d) Prior to the continuous offering of any Fund Shares,
commencing on a date agreed upon by the Fund and the
Distributor, it is contemplated that the Distributor may
solicit subscriptions for such Shares during a
subscription period which shall last for such period as
may be agreed upon by the parties hereto. The
subscriptions will be payable within three business days
after the termination of the subscription period, at
which time the Fund will commence operations.

4. Selling Agreements. Distributor is authorized to enter
into agreements with other broker-dealers providing for the
solicitation of unconditional orders for purchases of the Funds'
Shares authorized for issuance and registered under SA-33 and fix
therein the portion of the sales charge which may be reallowed to
the selected dealers, as permitted under that Fund's prospectus.
All such agreements shall be either in the form of agreement
attached hereto or in such other form as may be approved by the
officers of the Fund ("Selling Agreement"). Within the United
States, the Distributor shall offer and sell Shares to such
selected dealers as are members in good standing of the NASD;
"banks" as such term is defined in Section 3(a)(6) of the Exchange
Act or a "bank holding company" as such term is defined in the
Bank Holding Company Act of 1956, as amended, duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it was organized; and such other entities or
purchasers as otherwise mutually agreed in writing.

5. Conduct of Business. Other than as set forth in the
Funds' currently effective prospectus, Distributor will not
distribute any sales material or statements except literature or
advertising which conforms to the requirements of federal and
state securities laws and regulations which have been filed, where
necessary, with the appropriate regulatory authorities. Upon any
Fund's request, Distributor will furnish the Fund with copies of
all such materials prior to their use. Any sales material or
statements the substance of which is not included in the
Prospectus or SAI shall be submitted for advance approval by the
Fund.

6. Solicitation of Orders to Purchase Shares by Fund. The
rights granted to the Distributor shall be non-exclusive in that
the Funds reserve the right to solicit purchases from, and sell
its Shares to, investors. Further, the Funds reserve the right to
issue Shares in connection with the merger or consolidation of any
other investment company, trust or personal holding company with
any Fund, or any Fund's acquisition, by the purchase or otherwise,
of all or substantially all of the assets of an investment
company, trust or personal holding company, or substantially all
of the outstanding Shares or interests of any such entity. Any
right granted to Distributor to solicit purchases of Shares will
not apply to Shares that may be offered by any Fund to
shareholders by virtue of their being shareholders of the Fund.

7. Shares Covered by this Agreement. This Agreement relates
to the solicitation of orders to purchase Shares that are duly
authorized and registered and available for sale by the Funds,
including redeemed or repurchased Shares if and to the extent that
they may be legally sold and if, but only if, a Fund authorizes
the Distributor to sell them.

8. Public Offering Price. The public offering price for the
Funds' Shares will be the net asset value per Share next
determined by the Funds after the Distributor or its appointed
agent receives the order plus any sales charge as set forth in the
Funds' Prospectus. The net asset value per Share shall be
determined in the manner provided in each Fund's Agreement and
Declaration of Trust as now in effect or as they may be amended,
and as reflected in the Funds' then current Prospectus and SAI.

9. Compensation.

(a) Sales Charge. Distributor shall be entitled to charge a
sales charge on the sale or redemption, as appropriate,
of each series and class of each Fund's Shares as set
forth in the Fund's then current Prospectus. Distributor
may allow any dealers with which it has signed selling
agreements such commissions or discounts from and not
exceeding the total sales charge as Distributor shall
deem advisable, so long as any such commissions or
discounts are set forth in the Fund's current Prospectus
to the extent required by the applicable federal and
state securities laws. Distributor may also make
payments to dealers from Distributor's own resources,
subject to the following conditions: (a) any such
payments shall not create any obligation for or recourse
against the Fund or any series or class, and (b) the
terms and conditions of any such payments are consistent
with the Fund's Prospectus and applicable federal and
state securities laws and are disclosed in the Prospectus
or SAI to the extent such laws may require.

(b) Distribution Plans. Distributor shall also be entitled
to compensation for its services as provided in any
Distribution Plan adopted as to any series and class of
any Fund's Shares pursuant to Rule 12b-1 under the 1940
Act.

10. Suspension of Sales. If and whenever the determination
of a Fund's net asset value is suspended and until such suspension
is terminated, the Distributor shall not accept orders for Shares
except for unconditional orders placed before the suspension. In
addition, each Fund reserves the right to suspend sales of Shares
if, in the judgment of the Board of the Fund, it is in the best
interest of the Fund to do so, such suspension to continue for
such period as may be determined by the Board of the Fund; and in
that event, (i) at the direction of the Fund, Distributor shall
suspend receipt and acceptance of orders to purchase Shares of the
Fund until otherwise instructed by the Fund and (ii) the
Distributor shall not accept orders to purchase Shares while such
suspension remains in effect unless otherwise directed by the
Board.

11. Orders and Payment for Shares.

(a) Distributor shall direct orders for the purchase of
Shares of any series to the Fund's transfer agent. At or
prior to the time of delivery of any Shares the
Distributor will pay or cause to be paid to the custodian
of the Fund's assets, for the account of such series, an
amount in cash equal to the purchase price of such
Shares. The Fund's custodian and transfer agent shall be
identified in its Prospectus.

(b) The Fund, or any agent of the Fund designated in writing
by the Fund, shall be promptly advised of all purchase
orders for Fund Shares received by the Distributor. Any
order may be rejected by the Fund; provided, however,
that the Fund will not arbitrarily or without reasonable
cause refuse to accept or confirm orders for the purchase
of Fund Shares from eligible investors.

12. Repurchase or Redemption of Shares by the Fund.

(a) Any of the outstanding Fund Shares may be tendered to the
transfer agent for redemption at any time, other than
when the Fund suspends redemptions as permitted by the
Prospectus or applicable law, and the Fund agrees to
repurchase or redeem the Shares so tendered in accordance
with its obligations as set forth in its Agreement and
Declaration of Trust, as amended from time to time, and
in accordance with the applicable provisions set forth
in the Prospectus and SAI. The price to be paid to
redeem or repurchase the Shares shall be equal to the net
asset value calculated in accordance with the provisions
of the Fund's Prospectus and SAI, less any contingent
deferred sales charge ("CDSC"), redemption fee or other
charge(s), if any, set forth in the Prospectus or SAI of
the Fund. All payments by the Fund hereunder shall be
made in the manner set forth below.

(b) If Shares are tendered to the transfer agent for
redemption or repurchase by the Fund within seven
business days after Distributor's acceptance of the
original purchase order for such Shares, Distributor will
immediately refund to the Fund the full sales commission
(net of allowances to dealers or brokers) allowed to
Distributor on the original sale, and will promptly, upon
receipt thereof, pay to the Fund any refunds from dealers
or brokers of the balance of sales commissions reallowed
by Distributor. The transfer agent shall notify
Distributor of such tender for redemption within ten days
of the day on which notice of such tender for redemption
is received by the transfer agent.

(c) The transfer agent shall pay the total amount of the
redemption price as defined in the above paragraph 12(a),
pursuant to the instructions of the Distributor in
Federal Funds on or before the seventh business day
subsequent to its having received the notice of
redemption in proper form except as otherwise provided in
the Prospectus or SAI of the Fund. The proceeds of any
redemption of Shares shall be paid by the transfer agent
as follows: (i) any applicable CDSC shall be paid to the
Distributor, and (ii) the balance shall be paid to or for
the account of the shareholder, in each case in
accordance with the applicable provision of the
Prospectus and SAI.

13. Purchases for your own Account. Distributor may
purchase Shares for its own investment account upon Distributor's
written assurance that the purchase is for investment purposes and
that the Shares will not be resold except through redemption by
the Fund.

14. Stein Roe & Farnham Incorporated Investment Programs.
In connection with any program under which Stein Roe & Farnham
Incorporated or one of its affiliates offers investment advice to
shareholders, the Distributor is authorized to offer and sell
Shares of the Fund, as principal, to participants in such program.
The terms of this Agreement shall apply to such sales, including
terms as to the offering price of Shares, the proceeds to be paid
to the Fund, the duties of the Distributor, the payment of
expenses and indemnification obligations of the Fund and the
Distributor.

15. Authorized Representations. No Fund is authorized by
the Distributor to give on behalf of the Distributor any
information or to make any representations other than the
information and representations contained in the Fund's
registration statement filed with the SEC under SA-33 and/or ICA-
40 as it may be amended from time to time.

16. Registration of Additional Shares. The Fund hereby
agrees to register an indefinite number of Shares pursuant to Rule
24f-2 under ICA-40, as amended. The Fund will, in cooperation
with the Distributor, take such action as may be necessary from
time to time to qualify the Shares (so registered or otherwise
qualified for sale under SA-33), in any state mutually agreeable
to the Distributor and the Fund, and to maintain such
qualification; provided, however, that nothing herein shall be
deemed to prevent the Fund from registering its Shares without
approval of the Distributor in any state it deems appropriate.

17. Conformity With Law. Distributor agrees that in
soliciting orders to purchase Shares it shall duly conform in all
respects with applicable federal and state laws and the rules and
regulations of the NASD. Distributor will use its best efforts to
maintain its registrations in good standing during the term of
this Agreement and will promptly notify the Fund and Stein Roe &
Farnham Incorporated in the event of the suspension or termination
of any of the registrations.

18. Independent Contractor. Distributor shall be an
independent contractor and neither the Distributor, nor any of its
officers, directors, employees, or representatives is or shall be
an employee of the Fund in the performance of Distributor's duties
hereunder. Distributor shall be responsible for its own conduct
and the employment, control, and conduct of its agents and
employees and for injury to such agents or employees or to others
through its agents and employees and agrees to pay all employee
taxes thereunder. Distributor may appoint sub-agents or
distribute through dealers or otherwise as Distributor may
determine from time to time, but this Agreement shall not be
construed as authorizing any dealer or other person to accept
orders for sale or repurchase on the Fund's behalf or otherwise
act as the Fund's agent for any purpose.

19. Indemnification. Distributor agrees to indemnify and
hold harmless the Fund and each of the members of its Board and
its officers, employees and representatives and each person, if
any, who controls the Fund within the meaning of Section 15 of SA-
33 against any and all losses, liabilities, damages, claims and
expenses (including the reasonable costs of investigating or
defending any alleged loss, liability, damage, claim or expense
and reasonable legal counsel fees incurred in connection
therewith) to which the Fund or such of the members of its Board
and of its officers, employees, representatives, or controlling
person or persons may become subject under SA-33, under any other
statute, at common law, or otherwise, arising out of or based upon
(i) any violation of an applicable law, rule or regulation or
wrongful act by Distributor or any of Distributor's directors,
officers, employees or representatives, or (ii) any untrue
statement or alleged untrue statement of a material fact contained
in a registration statement, Prospectus, SAI, shareholder report
or other information covering Shares of the Fund filed or made
public by the Fund or any amendment thereof or supplement thereto
or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading if such statement or omission
was made in reliance upon information furnished to the Fund by
Distributor in writing. In no case (i) is Distributor's indemnity
in favor of the Fund, or any person indemnified, to be deemed to
protect the Fund or such indemnified person against any liability
to which the Fund or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or negligence in the
performance of its or his duties or by reason of its or his
reckless disregard of its or his obligations and duties under this
Agreement or (ii) is Distributor to be liable under its indemnity
agreement contained in this paragraph with respect to any claim
made against the Fund or any person indemnified unless the Fund or
such person, as the case may be, shall have notified Distributor
in writing of the claim within a reasonable time after the
summons, or other first written notification, giving information
of the nature of the claim served upon the Fund or upon such
person (or after the Fund or such person shall have received
notice of such service on any designated agent). However, failure
to notify Distributor of any such claim shall not relieve
Distributor from any liability which Distributor may have to the
Fund or any person against whom such action is brought otherwise
than on account of Distributor's indemnity agreement contained in
this Paragraph.

Distributor shall be entitled to participate, at its own
expense, in the defense, or, if Distributor so elects, to assume
the defense of any suit brought to enforce any such claim but, if
Distributor elects to assume the defense, such defense shall be
conducted by legal counsel chosen by Distributor and satisfactory
to the persons indemnified who are defendants in the suit. In the
event that Distributor elects to assume the defense of any such
suit and retain such legal counsel, persons indemnified who are
defendants in the suit shall bear the fees and expenses of any
additional legal counsel retained by them. If Distributor does
not elect to assume the defense of any such suit, Distributor will
reimburse persons indemnified who are defendants in such suit for
the reasonable fees of any legal counsel retained by them in such
litigation.

Each Fund agrees to indemnify and hold harmless Distributor
and each of its directors, officers, employees, and
representatives and each person, if any, who controls Distributor
within the meaning of Section 15 of SA-33 against any and all
losses, liabilities, damages, claims or expenses (including the
damage, claim or expense and reasonable legal counsel fees
incurred in connection therewith) to which Distributor or such of
its directors, officers, employees, representatives or controlling
person or persons may become subject under SA-33, under any other
statute, at common law, or otherwise arising out of or based upon
(i) any violation of applicable law, rule or regulation or
wrongful act by the Fund or any of the members of the Fund's
Board, or the Fund's officers, employees or representatives other
than Distributor, or (ii) any untrue statement or alleged untrue
statement of a material fact contained in a registration
statement, Prospectus, SAI, shareholder report or other
information covering Shares filed or made public by the Fund or
any amendment thereof or supplement thereto, or the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading unless such statement or omission was made in reliance
upon information furnished by Distributor to the Fund. In no case
(i) is the Fund's indemnity in favor of the Distributor or any
person indemnified to be deemed to protect the Distributor or such
indemnified person against any liability to which Distributor or
such indemnified person would otherwise be subject by reason of
willful misfeasance, bad faith, or negligence in the performance
of its or his duties or by reason of its or his reckless disregard
of its or his obligations and duties under this Agreement, or (ii)
is the Fund to be liable under its indemnity agreement contained
in this Paragraph with respect to any claim made against
Distributor or any person indemnified unless Distributor, or such
person, as the case may be, shall have notified the Fund in
writing of the claim within a reasonable time after the summons,
or other first written notification, giving information of the
nature of the claim served upon Distributor or upon such person
(or after Distributor or such person shall have received notice of
such service on any designated agent). However, failure to notify
a Fund of any such claim shall not relieve the Fund from any
liability which the Fund may have to Distributor or any person
against whom such action is brought otherwise than on account of
the Fund's indemnity agreement contained in this Paragraph.

Each Fund shall be entitled to participate, at its own
expense, in the defense or, if the Fund so elects, to assume the
defense of any suit brought to enforce such claim but, if the Fund
elects to assume the defense, such defense shall be conducted by
legal counsel chosen by the Fund and satisfactory to the persons
indemnified who are defendants in the suit. In the event that the
Fund elects to assume the defense of any such suit and retain such
legal counsel, the persons indemnified who are defendants in the
suit shall bear the fees and expenses of any additional legal
counsel retained by them. If the Fund does not elect to assume
the defense of any such suit, the Fund will reimburse the persons
indemnified who are defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them in such
litigation.

20. Duration and Termination of this Agreement. With
respect to the Fund and the Distributor, this Agreement shall
become effective upon its execution ("Effective Date") and unless
terminated as provided herein, shall remain in effect through June
30, 1998, and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually (a) by
a vote of majority of the members of the Board of the Fund who are
not interested persons of the Distributor or of the Fund, voting
in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of either the Board of the Fund or a
majority of the outstanding Shares of the Fund. This Agreement
may be terminated by and between an individual Fund and
Distributor at any time, without the payment of any penalty (a) on
60 days' written notice, by the Board of the Fund or by a vote of
a majority of the outstanding Shares of the Fund, or by
Distributor, or (b) immediately, on written notice by the Board of
the Fund, in the event of termination or suspension of any of the
Registrations. This Agreement will automatically terminate in the
event of its assignment. In interpreting the provisions of this
Paragraph 20 the definitions contained in Section 2(a) of ICA-40
(particularly the definitions of "interested person",
"assignment", and "majority of the outstanding Shares") shall be
applied.

21. Amendment of this Agreement. No provision of this
Agreement may be changed, waived, discharged, or terminated
orally, but only by an instrument in writing signed by each party
against which enforcement of the change, waiver, discharge, or
termination is sought. If the Fund should at any time deem it
necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the
recommendations or requirements of the SEC or any other
governmental authority or to obtain any advantage under state or
Federal tax laws and notifies Distributor of the form of such
amendment, and the reasons therefor, and if Distributor should
decline to assent to such amendment, the Fund may terminate this
Agreement forthwith. If Distributor should at any time request
that a change be made in the Fund's Agreement and Declaration of
Trust or By-Laws or in its methods of doing business, in order to
comply with any requirements of Federal law or regulations of the
SEC, or of a national securities association of which Distributor
is or may be a member, relating to the sale of Shares, and the
Fund should not make such necessary changes within a reasonable
time, Distributor may terminate this Agreement forthwith.

22. Liability. It is understood and expressly stipulated
that neither the shareholders of the Fund nor the members of the
Board of the Fund shall be personally liable hereunder. The
obligations of the Fund are not personally binding upon, nor shall
resort to the private property of, any of the members of the Board
of the Fund, nor of the shareholders, officers, employees or
agents of the Fund, but only the Fund's property shall be bound.
A copy of the Declaration of Trust and of each amendment thereto
has been filed by the Trust with the Secretary of State of The
Commonwealth of Massachusetts and with the Clerk of the City of
Boston, as well as any other governmental office where such filing
may from time to time be required.

23. Miscellaneous. The captions in this Agreement are
included for convenience or reference only, and in no way define
or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
and the same instrument.

24. Notice. Any notice required or permitted to be given by
a party to this Agreement or to any other party hereunder shall be
deemed sufficient if delivered in person or sent by registered or
certified mail, postage prepaid, addressed by the party giving
notice to each such other party at the address provided below or
to the last address furnished by each such other party to the
party giving notice.

If to the Fund: One South Wacker Drive
Chicago, Illinois 60606
Attn: Secretary

If to Distributor: One Financial Center
Boston, Massachusetts 02111
Attn: Secretary

LIBERTY FUNDS DISTRIBUTOR, INC.

By:_____________________________
ATTEST:

_______________________

STEIN ROE INVESTMENT TRUST
STEIN ROE INCOME TRUST
STEIN ROE MUNICIPAL TRUST

By: THOMAS W. BUTCH
Thomas W. Butch
President
ATTEST:

NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary

<PAGE>

Schedule A to Underwriting Agreement
Between the Stein Roe Investment Trust, Stein Roe Income Trust,
and Stein Roe Municipal Trust and
Liberty Funds Distributor, Inc.

The series of the Trust covered by this agreement are:

Stein Roe Investment Trust
Stein Roe International Fund
Stein Roe Growth & Income Fund
Stein Roe Balanced Fund
Stein Roe Growth Stock Fund
Stein Roe Disciplined Stock Fund
Stein Roe Young Investor Fund
Stein Roe Growth Investor Fund
Stein Roe Capital Opportunities Fund
Stein Roe Midcap Growth Fund
Stein Roe Small Company Growth Fund
Stein Roe Asia Pacific Fund
Stein Roe Large Company Focus Fund

Stein Roe Income Trust
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

Stein Roe Municipal Trust
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund

Dated: August 3, 1999

<PAGE>
STEIN ROE FUNDS
AMENDED AND RESTATED
ACCOUNTING AND BOOKKEEPING AGREEMENT

This Agreement is made this 3rd day of August, 1999 by and
between Stein Roe Municipal Trust, a Massachusetts business trust,
(hereinafter referred to as the "Trust") and Stein Roe & Farnham
Incorporated ("Stein Roe"), a Delaware corporation.

1. Appointment. The Trust hereby appoints Stein Roe to act as
its agent to perform the services described herein with respect to
each series of shares of the Trust (the "Series") identified in
and beginning on the date specified on Appendix I to this
Agreement, as may be amended from time to time. Stein Roe hereby
accepts appointment as the Trust's agent and agrees to perform the
services described herein.

2. Accounting.

(a) Pricing. For each Series of the Trust, Stein Roe shall
value all securities and other assets of the Series, and
compute the net asset value per share of such Series, at
such times and dates and in the manner and by such
methodology as is specified in the then currently
effective prospectus and statement of additional
information for such Series, and pursuant to such other
written procedures or instructions furnished to Stein Roe
by the Trust. To the extent procedures or instructions
used to value securities or other assets of a Series under
this Agreement are at any time inconsistent with any
applicable law or regulation, the Trust shall provide
Stein Roe with written instructions for valuing such
securities or assets in a manner which the Trust
represents to be consistent with applicable law and
regulation.

(b) Net Income. Stein Roe shall calculate with such frequency
as the Trust shall direct, the net income of each Series
of the Trust for dividend purposes and on a per share
basis. Such calculation shall be at such times and dates
and in such manner as the Trust shall instruct Stein Roe
in writing. For purposes of such calculation, Stein Roe
shall not be responsible for determining whether any
dividend or interest accruable to the Trust is or will be
actually paid, but will accrue such dividend and interest
unless otherwise instructed by the Trust.

(c) Capital Gains and Losses. Stein Roe shall calculate gains
or losses of each Series of the Trust from the sale or
other disposition of assets of that Series as the Trust
shall direct.

(d) Yields. At the request of the Trust, Stein Roe shall
compute yields for each Series of the Trust for such
periods and using such formula as shall be instructed by
the Trust.

(e) Communication of Information. Stein Roe shall provide the
Trust, the Trust's transfer agent and such other parties
as directed by the Trust with the net asset value per
share, the net income per share and yields for each Series
of the Trust at such time and in such manner and format
and with such frequency as the parties mutually agree.

(f) Information Furnished by the Trust. The Trust shall
furnish Stein Roe with any and all instructions,
explanations, information, specifications and
documentation deemed necessary by Stein Roe in the
performance of its duties hereunder, including, without
limitation, the amounts and/or written formula for
calculating the amounts, and times of accrual of
liabilities and expenses of each Series of the Trust. The
Trust shall also at any time and from time to time furnish
Stein Roe with bid, offer and/or market values of
securities owned by the Trust if the same are not
available to Stein Roe from a pricing or similar service
designated by the Trust for use by Stein Roe to value
securities or other assets. Stein Roe shall at no time be
required to commence or maintain any utilization of, or
subscriptions to, any such service which shall be the sole
responsibility and expense of the Trust.

3. Recordkeeping.

(a) Stein Roe shall, as agent for the Trust, maintain and keep
current and preserve the general ledger and other
accounts, books, and financial records of the Trust
relating to activities and obligations under this
Agreement in accordance with the applicable provisions of
Section 31(a) of the General Rules and Regulations under
the Investment Company Act of 1940, as amended (the
"Rules").

(b) All records maintained and preserved by Stein Roe pursuant
to this Agreement which the Trust is required to maintain
and preserve in accordance with the Rules shall be and
remain the property of the Trust and shall be surrendered
to the Trust promptly upon request in the form in which
such records have been maintained and preserved.

(c) Stein Roe shall make available on its premises during
regular business hours all records of a Trust for
reasonable audit, use and inspection by the Trust, its
agents and any regulatory agency having authority over the
Trusts.

4. Instructions, Opinion of Counsel, and Signatures.

(a) At any time Stein Roe may apply to a duly authorized agent
of the Trust for instructions regarding the Trust, and may
consult counsel for such Trust or its own counsel, in
respect of any matter arising in connection with this
Agreement, and it shall not be liable for any action taken
or omitted by it in good faith in accordance with such
instructions or with the advice or opinion of such
counsel. Stein Roe shall be protected in acting upon any
such instruction, advice, or opinion and upon any other
paper or document delivered by the Trust or such counsel
believed by Stein Roe to be genuine and to have been
signed by the proper person or persons and shall not be
held to have notice of any change of authority of any
officer or agent of the Trust, until receipt of written
notice thereof from such Trust.

(b) Stein Roe may receive and accept a certified copy of a
vote of the Board of Trustees of the Trust as conclusive
evidence of (i) the authority of any person to act in
accordance with such vote or (ii) any determination or any
action by the Board of Trustees pursuant to its Agreement
and Declaration of Trust as described in such vote, and
such vote may be considered as in full force and effect
until receipt by Stein Roe of written notice to the
contrary.

5. Compensation. The Trust shall reimburse Stein Roe from the
assets of the respective applicable Series of the Trust, for any
and all out-of-pocket expenses and charges in performing services
under this Agreement and such compensation as is provided in
Appendix II to this Agreement, as amended from time to time.
Stein Roe shall invoice the Trust as soon as practicable after the
end of each calendar month, with allocation among the respective
Series and full detail, and the Trust shall promptly pay Stein Roe
the invoiced amount.

6. Confidentiality of Records. Stein Roe agrees not to disclose
any information received from the Trust to any other client of
Stein Roe or to any other person except its employees and agents,
and shall use its best efforts to maintain such information as
confidential. Upon termination of this Agreement, Stein Roe shall
return to the Trust all records in the possession and control of
Stein Roe related to such Trust's activities, other than Stein
Roe's own business records, it being also understood and agreed
that any programs and systems used by Stein Roe to provide the
services rendered hereunder will not be given to any Trust.

7. Liability and Indemnification.

(a) Stein Roe shall not be liable to any Trust for any action
taken or thing done by it or its employees or agents on
behalf of the Trust in carrying out the terms and
provisions of this Agreement if done in good faith and
without negligence or misconduct on the part of Stein Roe,
its employees or agents.

(b) The Trust shall indemnify and hold Stein Roe, and its
controlling persons, if any, harmless from any and all
claims, actions, suits, losses, costs, damages, and
expenses, including reasonable expenses for counsel,
incurred by it in connection with its acceptance of this
Agreement, in connection with any action or omission by it
or its employees or agents in the performance of its
duties hereunder to the Trust, or as a result of acting
upon instructions believed by it to have been executed by
a duly authorized agent of the Trust or as a result of
acting upon information provided by the Trust in form and
under policies agreed to by Stein Roe and the Trust,
provided that: (i) to the extent such claims, actions,
suits, losses, costs, damages, or expenses relate solely
to one or more Series, such indemnification shall be only
out of the assets of that Series or group of Series; (ii)
this indemnification shall not apply to actions or
omissions constituting negligence or misconduct on the
part of Stein Roe or its employees or agents, including
but not limited to willful misfeasance, bad faith, or
gross negligence in the performance of their duties, or
reckless disregard of their obligations and duties under
this Agreement; and (iii) Stein Roe shall give the Trust
prompt notice and reasonable opportunity to defend against
any such claim or action in its own name or in the name of
Stein Roe.

(c) Stein Roe shall indemnify and hold harmless the Trust from
and against any and all claims, demands, expenses and
liabilities which such Trust may sustain or incur arising
out of, or incurred because of, the negligence or
misconduct of Stein Roe or its agents or contractors, or
the breach by Stein Roe of its obligations under this
Agreement, provided that: (i) this indemnification shall
not apply to actions or omissions constituting negligence
or misconduct on the part of such Trust or its other
agents or contractors and (ii) such Trust shall give Stein
Roe prompt notice and reasonable opportunity to defend
against any such claim or action in its own name or in the
name of such Trust.

8. Further Assurances. Each party agrees to perform such further
acts and execute such further documents as are necessary to
effectuate the purposes hereof.

9. Dual Interests. It is understood and agreed that some person
or persons may be trustees, officers, or shareholders of both the
Trusts and Stein Roe, and that the existence of any such dual
interest shall not affect the validity hereof or of any
transactions hereunder except as otherwise provided by specific
provision of applicable law.

10. Amendment and Termination. This Agreement may be modified or
amended from time to time, or terminated, by mutual agreement
between the parties hereto and may be terminated by at least one
hundred eighty (180) days' written notice given by one party to
the other. Upon termination hereof, the Trust shall pay to Stein
Roe such compensation as may be due from it as of the date of such
termination, and shall reimburse Stein Roe for its costs,
expenses, and disbursements payable under this Agreement to such
date. In the event that, in connection with termination, a
successor to any of the duties or responsibilities of Stein Roe
hereunder is designated by a Trust by written notice to Stein Roe,
Stein Roe shall promptly upon such termination and at the expense
of such Trust, deliver to such successor all relevant books,
records, and data established or maintained by Stein Roe under
this Agreement and shall cooperate in the transfer of such duties
and responsibilities, including provision, at the expense of such
Trust, for assistance from Stein Roe personnel in the
establishment of books, records, and other data by such successor.

11. Assignment. Any interest of Stein Roe under this Agreement
shall not be assigned or transferred either voluntarily or
involuntarily, by operation of law or otherwise, without prior
written notice to the Trust.

12. Use of Affiliated Companies and Subcontractors. In connection
with the services to be provided by Stein Roe under this
Agreement, Stein Roe may, to the extent it deems appropriate, and
subject to compliance with the requirements of applicable laws and
regulations and upon receipt of approval of the Trustees, make use
of (i) its affiliated companies and their directors, trustees,
officers, and employees and (ii) subcontractors selected by Stein
Roe, provided that Stein Roe shall supervise and remain fully
responsible for the services of all such third parties in
accordance with and to the extent provided by this Agreement. All
costs and expenses associated with services provided by any such
third parties shall be borne by Stein Roe or such parties.

13. Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or sent by registered mail, postage
prepaid to the other party at such address as such other party may
designate for the receipt of such notices. Until further notice
to the other parties, it is agreed that the address of the Trust
and Stein Roe is One South Wacker Drive, Chicago, Illinois 60606,
Attention: Secretary.

14. Non-Liability of Trustees and Shareholders. Any obligation of
the Trust hereunder shall be binding only upon the assets of that
Trust (or the applicable Series thereof), as provided in the
Agreement and Declaration of Trust of that Trust, and shall not be
binding upon any Trustee, officer, employee, agent or shareholder
of the Trust or upon any other Trust. Neither the authorization
of any action by the Trustees or the shareholders of the Trust,
nor the execution of this Agreement on behalf of the Trust shall
impose any liability upon any Trustee or any shareholder. Nothing
in this Agreement shall protect any Trustee against any liability
to which such Trustee would otherwise be subject by willful
misfeasance, bad faith or gross negligence in the performance of
his duties, or reckless disregard of his obligations and duties
under this Agreement. In connection with the discharge and
satisfaction of any claim made by Stein Roe against the Trust
involving more than one Series, the Trust shall have the exclusive
right to determine the appropriate allocations of liability for
any such claim between or among the Series.

15. References and Headings. In this Agreement and in any such
amendment, references to this Agreement and all expressions such
as "herein," "hereof," and "hereunder," shall be deemed to refer
to this Agreement as amended or affected by any such amendments.
Headings are placed herein for convenience of reference only and
shall not be taken as part hereof or control or affect the
meaning, construction or effect of this Agreement. This Agreement
may be executed in any number of counterparts, each of which shall
be deemed an original.

16. Governing Law. This Agreement shall be governed by the laws
of the State of Illinois.

IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the day and year first above written.

STEIN ROE MUNICIPAL TRUST

Attest: By: THOMAS W. BUTCH
NICOLETTE D. PARRISH Thomas W. Butch, President
Nicolette D. Parrish
Assistant Secretary

STEIN ROE & FARNHAM INCORPORATED

Attest: By: THOMAS W. BUTCH
NICOLETTE D. PARRISH Thomas W. Butch
Nicolette D. Parrish President, Mutual Funds
Assistant Secretary Division

<PAGE>

STEIN ROE MUNICIPAL TRUST
ACCOUNTING & BOOKKEEPING AGREEMENT
APPENDIX I

The series of the Trust currently subject to this Agreement are as
follows:

Series Effective Date
Stein Roe Intermediate Municipals Fund August 3, 1999
Stein Roe High-Yield Municipals Fund August 3, 1999
Stein Roe Municipal Money Market Fund August 3, 1999
Stein Roe Managed Municipals Fund August 3, 1999

Dated: August 3, 1999

<PAGE>

STEIN ROE MUNICIPAL TRUST
ACCOUNTING & BOOKKEEPING AGREEMENT
APPENDIX II

For the services provided under the Accounting & Bookkeeping
Agreement (the "Agreement"), the Trust shall pay Stein Roe an
annual fee with respect to each series, calculated and paid
monthly, equal to $25,000 plus .0025 percent per annum of the
average daily net assets of the series in excess of $50 million.
Such fee shall be paid within thirty days after receipt of monthly
invoice.

<PAGE>

RESTATED AGENCY AGREEMENT

This agreement, effective this 1st day of August, 1995,
amends and restates (a) the agreement dated December 31, 1987,
as amended by amendments dated May 1, 1995, July 29, 1992,
February 1, 1991, and August 1, 1988 (the "Agreement") by and
between STEINROE MUNICIPAL TRUST, a Massachusetts business
trust, and STEINROE SERVICES INC. (hereinafter referred to as
"SSI"), a Massachusetts corporation and (b) the agreement
dated February 11, 1986, as amended by amendments dated May 1,
1995, July 29, 1992, February 1, 1991, August 1, 1988, and
March 3, 1987, among STEINROE INCOME TRUST and STEINROE
INVESTMENT TRUST, each a Massachusetts business trust, and
SSI. [SteinRoe Municipal Trust, SteinRoe Income Trust, and
SteinRoe Investment Trust are referred to hereinafter
individually as a "Trust" and collectively as the "Trusts."]

WITNESSETH:

1. APPOINTMENT. Each Trust hereby appoints SSI,
effective as of the date hereof, as its agent in connection
with the issue, redemption, and transfer of shares of
beneficial interest of the Trust, including shares of each
respective series of the Trust (hereinafter called the
"Shares"), and to process investment income and capital gain
distributions with respect to such Shares, to perform certain
duties in connection with the Trust's withdrawal and other
plans, to mail proxy and other materials to the Trust's
shareholders upon the terms and conditions set forth herein,
and to perform such other and further duties as are agreed
upon between the parties from time to time.

2. ACKNOWLEDGMENT. SSI acknowledges that it has
received from each Trust the following documents:

A. A certified copy of the Agreement and Declaration of
Trust and any amendments thereto;

B. A certified copy of the By-Laws of Trust;

C. A certified copy of the resolution of its Board of
Trustees authorizing this Agreement;

D. Specimens of all forms of Share certificates as
approved by its Board of Trustees with a statement
of its Secretary certifying such approval;

E. Samples of all account application forms and other
documents relating to shareholders accounts,
including terms of its Systematic Withdrawal Plan;

F. Certified copies of any resolutions of the Board of
Trustees authorizing the issue of authorized but
unissued Shares;

G. An opinion of counsel for the Trust with respect to
the validity of the Shares, the status of
repurchased Shares and the number of Shares

<PAGE> 2
with respect to which a Registration Statement has
been filed and is in effect;

H. A certificate of incumbency bearing the signatures of
the officers of the Trust who are authorized to sign
Share certificates, to sign checks and to sign
written instructions to SSI.

3. ADDITIONAL DOCUMENTATION. Each Trust will also furnish
SSI from time to time with the following documents:

A. Certified copies of each amendment to its Agreement
and Declaration of Trust and By-Laws;

B. Each Registration Statement filed with the Securities
and Exchange Commission and amendments thereto with
respect to its Shares;

C. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions
to SSI;

D. Specimens of all new Share certificates accompanied
by certified copies of Board of Trustees resolutions
approving such forms;

E. Forms and terms with respect to new plans that may be
instituted and such other certificates, documents or
opinions that SSI may from time to time, in its
discretion, deem necessary or appropriate in the
proper performance of its duties.

4. AUTHORIZED SHARES. Each Trust certifies to SSI that,
as of the date of this Agreement, it may issue unlimited
number of Shares of the same class in one or more series as
the Board of Trustees may authorize. The series authorized as
of the date of this Agreement are listed in Schedule B.

5. REGISTRATION OF SHARES. SSI shall record issuances
of Shares based on the information provided by each Trust.
SSI shall have no obligation to a Trust, when countersigning
and issuing Shares, whether evidenced by certificates or in
uncertificated form, to take cognizance of any law relating to
the issuance and sale of Shares, except as specifically agreed
in writing between SSI and the Trusts, and shall have no such
obligation to any shareholder except as specifically provided
in Sections 8-205, 8-208 and 8-406 of the Uniform Commercial
Code. Based on data provided by each Trust of Shares
registered or qualified for sale in various states, SSI will
advise the Trusts when any sale of Shares to a resident of a
state would result in total sales in that state in excess of
the amount registered or qualified in that state.

6. SHARE CERTIFICATES. Each Trust shall supply SSI with
a sufficient supply of serially pre-numbered blank Share
certificates, which shall contain the appropriate series
designation, if applicable. Such blank certificates shall be
properly prepared and signed by authorized officers of Trust
manually or, if authorized by Trust, by facsimile and shall
bear the seal of Trust or a facsimile thereof. Notwithstanding
the death, resignation, or removal of any officer authorized to
sign

<PAGE> 3
certificates, SSI may continue to countersign certificates
which bear the manual or facsimile signature of such officer
as directed by Trust.

7. CHECKS. Each Trust shall supply SSI with a
sufficient supply of serially pre-numbered blank checks for
the dividend bank accounts and for the principal bank accounts
of Trust. SSI shall prepare and sign by facsimile signature
plates, bearing the facsimiles of the signatures of authorized
signatories, dividend account checks for payment of ordinary
income dividends and capital gain distributions and principal
account checks for payment of redemptions of Shares, including
those in connection with the Trusts' Withdrawal Plans, refunds
on subscriptions and other capital payments on Shares, in
accordance with this Agreement. SSI shall hold signature
facsimile plates for this purpose and shall exercise
reasonable care in their transportation, storage or use. SSI
may deliver such signature facsimile plates to an agent or
contractor to perform the services described herein, but shall
not be relieved of its duties hereunder by any such delivery.

8. RECORDKEEPING. SSI shall maintain records showing
for each shareholder's account in the appropriate series of
each Trust, the following information and such other
information as may be mutually agreed to from time to time by
the Trusts and SSI:

A. To the extent such information is provided by
shareholders: name(s), address, alphabetical sort
key, client number, tax identification number,
account number, the existence of any special service
or transaction privilege offered by the Trust and
applicable to the shareholder's account including
but not limited to the telephone exchange privilege,
and other similar information;

B. Number of Shares held;

C. Amount of accrued dividends;

D. Information for the current calendar year regarding
the account of the shareholder, including
transactions to date, date of each transaction,
price per share, amount and type of each purchase
and redemption, transfers, amount of accrued
dividends, the amount and date of all distributions
paid, price per share, and amount of all
distributions reinvested;

E. Any stop order currently in effect against the
shareholder's account;

F. Information with respect to any withholding for the
calendar year as required under applicable Federal
and state laws, rules and regulations;

G. The certificate number and date of issuance of each
Share certificate outstanding, if any, representing
a shareholder's Shares in each account, the number
of Shares so represented, and any stop legend on
each certificate;

<PAGE> 4
H. Information with respect to gross proceeds of all
sales transactions as required under applicable
Federal income tax laws, rules and regulations; and

I. Such other information as may be agreed upon by the
Trusts and SSI from time to time.

SSI shall maintain for any account that is closed
("Closed Account") the aforesaid records through the June of
the calendar year following the year in which the account is
closed or such other period as may be mutually agreed to from
time to time by such Trust and SSI.

9. ADMINISTRATIVE SERVICES. SSI shall furnish the
following administrative services to each Trust:

A. Coordination of the printing and dissemination of
Prospectuses, financial reports, and other
shareholder information as are agreed to by SSI and
the Trust from time to time.

B Maintenance of data and statistics and preparation of
reports for internal use and for distribution to the
Board of Trustees concerning shareholder transaction
and service activity.

C. Handling of requests from third parties involving
shareholder records, including, but not limited to,
record subpoenas, tax levies, and orders issued by
courts or administrative or regulatory agencies.

D. Development and monitoring of shareholder service
programs that may be offered from time to time,
including, but not limited to, individual retirement
account and tax-qualified retirement plan programs,
checkwriting redemption privileges, automatic
purchase, exchange and redemption programs, audio
response services, programs involving electronic
transfer of funds, and lock box facilities.

E. Provision of facilities, hardware and software
systems, and equipment in Chicago (and other
locations mutually agreed to by SSI and the Trusts)
to meet the needs of shareholders and prospective
shareholders, including, but not limited to, walk-in
facilities, toll-free telephone numbers, electronic
audio and other communication, accounting and
recordkeeping systems to handle shareholder
transaction, inquiry and other activity, and to
provide management and other personnel required to
staff such facilities and administer such systems.

10. SHAREHOLDER SERVICES. SSI shall provide the
following services as are requested by a Trust in addition to
the transactional and recordkeeping services provided for
elsewhere herein:

A. Responding to communications from shareholders or
their representatives or agents concerning any
matters pertaining to shares

<PAGE> 5
registered in their names, including, but not
limited to, (i) net asset value and average cost
basis information; (ii) shareholder services, plans,
options, and privileges; and (ii) with respect to
the series of the Trust represented by such shares,
information concerning investment policies,
portfolio holdings, performance, and shareholder
distributions and the classification thereof for tax
purposes.

B. Handling of shareholder complaints and correspondence
directed to or brought to the attention of SSI.

C. Soliciting and tabulating proxies of shareholders and
answering questions concerning the subject matter
thereof.

D. Under the direction of the officers of the Trust,
administering a program whereby shareholders whose
mail from the Trust is returned are identified,
current address information for such shareholders is
solicited, and shares and dividend or redemption
proceeds owned by shareholders who cannot be located
are escheated to the proper authorities in
accordance with applicable laws and regulations.

E. Preparing and disseminating special data, notices,
reports, programs, and literature for certain
categories of shareholders based on account
characteristics, or for shareholders generally in
light of industry, market, product, tax, or legal
developments.

F. Assisting any institutional servicing or
recordkeeping agent engaged by SSI and approved by
the Trust in the development, implementation, and
maintenance of special programs and systems to
enhance overall shareholder servicing capability,
consisting of:

(i) Product and system training for personnel of
the institutional servicing agent.
(ii) Joint programs with the institutional servicing
agent to develop customized shareholder
software systems, account statements, and other
information and reports.
(iii) Electronic and telephonic systems and other
technological means by which shareholder
information, account data, and cost of
securities may be exchanged among SSI, the
institutional servicing agent, and their
respective agents or vendors.

G. Furnishing sub-accounting services for retirement
plan shareholders and other shareholders
representing group relationships with special
recordkeeping needs.

H. Providing and supervising the services of employees
whose principal responsibility and function will be
to preserve and strengthen the Trust's relationships
with its shareholders.

I. Such other shareholder and shareholder-related
services, whether similar to or different from those
described in this section as the parties may from
time to time agree in writing.

<PAGE> 6
11. PURCHASES. Upon receipt of a request for purchase
of Shares containing data required by a Trust for processing
of a purchase transaction, SSI will:

A. Compute the number of Shares of the appropriate
series of the Trust to which the purchaser is
entitled and the dollar value of the transaction
according to the price of such Shares as provided by
the Trust for purchases made at that time and date;

B. In the case of a new shareholder, establish an
account for the shareholder, including the
information specified in Section 8 hereof; in the
case of an Exchange as described in Section 14 below
by telephone or telegraph, the account shall have
exactly the same registration as that of the account
of the other series of the Trust or any other series
of another Trust from which the Exchange was made;

C. Transmit to the shareholder by mail or electronically
a confirmation of the purchase, as directed by the
Trust, in such format as agreed to by SSI and the
Trusts, including all information called for
thereby, and, in the case of a purchase for a new
account, shall also furnish the shareholder a
current Prospectus of the applicable series;

D. If applicable, prepare a refund check in the amount
of any overpayment of the subscription price and
deliver it to the Trust for signing; and

E. If a certificate is requested by the shareholder,
prepare, countersign, issue and mail, not earlier
than 30 days after the date of purchase, to the
shareholder at his address of record a Share
certificate for such full Shares purchased.

12. REDEMPTIONS. Instructions to redeem Shares of any
series of a Trust, including instructions for an Exchange as
described in Section 14 below, may be furnished in written
form, or by other means, including but not limited to
telephonic or electronic transmission or by writing a special
form of check, as may be mutually agreed to from time to time
by each Trust and SSI. Upon receipt by SSI of instructions to
redeem which are in "good order," as defined in the Prospectus
of the applicable series and satisfactory to SSI, SSI will:

A. Compute the amount due for the Shares and the total
number of all the Shares redeemed in accordance with
the price per Share as provided by the Trust for
redemptions of such Shares at that time and date,
and transmit to the shareholder by mail or
electronically a confirmation of the redemption, as
directed by the Trust, in such format as agreed to
by SSI and the Trust, including all information
called for thereby;

B. Confirmations of redemptions that result in the
payment of accrued dividends shall indicate the
amount of such payment and any amounts withheld;

<PAGE> 7
C. In the case of a redemption in written form other
than by Exchange, SSI shall transmit to the
shareholder by check or, as may be mutually agreed
to by the Trust and SSI and requested by the
shareholder, electronic means, an amount equal to
the redemption price and any payment of accrued
dividends occasioned by the redemption, net of any
amounts withheld under applicable Federal and state
laws, rules and regulations on or before the seventh
calendar day following the date on which
instructions to redeem in "good order" as defined in
the Prospectus of the applicable series, which
instructions are satisfactory to SSI as received by
SSI. In the case of an Exchange, SSI shall use the
proceeds of the redemption, net of any amounts
withheld under applicable Federal and state laws,
rules and regulations, to purchase Shares of any
other series of the Trust or any other series of
another Trust selected by the person requesting the
Exchange;

D. In the case of Exchanges by telephone or telegraph,
redemptions by telephone or electronic transmission
and redemptions by writing a special form of check,
SSI shall deliver to the Trust, on the business day
following the effective date of such transaction, a
listing of such transaction data in a format agreed
to by the Trusts and SSI from time to time;

E. If any Share certificate or instruction to redeem
tendered to SSI is not satisfactory to SSI, it shall
promptly notify the Trust of such fact together with
the reason therefor;

F. SSI shall cancel promptly Share certificates received
in proper form for redemption and issue, countersign
and mail new Share certificates for the Shares
represented by certificates so cancelled which are
not redeemed;

G. SSI shall advise the Trust and refuse to process any
redemption by electronic transmission or Exchange by
telephone or telegraph or redemptions by writing a
special form of check, if such transaction would
result in the redemption of Shares represented by
outstanding certificates, unless otherwise
instructed by an officer of the Trust.

13. ADMINISTRATION OF WITHDRAWAL PLANS. A redemption
made pursuant to a Withdrawal Plan offered by the Trusts shall
be effected by SSI at the net asset value per Share of the
appropriate series of the Trust on the twentieth day or the
next business day of the month in which the recipient is
scheduled to receive the withdrawal payment. SSI shall
prepare and mail to the recipient on or before the seventh
calendar day after the date of redemption a check in the
amount of each required payment, net of any amounts withheld
under applicable Federal and state laws, rules and
regulations, and also furnish the shareholder a confirmation
of the redemption as described in Section 12 above.

14. EXCHANGES. Upon receipt by SSI of a request to
exchange Shares of a series of a Trust held in a shareholder's
account for those of any other series of the

<PAGE> 8
Trust or any other series of another Trust or vice versa in
written form, by telephone or telegraph or by other electronic
means, containing data required by the Trust for processing
such a transaction, SSI will:

A. If the request is by telephone, telegraph or other
electronic means, verify that the shareholder has
furnished both the series of a Trust from and to
which the Exchange is to be made authorization, in a
form acceptable to such Trust, to accept Exchange
instructions for his account by such means.

B. Process a redemption of the Shares of the series of
the Trust to be redeemed in connection with the
Exchange and apply the proceeds thereof, net of any
amounts withheld under applicable Federal and state
laws, rules and regulations, to purchase shares of
any other series of the Trust or any other series of
another Trust being acquired in accordance with the
respective Trust's redemption and purchase policies
and Sections 11 and 12 of this Agreement.

Any redemption and purchase pursuant to an Exchange shall
be effected as of the time and prices applicable to an order
for redemption or purchase received at the time the request
for Exchange is received.

15. TRANSFER OF SHARES. Upon receipt by SSI of a
request for a transfer of Shares of any series of a Trust, and
receipt of a Share certificate for transfer or an order for
the transfer of Shares in the case of an uncertificated
account, in either case with such endorsements, instruments of
assignment or evidence of succession as may be required by SSI
and accompanied by payment of such transfer taxes, if any, as
may be applicable, and satisfaction of any other conditions
for registration of transfers contained in the Trust's By-
Laws, Prospectuses, and Statements of Additional Information,
SSI will verify the balance of Shares of such series of the
Trust in the account; record the transfer of ownership of such
Shares in its Share certificate and shareholder records for
such series; cancel Share certificates for Shares surrendered
for transfer; establish an account pursuant to Section 8 for
the transferee if a new shareholder; prepare, countersign and
mail new Share certificates for a like number of Shares in the
case of a certificated account; and transmit to the
shareholder by mail or electronically confirmation of the
transfer for each account affected, in a format agreed to by
SSI and the Trust, including all information called for
thereby. SSI shall be responsible for determining that
certificates, orders for transfer, and supporting documents,
if any, are in proper legal form for the transfer of Shares.

16. CHANGES IN SHAREHOLDER RECORDS. Changes in items of
information specified in Section 8 not relating to change in
ownership of Shares will be made by SSI upon receipt of a
request for such change in a format agreed to by SSI and the
Trusts. In the case of any change that SSI and the Trusts
agree requires confirmation, a confirmation of such change in
a format agreed to by SSI and the Trusts shall be transmitted
to the shareholder by mail or electronically.

<PAGE> 9
17. REFUSAL TO REDEEM OR TRANSFER. SSI reserves the
right to refuse to redeem or transfer Shares until reasonably
satisfied that the endorsement on the Share certificates or
written request presented is valid and genuine, and for such
purpose may require where reasonably necessary or appropriate
a guarantee of signature. SSI also reserves the right to
refuse to redeem or transfer Shares until satisfied that the
requested transfer or redemption is legally authorized, and it
shall incur no liability for the refusal in good faith to make
transfers or redemptions which it, in its judgment, deems
improper or unauthorized. Notwithstanding the foregoing, SSI
shall redeem or transfer Shares even though not satisfied as
to the endorsement or legal authority if it is first
indemnified to its reasonable satisfaction against all
expenses and liabilities to which it might, in its judgment,
be subjected by such action.

18. DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. Each
Trust will promptly inform SSI of the declaration of any
dividend or other distribution with respect to Shares of any
series of the Trust, including the amount of distribution, the
amount of withholding under applicable Federal and state laws,
rules and regulations, if any, dividend number, if any, record
date, ex-dividend date, payable date and price at which
dividends or other distributions are to be reinvested.

In the case of any series of a Trust for which dividends
shall be declared daily and paid monthly or quarterly, SSI
will credit the dividend payable to each shareholder thereof
to a dividend account of the shareholder and will provide the
Trust on each business day with reports of the total amount of
dividends credited and such other data as are agreed upon by
the Trust and SSI. Promptly after the payable date for the
Trust, SSI will provide the Trust with reports showing the
accounts which have been paid a dividend or other
distribution, the amount received by each account, the amount
withheld as required under applicable Federal and state laws,
rules and regulations, if any, the amount of the dividend or
distribution paid in cash or reinvested in Shares, and the
total amount of cash and Shares required for payment of the
dividend or other distribution.

In the case of each other series of the Trust, SSI will
provide the Trust promptly following the record date therefor
with reports of the total amount of dividends payable with
respect thereto and such other data as are agreed to by the
Trusts and SSI. Promptly after the payable date therefor, SSI
will provide the Trust with reports showing the accounts which
are to be paid a dividend or other distribution, the amount to
be received by each account, the amount to be withheld as
required under applicable Federal and state laws, rules and
regulations, if any, whether such dividend or distribution is
to be paid in cash or reinvested in Shares, and the total
amount of cash and Shares required for the payment of such
dividend or distribution.

At times agreed to by the Trusts and SSI, SSI will
transmit by mail or electronically to shareholders the
proceeds of such dividend or other distribution and
confirmation thereof. Where distributions are reinvested, the
price and date of reinvestment will be those supplied by the
Trusts. Confirmations will be prepared by SSI in a format
agreed to by SSI and the Trusts.

<PAGE> 10
19. WITHHOLDING. Under applicable Federal and state
laws, rules and regulations requiring withholding from
dividends and other distributions and payments to
shareholders, SSI shall be responsible for determining the
amount to be withheld and the Trusts shall forward that amount
to SSI, which will deposit said amount with, and report said
amount to, the proper governmental agency as required
thereunder. Liability for any amounts withheld, whether or
not actually withheld, and for any penalties which may be
imposed upon the payor for failure to withhold, report, or
deposit the proper amount, and for any interest due on said
amount, shall be borne by the Trusts and SSI as provided in
Section 37 hereof.

Upon receipt of a certificate from a shareholder
pertaining to withholding (including exemptions therefrom)
containing such information as required by a Trust of the
shareholder under applicable Federal and state laws, rules and
regulations, SSI shall promptly process the certificate, which
shall become effective as soon as reasonably possible after
receipt by SSI, but no later than may be required by
applicable Federal and state laws, rules and regulations.

At the time a shareholder account is established with a
Trust, the Trust shall be responsible for (i) soliciting the
shareholder's tax identification number in the manner and form
required under applicable Federal and state laws, rules and
regulations; (ii) identifying and rejecting an obviously
incorrect number (as defined under applicable Federal and
state laws, rules and regulations) and (iii) furnishing to SSI
the number and any related information provided by or on
behalf of the shareholder. SSI shall be responsible for any
subsequent communications to the shareholder that may be
required in this regard.

In the case of withholding an amount in excess of the
proper amount from a payment made by or on behalf of a Trust
to a shareholder except as otherwise provided by applicable
Federal and state laws, rules and regulations, SSI, at the
direction of the Trust, shall immediately adjust the
shareholder's account, as well as succeeding deposits;
provided, however, that when an adjustment would result in an
adjustment across calendar years, SSI shall not be required to
make such adjustment.

In the case of (i) a failure to withhold the proper
amount from a dividend or other distribution or payment made
by or on behalf of any series of a Trust to a shareholder or
(ii) any penalties attributable to (a) a failure to withhold
the proper amount or (b) the shareholder's failure to provide
the Trust or SSI with correct information requested in order
to comply with withholding requirements under applicable
Federal and state laws, rules and regulations, SSI, at the
direction of the Trust, shall immediately cause the redemption
of Shares from the shareholder's account with such series
having a value not exceeding the sum of such deficit amount
and applicable penalties and apply the proceeds to reimburse
whomever has borne the expense resulting from the
shareholder's failure. If the value of the Shares in the
shareholder's account with the series is less than the sum of
the deficit amount and applicable penalties, SSI may cause the
redemption of Shares having a value not exceeding such
difference from any account, including a joint

<PAGE> 11
account, of the shareholder with any other series of the Trust
or any other series of another Trust, subject to the consent
of the other Trust, and apply the proceeds to reimburse
whoever has borne the expense resulting from the shareholder's
failure.

20. MAILINGS. SSI shall take all steps required,
including the addressing of envelopes, to make the following
additional mailings to shareholders:

A. SSI shall mail financial reports furnished by each
series of a Trust to shareholders as requested and
will mail the current Prospectus for each series of
the Trust to shareholders of such series once each
year;

B. SSI shall mail to shareholders of each series of a
Trust proxy material for each duly scheduled meeting
of shareholders of that series;

C. SSI shall include in any of the above mailings such
other enclosures as are compatible for mailing
purposes as reasonably requested by the Trusts;

D. SSI shall make such other mailings upon such terms
and conditions and for such fees as are agreed to by
SSI and each Trust from time to time.

The Trusts shall deliver all material required to be
furnished to SSI for any scheduled mailing sufficiently in
advance of the date for such mailing, so that SSI may effect
the scheduled mailing.

21. TAX INFORMATION RETURNS AND REPORTS. SSI will
prepare and file with the appropriate governmental agencies,
such information, returns and reports as are required to be so
filed for reporting (i) dividends and other distributions
made, (ii) amounts withheld on dividends and other
distributions and payments under applicable Federal and state
laws, rules and regulations, and (iii) gross proceeds of sales
transactions as required and as the Trusts shall direct SSI.
Further, SSI shall prepare and deliver to the Trusts reports
showing amounts withheld from dividends and other
distributions and payments made for each series of the Trusts.

22. INFORMATION TO BE FURNISHED TO SHAREHOLDERS. SSI
will prepare and transmit to each shareholder of each Trust
annually in such format as is reasonably requested by the
Trust, and as agreed to by SSI, information returns and
reports for reporting dividends and other distribution and
payments, amounts withheld, if any, and gross proceeds of
sales transactions as required under applicable Federal and
state laws, rules and regulations.

23. STOP ORDERS. Upon receipt of a request from a Trust
or a shareholder that a "stop" should be placed on the
shareholder's account, SSI will maintain a record of such
"stop" and notify the Trust if any transaction request is
received from a shareholder which would reduce the number of
Shares in an account on which a "stop" has been placed. SSI
will inform the Trusts of any information SSI receives
relating to a "stop." SSI shall also maintain for the Trusts
the record of share certificates on which a "stop" has been
placed, it being understood that a

<PAGE> 12
certificate "stop" does not mean a "stop" on the shareholder's
entire account to which a certificate may relate.

24. SHARE SPLITS AND SHARE DIVIDENDS. If a Trust elects
to declare a Share dividend or split for any series, the
services and fees with respect thereto will be negotiated by
the Trust and SSI.

25. REPLACEMENT OF SHARE CERTIFICATES. SSI may issue a
new Share certificate in place of a Share certificate
represented as not having been received or as having been
lost, stolen, seized or destroyed, upon receiving instructions
from a Trust and indemnity satisfactory to SSI, and may issue
a new Share certificate in exchange for, and upon surrender
of, an identifiable mutilated Share certificate. Such
instructions from the Trust shall be in such form as has been
approved by its Board of Trustees and shall be in accordance
with the provisions of its By-Laws governing such matters.

26. UNCLAIMED AND UNDELIVERED SHARE CERTIFICATES. Where
a Share certificate is in the possession of SSI for any
reason, and has not been claimed by the record holder or
cannot be delivered to the record holder, SSI shall cancel
said certificate and reflect as uncertificated Shares on the
shareholder's account record the Shares represented by said
cancelled certificate.

27. REPORTS AND FILES. SSI shall maintain the files and
furnish the statistical and other information listed on
Schedule C. However, SSI reserves the right to delete, change
or add to the files maintained and information provided so
long as such deletions, additions or changes do not impair the
receipt of services described elsewhere in this Agreement.
SSI shall also use its best efforts to obtain such additional
statistical and other information as the Trusts may reasonably
request within the capabilities of SSI, for such additional
consideration as may be agreed to by SSI and the Trusts.

28. EXAMINATION OF DAILY TRANSACTIONS. The Trusts will
examine reports reflecting each day's transactions and other
data delivered to it for the accuracy of the transactions
reflected therein and failure to reflect transactions that
should have been reflected therein. If SSI has not received
from a Trust, within five (5) business days after delivery of
such reports to the Trust, written notice, which may be in the
form of an appropriate transaction instruction submitted by
the Trust for the purpose of correcting the error or omission,
as to any errors or omissions which a reasonable inspection
and normal audit and control procedure would reveal, then all
transactions reflected in such reports shall be deemed to be
correct and accepted by the Trust, and SSI shall have no
further responsibility for the omission from or correction,
deletion, or inclusion of any transaction reflected or which
should have been reflected therein, or any liability to the
Trust or any third person on account of such error or
omission.

29. DISPOSITION OF BOOKS, RECORDS, AND CANCELLED SHARE
CERTIFICATES. SSI will periodically send to each Trust all
books, documents, and records of the Trust no longer needed
for current purposes and Share certificates which have been

<PAGE> 13
cancelled in transfer or in redemption; such books, documents,
records, and Share certificates shall be safely stored by the
Trusts for future reference for such period as is required and
by any means permitted by the Investment Company Act of 1940,
or the rules and regulations issued thereunder, or other
relevant statutes. SSI shall have no liability for loss or
destruction of said books, documents, records, or Share
certificates after they are returned to the Trusts.

30. INSPECTION OF SHARE BOOKS. In case of any request
or demand for inspection of the books of a Trust reflecting
ownership of the Shares therein ("Share books"), SSI will make
a reasonable effort to notify the Trust and to secure
instructions as to permitting or refusing such inspection.
SSI reserves the right, however, to exhibit the Share books to
any person in case it is advised by its counsel that it may be
held liable for the failure to exhibit the Share books to such
person.

31. FEES. Each Trust shall pay to SSI for its services
hereunder fees computed as set forth in Schedule A hereto.

32. OUT-OF-POCKET EXPENSES. Each Trust shall reimburse
SSI for any and all out-of-pocket expenses and charges in
performing services under this Agreement (other than charges
for normal data processing services and related software,
equipment and facilities) including, but not limited to,
mailing service, postage, printing of shareholder statements,
the cost of any and all forms of the Trust and other materials
used by SSI in communicating with shareholders of the Trust,
the cost of any equipment or service used for communicating
with the Trust's custodian bank or other agent of the Trust,
and all costs of telephone communication with or on behalf of
shareholders allocated in a manner mutually acceptable to the
Trust and SSI.

33. INSTRUCTIONS, OPINION OF COUNSEL, AND SIGNATURES.
At any time SSI may apply to a duly authorized agent of a
Trust for instructions regarding the Trust, and may consult
counsel for the Trust or its own counsel, in respect of any
matter arising in connection with this Agreement, and it shall
not be liable for any action taken or omitted by it in good
faith in accordance with such instructions or with the advice
or opinion of such counsel. SSI shall be protected in acting
upon any such instruction, advice, or opinion and upon any
other paper or document delivered by the Trust or such counsel
believed by SSI to be genuine and to have been signed by the
proper person or persons and shall not be held to have notice
of any change of authority of any officer or agent of the
Trust, until receipt of written notice thereof from the Trust.

34. TRUSTS' LEGAL RESPONSIBILITY. Each Trust assumes
full responsibility for the preparation, contents, and
distribution of each Prospectus and Statement of Additional
Information of the Trust, and for complying with all
applicable requirements of the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and
any laws, rules, and regulations of government authorities
having jurisdiction over the Trust except that SSI shall be
responsible for all laws, rules and regulations of government
authorities having jurisdiction over transfer agents and their
activities. SSI assumes full responsibility for complying

<PAGE> 14
with due diligence requirements of payors of reportable
dividends and of brokers under the Internal Revenue Code with
respect to shareholder accounts.

35. REGISTRATION OF SSI AS TRANSFER AGENT. SSI
represents that it is registered with the Securities and
Exchange Commission as a transfer agent under Section 17A of
the Securities Exchange Act of 1934 and will notify the Trusts
promptly if such registration is revoked or if any proceeding
is commenced before the Securities and Exchange Commission
which may lead to such revocation.

36. CONFIDENTIALITY OF RECORDS. SSI agrees not to
disclose any information received from the Trusts to any other
customer of SSI or to any other person except SSI's employees
and agents, and shall use its best efforts to maintain such
information as confidential. Upon termination of this
Agreement, SSI shall return to the Trusts all records in the
possession and control of SSI related to the Trusts'
activities, other than SSI's own business records, it being
also understood that any programs and systems used by SSI to
provide the services rendered hereunder will not be given to
the Trusts.

Notwithstanding the foregoing, it is understood and
agreed that SSI may maintain with the Trusts' records
information and data to be utilized by SSI in providing
services to entities serving as trustees and/or custodians of
prototype Tax-Qualified Retirement Plans, IRA Plans, plans for
employees of public schools or tax-exempt organizations, or
other plans which invest in the Shares. In the event that
this Agreement is terminated, SSI may transfer and retain from
the records maintained for the Trusts such information and
data relating to participants in such aforementioned plans as
may be required for SSI to continue providing its services to
such trustees and/or custodians.

37. LIABILITY AND INDEMNIFICATION. SSI shall not be
liable to the Trusts for any action taken or thing done by it
or its agents or contractors on behalf of a Trust in carrying
out the terms and provisions of this Agreement if done in good
faith and without negligence or misconduct on the part of SSI,
its agents or contractors.

Each Trust shall indemnify and hold SSI, and its
controlling persons, if any, harmless from any and all claims,
actions, suits, losses, costs, damages, and expenses,
including reasonable expenses for counsel, incurred by it in
connection with its acceptance of this Agreement, in
connection with any action or omission by it or its agents or
contractors in the performance of its duties hereunder to the
Trusts, or as a result of acting upon any instruction believed
by it to have been executed by a duly authorized agent of a
Trust or as a result of acting upon information provided by a
Trust in form and under policies agreed to by SSI and the
Trusts provided that: (i) to the extent such claims, actions,
suits, losses, costs, damages, or expenses relate solely to a
particular series or group of series of Shares, such
indemnification shall be only out of the assets of that series
or group of series; (ii) this indemnification shall not apply
to actions or omissions constituting negligence or misconduct
of SSI or its agents or contractors, including but not limited
to willful misfeasance, bad faith, or gross negligence in the
performance of their duties, or reckless disregard of their
obligations and duties under this Agreement;

<PAGE> 15
and (iii) SSI shall give a Trust prompt notice and reasonable
opportunity to defend against any such claim or action in its
own name or in the name of SSI.

SSI shall indemnify and hold harmless each Trust from and
against any and all claims, demands, expenses and liabilities
which the Trust may sustain or incur arising out of, or
incurred because of, the negligence or misconduct of SSI or
its agents or contractors, provided that: (i) this
indemnification shall not apply to actions or omissions
constituting negligence or misconduct of the Trust or its
other agents or contractors and (ii) the Trust shall give SSI
prompt notice and reasonable opportunity to defend against any
such claim or action in its own name or in the name of the
Trust.

38. INSURANCE. SSI represents that it has available to
it the insurance coverage set forth on Schedule D hereto, and
agrees to notify the Trusts in advance of any proposed
deletion or reduction in said insurance.

39. FURTHER ASSURANCES. Each party agrees to perform
such further acts and execute such further documents as are
necessary to effectuate the purposes hereof.

40. DUAL INTERESTS. It is understood that some person
or persons may be trustees, directors, officers, or
shareholders of both the Trusts and SSI, and that the
existence of any such dual interest shall not affect the
validity hereof or of any transactions hereunder except as
otherwise provided by specific provision of applicable law.

41. AMENDMENT AND TERMINATION. This Agreement may be
modified or amended from time to time by mutual agreement
between the parties hereto and may be terminated by at least
one hundred eighty (180) days' written notice given by one
party to the other. Upon termination hereof, each Trust shall
pay to SSI such compensation as may be due as of the date of
such termination and shall reimburse SSI for its costs,
expenses, and disbursements payable under this Agreement to
such date. In the event that in connection with termination a
successor to any of the duties or responsibilities of SSI
hereunder is designated by the Trust by written notice to SSI,
it shall promptly upon such termination and at the expense of
the Trust, transfer to such successor a certified list of
shareholders of each series of the Trust (with name, address,
and tax identification number), a record of the account of
each shareholder and status thereof, and all other relevant
books, records, and data established or maintained by SSI
under this Agreement and shall cooperate in the transfer of
such duties and responsibilities, including provision, at the
expense of the Trust, for assistance from SSI personnel in the
establishment of books, records, and other data by such
successor.

42. ASSIGNMENT.

A. Except as provided below, neither this Agreement nor
any rights or obligations hereunder may be assigned
by either party without the written consent of the
other party.

<PAGE> 16
B. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective
permitted successors and assigns.

C. SSI may subcontract for the performance of any of its
duties or obligations under this Agreement with any
person if such subcontract is approved by the Board
of Trustees of a Trust provided, however, that SSI
shall be as fully responsible to the Trust for the
acts and omissions of any subcontractor as it is for
its own acts and omissions.

43. NOTICE. Any notice under this Agreement shall be in
writing, addressed and delivered or sent by registered mail,
postage prepaid to the other party at such address as such
other party may designate for the receipt of such notices.
Until further notice to the other parties, it is agreed that
the address of the Trusts is One South Wacker Drive, Chicago,
Illinois 60606, Attention: Secretary, and that of SSI for this
purpose is One South Wacker Drive, Chicago, Illinois 60606,
Attention: Secretary.

44. NON-LIABILITY OF TRUSTEES AND SHAREHOLDERS. Any
obligation of a Trust hereunder shall be binding only upon the
assets of that Trust (or the applicable series thereof), as
provided in its Agreement and Declaration of Trust, and shall
not be binding upon any Trustee, officer, employee, agent or
shareholder of the Trust or upon any other Trust. Neither the
authorization of any action by the Trustees or the
shareholders of a Trust, nor the execution of this Agreement
on behalf of the Trust shall impose any liability upon any
Trustee or any shareholder. Nothing in this Agreement shall
protect any Trustee against any liability to which such
Trustee would otherwise be subject by willful misfeasance, bad
faith or gross negligence in the performance of his duties, or
reckless disregard of his obligations and duties under this
Agreement.

45. REFERENCES AND HEADINGS. In this Agreement and in
any such amendment, references to this Agreement and all
expressions such as "herein," "hereof," and "hereunder," shall
be deemed to refer to this Agreement as amended or affected by
any such amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part
hereof or control or affect the meaning, construction or
effect of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an
original.

<PAGE> 17
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the day and year first above
written.

STEINROE MUNICIPAL TRUST
STEINROE INCOME TRUST
STEINROE INVESTMENT TRUST

ATTEST: By: TIMOTHY K. ARMOUR
President
JILAINE HUMMEL BAUER
Secretary
STEINROE SERVICES INC.

ATTEST: By: STEPHEN P. LAUTZ
Vice President
JILAINE HUMMEL BAUER
Secretary

<PAGE> 18
Schedule A
Agency Agreement
(August 1, 1995)

Fees pursuant to Section 31 of the Agency Agreement shall
be calculated in accordance with the following schedule. For
each series, the fee shall accrue on each calendar day and
shall be payable monthly on the first business day of the next
succeeding calendar month.

The daily fee accrual shall be computed by multiplying
the fraction of one divided by the number of days in the
calendar year by the applicable annual fee and multiplying
this product by the net assets of the series, determined in
the manner established by the Board of Trustees of the
applicable Trust, as of the close of business on the last
preceding business day on which the series' net asset value
was determined.

Type of Series Annual Fee
- -------------------------------- ---------------------------
Fixed Income (non-money fund) 0.140% of average daily net
assets
Fixed Income (money market fund) 0.150% of average daily net
assets
Equity 0.220% of average daily net
assets

Dated: August 1, 1995

<PAGE> 19
Schedule B
Agency Agreement

The Series of the Trusts covered by this agreement are as
follows:

STEIN ROE INVESTMENT TRUST
Stein Roe Growth & Income Fund
Stein Roe International Fund
Stein Roe Young Investor Fund
Stein Roe Special Venture Fund
Stein Roe Balanced Fund
Stein Roe Growth Stock Fund
Stein Roe Capital Opportunities Fund
Stein Roe Special Fund
Stein Roe Growth Opportunities Fund
Stein Roe Large Company Focus Fund
Stein Roe Asia Pacific Fund
Stein Roe Small Company Growth Fund
Stein Roe Growth Investor Fund

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Cash Reserves
Stein Roe High Yield Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals
Stein Roe High-Yield Municipals
Stein Roe Municipal Money Market Fund
Stein Roe Managed Municipals

Dated: March 31, 1999

STEIN ROE INCOME TRUST
STEIN ROE MUNICIPAL TRUST
STEIN ROE INVESTMENT TRUST

By: THOMAS W. BUTCH
Thomas W. Butch, President
Attest:
NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary
STEINROE SERVICES INC.

By: THOMAS W. BUTCH
Thomas W. Butch,
Vice President
Attest:
NICOLETTE D. PARRISH
Nicolette D. Parrish
Assistant Secretary

<PAGE> 20
SCHEDULE C
SYSTEM DESCRIPTION

TRANSACTION PROCESSING LOG - PROCESSING SPAN IN DAYS
EXPEDITED REDEMPTION FILE - BATCH MAINTENANCE JOURNAL
DAILY CRT OPERATOR STATISTICS
DAILY BATCH MONITORING REPORT
ONLINE NEW ACCOUNT REPORT
DETAIL DAILY "AS OF" REPORT - BY ACCOUNTABILITY
SPECIAL HANDLING - DAILY CONFIRMATIONS
BANK ACCOUNT OUTSTANDING BALANCE VERIFICATION
MISCELLANEOUS FEE JOURNAL
BATCH ENTRY SUMMARY REPORT
ACCOUNT CLOSEOUT ADJUSTMENTS - SUMMARY REPORT
REDEMPTION CHECK REGISTER
WIRE INSTRUCTION REPORT FOR EXPEDITED REDEMPTIONS
DST INC. - DDPS DAILY CASH RECAP REPORT
DAILY UPDATE (MU100) ERROR LISTING
EXCHANGE DISTRIBUTION SUMMARY REPORT
BATCH TRANSMISSION ERRORS - TRANSACTION ID: DFUNP
DAILY CHECK RECONCILIATION UPDATE REGISTER UCHECK UPDATES
WIRE INSTRUCTION REPORT FOR EXPEDITED REDEMPTIONS
WIRE INSTRUCTION REPORT FOR DIRECT REDEMPTIONS
TRANSFER RECORD DAILY DVND INCREASE JOURNAL
RECORD DATE JOURNAL
DAILY RECAP & SHARE CONTROL SHEET - SHARE AMOUNT
EXCHANGE CLOSE-OUT AUTOMATIC REINVESTMENT REPORT BY EXCHANGE
(FROM) FUND
DETAIL DAILY "AS OF" REPORT - BY REASON CODE
SHAREOWNER CHECK-CONFIRM RECONCILIATION

<PAGE> 21
DAILY/FREE DAILY BALANCE LISTING - ALPHA CODE SEQUENCE
CONSOLIDATED ERROR REPORTING
DAILY CONFIRMED UNPAID PURCHASE JOURNAL - NO LOAD
REQUESTS FOR DUPLICATE CONFIRMS
CALCULATED DAILY DIVIDEND RATE
EXTERNAL CHECK/INVESTMENT ISSUANCE REPORT
IN-HOUSE CHECK ISSUANCE REPORT
AUTOMATED CLEARING HOUSE REDEMPTION TRANSACTIONS
STEINROE FUNDS
ACH PURCHASE TRANSACTIONS REPORT
ACH MONTHLY REDEMPTION/PURCHASE - TRANSACTION REPORT
STEIN ROE & FARNHAM TRANSFER RECORD FOR DIRECT
PAYMENTS
REDEMPTION CHECK REGISTER
DAILY DIVIDEND ACCRUAL CLOSEOUTS COMBINED WITH
CLOSEOUT REDEMPTION WIRES
DAILY DIVIDEND ACCRUAL CLOSEOUTS UNMATCHED CLOSEOUT
ACCRUAL ERROR REPORT
AVERAGE COST ACCOUNT CALCULATION EXCEPTION REPORT
FOR DAILY AVERAGE COST FORMS REQUEST
NEW FOREIGN ACCOUNT REPORT
BATCH BALANCE LISTING
TRANSACTION TRACER REPORT
BATCH BALANCE LISTING - ACCOUNT DETAIL
TIMER - SWITCH UPDATE VERIFICATION
REDEMPTION & ADDRESS CHANGE PROCESSED SAME DAY
WARNING REPORT
AUTOMATE CLEARING HOUSE PRENOTE TRANSACTIONS
STEINROE FUNDS
EXRED WARNING REPORT
EXCHANGE WARNING REPORT UNLIKE TAX ID NUMBERS
INVESTOR TRANSFER TRANSACTIONS LISTING INVESTOR DISTRIBUTOR CODE:
STR

<PAGE> 22
DETAIL DAILY "AS OF" REPORT BY TRANSACTION CODE
DAILY "AS OF" REPORT
DAILY FUND SHARE BALANCE ERROR LIST
DAILY BATCH BALANCE
DAILY SHAREOWNER MAINTENANCE ERROR LISTING
EXPEDITED REDEMPTION FILE STATUS JOURNAL
NEW ACCOUNT VERIFICATION QUALITY REPORT
SYSTEMATIC EXCHANGE DAILY MAINTENANCE ACTIVITY
ADDITIONAL MAIL MAINTENANCE JOURNAL
BATCH TRANSMISSION ERRORS TRANSACTION ID: ATRANS
DEALER FILE MAINTENANCE REPORT
CHECK-WRITING REDEMPTION REPORT
ASSET ALLOCATION - REALLOCATION
NEW ACCOUNT REPORT

<PAGE> 23

<TABLE>

SCHEDULE D
SCHEDULE OF INSURANCE
STEIN ROE & FARNHAM INCORPORATED
ONE SOUTH WACKER DRIVE
CHICAGO, IL 60606-4685
<CAPTION>
CARRIER POLICY NO. TERM COVERAGE EXPOSURE/RATE LIMITS PREMIUM
- --------- ------------ -------- --------- ---------------------------- -------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Federal (96)7626-89 01/01/95 Workers' FL-8810 $213,000 .71 Workers' Compensation: Statutory $61,612
Insurance. -79 -96 Compensation NY-8810 $660,000 .57
Co Experience Mod. .97 Employers Liability:
Premium Disc. 10.1% Bodily Injury by Accident:
$100,000 each accident
IL-8810 $18,900,000 .42
IL-8742 $ 710,000 .92 Bodily Injury by Disease:
Experience Mod. .97 $500,000 policy limit
IL Schedule Credit 25%
Premium Discount 10.1% Bodily Injury by Disease:
$100,000 each employee
Flat Coverage Monopolistic
Fund States 50. x 6

Expense Constant 160
- --------------------------------------------------------------------------------------------------------------------------------
Federal 681-26-32 01/01/95 Financial Blanket Personal $2,000,000 General Aggregate $21,686.92
Insurance -96 Package Property Limit $11,070,000 (other than Products Completed
Co. Policy Operations)
Two Scheduled Locations: $1,000,000 Products Completed
Puerto Rico $30,300 Operations Aggregate Limit
1510 Skokie Blvd. $600,000
$1,000,000 Personal & Advertising
Library Values: $80,000 Injury Limit

Fine Arts: $399,387 $1,000,000 Each Occurrence Limit

Inland Marine - Valuable $10,000 Medical Expense Limit
Papers

General Liability based on $100,000 Personal Property Damage
square feet to Rented Premises Limit
- --------------------------------------------------------------------------------------------------------------------------------
Vigilant 7312-72-46 01/01/95 Foreign Liability & N.O. Auto $1,765 General Liability: $3,100
Insurance -96 Package Policy Workers' Compensation 1,335 $1,000,000 Commercial Liability
Co. for Bodily Injury or Property
General Damage Liability per occurrence
Liability $50 Per Person, per trip- & Personal Injury or Advertising
Flat. Based on: Injury caused by an offense

Automobile Total Employees - 20 $1,000,000 Annual Aggregate -
Liability-DIC/ No. of Trips 49 Products/Completed Operations
Excess Auto Total No. of Days 104
$250,000 Fire Legal Liability

Foreign Volun- $10,000 Medical Expense Per person
ary Workers'
Compensation $30,000 Medical Expense per accident

Automobile Liability - DIC/Excess Auto
$1,000,000 Bodily Injury per person
$1,000,000 Bodily Injury per occurrence
$1,000,000 Property damage per occurrence
$10,000 Medial Expense per person
$30,000 Medical Per Accident

Foreign Voluntary Workers'
Compensation - Statutory

$100,000 Employers Liability Limit
$20,000 Repatriation Expense for
any one Employee
- --------------------------------------------------------------------------------------------------------------------------------
St. Paul IM01200804 01/01/95 Electronic Data/Media Flat $400 for Computer Equipment $4,132,731 $6,987
Insurance -96 Data $500,000 limit
Co. Processing
Business Interruption -
1,000,000 limit Valuable Papers & Records 600,000

Contingent Business Interrup-
tion: 1,000,000 - Kansas City Business Interruption 1,000,000

100,000 - Downers Grove

Deductible Contingent Business
Computer Equipment, Data and Interruption 1,100,000
Media and Extra Expense
Combined $1,000

Special Breakdown Deductible Extra Expense 500,000
$5,000

Transit
Computer Equipment $50,000
Data & Media $50,000
Valuable Papers $5,000
- --------------------------------------------------------------------------------------------------------------------------------
Gulf GA5743948P 02/15/96 Excess Mutual $15,000,000 excess of $5,000,000 $540,935
Insurance -96 Fund D&O/E&O excess of underlying deductible
Company
- --------------------------------------------------------------------------------------------------------------------------------
Federal 81391969-A 02/15/95 Investment Limits of Liability $25,000,000 $211,312
Insurance -96 Company Assets Extended Forgery 10,000,000
Co. Protection Bond Threats to Persons 5,000,000
Uncollectible items of Deposit 500,000
Audit Expense 100,000
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

SUB-TRANSFER AGENT AGREEMENT

Agreement dated as of July 3, 1996, between SteinRoe
Services Inc. ("SSI"), a Massachusetts corporation, for
itself and on behalf SteinRoe Municipal Trust, SteinRoe
Income Trust and SteinRoe Investment Trust, each a
Massachusetts business trust (all referred to herein as the
"Trust") comprised of the series of portfolios listed in
Schedule A (as the same may from time to time be amended to
add or to delete one or more series, all referred to herein
as the "Fund"), and Colonial Investors Service Center, Inc.
("CISC"), a Massachusetts corporation.

WHEREAS, the Trust has appointed SSI as Transfer Agent,
Registrar and Dividend Disbursing Agent for the Fund, a
registered investment company, pursuant to Restated Agency
Agreement dated August 1, 1995 ("Transfer Agent Agreement");

WHEREAS, SSI is a registered transfer agent duly
authorized to appoint CISC as its agent for purposes of
performing certain transfer agency, registration and dividend
disbursement services in respect of the Trust;

WHEREAS, CISC desires to accept such appointment and to
perform such services upon the terms and subject to the
conditions set forth herein; and

WHEREAS, Stein Roe & Farnham, Inc. ("SRF") is the
investment adviser to the Fund and Liberty Securities
Corporation is the principal underwriter of its shares.

NOW THEREFORE, in consideration of the mutual promises
and covenants set forth herein, the parties hereto agree as
follows:

1. Appointment. SSI hereby appoints CISC to act as its
agent in respect of the purchase, redemption and transfer of
Fund shares and dividend disbursing services in connection
with such shares other than with respect to Fund shares (a)
held under Stein Roe Counselor [service mark] for which SSI
shall perform such services and (b) held in omnibus accounts
with respect to which such services are performed by third
party financial institutions as described in the Fund's
Prospectus from time to time. CISC accepts such appointments
and will perform the duties and functions described herein in
the manner hereinafter set forth. In respect of its duties
and obligations pursuant to this Agreement, CISC will act as
agent of SSI and not as agent of the Trust nor the Fund.

CISC agrees to provide the necessary facilities,
equipment and personnel to perform its duties and obligations
hereunder in accordance with the practice of transfer agents
of investment companies registered with the Securities and
Exchange Commission and in compliance with all laws
applicable to mutual fund transfer agents and the Fund.

<PAGE> 2
CISC agrees that it shall perform usual and ordinary
services as transfer agent, registrar and dividend disbursing
agent, which are necessary and appropriate for investment
companies registered with the Securities and Exchange
Commission, except as otherwise specifically excluded herein,
including but not limited to: receiving and processing
payments for purchases of Fund shares, opening shareholder
accounts, receiving and processing requests for liquidation
of Fund shares , transferring and canceling stock
certificates, maintaining all shareholder accounts, preparing
annual shareholder meetings lists, corresponding with
shareholders regarding transaction rejections, providing
order room services to brokers, withholding taxes on
accounts, disbursing income dividends and capital gains
distributions, preparing and filing U.S. Treasury Department
Form 1099 for shareholders, preparing and mailing
confirmation forms to shareholders for all purchases and
liquidations of Fund shares and other confirmable
transactions in shareholder accounts, recording reinvestment
of dividends and distributions in Fund shares, and causing
liquidation of shares and disbursements to be made to
withdrawal plan holders. The services to be performed by
CISC under this Agreement may be set forth in a procedures
manual and other documents as mutually agreed to by CISC and
SSI. Specifically excluded from the services to be provided
by CISC are the following: mailing proxy materials,
receiving and tabulating proxies, mailing shareholder reports
and prospectuses, account research, shareholder
correspondence and telephone services regarding general
inquiries, information requests and all other matters except
transaction rejections, all of which SRS agrees to continue
to perform directly on behalf of the Trust and the Fund.

2. Fees and Charges. SSI will pay CISC for the services
provided hereunder in accordance with and in the manner set
forth in Schedule B to this Agreement.

3. Representations and Warranties of CISC. CISC
represents and warrants to SSI that:

(a) It is a corporation duly organized and existing in
good standing under the laws of the Commonwealth of
Massachusetts;

(b) It is duly qualified to carry on its business in the
Commonwealth of Massachusetts;

(c) It is empowered under applicable state and federal
laws and by its Articles of Organization and By-Laws
to enter into and perform the services contemplated
by this Agreement and it is in compliance and shall
continue during the term of this Agreement to be in
compliance with all such applicable laws;

(d) All requisite corporate proceedings have been taken
to authorize it to enter into and perform this
Agreement;

(e) It has and shall continue to have and maintain the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement; and

<PAGE> 3
(f) It has filed a Registration Statement on SEC Form TA-
1 and will file timely an amendment to same
respecting this Sub-Transfer Agent Agreement with the
Securities and Exchange Commission, it is duly
registered as a transfer agent as provided in Section
17Ac of the Securities and Exchange Act of 1934, and
it will remain so registered and will comply with all
state and federal laws and regulations relating to
transfer agents throughout the term of this
Agreement.

4. Representations and Warranties of SSI. SSI
represents and warrants to CISC that:

(a) It is a corporation duly organized and existing in
good standing under the laws of the Commonwealth of
Massachusetts;

(b) It is duly qualified to carry on its business in the
State of Illinois;

(c) It is empowered under applicable state and federal
laws and by its Articles of Organization and By-Laws
to enter into and perform the services contemplated
in this Agreement and in the Transfer Agent Agreement
and it is in compliance and shall continue during the
term of this Agreement to be in compliance with the
Transfer Agent Agreement and all such applicable
laws;

(d) All requisite corporate proceedings have been taken
to authorize it to enter into and perform this
Agreement;

(e) It has and shall continue to have and maintain the
necessary facilities, equipment and personnel to
perform its duties and obligations under this
Agreement and the Transfer Agent Agreement; and

(f) It has filed a Registration Statement on SEC Form TA-
1 and will file timely an amendment to same
respecting this Sub-Transfer Agent Agreement with the
Securities and Exchange Commission; it is duly
registered as a Transfer Agent as provided in Section
17Ac of the Securities Exchange Act of 1934; and it
will remain so registered and comply with all state
and federal laws and regulations relating to transfer
agents throughout the term of this Agreement.

5. Representations and Warranties of the Trust. The
Trust represents and warrants to CISC that:

(a) It is a business trust duly organized and existing
and in good standing under the laws of the State of
Massachusetts;

(b) The Fund is an open-end diversified management
investment company registered under the Investment
Company Act of 1940;

<PAGE> 4
(c) Registration statements under the Securities Act of
1933 and applicable state laws are currently
effective and will remain effective at all times with
respect to all shares of the Fund being offered for
sale;

(d) The Trust is empowered under applicable laws and
regulations and by its Agreement and Declaration of
Trust and By-Laws to enter into and perform this
Agreement; and

(e) All requisite proceedings and actions have been
taken to authorize it to enter into and perform this
Agreement.

6. Copies of Documents. SSI promptly from time to time
will furnish CISC with copies of the following Trust and Fund
documents and all amendments or supplements thereto: the
Agreement and Declaration of Trust ; the By-Laws; and the
Registration Statement under Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended,
together with any other information reasonably requested by
CISC. The Prospectus and Statement of Additional Information
contained in such Registration Statement, as from time to
time amended and supplemented, are herein collectively
referred to as the "Fund's Prospectus."

On or before the date of effectiveness of this
Agreement, or as soon thereafter as is reasonably
practicable, and from time-to-time thereafter, SSI will
furnish CISC with certified copies of the resolutions of the
Trustees of the Trust authorizing this Agreement and
designating authorized persons to give instructions to CISC;
if applicable, a specimen of the certificate for shares of
the Fund in the form approved by the Trustees of the Trust,
with a certificate of the Secretary of the Trust as to such
approval; and certificates as to any change in any officer,
director, or authorized person of the SSI and the Trust.

7. Share Certificates. The Fund has resolved that all
of the Fund's shares shall hereafter be issued in
uncertificated form. Thus, CISC shall not be responsible for
the issuance of certificates representing shares in the Fund.
However, CISC shall maintain a record of each certificate
previously issued and outstanding, the number of shares
represented thereby, and the holder of record of such shares.

8. Lost or Destroyed Certificates. In case of the
alleged loss or destruction of any share certificate, no new
certificate shall be issued in lieu thereof, unless there
shall first be furnished to CISC an affidavit of loss or non-
receipt by the holder of shares with respect to which a
certificate has been lost or destroyed, supported by an
appropriate bond paid for by the shareholder which is
satisfactory to CISC and issued by a surety company
satisfactory to CISC. CISC shall place and maintain stop
transfer instructions on all lost certificates as to which it
receives notice.

9. Receipt of Funds for Investment. CISC will maintain
one or more accounts with The First National Bank of Boston
("Bank"),in the name of SSI into which

<PAGE> 5
it will deposit funds payable to CISC or SSI as agent for, or
otherwise identified as being for the account of, the Trust
or the Fund.

10. Shareholder Accounts. Upon receipt of any funds
referred to in paragraph 9, CISC will compute the number of
shares purchased by the shareholder according to the net
asset value of Fund shares determined in accordance with
applicable federal laws and regulations and as described in
the Prospectus of the Fund and:

(a) In the case of a new shareholder, open and maintain
an open account for such shareholder in the name or
names set forth in the subscription application form;

(b) Send to the shareholder a confirmation indicating the
amount of full and fractional shares purchased (in
the case of fractional shares, rounded to three
decimal places) and the price per share;

(c) In the case of a request to establish a plan or
program being offered by the Fund's Prospectus, open
and maintain such plan or program for the shareholder
in accordance with the terms thereof; and

(d) Perform such other services and initiate and maintain
such other books and records as are customarily
undertaken by transfer agents in maintaining
shareholder accounts for registered investment
company investors;

all subject to requirements set forth in the Fund's
Prospectus with respect to rejection of orders.

For closed accounts, CISC will maintain account records
through June of the calendar year following the year in which
the account is closed, or such other period of time as CISC
and SSI shall mutually agree in writing from time to time.

11. Unpaid Checks; Accounts Assigned for Collection.
If any check or other order for payment of money on the
account of any shareholder or new investor is returned unpaid
for any reason, CISC will:

(a) Give prompt notification to SRS of such non-payment
by facsimile sent prior to 9 a.m. E.S.T.; and

(b) Upon SSI's written instruction, received by facsimile
delivery not later than 11 a.m. E.S.T., authorize
payment of such order notwithstanding insufficient
shareholder account funds, on the condition that SSI
shall indemnify CISC and payor bank in respect of
such payment.

12. Dividends and Distributions. SSI will promptly
notify CISC of the declaration of any dividend or
distribution with respect to Fund shares, the amount of

<PAGE> 6
such dividend or distribution, the date each such dividend or
distribution shall be paid, and the record date for
determination of shareholders entitled to receive such
dividend or distribution. As dividend disbursing agent, CISC
will, on or before the payment date of any such dividend or
distribution, notify the Trust's custodian of the estimated
amount of cash required to pay such dividend or distribution,
and the Trust agrees that on or before the mailing date of
such dividend or distribution it will instruct its custodian
to make available to CISC sufficient funds in the dividend
and distribution account maintained by CISC with the Bank.
As dividend disbursing agent, CISC will prepare and
distribute to shareholders any funds to which they are
entitled by reason of any dividend or distribution and, in
the case of shareholders entitled to receive additional
shares by reason of any such dividend or distribution, CISC
will make appropriate credits to their accounts and cause to
be prepared and mailed to shareholders confirmation
statements and, of such additional shares. CISC will maintain
all records necessary to reflect the crediting of dividends
and distributions which are reinvested in shares of the Fund.

13. Redemptions. CISC will receive and process for
redemption in accordance with the Fund's Prospectus, share
certificates and requests for redemption of shares as
follows:

(a) If such certificate or request complies with
standards for redemption, CISC will, in accordance
with the Fund's current Prospectus, pay to the
shareholder from funds deposited by the Fund from
time to time in the redemption account maintained by
CISC with the Bank, the appropriate redemption price
as set forth in the Fund's Prospectus; and

(b) If such certificate or request does not comply with
the standards for redemption, CISC will promptly
notify the shareholder and shall effect the
redemption at the price in effect at the time of
receipt of documents complying with the standard.

14. Transfer and Exchanges. CISC will review and
process transfers of shares of the Fund and to the extent, if
any, permitted in the Prospectus of the Fund, exchanges
between series of the Trust received by CISC. If shares to
be transferred are represented by outstanding certificates,
CISC will, upon surrender to it of the certificates in proper
form for transfer, credit the same to the transferee on its
books. If shares are to be exchanged for shares of another
Fund, CISC will process such exchange in the same manner as a
redemption and sale of shares, in accordance with the Fund's
Prospectus may in its.

15. Plans. CISC will process such plans or programs
for investing in shares, and such systematic withdrawal
plans, as are provided for in the Fund's Prospectus.

16. Tax Returns and Reports. CISC will prepare and
file tax returns and reports with the Internal Revenue
Service and any other federal, state or local governmental
agency which may require such filings, including state
abandoned

<PAGE> 7
property laws, and conduct appropriate communications
relating thereto, and, if required, mail to shareholders such
forms for reporting dividends and distributions paid by the
Fund as are required by applicable laws, rules and
regulations, and CISC will withhold such sums as are required
to be withheld under applicable Federal and state income tax
laws, rules and regulations. CISC will periodically provide
SSI with reports showing dividends and distributions paid and
any amounts withheld. CISC will also make reasonable attempt
to obtain such tax withholding information from shareholders
as is required to be obtained on behalf of the Trust under
applicable federal or state laws.

17. Record Keeping. CISC will maintain records, which
at all times will be the property of the Trust and available
for inspection by SSI, showing for each shareholder's account
the following information and such other information as CISC
and SSI shall mutually agree in writing from time to time:

(a) Name, address, and United States taxpayer
identification or Social Security number, if provided
(or amounts withheld with respect to dividends and
distributions on shares if a taxpayer identification
or Social Security number is not provided);

(b) Number of shares held for which certificates have not
been issued and for which certificates have been
issued;

(c) Historical information regarding the account of each
shareholder, including dividends and distributions
paid, if any, gross proceeds of sales transactions,
and the date and price for transactions on a
shareholder's account;

(d) Any stop or restraining order placed against a
shareholder's account of which SSI has notified CISI;

(e) Information with respect to withholdings of taxes as
required under applicable Federal and state laws and
regulations;

(f) Any capital gain or dividend reinvestment order and
plan application relating to the current maintenance
of a shareholder's account; and

(g) Any instructions as to record addresses and any
correspondence or instructions relating to the
current maintenance of a shareholder's account.

SSI hereby agrees that CISC shall have no liability or
obligation with respect to the accuracy or completeness of
shareholder account information received by CISC on or about
the Operational Date.

<PAGE> 8
By mutual agreement of CISC and SSI, CISC shall
administer a program whereby reasonable attempt is made to
identify current address information from shareholders whose
mail from the Trust is returned.

CISC shall maintain at its expense those records
necessary to carry out its duties under this Agreement. In
addition, CISC shall maintain at its expense for periods
prescribed by law all records which the Fund or CISC is
required to keep and maintain pursuant to any applicable
statute, rule or regulation, including without limitation
Rule 31(a)-1 under the Investment Company Act of 1940,
relating to the maintenance of records in connection with the
services to be provided hereunder. Upon mutual agreement of
CISC and SSI, CISC shall also maintain other records
requested from time to time by SSI, at SSI's expense.

At the end of the period in which records must be
retained by law, such records and documents will either be
provided to the Trust or destroyed in accordance with prior
written authorization from the Trust.

18. Retirement Plan Services. CISC shall provide sub-
accounting services for retirement plan shareholders
representing group relationships with special recordkeeping
needs.

19. Other Information Furnished. CISC will furnish to
SSI such other information, including shareholder lists and
statistical information as may be agreed upon from time to
time between CISC and SSI. CISC shall notify SSI and the
Trust of any request or demand to inspect the share records
of the Fund, and will not permit or refuse such inspection
until receipt of written instructions from the Trust as to
such permission or refusal unless required by law.

CISC shall provide to the Trust any results of studies
and evaluations of systems of internal accounting controls
performed for the purpose of meeting the requirements of
Regulation 240.17Ad-13(a) of the Securities Exchange Act of
1934.

20. Shareholder Inquiries. CISC will not respond to
written correspondence from fund shareholders or others
relating to the Fund other than those regarding transaction
rejections and clarification of transaction instructions, but
shall forward all such correspondence to SSI.

21. Communications to Shareholders and Meetings. CISC
will determine all shareholders entitled to receive, and will
cause to be addressed and mailed, all communications by the
Fund to its shareholders, including quarterly and annual
reports, proxy material for meetings, and periodic
communications. CISC will cause to be received, examined and
tabulated return proxy cards for meetings of shareholders and
certify the vote to the Trust Fund.

22. Other Services by CISC. CISC shall provide SSI,
with the following additional services:

<PAGE> 9
(a) All CTRAN, CIMAGE, Price Waterhouse Blue Sky 2, and
Pegashares functionality and enhancements (on a
remote basis) as they now exist and as they are
developed and made available to CISC clients;

(b) Initial programs and report enhancements to the CTRAN
System which are necessary to accommodate the Fund as
a no-load fund group;

(c) Development, systems training, technical support,
implementation, and maintenance of special programs
and systems to enhance overall shareholder servicing
capability;

(d) Product and system training for personnel of
institutional servicing agents.

23. Insurance. CISC will not reduce or allow to lapse
any of its insurance coverages from time to time in effect,
including but not limited to errors and omissions, fidelity
bond and electronic data processing coverage, without the
prior written consent of SSI. Attached as Schedule D to this
Agreement is a list of the insurance coverage which CISC has
in effect as of the date of execution of this Agreement and,
if different, will have in effect on the Operational Date.

24. Duty of Care and Indemnification. CISC will at all
times use reasonable care, due diligence and act in good
faith in performing its duties hereunder. CISC will not be
liable or responsible for delays or errors by reason of
circumstances beyond its control, including without
limitation acts of civil or military authority, national or
state emergencies, labor difficulties, fire, mechanical
breakdown, flood or catastrophe, acts of God, insurrection,
war, riots or failure of transportation, communication or
power supply.

CISC may rely on certifications of those individuals
designated as authorized persons to give instructions to CISC
as to proceedings or facts in connection with any action
taken by the shareholders of the Fund or Trustees of the
Trust, and upon instructions not inconsistent with this
Agreement from individuals who have been so authorized. Upon
receiving authorization from an individual designated as an
authorized person to give instructions to CISC, CISC may
apply to counsel for the Trust, or counsel for SSI or the
Fund's investment adviser, at the Fund's expense, for advice.
With respect to any action reasonably taken on the basis of
such certifications or instructions or in accordance with the
advice of counsel of the Trust, or counsel for SSI or the
Fund's investment adviser, the Fund will indemnify and hold
harmless CSC from any and all losses, claims, damages,
liabilities and expenses (including reasonable counsel fees
and expenses).

SSI will indemnify CISC against and hold CISC harmless
from any and all losses, claims, damages, liabilities and
expenses (including reasonable counsel fees and expenses) in
respect of any claim, demand, action or suit not resulting
from CISC's bad faith, negligence, lack of due diligence or
willful misconduct and arising out of, or in connection with
its duties under this Agreement.

<PAGE> 10
CISC shall indemnify SSI against and hold SSI harmless
from any and all losses, claims, damages, liabilities and
expenses (including reasonable counsel fees and expenses) in
respect to any claim, demand, action or suit resulting from
CISC's bad faith, negligence, lack of due diligence or
willful misconduct, and arising out of, or in connection
with, its duties under this Agreement. For purposes of this
Sub-Transfer Agent Agreement, "lack of due diligence" shall
mean the processing by CISC of a Fund share transaction in
accordance with a practice that is not substantially in
compliance with (1) a transaction processing practice of SSI
approved by Fund Trustees, (2) insurance coverages, or (3)
generally accepted industry practices of mutual fund agents.

CISC shall also be indemnified and held harmless by SSI
against any loss, claim, damage, liability and expenses
(including reasonable counsel fees and expenses) by reason of
any act done by it in good faith with due diligence and in
reasonable reliance upon any instrument or certificate for
shares reasonably believed by it (a) to be genuine and (b) to
be signed, countersigned or executed by any person or persons
authorized to sign, countersign, or execute such instrument
or certificate.

In addition, SSI will indemnify and hold CISC harmless
against any loss, claim, damage, liability and expense
(including reasonable counsel fees and expenses) in respect
of any claim, demand, action or suit as a result of the
negligence of the Fund, Trust SRF or SSI, or as a result of
CISC's acting upon any instructions reasonably believed by
CISC to have been executed or orally communicated by a duly
authorized officer or employee of the Fund, Trust SRF or SSI,
or as a result of acting in reliance upon written or oral
advice reasonably believed by CISC to have been given by
counsel for the Fund, Trust SRF or SSI.

In any case in which a party to this Agreement may be
asked to indemnify or hold harmless the other party hereto,
the party seeking indemnification shall advise the other
party of all pertinent facts concerning the situation giving
rise to the claim or potential claim for indemnification, and
each party shall use reasonable care to identify and notify
the other promptly concerning any situation which presents or
appears likely to present a claim for indemnification.
Prior to admitting to or agreeing to settle any claim subject
to this Section, each party shall give the other reasonable
opportunity to defend against said claim in either party's
name.

25. Employees. CISC and SSI are separately
responsible for the employment, control and conduct of their
respective agents and employees and for injury to such agents
or employees or to others caused by such agents or employees.
CISC and SSI severally assume full responsibility for their
respective agents and employees under applicable statues and
agree to pay all employer taxes thereunder. The conduct of
their respective agents and employees shall be included in
any reference to the conduct of CISC or SSI for all purposes
hereunder.

26. Termination and Amendment. This Agreement shall
continue in effect for eighteen (18) months from the
Operational Date, and will automatically be

<PAGE> 11
renewed for successive one year terms thereafter. After
eighteen (18) months from the Operational Date the Agreement
may be terminated at any time by not less than one hundred
eighty (180) days written notice. Upon termination hereof,
SSI shall pay CISC such compensation as may be due to CISC as
of the date of such termination for services rendered and
expenses incurred, as described in Schedule B. This
Agreement may be modified or amended from time to time by
mutual agreement between SSI and CISC.

27. Successors. In the event that in connection with
termination of this Agreement a successor to any of CISC's
duties or responsibilities hereunder is designated by SSI by
written notice to CISC, CISC shall promptly at the expense of
SSI, transfer to such successor, or if no successor is
designated, transfer to the Trust, a certificate list of the
shareholders of the Fund (with name, address and taxpayer
identification or Social Security number), a historical
record of the account of each shareholder and the status
thereof, all other relevant books, records, correspondence
and other data established or maintained by CISC under this
Agreement in machine readable form and will cooperate in the
transfer of such duties and responsibilities, and in the
establishment of books, records and other data by such
successor. CISC shall be entitled to reimbursement of its
reasonable out-of-pocket expenses in respect of assistance
provided in accordance with the preceding sentence.

28. Miscellaneous. This Agreement shall be construed
in accordance with and governed by the laws of The
Commonwealth of Massachusetts.

The captions in this Agreement are included for
convenience of reference only and in no way define or limit
any of the provisions of this Agreement or otherwise affect
their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which
shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.

CISC shall keep confidential all records and information
provided to CISC by the Trust, SSI, SRF, and prior, present
or prospective shareholders of the Fund, except, after notice
to SSI , to the extent disclosures are required by this
Agreement, by the Fund's registration statement, or by a
reasonable request or a valid subpoena or warrant issued by a
court, state or federal agency or other governmental
authority.

Neither CISC nor SSI may use each other's name in any
written material without written consent of such other party,
provided , however, that such consent shall not unreasonably
withheld. CISC and SSI hereby consent to all uses of their
respective names which refer in accurate terms to appointment
and duties under this Agreement or which are required by any
governmental or regulatory authority including required
filings. SSI, SRF, the Trust and the Fund consent to use of
their respective names and logos by CISC for shareholder
correspondence and statements

This Agreement shall be binding upon and shall inure to
the benefit of SSI and CISC and their respective successors
and assigns. Neither SSI nor CISC shall assign this

<PAGE> 12
Agreement nor its rights and obligations under this Agreement
without the express written consent of the other party.

This Agreement may be amended only in writing by mutual
agreement of the parties.

Any notice and other instrument in writing authorized or
required by this Agreement t be given to SSI or CISC shall
sufficiently be given if addressed to that party and mailed
or delivered to it as its office set for the below or at such
other place as it may from time to time designate in writing.

SSI, the Trust and the Fund:
SteinRoe Services Inc.
One South Wacker Drive
Suite 3300
Chicago, Illinois 60606
Attn: Jilaine Hummel Bauer, Esq.

CISC:
Colonial Investors Service Center, Inc.
One Financial Center
Boston, Massachusetts 02111
Attn: Mary McKenzie; with a separate copy to
Attn: Nancy L. Conlin, Esq., Legal Department
<PAGE> 13

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and sealed as of the date first
above written.

STEINROE SERVICES INC.

By: TIMOTHY K. ARMOUR
Name:
Title: Vice President

COLONIAL INVESTORS SERVICE CENTER, INC.

By: D.S. SCOON
Name: Davey S. Scoon
Title: President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

STEIN ROE INCOME TRUST
STEIN ROE INVESTMENT TRUST
STEIN ROE MUNICIPAL TRUST

By: TIMOTHY K. ARMOUR
Name: Timothy K. Armour
Title: President

<PAGE>
SCHEDULE A

Stein Roe Mutual Funds (the "Fund"), consists of the
following series of portfolios:

Stein Roe Investment Trust
- --------------------------
Stein Roe Growth & Income Fund
Stein Roe International Fund
Stein Roe Young Investor Fund
Stein Roe Balanced Fund
Stein Roe Growth Stock Fund
Stein Roe Capital Opportunities Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund

Stein Roe Income Trust
- ----------------------
Stein Roe Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Reserves Fund
Stein Roe Limited Maturity Income Fund

Stein Roe Municipal Trust
- -------------------------
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund
Stein Roe Managed Municipals Fund

<PAGE>
SCHEDULE B

This Schedule B is attached to and is part of a certain
Sub-Transfer Agent Agreement ("Agreement") dated July 3, 1996
between SteinRoe Services Inc. ("SSI") and Colonial Investors
Center, Inc. ("CISC").

A. SSI will pay CISC for services rendered under the
Agreement and in accordance with a negotiated allocation of
revenues and reimbursement of costs as follows:

1. As of the Operational Date, CISC and SSI shall agree upon
a fixed monthly per account fee to be paid under the
Agreement, which shall be in an amount equal to 1/12 (a) the
estimated total, determined on an annualized basis, of (1)
all incremental costs incurred by CISC in connection with the
sub-transfer agency relationship, plus (2) 1/2 the net
economic benefit derived by Liberty Financial Companies, the
parent company of both CISC and SSI, as a result of the sub-
transfer agency relationship, (b) divided by the number of
shareholder accounts to be serviced by CISC pursuant to the
Agreement as of the Operational Date.

2. For the first eighteen (18) months of the Agreement, SSI
shall pay CISC, monthly in arrears, commencing with the first
day of August, 1996, and on the first day of each month
thereafter, the greater of (a) the product of the fixed per
account fee determined as provided in paragraph 1. above
multiplied by the number of shareholder accounts serviced by
CISC pursuant to the Agreement as of the end of the preceding
month, and (b) 1/12 the annualized estimated total costs and
benefit determined pursuant to (a) of paragraph 1. above.
All estimates under this paragraph shall be determined no
later than September 30, 1996. The annual fee for the first
eighteen months shall not be less than $1.4 million.

3. Commencing January 1, 1998, and during each calendar year
thereafter, SSI shall pay CISC a fee equal to CISC's budgeted
annual per account expense of providing services pursuant to
the Agreement. Said fee shall be paid monthly in arrears, on
the first day of each month, in an amount equal to the
product of 1/12 the budgeted annual per account fee
multiplied by the number of shareholder accounts serviced by
CISC pursuant to the Agreement as of the end of the preceding
month. All budgeted numbers under this paragraph shall be
determined no later than November 30 each year.

B. The Fund shall be credited each month with balance
credits earned on all Fund cash balances.

Upon thirty (30) days' notice to SSI, CISC may increase
the fees it charges to the extent the cost to CISC of
providing services increases (i) because of changes in the
Fund's Prospectus, or (ii) on account of any change after the
date hereof in law or regulations governing performance of
obligations hereunder.

Fees for any additional services not provided herein, ad
hoc reports or special programming requirements to be
provided by CISC shall be agreed upon by SSI and CISC at such
time as CISC agrees to provide any such services.

In addition to paying CISC fees as described herein, SSI
agrees to reimburse CISC for any and all out-of-pocket
expenses and charges in performing services under the
Agreement (other than charges for normal data processing
services and related software, equipment and facilities)
including, but not limited to, mailing service, postage,
printing of shareholder statements, the cost of any and all
forms of the Trust and other materials used in communicating
with shareholders of the Trust, the cost of any equipment or
service used for communicating with the Trust's custodian
bank or other agent of the Trust, and all costs of telephone
communication with or on behalf of shareholders allocated in
a manner mutually acceptable to CISC and SSI.

<PAGE>
SCHEDULE C

SRS and CSC hereby agree that the date on which the
complete services began ("Operational Date") under the Sub-
Transfer Agent Agreement between them dated July 3, 1996, is:

July , 1996

STEINROE SERVICES INC.

By:________________________________________
Name:
Title: Vice President

COLONIAL INVESTORS SERVICE CENTER, INC.

By:________________________________________
Name:
Title:

<PAGE>
AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of January 1, 1997, and
effective that date unless otherwise indicated below, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust and Stein Roe Investment Trust
(collectively the "Trust") and Colonial Investors Service
Center, Inc. ("CISC") to add Stein Roe Advisor Trust
(effective February 14, 1997), Stein Roe Institutional Trust
(effective January 2, 1997) and Stein Roe Trust (effective
February 14, 1997), comprised of the Series listed on
Schedule A, as amended, and assenting parties to the
contract and to add new series of the existing Trusts. The
amended Schedule A is as follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund

STEIN ROE ADVISOR TRUST
Stein Roe Advisor Balanced Fund
Stein Roe Advisor Growth & Income Fund
Stein Roe Advisor Growth Stock Fund
Stein Roe Advisor International Fund
Stein Roe Advisor Special Fund
Stein Roe Advisor Special Venture Fund
Stein Roe Advisor Young Investor Fund

STEIN ROE INSTITUTIONAL TRUST
Stein Roe Institutional High Yield Fund

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: HEIDI J. WALTER
Name: Heidi J. Walter
Title: Vice President

Colonial Investors Service Center, Inc.

By: MARY DILLON MCKENZIE
Name: Mary Dillon McKenzie
Title: Senior Vice President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Advisor Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: JILAINE HUMMEL BAUER
Name: Jilaine Hummel Bauer
Title: Executive Vice President and Secretary

<PAGE>
AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of June 30, 1997, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Advisor Trust, Stein Roe Trust and Stein Roe
Institutional Trust (collectively the "Trust") and Colonial
Investors Service Center, Inc. ("CISC") to add additional
series of the existing Trusts. The amended Schedule A is as
follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Government Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund
Stein Roe Government Reserves Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INVESTMENT TRUST
Stein Roe International Fund
Stein Roe Growth & Income Fund
Stein Roe Balanced Fund
Stein Roe Young Investor Fund
Stein Roe Growth Stock Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund
Stein Roe Emerging Markets Fund
Stein Roe Capital Opportunities Fund
Stein Roe Growth Opportunities Fund

STEIN ROE INSTITUTIONAL TRUST
Stein Roe Institutional High Yield Fund

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: HEIDI J. WALTER
Name: Heidi J. Walter
Title: Vice President

Colonial Investors Service Center, Inc.

By: JOHN W. BYRNE
Name: John W. Byrne
Title: Vice President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Advisor Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: HEIDI J. WALTER
Name: Heidi J. Walter
Title: Vice President

<PAGE>

AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of October 15, 1997, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Advisor Trust, Stein Roe Trust and Stein Roe
Institutional Trust (collectively the "Trust") and Colonial
Investors Service Center, Inc. ("CISC") to remove Stein Roe
Advisor Trust as a party to this agreement. The amended
Schedule A is as follows:

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INSTITUTIONAL TRUST
Stein Roe Institutional High Yield Fund

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: HANS P. ZIEGLER
Name:
Title:

Colonial Investors Service Center, Inc.

By: MARY D. MCKENZIE
Name: Mary D. McKenzie
Title: President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Advisor Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: HANS P. ZIEGLER
Name:
Title:

<PAGE>

AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of October 17, 1997, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Trust and Stein Roe Institutional Trust
(collectively the "Trust") and Colonial Investors Service
Center, Inc. ("CISC") to remove two series of Income Trust
from Schedule A. The amended Schedule A is as follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INSTITUTIONAL TRUST
Stein Roe Institutional High Yield Fund

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: ANNE E. MARCEL
Name: Anne E. Marcel
Title: Vice President

Colonial Investors Service Center, Inc.

By: MARY D. MCKENZIE
Name: Mary D. McKenzie
Title: President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Advisor Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title: Vice President

<PAGE>
AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of April 30, 1998, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Trust and Stein Roe Institutional Trust
(collectively the "Trust") and Colonial Investors Service
Center, Inc. ("CISC") to add one series of Investment Trust
to Schedule A. The amended Schedule A is as follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INSTITUTIONAL TRUST
Stein Roe Institutional High Yield Fund

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: HANS P. ZIEGLER
Name:
Title:

Colonial Investors Service Center, Inc.

By: MARY D. MCKENZIE
Name: Mary D. McKenzie
Title: President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Advisor Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: HANS P. ZIEGLER
Name:
Title:

<PAGE>
AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of October 19, 1998, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Trust and Stein Roe Institutional Trust
(collectively the "Trust") and Liberty Funds Services, Inc.
(f/k/a Colonial Investors Service Center, Inc. ("CISC") to add
one series of Investment Trust to Schedule A. The amended
Schedule A is as follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INSTITUTIONAL TRUST
Stein Roe Institutional High Yield Fund

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title:

Liberty Funds Services, Inc.

By: DAVEY SCOON
Name: Davey Scoon
Title: President

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title: President

<PAGE>
AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of February 2, 1999, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Trust and Stein Roe Institutional Trust
(collectively the "Trust") and Liberty Funds Services, Inc.
(f/k/a Colonial Investors Service Center, Inc.) to add
one series of Investment Trust to Schedule A. The amended
Schedule A is as follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INVESTMENT TRUST
Stein Roe International Fund
Stein Roe Growth & Income Fund
Stein Roe Balanced Fund
Stein Roe Young Investor Fund
Stein Roe Growth Stock Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund
Stein Roe Capital Opportunities Fund
Stein Roe Growth Opportunities Fund
Stein Roe Large Company Focus Fund
Stein Roe Asia Pacific Fund
Stein Roe Small Company Growth Fund

STEIN ROE INSTITUTIONAL TRUST

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title:

Liberty Funds Services, Inc.

By: NANCY L. CONLIN
Name: Nancy L. Conlin
Title: Clerk

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title: President

<PAGE>
AMENDMENT TO
SUB-TRANSFER AGENT AGREEMENT

This Amendment dated as of March 31, 1999, amends
the agreement dated as of July 3, 1996 (the "Agreement"),
between SteinRoe Services Inc.("SSI"), Stein Roe Municipal
Trust, Stein Roe Income Trust, Stein Roe Investment Trust,
Stein Roe Trust and Stein Roe Institutional Trust
(collectively the "Trust") and Liberty Funds Services, Inc.
(f/k/a Colonial Investors Service Center, Inc.) to add
one series of Investment Trust to Schedule A. The amended
Schedule A is as follows:

STEIN ROE INCOME TRUST
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

STEIN ROE MUNICIPAL TRUST
Stein Roe Intermediate Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe Municipal Money Market Fund

STEIN ROE INVESTMENT TRUST
Stein Roe International Fund
Stein Roe Growth & Income Fund
Stein Roe Balanced Fund
Stein Roe Young Investor Fund
Stein Roe Growth Stock Fund
Stein Roe Special Fund
Stein Roe Special Venture Fund
Stein Roe Capital Opportunities Fund
Stein Roe Growth Opportunities Fund
Stein Roe Large Company Focus Fund
Stein Roe Asia Pacific Fund
Stein Roe Small Company Growth Fund
Stein Roe Growth Investor Fund

STEIN ROE INSTITUTIONAL TRUST

STEIN ROE TRUST
Stein Roe Institutional Client High Yield Fund

IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and sealed as of the date
first above written.

SteinRoe Services Inc.

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title: Vice President

Liberty Funds Services, Inc.

By: NANCY L. CONLIN
Name: Nancy L. Conlin
Title: Clerk

Assented to on behalf of Trust and Stein Roe Mutual Funds:

Stein Roe Income Trust
Stein Roe Investment Trust
Stein Roe Municipal Trust
Stein Roe Institutional Trust
Stein Roe Trust

By: THOMAS W. BUTCH
Name: Thomas W. Butch
Title: President

CONSENT OF INDEPENDENT AUDITORS

We consent to the references to our firm under the captions
"Financial Highlights" and "Independent Auditors" and to the
incorporation by reference of our report dated August 11,
1999 with respect to Stein Roe Municipal Money Market Fund,
Stein Roe Intermediate Municipals Fund, Stein Roe Managed
Municipals Fund, Stein Roe High-Yield Municipals Fund,
SR&F Municipal Money Market Portfolio and SR&F High-Yield
Municipals Portfolio in the Registration Statement (Form N-1A)
and related Statement of Additional Information of Stein Roe
Municipal Trust, filed with the Securities and Exchange Commission
in this Post-Effective Amendment No. 27 to the Registration
Statement under the Securities Act of 1933 (Registration No.
2-99356) and in this Amendment No. 28 to the Registration
Statement under the Investment Company Act of l940 (Registration
No. 811-4367).

ERNST & YOUNG LLP

Boston, Massachusetts
August 11, 1999

<PAGE>
Stein Roe Mutual Funds
Rule 12b-1 Distribution Plan

Each Massachusetts Business Trust (Trust) designated in
Appendix 1 as revised from time to time, acting severally, adopts
as of August 3, 1999, the following distribution plan (the Plan)
pursuant to Rule 12b-1 (the Rule) under the Investment Company Act
of 1940 (Act) on behalf of each Fund in that Trust for the purpose
of providing personal service and/or the maintenance of
shareholder accounts and to facilitate the distribution of shares
of the Funds.

I. Plans Applying to Class A, B and C Shares

Except as indicated below, each Fund having Class A, B or C
Shares shall pay a service fee at the annual rate of 0.25% of the
net assets of its Class A, B and C Shares, and a distribution fee
at the annual rate of 0.75% of the average daily net assets of its
Class B and C Shares.

II. Payments of Fees Under the Plan

Each Fund shall make all payments of service and distribution
fees under this Plan to Liberty Funds Distributor, Inc. (LFDI)
monthly, on the 20th day of each month or, if such day is not a
business day, on the next business day thereafter. No Fund shall
pay, nor shall LFDI be entitled to receive, any amount under this
Plan if such payment would result in LFDI receiving amounts in
excess of those permitted by applicable law or by rules of the
National Association of Securities is Dealers, Inc.

III. Use of Fees.

LFDI may pay part or all of the service and distribution fees
it receives from a Fund as commissions to financial service firms
that sell Fund Shares or as reimbursements to financial service
firms or other entities that provide shareholder services to
record or beneficial owners of shares (including third-party
administrators of qualified plans). This provision does not
obligate LFDI to make any such payments nor limit the use that
LFDI may make of the fees it receives.

IV. Reporting

LFDI shall provide to the Trust's Trustees, and the Trustees
shall review, at least quarterly, reports setting forth all Plan
expenditures, and the purposes for those expenditures. Amounts
payable under this paragraph are subject to any limitations on
such amounts prescribed by applicable laws or rules.

V. Other Payments Authorized

Payments by the Trust to LFDI and its affiliates (including
Colonial Management Associates, Inc.) other than as set forth in
Section I which may be indirect financing of distribution costs
are authorized by this Plan.

VI. Continuation; Amendment; Termination

This Plan shall continue in effect with respect to a Class of
Shares only so long as specifically approved for that Class at
least annually as provided in the Rule. The Plan may not be
amended to increase materially the service fee or distribution fee
with respect to a Class of Shares without such shareholder
approval as is required by the Rule and any applicable orders of
the Securities and Exchange Commission, and all material
amendments of the Plan must be approved in the manner described in
the Rule. The Plan may be terminated with respect to any Class of
Shares at any time as provided in the Rule without payment of any
penalty. The continuance of the Plan shall be effective only if
the selection and nomination of the Trust's Trustees who are not
interested persons (as defined under the Act) of the Trust is
effected by such non-interested Trustees as required by the Rule.

Approved by the Trustees as of the date
set forth above:

By: HEIDI J. WALTER
Heidi J. Walter, Secretary For Each
Trust

<PAGE>
APPENDIX 1

Stein Roe Income Trust
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

Stein Roe Municipal Trust
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund

Stein Roe Advisor Floating Rate Fund

STEIN ROE INCOME TRUST
STEIN ROE INVESTMENT TRUST
STEIN ROE MUNICIPAL TRUST
STEIN ROE ADVISOR FLOATING RATE FUND

Plan pursuant to Rule 18f-3(d) under the
Investment Company Act of 1940

Effective August 3, 1999

Each Series (each a "Stein Roe Fund") of Stein Roe Income Trust,
Stein Roe Investment Trust, and Stein Roe Municipal Trust, (each a
"Trust") as set forth in Schedule I and Stein Roe Advisor Floating
Rate Fund ("Floating Rate Fund") may from time to time issue one
or more of the following classes of shares as authorized by the
Board of Trustees and as provided for herein: Class A shares,
Class B shares, Class C shares and Class Z shares. Each class is
subject to such investment minimums and other conditions of
eligibility as set forth in the Stein Roe Funds or Floating Rate
Fund's prospectus and statement of additional information as from
time to time in effect. The differences in expenses among these
classes of shares and the conversion and exchange features of each
class of shares, are set forth below. These differences are
subject to change, to the extent permitted by law and by the
Declaration of Trust and By-laws of the Trusts and the Floating
Rate Fund, by action of the Board of Trustees.

CLASS A SHARES

Class A shares of the Stein Roe Funds and Floating Rate Fund are
offered at net asset value ("NAV") plus the initial sales charges
described in the Stein Roe Funds and Floating Rate Fund's
prospectus and statement of additional information as from time to
time in effect. Initial sales charges may not exceed 6.50%, and
may be reduced or waived as permitted by Rule 22d-1 under the
Investment Company Act of 1940 ( the "1940 Act") and as described
in the Stein Roe Funds and Floating Rate Fund's prospectus and
statement of additional information from time to time in effect.

Purchases of $1 million to $5 million of Class A shares that are
redeemed within 18 months from purchase are subject to a
contingent deferred sales charge ("CDSC") of 0.50% of either the
purchase price or the NAV of the shares redeemed, whichever is
less. Purchases in excess of $5 million of Class A shares that
are redeemed within 18 months from purchase are subject to a CDSC
of 0.50% only on assets redeemed below the $5 million level. The
CDSC may be reduced or waived as permitted by Rule 6c-10 under the
1940 Act and as described in the Stein Roe Funds and Floating Rate
Fund's prospectus and statement of additional information as from
time to time in effect.

Class A shares pay distribution and service fees pursuant to a
plan adopted pursuant to Rule 12b-1 under the 1940 Act ("12b-1
Plan") as described in the Stein Roe Funds and Floating Rate
Fund's prospectus and statement of additional information in
effect from time to time. Such fees may be in amounts up to but
may not exceed, respectively, 0.10% and 0.25% per annum of the
average daily net assets attributable to such class.

Class A shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Floating
Rate Fund's prospectus and statement of additional information in
effect from time to time. Total transfer agency fees, including
such service component, may not exceed 0.30% of average annual net
assets attributable to the class.

Class A shares of the Stein Roe Funds and Floating Rate Fund may
be exchanged, at the holder's option, for Class A shares of any
other Stein Roe Fund, Floating Rate Fund, any Liberty-Stein Roe
Advisor Trust Fund ("Advisor Fund") and most funds advised by
Colonial Management Associates, Inc. or distributed by Liberty
Funds Distributor, Inc. ("LFD") or its successor without the
payment of a sales charge, except that if shares of any Stein Roe
Fund, Floating Rate Fund, Advisor Fund or non-money market
Colonial Fund are exchanged within five months after purchase for
shares of another Stein Roe Fund, Floating Rate Fund, Advisor Fund
or Colonial Fund with a higher sales charge, then the difference
in sales charges must be paid on the exchange.

In addition, Class A shares of Stein Roe Funds or Floating Rate
Fund may be exchanged, at the holder's option, for Class A shares
of any other Stein Roe Fund, Floating Rate Fund, any Advisor Fund
or a Colonial Fund offering Class A shares, without the payment of
a CDSC. The holding period for determining the CDSC will include
the holding period of the shares exchanged. If the Class A shares
received in the exchange are subsequently redeemed, the amount of
the CDSC, if any, will be determined by the schedule of the Stein
Roe Fund, Floating Rate Fund, Advisor Fund or Colonial Fund in
which the original investment was made.

CLASS B SHARES

Class B shares are offered at NAV, without an initial sales
charge. Class B shares that are redeemed within the period of
time after purchase (not more than 8 years) specified in each
Stein Roe Funds or Floating Rate Fund's prospectus and statement
of additional information as from time to time in effect are
subject to a CDSC of up to 3% of either the purchase price or the
NAV of the shares redeemed, whichever is less; such percentage may
be lower for certain Funds and declines the longer the shares are
held, all as described in the Stein Roe Funds or Floating Rate
Fund's prospectus and statement of additional information as from
time to time in effect. Class B shares purchased with reinvested
distributions are not subject to a CDSC. The CDSC is subject to
reduction or waiver in certain circumstances, as permitted by Rule
6c-10 under the 1940 Act and as described in the Stein Roe Funds
or Floating Rate Fund's prospectus and statement of additional
information as from time to time in effect.

Class B shares pay distribution and service fees pursuant to a
12b-1 Plan as described in Stein Roe Funds or Floating Rate Fund's
prospectus and statement of additional information in effect from
time to time. Such fees may be in amounts up to but may not
exceed, respectively, 0.55% and 0.25% per annum of the average
daily net assets attributable to such class.

Class B shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees, including such service component, may not
exceed 0.30% of average annual net assets attributable to the
class.

Class B shares automatically convert to Class A shares of the same
Stein Roe Fund or Floating Rate Fund eight years after purchase,
except that Class B shares purchased through the reinvestment of
dividends and other distributions on Class B shares convert to
Class A shares proportionally to the amount of Class B shares
otherwise being converted.

Class B shares of Stein Roe Funds and Floating Rate Fund may be
exchanged, at the holder's option, for Class B shares of any other
Stein Roe Fund, Floating Rate Fund, any Advisor Fund or a Colonial
Fund offering Class B shares, without the payment of a CDSC. The
holding period for determining the CDSC and the conversion to
Class A shares will include the holding period of the shares
exchanged. If the Class B shares received in the exchange are
subsequently redeemed, the amount of the CDSC, if any, will be
determined by the schedule of the Stein Roe Fund or Floating Rate
Fund, Advisor Fund or Colonial Fund in which the original
investment was made.

CLASS C SHARES

Class C shares are offered at NAV without an initial sales charge.
Class C shares that are redeemed within up to three years from
purchase may be subject to a CDSC of 1% of either the purchase
price or the NAV of the shares redeemed, whichever is less. Class
C shares purchased with reinvested dividends or capital gain
distributions are not subject to a CDSC. The CDSC may be reduced
or waived in certain circumstances as permitted by Rule 6c-10
under the 1940 Act and as described in the Stein Roe Funds or
Floating Rate Fund's prospectus and statement of additional
information as from time to time in effect.

Class C shares pay distribution and service fees pursuant to a
12b-1 Plan as described in the Stein Roe Funds or Floating Rate
Fund's prospectus and statement of additional information in
effect from time to time. Such fees may be in amounts up to but
may not exceed, respectively, 0.60% and 0.25% per annum of the
average daily net assets attributable to such class.

Class C shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees, including such service component, may not
exceed 0.30% of average annual net assets attributable to the
class.

Class C shares of Stein Roe Funds or Floating Rate Fund may be
exchanged, at the holder's option, for Class C shares of any other
Stein Roe Fund, Floating Rate Fund, any Advisor Fund or a Colonial
Fund offering Class C shares, without the payment of a CDSC. The
holding period for determining the CDSC will include the holding
period of the shares exchanged. If the Class C shares received in
the exchange are subsequently redeemed, the amount of the CDSC, if
any, will be determined by the schedule of the Stein Roe Fund or
Floating Rate Fund, Advisor Fund or Colonial Fund in which the
original investment was made. Only one exchange of any Stein Roe
Fund, Floating Rate Fund, Advisor Fund or Colonial Fund's Class C
shares may be made in any three month period. For this purpose,
an exchange into a Stein Roe Fund, Floating Rate Fund, Advisor
Fund or Colonial Fund and a prior or subsequent exchange out of a
Stein Roe Fund, Floating Rate Fund, Advisor Fund or Colonial Fund
constitutes an "exchange."

CLASS Z SHARES

Class Z shares are offered at NAV, without an initial sales
charge, 12b-1 fee or CDSC.

Class Z shares pay service fees equaling a portion of the transfer
agency fee attributable to that class as described in the Stein
Roe Funds or Floating Rate Fund's prospectus and statement of
additional information in effect from time to time. Total
transfer agency fees may not exceed 0.30% of average annual net
assets attributable to the class.

Class Z shares of Stein Roe Funds may be exchanged, at the
holder's option, for Class Z shares of any other Stein Roe Fund.
Class Z shares of any Stein Roe Fund or Floating Rate Fund may not
be exchanged for Class Z shares of any Colonial Fund.

<PAGE>
Schedule I

Stein Roe Income Trust
Stein Roe Income Fund
Stein Roe Intermediate Bond Fund
Stein Roe High Yield Fund
Stein Roe Cash Reserves Fund

Stein Roe Municipal Trust
Stein Roe Intermediate Municipals Fund
Stein Roe Managed Municipals Fund
Stein Roe High-Yield Municipals Fund
Stein Roe Municipal Money Market Fund

<PAGE>

[Logo] Stein Roe Mutual Funds IN40297
Sensible Risks. Intelligent Investments. [service mark]

MUTUAL FUND APPLICATION

Mail to:
STEIN ROE MUTUAL FUNDS
P.O. Box 8900
Boston, MA 02205-8900

This application is for:
[ ] New account
[ ] Change to current account (see Section 13)

1. ACCOUNT REGISTRATION
Please check one box below to indicate the type of account
and complete the related information.

[ ] INDIVIDUAL OR [ ] JOINT* ACCOUNT
______________________________________________
Owner's name (First, middle initial, last)
_______________________________________________
Joint owner's name (First, middle initial, last)
__________________________________________________________________
Owner's Social Security number Joint owner's Social Security
number

*Joint tenants with right of survivorship, unless indicated
otherwise.

[ ] UNIFORM GIFTS (TRANSFERS) TO MINORS ACCOUNT (UGMA/UTMA)
_________________________________________
Name of one custodian only
_________________________________________
Name of one minor only
_________________________________________
State of residence
_________________________________________
Minor's Social Security number

[ ] ORGANIZATION OR OTHER ACCOUNT
Please complete and return the Certificate of Authorization on the
last page of the prospectus.
_______________________________________________
Name of corporation, partnership, estate, etc.
_______________________________________________
Tax identification number

[ ] TRUST OR RETIREMENT ACCOUNT
For a Stein Roe IRA, please call us for a separate application.
_________________________________________
Name of trustee(s)
_________________________________________
_________________________________________
Name of trust
____________________________________________________
Date of trust Trust's tax identification number
_________________________________________
Trust beneficiary(ies)
_________________________________________
Trust beneficiary(ies)

2. ADDRESS
______________________________________________
Street Address or P.O. box
______________________________________________
______________________________________________
City State Zip code
______________________________________________
Owner's citizenship Joint owner's citizenship
______________________________________________
Daytime telephone Evening Telephone

[ ] CONSOLIDATED QUARTERLY STATEMENTS
Check the box above if you would like to link your new Stein Roe
account to an existing Stein Roe account--even if the existing
account is registered to another member in your household.
Linking your accounts allows us to consolidate your Stein Roe
accounts on one quarterly statement. Please provide the existing
Stein Roe account number below. Statements will be sent to the
address on the existing account.

________________________________________________
Existing account number

- -----------------------------------------------------------------
Stein Roe Mutual Funds, P.O. Box 8900, Boston, MA 02205-8900 800-
338-2550
- -----------------------------------------------------------------

3. FUND SELECTION
Fill in the amount you would like to invest in each of the funds
below. The initial minimum is $2,500; for custodial accounts
(UGMAs), the minimum is $1,000. When an Automatic Investment Plan
in Section 6 is established, Stein Roe reduces the minimum initial
investment to $1,000 for each new account ($500 for UGMAs and $100
for Young Investor Fund). If you do not specify a fund, your
investment will be in Stein Roe Cash Reserves Fund, a money market
fund.

MONEY MARKET FUNDS
Cash Reserves Fund (036) $_____

TAX-EXEMPT FUNDS
Municipal Money Market Fund (030) _____
Intermediate Municipals Fund (008)_____
Managed Municipals Fund (037) _____
High-Yield Municipals Fund (028) _____

BOND FUNDS
Intermediate Bond Fund (035) _____
Income Fund (009) _____
High Yield Fund (015) _____

GROWTH AND INCOME FUNDS
Balanced Fund (031) _____
Growth & Income Fund (011) _____

GROWTH FUNDS
Growth Stock Fund (032) *CLOSED
Young Investor Fund (014) _____
Growth Investor Fund (026) _____
Midcap Growth Fund (20) _____
Disciplined Stock Fund (034) _____
Large Company Focus Fund (021) _____
Capital Opportunities (033) _____
International Fund (012) _____
Small Company Growth Fund (025) _____

*This Fund is closed to new investors. If you are a shareholder
in any Stein Roe Fund as of Oct. 15, 1997, you may open an
additional account in your name. See a prospectus for more
information. To verify your status as an eligible shareholder,
please provide existing account number with your new investment
amount below.
_________________________________________________________________
Current Stein Roe Fund account number New Growth Stock Fund
investment amount

4. INVESTMENT METHOD
Check one box below. (Money orders not accepted.)

[ ] BY CHECK: Payable to Stein Roe Mutual Funds

[ ] BY EXCHANGE FROM:
Your account must be registered identically to invest by exchange.
______________________________
Fund name
______________________________________________________________
Account number Number of shares or $ amount

[ ] BY WIRE: Call us for instructions at 800-338-2550

5. TELEPHONE AND ONLINE REDEMPTION OPTIONS

A. Telephone/Online Redemption Options. You can redeem shares by
telephone or online two ways: with Telephone/Online Redemption, a
check is mailed to your address of record; with Telephone/Online
Exchange, redemption proceeds are used to purchase shares in
another Stein Roe Fund. Most shareholders prefer these
conveniences. They apply unless you check the boxes below.

I DO NOT WANT:
[ ] Telephone Redemption [ ] Online Redemption
[ ] Telephone Exchange [ ] Online Exchange

B. ACH Redemption Option. Check either or both boxes if you wish
to be able to redeem shares at any time by telephone or online and
have the proceeds sent to your bank account designated in Section
8. ($50 minimum; $100,000 maximum.)
[ ] ACH Telephone Redemption
[ ] ACH Online Redemption

C. Telephone Redemption by Wire. Check the box below if you wish
to redeem shares at any time and wire the proceeds to your bank
account designated in Section 8. ($1,000 minimum for all funds;
$100,000 maximum for all funds except money market funds.) [ ]

If you decide to add these options at a later date, you will be
required to obtain a signature guarantee.

6. AUTOMATIC INVESTMENT PLAN
Please allow 3 weeks to establish this option.
[ ] A. Regular Investments. This option allows you to make
scheduled investments into your account(s) directly from
your bank account by electronic transfer. When this
option is established, Stein Roe reduces the minimum
initial investment to $1,000 for each new account ($500
for UGMAs and $100 for Young Investor Fund). Please
remember to include a check for the appropriate minimum
and also complete Section 8.
__________________________________________________________________
Fund name Account number or ("new") Amount (minimum $50 monthly)
__________________________________________________________________
Fund name Account number or ("new") Amount (minimum $50 monthly)

I authorize Stein Roe Mutual Funds to draw on my bank account to
purchase shares for the account(s) listed above. Check one box
below to indicate the frequency of your automatic investments.

[ ] Monthly [ ] Quarterly [ ] Every 6 months [ ] Annually

Check one box below to indicate which day of the month your
investment should be made:

[ ] 5th or [ ] 20th day of the month

Please begin: [ ] Immediately or [ ] _______ (Specify month)

[ ] B. Special Investments. You can also make subsequent
purchases by telephone or online and pay for them by
electronic transfer from your bank account on request.
Check the box above for this option, which saves you the
trouble and expense of arranging for a wire transfer or
writing a check. Please also complete Section 8. ($50
minimum; $100,000 maximum).

7. DISTRIBUTION OPTIONS
We will automatically reinvest all distributions for you. If you
want this option, you do not need to fill out this section.
Please check below only if you prefer that your distributions be
invested in shares of another Stein Roe Fund with the same account
registration (a $1,000 minimum applies to the account in which you
are investing); deposited into your bank account; or sent by check
to your registered address.
Dividends Capital Gains
(check one or both)
[ ] A. Distribution purchase [ ] [ ]

Invest into ____________________________________________
Fund name Account number (or "new")

from: ___________________________________________________
Fund name Account number (or "new")

[ ] B. Automatic deposit direct to your bank [ ] [ ]
account. Please also complete Section 8.

[ ] C. Send check to registered address [ ] [ ]

8. BANK INFORMATION
Complete this section if you have selected options from Sections
5B, 5C,6A, 6B, or 7B. You must use the same bank account for
these options.

[ ] Checking [ ] Savings
________________________________________________________________
Name of bank
________________________________________________________________
Street address of bank
________________________________________________________________
City State Zip code
________________________________________________________________
Name(s) on bank account
___________________________ ____________________________________
Bank account number ACH Routing number (see diagram below)

- ------------------------------------------------------
Joe Investor 0000
123 Main Street ______ 19__
Anytown, USA 12345

Pay to the
order of ________________________________ $_________

______________________________________________ Dollars

Anytown Bank USA

Memo ____________ ______________________________

1 000 000000 00 0000000000
- ------------------------------------------------------
ACH ROUTING NUMBER YOUR ACCOUNT NUMBER
A unique nine-digit number Unique to your account at
that allows for the electronic your financial institution
transfer of funds and identi-
fies your financial institution
within the Automatic Clearing
House Network.

9. AUTOMATIC EXCHANGE PLAN
With this option you can authorize Stein Roe to regularly exchange
shares from one existing Stein Roe Fund account to another with
the same account registration. A $1,000 minimum applies to each
account.
________________________________________________________________
Redeem shares from (Fund name) Account number
________________________________________________________________
Amount ($50 minimum)
________________________________________________________________
Purchase shares from (Fund name) Account number

Check one box below to indicate frequency of exchange and fill in
dates between the 1st and 28th of the month:

[ ] Twice monthly on the ___ and ___ beginning ___ (Specify month)
[ ] Monthly on the ______ beginning __________ (Specify month)
[ ] Quarterly on the ______ of _______________ (List four months)
[ ] Twice yearly on the _____ of _____________ (List two months)
[ ] Annually on the _____ of _________________ (Specify month)

10. MONEY MARKET FUND OPTIONS
[ ] FREE CHECK WRITING
Available for Cash Reserves Fund and Municipal Money Market Fund
only.

Check the above box and complete the signature card below if you
wish to write checks ($50 minimum) on your money market fund
account Please also complete Section 12.

PLEASE DO NOT DETACH
- ------------------------------------------------------------------
Bank of Boston Check Writing Signature Card (for money market
funds only)

Select Fund:[ ] Cash Reserves Fund [ ] Municipal Money Market Fund

Account name(s) as registered: ____________________________

By signing this card, I authorize Bank of Boston to honor any
check drawn by me on an account with the bank and to redeem and
pay to bank shares in my Fund account having a redemption price
equal to the amount of such check. I agree to be subject to the
rules governing the Check Writing Redemption option as in effect
from time to time.

Signature (sign as you will on checks): Signature guarantee*
__________________________________________________________________
__________________________________________________________________

Number of signatures on each check/1: __________

*Required if you are adding these options to an existing account;
or if you are requesting check writing for a Trust, Corporation
or other Organization account, guarantee required for any person
signing these cards who has not signed in Section 12. Otherwise
a signature guarantee is not required.
/1 If left blank, only one signature is required for joint tenant
accounts, but all signatures are required for all other types of
accounts.

For office use only: Account no. _______________ Date: __________

You are subject to Fund and bank rules pertaining to checking
accounts under the privilege as in effect from time to time. For
a joint tenancy account with rights of survivorship, each owner
appoints each other owner as attorney-in-fact with power to
authorize redemptions on his behalf by signing checks under the
privilege unless the reverse side indicates all owners must sign
checks.

You agree to hold Fund and its transfer agent free from any
liability resulting from payment of any forged, altered, lost or
stolen check unless you notify Fund and bank of such
misappropriation no later than 14 days after the earliest of the
date on which you (a) discover the misappropriation or (b) receive
a copy of the check cancelled by bank. A copy of a cancelled
check paid during a calendar month is deemed received 6 days after
posting in the U.S. mail to your registered address with Fund
unless you notify Fund of non-receipt by certified mail within 20
days after the close of such month.

You agree to hold Fund and its transfer agent free from any
liability for any other check misappropriated by the same
wrongdoer and paid from proceeds of a redemption made in good
faith on or after the date you notify Fund of the first
misappropriated check.
- ------------------------------------------------------------------

11. TERMS AND CONDITIONS OF SERVICES
Please read carefully before signing in Section 12. By electing
an automatic service, you agree to the following terms and
conditions and those stated in the Fund prospectus as in effect
from time to time.

*By signing this application, you agree that any privilege you
elect may be restricted or terminated at any time without notice
to you. Your termination of a privilege will be effective no
later than five business days after the Fund(s) or its transfer
agent receives 1) your request; 2) notice and proof of your
death, or if a trust, termination thereof; or 3) the closing of
an affected Fund or bank account.

*All privileges except Automatic Dividend Deposit, Dividend
Purchase Option, Automatic Investment Plan, Money Market Fund
Check Writing, Automatic Exchange, Automatic Redemption Plan and
Telephone Redemption by Wire will be transferred automatically to
any new account you open in any other Fund offering the
privileges into which a telephone or written exchange is made.

*You authorize the Fund(s) and its transfer agent to initiate any
and all credit or debit entries (and reversals thereof) to effect
electronic transfers under any privilege and redeem shares of any
Fund(s) you own equal to the amount of any loss incurred by any
of them in effecting any electronic transfer and retain the
proceeds.

12. SIGNATURE(S)
By signing this form, I certify that:
*I have received the current Fund prospectus and have read the
Terms and Conditions of Services in Section 11 and agree to be
bound by their terms as governed by Illinois law. I have full
authority and legal capacity to purchase Fund shares and
establish and use any related privileges.
*By signing below, I certify under penalties or perjury that:
-All information and certifications on this application are true
and correct, including the Social Security or other tax
identification number (TIN) in Section 1.
-If I have not provided a TIN, I have not been issued a number
but have applied (or will apply) for one and understand that if
I do not provide the Fund(s) a TIN within 60 days, the Fund(s)
will withhold 31 percent from all my dividend, capital gain and
redemption payments until I provide one.
-Check one of the following only if applicable:
[ ] The IRS has informed me I am subject to backup withholding as
a result of a failure to report all interest or dividend
income.
[ ] I am a trust or organization that qualifies for the IRS backup
withholding exemption.
*Unless I have declined the Telephone Redemption, Telephone
Exchange, Online Redemption and Online Exchange privileges in
Section 5A, I have authorized the Fund and its agents to act upon
instructions received by telephone or online to redeem my shares
of the Fund or to exchange them for shares of another Stein Roe
Fund, and I agree that, subject to the Fund's employing
reasonable procedures to confirm that such telephone or online
instructions are genuine, neither the Fund, nor any of its agents
will be liable for any loss, injury, damage, or expense as a
result of acting upon, and will not be responsible for the
authenticity of, any telephone or online instructions, and will
hold the Fund and its agents harmless from any loss, claims or
liability arising from its or their compliance with these
instructions. Accordingly, I understand that I will bear any
risk of loss resulting from unauthorized instructions.
*The Internal Revenue Service does not require your consent to any
provision of this document other than the certifications required
to avoid backup withholding.

Sign below exactly as your name(s) appears in Section 1.

x________________________________________________________________
Signature Date
_________________________________________________________________
Title (if owner is an organization)
x________________________________________________________________
joint owner's signature Date
_________________________________________________________________
Title (if owner is an organization)

13. SIGNATURE GUARANTEE (IF REQUIRED)
A signature guarantee is not required if you are establishing a
new account. For existing accounts, a signature guarantee is
required if you are adding or making changes to options listed in
Sections 5, 6, 7B, 8 or 10. We are unable to accept
notarizations.

Signature(s) guaranteed by:
________________________________________________________________
Name of institution
________________________________________________________________
Name of authorized officer
________________________________________________________________
Signature of authorized officer

Guarantor's stamp:

If you have any questions, please call us toll free
at 800-338-2550

Please return this completed form to:
Stein Roe Mutual Funds
P.O. Box 8099
Boston, MA 02205-8900

Liberty Funds Distributor, Inc.
MFAPP 5/99