21Though Sri Lanka belongs to one of the 34 biodiversity hotspots of the world, its microfolora 22 specially fungi are not well studied and underrepresented in the global literature. Here we report 23 the fungal species diversity of decaying hardwood of a Sri Lankan dry zone forest for the first 24 time. Decaying hardwoods were collected from historically important Dimbulagala forest reserve, 25 Sri Lanka and fungi associated with these woods were isolated. Out of 35 fungal species identified 26 using morphological and molecular methods, 11 species were first records in Sri Lanka. All the 27 tested isolates were able to utilize wood as the sole carbon source and produced varying degrees 28 of laccase. Isolates of Perenniporia tephropora, Coriolopsis caperata, Gymnopilus dilepis, 29 Fusarium solani and Vanderbylia fraxinea were among the top six laccase producers. Except 30 Fusarium solani, the rest of the isolates showed more than 70% decolorization of the of 31 triphenylmethane dye and there was a significant positive correlation between laccase production 32 and dye decolorization. To the best of our knowledge laccase production and dye decolorization 33 ability of Vanderbylia fraxinea and Gymnopilus dilepis have never been reported in the fungal 34 kingdom before. Perenniporia tephropora was isolated from one of the strongest decay resistant 35 hardwood species, Ebony (Diospyros ebenum) also known as dark wood and V. fraxinea was 36 isolated from another medicinally important hardwood Neem (Azadirachta indica). Findings of 37 this study confirms that decaying hardwood of Sri Lanka provide unexplode a unique niche for 38 discovering fungal species with biotechnological applications such as high laccase producers and 39 dye decolorizers. 40 41 48metagenomics studies suggested that actual numbers might be closer to 3.5 to 5.1 million species 49 or much higher than this [3]. This uncertainty in the numbers is partially due to lack of advanced 50 molecular based thorough studies in the tropics where incredibly rich diversity has been reported 51 [4]. Hawksworth [5] also suggested that much of the undescribed fungal species could be present 52 in the tropics and it is reviewed in Aime and Brearley [4]. 53Sri Lanka, a tropical island in the Indian ocean along with the Western Ghats, belongs to one of 54 the 34 biodiversity hotspots in the world. Though its plant and animal diversity is well studied 55 [6,7], microbial studies, especially fungal studies remain in its infancy. Furthermore, biodiversity 56 hotspot concept of Sri Lanka should not be an exception for microbial diversity including fungi. 57However, most of the fungal studies in Sri Lanka have mainly focused on macro-fungi using 58 morphological characters [8]. Moreover, these studies have mainly concentrated on the wet zone 59 forests. On the other hand, dry zone forest ecosystems in the country spread over 22 % of area in 60 Sri Lanka, whereas the total forest cover is about 26.6%. Dimbulagala (7°51'40.5"N 61 81°07'05.5"E) is an isolated hill co...
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