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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-05009 |
COLORADO BONDSHARES — A TAX EXEMPT FUND
(Exact name of registrant as specified in charter)
1200 17TH STREET, SUITE 850, DENVER, COLORADO 80202-5808
(Address of principal executive offices) (Zip code)
FRED R. KELLY, JR. 1200 17TH STREET, SUITE 850, DENVER, COLORADO 80202-5808
(Name and address of agent for service)
Registrant’s telephone number, including area code: | 303-572-6990 |
Date of fiscal year end: | 09/30/2006 |
Date of reporting period: | 09/30/2006 |
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
Item 7. | ||||||||
Item 8. | ||||||||
Item 9. | ||||||||
Item 10. | ||||||||
Item 11. | ||||||||
Item 12. | ||||||||
Certification Pursuant to Section 302 | ||||||||
Certification Pursuant to Section 906 |
Item 1. Reports to Stockholders
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![COLORADO BONDSHARES LOGO](https://capedge.com/proxy/N-CSR/0000950134-06-022919/d41510d4151000.gif)
Sincerely, | |
![]() | |
Fred R. Kelly, Jr. | |
Portfolio Manager |
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George N. Donnelly, Chairman of the Board |
Freedom Funds Management Company |
Freedom Funds Management Company |
SMITH HAYES Financial Services Corporation |
Wells Fargo Investments and Trust, Wells Fargo Bank, N.A. |
Anton Collins Mitchell LLP |
Kutak Rock LLP |
FEDERAL INCOME TAX INFORMATION | |
(unaudited) | |
In early 2007, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2006. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service. |
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• | Sales charges (front loads) on fund purchases and | |
• | Ongoing fund costs, including management fees, administrative services, and other fund expenses. All mutual funds have operating expenses. Operating expenses, which are deducted from a fund’s gross income, directly reduce the investment return of a fund. |
Beginning Account | Ending Account | Expenses Paid | ||||||||||
Colorado BondShares — A Tax-Exempt Fund | Value 03/31/06 | Value 09/30/06 | During Period | |||||||||
Based on Actual Fund Return | $ | 1,000.00 | $ | 1,027.15 | $ | 3.10 | ||||||
Based on Hypothetical 5% Annual Return Before Expenses | $ | 1,000.00 | $ | 1,021.95 | $ | 3.09 |
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(1) | Total return is the percentage change in the value of a hypothetical investment that has occurred in the indicated period of time, taking into account the imposition of the sales charge and other fees and assuming the reinvestment of all dividends and distributions. Past performance is not indicative of future performance. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of shares of the Fund. | |
(2) | Average annual total return reflects the hypothetical annually compounded return that would have produced the same cumulative total return if the Fund’s performance had been constant over the entire period. Average annual total returns for the one-year, five-year and ten-year periods ended September 30, 2006 are 0.70%, 4.91% and 5.89%, respectively. Average annual total return includes the imposition of the sales charge and assumes the reinvestment of all dividends and distributions. Past performance is not indicative of future performance. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of shares of the Fund. |
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(3) | Includes reinvestment of dividends and adjustment for the maximum sales charge of 4.75%. | |
(4) | The Lipper Muni Debt Fund Index is a non-weighted index of the 30 largest funds within the investment objective of the General Municipal Debt. Reflects no deductions for fees, expenses or taxes. Includes reinvestment of dividends but does not reflect any adjustment for sales charge. | |
(5) | The Lehman Index represents an unmanaged group of securities widely regarded by investors as representative of the bond market. You cannot invest directly in this index. This index does not have an investment advisor and does not pay any commissions, expenses or taxes. If this index did pay commissions, expenses or taxes, its returns would be lower. The Fund selected the Lehman Index to compare the returns of the Fund to an appropriate broad-based securities market index. You should note, however, that there are some fundamental differences between the portfolio of securities invested in by the Fund and the securities represented by the Lehman Index. Unlike the Fund which invests primarily in not-rated securities on issues of any size, the Lehman Index only includes securities with a rating of at least “Baa” by Moody’s Investor Services, Inc. from an issue size of no less than $50,000,000. Some of these differences between the portfolio of the Fund and the securities represented by the Lehman Index may cause the performance of the Fund to differ from the performance of the Lehman Index. |
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ANTON COLLINS MITCHELL LLP |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — 84.0% | ||||||||||||
1,000,000 | Adonea Metropolitan District No. 2 LTD Tax (Convertible to Unlimited Tax) G.O. Series 2005A, 6.125% to yield 6.25% due 12/1/2025 | $ | 1,025,630 | |||||||||
2,175,000 | Antelope Heights Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2003, 8.00% due 12/1/2023 | 2,396,741 | ||||||||||
2,000,000 | Arista Metropolitan District Special Revenue Bond Series 2005, 6.75% due 12/1/2035 | 2,140,080 | ||||||||||
950,000 | Aurora Multifamily Housing Revenue (River Falls Project) Senior Series 1999A, 5.70% due 7/1/2029 | 800,005 | ||||||||||
306,040 | Aurora Centretech Metropolitan District G.O. Refunding and Improvement Series 1994, 6.00% due 12/1/2023(b) | 465,221 | ||||||||||
2,960,000 | BNC Metropolitan District No. 1 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2004, 8.00% due 6/1/2028 | 2,960,000 | ||||||||||
1,000,000 | Beacon Pointe Metropolitan District LTD Tax (Convertible to Unlimited Tax) G.O. Series 2005A, 6.125% to yield 6.25% due 12/1/2025 | 985,550 | ||||||||||
700,000 | Beebe Draw Farms Metropolitan District G.O. Series 1998, 7.00% due 10/1/2018 | 691,075 | ||||||||||
5,095,000 | Belle Creek Metropolitan District No. 1 G.O. LTD Tax Series 2000, 8.00% due 12/1/2020 | 5,291,871 | ||||||||||
2,250,000 | Black Hawk (City of) Device Tax Revenue Series 1998, 5.625% due 12/1/2021 | 2,292,592 | ||||||||||
700,000 | Boulder County Variable Rate Demand Revenue (YCMA of Boulder Valley Project) Series 2006, 3.74% due 2/1/2031(h) | 700,000 | ||||||||||
1,845,000 | Bradburn Metropolitan District No. 3 G.O. LTD Tax Series 2003, 7.50% due 12/1/2033 | 1,845,000 | ||||||||||
6,405,000 | Bromley Park Metropolitan District No. 3 G.O. Exchange (LTD Tax to Unlimited Tax) Series 2001A and B, 8.00% due 12/1/2019-22 | 6,678,807 | ||||||||||
6,000,000 | Bromley Park Metropolitan District No. 2 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2002B, 8.00% due 12/1/2022 | 6,128,760 | ||||||||||
4,730,000 | Bromley Park Metropolitan District No. 2 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2003, 8.00% due 12/01/2028 | 4,814,762 | ||||||||||
4,900,000 | Broomfield Village Metropolitan District No. 2 Special Revenue Refunding Series 2005B, 3.99% due 7/1/2032(h) | 4,900,000 | ||||||||||
9,275,000 | Broomfield Village Metropolitan District No. 2 Special Revenue Refunding Series 2003B, 4.49% due 7/1/2032(h) | 9,275,000 | ||||||||||
500,000 | Castle Oaks Metropolitan District G.O. LTD Tax Series 2005, 6.00% due 12/1/2025 | 522,535 |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — (Continued) | ||||||||||||
1,500,000 | Castle Pines North Metropolitan District LTD Tax G.O. Variable Rate Refunding Series 2006C, 3.76% due 12/1/2024(h) | $ | 1,500,000 | |||||||||
25,000 | Castle Rock (Town of) G.O. Series 1988-2, 10.375% due 12/1/2008 | 27,195 | ||||||||||
565,000 | Castle Rock (Town of) LID No. 1988-2 Special Assessment Series 1988, 9.25%-10.375% due 12/1/2008(i) | 39,550 | ||||||||||
2,045,000 | Central Platte Valley Metropolitan District Special Obligation Revenue Series 1998, 7.00% due 12/1/2017(b) | 2,140,154 | ||||||||||
6,465,662 | Colorado Centre Metropolitan District LTD Tax and Special Revenue Series 1992B, 0.00% due 1/1/2032(a)(g)(i) | 161,642 | ||||||||||
2,009,520 | Colorado Centre Metropolitan District LTD Tax and Special Revenue Series 1992A, principal only, 0.00% due 1/1/2027(a)(e)(i) | 20,095 | ||||||||||
2,008,335 | Colorado Centre Metropolitan District LTD Tax and Special Revenue Series 1992A, interest only, 9.00% due 1/1/2027(f)(h)(i) | 1,104,584 | ||||||||||
3,490,000 | Colorado Educational and Cultural Facilities Authority Charter School Revenue (Liberty Common School Project) Series 1998, 6.95% due 8/15/2019(b) | 3,679,437 | ||||||||||
860,000 | Colorado Educational and Cultural Facilities Authority Charter School Revenue (Crown Pointe Academy) Series 2000, 7.25% due 7/15/2025 | 901,426 | ||||||||||
1,155,000 | Colorado Educational and Cultural Facilities Authority Private School Revenue (Escuela Tlatelolco Project) Series 2000A, 8.50% due 6/1/2022 | 1,118,941 | ||||||||||
375,000 | Colorado Educational and Cultural Facilities Authority Charter School Revenue (Elbert County Charter School Project) Series 2000A, 8.00% due 6/1/2010(b) | 407,179 | ||||||||||
5,410,000 | Colorado Educational and Cultural Facilities Authority Student Housing Revenue (Inn at Auraria LLC Project) Series 2005A, 5.875% due 7/1/2023 | 5,550,444 | ||||||||||
2,080,000 | Colorado Educational and Cultural Facilities Authority Charter School Revenue (Belle Creek Charter School Project) Series 2002A, 7.625% to yield 7.75% due 3/15/2032 | 2,166,237 | ||||||||||
6,250,000 | Colorado Educational and Cultural Facilities Authority Revenue Variable Rate (Colorado Christian University Project) Series 2004, 3.79% due 7/1/2034(h) | 6,250,000 | ||||||||||
785,000 | Colorado Educational and Cultural Facilities Authority Charter School Revenue Refunding and Improvement (Elbert County Charter School Project) Series 2004, 7.375% to yield 7.45% due 3/1/2035 | 777,825 | ||||||||||
5,150,000 | Colorado Educational and Cultural Facilities Authority Revenue Variable Rate (Denver Art Museum Project) Series 2004, 3.74% due 1/1/2034(h) | 5,150,000 |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — (Continued) | ||||||||||||
1,780,000 | Colorado Health Facilities Authority Variable Rate Demand Revenue (Golden West Manor Project) Series 2006A, 3.76% due 12/1/2037(h) | $ | 1,780,000 | |||||||||
3,655,000 | Colorado Housing and Finance Authority Economic Development Revenue (Micro Business Development Corporation Project) Series 2005, 6.75% due 12/1/2010 | 3,672,288 | ||||||||||
12,270,000 | Colorado Housing and Finance Authority Adjustable Rate Class I Series A-1, 3.75% due 10/1/2030(h) | 12,270,000 | ||||||||||
6,960,000 | Colorado Housing and Finance Authority Variable Rate Class I Series A-2, 3.75% due 4/1/2020(h) | 6,960,000 | ||||||||||
18,500,000 | Colorado Housing and Finance Authority Adjustable Rate Multifamily Insured Mortgage Revenue 2002 Series AA, 3.75% due 10/1/2030(h) | 18,500,000 | ||||||||||
2,000,000 | Colorado Housing and Finance Authority Single Family Class I Adjustable Rate Series 2001 AA-3, 3.75% due 5/1/2036(h) | 2,000,000 | ||||||||||
11,740,000 | Colorado Housing and Finance Authority Multifamily Project Class I Adjustable Rate 2002 Series C4, 3.75% due 10/1/2032(h) | 11,740,000 | ||||||||||
30,000 | Colorado Housing and Finance Authority Multifamily Project Class I Adjustable Rate 2005 Series B-3, 3.75% due 10/1/2036(h) | 30,000 | ||||||||||
2,990,000 | Colorado School of Mines Development Corporation Refunding Variable Rate Demand Series 2005, 3.91% due 9/1/2026(h) | 2,990,000 | ||||||||||
5,000,000 | Commerce City Northern Infrastructure General Improvement District G.O. Variable Rate Series 2006, 3.79% due 12/1/2028(h) | 5,000,000 | ||||||||||
2,455,000 | Conservatory Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2003, 7.50% due 12/1/2027 | 2,613,863 | ||||||||||
3,725,000 | Conservatory Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2005, 6.75% due 12/1/2034 | 3,725,000 | ||||||||||
1,000,000 | Cornerstone Metropolitan District No. 1 Variable Rate Revenue Series 2006, 3.77% due 12/1/2036(h) | 1,000,000 | ||||||||||
1,025,000 | Cotton Ranch Metropolitan District G.O. Series 1998A, 7.25% due 12/15/2017 | 1,031,457 | ||||||||||
3,445,000 | Cotton Ranch Metropolitan District G.O. LTD Tax Refunding Series 1999A, 8.00% due 12/15/2017(h) | 3,444,655 | ||||||||||
2,100,000 | Cottonwood Water and Sanitation District G.O. (LTD Tax through 2000) Refunding Series 1996A, 7.60% due 12/1/2012 | 2,150,925 | ||||||||||
3,145,000 | Crested Butte Industrial Development Refunding and Improvement Revenue (Crested Butte Academy Project) Series 2006B, 7.50% due 8/15/2026 | 3,190,225 | ||||||||||
1,865,000 | Denver (City and County of) Subordinate Multifamily Housing Revenue (Capitol Heights Apartments) Series 1999C, 8.00% due 5/1/2032 | 1,492,000 |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — (Continued) | ||||||||||||
2,490,000 | Denver (City and County of) Single Family Home Mortgage Revenue (Metro Mayors Caucus Single Family Mortgage Bond Program) Series 2001A, 6.30% to yield 5.80% due 11/1/2032 | $ | 2,494,457 | |||||||||
13,280,000 | Denver (City and County of) Special Facilities Airport Revenue (United Airlines Project) Series 1992A, 6.875% due 10/1/2032(a) | 14,342,400 | ||||||||||
775,000 | Denver West Metropolitan District G.O. Series 1997B, 5.70% due 12/1/2017 | 783,292 | ||||||||||
405,000 | Eagle Riverview Affordable Housing Corporation Multifamily Housing Project Revenue Series 1999B, 7.00% due 7/1/2029 | 402,659 | ||||||||||
1,055,000 | Eaglebend Affordable Housing Corporation Multifamily Housing Project Revenue Refunding Series B, 7.40% due 7/1/2021 | 1,105,566 | ||||||||||
7,500,000 | East Cherry Creek Valley Water and Sanitation District Water Activity Enterprise, Inc. Variable Rate Water Revenue Series 2004, 3.00% due 11/15/2023(h) | 6,000,000 | ||||||||||
5,000,000 | Ebert Metropolitan District Securitization Trust Series 2004-S1, Class A2 Certificates 3.89% due 12/1/2034(h) | 5,000,000 | ||||||||||
1,725,000 | Ebert Metropolitan District Securitization Trust Series 2005-S1, Class A2 Certificates 3.89% due 12/1/2009(h) | 1,725,000 | ||||||||||
90,000 | El Paso County Powers Boulevard/ Drennan Road LID 1985-2 Special Assessment Refunding Series 1988, 8.875%-9.00% due 9/1/2000(a) | 9,000 | ||||||||||
1,149 | Equi-Mor Holdings, Inc. Series 1999A Class A Pass-Through Certificates, 7.50% due 4/5/2018 | 1,149 | ||||||||||
620,000 | Fort Lupton Golf Course Revenue Anticipation Warrants Senior Series 1996A, 8.50% due 12/15/2015(a) | 124,000 | ||||||||||
1,900,000 | Fronterra Village Metropolitan District Series 2001, 8.00% due 12/1/2021 | 1,957,000 | ||||||||||
4,550,000 | Fronterra Village Metropolitan District No. 2 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2003, 8.00% due 12/1/2023 | 4,732,000 | ||||||||||
500,000 | Galleria Metropolitan District G.O. LTD Tax Series 1999, 7.25% to yield 7.375% due 12/1/2019(b) | 553,435 | ||||||||||
920,000 | Gateway Village GID Subordinate LTD Tax G.O. Series 1999, 7.00% due 6/1/2019(b) | 962,706 | ||||||||||
955,000 | Gateway Village GID G.O. Refunding and Improvement Series 1998, 6.00% due 12/1/2018(b) | 990,803 | ||||||||||
795,000 | Gateway Village GID G.O. Refunding and Improvement Series 1998, 6.00% due 12/1/2018 | 777,494 | ||||||||||
2,000,000 | Granby Ranch Metropolitan District LTD Tax G.O. Series 2006, 6.75% due 12/1/2036 | 2,036,800 |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — (Continued) | ||||||||||||
5,750,000 | Grand Elk Ranch GID LTD Tax G.O. Series 2003, 8.00% due 12/1/2023 | $ | 5,796,863 | |||||||||
705,000 | Greatrock North Water and Sanitation District LTD Tax G.O. Series 1998, 8.00% due 12/1/2017 | 714,306 | ||||||||||
1,000,000 | High Plains Metropolitan District LTD Tax (Convertible to Unlimited Tax) G.O. Series 2005A, 6.125% to yield 6.25% due 12/1/2025 | 985,550 | ||||||||||
135,000 | Idledale Fire Protection District G.O. Series 1993, 5.65%-5.80% due 12/15/2006-07 | 135,385 | ||||||||||
165,000 | Las Animas (City of) G.O. Water Series 1989, 8.60% due 12/1/2009 | 167,566 | ||||||||||
585,000 | Littleton (The) Riverfront Authority Tax Increment Revenue Refunding Series 1999A-1, 8.00% due 12/1/2008 | 591,599 | ||||||||||
6,245,000 | Maher Ranch Metropolitan District No. 4 G.O. LTD Tax Series 2003, 7.80% due 12/1/2027 | 6,557,250 | ||||||||||
1,945,000 | Maher Ranch Metropolitan District No. 4 G.O. LTD Tax Series 2006, 7.00% due 12/1/2036 | 1,977,598 | ||||||||||
10,045,000 | Moffat County Weekly Adjustable/ Fixed Rate Pollution Control Revenue Refunding (Colorado-Ute Electric Association, Inc. Project) Tri-State Generation and Transmission Series 1984, 3.75% due 7/1/2010(h) | 10,045,000 | ||||||||||
260,000 | Mount Carbon Metropolitan District LTD Tax and Revenue Refunding Series 2004A, 7.00% due 6/1/2043 | 263,500 | ||||||||||
2,000,000 | Mount Carbon Metropolitan District LTD Tax and Revenue Refunding Series 2004B, 7.00% due 6/1/2043 | 2,026,920 | ||||||||||
565,000 | Mount Carbon Metropolitan District LTD Tax and Revenue Refunding Series 2004C, 8.00% due 6/1/2043(e) | 40 | ||||||||||
1,500,000 | Neu Towne Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2004, 7.20% due 12/1/2023 | 1,500,000 | ||||||||||
1,275,000 | North Pines Metropolitan District G.O. LTD Tax Series 2000, 9.00% due 12/1/2020 | 1,309,731 | ||||||||||
2,785,000 | North Range Village Metropolitan District G.O. LTD Tax Series 2000, 8.00% due 12/1/2020 | 2,862,618 | ||||||||||
1,365,000 | North Range Village Metropolitan District G.O. LTD Tax Series 2001, 4.9%-8.5% currently 8.30% due 12/1/2021(h) | 1,518,563 | ||||||||||
1,000,000 | Northwest Metropolitan District No. 3 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2005, 6.125% due 12/1/2025 | 1,059,980 | ||||||||||
1,520,000 | Parker Jordan Metropolitan District G.O. Series 1998A, 6.25% due 12/1/2017(b) | 1,589,586 |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — (Continued) | ||||||||||||
4,450,000 | Parker Jordan Metropolitan District G.O. Series 2000, 7.25% to yield 7.375% due 12/1/2019(b) | $ | 4,936,118 | |||||||||
5,940,000 | Rendezvous Residential Metropolitan District G.O. LTD Tax Series 2002, 8.00% due 12/1/2021 | 6,058,800 | ||||||||||
11,375,000 | Revenue Bond Certificate Series Trust 2004-1 Senior Certificates of Beneficial Ownership (Castlegate I Apartments) 4.14% due 1/1/2028(h) | 11,375,000 | ||||||||||
3,100,000 | Revenue Bond Certificate Series Trust 2004-13 Senior Certificates of Beneficial Ownership (Centennial East Apartments Project) 3.99% due 12/1/2033(h) | 3,100,000 | ||||||||||
970,000 | Riverdale Peaks II Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2005, 6.40% due 12/1/2025 | 1,024,262 | ||||||||||
1,135,000 | Riverdale Peaks II Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2005, 6.50% due 12/1/2035 | 1,196,562 | ||||||||||
1,375,000 | Routt County LID No. 2002-1 Special Assessment Series 2004A, 6.50% to yield 6.59% due 8/1/2024 | 1,372,113 | ||||||||||
148,147 | Roxborough Village Metropolitan District Series 1993A, 9.00% due 12/31/2016(i) | 149,111 | ||||||||||
335,834 | Roxborough Village Metropolitan District Series 1993B, principal only, 0.00% due 12/31/2021(e)(i) | 179,507 | ||||||||||
367,251 | Roxborough Village Metropolitan District Series 1993B, interest only, 10.41% due 12/31/2042(f)(i) | 56,924 | ||||||||||
1,975,000 | Sand Creek Metropolitan District G.O. LTD Tax Series 1997, 7.125% due 12/1/2016 | 2,085,027 | ||||||||||
840,000 | Sand Creek Metropolitan District G.O. LTD Tax Series 1998, 6.625% due 12/1/2017(b) | 894,533 | ||||||||||
2,000,000 | Serenity Ridge Metropolitan District No. 2 Series 2004, 7.375% due 12/1/2024 | 2,000,000 | ||||||||||
1,285,000 | Sheridan (City of) G.O. Series 1997, 7.50% due 12/1/2016 | 1,325,657 | ||||||||||
3,750,000 | Solitude Metropolitan District Senior G.O. LTD Tax Series 2006, 7.00% due 12/1/2026 | 3,750,000 | ||||||||||
510,000 | Southlands Metropolitan District No. 1 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2004, 6.75% to yield 6.80% due 12/1/2016 | 562,397 | ||||||||||
1,000,000 | Southlands Metropolitan District No. 1 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2004, 7.00% to yield 7.05% due 12/1/2024 | 1,104,490 | ||||||||||
2,000,000 | Southlands Metropolitan District No. 1 (LTD Tax Convertible to Unlimited Tax) Series 2004, 7.125% to yield 7.18% due 12/1/2034 | 2,211,420 |
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Face Amount | Market Value | |||||||||||
Colorado Municipal Bonds — (Continued) | ||||||||||||
1,000,000 | Southpark Metropolitan District G.O. Refunding Series 1996, 6.60% to yield 6.75% due 12/1/2013 | $ | 1,004,620 | |||||||||
1,845,000 | Sterling Hills Metropolitan District G.O. LTD Tax Refunding and Improvement Series 1998, 7.75% due 6/1/2018 | 1,909,095 | ||||||||||
3,225,000 | Sterling Hills West Metropolitan District G.O. Exchange (LTD Tax Convertible to Unlimited Tax) Series 2001A, 8.00% due 12/1/2019 | 3,392,249 | ||||||||||
3,315,000 | Sterling Hills West Metropolitan District G.O. (LTD Tax Convertible to Unlimited Tax) Series 2001B, 8.00% due 12/1/2021 | 3,561,371 | ||||||||||
3,012,007 | Sterling Hills West Metropolitan District G.O. LTD Tax Series 2004, 7.50% due 12/1/2021 | 2,644,301 | ||||||||||
4,210,000 | Tabernash Meadows Water and Sanitation District G.O. Series 2000, 8.40% due 6/1/2020 | 3,157,500 | ||||||||||
1,570,000 | Todd Creek Farms Metropolitan District No. 2 LTD Tax G.O. Series 1997, 8.00% due 6/1/2017(b) | 1,632,455 | ||||||||||
905,000 | Todd Creek Farms Metropolitan District No. 2 LTD Tax G.O. Series 1999, 7.50% due 12/1/2018(b) | 936,937 | ||||||||||
5,500,000 | Triview Metropolitan District G.O. Variable Rate Refunding and Improvement Series 2006A, 3.70% due 11/1/2023(h) | 5,500,000 | ||||||||||
12,185,000 | United Water & Sanitation District Revenue Refunding and Improvement Series 2004A, 6.00% due 12/1/2013 | 12,185,000 | ||||||||||
10,800,000 | United Water & Sanitation District Revenue Series 2004B, 6.00% to yield 6.05% due 12/1/2012 | 10,945,800 | ||||||||||
20,400,000 | United Water & Sanitation District (Lupton Lakes Water Storage Project and Water Activity Enterprise) Revenue Bonds, Series 2006 6.00% due 3/1/2021 | 20,400,000 | ||||||||||
500,000 | Wheatlands Metropolitan District No. 2 G.O. (LTD Tax Convertible to Unlimited Tax) Series 2005, 6.00% due 12/1/2025 | 515,955 | ||||||||||
500,000 | Wyndham Hill Metropolitan District No. 2 G.O. LTD Tax Series 2005, 6.25% due 12/1/2025 | 522,655 | ||||||||||
Total Colorado Municipal Bonds (cost $351,693,624) | $ | 363,288,426 | ||||||||||
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Face Amount | Market Value | |||||||||||
Colorado Capital Appreciation and Zero Coupon — 8.7% | ||||||||||||
28,835,000 | Bromley Park Metropolitan District No. 3 Subordinate LTD Tax G.O. Capital Appreciation Series 2006, 8.00% due 12/15/2031(d) | $ | 4,189,149 | |||||||||
520,000 | Colorado Health Facilities Authority Zero Coupon Retirement Housing Revenue (Liberty Heights Project) 1990 Subordinate Series B, 6.97% due 7/15/2020(b)(d) | 288,371 | ||||||||||
18,719,663 | Cottonwood Water and Sanitation District G.O. Second Lien (LTD Tax Through 2001) Refunding Series 1998A, Capital Appreciation 8.00% due 12/1/2027(d) | 3,845,206 | ||||||||||
500,000 | El Paso County School District No. 20 G.O. Refunding Series 1993A, Zero Coupon 6.10% due 6/15/2008(d) | 469,320 | ||||||||||
8,005,000 | McKay Landing Metropolitan District No. 2 Subordinate G.O. LTD Tax Refunding Series 2004B, Capital Appreciation 7.50% due 12/1/2031(d) | 1,452,827 | ||||||||||
19,500,000 | PV Water and Sanitation Metropolitan District Capital Appreciation Revenue Series 2006, 6.00% due 12/15/2017(d) | 10,163,595 | ||||||||||
906,622 | Roxborough Village Metropolitan District Series 1993C, 9.84% due 12/31/2032(d)(i) | 18,132 | ||||||||||
9,415,000 | Silver Peaks Metropolitan District No. 1 Revenue Series 2003, 8.00% due 12/1/2006-2012(d) | 7,433,304 | ||||||||||
13,910,000 | United Water & Sanitation District Ravenna Project Water Activity Enterprise Capital Appreciation Revenue Series 2006, 6.50% due 12/15/2011(d) | 10,042,742 | ||||||||||
Total Colorado Capital Appreciation and Zero Coupon Bonds (cost $42,182,799) | $ | 37,902,646 | ||||||||||
Colorado Certificates of Participation — 0.2% | ||||||||||||
75,000 | Arapahoe County Recreation District Refunding Certificates of Participation Series 1996, 5.20% due 12/1/2006 | $ | 75,204 | |||||||||
600,000 | Eagle-Vail Metropolitan District Building Authority (Golf Course Project) Series 1999, 6.00% due 12/1/2019 | 609,528 | ||||||||||
Total Colorado Certificates of Participation Bonds (cost $602,330) | $ | 684,732 | ||||||||||
Other Municipal Bonds — 7.1% | ||||||||||||
3,740,000 | Class B Revenue Bond Certificate Series Trust 2004-1 Variable Rate Senior Certificates of Beneficial Ownership, 3.99% due 7/1/2037(h) | $ | 3,740,000 |
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Face Amount | Market Value | |||||||||||
Other Municipal Bonds — (Continued) | ||||||||||||
4,932,269 | Freddie Mac Multifamily Variable Rate Certificates Series M001 Class B, 15.25% due 4/1/2037(g) | $ | 4,932,269 | |||||||||
4,000,000 | The Industrial Development Authority of the City of Kansas City, Missouri Subordinate Senior Housing Revenue (The Residences at West Paseo Project) Series 2004B, 4.50% due 1/1/2007 | 4,000,000 | ||||||||||
700,000 | The Industrial Development Authority of the City of Kansas City, Missouri Multifamily Housing Revenue (Alexandria Apartments) Series 2005A, 6.75% due 1/1/2028 | 701,330 | ||||||||||
3,300,000 | The Industrial Development Authority of the City of Kansas City, Missouri Subordinate Multifamily Housing Revenue (Alexandria Apartments) Series 2005B, 4.50% due 1/1/2008 | 3,299,406 | ||||||||||
525,000 | Lisbon (City of) North Dakota Industrial Revenue Series 2002C (Harvest Board LLC), 15.00% due 4/1/2005(a) | 131,250 | ||||||||||
4,500,000 | Lisbon (City of) North Dakota Industrial Revenue Series 2001A (Harvest Board LLC), 15.00% due 4/1/2011(a) | 1,125,000 | ||||||||||
7,715,000 | Revenue Bond Certificate Series Trust 2005-4 Senior Certificates of Beneficial Ownership (Hermitage Apartments Project), 3.99% due 5/1/2031(h) | 7,715,000 | ||||||||||
1,000,000 | The Industrial Development Authority of the City of St. Louis, Missouri Senior Housing Revenue (Grant School Apartments) Series 2005A, 6.75% due 5/1/2027 | 1,011,980 | ||||||||||
3,900,000 | The Industrial Development Authority of the City of St. Louis, Missouri Subordinate Senior Housing Revenue (Grant School Apartments) Series 2005B, 4.50% due 11/1/2006 | 3,899,961 | ||||||||||
Total Other Municipal Bonds (cost $34,312,269) | $ | 30,556,196 | ||||||||||
Colorado Taxable Notes — 0% | ||||||||||||
227,347 | Note receivable from Tabernash Meadows, LLC, A Colorado Limited Liability Company, 24.00% due 2/09/2002(a) | $ | 227,347 | |||||||||
Total Colorado Taxable Notes (cost $227,347) | $ | 227,347 | ||||||||||
Total investments, at value (cost $429,018,369) | 98.2 | % | $ | 432,659,347 | ||||||||
Other assets net of liabilities | 1.8 | 7,903,629 | ||||||||||
Net assets | 100.0 | % | $ | 440,562,976 | ||||||||
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(a) | Non-income producing based upon the financial condition of the issuer (see footnote 1 to notes to financial statements). | |
(b) | Originally issued as general obligation bonds but are now pre-refunded and are secured by an escrow fund consisting entirely of direct U.S. Government obligations. | |
(c) | Represents interest certificates whose characteristics are similar to zero coupon bonds. All interest based on the coupon rate is remitted upon maturity. Interest rate shown for interest certificates represents effective yield at acquisition. At September 30, 2006, the Fund had no such investments. | |
(d) | Interest rate shown for zero coupon bonds represents the effective yield at the date of acquisition. | |
(e) | Principal-only certificate represents the right to receive the principal payments on the underlying debt security upon maturity. The price of this security is typically more volatile than that of coupon-bearing bonds of the same maturity. | |
(f) | Interest-only certificate represents the right to receive semi-annual interest payments on the underlying debt security. The principal amount of the underlying security represents the notional amount on which current interest is calculated. The interest rate shown represents the effective yield at the date of acquisition. | |
(g) | Interest rate disclosed for cash flow bond represents the effective yield at September 30, 2006. Income on this security is derived from the cash flow of the issuer. | |
(h) | Represents current interest rate for a variable/step rate bond. | |
(i) | Terms of security have been restructured since the original issuance. The total face amount of all such restructured securities approximates $12,806,371 and a market value of $1,729,545 or less than 1% of net assets, respectively, as of September 30, 2006. |
The following abbreviations are used in the descriptions of securities included in the Schedule of Investments: | |
G.O. — General Obligation | |
GID — General Improvement District | |
LID — Local Improvement District | |
LTD — Limited | |
See accompanying notes to financial statements. |
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ASSETS | |||||
Investments, at fair value (cost $429,018,369) | $ | 432,659,347 | |||
— see accompanying statement | |||||
Cash | 4,469,614 | ||||
Interest receivable | 8,772,228 | ||||
Shares of beneficial interest sold | 1,303,562 | ||||
TOTAL ASSETS | 447,204,751 | ||||
LIABILITIES | |||||
Payables and other liabilities: | |||||
Dividends payable | 939,719 | ||||
Shares of beneficial interest redeemed | 20,867 | ||||
Accrued expenses | 181,189 | ||||
Payable for investment securities purchased | 5,500,000 | ||||
TOTAL LIABILITIES | 6,641,775 | ||||
NET ASSETS, AT FAIR VALUE | $ | 440,562,976 | |||
COMPOSITION OF NET ASSETS | |||||
Paid-in capital | $ | 437,503,965 | |||
Accumulated distributions in excess of net investment income | (581,967 | ) | |||
Net unrealized appreciation of investments (note 3) | 3,640,978 | ||||
NET ASSETS, AT FAIR VALUE | $ | 440,562,976 | |||
NET ASSET PRICE AND REDEMPTION PRICE PER SHARE (based on 46,626,204 shares of beneficial interest outstanding at September 30, 2006, unlimited number of no par value shares authorized) | $ | 9.45 | |||
MAXIMUM OFFERING PRICE PER SHARE (net asset value plus sales charge of 4.75% of offering price) | $ | 9.92 | |||
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INVESTMENT INCOME | ||||||
Interest | $ | 22,114,623 | ||||
EXPENSES | ||||||
Management fees (note 4) | 2,014,160 | |||||
Custodian fees (note 5) | 82,716 | |||||
Legal and auditing fees | 99,215 | |||||
Portfolio pricing fees (note 5) | 15,652 | |||||
Registration fees | 9,040 | |||||
Shareholders’ reports | 98,781 | |||||
Transfer agency expenses (note 4) | 93,262 | |||||
Trustees’ fees | 3,209 | |||||
Other | 15,757 | |||||
Total expenses | 2,431,792 | |||||
Earnings credits on cash balances (note 5) | (160,040 | ) | ||||
Net expenses | 2,271,752 | |||||
NET INVESTMENT INCOME | 19,842,871 | |||||
REALIZED AND UNREALIZED GAIN ON INVESTMENTS | ||||||
Realized net gain on investments | 3,257 | |||||
Change in net unrealized appreciation/depreciation on investments | 2,765,643 | |||||
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS | 2,768,900 | |||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ | 22,611,771 | ||||
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Year Ended | Year Ended | |||||||||
September 30, | September 30, | |||||||||
2006 | 2005 | |||||||||
FROM OPERATIONS: | ||||||||||
Net investment income | $ | 19,842,871 | $ | 17,323,700 | ||||||
Realized net gain on investments | 3,257 | 635,219 | ||||||||
Change in unrealized appreciation/depreciation on investments | 2,765,643 | 2,016,338 | ||||||||
Net increase in net assets resulting from operations | 22,611,771 | 19,975,257 | ||||||||
FROM DISTRIBUTIONS TO SHAREHOLDERS: | ||||||||||
Dividends to shareholders from net investment income | (19,842,871 | ) | (17,323,700 | ) | ||||||
Distributions in excess of net investment income | (587,743 | ) | — | |||||||
Realized capital gain and ordinary income | (354,059 | ) | (331,324 | ) | ||||||
Total distributions to shareholders | (20,784,673 | ) | (17,655,024 | ) | ||||||
FROM BENEFICIAL INTEREST TRANSACTIONS: | ||||||||||
Proceeds from sale of shares | 98,061,711 | 73,843,879 | ||||||||
Dividends reinvested | 13,000,474 | 10,441,279 | ||||||||
Payments for shares redeemed | (40,755,502 | ) | (30,826,825 | ) | ||||||
Increase in net assets derived from beneficial interest transactions | 70,306,683 | 53,458,333 | ||||||||
Net increase in net assets | 72,133,781 | 55,778,566 | ||||||||
NET ASSETS: | ||||||||||
Beginning of period | 368,429,195 | 312,650,629 | ||||||||
End of period | $ | 440,562,976 | $ | 368,429,195 | ||||||
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For Fiscal Years Ended September 30, | |||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | |||||||||||||||||
Per Share Operating Data: | |||||||||||||||||||||
Net Asset Value, beginning of period | $ | 9.41 | $ | 9.35 | $ | 9.27 | $ | 9.33 | $ | 9.39 | |||||||||||
Net investment income | 0.47 | 0.48 | 0.47 | 0.60 | 0.59 | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.06 | 0.07 | 0.08 | (0.06 | ) | (0.06 | ) | ||||||||||||||
Increase from investment operations | 0.53 | 0.55 | 0.55 | 0.54 | 0.53 | ||||||||||||||||
Dividends to shareholders from net investment income | (0.47 | ) | (0.48 | ) | (0.47 | ) | (0.60 | ) | (0.59 | ) | |||||||||||
Distributions in excess of net investment income | (0.01 | ) | — | — | — | — | |||||||||||||||
Realized capital gains and ordinary income | (0.01 | ) | (0.01 | ) | 0.00 | 0.00 | 0.00 | ||||||||||||||
Net increase (decrease) in net asset value | 0.04 | 0.06 | 0.08 | (0.06 | ) | (0.06 | ) | ||||||||||||||
Net Asset Value, end of period | $ | 9.45 | $ | 9.41 | $ | 9.35 | $ | 9.27 | $ | 9.33 | |||||||||||
Total Return, at Net Asset Value(1) | 5.72 | % | 6.14 | % | 6.19 | % | 5.96 | % | 5.90 | % | |||||||||||
Ratios/ Supplemental Data: | |||||||||||||||||||||
Net investment income | 4.97 | % | 5.10 | % | 5.08 | % | 6.46 | % | 6.77 | % | |||||||||||
Total expenses | 0.61 | % | 0.58 | % | 0.63 | % | 0.65 | % | 0.64 | % | |||||||||||
Net expenses | 0.57 | % | 0.55 | % | 0.60 | % | 0.61 | % | 0.59 | % | |||||||||||
Net assets, end of period (000s) | $ | 440,563 | $ | 368,429 | $ | 312,651 | $ | 267,207 | $ | 201,051 | |||||||||||
Ratios to average net assets: | |||||||||||||||||||||
Portfolio turnover rate(2) | 5.27 | % | 4.40 | % | 2.57 | % | 4.65 | % | 6.03 | % | |||||||||||
(1) | Assumes a hypothetical initial investment on the business day before the first day of the fiscal period, with all dividends reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. |
(2) | The portfolio turnover rate is computed by dividing the lesser of purchases or sales of portfolio securities for a period by the monthly average of the market value of portfolio securities owned during the period. Sales of securities include the proceeds of securities which have been called, or for which payment has been made through redemption or maturity. Securities with a maturity date of one year or less at the time of acquisition are excluded from the calculation. Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) for the period September 30, 2006 were $72,209,183 and $11,967,118, respectively. |
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(1) | Summary of Significant Accounting Policies |
(a) | Investment Valuation |
(b) | Income Taxes |
21
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(d) | Uses of Estimates |
(e) | Classification of Distributions to Shareholders |
(f) | New Accounting Pronouncement |
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(2) | Shares of Beneficial Interest |
2006 | 2005 | |||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||
Shares sold | 10,423,444 | $ | 98,061,711 | 7,873,185 | $ | 73,843,880 | ||||||||||
Dividends reinvested | 1,382,357 | 13,000,474 | 1,113,420 | 10,441,279 | ||||||||||||
11,805,801 | 111,062,185 | 8,986,605 | 84,285,159 | |||||||||||||
Shares redeemed | (4,333,243 | ) | (40,755,502 | ) | (3,286,316 | ) | (30,826,825 | ) | ||||||||
Net increase in shares outstanding | 7,472,558 | $ | 70,306,683 | 5,700,289 | $ | 53,458,334 | ||||||||||
(3) | Unrealized Gains and Losses |
(4) | Management Fees and Other Transactions with Affiliates |
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(5) | Earnings Credits on Cash Balances |
24
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Officers and Trustees | Principal Occupation During the Past Five Years: | |
Chairman of the Board | ||
George N. Donnelly Chairman of the Board of Trustees since inception of the Fund 1987 | Mr. Donnelly is currently a Senior Regional Vice President for Phoenix Life Insurance Company. | |
Independent Trustees | ||
Bruce G. Ely Trustee since July 2002 | Mr. Ely is currently the Regional Marketing Director for MBIA Municipal Investors Service Corporation in Colorado. | |
James R. Madden Trustee since September 2004 | Mr. Madden has owned Madden Enterprises, a real estate company that owns and leases commercial buildings and real estate, for the past thirty years. | |
Officer and Trustee1 Andrew B. Shaffer1 Trustee, Secretary and Treasurer since June 1995 and President since January 2003 | Mr. Shaffer is the manager of Shaffer Capital Management/ LLC. 1Andrew B. Shaffer is an “interested person” of the Fund as defined in the Investment Company Act of 1940 (the “1940 Act”) by virtue of his position as both an officer and a trustee of the Fund as described in the table. |
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ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics (as defined in Item 2 of Form N-CSR), that applies to its President and Treasurer.
(c) There have been no amendments to the code of ethics during the period covered by this report.
(d) The registrant has not granted, during the period covered by this report, any waivers, including an implicit waiver from the code of ethics.
(f)(3) A copy of the registrant’s code of ethics is available upon request and without charge by calling or writing the registrant at 1200 Seventeenth Street, Suite 850, Denver, Colorado 80202, telephone (303) 572-6990 or (800) 572-0069 (outside Denver).
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a) The registrant’s board of trustees has determined that the registrant does not have an “audit committee financial expert” serving on its audit committee as the Securities and Exchange Commission defines that term. The board of trustees which serves as the audit committee is composed of individuals who, in the aggregate possess experience evaluating audits, understand generally accepted accounting principles have experience evaluating financial statements and understand internal control over financial reporting and the audit committee function; however no single individual appears to meet all of the independence and the financial training/experience qualifications outlined in the instructions to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The aggregate fees billed by the registrant’s independent registered public accountant firm, for professional services in the registrant’s fiscal years ended September 30, 2006 and 2005 are as follows:
2006 | 2005 | |||||||
(a) Audit Fees | $ | 33,973 | $ | 33,184 | ||||
(b) Audit-Related Fees | $ | 0 | $ | 0 | ||||
(c) Tax Fees | $ | 0 | $ | 0 | ||||
(d) Other Fees | $ | 0 | $ | 0 |
(e)(1) The board of trustees serves as the audit committee pre-approves all audit and non-audit services to be provided by the registrant’s independent registered public accounting firm.
(e)(2) Not applicable.
(f) Not applicable.
(g) No non-audit fees were billed by the registrant’s independent registered public accounting firm for services rendered to the registrant and the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for the fiscal years ended September 30, 2006 and 2005.
(h) The registrant’s audit committee has considered whether the provision of non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, is compatible with maintaining the independent registered public accounting firm’s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant has not adopted procedures by which shareholders may recommend nominees to the registrant’s board of trustees.
ITEM 11. CONTROLS AND PROCEDURES.
ITEM 12. EXHIBITS.
(a)(2)(i) | President & Treasurer’s (Principal Executive Officer and Principal Financial Officer) Section 302 certification | |
(b) | Combined Section 906 certification |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) | Colorado BondShares A Tax-Exempt Fund | |
By (Signature and Title) | /s/ Andrew B. Shaffer | |
Andrew B. Shaffer | ||
President, Secretary and Treasurer |
Date: | December 11, 2006 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Andrew B. Shaffer | ||
Andrew B. Shaffer, | ||
President, Secretary and Treasurer | ||
(Principal Executive Officer and | ||
Principal Financial Officer) | ||
Date: December 11, 2006 |