<PAGE> PAGE 1
000 B000000 09/30/1999
000 C000000 0000810744
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 Y
000 H000000 N
000 I000000 6.1
000 J000000 A
001 A000000 COLORADO BONDSHARES - A TAX-EXEMPT FUND
001 B000000 811-05009
001 C000000 3035726990
002 A000000 1200 17TH STREET, SUITE 1000
002 B000000 DENVER
002 C000000 CO
002 D010000 80202
002 D020000 5835
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
007 C011100 11
007 C011200 12
007 C011300 13
007 C011400 14
007 C011500 15
007 C011600 16
007 C011700 17
007 C011800 18
007 C011900 19
007 C012000 20
007 C012100 21
007 C012200 22
007 C012300 23
007 C012400 24
007 C012500 25
007 C012600 26
007 C012700 27
007 C012800 28
<PAGE> PAGE 2
007 C012900 29
007 C013000 30
007 C013100 31
007 C013200 32
007 C013300 33
007 C013400 34
007 C013500 35
007 C013600 36
007 C013700 37
007 C013800 38
007 C013900 39
007 C014000 40
007 C014100 41
007 C014200 42
007 C014300 43
007 C014400 44
007 C014500 45
007 C014600 46
007 C014700 47
007 C014800 48
007 C014900 49
007 C015000 50
013 A000001 FORTNER BAYNES LEVKULICH & CO PC
013 B010001 DENVER
013 B020001 CO
013 B030001 80202
015 B000001 C
015 B000004 C
019 B000000 0
020 C000001 0
020 C000002 0
020 C000003 0
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
020 C000010 0
021 000000 0
022 A000001 BIGELOW & COMPANY
022 B000001 84-1305681
022 C000001 3805
022 D000001 0
022 A000002 KIRKPATRICK PETTIS
022 B000002 47-0301070
022 C000002 17785
022 D000002 2450
022 A000003 NEWMAN ASSOCIATES
022 B000003 84-0775574
022 C000003 1885
<PAGE> PAGE 3
022 D000003 0
022 A000004 STIFEL NICOLAUS
022 B000004 43-0538770
022 C000004 72
022 D000004 0
022 A000005 US BANK
022 B000005 84-1019337
022 C000005 1087
022 D000005 0
022 C000006 0
022 D000006 0
022 C000007 0
022 D000007 0
022 C000008 0
022 D000008 0
022 C000009 0
022 D000009 0
022 C000010 0
022 D000010 0
023 C000000 24639
023 D000000 2450
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
027 000000 Y
028 A010000 1040
028 A020000 245
028 A030000 0
028 A040000 408
028 B010000 1337
028 B020000 249
028 B030000 0
028 B040000 563
028 C010000 786
028 C020000 229
028 C030000 0
028 C040000 112
028 D010000 1053
028 D020000 242
028 D030000 0
028 D040000 296
028 E010000 583
028 E020000 259
028 E030000 0
028 E040000 457
028 F010000 605
<PAGE> PAGE 4
028 F020000 244
028 F030000 0
028 F040000 479
028 G010000 5404
028 G020000 1467
028 G030000 0
028 G040000 2316
028 H000000 4571
030 A000000 176
030 B000000 4.75
030 C000000 0.20
031 A000000 32
031 B000000 0
032 000000 126
033 000000 18
035 000000 0
036 B000000 0
038 000000 0
042 A000000 0
042 B000000 0
042 C000000 0
042 D000000 0
042 E000000 0
042 F000000 0
042 G000000 0
042 H000000 0
043 000000 0
044 000000 0
045 000000 Y
046 000000 N
047 000000 Y
048 000000 0.500
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
<PAGE> PAGE 5
048 J020000 0.000
048 K010000 0
048 K020000 0.000
049 000000 N
050 000000 N
051 000000 N
052 000000 N
053 A000000 N
055 A000000 N
055 B000000 N
061 000000 500
062 A000000 Y
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 8.3
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 6.6
062 M000000 0.0
062 N000000 0.0
062 O000000 85.1
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 12.2
064 A000000 Y
064 B000000 Y
065 000000 N
066 A000000 N
071 A000000 24639
071 B000000 16533
071 C000000 75331
071 D000000 22
072 A000000 12
072 B000000 5269
072 C000000 0
072 D000000 0
072 E000000 0
072 F000000 399
072 G000000 0
072 H000000 0
072 I000000 54
072 J000000 0
072 K000000 0
072 L000000 24
<PAGE> PAGE 6
072 M000000 1
072 N000000 0
072 O000000 0
072 P000000 0
072 Q000000 0
072 R000000 17
072 S000000 15
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 4
072 X000000 514
072 Y000000 0
072 Z000000 4755
072AA000000 7
072BB000000 0
072CC010000 0
072CC020000 1968
072DD010000 4698
072DD020000 0
072EE000000 0
073 A010000 0.5600
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 4281
074 B000000 0
074 C000000 6988
074 D000000 71674
074 E000000 0
074 F000000 0
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 0
074 K000000 0
074 L000000 1647
074 M000000 0
074 N000000 84590
074 O000000 23
074 P000000 0
074 Q000000 0
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 425
074 S000000 0
074 T000000 84142
074 U010000 8932
074 U020000 0
074 V010000 9.42
<PAGE> PAGE 7
074 V020000 0.00
074 W000000 0.0000
074 X000000 1374
074 Y000000 5124
075 A000000 0
075 B000000 79750
076 000000 0.00
077 A000000 Y
077 B000000 Y
077 C000000 N
077 D000000 N
077 E000000 N
077 F000000 N
077 G000000 Y
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 Y
077 L000000 N
077 M000000 N
077 N000000 N
077 O000000 N
077 P000000 N
077 Q010000 Y
077 Q020000 N
077 Q030000 N
080 A000000 ST. PAUL MERCURY INSURANCE CO.
080 C000000 450
081 A000000 N
081 B000000 0
082 A000000 Y
082 B000000 10
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 N
086 A010000 0
086 A020000 0
086 B010000 0
086 B020000 0
086 C010000 0
086 C020000 0
086 D010000 0
086 D020000 0
086 E010000 0
086 E020000 0
086 F010000 0
086 F020000 0
SIGNATURE FRED R. KELLY, JR.
TITLE PORTFOLIO MANAGER
ITEM 77B
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Trustees and Shareholders
Freedom Funds Management Company, Inc.
We have examined management's assertion, included in its
representation letter dated November 11, 1999, that Freedom Funds Management
Company, Inc. (the Company) "maintained effective internal controls, including
the appropriate segregation of responsibilities and duties, over the transfer
agent and registrar functions, as of September 30, 1999 and that no material
inadequacies as defined by Rule 17Ad-13(a)(3) of the Securities Exchange Act of
1934 existed at such date." The following management investment company
registered under the Investment Company Act of 1940 is served by the transfer
agent operations covered by our review: Colorado BondShares - A Tax-Exempt
Fund.
Our examination was made in accordance with standards established by
the American Institute of Certified Public Accountants and, accordingly,
included a study and evaluation of internal controls over the transfer agent
and registrar functions, using the objectives set forth in Rule 17Ad-13(a)(3)
of the Securities Exchange Act of 1934. Those objectives are to provide
reasonable, but not absolute, assurance that securities and funds are
safeguarded against loss from unauthorized use or disposition and that transfer
agent activities are performed promptly and accurately. We believe that our
examination provides a reasonable basis for our opinion.
Because of inherent limitations in internal controls, errors may
occur and may not be detected. Also, projection of any evaluation of internal
controls to future periods is subject to the risk that they may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
In our opinion, management's assertion that, as of September 30,
1999, the Company maintained effective internal controls, including the
appropriate segregation of responsibilities and duties over the transfer agent
and registrar functions, and that no material inadequacies existed as defined
by Rule 17Ad-13(a)(3) of the Securities Act of 1934, is fairly stated, in all
material respects, based on the criteria established by Rule 17Ad-13(a)(3) of
the Securities Exchange Act of 1934.
This report is intended solely for the information and use of the
Board of Trustees and management of the Company and the Securities and Exchange
Commission and should not be used for any other purpose.
/s/ Fortner, Bayens, Levkulich
and Co., P.C.
Denver, Colorado
November 11, 1999
EXHIBIT 99
ATTACHMENT 77G
For the period ending: 09/30/99
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: $ 310,543
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: $ 90,588
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
6) The City of Fort Collins, Colorado Industrial Development Revenue Bonds
In default: Interest
Nature of Default: District did not make timely interest payment.
Date of Default: December 1, 1998
Default per $1,000 face: $ 2,900,000
</TABLE>
ATTACHMENT 77K
CHANGE IN AUDITORS
During 1999, the Board of Directors (the "Board") of Colorado
BondShares--A Tax Exempt Fund (the "Fund") solicited competitive proposals from
selected certified public accounting firms to provide audit services for the
Fund. Based on a review of the proposals and discussions with the respective
firms, the Board decided by unanimous vote to hire the firm of Fortner, Bayens,
Levkulich and Co., P.C. and, in connection therewith, a letter of engagement
was signed on September 28, 1999.
The prior auditor of the Fund was KPMG LLP ("KPMG"), which had
provided audit services to the Fund since the Fund's inception in 1987. The
change in auditors was not based on a disagreement with KPMG with respect to
any accounting or management method or procedures. KPMG resigned by letter
dated August 30, 1999, after the Fund had begun to solicit proposals from other
accounting firms.
KPMG had never given an adverse opinion or a disclaimer of opinion,
which was qualified or modified in any way at any time during their tenure.
Furthermore, during the 1998 and 1999 fiscal years of the Fund, there were no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosures or auditing scope or procedures, which, if not
resolved to the satisfaction of KPMG, would have caused them to make a
reference to the subject matter of such disagreement in connection with its
report on the financial statements of the Fund.
<PAGE>
LETTER FROM FORMER INDEPENDENT AUDITORS
[KPMG LETTERHEAD]
January 28, 2000
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously principal accountants for Colorado BondShares--A Tax-Exempt
Fund (the Fund) and, under the date of November 3, 1998, we reported on the
statement of assets and liabilities, including the statement of investments, as
of September 30, 1998, 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 five-year period then ended. On August 30, 1999, we resigned. We
have read the Fund's statements included in Attachment 77K included in the
amended Form N-SAR, and we agree with such statements.
Very truly yours,
/s/ KPMG LLP
KPMG LLP
EXHIBIT 99
INDEPENDENT AUDITORS' REPORT
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, 1999, we
considered its internal controls, 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 c:\ee, not to provide assurance on the internal controls.
The management of Colorado Bond Shares - A Tax-Exempt Fund is responsible for
establishing and maintaining internal controls. In fulfilling this
responsibility, estimates and judgments by management are required to assess
the expected benefits and related costs of controls. Generally, controls that
are relevant to an audit pertain to the entity's objective of preparing
financial statements for external purposes that are fairly presented in
conformity with generally accepted accounting principles. Those controls
include the safeguarding of assets against unauthorized acquisition, use or
disposition.
Because of inherent limitations in internal controls, errors may occur and may
not be detected. Also, projection of any evaluation of internal controls to
future periods is subject to the risk that they may become inadequate because
of changes in conditions or that the effectiveness of the design and operation
may deteriorate.
Our consideration of internal controls would not necessarily disclose all
matters in internal controls 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 elements does not reduce to a relatively low level
the risk that errors 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 internal controls, including
procedures for safeguarding securities, that we considered to be material
weaknesses as defined above as of September 30, 1999.
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.
/s/ FORTNER, BAYNES, LEVKULICH AND CO., P.C.
Denver, Colorado
November 11, 1999
