KPMG LLP
                     2500 Ruan Center
                     666 Grand Avenue
                     Des Moines, IA 50309


                          Independent Auditors' Report


The Board of Directors
MACC Private Equities Inc. and subsidiary
   and
The Securities and Exchange Commission:


We have examined management's  assertion,  included in its representation letter
dated July 20,  2004,  that MACC  Private  Equities  Inc.  and  subsidiary  (the
Company)  complied with the provisions of subsections  (b) and (c) of Rule 17f-2
under the  Investment  Company Act of 1940 as of July 20,  2004,  and during the
period March 4, 2004 (the date of our last similar examination) through July 20,
2004, included in the accompanying  Management  Statement  Regarding  Compliance
with Certain  Provisions of the  Investment  Company Act of 1940.  Management is
responsible   for  the  Company's   compliance   with  those   provisions.   Our
responsibility  is to express an opinion  on  management's  assertion  about the
Company's compliance based on our examination.

Our  examination  was  conducted  in  accordance  with   attestation   standards
established  by the  American  Institute of Certified  Public  Accountants  and,
accordingly,  included examining,  on a test basis, evidence about the Company's
compliance with those  requirements  and performing such other  procedures as we
considered  necessary in the  circumstances.  Included among our procedures were
the  following  tests  performed as of July 20, 2004 and for the period March 4,
2004 through July 20, 2004, with respect to securities of the Company:

•    Count and inspection of all  securities  located in the vault of Zions Bank
     in Salt Lake City, Utah

•    Reconciliation  of all such  securities  to the  books and  records  of the
     Company

•    Confirmation of selected security  transactions  since the date of our last
     report

We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on Company's  compliance with
specified requirements.

In our  opinion,  management's  assertion  that MACC Private  Equities  Inc. and
subsidiary was in compliance  with the provisions of subsections  (b) and (c) of
Rule 17f-2 of the Investment Company Act of 1940 as of July 20, 2004 and for the
period from March 4, 2004 (prior  report date)  through July 20, 2004, is fairly
stated in all material respects.

This report is intended solely for the information and use of management of MACC
Private Equities Inc. and subsidiary and the Securities and Exchange  Commission
and  should  not be used for any other  purpose  and is not  intended  to be and
should not be used by anyone other than these specified parties.


                                       KPMG LLP


Des Moines, IA
July 20, 2004



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