<PAGE> 1
[COLORADO BONDSHARES LETTERHEAD]
May 27, 1999
Dear Shareholders:
We are pleased to present the, unaudited, semiannual report for Colorado
BondShares for the six months ended March 31, 1999.
This period was characterized by extreme volatility. Last fall the securities
markets suffered some nervous times as economies around the world were shaken by
cataclysmic events. Almost as suddenly as the disruption started, it was over
and U.S. equity markets made nearly a 3,500 point correction reaching new, all
time highs.
During this same time, bond investors perceptions shifted from fears of global
depression to the return of inflation. Interest rates adjusted from an almost
inverted yield curve to a more normal inclining curve. Long-term rates moved up
about one half of one percent and short-term rates are down about 1/2 of 1%.
How did all these events affect your investment in Colorado BondShares? Very
little. The net asset value per share started the period at $9.64 and ended at
$9.60, a 4/10 of 1% change. The dividend went down slightly from $0.29 per share
to $0.285, largely because of our abundance of caution and high liquidity
positions. The Fund experienced one of the greatest growth periods in its
history as investors shifted their strategy by moving out of volatile investment
vehicles. We have also been positively affected by the "Internet Age," as
investors around the country are able to see, on line, how favorably our
investment performance compares with our competitors. In our view, the
volatility is far from over so we are not unhappy to be in an investor sector
characterized by comparative stability.
Thank you, as always, for investing with us.
Sincerely,
Fred R. Kelly, Jr.
Portfolio Manager
<PAGE> 2
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Face Market
Amount Colorado Municipal Bonds - 85.5% Value
-------- --------------------------------------------------------- ----------
<S> <C> <C>
$235,000 Academy Water and Sanitation District G.O.
Series 1995, 6.20%-7.10% due 11/15/02-05 $ 260,010
25,000 Adams & Arapahoe Counties School District No. 31J
G.O. Series 1989, 7.30% due 11/15/04(b) 25,643
200,000 Arapahoe County Water and Wastewater Authority
Revenue Series 1994, 6.20%-6.30% due 12/01/03-04(b) 213,733
235,000 Arapahoe Water and Sanitation District G.O. Refunding
and Improvement Series 1986, 8.50% due 12/01/05 273,632
2,250,000 Arapahoe Water and Sanitation District G.O. Refunding
Series 1995B, 8.50% due 12/01/20(b) 2,594,767
65,000 Arrowhead Metropolitan District G.O. Improvement
Series 1995A, 5.90%-6.10% due 12/01/01-03 68,119
100,000 Arrowhead Metropolitan District G.O. Refunding Series
1994, 5.70% due 12/01/03 105,415
70,000 City of Arvada G.O. Street and Bridge Refunding
Series 1994, 3.80% due 12/01/99 70,259
306,040 Aurora Centretech Metropolitan District G.O.
Refunding and Improvement Series 1994, 6.00% due
12/01/23(b) 344,191
700,000 Beebe Draw Farms Metropolitan District G.O. Series
1998, 7.00% due 10/01/18 700,000
1,765,000 Bell Mountain Ranch Phase II Metropolitan District
G.O. Series 1995, 8.50% due 11/15/15 1,925,544
255,000 Bell Mountain Ranch Phase II Metropolitan District
Improvement Fee Revenue Series 1997, 7.50% due
11/15/00 255,612
190,000 Bell Mountain Ranch Phase III Metropolitan District
Improvement Fee Revenue Series 1997, 7.50% due
11/15/00 190,456
680,000 Bennett School District No. 29J G.O. Refunding and
Improvement Series 1991, 6.35%-6.95% due 12/01/99-04 701,267
145,000 City of Black Hawk Device Tax Revenue Series 1994,
5.55%-5.70% due 12/01/00-01 150,001
200,000 City of Black Hawk Device Tax Revenue Series 1996,
5.75%-5.85% due 12/01/03-04 212,234
275,000 City of Black Hawk G.O. Water Improvement Series
1992, 6.60%-6.80% due 12/01/99-00 284,719
80,000 Boulder County Gunbarrel General Improvement District
G.O. Series 1994, 5.00% due 11/15/99 80,862
100,000 Boulder County Single Family Mortgage Revenue Series
1982A, 10.00% due 05/01/99 98,958
120,000 Boulder County Zero Coupon Single Family Mortgage
Revenue Series 1983, 11.00% due 12/01/14(d) 23,336
500,000 City of Boulder Open Space Acquisition Refunding
Series 1989 7.20% due 08/15/13 512,365
25,000 Boulder Valley School District No. RE-2 Series 1992A,
5.80% due 10/15/01 26,385
135,000 Boxelder Sanitation District Sewer Revenue Refunding
and Improvement Series 1994, 5.60%-5.90% due
01/01/00-03 139,112
280,000 Town of Breckenridge G.O. Recreation Center Refunding
Series 1993, 4.30%-4.45% due 12/01/99-00 283,851
403,438 Briargate Public Building Authority, Landowner
Assessment Lien Series 1985A and 1986A, 9.50%-10.25%
due 12/15/95-05 (a)(i) 342,922
12,000 Castle Pines North Metropolitan District Tax Revenue
Bonds Series 1994B, 6.10%, due 12/01/33(h) 10,200
25,000 Town of Castle Rock G.O. Series 1988-2 10.375% due
12/01/08 25,000
530,000 Town of Castle Rock LID Series 1988-2D Special
Assessment, 9.25%-10.375% due 12/01/08(a) 185,500
</TABLE>
2
<PAGE> 3
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Face Market
Amount Colorado Municipal Bonds - 85.5% Value
-------- --------------------------------------------------------- ----------
<S> <C> <C>
470,000 Town of Castle Rock G.O. Water Refunding Series 1993,
4.55%-4.65% due 12/01/99-00 474,961
59,394 Centennial Downs Metropolitan District Cash Payment
Deficiency Bond Series 1993, 8.09% due 12/01/34(i) 47,515
588,601 Centennial Downs Metropolitan District Limited Tax
Refunding Bond Series 1993, 8.09% due 12/01/34(i) 353,161
271,980 Centennial Downs Metropolitan Interest Certificate
Series 1993, 6.00% due 12/01/34(i) 2,720
50,000 City of Central City Special Assessment District
No.1, 7.5% due 12/01/03 50,272
2,500,000 Central Platte Valley Metropolitan District Special
Obligation Revenue, Series 1998 7.00%, due 12/01/17 2,471,475
100,000 Clear Creek School District No. Re-1 G.O. Improvement
Series 1991, 5.90% due 12/01/00 104,265
2,009,520 Colorado Centre Metropolitan District Limited Tax and
Special Revenue Series 1992A, principal only, 0.00%
due 01/01/27(a)(e)(i) 20,095
2,008,335 Colorado Centre Metropolitan District Limited Tax and
Special Revenue Series 1992A, interest only, 9.00%
due 01/01/27(a)(f)(i) 1,205,001
6,465,662 Colorado Centre Metropolitan District Limited Tax and
Special Revenue Series 1992B, 0.00% due 01/01/32
(a)(g)(i) 64,657
3,660,000 Colorado Educational & Cultural Facility Auth.
Revenue Charter School-Liberty Common Series 1998
6.95% due 08/15/19 3,612,530
190,000 Colorado Health Facilities Authority Refunding
Revenue Porter Memorial Hospital Series 1986A, 7.40%
due 02/01/16(b) 196,578
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) 165,178
635,000 Colorado Postsecondary Educational Facilities
Authority Revenue National Technological University
Project Series 1993, 7.375% due 12/01/10(b) 734,092
935,000 Colorado Postsecondary Educational Facilities
Authority Revenue National Technological University
Project Series 1993, 7.75% due 12/01/10 944,350
70,000 Colorado Postsecondary Educational Facilities
Authority Revenue The Naropa Institutional Project
Series 1990, 7.875% due 09/01/10 put 09/01/00 70,000
835,000 Colorado Springs Spring Creek G.I.D. GO Series 1995,
3.49% due 12/01/14(h)(i) 375,750
310,000 Colorado Tech Center Metropolitan District G.O.
Refunding Series 1989, 9.75% due 06/01/09(b) 319,452
1,180,000 Columbia Metropolitan District G.O. Improvement
Series 1992, 7.60%-8.50% due 11/01/00-11/01/12 1,370,100
500,000 Cordillera Metropolitan District G.O. Series 1994A,
8.00% due 12/01/09(b) 607,020
500,000 Cordillera Metropolitan District G.O. Series 1994,
8.25% due 12/01/13(b) 613,230
1,025,000 Cotton Ranch Metropolitan District G.O. Series 1998A
7.25% due 12/01/17 1,025,000
2,250,000 Cottonwood Water and Sanitation District Refunding
Series 1996A, 7.60% 12/01/12 2,410,110
19,106,474 Cottonwood Water and Sanitation District Capital
Appreciation Refunding Second Lien, Series 1998A
8.00% due 12/01/27(d) 3,810,595
240,000 Town of Crested Butte Sales Tax Revenue Series 1994,
6.10%-6.35% due 12/01/01-03 254,297
125,000 Town of Crested Butte G.O. Water and Sewer Refunding
Series 1993, 4.25% due 11/01/99 125,771
375,000 City of Delta Sales and Use Tax Revenue Refunding
Series 1994, 4.35%-4.65% due 12/01/01-03 383,827
2,250,000 City and County of Denver Excise Tax Revenue Series
1989 6.50% due 09/01/14 2,279,475
72,000 City and County of Denver Lease Purchase Certificates
Series 1993, 6.30% due 01/01/02 72,253
45,000 Denver West Metropolitan District Series 1997B 4.80%
due 12/01/02 46,017
775,000 Denver West Metropolitan District Series 1997B 5.70%
due 12/01/17 809,395
</TABLE>
3
<PAGE> 4
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Face Market
Amount Colorado Municipal Bonds - 85.5% Value
-------- --------------------------------------------------------- ----------
<S> <C> <C>
75,000 Town of Dillon G.O. Series 1992, 5.70%-5.90% due
10/01/99-00 76,833
95,000 Town of Dillon Excise Tax Revenue Series 1994, 5.80%
- 5.90% due 06/01/02-03 100,365
150,000 Douglas County LID #3 Series 1991, 10.00% due
08/01/02 150,000
90,000 City of Durango First Mortgage Revenue Series 1995,
6.50% due 12/15/00 90,816
60,000 El Paso and Elbert Counties Joint School District No.
23-JT G.O. Building Series 1994, 5.75% due 12/15/01 63,458
90,000 El Paso County LID 85-2 Special Assessment Refunding
Series 1988, 8.875%-9.00% due 09/01/00 9,000
100,000 El Paso County Pheasant Run LID Special Assessment
Bonds Series 1986-2, 9.25% due 09/01/99(a) 25,000
100,000 El Paso County School District No. 2 - Harrison G.O.
Improvement Series 1994, 7.10% due 12/01/04 115,561
500,000 El Paso County School District No. 20 Zero Coupon
G.O. Refunding Series 1993A, 6.10% due 06/15/08(d) 329,260
150,000 Elbert County School District C-1 G.O. Series 1994,
4.40% due 12/01/02 152,522
155,000 City of Englewood Golf Course Revenue Series 1994,
4.35% due 12/01/00 156,700
3,151,665 Equi-Mor Holdings Inc., Series 1998B, Class A
Pass-Through Certificates, 7.00% due 09/01/18 3,151,665
1,086,779 Equi-Mor Holdings Inc., Series 1999A, Class A
Pass-Through Certificates, 7.50% due 04/05/18 1,086,779
250,000 Evergreen Metropolitan District Water Revenue
Refunding Series 1992A, 6.25% due 07/15/99 252,137
1,500,000 Fairlake Metropolitan District G.O. Series 1989,
9.00% due 06/01/09 1,572,555
25,000 Fort Collins Refunding Series B, 6.00%, due 12/01/02 26,962
80,000 Fraser Valley Metropolitan Recreation District G.O.
Refunding Series 1992, 5.40% due 10/01/99 80,690
100,000 Fremont School District RE-1 G.O. Refunding Series
1990, 6.80% due 10/01/99 101,737
2,000,000 Gateway Village GID G.O. Refunding and Improvement
Series 1998, 6.00% due 12/01/18 1,986,120
239,000 Gateway Village GID G.O. Refunding and Improvement
Series 1998, Zero Coupon 5.20%-5.60% due
12/01/99-12/01/01(d) 223,933
845,000 Gateway Village GID G.O. Series 1995, 8.25%-8.75% due
12/01/05-14(b) 975,064
200,000 City of Glenwood Springs Sales and Use Tax Revenue
Series 1992A, 5.90% due 12/01/02 203,910
100,000 City of Golden Sales and Use Tax Revenue Series 1992,
5.00% due 11/15/99 101,078
300,000 City of Grand Junction Downtown Development Authority
Tax Increment Revenue Series 1996, 5.55%-5.65% due
11/15/04-05 317,840
1,275,000 Greatrock North Water and Sanitation District,
Limited Tax G.O. Series 1998, 8.00% due 12/01/17 1,266,241
70,000 Greeley General Improvement District No. 1 G.O.
Refunding Series July 15, 1994, 5.30% due 10/01/99 70,687
270,000 Greenwood Metropolitan District G.O. Refunding Series
1994, 6.10%-7.00% due 12/01/00-04 290,016
380,000 Greenwood North Metropolitan District G.O. Refunding
Series 1993, 4.50%-5.00% due 12/01/99-01 380,651
220,000 Greenwood South Metropolitan District G.O. Refunding
Series 1994, 6.25%-6.90% due 12/01/01-04 236,108
100,000 City of Greenwood Village Sales Tax Revenue Refunding
Series 1993, 4.40% due 12/01/99 100,762
500,000 Hamilton Creek District Series 1990, 1% due 12/01/04
(g)(i) 250,000
</TABLE>
4
<PAGE> 5
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Face Market
Amount Colorado Municipal Bonds - 85.5% Value
-------- --------------------------------------------------------- ----------
<S> <C> <C>
55,000 Town of Hayden G.O. Water Refunding Series 1993,
4.30% due 09/01/99 55,223
10,000 Hyland Hills Park & Recreation District Special
Revenue Improvement Series 1992, 7.10% due 12/15/00 10,603
340,000 Idledale Fire Protection District G.O. Series 1993,
5.20%-5.80% due 12/15/03-07 342,866
475,000 La Plata County Recreational Facilities Revenue
Refunding Durango Ski Corporation Project Series
1989A, 9.00% due 02/01/10 482,410
65,000 City of Lakewood Zero Coupon Single Family Mortgage
Series 1985, 11.10% due 05/01/15(d) 11,427
315,000 City of Las Animas Water G.O. Series 1989, 8.60% due
12/01/09 317,025
300,000 Left Hand Water District Water Revenue Refunding
Series 1993, 4.30%-4.45% due 11/15/00-01 305,129
135,000 Lookout Mountain Water District G.O. Refunding Series
1993, 5.20% due 12/01/01 139,778
220,000 Mesa County Single Family Mortgage Revenue Series
1982, 10.75% due 12/01/99(a) 17,600
1,250,000 Mid Valley Metropolitan District G.O. Refunding &
Improvement Series 1989, 8.90% due 12/15/04(b) 1,312,362
320,000 City of Montrose Sales and Use Tax Revenue Refunding
Series 1993, 4.20%-4.40% due 08/15/99-00 322,918
250,000 City of Montrose Water and Sewer Revenue Refunding
and Improvement Series 1993, 4.50%-4.65% due
10/01/01-02 256,648
155,000 Monument Sanitation District G.O. Refunding Series
1994, 5.80%-5.90% due 12/01/01-02 161,748
255,000 Town of Mt. Crested Butte G.O. Refunding Series 1993,
4.40%-4.75% due 05/01/99-01 257,552
100,000 Mountain Village Metropolitan District G.O. Series
1992, 7.95% due 12/01/03(b) 116,125
545,000 Mountain Village Metropolitan District G.O. Series
1992, 7.95% due 12/01/03 611,501
225,000 North Jeffco Park and Recreation District Golf Course
Revenue Series 1994, 5.80%-6.10% due 12/01/01-04 238,606
20,000 Northgate Public Building Authority Landowner
Assessment Lien Series 1987A, 8.25% due 12/01/00(a) 2,800
75,000 Otero County Swink School District No. 33 G.O.
Building Bonds Series 1994, 8.40% due 12/15/00-03 86,183
165,000 Ouray County Ridgway School District #R-2 Series 1994,
7.75% due 12/01/99-02 179,934
100,000 Town of Palisade G.O. Water Refunding Series 1993B,
5.10% due 04/01/99 100,000
1,055,000 Panorama Metropolitan District G.O. Refunding Series
1989B, 9.00% due 12/01/09(b) 1,105,756
1,900,000 Parker Jordan Metropolitan District Series 1998A
6.25% due 12/01/17 1,900,000
280,000 Town of Parker Sales and Use Tax Refunding Revenue
Series 1993, 4.20%-4.30% due 11/01/99-00 282,888
45,000 Pitkin County Sales Tax Revenue Series 1995, 5.30%
due 12/01/00 45,478
200,000 Project 7 Water Authority Water Revenue Refunding
Series 1993, 4.50% due 12/01/00 203,456
354,000 Pueblo County Capital Improvement Residual Revenue
Series 1988 10.07% due 08/02/10(d) 130,711
130,000 Rangely Junior College District G.O. Building Series
1992, 6.25%-6.40% due 10/01/99-00 132,626
159,868 Roxborough Village Metropolitan District Series
1993A, 9.00% due 12/31/16(i) 131,092
278,078 Roxborough Village Metropolitan District Series
1993B, principal only, 0.00% due 12/31/21(e)(i) 16,685
906,622 Roxborough Village Metropolitan District Series
1993C, 9.84% due 12/31/32(d)(i) 9,066
20,270 Roxborough Village Metropolitan District Series
1993B, interest only, 10.41% due 01/01/43(f)(i) 203
125,000 Saguache County Moffat School District No. 2 G.O.
Series 1994, 5.70%-5.90% due 12/01/99-01 130,703
</TABLE>
5
<PAGE> 6
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Face Market
Amount Colorado Municipal Bonds - 85.5% Value
-------- --------------------------------------------------------- ----------
<S> <C> <C>
1,250,000 Sand Creek Metropolitan District G.O. Limited Tax
Bonds, Series 1997, 7.125% due 12/1/16 1,250,000
535,000 San Miguel County Housing Authority Multifamily
Telluride Village Revenue Refunding Series 1993,
6.30% due 07/01/13 570,273
1,710,000 City of Sheridan G.O. Series 1997, 7.50% due 12/01/16 1,710,000
120,000 Town of Snowmass Village Multifamily Housing Series
1990A, 7.70% due 12/15/99 123,825
1,000,000 Southpark Metropolitan District Refunding G.O. Series
1996, 6.60% due 12/01/13 1,044,320
305,000 Southtech Metropolitan District G.O. Refunding Series
1994, 5.10%-5.85% due 12/01/99-04 317,807
100,000 Southwest Plaza Metropolitan District G.O. Refunding
Series 1993, 5.00% due 12/01/99 101,031
40,000 City of Steamboat Springs Accommodations Tax Revenue
Series 1995, 5.25% due 03/01/00 40,766
2,000,000 Sterling Hills Metropolitan District Series 1998
7.75% due 12/01/18 2,000,000
360,000 Telluride Hospital District Series 1997 4.60%-4.80%
due 12/01/00-02 364,880
2,000,000 Todd Creek Farms Metropolitan District #2 Limited Tax
G. O. Series 1997 8.00% due 06/01/17 2,000,000
300,000 Upper Eagle Regional Water Authority Water Refunding
Series 1994, 5.50%-5.80% due 12/01/99-01 308,665
610,000 Valley Metropolitan District G.O. Revenue Series
1992, 7.00% due 12/15/06 641,293
50,000 Walsenburg Natural Gas Revenue Series 1968, 6.25% due
06/01/99 50,203
100,000 Weld County Reorganized School District RE-4 G.O.
Series 1993, 4.65% due 12/01/00 102,016
335,000 Town of Windsor, G.O. Water Refunding Series 1994,
4.40%-4.80% due 04/01/99-01 338,392
----------
Total Colorado Municipal Bonds (cost $68,590,509) 69,448,258
----------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Colorado Certificates of Participation - 1.1% Value
- -------- ------------------------------------------------------------------- ----------
<S> <C> <C>
155,000 Arapahoe County Recreation District Refunding
Certificates of Participation Series 1996,
5.00%-5.20% due 12/01/04-06 163,788
170,000 City of Central City Certificates of Participation
City Hall Project Series 1995, 6.50%-6.80% due
12/01/99-01 172,687
100,000 El Paso County School District No. 49 Falcon Schools
Refunding Certificates of Participation Series 1995,
4.375% due 11/01/01 101,819
200,000 Gilpin County Certificates of Participation Detention
Facility Project Series 1994, 6.60% due 10/15/01 213,928
50,000 Las Animas County School District No. 001
Certificates of Participation Series 1991A, 8.00% due
12/01/10 54,135
145,000 Park School District R-3 Certificates of
Participation Series 1996, 5.35%-5.45% due
06/01/04-05 145,263
---------
Total Colorado Certificates of Participation Bonds (cost $792,473) 851,618
---------
</TABLE>
6
<PAGE> 7
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Face Market
Amount Colorado Industrial Development Revenue Bonds - 3.2% Value
- -------- ----------------------------------------------------------------------------------- ------------
<S> <C> <C>
2,835,000 City of Fort Collins The Opera House Project Series 1986, 8.75%-10.00% due 12/01/10-16 2,583,772
------------
Total Colorado Industrial Development Revenue Bonds (cost $2,826,875) 2,583,772
------------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Amount Other Municipal Bonds - 1.7% Value
- -------- ----------------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
100,000 City of Burnsville G.O. Tax Increment Refunding Series 1993C, 4.40% due 02/01/02 102,308
105,000 Daggett County School District, G.O. Refunding Series 1993, 4.65% due 12/15/99 106,034
225,000 Saint Charles Mesa Water District Water Revenue Refunding Series 1992,
5.55% due 12/01/00 232,830
515,000 Sandoval County, New Mexico Project Revenue Bonds, Series 1997, 7.50% due 08/15/06 515,000
100,000 Santa Fe Public School District G.O. Series 1993, 4.00% due 06/15/99 100,070
100,000 Santa Fe Public School District G.O. Series 1994, 5.60% due 06/15/01 100,413
100,000 Washington County School District 007 Hillsboro Series 1989, 6.70% due 06/01/08(b) 100,594
120,000 West Wendover Recreation District G.O. Golf Course Improvement Refunding Series 1993,
5.60% due 12/01/99 121,789
------------
Total Other Municipal Bonds (cost $1,292,532) 1,379,038
------------
Total investments, at value (cost $73,502,389) 91.5% $ 74,262,686
Other assets net of liabilities 8.5 6,902,962
------------
Net assets 100.0% $ 81,165,648
------------
</TABLE>
7
<PAGE> 8
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Investments
March 31, 1999 (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. Interest rate shown for interest certificates represents
effective yield at acquisition.
(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, 1999. Income on this security is derived from the cash flow
of the issuer.
(h) Represents current interest rate for a variable rate bond.
(i) Terms of security have been restructured since the original issuance. The
face amount and market value of such securities amount to $14,506,766 and
$2,818,867, or 3.47% of net assets, respectively, as of March 31, 1999.
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.
8
<PAGE> 9
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Assets and Liabilities
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Investments, at value (cost $73,583,990) - see accompanying statement $ 74,262,686
Cash 5,591,042
Interest receivable 1,539,954
Shares of beneficial interest sold 45,264
-------------
Total assets 81,438,946
-------------
Liabilities
Payables and other liabilities:
Dividends 209,286
Accrued expenses and other 64,012
-------------
Total liabilities 273,298
-------------
Net Assets $ 81,165,648
=============
Composition of Net Assets
Paid-in capital $ 80,390,291
Undistributed net investment income 34,784
Accumulated net realized gain from investment transactions 61,877
Net unrealized appreciation of investments (note 3) 678,696
-------------
Net assets $ 81,165,648
=============
Net asset value and redemption value per share (based on 8,453,870
shares of beneficial interest outstanding) $ 9.60
=============
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 10.08
=============
</TABLE>
See accompanying notes to financial statements.
9
<PAGE> 10
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statement of Operations
March 31, 1999 (unaudited)
<TABLE>
<S> <C>
Investment income - interest $ 2,546,816
-------------
Expenses:
Management fees (note 4) 190,791
Custodian fees (note 5) 35,992
Legal and auditing fees 17,683
Transfer agency expenses (note 4) 19,110
Shareholders' reports and proxy statements 15,097
Registration fees 1,820
Trustees' fees 910
Other 1,684
-------------
Total expenses 283,087
Earnings credits on cash balances (note 5) (35,992)
-------------
Net expenses 247,095
-------------
Net investment income 2,299,721
-------------
Realized and unrealized gain on investments:
Net realized gain on investments 69,594
-------------
Net unrealized appreciation (depreciation) of investments:
Beginning of the period 1,102,024
End of the period 678,696
-------------
Net change in unrealized appreciation on investments (423,328)
-------------
Net realized and unrealized gain (loss) on investments (353,734)
-------------
Net increase in net assets resulting from operations $ 1,945,987
=============
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 11
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Statements of Changes in Net Assets
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Six Months Ended Year Ended
03/31/99 09/30/98
---------------- --------------
<S> <C> <C>
From investment activities:
Net investment income $ 2,299,721 $ 4,640,447
Net realized gain on investments 69,594 294,050
Net change in unrealized depreciation on investments (423,328) 187,505
-------------- --------------
Net increase in net assets resulting from operations 1,945,987 5,122,002
-------------- --------------
Dividends to shareholders from net investment income (2,270,306) (4,661,865)
-------------- --------------
From beneficial interest transactions:
Proceeds from sale of shares 10,044,804 12,613,472
Dividends reinvested 1,360,916 2,860,000
Payments for shares redeemed (3,023,351) (10,075,001)
-------------- --------------
Increase in net assets derived from
beneficial interest transactions 8,382,369 5,398,471
-------------- --------------
Net increase in net assets 8,058,050 5,858,608
Net assets:
Beginning of period 73,107,598 67,248,990
-------------- --------------
End of period, including undistributed net investment
income of $21,418 and 34,785 respectively $ 81,165,648 $ 73,107,598
============== ==============
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 12
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Financial Highlights
March 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Year Ended September 30,
-----------------------------------------
Period Ended
Per Share Operating Data: 03/31/99 1998 1997
------------ ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.64 $ 9.58 $ 9.37
------------ ---------- ----------
Net investment income 0.29 0.62 0.58
Net realized and unrealized gain (loss) on investments (0.05) 0.06 0.21
------------ ---------- ----------
Increase (decrease) from investment operations 0.24 0.68 0.79
Dividends from net investment income (0.28) (0.62) (0.58)
------------ ---------- ----------
Net increase (decrease) in net asset value (0.04) 0.06 0.21
------------ ---------- ----------
Net asset value, end of period $ 9.60 $ 9.64 $ 9.58
============ ========== ==========
Total Return, at Net Asset Value(1) 2.59% 7.62% 8.66%
=========== ========== ==========
Ratios/Supplemental data:
Net assets, end of period (000)s $ 81,165 $ 73,108 $ 67,249
Ratios to average net assets:
Net investment income 3.00%+ 6.66% 6.13%
Expenses, inclusive of expenses paid indirectly by the Fund .74%* .77% .84%
Expenses, net of expenses paid indirectly by the Fund .64%* .66% .73%
Portfolio turnover rate(2) 15.57% 28.63% 27.66%
========== ========== ==========
<CAPTION>
Year Ended September 30,
----------------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.16 $ 9.07 $ 9.13
---------- ---------- ----------
Net investment income 0.61 0.60 0.63
Net realized and unrealized gain (loss) on investments 0.20 0.09 (0.06)
---------- ---------- ----------
Increase (decrease) from investment operations 0.81 0.69 0.57
Dividends from net investment income (0.60) (0.60) (0.63)
---------- ---------- ----------
Net increase (decrease) in net asset value 0.21 0.09 (0.06)
---------- ---------- ----------
Net asset value, end of period $ 9.37 $ 9.16 $ 9.07
========== ========== ==========
Total Return, at Net Asset Value(1) 9.15% 8.05% 6.50%
========== ========== ==========
Ratios/Supplemental data:
Net assets, end of period (000)s $ 50,583 $ 44,768 $ 41,790
Ratios to average net assets:
Net investment income 6.50% 6.81% 6.96%
Expenses, inclusive of expenses paid indirectly by the Fund .77% .84% .74%
Expenses, net of expenses paid indirectly by the Fund .70% .77% .74%
Portfolio turnover rate(2) 24.53% 27.48% 22.04%
========== ========== ==========
</TABLE>
+ 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) 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.
Cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) for the period March 31, 1999 were $
13,690,535 and $ 11,455,741, respectively.
See accompanying notes to financial statements
12
<PAGE> 13
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Notes to Financial Statements
March 31, 1999 (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
The value of investments are determined using prices quoted by a
national independent pricing service approved by the Fund's Board of
Trustees. The pricing service values the municipal bonds taking into
consideration yield, stability, risk, quality, coupon, maturity, type
of issue, trading characteristics and any other revenant trading or
market factors. The Fund records amortization of premiums, and
accretion of original issued discounts on zero coupon bonds, using the
effective yield method, in accordance with federal income tax
requirements. 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.
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
$9,748,620 and $658,394 (.1% of net assets), respectively, as of March
31, 1999.
13
<PAGE> 14
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
Notes to Financial Statements
March 31, 1999 (unaudited)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires man agement 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, 1999, there was an unlimited number of no par value shares
of beneficial interest authorized. Transactions in shares of beneficial
interest for the six month period ended March 31, 1999 and the fiscal
year ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
3/31/99 09/30/98
------------ ------------
<S> <C> <C>
Proceeds from shares sold 1,043,813 1,313,197
Dividends reinvested 141,512 297,289
------------ ------------
1,185,325 1,610,486
Shares redeemed (314,047) (1,047,465)
------------ ------------
Net change 871,278 563,021
============ ============
</TABLE>
(3) Unrealized Gains and Losses
At March 31, 1999, the net unrealized appreciation on investments of
$678,696 was comprised of gross appreciation of $2,474,214 and gross
depreciation of $1,795,518.
(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 six month period ended March 31,
1999. Transfer agency expenses represent direct expenses charged to the
Fund by third parties.
(5) Earnings Credits on Cash Balances
Expenses paid indirectly by the Fund represent earnings credits on cash
balances maintained with the custodian by the Fund which result in
offsetting custodian fees incurred for the safeguarding of Fund assets.
14
