<PAGE>
[LOGO OF THE MARKETWATCH FUNDS]
ANNUAL REPORT TO SHAREHOLDERS
NOVEMBER 30, 1995
--------------------------------------------------
CENTRAL FIDELITY NATIONAL BANK, INVESTMENT ADVISER
BISYS FUND SERVICES
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
<TABLE>
<S> <C>
Letter to Shareholders........................ 3
Performance Report............................ 6
Statements of Assets and Liabilities.......... 12
Statements of Operations...................... 13
Statements of Changes in Net Assets........... 14
Schedules of Portfolio Investments............ 16
Notes to Financial Statements................. 23
Financial Highlights.......................... 28
Independent Auditors' Report.................. 30
</TABLE>
2
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
DEAR SHAREHOLDERS:
The 12-month period ended November 30, 1995, was a remarkable year in the fi-
nancial markets. Hitting record highs week after week, the stock market blasted
first through the 5000 and then the 5100 level in November. By late December,
stocks had fallen back a bit, but investors could hardly complain. The gain of
more than 1300 points in the Dow Jones Industrial Average--an increase of
35.71%--over the November-to-November period can only be described as
spectacular.
Fixed-income investors, too, had little reason to complain in 1995. Early in
the year, we saw clear evidence that the economy was indeed slowing. As infla-
tionary pressures eased, investors' nervousness abated. Interest rates stabi-
lized and then began to decline--which touched off an explosive rally in the
fixed-income markets. While bonds have taken a hit in recent weeks as budget
talks in Washington stalled, the overall trend for the year in the fixed-income
markets was positive--a welcome relief after the declines of 1994.
CONSUMERS ARE KEY TO CONTINUED PROSPERITY
Looking ahead, we are optimistic about the prospects for our economy and for
the financial markets in 1996. Currently, our indicators suggest that growth
will average 2% to 3% for the year, a somewhat slower pace than we've seen in
1995 to be sure, but still a steady and moderate rate with, we believe, little
probability of a downturn or recession in the near term.
Our indicators also show, however, that the likelihood of a recession increases
after the 1996 elections, as we move into 1997. But if the Federal Reserve
Board loosens monetary policy sufficiently over the next several quarters, we
believe a recession could be avoided indefinitely.
Ultimately, however, the key to the strength of our economy remains with the
consumer. As we've stated before, economic growth is determined by consumer
spending, which represents two-thirds of all economic activity. And presently,
the foot of the consumer is still reaching for the gas pedal as spending con-
tinues at a strong enough pace to keep the economy expanding. Jobs are still
being created and consumer confidence remains relatively high. Consequently,
the economy's hold on a moderate, steady pace of growth may be somewhat tenu-
ous. If consumers
SHARES OF THE FUNDS
. ARE NOT FDIC INSURED
. ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, CENTRAL FIDELITY
NATIONAL BANK
. ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST
3
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
do not put the brakes on to some extent, we could see some upward pressure on
inflation.
A BULLISH OUTLOOK FOR BONDS
While an unexpected upturn in the rate of growth could re-ignite worries about
inflation, we are, nonetheless, optimistic about the prospects for the fixed-
income markets. Our indicators suggest that interest rates will trade in a
broad range around current levels in the months ahead.
Of course, the current situation in Washington concerning the budget deficit
could result in a more volatile market. Continued stalemating, periodic govern-
ment shutdowns and threats of default could eventually take their toll on the
market. But the effects would more than likely be only temporary. Meaningful
progress in the budget talks, on the other hand, would be extremely positive.
In fact, interest rates ultimately are more likely to slip to lower levels due
primarily to the combination of moderate economic growth, subdued inflation,
the stabilization of the dollar and the political focus on the budget deficit.
In addition, the Federal Reserve Board's unexpected lowering of a key interest
rate in mid-December indicates its willingness to support the economy if growth
appears to be too slow. As a result, the outlook for bonds in 1996 is favora-
ble, since falling interest rates mean higher bond prices.
STOCKS--NEXT STOP, 5500?
The environment for stocks is also favorable for many of the same reasons. In
addition, at current interest-rate levels, bonds are not as competitive as they
were 12 months ago, especially in light of the Federal Reserve's recent action.
As a result, we expect slow, steady economic growth to support the market's up-
ward momentum.
Nevertheless, there is reason for caution. When fourth-quarter profits are re-
ported, we expect to see a slowdown in the earnings growth rate for many compa-
nies. We do not feel that this will derail the overall market, but the market
will most likely become even more selective than it has been since late summer.
Unlike the first half of 1995, it will be far more critical to be in the right
stocks rather than just in the market, since companies with disappointing earn-
ings could witness sharp declines in the value of their stocks. Conversely, we
expect stocks of companies that produce consistent, visible earnings to be re-
warded with significant gains vis-a-vis the rest of the market.
IN CLOSING . . .
In the Performance Report that follows, you'll find a discussion of the activ-
ity in each of the MarketWatch Funds during the year ended November 30, 1995.
While the period was one of strong gains for most of the Funds, we remind all
shareholders that investing in many mutual funds
4
<PAGE>
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
requires a long-term time horizon, coupled with the ability to withstand short-
term swings in price.
In particular, investors in equity funds should, we believe, generally have a
time horizon of at least 10 years. While we do not anticipate a dramatic down-
turn in the market's fortunes, stocks have moved upward virtually uninterrupted
for more than a year--and we expect to eventually see some sort of correction.
The depth and duration of any decline, however, is impossible to predict. And
for far too many investors, the long term is quickly forgotten when prices be-
gin to fall.
History, however, has shown that investors who had the fortitude to hold on
through corrections and bear markets have been rewarded far more handsomely
than short-term investors. Consequently, given the current environment, we
would suggest that our shareholders consider lengthening their time horizons,
if possible, in order to capitalize on the buying opportunities that a downturn
in the market would potentially offer.
In closing, we thank you for your continued confidence in us, and we look for-
ward to providing you with investment management that will serve your needs now
and in the future. If you would like a prospectus, have any questions, or re-
quire any assistance, please do not hesitate to call us at 1-800-232-9091.
We wish all of you the very best in the new year.
Sincerely,
/s/ J. David Huber
- -----------------------
J. David Huber
Chairman, MarketWatch Funds
/s/ Paul P. Baran
- -----------------------
Paul P. Baran
Senior Vice President and
Chief Investment Officer
Central Fidelity National Bank
Investment Adviser to the Market Watch Funds
5
<PAGE>
PERFORMANCE REPORT
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
THE EQUITY FUND
The past year was one for the record books. After rising steadily throughout
the period, the market broke through the 5100 level, as measured by the Dow
Jones Industrial Average, by the end of November and continued its upward move
into December. Stocks across the board showed gains, although some benefited
far more dramatically than others. In particular, many technology stocks posted
gains of 50% to 100%.
Despite the market's euphoria, we invested cautiously since our indicators
through much of the year suggested that the environment, while positive for
stocks, was risky--and growing more so with each record high.
FEW SECTOR BETS
As a result, despite investors' infatuation with a few select industries, we
made few sector bets in an effort to minimize risk to the Fund's portfolio.
While the Fund gained substantial ground during the year, due to our guarded
stance it did not gain quite as much as those funds more heavily invested in
the market's favorites. For the year ended November 30, 1995, the Fund posted a
total return of 33.59%,+ compared to a gain of 37.05% for the Fund's benchmark,
the S&P 500 Stock Index, for the same period.
+The Fund's return with the maximum 4.50% sales charge was 27.60% for the
period.
ONWARD . . .AND UPWARD?
The current environment is still generally positive for stocks--the economy's
fundamentals are strong and corporate profits are expected to continue to come
in nicely, albeit at lower levels. Given investor expectations, however, we ex-
pect that some companies will post disappointing earnings in the months ahead,
which may trigger a downturn, or at least a halt, in the market's upward march.
Given the backdrop of a slow-growth, low-inflation economy, however, we would
view any such decline or weakness in the market as a potential buying opportu-
nity during which we would anticipate increasing our holdings in sectors that
traditionally do well in this kind of environment--consumer staples, insurance
and finance.
As of November 30, 1995, the Fund's top five equity holdings were Merck
(3.08%), State Street Boston (2.61%), Lockheed Martin (2.56%), Equifax (2.43%)
and Gillette (2.41%).*
*The Fund's composition is subject to change.
6
<PAGE>
PERFORMANCE REPORT
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
EQUITY FUND
VALUE OF A $10,000 INVESTMENT
The graph which appears on page 7 of the annual report represents a comparison
between a $10,000 investment made on January 29, 1993 in the S&P 500 Index and
an identical investment in the MarketWatch Equity Fund with a load and with no
load. The graph indicates that $10,000 invested on January 29, 1993 in the S&P
500 Index would on November 30, 1995 be worth $14,936 as opposed to $13,504 had
the $10,000 been invested in the MarketWatch Equity Fund with no load and
$12,897 had the $10,000 been invested in the MarketWatch Equity Fund with a
load.
Past performance is not predictive of future results. The value of shares in
the MarketWatch Funds will fluctuate so that the shares, when redeemed, may be
worth more or less than their original cost.
The performance of the MarketWatch Equity Fund is measured against the S&P 500
Index, which is generally representative of the stockmarket as a whole. The
index is unmanaged and does not reflect the deduction of expenses associated
with a mutual fund, such as investment management fees. The fund's performance
reflects the deduction of fees for these value-added services.
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
PERIOD ENDING 1 YEAR SINCE INCEPTION
(1/29/93)
LOAD* NO LOAD LOAD* NO LOAD
11/30/95 27.60% 33.59% 9.40% 11.19%
*Reflects the maximum 4.50% sales charge.
- -------------------------------------------------
THE INTERMEDIATE FIXED INCOME FUND AND THE FLEXIBLE INCOME FUND
Despite inflation worries and increased volatility, the year ended November 30,
1995, was a good one for bond investors. After one last upward push in Febru-
ary, the Federal Reserve stepped to the sidelines and let interest rates level
off and then decline, sparking an explosive rally that caught many money manag-
ers off guard. While we were not particularly surprised by this move, we did
not anticipate its strength and momentum.
Given the volatility of the market, we moved slowly off our defensive position-
ing and extended maturities in the Intermediate Fixed Income Fund very gradu-
ally throughout the spring and summer. Because the Flexible Income Fund is man-
aged more conservatively with an eye to minimizing fluctuation in its net asset
value, we moved even more gradually to reduce cash and extend maturities in
this portfolio. In both Funds, our high quality standards were strictly
maintained.
Consequently, due to our cautious approach in the early spring, the Funds' per-
formance for the period underperformed their benchmarks. For the year ended No-
vember 30, 1995, the Intermediate Fixed Income Fund had a total return of
14.44%+ and the Flexible Income Fund returned 8.68%+, compared to 14.52% and
12.39% for the Lehman Brothers Intermediate Government/Corporate Index and the
Merrill Lynch 1-5 Year Index, respectively.
WHERE DO WE GO FROM HERE?
As we move into 1996 and the economy settles into a slow-growth pattern, our
indicators suggest
+The returns for the Intermediate Fixed Income Fund and the Flexible Income
Fund with the maximum 4.50% sales charge were 9.28% and 3.74%, respectively,
for the period.
7
<PAGE>
PERFORMANCE REPORT
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
that interest rates will trade in a relatively narrow range. Longer term, how-
ever, they may trend lower. Much of this, of course, depends on what happens at
the budget talks in Washington. Currently, the fixed-income markets are being
driven by investor expectations rather than by the Federal Reserve--and a lack
of meaningful progress on the deficit in the near future could dampen invest-
ors' enthusiasm for bonds.
Nevertheless, we believe that 1996 will be a good year for the fixed-income
markets. In mid-December, the Federal Reserve lowered short-term interest
rates, underscoring its commitment to keep the economy growing. Should interest
rates continue to trend lower, we would expect to lengthen maturities in both
portfolios.
A BOOST FROM CORPORATE BONDS
In addition, while the Funds continue to emphasize investments in U.S. Treasury
and government agency securities, we have added positions in corporate securi-
ties to each in an effort to boost yields. The Intermediate Fixed Income Fund
now holds bonds issued by Wal-Mart; the Flexible Income Fund has added Coca-
Cola and American Express bonds. In the months ahead, as opportunities arise,
we may increase these positions very slightly. As of November 30, 1995, the av-
erage credit quality of both of the portfolios was AAA.
INTERMEDIATE FIXED INCOME FUND
VALUE OF A $10,000 INVESTMENT
The graph which appears on page 8 of the annual report represents a comparison
between a $10,000 investment made on January 29, 1993 in the Lehman Brothers
Intermediate Government/Corporate Index and an identical investment in the
MarketWatch Intermediate Fixed Income Fund with a load and with no load. The
graph indicates that $10,000 invested on January 29, 1993 in the Lehman Brothers
Intermediate Government/Corporate Index would on November 30, 1995 be worth
$11,942 as opposed to $11,616 had the $10,000 been invested in the MarketWatch
Intermediate Fixed Income Fund with no load and $11,094 had the $10,000 been
invested in the MarketWatch Intermediate Fixed Income Fund with a load.
Past performance is not predictive of future results. The value of shares in
the MarketWatch Funds will fluctuate so that the shares, when redeemed, may be
worth more or less than their original cost.
The performance of the MarketWatch Intermediate Fixed Income Fund is measured
against the Lehman Brothers Intermediate Government/Corporate Index, an
unmanaged index generally representative of the performance of government and
corporate bonds with maturities of 1 to 10 years. The index does not reflect the
deduction of expenses associated with a mutual fund, such as investment
management fees. The Fund's performance reflects the deduction of fees for these
value-added services.
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
PERIOD ENDING 1 YEAR SINCE INCEPTION
(1/29/93)
LOAD* NO LOAD LOAD* NO LOAD
11/30/95 9.28% 14.44% 3.73% 5.43%
*Reflects the maximum 4.50% sales charge.
- -------------------------------------------------
8
<PAGE>
PERFORMANCE REPORT
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
FLEXIBLE INCOME FUND
VALUE OF A $10,000 INVESTMENT
The graph which appears on page 9 of the annual report represents a comparison
between a $10,000 investment made on January 29, 1993 in the Merrill Lynch 1-5
Year Government/Corporate Bond Index and an identical investment in the
MarketWatch Flexible Income Fund with a load and with no load. The graph
indicates that $10,000 invested on January 29, 1993 in the Merrill Lynch 1-5
Year Government/Corporate Bond Index would on November 30, 1995 be worth
$11,767 as opposed to $11,156 had the $10,000 been invested in the MarketWatch
Flexible Income Fund with no load and $10,656 had the $10,000 been invested in
the MarketWatch Flexible Income Fund with a load.
Past performance is not predictive of future results. The value of shares in
the MarketWatch Funds will fluctuate so that the shares, when redeemed, may be
worth more or less than their original cost.
The performance of the MarketWatch Flexible Income Fund is measured
against the Merrill Lynch 1-5 Year Government/Corporate Bond Index, an
unmanaged index generally representative of the performance of 1-5 year
government and corporate bonds. The index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management fees. The
Fund's performance reflects the deduction of fees for these value-added
services.
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
PERIOD ENDING 1 YEAR SINCE INCEPTION
(1/29/93)
LOAD* NO LOAD LOAD* NO LOAD
11/30/95 3.74% 8.68% 2.26% 3.93%
*Reflects the maximum 4.50% sales charge.
- -------------------------------------------------
THE VIRGINIA MUNICIPAL BOND FUND
Despite talk of a flat tax, gridlock on the budget in Washington and a govern-
ment shutdown, the 12 months ended November 30, 1995, were positive for munici-
pal bond investors. After climbing steadily throughout 1994, interest rates
peaked in November 1994 and then declined in the spring of 1995, which sparked
a rally in the bond market. (Declining rates result in rising prices.)
Like the other MarketWatch fixed-income funds, the Virginia Municipal Bond Fund
was positioned defensively after the market began to move upward. However, as
our indicators signaled a change in the environment, we gradually lengthened
maturities from 6.8 years at the end of May to 11.7 years by the end of Novem-
ber, in an effort to lock in the higher yields of longer-maturity bonds.
A SHORTAGE OF HIGH-QUALITY BONDS
However, the shortage of high-quality securities in the Virginia market pre-
vented us from moving as quickly as we might have liked. As a result, while the
Fund benefited from the market's rally, performance lagged our benchmarks, the
Lehman Brothers Municipal Bond Index, which returned 18.88% and the Lehman
Brothers Municipal Bond 7-Year Index, which returned 15.24%. We are pleased to
report that for the year ended November 30, 1995, the Fund's total return was a
solid 13.79%.+
When evaluating Fund performance, it is important to remember that broad market
indices are not representative of the Virginia market alone. Rather, they re-
flect the performance of municipal bonds across the country, including those
with
+Fund performance with the maximum 4.50% sales charge was 8.70% for the period.
9
<PAGE>
PERFORMANCE REPORT
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
much lower credit quality than the bonds in the Fund. We believe that an empha-
sis on quality will better meet the objectives of our shareholders in the long
run.
SUPPLY SHOULD INCREASE
We are optimistic about the prospects for the municipal markets for several
reasons. Currently, our indicators are signaling a relatively stable interest-
rate environment for 1996. While talk of a flat tax dampened enthusiasm for mu-
nicipal bonds in the spring and summer, investor fears have subsided as pros-
pects for a flat tax have dimmed in recent months.
As budget talks continue, we can expect to see some concern resurface, but, as
most experienced investors know, it is extremely unlikely that a radical change
in the tax laws would be enacted in an election year. Finally, we expect supply
problems in the Virginia municipal market to ease in the months ahead. Having
issued relatively few bonds over the past 18 months, many municipalities now
need money to fund basic services.
We anticipate no major changes in the credit or maturity structure of the
Fund's portfolio. At the period's end, the Fund was well diversified with 32
different issuers in the portfolio. All of the Fund's securities were rated A
or better.
VIRGINIA MUNICIPAL BOND FUND
VALUE OF A $10,000 INVESTMENT
The graph which appears on page 10 of the annual report represents a comparison
between a $10,000 investment made on February 1, 1993 in the Lehman Brothers
Municipal Bond Index, the Lehman Brothers Municipal Bond 7-Year Index and the
MarketWatch Virginia Municipal Bond Fund with a load and with no load. The
graph indicates that $10,000 invested on February 1, 1993 in the Lehman Brothers
Municipal Bond Index would on November 30, 1995 be worth $12,242 as opposed to
$12,011 in the Lehman Brothers Municipal Bond 7-Year Bond Index and $11,420 had
the $10,000 been invested in the MarketWatch Virginia Municipal Bond Fund with
no load and $10,907 had the $10,000 been invested in the MarketWatch Municipal
Bond Fund with a load.
Past performance is not predictive of future results. The value of shares in
the MarketWatch Funds will fluctuate so that the shares, when redeemed, may be
worth more or less than their original cost.
The performance of the MarketWatch Virginia Municipal Bond Fund is measured
against the Lehman Brothers Municipal Bond Index, an unmanaged index generally
representative of the performance of the municipal bond market as a whole, and
against the Lehman Brothers Municipal Bond 7-Year Index, an unmanaged index
representative of municipal bonds with remaining maturities of seven years. The
indices do not reflect the deduction of expenses associated with a mutual fund,
such as investment management fees. The Fund's performance reflects the
deduction of fees for these value-added services.
AVERAGE ANNUAL TOTAL RETURN
- -------------------------------------------------
PERIOD ENDING 1 YEAR SINCE INCEPTION
(1/29/93)
LOAD* NO LOAD LOAD* NO LOAD
11/30/95 8.70% 13.79% 3.12% 4.80%
*Reflects the maximum 4.50% sales charge.
- -------------------------------------------------
THE MONEY MARKET FUND
Although a good year, 1995 was at times a somewhat trying year for the money
markets. In January, interest rates threatened to go higher, but then reversed
direction and declined. Much as we
10
<PAGE>
PERFORMANCE REPORT
- -------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
had anticipated, short-term interest rates bounced around in a narrow trading
range for most of the year. After lengthening the average maturity of the Fund
from approximately 16 days to 40 days when rates began their decline in the
spring, we generally maintained the latter maturity throughout the summer and
fall.
LOOKING AHEAD
Despite the Federal Reserve's easing of short-term interest rates in mid-
December, our indicators have signaled no dramatic future decrease--or
increase--in interest rates. Consequently, we expect to see rates continue to
move in a narrow
range in the months ahead. Barring a major disruption in our economy, a sudden
increase in inflation or the complete breakdown of budget talks in Washington,
we expect the year ahead to be a positive one for the money markets and the
Fund.
We expect to make no major changes in the portfolio's allocation or maturity
structure. As of November 30, 1995, the average maturity of the Fund's hold-
ings was 33 days and the Fund's assets were invested primarily in U.S. Trea-
sury securities and repurchase agreements collateralized by U.S. Treasury se-
curities.
Performance data represent past performance and are not predictive of future
performance. The composition of the Fund's holdings is subject to change. An
investment in the MarketWatch Money Market Fund is neither insured nor guaran-
teed by the U.S. Government or any government agency. Yields will fluctuate
and there can be no assurance that the Fund will be able to maintain a stable
net asset value of $1.00 per share.
For more complete information, including charges and expenses, call 1-800-232-
9091 for a prospectus, which you should read carefully before you invest or
send money.
The MarketWatch Funds are distributed by BISYS Fund Services.
SHARES OF THE FUNDS
. ARE NOT FDIC INSURED
. ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY, CENTRAL FI-
DELITY NATIONAL BANK
. ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED, SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH
MORE OR LESS THAN THEIR ORIGINAL COST
11
<PAGE>
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
<TABLE>
<CAPTION>
Intermediate Virginia
Money Market Equity Fixed Income Flexible Municipal Bond
Fund Fund Fund Income Fund Fund
------------ ------------ ------------ ----------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value... $ 9,230,538 $120,523,045 $36,392,753 $19,618,788 $53,169,266
Repurchase agreements... 4,276,521 1,532,447
----------- ------------ ----------- ----------- -----------
13,507,059 120,523,045 36,392,753 21,151,235 53,169,266
Interest and dividends
receivable............. 16,545 291,574 406,553 242,537 921,707
Receivable for capital
shares sold............ 19,072 2,095
Prepaid expenses and
other assets........... 4,369 18,958 8,335 4,137 6,789
----------- ------------ ----------- ----------- -----------
Total Assets........... 13,527,973 120,852,649 36,807,641 21,397,909 54,099,857
----------- ------------ ----------- ----------- -----------
LIABILITIES:
Dividends payable....... 56,100
Payable to brokers for
investments purchased.. 1,200,808 965,460 509,585
Cash overdraft.......... 18,370
Accrued expenses and
other payables:
Investment advisory
fees.................. 70,781 14,180 6,879 16,890
Administration fees.... 551 4,817 1,463 818 2,164
Distribution and
services fees......... 23,802 7,288 4,028 10,776
Accounting and transfer
agent fees............ 1,708 9,324 3,765 2,348 3,482
Other.................. 6,402 58,741 19,555 10,336 25,105
----------- ------------ ----------- ----------- -----------
Total Liabilities.... 83,131 1,368,273 1,011,711 533,994 58,417
----------- ------------ ----------- ----------- -----------
NET ASSETS:
Capital................. 13,445,341 92,393,169 37,144,683 21,178,398 53,754,662
Undistributed net
investment income...... 33,959 55,552 27,180 66,646
Net unrealized
appreciation from
investments............ 25,761,112 1,597,567 288,615 2,264,891
Accumulated
undistributed net
realized gains (losses)
from investment
transactions........... (499) 1,296,136 (3,001,872) (630,278) (2,044,759)
----------- ------------ ----------- ----------- -----------
Net Assets........... $13,444,842 $119,484,376 $35,795,930 $20,863,915 $54,041,440
=========== ============ =========== =========== ===========
Outstanding units of
beneficial interest
(shares)............... 13,445,341 9,279,318 3,555,612 2,080,607 5,269,930
=========== ============ =========== =========== ===========
Net asset value--
redemption price per
share.................. $ 1.00 $ 12.88 $ 10.07 $ 10.03 $ 10.25
=========== ============ =========== =========== ===========
Maximum Sales Charge.... 4.50% 4.50% 4.50% 4.50%
------------ ----------- ----------- -----------
Maximum Offering Price
(100%/(100%--Maximum
Sales Charge) of net
asset value adjusted to
nearest cent) per
share.................. $ 1.00(a) $ 13.49 $ 10.54 $ 10.50 $ 10.73
=========== ============ =========== =========== ===========
Investments, at cost.... $13,507,059 $ 94,761,933 $34,795,186 $20,862,620 $50,904,375
=========== ============ =========== =========== ===========
</TABLE>
- ------
(a) Offering price and redemption price are the same for the Money Market Fund.
See notes to financial statements.
12
<PAGE>
Statements of Operations
- --------------------------------------------------------------------------------
MarketWatch Funds For The Year Ended November 30, 1995
<TABLE>
<CAPTION>
Intermediate Flexible Virginia
Money Market Equity Fixed Income Income Municipal Bond
Fund Fund Fund Fund Fund
------------ ----------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income......... $ 673,891 $ 500,308 $2,668,843 $1,258,980 $2,388,069
Dividend income......... 2,754,145
--------- ----------- ---------- ---------- ----------
Total Income.......... 673,891 3,254,453 2,668,843 1,258,980 2,388,069
--------- ----------- ---------- ---------- ----------
EXPENSES:
Investment advisory
fees................... 61,096 1,113,048 294,633 163,000 328,522
Administration fees..... 24,439 222,610 79,631 44,054 88,790
Distribution and
services fees.......... 30,548 278,150 99,627 55,084 110,891
Custodian and accounting
fees................... 32,640 57,572 41,424 37,358 54,395
Legal and audit fees.... 8,389 74,504 26,108 14,214 31,446
Organization costs...... 1,798 7,546 6,468 1,568 690
Registration and filing
fees................... 5,551 16,088 11,330 4,022 6,849
Trustees' fees and
expenses............... 1,144 10,241 3,237 1,580 3,779
Transfer agent fees..... 15,944 78,544 24,292 13,247 25,899
Printing costs.......... 6,197 30,979 10,827 5,951 13,253
Other................... 996 10,203 4,670 2,289 3,377
Expenses voluntarily
reduced................ (100,198) (371,646) (119,461) (78,025) (178,227)
--------- ----------- ---------- ---------- ----------
Total expenses before
reimbursement by
investment adviser
and administrator.... 88,544 1,527,839 482,786 264,342 489,664
Reimbursement of
expenses by
investment adviser
and administrator.... (49,443) (29,780) (44,670) (11,873) (24,361)
--------- ----------- ---------- ---------- ----------
Total Expenses...... 39,101 1,498,059 438,116 252,469 465,303
--------- ----------- ---------- ---------- ----------
Net Investment Income... 634,790 1,756,394 2,230,727 1,006,511 1,922,766
--------- ----------- ---------- ---------- ----------
REALIZED/UNREALIZED
GAINS (LOSSES) FROM
INVESTMENTS:
Net realized gains
(losses) from
investment
transactions........... 2,036,767 (121,909) (41,008) 210,006
Net change in unrealized
appreciation from
investments............ 28,311,607 3,308,579 841,099 3,684,046
--------- ----------- ---------- ---------- ----------
Net realized/unrealized
gains from investments. 30,348,374 3,186,670 800,091 3,894,052
--------- ----------- ---------- ---------- ----------
Change in net assets
resulting from
operations............. $ 634,790 $32,104,768 $5,417,397 $1,806,602 $5,816,818
========= =========== ========== ========== ==========
</TABLE>
See notes to financial statements.
13
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
MarketWatch Funds
<TABLE>
<CAPTION>
Intermediate Fixed
Money Market Fund Equity Fund Income Fund
-------------------------- -------------------------- --------------------------
Year Ended Year Ended Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30, November 30, November 30,
1995 1994 1995 1994 1995 1994
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 634,790 $ 388,136 $ 1,756,394 $ 1,917,924 $ 2,230,727 $ 2,687,892
Net realized gains
(losses) from
investment
transactions.......... 169 2,036,767 (573,364) (121,909) (2,880,286)
Net change in
unrealized
appreciation
(depreciation) from
investments........... 28,311,607 (3,671,678) 3,308,579 (2,206,766)
----------- ----------- ------------ ------------ ------------ ------------
Change in net assets
resulting from
operations............. 634,790 388,305 32,104,768 (2,327,118) 5,417,397 (2,399,160)
----------- ----------- ------------ ------------ ------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................ (634,790) (388,136) (1,756,394) (1,877,899) (2,230,727) (2,687,892)
In excess of net
investment income..... (62,708) (16,139) (17,348)
In excess of net
realized gains from
investment
transactions.......... (689,810)
----------- ----------- ------------ ------------ ------------ ------------
Change in net assets
from shareholder
distributions.......... (634,790) (388,136) (1,819,102) (1,877,899) (2,246,866) (3,395,050)
----------- ----------- ------------ ------------ ------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 5,124,061 5,001,878 29,059,609 32,511,127 12,030,836 16,509,864
Dividends reinvested... 55,479 14,009 1,421,733 1,550,325 1,117,175 2,349,276
Cost of shares
redeemed.............. (3,099,165) (9,692,910) (44,422,829) (34,575,704) (29,252,870) (29,008,569)
----------- ----------- ------------ ------------ ------------ ------------
Change in net assets
from capital
transactions........... 2,080,375 (4,677,023) (13,941,487) (514,252) (16,104,859) (10,149,429)
----------- ----------- ------------ ------------ ------------ ------------
Change in net assets.... 2,080,375 (4,676,854) 16,344,179 (4,719,269) (12,934,328) (15,943,639)
NET ASSETS:
Beginning of period.... 11,364,467 16,041,321 103,140,197 107,859,466 48,730,258 64,673,897
----------- ----------- ------------ ------------ ------------ ------------
End of period.......... $13,444,842 $11,364,467 $119,484,376 $103,140,197 $ 35,795,930 $ 48,730,258
=========== =========== ============ ============ ============ ============
SHARE TRANSACTIONS:
Issued................. 5,124,061 5,001,878 2,522,626 3,234,376 1,232,724 1,679,747
Reinvested............. 55,479 14,009 126,366 154,437 115,696 241,176
Redeemed............... (3,099,165) (9,692,910) (3,896,003) (3,440,391) (3,024,490) (3,027,630)
----------- ----------- ------------ ------------ ------------ ------------
Change in shares........ 2,080,375 (4,677,023) (1,247,011) (51,578) (1,676,070) (1,106,707)
=========== =========== ============ ============ ============ ============
</TABLE>
See notes to financial statements.
14
<PAGE>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
MarketWatch Funds
<TABLE>
<CAPTION>
Virginia Municipal
Flexible Income Fund Bond Fund
-------------------------- --------------------------
Year Ended Year Ended Year Ended Year Ended
November 30, November 30, November 30, November 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM INVESTMENT
ACTIVITIES:
OPERATIONS:
Net investment income.. $ 1,006,511 $ 902,277 $ 1,922,766 $ 1,575,934
Net realized gains
(losses) from
investment
transactions.......... (41,008) (589,471) 210,006 (2,255,034)
Net change in
unrealized
appreciation
(depreciation) from
investments........... 841,099 (385,332) 3,684,046 (1,591,931)
------------ ------------ ----------- ------------
Change in net assets
resulting from
operations............. 1,806,602 (72,526) 5,816,818 (2,271,031)
------------ ------------ ----------- ------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income................ (1,005,771) (902,277) (1,902,288) (1,572,748)
In excess of net
investment income..... (4,538)
In excess of net
realized gains from
investment
transactions.......... (37,075) (13,788)
------------ ------------ ----------- ------------
Change in net assets
from shareholder
distributions.......... (1,005,771) (943,890) (1,902,288) (1,586,536)
------------ ------------ ----------- ------------
CAPITAL TRANSACTIONS:
Proceeds from shares
issued................ 9,031,791 8,937,659 17,489,702 20,145,948
Dividends reinvested... 892,055 865,035 296,036 299,140
Cost of shares
redeemed.............. (13,182,750) (14,596,019) (7,636,373) (10,261,636)
------------ ------------ ----------- ------------
Change in net assets
from capital
transactions........... (3,258,904) (4,793,325) 10,149,365 10,183,452
------------ ------------ ----------- ------------
Change in net assets.... (2,458,073) (5,809,741) 14,063,895 6,325,885
NET ASSETS:
Beginning of period.... 23,321,988 29,131,729 39,977,545 33,651,660
------------ ------------ ----------- ------------
End of period.......... $ 20,863,915 $ 23,321,988 $54,041,440 $ 39,977,545
============ ============ =========== ============
SHARE TRANSACTIONS:
Issued................. 916,815 906,852 1,765,911 2,005,954
Reinvested............. 90,656 88,237 30,088 30,345
Redeemed............... (1,339,942) (1,486,281) (779,584) (1,047,674)
------------ ------------ ----------- ------------
Change in shares........ (332,471) (491,192) 1,016,415 988,625
============ ============ =========== ============
</TABLE>
See notes to financial statements.
15
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
MarketWatch Money Market Fund November 30, 1995
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BILLS (64.6%):
1,250,000 12/14/95............................................... $ 1,247,635
1,000,000 12/7/95................................................ 999,135
1,000,000 12/21/95............................................... 997,111
1,250,000 1/4/96................................................. 1,243,767
750,000 1/11/96................................................ 745,528
750,000 1/18/96................................................ 744,680
1,000,000 1/25/96................................................ 992,017
750,000 2/15/96................................................ 741,561
1,000,000 4/25/96................................................ 978,769
-----------
Total U.S. Treasury Bills 8,690,203
-----------
INVESTMENT COMPANIES (4.0%):
540,335 Dreyfus Treasury Prime Cash Management Fund............ 540,335
-----------
Total Investment Companies 540,335
-----------
Total Investments, at value 9,230,538
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Security Amortized
Amount Description Cost
--------- ------------------------------------------------------ -----------
<C> <S> <C>
REPURCHASE AGREEMENTS (31.8%):
2,283,916 J.P. Morgan, 5.80%, 12/1/95 (Collateralized by
2,335,000 U.S. Treasury Notes, 5.50%, 11/15/98,
market value--$2,341,369)............................ $ 2,283,916
1,992,605 Morgan Stanley, 5.82%, 12/1/95, (Collateralized by
1,633,000 U.S. Treasury Bonds, 8.13%, 8/15/21, market
value--$2,037,622)................................... 1,992,605
-----------
Total Repurchase Agreements 4,276,521
-----------
Total (Cost--$13,507,059)(a) $13,507,059
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $13,444,842.
(a) Cost and value for federal income tax and financial reporting purposes are
the same.
See notes to financial statements.
16
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
MarketWatch Equity Fund November 30, 1995
<TABLE>
<CAPTION>
Security
Shares Description Market Value
------ ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS (98.2%):
Aircraft Engines & Engine Parts (1.6%):
40,000 Allied Signal, Inc. .................................. $ 1,890,000
------------
Banking (2.6%):
70,000 State Street Boston Corp. ............................ 3,150,000
------------
Beverages (4.3%):
40,000 Anheuser-Busch Cos., Inc. ............................ 2,650,000
45,000 PepsiCo, Inc. ........................................ 2,486,250
------------
5,136,250
------------
Chemicals (6.0%):
44,000 Betz Laboratories, Inc. .............................. 1,771,000
25,000 Dow Chemical Co. ..................................... 1,771,875
25,000 E. I. Du Pont De Nemours.............................. 1,662,500
40,500 Nalco Chemical Co. ................................... 1,240,312
15,000 PPG Industries........................................ 680,625
------------
7,126,312
------------
Consumer Goods & Services (10.6%):
73,000 Circuit City.......................................... 2,117,000
30,000 Colgate Palmolive Co. ................................ 2,197,500
56,000 Gillette Co. ......................................... 2,905,000
45,000 Goodyear Tire Co. .................................... 1,906,875
28,000 Nike, Inc. ........................................... 1,624,000
65,000 Sturm, Ruger & Co., Inc. ............................. 1,901,250
------------
12,651,625
------------
Defense (4.7%):
42,000 Lockheed Martin Corp. ................................ 3,081,750
58,400 Raytheon Co. ......................................... 2,598,800
------------
5,680,550
------------
Electrical & Electronic (3.0%):
20,000 Compaq Computer Corp. (b)............................. 990,000
43,500 Intel Corp. .......................................... 2,648,062
------------
3,638,062
------------
Electrical Equipment (4.1%):
30,000 Emerson Electric Co. ................................. 2,340,000
37,550 General Electric Co. ................................. 2,525,238
------------
4,865,238
------------
Entertainment (1.7%):
100,000 Callaway Golf Co. .................................... 1,987,500
------------
Financial Services (8.6%):
70,000 Equifax, Inc. ........................................ 2,931,250
</TABLE>
<TABLE>
<CAPTION>
Security
Shares Description Market Value
------ ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Financial Services, continued:
20,000 Federal Home Loan Mortgage Corp. ..................... $ 1,540,000
35,000 Franklin Resources, Inc. ............................. 1,850,625
58,000 Green Tree Financial Corp. ........................... 1,638,500
40,000 Travelers, Inc. ...................................... 2,380,000
------------
10,340,375
------------
Food Processing (1.4%):
50,000 Quaker Oats Co. ...................................... 1,737,500
------------
Food Products (1.9%):
40,000 Campbell Soup Co. .................................... 2,235,000
------------
Health Care (1.0%):
25,000 U.S. Healthcare....................................... 1,137,500
------------
Household Products & Wares (2.2%):
30,000 Procter & Gamble Co. ................................. 2,591,250
------------
Insurance (1.9%):
50,000 Progressive Corp. .................................... 2,225,000
------------
Machinery & Equipment (1.9%):
56,000 Briggs & Stratton..................................... 2,331,000
------------
Manufacturing-Consumer Goods (1.2%):
53,125 Mattel, Inc. ......................................... 1,487,500
------------
Oil & Gas Exploration (8.9%):
30,000 Amoco Corp. .......................................... 2,032,500
36,000 Chevron Corp. ........................................ 1,777,500
27,500 Exxon Corp. .......................................... 2,127,813
25,000 Mobil Corp. .......................................... 2,609,374
28,000 Texaco, Inc. ......................................... 2,072,000
------------
10,619,187
------------
Pharmaceuticals (9.4%):
60,000 Abbott Laboratories................................... 2,437,500
25,000 Johnson & Johnson..................................... 2,165,625
60,000 Merck & Co. .......................................... 3,712,500
50,000 Schering-Plough....................................... 2,868,750
------------
11,184,375
------------
Real Estate (1.4%):
115,000 United Dominion Realty Trust.......................... 1,624,375
------------
Securities Brokers (1.6%):
22,500 Morgan Stanley Group.................................. 1,940,625
------------
Technology (1.8%):
16,000 Xerox................................................. 2,194,000
------------
</TABLE>
Continued
17
<PAGE>
Schedule of Portfolio Investments, Continued
- --------------------------------------------------------------------------------
MarketWatch Equity Fund November 30, 1995
<TABLE>
<CAPTION>
Security
Shares Description Market Value
------ ------------------------------------------------------ ------------
<C> <S> <C>
COMMON STOCKS, CONTINUED:
Tire & Rubber (0.7%):
45,000 U.S. West Media Group................................. $ 810,000
------------
Tobacco (4.0%):
27,850 Philip Morris, Inc. .................................. 2,443,838
70,000 UST, Inc. ............................................ 2,283,750
------------
4,727,588
------------
Transportation & Shipping (2.4%):
70,000 Illinois Central Corp. ............................... 2,835,000
------------
Utilities--Electric (1.9%):
25,000 Duke Power............................................ 1,121,875
35,000 General Public Utilities.............................. 1,106,875
------------
2,228,750
------------
Utilities--Gas (0.8%):
40,000 Nicor, Inc. .......................................... 1,015,000
------------
Utilities--Telecommunications (6.6%):
65,000 ALLTEL Corp. ......................................... 1,917,500
36,000 A T & T Corp. ........................................ 2,376,000
35,000 Bell Atlantic Corp. .................................. 2,205,000
45,000 U.S. West, Inc. (b)................................... 1,406,250
------------
7,904,750
------------
Total Common Stocks 117,294,312
------------
</TABLE>
<TABLE>
<CAPTION>
Security
Shares Description Market Value
------ ------------------------------------------------------ ------------
<C> <S> <C>
INVESTMENT COMPANIES (2.7%):
3,228,733 Dreyfus Government Cash Management Fund............... $ 3,228,733
------------
Total Investment Companies 3,228,733
------------
Total (Cost--$94,761,933)(a) $120,523,045
============
</TABLE>
- ------
Percentages indicated are based on net assets of $119,484,376.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.. $26,665,246
Unrealized depreciation.. (904,134)
-----------
Net unrealized
appreciation............ $25,761,112
===========
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
18
<PAGE>
Schedule of Portfolio Investments
- -------------------------------------------------------------------------------
MarketWatch Intermediate Fixed Income Fund November 30, 1995
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
ASSET BACKED SECURITIES (6.3%):
Financial Services (6.3%):
1,000,000 Discover Card Master Trust I, Series 1993-2, 5.40%,
11/16/01............................................. $ 992,470
1,250,000 Signet Master Trust, Series 1994-1, Class A, 5.94%*,
9/15/99.............................................. 1,251,500
-----------
Total Asset Backed Securities 2,243,970
-----------
CORPORATE BONDS (5.5%):
Financial Services (2.8%):
1,000,000 Ford Motor Credit Co., 6.25%, 11/8/00................. 1,006,250
-----------
Industrial Goods & Services (2.7%):
1,000,000 Wal-Mart Stores, 5.88%, 10/15/05...................... 971,250
-----------
Total Corporate Bonds 1,977,500
-----------
U.S. GOVERNMENT AGENCIES (44.9%):
Federal Farm Credit Bank:
1,000,000 8.65%, 10/1/99........................................ 1,098,720
Federal Home Loan Mortgage Corp.:
1,728,227 6.50%, 12/1/08 Pool #E20072........................... 1,725,272
1,718,958 7.00%, 12/1/23 Pool #C80082........................... 1,720,006
3,028,734 8.50%, 9/1/24 Pool #D56596............................ 3,147,854
Federal National Mortgage Assoc.:
1,000,000 8.15%, 5/11/98........................................ 1,057,210
1,000,000 8.70%, 6/10/99........................................ 1,094,550
2,000,000 7.65%, 4/29/04........................................ 2,041,660
2,000,000 8.05%, 7/14/04........................................ 2,061,200
1,000,000 8.25%, 10/12/04....................................... 1,066,880
1,000,000 8.40%, 10/25/04....................................... 1,071,150
-----------
Total U.S. Government Agencies 16,084,502
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY BONDS (10.1%):
500,000 7.13%, 2/15/23......................................... $ 556,500
700,000 6.25%, 8/15/23......................................... 700,385
2,000,000 7.50%, 11/15/24........................................ 2,340,340
-----------
Total U.S. Treasury Bonds 3,597,225
-----------
U.S. TREASURY NOTES (31.1%):
500,000 6.13%, 5/31/97......................................... 505,080
1,000,000 5.75%, 7/31/97......................................... 1,007,540
1,000,000 6.13%, 5/15/98......................................... 1,016,430
500,000 7.75%, 11/30/99........................................ 539,130
2,000,000 7.75%, 1/31/00......................................... 2,161,720
1,000,000 6.13%, 7/31/00......................................... 1,023,030
1,000,000 7.25%, 8/15/04......................................... 1,098,710
1,000,000 7.88%, 11/15/04........................................ 1,143,420
2,500,000 6.50%, 8/15/05......................................... 2,630,450
-----------
Total U.S. Treasury Notes 11,125,510
-----------
INVESTMENT COMPANIES (3.8%):
1,351,448 Dreyfus Government Cash Management Fund................ 1,351,448
12,598 Dreyfus Treasury Cash Management Fund.................. 12,598
-----------
Total Investment Companies 1,364,046
-----------
Total (Cost--$34,795,186)(a) $36,392,753
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $35,795,930.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $1,671,021
Unrealized depreciation... (73,454)
----------
Net unrealized
appreciation............. $1,597,567
==========
</TABLE>
* Variable rate securities are collateralized by bank letters of credit or
other bank credit arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at November 30, 1995.
See notes to financial statements.
19
<PAGE>
Schedule of Portfolio Investments
- -------------------------------------------------------------------------------
MarketWatch Flexible Income Fund November 30, 1995
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
ASSET BACKED SECURITIES (7.2%):
Banking Financial Services (7.2%):
1,000,000 MBNA Master Credit Card Trust, 6.05%, 11/15/02........ $ 1,009,190
500,000 Signet Master Trust, Series 1994-1, Class A, 5.94%*,
9/15/99.............................................. 500,600
-----------
Total Asset Backed Securities 1,509,790
-----------
CORPORATE BONDS (14.7%):
Financial Services (7.2%):
500,000 American Express Credit Corp., 6.50%, 8/1/00.......... 511,250
500,000 Ford Motor Credit Corp., 5.63%, 1/15/99............... 496,250
500,000 Household International, 6.00%, 3/15/99............... 500,000
-----------
1,507,500
-----------
Industrial Goods & Services (7.5%):
500,000 Coca-Cola Enterprises, 6.50%, 11/15/97................ 506,250
1,000,000 PepsiCo, Inc., 7.63%, 12/18/98........................ 1,048,750
-----------
1,555,000
-----------
Total Corporate Bonds 3,062,500
-----------
U.S. GOVERNMENT AGENCIES (19.7%):
Federal Farm Credit Bank:
1,000,000 6.38%, 5/1/96......................................... 1,004,820
Federal Home Loan Bank:
500,000 4.70%, 2/5/96......................................... 499,395
Federal Home Loan Mortgage Corp.:
1,118,539 8.00%, 6/1/97 Pool #M9011D............................ 1,145,876
460,147 5.00%, 10/15/00 Series 1587B.......................... 457,731
Federal National Mortgage Assoc.:
500,000 5.35%, 8/12/98........................................ 495,260
500,000 6.35%, 6/10/05........................................ 511,550
-----------
Total U.S. Government Agencies 4,114,632
-----------
</TABLE>
<TABLE>
<CAPTION>
Shares or
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. TREASURY BONDS (4.8%):
1,000,000 5.63%, 6/30/97........................................ $ 1,003,300
-----------
Total U.S. Treasury Bonds 1,003,300
-----------
U.S. TREASURY NOTES (44.2%):
1,000,000 6.88%, 2/28/97........................................ 1,017,360
1,000,000 7.25%, 2/15/98........................................ 1,037,440
2,000,000 6.13%, 5/15/98........................................ 2,032,860
200,000 5.13%, 6/30/98........................................ 198,680
500,000 5.88%, 8/15/98........................................ 505,600
500,000 7.75%, 1/31/00........................................ 540,430
1,000,000 7.13%, 2/29/00........................................ 1,058,850
1,000,000 6.25%, 5/31/00........................................ 1,028,100
1,000,000 6.13%, 7/31/00........................................ 1,023,030
500,000 5.63%, 11/30/00....................................... 501,950
250,000 7.88%, 11/15/04....................................... 285,855
-----------
Total U.S. Treasury Notes 9,230,155
-----------
INVESTMENT COMPANIES (3.4%):
498,650 Dreyfus Government Cash Management Fund............... 498,650
199,761 Dreyfus Treasury Cash Management Fund................. 199,761
-----------
Total Investment Companies 698,411
-----------
Total Investments, at value 19,618,788
-----------
REPURCHASE AGREEMENTS (7.3%):
1,532,447 J.P. Morgan, 5.80%, 12/1/95, (Collateralized by
1,530,000 U.S. Treasury Notes, 6.38%, 6/30/97, market
value--$1,569,366)................................... 1,532,447
-----------
Total Repurchase Agreements 1,532,447
-----------
Total (Cost--$20,862,620)(a) $21,151,235
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $20,863,915.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.... $316,374
Unrealized depreciation.... (27,759)
--------
Net unrealized
appreciation.............. $288,615
========
</TABLE>
* Variable rate securities are collateralized by bank letters of credit or
other bank credit arrangements. The interest rate, which will change
periodically, is based upon bank prime rates or an index of market interest
rates. The rate reflected on the Schedule of Portfolio Investments is the
rate in effect at November 30, 1995.
See notes to financial statements.
20
<PAGE>
Schedule of Portfolio Investments
- --------------------------------------------------------------------------------
MarketWatch Virginia Municipal Bond Fund November 30, 1995
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
U.S. TREASURY BONDS (7.1%):
3,500,000 6.88%, 8/15/25........................................ $ 3,851,960
-----------
Total U.S. Treasury Bonds 3,851,960
-----------
MUNICIPAL BONDS (89.3%):
District of Columbia (3.6%):
2,000,000 Metropolitan Washington D.C., General Airport Revenue,
5.25%, 10/1/22....................................... 1,941,040
-----------
Virginia (85.7%):
500,000 Albemarle County, Service Authority, Water & Sewer
Revenue, 5.50%, 8/1/06............................... 517,730
850,000 Arlington County, 6.00%, 6/1/04....................... 936,105
1,000,000 Arlington County, 5.40%, 6/1/14....................... 1,013,690
1,000,000 Arlington County, 5.30%, 9/1/15....................... 953,990
885,000 Arlington County, Industrial Development Authority,
Arlington Hospital, 6.30%, 9/1/00.................... 942,746
2,000,000 Augusta County, Industrial Development Authority,
Hospital Revenue, 6.63%, 9/1/12...................... 2,182,240
1,000,000 Capital Region Airport, Commercial Airport Revenue,
Richmond International Airport, 5.63%, 7/1/15........ 1,001,630
1,000,000 Capital Region Airport, Commercial Airport Revenue,
Richmond International Airport, 5.63%, 7/1/25........ 999,230
1,000,000 Chesapeake Bay Bridge & Tunnel, 6.38%, 7/1/22......... 1,056,790
885,000 Chesterfield County, 6.25%, 7/15/05................... 967,987
1,000,000 Chesterfield County, 5.25%, 3/1/11.................... 1,007,940
600,000 Danville, 6.40%, 5/1/09............................... 646,104
500,000 Danville, 6.40%, 5/1/10............................... 537,000
1,000,000 Fairfax County, Public Improvement, Series A, 5.50%,
6/1/15............................................... 1,013,290
2,000,000 Fairfax County, Water Authority, 6.00%, 4/1/22........ 2,080,000
1,000,000 Hampton, 5.90%, 1/15/07............................... 1,082,240
1,000,000 Hanover County, 6.38%, 8/15/18........................ 1,125,200
1,000,000 Hanover County, Industrial Authority, Bon Secours
Health System Projects, 5.50%, 8/15/25............... 986,940
1,000,000 Henrico County, 5.30%, 1/15/10........................ 1,015,110
725,000 Lynchburg, 6.88%, 4/1/01.............................. 808,607
1,000,000 Newport News, 5.70%, 7/1/16........................... 1,034,250
1,000,000 Norfolk, 5.38%, 11/1/23............................... 989,260
1,000,000 Norfolk, Depaul Hospital, 6.50%, 12/1/07.............. 1,091,670
1,000,000 Norfolk, Industrial Development Authority, Sentara
Hospitals, Series A, 6.50%, 11/1/13.................. 1,080,370
1,000,000 Norfolk, Water Revenue Bonds, 5.75%, 11/1/12.......... 1,038,440
1,000,000 Norfolk, Water Revenue Bonds, 5.90%, 11/1/25.......... 1,031,930
2,000,000 Richmond, Public Improvement, Series A, 6.25%,
1/15/21.............................................. 2,084,900
500,000 Roanoke County, Water System Revenue Bonds, 5.00%,
7/1/21............................................... 469,775
1,250,000 Roanoke, 6.30%, 8/1/07................................ 1,346,000
2,000,000 Roanoke, Individual Developmental Authority, 5.25%,
7/1/25............................................... 1,930,080
300,000 Spotsylvania County, 5.50%, 7/15/05................... 315,546
1,000,000 State University & College Improvements, 5.25%,
6/1/16............................................... 1,004,450
1,500,000 University of Virginia, University Revenues, 5.20%,
6/1/15............................................... 1,460,565
1,000,000 Virginia Beach, 5.70%, 7/15/06........................ 1,061,440
1,000,000 Virginia College Building Authority, Washington & Lee
University Project, 5.80%, 1/1/24.................... 1,019,060
1,000,000 Virginia Housing Development Authority, 6.35%, 1/1/15. 1,028,850
1,000,000 Virginia Housing Development Authority, 6.40%, 7/1/17. 1,021,320
2,000,000 Virginia State Public Building Authority, 6.50%,
8/1/11............................................... 2,168,300
1,000,000 Virginia State Public School Authority, 6.25%, 1/1/04. 1,099,040
</TABLE>
Continued
21
<PAGE>
Schedule of Portfolio Investments, Continued
- --------------------------------------------------------------------------------
MarketWatch Virginia Municipal Bond Fund November 30, 1995
<TABLE>
<CAPTION>
Principal Security Market
Amount Description Value
--------- ------------------------------------------------------ -----------
<C> <S> <C>
MUNICIPAL BONDS, CONTINUED:
Virginia, continued:
1,000,000 Virginia State Public School Authority, Series A,
8.00%, 1/1/99........................................ $ 1,111,920
300,000 Virginia State Public School Authority, 5.75%, 1/1/08. 316,479
1,000,000 Virginia State Resource Authority, 5.25%, 10/1/13..... 980,640
750,000 Washington County, Industrial Development Authority,
Johnston Memorial Hospital Revenue,
6.00%, 7/1/14........................................ 756,750
-----------
46,315,604
-----------
Total Municipal Bonds 48,256,644
-----------
INVESTMENT COMPANIES (2.0%):
1,060,662 Dreyfus Tax-Exempt Fund............................... 1,060,662
-----------
Total Investment Companies 1,060,662
-----------
Total (Cost--$50,904,375)(a) $53,169,266
===========
</TABLE>
- ------
Percentages indicated are based on net assets of $54,041,440.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation... $2,264,891
Unrealized depreciation... 0
----------
Net unrealized
appreciation............. $2,264,891
==========
</TABLE>
See notes to financial statements.
22
<PAGE>
Notes to Financial Statements
- -------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
1. ORGANIZATION:
The MarketWatch Funds (the "Company") was organized on June 4, 1992, and is
registered under the Investment Company Act of 1940, as amended, (the "1940
Act"), as an open-end management investment company established as a
Massachusetts business trust. Between the date of organization and the date
of commencement of operations, the Company had no operations other than
incurring organizational expenses and the sale of initial units of beneficial
interest ("shares").
The Company is authorized to issue an unlimited number of shares with $0.001
par value. The Company offers shares of the Money Market Fund, the Equity
Fund, the Intermediate Fixed Income Fund, the Flexible Income Fund and the
Virginia Municipal Bond Fund (individually a "Fund", collectively, the
"Funds"). Sales of shares may be made to customers of Central Fidelity
National Bank and its affiliates, to all accounts of correspondent banks of
Central Fidelity National Bank and to the general public. Central Fidelity
National Bank serves as investment adviser and custodian to each of the
Funds.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Company in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
SECURITIES VALUATION:
Investments of the Money Market Fund are valued at either amortized cost,
which approximates market value, or at original cost, which combined with
accrued interest, approximates market value. Under the amortized cost method,
discount or premium is amortized on a constant basis to the maturity of the
security. In addition, the Money Market Fund may not (a) purchase any
instrument with a remaining maturity greater than thirteen months, unless
such instrument is subject to a demand feature, or (b) maintain a dollar-
weighted-average portfolio maturity which exceeds 90 days.
Investments in common stocks, corporate bonds, commercial paper, municipal
bonds and U.S. Government securities of the Equity Fund, the Intermediate
Fixed Income Fund, the Flexible Income Fund and the Virginia Municipal Bond
Fund (collectively, "the variable net asset value funds") are valued at their
market values determined on the basis of the latest available bid prices in
the principal market (closing sales prices if the principal market is an
exchange) in which such securities are normally traded. Investments in
investment companies are valued at their respective net asset values as
reported by such companies. Securities, including restricted securities, for
which market quotations are not readily available, are valued at fair market
value under the supervision of the Group's Board of Trustees. The differences
between the cost and market values of investments held by the variable net
asset value funds are reflected as either unrealized appreciation or
depreciation.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the pro rata amortization of premium
and/or discount. Paydowns of mortgage-backed securities are applied to
principal and interest when received.
Continued
23
<PAGE>
Notes to Financial Statements, Continued
- -------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
Amortization of premium and discount is accrued daily. Dividend income is
recorded on the ex-dividend date. Gains or losses realized on sales of
securities are determined by comparing the identified cost of the security
lot sold with the net sales proceeds.
REPURCHASE AGREEMENTS:
The Funds may acquire repurchase agreements from member banks of the Federal
Deposit Insurance Corporation and from registered broker/dealers who Central
Fidelity National Bank, investment adviser to the Funds, deems creditworthy
under guidelines approved by the Board of Trustees, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price generally equals the price paid by a Fund plus
interest negotiated on the basis of current short-term rates, which may be
more or less than the rate on the underlying portfolio securities. The
seller, under a repurchase agreement, is required to maintain the value of
collateral held pursuant to the agreement at not less than 102% of the
repurchase price (including accrued interest). Securities subject to
repurchase agreements are held by the Funds' custodian or another qualified
custodian or in the Federal Reserve/Treasury book-entry system. Repurchase
agreements are considered to be loans by a Fund under the 1940 Act.
DIVIDENDS TO SHAREHOLDERS:
Dividends from net investment income are declared daily and paid monthly and
distributable net realized capital gains, if any, are declared and
distributed at least annually for the Money Market Fund. Dividends from net
investment income are declared and paid monthly and distributable net
realized capital gains, if any, are declared and distributed at least
annually for the variable net asset value funds.
During the year ended November 30, 1994, the Funds adopted Statement of
Position 93-2, Determination, Disclosure, and Financial Statement
Presentation of Income, Capital Gain, and Return of Capital Distributions by
Investment Companies. Accordingly, timing differences relating to shareholder
distributions are reflected in the components of net assets and permanent
book and tax basis differences relating to shareholder distributions have
been reclassified to additional paid-in capital. Net investment income, net
realized gains and net assets were not affected by this change.
Dividends from net investment income and from net realized capital gains are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily due
to differing treatments for mortgage-backed securities, expiring capital loss
carryforwards and deferrals of certain losses.
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, Federal income taxes.
OTHER:
Expenses that are directly related to one of the Funds are charged directly
to that Fund. Other operating expenses for the Company are prorated to the
Funds on the basis of relative net assets or other appropriate basis.
Continued
24
<PAGE>
Notes to Financial Statements, Continued
- -------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended November 30, 1995 are as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------- -----------
<S> <C> <C>
Equity Fund............................................ $31,477,612 $31,339,236
Intermediate Fixed Income Fund......................... $16,357,460 $14,590,105
Flexible Income Fund................................... $13,794,919 $11,038,627
Virginia Municipal Bond Fund........................... $43,685,735 $32,779,753
</TABLE>
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to each Fund by Central Fidelity
National Bank. Under the terms of the investment advisory agreement, Central
Fidelity National Bank is entitled to receive fees based on a percentage of
the average net assets of each of the Funds.
The BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services
("BISYS") is an Ohio limited partnership. The sole general partner of BISYS
is BISYS Fund Services, Inc. The sole limited partner of BISYS is WC
Subsidiary Corporation. BISYS Fund Services, Inc., BISYS Fund Services Ohio,
Inc. and WC Subsidiary Corporation are all subsidiaries of The BISYS Group,
Inc.
Certain officers and trustees of the Company are affiliated with BISYS, which
serves the Company as manager and administrator. Such officers and trustees
are paid no fees directly by the Funds for serving as officers and trustees
of the Company. Under the terms of the Management and Administration
Agreement between BISYS and the Company, BISYS's fees are computed daily as a
percentage of the average net assets of each of the Funds. BISYS also serves
as distributor of the Funds' shares and is entitled to receive commissions on
sales of shares of the variable net asset value funds. For the year ended
November 30, 1995, BISYS received $193,184 from commissions earned on sales
of shares of the Company's variable net asset value funds of which $181,277
was allowed to James Mitchell & Co., a broker dealer of the Company's shares.
BISYS Fund Services Ohio, Inc. serves the Company as Transfer Agent and
Mutual Fund Accountant, and as such, is entitled to receive fees based on the
number of shareholders and as a percentage of average net assets,
respectively.
The Company has adopted a Distribution and Services Plan in accordance with
Rule 12b-1 under the 1940 Act, pursuant to which the Company is authorized to
pay or reimburse BISYS, as distributor, a periodic amount, calculated at an
annual rate not to exceed 0.25% of the average daily net asset value of each
Fund. These fees are used by BISYS to pay financial institutions, including
the investment adviser, broker/dealers and other institutions, or to
reimburse BISYS or its affiliates, for administration, distribution and
shareholder services in connection with the distribution of Fund shares.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios.
Continued
25
<PAGE>
Notes to Financial Statements, Continued
- --------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
Information regarding these transactions is as follows for the year ended
November 30, 1995:
<TABLE>
<CAPTION>
Intermediate
Money Market Equity Fixed Income
Fund Fund Fund
------------ -------- ------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)....... 0.50% 1.00% 0.74%
Voluntary fee reductions.................. $61,096 $315,926 $99,607
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)....... 0.20% 0.20% 0.20%
Voluntary fee reductions.................. $ 6,110 $ 55,720 $19,854
DISTRIBUTION AND SERVICES FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)....... 0.25% 0.25% 0.25%
Voluntary fee reductions.................. $30,548
CUSTODIAN FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)....... 0.02% 0.02% 0.02%
Voluntary fee reductions.................. $ 2,444
TRANSFER AGENT AND MUTUAL FUND ACCOUNTANT
FEES:..................................... $46,140 $102,702 $57,746
REIMBURSED FEES:.......................... $49,443 $ 29,780 $44,670
</TABLE>
<TABLE>
<CAPTION>
Virginia
Flexible Income Municipal Bond
Fund Fund
--------------- --------------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)............ 0.74% 0.74%
Voluntary fee reductions....................... $67,022 $155,972
ADMINISTRATION FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)............ 0.20% 0.20%
Voluntary fee reductions....................... $11,003 $ 22,255
DISTRIBUTION AND SERVICES FEES:
Annual fee (percentage of average net assets).. 0.25% 0.25%
CUSTODIAN FEES:
Annual fee (percentage of average net assets).. 0.02% 0.02%
TRANSFER AGENT AND MUTUAL FUND ACCOUNTANT
FEES:.......................................... $46,198 $ 71,423
REIMBURSED FEES:............................... $11,873 $ 24,361
</TABLE>
Continued
26
<PAGE>
Notes to Financial Statements, Continued
- -------------------------------------------------------------------------------
MarketWatch Funds November 30, 1995
5. CONCENTRATION OF CREDIT RISK:
The Virginia Municipal Bond Fund invests a substantial portion of its assets
in debt obligations issued by the State of Virginia and its political
subdivisions, agencies and public authorities. The Fund is more susceptible
to factors adversely affecting issuers of Virginia Municipal securities than
a fund that is not concentrated in these issuers to the same extent.
6. EXEMPT-INTEREST DIVIDENDS (UNAUDITED):
The MarketWatch Funds designate the following exempt-interest dividends for
the Fund's taxable year ended November 30, 1995.
<TABLE>
<CAPTION>
Virginia Municipal
Bond Fund
------------------
<S> <C>
Exempt-interest dividends................................... $1,816,337
Exempt-interest dividends per share......................... $ 0.40
</TABLE>
100% of the exempt-interest dividends for the Virginia Municipal Bond Fund
was derived from income from municipal securities issued by the state of
Virginia for the taxable year ended November 30, 1995.
7. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Equity Fund designates the following eligible distributions for the
dividends received deduction for corporations:
<TABLE>
<S> <C>
Dividend income.................................................... $2,754,145
Dividend income per share.......................................... $ 0.14
</TABLE>
8. FEDERAL TAX INFORMATION:
As of November 30, 1995, for Federal income tax purposes, the following Funds
have capital loss carryforwards available to offset future capital gains, if
any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
---------- -------
<S> <C> <C>
Intermediate Fixed Income Fund.............................. $2,880,285 2002
Intermediate Fixed Income Fund.............................. 121,909 2003
Flexible Income Fund........................................ 589,471 2002
Flexible Income Fund........................................ 41,008 2003
Virginia Municipal Bond Fund................................ 2,047,921 2002
</TABLE>
27
<PAGE>
Financial Highlights
- --------------------------------------------------------------------------------
MarketWatch Funds
<TABLE>
<CAPTION>
Money Market Fund Equity Fund
-------------------------------------- --------------------------------------
February 1, January 29,
Year Ended Year Ended 1993 to Year Ended Year Ended 1993 to
November 30, November 30, November 30, November 30, November 30, November 30,
1995 1994 1993(a) 1995 1994 1993(a)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of
Period......... $ 1.000 $ 1.000 $ 1.000 $ 9.80 $ 10.20 $ 10.00
------- ------- ------- -------- -------- --------
INVESTMENT
ACTIVITIES:
Net investment
income......... 0.052 0.034 0.020 0.17 0.17 0.15
Net realized and
unrealized
gains (losses)
from
investments.... 3.09 (0.40) 0.19
------- ------- ------- -------- -------- --------
Total from
Investment
Activities..... 0.052 0.034 0.020 3.26 (0.23) 0.34
------- ------- ------- -------- -------- --------
DISTRIBUTIONS:
From net
investment
income......... (0.052) (0.034) (0.020) (0.17) (0.17) (0.14)
In excess of net
investment
income......... (0.01)
In excess of net
realized gains.
------- ------- ------- -------- -------- --------
Total
Distributions.. (0.052) (0.034) (0.020) (0.18) (0.17) (0.14)
------- ------- ------- -------- -------- --------
Net Asset Value,
End of Period.. $ 1.000 $ 1.000 $ 1.000 $ 12.88 $ 9.80 $ 10.20
======= ======= ======= ======== ======== ========
Total Return
(excludes sales
charges)....... 5.32% 3.49% 2.01%(b) 33.59% (2.26)% 3.42%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at
end of period
(000).......... $13,445 $11,364 $16,041 $119,484 $103,140 $107,859
Ratio of
expenses to
average net
assets......... 0.32% 0.32% 0.63%(c) 1.35% 1.35% 1.33%(c)
Ratio of net
investment
income to
average net
assets......... 5.19% 3.39% 2.37%(c) 1.58% 1.75% 1.75%(c)
Ratio of
expenses to
average net
assets*........ 1.54% 1.65% 1.59%(c) 1.71% 1.75% 1.72%(c)
Ratio of net
investment
income to
average net
assets*........ 3.97% 2.06% 1.40%(c) 1.22% 1.34% 1.36%(c)
Portfolio
Turnover....... 29.98% 30.33% 29.72%
<CAPTION>
Intermediate Fixed
Income Fund
----------------------------------------
January 29,
Year Ended Year Ended 1993 to
November 30, November 30, November 30,
1995 1994 1993(a)
------------ ------------ --------------
<S> <C> <C> <C>
Net Asset Value,
Beginning of
Period......... $ 9.31 $ 10.20 $ 10.00
------------ ------------ --------------
INVESTMENT
ACTIVITIES:
Net investment
income......... 0.55 0.44 0.33
Net realized and
unrealized
gains (losses)
from
investments.... 0.76 (0.79) 0.19
------------ ------------ --------------
Total from
Investment
Activities..... 1.31 (0.35) 0.52
------------ ------------ --------------
DISTRIBUTIONS:
From net
investment
income......... (0.54) (0.43) (0.32)
In excess of net
investment
income......... (0.01) (0.01)
In excess of net
realized gains. (0.10)
------------ ------------ --------------
Total
Distributions.. (0.55) (0.54) (0.32)
------------ ------------ --------------
Net Asset Value,
End of Period.. $ 10.07 $ 9.31 $ 10.20
============ ============ ==============
Total Return
(excludes sales
charges)....... 14.44% (3.51)% 5.19%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at
end of period
(000).......... $35,796 $48,730 $64,674
Ratio of
expenses to
average net
assets......... 1.10% 1.09% 1.08%(c)
Ratio of net
investment
income to
average net
assets......... 5.60% 4.46% 3.92%(c)
Ratio of
expenses to
average net
assets*........ 1.51% 1.49% 1.47%(c)
Ratio of net
investment
income to
average net
assets*........ 5.19% 4.07% 3.53%(c)
Portfolio
Turnover....... 43.65% 55.36% 57.40%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition,
certain fees were voluntarily reimbursed. If such voluntary fee reductions
and reimbursements had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
28
<PAGE>
Financial Highlights
- -------------------------------------------------------------------------------
MarketWatch Funds
<TABLE>
<CAPTION>
Flexible Income Fund Virginia Municipal Bond Fund
-------------------------------------- --------------------------------------
January 29, February 1,
Year Ended Year Ended 1993 to Year Ended Year Ended 1993 to
November 30, November 30, November 30, November 30, November 30, November 30,
1995 1994 1993(a) 1995 1994 1993(a)
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 9.66 $ 10.03 $ 10.00 $ 9.40 $ 10.31 $ 10.00
------- ------- ------- ------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income.. 0.45 0.34 0.26 0.42 0.38 0.28
Net realized and
unrealized gains
(losses) from
investments........... 0.37 (0.36) 0.02 0.85 (0.90) 0.30
------- ------- ------- ------- ------- -------
Total from Investment
Activities............ 0.82 (0.02) 0.28 1.27 (0.52) 0.58
------- ------- ------- ------- ------- -------
DISTRIBUTIONS:
From net investment
income................ (0.45) (0.34) (0.25) (0.42) (0.38) (0.27)
In excess of net
realized gains........ (0.01) (0.01)
------- ------- ------- ------- ------- -------
Total Distributions.... (0.45) (0.35) (0.25) (0.42) (0.39) (0.27)
------- ------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 10.03 $ 9.66 $ 10.03 $ 10.25 $ 9.40 $ 10.31
======= ======= ======= ======= ======= =======
Total Return (excludes
sales charges)......... 8.68% (0.12)% 2.77%(b) 13.79% (5.17)% 5.84%(b)
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000).......... $20,864 $23,322 $29,132 $54,041 $39,978 $33,652
Ratio of expenses to
average net assets.... 1.15% 1.13% 1.12%(c) 1.05% 1.04% 1.02%(c)
Ratio of net investment
income to average net
assets................ 4.57% 3.47% 3.16%(c) 4.33% 3.90% 3.65%(c)
Ratio of expenses to
average net assets*... 1.56% 1.58% 1.64%(c) 1.51% 1.56% 1.66%(c)
Ratio of net investment
income to average net
assets*............... 4.16% 3.01% 2.64%(c) 3.87% 3.38% 3.01%(c)
Portfolio Turnover..... 64.14% 19.65% 64.40% 77.50% 87.36% 86.08%
</TABLE>
- ------
* During the period, certain fees were voluntarily reduced. In addition,
certain fees were voluntarily reimbursed. If such voluntary fee reductions
and reimbursements had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
See notes to financial statements.
29
<PAGE>
Independent Auditors' Report
- -------------------------------------------------------------------------------
MarketWatch Funds
The Shareholders and Board of Trustees of
The MarketWatch Funds:
We have audited the accompanying statements of assets and liabilities of The
MarketWatch Funds - Money Market Fund, Equity Fund, Intermediate Fixed Income
Fund, Flexible Income Fund, and the Virginia Municipal Bond Fund, including
the schedules of portfolio investments, as of November 30, 1995, and the
related statements of operations, statements of changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and the financial highlights are the responsibility of The
MarketWatch Funds' management. Our responsibility is to express an opinion on
these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification of securities
owned as of November 30, 1995, by examination and other appropriate audit
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned funds comprising The MarketWatch Funds as of
November 30, 1995, the results of their operations, the changes in their net
assets and the financial highlights for each of the periods indicated herein,
in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
January 17, 1996
30
<PAGE>
Investment Advisor and Custodian
Central Fidelity National Bank
1021 East Cary Street
Richmond, Virginia 23219
Manager, Administrator
and Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Legal Counsel
Drinker Biddle & Reath
1100 Philadelphia National Bank Building
Philadelphia, Pennsylvania 19107
Auditors
KPMG Peat Marwick LLP
Two Nationwide Plaza
Suite 1600
Columbus, Ohio 43215
[Logo of Market Watch Funds appears here]
Annual Report
to Shareholders
November 30, 1995
---------------------------
Central Fidelity National Bank
Investment Adviser
BISYS Fund Services
