<PAGE> 1
[COLORADO BONDSHARES LETTERHEAD]
May 27, 1997
Dear Shareholders:
Colorado BondShares is about to reach an important milestone: we will celebrate
our 10 year anniversary on June 4, 1997. During these years we have had total
paid in capital of over $101,000,000, reflecting all deposits to the Fund. We
have returned approximately $53,000,000 to investors in redemptions and we have
paid out over $20,00,000 in dividends. Total assets of the Fund are presently
at $63,000,000, the highest ever. We prospered in the late eighties and had
some difficult days in 1990 due to a real estate downturn. Following a
management change and a switch in investment advisors, we have been the best
fund in our category in the country two out of the last three years.
Looking ahead we anticipate continued good fortune and we see the day coming
when we will reach $100,000,000 in size. This statistic is important in that
additional size allows us to achieve economies of scale that will bring down
costs (and increase the return) of each dollar managed. While we are still
quite small in the mammoth world of mutual funds, we remain very competitive
with the big guys in terms of the attractiveness of our product, and our
shareholder service is unequalled. Our commitment to our shareholders is as
fresh and alive today as it was ten years ago when the idea of having a
Colorado fund was first conceived. We are still very much committed to our
basic philosophy of buying bonds issued by smaller, lesser known non-rated
entities and now we have a ten year track record to prove that our strategy
works well.
It would be inappropriate to celebrate in earnest without first thanking the
shareholders who are really the ones who deserve the credit for bringing us to
this point. Without your continued confidence in our efforts we certainly
would not have been able to point to these accomplishments. We value the
relationships that have grown from our association and we thank you all for
your wonderful support. We look forward to serving you for the next ten years
and we pledge to continue to put your interests first. Thank you all.
Sincerely,
/s/ FRED R. KELLY, JR.
Fred R. Kelly, Jr.
<PAGE> 2
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 ADVISER
FREEDOM FUNDS MANAGEMENT COMPANY
TRANSFER, SHAREHOLDER SERVICING, AND DIVIDEND
DISBURSING AGENT
FREEDOM FUNDS MANAGEMENT COMPANY
DISTRIBUTOR
SMITH HAYES FINANCIAL SERVICES CORP.
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.
<PAGE> 3
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 235,000 Academy Water and Sanitation District G. O. Series 1995, 6.20%-
7.10% due 11/15/02-05 $ 250,220
25,000 Adams & Arapahoe Counties School District No. 31J G.O. Series
1989, 7.30% due 11/15/04 (b) 26,827
75,000 Adams County Pollution Control Revenue Refunding Series 1986A,
7.375% due 11/01/09 76,622
200,000 Arapahoe County Water and Wastewater Authority Revenue Series
1994, 6.20%-6.30% due 12/01/03-04 (b) 213,348
250,000 Arapahoe Water and Sanitation District G.O. Refunding and
Improvement Series 1986, 8.50% due 12/01/05 294,190
175,000 Arapahoe Water and Sanitation District G.O. Refunding and
Improvement Series, 1988A, 9.25% due 12/01/13 184,599
1,000,000 Arapahoe Water and Sanitation District G.O. Refunding and
Improvement Series, 1988A, 9.25% due 12/01/13 (b) 1,088,600
2,250,000 Arapahoe Water and Sanitation District G.O. Refunding Series
1995B, 8.50% due 12/01/20 2,179,980
100,000 Arrowhead Metropolitan District G.O. Improvement Series 1995A,
5.20%-6.10% due 12/01/97-03 98,062
100,000 Arrowhead Metropolitan District G.O. Refunding Series 1994, 5.70%
due 12/01/03 101,262
70,000 City of Arvada G.O. Street and Bridge Refunding Series 1994, 3.80%
due 12/01/99 69,151
565,000 Arvada Multifamily Rental Housing Revenue Series 1993, 7.50% due
12/15/18 564,904
250,000 City of Aspen G.O. Electric Refunding Series 1991, 5.35% due
10/01/98 254,195
306,040 Aurora Centretech Metropolitan District G.O. Refunding and
Improvement Series 1994, 6.00% due 12/01/23 224,477
135,000 Bayfield School District No. 10JT-R G..O. Refunding Series 1992,
5.50% due 09/15/98 137,546
305,000 Bear Creek LID #1 Special Assessment Refunding Series 1993, 6.50%
due 3/15/98 305,677
125,000 Beaver Creek Metropolitan District G.O. Refunding Series 1994,
3.90% due 12/01/97 125,141
</TABLE>
1
<PAGE> 4
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 100,000 Beaver Creek Metropolitan District G.O. Refunding Series 1993, 4.60% due
12/01/98 $ 100,677
1,910,000 Bell Mountain Ranch Phase II Metropolitan District G.O. Series 1995, 8.50%
due 11/15/97-15 1,926,381
100,000 Bell Mountain Ranch Phase II Metropolitan District Improvement Fee Revenue
Series 1995, 7.00% due 11/15/98 99,865
500,000 Bell Mountain Ranch Phase III Metropolitan District Improvement Fee
Revenue Series 1996, 7.00% due 11/15/99 499,015
680,000 Bennett School District No. 29J G.O. Refunding and Improvement Series
1991, 6.35%-6.95% due 12/01/99-04 726,588
145,000 City of Black Hawk Device Tax Revenue Series 1994, 5.55%-5.70% due
12/01/00-01 147,567
200,000 City of Black Hawk Device Tax Revenue Series 1996, 5.75%-5.85% due
12/01/03-04 203,319
350,000 City of Black Hawk G.O. Water Improvement Series 1992, 6.40%-6.80% due
12/01/98-00 363,184
130,000 Boulder County Gunbarrel General Improvement District G.O. Series 1994,
4.90%-5.00% due 11/15/98-99 131,513
100,000 Boulder County Single Family Mortgage Revenue Series 1982A, 10.00% due
5/01/99 93,590
370,000 Boulder County Zero Coupon Single Family Mortgage Revenue Series 1983,
11.00% due 12/01/14 (d) 58,675
25,000 Boulder Valley School District No. RE-2 Series 1992A , 5.80% 10/15/01 26,143
165,000 Boxelder Sanitation District Sewer Revenue Refunding and Improvement
Series 1994, 5.35%-5.90% due 01/01/98-03 165,531
280,000 Town of Breckenridge G.O. Recreation Center Refunding Series 1993, 4.30%-
4.45% due 12/01/99-00 278,046
120,000 Town of Breckenridge Excise Tax Revenue Series 1991, 5.70% due 12/01/97 121,477
435,270 Briargate Public Building Authority, Landowner Assessment Lien Series
1985A and 1986A, 9.50%-10.25% due 06/15/95-05 (a) 217,635
12,000 Castle Pines North Metropolitan District Tax Revenue Bonds Series 1994B,
8.55%, due 12/01/33 (h) 7,800
25,000 Town of Castle Rock G.O. Series 1988-2 10.375% due 12/01/08 25,000
</TABLE>
2
<PAGE> 5
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 530,000 Town of Castle Rock LID Series 1988-2D Special Assessment, 9.25%-10.375%
due 12/01/08 (a) $ 106,000
470,000 Town of Castle Rock G.O. Water Refunding Series 1993, 4.30%-4.65% due
12/01/98-00 470,380
300,000 Castlewood Water District G.O. Refunding Series 1993, 4.40%-5.10% due
12/01/97 302,828
60,389 Centennial Downs Metropolitan District Cash Payment Deficiency Bond Series
1993, 8.09% due 12/01/34 48,311
588,601 Centennial Downs Metropolitan District 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) 2,720
100,000 Central Weld County Water District Water Revenue Refunding Series 1993,
3.80% due 12/01/97 99,993
105,000 Cherry Hills Farm Metropolitan District G.O. Refunding Series 1992, 6.50%
due 12/01/97 107,150
100,000 Clear Creek School District No. Re-1 G.O. Improvement Series 1991, 5.90%
due 12/01/00 104,594
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) 1,205,001
6,465,662 Colorado Centre Metropolitan District Limited Tax and Special Revenue
Series 1992B, 0.00% due 1/01/32 (g) 64,657
370,000 Colorado Health Facilities Authority Revenue Bethesda Psyc-health System
Project Series 1987, 8.875%-9.125% due 9/01/07-17 (b) 381,539
5,000 Colorado Health Facilities Authority Hospital Refunding Revenue National
Jewish Center Series 1992, 6.15% due 2/15/98 5,070
190,000 Colorado Health Facilities Authority Refunding Revenue Porter Memorial
Hospital Series 1986A, 7.40% due 2/01/16 (b) 203,912
240,000 Colorado Health Facilities Authority Revenue Refunding Swedish Medical
Center Series 1987, 7.00% due 10/01/15 (b) 248,515
</TABLE>
3
<PAGE> 6
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 520,000 Colorado Health Facilities Authority Zero Coupon Retirement Housing
Revenue Liberty Heights Project 1990 Subordinate Series B, 6.97% due
07/15/20 (d) $ 101,265
1,610,000 Colorado Postsecondary Educational Facilities Authority Revenue National
Technological University Project Series 1993, 7.375%-7.75% due 12/01/10 1,598,621
75,000 Colorado Postsecondary Educational Facilities Authority Revenue The
Naropa Institutional Project Series 1990, 7.875% due 9/01/10 put 9/01/97 75,000
920,000 Colorado Springs Spring Creek G.O. Series 1995, 3.00% due 12/01/14 (h) 414,000
340,000 Colorado Tech Center Metropolitan District G.O. Refunding Series 1989,
9.75% due 6/01/09(b) 360,971
1,180,000 Columbia Metropolitan District G.O. Improvement Series 1992, 7.60%-8.50%
due 11/01/00-11/01/12 1,387,492
100,000 City of Commerce City Special Improvement District No. 17 Special
Assessment, 6.90%-7.10% due 12/01/07 (b) 99,913
575,000 Cordillera Metropolitan District G.O. Series 1994A, 8.00% due 12/01/09 598,000
500,000 Cordillera Metropolitan District G.O. Series 1994, 8.25% due 12/01/13 520,000
2,250,000 Cottonwood Water and Sanitation District Refunding Series 1996, 7.60%
12/01/12 2,247,997
240,000 Town of Crested Butte Sales Tax Revenue Series 1994, 6.10%-6.35% due
12/01/01-03 251,417
260,000 Town of Crested Butte G.O. Water and Sewer Refunding Series 1993, 3.90%-
4.25% due 11/01/97-99 259,203
375,000 City of Delta Sales and Use Tax Revenue Refunding Series 1994, 4.35%-
4.65% due 12/01/01-03 365,957
25,000 City and County of Denver Special Facilities Airport Revenue Series 1967,
5.375% due 01/01/99 24,386
90,000 City and County of Denver Zero Coupon Single Family Mortgage Revenue
Series 1984, 11.63% due 9/01/15 (d) 12,054
200,000 Denver Southeast Suburban Water and Sanitation District G.O. Refunding
Series 1988, 6.45% due 12/01/97 202,890
</TABLE>
4
<PAGE> 7
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 75,000 Town of Dillon G.O. Series 1992, 5.70%-5.90% due 10/01/99-00 $ 77,550
95,000 Town of Dillon Excise Tax Revenue Series 1994, 5.80% - 5.90% due
06/01/02-03 95,178
410,000 Douglas County LID #3 Series 1991, 10.00% due 8/01/99-02 410,000
505,000 Dove Valley Metropolitan District G.O. Refunding & Improvement Series
1989, 8.25% due 12/01/08 519,716
90,000 City of Durango First Mortgage Revenue Series 1995, 6.50% due 12/15/00 89,793
25,000 Eagle County Eagle Valley Library District G.O. (Limited Tax) Library
Series March 1, 1994, 4.45% due 12/01/98 25,100
600,000 Eaglebend Affordable Housing Corporation Revenue Series 1990A-2, 10.000%
due 7/01/21 (g) 588,048
500,000 Eaglebend Affordable Housing Corporation Revenue Series 1991B, 10.000%
due 7/01/21 (g) 490,040
120,000 El Paso and Elbert Counties Joint School District No. 23-JT
G.O. Building Series 1994, 5.80%-5.75% due 12/15/97-01 122,637
90,000 El Paso County LID 85-2 Special Assessment Refunding Series 1988, 8.875%-
9.00% due 9/01/00 9,000
2,400,000 El Paso County Multifamily Housing Briarglen Apartments Project Series
1994, 3.45% due 12/01/24 (h) 2,400,000
100,000 El Paso County Pheasant Run LID Special Assessment Bonds Series 1986-2,
9.25% due 9/01/97 (a) 26,000
100,000 El Paso County School District No. 2 - Harrison G.O. Improvement Series
1994, 7.10% due 12/01/04 113,072
500,000 El Paso County School District No. 20 Zero Coupon G.O. Refunding Series
1993A, 6.10% due 6/15/08 (d) 271,335
150,000 Elbert County School District C-1 G.O. Series 1994, 4.40% due 12/01/02 143,484
155,000 City of Englewood Golf Course Revenue Series 1994, 4.35% due 12/01/00 151,785
100,000 Estes Park Urban Renewal Authority Tax Increment Revenue Refunding Series
1993, 4.30% due 05/15/98 100,132
490,000 Evergreen Metropolitan District Water Revenue Refunding Series 1992A,
6.10%-6.25% due 07/15/98-99 504,914
</TABLE>
5
<PAGE> 8
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 10,000 Fairlake Metropolitan District G.O. Series 1991, 9.625% due 12/01/98 $ 10,712
1,500,000 Fairlake Metropolitan District G.O. Series 1989, 9.00% due 6/01/09 1,564,560
515,000 Forest Hills Metropolitan District G.O. Refunding Series 1992B, 7.75% due
11/01/99 521,376
500,000 Fort Collins G.O. Water Series 1982, 10.00% due 12/01/99 (b) 519,950
25,000 Fort Collins Refunding Series B, 6.00%, due 12/01/02 26,509
150,000 Fraser Valley Metropolitan Recreation District GO. Refunding Series 1992,
5.20%-5.40% due 10/01/98-99 152,567
100,000 Town of Frederick G.O. Water Refunding Series 1993, 4.50%-4.70% due
12/01/97-98 100,308
100,000 School District Fremont RE-1 G.O. Refunding Series 1990, 6.80% due
10/01/99 102,348
850,000 Gateway Village Improvement District G.O. Series 1995, 8.25%-8.75% due
12/01/05-14 844,932
200,000 City of Glenwood Springs Sales and Use Tax Revenue Series 1992A, 5.90%
due 12/01/02 203,388
300,000 City of Golden Sales and Use Tax Revenue Series 1992, 4.50%-5.00% due
11/15/97-99 302,448
300,000 City of Grand Junction Downtown Development Authority Tax Increment
Revenue Series 1996, 5.55%-5.65% due 11/15/04-05 303,839
100,000 Greeley General Improvement District No. 1 G.O. Refunding Series July 15,
1994, 5.20%-5.30% due 10/01/98-99 101,403
290,000 Greenwood Metropolitan District G.O. Refunding Series 1994, 5.30%-7.00%
due 12/01/97-04 301,926
520,000 Greenwood North Metropolitan District G.O. Refunding Series 1993, 4.30%-
5.00% due 12/01/97-01 517,697
220,000 Greenwood South Metropolitan District G.O. Refunding Series 1994, 6.25%-
6.90% due 12/01/01-04 229,006
100,000 City of Greenwood Village Sales Tax Revenue Refunding Series 1993, 4.40%
due 12/01/99 99,895
500,000 Hamilton Creek District Series 1990, .7% due 12/01/04 (g) 250,000
55,000 Town of Hayden G.O. Water Refunding Series 1993, 4.30% due 09/01/99 54,518
</TABLE>
6
<PAGE> 9
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 210,000 Heritage Greens Metropolitan District G.O. Refunding Series 1994, 5.35%
due 06/15/97-12/15/97 $ 210,802
10,000 Hyland Hills Park & Recreation District Special Revenue Improvement
Series 1992, 7.10% due 12/15/00 10,206
340,000 Idledale Fire Protection District G.O. Series 1993, 5.20%-5.80% due
12/15/03-07 330,786
1,655,000 Interstate South Metropolitan District Zero Coupon G.O. Refunding &
Improvement Series 1989, 9.00% due 12/01/10-14 (d) 406,833
100,000 La Plata County Hospital District G.O. Series 1987, 7.50% 12/01/00 (b)
490,000 La Plata County Recreational Facilities Revenue Refunding Durango Ski
Corporation Project Series 1989A, 9.00% due 02/01/10 475,300
100,000 City of Lafayette Sales and Use Tax Revenue Series 1991, 5.70% due
11/15/98 102,568
100,000 City of Lakewood Combined Utility Revenue Refunding Series 1993, 4.20%
due 12/01/97 100,145
65,000 City of Lakewood Zero Coupon Single Family Mortgage Series 1985, 11.10%
due 5/01/15 (d) 9,309
315,000 City of Las Animas Water G.O. Series 1989, 8.60% due 12/01/09 315,998
300,000 Left Hand Water District Water Revenue Refunding Series 1993, 4.30%-4.45%
due 11/15/00-01 297,078
135,000 Lookout Mountain Water District G.O. Refunding Series 1993, 5.20% due
12/01/01 136,269
1,000,000 City of Louisville Sales Tax Revenue Series 1989, 8.60% due 11/15/13 (b) 1,081,060
70,000 City of Manitou Springs Water and Sewer Revenue Series 1992, 5.00%-5.20%
due 03/01/98-99 70,583
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 (b) 1,404,063
200,000 Moffat School District No. 2 G.O. Series 1994, 5.40%-5.90% due 12/01/97-01 205,991
</TABLE>
7
<PAGE> 10
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 320,000 City of Montrose Sales and Use Tax Revenue Refunding Series 1993, 4.20%-
4.40% due 08/15/99-00 $ 317,930
250,000 City of Montrose Water and Sewer Revenue Refunding and Improvement Series
1993, 4.50%-4.65% due 10/01/01-02 248,265
15,000 Montrose County Airport Authority Airport Revenue Refunding & Improvement
Series 1987, 9.50% due 12/01/07 (b) 15,702
155,000 Monument Sanitation District G.O. Refunding Series 1994, 5.80%-5.90% due
12/01/01-02 158,433
255,000 Town of Mt. Crested Butte G.O. Refunding Series 1993, 4.40% -4.75% due
05/01/99-01 252,298
750,000 Mountain Village Metropolitan District G.O. Series 1992, 7.95% due
12/01/03 823,898
350,000 Town of Nederland G.O. Water Refunding Series 1989, 8.50% due 8/15/13 (b) 371,042
225,000 North Jeffco Park and Recreation District Golf Course Revenue Series
1994, 5.80%-6.10% due 12/01/01-04 231,336
100,000 North Table Mountain Water and Sanitation District G.O. Water
Improvement, 7.10% due 12/01/97 100,255
120,000 Northeast Teller County Fire Protection District G.O. Series 1988, 7.50%-
7.60% due 12/01/97-98 120,677
193,750 Northern Metropolitan District Limited Tax Revenue Refunding Series
1992A, 8.25%-8.875% due 12/01/22 168,562
579,900 Northern Metropolitan District Limited Tax Revenue Refunding Series
1992B, 0.00% due 12/01/22 (a)(d) 226,161
918,750 Northern Metropolitan District Limited Tax Revenue Refunding Series
1992B, 8.25%-8.875% due 12/01/22 (c) 358,313
20,000 Northgate Public Building Authority Landowner Assessment Lien Series
1987A, 8.25% due 12/01/00(a) 5,000
200,000 City of Northglenn Water and Sewer Revenue Refunding Series 1992, 4.70%
due 12/01/98 201,834
100,000 Town of Palisade G.O. Water Refunding Series 1993B, 5.10% due 04/01/99 100,679
1,055,000 Panorama Metropolitan District G.O. Refunding Series 1989B, 9.00% due
12/01/09 1,076,100
</TABLE>
8
<PAGE> 11
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 280,000 Town of Parker Sales and Use Tax Refunding Revenue Series 1993, 4.20%-
4.30% due 11/01/99-00 $ 278,047
1,000,000 Piney Creek Metropolitan District Refunding Series 1989A, 8.50% due
12/01/14 1,037,000
50,000 Pitkin County Sales Tax Revenue Series 1993, 3.45% due 12/01/97 49,875
45,000 Pitkin County Sales Tax Revenue Series 1995, 5.30% due 12/01/00 45,341
360,000 Plains Metropolitan District G.O. Series 1986, 9.25% due 6/01/06 288,000
200,000 Project 7 Water Authority Water Revenue Refunding Series 1993, 4.50% due
12/01/00 198,788
205,000 Rangely Junior College District G.O. Building Series 1992, 6.15%-6.40%
due 10/01/98-00 209,688
210,000 Ridgway School District No. R-2 G.O. Series 1994, 7.75% due 12/01/98-02 229,335
159,868 Roxborough Village Metropolitan District Series 1993A, 9.00% due 12/31/16 131,092
278,078 Roxborough Village Metropolitan District Series 1993B, principal only,
0.00% due 12/31/21 (e) 16,685
906,622 Roxborough Village Metropolitan District Zero Coupon Series 1993C, 9.84%
due 12/31/32 (d) 9,066
20,270 Roxborough Village Metropolitan District Series 1993B, interest only,
10.41% due 1/01/43 (f) 203
225,000 St. Charles Mesa Water District Water Revenue Refunding Series 1992,
5.55% due 12/01/00 232,351
240,000 Saint Vrain Sanitation District G.O. Series 1987, 9.625% due 12/01/06 251,261
500,000 City of Salida Sales Tax Revenue Refunding & Improvement Series 1990,
8.20% due 12/01/11 519,170
125,000 San Miguel County Housing Authority Multifamily Telluride Village Zero
Coupon Revenue Refunding Series 1993, 7.00% due 7/01/98 (d) 117,160
535,000 San Miguel County Housing Authority Multifamily Telluride Village Revenue
Refunding Series 1993, 6.30% due 7/01/13 524,295
</TABLE>
9
<PAGE> 12
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 185,000 San Miguel County School District No. R-1 G.O. Series 1992, 8.50% due
12/01/98 $ 197,513
145,000 City of Silverthorne Joint Water and Sewer Revenue Series 1989, 7.80%-
7.90% due 01/01/98-99 148,689
230,000 Town of Snowmass Village Multifamily Housing Series 1990A, 7.60%-7.70%
due 12/15/98-99 246,253
210,000 Southgate Corporate Center Metropolitan District G.O. Refunding Series
1994, 5.50% due 12/01/98 208,690
1,000,000 Southpark Metropolitan District Refunding G.O. Series 1996, 6.60% due
12/01/13 980,000
305,000 Southtech Metropolitan District G.O. Refunding Series 1994, 5.10%-5.85%
due 12/01/99-04 314,341
100,000 Southwest Plaza Metropolitan District G.O. Refunding Series 1993, 5.00%
due 12/01/99 100,638
385,000 Squaw Creek Metropolitan District Revenue Series 1994, 5.25% due
12/01/13, put 12/01/98 385,797
40,000 City of Steamboat Springs Accommodations Tax Revenue Series 1995, 5.25%
due 03/01/00 40,788
200,000 Summit County Sewer Revenue Refunding Series 1992, 4.60% due 12/01/98 201,616
180,000 Superior Metropolitan District No. 2 G.O. Refunding Series 1994A, 5.90%
due 12/01/98 179,752
90,000 Swink School District No. 33 G.O. Building Bonds Series 1994, 8.40% due
12/15/97-03 102,771
170,000 Upper Bear Creek Water and Sanitation District G.O. Refunding Bonds
Series 1992, 6.20%-6.40% due 09/01/97-03/01/98 172,798
300,000 Upper Eagle Regional Water Authority Water Refunding Series 1994, 5.50%-
5.80% due 12/01/99-01 306,128
610,000 Valley Metropolitan District G.O. Revenue Series 1992, 7.00% due 12/15/06 636,889
100,000 Walsenburg Natural Gas Revenue Series 1968, 6.25% due 6/01/98-99 101,256
100,000 Weld County Reorganized School District RE-4 G.O. Series 1993, 4.65% due
12/01/00 99,894
</TABLE>
10
<PAGE> 13
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS - 92.8% VALUE
------ -------------------------------- -----
<S> <C> <C>
$ 100,000 Westglenn Metropolitan District G.O. Refunding Series 1994, 4.80% due
12/01/98 $ 100,885
70,000 City of Westminster Sheridan Park General Improvement District G.O.
Refunding Series 1994, 5.25% due 12/01/97 70,641
100,000 City of Wheat Ridge Sales Tax Revenue Refunding Series 1993, 3.75% due
12/15/97 99,939
335,000 Town of Windsor, G.O. Water Refunding Series 1994, 4.4%-4.80% due
04/01/99-01 333,813
185,000 City of Woodland Park Limited Sales Tax Refunding Bonds Series 1994A,
5.00%-5.25% due 12/01/97-98 186,904
Total Colorado Municipal Bonds (cost $55,810,883) 55,388,287
------------
COLORADO CERTIFICATES OF PARTICIPATION - 1.4%
---------------------------------------------
155,000 Arapahoe County Recreation District Refunding Certificates of
Participation Series 1996, 5.00%-5.20% due 12/01/04-06 155,159
170,000 City of Central City Certificates of Participation City Hall Project
Series 1995, 6.50%-6.80% due 12/01/99 - 00 167,365
100,000 El Paso County School District No. 49 (Falcon Schools) Refunding
Certificates of Participation Series 1995, 4.375% due 11/01/01 98,853
200,000 Gilpin County Certificates of Participation Detention Facility Project
Series 1994, 6.60% due 10/15/01 214,656
50,000 Las Animas County School District No. 001 Certificates of Participation
Series 1991A, 8.00% due 12/01/10 55,789
145,000 Park School District R-3 Certificates of Participation Series 1996,
5.35%-5.45% due 06/01/04-05 144,996
Total Colorado Certificates of Participation Bonds (cost $858,641) 836,818
------------
</TABLE>
11
<PAGE> 14
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
COLORADO INDUSTRIAL DEVELOPMENT REVENUE BONDS - 4.3%
----------------------------------------------------
350,000 Adams County Outdoor Sports Project Series 1978, 7.125% due 11/01/97-98 $ 350,945
730,000 City of Aurora Industrial Development Revenue McKesson Corp. Series 1987,
5.00% due 12/01/11 (h) 732,803
5,000 City and County of Denver American Water Works Association Series 1987,
10.00% due 3/01/07 5,117
200,000 City and County of Denver Desks Colorado Project Series 1983, 4.30% due
10/15/05 (put 10/15/97) 199,586
305,000 City of Fort Collins The Opera House Project Series 1986, 8.75%-9.125%
due 12/01/10-16 1,307,849
Total Colorado Industrial Development Revenue Bonds (cost $2,585,876)
2,596,300
------------
OTHER MUNICIPAL BONDS - 1.5%
------------------------------
100,000 City of Burnsville G.O. Tax Increment Refunding Series 1993C, 4.40% due
02/01/02 98,202
50,000 Carbon County School District No. 2 G.O. Refunding Series 1993, 3.75% due
07/01/97 49,997
305,000 Daggett County School District G.O. Refunding Series 1993, 4.30%-4.65%
due 12/15/97-99 306,167
100,000 Santa Fe Public School District G.O. Series 1993, 4.00% due 06/15/99 99,045
100,000 Santa Fe Public School District G.O. Series 1993, 5.60% due 06/15/01 101,752
100,000 Washington County School District 007 Hillsboro Series 1989, 6.70% due
06/01/08 (b) 105,013
120,000 West Wendover Recreation District G.O. Golf Course Improvement Refunding
Series 1993, 5.60% due 12/01/99 122,910
Total Other Municipal Bonds (cost $891,731) 883,086
------------
Total investments, at value (cost $60,147,131) 96.9% 59,704,491
Other assets net of liabilities 3.1 1,891,319
----- ------------
Net assets 100.0% $ 61,595,810
===== ============
</TABLE>
12
<PAGE> 15
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS, CONTINUED
MARCH 31, 1997 (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, 1997. Income on this security is derived from the cash flow
of the issuer.
(h) Represents current interest rate for a variable rate bond.
(i) Represents a security which was formerly in default and was restructured
during the period ended March 31, 1997.
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.
13
<PAGE> 16
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
- ------
Investments, at value (cost $60,147,131) - see accompanying statement $ 59,704,491
Cash 614,538
Interest receivable 1,440,408
Shares of beneficial interest sold 39,467
------------
Total assets 61,798,904
------------
LIABILITIES
- -----------
Payables and other liabilities:
Dividends 142,636
Accrued expenses and other 60,458
------------
Total liabilities 203,094
------------
Net assets $ 61,595,810
============
COMPOSITION OF NET ASSETS
- -------------------------
Paid-in capital $ 62,435,702
Accumulated net realized loss from investment transactions (397,251)
Net unrealized depreciation of investments (note 3) (442,641)
------------
Net assets $ 61,595,810
============
Net asset value and redemption value per share (based on 6,578,346
shares of beneficial interest outstanding) $ 9.36
======
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 9.83
======
</TABLE>
See accompanying notes to financial statements.
14
<PAGE> 17
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF OPERATIONS
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income - interest $ 1,882,154
-----------
Expenses:
Management fees (note 4) 136,624
Transfer agency expenses (note 4) 19,110
Custodian fees (note 5) 44,650
Legal and auditing fees 15,834
Shareholders' reports and proxy statements 7,462
Registration fees 1,820
Fidelity bond 1,183
Trustees' fees 801
Other 546
-----------
Total expenses 228,030
Earnings credits on cash balances (note 5) (23,552)
-----------
Net expenses 204,478
-----------
Net investment income 1,677,676
-----------
Realized and unrealized loss on investments:
Net realized loss on investments (29,479)
-----------
Net unrealized depreciation of investments:
Beginning of year (428,401)
End of year (442,641)
-----------
Net change in unrealized depreciation on investments (14,240)
-----------
Net realized and unrealized loss on investments (43,728)
-----------
Net increase in net assets resulting from operations $ 1,633,957
===========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE> 18
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
MARCH 31, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Year Ended
Ended 03/31/97 09/30/96
1997 1996
-------------- -------------
<S> <C> <C>
From investment activities:
Net investment income $ 1,677,676 3,092,785
Net realized loss on investments (29,479) (7,594)
Net change in unrealized depreciation on
investments (14,240) 1,064,774
------------ ------------
Net increase in net assets resulting from operations 1,633,957 4,149,965
------------ ------------
Dividends to shareholders from net investment income (1,688,374) (3,082,087)
------------ ------------
From beneficial interest transactions:
Proceeds from sale of shares 12,179,781 6,719,354
Dividends reinvested 1,095,263 2,038,765
Payments for shares redeemed (2,207,667) (4,011,430)
------------ ------------
Increase in net assets derived from
beneficial interest transactions 11,067,377 4,746,689
------------ ------------
Net increase in net assets 11,012,960 5,814,567
Net assets:
Beginning of year 50,582,850 44,768,283
------------ ------------
End of year, including undistributed net investment
income of $27,642 and $10,698 respectively $ 61,595,810 $ 50,582,850
============ ============
</TABLE>
See accompanying notes to financial statements.
16
<PAGE> 19
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Ended September 30
-----------------------------------------------------
Six Months
PER SHARE OPERATING DATA: Ended
03/31/97 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period $ 9.37 9.16 9.07 9.13 9.07
------- ---------- ---------- ---------- ----------
Net investment income .29 .61 .60 .63 .66
Net realized and unrealized
gain (loss) on investments (.01) .20 .09 (.06) .07
------- ---------- ---------- ---------- ----------
Increase (decrease) from
investment operations .28 .81 .69 .57 .73
Dividends from net investment
income (.29) (.60) (.60) (.63) (.67)
---------- ---------- ---------- ---------- ----------
Net increase (decrease)
in net asset value (.01) .21 .09 (.06) .06
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.36 $ 9.37 9.16 9.07 9.13
---------- ========== ========== ========== ==========
TOTAL RETURN, AT NET ASSET
VALUE (1) 2.99%* 9.15% 8.05 6.50 8.53
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)s $ 61,595 $ 50,583 44,768 41,790 34,773
========== ========== ========== ========== ==========
Ratios to average net assets:
Expenses (2) .82%** .77 .84 .74 .81
Net investment income 6.09%** 6.50 6.81 6.96 7.27
Portfolio turnover rate (3) 15.30%* 24.53 27.48 22.04 7.87
========== ========== ========== ========== ==========
<CAPTION>
Year Ended September 30
--------------------------------------------------------------------
PER SHARE OPERATING DATA:
1992 1991 1990 1989 1988
------ ------ ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period 8.96 8.93 9.61 9.59 9.43
------ ------ ------ ------ ------
Net investment income .68 .71 .74 .74 .77
Net realized and unrealized
gain (loss) on investments .10 .03 (.68) .03 .16
------ ------ ------ ------ ------
Increase (decrease) from
investment operations .78 .74 .06 .77 .93
Dividends from net investment
income (.67) (.71) (.74) (.75) (.77)
------ ------ ------ ------ ------
Net increase (decrease)
in net asset value .11 .03 (.68) .02 .16
------ ------ ------ ------ ------
Net asset value, end of period 9.07 8.96 8.93 9.61 9.59
====== ====== ====== ====== ======
TOTAL RETURN, AT NET ASSET
VALUE (1) 9.09 8.49 0.61 8.49 9.57
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)s 27,585 25,177 34,397 37,551 15,319
====== ====== ====== ====== ======
Ratios to average net assets:
Expenses (2) .94 1.06 .82 .79 .43
Net investment income 7.61 8.04 7.85 8.80 7.38
Portfolio turnover rate (3) 5.00 9.35 34.54 11.58 11.12
====== ====== ====== ====== ======
</TABLE>
17
<PAGE> 20
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS, CONTINUED
- --------------------------------------------------------------------------------
* Not annualized.
** Annualized.
(1) Assumes a hypothetical initial investment on the business day before the
first day of the fiscal 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 fiscal 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.
Absent voluntary expense reimbursement by the Fund's investment adviser,
the expense ratio for the years and period ended September 30, 1989, 1988,
and 1987 would have been .86%, 1.27%, and 3.13%, respectively. There have
been no voluntary reimbursements subsequent to fiscal 1989.
(3) The portfolio turnover rate 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. Sales of securities include the proceeds of securities which have
been called, or for which payment has been made through redemption or
maturity. 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 six month period ended March 31, 1997 were $20,093,414
and $12,048,290, respectively.
See accompanying notes to financial statements.
18
<PAGE> 21
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Notes to Financial Statements
March 31, 1997 (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 company. The Fund's investment objectives are to maximize
income exempt from federal income taxes and from personal income taxes of
the State of Colorado to the extent consistent with the preservation of
capital and to seek opportunities for capital appreciation. The Fund's
investment adviser is Freedom Funds Management Company (Freedom Funds).
The following is a summary of significant accounting policies
consistently followed by the Fund.
Investment Valuation
In determining the market values of bonds and other investments in the
portfolio, the Fund uses valuations provided on a daily basis by a
pricing service approved by the Board of Trustees. The Fund does not
record amortization of premiums or accretion of discounts for financial
statement purposes, except for original issued discounts on zero coupon
bonds which are amortized to maturity using the effective yield method.
Short-term debt securities having a remaining maturity of 60 days or less
are valued at amortized cost which approximates market value.
Income Taxes
The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all
its net investment income to shareholders. Therefore, no tax provision is
required. At March 31, 1997, the Fund had available for federal income
tax purposes an unused capital loss carryover of approximately $397,000,
expiring in 2001, 2002, and 2003.
Other/Security Credit Risk
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 are calculated using the identified-cost basis
which is the same basis the Fund uses for federal income tax purposes.
The Fund concentrates its investments in Colorado and, therefore, may
have more credit risks related to the economic conditions of Colorado
than a portfolio with a broader geographical diversification. The Fund
invests in nonrated securities, which may be subject to a greater degree
of credit risk, and risk of loss of income and principal, and may be more
sensitive to economic conditions than lower yielding, higher rated fixed
income securities. 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 adviser determines
that an 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
$2,037,900 and $597,796 (1% of net assets), respectively, as of March 31,
1997.
19
<PAGE> 22
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Notes to Financial Statements, Continued
- --------------------------------------------------------------------------------
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from those
estimates.
(2) Shares of Beneficial Interest
At March 31, 1997, there was an unlimited number of no par value shares
of beneficial interest authorized. Transactions in shares of beneficial
interest for the years ended March 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
--------- -------
<S> <C> <C>
Sold 1,297,102 724,744
Dividends reinvested 116,680 219,736
--------- -------
1,413,782 944,480
Redeemed (235,326) (431,911)
Net increase 1,178,456 512,569
========= =======
</TABLE>
(3) Unrealized Gains and Losses
At March 31, 1997, the net unrealized depreciation on investments of
$442,641 was comprised of gross appreciation of $1,750,094 and gross
depreciation of $2,192,735.
(4) Management Fees and Other Transactions with Affiliates
Management fees paid to Freedom Funds were in accordance with the
investment advisory agreement with the Fund which provides for an annual
fee equivalent to 0.5% of the net assets of the Fund. Freedom Funds pays
all expenses associated with advertising, marketing, and distributing the
Fund's shares and serves as the transfer agent, dividend disbursing
agent, and registrar for the Fund. Freedom Funds provided certain
transfer agency and shareholder services as part of the management fee
arrangement for the semi annual period ended March 31, 1997. Transfer
agency expenses represent 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.
20
<PAGE> 23
COLORADO BONDSHARES - A TAX-EXEMPT FUND
1200 17TH STREET, SUITE 1150
DENVER, CO 80202-5811
- ----------------------
FIRST-CLASS MAIL
U.S. POSTAGE
PAID
DALLAS, TEXAS
PERMIT NO. 1808
- ----------------------
COLORADO
BONDSHARES
A TAX-EXEMPT FUND
SEMI-ANNUAL REPORT
MARCH 31, 1997
(UNAUDITED)
