COLORADO
BONDSHARES
A TAX-EXEMPT FUND
SEMI-ANNUAL REPORT
MARCH 31, 1996
(UNAUDITED)
<PAGE>
May 28, 1996
Dear Shareholders:
We are pleased to report continued good news for the semi-annual period ending
March 31, 1996. According to Morningstar, Colorado BondShares was second,
overall, for the last six months. More recently, we repeated during the first
quarter of 1996 as the best performing single state municipal bond fund in the
U.S.A. This is the second time in three years that the fund has received this
distinction. While past performance is not necessarily indicative of future
performance, we view it as a real advantage to start off the calendar year so
favorably.
The bond market is showing signs of worry about inflation and is off from its
high which occurred in mid-January. Inflation fears are, however, premature in
our minds and will be relatively short lived. Hence, we believe that long-term
interest rates will likely come down a bit later in the year and this should
prove to be a favorable time to own bonds generally and Colorado BondShares in
particular. Additional gains may also result from the still improving Colorado
economy, ratings upgrades and ongoing refinancing trends.
As a precaution, we are maintaining a relatively short average maturity of 8.87
years in order to help guard against an unexpected sharp rise in interest rates.
While this is slightly longer than we have had recently, it is still relatively
short by industry standards.
We would be happy to answer any specific questions that you may have after
reviewing the attached information. Most importantly, we appreciate your
continued confidence in our fund.
Yours truly,
Fred R. Kelly, Jr.
Portfolio Manager
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
<TABLE>
<CAPTION>
Statement of Investments
March 31, 1996 (unaudited)
- ----------------------------------------------------------------------------------------------
Face Market
amount Colorado Municipal Bonds - 83.8% value
- ------ -------------------------------- ------
<S> <C> <C>
75,000 Adams County Pollution Control Revenue Refunding Series 1986A,
7.375% due 11/01/09 77,850
25,000 Arapahoe County Cherry Creek School District No. 5, Series 1990,
6.45%, due 12/15/96 25,513
250,000 Arapahoe Water and Sanitation District G.O. Refunding & Improvement
Series 1986, 8.50% due 12/01/05 305,000
175,000 Arapahoe Water and Sanitation District G. O. Refunding & Improvement
Series 1988A, 9.25% due 12/01/13 181,650
1,000,000 Arapahoe Water and Sanitation District G.O. Refunding & Improvement
Series 1988A, 9.25% due 12/01/13 (b) 1,150,000
2,250,000 Arapahoe Water and Sanitation District G.O. Refunding Series 1995B,
8.50% due 12/01/20 2,182,500
525,000 Arrowhead Metropolitan District G. O. Refunding & Improvement
Series 1986, 8.50% due 11/01/06 (b) 544,163
575,000 Arvada Multifamily Rental Housing Revenue Series 1993, 7.50%
due 12/15/18 572,125
218,600 Aurora Centretech Metropolitan District G.O. Refunding & Improvement
Series 1994, 6.00% due 12/01/23 163,950
115,000 Avon Colorado Supplemental B Interest Coupons Series 1996, 3.65%
due 6/01/96 (d) 114,477
155,000 Basalt and Rural Fire Protection District G.O. Series 1996, 3.50%
due 12/01/96 155,000
480,000 Bear Creek LID #1 Special Assessment Refunding Series 1993, 6.50%
due 3/15/98 480,000
1,915,000 Bell Mountain Ranch Phase II Metropolitan District G.O. Improvement
Series 1995, 8.50% due 11/15/96-11/15/15 1,915,000
350,000 Bell Mountain Ranch Phase II Metropolitan District Improvement Fee
Revenue Series 1995, 7.00% due 11/15/98 350,000
100,000 Boulder County Single Family Mortgage Revenue Series 1982A, 10.00%
due 5/01/99 90,000
485,000 Boulder County Zero Coupon Single Family Mortgage Revenue Series
1983, 11.00% due 12/01/14 (d) 64,699
486,750 Briargate Public Building Authority Landowner Assessment Lien
Series 1985A & 86, 9.50%-10.25% due 12/15/95-05 (a) 199,567
12,000 Castle Pines North Metropolitan District Tax Revenue Series 1994B,
variable rate 8.55% due 12/01/33 (g) 6,000
25,000 Town of Castle Rock G.O. Series 1988, 10.375% due 12/01/08 6,500
530,000 Town of Castle Rock LID Special Assessment Series 1988-2D, 9.25% -
10.375% due 12/01/08 (a) 84,800
60,389 Centennial Downs Metropolitan District Cash Payment Deficiency Bond
Series 1993, 8.09% due 12/01/34 36,234
1
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Investments, Continued
March 31, 1996 (unaudited)
- ----------------------------------------------------------------------------------------------
Face Market
amount Colorado Municipal Bonds - 83.8% value
- ------ -------------------------------- ------
588,601 Centennial Downs Metropolitan Limited Tax Refunding Bond Series
1993, 8.09% due 12/01/34 353,161
271,980 Centennial Downs Metropolitan Interest Certificate Series 1993, 6.00%
due 12/01/34 (c) 6,799
205,000 Cherry Hills Farm Metropolitan District G.O. Refunding Series 1992,
6.50% due 12/01/96-97 207,050
50,000 Clifton Water District Series 1973, 5.90% due 8/01/96 50,385
2,009,520 Colorado Centre Metropolitan District Limited Tax and Special Revenue
Series 1992A, principal only, 0.00% due 1/01/27 (e) 20,095
2,008,335 Colorado Centre Metropolitan District Limited Tax and Special Revenue
Series 1992A, interest only, 9.00% due 1/01/27 (f) 1,305,418
6,465,662 Colorado Centre Metropolitan District Limited Tax and Special Revenue
Series 1992B, 10.19% due 1/01/32 (g) 64,657
370,000 Colorado Health Facilities Authority Revenue Bethesda Psychealth
System Project Series 1987, 8.875%-9.125% due 9/01/07-17 (b) 403,100
5,000 Colorado Health Facilities Authority Refunding Revenue National Jewish
Center Series 6.15% due 2/15/98 4,950
190,000 Colorado Health Facilities Authority Refunding Revenue Porter Memorial
Hospital Series 1986A, 7.40% due 2/01/16 (b) 212,800
240,000 Colorado Health Facilities Authority Revenue Refunding Swedish
Medical Center Series 1987A, 7.00% due 10/01/15 (b) 257,784
25,000 Colorado Postsecondary Educational Facilities Authority Revenue
University of Denver Project, Series 1987B, 8.10% due 12/01/96 25,647
75,000 Colorado Postsecondary Educational Facilities Authority Revenue
The Naropa Institutional Project Series 1990, 7.875% due 09/01/10
put 09/01/97 75,750
1,610,000 Colorado Postsecondary Educational Facilities Authority Revenue
National Technological University Project Series 1993, 7.375%
-7.75% due 12/01/97-10 1,626,100
1,000,000 Colorado Springs Spring Creek GID G.O. Series 1995, variable rate
due 12/01/14 (g) 450,000
350,000 Colorado Tech Center Metropolitan District G.O. Refunding Series
1989, 9.75% due 6/01/09 409,500
1,180,000 Columbia Metropolitan District G.O. Improvement Series 1992,
7.60%-8.50% due 11/01/00-11/01/12 1,458,350
595,000 Cordillera Metropolitan District G.O. Series 1994A, 8.00% due
12/01/09 595,000
500,000 Cordillera Metropolitan District G.O. Series 1994, 8.25% due
12/01/13 510,000
140,000 City and County of Denver Zero Coupon Single Family Mortgage
Revenue Series 1984, 11.63% due 9/01/15 (d) 15,708
2
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Investments, Continued
March 31, 1996 (unaudited)
- ----------------------------------------------------------------------------------------------
Face Market
amount Colorado Municipal Bonds - 83.8% value
- ------ -------------------------------- ------
50,000 Denver Metropolitan Sewage Disposal District No. 1 G.O. Series
1986A, 6.75% due 4/01/11 (b) 51,625
555,000 Douglas County LID #3 South Quebec Street Series 1991, 9.75% -
10.00% due 8/01/97-02 555,000
575,000 Dove Valley Metropolitan District G.O. Refunding & Improvement
Series 1988, 8.90%-9.50% due 12/01/99-08 575,000
505,000 Dove Valley Metropolitan District G.O. Refunding & Improvement
Series 1989, 8.25% due 12/01/08 505,000
600,000 Eaglebend Affordable Housing Revenue Series 1990A-2, 10.00% due
7/01/21 582,000
500,000 Eaglebend Affordable Housing Revenue Series 1991B-2, 10.00% due
7/01/21 485,000
100,000 El Paso County Pheasant Run LID 1986-2 Special Assessment, 9.25%
due 9/01/99 (a) 26,000
90,000 El Paso County Powers Boulevard/Drennan Road LID 1985-2 Special
Assessment Refunding, 8.875%-9.00% due 9/01/00 9,000
2,200,000 El Paso County Multifamily Housing Revenue Refunding (Briarglen
Apartments) Series 1994, weekly reset rate 3.40% due 12/1/24 2,200,000
500,000 El Paso County School District No. 20 Zero Coupon G.O. Refunding
Series 1993A, 6.10% due 6/15/08 (d) 261,250
1,500,000 Fairlake Metropolitan District G.O. Series 1989, 9.00% due 6/01/09 1,530,000
10,000 Fairlake Metropolitan District G.O. Series 1991, 9.625% due
12/01/98 10,100
515,000 Forest Hills Metropolitan District G.O. Refunding, Series 1992B, 7.75%
due 11/01/99 526,897
95,000 Fort Collins Special Assessment Series 1989, 8.75% due 8/01/01 95,000
500,000 Fort Collins G.O. Water Series 1982, 10.00% due 12/01/99 (b) 558,200
850,000 Gateway Village G.I.D. G.O. Series 1995, 8.25%-8.75% due
12/01/05-14 850,000
490,000 Greenwood North Metropolitan District G.O. Refunding Series 1993,
4.40%-5.00% due 12/01/98-01 470,079
500,000 Hamilton Creek Metropolitan District G.O. Series 1990 Exchange Bonds,
11.25% due 12/01/04 (g) 250,000
10,000 Hyland Hills Metropolitan Park & Recreation District Special Revenue
Series 1992, 7.10% due 12/15/00 10,100
340,000 Idledale Fire Protection District G.O. Series 1993, 5.20%-5.80% due
12/15/03-07 319,143
210,000 Interstate South Metropolitan District G.O. Refunding & Improvement
Series 1986, 9.50% due 12/01/06 (b) 222,390
270,000 Interstate South Metropolitan District G.O. Refunding & Improvement
Series 1989, 8.375% due 12/01/05 (b) 283,500
3
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Investments, Continued
March 31, 1996 (unaudited)
- ----------------------------------------------------------------------------------------------
Face Market
amount Colorado Municipal Bonds - 83.8% value
- ------ -------------------------------- ------
230,000 Interstate South Metropolitan District G.O. Refunding & Improvement
Series 1989, 8.375% due 12/01/05 235,313
1,655,000 Interstate South Metropolitan District Zero Coupon G.O. Refunding &
Improvement Series 1989, 9.00% due 12/01/10-14 (d) 362,434
250,000 Jefferson County School District No. R-1 G.O. School Building and
Refunding Series 1985A & B, 8.75% due 12/15/96 259,900
495,000 La Plata County Recreational Facilities Refunding Revenue (Durango
Ski Corporation Project) Series 1989A, 9.00% due 02/01/10 475,200
65,000 City of Lakewood Zero Coupon Single Family Mortgage Series 1985,
11.10% due 5/01/15 (d) 8,138
45,000 Larimer County Zero Coupon Single Family Mortgage Revenue Series
1985A, 11.25% due 4/01/15 (d) 5,535
315,000 City of Las Animas Water G.O. Series 1989, 8.60% due 12/01/09 320,135
1,000,000 City of Louisville Sales Tax Revenue Series 1989, 8.60% due
11/15/13 (b) 1,130,000
220,000 Mesa County Single Family Mortgage Revenue Series 1982, 10.75%
due 12/01/99 (a) 22,000
1,250,000 Mid Valley Metropolitan District G.O. Refunding & Improvement
Series 1989, 8.90% due 12/15/04 1,362,500
15,000 Montrose County Airport Authority Airport Revenue Refunding &
Improvement Series 1987, 9.50% due 12/01/07 16,015
750,000 Mountain Village Metropolitan District G.O. Series 1992, 7.95%
due 12/01/03 821,850
350,000 Town of Nederland G.O. Water Refunding Series 1989, 8.50% due
8/15/13 357,000
285,000 Northern Metropolitan District Limited Tax Revenue Refunding Series
1992A, 8.20%-8.875% due 12/01/22 247,950
596,100 Northern Metropolitan District Limited Tax Revenue Refunding Series
1992B, 0.00% due 12/01/22 (c) 23,844
881,250 Northern Metropolitan District Limited Tax Revenue Refunding Interest
Certificates Series 1992B, 8.25%-8.875% due 12/01/22 (c) 236,925
20,000 Northgate Public Building Authority Landowner Assessment Lien Series
1987A, 8.25% due 12/01/00 (a) 3,200
150,000 Panorama Metropolitan District G.O. Series 1986, 9.50% due
12/01/05 (b) 158,880
5,000 Panorama Metropolitan District G.O. Refunding Series 1986, 9.50%
due 12/01/05 5,150
1,055,000 Panorama Metropolitan District G.O. Refunding Series 1989B, 9.00%
due 12/01/09 1,065,550
4
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Investments, Continued
March 31, 1996 (unaudited)
- ----------------------------------------------------------------------------------------------
Face Market
amount Colorado Municipal Bonds - 83.8% value
- ------ -------------------------------- ------
15,000 Parker Properties Metropolitan District No. 1 Limited Tax Variable
Rate Refunding Exchange Term Bond Series 1991B, 10.41% due
8/15/10 (c) 5,100
1,000,000 Piney Creek Metropolitan District Refunding Series 1989A, 8.50% due
12/01/14 1,042,500
410,000 Plains Metropolitan District G.O. Series 1986, 8.50%-9.25% due
12/01/96-6/01/06 205,000
225,000 Pueblo Urban Renewal Authority Revenue Refunding (Phase One Urban
Renewal Project) Series 1994B, 5.05% due 12/01/19 mandatory call
12/01/96 225,000
155,716 Roxborough Village Metropolitan District Series 1993A, 9.00%
due 12/31/16 129,244
271,967 Roxborough Village Metropolitan District Series 1993B, principal only,
10.41% due 12/31/21 (e) 27,197
14,158 Roxborough Village Metropolitan District Series 1993B, interest only,
10.41% due 1/01/43 (f) 142 9,066
906,622 Roxborough Village Metropolitan District Series 1993C, 9.84% due
12/31/32 9,066
240,000 Saint Vrain Sanitation District G.O. Series 1987, 9.625% due
12/01/06 268,800
500,000 City of Salida Sales Tax Revenue Refunding & Improvement Series
1990, 8.20% due 12/01/11 529,850
125,000 San Miguel County Housing Authority Multifamily Telluride Village
Zero Coupon Revenue Series 1993, 7.00% due 7/01/98 (d) 109,275
535,000 San Miguel County Housing Authority Multifamily Telluride Village
Revenue Refunding Series 1993, 6.30% due 7/01/13 524,300
185,000 San Miguel County School District No. R-1 G.O. Series 1992, 8.50%
due 12/01/98 207,200
1,000,000 Southpark Metropolitan District G.O. Refunding Series 1996, 6.60%
due 12/01/13 984,520
100,000 Southtech Metropolitan District G.O. Refunding Series 1994, 5.35%-
5.85% due 12/01/01-04 97,184
385,000 Squaw Creek Metropolitan District Revenue Series 1994, 5.25%
due 12/01/13 put 12/01/98 385,000
610,000 Valley Metropolitan District G.O. Refunding Series 1992, 7.00%
due 12/15/06 610,000
100,000 Walsenburg Natural Gas Revenue Bonds Series 1968, 6.25% due
06/01/98-99 101,000
75,000 City of Westminster 104th Avenue Special Improvement District Special
Assessment Series 1988, 9.00% due 12/01/03 75,750
5
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Investments, Continued
March 31, 1996 (unaudited)
- ----------------------------------------------------------------------------------------------
Face Market
amount Colorado Municipal Bonds - 83.8% value
- ------ -------------------------------- ------
5,000 Wright Farms Metropolitan District G.O. Series 1986, 9.75% due
12/01/05 5,050
----------
Total Colorado Municipal Bonds (cost $40,369,939) 39,791,263
----------
Colorado Certificates of Participation - 1.4%
-----------------------------------------------------
100,000 Arapahoe Library District Certificates of Participation Series 1990,
6.55% due 12/15/96 102,000
80,000 Huerfano County Refunding Certificates of Participation Series 1993,
4.50% due 12/01/96 80,000
50,000 Las Animas County School District No. 001 Certificates of Participation
Series 1991, 8.00% due 12/01/10 (b) 58,000
425,000 Roaring Fork School District No. RE-1 Certificates of Participation
Series 1996, 3.40% due 12/15/96 425,000
Total Colorado Certificates of Participation Bonds (cost $662,175) 665,000
----------
Colorado Industrial Development Revenue Bonds - 8.6%
-------------------------------------------------------
5,000 City and County of Denver American Water Works Association Series
1987, 10.00% due 3/01/07 5,050
200,000 City and County of Denver Desks Colorado Project Series 1983, 4.60%
variable rate due 10/15/05 put 10/15/96 200,456
2,090,000 City of Englewood Floating Rate Demand Series 1985, 3.60% variable
rate due 12/01/10 2,090,000
1,305,000 City of Fort Collins The Opera House Project Series 1986, 8.75%-
9.125% due 12/01/10-16 1,305,000
500,000 City of Northglenn Refunding (Castle Garden Retirement Project)
Series 1988, variable rate 3.30% due 1/01/09 500,000
----------
Total Colorado Industrial Development Revenue Bonds
(cost $ 4,092,325) 4,100,506
----------
Total Investments (cost $45,124,439) 93.8% 44,556,769
Other assets in excess of liabilities 6.2% 2,915,802
---------
Net Assets 100.0% $ 47,472,571
====== ==========
</TABLE>
6
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Investments, Continued
March 31, 1995 (unaudited)
- -------------------------------------------------------------------------------
(a) Non-income producing based upon the financial condition of the issuer (see
footnote 1).
(b) Originally issued as general obligation bonds but are now prerefunded and
are secured by an escrow fund consisting entirely of direct U.S. Government
obligations.
(c) Represents interest certificates whose characteristics are similar to zero
coupon bonds. All interest based on the coupon rate is remitted upon
maturity.
(d) Interest rate shown for zero coupon bonds represents the effective yield at
the date of acquisition.
(e) Principal-only certificate represents the right to receive the principal
payments on the underlying debt security upon maturity. The price of this
security is typically more volatile than that of coupon-bearing bonds of the
same maturity.
(f) Interest-only certificate represents the right to receive semi-annual
interest payments on the underlying debt security. The principal amount of
the underlying security represents the notional amount on which current
interest is calculated. The interest rate shown represents the effective
yield at the date of acquisition.
(g) Interest rate disclosed for cash flow bond represents the effective yield at
March 31, 1996. Income on this security is derived from the cash flow of the
issuer.
The following abbreviations are used in the descriptions of securities included
in the Statement of Investments:
G.O. - General Obligations
LID - Local Improvement District
GID - General Improvement District
See accompanying notes to financial statements.
7
<PAGE>
COLORADO BONDSHARES -A TAX-EXEMPT FUND
Statement of Assets and Liabilities
October 1, 1995 to March 31, 1996 (unaudited)
- -------------------------------------------------------------------------------
Assets
Investments at value (cost $45,124,439) - see $ 44,556,769
accompanying notes to financial statements
Cash 2,384,807
Receivables:
Interest 1,205,711
Shares of beneficial interest sold 23,107
----------
Total Assets 48,170,394
----------
Liabilities
Payables and other liabilities:
Dividends 115,326
Shares of beneficial interest redeemed 8,478
Investments purchased 539,477
Accrued expenses and other 34,542
----------
Total liabilities 697,823
----------
Net Assets $ 47,472,571
==========
Composition of Net Assets
Paid-in capital 48,619,641
Undistributed net investment income 46,094
Accumulated net realized loss from investment transactions (625,494)
Net unrealized depreciation of investments (note 3) (567,670)
----------
Net assets $ 47,472,571
==========
Net asset value and redemption value per share (based on 5,104,564
shares of beneficial interest outstanding) $ 9.30
====
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 9.76
====
See accompanying notes to financial statements.
8
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Operations
October 1, 1995 to March 31, 1996 (unaudited)
- -------------------------------------------------------------------------------
Investment income
Interest $ 1,674,343
---------
Expenses:
Management fees (note 4) 115,937
Transfer agency expenses 18,807
Custodian fees (note 5) 16,407
Legal and auditing fees 15,780
Shareholders' reports 7,487
Fidelity bond 1,590
Trustees' fees 932
Other 2,063
Total Expenses 179,003
--------
Earnings credits on cash balances (note 5) (16,407)
Net Expenses 162,596
Net investment income 1,511,747
---------
Realized and unrealized gain (loss) on investments:
Net realized loss on investments (265,315)
----------
Net unrealized depreciation of investments:
Beginning of year (1,493,175)
End of period (March 31, 1996) (567,670)
-----------
Net change in unrealized depreciation on investments 925,505
Net realized and unrealized gain on investments 660,190
----------
Net increase in net assets resulting from operations $ 2,171,937
=========
See accompanying notes to financial statements.
9
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Statement of Changes in Net Assets
October 1, 1995 to March 31, 1996 (unaudited)
- -------------------------------------------------------------------------------
From investment activities:
Net investment income $ 1,511,747
Net realized loss from investments (265,315)
Net change in unrealized appreciation or (depreciation) on
investments 925,505
Net increase in net assets resulting from operations 2,171,937
Dividends to shareholders from net investment income (1,465,654)
-----------
From beneficial interest transactions:
Proceeds from sale of shares 2,910,213
Dividends reinvested 976,112
Payments for shares redeemed (1,888,320)
-----------
Increase in net assets derived from
beneficial interest transactions 1,998,005
-----------
Net increase in net assets 2,704,288
Net Assets:
Beginning of period 44,768,283
-----------
End of period, including undistributed net investment
income of $46,094 $ 47,472,571
==========
See accompanying notes to financial statements
10
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
<TABLE>
<CAPTION>
Financial Highlights
Period
Semi-annual period ended March 31 ended
------------------------------------------------------------------------------ September 30,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
Per Share Operating Data:
Net asset value, beginning
of period $ 9.16 9.07 9.13 9.07 8.96 8.93 9.61 9.59 9.43 10.00
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Net investment income .30 .30 .36 .34 .34 .35 .36 .38 .38 .26
Net realized and unrealized
gain (loss) on investments .13 (.02) (.04) .02 .04 .00 (.23) (.15) .05 (.57)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Increase (decrease) from
investment operations .43 .28 .32 .36 .38 .35 .13 .23 .43 (.31)
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Dividends from net investment
income (.29) (.30) (.36) (.34) (.34) (.35) (.36) (.38) (.38) (.26)
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Net increase (decrease)
in net asset value .14 (.02) (.04) .02 .04 .00 (.23) (.15) .05 (.57)
----- ------ ----- ----- ----- ----- ----- ----- ----- -----
Net asset value, end of period $ 9.30 9.05 9.09 9.09 9.00 8.93 9.38 9.44 9.48 9.43
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
Total Return, at Net Asset
Value (1) 9.63% 6.31 6.31 8.04 8.58 8.24 2.86 4.74 9.44 (2.59)**
Ratios/Supplemental data:
Net assets, end of period
(000)s $47,472 43,907 39,335 39,067 25,845 25,643 40,207 26,334 9,912 5,992
====== ====== ====== ====== ====== ====== ====== ====== ===== ======
Ratios to average net assets (annualized):
Expenses (2) .77 .71 .75 .89 1.20 1.30 .84 .60 .20 .34**
Net investment income 6.51% 6.71 7.15 7.31 7.52 7.89 7.41 7.61 7.87 7.79**
Portfolio turnover ratio (3) 10.70 2.41 6.83 5.68 1.49 4.00 7.17 6.94 7.20 56.84**
===== ===== ===== ===== ===== ===== ===== ===== ===== =====
</TABLE>
11
<PAGE>
COLORADO BONDSHARES A TAX-EXEMPT FUND
Financial Highlights, Continued
* For the Period June 4,1987(commencement of operations) to September 30, 1987.
** Annualized.
(1) Assumes a hypothetical initial investment on the business day before the
first day of the semi-annual period, with all dividends reinvested in
additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the semi-annual period.
Sales charges are not reflected in the total returns.
(2) Beginning in fiscal 1995 the expense ratio reflects the effect of gross
expenses (including those paid indirectly by the Fund via earnings credits
on cash balances). Prior period expense ratios have not been adjusted.
(3) The portfolio turnover ratio is computed by dividing the lesser of
purchases or sales of portfolio securities for a period by the monthly
average of the market value of portfolio securities owned during the
period. Securities with a maturity date of one year or less at the time of
acquisition are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended March 31, 1996 were $4,485,622 and
$7,761,685, respectively.
See accompanying notes to financial statements.
12
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Notes to Financial Statements
March 31, 1996 (unaudited)
- -------------------------------------------------------------------------------
(1) Summary of Significant Accounting Policies
Colorado BondShares - A Tax-Exempt Fund (the Fund) is registered under the
Investment Company Act of 1940 as amended, as a diversified, open-end
management investment company. The Fund's investment adviser is Freedom
Funds Management Company (Freedom Funds), formerly known as Hanifen, Imhoff
Management Company, Inc. The following is a summary of significant
accounting policies consistently followed by the Fund.
Investment Valuation
Investments are valued at 4:00 p.m. (New York time) at the mean of the bid
and asked prices obtained from one or more broker-dealers dealing in
municipal bonds. Since it is unlikely that the bonds will be held to
maturity, the Fund does not record amortization of premiums or discounts for
financial statement purposes. Short-term debt securities having a remaining
maturity of sixty days or less are valued at cost (or last determined market
value) adjusted for amortization to maturity of any premium or discount.
Income Taxes
No provision for federal income taxes has been recorded since it is the
Fund's policy to comply with provisions of the Internal Revenue Code
available to regulated investment companies and to distribute its net income
to shareholders.
Other
Investment transactions are accounted for on the date the investments are
purchased or sold (trade date). Dividends to shareholders are declared each
business day and paid monthly. Distributions to shareholders are recorded on
the ex-dividend date. Realized gains and losses from investment transactions
and unrealized appreciation and depreciation of investments are reported on
an identified-cost basis which is the same basis the Fund uses for federal
income tax purposes. The Fund discontinues the accrual of interest income on
municipal bonds when the securities become delinquent as to payment of
principal or interest, or when the Fund's investment advisor determines
uncertainty exists as to the realization of all or a portion of the
principal balance. The face amount and market value of bonds, for which the
accrual of interest income has been discontinued, approximated $1,336,750
and $335,567 (.7% of net assets) respectively, as of March 31, 1996.
13
<PAGE>
COLORADO BONDSHARES - A TAX-EXEMPT FUND
Notes to Financial Statements
March 31, 1996 (unaudited)
- ------------------------------------------------------------------------------
(2) Shares of Beneficial Interest
At March 31, 1996 there was an unlimited number of no par value shares of
beneficial interest authorized. Transactions in shares of beneficial
interest for the period from October 1, 1995 to March 31, 1996 were as
follows:
Sold 315,651
Dividends Reinvested 105,808
-------
421,459
Redeemed (204,226)
-------
Net increase 217,233
=======
(3) Unrealized Gains and Losses
At March 31, 1996, the net unrealized depreciation of investments of
$567,670 was composed of gross appreciation of $1,680,040 and gross
depreciation of $2,247,710 for those investments having an excess of cost
over value.
(4) Management Fees and Other Transactions with Affiliates
Management fees paid to Freedom Funds Management Company were in accordance
with the investment advisory agreement with the Fund which provides for an
annual fee at the rate of .5% of the net assets of the Fund. Freedom Funds
Management Company pays all expenses connected with advertising, marketing,
and distributing the Fund's shares and is the transfer agent, dividend
disbursing agent, and registrar for the Fund. Freedom Funds Management
Company agreed that no transfer agency costs would be charged to the Fund
through March 31, 1996, except for direct expenses charged to the Fund by
third parties.
(5) Earnings Credits on Cash Balances
Earnings credits on cash balances maintained with the custodian by the Fund
resulted in offsetting custodian fees incurred for the safeguarding of Fund
assets.
14
<PAGE>
Officers and Trustees
George N. Donnelly, President and
Chairman of the Board of Trustees
Andrew B. Shaffer, Secretary,
Treasurer and Trustee
Fred R. Kelly, Jr. Portfolio Manager
Investment Advisor
Freedom Funds Management Company
Transfer, Shareholder Servicing,
and Dividend Disbursing Agent
Freedom Funds Management Company
Distributor
SMITH HAYES Financial Services Corporation
Custodian of Portfolio Securities
Norwest Investments and Trust,
Norwest Bank Denver, N.A.
Independent Auditors
KPMG Peat Marwick LLP
Legal Counsel
Kutak Rock
This Report is submitted for the general information of the shareholders of
the Colorado BondShares - A Tax-Exempt Fund. This report must be preceded or
accompanied by a Prospectus of the Fund. The prospectus contains information
concerning the investment policies and expenses of the portfolio in addition to
other pertinent information. Shares of Colorado BondShares - A Tax-Exempt Fund
are not deposits or obligations of any bank, are not guaranteed by any bank, and
are not insured by the FDIC or any other agency, and involve investment risks,
including possible loss of the principal amount invested.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
PURSUANT TO ITEM 601 (C) (2) (i) of Regulations S-K and S-B.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 47,509,246
<INVESTMENTS-AT-VALUE> 46,941,576
<RECEIVABLES> 1,228,818
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 48,170,394
<PAYABLE-FOR-SECURITIES> 539,477
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 158,346
<TOTAL-LIABILITIES> 697,823
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,619,641
<SHARES-COMMON-STOCK> 5,104,564
<SHARES-COMMON-PRIOR> 4,887,331
<ACCUMULATED-NII-CURRENT> 46,094
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 625,494
<ACCUM-APPREC-OR-DEPREC> (567,670)
<NET-ASSETS> 47,472,571
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,674,343
<OTHER-INCOME> 0
<EXPENSES-NET> 162,596
<NET-INVESTMENT-INCOME> 1,511,747
<REALIZED-GAINS-CURRENT> (265,315)
<APPREC-INCREASE-CURRENT> 925,505
<NET-CHANGE-FROM-OPS> 2,171,937
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,465,654
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,910,213
<NUMBER-OF-SHARES-REDEEMED> 1,888,320
<SHARES-REINVESTED> 976,112
<NET-CHANGE-IN-ASSETS> 2,704,288
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 115,937
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 46,460,355
<PER-SHARE-NAV-BEGIN> 9.16
<PER-SHARE-NII> .30
<PER-SHARE-GAIN-APPREC> .13
<PER-SHARE-DIVIDEND> .29
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.30
<EXPENSE-RATIO> .77
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
