<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
Gary C. Cornia
Diana P. Herrmann
John C. Lucking
Anne J. Mills
J. William Weeks
OFFICERS
Diana P. Herrmann, President
James M. McCullough, Senior Vice President
Emily C. Van Voorhis, 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
757 Third Avenue
New York, New York 10017
Further information is contained in the Prospectus,
which must precede or accompany this report.
SEMI-ANNUAL
REPORT
JUNE 30, 2000
[Logo of Tax-Free Fund of Colorado: a square with silhouettes of two mountains
and a rising sun]
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 with silhouettes of two mountains
and a rising sun]
SERVING COLORADO INVESTORS FOR OVER A DECADE
TAX-FREE FUND OF COLORADO
SEMI-ANNUAL REPORT
"CONSISTENCY"
August 18, 2000
Dear Fellow Shareholder:
If there is one word that captures the essence of Tax-Free Fund of
Colorado, that word is "CONSISTENCY."
The Fund has constantly attempted to provide:
* CONSISTENCY of share value,
* CONSISTENCY in the TAX-FREE return produced by the Fund
* CONSISTENCY of quality of investments and
* CONSISTENCY in the type of investments for the Fund.
CONSISTENCY OF SHARE VALUE
As you are aware, management of the Fund cannot control interest rates or
their effect upon the market. Interest rates are primarily controlled by the
Federal Reserve Board. The Fed increases or decreases rates as they feel is
necessary in order to maintain the stability and growth potential of the economy
of the United States.
When the Federal Reserve feels that growth in the economy is increasing at
too rapid a pace, they tend to increase interest rates and reduce the supply of
money in order to slow down the rate of growth. (This is what has happened
during the past year or so.) On the other hand, when the Federal Reserve feels
that the economy needs stimulation, there is a tendency to decrease interest
rates and increase the supply of money in order to provide an additional impetus
to the overall economy.
Interest rate changes have the effect in the marketplace of creating
changes in the share value of fixed-income securities such as the Fund. As we
have previously indicated, when interest rates go up, the share value goes down.
And, when interest rates go down, the share value goes up. What we have done is
to use various investment management techniques to dampen the swings that can
occur in the share value of the Fund.
Despite the variations in share price that have taken place since the
inception of the Fund, management of the Fund has strived to provide, to the
maximum extent possible, CONSISTENCY in the value of the Fund's shares. This you
will note from the chart below.
[Graphic of a pie chart with the following information:]
SHARE NET ASSET VALUE
5/21/87 $ 9.60
12/31/87 9.51
12/31/88 9.66
12/31/89 9.80
12/31/90 9.77
12/31/91 10.18
12/31/92 10.38
12/31/93 10.77
12/31/94 9.82
12/31/95 10.56
12/31/96 10.41
12/31/97 10.62
12/31/98 10.63
12/31/99 9.98
6/30/2000 10.03
</PAGE>
<PAGE>
Since the majority of investors using the Fund are pre-retirees or
retirees, this action by the Fund of maintaining a stable share value is what we
feel is in the best interest of all shareholders. We want you to know that when
you need money from your investment in the Fund, it is THERE - at approximately
the same value that it has been all along.
CONSISTENCY IN THE TAX-FREE RETURN PRODUCED BY THE FUND
When you look at the Fund in terms of income produced on a year-by-year
basis, you will observe that we have tried to provide the maximum level of
yearly TAX-FREE return as can be produced by a quality-oriented portfolio of
municipal securities.
As you are aware, this level of return will vary from year to year as
interest rate changes by the Federal Reserve affect the overall marketplace.
Nevertheless, there is a CONSISTENCY to the level of return that the Fund would
like to provide for you and other shareholders.
Although the income level received by shareholders will vary from year to
year, it does have a CONSISTENCY to it. And, this is why shareholders buy and
own the Fund - for that CONSISTENCY of TAX-FREE income.
During recent years, the level of SPENDABLE TAX-FREE return provided to
shareholders has ranged between 4.36% to 5.02% based upon an average share value
of the Fund.
Shareholders of Tax-Free Fund of Colorado should not buy or sell the Fund
based upon capital appreciation, such as they would with an equity or stock
fund.
An analogy for a shareholder of Tax-Free Fund of Colorado would be a person
buying a dairy cow for the steady stream of milk it supplies, not for what it
might be worth when he/she sells it.
What the Fund is providing is a relatively steady stream of TAX-FREE income
and a relatively stable share value.
Shareholders buy and hold their position in Tax-Free Fund of Colorado for
the longer term, not for a quick in and out. Therefore, shareholders do NOT and
should NOT look upon the Fund for its total return - but, rather for the income
stream it provides in the form of TAX-FREE dividends.
Also, when you look at the recent level of TAX-FREE income provided by the
Fund and measure that against the taxable income required to provide the same
amount of money in your pocket, here's what things look like.
[Graphic of a bar chart with the following information:]
TAX-FREE FUND OF COLORADO'S DOUBLE TAX-FREE DISTRIBUTION RATE
AS COMPARED TO THE TAXABLE EQUIVALENT RATE AN
INVESTOR WOULD HAVE TO EARN AT VARIOUS TAX BRACKETS
TAX BRACKET RATE OF RETURN
DOUBLE TAX-FREE TAXABLE
DISTRIBUTION RATE EQUIVALENT RATE
28% 4.56% 6.67%
31% 4.56% 7.05%
36% 4.56% 7.63%
39.6% 4.56% 8.11%
</PAGE>
<PAGE>
CONSISTENCY OF QUALITY OF INVESTMENTS
Since inception of the Fund, management has CONSISTENTLY sought
high-quality investments for its shareholders.
We don't like surprises. Nor, do shareholders like surprises. We believe
the best way to avoid surprises is to stick with quality.
The pie chart below gives you a breakdown of the quality of the individual
securities of the Fund as at the Semi-Annual Report date of June 30, 2000.
[Graphic of a pie chart with the following information:]
PORTFOLIO DISTRIBUTION BY QUALITY
AAA 71.17%
AA 20.15%
A 7.26%
Below A 1.42%
As you will recall, the Fund's prospectus restricts its investments to only
the top four quality securities - AAA, AA, A, Baa - although there are nine
different grades of quality associated with municipal bond investing ranging
from the highest to the lowest. We have always tried to make sure that
shareholders know that, to the maximum extent possible, their invested money
will be there when they need it. The best way we know to accomplish this
objective is by sticking with quality.
This is why we CONSISTENTLY seek to maintain most of the Fund's money in
the upper quality securities - AAA AND AA. As you will appreciate, the exact
level of quality will vary from time to time based upon availability of
securities in the marketplace to achieve the Fund's objective.
CONSISTENCY IN THE TYPE OF INVESTMENTS FOR THE FUND
Management of Tax-Free Fund of Colorado has CONSISTENTLY embraced the idea
that your investment should not only help shareholders financially, but also
help your state and its communities. Thus, investments in the Fund are as
diversified as possible. Diversification geographically and by type of project
is another way of ensuring that your money is doing the best job possible for
not only you, but also for your community and state.
[Graphic of a pie chart with the following information:]
PORTFOLIO DISTRIBUTION BY MARKET SECTOR
School Districts 25.57%
Metropolitan Districts 11.21%
Water and Sewer 14.56%
Hospitals 8.30%
Higher Education 9.27%
Housing 9.16%
Electric 5.41%
Transportation 1.67%
Leases 1.17%
Other 13.68%
SUMMARY
As we have tried to illustrate in this report to you, the essence of
Tax-Free Fund of Colorado is CONSISTENCY. This is what we feel that shareholders
are primarily interested in. And, this is exactly what we are trying to provide
to you and other shareholders.
CONSISTENCY OF APPRECIATION
As always, we again wish to express our appreciation for the confidence you
have shown by your investment in Tax-Free Fund of Colorado. We can assure you
that we will CONSISTENTLY do our best to merit your continued level of trust.
Sincerely,
Diana P. Herrmann
President
Lacy B. Herrmann
Chairman, Board of Trustees
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENT OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
RATING
FACE MOODY'S/
AMOUNT GENERAL OBLIGATION BONDS (38.4%) S&P VALUE
</CAPTION>
<S> <C> <C> <C> <C> <C>
SCHOOL DISTRICTS (25.5%)
$ 1,275,000 Adams County School District #14 Aaa/AAA $ 1,345,125
5.750%, 12/01/08, FSA Insured
1,255,000 Adams County School District #12 Aaa/AAA 1,313,044
5.625%, 12/15/08, FGIC Insured
2,500,000 Adams County School District #12 Aaa/AAA 2,593,750
6.20%, 12/15/09, FGIC Insured
1,000,000 Arapahoe County School District #5 Aa2/AA 1,035,000
5.50%, 12/15/08
1,325,000 Arapahoe County School District #5 Aaa/AAA 1,333,281
5.125%, 12/01/10, FSA Insured
2,760,000 Arapahoe County School District Aa2/AA 2,835,900
5.500%, 12/15/11
2,750,000 Arapahoe County, Cherry Creek School District Aa2/AA 2,811,875
5.50%, 12/15/12
1,215,000 Boulder Valley Colorado Aaa/AAA 1,260,562
5.50%, 12/01/08, FGIC Insured
1,000,000 Denver City & County School District #1 Aa3/AA- 1,038,750
5.60%, 06/01/08
2,500,000 Douglas & Elbert Counties School District # Re-1, Aaa/AAA 2,637,500
Series 1992, 6.15%, 12/15/08, MBIA Insured
1,000,000 Douglas & Elbert Counties School District # Re-1, Aaa/AAA 997,500
Series 1992, 5.00%, 6/15/10, FGIC Insured
2,000,000 Douglas & Elbert Counties School District # Re-1, Aaa/AAA 2,017,500
Series 1992, 5.25%, 12/15/11, FGIC Insured
1,145,000 El Paso County School District #11 Aa3/AA- 1,185,075
5.50%, 12/01/07
1,330,000 El Paso County School District #11 Aa3/AA- 1,443,050
6.25%, 12/01/08
1,000,000 El Paso County School District #20 Aaa/AAA 1,082,500
6.15%, 12/15/08, MBIA Insured
1,110,000 El Paso County School District Aa3/NR 1,150,237
5.70%, 12/01/12
1,500,000 El Paso County School District, FSA Insured Aaa/AAA 1,539,375
5.50%, 12/01/13
</PAGE>
<PAGE>
$ 1,040,000 El Paso County Colorado School Dist. #20 Aaa/AAA $ 1,090,700
6.00%, 12/15/04
3,000,000 Jefferson County School District # R-1 Aaa/AAA 3,112,500
5.50%, 12/15/09, FGIC Insured
1,000,000 Jefferson County, Colorado School District SE Aaa/AAA 1,022,500
5.50%, 12/15/13
1,500,000 Larimer County, Colorado School #R-1 Refunding A1/NR 1,531,875
5.40%, 12/15/04
2,000,000 Larimer Weld and Boulder County, Colorado School A1/AA- 2,087,500
5.90%, 12/15/05
2,100,000 Larimer County, Colorado School #R-1 Refunding Aa3/AA- 2,110,500
5.25%, 12/15/11
1,065,000 Mesa County School District #51 Aaa/AAA 1,131,563
6.00%, 12/01/06, MBIA Insured
1,000,000 Mesa County School District #51 Aaa/AAA 1,012,500
5.20%, 12/01/09, MBIA Insured
1,045,000 Pitkin County Colorado School District #1 (ASPEN) Aaa/AAA 1,080,269
5.85%, 11/15/03, AMBAC Insured
1,790,000 Pitkin County, Aspen School District #1 Series 1989 Aaa/AAA 1,850,413
5.95%, 11/15/05, AMBAC Insured
1,040,000 Pueblo County Colorado School District # 70 Aaa/AAA 1,072,500
5.50%, 12/01/09, AMBAC Insured
1,050,000 Summit County School District, Series A Aaa/AAA 1,077,562
5.40%, 12/01/06, FGIC Insured
1,000,000 Summit County School District, Series A Aaa/AAA 1,032,500
5.50%, 12/01/07, FGIC Insured
1,000,000 Weld & Adams County S School District 3J Aaa/AAA 1,042,500
5.50%, 12/15/10, AMBAC Insured
47,875,406
CITY & COUNTY (0.6%)
1,000,000 Westminster Colorado Water Series 1992 A Aa3/AA- 1,032,500
6.25%, 12/01/07
</PAGE>
<PAGE>
METROPOLITAN DISTRICT (11.2%)
$ 2,500,000 Boulder Colorado Central Area Improvement Aaa/AAA $ 2,525,300
6.30%, 08/15/07, FGIC Insured
1,060,000 Castle Pines Metropolitan District Aaa/AAA 1,098,425
5.50%, 12/01/07, FSA Insured
2,000,000 Castle Pines Metropolitan District Aaa/AAA 1,977,500
5.00%, 12/01/11, FSA Insured
1,550,000 Central Platte Valley Metropolitan District NR/A 1,551,938
5.25%, 12/01/09, ACA Insured
1,080,000 Greenwood South Metropolitan District Aaa/AAA 1,120,500
5.60%, 12/01/05, MBIA Insured
1,000,000 Highlands Ranch Metropolitan District #4 Aaa/NR 1,052,500
5.80%, 12/01/05, LOC Swiss Bank, Pre-Refunded
1,530,000 Highlands Ranch Metropolitan District #1, Refunding Aaa/AAA 1,573,988
6.25%, 09/01/06, MBIA Insured
1,000,000 Highlands Ranch Metropolitan District #1, Refunding Aaa/AAA 1,053,750
5.75%, 09/01/08, AMBAC Insured
1,730,000 Highlands Ranch Metropolitan District #1, Refunding Aaa/AAA 1,825,150
5.75%, 09/01/09, AMBAC Insured
2,165,000 Interstate South Metropolitan District NR/A+ 2,221,831
5.75%, 12/01/09, LOC FBS
1,245,000 North Jeffco Pk and Rec Dist Colorado Aaa/NR 1,271,456
5.25%, 12/01/08
1,365,000 South Suburban Park & Recreational District Aaa/AAA 1,370,119
5.125%, 12/15/09, FGIC Insured
1,260,000 Westglenn Metropolitan District Colorado Jefferson NR/A+ 1,283,625
County Refunding, 5.65%, 12/01/04, LOC FBS
1,000,000 Westglenn Metropolitan District Colorado, NR/A+ 1,051,250
6.25%, 06/01/04, LOC FBS
20,977,332
WATER & SEWER (1.1%)
2,000,000 Thornton, Colorado, Refunding-Spur A Aaa/AAA 2,082,500
5.60%, 12/01/06, FSA Insured
Total General Obligation Bonds 71,967,738
</PAGE>
<PAGE>
REVENUE BONDS (61.4%)
HIGHER EDUCATION (9.2%)
$ 1,580,000 City of Aurora Colorado Educational Development NR/BBB $ 1,625,425
Refunding Bonds Series 1994, 6.00%, 10/15/07
1,170,000 Colorado Post Secondary Educational Facility, Aaa/AAA 1,205,100
5.50%, 03/01/08, MBIA Insured
1,000,000 Colorado Post Secondary Educational Facilities A2/AAA 1,026,250
Authority Refunding Revenue Bonds Series 93,
5.95%, 03/01/09, AMBAC Insured
1,000,000 Colorado State Board of Agriculture Revenue Aaa/AAA 1,020,000
Refunding, Colorado State University Student
Sports, 5.40%, 04/01/06, MBIA Insured
1,000,000 Colorado State Board of Agriculture Revenue, Aaa/AAA 1,037,500
Fort Lewis College, 6.50%, 10/01/06, FGIC Insured
1,000,000 Colorado State Board of Agriculture Revenue, Aaa/AAA 1,030,000
University of Southern Colorado Auxiliary Facility
6.25%, 08/01/07, AMBAC Insured
1,000,000 Colorado State Board of Agriculture Revenue Aaa/AAA 1,017,500
Refunding, Colorado State University Student
Sports, 5.45%, 04/01/08, MBIA Insured
1,500,000 Colorado Student Obligation Board Authority A/NR 1,524,375
Student Loan Revenue, 6.00%, 09/01/01
1,860,000 Colorado State Colleges Board of Trustees, Aaa/AAA 1,899,525
5.50%, 05/15/09, MBIA Insured
500,000 University of Colorado Regents Research Building A2/A+ 504,375
Revolving Fund Revenue 6.85%, 06/01/03
1,000,000 University of Colorado Research Building Revenue Aaa/AAA 1,032,500
6.00%, 06/01/06, MBIA Insured
1,000,000 University of Colorado Revenue Aaa/AAA 1,035,000
6.20%, 06/01/07, MBIA Insured
1,500,000 State of Colorado University of Northern Colorado Aaa/AAA 1,565,625
Auxiliary Facilities, 5.75%, 06/01/04, MBIA Insured
1,745,000 State of Colorado University of Northern Colorado Aaa/AAA 1,825,706
Auxiliary Facilities, 5.75%, 06/01/08, MBIA Insured
17,348,881
</PAGE>
<PAGE>
ELECTRIC (5.4%)
$ 5,000,000 Adams County Colorado Pollution Control Aaa/AAA $ 5,100,000
Revenue Public Service, 5.625%, 04/01/08,
MBIA Insured
1,210,000 Moffat County Colorado Pollution Control Revenue Aaa/AAA 1,237,225
5.50%, 11/01/03, AMBAC Insured
2,125,000 Moffat County Colorado Pollution Control Revenue Aaa/AAA 2,204,688
5.625%, 11/01/06, AMBAC Insured
1,500,000 Platte River Power Authority Aaa/AAA 1,588,125
6.00%, 06/01/07, MBIA Insured
10,130,038
SALES TAX (9.5%)
510,000 Arvada Colorado Sales & Use Tax Revenue Aaa/AAA 525,938
6.10%, 12/01/07, FGIC Insured
490,000 Arvada Colorado Sales & Use Tax Revenue Aaa/AAA 505,925
6.10%, 12/01/02
1,740,000 Boulder County Colorado Open Space & Use Aaa/AAA 1,805,250
Tax Revenue Bonds Series 1994, 5.75%, 12/15/04,
FGIC Insured
260,000 Boulder County Colorado Open Space & Use Tax Aaa/AAA 270,075
Revenue Bonds Series 1994, 5.75%, 12/15/04,
FGIC Insured
1,250,000 Boulder Colorado Open Space Acquisition Aa1/AA+ 1,273,438
5.500%, 08/15/12
1,045,000 City of Boulder Colorado Aaa/AAA 1,056,756
5.25%, 08/15/10, AMBAC Insured
2,000,000 City & County of Denver Colorado Excise Tax Aaa/AAA 2,040,000
Revenue, 5.375%, 09/01/10, FSA Insured
1,000,000 Denver Metro Major League Baseball Stadium Excise Aaa/AAA 1,031,250
Tax Revenue, 6.35%, 10/01/01, FGIC Insured,
Pre-Refunded
1,780,000 Douglas County Colorado Sales Open Space Aaa/AAA 1,822,275
Revenue, 5.500%, 10/15/12
</PAGE>
<PAGE>
$ 1,000,000 Fort Collins Downtown Development Authority Aaa/AAA $ 1,027,280
Tax Increment Revenue, 6.50%, 06/01/07,
MBIA Insured
1,000,000 Jefferson County Districtwide Sales Tax Aaa/AAA 1,031,250
6.10%, 12/01/04, MBIA Insured
1,245,000 Jefferson County Open Space Sales Tax Aaa/AAA 1,229,437
5.00%, 11/01/11, FGIC Insured
1,040,000 Lakewood Colorado Sales & Use Tax Revenue, NR/AA 1,050,400
5.25%, 12/01/09
1,000,000 Larimar County Colorado Sales Tax Revenue Bond Aaa/AAA 980,000
5.50%, 12/15/12
1,000,000 Westminster Sales & Use Tax 1991 Aaa/AAA 1,018,280
6.70%, 12/01/01, FGIC Insured
1,175,000 Westminster Colorado Sales Tax Revenue Aaa/AAA 1,211,719
5.50%, 12/01/07, FGIC Insured
17,879,273
WATER & SEWER (13.4%)
1,500,000 Broomfield Colorado Water Activity Enterprise Aaa/NR 1,511,250
5.30%, 12/01/12
1,750,000 Centennial Water & Sewer District Aaa/AAA 1,830,938
5.80%, 12/01/07, FSA Insured
500,000 Colorado Water Resource & Power Development Aaa/AAA 504,010
Authority, 7.00%, 11/01/00, FGIC Insured
710,000 Colorado Water Resource & Power Development Aaa/AAA 735,738
Authority, Series A, 7.00%, 09/01/01, Pre-Refunded
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,028,750
Authority, 6.80%, 11/01/001, FGIC Insured,
Pre-Refunded
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,038,750
Authority, 6.50%, 11/01/05, FGIC Insured
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,035,000
Authority, 6.00%, 09/01/06
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,025,000
Authority, Clean Water Revenue, 5.35%, 09/01/06
</PAGE>
<PAGE>
$ 1,000,000 Colorado Water Resource & Power Development Aaa/AAA $ 1,032,500
Authority, Clean Water Revenue, 5.50%, 09/01/09
1,000,000 Colorado Clean Water Revenue Aaa/AAA 1,021,250
5.375%, 09/01/10
1,000,000 Colorado Water Resource & Power Development Aaa/AAA 1,016,250
Authority, 5.55%, 11/01/13
1,965,000 Fort Collins Colorado Wastewater Sewer Revenue Aaa/AAA 1,996,931
5.375%, 12/01/08, FGIC Insured
1,530,000 Left Hand Water District, Series 1996 Aaa/AAA 1,589,287
5.75%, 11/15/08, MBIA Insured
1,055,000 Metro Wastewater Reclamation District, Gross Aa2/AA 1,074,781
Revenue Series, 5.80%, 04/01/02, Pre-Refunded
1,270,000 Metro Wastewater Reclamation District, Gross Aa2/AA 1,285,875
Revenue Series, 5.25%, 04/01/09
1,010,000 Northglenn Colorado Water & Sewer Aaa/AAA 1,059,238
5.75%, 12/01/06, FSA Insured
1,000,000 Pagosa Water & Sanitation Colorado Water & Sewer Aaa/AAA 1,013,750
5.25%, 12/01/08, AMBAC Insured
1,000,000 Pueblo Colorado Board Water Works Aaa/AAA 1,031,250
5.50%, 11/01/10
1,715,000 Town of Erie NR/A 1,695,706
5.125%, 12/01/10, ACA Insured
1,570,000 Colorado Water Conservancy District Aaa/AAA 1,609,250
5.500, 6/15/12
1,000,000 Westminster Colorado Water & Wastewater Utility Aaa/AAA 1,035,000
Enterprise - Water And Wastewater Revenue
Series 1994 5.70%, 12/01/04, AMBAC Insured
25,170,504
HOSPITAL (8.3%)
1,000,000 Poudre Valley Hospital District, Refunding Aa/AA- 1,015,000
5.375%, 11/15/07
2,030,000 Colorado Health Facility Authority Hospital Revenue Aaa/AAA 2,083,288
North Colorado Medical Center 5.60%, 05/15/05,
MBIA Insured
</PAGE>
<PAGE>
$ 1,000,000 Colorado Health Facility Authority Hospital Revenue Aaa/AAA $ 1,021,250
Medical Center 5.50%, 12/01/08, MBIA Insured
1,000,000 Colorado Health Facility Authority Hospital Revenue Aa3/AA- 987,500
Medical Center 5.375%, 12/01/09, MBIA Insured
1,500,000 Colorado Health Facility Authority Hospital Revenue Aaa/AAA 1,505,625
Medical Center 5.25%, 12/01/10, MBIA Insured
2,255,000 Colorado Health Facility Community Provider Aaa/AAA 2,354,558
Pooled Loan Revenue, 7.20%, 07/15/05,
FSA Insured
1,410,000 Colorado Health Facility Authority Hospital Revenue Aaa/AAA 1,455,825
Boulder Community Hospital 5.65%, 10/01/06,
MBIA Insured
1,000,000 Colorado Health Facility Authority Sisters of Charity Aaa/AAA 1,076,250
Health Care, 6.25%, 05/15/09, AMBAC Insured
1,460,000 Colorado Springs Hospital Revenue Aaa/AAA 1,492,850
5.50%, 12/15/06, MBIA Insured
1,000,000 Pueblo County Colorado Hospital Facilities, Series A Aaa/AAA 1,032,500
6.80%, 09/01/05, MBIA Insured
1,475,000 University Colorado Hospital Authority Hospital Aaa/NR 1,508,187
Revenue, 5.50%, 11/15/07, AMBAC Insured
15,532,833
HOUSING (9.1%)
1,600,000 Adams County Colorado Multi-family Housing NR/AAA 1,622,000
Revenue, Brittany Station Series A, FNMA,
5.40%, 09/01/25
795,000 City of Arvada Colorado Multi-family Housing NR/AAA 802,950
Revenue, Springwood, 5.60%, 08/20/08,
GNMA Insured
1,000,000 City and County of Denver Colorado Single Family NR/AAA 923,750
Mortgage Revenue, Series 1999 C, 5.000%,
11/01/15, GNMA Insured
85,000 Colorado Housing Finance Authority 1991, NR/AA+ 85,265
Series A-3, 6.10%, 11/01/00
70,000 Colorado Housing Finance Authority 1991, NR/AA+ 71,137
Series A-1, 6.20%, 11/01/01
165,000 Colorado Housing Finance Authority 1991, Series A A1/A 167,020
6.90%, 05/01/01
</PAGE>
<PAGE>
$ 795,000 Colorado Housing Finance Authority, SFM Series A-2 NR/AA+ $ 824,812
6.65%, 11/01/06
305,000 Colorado Housing Finance Authority, SFM Series Aa2/NR 308,812
1994C, 6.00%, 12/01/04
1,115,000 Colorado Housing Finance Authority, SFM Series D-2 Aa2/NR 1,126,150
5.625%, 06/01/10
615,000 Colorado Housing Finance Authority, SFM Series A-2 Aa2/A+ 619,717
5.75%, 11/01/10
840,000 Colorado Housing Finance Authority, SFM Series Aa2/NR 848,232
1994C, 6.25%, 12/01/12
2,000,000 Colorado Single Family Housing Aa2/NR 2,090,000
6.50%, 05/01/16
2,750,000 Colorado Housing Finance Authority Aa2/NR 2,805,000
6.05%, 10/01/16
1,000,000 Colorado Housing Finance Authority, Single Family Aa2/AA 1,007,500
Program, 5.700%, 10/01/22
990,000 Colorado Housing Finance Authority Aa2/NR 1,011,037
6.125%, 11/01/23
1,000,000 Littleton Assisted Living Building Authority, Amity NR/A+ 1,022,500
Plaza Project Multi-family Housing Revenue
Bond Series 1994, 6.10%, 03/01/06
1,500,000 Snowmass Village Multi-family Revenue Refunding Aaa/AAA 1,552,500
6.30%, 12/15/08, FSA Insured
165,000 Southwestern Colorado Single Family Revenue Aa2/NR 168,713
Partnership, Refunding 7.10%, 09/01/04
80,000 Summit County Single Family, Series A Aaa/NR 81,505
7.25%, 12/01/04 17,138,600
TRANSPORTATION (1.7%)
1,000,000 Arapahoe County Colorado E-470 Vehicle Aaa/AAA 1,027,500
Registration Revenue Bonds, 5.45%, 08/31/07,
MBIA Insured
1,000,000 Regional Transportation District Sales Tax Revenue Aaa/AAA 1,040,000
6.15%,11/01/05, FGIC Insured
1,000,000 Colorado Dept. Of Transportation Aaa/AAA 1,057,500
6.00%, 06/15/13
3,125,000
</PAGE>
<PAGE>
LEASE (1.2%)
$ 1,055,000 Westminster, Colorado Certificate of Participation Aaa/AAA $ 1,066,869
5.35%, 09/01/11, MBIA Insured
1,100,000 El Paso County School District #2 Aaa/AAA 1,115,125
5.25%, 12/01/09, MBIA Insured
2,181,994
MISCELLANEOUS REVENUE (3.6%)
1,000,000 Boulder County, CO, N.C.A.R. NR/A 1,032,500
6.50%, 12/01/02
2,275,000 Denver Colorado City & County Helen Bonfils NR/AA- 2,366,000
Project, 5.875%, 12/01/09
1,000,000 South Suburban Park & Recreational District Baa/NR 1,038,750
6.00%, 11/01/07
1,230,000 Thornton, Colorado Development Authority Aaa/AAA 1,285,350
5.75%, 12/01/06, MBIA Insured
1,000,000 Westminster, Colorado Golf Course Activity NR/AA 976,250
5.400%, 12/01/13 6,698,850
Total Revenue Bonds 115,205,973
Total Investments (cost $185,743,685*) 99.8% 187,173,711
Other assets in excess of liabilities 0.2 308,339
Net Assets 100.0% $ 187,482,050
</TABLE>
* Cost for Federal tax purposes is identical.
PORTFOLIO ABBREVIATIONS:
ACA - American Capital Access
AMBAC - American Municipal Bond Assurance Corp.
FGIC - Financial Guaranty Insurance Co.
FNMA - Federal Housing Administration
FSA - Financial Security Assurance
GNMA - Government National Mortgage Association
MBIA - Municipal Bond Investors Assurance Corp.
See accompanying notes to financial statements
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
Investments at value (cost $185,743,685) $187,173,711
Cash 12,509
Interest receivable 1,540,773
Receivable for Fund shares sold 145,415
Other assets 15,822
Receivable for investment securities sold 15,070
Total assets 188,903,300
LIABILITIES
Payable for investment securities purchased $ 1,022,968
Dividends payable 184,648
Payable for Fund shares redeemed 94,350
Management fee payable 76,652
Distribution fees payable 27,814
Accrued expenses 14,818
Total liabilities 1,421,250
NET ASSETS $187,482,050
Net Assets consist of:
Capital Stock - Authorized an unlimited number of shares, par value $.01 per share $ 186,938
Additional paid-in capital 186,612,606
Net unrealized appreciation on investments 1,430,026
Accumulated net realized loss on investments (534,105)
Distributions in excess of net investment income (213,415)
$187,482,050
CLASS A
Net Assets $180,627,542
Capital shares outstanding 18,010,781
Net asset value and redemption price per share $ 10.03
Offering price per share (100/96 of $10.03 adjusted to nearest cent) $ 10.45
CLASS C
Net Assets $ 2,293,839
Capital shares outstanding 229,112
Net asset value and offering price per share $ 10.01
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) $ 10.01*
CLASS Y
Net Assets $ 4,560,669
Capital shares outstanding 453,929
Net asset value, offering and redemption price per share $ 10.05
</TABLE>
See accompanying notes to financial statements.
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income $ 5,096,090
EXPENSES:
Management fee (note 3) $ 474,544
Transfer and shareholder servicing agent fees 65,000
Distribution and service fees (note 3) 56,343
Trustees' fees and expenses 35,000
Legal fees 34,500
Custodian fees 21,837
Shareholders' reports and proxy statements 20,000
Audit and accounting fees 12,000
Registration fees and dues 7,500
Insurance 4,500
Miscellaneous 8,983
740,207
Expenses paid indirectly (note 7) (13,083)
Net expenses 727,124
Net investment income 4,368,966
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss from securities transactions (497,975)
Change in unrealized depreciation on investments 1,500,602
Net realized and unrealized gain on investments 1,002,627
Net increase in net assets resulting from operations $ 5,371,593
</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, 2000 DECEMBER 31, 1999
</CAPTION>
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 4,368,966 $ 9,289,534
Net realized loss from securities transactions (497,975) (36,131)
Change in unrealized depreciation on investments 1,500,602 (10,905,549)
Change in net assets from operations 5,371,593 (1,652,146)
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 6):
Class A Shares:
Net investment income (4,415,861) (9,466,538)
Net realized gain on investments - (1,495,582)
Class C Shares:
Net investment income (41,411) (62,746)
Net realized gain on investments - (15,059)
Class Y Shares:
Net investment income (125,109) (308,855)
Net realized gain on investments - (42,367)
Change in net assets from distributions (4,582,381) (11,391,147)
CAPITAL SHARE TRANSACTIONS (NOTE 8):
Proceeds from shares sold 6,828,833 16,765,266
Reinvested dividends and distributions 2,762,141 6,993,793
Cost of shares redeemed (20,944,440) (29,816,558)
Change in net assets from capital share transactions (11,353,466) (6,057,499)
Change in net assets (10,564,254) (19,100,792)
NET ASSETS:
Beginning of period 198,046,304 217,147,096
End of period $ 187,482,050 $ 198,046,304
</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, 2000 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.
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.
</PAGE>
<PAGE>
For the six months ended June 30, 2000, the Fund incurred fees for advisory
and administrative services of $474,544.
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, 2000, service fees on Class A Shares amounted to $45,637
of which the Distributor received $2,082.
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, 2000, amounted to $8,029. 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, 2000 amounted to $2,677. The total of these payments with
respect to Class C Shares amounted to $10,706 of which the Distributor received
$6,371.
</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, 2000, total commissions on sales of Class AShares amounted to $113,232, of
which the Distributor received $33,572.
At the Fund's annual meeting held in June 2000, proposals were submitted to
the shareholders which would have the effect of allowing the Fund to make
management fee payments at the annual rate of 0.50 of 1% regardless of asset
size or Class A distribution fees paid and to make 12b-1 distribution fee
payments at the annual rate of up to 0.15 of 1% of all of its average annual net
assets represented by Class A Shares. Approval of these proposals is pending.
4. PURCHASES AND SALES OF SECURITIES
During the six months ended June 30, 2000, purchases of securities and
proceeds from the sales of securities aggregated $23,437,796 and $33,617,468,
respectively.
At June 30, 2000, aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost amounted to
$2,662,824 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value amounted to $1,232,798
for a net unrealized appreciation of $1,430,026.
At December 31, 1999, the Fund has a capital loss carryover of $36,131
which expires on December 31, 2007. This carryover is available to offset future
net realized gains on securities transactions to the extent provided for in the
Internal Revenue Code. To the extent that this loss is used to offset future
realized capital gains, it is probable the gains so offset will not be
distributed.
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, in cash,
or in a combination of both, 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, 2000 DECEMBER 31, 1999
SHARES AMOUNT SHARES AMOUNT
</CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CLASS A SHARES:
Proceeds from shares sold 562,548 $ 5,593,372 1,338,033 $ 13,893,721
Reinvested distributions 273,710 2,723,768 672,082 6,907,950
Cost of shares redeemed (1,924,277) (19,142,541) (2,550,998) (26,331,915)
Net change (1,088,019) (10,825,401) (540,883) (5,530,244)
CLASS C SHARES:
Proceeds from shares sold 43,855 436,142 82,358 848,198
Reinvested distributions 2,183 21,685 4,283 43,970
Cost of shares redeemed (10,800) (107,393) (17,963) (183,817)
Net change 35,238 350,434 68,678 708,351
CLASS Y SHARES:
Proceeds from shares sold 80,504 799,319 192,086 2,023,347
Reinvested distributions 1,674 16,688 4,109 41,873
Cost of shares redeemed (169,677) (1,694,506) (316,465) (3,300,826)
Net change (87,499) (878,499) (120,270) (1,235,606)
Total transactions in Fund
shares (1,140,280) $ (11,353,466) (592,475) $ (6,057,499)
</TABLE>
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
FINANCIAL HIGHLIGHTS
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS A
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/00 1999 1998 1997 1996 1995
</CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.98 $10.63 $10.62 $10.41 $10.56 $9.82
Income from Investment Operations:
Net investment income 0.23 0.46 0.47 0.50 0.52 0.54
Net gain (loss) on securities (both realized
and unrealized) 0.06 (0.55) 0.04 0.23 (0.13) 0.74
Total from Investment Operations 0.29 (0.09) 0.51 0.73 0.39 1.28
Less Distributions (note 6):
Dividends from net investment income (0.24) (0.48) (0.46) (0.52) (0.54) (0.54)
Distributions from capital gains - (0.08) (0.04) - - -
Total Distributions (0.24) (0.56) (0.50) (0.52) (0.54) (0.54)
Net Asset Value, End of Period $10.03 $9.98 $10.63 $10.62 $10.41 $10.56
Total Return (not reflecting sales charge)(%) 2.94+ (0.84) 4.92 7.21 3.78 13.28
Ratios/Supplemental Data
Net Assets, End of Period ($ thousands) 180,628 190,698 208,771 216,321 214,392 219,306
Ratio of Expenses to Average Net Assets (%) 0.77* 0.76 0.75 0.75 0.70 0.64
Ratio of Net Investment Income to Average
Net Assets (%) 4.60* 4.41 4.47 4.78 5.02 5.20
Portfolio Turnover Rate (%) 12.40+ 13.08 15.20 22.66 10.96 14.20
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 and 1995 were:
Ratio of Expenses to Average Net Assets (%) - - - - 0.74 0.76
Ratio of Net Investment Income to
Average Net Assets (%) - - - - 4.98 5.08
The expense ratios after giving effect to the waiver and expense offset for
uninvested cash balances were:
Ratio of Expenses to Average Net Assets (%) 0.76* 0.75 0.73 0.72 0.69 0.63
</TABLE>
+ Not annualized.
* Annualized.
</PAGE>
<PAGE>
TAX-FREE FUND OF COLORADO
FINANCIAL HIGHLIGHTS (CONTINUED)
(UNAUDITED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CLASS C CLASS Y
SIX MONTHS PERIOD SIX MONTHS PERIOD
ENDED YEAR ENDED DECEMBER 31, ENDED ENDED YEAR ENDED DECEMBER 31, ENDED
6/30/00 1999 1998 1997 12/31/96(1) 6/30/00 1999 1998 1997 12/31/96(1)
</CAPTION>
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $9.97 $10.61 $10.60 $10.41 $10.31 $10.00 $10.65 $10.64 $10.41 $10.31
Income from Investment Operations:
Net investment income 0.18 0.36 0.37 0.40 0.28 0.24 0.46 0.48 0.52 0.38
Net gain (loss) on securities (both
realized and unrealized) 0.05 (0.54) 0.04 0.21 0.12 0.05 (0.54) 0.04 0.25 0.12
Total from Investment Operations 0.23 (0.18) 0.41 0.61 0.40 0.29 (0.08) 0.52 0.77 0.50
Less Distributions (note 6):
Dividends from net investment income (0.19) (0.38) (0.36) (0.42) (0.30) (0.24) (0.49) (0.47) (0.54) (0.40)
Distributions from capital gains - (0.08) (0.04) - - - (0.08) (0.04) - -
Total Distributions (0.19) (0.46) (0.40) (0.42) (0.30) (0.24) (0.57) (0.51) (0.54) (0.40)
Net Asset Value, End of Period $10.01 $9.97 $10.61 $10.60 $10.41 $10.05 $10.00 $10.65 $10.64 $10.41
Total Return (not reflecting sales
charge) (%) 2.35+ (1.70) 3.92 5.99 3.78+ 2.96+ (0.79) 4.97 7.65 4.87+
Ratios/Supplemental Data
Net Assets, End of Period
($ thousands) 2,294 1,932 1,328 1,036 915 4,561 5,416 7,047 5,668 0.1
Ratio of Expenses to Average
Net Assets (%) 1.72* 1.70 1.69 1.69 1.65* 0.72* 0.71 0.69 0.70 0.65*
Ratio of Net Investment Income to
Average Net Assets (%) 3.63* 3.44 3.50 3.81 4.07* 4.64* 4.45 4.50 4.76 5.07*
Portfolio Turnover Rate (%) 12.40+ 13.08 15.20 22.66 10.96 12.40+ 13.08 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 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 (%) 1.71* 1.69 1.68 1.66 1.64* 0.71* 0.70 0.68 0.67 0.64*
</TABLE>
(1) For the period April 30, 1996 (commencement of operations) through
December 31, 1996.
+ Not annualized.
* Annualized.
See accompanying notes to financial statements.
</PAGE>
