<PAGE> 1
May 22, 2000
Dear Shareholders:
Attached hereto is the unaudited semi-annual report for the six month period
ended March 31, 2000. The results will show that the performance of the Fund
continues to be very competitive as compared to other fixed income municipal
bond funds. Based on our anticipated income stream, we expect the Fund to pay
out a tax-exempt dividend of at least 7.00% until 09/30/2000. This is higher
than in our recent past for two reasons. We ended last year with a high cash
balance. Since that time we have committed about 12% of the Fund to longer-term,
higher-yielding securities. This has had a positive impact on the amount of
income that we have available for distribution. In addition, we have received
income from workouts, exceeding our expectations. In keeping with our historic
accounting practice, we are amortizing this excess over the time period
beginning when it is received and ending at the end of fiscal year 09/30/2000.
This, too, enhances the yield on the Fund.
We made ACH (electronic deposits) available to shareholders during the last 6
months which allows us, with your permission, to deposit your dividend checks
directly into your bank account. This saves several days of float on the money
caused by mail delays etc.
As always, we are most appreciative of your continuing support of the Fund and
we remain very optimistic about our future together.
Sincerely,
Fred R. Kelly, Jr.
Portfolio Manager
<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 COLORADO, N.A.
INDEPENDENT AUDITORS
FORTNER BAYENS LEVKULICH & CO., P.C.
LEGAL COUNSEL
KUTAK ROCK
THIS REPORT IS SUBMITTED FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF
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
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS- 95.5% VALUE
------ ------------------------------- ---------
<S> <C> <C>
235,000 Academy Water and Sanitation District G.O. Series 1995, 6.20%-7.10% due
11/15/2002-05 247,361
200,000 Arapahoe County Water and Wastewater Authority Revenue Series 1994,
6.20%-6.30% due 12/1/2003-04 (b) 205,431
215,000 Arapahoe Water and Sanitation District G.O. Refunding and Improvement Series
1986, 8.50% due 12/1/2005 238,211
2,250,000 Arapahoe Water and Sanitation District G.O. Refunding Series 1995B, 8.50% due
12/1/2020 (b) 2,455,200
65,000 Arrowhead Metropolitan District G.O. Improvement Series 1995A, 5.90%-6.10% due
12/1/2001-03 65,768
100,000 Arrowhead Metropolitan District G.O. Refunding Series 1994, 5.70% due 12/1/2003 100,806
950,000 Aurora Multifamily Housing Revenue River Falls Project Series 1999A, 5.70% due
7/1/2029 835,307
306,040 Aurora Centretech Metropolitan District G.O. Refunding and Improvement Series
1994, 6.00% due 12/1/2023 (b) 324,148
700,000 Beebe Draw Farms Metropolitan District G.O. Series 1998, 7.00% due 10/1/2018 700,000
1,765,000 Bell Mountain Ranch Phase II Metropolitan District G.O. Series 1995, 8.50% due
11/15/2015 1,965,773
145,000 Black Hawk (City of) Device Tax Revenue Series 1994, 5.55%-5.70% due
12/1/2000-01 145,982
200,000 Black Hawk (City of) Device Tax Revenue Series 1996, 5.75%-5.85% due
12/1/2003-04 202,243
2,250,000 Black Hawk (City of) Device Tax Revenue Series 1998, 5.625% due 12/1/2021 1,913,985
100,000 Black Hawk (City of) G.O. Water Improvement Series 1992, 6.80% due 12/1/2000 101,728
265,000 Boulder County Multifamily Refunding & Improvement Revenue (Thistle Cmnty
Housing) Series 1999A, 6.00% due 6/1/2011 251,146
805,000 Boulder County Multifamily Refunding & Improvement Revenue (Thistle Cmnty
Housing) Series 1999A, 6.25% due 6/1/2019 746,517
75,000 Boulder County Multifamily Refunding & Improvement Revenue (Thistle Cmnty
Housing) Subordinate Series 1999B, 7.375% due 6/1/2015 71,384
25,000 Boulder Valley School District No. RE-2 Series 1992A, 5.80% due 10/15/2001 25,490
75,000 Boxelder Sanitation District Sewer Revenue Refunding and Improvement Series
1994, 5.90% due 1/1/2003 75,638
200,000 Breckenridge (Town of) G.O. Recreation Center Refunding Series 1993, 4.45% due
12/1/2000 200,448
</TABLE>
2
<PAGE> 4
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS- 95.5% VALUE
------ ------------------------------- ---------
<S> <C> <C>
4,450,000 Bromley Park Metropolitan District No. 3 G.O. Ltd. Tax Series 2000, 8.00% due
12/1/2019 4,450,000
70,000 Castle Rock (Town of) G.O. Water Refunding Series 1993, 4.65% due 12/1/2000 70,164
25,000 Castle Rock (Town of) G.O. Series 1988-2, 10.375% due 12/1/2008 25,000
545,000 Castle Rock (Town of) LID Series 1988-2D Special Assessment, 9.25%-10.375% due
12/1/2008 (a) 177,125
130,000 Central City (City of) Excise Tax Revenue Refunding Series 1996, 5.70%-6.60%
due 12/1/2001-11 123,531
45,000 Central City (City of) Special Assessment District No.1, 7.50% due 12/1/2003 45,213
2,500,000 Central Platte Valley Metropolitan District Special Obligation
Revenue Series 1998, 7.00% due 12/1/2017 2,437,500
100,000 Clear Creek School District No. Re-1 G.O. Improvement Series 1991, 5.90% due
12/1/2000 101,149
2,009,520 Colorado Centre Metropolitan District Ltd. Tax and Special Revenue Series
1992A, principal only, 0.00% due 1/1/2027 (a)(e)(i) 17,262
2,008,335 Colorado Centre Metropolitan District Ltd. Tax and Special Revenue Series
1992A, interest only, 9.00% due 1/1/2027 (f)(I) 1,202,169
6,465,662 Colorado Centre Metropolitan District Ltd. Tax and Special Revenue Series
1992B, 0.00% due 1/1/2032 (a)(g)(i) 55,540
965,000 Colorado Educational & Cultural Facilities Authority Charter School Revenue -
Crown Pointe Academy Series 2000, 7.25% due 7/15/2025 965,000
4,150,000 Colorado Educational & Cultural Facilities Authority Charter School Revenue -
Liberty Common Series 1998, 6.95% due 8/15/2019 4,096,465
1,765,000 Colorado Health Facilities Authority Revenue Refunding Christian Living Campus
Project Series 1998, 3.90% due 1/1/2024 (h) 1,765,000
520,000 Colorado Health Facilities Authority Zero Coupon Retirement Housing Revenue
Liberty Heights Project 1990 Subordinate Series B, 6.97% due 7/15/2020 (d) 137,363
595,000 Colorado Postsecondary Educational Facilities Authority Revenue National
Technological University Project Series 1993, 7.375% due 12/1/2010 (b) 649,026
830,000 Colorado Postsecondary Educational Facilities Authority Revenue National
Technological University Project Series 1993, 7.75% due 12/1/2010 928,496
805,000 Colorado Springs Spring Creek G.I.D. GO Series 1995, 2.07% due 12/1/2014 (h)(i) 362,250
1,180,000 Columbia Metropolitan District G.O. Improvement Series 1992, 7.60%-8.50% due
11/1/2000-12 1,292,688
</TABLE>
3
<PAGE> 5
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS- 95.5% VALUE
------ ------------------------------- ---------
<S> <C> <C>
470,000 Cordillera Metropolitan District G.O. Series 1994A, 8.00% due 12/1/2009 (b) 534,879
500,000 Cordillera Metropolitan District G.O. Series 1994, 8.25% due 12/1/2013 (b) 574,070
1,025,000 Cotton Ranch Metropolitan District G.O. Series 1998A, 7.25% due 12/1/2017 1,007,555
3,500,000 Cotton Ranch Metropolitan District Subordinate Junior G.O. Ltd. Tax Refunding
Variable Rate Series 1999B, 7.75% due 12/15/2017 (h) 3,104,535
2,250,000 Cottonwood Water and Sanitation District Refunding Series 1996A, 7.60% due
12/1/2012 2,295,338
19,106,474 Cottonwood Water and Sanitation District Capital Appreciation Refunding Second
Lien, Series 1998A, 8.00% due 12/1/2027 (d) 3,810,595
240,000 Crested Butte (Town of) Sales Tax Revenue Series 1994, 6.10%-6.35% due
12/1/2001-03 245,944
375,000 Delta Sales (City of) and Use Tax Revenue Refunding Series 1994, 4.35%-4.65%
due 12/1/2001-03 372,101
72,000 Denver (City and County of) Lease Purchase Certificates Series 1993, 6.30% due
1/1/2002 72,059
1,000,000 Denver (City and County of) Airport System Subordinate Revenue Series 1997B,
3.90% due 12/1/2020 (h) 1,000,000
1,885,000 Denver (City and County of) Subordinate Multifamily Housing Revenue Capitol
Heights Apts. Series 1999C, 8.00% due 5/1/2032 1,885,000
45,000 Denver West Metropolitan District Series 1997B, 4.80% due 12/1/2002 44,365
775,000 Denver West Metropolitan District Series 1997B, 5.70% due 12/1/2017 716,472
40,000 Dillon (Town of) G.O. Series 1992, 5.90% due 10/1/2000 40,340
95,000 Dillon (Town of) Excise Tax Revenue Series 1994, 5.80%-5.90% due 6/1/2002-03 96,667
90,000 Durango (City of) First Mortgage Revenue Series 1995, 6.50% due 12/15/2000 89,667
470,000 Eagle Ranch Metropolitan District Golf Course Enterprise Revenue Series 1999B,
3.95% due 10/15/2018 (h) 470,000
455,000 Eagle Riverview Affordable Housing Corp. Multifamily Housing Project Revenue
Series 1999B, 7.00% due 7/1/2029 455,000
60,000 El Paso and Elbert Counties Joint School District No. 23-JT G. O. Building
Series 1994, 5.75% due 12/15/2001 60,932
90,000 El Paso County LID 85-2 Special Assessment Refunding Series 1988, 8.875%-9.00%
due 9/1/2000 9,000
69,412 El Paso County Pheasant Run LID Special Assessment Series 1986-2, 9.25% due
9/1/1999 (a) 17,353
100,000 El Paso County School District No. 2 - Harrison G.O. Improvement Series 1994,
7.10% due 12/1/2004 108,982
</TABLE>
4
<PAGE> 6
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS- 95.5% VALUE
------ ------------------------------- ---------
<S> <C> <C>
500,000 El Paso County School District No. 20 Zero Coupon G.O. Refunding Series 1993A,
6.10% due 6/15/2008 (d) 323,430
150,000 Elbert County School District C-1 G.O. Series 1994, 4.40% due 12/1/2002 147,873
155,000 City of Englewood Golf Course Revenue Series 1994, 4.35% due 12/1/2000 154,699
3,093,651 Equi-Mor Holdings Inc. Class A Pass-Through Certificates Series 1998-B, 7.00%
due 9/1/2018 3,093,651
1,032,432 Equi-Mor Holdings Inc Class A Pass-Through Certificates Series 1999A, 7.50%
due 4/5/2018 1,032,432
25,000 Fort Collins Refunding Series B, 6.00%, due 12/1/2002 25,848
25,000 Fort Lupton Golf Course Revenue Anticipation Warrants Series 1996A, 8.50% due
12/15/2015 23,000
500,000 Galleria Metropolitan District G.O. Series 1999, 7.25% due 12/1/2019 491,305
2,000,000 Gateway Village GID G.O. Refunding and Improvement Series 1998, 6.00% due
12/1/2018 1,814,780
160,000 Gateway Village GID G.O. Refunding and Improvement Series 1998, Zero Coupon
5.40%-5.60% due 12/1/2000-01 (d) 151,090
835,000 Gateway Village GID G.O. Series 1995, 8.25%-8.75% due 12/1/2005-14 (b) 909,072
1,000,000 Gateway Village GID Subordinate Ltd. Tax G.O. Series 1999, 7.00% due 6/1/2019 1,000,000
300,000 Grand Junction (City of) Downtown Development Authority Tax Increment Revenue
Series 1996, 5.55%-5.65% due 11/15/2004-05 304,128
1,200,000 Greatrock North Water and Sanitation District Ltd. Tax G.O. Series 1998, 8.00%
due 12/1/2017 1,145,412
270,000 Greenwood Metropolitan District G.O. Refunding Series 1994, 6.10%-7.00% due
12/1/2000-04 279,331
265,000 Greenwood North Metropolitan District G.O. Refunding Series 1993, 4.75%-5.00%
due 12/1/2000-01 265,082
220,000 Greenwood South Metropolitan District G.O. Refunding Series 1994, 6.25%-6.90%
due 12/1/2001-04 227,388
510,000 Hamilton Creek District Series 1990, .7% due 12/1/2004 (g)(i) 255,000
10,000 Hyland Hills Park & Recreation District Special Revenue Improvement Series
1992, 7.10% due 12/15/2000 10,195
340,000 Idledale Fire Protection District G.O. Series 1993, 5.20%-5.80% due
12/15/2003-07 338,008
465,000 La Plata County Recreational Facilities Revenue Refunding Durango Ski
Corporation Project Series 1989A, 9.00% due 2/1/2010 453,329
315,000 Las Animas (City of) Water G.O. Series 1989, 8.60% due 12/1/2009 317,057
</TABLE>
5
<PAGE> 7
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS- 95.5% VALUE
------ ------------------------------- ---------
<S> <C> <C>
300,000 Left Hand Water District Water Revenue Refunding Series 1993, 4.30%-4.45% due
11/15/2000-01 300,195
2,030,000 Littleton (The) Riverfront Authority Tax Increment Revenue Refunding Series
1999A-1, 8.00% due 12/1/2008 2,015,932
135,000 Lookout Mountain Water District G.O. Refunding Series 1993, 5.20% due 12/1/2001 135,927
165,000 Montrose (City of) Sales and Use Tax Revenue Refunding Series 1993, 4.40% due
8/15/2000 165,129
250,000 Montrose (City of) Water and Sewer Revenue Refunding and Improvement Series
1993, 4.50%-4.65% due 10/1/2001-02 250,068
155,000 Monument Sanitation District G.O. Refunding Series 1994, 5.80%-5.90% due
12/1/2001-02 157,040
175,000 Mt. Crested Butte (Town of) G.O. Refunding Series 1993, 4.60%-4.75% due
5/1/2000-01 175,128
100,000 Mountain Village Metropolitan District G.O. Series 1992, 7.95% due 12/1/2003
(b) 108,574
435,000 Mountain Village Metropolitan District G.O. Series 1992, 7.95% due 12/1/2003 488,078
225,000 North Jeffco Park and Recreation District Golf Course Revenue Series 1994,
5.80%-6.10% due 12/1/2001-04 229,986
750,000 North Pines Metropolitan District G.O. Ltd. Tax Series 1999, 6.00% due
12/1/2003 740,490
760,000 North Pines Metropolitan District G.O. Ltd. Tax Series 1999, 8.00% due 6/1/2019 739,586
75,000 Otero County Swink School District No. 33 G.O. Building Series 1994, 8.40% due
12/15/2000-03 81,273
115,000 Ouray County Ridgway School District #R-2 Series 1994, 7.75% due 12/1/2001-02 121,976
145,000 Parker (Town of) Sales and Use Tax Refunding Revenue Series 1993, 4.30% due
11/1/2000 145,172
4,470,000 Parker Jordan Metropolitan District G.O. Series 2000, 7.25% due 12/1/2019 4,470,000
45,000 Pitkin County Sales Tax Revenue Series 1995, 5.30% due 12/1/2000 45,029
200,000 Project 7 Water Authority Water Revenue Refunding Series 1993, 4.50% due
12/1/2000 200,512
354,000 Pueblo County Capital Improvement Residual Revenue Series 1988, 10.07% due
8/2/2010 (d) 142,704
45,000 Rangely Junior College District G.O. Building Series 1992, 6.40% due 10/1/2000 45,363
159,868 Roxborough Village Metropolitan District Series 1993A, 9.00% due 12/31/2016 (i) 130,866
</TABLE>
6
<PAGE> 8
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO MUNICIPAL BONDS- 95.5% VALUE
------ ------------------------------- ---------
<S> <C> <C>
278,078 Roxborough Village Metropolitan District Series 1993B, principal only, 0.00%
due 12/31/2021 (e)(i) 16,293
906,622 Roxborough Village Metropolitan District Series 1993C, 9.84% due 12/31/2032
(d)(i) 7,788
20,270 Roxborough Village Metropolitan District Series 1993B, interest only, 10.41%
due 1/1/2043 (f)(i) 174
120,000 Saguache County Moffat School District No. 2 G.O. Series 1994, 5.80%-5.90% due
12/1/2000-01 121,914
535,000 San Miguel County Housing Authority Multifamily Telluride Village Revenue
Refunding Series 1993, 6.30% due 7/1/2013 551,376
1,250,000 Sand Creek Metropolitan District G.O. Ltd. Tax Series 1997, 7.125% due 12/1/2016 1,230,350
1,660,000 Sheridan Series 1997A, 7.50% due 12/1/2016 1,646,056
1,000,000 Southpark Metropolitan District Refunding G.O. Series 1996, 6.60%
due 12/1/2013 1,029,920
275,000 Southtech Metropolitan District G.O. Refunding Series 1994, 5.20%-5.85% due
12/1/2000-04 278,112
2,000,000 Sterling Hills Metropolitan District G.O. Ltd. Tax Series 1998, 7.75% due
6/1/2018 1,892,000
3,320,000 Sterling Hills West Metropolitan District G.O. Ltd. Tax Series 2000, 8.00% due
12/1/2019 3,320,000
360,000 Telluride Hospital District Series 1997, 4.60%-4.80% due 12/1/00-02 357,069
1,950,000 Todd Creek Farms Metropolitan District #2 Ltd. Tax G. O. Series 1997, 8.00%
due 6/1/2017 1,912,658
1,000,000 Todd Creek Farms Metropolitan District No. 2 Ltd. Tax G.O. Series 1999, 7.50%
due 12/1/2018 948,280
200,000 Upper Eagle Regional Water Authority Water Refunding Series 1994, 5.65%-5.80%
due 12/1/2000-01 201,792
610,000 Valley Metropolitan District G.O. Revenue Series 1992, 7.00% due 12/15/2006 625,317
100,000 Weld County Reorganized School District RE-4 G.O. Series 1993, 4.65% due
12/1/2000 100,325
235,000 Town of Windsor G.O. Water Refunding Series 1994, 4.60%-4.80% due 4/1/2000-01 235,163
----------
Total Colorado Municipal Bonds (cost $85,939,161) 84,910,086
----------
</TABLE>
7
<PAGE> 9
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT COLORADO CERTIFICATES OF PARTICIPATION- 1.5% VALUE
------ -------------------------------------------- ---------
<S> <C> <C>
155,000 Arapahoe County Recreation District Refunding Certificates of Participation
Series 1996, 5.00%-5.20% due 12/1/2004-06 156,176
125,000 Central City (City of) Certificates of Participation City Hall Project Series
1995, 6.65%-6.80% due 12/1/2000-01 124,926
600,000 Eagle-Vail Metropolitan District Golf Course Series 1999, 6.00% due 12/1/2019 550,722
100,000 El Paso County School District No. 49 Falcon Schools Refunding Certificates of
Participation Series 1995, 4.375% due 11/1/2001 99,839
200,000 Gilpin County Certificates of Participation Detention Facility Project Series
1994, 6.60% due 10/15/2001 204,356
50,000 Las Animas County School District No. 001 Certificates of Participation
Series 1991A, 8.00% due 12/1/2010 51,697
145,000 Park School District R-3 Certificates of Participation Series 1996,
5.35%-5.45% due 6/1/2004-05 145,032
----------
Total Colorado Certificates of Participation Bonds
(cost $1,314,339) 1,332,748
----------
OTHER MUNICIPAL BONDS - 1.6%
----------------------------
100,000 City of Burnsville G.O. Tax Increment Refunding Series 1993C, 4.40% due
2/1/2002 99,834
510,000 Dona Ana County New Mexico Tax-Exempt Multi-Family Housing Revenue Bonds
Subordinate Series 1999B1, 8.50% due 8/1/2014 510,000
225,000 Saint Charles Mesa Water District Water Revenue Refunding Series 1992, 5.55%
due 12/1/2000 227,111
515,000 Sandoval County Project Revenue Bonds New Mexico Tournament Soccer Complex
Series 1997, 7.50% due 8/15/2006 499,704
100,000 Santa Fe Public School District G.O. Series 1994, 5.60% due 6/15/2001 100,099
Total Other Municipal Bonds (cost $1,453,122) 1,436,748
----------
Total investments, at value (cost $88,706,622)* 98.6% 87,679,582
Other assets net of liabilities 1.4% 1,205,503
----- ----------
Net assets 100.0% $88,885,085
===== ==========
</TABLE>
o Tax cost basis approximates book cost basis.
8
<PAGE> 10
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (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, 2000. 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 $9,089,594 and
$267,280 or .3% of net assets, respectively, as of March 31, 2000.
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.
9
<PAGE> 11
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
------
Investments, at value (cost $88,706,622) - see accompanying statement $ 87,679,582
Cash 777
Interest receivable 1,569,309
Shares of beneficial interest sold 30,615
------------
Total assets 89,280,283
------------
LIABILITIES
-----------
Payables and other liabilities:
Dividends 310,520
Shares of beneficial interest redeemed 58,770
Accrued expenses and other 25,908
------------
Total liabilities 395,198
------------
Net Assets $ 88,885,085
============
COMPOSITION OF NET ASSETS
-------------------------
Paid-in capital $ 89,760,842
Undistributed net investment income 817,999
Accumulated net realized loss from investment transactions (666,716)
Net unrealized depreciation of investments (note 3) (1,027,040)
------------
Net assets $ 88,885,085
============
Net asset value and redemption value per share (based on 9,444,770
shares of beneficial interest outstanding) $ 9.41
=======
Maximum offering price per share (net asset value plus sales charge
of 4.75% of offering price) $ 9.88
=======
</TABLE>
See accompanying notes to financial statements.
10
<PAGE> 12
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF OPERATIONS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment income - interest $ 3,852,142
-----------
Expenses:
Management fees (note 4) 216,112
Custodian fees (note 5) 34,387
Legal and auditing fees 33,506
Transfer agency expenses (note 4) 27,450
Shareholders' reports and proxy statements 9,150
Registration fees 229
Trustees' fees 800
Other 6,039
-----------
Total expenses 327,673
Earnings credits on cash balances (note 5) (34,387)
-----------
Net expenses 293,286
-----------
Net investment income 3,558,856
Realized and unrealized gain (loss) on investments:
Net realized loss on investments (666,716)
-----------
Net unrealized appreciation (depreciation) of investments:
Beginning of the period (865,820)
End of the period (1,027,040)
-----------
Net change in unrealized depreciation on investments (161,220)
-----------
Net realized and unrealized gain (loss) on investments (827,936)
-----------
Net increase in net assets resulting from operations $ 2,730,920
===========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE> 13
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
STATEMENT OF CHANGES IN NET ASSETS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FISCAL YEAR
ENDED ENDED
3/31/2000 9/30/1999
------------ ------------
<S> <C> <C>
Net investment income $ 3,558,856 $ 4,755,392
Net realized loss on investments (666,716) 7,024
Net change in unrealized depreciation on investments (161,220) (1,967,844)
------------ ------------
Net increase in net assets resulting from operations 2,730,920 2,794,572
------------ ------------
Dividends to shareholders from net investment income (2,792,528) (4,697,920)
------------ ------------
From beneficial interest transactions:
Proceeds from sale of shares 6,173,590 15,448,573
Dividends reinvested 1,566,635 2,828,356
Payments for shares redeemed (2,935,786) (5,338,925)
------------ ------------
Increase in net assets derived from
beneficial interest transactions 4,804,439 12,938,004
------------ ------------
Net increase in net assets 4,742,831 11,034,656
Net assets:
Beginning of period 84,142,254 73,107,598
------------ ------------
End of period (including undistributed net investment
income of $817,999 and $57,472, respectively) $ 88,885,085 $ 84,142,254
============ ============
</TABLE>
12
<PAGE> 14
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
PER SHARE OPERATING DATA: 3/31/2000 1999 1998 1997 1996 1995
--------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.42 $ 9.64 $ 9.58 $ 9.37 $ 9.16 $ 9.07
------ ------ ------ ------ ------ ------
Net investment income 0.30 0.56 0.62 0.58 0.61 0.60
Net realized and unrealized gain (loss) on
investments (.01) (0.22) 0.06 0.21 0.20 0.09
------ ------ ------ ------ ------ ------
Increase (decrease) from investment
operations 0.29 0.34 0.68 0.79 0.81 0.69
Dividends from net investment income (0.30) (0.56) (0.62) (0.58) (0.60) (0.60)
------ ------ ------ ------ ------ ------
Net increase (decrease) in net asset value (0.01) (0.22) 0.06 0.21 0.21 0.09
------ ------ ------ ------ ------ ------
Net asset value, end of period $ 9.41 $ 9.42 $ 9.64 $ 9.58 $ 9.37 $ 9.16
====== ====== ====== ====== ====== ======
TOTAL RETURN, AT NET ASSET VALUE (1) 3.11%+ 3.64% 7.62% 8.66% 9.15% 8.05%
===== ===== ===== ===== ===== =====
Net assets, end of period (000)s $ 88,885 $ 84,142 $ 73,108 $ 67,249 $ 50,583 $ 44,768
Net investment income 4.11%+ 5.96% 6.66% 6.13% 6.50% 6.81%
Expenses, inclusive of expenses paid
indirectly by the Fund .76%* .73% .77% .84% .77% .84%
Expenses, net of expenses paid indirectly by
the Fund .68%* .64% .66% .73% .70% .77%
Portfolio turnover rate (2) 16.49% 21.95% 28.63% 27.66% 24.53% 27.48%
====== ====== ====== ====== ====== ======
</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 ended March 31, 2000 were $19,250,747 and
$12,961,826, respectively.
See accompanying notes to financial statements.
13
<PAGE> 15
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (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 (FFMC). The
following is a summary of significant accounting policies consistently
followed by the Fund.
(a) INVESTMENT VALUATION
The values 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 relevant trading or market factors. The Fund
records amortization of premiums and accretion of original discounts on
zero coupon bonds, using the effective yield method, in accordance with
federal income tax purposes. Short-term debt securities having a remaining
maturity of 60 days or less are valued at amortized cost which
approximates market value.
(b) 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.
(c) 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
$13,163,355and $2,047,342 (2.3% of net assets), respectively, as of March
31, 2000.
14
<PAGE> 16
COLORADO BONDSHARES -
A TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS
SEMI-ANNUAL PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
(d) 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
The Fund has 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, 2000 and the fiscal year ended September
30, 1999 were as follows:
<TABLE>
<CAPTION>
3/31/2000 1999
--------- ----
<S> <C> <C>
Proceeds from shares sold 658,517 1,611,128
Dividends reinvested 167,024 295,764
--------- ---------
825,541 1,906,892
Shares redeemed (312,866) (557,388)
--------- ---------
Net change 512,675 1,349,504
========= =========
</TABLE>
(3) UNREALIZED GAINS AND LOSSES
At March 31, 2000, the net unrealized depreciation on investments of
$1,027,042 was comprised of gross appreciation of $1,605,331 and gross
depreciation of $2,632,373.
(4) MANAGEMENT FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Management fees paid to FFMC 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. FFMC 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. FFMC provided certain transfer agency and shareholder
services as part of the management fee arrangement for the period ended
March 31, 2000. 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.
15
