Report of Independent Auditors
To the Shareholders and
Board of Directors of
The Chapman Funds, Inc.
In planning and performing our audit of the financial statements
of The Chapman Funds, Inc. (the "Funds") for the year ended
October 31, 2000, we considered its internal control, including
control activities for safeguarding securities, to determine our
auditing procedures for the purpose of expressing our opinions on
the financial statements and to comply with the requirements of
Form N-SAR, and not to provide assurance on 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 internal control.
Generally, internal controls that are relevant to an audit
pertain to the Funds' objective of preparing financial statements
for external purposes that are fairly presented in conformity
with generally accepted accounting principles. Those internal
controls include the safeguarding of assets against unauthorized
acquisition, use, or disposition.
Because of inherent limitations in any internal control,
misstatements due to errors or fraud may occur and not be
detected. Also, projections of any evaluation of internal
control to future periods are subject to the risk that internal
control may become inadequate because of changes in conditions,
or that the degree of compliance with the policies or procedures
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, including control activities for safeguarding
securities, and its operation that we consider to be material
weaknesses as defined above as of October 31, 2000.
This report is intended solely for the information and use of
Board of Directors and management of The Chapman 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.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
December 8, 2000
