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<PAGE> PAGE 2
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<PAGE> PAGE 8
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SIGNATURE KEVIN MCGANN
TITLE TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-END> NOV-30-1998
<INVESTMENTS-AT-COST> 11,415,423
<INVESTMENTS-AT-VALUE> 12,275,561
<RECEIVABLES> 180,914
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<TOTAL-LIABILITIES> 9,690
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<SHARES-COMMON-PRIOR> 627,459
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 12,520,460
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 681,101
<OTHER-INCOME> 0
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<NET-INVESTMENT-INCOME> 610,619
<REALIZED-GAINS-CURRENT> 6,633
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<PER-SHARE-NAV-BEGIN> 19.86
<PER-SHARE-NII> 0.97
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</TABLE>
The Shareholders and Board of Directors
Of Tep Fund, Inc.
In planning and performing our audit of the financial statements of
Tep Fund, Inc. for the year ended November 30, 1998, 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 Tep Fund, Inc. 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 the
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 consider
material weaknesses as defined above as of November 30, 1998.
This report is intended solely for the information and use of
management and the Securities and Exchange Commission.
PUSTORINO, PUGLISI & CO., LLP
New York, New York
December 14, 1998
