Report Of Independent Auditors
To the Board of Directors of
FPA New Income, Inc.
In planning and performing our audit of the financial statements of FPA New
Income, Inc. (the "Fund") for the year ended September 30, 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 the Fund is responsible for establishing and maintaining
internalcontrol. 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 entitys
objective of preparing financial statements for external purposes that are
fairly presented in conformitywith 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 ininternal 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 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 as of September 30, 2000.
This report is intended solely for the information and use of management,
the Board of Directors of the 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.
Los Angeles, California
October 27, 2000
