<PAGE> PAGE 1
000 B000000 12/31/98
000 C000000 0000893730
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010 A00AA01 AMERICAN DATA SERVICES, INC.
010 C01AA01 HAUPPAUGE
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011 A00AA01 ADS DISTRIBUTORS, INC.
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<PAGE> PAGE 2
012 A00AA01 AMERICAN DATA SERVICES, INC.
012 B00AA01 84-1964
012 C01AA01 HAUPPAUGE
012 C02AA01 NY
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013 A00AA01 MORGA JONES & HUFSMITH, P.C.
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015 A00AA01 NORTHERN TRUST COMPANY
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 12
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SIGNATURE JAMES COLANTINO
TITLE SENIOR ADMINISTRATOR
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<NAME> THE CANANDAIGUA FUNDS
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xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
The Canandaigua Funds
In planning and performing our audit of the financial statements of The
Canandaigua Funds (The Fund - previously Canandaigua National Collective
Investment Fund for Qualified Trusts; comprised of the Bond and Equity
Funds) for the year ended December 31, 1998, we considered its internal
control, including controls over 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 Canandaigua 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 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, errors or
irregularities may occur and may 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 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 any specific internal control component does not reduce to
a relatively low level the risk that errors or irregularities 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
controls over safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1998.
This report is intended solely for the information and use of management
and the Securities and Exchange Commission.
Canandaigua, New York
January 15, 1998
