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001 A000000 THE KAUFMANN FUND, INC.
001 B000000 811-1586
001 C000000 2129220123
002 A000000 140 EAST 45TH STREET, 43RD FLOOR
002 B000000 NEW YORK
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020 A000001 INSTINET
020 C000001 871
020 A000002 SMITH BARNEY, INC.
020 C000002 683
020 A000003 NATIONSBANC MONTGOMERY SECURITIES
020 C000003 682
020 A000004 GOLDMAN SACHS
020 C000004 548
020 A000005 MORGAN STANLEY & CO., INC.
020 C000005 470
020 A000006 MERRILL LYNCH
020 C000006 413
020 A000007 BEAR STEARNS & CO.
020 C000007 377
020 A000008 LEWCO SECURITIES FOR WERTHEIM
020 C000008 335
020 A000009 ABN AMRO HOARE GOVETT ASIA LTD
<PAGE> PAGE 2
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020 A000010 WILLIAM BLAIR & CO.
020 C000010 326
021 000000 12667
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SIGNATURE LUCY MUCCIO
TITLE ASSISTANT TREASURER
SANVILLE & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
1514 OLD YORK ROAD
ABINGTON, PA 19001
(215) 884-8460
FAX (215) 884-8686
MEMBERS OF
AMERICAN INSTITUTE OF
ROBERT E. SANVILLE, CPA CERTIFIED PUBLIC ACCOUNTANTS
MICHAEL T. BARANOWSKY, CPA PENNSYLVANIA INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
In planning and performing our audit of the financial statements of The
Kaufmann Fund, Inc. for the year ended December 31, 1998, we considered its
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 Kaufmann Fund, Inc. 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 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 control, error 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
operations 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 misstatements caused by error 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 controls for
safeguarding securities, that we consider to be material weaknesses as defined
above as of December 31, 1998.
This report is intended solely for the information and use of management,
the Board of Directors of The Kaufmann Fund, Inc., and the Securities and
Exchange Commission.
Abington, Pennsylvania /s/SANVILLE & COMPANY
January 22, 1999 Certified Public Accountants
