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SIGNATURE JIM ARNOLD
TITLE ADMINISTRATOR
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<CIK> 0000794801
<NAME> THE PRIMARY TREND FUND, INC.
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Exhibit to Accompany
Item 77J
Form N-SAR
The Primary Trend Fund, Inc.
(the "Fund")
According to the provisions of Statement of Position 93 - 2 (SOP
93 - 2) "Determination, Disclosure and Financial Statement
Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies," the Fund is required to
report the accumulated net investment income (loss) and
accumulated net capital gain (loss) accounts to approximate
amounts available for future distributions on a tax basis (or to
offset future realized capital gains). Accordingly, at June 30, 1999,
a reclassification was made to increase undistributed net realized
gains and to decrease undistributed net investment income by $590
for the Fund.
This reclassification has no impact on the net asset value of the
Fund and is designed to present the Fund's capital account on a tax
basis.
Report of Independent Auditors
To the Shareholders and Board of Directors of
The Primary Trend Fund, Inc. and The Primary Income Funds, Inc.
In planning and performing our audit of the financial statements of The
Primary Trend Fund, Inc. and The Primary Income Funds, Inc.
(comprised of the Primary Income Fund and the Primary U.S.
Government Fund), collectively, the "Funds", for the year ended June
30, 1999, 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, and
not to provide assurance on the 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 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, 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 specific 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 controls for safeguarding securities, that we
consider to be material weaknesses as defined above at June 30, 1999.
This report is intended solely for the information and use of the board of
directors and management of The Primary Trend Fund, Inc. and The
Primary Income Funds, Inc. and the Securities and Exchange
Commission and is not intended to be and should not be used by anyone
other than these specified parties.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
July 23, 1999
