<PAGE>
MANAGER AND FOUNDER
AQUILA MANAGEMENT CORPORATION
380 Madison Avenue, Suite 2300
New York, New York 10017
INVESTMENT SUB-ADVISER
KPM INVESTMENT MANAGEMENT, INC.
1700 Lincoln Street, Suite 1300
Denver, Colorado 80203
BOARD OF TRUSTEES
Lacy B. Herrmann, Chairman
Tucker Hart Adams
Arthur K. Carlson
William M. Cole
Anne J. Mills
J. William Weeks
John G. Welles
OFFICERS
Diana P. Herrmann, President
James M. McCullough, Senior Vice President
Jerry G. McGrew, Senior Vice President
Jean M. Smith, Vice President
Jessica L. Wiltshire, Vice President
Rose F. Marotta, Chief Financial Officer
Richard F. West, Treasurer
Edward M.W. Hines, Secretary
DISTRIBUTOR
AQUILA DISTRIBUTORS, INC.
380 Madison Avenue, Suite 2300
New York, New York 10017
CUSTODIAN
BANK ONE TRUST COMPANY, N.A.
100 East Broad Street
Columbus, Ohio 43271
TRANSFER AND SHAREHOLDER SERVICING AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, Delaware 19809
INDEPENDENT AUDITORS
KPMG LLP
345 Park Avenue
New York, New York 10154
Further information is contained in the Prospectus, which must precede or
accompany this report.
SEMI-ANNUAL
REPORT
JUNE 30, 1999
[Logo of Tax-Free Fund of Colorado: a square which contains three mountains and
a round sun above the first two mountains]
TAX-FREE FUND
OF
COLORADO
A TAX-FREE INCOME INVESTMENT
[Logo of the Aquila Group of Funds: an eagle's head]
ONE OF THE
AQUILAsm GROUP OF FUNDS
</PAGE>
<PAGE>
[Logo of Tax-Free Fund of Colorado: a square which contains three mountains and
a round sun above the first two mountains]
TAX-FREE FUND OF COLORADO
SEMI-ANNUAL REPORT
"TAKE PRIDE IN HOW YOUR INVESTMENT IS HELPING OTHERS -
WHILE PRIMARILY HELPING YOU"
Dear Fellow Shareholders: August 20, 1999
Our surveys of shareholders of Tax-Free Fund of Colorado have shown that
you and other owners of the Fund bought your shares primarily for TAX-FREE
INCOME. And, secondarily, the knowledge - provided through the stability of the
Fund - that your money would be there when you needed it.
Additionally, our surveys showed that most of our shareholders are
pre-retirees or retirees. These are people who are looking forward to making
sure that they have the security of a sound income source from the Fund when
they are no longer in the workforce.
The point you may not have fully appreciated - when you made your
investment in the Fund - was that in the process of having the Fund provide you
with these benefits, it also provides help to a variety of others within your
community and Colorado. And, this is a factor in which you can take real PRIDE.
The economy of Colorado is growing at a dynamic rate. As this growth
takes place, new and additional municipal projects are needed for the benefit of
the citizens of Colorado and the various communities in it. These projects
include schools, highways, recreational facilities, and a whole array of useful
public purpose projects. These projects are what help economic development and
provide a high quality of life for the citizens of Colorado.
We think it is important for you to realize this. The projects that the
Fund helped finance are all ones that you and others can reach out and touch. We
are illustrating for you some of the various kinds of municipal projects that
your investment in the Fund has helped create in Colorado.
[Photo]
University of Colorado
[Photo]
E-470 Tollway
[Photo]
Snowmass Village
[Photo]
Poudre Valley Hospital
</PAGE>
<PAGE>
The tax laws of Colorado, as well as those of the Federal government,
allow you to receive income from your investment in the Fund DOUBLE TAX-FREE. It
is realized by the State and Federal governmental authorities that it is
essential that various municipal projects be built with an advantage to the
investor. This advantage is primarily one of TAX-FREE income for you.
You can take comfort in the knowledge that your investment in the Fund
is comprised of a portfolio of municipal securities which possess extremely high
quality. Therefore, you can "SLEEP WELL AT NIGHT" knowing that the chances of
anything happening to these high quality bonds is very slight indeed. The reason
for this, of course, is that the various municipal projects represented in the
Fund have behind them a very sound stream of taxes and revenues generated by the
projects themselves.
We again wish to emphasize that while primarily helping you, Tax-Free
Fund of Colorado is also helping others in your communities and Colorado.
Consequently, you can take great PRIDE in your investment in Tax-Free
Fund of Colorado.
You can rest assured that the overall management of the Fund is doing a
very careful job of "MINDING THE STORE" for you.
We appreciate the continued confidence that you have placed in the Fund
through your investment in Tax-Free Fund of Colorado.
Sincerely,
Diana P. Herrmann
President
Lacy B. Herrmann
Chairman, Board of Trustees
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENT OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (45.0%) S&P VALUE
</CAPTION>
<S> <C> <C> <C>
SCHOOL DISTRICTS (30.5%)
$ 1,275,000 Adams County School District #14 Aaa/AAA $ 1,361,063
5.750%, 12/01/08, FSA Insured
1,255,000 Adams County School District #12 Aaa/AAA 1,328,731
5.625%, 12/15/08, FGIC Insured
2,500,000 Adams County School District #12 Aaa/AAA 2,637,500
6.20%, 12/15/09, FGIC Insured
1,750,000 Arapahoe County School District #6 Aa2/AA 1,844,063
5.50%, 12/01/05
1,475,000 Arapahoe County, Cherry Creek School District #5 Aa2/AA 1,596,688
6.00%, 12/15/05
2,000,000 Arapahoe County School District #5 Aa2/AA 2,107,500
5.50%, 12/15/07
1,000,000 Arapahoe County School District #5 Aa2/AA 1,051,250
5.50%, 12/15/08, FGIC Insured
1,325,000 Arapahoe County School District #5 Aa2/AA 1,339,906
5.125%, 12/01/10, FGIC Insured
1,215,000 Boulder Valley Colorado Aaa/AAA 1,274,231
5.50%, 12/01/08, FGIC Insured
1,875,000 Boulder, Larimer & Weld County # RE-1J Aaa/AAA 1,968,750
5.50%, 12/15/08, FGIC Insured
1,000,000 Denver City & County School District #1 A1/AA- 1,053,750
5.60%, 06/01/08
2,920,000 Douglas & Elbert Counties School District Aaa/AAA 3,073,300
#RE-1 Refunding,
5.50%, 12/15/07, FGIC Insured
2,500,000 Douglas & Elbert Counties School District Aaa/AAA 2,671,875
#Re-1, Series 1992,
6.15%, 12/15/08, MBIA Insured
1,000,000 Douglas & Elbert Counties School District Aaa/AAA 1,001,250
# Re-1, Series 1992,
5.00%, 12/15/10, FGIC Insured
2,000,000 Douglas & Elbert Counties School District Aaa/AAA 2,030,000
# Re-1, Series 1992,
5.25%, 12/15/11, FGIC Insured
</PAGE>
2,320,000 Eagle County School District #RE50J, Series 1999 Aaa/AAA 2,502,700
6.15%, 12/01/04, FGIC Insured
1,820,000 Eagle County School District #RE50J, Series 1999 Aaa/AAA 1,835,925
5.00%, 12/01/09, FGIC Insured
1,040,000 El Paso County School District #20 Aaa/AAA 1,116,700
6.00%, 12/15/04, AMBAC Insured
75,000 El Paso County School District #20 Aaa/AAA 76,137
8.00%, 12/01/06, MBIA Insured
1,145,000 El Paso County School District #11 Aa3/AA- 1,203,681
5.50%, 12/01/07
1,330,000 El Paso County School District #11 Aa3/AA- 1,466,325
6.25%, 12/01/08
1,000,000 El Paso County School District #20 Aaa/AAA 1,098,750
6.15%, 12/15/08, MBIA Insured
1,190,000 El Paso County School District #2 Aaa/AAA 1,222,725
5.25%, 12/01/10, MBIA Insured
1,835,000 Jefferson County School District # R-1 Aaa/AAA 1,906,106
5.25%, 12/15/05, MBIA Insured
3,000,000 Jefferson County School District # R-1 Aaa/AAA 3,161,250
5.50%, 12/15/06, MBIA Insured
1,000,000 Jefferson County School District # R-1 Aaa/AAA 1,047,500
5.50%, 12/15/09, FGIC Insured
1,500,000 Larimer County, Colorado School #R-1 Refunding A2/NR 1,561,875
5.40%, 12/15/04
2,000,000 Larimer County, Colorado School #R-1 Refunding A1/AA- 2,135,000
5.90%, 12/15/05
1,245,000 Larimer County, Colorado School #R-1 Refunding Aaa/AAA 1,341,488
5.875%, 12/15/06, FGIC Insured
5,560,000 Larimer County, Colorado School #R-1 Refunding Aaa/AAA 5,622,550
5.25%, 12/15/11, FGIC Insured
2,065,000 Mesa County School District #51 Aaa/AAA 2,237,944
6.00%, 12/01/06, MBIA Insured
1,245,000 North Jefferson County, Park & Recreation Aaa/NR 1,283,906
5.25%, 12/01/08
</PAGE>
<PAGE>
1,045,000 Pitkin County Colorado School District #1 Aaa/AAA 1,102,475
(ASPEN)
5.85%, 11/15/03, AMBAC Insured
1,790,000 Pitkin County, Aspen School District #1 Series Aaa/AAA 1,883,975
1989,
5.95%, 11/15/05, AMBAC Insured
1,040,000 Pueblo County Colorado School District # 70 Aaa/AAA 1,081,600
5.50%, 12/01/09, AMBAC Insured
1,000,000 Routt County School District # RE- 2 Aaa/AAA 1,052,500
5.50%, 12/01/07, MBIA Insured
1,050,000 Summit County School District, Series A Aaa/AAA 1,093,311
5.40%, 12/01/06, FGIC Insured
1,000,000 Summit County School District, Series A Aaa/AAA 1,047,500
5.50%, 12/01/07, FGIC Insured
64,421,780
CITY & COUNTY (2.7%)
500,000 Boulder County Open Space Acquisition Aa1/AA 506,820
6.90%, 08/15/04
1,000,000 Denver Colorado City & County Unlimited Tax, Aa2/AA 1,046,030
7.00%, 08/01/00, Pre- Refunded
2,000,000 Denver Colorado City & County Unlimited Tax, Aa2/AA 2,075,000
5.25%, 08/01/06
1,085,000 Snowmass Refunding Aaa/AAA 1,132,469
6.95%,11/15/00, FSA Insured, Pre-Refunded
1,000,000 Westminster Colorado Water Series 1992 A A1/AA- 1,053,750
6.25%, 12/01/07
5,814,069
METROPOLITAN DISTRICT (9.5%)
2,500,000 Boulder Colorado Central Area Improvement Aaa/AAA 2,530,425
6.30%, 08/15/07, FGIC Insured
1,060,000 Castle Pines Metropolitan District Aaa/AAA 1,115,650
5.50%, 12/01/07, FSA Insured
2,000,000 Castle Pines Metropolitan District Aaa/AAA 1,990,000
5.00%, 12/01/11, FSA Insured
1,550,000 Central Platte Valley Metropolitan District NR/A 1,569,375
5.25%, 12/01/09, ACA Insured
</PAGE>
<PAGE>
1,080,000 Greenwood South Metropolitan District Aaa/AAA 1,143,450
5.60%, 12/01/05, MBIA Insured
1,000,000 Highlands Ranch Metropolitan District #4 Aaa/AA+ 1,070,000
5.80%, 12/01/05, LOC Swiss Bank, Pre-Refunded
1,530,000 Highlands Ranch Metropolitan District #1, Aaa/AAA 1,604,588
Refunding,
6.25%, 09/01/06, MBIA Insured
1,000,000 Highlands Ranch Metropolitan District #4 Aaa/AAA 1,066,250
5.75%, 09/01/08, AMBAC Insured
1,730,000 Highlands Ranch Metropolitan District #4 Aaa/AAA 1,846,775
5.75%, 09/01/09, AMBAC Insured
2,165,000 Interstate South Metropolitan District NR/A+ 2,254,306
5.75%, 12/01/09, LOC FBS
1,500,000 Meridian Metropolitan District A3/NR 1,515,075
7.00%, 12/01/99
1,260,000 Westglenn Metropolitan District Colorado NR/A+ 1,310,400
Jefferson County Refunding,
5.65%, 12/01/04, LOC FBS
1,000,000 Westglenn Metropolitan District Colorado, NR/A+ 1,063,750
6.25%, 12/01/08, LOC FBS
20,080,044
WATER & SEWER (1.8%)
1,550,000 Denver Colorado City & County Water Aa2/AA 1,631,375
5.50%, 10/01/07
2,000,000 Thornton, CO, Refunding-Spur A Aaa/AAA 2,120,000
5.60%, 12/01/06, FSA Insured
3,751,375
HOSPITAL (0.5%)
1,000,000 Poudre Valley Hospital District, Refunding Aa/AA- 1,027,500
5.375%, 11/15/07
Total General Obligation Bonds 95,094,768
</PAGE>
<PAGE>
REVENUE BONDS (55.0%)
HIGHER EDUCATION (9.8%)
1,000,000 Aurora Educational Development Community Aaa/AAA 1,025,860
College Series 1990,
7.10%, 04/01/00, MBIA Insured, Pre-Refunded
1,000,000 Aurora Educational Development Revenue Bonds Aaa/AAA 1,026,940
7.25%, 04/01/00 MBIA Insured, Pre-Refunded
1,580,000 City of Aurora Colorado Educational NR/BBB 1,639,250
Development Refunding Bonds Series 1994,
6.00%, 10/15/07
1,000,000 Colorado Post Secondary Educational Facilities NR/AAA 1,044,450
Authority Refunding, Revenue Bonds,
6.35%, 06/01/00, AMBAC Insured, Pre-Refunded
1,170,000 Colorado Post Secondary Educational Facility, Aaa/AAA 1,215,338
5.50%, 03/01/08, MBIA Insured
1,000,000 Colorado Post Secondary Educational Facilities A2/AAA 1,035,000
Authority Refunding, Revenue Bonds Series 93,
5.95%, 03/01/09, AMBAC Insured
1,000,000 Colorado State Board of Agriculture Revenue Aaa/AAA 1,031,250
Refunding, Colorado State University Student Sports,
5.40%, 04/01/06, MBIA Insured
1,000,000 Colorado State Board of Agriculture Revenue, Aaa/AAA 1,062,500
Fort Lewis College,
6.50%, 10/01/06,FGIC Insured
1,000,000 Colorado State Board of Agriculture Revenue, Aaa/AAA 1,050,000
University of Southern Colorado Auxiliary Facility
6.25%, 08/01/07, AMBAC Insured
1,000,000 Colorado State Board of Agriculture Revenue Aaa/AAA 1,025,000
Refunding, Colorado StateUniversity Student Sports,
5.45%, 04/01/08, MBIA Insured
1,500,000 Colorado Student Obligation Board Authority A/NR 1,531,875
6.00%, 09/01/01
1,860,000 Colorado State Colleges Western State, Aaa/AAA 1,913,475
5.50%, 05/15/09, MBIA Insured
</PAGE>
<PAGE>
500,000 University of Colorado Regents Research A2/A+ 510,210
Building Revolving Fund Revenue,
6.85%, 06/01/03
1,000,000 University of Colorado Research Building Revenue Aaa/AAA 1,051,250
6.00%, 06/01/06, MBIA Insured
1,000,000 University of Colorado Revenue Aaa/AAA 1,055,000
6.20%, 06/01/07, MBIA Insured
1,500,000 State of Colorado University of Northern Aaa/AAA 1,593,750
Colorado Auxiliary Facilities,
5.75%, 06/01/04, MBIA Insured
1,745,000 State of Colorado University of Northern Aaa/AAA 1,845,337
Colorado Auxiliary Facilities,
5.75%, 06/01/08, MBIA Insured
20,656,485
ELECTRIC (5.8%)
5,000,000 Adams County Colorado Pollution Control Aaa/AAA 5,187,500
Revenue Public Service,
5.625%, 04/01/08, MBIA Insured
1,210,000 Moffat County Colorado Pollution Control Aaa/AAA 1,261,425
Revenue,
5.50%, 11/01/03, AMBAC Insured
2,125,000 Moffat County Colorado Pollution Control Aaa/AAA 2,239,219
Revenue,
5.625%, 11/01/06, AMBAC Insured
1,375,000 Platte River Power Authority Aaa/AAA 1,448,906
5.75%, 06/01/04, MBIA Insured
2,000,000 Platte River Power Authority Aaa/AAA 2,150,000
6.00%, 06/01/07, MBIA Insured
12,287,050
SALES TAX (9.0%)
510,000 Arvada Colorado Sales & Use Tax Revenue Aaa/AAA 535,500
6.10%, 12/01/07, FGIC Insured
490,000 Arvada Colorado Sales & Use Tax Revenue Aaa/AAA 518,175
6.10%, 12/01/07, FGIC Insured
</PAGE>
<PAGE>
2,000,000 Boulder County Colorado Open Space & Use Aaa/AAA 2,117,500
Tax Revenue Bonds, Series 1994 FGIC Insured,
5.75%, 12/15/04
2,500,000 Boulder County, Colorado Capital Improvements NR/AA- 2,565,625
5.25%, 12/15/09
1,045,000 City of Boulder Colorado, AMBAC Insured Aaa/AAA 1,061,981
5.25%, 08/15/10
2,000,000 City & County of Denver Colorado Excise Tax Aaa/AAA 2,052,500
Revenue, FSA Insured,
5.375%, 09/01/10
1,000,000 Denver Metro Major League Baseball Stadium Aaa/AAA 1,056,250
Excise Tax Revenue,
6.35%, 10/01/01, FGIC Insured, Pre-Refunded
2,045,000 Fort Collins Sales & Use Tax Revenue Aaa/AAA 2,108,906
5.375%, 12/01/06, FGIC Insured
1,000,000 Fort Collins Downtown Development Authority Aaa/AAA 1,038,110
Tax Increment Revenue
6.50%, 06/01/07, MBIA Insured
1,000,000 Jefferson County Districtwide Sales Tax Aaa/AAA 1,052,500
6.10%, 12/01/04, MBIA Insured
1,245,000 Jefferson County Open Space Sales Tax Aaa/AAA 1,230,994
5.00%, 11/01/15, FGIC Insured
1,040,000 Lakewood Colorado Sales & Use Tax Revenue, NR/AA 1,067,300
5.25%, 12/01/09
290,000 Thornton, Colorado Sales and Use Tax Revenue, Aaa/AAA 291,508
6.80%, 09/01/99, FGIC Insured, Pre-Refunded
1,000,000 Westminster Sales & Use Tax 1991 Aaa/AAA 1,043,750
6.70%, 12/01/01, FGIC Insured
1,175,000 Westminster Colorado Sales Tax Revenue Aaa/AAA 1,227,875
5.50%, 12/01/07, FGIC Insured
18,968,474
</PAGE>
<PAGE>
WATER & SEWER (9.1%)
1,750,000 Centennial Water & Sewer District Aaa/AAA 1,855,000
5.80%, 12/01/07, FSA Insured
500,000 Colorado Water Resource & Power Development Aaa/AAA 521,250
Authority,
7.00%, 11/01/00, FGIC Insured
710,000 Colorado Water Resource & Power Development Aa2/AA 758,812
Authority, Series A,
7.00%, 09/01/01, Pre-Refunded
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,058,750
Authority,
6.80%, 11/01/01, FGIC Insured, Pre-Refunded
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,071,250
Authority,
6.50%, 11/01/05, FGIC Insured
1,000,000 Colorado Water Resource & Power Development Aa2/AA 1,058,750
Authority,
6.00%, 09/01/06
1,000,000 Colorado Water Resource & Power Development Aa2/AA 1,048,750
Authority, Clean Water Revenue,
5.35%, 09/01/06
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,046,250
Authority, Clean Water Revenue,
5.50%, 09/01/09
1,965,000 Fort Collins Colorado Wastewater Sewer Revenue Aaa/AAA 2,011,669
5.375%, 12/01/08, FGIC Insured
1,530,000 Left Hand Water District, Series 1996 Aaa/AAA 1,606,500
5.75%, 11/15/08, MBIA Insured
1,055,000 Metro Wastewater Reclamation District, Gross Aa/AA 1,094,563
Revenue Series,
5.80%, 04/01/02, Pre-Refunded
1,270,000 Metro Wastewater Reclamation District, Gross Aa2/AA 1,300,162
Revenue Series,
5.25%, 04/01/09
</PAGE>
<PAGE>
1,010,000 Northglenn Colorado Water & Sewer Aaa/AAA 1,079,438
5.75%, 12/01/06, FSA Insured
1,000,000 Pagosa Water & Sanitation Colorado Water & Aaa/AAA 1,021,250
Sewer,
5.25%, 12/01/08, FSA Insured
1,715,000 Town of Erie Aaa/AAA 1,697,850
5.125%, 12/01/10, FSA Insured
1,000,000 Westminster Colorado Water & Wastewater - Aaa/AAA 1,056,250
Utility Enterprise, Revenue Series 1994
5.70%, 12/01/04, AMBAC Insured
19,286,494
HOSPITAL (7.3%)
667,000 Colorado Health Facility Authority Hospital Aaa/AAA 667,667
Revenue North Colorado, Medical Center
7.40%, 07/15/99, MBIA Insured
2,030,000 Colorado Health Facility Authority Hospital Aaa/AAA 2,123,888
Revenue North Colorado, Medical Center
5.60%, 05/15/05, MBIA Insured
1,000,000 Colorado Health Facility Authority Hospital Aaa/AAA 1,037,500
Revenue Medical Center
5.50%, 12/01/08, MBIA Insured
1,000,000 Colorado Health Facility Authority Hospital Aa2/AA 1,011,250
Revenue Medical Center
5.375%, 12/01/09, MBIA Insured
1,500,000 Colorado Health Facility Authority Hospital Aaa/AAA 1,518,750
Revenue Medical Center
5.25%, 12/01/10, MBIA Insured
2,255,000 Colorado Health Facility Community Provider Aaa/AAA 2,418,487
Pooled Loan Revenue
7.20%, 07/15/05, FSA Insured
1,410,000 Colorado Health Facility Authority Hospital Aaa/AAA 1,487,550
Revenue Boulder Community Hospital
5.65%, 10/01/06, MBIA Insured
</PAGE>
<PAGE>
1,000,000 Colorado Health Facility Authority Sisters of Aaa/AAA 1,097,500
Charity Health Care
6.25%, 05/15/09, AMBAC Insured
1,460,000 Colorado Springs Hospital Revenue Aaa/AAA 1,523,875
5.50%, 12/15/06, MBIA Insured
1,000,000 Pueblo County Colorado Hospital Facilities, Aaa/AAA 1,058,750
Series A,
6.80%, 09/01/05, MBIA Insured
1,475,000 University Colorado Hospital Authority Hospital Aaa/NR 1,535,844
Revenue
5.50%, 11/15/07, AMBAC Insured
15,481,061
HOUSING (7.6%)
1,600,000 Adams County Colorado Multi-family Housing NR/AAA 1,656,000
Revenue, Brittany Station Series A, FNMA
5.40%, 09/01/05
855,000 City of Arvada Colorado Multi-family Housing NR/AAA 878,513
Revenue, Springwood,
5.60%, 08/20/08, GNMA Insured
1,000,000 City and County of Denver Colorado Single NR/AAA 963,750
Family Mortgage Revenue, Series 1999 C
5.000%, 11/01/15
105,000 Colorado Housing Finance Authority 1991, NR/AA+ 107,231
Series A-3,
6.10%, 11/01/00
100,000 Colorado Housing Finance Authority 1991, NR/AA+ 103,000
Series A-1,
6.20%, 11/01/01
315,000 Colorado Housing Finance Authority 1991, A2/A 322,088
Series A,
6.90%, 05/01/01
1,020,000 Colorado Housing Finance Authority, SFM NR/AA+ 1,068,450
Series A-2,
6.65%, 11/01/06
</PAGE>
<PAGE>
490,000 Colorado Housing Finance Authority, SFM Series Aa2/NR 504,700
1994C,
6.00%, 12/01/04
1,350,000 Colorado Housing Finance Authority, SFM Series Aa2/NR 1,402,312
D-2,
5.625%, 06/01/10
730,000 Colorado Housing Finance Authority, SFM Series Aa2/NR 767,412
A-2,
5.75%, 11/01/10
1,135,000 Colorado Housing Finance Authority, SFM Series Aa2/NR 1,184,656
1994C,
6.25%, 12/01/12
2,000,000 Colorado Housing Finance Authority Aa2/NR 2,157,500
6.50%, 05/01/16
750,000 Colorado Housing Finance Authority Aa2/NR 794,063
6.05%, 10/01/16
1,000,000 Colorado Housing Finance Authority Aa2/NR 1,061,250
6.125%, 11/01/23
205,000 Commerce City Single Family Revenue Series A Aa1/NR 212,431
6.875%, 03/01/12
1,000,000 Littleton Assisted Living Building Authority, NR/A+ 1,046,250
Amity Plaza Project, Multi-family Housing
Revenue Bond Series 1994,
6.10%, 03/01/06
1,500,000 Snowmass Village Multi-family Revenue Refunding Aa2/NR 1,582,500
6.30%, 12/15/08, FSA Insured
235,000 Southwestern Colorado Single Family Revenue Aaa/NR 243,519
Partnership, Refunding,
7.10%, 09/01/04
115,000 Summit County Single Family Revenue Refunding A1/NR 118,450
Series A,
7.25%, 12/01/04
16,174,075
TRANSPORTATION (2.0%)
1,000,000 Arapahoe County Colorado E-470 Vehicle Aaa/AAA 1,040,000
Registration Revenue Bonds,
5.45%, 08/31/07, MBIA Insured
</PAGE>
<PAGE>
2,000,000 Regional Transportation District Sales Tax Revenue Aaa/AAA 2,092,500
5.50%,11/01/05, FGIC Insured
1,000,000 Regional Transportation District Sales Tax Revenue Aaa/AAA 1,058,750
6.15%,11/01/05, FGIC Insured
4,191,250
LEASE (1.0%)
2,000,000 Regional Transportation District Sales Tax Revenue Aaa/AAA 2,007,500
5.00%,06/01/10, FGIC Insured
MISCELLANEOUS REVENUE (3.4%)
1,000,000 Boulder County, CO, N.C.A.R. NR/A 1,056,250
6.50%, 12/01/02
2,275,000 Denver Colorado City & County Helen Bonfils NR/AA- 2,397,281
Project,
5.875%, 12/01/09
1,000,000 South Suburban Park & Recreational District Baa/NR 1,053,750
6.00%, 11/01/07
1,365,000 South Suburban Park & Recreational District Aaa/AAA 1,378,650
5.125%, 12/15/09, FGIC Insured
1,230,000 Thornton, Colorado Development Authority Aaa/AAA 1,306,875
5.75%, 12/01/06, MBIA Insured
7,192,806
Total Revenue Bonds 116,245,195
Total Investments (cost $208,082,549*) 100.0% $ 211,339,963
Other assets in excess of liabilities 0.0 5,177
Net Assets 100.0% $ 211,345,140
</TABLE>
* Cost for Federal tax purposes is identical.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $208,082,549) $ 211,339,963
Cash 1,893,146
Interest receivable 1,722,068
Receivable for investment securities sold 35,346
Receivable for Fund shares sold 26,516
Other assets 925
Total assets 215,017,964
LIABILITIES
Payable for investment securities purchased 3,137,732
Payable for Fund shares redeemed 219,061
Dividends payable 185,408
Management fee payable 86,691
Distribution fees payable 29,142
Accrued expenses 14,790
Total liabilities 3,672,824
NET ASSETS $ 211,345,140
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share $ 205,951,725
Additional paid-in capital 205,856
Net unrealized appreciation on investments 3,257,414
Distributions in excess of net investment income (281,612)
Accumulated net realized gain on investments 2,211,757
$ 211,345,140
CLASS A
Net Assets $ 203,332,444
Capital shares outstanding 19,806,060
Net asset value and redemption price per share $ 10.27
Offering price per share (100/96 of $10.27 adjusted to nearest cent) $ 10.70
CLASS C
Net Assets $ 1,428,010
Capital shares outstanding 139,352
Net asset value and offering price per share $ 10.25
Redemption price per share (*a charge of 1% is imposed on the redemption
proceeds of the shares, or on the original price, whichever is lower,
if redeemed during the first 12 months after purchase) $ 10.25*
CLASS Y
Net Assets $ 6,584,686
Capital shares outstanding 640,221
Net asset value, offering and redemption price per share $ 10.29
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 5,457,684
Expenses:
Management fee (note 3) $ 534,193
Transfer and shareholder servicing agent fees 73,000
Distribution and service fees (note 3) 58,365
Trustees' fees and expenses 40,000
Shareholders' reports and proxy statements 26,000
Legal fees 24,000
Custodian fees 17,000
Audit and accounting fees 12,000
Registration fees and dues 6,000
Insurance 4,000
Miscellaneous 13,082
807,640
Expenses paid indirectly (note 7) (2,000)
Net expenses 805,640
Net investment income 4,652,044
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain from securities transactions 458,754
Change in unrealized appreciation on investments (7,577,559)
Net realized and unrealized loss on investments (7,118,805)
Net decrease in net assets resulting from operations $ (2,466,761)
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
</CAPTION>
<S> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,652,044 $ 9,744,863
Net realized gain from securities transactions 458,754 1,753,003
Change in unrealized appreciation on investments (7,577,559) (1,140,899)
Change in net assets from operations (2,466,761) 10,356,967
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income (4,745,873) (9,122,237)
Net realized gain on investments - (771,886)
Class C Shares:
Net investment income (25,780) (41,352)
Net realized gain on investments - (3,498)
Class Y Shares:
Net investment income (162,004) (280,993)
Net realized gain on investments - (23,772)
Change in net assets from distributions (4,933,657) (10,243,738)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 12,054,693 21,817,536
Reinvested dividends and distributions 2,954,532 6,045,620
Cost of shares redeemed (13,410,763) (33,853,380)
Change in net assets from capital share transactions 1,598,462 (5,990,224)
Change in net assets (5,801,956) (5,876,995)
NET ASSETS:
Beginning of period 217,147,096 223,024,091
End of period $ 211,345,140 $ 217,147,096
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
Tax-Free Fund of Colorado (the "Fund"), a non-diversified, open-end
investment company, was organized in February, 1987 as a Massachusetts business
trust and commenced operations on May 21, 1987. The Fund is authorized to issue
an unlimited number of shares and, since its inception to April 30, 1996,
offered only one class of shares. On that date, the Fund began offering two
additional classes of shares, Class C and Class Y shares. All shares outstanding
prior to that date were designated as Class A shares and are sold with a
front-payment sales charge and bear an annual service fee. Class C shares are
sold with a level-payment sales charge with no payment at time of purchase but
level service and distribution fees from date of purchase through a period of
six years thereafter. A contingent deferred sales charge of 1% is assessed to
any Class C shareholder who redeems shares of this Class within one year from
the date of purchase. The Class Y shares are only offered to institutions acting
for an investor in a fiduciary, advisory, agency, custodian or similar capacity
and are not offered directly to retail investors. Class Y shares are sold at net
asset value without any sales charge, redemption fees, contingent deferred sales
charge or distribution or service fees. On April 30, 1998 the Fund established
Class I shares, which are offered and sold only through financial intermediaries
and are not offered directly to retail investors. At June 30, 1999 there were no
Class I shares outstanding. All classes of shares represent interests in the
same portfolio of investments and are identical as to rights and privileges but
differ with respect to the effect of sales charges, the distribution and/or
service fees borne by each class, expenses specific to each class, voting rights
on matters affecting a single class and the exchange privileges of each class.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles for investment
companies.
a) PORTFOLIO VALUATION: Municipal securities which have remaining maturities
of more than 60 days are valued at fair value each business day based upon
information provided by a nationally prominent independent pricing service
and periodically verified through other pricing services; in the case of
securities for which market quotations are readily available, securities
are valued at the mean of bid and asked quotations and, in the case of
other securities, at fair value determined under procedures established by
and under the general supervision of the Board of Trustees. Securities
which mature in 60 days or less are valued at amortized cost if their term
to maturity at purchase was 60 days or less, or by amortizing their
unrealized appreciation or depreciation on the 61st day prior to maturity,
if their term to maturity at purchase exceeded 60 days.
b) SECURITIES TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities
transactions are recorded on the trade date. Realized gains and losses from
securities transactions are reported on the identified cost basis. Interest
income is recorded daily on the accrual basis and is adjusted for
amortization of premium and accretion of original issue discount. Market
discount is recognized upon disposition of the security.
</PAGE>
<PAGE>
c) FEDERAL INCOME TAXES: It is the policy of the Fund to qualify as a
regulated investment company by complying with the provisions of the
Internal Revenue Code applicable to certain investment companies. The Fund
intends to make distributions of income and securities profits sufficient
to relieve it from all, or substantially all, Federal income and excise
taxes.
d) ALLOCATION OF EXPENSES: Expenses, other than class-specific expenses, are
allocated daily to each class of shares based on the relative net assets of
each class. Class-specific expenses, which include distribution and service
fees and any other items that are specifically attributed to a particular
class, are charged directly to such class.
e) 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 increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
3. FEES AND RELATED PARTY TRANSACTIONS
a) MANAGEMENT ARRANGEMENTS:
Aquila Management Corporation (the "Manager"), the Fund's founder and
sponsor, serves as the Manager for the Fund under an Advisory and Administration
Agreement with the Fund. The portfolio management of the Fund has been delegated
to a Sub-Adviser as described below. Under the Advisory and Administration
Agreement, the Manager provides all administrative services to the Fund, other
than those relating to the day-to-day portfolio management. The Manager's
services include providing the office of the Fund and all related services as
well as overseeing the activities of the Sub-Adviser and all the various support
organizations to theFund such as the shareholder servicing agent, custodian,
legal counsel, auditors and distributor and additionally maintaining the Fund's
accounting books and records. For its services, the Manager is entitled to
receive a fee which is payable monthly and computed as of the close of business
each day at the annual rate of 0.50 of 1% on the Fund's net assets. This fee
will be reduced to 0.40% if certain payments are made under the Fund's
Distribution Plan relative to Class A Shares.
KPM Investment Management, Inc. (the "Sub-Adviser"), a wholly-owned
subsidiary of KFS Corporation, a member of the nationally oriented Mutual of
Omaha Companies, serves as the Investment Sub-Adviser for the Fund under a
Sub-Advisory Agreement between the Manager and the Sub-Adviser. Under this
agreement, the Sub-Adviser continuously provides, subject to oversight of the
Manager and the Board of Trustees of the Fund, the investment program of the
Fund and the composition of its portfolio, arranges for the purchases and sales
of portfolio securities, and provides for daily pricing of the Fund's portfolio.
</PAGE>
<PAGE>
For its services, the Sub-Adviser is entitled to receive a fee from the Manager
which is payable monthly and computed as of the close of business each day at
the annual rate of 0.20 of 1% on the Fund's net assets. This fee will be reduced
to 0.16% if certain payments are made under the Fund's Distribution Plan
relative to Class A Shares.
For the six months ended June 30, 1999, the Fund incurred fees for
advisory and administrative services of $534,193.
Specific details as to the effect of the Fund's payments under its
Distribution Plan, as described below, on the above management fees and as to
the nature and extent of the services provided by the Manager and the
Sub-Adviser are more fully defined in the Fund's Prospectus and Statement of
Additional Information.
b) DISTRIBUTION AND SERVICE FEES:
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940. Under one part of
the Plan, with respect to Class A Shares, the Fund is authorized to make service
fee payments to broker-dealers or others ("Qualified Recipients") selected by
Aquila Distributors, Inc. (the "Distributor"), including, but not limited to,
any principal underwriter of the Fund, with which the Distributor has entered
into written agreements contemplated by the Rule and which have rendered
assistance in the distribution and/or retention of the Fund's shares or
servicing of shareholder accounts. The Fund makes payment of this service fee at
the annual rate of 0.05% of the Fund's average net assets represented by Class A
Shares. The Board of Trustees and shareholders approved an amendment to the
Fund's Distribution Plan applicable to Class A Shares which will permit the Fund
to make service fee payments at the rate of 0.15 of 1% on the entire net assets
represented by Class A Shares. However, there will be a simultaneous reduction
in the fee payable to the Manager from an annual rate of 0.50 of 1% to 0.40% on
all net assets so that the combined payments of these fees will remain at the
current level of 0.55 of 1% of the average annual net assets represented by the
Class A Shares. However, management of the Fund has determined that
implementation of the changes should be indefinitely postponed. For the six
months ended June 30, 1999, service fees on Class A Shares amounted to $51,330,
of which the Distributor received $2,318.
Under another part of the Plan, the Fund is authorized to make
payments with respect to Class C Shares to Qualified Recipients which have
rendered assistance in the distribution and/or retention of the Fund's Class C
shares or servicing of shareholder accounts. These payments are made at the
annual rate of 0.75% of the Fund's net assets represented by Class C Shares and
for the six months ended June 30, 1999, amounted to $5,276. In addition, under a
Shareholder Services Plan, the Fund is authorized to make service fee payments
with respect to Class C Shares to Qualified Recipients for providing personal
services and/or maintenance of shareholder accounts. These payments are made at
the annual rate of 0.25% of the Fund's net assets represented by Class C Shares
and for the six months ended June 30, 1999 amounted to $1,759. The total of
these payments with respect to Class C Shares amounted to $7,035, of which the
Distributor received $3,282.
</PAGE>
<PAGE>
Specific details about the Plans are more fully defined in the Fund's
Prospectus and Statement of Additional Information.
Under a Distribution Agreement, the Distributor serves as the
exclusive distributor of the Fund's shares. Through agreements between the
Distributor and various broker-dealer firms ("dealers"), the Fund's shares are
sold primarily through the facilities of these dealers having offices within
Colorado, with the bulk of sales commissions inuring to such dealers. For the
six months ended June 30, 1999, the Distributor received sales commissions of
$32,344 on sales of Class A Shares.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 1999, purchases of securities and
proceeds from the sales of securities aggregated $19,897,047 and $16,814,003,
respectively.
At June 30, 1999, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$4,650,254 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $1,392,840
for a net unrealized appreciation of $3,257,414.
5. PORTFOLIO ORIENTATION
Since the Fund invests principally and may invest entirely in double
tax-free municipal obligations of issuers within Colorado, it is subject to
possible risks associated with economic, political, or legal developments or
industrial or regional matters specifically affecting Colorado and whatever
effects these may have upon Colorado issuers' ability to meet their obligations.
6. DISTRIBUTIONS
The Fund declares dividends daily from net investment income and makes
payments monthly in additional shares at the net asset value per share or in
cash, at the shareholder's option. Net realized capital gains, if any, are
distributed annually and are taxable. An additional distribution of gain may be
made to the extent necessary to avoid payment of Federal taxes by the Fund.
The Fund intends to maintain, to the maximum extent possible, the
tax-exempt status of interest payments received from portfolio municipal
securities in order to allow dividends paid to shareholders from net investment
income to be exempt from regular Federal and State of Colorado income taxes.
However, due to differences between financial statement reporting and Federal
income tax reporting requirements, distributions made by the Fund may not be the
same as the Fund's net investment income, and/or net realized securities gains.
Further, a small portion of the dividends may, under some circumstances, be
subject to taxes at ordinary income and/or capital gain rates.
</PAGE>
<PAGE>
7. EXPENSES
The Fund has negotiated an expense offset arrangement with its
custodian wherein it receives credit toward the reduction of custodian fees and
other Fund expenses whenever there are uninvested cash balances. The Statement
of Operations reflects the total expenses before any offset, the amount of
offset and the net expenses. It is the general intention of the Fund to invest,
to the extent practicable, some or all of cash balances in income-producing
assets rather than leave cash on deposit.
8. CAPITAL SHARE TRANSACTIONS
Transactions in Capital Shares of the Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 972,891 10,181,721 1,425,794 $ 15,152,177
Reinvested distributions 278,289 2,929,768 566,091 6,002,679
Cost of shares redeemed (1,084,803) (11,437,115) (2,717,744) (28,777,984)
Net change 166,377 1,674,374 (725,859) (7,623,128)
CLASS C SHARES:
Proceeds from shares sold 13,028 137,938 37,561 396,665
Reinvested distributions 1,837 19,303 3,233 34,224
Cost of shares redeemed (709) (7,490) (13,267) (139,797)
Net change 14,156 149,751 27,527 291,092
CLASS Y SHARES:
Proceeds from shares sold 63,871 1,735,034 591,639 6,268,694
Reinvested distributions 517 5,460 822 8,717
Cost of shares redeemed (185,866) (1,966,157) (463,517) (4,935,599)
Net change (21,478) (225,663) 128,944 1,341,812
Total transactions in Fund
shares 159,055 $ 1,598,462 (569,388) $ (5,990,224)
</TABLE>
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A(1)
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1999 1998 1997 1996 1995 1994
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.63 $10.62 $10.41 $10.56 $9.82 $10.77
Income from Investment Operations:
Net investment income 0.23 0.47 0.50 0.52 0.54 0.55
Net gain (loss) on securities (both realized and
unrealized) (0.35) 0.04 0.23 (0.13) 0.74 (0.95)
Total from Investment Operations (0.12) 0.51 0.73 0.39 1.28 (0.40)
Less Distributions (note 6):
Dividends from net investment income (0.24) (0.46) (0.52) (0.54) (0.54) (0.55)
Distributions from capital gains - (0.04) - - - -
Total Distributions (0.24) (0.50) (0.52) (0.54) (0.54) (0.55)
Net Asset Value, End of Period $10.27 $10.63 $10.62 $10.41 $10.56 $9.82
Total Return (not reflecting sales charge)(%) (1.14)+ 4.92 7.21 3.78 13.28 (3.80)
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 203,332 208,771 216,321 214,392 219,306 199,075
Ratio of Expenses to Average Net Assets (%) 0.75* 0.75 0.75 0.70 0.64 0.61
Ratio of Net Investment Income to Average
Net Assets (%) 4.36* 4.47 4.78 5.02 5.20 5.32
Portfolio Turnover Rate (%) 7.87+ 15.20 22.66 10.96 14.20 15.53
The expense and net investment income ratios without the effect of the voluntary
waiver of a portion of the management fee in years ended December 31, 1996, 1995
and 1994 were:
Ratio of Expenses to Average Net Assets (%) - - - 0.74 0.76 0.72
Ratio of Net Investment Income (Loss) to
Average Net Assets (%) - - - 4.98 5.08 5.21
The expense ratios after giving effect to the waiver and expense offset for
uninvested cash balances were:
Ratio of Expenses to Average Net Assets (%) 0.75* 0.73 0.72 0.69 0.63 0.57
</TABLE>
(1) Designated as Class A Shares on April 30, 1996.
+ Not annualized.
* Annualized.
Note:On October 1, 1992, Kirkpatrick, Pettis, Smith, Polian Inc. became the
Fund's Investment Adviser and on July 1, 1994, KPM Investment Management,
Inc., a wholly-owned subsidiary of Kirkpatrick, Pettis, Smith, Polian Inc.,
became the Fund's Investment Adviser. Pursuant to new management
arrangements which were effective on June 29, 1998, KPM Investment
Management, Inc. was appointed as the Fund's Investment Sub-Adviser.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C(1) CLASS Y(1)
SIX MONTHS YEAR ENDED PERIOD(2) SIX MONTHS YEAR ENDED PERIOD(2)
ENDED DECEMBER 31, ENDED ENDED DECEMBER 31, ENDED
JUNE 30, 1999 1998 1997 DEC. 31, 1996 JUNE 30, 1999 1998 1997 DEC. 31, 1996
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $10.61 $10.60 $10.41 $10.31 $10.65 $10.64 $10.41 $10.31
Income from Investment Operations:
Net investment income 0.18 0.37 0.40 0.28 0.23 0.48 0.52 0.38
Net gain (loss) on securities (both
realized and unrealized) (0.35) 0.04 0.21 0.12 (0.35) 0.04 0.25 0.12
Total from Investment Operations (0.17) 0.41 0.61 0.40 (0.12) 0.52 0.77 0.50
Less Distributions (note 6):
Dividends from net investment income (0.19) (0.36) (0.42) (0.30) (0.24) (0.47) (0.54) (0.40)
Distributions from capital gains - (0.04) - - - (0.04) - -
Total Distributions (0.19 (0.40) (0.42) (0.30) (0.24) (0.51) (0.54) (0.40)
Net Asset Value, End of Period $10.25 $10.61 $10.60 $10.41 $10.29 $10.65 $10.64 $10.41
Total Return (not reflecting sales
charge) (%) (1.61)+ 3.92 5.99 3.78+ (1.12)+ 4.97 7.65 4.87+
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 1,428 1,328 1,036 915 6,585 7,047 5,668 0.1
Ratio of Expenses to Average Net
Assets (%) 1.70* 1.69 1.69 1.65* 0.70* 0.69 0.70 0.65*
Ratio of Net Investment Income to
Average Net Assets (%) 3.40* 3.50 3.81 4.07* 4.40* 4.50 4.76 5.07*
Portfolio Turnover Rate (%) 7.87+ 15.20 22.66 10.96 7.87+ 15.20 22.66 10.96
The expense and net investment income ratios without the effect of the voluntary
waiver of a portion of the management fee in the period ended December 31, 1996
were:
Ratio of Expenses to Average Net
Assets (%) - - - 1.69* - - - 0.69*
Ratio of Net Investment Income (Loss)
to Average Net Assets (%) - - - 4.03* - - - 5.03*
The expense ratios after giving effect to the waiver and expense offset for
uninvested cash balances were:
Ratio of Expenses to Average Net
Assets (%) 1.70* 1.68 1.66 1.64* 0.70* 0.68 0.67 0.64*
</TABLE>
(1) New Class of Shares established on April 30, 1996.
(2) From April 30, 1996 to December 31, 1996.
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
<PAGE>
SHAREHOLDER MEETING RESULTS (UNAUDITED)
The Annual Meeting of Shareholders of Tax-Free Fund of Colorado (the "Fund") was
held on June 16, 1999. The holders of shares representing 69% of the total net
asset value of the shares entitled to vote were present in person or by proxy.
At the meeting, the following matters were voted upon and approved by the
shareholders (the resulting votes for each matter are presented below).
1. To elect Trustees.
Number of Votes:
TRUSTEE FOR WITHHELD
Lacy B. Herrmann 148,125,608.12 1,241,975.62
Tucker Hart Adams 149,041,793.08 1,170,613.52
Arthur K. Carlson 149,039,655.92 1,172,750.68
William M. Cole 149,121,820.20 1,090,586.40
Anne J. Mills 149,215,717.70 996,688.90
J. William Weeks 149,235,385.92 977,020.68
John G. Welles 149,235,385.92 976,385.88
2. To ratify the selection of KPMG LLP as
the Fund's independent auditors.
Number of Votes:
FOR AGAINST ABSTAIN
148,057,874.24 439,281.60 1,715,250.76
</PAGE>
<PAGE>
PREPARING FOR YEAR 2000 (UNAUDITED)
The Trustees and officers of the Fund have been monitoring issues
involving preparedness for the turn of the century for some time in an effort to
minimize or eliminate any potential impact upon the Fund and its shareholders.
Our officers have focussed significant time and effort in order that the various
computerized functions that could affect the Fund are ready by the beginning of
the year 2000.
The Fund is highly reliant on certain mission-critical suppliers'
services. Each supplier of these services has provided the Fund's officers with
assurances that it is actively addressing potential problems relating to the
year 2000. The officers, in turn, are monitoring and will continue to monitor
the progress of its suppliers.
The Fund has NOT incurred, nor is anticipated to incur, any costs
related to Y2K. All such costs are being incurred by the respective vendors.
As you can well understand, we cannot directly control our supplier
operations. We assure you, however, that we recognize a responsibility to inform
our shareholders if in the future we become aware of any developments which
would lead us to believe that the Fund will be significantly affected by year
2000 problems.
We will continue to keep you up-to-date through future
communications.
</PAGE>
