N-CSR

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 its 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

Date of reporting period: 09/30/2018

Table of Contents

ITEM 1.	REPORTS TO STOCKHOLDERS
ITEM 2.	CODE OF ETHICS
ITEM 3.	AUDIT COMMITTEE FINANCIAL EXPERT
ITEM 4.	PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 5.	AUDIT COMMITTEE OF LISTED REGISTRANTS
ITEM 6.	INVESTMENTS
ITEM 7.	DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
ITEM 8.	PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
ITEM 9.	PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS
ITEM 10.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 11.	CONTROLS AND PROCEDURES
ITEM 12.	DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES
ITEM 13.	EXHIBITS
	(a)(2)(i)
	(99.302) Interim President’s (Principal Executive Officer) Section 302 Certification
	(a)(2)(ii)
	(99.302) Interim Treasurer’s (Principal Financial Officer) Section 302 Certification
	(a)(4)(i)  Change in Independent Registered Public Accounting Firm
	(a)(4)(ii) EKS&H Letter to Securities and Exchange Commission
	(b)
	(99.906) Combined Interim President & Treasurer (Principal Executive Officer and Principal Financial Officer)                Section 906 Certification

ITEM 1. REPORTS TO STOCKHOLDERS.

November 20, 2018

Dear Shareholders:

Gridlock is good for the system. After digesting the results of the mid-term election, I am of the opinion that what happened may be ok; for bonds at least. Many have been fighting back the gut-aching feeling that if the economy got too healthy, this might conceivably lead to inflation pressures. This could, in turn, prompt the Federal Reserve to increase rates even more than the current projections of one more this year and up to four in 2019. This was not a particularly rosy prognosis for fixed income instruments but maybe that analysis has changed. For now, it appears that a more likely scenario is that the next two years will be spent in mortal combat and political dissidence involving all three branches of government, giving the Federal Reserve a reason to moderate. In addition, it appears that other economies around the world are decelerating rather than accelerating, as previously predicted.

With a main event like political bickering, it appears quite unlikely that anything else of major consequence gets done. How is that so bad if we understand the rules as they stand and are not left guessing about what may be on the horizon? Maybe the country maintains the status quo for at least a couple more years. And the status quo is not all that bad. Colorado is doing very well. Virtually everyone who wants a job, has one. Some may well be under-employed but at least they can put food on the table. The U.S. is by far the most vibrant economy on the globe and the dollar, though strong, may be peaking. This should lead to greater demand for U.S. products, particularly if trade talks prove successful.

It appears unlikely, now, that an additional tax measure will pass so no new additions to the deficit. Healthcare and immigration legislation are doomed so unemployment remains low and premiums are hopefully predictable. Any compromise infrastructure bill that passes will likely be watered down from what was originally conceived. Fewer bonds being issued at the federal level, probably puts less downward pressure on the bond market and might even spark a rally.

Given these observations, I feel more comfortable about committing some, not all, of your funds to new projects thereby garnering more income in an attempt to raise the dividend. Halleluiah! We will also be distributing a capital gain dividend to you in December which will amount to approximately $0.06/share. This amount is already reflected in the share price so do your tax planning accordingly and do not be surprised when the shares go down in price by the exact amount of the capital gain distribution. This happens automatically as a balance sheet adjustment when the already accrued distributions are paid.

Last year, I facetiously promised to try and do better to improve on our #1 rating (as computed by Thomson Reuters Lipper) among our peer group. Given that, once again, we were ranked #1 by the same service, I failed to top it but we will settle for a tie with last year.

Please review the accompanying information for a detailed view of the 2018 fiscal year. No matter how the coming year turns out, one thing is true. Our shareholders always come first with us. So, look for us to keep endeavoring on your behalf to make the most of what we have. What we have is a portfolio of strong earning assets with above average liquidity located in a dynamic state and an incomparable group of investors. Thank you all!

Sincerely,

Fred R. Kelly, Jr.

Portfolio Manager

Officers and Trustees

George N. Donnelly, Chairman of the Board of Trustees, Interim President, Secretary, Treasurer and Trustee

Bruce G. Ely, Trustee

James R. Madden, Trustee

Fred R. Kelly, Jr., Portfolio Manager

Investment Adviser

Freedom Funds Management Company

Transfer, Shareholder Servicing, and Dividend Disbursing Agent

Freedom Funds Management Company

Distributor

Colorado Financial Service Corporation

Custodian of Portfolio Securities

UMB Bank, N.A.

Independent Registered Public Accounting Firm

Plante & Moran, PLLC

Special Legal Counsel

Kutak Rock LLP

This report is submitted for the general information of the shareholders of Colorado BondShares — A Tax-Exempt Fund. This report must be preceded or accompanied by a Prospectus of the Fund. The prospectus contains information concerning the investment policies and expenses of the portfolio in addition to other pertinent information. Shares of Colorado BondShares — A Tax-Exempt Fund are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency, and involve investment risks, including possible loss of the principal amount invested.

FEDERAL INCOME TAX INFORMATION

(unaudited)

The Fund hereby designates the following amount for the Fund’s fiscal year ended September 30, 2018:

Exempt interest dividends: 94.14%

In early 2019, shareholders will receive information regarding all dividends and distributions paid to them by the Fund during calendar year 2018. Regulations of the U.S. Treasury Department require the Fund to report this information to the Internal Revenue Service.

Individual shareholders should refer to their Form 1099s or other tax information to determine the calendar year amounts to be included on their 2018 tax returns. Shareholders should consult their tax advisers.

MANAGEMENT’S DISCUSSION OF FUND PERFORMANCE

The US economy has continued to strengthen on the heels of strong labor force participation, rising incomes and consumer spending (partly fueled by the Tax Cuts and Jobs Act). GDP beat forecasts in third quarter 2018 at 3.5%, down slightly from 4.2% in second quarter. All of this promises to record one of the longest economic expansions in US history. This is all somewhat tempered by inflation concerns and rising trade tensions amid current trade war negotiations. It is our belief that there will be resolution around the trade issues before too long.

The Colorado economy remains one of the strongest in the country and continues to show positive markers for continued expansion, albeit at a slower pace than prior years, suggesting we are coming to a more mature stage of the business cycle. In past years, Colorado’s strong labor market has been a significant component of our robust economy. This remains true in 2018 and the near future. Partnered with consumer spending and new job opportunities, the state has one of the lowest unemployment rates in the nation. The Colorado Legislative Council September 2018 Economic and Review Forecast presented an interesting observation where the strong labor force counteracts “structural shifts” such as the increasing number of annual retirements. This aging generation, better known as the “Baby Boomers”, are estimated to be around 70 million nationwide.

Earlier this year, the FOMC (Federal Open Market Committee) stated that the labor market had continued to strengthen as had economic activity and, in keeping with that observation, they raised the target rate for federal funds twice in the first half of the year and once again in September. The Federal Reserve commented that economic activity “has been rising at a solid rate,” an upgrade from May of this year. They announced that they would likely raise rates one more time in 2018, bringing the total number of increases for the calendar year to four. Should those indicators maintain a consistent expansion into 2019, the Committee would expect to make further increases for calendar year 2019.

The municipal bond market is multifaceted in nature, lending complexity to an already challenging task of analyzing credit quality while weighing the risks that inevitably crop up in an economy such as ours. Municipal bonds persisted in strength again this year with issuances north of $280 billion year over year at the national level and roughly $10 billion for the state of Colorado. Prices generally trended higher punctuated by occasional corrective pressure from the Federal Reserve, seeking to temper the strong economy. During the 1st and 2nd quarter 2018, the Fund garnered additional capital gains and tax-exempt income through select refunding where original cost basis was low enough to effect substantial gains and interest income. Throughout the fiscal year period, the Fund experienced strong net cash inflows, as shareholders sought both tax-exempt income and relative safety when compared with other, more uncertain investments. Depending on their respective tax bracket, investors could capture appealing tax-equivalent yields, especially when compared to U.S. Treasuries or low yielding bank CDs. Given that the top marginal tax rate only went down to 40.8%, tax-exempt income becomes a fairly meaningful contribution to an individual’s portfolio. Additionally, individual state and local tax deductions from federal taxes are now limited to $10,000.

Experts estimate the state population to be around 5.68 million. Different sources estimate the growth rate over the next couple of years to somewhere in the vicinity of 1.37%. Assuming that growth rate, one could expect the population in the Denver Metro area to grow to around 6 million by 2020 and possibly 7.8 million by 2040. Over 80% of Colorado’s population reside in the 12 counties that make up the Front

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Range. Given those statistics and the fact that the majority of our special district bonds are located within the Front Range, Management is confident that our investments in these districts will continue to prosper.

The Denver housing market has experienced a slight dip in home sales over recent months, giving rise to speculation as to whether these are signs of a pervasive slower growth in the industry or a seasonal downshift. The more widely held perception is that this is more of a “normalizing” in stark contrast to the buying frenzy of the last several years. Much of the regional rhetoric being published on the subject points to several factors that have been the impetus behind the deceleration. The most obvious are the persistence of high home prices coupled with rising interest rates which, simply put, raise concerns among cautious buyers of how to cash flow their investment without significantly compromising their lifestyle. So, with higher home prices and more potential interest rate hikes, new home buyers and existing home owners looking to “move up” are at the mercy of two factors: price and borrowing costs, both of which can put pressure on potential future sales. The pushback has become evident recently in price reductions by sellers who no longer appear to be in the driver’s seat as in years past.

The housing industry plays a key role in the Colorado municipal bond industry because of its dramatic effect on taxable land. Therefore, it is encouraging to note that the state continues to experience net in-migration, strong wage and employment growth which subsequently creates demand for more housing. Third quarter 2018 data revealed existing home sales were “down 20% to 3,983 homes, the largest decline since 2010, for any month but year to date annual sales…still up from 2017” (Metrostudy, Denver Executive Summary, Third Quarter 2018). The median price for existing detached homes was $428,000.

Home prices, in general, are still high with the average price for new single family detached over $500,000, again contributing to the noticeably cooler attitude from prospective buyers. This has caused many builders to rethink their strategies and examine the challenge of committing to their upcoming building season in 2019, taking into account trade labor shortages and vacant lot availability and weighing those against their convictions that economists have correctly called the near future for Colorado. This has galvanized a number of them to shift their focus back to more affordable options within the $350,000 to $400,000 price range. This sector increased 5% in annual starts over last year. Supply for existing homes, as measured in months on the market, has remained below two months while lot supply is around 14.8 months, the lowest in over 18 years. New single family detached homes, townhomes and condominiums are around 10.6 months in aggregate. This is down from last quarter but unchanged from last year (Metrostudy, Denver Executive Summary, Third Quarter 2018).

To date, the positive still appears to outweigh the negative. However, this slowing trend has prompted some to believe that these factors are changing the way we view family formations. Forbes published an article (Forbes, August 27, 2018 “Are Millennials Killing The U.S. Housing Market” by Neil Howe) where Mr. Howe made some interesting observations. He remarked that in 1972, “America built twice as many houses even though our adult population back then was only 57% as large as it is today.” Mr. Howe pointed out that millennials have a more “group lifestyle” mentality, meaning they are more comfortable living at home with their parent or with their peers than pursuing the conventional paths of marriage and a home in suburbia. Some Baby Boomers, on the other hand, are electing to remain in their existing homes instead of opting for a downsized version. This could be in part because many are choosing to remain in the workforce longer and some have millennial children that are delaying moving out. This would explain part of the changing dynamic in the housing industry nationwide, as well as Colorado. Many would-be buyers are gravitating toward the townhome/duplex market while still others are remodeling their existing homes, which offers a more affordable option. Rents have continued to trend upward with one source citing an average of

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$1,610/month in the Denver metro area, an increase of 1.86% over last year (Rent Jungle). Going forward, we believe, rentals in the condo and townhome sector will continue to fill a need for those unable or unwilling to step into a hefty mortgage.

Charter schools have been great performers for the Fund over the years. Currently, there are over 7,000 charter schools in the United States with an enrollment of around 3.2 million students. Charter schools exist in 43 states plus the District of Columbia. Colorado’s charter school law was passed in 1993. Schools opened quickly and by fall of 2017 there were 250 schools with 120,700 students enrolled. At fiscal year-end, charter schools constituted 20% of the bonds in the portfolio.

The combination of relatively low interest rates and tight underwriting spreads have continued to put pressure on municipal bond funds to produce net positive returns for the year. Municipal bond mutual funds typically experience net cash inflows correlative with strong total return performance. Every month throughout the fiscal year, the Fund had net positive cash inflows. The Fund’s total return (principal appreciation plus income) performance record for fiscal year period ended 09/30/2018 was ranked #1 by Lipper when compared to peers in the single-state intermediate municipal bond fund category. This year’s results were highlighted by a number of positive events, some being the retirement of several bonds purchased in prior years at a deep discount with unpaid interest owed. The bonds were all paid off in full plus all accrued interest. For the fiscal year ended September 30, 2018, the Fund recorded a total return of 5.29% at net asset value; the return was comprised of an investment income component of 4.171% and principal depreciation of 1.009%. Some funds use leverage to enhance yields. The Fund did not use leverage. According to Thomson Reuters, the Fund has ranked #1 in the 1-year, 3-year and 5-year category. The average annual total returns at the maximum offering price (including sales charges and reinvestment of all dividends and distributions) are 0.28%, 3.11%, 3.96%, 4.01% for the one, three, five and ten-year periods ended September 30, 2018, respectively.

A key factor that has contributed to the Fund’s stability in the past and continues going forward is management’s determination to maintain a shorter average duration (time period that securities are likely to be held by the portfolio) which remains very competitive within our peer group. Throughout the year, the Fund carried a disproportionately high weighting of short-term bonds and cash in the portfolio, designed to lessen the exposure to market risk in a time when it appeared likely for interest rates to rise and spreads to widen. In the first part of the year, several Colorado issuers refinanced their higher coupon debt for bonds with significantly lower rates. This effectively reduced their annual debt service payments and simultaneously improved the financial health of their districts. Additionally, some issuers, again taking advantage of the lower borrowing costs, made the decision to embark on new projects that had been delayed during the credit crisis years earlier. Both scenarios resulted in more new deals that came to our Colorado market in 2018. While the strategy of buying short maturities helped to protect principal, it did not maximize the current income stream. Distributions of $0.38/share in fiscal year 2018 compared less favorably to $0.48/share in 2017 and $0.41/share in 2016. It is management’s philosophy that it is easier to recoup lost income than it is to recover principal losses. Until the risks posed by rising interest rates have abated, management will continue to exercise this methodology. Much of this year’s income may be attributed to longer term holdings being principally invested in not-rated tax-exempt bonds, with coupon rates that exceed average coupons currently available in the market. Not-rated securities are generally subject to greater credit risk than rated issues; but proper analysis by management may effectively mitigate these risks. It should be stated that past performance is not necessarily indicative of future performance, but it is one of many important factors to consider when evaluating a potential investment.

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PERFORMANCE SUMMARY (Unaudited)

COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN

COLORADO BONDSHARES⁽¹⁾

THE LIPPER GENERAL MUNICIPAL DEBT FUND INDEX⁽⁴⁾

AND THE BLOOMBERG BARCLAY MUNICIPAL BOND TOTAL RETURN INDEX⁽⁵⁾

(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.

* Fiscal year ended September 30, 2016 includes a principal write down of approximately $14.5 million due to an adverse decision by the Colorado State Court of Appeal on the Marin Metropolitan District bonds that is a non-recurring event outside of the control 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, 2018 are 0.28%, 3.96%, and 4.01%, respectively. Average annual total includes the imposition of the sales charge and assumes the reinvestment of all dividends and distributions. Past

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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.

(3) Includes reinvestment of dividends and adjustment for the maximum sales charge of 4.75%.

(4) The Lipper General Municipal Debt Fund Index is a non-weighted index of the 30 largest funds that invest at least 65% of assets in municipal debt issues in the top four credit ratings. The Lipper General Municipal Debt Fund Index reflects no deductions for fees, expenses or taxes, includes reinvestment of dividends but does not reflect any adjustment for sales charge.

(5) The Bloomberg Barclay Municipal Bond Total Return Index which replaced the Barclays Capital Municipal Bond Total Return Index (the “Barclay Index”) is considered representative of the broad market for investment grade, tax-exempt and fixed-rate bonds with long-term maturities (greater than two years) selected from issues larger than $50 million. You cannot invest directly in this index. This index is not professionally managed 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 Bloomberg Barclay 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 Bloomberg Barclay Index. Unlike the Fund which invests primarily in not rated securities on issues of any size, the Bloomberg Barclay 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 million. Some of these differences between the portfolio of the Fund and the securities represented by the Bloomberg Barclay Index may cause the performance of the Fund to differ from the performance of the Bloomberg Barclay Index.

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CREDIT QUALITY (unaudited)

Colorado BondShares — A Tax-Exempt Fund

Based on a Percentage of Total Net Assets as of September 30, 2018

SECTOR BREAKDOWN (unaudited)

Colorado BondShares — A Tax-Exempt Fund

Based on a Percentage of Total Net Assets as of September 30, 2018

* Cash & equivalents include cash and receivables less liabilities.

** Short-term investments include securities with a maturity date or redemption feature of one year or less, as identified in the Schedule of Investments.

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Officers and Trustees of the Fund

The following tables list the trustees and officers of the Fund, together with their address, age, positions held with the Fund, the term of each office held and the length of time served in each office, principal business occupations during the past five years and other directorships, if any, held by each trustee and officer. Each trustee and officer has served in that capacity for the Fund continuously since originally elected or appointed. The Board of Trustees supervises the business activities of the Fund. Each trustee serves as a trustee until termination of the Fund unless the trustee dies, resigns, retires, or is removed. The Statement of Additional Information of the Fund includes additional information about Fund trustees and is available, without charge, upon request. Shareholders may call (800) 572-0069 to request the Statement of Additional Information.

Name, Address and Age	Position held with the Fund and Length of Time Served	Principal Occupation During the Past Five Years:	Other Directorships Held By Director
Non-Interested Trustees
Bruce G. Ely 1200 17th Street, Suite 850 Denver CO 80202 Age: 67	Trustee since July 2002	Mr. Ely was a Regional Director for Cutwater Asset Management, a wholly owned subsidiary of MBIA, Inc., until his retirement in September 2013.	None
James R. Madden 1200 17th Street, Suite 850 Denver CO 80202 Age: 74	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. He is also a stockholder and director of The Community Bank in western Kansas. He has been a bank director for 25 years.	None
Interested Trustees*
George N. Donnelly 1200 17th Street, Suite 850 Denver CO 80202 Age: 71	Chairman of the Board of Trustees, Trustee since inception of the Fund in 1987 and Interim President, Secretary and Treasurer of the Fund since September 26, 2008	Mr. Donnelly was a Senior Regional Vice President for Phoenix Life Insurance Company until his retirement in January 2010.	None

*George N. Donnelly 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 above. None of the trustees nor the officers of the Fund have any position with the Investment Adviser, the principal underwriter of the Fund, the distribution agent of the Fund, the service agent of the Fund or the custodian of the Fund, or any affiliates thereof. There is no family relationship between any officers and trustees of the Fund.

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Compensation

The Board met four times during the fiscal year ended September 30, 2018. The following tables show the compensation paid by the Fund to each of the trustees during that year:

Name of Person, Position(s) with the Fund	Aggregate Compensation from Fund		Pension or Retirement Benefits Accrued As Part of Fund Expenses		Total Compensation from Fund Paid to Such Person
Non-Interested Trustees
Bruce G. Ely, Trustee	$	3,600		N/A	$	3,600
James R. Madden, Trustee		3,600		N/A		3,600
Interested Trustees
George N. Donnelly, Trustee, Interim President, Secretary and Treasurer		3,600		N/A		3,600

No officer or trustee of the Fund received remuneration from the Fund in excess of $60,000 for services to the Fund during the fiscal year ended September 30, 2018. The officers and trustees of the Fund, as a group, received $10,800 in compensation from the Fund for services to the Fund during the 2018 fiscal year.

Other Information

Proxy Voting Record

The Fund does not invest in equity securities. Accordingly, there were no matters relating to a portfolio security considered during the 12 months ended June 30, 2018 with respect to which the Fund was entitled to vote. Applicable regulations require us to inform you that the foregoing proxy voting information is available on the SEC website at http://www.sec.gov or you may call us at 1-800-572-0069.

Quarterly Statement of Investments

The Fund files a complete statement of investments with the Securities and Exchange Commission for the first and third quarters for each fiscal year on Form N-Q. Shareholders may view the filed Form N-Q by visiting the Commission’s website at http://www.sec.gov. The filed form may also be viewed and copied at the Commission’s Public Reference Room in Washington, DC. Information regarding the operations of the Public Reference Room may be obtained by calling 1-800-732-0330 or you may call us at 1-800-572-0069.

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Trustees Approve Advisory Agreement

The Board of Trustees (the “Trustees”) of Colorado BondShares — A Tax-Exempt Fund unanimously approved the continuance of the Fund’s Investment Advisory and Service Agreement with Freedom Funds Management Company (“Freedom Funds”) at a meeting held on September 28, 2018. In approving the Advisory Agreement, the Trustees, including the disinterested trustees, considered the reasonableness of the advisory fee in light of the extent and quality of the advisory services provided and any additional benefits received by Freedom Funds or its affiliates in connection with providing services to the Fund, compared the fees charged by Freedom Funds to those paid by similar funds, and analyzed the expenses incurred by Freedom Funds with respect to the Fund. The Trustees also considered the Fund’s performance relative to a selected peer group, the expense ratio of the Fund in comparison to other funds of comparable size, and other factors. The Trustees determined that the Fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the Fund and its shareholders. Matters considered by the Trustees in connection with its consideration of the Advisory Agreement included, among other things, the following:

1. Investment Adviser Services

Freedom Funds manages the assets of the Fund, including making purchases and sales of portfolio securities consistent with the Fund’s investment objectives and policies. In addition, Freedom Funds administers the Fund’s daily business affairs such as providing accurate accounting records, computing accrued income and expenses of the Fund, computing the daily net asset value of the Fund, assuring proper dividend disbursements, proper financial information to investors, and notices of all shareholders’ meetings, and providing sufficient office space, storage, telephone services, and personnel to accomplish these responsibilities. In considering the nature, extent and quality of the services provided by Freedom Funds, the Trustees believe that the services provided by Freedom Funds have provided the Fund with superior results. At the same time, Freedom Fund’s fee structure is equal to or lower than the comparable funds. The Trustees noted the Fund’s focus is inherently more labor intensive. Under the circumstances, the Trustees found the fee structure to be justified.

2. Investment Performance

The Trustees reviewed the performance of the Fund compared to other similar funds, and reported that the current (as of September 27, 2018) net asset value was $9.138 per share and the current distribution yield (based on net asset value) was 3.43% (also as of September 27, 2018). Since the overall structure of the portfolio was satisfactory and the performance of the Fund, measured in terms of distribution yield and total return, was ahead of the other members of its peer group of Colorado funds (higher than the distribution yield of six comparable Colorado municipal bond funds), no changes to either the type of assets or manner of operations were recommended.

3. Expense Ratios

The Trustees reviewed the performance (measured by distribution yield), fees and expense ratios of six Colorado municipal bond funds (such six being the only such funds known to the Trustees at the time). The Fund was at the top of the list in terms of current yield and total performance; it had one of the lower expense ratios. The Trustees considered the fact that the Fund’s unique focus on not rated bonds, while

9

geared toward producing superior investment results, often required additional expenses. While expenses can vary with not rated bonds (principally as a result of litigation with respect to defaulted issues and higher monitoring costs occasioned by less readily available information), the Trustees noted the Fund’s performance for the current year.

4. Management Fees and Expenses

The Trustees reviewed the investment advisory fee rates payable by the Fund to Freedom Funds. As part of its review, the Trustees considered the estimated advisory fees and the Fund’s estimated total expense ratio for the one-year period as of September 27, 2018 as compared to a group of six comparable Colorado municipal bond funds identified by Freedom Funds. After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by Freedom Funds, the Trustees concluded that the advisory fees charged by Freedom Funds for the advisory and related services to the Fund and the Fund’s total expense ratio are reasonable. The management fee is one half of one percent of total net assets managed. Such fee is payable to Freedom Funds on a monthly basis. This fee is comparable to the group of six competing Colorado municipal bond funds identified by Freedom Funds and is consistent with national funds many times the Fund’s size.

5. Profitability

The Trustees reviewed the level of profits realized by Freedom Funds and relevant affiliates thereof in providing investment and administrative services to the Fund. The Trustees considered the level of profits realized without regard to revenue sharing or other payments by Freedom Funds and its affiliates to third parties in respect to distribution of the Fund’s securities. The Trustees also considered other direct or indirect benefits received by Freedom Funds and its affiliates in connection with its relationship with the Fund and found that there were none. The Trustees concluded that, in light of the foregoing factors and the nature, extent and quality of the services provided by Freedom Funds, the profits realized by Freedom Funds are reasonable.

6. Economies of Scale

In reviewing advisory fees and profitability, the Trustees also considered the extent to which Freedom Funds and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund increase. The Trustees acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds, particularly in an environment where costs are rising due to changing regulations. The Trustees reviewed data summarizing the increases and decreases in the assets of the Fund over various time periods, and evaluated the extent to which the total expense ratio of the Fund and Freedom Fund’s profitability may have been affected by such increases or decreases. Between October 2017 and September 27, 2018, total net assets of the Fund under management by Freedom Funds increased from $1,137.8 billion to 1,265.9 billion. The number of shares of the Fund that have been redeemed has been less than the number of new shares issued by the Fund, and as a result the Fund continues to grow at what the Trustees determined was a healthy level and the fund is near its all-time high in terms of total assets.

Based upon the foregoing, the Trustees concluded that the benefits from the economies of scale are currently being shared equitably by Freedom Funds and the Fund. The Trustees also concluded that the

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structure of the advisory fee can be expected to cause Freedom Funds, its affiliates and the Fund to continue to share such benefits equitably and that breakpoints need not be instituted at this time.

After requesting and reviewing these and other factors that they deemed relevant, the Trustees concluded that the continuation of the Advisory Agreement was in the best interest of the Fund and its shareholders.

Freedom Funds also serves as the transfer agent, shareholder servicing agent and dividend disbursing agent for the Fund, pursuant to a Transfer Agency and Service Agreement (the “Service Agreement”).

Freedom Funds’ duties under the Service Agreement include processing purchase and redemption transactions, establishing and maintaining shareholder accounts and records, disbursing dividends declared by the Fund and all other customary services of a transfer agent, shareholder servicing agent and dividend disbursing agent. As compensation for these services, the Fund may pay Freedom Funds at a rate intended to represent Freedom Funds’ cost of providing such services. This fee would be in addition to the investment advisory fee payable to Freedom Funds under the Advisory Agreement.

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FUND EXPENSES (unaudited)

The following examples are intended to help you understand the ongoing costs (in dollars) of investing in the Fund and compare these costs with those of other mutual funds. The examples (actual and hypothetical 5% return) are based on an investment of $1,000 made at the beginning of the period shown and held for the entire period.

As a shareholder of Colorado BondShares — A Tax-Exempt Fund (the “Fund’) you can incur two types of costs:

• 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 the Fund’s gross income, directly reduce the investment return of the Fund.

Actual Fund Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.

Hypothetical Example for Comparison Purposes

The second line of the table below provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in shareholder reports of other funds.

Six Months Ended September 30, 2018

Colorado BondShares — A Tax- Exempt Fund	Beginning Account Value 04/01/18			Ending Account Value 09/30/18			Expenses Paid During Period(1)
Based on Actual Fund Return		$	1,000.00		$	1,027.47		$	2.85
Based on Hypothetical 5% Annual Return Before Expenses		$	1,000.00		$	1,022.20		$	2.84

(1) The expenses shown in this table are equal to the Fund’s annualized expense ratio of 0.56% for fiscal year ended September 30, 2018, multiplied by the average account value over the period, multiplied by 183/365 to reflect the one-half year period.

Please note that expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads), redemption fees or exchange fees. Therefore, the second line of the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if transactional costs were included, your costs would have been higher. You can find more information about the Fund’s expenses in the Financial Statements section of this report. For additional information on operating costs please see the Fund’s prospectus.

12

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of

Colorado BondShares — A Tax-Exempt Fund

Opinion on the Financial Statements

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Colorado BondShares — A Tax-Exempt Fund (the “Fund”) as of September 30, 2018, and the related statements of operations and changes in net assets for the year then ended, and the financial highlights for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Colorado BondShares — A Tax-Exempt Fund as of September 30, 2018, and the results of its operations and changes in net assets for the year then ended, and the financial highlights for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The Fund’s management is responsible for these financial statements. Our responsibility is to express an opinion on the Fund’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Plante & Moran, PLLC

We have served as the Fund’s auditor since 2014.

Denver, Colorado

November 16, 2018

13

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Trustees of

Colorado BondShares — A Tax-Exempt Fund

We have audited the accompanying statement of assets and liabilities of Colorado BondShares — A Tax-Exempt Fund (the “Fund”), including the schedule of investments, as of September 30, 2017, and the related statements of operations and changes in net assets for the year then ended, the financial highlights for each of the four years ended September 30, 2017, 2016, 2015, and 2014, and the related notes. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2017, by correspondence with the custodian. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Colorado BondShares — A Tax-Exempt Fund as of September 30, 2017, and the results of its operations and changes in its net assets for the year then ended, and the financial highlights for each of the four years ended September 30, 2017, 2016, 2015, and 2014, in conformity with accounting principles generally accepted in the United States of America.

EKS&H LLLP

We have served as the Fund’s auditor since 2014.

November 21, 2017

Denver, Colorado

14

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments

September 30, 2018

Colorado Municipal Bonds 42.5%	Maturity		Coupon		Principal		Value
Colorado 100.0%
ABERDEEN METROPOLITAN DISTRICT #1		12/1/2035		7.50%	$	1,600,000	$	476,000
ANTHOLOGY WEST METROPOLITAN DISTRICT #4(g)		12/15/2037		6.00%		6,440,000		6,263,029
BANNING LEWIS RANCH METROPOLITAN DISTRICT #3 – SENIOR 2015A		12/1/2045		6.13%		1,775,000		1,686,090
BOULDER COUNTY – BOULDER COLLEGE OF MASSAGE(a)(j)		10/15/2031		0.00%		4,315,000		4,315,000
BRAMMING FARM METROPOLITAN DISTRICT #1(d)		12/1/2044		6.00%		2,025,000		2,039,661
BRENNAN METROPOLITIAN DISTRICT – SENIOR 2016A		12/1/2046		5.25%		1,185,000		1,219,448
BRENNAN METROPOLITAN DISTRICT – SUBORDINATE 2016b(g)		12/15/2046		7.50%		516,000		501,217
BRIGHTON CROSSING METROPOLITAN DISTRICT #4 – SENIOR 2017A		12/1/2037		5.00%		525,000		535,411
BRIGHTON CROSSING METROPOLITAN DISTRICT #4 – SUBORDINATE 2017B(g)		12/1/2047		7.00%		670,000		650,409
CASTLE OAKS METROPOLITAN DISTRICT #3		12/1/2044		6.25%		2,860,000		3,191,045
CASTLE OAKS METROPOLITAN DISTRICT #3 – SERIES 2016		12/1/2045		5.50%		2,345,000		2,579,453
CASTLE OAKS METROPOLITAN DISTRICT #3 – SERIES 2017		12/1/2037		5.00%		3,275,000		3,270,775
COLLIERS HILL METROPOLITAN DISTRICT #2 – SUBORDINATE 2017B(g)		12/15/2047		8.50%		3,501,000		3,293,286
COLORADO CENTRE METROPOLITAN DISTRICT – SERIES B(g)(i)(j)		1/1/2032		0.00%		6,490,174		3,407,341
COLORADO CENTRE METROPOLITAN DISTRICT – SERIES 1992 P/O(e)(i)		1/1/2027		0.00%		2,016,986		1,606,267
COLORADO CENTRE METROPOLITAN DISTRICT – SERIES 1992 I/O(f)(i)(j)		1/1/2027		9.00%		2,015,949		1,612,759
COLORADO CROSSING METROPOLITAN DISTRICT #2		12/1/2047		7.50%		7,391,000		7,268,531
CECFA – PROSPECT RIDGE ACADEMY CHARTER SCHOOL		3/15/2023		5.00%		13,500,000		13,473,000
CECFA – THOMAS MACLAREN CHARTER SCHOOL		6/1/2024		5.00%		15,350,000		15,133,412
CECFA – APEX CMNTY CHARTER SCHOOL		7/1/2022		5.25%		11,635,000		11,469,550
CECFA – SWALLOW ACADEMY CHARTER SCHOOL		11/15/2027		5.35%		3,515,000		3,514,789
CECFA-NEW VISION CHARTER SCHOOL		6/1/2025		5.38%		23,135,000		22,992,720

15

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
CECFA – GRAND PEAK ACADEMY CHARTER SCHOOL		7/1/2025		5.60%	$	20,975,000	$	20,787,484
CECFA – UNIVERSITY LAB CHARTER SCHOOL #6		12/15/2019		2.50%		500,000		499,285
CECFA – AMERICAN ACADEMY CHARTER SCHOOL		12/1/2025		4.20%		37,355,000		37,437,555
CECFA – MONARCH MONTESSORI CHARTER SCHOOL		5/15/2020		5.50%		8,620,000		8,616,811
CECFA – PROSPECT RIDGE ACADEMY CHARTER SCHOOL		3/15/2023		4.85%		21,330,000		21,111,154
CECFA – AMERICAN ACADEMY CHARTER SCHOOL		12/1/2026		4.05%		27,570,000		26,346,995
CECFA – ADDENBROOKE CLASSICAL ACADEMY CHARTER SCHOOL		6/1/2021		4.50%		18,045,000		17,740,942
COLORADO HOUSING & FINANCE AUTHORITY(a)(j)		12/1/2013		0.00%		3,755,000		3,755,000
CHFA – CASEY’S POND SENIOR LIVING(l)		6/1/2032		0.00%		8,110,000		5,431,429
CHFA – CASEY’S POND SENIOR LIVING(l)		6/1/2042		0.00%		10,665,000		7,124,860
CHFA – CASEY’S POND SENIOR LIVING(l)		6/1/2047		0.00%		8,600,000		5,743,338
COLORADO INTERNATIONAL CENTER METROPOLITAN DISTRICT #3		12/1/2031		4.63%		635,000		607,466
COLORADO SPRINGS URBAN RENEWAL AUTHORITY		12/15/2030		6.75%		2,224,000		2,069,521
CONIFER METROPOLITAN DISTRICT(a)		12/1/2030		0.00%		10,000,000		4,000,000
CONIFER METROPOLITAN DISTRICT(a)		12/1/2032		0.00%		1,450,000		580,000
CONIFER METROPOLITAN DISTRICT(a)		12/1/2033		0.00%		1,550,000		620,000
COPPERLEAF METROPOLITAN DISTRICT #3		12/1/2037		5.00%		500,000		499,355
COUNTRY CLUB HIGHLANDS METROPOLITAN DISTRICT		12/1/2037		7.25%		1,030,000		875,500
CUCHARES RANCH METROPOLITAN DISTRICT		12/1/2045		5.00%		2,100,000		2,051,049
DENVER WEST PROMENADE METROPOLITAN DISTRICT		12/1/2031		5.13%		500,000		501,095
DENVER WEST PROMENADE METROPOLITAN DISTRICT		12/15/2046		6.00%		500,000		448,505
UNITED W & S – EAST CHERRY CREEK(c)		11/15/2023		5.00%		4,949,000		4,951,920
ELBERT & HWY 86 COML METROPOLITAN DISTRICT		12/1/2032		7.50%		4,500,000		3,375,000
ERIE FARM METROPOLITAN DISTRICT – SERIES 2016A		12/1/2045		5.50%		2,000,000		2,016,460
ERIE HIGHLANDS METROPOLITAN DISTRICT #1 – SENIOR 2015A		12/1/2045		5.75%		2,620,000		2,643,030
ERIE HIGHLANDS METROPOLITAN DISTRICT #1 – SUBORDINATE 2015B		12/15/2045		7.75%		708,000		697,465

16

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
ERIE HIGHLANDS METROPOLITAN DISTRICT NO2, SER 2018A		12/1/2048		5.25%	$	6,000,000	$	6,015,360
ERIE HIGHLANDS METROPOLITAN DISTRICT NO 2, SER 2018B SUBORDINATES(g)		12/15/2048		7.63%		1,819,000		1,819,000
FLATIRON MEADOWS METROPOLITAN DISTRICT		12/1/2046		5.13%		2,000,000		1,920,700
FOREST TRACE METROPOLITAN DISTRICT #3 – SUBORDINATE 2016B(g)		12/15/2046		7.25%		683,000		625,150
FORT LUPTON GOLF COURSE(a)		12/15/2037		0.00%		620,000		15,500
FRONTERRA VLG METROPOLITAN DISTRICT #2		12/1/2034		5.00%		3,685,000		3,686,099
GREAT WESTERN PARK METROPOLITAN DISTRICT #2 – SENIOR 2016A		12/1/2026		4.00%		585,000		567,117
GREAT WESTERN PARK METROPOLITAN DISTRICT #2 – SUBORDINATE 2016B		12/15/2046		7.25%		775,000		729,911
GREEN GABLES METROPOLITAN DISTRICT #1 – SENIOR 2016A		12/1/2046		5.30%		1,250,000		1,248,088
GREEN GABLES METROPOLITAN DISTRICT #1 – SUBORDINATE 2016B(g)		12/15/2046		7.75%		740,000		732,992
HIGHLANDS METROPOLITAN DISTRICT #2 – SENIOR 2016A		12/1/2046		5.13%		1,960,000		1,975,817
HIGHLANDS METROPOLITAN DISTRICT #2 – SUBORDINATE 2016B		12/15/2046		7.50%		1,269,000		1,251,221
HYLAND VILLAGE METROPOLITAN DISTRICT		12/1/2027		7.25%		4,293,000		1,674,270
JEFFCO BUSINESS CENTER METROPOLITAN DISTRICT #1(j)		5/1/2020		8.00%		1,006,000		1,006,000
JEFFERSON CENTER METROPOLITAN DISTRICT #1		12/1/2026		4.75%		2,269,000		2,267,344
LEWIS POINTE METROPOLITAN DISTRICT – SENIOR 2015A		12/1/2044		6.00%		2,590,000		2,595,983
LEWIS POINTE METROPOLITAN DISTRICT – JUNIOR LIEN 2017C(g)		12/15/2047		9.00%		536,000		329,586
LEYDEN ROCK METROPOLITAN DISTRICT – SENIOR 2016A		12/1/2025		4.00%		500,000		506,130
LEYDEN ROCK METROPOLITAN DISTRICT – SENIOR 2016A		12/1/2033		4.38%		905,000		900,484
LEYDEN ROCK METROPOLITAN DISTRICT – SENIOR 2016A		12/1/2045		5.00%		1,525,000		1,551,596
LEYDEN ROCK METROPOLITAN DISTRICT – SUBORDINATE 2016B(g)		12/15/2045		7.25%		1,195,000		1,168,304

17

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
LEYDEN ROCK METROPOLITAN DISTRICT #10 – JUNIOR LIEN 2017C(g)		12/15/2049		10.75%	$	1,025,000	$	998,155
LITTLETON VILLAGE METROPOLITAN DISTRICT #2		12/1/2045		5.38%		1,700,000		1,716,252
LITTLETON VILLAGE METROPOLITAN DISTRICT NO 2, SERIES 2018B SUBORDINATES(g)		12/15/2028		7.63%		1,140,000		1,129,979
MARIN METROPOLITAN DISTRICT(a)(j)		12/1/2028		0.00%		17,485,000		3,000,076
MARVELLA METROPOLITAN DISTRICT – SENIOR 2016A		12/1/2046		5.13%		1,405,000		1,438,804
MEADOWS METROPOLITAN DISTRICT #1(k)		6/1/2029		8.00%		11,580,000		11,709,464
MEADOWS METROPOLITAN DISTRICT #2(k)		6/1/2029		8.00%		11,565,000		11,694,297
MEADOWS METROPOLITAN DISTRICT #7(k)		6/1/2029		8.00%		11,515,000		11,643,738
MIDCITIES METROPOLITAN DISTRICT #2 – SUBORDINATE 2016B(g)		12/15/2046		7.75%		1,945,000		1,905,050
MOUNT CARBON METROPOLITAN DISTRICT – SERIES 2004A(g)		6/1/2043		7.00%		197,916		178,125
MOUNT CARBON METROPOLITAN DISTRICT – SERIES 2004B(g)		6/1/2043		7.00%		1,540,000		1,386,000
MOUNT CARBON METROPOLITAN DISTRICT – SERIES 2004C(g)		6/1/2043		0.00%		565,000		124,300
MOUNTAIN SHADOWS METROPOLITAN DISTRICT – SUBORDINATE 2016B(g)		12/15/2046		7.50%		1,800,000		1,788,804
MOUNTAIN SHADOWS METROPOLITAN DISTRICT – SUBORDINATE 2018C-1(g)		12/15/2040		10.00%		1,994,000		1,971,568
MURPHY CREEK METROPOLITAN DISTRICT #3		12/1/2026		6.00%		2,540,000		2,082,800
MURPHY CREEK METROPOLITAN DISTRICT #3		12/1/2035		6.13%		1,880,000		1,541,600
NORTH PINE VISTAS METROPOLITAN DISTRICT #2 – SENIOR 2016A		12/1/2046		6.75%		6,735,000		6,734,192
NORTH PINE VISTAS METROPOLITAN DISTRICT #2 – SUBORDINATE 2016B(g)		12/15/2046		8.50%		1,810,000		1,809,620
NORTH PINE VISTAS METROPOLITAN DISTRICT #3 – SENIOR 2016A		12/1/2036		6.00%		4,345,000		4,330,314
NORTH PINE VISTAS METROPOLITAN DISTRICT #3 – SUBORDINATE 2016B(g)		12/15/2046		8.25%		1,203,000		1,199,571
OVERLOOK METROPOLITAN DISTRICT – SENIOR 2016A		12/1/2046		5.50%		1,500,000		1,421,880
PALISADE METROPOLITAN DISTRICT #2		12/1/2031		4.38%		2,650,000		2,545,882
PALISADE PARK NORTH METROPOLITAN DISTRICT #1 – SENIOR 2016A		12/1/2046		5.88%		2,075,000		1,920,765

18

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
PALISADE PARK NORTH METROPOLITAN DISTRICT #1 – SUBORDINATE 2016B		12/15/2046		8.00%	$	525,000	$	493,248
PALISADE PARK NORTH METROPOLITAN DISTRICT #2 – SENIOR 2018A		12/1/2047		5.63%		1,745,000		1,711,758
PARKER AUTOMOTIVE METROPOLITAN DISTRICT		12/1/2045		5.00%		2,088,000		1,924,948
PARKER AUTOMOTIVE METROPOLITAN DISTRICT SUB SERIES 2018B(g)		12/15/2032		8.00%		3,785,000		3,746,393
PIONEER METROPOLITAN DISTRICT #3(g)		12/1/2046		6.50%		5,236,000		4,766,540
THE PLAZA METROPOLITAN DISTRICT #1		12/1/2040		5.00%		5,350,000		5,482,894
POTOMAC FARMS METROPOLITAN DISTRICT – SERIES 2007A		12/1/2037		7.25%		2,340,000		2,191,691
POTOMAC FARMS METROPOLITAN DISTRICT – SERIES 2007B		12/1/2023		7.63%		311,000		295,170
PROMENADE AT CASTLE ROCK METROPOLITAN DISTRICT #1 – SERIES A		12/1/2025		5.13%		1,040,000		1,097,522
PUBLIC FINANCE AUTHORITY COLO EARLY COLLEGES CHARTER SCHOOL – SERIES 2016A		7/1/2023		4.25%		33,695,000		33,096,577
PUBLIC FINANCE AUTHORITY WEST RIDGE ACADEMY CHARTER SCHOOL – SERIES 2017A		12/1/2021		5.50%		9,345,000		9,322,852
RAVENNA METROPOLITAN DISTRICT CONV CABS – SUBORDINATE SERIES 2017B(d)		12/15/2026		7.50%		8,000,000		7,753,200
RENDEZVOUS METROPOLITAN DISTRICT NO 4 – SUBORDINATE, SERIES 2018B(g)		10/15/2048		8.00%		1,189,000		1,136,708
REX RANCH METROPOLITAN DISTRICT – SUBORDINATE 2018B(g)		12/15/2047		7.88%		445,000		438,561
RICHARDS FARM METROPOLITAN DISTRICT #2 – SENIOR SERIES 2015A		12/1/2045		5.75%		1,400,000		1,321,096
RIVERDALE PEAKS II METROPOLITAN DISTRICT		12/1/2025		6.40%		930,000		465,000
RIVERDALE PEAKS II METROPOLITAN DISTRICT		12/1/2035		6.50%		1,135,000		567,500
ROUTT CNTY LID – SERIES 2004A		8/1/2024		6.50%		273,000		275,402
ROXBOROUGH VILLAGE METROPOLITAN DISTRICT – SERIES 1993B P/O(e)(i)(j)		12/31/2021		0.00%		169,939		97,800
ROXBOROUGH VILLAGE METROPOLITAN DISTRICT – SERIES 1993B I/O(f)(i)(j)		12/31/2042		0.00%		242,645		26,691
SIERRA RIDGE METROPOLITAN DISTRICT #2 – SENIOR SERIES 2016A		12/1/2031		4.50%		1,000,000		967,120
SIERRA RIDGE METROPOLITAN DISTRICT #2 – SUBORDINATE SERIES 2016B(g)		12/15/2046		7.63%		1,500,000		1,449,930

19

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
SILVER PEAKS METROPOLITAN DISTRICT #2		12/1/2036		5.75%	$	500,000	$	447,095
SOLARIS METROPOLITIAN DISTRICT #3 – SUBORDINATE SERIES 2016B(g)		12/15/2046		7.00%		1,000,000		971,070
SOLITUDE METROPOLITAN DISTRICT(j)		12/1/2026		7.00%		3,520,000		2,464,000
SORREL RANCH METROPOLITAN DISTRICT		12/1/2036		5.75%		5,977,000		5,304,647
SOUTHGLENN METROPOLITAN DISTRICT		12/1/2021		3.00%		1,433,000		1,419,945
SOUTHSHORE METROPOLITAN DISTRICT #2 CONV CABS(d)		12/1/2042		6.50%		7,205,000		7,058,162
SOUTHSHORE METROPOLITAN DISTRICT #2 – SUBORDINATE SERIES 2017(g)		12/15/2042		7.75%		5,202,000		5,116,427
ST VRAIN LAKES METROPOLITAN DISTRICT #2 – SENIOR SERIES 2017A		12/1/2037		5.00%		1,500,000		1,465,545
ST VRAIN LAKES METROPOLITAN DISTRICT #2 – SUBORDINATE SERIES 2017B(g)		12/15/2047		7.63%		1,083,000		1,044,131
STC METROPOLITAN DISTRICT #2 – SENIOR SERIES 2015A		12/1/2038		6.00%		1,000,000		1,021,650
STC METROPOLITAN DISTRICT #2 – SUBORDINATE SERIES 2015B(g)		12/15/2038		7.75%		3,500,000		3,528,280
STERLING RANCH COMMUNITY AUTHORITY BOARD – SENIOR SERIES 2015A		12/1/2035		5.50%		2,195,000		2,231,261
STERLING RANCH COMMUNITY AUTHORITY BOARD – SENIOR SERIES 2015A		12/1/2045		5.75%		3,000,000		3,060,060
STERLING RANCH COMMUNITY AUTHORITY BOARD – SUBORDINATE SERIES 2015B(g)		12/15/2045		7.75%		1,045,000		1,054,123
STONE RIDGE METROPOLITAN DISTRICT #2		12/1/2031		0.00%		11,896,000		1,903,360
TABLE MOUNTAIN METROPOLITAN DISTRICT – SENIOR SERIES 2016A		12/1/2045		5.25%		1,615,000		1,667,181
TABLE MOUNTAIN METROPOLITAN DISTRICT – SUBORDINATE SERIES 2016B(g)		12/15/2045		7.75%		570,000		582,466
TALLYN’S REACH METROPOLITAN DISTRICT #3		11/1/2038		5.13%		2,070,000		2,166,752
TALLYN’S REACH METROPOLITIAN DISTRICT #3 – SUBORDINATE SERIES 2016A(g)		11/1/2038		6.75%		1,220,000		1,205,397
UNITED WATER & SAN DISTRICT LUPTON LAKES		3/1/2021		6.00%		7,775,000		7,776,400
UNITED WATER & SAN DISTRICT ELBERT COUNTY(g)		12/1/2023		6.00%		5,342,000		5,287,779
VDW METROPOLITAN DISTRICT #2 – SUBORDINATE SERIES 2016B(g)		12/15/2045		7.25%		1,934,000		1,808,309
VILLAS EASTLAKE RESERVOIR METROPOLITAN DISTRICT – SUBORDINATE SERIES 2016B(g)		12/15/2046		8.00%		355,000		357,510

20

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
WESTOWN METROPOLITAN DISTRICT – SENIOR SERIES 2017A		12/1/2047		5.00%	$	1,400,000	$	1,351,994
WHISPERING PINES METROPOLITAN DISTRICT #1 – SENIOR SERIES 2017A		12/1/2037		5.00%		1,000,000		1,002,320
Colorado (amortized cost $554,446,852)						598,353,609		537,812,762
Colorado Municipal Bonds (amortized cost $554,446,852)					$	598,353,609	$	537,812,762
Short-Term Municipal Bonds 14.3%
Multi-State 64.1%
FREDDIE MAC VR AMT TAX (LOC 6)		5/15/2046		1.62%	$	15,350,000	$	15,350,000
FREDDIE MAC VR AMT (LOC 6)		6/15/2036		1.61%		27,385,000		27,385,000
FREDDIE MAC VR AMT TAX (LOC 6)		7/15/2050		1.62%		9,660,000		9,660,000
FREDDIE MAC VR (LOC 6)		12/15/2045		1.59%		18,805,000		18,805,000
FREDDIE MAC VR (LOC 6)		3/15/2049		1.59%		34,840,000		34,840,000
SUNAMERICA TRUST CLASS A – SERIES 2001-2 AMT TAX (LOC 6)		7/1/2041		1.62%		10,200,000		10,200,000
Multi-State (amortized cost $116,240,000)						116,240,000		116,240,000
Colorado 35.9%
BROOMFIELD URBAN RENEWAL AUTHORITY (LOC 1)		12/1/2030		1.61%		9,745,000		9,745,000
CECFA – ABILITIES CONNECTION CHARTER SCHOOL		4/1/2019		5.85%		30,825,000		30,833,939
COLORADO HOUSING & FINANCE AUTHORITY (LOC 2)		10/1/2038		1.60%		2,975,000		2,975,000
COLORADO HOUSING & FINANCE AUTHORITY (LOC 2)		11/1/2034		1.60%		865,000		865,000
COLORADO HOUSING & FINANCE AUTHORITY (LOC 4)		11/1/2036		1.56%		10,140,000		10,140,000
COLORADO HOUSING & FINANCE AUTHORITY – SERIES 2007A (LOC 3)		1/1/2032		1.63%		2,700,000		2,700,000
COLORADO SPRINGS UTILITIES (LOC 3)		11/1/2041		1.55%		1,300,000		1,300,000
LAFAYETTE CITY CTR GENERAL IMPROVEMENT DISTRICT		12/1/2018		5.75%		70,000		70,265

21

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Short-Term Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Colorado (Continued)
SHERIDAN REDEVLOPMENT AGENCY – SERIES 2011A-1 (LOC 5)		12/1/2029		1.65%	$	6,400,000	$	6,400,000
Colorado (amortized cost $65,012,672)						65,020,000		65,029,204
Short-Term Municipal Bonds (amortized cost $181,252,672)					$	181,260,000	$	181,269,204
Other Municipal Bonds 7.3%
South Dakota 61.4%
FLANDREAU SANTEE SIOUX TRIBE		1/1/2036		5.75%	$	6,055,000	$	5,419,831
FLANDREAU SANTEE SIOUX TRIBE		1/1/2026		5.00%		4,125,000		3,843,428
FLANDREAU SANTEE SIOUX TRIBE		1/1/2031		5.50%		3,565,000		3,224,614
FLANDREAU SANTEE SIOUX TRIBE TE SERIES 2018B		1/1/2038		6.00%		6,120,000		6,023,304
FLANDREAU SANTEE SIOUX TRIBE TE SERIES 2018C		1/1/2038		6.00%		5,450,000		5,363,890
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2023		8.28%		875,000		870,030
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2024		8.28%		950,000		943,198
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2025		8.28%		1,030,000		1,022,543
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2026		8.28%		1,115,000		1,105,991
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2027		8.28%		1,205,000		1,195,035
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2028		8.28%		1,305,000		1,291,689
FLANDREAU SANTEE SIOUX TRIBE TAXABLE SERIES 2018A		1/1/2033		8.28%		8,670,000		8,545,672
LOWER BRULE SIOUX TRIBE		3/1/2025		5.88%		1,345,000		1,309,613
OGLALA SIOUX TRIBE OF PINE RIDGE		10/1/2022		5.00%		1,560,000		1,553,885
OGLALA SIOUX TRIBE, SERIES 2018		7/1/2028		5.50%		4,000,000		3,943,360
OGLALA SIOUX TRIBE, SERIES 2018		7/1/2037		6.00%		9,270,000		9,085,249
OGLALA SIOUX TRIBE OF PINE RIDGE		10/1/2024		5.50%		1,985,000		1,989,367
South Dakota (amortized cost $58,604,970)						58,625,000		56,730,697

22

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Other Municipal Bonds (Continued)	Maturity		Coupon		Principal		Value
Puerto Rico 10.6%
COMMONWEALTH OF PUERTO RICO(a)		7/1/2035		8.00%	$	2,500,000	$	1,446,875
PUERTO RICO SALES TAX FINANCING CORP(d)		8/1/2045		0.00%		7,100,000		1,790,904
PUERTO RICO SALES TAX FINANCING CORP(d)		8/1/2038		0.00%		20,000,000		4,442,600
PUERTO RICO SALES TAX FINANCING CORP(d)		8/1/2039		0.00%		10,000,000		2,080,100
Puerto Rico (amortized cost $9,408,000)						39,600,000		9,760,479
South Carolina 6.1%
GREEN MIDLANDS CHARTER SCHOOL – SENIOR SERIES 2016A		12/1/2021		5.25%		5,655,000		5,654,152
South Carolina (amortized cost $5,655,000)						5,655,000		5,654,152
Oregon 6.0%
MULTNOMAH CITY HOSPITAL FACILITY ODD FELLOWS		9/15/2020		5.45%		6,085,000		5,502,361
Oregon (amortized cost $6,085,000)						6,085,000		5,502,361
Arizona 5.4%
HERITAGE ACADEMY CHARTER SCHOOL MARICOPA COUNTY		7/1/2027		5.25%		5,000,000		4,951,250
Arizona (amortized cost $5,000,000)						5,000,000		4,951,250
Multi-State 5.3%
FREDDIE MAC(g)(j)		1/1/2037		9.75%		4,904,915		4,904,915
Multi-State (amortized cost $4,904,915)						4,904,915		4,904,915
Washington 3.3%
TACOMA CONSOLIDATED LID		4/1/2043		5.75%		3,055,000		3,057,108
Washington (amortized cost $2,895,900)						3,055,000		3,057,108
Missouri 1.5%
KANSAS CITY INDL DEV AUTH		1/1/2028		6.75%		508,000		509,600
ST LOUIS INDL DEV AUTH SR HSG – SENIOR SERIES 2005A		5/1/2027		6.75%		884,000		836,087
Missouri (amortized cost $1,392,000)						1,392,000		1,345,687
Oklahoma 0.5%
HASKELL CNTY PUBLIC FAC.		4/1/2024		5.25%		450,000		457,727
Oklahoma (amortized cost $450,000)						450,000		457,727
Other Municipal Bonds (amortized cost $94,395,785)					$	124,766,915	$	92,364,376

23

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

Colorado Capital Appreciation and Zero Coupon Bonds 4.8%			Maturity		Coupon		Principal		Value
Colorado 100.0%
COLORADO HEALTH FACILITIES AUTHORITY(b)(d)				7/15/2020		0.00%	$	520,000	$	499,543
CONIFER METROPOLITAN DISTRICT(a)(d)(j)				12/1/2031		0.00%		7,470,000		3,352,312
FLYINGHORSE METROPOLITAN DISTRICT #2(d)				12/15/2042		8.00%		15,725,000		13,719,748
PV WATER & SAN METROPOLITAN DISTRICT(a)(d)				12/15/2037		0.00%		14,000,000		2,940,000
RAVENNA METROPOLITAN DISTRICT CONV CABS – SERIES 2017A(d)				12/1/2046		0.00%		33,685,000		32,036,456
RAVENNA METROPOLITAN DISTRICT CONV CABS – SERIES 2017 SUPPLEMENTAL B(d)				12/1/2021		0.00%		15,000		12,771
RAVENNA METROPOLITAN DISTRICT CONV CABS – SERIES 2017 SUPPLEMENTAL B(d)				12/1/2022		0.00%		170,000		137,450
RAVENNA METROPOLITAN DISTRICT CONV CABS – SERIES 2017 SUPPLEMENTAL B(d)				12/1/2023		0.00%		325,000		249,948
RAVENNA METROPOLITAN DISTRICT CONV CABS – SERIES 2017 SUPPLEMENTAL B(d)				12/1/2024		0.00%		490,000		357,514
RAVENNA METROPOLITAN DISTRICT CONV CABS – SERIES 2017 SUPPLEMENTAL B(d)				12/1/2025		0.00%		585,000		404,136
STERLING RANCH METROPOLITAN DISTRICT #2 CONV CAB(d)				12/1/2045		0.00%		6,685,000		5,437,044
WILDWING METROPOLITAN DISTRICT #1(d)				12/1/2023		0.00%		2,150,000		1,470,342
Colorado (amortized cost $71,665,781)								81,820,000		60,617,264
Colorado Capital Appreciation and Zero Coupon Bonds (amortized cost $71,665,781)							$	81,820,000	$	60,617,264
Colorado Taxable Certificates/Notes/Bonds 0.5%
Colorado 100.0%
PUBLIC FINANCE AUTHORITY COLO EARLY COLLEGES CHARTER SCHOOL – SERIES 2016B TAX				7/1/2023		5.75%		6,970,000		6,787,804
TABERNASH POLE CREEK NOTE(a)(j)				12/31/2018		0.00%		227,347		127,601
Colorado (amortized cost $7,197,347)								7,197,347		6,915,405
Colorado Taxable Certificates/Notes/Bonds (amortized cost $7,197,347)							$	7,197,347	$	6,915,405
Total investments, at value (amortized cost $908,958,438)	69.4	%							$	878,979,011
Other assets net of liabilities	30.6	%								386,979,007
Net Assets	100.0	%							$	1,265,958,018

24

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

(a) Defaulted or non-income producing based upon the financial condition of the issuer (see note 2 in 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 securities whose blended characteristics are reflective of a zero coupon bond and a step rate bond. Interest rate shown represents effective yield at acquisition.

(d) Interest rate shown for capital appreciation and 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, 2018. Income on this security is derived from the cash flow of the issuer.

(h) Represents current interest rate for a step rate bond. No step rate bonds were owned by the Fund at September 30, 2018.

(i) Terms of security have been restructured since the original issuance. The total face amount of all such restructured securities approximates $10,935,693 and a value of $6,750,859 or less than 1.0% of net assets, as of September 30, 2018.

(j) Securities valued at fair value (see note 2 in notes to financial statements).

(k) See note 7 in notes to financial statements for further information on purchase accrued interest related to these bonds.

(l) The Fund has entered into a forbearance agreement under which it agrees that the issuer may pay a reduced rate of interest in lieu of the contract rate for a period of time (see note 2 in notes to financial statements).

(m) Tax lien receipt certificates.

See accompanying notes to financial statements.

25

Colorado BondShares

A Tax-Exempt Fund

Schedule of Investments — (Continued)

(LOC) These securities are Variable Rate Demand Obligations (“VRDO”) with scheduled principal and interest payments that have a guaranteed liquidity provider in the form of a letter of credit. These obligations bear interest at a rate that resets daily or weekly (see note 2 in notes to financial statements). The numbered list below corresponds to the liquidity provider associated with the respective LOC.

1. BNP Paribas

2. FHLB Topeka

3. US Bank, N. A.

4. Royal Bank of Canada

5. JPMorgan Chase Bank, N.A.

6. Freddie Mac

The following abbreviations are used in the descriptions of securities included in the Schedule of Investments:

CABS — Capital Appreciation Bonds

CONV — Convertible

I/O — Interest Only

L/D — Local Improvement District

P/O — Principal Only

See accompanying notes to financial statements.

26

Colorado BondShares

A Tax-Exempt Fund

Statement of Assets and Liabilities

September 30, 2018

ASSETS
Investments, at value (amortized cost 908,958,438)	$	878,979,011
— see accompanying schedule
Cash		265,910,679
Interest receivable		77,113,440
Purchase accrued interest (note 7)		44,086,942
Receivable for shares of beneficial interest sold		463,210
Receivable from bonds sold		2,058,500
TOTAL ASSETS		1,268,611,782
LIABILITIES
Payables and other liabilities:
Dividends payable		1,504,920
Payable for shares of beneficial interest redeemed		—
Management fees payable		520,141
Accrued expenses payable		628,703
TOTAL LIABILITIES		2,653,764
NET ASSETS	$	1,265,958,018
COMPOSITION OF NET ASSETS
Paid-in capital	$	1,287,195,651
Accumulated net realized gain		8,741,794
Net unrealized depreciation of investments		(29,979,427	)
NET ASSETS	$	1,265,958,018
NET ASSET PRICE AND REDEMPTION PRICE PER SHARE (based on 138,591,887 shares of beneficial interest outstanding at September 30, 2018 unlimited number of no par value shares authorized)	$	9.13
MAXIMUM OFFERING PRICE PER SHARE (net asset value plus sales charge of 4.75% of offering price)	$	9.59

See accompanying notes to financial statements.

27

Colorado BondShares

A Tax-Exempt Fund

Statement of Operations

For the Fiscal Year Ended September 30, 2018

INVESTMENT INCOME
Interest	$	54,571,033
EXPENSES
Management fees (note 4)		5,984,614
Custodian fees (note 5)		92,367
Legal and auditing fees		179,948
Portfolio pricing fees		31,494
Registration fees		11,370
Shareholders’ reports		93,579
Transfer agency expenses (note 4)		182,757
Trustees’ fees		12,045
Other		126,896
Total expenses		6,715,070
Custody credits (note 5)		(67,986	)
Net expenses		6,647,084
NET INVESTMENT INCOME		47,923,949
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments		8,849,974
Net unrealized appreciation on investments		5,152,413
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS		14,002,387
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	61,926,336

See accompanying notes to financial statements.

28

Colorado BondShares

A Tax-Exempt Fund

Statements of Changes in Net Assets

For the Fiscal Years Ended September 30

	2018			2017
FROM OPERATIONS:
Net investment income	$	47,923,949		$	49,322,705
Net realized gain on investments		8,849,974			2,024,480
Unrealized appreciation on investments		5,152,413			(7,899,878	)
Net increase in net assets resulting from operations		61,926,336			43,447,307
FROM DISTRIBUTIONS TO SHAREHOLDERS: (note 2)
Dividends to shareholders from net investment income		(47,923,949	)		(49,322,705	)
Net realized gain to shareholders from investment transactions		(2,461,987	)		(8,438,030	)
Total distributions to shareholders		(50,385,936	)		(57,760,735	)
FROM BENEFICIAL INTEREST TRANSACTIONS:
Proceeds from sale of shares		165,737,565			150,272,882
Reinvested dividends and distributions		33,688,617			38,653,680
Redemption of shares		(82,825,774	)		(98,802,502	)
Increase in net assets derived from beneficial interest transactions		116,600,408			90,124,060
Net increase in net assets		128,140,808			75,810,632
NET ASSETS:
Beginning of period		1,137,817,210			1,062,006,578
End of period	$	1,265,958,018		$	1,137,817,210

See accompanying notes to financial statements.

29

Colorado BondShares

A Tax-Exempt Fund

Financial Highlights

The financial highlights table is intended to help you understand the Fund’s financial performance. Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). Sales charges are not reflected in the total returns.

	For Fiscal Years Ended September 30
	2018			2017			2016			2015			2014
For a share outstanding throughout the period
Net asset value, beginning of period	$	9.05		$	9.18		$	9.14		$	9.11		$	9.00
Income From Investment Operations
Net investment income(1)		0.36			0.41			0.39			0.37			0.41
Net gain or (loss) on investments (both realized and unrealized)		0.10			(0.06	)		0.06			0.04			0.12
Increase from investment operations		0.46			0.35			0.45			0.41			0.53
Less Distributions
Dividends to shareholders from net investment income		(0.36	)		(0.41	)		(0.39	)		(0.37	)		(0.41	)
Distributions from realized capital gains	$	(0.02	)	$	(0.07	)	$	(0.02	)	$	(0.01	)	$	(0.01	)
Total Distributions		(0.38	)		(0.48	)		(0.41	)		(0.38	)		(0.42	)
Net increase (decrease) in net asset value					(0.13	)		0.04			0.03			0.11
Net Asset Value, end of period	$	9.13		$	9.05		$	9.18		$	9.14		$	9.11
Total Return, at Net Asset Value(2)		5.29	%		4.03	%		5.07	%		4.48	%		6.06	%
Ratios/Supplemental Data:
Ratios to average net assets:
Net investment income		4.00	%		4.54	%		4.29	%		4.03	%		4.52	%
Total expenses		0.56	%		0.62	%		0.56	%		0.58	%		0.71	%
Net expenses		0.56	%		0.61	%		0.55	%		0.58	%		0.70	%
Net assets, end of period (000s)	$	1,265,958		$	1,137,817		$	1,062,007		$	921,523		$	891,733
Portfolio turnover rate(3)		27.02	%		8.77	%		16.77	%		19.06	%		11.36	%

(1) Net investment income per share was calculated using an average shares method.

(2) 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.

(3) 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 value of portfolio securities owned during the period. Sales of securities include the proceeds of securities that have been called or for which payment has been made through redemption or maturity. Securities with a maturity date of one year or less at the time of acquisition are excluded from the calculation. Cost of purchases and proceeds from sales of investment securities (excluding short-term securities) for the period ended September 30, 2018 were $194,814,378 and $230,406,591 respectively.

See accompanying notes to financial statements.

30

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements

(1) Organization

Colorado BondShares — A Tax-Exempt Fund (the “Fund”) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management company. The Fund’s investment objectives are to maximize income exempt from federal income taxes and from personal income taxes of the State of Colorado to the extent consistent with the preservation of capital and to seek opportunities for capital appreciation. The Fund’s investment adviser is Freedom Funds Management Company (“Freedom Funds”).

(2) Summary of Significant Accounting Policies

These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. This requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. These financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of finanacial position and results of operations for the reporting period. The following summarizes the significant accounting policies of the Fund:

(a) Investment Valuation and Risk

Securities for which there is no last sales price are valued by an independent pricing service based on evaluated prices which considers such factors as transactions in bonds, quotations from bond dealers, market transactions in comparable securities and various relationships between securities, or are fair valued by management.

Securities for which market quotations are not readily available (or management considers otherwise are no longer valid or reliable) are valued at fair value determined in accordance with procedures approved by the Board of Trustees. This can occur in the event of, among other things, natural disasters, acts of terrorism, market disruptions, intra-day trading halts, and extreme market volatility. The determination of fair value involves subjective judgments. As a result, using fair value to price a security may result in a price materially different from the prices used by other mutual funds to determine net asset value or the price that may be realized upon the actual sale of the security. Short-term holdings are valued at current market quotations or amortized cost, whichever management believes best approximates fair value.

Fixed-income securities owned by the Fund are subject to interest-rate risk, credit risk, prepayment risk and market risk. The Fund invests in not rated securities which may be subject to a greater degree of credit risk and risk of loss of income and principal and may be more sensitive to economic conditions than lower yielding, higher rated fixed income securities. The Fund concentrates its investments in Colorado and, therefore, may be impacted by specific events, issuers or factors affecting Colorado. The Fund has more credit risk related to the economic conditions of Colorado than a portfolio with a broader geographical diversification.

31

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

Accounting Standards Codification (“ASC”) 820 Fair Value Measurements and Disclosures establishes a fair value hierarchy that classifies securities based on valuation techniques used to measure fair value and distinguish between observable inputs (market data obtained from independent sources) and the reporting entities own assumptions, which are not readily observable to market participants. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).

Level 1 Inputs:    Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 Inputs:    Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 Inputs:    Significant unobservable inputs for the asset or liability including management’s own assumptions. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

The following table summarizes the valuation of the Fund’s investments as defined by ASC 820 hierarchy levels as of September 30, 2018:

Valuation Inputs Summary

	Colorado Municipal Bonds		Short-Term Municipal Bonds		Other Municipal Bonds		Colorado Capital Appreciation and Zero Coupon Bonds		Colorado Taxable Certificates/ Notes/Bonds		Total Securities September 30, 2018
Level 1 Securities	$	—	$	—	$	—	$	—	$	—	$	—
Level 2 Securities		519,160,785		181,269,204		87,459,461		57,264,952		6,787,804		851,942,206
Level 3 Securities		18,651,977		—		4,904,915		3,352,312		127,601		27,036,805
Totals	$	537,812,762	$	181,269,204	$	92,364,376	$	60,617,264	$	6,915,405	$	878,979,011

32

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

	Colorado Municipal Bonds			Short-Term Municipal Bonds			Other Municipal Bonds		Colorado Capital Appreciation and Zero Coupon Bonds			Colorado Taxable Certificates/ Notes/Bonds			Totals
Level 3 Beginning Balance September 30, 2017	$	19,880,977		$	20,300,000		$	4,904,915	$	5,524,040		$	1,934,119		$	52,544,051
Unrealized Losses		(301,429	)		(5,067,929	)		—		(588,470	)		—			(5,957,828	)
Unrealized Gains		—			—			—		—			—			—
Realized Losses		—			—			—		—			—			—
Realized Gains		37,531			4,558,656			—		702,771			—			5,298,958
Purchases		3,837			—			—		—			—			3,837
Sales		(41,701	)		(19,790,727	)		—		(2,286,029	)		(1,806,518	)		(23,924,975	)
Transfers In to Level 3*		1,604,173			—			—		—			—			1,604,173
Transfers Out of Level 3*		(2,531,411	)		—			—		—			—			(2,531,411	)
Balance as of September 30, 2018	$	18,651,977		$	—		$	4,904,915	$	3,352,312		$	127,601		$	27,036,805

* Transfers from Level 2 to Level 3 are because of a lack, or change of observable inputs or reduced market data reliability. Transfers from Level 3 to Level 2 are the result of observable inputs becoming available or increased market data reliability. The Fund’s policy is to recognize transfers into and out of Level 3 when management becomes aware of a change to significant observable input or market data reliability.

From September 30, 2017 to September 30, 2018, there were no Level 1 Securities.

Significant Unobservable Inputs Quantitative Disclosure

Level 3 Securities*	Fair Value as of September 30, 2018		Valuation Technique(s)**	Unobservable Inputs	Low		High		Weighted Average
Colorado Municipal Bonds	$	18,651,977	discounted cash flow	probability of default		10.00%		100.00%		28.12%
			consensus pricing	Bond Dealer #1		0.00%		100.00%		48.92%
Short-Term Municipal Bonds		—	discounted cash flow	probability of default		0.00%		0.00%		0.00%
			consensus pricing	Bond Dealer #1		0.00%		0.00%		0.00%
Other Municipal Bonds		4,904,915	discounted cash flow	probability of default		10.00%		10.00%		10.00%
			consensus pricing	Bond Dealer #1		100.00%		100.00%		100.00%
Colorado Capital Appreciation and Zero Coupon Bonds		3,352,312	discounted cash flow	probability of default		100.00%		100.00%		100.00%
			consensus pricing	Bond Dealer #1		44.87%		44.87%		44.87%
Colorado Taxable Certificates/Notes/Bonds		127,601	discounted cash flow	probability of default		10.00%		10.00%		10.00%
			consensus pricing	Bond Dealer #1		56.25%		56.25%		56.25%
Total Level 3 Securities at September 30, 2018	$	27,036,805

The significant unobservable inputs used in the fair value measurement of the Fund’s securities are collateral value, probability of default, and loss severity in the event of default. Any changes in unobservable inputs may result in substantial changes to fair value measurements.

33

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

* The inputs for these securities are not readily available or cannot be reasonably estimated and are generally those inputs described in Note 2(a). The appropriateness of fair values for these securities is based on results of back testing, broker due diligence, unchanged price review and consideration of macro or security specific events.

** Other unobservable inputs used in the discounted cash flow technique include collateral value and loss severity. These unobservable inputs are specific to the characteristics of each security being valued.

(b) Cash

The Fund continually monitors its positions with, and the credit quality of, the financial institutions with which it invests. As of September 30, 2018, and periodically throughout the year, the Fund has maintained balances in various operating accounts in excess of federally insured limits.

(c) Income Tax Information and Distributions to Shareholders

The Fund intends to comply with the requirements of Subchapter M of the Internal Revenue Code, as amended, applicable to regulated investment companies and to distribute all its net investment income and any net realized gain on investments not offset by capital loss carryforwards to shareholders. The Fund distributes investment income monthly and due to the tax-exempt nature of its investments, the income is generally non-taxable to the shareholders. The Fund distributes net realized capital gains, if any, to its shareholders at least annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences are primarily due to the differing treatment of tax allocations.

Management has reviewed the Fund’s tax position for all open tax years. As of September 30, 2018, the Fund did not have a liability for any unrecognized tax obligations. The fund recognizes interest and penalties, if any, related to unrecognized tax obligations as income tax expense in the Statement of Operations. The Fund has no examinations in progress.

The tax components of undistributed net tax-exempt income, net ordinary income and net long-term capital gains were as follows during the Fund’s tax years ended September 30, 2018 and September 30, 2017:

	2018		2017
Undistributed net tax-exempt income	$	—	$	—
Undistributed net ordinary income*		1,357,460		1,217,952
Undistributed net long-term capital gain		6,583,724		600,301

* Net ordinary income consists of taxable market discount income and net short-term capital gains, if any.

34

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

The tax character of distributions paid during the Fund’s tax years ended September 30, 2018 and September 30, 2017 was designated for purposes of the dividends paid deduction as follows:

	2018		2017
Distributions from net tax-exempt income*	$	47,876,432	$	48,722,633
Distributions from net ordinary income**		2,381,563		587,475
Distributions from net long-term capital gain		600,302		8,356,287

* The Fund hereby designates this amount paid during the fiscal year ended September 30, 2018, as Exempt Interest Dividends.

** Net ordinary income consists of taxable market discount income, taxable interest income and net short-term gains, if any.

At September 30, 2018, the cost and unrealized appreciation (depreciation) of investments, as determined on a federal income tax basis , were as follows:

Cost of investments	$	908,958,438
Gross unrealized appreciation	$	10,447,747
Gross unrealized depreciation		(40,427,174	)
Net unrealized depreciation of investments	$	(29,979,427	)

For tax purposes, capital losses may be carried over to offset future capital gains, if any. Under the Regulated Investment Company Modernization Act of 2010, capital losses incurred by the Fund in taxable years beginning after December 22, 2010 are not subject to expiration and such losses retain their character as either short-term or long-term, rather than being considered short-term as under previous law. Post-enactment capital losses must be fully utilized prior to utilizing any losses incurred in pre-enactment tax years. At September 30, 2018, the Fund did not have any capital loss carryforwards.

(d) Defaulted or Non-income Producing Investments

The Fund discontinues the accrual of interest income on municipal bonds when the securities become delinquent as to payment of principal or interest, or when the Fund’s investment adviser determines that an uncertainty exists as to the realization of all or a portion of the principal balance. The face amount of bonds for which the accrual of interest income has been discontinued approximates $63,372,347 and such bonds have a value of $24,152,364 or 1.91% of net assets, as of September 30, 2018. These securities have been identified in the accompanying Schedule of Investments.

The Fund has entered into forbearance agreements with one district under which it agrees that the issuer may pay a reduced rate of interest in lieu of the contract rate for a period of time. Face amount of the bonds for which the Fund has entered into forbearance agreements total $27,375,000 and have a value of $18,299,627 or 1.45% of net assets, as of September 30, 2018. These securities have been identified in the Schedule of Investments.

35

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

(e) Investment Transactions and Revenue Recognition

Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Purchases and sales of securities, other than short-term securities, aggregated to $194,814,378 and $230,406,591 respectively.

Dividends to shareholders are declared each business day and paid monthly. Distributions to shareholders are recorded on the ex-dividend date. Realized gains and losses from investment transactions are calculated using the identified-cost basis, which is the same basis the Fund uses for federal income tax purposes. Interest income is recorded on the accrual basis.

Variable Rate Demand Obligations (“VRDO”) purchased by the Fund are floating rate obligations that have a nominal long-term maturity but have a coupon rate that is reset periodically (e.g., daily or weekly). The investor has the option to put the issue back to the trustee or tender agent at any time with specified (e.g., seven days) notice; accordingly the Fund treats these obligations as short-term holdings. On September 30, 2018, the interest rates paid on these obligations ranged from 1.55% to 1.65%.

(f) Classification of Distributions to Shareholders

The character of distributions made during the year from net investment income or net realized gains may differ from its ultimate characterization for federal income tax purposes. Also, due to timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund.

(g) Securities Purchased on a When-Issued Basis

The Fund may purchase securities on a when-issued basis with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and may increase or decrease in value prior to the delivery date. The Fund maintains segregated assets with a value equal to or greater than the amount of its purchase commitments. The Fund did not have any when-issued securities at September 30, 2018.

(3) Shares of Beneficial Interest

The Fund has an unlimited number of no par value shares of beneficial interest authorized. Transactions in shares of beneficial interest were as follows:

	Years Ended September 30,
	2018				2017
	Shares		Amount		Shares		Amount
Shares sold		18,268,580	$	165,737,565		16,690,637	$	150,272,882
Dividends reinvested		3,714,640		33,688,617		4,302,757		38,653,680
		21,983,220		199,426,182		20,993,394		188,926,562

36

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

	Years Ended September 30,
	2018						2017
	Shares			Amount			Shares			Amount
Shares redeemed		(9,126,410	)	$	(82,825,774	)		(10,993,823	)	$	(98,802,502	)
Net increase in shares outstanding		12,856,810		$	116,600,408			9,999,571		$	90,124,060

(4) Management Fees and Other Transactions with Affiliates

Management fees paid to Freedom Funds were in accordance with the investment advisory agreement with the Fund which provides for an annual fee equivalent to 0.5% of the net assets of the Fund. Freedom Funds pays all expense associated with advertising, marketing, and distributing the Fund’s shares and serves as the transfer agent, dividend disbursing agent, and registrar for the Fund. Freedom Funds provided certain transfer agency and shareholder services as part of the management fee arrangement for the period ended September 30, 2018. Transfer agency expenses on the Statement of Operations represent direct expenses charged to the Fund by third parties.

Allen Insurance, an affiliate of the investment adviser, acted as agent for the Fidelity Bond and the Errors and Omissions insurance policy maintained by the Fund and as a result received compensation in the form of commissions. The policies were provided by Traveler’s Insurance Company and all the commissions referred to above were paid by Travelers. Allen Insurance received no compensation directly from the assets of the Fund.

The Fund does not have any Trustees who are affiliated with the Adviser or Distributor. The Board of Trustees appointed a Chief Compliance Officer to the Fund in accordance with federal securities regulations. The Fund does not reimburse the Adviser for any compensation or fees associated with the Chief Compliance Officer.

(5) Custody Credits

Expenses paid indirectly by the Fund represent earnings credits on cash balances maintained with the Fund’s custodian bank, UMB Bank, N.A. The earnings credits resulted in offsetting custodian fees of $67,986 for the period ended September 30, 2018.

(6) Indemnification

From time to time the Fund may be involved in certain disputes and legal actions arising in the ordinary course of its business. While it is not feasible to predict or determine the outcome of these proceedings, in management’s opinion, based on a review with legal counsel, none of these disputes and legal actions is expected to have a material impact on its financial position or results of operations. However, litigation is subject to inherent uncertainties, and an adverse result in these matters may arise from time to time that may harm the Fund’s business.

37

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

In the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Fund that have not yet occurred. However, based on experience, the Fund expects the risk of loss to be remote.

(7) Purchase Accrued Interest

Purchase accrued interest is typically a component of a municipal bond purchase and is paid on settlement date. The accrual period begins on the last interest payment date (or original issue date) and runs through the day immediately preceding the settlement date. The Fund has purchased three bonds from the Meadows Metropolitan Districts No. 1, 2 and 7 with an aggregate balance of purchase accrued of $44,026,872 (99.9% of the September 30, 2018 balance of $44,086,942). Approximately $69,452,093 of additional interest has accrued on the purchase accrued interest since its purchase in 2007. This additional accrued interest has been fair valued in accordance with ASC 820 at approximately $51,742,233 and is included in other assets net of liabilities in the Schedule of Investments. This amount bears interest at the rate of 7.999% and will be received over an uncertain period of years. The value of the Meadows bonds is contained within three separate line items of the financial statements which all relate to a single set of bonds that cannot be sold separately.

(8) Litigation

The Fund is periodically involved in various legal proceedings. At September 30, 2018, the Fund has a litigation accrual of $423,011 for all pending litigation matters primarily for the purpose of paying lawyer fees. Possible additional amounts cannot be currently estimated but will be set aside as needed. Although there can be no assurances, based on information available, management believes that it is probable that the ultimate outcome of the action described below and other matters that are pending or threatened will not have a material effect on the Fund’s financial condition.

Marin Metropolitan District LTD Tax G.O. Series 2008

The Fund is the beneficial owner of bonds issued in 2008 (the “Bonds”), by Marin Metropolitan District (the “District”), as described more fully in these financial statements. The original principal amount of the Bonds was $30,485,000. The current principal amount of the Bonds is $17,485,000. The valuation of these Bonds as of September 30, 2018 was set forth in the schedule of investments included in these financial statements.

On June 1, 2011, Landmark Towers Association, Inc. (“Landmark”), a homeowners association, filed an action on behalf of its members entitled Landmark Towers Ass’n, et al. v. UMB Bank, et al., Case Number 2011-CV-1076 in Arapahoe County District Court, Colorado (“Landmark Litigation”). The complaint filed in the Landmark Litigation sought a temporary restraining order, declaratory relief and permanent

38

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

injunction against the District, the Fund, and UMB Bank (“UMB”), the trustee, alleging that the taxes imposed by the District pledged to pay the Bonds violated Colorado’s Tax Payer Bill of Rights (“TABOR”).

In August 2011, Landmark sought to freeze approximately $13,000,000 in original proceeds from the sale of the Bonds to the Fund, which moneys were held by UMB as trustee. The District Court denied Landmark’s efforts to freeze the $13,000,000 and allowed those moneys to be paid to the Fund, which reduced the principal amount of the Bonds to the current level.

In July and August of 2013, the District Court held a bench trial regarding Landmark’s claims for declaratory relief and permanent injunction. On September 6, 2013, the District Court issued an order (“Sept. 6 Order”) that the District was properly formed and that the election approving the taxes was proper, but nonetheless held that there were violations of TABOR relating to the property taxes. In particular, the District Court held that (1) bond proceeds were used to pay improper charges of the developer; (2) the taxes exceeded the maximum mill levy for debt service; and (3) the taxes did not benefit the Landmark taxpayers. After holding that the taxes did not provide a benefit to the Landmark taxpayers, the Court enjoined the District from imposing its taxes on the Landmark members for purposes of paying the Bonds (the “Injunction”). The Fund, the District, and UMB filed a motion for reconsideration of the Sept. 6 Order, which the District Court denied in an order dated October 31, 2013 (“Oct. 31 Order”).

While the Fund was not found to be responsible for damages based on the asserted TABOR violations, the District Court on March 10, 2014, entered an order allowing Landmark to pursue claims for fraudulent transfer and constructive trust that could result in the Fund being ordered to pay some or all of the tax refund obligations of the District.

In August 2014, the District Court held a four-day trial on the newly asserted claims against the Fund, and on September 10, 2014, the District Court issued an order (the “Sept. 10 Order”) denying each of the new claims asserted against the Fund. Landmark, however, filed a post-trial motion for reconsideration of the Sept. 10 Order, which motion was denied on November 12, 2014.

The Fund filed a Notice of Appeal of the Sept. 6 Order and the Oct. 31 Order, including the Injunction.

On April 21, 2016, the Colorado Court of Appeals issued an Opinion (the “April 2016 Opinion”), in which it concluded that the TABOR election held for approving the Bonds and the District’s ad valorem property taxes was invalid because eligible electors were denied the right to vote in the election and that ineligible electors voted in the election. Based on those decisions, the Court of Appeals upheld the injunction against the District, prohibiting it from levying taxes for payment of the Bonds.

The April 2016 Opinion created uncertainty in the Colorado public finance market in that it calls into question the process that is routinely used to qualify electors for special district elections in Colorado. Emergency legislation was introduced in the Colorado legislature to remove the uncertainty and any impact the April 2016 Opinion may have on other special district financings. The Colorado General Assembly unanimously passed the legislation, and it was signed by the Governor on May 18, 2016.

39

Colorado BondShares

A Tax-Exempt Fund

Notes to Financial Statements — (Continued)

In a further effort to reduce any impact the April 2016 Opinion may have on the Colorado public finance market, the Fund filed a Petition for Rehearing with the Court of Appeals, asking it to withdraw a portion of its April 2016 Opinion as unnecessary. That Petition was filed on May 5, 2016, and was denied on May 12, 2016.

The Fund filed a petition with the Colorado Supreme Court to review the April 2016 Opinion on various grounds. On November 7, 2016, the Supreme Court granted the petition for review. On December 11, 2017, the Supreme Court reversed the April 2016 Opinion on the grounds that all claims challenging the election held by the District in 2007 were barred under C.R.S. § 1-11-213(4) (which requires an election contest to be filed no later than 10 days after the certification of the results of an election). The Supreme Court, however, remanded the case back to the Court of Appeals to decide issues that were not decided in the April 2016 Opinion.

On January 8, 2018, Landmark filed a Petition for Rehearing asking the Supreme Court to reconsider its decision to reverse the April 2016 Opinion. On January 22, 2018, the Supreme Court denied the Petition for Rehearing.

On May 5, 2018, the Court of Appeals issued an opinion on remanded issues (the “May 2018 Opinion”), concluding that the due process rights of the District taxpayers were violated and upholding the injunction that prevents the District from collecting taxes for repayment of the Bonds.

The Fund filed a petition with the Colorado Supreme Court to review the May 2018 Opinion on various grounds. The petition to the Supreme Court was fully briefed on August 31, 2018. The Supreme Court has not yet taken action on the petition for review.

However, it is not possible to determine the direction, cost, duration or ultimate outcome of the Landmark Litigation. In addition, litigation is expensive and time consuming and, while the Fund fully intends to recover its costs, there can be no assurance that this will occur and there could be further adverse effects on dividend distributions and net asset values of the Fund while the matter is pending.

(9) Subsequent Events

Management has evaluated the possibility of subsequent events in the Fund’s financial statements through the date of issuance. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.

40

A Tax-Exempt Fund

ANNUAL REPORT

September 30, 2018

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 (Principal Executive Officer) and Treasurer (Principal Financial Officer).

(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” as such term is defined by the Securities and Exchange Commission pursuant to Item 3 of Form N-CSR, as no single individual appears to meet all of the independence and the financial training/experience qualifications outlined in the instructions to Form N-CSR. The board of trustees, which serves as the audit committee, has determined that it collectively has experience evaluating financial statements and understanding internal control over financial reporting and the audit committee function and has sufficient financial expertise to adequately perform its duties without the addition of an expert.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table shows the amount of fees and reimbursable expenses that EKS&H LLLP, the registrant’s independent registered public accounting firm, billed to the registrant during the registrant’s last two fiscal years. For the reporting periods, the audit committee approved in advance all services that EKS&H LLLP provided to the registrant.

The aggregate fees billed by the registrant’s independent registered public accounting firm, for professional services in the registrant’s fiscal years ended September 30, 2018 and 2017 are as follows:

	2018		2017
(a) Audit Fees	$	105,000	$	125,000
(b) Audit-Related Fees	$	0	$	0
(c) Tax Fees	$	0	$	0
(d) All Other Fees	$	0	$	0

The above “Audit Fees” were billed for amounts related to the audit of the registrant’s financial statements and services normally provided by the accountant in connection with statutory and regulatory filings.

(e)(1) The board of trustees serves as the audit committee and 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, 2018 and 2017.

(h) The registrant’s independent registered public accounting firm did not provide any non-audit services to the registrant in the registrant’s fiscal years ended September  30, 2018 and 2017.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. INVESTMENTS.

(a) Please see the Schedule of Investments contained in the Annual Report included under Item 1 of this Form N-CSR.

(b) 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.

(a) The registrant has adopted and maintained disclosure controls and procedures (as such term is defined in Rules 30a-3(c) under the Investment Company Act of 1940, as amended (the “Act”)) that are designed to ensure that information required to be disclosed in the registrant’s reports under the Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is accumulated and communicated to the registrant’s management, including its principal executive officer and principal financial officer to allow for timely decisions regarding required disclosure.

As required by Rule 30a-3(b) of the Act, the registrant carried out an evaluation under the supervision and with the participation of its management, including its principal executive officer and principal financial officer, of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures within the 90-day period prior to the filing date of this report. Based on the foregoing, the registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures were effective, as of that date.

(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

ITEM 12. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 13. EXHIBITS.

(a)(1)	Not applicable (See Item 2(f)(3) of this report).
(a)(2)(i)
(99.302)	Interim President’s (Principal Executive Officer) Section 302 Certification
(a)(2)(ii)
(99.302)	Interim Treasurer’s (Principal Financial Officer) Section 302 Certification
(a)(4)(i)	Change in Independent Registered Public Accounting Firm
(a)(4)(ii)	EKS&H Letter to Securities and Exchange Commission
(b)
(99.906)	Combined Interim President & Treasurer (Principal Executive Officer and Principal Financial Officer) Section 906 Certification

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/ George N. Donnelly
	George N. Donnelly Interim President, Secretary and Treasurer

Date: December 6, 2018

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/ George N. Donnelly

George N. Donnelly

Interim President, Secretary and Treasurer

(Principal Executive Officer and

Principal Financial Officer)

Date: December 6, 2018

EX-99.302 CERT

EXHIBIT (a)(2)(i) 99.302 CERT

I, George N. Donnelly, certify that:

1. I have reviewed this report on Form N-CSR of Colorado BondShares — A Tax-Exempt Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 6, 2018

/s/ George N. Donnelly

George N. Donnelly

Interim President

(Principal Executive Officer)

EXHIBIT (a)(2)(ii) 99.302 CERT

I, George N. Donnelly, certify that:

1. I have reviewed this report on Form N-CSR of Colorado BondShares — A Tax-Exempt Fund;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed to the registrant’s auditors and audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 6, 2018

/s/ George N. Donnelly

George N. Donnelly

Interim Treasurer

(Principal Financial Officer)

EX-99.13(A)(4)(I)

Exhibit 99.13(a)(4)(i)

Change in Independent Registered Public Accounting Firm

Effective October 1, 2018, EKS&H LLLP (“EKS&H”), the Fund’s independent registered public accounting firm, combined with Plante & Moran PLLC (‘‘Plante Moran”). As a result of this transaction, on October 1, 2018, EKS&H resigned as the independent registered public accounting firm for the Fund. The Board of Trustees of the Fund approved the engagement of Plante Moran as the independent registered public accounting firm of the Fund with such appointment to be effective as of October 1, 2018.

EKS&H’s reports on the financial statements of the Fund for the Fund’s two most recent fiscal years ended September 30, 2016 and 2017, and the interim period preceding Plante Moran’s engagement contained no adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the Fund’s fiscal years ended September 30, 2016 and 2017, and the interim period preceding Plante Moran’s engagement, there were (a) no disagreements between the Fund and EKS&H on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, and (b) no reportable events as described in Item 304(a)(l)(v) of Regulation S-K.

During the Fund’s two most recent fiscal years ended September 30, 2016 and 2017, and through the subsequent interim period preceding Plante Moran’s engagement, neither the Fund nor anyone on its behalf has consulted with Plante Moran on either (a) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Fund’s financial statements, and Plante Moran did not provide either a written report or oral advise to the Fund that Plante Moran concluded was an important factor considered by the Fund in reaching a decision as to the accounting, auditing or financial reporting issue; or (b) any matter that was the subject of a disagreement (as defined in paragraph (a)(l)(iv) of Item 304 of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended and the related instructions thereto) or a reportable event (as described in paragraph (a)( 1 )(v) of said Item 304 of Regulation S-K).

The Fund provided EKS&H with a copy of the above disclosures and requested that EKS&H furnish the Fund with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the foregoing statements and, if not, stating the respects in which it does not agree. A copy of that letter is filed as an exhibit to this Form N-CSR.

EX-99.13(A)(4)(II)

Exhibit 99.13(a)(4)(ii)

November 16, 2018

Securities and Exchange Commission

Washington, D.C. 20549

Commissioners:

We have read the statements made by Colorado BondShares – A Tax-Exempt Fund (the “Fund”) included under the caption “Change in Independent Registered Public Accounting Firm” in Exhibit 99.13(a)(4)(i) to the Fund’s Annual Report on Form N-CSR for the fiscal year ended September 30, 2018, which we understand will be filed with the Securities and Exchange Commission pursuant to paragraph (a)(4) of Item 13 on Form N-CSR, and we agree with such statements concerning our firm.

/s/ EKS&H LLLP

EKS&H LLLP

EX-99.906 CERT

EXHIBIT (b) 99.906 CERT

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certifies in his capacity as Treasurer and President, respectively, of COLORADO BONDSHARES — A TAX-EXEMPT FUND (the “Fund”), that:

(a) The Form N-CSR of the Fund for the period ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Act of 1934, as amended; and

(b) the information contained in the Report fairly presents, in all material respects, the financial condition and the results of operations of the Fund.

SIGNED ORIGINAL OF THIS WRITTEN STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO COLORADO BONDSHARES — A TAX-EXEMPT FUND AND WILL BE RETAINED BY THE TRUST AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.

Colorado BondShares — A Tax-Exempt Fund

Date: December 6, 2018

/s/ George N. Donnelly

George N. Donnelly

Interim President and Treasurer

(Principal Executive Officer and Principal Financial Officer)