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SIGNATURE JOSEPH REZABEK
TITLE ASST. VICE PRESIDENT
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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Report of Independent Accountants
To the Board of Trustees and Shareholders of
AFD Exchange Reserves
In planning and performing our audit of the financial statements of AFD
Exchange Reserves (the "Fund") for the year ended September 30, 1999, 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
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 fraud may occur
and not be detected. Also, projection of any evaluation of internal control
to future periods is subject to the risk that controls may become inadequate
because of changes in conditions or that the effectiveness of their 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 one or
more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error 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, 1999.
This report is intended solely for the information and use of the Board of
Trustees, management and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
PricewaterhouseCoopers LLP
October 29, 1999
Exhibit 77K
Change In Independent Accountant AFD Exchange Reserves
On July 13, 1999, McGladrey and Pullen, LLP ("McGladrey") notified the
Fund of its intention to resign as an independent auditors of the Fund
pursuant to an agreement by PricewaterhouseCoopers LLP ("PwC") to
acquire McGladrey's investment company practice. The McGladrey partners
and professionals serving the Fund at the time of the acquisition joined
PwC.
The reports of McGladrey on the financial statements of the Fund during
the past two fiscal years contained no adverse opinion or disclaimer of
opinion, and were not qualified or modified as to uncertainty, audit
scope or accounting principles.
In connection with its audits for the two most recent fiscal years and
through July 13, 1999, there were no disagreements with McGladrey on any
matter of accounting principle or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements, if not
resolved to the satisfaction of McGladrey would have caused it to make
reference to the subject matter of disagreement in connection with its
report.
On July 13, 1999, the Fund, with the approval of its Board of Trustees
and its Audit Committee, engaged PwC as its independent auditors.
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street
Washington D.C. 20549
We were previously the independent accountants for AFD Exchange
Reserves. We have read their notification of change in independent
accountants made in Item 77K of Form N-SAR. We agree with the
statements in the filing.
McGladrey & Pullen, LLP
New York, New York
November 22, 1999
