REPORT OF ERNST & YOUNG INDEPENDENT AUDITORS
To the Trustees and Shareholders
of The Baupost Fund
In planning and performing our audit of the financial statements of The Baupost
Fund for the year ended October 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, and not
to provide assurance on internal control.
The management of The Baupost Fund 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 entity's 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 consolidated 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 the Trustees and
management of The Baupost Fund 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
December 13, 2000
Boston, Massachusetts
