<PAGE> PAGE 1
000 B000000 06/30/98
000 C000000 0000852244
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 3.0.a
000 J000000 A
001 A000000 THE PRIMARY INCOME FUNDS, INC.
001 B000000 811-5831
001 C000000 4142717870
002 A000000 700 N. WATER STREET
002 B000000 MILWAUKEE
002 C000000 WI
002 D010000 53202
002 D020000 4206
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 Y
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007 C010100 1
007 C020100 THE PRIMARY INCOME FUND
007 C030100 N
007 C010200 2
007 C020200 THE PRIMARY U.S. GOVERNMENT FUND
007 C030200 N
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
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008 B00AA01 A
008 C00AA01 801-13754
008 D01AA01 MILWAUKEE
008 D02AA01 WI
008 D03AA01 53202
008 D04AA01 4206
010 A00AA01 SUNSTONE FINANCIAL GROUP, INC
010 C01AA01 MILWAUKEE
010 C02AA01 WI
010 C03AA01 53202
012 A00AA01 FIRSTAR TRUST COMPANY
012 B00AA01 85-00410
012 C01AA01 MILWAUKEE
<PAGE> PAGE 2
012 C02AA01 WI
012 C03AA01 53202
013 A00AA01 ERNST & YOUNG LLP
013 B01AA01 MILWAUKEE
013 B02AA01 WI
013 B03AA01 53202
015 A00AA01 FIRSTAR TRUST COMPANY
015 B00AA01 C
015 C01AA01 MILWAUKEE
015 C02AA01 WI
015 C03AA01 53202
015 E01AA01 X
018 00AA00 Y
019 A00AA00 Y
019 B00AA00 3
019 C00AA00 PRIMRYTRND
020 A000001 PAINEWEBBER, INC.
020 B000001 13-2638166
020 C000001 3
020 A000002 KALB VOORHIS & CO., LLC
020 B000002 13-5549000
020 C000002 1
020 A000003 STANDARD AND POOR'S SECURITIES, INC.
020 B000003 13-2671951
020 C000003 1
020 A000004 BEAR, STEARNS & CO., INC.
020 B000004 13-3299429
020 C000004 1
020 A000005 PCS SECURITIES, INC.
020 B000005 94-3091854
020 C000005 0
020 A000006 SANDS BROTHERS & CO., LTD
020 B000006 13-3777308
020 C000006 0
020 C000007 0
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021 000000 6
022 A000001 FIRSTAR BANK MILWAUKEE
022 B000001 39-0281260
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022 A000002 A.G. EDWARDS & SONS, INC.
022 B000002 43-0895447
022 C000002 599
022 D000002 0
022 A000003 SOUTHWEST SECURITIES, INC.
022 B000003 75-1382137
022 C000003 521
022 D000003 0
<PAGE> PAGE 3
022 A000004 HOWE BARNES INVESTMENTS, INC.
022 B000004 36-2643382
022 C000004 100
022 D000004 0
022 A000005 LEGG MASON WOOD WALKER, INC.
022 B000005 52-0902557
022 C000005 96
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022 B000006 13-2671951
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030 A00AA00 0
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<PAGE> PAGE 4
052 00AA00 N
053 A00AA00 Y
053 B00AA00 Y
053 C00AA00 N
054 A00AA00 Y
054 B00AA00 Y
054 C00AA00 N
054 D00AA00 N
054 E00AA00 N
054 F00AA00 N
054 G00AA00 N
054 H00AA00 Y
054 I00AA00 N
054 J00AA00 Y
054 K00AA00 N
054 L00AA00 N
054 M00AA00 Y
054 N00AA00 N
054 O00AA00 Y
055 A00AA00 N
055 B00AA00 N
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060 A00AA00 Y
060 B00AA00 Y
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077 A000000 Y
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077 G000000 N
077 H000000 N
077 I000000 N
077 J000000 N
077 K000000 N
077 L000000 N
077 M000000 N
077 N000000 N
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077 P000000 N
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<PAGE> PAGE 5
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028 B020100 12
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028 C020100 10
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028 D010100 14
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028 E020100 14
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028 G020100 72
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045 000100 Y
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048 A020100 0.000
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048 B020100 0.000
048 C010100 0
048 C020100 0.000
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048 D020100 0.000
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<PAGE> PAGE 6
048 E020100 0.000
048 F010100 0
048 F020100 0.000
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048 G020100 0.000
048 H010100 0
048 H020100 0.000
048 I010100 0
048 I020100 0.000
048 J010100 0
048 J020100 0.000
048 K010100 0
048 K020100 0.000
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062 B000100 0.0
062 C000100 0.0
062 D000100 0.0
062 E000100 0.0
062 F000100 0.0
062 G000100 0.0
062 H000100 0.0
062 I000100 0.0
062 J000100 0.0
062 K000100 0.0
062 L000100 0.0
062 M000100 0.0
062 N000100 0.0
062 O000100 0.0
062 P000100 0.0
062 Q000100 0.0
062 R000100 0.0
063 A000100 0
063 B000100 0.0
066 A000100 Y
066 B000100 N
066 C000100 N
066 D000100 N
066 E000100 N
066 F000100 Y
066 G000100 N
067 000100 N
068 A000100 N
068 B000100 N
069 000100 N
070 A010100 N
070 A020100 N
070 B010100 N
070 B020100 N
070 C010100 N
070 C020100 N
070 D010100 N
<PAGE> PAGE 7
070 D020100 N
070 E010100 N
070 E020100 N
070 F010100 N
070 F020100 N
070 G010100 N
070 G020100 N
070 H010100 N
070 H020100 N
070 I010100 N
070 I020100 N
070 J010100 N
070 J020100 N
070 K010100 Y
070 K020100 N
070 L010100 Y
070 L020100 Y
070 M010100 N
070 M020100 N
070 N010100 N
070 N020100 N
070 O010100 N
070 O020100 N
070 P010100 N
070 P020100 N
070 Q010100 N
070 Q020100 N
070 R010100 N
070 R020100 N
071 A000100 1382
071 B000100 1761
071 C000100 4120
071 D000100 34
072 A000100 12
072 B000100 56
072 C000100 139
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072 E000100 0
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072 G000100 27
072 H000100 0
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072 J000100 1
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<PAGE> PAGE 8
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072 T000100 0
072 U000100 0
072 V000100 0
072 W000100 1
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072 Z000100 149
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072BB000100 8
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072DD010100 145
072DD020100 0
072EE000100 643
073 A010100 0.4382
073 A020100 0.0000
073 B000100 2.1023
073 C000100 0.0000
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074 D000100 393
074 E000100 293
074 F000100 3206
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<PAGE> PAGE 9
076 000100 0.00
080 A000100 NATIONAL UNION FIRE INSURANCE COMPANY
080 C000100 450
081 A000100 Y
081 B000100 2
082 A000100 N
082 B000100 0
083 A000100 N
083 B000100 0
084 A000100 N
084 B000100 0
085 A000100 N
028 A010200 45
028 A020200 3
028 A030200 0
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028 B010200 0
028 B020200 3
028 B030200 0
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028 D010200 5
028 D020200 3
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028 E010200 3
028 E020200 2
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028 F020200 3
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028 F040200 0
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028 G020200 16
028 G030200 0
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028 H000200 0
045 000200 Y
046 000200 N
047 000200 Y
048 000200 0.650
048 A010200 0
048 A020200 0.000
048 B010200 0
048 B020200 0.000
048 C010200 0
048 C020200 0.000
<PAGE> PAGE 10
048 D010200 0
048 D020200 0.000
048 E010200 0
048 E020200 0.000
048 F010200 0
048 F020200 0.000
048 G010200 0
048 G020200 0.000
048 H010200 0
048 H020200 0.000
048 I010200 0
048 I020200 0.000
048 J010200 0
048 J020200 0.000
048 K010200 0
048 K020200 0.000
062 A000200 Y
062 B000200 0.0
062 C000200 0.0
062 D000200 0.0
062 E000200 0.0
062 F000200 0.0
062 G000200 0.0
062 H000200 0.0
062 I000200 13.0
062 J000200 0.0
062 K000200 0.0
062 L000200 3.2
062 M000200 9.8
062 N000200 65.3
062 O000200 0.0
062 P000200 6.5
062 Q000200 0.0
062 R000200 0.0
063 A000200 0
063 B000200 3.8
064 A000200 N
064 B000200 N
066 A000200 N
067 000200 N
068 A000200 N
068 B000200 N
069 000200 N
070 A010200 N
070 A020200 N
070 B010200 N
070 B020200 N
070 C010200 N
070 C020200 N
070 D010200 N
070 D020200 N
<PAGE> PAGE 11
070 E010200 N
070 E020200 N
070 F010200 N
070 F020200 N
070 G010200 N
070 G020200 N
070 H010200 N
070 H020200 N
070 I010200 N
070 I020200 N
070 J010200 N
070 J020200 N
070 K010200 Y
070 K020200 N
070 L010200 Y
070 L020200 N
070 M010200 N
070 M020200 N
070 N010200 N
070 N020200 N
070 O010200 N
070 O020200 N
070 P010200 N
070 P020200 N
070 Q010200 N
070 Q020200 N
070 R010200 N
070 R020200 N
071 A000200 476
071 B000200 400
071 C000200 639
071 D000200 63
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072 B000200 49
072 C000200 0
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<PAGE> PAGE 12
072 T000200 0
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072CC020200 0
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072DD020200 0
072EE000200 0
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074 C000200 125
074 D000200 631
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074 S000200 0
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076 000200 0.00
<PAGE> PAGE 13
080 A000200 NATIONAL UNION FIRE INSURANCE COMPANY
080 C000200 450
081 A000200 Y
081 B000200 2
082 A000200 N
082 B000200 0
083 A000200 N
083 B000200 0
084 A000200 N
084 B000200 0
085 A000200 N
SIGNATURE JIM ARNOLD
TITLE ADMINISTRATOR
[ARTICLE] 6
[CIK] 0000085224
[NAME] THE PRIMARY INCOME FUNDS, INC.
[SERIES]
[NUMBER] 1
[NAME] THE PRIMARY INCOME FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-30-1998
[PERIOD-START] JUL-01-1997
[PERIOD-END] JUN-30-1998
[INVESTMENTS-AT-COST] 3,900,072
[INVESTMENTS-AT-VALUE] 4,564,708
[RECEIVABLES] 23,372
[ASSETS-OTHER] 7,611
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 4,595,691
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 23,642
[TOTAL-LIABILITIES] 23,642
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 3,503,422
[SHARES-COMMON-STOCK] 329,953
[SHARES-COMMON-PRIOR] 297,996
[ACCUMULATED-NII-CURRENT] 3,505
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 400,486
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 664,636
[NET-ASSETS] 4,572,049
[DIVIDEND-INCOME] 138,408
[INTEREST-INCOME] 56,339
[OTHER-INCOME] 0
[EXPENSES-NET] (45,793)
[NET-INVESTMENT-INCOME] 148,954
[REALIZED-GAINS-CURRENT] 543,724
[APPREC-INCREASE-CURRENT] (59,402)
[NET-CHANGE-FROM-OPS] 633,276
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (145,449)
[DISTRIBUTIONS-OF-GAINS] (642,742)
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 14,295
[NUMBER-OF-SHARES-REDEEMED] 37,768
[SHARES-REINVESTED] 55,430
[NET-CHANGE-IN-ASSETS] 265,470
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 499,504
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 34,852
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 95,170
[AVERAGE-NET-ASSETS] 4,687,255
[PER-SHARE-NAV-BEGIN] 14.45
[PER-SHARE-NII] 0.45
[PER-SHARE-GAIN-APPREC] 1.50
[PER-SHARE-DIVIDEND] (0.44)
[PER-SHARE-DISTRIBUTIONS] (2.10)
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 13.86
[EXPENSE-RATIO] 0.97
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6
[CIK] 0000852244
[NAME] THE PRIMARY INCOME FUNDS, INC.
[SERIES]
[NUMBER] 2
[NAME] THE PRIMARY U.S. GOVERNMENT FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUN-30-1998
[PERIOD-START] JUL-01-1997
[PERIOD-END] JUN-30-1998
[INVESTMENTS-AT-COST] 750,552
[INVESTMENTS-AT-VALUE] 756,612
[RECEIVABLES] 15,977
[ASSETS-OTHER] 15,576
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 788,165
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 14,211
[TOTAL-LIABILITIES] 14,211
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 799,351
[SHARES-COMMON-STOCK] 77,970
[SHARES-COMMON-PRIOR] 74,302
[ACCUMULATED-NII-CURRENT] 222
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (31,679)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 6,060
[NET-ASSETS] 773,954
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 49,327
[OTHER-INCOME] 0
[EXPENSES-NET] (7,237)
[NET-INVESTMENT-INCOME] 42,090
[REALIZED-GAINS-CURRENT] 538
[APPREC-INCREASE-CURRENT] 2,339
[NET-CHANGE-FROM-OPS] 44,967
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] (41,868)
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 7,013
[NUMBER-OF-SHARES-REDEEMED] 6,548
[SHARES-REINVESTED] 3,203
[NET-CHANGE-IN-ASSETS] 39,753
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (32,217)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 4,930
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 45,846
[AVERAGE-NET-ASSETS] 758,338
[PER-SHARE-NAV-BEGIN] 9.88
[PER-SHARE-NII] 0.55
[PER-SHARE-GAIN-APPREC] 0.05
[PER-SHARE-DIVIDEND] (0.55)
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.93
[EXPENSE-RATIO] 0.95
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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, 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, 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, 1998.
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.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
July 24, 1998
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
Exhibit to Accompany
Item 77C
Form N-SAR
The Primary Trend Funds, Inc.
(the "Funds")
RESULTS OF SHAREHOLDER MEETING
A special meeting of the shareholders of the Funds was
held on April 29, 1998 for the sole purpose of electing
directors. Barry S. Arnold, Lilli Gust, Clark J. Hillery and
Harold L. Holtz were elected directors of the Funds by
shareholders of record as of March 25, 1998. The results of
the vote were as follows:
FOR All
Directors
Withheld
The Primary Trend
Fund, Inc.
1,103,054
15,563
The Primary
Income Funds, Inc.
312,083
485
</TABLE>
