[C]
SECURITIES AND EXCHANGE COMMISSION ------------------------
WASHINGTON, D.C. 20549 OMB Approval
FORM N-17f-2 ------------------------
OMB Number 3235-0360
Certificate of Accounting of Securities and Similar Expires: July 31, 1994
Investments in the Custody of Estimated average burden
Management Investment Companies hours per response. 0.05
Pursuant to Rule 17f-2 [17 CFR 270.17f-2]
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1. Investment Company Act File Number:
811-06696
Date examination completed: August 29, 1997
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2. State identification Number: N/A
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AL AK AZ AR CA CO
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CT DE DC FL GA HI
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ID IL IN IA KS KY
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LA ME MD MA MI MN
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MS MO MT NE NV NH
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NJ NM NY NC ND OH
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OK OR PA RI SC SD
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TN TX UT VT VA WA
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WV WI WY PUERTO RICO
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Other (specify):
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3. Exact name of investment company as specified in registration statement:
MarketWatch Funds
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4. Address of principal executive office (number, street, city, state, zip code)
3435 Stelzer Rd, Ste 1000, Columbus, OH, 43219
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Independent Auditors' Report
To the Board of Directors of
the MarketWatch Funds
and the
Securities and Exchange Commission:
We have examined management's assertion about the MarketWatch Funds'
(the Funds) compliance with the requirements of subsection (b) and (c)
of Rule 17f-2 under the Investment Company Act of 1940 as of August 29,
1997 and for the period June 30, 1997 through August 29, 1997, included in
the accompanying Management Statement regarding Compliance with Certain
Provisions of the Investment Company Act of 1940. Management is responsible
for the Funds' compliance with those requirements. Our responsibility is to
express an opinion on management's assertion about the Funds' compliance
based on our examination.
Our examination was made in accordance with standards established by the
American Institute of Certified Public Accountants and, accordingly,
included examining, on a test basis, evidence about the Funds' compliance
with those requirements and performing such other procedures as we
considered necessary in the circumstances. Included among our procedures
were the following tests performed as of August 29, 1997 and for the period
June 30, 1997 (the date of our last examination) through August 29, 1997,
with respect to securities transactions, without prior notice to management:
* Confirmation of all securities held as of August 29, 1997 by institutions
in book entry form at the Federal Reserve Bank, The Depository Trust
Company and Dreyfus Government Securities Cash Management Fund;
* Verification of all securities purchased/sold but not received/delivered
and securities in transit as of August 29, 1997 via examination of
underlying trade ticket or brokerage confirmation;
* Reconciliation of all such securities to the books and records of the
Funds and Central Fidelity Bank;
* Confirmation of all repurchase agreements with brokers/banks and
agreement of underlying collateral with Central Fidelity Bank records as
of August 29, 1997; and
* Agreement of selected security purchases/security sales or maturities
since our last report date from the books and records of the Company to
broker confirmations.
We believe that our examination provides a reasonable basis for our opinion.
Our examination does not provide a legal determination on the Funds'
compliance with specified requirements.
In our opinion, management's assertion that the Funds were in compliance
with the above mentioned provisions of Rule 17f-2 of the Investment Company
Act of 1940 as of August 29, 1997 and for the period from June 30, 1997
through August 29, 1997 is fairly stated, in all material respects.
This report is intended solely for the information and use of management of
the MarketWatch Funds and the Securities and Exchange Commission and should
not be used for any other purpose.
/s/ KPMG PEAT MARWICK LLP
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KPMG Peat Marwick LLP
Columbus, Ohio
December 12, 1997
October 17, 1997
Management Statement Regarding Compliance with
Certain Provisions of the Investment Company Act of 1940
We, as management of The MarketWatch Funds (the Funds), are responsibile
for complying with the requirements of subsections (b) and (c) of Rule 17f-2,
Custody of Investments by Registered Management Investment Companies, of
the Investment Company Act of 1940. We are also responsible for
establishing and maintaining effective intrnal controls over compliance
with Rule 17f-2 requirements. We have performed an evaluation of the Funds'
compliance with the requirments of subsections (b) and (c) of Rule 17f-2 as
of August 29, 1997.
Based on this evaluation, we assert that the Funds were in compliance with
the requirements of subsections (b) and (c) of Rule 17f-2 of the Investment
Company Act of 1940 as of August 29, 1997 and for the period from July 1,
1997 through August 29, 1997, with respect to securities reflected in the
investment accounts of The MarketWatch Funds.
Sincerely,
/s/ WALTER B GRIMM
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Walter B. Grimm
Chairman and President
