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SIGNATURE FRED R. KELLY, JR.
TITLE PORTFOLIO MANAGER
EXHIBIT 99
INDEPENDENT AUDITORS' REPORT
THE TRUSTEES AND SHAREHOLDERS OF
COLORADO BONDSHARES -
A TAX-EXEMPT FUND:
We have audited the accompanying statements of investments and assets and
liabilities of Colorado BondShares - A Tax-Exempt Fund as of September 30, 1997,
and the related statement of operations for the year then ended, the statements
of changes in net assets for each of the years in the two-year period then ended
and the financial highlights for each of the years in the ten-year period then
ended. 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
audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of September 30, 1997, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide 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, 1997, the results of
its operations for the year then ended, the changes in its net assets for each
of the years in the two-year period then ended, and the financial highlights for
each of the years in the ten-year period then ended, in conformity with
generally accepted accounting principles.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 24, 1997
<PAGE>
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
COLORADO BOND SHARES - A TAX-EXEMPT FUND:
In planning and performing our audit of the financial statements of Colorado
Bond Shares - A Tax-Exempt Fund for the year ended September 30, 1997, we
considered its internal control structure, including procedures for safeguarding
securities, in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal control
structure.
The management of Colorado Bond Shares - A Tax-Exempt Fund is responsible for
establishing and maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of internal control structure policies and
procedures. Two of the objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition and that
transactions are executed in accordance with management's authorization and
recorded properly to permit preparation of financial statements in conformity
with generally accepted accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and may not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it may
become inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we considered to be material weaknesses as defined above as of
September 30, 1997.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission and should not be used for any other purpose.
KPMG PEAT MARWICK LLP
Denver, Colorado
October 24, 1997
EXHIBIT 99
ATTACHMENT 77G
For the period ending: 09/30/96
File number: 811-05009
DEFAULTS & ARREARS ON SENIOR SECURITIES
<TABLE>
<S> <C>
1) Briargate Public Building Authority, Landowner Assessment Lien Series 1985A
and 1986A
In default: Interest
Nature of Default: (partial default) District did not make timely interest payment.
Date of Default: December 15, 1990
Default per $1,000 face: $ 514,414
2) Town of Castle Rock, Local Improvement District 1988-2
In default: Interest
Nature of Default: (partial default) District did not make timely interest
payment.
Date of Default: December 1, 1993 (50% interest payment)
June 1, 1994 no interest payment
Default per $1,000 face: $ 530,000
3) El Paso County, Colorado Pheasant Run LID 86-2 Local Improvement District
In default: Interest
Nature of Default: District did not make timely interest payment.
Date of Default: March, 1994
Default per $1,000 face: $ 100,000
4) Mesa County Single Family Mortgage Revenue Series 1982
In default: Interest
Nature of Default: District did not make timely interest payment.
Date of Default: December 1, 1995
Default per $1,000 face: $ 220,000
5) Northgate Public Building Authority Landowner Assessment Lien Series 1987A
In default: Interest
Nature of Default: District did not make timely interest payment.
Date of Default: July 1, 1991
Default per $1,000 face: $ 20,000
</TABLE>
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<NAME> COLORADO BONDSHARES A TAX-EXEMPT FUND
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 64,346,398
<INVESTMENTS-AT-VALUE> 65,260,917
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