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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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SIGNATURE OTIS P. HEALD III
TITLE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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(Replace this text with the legend)
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<CIK> 0001060718
<NAME> Badgley Funds, Inc.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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(Replace this text with the legend)
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<NAME> Badgley Funds, Inc.
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REPORT OF INDEPENDENT ACCOUNTANTS
ON INTERNAL CONTROL
To the Board of Directors of
Badgley Funds, Inc.
In planning and performing our audit of the financial statements of Badgley
Funds, Inc. (being comprised of the Growth Fund and Balanced Fund, hereafter
referred to as the "Funds") for the period from June 25, 1998 (commencement of
operations) May 31, 1999, we considered the Funds' internal control, including
control activities 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 internal control.
The management of the Funds is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
control activities. 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 control, errors or fraud may occur
and not be detected. Also, projection of any evaluation of internal control 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 internal control would not necessarily disclose all matters
in internal control 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 one or more
of the internal control components does not reduce to a relatively low level the
risk that errors or fraud 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 control and its operation,
including control activities for safeguarding securities, that we consider to be
material weaknesses as defined above as of May 31, 1999.
This report is intended solely for the information and use of management and the
Board of Directors of Badgley Funds, Inc. and the Securities and Exchange
Commission.
June 25, 1999
