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SIGNATURE STEPHEN C LESLIE
TITLE CEO
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> California Muni Fund
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REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders and
Board of Trustees of
The California Muni Fund
In planning and performing our audit of the financial statements of The
California Muni Fund 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 California Muni Fund 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 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 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.
We noted the following matter involving internal control and its operation that
we consider to be a material weakness as defined above. The condition was
considered in determining the nature, timing and extent of the procedures to be
performed in our audit of the financial statements of the Fund for the year
ended December 31, 1998, and this report does not affect our report thereon
dated February 26, 1999 (except for the last two paragraphs of note 9 as to
which the date is March 31, 1999). Critical accounting routines were not
adequate to properly accrete discount on a zero coupon bond.
This report is intended solely for the information and use of management, the
Board of Trustees of The California Muni Fund, and the Securities and Exchange
Commission.
McGladrey & Pullen, LLP
New York, New York
February 26, 1999
Item 77H
On May 30, 1998, Registrant's Board decided not to renew Registrant's Investment
Management Agreement with Fundamental Portfolio Advisors, Inc. beyond May 31,
1998. Tocqueville Asset Management LP was selected by Registrant's Board to act
as interim investment adviser to Registrant for a 120-day period commencing June
1, 1998. Cornerstone was selected by Registrant's Board to act as interim
investment adviser to Registrant commencing September 29, 1998 and acted as such
throughout the remainder of Registrant's fiscal year.
