Report of Independent Auditors
To the Shareholders and
Board of Directors of
Excelsior Funds, Inc.
In planning and performing our audit of the financial
statements of Excelsior International Fund, Excelsior
Pacific/Asia Fund, Excelsior Pan European Fund, Excelsior
Latin America Fund, Excelsior Emerging Markets Fund,
Excelsior Treasury Money Fund, Excelsior Government Money
Fund, Excelsior Money Fund, Excelsior Short-Term Government
Securities Fund, Excelsior Intermediate-Term Managed Income
Fund, Excelsior Managed Income Fund, Excelsior Blended
Equity Fund, Excelsior Value and Restructuring Fund,
Excelsior Small Cap Fund, Excelsior Energy and Natural
Resources Fund, Excelsior Large Cap Fund and Excelsior Real
Estate Fund, the seventeen funds comprising the Excelsior
Funds, Inc. for the year ended March 31, 2000, 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 Excelsior Funds, 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 operation may deteriorate.
Our consideration of the 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 at March 31, 2000.
This report is intended solely for the information and use
of management, the Board of Directors of Excelsior Funds,
Inc., and the Securities and Exchange Commission and is not
intended and should not be used by anyone other than these
specified parties.
ERNST & YOUNG LLP
Boston, MA
May 24, 2000
