1933 Act File No.
1940 Act File No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. .................
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. ...............................
WESMARK FUNDS
(Exact name of Registrant as Specified in Charter)
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant's Telephone Number)
John W. McGonigle, Esq., Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering As soon as possible after
the effectiveness of the
Registration Statement
Pursuant to the provisions of Rule 24f-2 of the Investment Company Act of
1940, Registrant hereby elects to register an indefinite number of shares.
Amendment Pursuant to Rule 473
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission acting
pursuant to said Section 8(a), may determine.
Copies To:
Matthew G. Maloney, Esquire
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, D.C. 20037
CROSS-REFERENCE SHEET
This Registration Statement of WesMark Funds, which consists of two
portfolios, (1) WesMark West Virginia Municipal Bond Fund and (2) WesMark
Growth Fund is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page...............(1,2) Cover Page.
Item 2. Synopsis.................(1,2) Summary of Fund Expenses.
Item 3. Condensed Financial
Information..............(1,2) Performance Information.
Item 4. General Description of
Registrant...............(1,2) General Information; (1,2)
Investment Information; (1,2) Investment
Objective; (1,2) Investment Policies;
(1) West Virginia Municipal Securities;
(1,2) Investment Risks; (1) (Non-
Diversification; (1,2) Investment
Limitations.
Item 5. Management of the Fund...(1,2) WesMark Funds Information; (1,2)
Management of the Trust; (1,2)
Distribution of Fund Shares; 1,2)
Administration of the Fund; (1,2)
Expenses of the Fund.
Item 6. Capital Stock and Other
Securities...............(1,2) Dividends and Capital Gains; 1,2)
Shareholder Information; (1,2) Voting
Rights; (1,2) Effect of Banking Laws;
(1,2) Tax Information; (1,2) Federal
Income Tax; (1) West Virginia Taxes;
(1,2) Other State and Local Taxes.
Item 7. Purchase of Securities Being
Offered..................(1,2) Net Asset Value; (1,2) Investing
in the Fund; (1,2) Minimum Investment
Required; (1,2) What Shares Cost; (1,2)
Share Purchases; (1,2) Systematic
Investment Program; (1,2) Exchanging
Securities for Fund Shares; (1,2)
Certificates and Confirmations.
Item 8. Redemption or Repurchase.(1,2) Redeeming Shares; (1,2) Systematic
(1,2) Withdrawal Program; (1,2) Accounts
with Low Balances.
Item 9. Pending Legal Proceedings None.
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page...............(1,2) Cover Page.
Item 11. Table of Contents........(1,2) Table of Contents.
Item 12. General Information and
History..................(1,2) General Information About the
Fund; (1,2) Massachusetts Partnership
Law.
Item 13. Investment Objectives and
Policies.................(1,2) Investment Objective and Policies;
(1) West Virginia Investment Risks;
(1,2) Investment Limitations.
Item 14. Management of the Fund...(1,2) WesMark Funds Management; (1,2)
Trustees Compensation.
Item 15. Control Persons and Principal
Holders of Securities....(1,2) Fund Ownership.
Item 16. Investment Advisory and Other
Services.................(1,2) Investment Advisory Services;
(1,2) Other Services.
Item 17. Brokerage Allocation.....(1,2) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities...............Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered............(1,2) Purchasing Shares; (1,2)
Determining Net Asset Value; (1,2)
Redeeming Shares.
Item 20. Tax Status...............(1,2) Tax Status.
Item 21. Underwriters.............(1,2) Distribution and Shareholder
Services Plans.
Item 22. Calculation of Performance
Data.....................(1,2) Total Return; (1,2) Yield; (1)
Tax-Equivalent Yield; (1,2) Performance
Comparisons; (1,2) Appendix.
Item 23. Financial Statements.....(To be filed by Amendment.)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may any offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation, or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
Subject to Completion, November 14, 1996
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
(A PORTFOLIO OF WESMARK FUNDS)
PROSPECTUS
The shares of WesMark West Virginia Municipal Bond Fund (the `Fund'')
offered by this prospectus represent interests in a non-diversified
portfolio of securities. The Fund is an investment portfolio of WesMark
Funds (the `Trust''), an open-end management investment company (a mutual
fund). The investment objective of the Fund is to provide current income
which is exempt from federal income tax and the income taxes imposed by the
State of West Virginia. The Fund invests primarily in securities issued by
or on behalf of the State of West Virginia and its political subdivisions,
authorities and agencies, and securities issued by other states,
territories, and possessions of the United States which are exempt from
federal income tax and the income taxes imposed by the State of West
Virginia (`West Virginia Municipal Securities'').
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
WESBANCO BANK WHEELING OR ITS AFFILIATES, ARE NOT ENDORSED OR GUARANTEED BY
WESBANCO BANK WHEELING OR ITS AFFILIATES, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated January
, 1997 with the Securities and Exchange Commission. The information
- --
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information or a paper copy of this prospectus, if you have
received your prospectus electronically, free of charge, obtain other
information, or make inquiries about the Fund by writing or calling the
Fund at 1-800-368-3369. The Statement of Additional Information, material
incorporated by reference into this document, and other information
regarding the Fund is maintained electronically with the SEC at Internet
Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated January , 1997
---
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
West Virginia Municipal Securities 7
Investment Risks 7
Non-Diversification 8
Investment Limitations 8
WesMark Funds Information 8
Management of the Trust 8
Distribution of Fund Shares 9
Administration of the Fund 11
Expenses of the Fund 11
Net Asset Value 11
Investing in the Fund 11
Minimum Investment Required 11
What Shares Cost 11
Share Purchases 12
Systematic Investment Program 12
Exchanging Securities for Fund Shares 12
Certificates and Confirmations 13
Dividends and Capital Gains 13
Exchange Privilege 13
Redeeming Shares 14
Systematic Withdrawal Program 15
Redemption Before Purchase
Instruments Clear 15
Accounts with Low Balances 15
Shareholder Information 15
Voting Rights 15
Effect of Banking Laws 16
Tax Information 16
Federal Income Tax 16
West Virginia Taxes 17
Other State and Local Taxes 18
Performance Information 18
Addresses 19
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) ....................................................None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage
of offering price) ........................................None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds,
as applicable) .........................................None
Redemption Fee (as a percentage of amount redeemed, if applicable)
......................................................None
Exchange Fee ..............................................None
ANNUAL FUND OPERATING EXPENSES*
(AS A PERCENTAGE OF PROJECTED AVERAGE NET ASSETS)
Management Fee (after waiver) (1).............................0.30%
12b-1 Fee (2).................................................0.00%
Total Other Expenses..........................................0.44%
Shareholder Services Fee (2) ............... 0.00%
Total Annual Fund Operating Expenses (after waiver) (3) 0.74%
(1)The estimated management fee has been reduced to reflect the
anticipated voluntary waiver by the investment adviser. The
adviser may terminate this voluntary waiver at any time at its sole
discretion. The maximum management fee is 0.60%.
(2)The Fund has no present intention of paying or accruing 12b-1 fees
or shareholder servicing agent fees during the fiscal year ending
January 31, 1998. If the Fund were paying or accruing 12b-1 fees
or shareholder servicing agent fees, the Fund would be able to pay
up to 0.25% of its average daily net assets for 12b-1 fees and up
to 0.25% of its average daily net assets for shareholder servicing
agent fees.
(3)Total Fund Operating Expenses are estimated to be 1.04% absent the
anticipated voluntary waiver described above in note 1.
* Annual Fund Operating Expenses are estimated based on average
expenses expected to be incurred during the fiscal year ending January
31, 1998. During the course of this period, expenses may be more or
less than the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of the Fund will bear,
either directly or indirectly. For more complete descriptions of the
various costs and expenses, see `Investing in the Fund'' and ``WesMark
Funds Information.'' Wire-transferred redemptions may be subject to
additional fees.
EXAMPLE .............................. 1 year 3 years
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period. The Fund charges no redemption fees... $8
...................................$24
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THIS EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR
ENDING JANUARY 31, 1998.
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated
March 1, 1996. The Declaration of Trust permits the Trust to offer separate
series of shares of beneficial interest representing interests in separate
portfolios of securities. The Trust currently consists of WesMark West
Virginia Municipal Bond Fund and WesMark Growth Fund. This prospectus
relates only to the WesMark Funds' West Virginia municipal securities
portfolio, known as WesMark West Virginia Municipal Bond Fund. The shares
in any one portfolio may be offered in separate classes. As of the date of
this prospectus, the Board of Trustees (the `Trustees'') has not
established classes of shares of the Fund. The Fund is designed primarily
for customers of WesBanco Bank Wheeling and its affiliates and individual
investors who desire a convenient means of accumulating an interest in a
professionally managed, non-diversified portfolio investing primarily in
West Virginia Municipal Securities. WesBanco Bank Wheeling is the
investment adviser to the Fund (`Adviser''). A minimum initial investment
of $1,000 is required. Subsequent investments must be in amounts of at
least $100. The Fund is not likely to be a suitable investment for non-West
Virginia taxpayers or retirement plans since it intends to invest primarily
in West Virginia Municipal Securities.
Fund shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide current income which is
exempt from federal income tax and the income taxes imposed by the State of
West Virginia. Interest income of the Fund that is exempt from the income
taxes described above retains its tax-exempt status when distributed to the
Fund's shareholders. However, income distributed by the Fund may not
necessarily be exempt from state or municipal taxes in states other than
West Virginia.
While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies
described in this prospectus. The investment objective cannot be changed
without approval of shareholders. Unless indicated otherwise, the
investment policies may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material changes in
these policies become effective.
INVESTMENT POLICIES
The Fund attempts to achieve its investment objective by investing in a
professionally managed portfolio consisting primarily of West Virginia
Municipal Securities. As a matter of fundamental investment policy which
may not be changed without shareholder approval, the Fund will invest its
assets so that, under normal circumstances, at least 80% of its net assets
are invested in obligations, the interest income from which is exempt from
federal income tax and the income taxes imposed by the State of West
Virginia. For purposes of this policy, the tax-free interest must not be a
preference item for purposes of computing the federal alternative minimum
tax.
ACCEPTABLE INVESTMENTS. The Fund invests primarily in West Virginia
Municipal Securities, which are:
O obligations, including industrial development bonds, issued on
behalf of the State of West Virginia, its political subdivisions,
agencies, or instrumentalities (i.e., authorities);
o obligations issued by or on behalf of any state, territory or
possession of the United States, including the District of
Columbia, or any political subdivision or agency of any of these;
and
o participation, trust and partnership interests, as described
below, in any of the above obligations;
the interest from which is, in the opinion of bond counsel for the issuers
or in the opinion of officers of the Fund and/or the Adviser, exempt from
federal income tax, including the alternative minimum tax, and the income
taxes imposed by the State of West Virginia. It is possible that
shareholders who are subject to alternative minimum tax will be required to
include interest from a portion of the municipal securities owned by the
Fund in calculating the federal individual alternative minimum tax or the
federal alternative minimum tax for corporations.
While the Fund intends to invest primarily in securities issued by or on
behalf of the State of West Virginia and its political subdivisions, it
will invest in other securities issued by states, territories, and
possessions of the United States which are exempt from federal income tax,
including alternative minimum tax, and the income taxes imposed by the
State of West Virginia. The Fund will invest in such securities in
instances where, in the judgment of the Adviser, the supply and yield of
such securities would be beneficial to the Fund's performance.
CHARACTERISTICS. The West Virginia Municipal Securities in which the Fund
invests are:
o rated, at the time of purchase, investment grade (within the four
highest ratings categories for municipal securities) by a
nationally recognized statistical rating organization (``NRSRO''),
such as Moody's Investors Service, Inc. (``Moody's'') (Aaa, Aa, A,
or Baa), Standard & Poor's Ratings Group (``S&P'') (AAA, AA, A, or
BBB), or Fitch Investors Service, Inc. (``Fitch'') (AAA, AA, A, or
BBB);
o guaranteed at the time of purchase by the U.S. government as to
the payment of principal and interest;
o fully collateralized by an escrow of U.S. government securities or
other securities acceptable to the Adviser;
o rated at the time of purchase within Moody's highest short-term
municipal obligation rating (MIG1/VMIG1) or Moody's highest
municipal commercial paper rating (PRIME-1) or S&P's highest
municipal commercial paper rating (SP-1);
o unrated if, at the time of purchase, other municipal securities of
that issuer are rated investment grade by an NRSRO (i.e., Baa or
BBB or better by Moody's, S&P, or Fitch); or
o unrated if determined to be of equivalent quality to one of the
foregoing rating categories by the Adviser.
If a security is subsequently downgraded below the permissible investment
category for the Fund, the Adviser will determine whether it continues to
be an acceptable investment; if not, the security will be sold. Bonds rated
BBB by S&P or Fitch or Baa by Moody's are investment grade, but have more
speculative characteristics than A-rated bonds. Changes in economic
conditions or other circumstances are more likely to lead to weakened
capacity to make principal and interest payments than higher rated bonds.
A description of the rating categories is contained in the Appendix to the
Statement of Additional Information.
The prices of fixed income securities fluctuate inversely to the direction
of interest rates.
PARTICIPATION INTERESTS. The Fund may purchase interests in municipal
securities from financial institutions such as commercial and investment
banks, savings associations, and insurance companies. These interests may
take the form of participations, beneficial interests in a trust,
partnership interests or any other form of indirect ownership that allows
the Fund to treat the income from the investment as exempt from federal and
state tax. These participation interests would give the Fund undivided
interests in West Virginia Municipal Securities. The financial institutions
from which the Fund purchases participation interests frequently provide or
secure irrevocable letters of credit or guarantees to assure that the
participation interests are of high quality. The Adviser will ensure that
participation interests meet the prescribed quality standards for the Fund.
VARIABLE RATE MUNICIPAL SECURITIES. Some of the West Virginia Municipal
Securities which the Fund purchases may have variable interest rates.
Variable interest rates are ordinarily based on a published interest rate,
interest rate index, or a similar standard, such as the 91-day U.S.
Treasury bill rate. Many variable rate municipal securities are subject to
payment of principal on demand by the Fund, usually in not more than seven
days. All variable rate municipal securities will meet the quality
standards for the Fund. The Adviser monitors the pricing, quality, and
liquidity of the variable rate municipal securities, including
participation interests held by the Fund, on the basis of published
financial information and reports of the NRSROs and other analytical
services pursuant to guidelines established by the Trustees.
MUNICIPAL LEASES. Municipal leases are obligations issued by state and
local governments or authorities to finance the acquisition of equipment
and facilities and may be considered to be illiquid. They may take the form
of a lease, an installment purchase contract, or a conditional sales
contract.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may
invest in the securities of other investment companies (including closed-
end investment companies) but it will not own more than 3% of the total
outstanding voting stock of any investment company, invest more than 5% of
its total assets in any one investment company, or invest more than 10% of
its total assets in investment companies in general. The Fund will invest
in other investment companies primarily for the purpose of investing short-
term cash which has not yet been invested in other portfolio instruments.
It should be noted that investment companies incur certain expenses such as
management fees and, therefore, any investment by the Fund in shares of
another investment company would be subject to such duplicate expenses.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but
which are subject to restrictions on resale under federal securities laws.
Certain restricted securities which the Trustees deem to be liquid will be
excluded from this limitation. However, the Fund will limit investments in
illiquid securities, including certain restricted securities not determined
by the Trustees to be liquid, non-negotiable time deposits, repurchase
agreements providing for settlement in more than seven days after notice,
and over-the-counter options to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions
are arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete
these transactions may cause the Fund to miss a price or yield considered
to be advantageous. Settlement dates may be a month or more after entering
into these transactions, and the market values of the securities purchased
may vary from the purchase prices.
The Fund may dispose of a commitment prior to settlement if the Adviser
deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits
or losses upon the sale of such commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may lend portfolio securities (up to one-third of the value of its
total assets) on a short-term or long-term basis, to broker/dealers, banks,
or other institutional borrowers of securities. The Fund will only enter
into loan arrangements with broker/dealers, banks, or other institutions
which the Adviser has determined are creditworthy and will receive
collateral in the form of cash or U.S. government securities equal to at
least 100% of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities
may not be available to the Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file
for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
PUT AND CALL OPTIONS. The Fund may purchase put and call options on its
portfolio securities. These options will be used as a hedge to attempt to
protect securities which the Fund holds, or will be purchasing, against
decreases or increases in value. The Fund may also write (sell) put and
call options on all or any portion of its portfolio to generate income for
the Fund. The Fund will write call options on securities either held in its
portfolio or for which it has the right to obtain without payment of
further consideration or for which it has segregated cash in the amount of
any additional consideration. In the case of put options, the Fund will
segregate cash or U.S. Treasury obligations with a value equal to or
greater than the exercise price of the underlying securities.
The Fund may generally purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or writers
of the options since options on the portfolio securities held by the Fund
are not traded on an exchange. The Fund purchases and writes options only
with investment dealers and other financial institutions (such as
commercial banks or savings associations) deemed creditworthy by the
Adviser.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded options
are third-party contracts with standardized strike prices and expiration
dates and are purchased from a clearing corporation. Exchange-traded
options have a continuous liquid market while over-the-counter options may
not.
FINANCIAL FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell
financial futures contracts to hedge all or a portion of its portfolio of
long-term debt securities against changes in interest rates. Financial
futures contracts call for the delivery of particular debt instruments
issued or guaranteed by the U.S. Treasury or by specified agencies or
instrumentalities of the U.S. government at a certain time in the future.
The seller of the contract agrees to make delivery of the type of
instrument called for in the contract and the buyer agrees to take delivery
of the instrument at the specified future time.
The Fund may write call options and purchase put options on financial
futures contracts as a hedge to attempt to protect securities in its
portfolio against decreases in value resulting from anticipated increases
in market interest rates. When the Fund writes a call option on a futures
contract, it is undertaking the obligation of selling the futures contract
at a fixed price at any time during a specified period if the option is
exercised. Conversely, as purchaser of a put option on a futures contract,
the Fund is entitled (but not obligated) to sell a futures contract at the
fixed price during the life of the option.
The Fund may also write put options and purchase call options on financial
futures contracts as a hedge against rising purchase prices of portfolio
securities resulting from anticipated decreases in market interest rates.
The Fund will use these transactions to attempt to protect its ability to
purchase portfolio securities in the future at price levels existing at the
time it enters into the transactions. When the Fund writes a put option on
a futures contract, it is undertaking to buy a particular futures contract
at a fixed price at any time during a specified period if the option is
exercised. As a purchaser of a call option on a futures contract, the Fund
is entitled (but not obligated) to purchase a futures contract at a fixed
price at any time during the life of the option.
The Fund may not purchase or sell futures contracts or related options, for
other than bona fide hedging purposes, if immediately thereafter the sum of
the amount of margin deposits on the Fund's existing futures positions and
premiums paid for related options would exceed 5% of the market value of
the Fund's total assets. When the Fund purchases futures contracts, an
amount of cash and cash equivalents, equal to the underlying commodity
value of the futures contracts (less any related margin deposits), will be
deposited in a segregated account with the Fund's custodian (or the broker,
if legally permitted) to collateralize the position and thereby insure that
the use of such futures contracts is unleveraged.
RISKS. When the Fund uses financial futures and options on
financial futures as hedging devices, there is a risk that the
prices of the securities subject to the futures contracts may not
correlate perfectly with the prices of the securities in the Fund's
portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market
changes. In addition, the Adviser could be incorrect in its
expectations about the direction or extent of market factors such as
interest rate movements. In these events, the Fund may lose money on
the futures contract or option. It is not certain that a secondary
market for positions in futures contracts or for options will exist
at all times. Although the Adviser will consider liquidity before
entering into options transactions, there is no assurance that a
liquid secondary market on an exchange will exist for any particular
futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions
depends on this secondary market.
TEMPORARY INVESTMENTS. The Fund normally invests at least 80% of its net
assets in West Virginia Municipal Securities, as described above. Although
the Fund is permitted to invest up to 20% of its net assets in taxable
investments under normal market conditions, there is no current intention
of generating income subject to federal income tax or the income taxes
imposed by the State of West Virginia. In addition, from time to time,
when the Adviser determines that market conditions call for a temporary
defensive posture, the Fund may invest up to 100% of its total assets in
short-term tax-exempt or taxable temporary investments. These temporary
investments include: notes issued by or on behalf of municipal or
corporate issuers; obligations issued or guaranteed by the U.S. government,
its agencies, or instrumentalities; other debt securities; commercial
paper; certificates of deposit of banks; shares of other investment
companies; and repurchase agreements (arrangements in which the
organization selling the Fund a bond or temporary investment agrees at the
time of sale to repurchase it at a mutually agreed upon time and price).
The Adviser will purchase temporary investments it considers to be at least
of comparable quality to the Fund's other investments.
WEST VIRGINIA MUNICIPAL SECURITIES
West Virginia Municipal Securities are generally issued to finance public
works, such as airports, bridges, highways, housing, hospitals, schools,
streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and
to make loans to other public institutions and facilities. West Virginia
Municipal Securities include industrial development bonds issued by or on
behalf of public authorities to provide financing aid to acquire sites or
construct or equip facilities for privately or publicly owned corporations.
The availability of this financing encourages these corporations to locate
within the sponsoring communities and thereby increases local employment.
The two principal classifications of municipal securities are `general
obligation''and ``revenue'' bonds. General obligation bonds are secured by
the issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Revenue bonds do not represent a pledge
of credit or create any debt of or charge against the general revenues of a
municipality or public authority. Interest on and principal of revenue
bonds are payable only from the revenue generated by the facility financed
by the bond or other specified sources of revenue. Industrial development
bonds are typically classified as revenue bonds; the industry which is the
beneficiary of such bonds is generally the only source of payment for the
bonds.
INVESTMENT RISKS
Yields on West Virginia Municipal Securities depend on a variety of
factors, including, but not limited to: the general conditions of the
municipal bond market; the size of the particular offering; the maturity of
the obligations; and the rating of the issue. Further, any adverse economic
conditions or developments affecting the State of West Virginia or its
agencies or political subdivisions could impact the Fund's portfolio. The
Fund's concentration in securities issued by the State of West Virginia and
its agencies or political subdivisions provides a greater level of risk
than a fund which is diversified across numerous states and municipal
entities. The ability of the Fund to achieve its investment objective also
depends on the continuing ability of the issuers of West Virginia municipal
securities and participation interests, or the guarantors of either, to
meet their obligations for the payment of interest and principal when due.
Investing in West Virginia Municipal Securities which meet the Fund's
quality standards may not be possible if the State of West Virginia or its
agencies or political subdivisions do not maintain their current credit
ratings. In addition, certain West Virginia constitutional amendments,
legislative measures, executive orders, or administrative regulations could
result in adverse consequences affecting various West Virginia Municipal
Securities. A discussion of the current economic risks associated with the
purchase of West Virginia Municipal Securities is contained in the
Statement of Additional Information.
In the debt market, prices move inversely to interest rates. A decline
in market interest rates results in a rise in the market prices of
outstanding debt obligations. Conversely, an increase in market
interest rates results in a decline in market prices of outstanding
debt obligations. In either case, the amount of change in market prices
of debt obligations in response to changes in market interest rates
generally depends on the maturity of the debt obligations: the debt
obligations with the longest maturities will experience the greatest
market price changes.
The market value of debt obligations, and therefore the Fund's net asset
value, will fluctuate due to changes in economic conditions and other
market factors such as interest rates which are beyond the control of the
Fund's adviser. The Fund's adviser could be incorrect in its expectations
about the direction or extent of these market factors. Although debt
obligations with longer maturities offer potentially greater returns, they
have greater exposure to market price fluctuation. Consequently, to the
extent the Fund is significantly invested in debt obligations with longer
maturities, there is a greater possibility of fluctuation in the Fund's net
asset value.
NON-DIVERSIFICATION
The Fund is a non-diversified investment portfolio. As such, there is no
limit on the percentage of assets which can be invested in any single
issuer, except as noted below. An investment in the Fund, therefore, will
entail greater risk than would exist in a diversified portfolio of
securities because the higher percentage of investments among fewer issuers
may result in greater fluctuation in the total market value of the Fund's
portfolio. Any economic, political, or regulatory developments affecting
the value of the securities in the Fund's portfolio will have a greater
impact on the total value of the portfolio than would be the case if the
portfolio were diversified among more issuers. The Fund may purchase an
issue of municipal securities in its entirety.
The Fund intends to comply with Subchapter M of the Internal Revenue Code.
This undertaking requires that at the end of each quarter of each taxable
year, with regard to at least 50% of the Fund's total assets, no more than
5% of its total assets are invested in the securities of a single issuer;
and beyond that, no more than 25% of its total assets are invested in the
securities of a single issuer.
INVESTMENT LIMITATIONS
The Fund will not:
o borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of
its total assets and pledge assets to secure such borrowings.
The above investment limitation cannot be changed without
shareholder approval.
WESMARK FUNDS INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Board
of Trustees is responsible for managing the business affairs of the Trust
and for exercising all of the powers of the Trust except those reserved for
the shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the
WesMark Funds, investment decisions for the Fund are made by WesBanco Bank
Wheeling (the `Adviser'' or ``WesBanco''), the Fund's investment adviser,
subject to direction by the Trustees. The Adviser continually conducts
investment research and supervision for the Fund and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual
fee from the Fund.
ADVISORY FEES. The Adviser is entitled to receive an annual
investment advisory fee equal to 0.60% of the Fund's average daily
net assets. The investment advisory contract allows the voluntary
waiver, in whole or in part, of the investment advisory fee or the
reimbursement of expenses by the Adviser from time to time. The
Adviser can terminate any voluntary waiver of its fee or
reimbursement of expenses at any time at its sole discretion.
ADVISER'S BACKGROUND. WesBanco Bank Wheeling is a wholly-owned
subsidiary of WesBanco, Inc. (the ``Corporation''), a registered
bank holding company headquartered in Wheeling, West Virginia. The
Corporation and its subsidiaries provide a broad range of financial
services to individuals and businesses in West Virginia and Ohio
with 40 banking locations. The Adviser is a state chartered bank
which offers financial services that include, but are not limited
to, commercial and consumer loans, corporate, institutional and
personal trust services, and demand and time deposit accounts. The
Adviser employs an experienced staff of professional investment
analysts, portfolio managers and traders. The staff manages the
bond portfolios of the Corporation and its subsidiaries which
includes government, corporate, mortgage and municipal securities
with a total value of $500 million on December 31, 1995. In
addition, the Adviser provides investment management services to the
Trust Department of WesBanco and three other affiliate banks with
trust powers. The total assets of the trust departments of the
Corporation are valued at $1.5 billion. The Adviser has not
previously served as an investment adviser to a mutual fund.
As part of its regular banking operations, the Adviser may make
loans to public companies and municipalities. Thus, it may be
possible, from time to time, for the Fund to hold or acquire the
securities of issuers which are also lending clients of the Adviser.
The lending relationship will not be a factor in the selection of
securities.
Jerome B. Schmitt has been the portfolio manager for the Fund since
its inception. He has been employed by the Adviser since 1972 and
served as Senior Vice President of Trusts and Investments since
1991, and has been Executive Vice President since June 1995. He
received an M.A. in Economics from Ohio University and is a member
of the Institute of Chartered Financial Analysts. Mr. Schmitt is
responsible for supervising the activities of the Trust and
Investment Departments of the Adviser.
Both the Trust and the Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the interests of
shareholders ahead of the employees' own interest. Among other things, the
codes: require preclearance and periodic reporting of personal securities
transactions; prohibit personal transactions in securities being purchased
or sold, or being considered for purchase or sale, by the Fund; prohibit
purchasing securities in initial public offerings; and prohibit taking
profits on securities held for less than sixty days. Violations of the
codes are subject to review by the Board of Trustees, and could result in
severe penalties.
DISTRIBUTION OF FUND SHARES
Edgewood Services, Inc. is the principal distributor (the "Distributor")
for shares of the Fund. Edgewood Services, Inc. is a New York corporation
and a wholly-owned subsidiary of Federated Investors. The Distributor is a
registered broker/dealer.
DISTRIBUTION PLAN. Under a distribution plan adopted in accordance with
the Investment Company Act of 1940's Rule 12b-1 (the "Plan"), the Fund may
pay to the Distributor an amount computed at an annual rate of 0.25% of the
average daily net asset value of the Fund's shares to finance any activity
which is principally intended to result in the sale of shares subject to
the Plan. However, the Plan will not be activated, and the Distributor has
no present intention to collect any fees pursuant to the Plan, unless and
until a separate class of shares of the Fund (which would not have a Rule
12b-1 Plan) is created and such trust clients' investments in the Fund are
converted to such class.
The Distributor may from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan to the
extent the expenses attributable to the shares exceed such lower expense
limitation as the Distributor may, by notice to the Trust, voluntarily
declare to be effective.
The Distributor may select financial institutions, such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers ("brokers") to provide sales and support services as agents
for their clients or customers who beneficially own shares. Financial
institutions will receive fees from the Distributor based upon shares
subject to the Plan and owned by their clients or customers. The schedules
of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Distributor.
The Fund's Plan is a compensation type plan. As such, the Fund makes no
payments to the Distributor except as described above. Therefore, the Fund
does not pay for unreimbursed expenses of the Distributor, including
amounts expended by the Distributor in excess of amounts received by it
from the Fund, interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses.
However, the Distributor may be able to recover such amounts or may earn a
profit from future payments made by the Fund under the Plan.
SHAREHOLDER SERVICES ARRANGEMENTS. The Fund and WesBanco have entered into
a Shareholder Services Agreement (the `Services Agreement'') with respect
to the shares of the Fund to provide administrative support services to
customers who from time to time may be owners of record or beneficial
owners of the Fund's shares. In return for providing these support
services, WesBanco (or a financial institution which has an agreement with
WesBanco) may receive payments from the Fund at a rate not exceeding 0.25%
of the average daily net assets of the shares beneficially owned by the
financial institution's customers for whom it is holder of record or with
whom it has a servicing relationship. These administrative services may
include, but are not limited to, the following functions: providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to
establish and maintain shareholder accounts and records; processing
purchase and redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations,
and addresses; and providing such other services as the Fund reasonably
requests. Certain trust clients, including ERISA plans, will not be
effected by the Services Agreement because the Services Agreement will not
be activated unless and until a separate `trust'' class of shares of the
Fund (which would not have a Services Agreement) is created and such trust
clients' investments in the Fund are converted to such class.
ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay financial
institutions as directed by the Adviser a fee based upon the average daily
net asset value of shares of their customers invested in the Fund for
providing administrative services. This fee is in addition to the amounts
paid under the Distribution Plan for administrative services, and, if paid,
will be reimbursed by the Adviser and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with
the administrative personnel and services necessary to operate the Fund.
Such services include certain legal and accounting services. Federated
Services Company provides these at an annual rate as specified below:
Maximum Average Aggregate Daily
Administrative Fee Net Assets of the Trust
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$75,000 per Fund. Federated Services Company may choose voluntarily to
waive a portion of its fee.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust
expenses. These expenses include, but are not limited to, the cost of:
organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and
other Fund documents for shareholders; registering the Trust, the Fund, and
shares of the Fund; taxes and commissions; issuing, purchasing,
repurchasing, and redeeming shares; fees for custodians, transfer agents,
dividend disbursing agents, shareholder servicing agents, and registrars;
printing, mailing, auditing, accounting, and legal expenses; reports to
shareholders and government agencies; meetings of Trustees and shareholders
and proxy solicitations therefor; distribution fees; insurance premiums;
association membership dues; and such nonrecurring and extraordinary items
as may arise. However, the Adviser may voluntarily waive and/or reimburse
some expenses.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is determined by
dividing the sum of the market value of all securities and other assets,
less liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is $1,000.
Subsequent investments must be in amounts of at least $100. These minimums
may be waived for purchases by the Trust Division of WesBanco for its
fiduciary or custodial accounts and WesBanco employees and members of their
immediate family. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Fund.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value
of a Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) the
following holidays: New Year's Day, Martin Luther King Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving Day, and Christmas Day.
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and the
Federal Reserve wire system are open for business. Shares of the Fund may
be purchased through WesBanco. In connection with the sale of Fund shares,
the Distributor may, from time to time, offer certain items of nominal
value to any shareholder or investor. The Fund reserves the right to reject
any purchase request.
BY TELEPHONE. To place an order to purchase Fund shares, call WesMark
Funds Shareholder Services at 1-800-368-3369. Texas residents must purchase
shares of the fund through the Distributor at 1-800-618-3573. The order
must be placed by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price, and payment is normally expected the next business day.
PAYMENT BY WIRE. To purchase shares by Federal Reserve Wire, contact your
account officer for wiring instructions. Wire orders will only be accepted
on days on which the Fund, WesBanco and the Federal Reserve Banks are open
for business.
BY MAIL. To purchase shares of the Fund by mail, investors may send a
check made payable to the Fund to: WesMark Funds Shareholder Services,
WesBanco Bank Wheeling, One Bank Plaza, Wheeling, West Virginia 26003.
Orders by mail are considered received after payment by check is converted
by WesBanco into federal funds. This is normally the next business day
after WesBanco receives the check.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net asset
value next determined after an order is received by the Fund. A shareholder
may apply for participation in this program through WesBanco or by writing
to the Fund.
EXCHANGING SECURITIES FOR FUND SHARES
The Fund may accept securities in exchange for Fund shares. The Fund will
allow such exchanges only upon prior approval of the Fund and a
determination by the Fund and the Adviser that the securities to be
exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies of
the Fund, must have a readily ascertainable market value, and must be
liquid. The market value of any securities exchanged in an initial
investment, plus any cash, must be at least equal to the minimum investment
in the Fund.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property
of the Fund, along with the securities.
If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the investor.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company
maintains a share account for each shareholder. Share certificates are not
issued.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during
that month.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared daily and paid monthly. Dividends are declared just
prior to determining net asset value. If an order for shares is placed on
the preceding business day, shares purchased by wire begin earning
dividends on the business day wire payment is received by the custodian. If
the order for shares and payment by wire are received on the same day,
shares begin earning dividends on the next business day. Shares purchased
by check begin earning dividends on the business day after the check is
converted into federal funds. Unless cash payments are requested by
contacting the Fund, dividends and capital gains are automatically
reinvested in additional shares of the Fund on payment dates at net asset
value. Distributions of net long-term capital gains realized by the Fund
will be made at least annually.
EXCHANGE PRIVILEGE
You may exchange shares of the Fund for shares of the WesMark Growth Fund
at net asset value without a sales charge, provided you have received a
copy of the current prospectus of the WesMark Growth Fund, and you meet the
investment minimum of the WesMark Growth Fund.
Upon receipt of proper instructions and all necessary supporting documents,
the Fund's shares you submit for exchange will be redeemed at the next-
determined net asset value. Written exchange instructions may require a
signature guarantee. An exchange is treated as a sale for federal income
tax purposes and, depending on the circumstances, you may realize a short
or long-term capital gain or loss. The exchange privilege may be terminated
at any time, and you will be notified of such termination. You may obtain
further information on the exchange privilege by calling WesMark Funds
Shareholder Services.
The WesMark Funds currently offer only one class of shares. If each of the
Funds should add a second class of shares, exchanges may be limited to
shares of the same class of each of the WesMark Funds.
An authorization form permitting the Fund to accept telephone exchange
requests must first be completed. It is recommended that investors request
this exchange privilege on the account application at the time of their
initial application. If not completed at the time of initial application,
authorization forms and information on this service can be obtained through
WesMark Funds Shareholder Services. Telephone exchange instructions may be
recorded.
An excessive number of exchanges may be disadvantageous to the Fund.
Therefore, the Fund, in addition to its right to reject any exchange
request, reserves the right to modify or terminate the exchange privilege
at any time. Shareholders would be notified prior to any modification or
termination.
REDEEMING SHARES
The Fund redeems shares at their net asset value next determined after the
Fund receives the redemption request. Redemptions will be made on days on
which the Fund computes its net asset value. Requests for redemptions must
be received in proper form and can be made by calling WesBanco or writing
directly to the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by calling his
account officer or by calling WesMark Funds Shareholder Services to request
the redemption. (Call 1-800-368-3369.) Shares will be redeemed at the net
asset value next determined after the Fund receives the redemption request
from WesBanco. Redemption requests must be received by WesBanco before 4:00
p.m. (Eastern time) in order for shares to be redeemed at that day's net
asset value. Proceeds will normally be wired the next business day or a
check will be sent to the address of record. WesBanco is responsible for
promptly submitting redemption requests and providing proper redemption
instructions to the Fund. If, at any time, the Fund should determine it
necessary to terminate or modify this method of redemption, shareholders
would be promptly notified.
An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request
this privilege at the time of their initial application. If not completed
at the time of initial application, authorization forms and information on
this service are available by calling WesMark Funds Shareholder Services.
Telephone redemption instructions may be recorded. If reasonable
procedures are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of extraordinary economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, it is recommended that a redemption request be made in writing and
be sent by overnight mail to your account officer at WesBanco.
BY MAIL. Shareholders may redeem Fund shares by sending a written request
to WesMark Funds Shareholder Services to: WesBanco Bank Wheeling, One Bank
Plaza, Wheeling, West Virginia 26003. The written request should include
the shareholder's name, the Fund name, the account number, and the share or
dollar amount requested. Shareholders should call the WesMark Funds
Shareholder Services at 1-800-368-3369 for assistance in redeeming by mail.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have signatures on written redemption
requests guaranteed by:
o a trust company or commercial bank whose deposits are insured by
the Bank Insurance Fund (``BIF''), which is administered by the
Federal Deposit Insurance Corporation (``FDIC'');
o a member of the New York, American, Boston, Midwest, or Pacific
Stock Exchanges;
o a savings bank or savings association whose deposits are insured
by the Savings Association Insurance Fund (``SAIF''), which is
administered by the FDIC; or
o any other ``eligible guarantor institution,'' as defined in the
Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in the
future to limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Fund and its transfer agent
reserve the right to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven
calendar days, after receipt of a proper written redemption request,
provided that the transfer agent has received payment for shares from the
shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Fund shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Fund shares, and the fluctuation of the net
asset value of Fund shares redeemed under this program, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Fund.
For this reason, payments under this program should not be considered as
yield or income on the shareholder's investment in the Fund. To be eligible
to participate in this program, a shareholder must have an account value of
at least $10,000. A shareholder may apply for participation in this program
through his financial institution or WesMark Funds Shareholder Services.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When you purchase Fund shares by check or through the Automated Clearing
House System, the proceeds from the redemption of those shares are not
available, and the shares may not be exchanged, until WesMark Funds
Shareholder Services and/or the transfer agent is reasonably certain that
the purchase check has cleared, which could take up to seven calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund
may redeem shares in any account and pay the proceeds to the shareholder if
the account balance falls below the required minimum value of $1,000 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $1,000 because of changes in the Fund's net asset
value. Before shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional shares to
meet the minimum requirement.
SHAREHOLDER INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote. All shares of each
portfolio in the Trust have equal voting rights except that only shares of
the Fund are entitled to vote on matters affecting only the Fund.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of
the outstanding shares of the Trust.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit a bank holding company registered under the Bank Holding Company
Act of 1956 or any affiliate thereof from sponsoring, organizing or
controlling a registered, open-end investment company continuously engaged
in the issuance of its shares, and from issuing, underwriting, selling or
distributing securities in general. Such laws and regulations do not
prohibit such a holding company or affiliate from acting as investment
adviser, transfer agent, or custodian to such an investment company or from
purchasing shares of such a company as agent for and upon the order of
their customers.
Some entities providing services to the Fund, such as WesBanco Bank
Wheeling, are subject to such banking laws and regulations. They believe
that they may perform those services for the Fund contemplated by any
agreement entered into with the Fund without violating those laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations, could
prevent these entities from continuing to perform all or a part of the
above services. If this happens, the Trustees would consider alternative
means of continuing available services. It is not expected that
shareholders would suffer any adverse financial consequences as a result of
any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund expects to pay no federal regular income tax because it intends to
meet requirements of the Internal Revenue Code (the `Code'') applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies.
Shareholders are not required to pay federal regular income tax on any
dividends received from the Fund that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest income earned on some municipal bonds may be
included in calculating the federal individual alternative minimum tax or
the federal alternative minimum tax for corporations.
The alternative minimum tax, up to 28% of alternative minimum taxable
income for individuals and 20% for corporations, applies when it exceeds
the regular tax for the taxable year. Alternative minimum taxable income is
equal to the regular taxable income of the taxpayer increased by certain
`tax preference'' items not included in regular taxable income and reduced
by only a portion of the deductions allowed in the calculation of the
regular tax.
The Tax Reform Act of 1986 treats interest on certain `private activity''
bonds issued after August 7, 1986, as a tax preference item for both
individuals and corporations. Unlike traditional governmental purpose
municipal bonds, which finance roads, schools, libraries, prisons, and
other public facilities, private activity bonds provide benefits to private
parties. The Fund may purchase all types of municipal bonds, including
private activity bonds. Thus, should it purchase any such bonds, a portion
of the Fund's dividends may be treated as a tax preference item.
In addition, in the case of a corporate shareholder, dividends of the Fund
which represent interest on municipal bonds will become subject to the 20%
corporate alternative minimum tax because the dividends are included in a
corporation's `adjusted current earnings.'' The corporate alternative
minimum tax treats 75% of the excess of the taxpayer's `adjusted current
earnings''over the taxpayer's alternative minimum taxable income as a tax
preference item. `Adjusted current earnings'' is based upon the concept of
a corporation's `earnings and profits.'' Since "earnings and profits"
generally includes the full amount of any Fund dividend, and alternative
minimum taxable income does not include the portion of the Fund's dividend
attributable to municipal bonds which are not private activity bonds, the
difference will be included in the calculation of the corporation's
alternative minimum tax.
Shareholders should consult with their tax advisers to determine whether
they are subject to the alternative minimum tax or the corporate
alternative minimum tax and, if so, the tax treatment of dividends paid by
the Fund.
Dividends of the Fund representing net interest income earned on some
temporary investments and any realized net short-term gains are taxed as
ordinary income. Distributions representing net long-term capital gains
realized by the Fund, if any, will be taxable as long-term capital gains
regardless of the length of time shareholders have held their shares.
These tax consequences apply whether dividends are received in cash or as
additional shares. Information on the tax status of dividends and
distributions is provided annually.
WEST VIRGINIA TAXES
Under existing West Virginia laws, distributions made by the Fund will not
be subject to the West Virginia personal income tax to the extent that such
distributions qualify as exempt-interest dividends under the Internal
Revenue Code of 1986, as amended, and represent (i) interest income from
obligations of the United States and its possessions; or (ii) interest or
dividend income from obligations of any authority, commission or
instrumentality of the United States or the State of West Virginia exempt
from state income taxes under the laws of the United States or of the State
of West Virginia. For purposes of the West Virginia corporate income tax,
a special formula is used to compute such exemption.
Counsel to the Fund's distributor has been advised that, although they had
not been asked to rule on the matter, since no controversy concerning the
application of the tax had been presented, the Secretary of the Department
of Tax and Revenue had indicated that its likely position would be that the
exemption from the imposition of personal property taxes on the Fund's
portfolio securities would pass-through to the Fund's shareholders, such
that the Fund's shares would also be exempt from such taxes. Shareholders
should consult their own tax adviser for more information on the
application of personal property taxes on Fund shares.
OTHER STATE AND LOCAL TAXES
Income from the Fund is not necessarily free from taxes in states other
than West Virginia. State laws differ on this issue, and shareholders are
urged to consult their own tax advisers regarding the status of their
accounts under state and local tax laws.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return, yield, and tax-
equivalent yield.
Total return represents the change, over a specific period of time, in the
value of an investment in the Fund after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the offering price per share of the
Fund on the last day of the period. This number is then annualized using
semi-annual compounding. The tax-equivalent yield of the Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that
the Fund would have had to earn to equal its actual yield, assuming a
specific tax rate. The yield and the tax-equivalent yield do not
necessarily reflect income actually earned by the Fund and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare the Fund's performance to certain indices.
The Fund is the successor to the portfolio of a common trust fund managed
by the Adviser. It is anticipated that, at the Fund's commencement of
operations, the assets from the common trust fund will be transferred to
the Fund in exchange for Fund shares. The Adviser has represented that the
Fund's investment objective, policies and limitations are in all material
respects identical to those of the common trust fund.
The Fund's total return for the one-year period ended September 30, 1996,
was 4.57%. The Fund's average annual total return for the five-year period
ended September 30, 1996, and for the period from December 31, 1990 (date
of commencement of operations of the common trust fund) to September 30,
1996 was 5.28% and 5.51%, respectively. The quoted performance data is the
performance of the common trust fund for periods before the Fund's
registration statement became effective, as adjusted to reflect the Fund's
anticipated expenses as set forth in the `Expenses of the Fund'' section
of this prospectus. The common trust fund was not registered under the
Investment Company Act of 1940 (`1940 Act'') and therefore was not subject
to certain investment restrictions that are imposed by the 1940 Act. If
the common trust fund had been registered under the 1940 Act, the
performance may have been adversely affected.
ADDRESSES
WesMark West Virginia Municipal Bond Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Distributor
Edgewood Services, Inc. Clearing Operations
P.O. Box 897
Pittsburgh, Pennsylvania 15230-0897
Investment Adviser
WesBanco Bank Wheeling One Bank Plaza
Wheeling, West Virginia 26003
Custodian
WesBanco Bank Wheeling One Bank Plaza
Wheeling, West Virginia 26003
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder
Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
Prospectus
A Non-Diversified Portfolio of WesMark Funds, an Open-End, Management
Investment Company
January , 1997
---
EDGEWOOD SERVICES, INC.
Distributor WesBanco Bank Wheeling
A subsidiary of FEDERATED INVESTORS Investment Adviser
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP #
G01913-01 (1/97)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be
sold nor may any offers to buy be accepted prior to the time the
registration statement becomes effective. This Statement of Additional
Information shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities in
any State in which such offer, solicitation, or sale would be unlawful
prior to registration or qualification under the securities laws of any
such State.
Subject to Completion, November 14, 1996
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
(A PORTFOLIO OF WESMARK FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of WesMark West Virginia Municipal Bond Fund (the ``Fund')
dated January , 1997. This Statement is not a prospectus itself. You
---
may request a copy of the prospectus or a paper copy of this Statement
of Additional Information, if you have received it electronically, free
of charge by calling the WesMark Funds Shareholder Services at 1-800-
368-3369. Terms used but not defined herein, which are defined in the
prospectus, are used herein as defined in the prospectus.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January , 1997
---
Edgewood Services, Inc.
Distributor
A subsidiary of FEDERATED INVESTORS
General Information About the Fund 1
Investment Objective and Policies 1
Acceptable Investments 1
When-Issued and Delayed Delivery Transactions 2
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Futures and Options Transactions 3
Lending of Portfolio Securities 5
Restricted and Illiquid Securities 5
Portfolio Turnover 5
West Virginia Investment Risks 6
Investment Limitations 6
WesMark Funds Management 8
Fund Ownership 12
Trustees Compensation 13
Trustee Liability 14
Investment Advisory Services 14
Adviser to the Fund 14
Other Services 14
Fund Administration 14
Custodian 14
Transfer Agent,Dividend Disbursing Agent, and
Portfolio Accounting Services 14
Independent Auditors 14
Brokerage Transactions 14
Purchasing Shares 15
Distribution and Shareholder Services Plans 15
Administrative Arrangements 15
Conversion to Federal Funds 15
Determining Net Asset Value 15
Valuing Municipal Bonds 15
Valuing Futures and Options 16
Redeeming Shares 16
Redemption in Kind 16
Massachusetts Partnership Law 16
Tax Status 16
The Fund's Tax Status 16
Shareholders' Tax Status 17
Total Return 17
Yield 17
Tax-Equivalent Yield 17
Tax-Equivalency Table 17
Performance Comparisons 19
Economic and Market Information 19
Appendix 20
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in WesMark Funds (the `Trust'') which was
established as a Massachusetts business trust under a Declaration of Trust
dated March 1, 1996.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is to provide current income which is
exempt from federal income tax and the income taxes imposed by the State of
West Virginia. The objective cannot be changed without approval of
shareholders.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in a non-diversified portfolio of West Virginia
Municipal Securities.
CHARACTERISTICS
A West Virginia Municipal Security will be determined by the Adviser
to meet the quality standards established by the Trustees if it is of
comparable quality to municipal securities within the Fund's rating
requirements. The Trustees consider the creditworthiness of the
issuer of a municipal security, the issuer of a participation interest
if the Fund has the right to demand payment from the issuer of the
interest, or the guarantor of payment by either of those issuers.
If Moody's, S&P's, or Fitch's ratings change because of changes in
those organizations or in their rating systems, the Fund will try to
use comparable ratings as standards in accordance with the investment
policies described in the Fund's prospectus.
TYPES OF ACCEPTABLE INVESTMENTS
Examples of West Virginia Municipal Securities include, but are not
limited to:
ogeneral obligation bonds secured by a municipality's pledge of
taxation;
otax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes at a later date;
oserial bonds sold with differing maturity dates;
obond anticipation notes sold in anticipation of the issuance of
longer-term bonds; and
opre-refunded municipal bonds whose timely payment of interest and
principal is ensured by an escrow of U.S. government obligations.
PARTICIPATION INTERESTS
The financial institutions from which the Fund purchases participation
interests frequently provide or secure from other financial
institutions irrevocable letters of credit or guarantees and give the
Fund the right to demand payment of the principal amounts of the
participation interests plus accrued interest on short notice (usually
within seven days).
VARIABLE RATE MUNICIPAL SECURITIES
Variable interest rates generally reduce changes in the market value
of municipal securities from their original purchase prices.
Accordingly, as interest rates decrease or increase, the potential for
capital appreciation or depreciation is less for variable rate
municipal securities than for fixed income obligations.
Many municipal securities with variable interest rates purchased by
the Fund are subject to repayment of principal (usually within seven
days) on the Fund's demand. The terms of these variable rate demand
instruments require payment of principal and accrued interest from the
issuer of the municipal obligations, the issuer of the participation
interests, or a guarantor of either issuer.
MUNICIPAL LEASES
The Fund may invest up to 5% of its net assets in municipal leases.
The Fund may purchase municipal securities in the form of
participation interests which represent undivided proportional
interests in lease payments by a governmental or non-profit entity.
The lease payments and other rights under the lease provide for and
secure the payments on the certificates. Lease obligations may be
limited by municipal charter or the nature of the appropriation for
the lease. In particular, lease obligations may be subject to periodic
appropriation. If the entity does not appropriate funds for future
lease payments, the entity cannot be compelled to make such payments.
Furthermore, a lease may provide that the certificate trustee cannot
accelerate lease obligations upon default. The trustee would only be
able to enforce lease payments as they become due. In the event of a
default or failure of appropriation, it is unlikely that the trustee
would be able to obtain an acceptable substitute source of payment or
that the substitute source of payment will generate tax-exempt income.
In determining the liquidity of municipal lease securities, the
Adviser, under the authority delegated by the Trustees, will base its
determination on the following factors: (a) whether the lease can be
terminated by the lessee: (b) the potential recovery, if any, from a
sale of the leased property upon termination of the lease; (c) the
lessee's general credit strength (e.g., its debt, administrative,
economic, and financial characteristics and prospects); (d) the
likelihood that the lessee will discontinue appropriating funding for
the leased property because the property is no longer deemed essential
to its operations (e.g., the potential for an `event of non-
appropriation'); and (e) any credit enhancement or legal recourse
provided upon an event of non-appropriation or other termination of
the lease.
If the Fund purchases unrated municipal leases, the Trustees will be
responsible for determining, on an ongoing basis, the credit quality
of such leases and the likelihood that such leases will not be
canceled.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or expenses, other than
normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks, broker/dealers, and
other recognized financial institutions sell U.S. government securities or
certificates of deposit to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price within one year
from the date of acquisition. The Fund requires its custodian to take
possession of the securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities. In
the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject
to repurchase agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such securities.
The Fund may only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are found by
the Adviser to be creditworthy pursuant to guidelines established by the
Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in
the future the Fund will repurchase the portfolio instrument by remitting
the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase
agreements does not ensure that the Fund will be able to avoid selling
portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund in
a dollar amount sufficient to make payment for the obligations to be
purchased are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.
FUTURES AND OPTIONS TRANSACTIONS
The Fund may attempt to hedge all or a portion of its portfolio by buying
and selling financial futures contracts and options on financial futures
contracts. Additionally, the Fund may buy and sell call and put options on
portfolio securities.
FINANCIAL FUTURES CONTRACTS
A futures contract is a firm commitment by two parties, the seller who
agrees to make delivery of the specific type of security called for in
the contract (`going short'') and the buyer who agrees to take
delivery of the security (`going long'') at a certain time in the
future. Financial futures contracts call for the delivery of
particular debt securities issued or guaranteed by the U.S. Treasury
or by specified agencies or instrumentalities of the U.S. government.
In the fixed income securities market, price moves inversely to
interest rates. A rise in rates means a drop in price. Conversely, a
drop in rates means a rise in price. In order to hedge its holdings of
fixed income securities against a rise in market interest rates, the
Fund could enter into contracts to deliver securities at a
predetermined price (i.e., `go short'') to protect itself against the
possibility that the prices of its fixed income securities may decline
during the Fund's anticipated holding period. The Fund would `go
long''(agree to purchase securities in the future at a predetermined
price) to hedge against a decline in market interest rates.
PURCHASING PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures
contracts for U.S. government securities. Unlike entering directly
into a futures contract, which requires the purchaser to buy a
financial instrument on a set date at a specified price, the purchase
of a put option on a futures contract entitles (but does not obligate)
its purchaser to decide on or before a future date whether to assume a
short position at the specified price.
The Fund may purchase put options on futures to protect portfolio
securities against decreases in value resulting from an anticipated
increase in market interest rates. Generally, if the hedged portfolio
securities decrease in value during the term of an option, the related
futures contracts will also decrease in value and the option will
increase in value. In such an event, the Fund will normally close out
its option by selling an identical option. If the hedge is successful,
the proceeds received by the Fund upon the sale of the second option
will be large enough to offset both the premium paid by the Fund for
the original option plus the realized decrease in value of the hedged
securities.
Alternatively, the Fund may exercise its put option. To do so, it
would simultaneously enter into a futures contract of the type
underlying the option (for a price less than the strike price of the
option) and exercise the option. The Fund would then deliver the
futures contract in return for payment of the strike price. If the
Fund neither closes out nor exercises an option, the option will
expire on the date provided in the option contract, and the premium
paid for the contract will be lost.
WRITING CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
In addition to purchasing put options on futures, the Fund may write
listed call options on futures contracts for U.S. government
securities to hedge its portfolio against an increase in market
interest rates. When the Fund writes a call option on a futures
contract, it is undertaking the obligation of assuming a short futures
position (selling a futures contract) at the fixed strike price at any
time during the life of the option if the option is exercised. As
market interest rates rise, causing the prices of futures to go down,
the Fund's obligation under a call option on a future (to sell a
futures contract) costs less to fulfill, causing the value of the
Fund's call option position to increase.
In other words, as the underlying futures price goes down below the
strike price, the buyer of the option has no reason to exercise the
call, so that the Fund keeps the premium received for the option. This
premium can offset the drop in value of the Fund's fixed income
portfolio which is occurring as interest rates rise.
Prior to the expiration of a call written by the Fund, or exercise of
it by the buyer, the Fund may close out the option by buying an
identical option. If the hedge is successful, the cost of the second
option will be less than the premium received by the Fund for the
initial option. The net premium income of the Fund will then offset
the decrease in value of the hedged securities.
WRITING PUT OPTIONS ON FINANCIAL FUTURES CONTRACTS
The Fund may write listed put options on financial futures contracts
for U.S. government securities to hedge its portfolio against a
decrease in market interest rates. When the Fund writes a put option
on a futures contract, it receives a premium for undertaking the
obligation to assume a long futures position (buying a futures
contract) at a fixed price at any time during the life of the option.
As market interest rates decrease, the market price of the underlying
futures contract normally increases.
As the market value of the underlying futures contract increases, the
buyer of the put option has less reason to exercise the put because
the buyer can sell the same futures contract at a higher price in the
market. The premium received by the Fund can then be used to offset
the higher prices of portfolio securities to be purchased in the
future due to the decrease in market interest rates.
Prior to the expiration of the put option, or its exercise by the
buyer, the Fund may close out the option by buying an identical
option. If the hedge is successful, the cost of buying the second
option will be less than the premium received by the Fund for the
initial option.
PURCHASING CALL OPTIONS ON FINANCIAL FUTURES CONTRACTS
An additional way in which the Fund may hedge against decreases in
market interest rates is to buy a listed call option on a financial
futures contract for U.S. government securities. When the Fund
purchases a call option on a futures contract, it is purchasing the
right (not the obligation) to assume a long futures position (buy a
futures contract) at a fixed price at any time during the life of the
option. As market interest rates fall, the value of the underlying
futures contract will normally increase, resulting in an increase in
value of the Fund's option position. When the market price of the
underlying futures contract increases above the strike price plus
premium paid, the Fund could exercise its option and buy the futures
contract below market price.
Prior to the exercise or expiration of the call option the Fund could
sell an identical call option and close out its position. If the
premium received upon selling the offsetting call is greater than the
premium originally paid, the Fund has completed a successful hedge.
LIMITATION ON OPEN FUTURES POSITIONS
The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds
the current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the
futures contracts. If this limitation is exceeded at any time, the
Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.
`MARGIN'' IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather,
the Fund is required to deposit an amount of `initial margin'' in
cash or U.S. Treasury bills with its custodian (or the broker, if
legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities
transactions in that futures contract initial margin does not involve
the borrowing of funds by the Fund to finance the transactions.
Initial margin is in the nature of a performance bond or good faith
deposit on the contract which is returned to the Fund upon termination
of the futures contract, assuming all contractual obligations have
been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the
Fund pays or receives cash, called `variation margin,'' equal to the
daily change in value of the futures contract. This process is known
as `marking to market.'' Variation margin does not represent a
borrowing or loan by the Fund but is instead settlement between the
Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the
Fund will mark-to-market its open futures positions.
The Fund is also required to deposit and maintain margin when it
writes call options on futures contracts.
PURCHASING PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put and call options on portfolio securities to
protect against price movements in particular securities. A put option
gives the Fund, in return for a premium, the right to sell the
underlying security to the writer (seller) at a specified price during
the term of the option. A call option gives the Fund, in return for a
premium, the right to buy the underlying security from the seller.
WRITING COVERED PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may write covered put and call options to generate income. As
writer of a call option, the Fund has the obligation upon exercise of
the option during the option period to deliver the underlying security
upon payment of the exercise price. As a writer of a put option, the
Fund has the obligation to purchase a security from the purchaser of
the option upon the exercise of the option.
The Fund may write covered call options either on securities held in
its portfolio or on securities which it has the right to obtain
without payment of further consideration (or has segregated cash in
the amount of any additional consideration). In the case of put
options, the Fund will segregate cash or U.S. Treasury obligations
with a value equal to or greater than the exercise price of the
underlying securities.
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of
the options for those options on portfolio securities held by the Fund
and not traded on an exchange.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to
the investment.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in restricted securities. Restricted securities are any
securities in which the Fund may otherwise invest pursuant to its
investment objective and policies but which are subject to restriction on
resale under federal securities laws. The Fund will not invest more than
15% of the value of its total assets in restricted securities; however,
certain restricted securities which the Trustees deem to be liquid will be
excluded from this 15% limitation.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange
Commission (`SEC'') Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the `Rule''). The Rule is a
non-exclusive, safe-harbor for certain secondary market transactions
involving securities subject to restrictions on resale under federal
securities laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional
buyers. The Rule was expected to further enhance the liquidity of the
secondary market for securities eligible for resale under Rule 144A. The
Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities (eligible for resale
under Rule 144A) for determination by the Trustees. The Trustees consider
the following criteria in determining the liquidity of certain restricted
securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace
trades.
PORTFOLIO TURNOVER
The Fund may trade or dispose of portfolio securities as considered
necessary to meet its investment objective. It is not anticipated that the
portfolio trading engaged in by the Fund will result in its annual rate of
portfolio turnover exceeding 50%.
WEST VIRGINIA INVESTMENT RISKS
The economy of West Virginia has large dependence on the coal mining,
chemical, and steel industries. Per capita personal income is among the
lowest in the nation. The birth rate is also among the lowest while the
death rate is among the highest resulting in a low rate of population
growth.
The recent performance of the West Virginia economy has improved. Personal
income growth has been above 4% for the past nine consecutive quarters.
Total employment in West Virginia rose 3.4% in 1994, 1.9% in 1995, and an
estimated 1.7% in 1996. The unemployment rate was 7.9% in 1995 and is
expected to decline to 7.4% for 1996. The national unemployment rate for
1996 is expected to be 5.4%. Recent job growth is occurring in the service,
trade, and manufacturing industries.
The State posted a surplus for the fiscal year ended June 30, 1995. On
January 23, 1996, the State Legislature passed legislation which reduced
the personal income tax for certain taxpayers having federal adjusted gross
income of ten thousand dollars or less and reduced the business franchise
tax rate from seventy-five one hundredths of one percent to seventy one
hundredths of one percent of the value of the tax base. The Governor
signed the bill on January 26, 1996.
West Virginia's economy should be enhanced by the West Virginia Highway
System Improvements Initiative which is anticipated to involve the
expenditure of approximately $4.62 billion of federal and State funds over
the next several years to construct new roadways in the State. However,
one highway project, known as `Corridor H,'' has received considerable
opposition in its final approval process. Federally funded construction of
several federal administrative facilities in the State is also expected to
enhance the State's economy.
In March of 1994, the West Virginia Supreme Court of Appeals issued its
opinion in Booth v. Sims, 193 W.Va. 323, 456 S.E. 2d 167 (1994), which will
likely affect various State pension plans. In this case, the Court ruled
that the State Legislature could not reduce the state troopers' retirement
annual cost of living adjustment. The Legislature had approved such
reductions in 1994 due to concerns regarding the actuarial soundness of the
troopers' pension plan. The Court found the Legislature's reduction of
benefits unconstitutional as applied to troopers which have participated in
the plan long enough to have detrimentally relied on expected pension
profits. State lawmakers speculate that the Court's ruling may affect the
State's budget by restricting the Legislature's ability to amend State
pension plans which are inadequately funded.
In 1995, the State Legislature substantially reformed the State's workers'
compensation program. The reform, aimed primarily at enforcing employers'
premium obligations and strengthening requirements for permanent total
disability awards, is intended to decrease the program's unfunded liability
and make the State's business climate more attractive.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as may be necessary
for clearance of purchases and sales of securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options transactions is not considered
the purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money in amounts up to one-third of the value of its total
assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding. During
the period any reverse repurchase agreements are outstanding, but only
to the extent necessary to assure completion of the reverse repurchase
agreements, the Fund will restrict the purchase of portfolio
instruments to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate, although it may invest in
municipal bonds secured by real estate or interests in real estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase put and call options on portfolio securities and on financial
futures contracts. In addition, the Fund reserves the right to hedge
the portfolio by entering into financial futures contracts and to sell
puts and calls on financial futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities
up to one-third of the value of its total assets. The Fund may,
however, acquire publicly or non-publicly issued municipal bonds or
temporary investments or enter into repurchase agreements in
accordance with its investment objective, policies, and limitations or
the Declaration of Trust.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry, or in industrial development bonds or
other securities, the interest upon which is paid from revenues of
similar types of projects. However, the Fund may invest as temporary
investments more than 25% of the value of its assets in cash or cash
items, securities issued or guaranteed by the U.S. government, its
agencies, or instrumentalities, or instruments secured by these money
market instruments, such as repurchase agreements.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material change in these limitations becomes effective.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate its assets except
to secure permitted borrowings. For purposes of this limitation, the
following are not deemed to be pledges: margin deposits for the
purchase and sale of financial futures contracts and related options
and segregation or collateral arrangements made in connection with
options activities or the purchase of securities on a when-issued
basis.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
obligations, including repurchase agreements providing for settlement
in more than seven days after notice, over-the-counter options and
certain restricted securities and municipal leases not determined by
the Trustees to be liquid.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of its total assets in any one
investment company, and invest no more than 10% of its total assets in
investment companies in general. The Fund will purchase securities of
investment companies only in open-market transactions involving only
customary broker's commissions. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation,
or acquisition of assets.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
The Fund does not expect to borrow money or pledge securities in excess of
5% of the value of its total assets in the coming fiscal year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be `cash items.''
WESMARK FUNDS MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with WesMark Funds, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President, Treasurer, and Trustee
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing consultant; Conference Planning, Manchester
Craftsmen's Guild; Restaurant Consultant, Frick Art & History Center;
Conference Coordinator, University of Pittsburgh Art History Department;
Director or Trustee of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Trust.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
C. Christine Thomson
Federated Investors Tower
Pittsburgh, PA
Birthdate: September 1, 1957
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Board between meetings of
the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government Securities
Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*
John F. Donahue $ 0
Chairman and Trustee
Thomas G. Bigley $ 0
Trustee
John T. Conroy, Jr. $ 0
Trustee
William J. Copeland $ 0
Trustee
James E. Dowd $ 0
Trustee
Lawrence D. Ellis, M.D. $ 0
Trustee
Edward L. Flaherty, Jr. $ 0
Trustee
Edward C. Gonzales $ 0
President, Treasurer, and
Trustee
Peter E. Madden $ 0
Trustee
Gregor F. Meyer $ 0
Trustee
John E. Murray, Jr. $ 0
Trustee
Wesley W. Posvar $ 0
Trustee
Marjorie P. Smuts$ 0
Trustee
*The aggregate compensation is provided for the Trust which is comprised of
two portfolios. Information is furnished for the fiscal year ending
January 31, 1996.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is WesBanco Bank Wheeling. It is a wholly-
owned subsidiary of WesBanco, Inc. The Adviser shall not be liable to the
Fund or any shareholder for any losses that may be sustained in the
purchase, holding, lending, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties imposed upon
it by its contract with the Fund.
Because of internal controls maintained by the Adviser to restrict the flow
of non-public information, Fund investments are typically made without any
knowledge of the Adviser's or its affiliates' relationships with an issuer.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus.
CUSTODIAN
WesBanco Bank Wheeling is custodian for the securities and cash of the
Fund. Under the custodian agreement, WesBanco holds the Fund's portfolio
securities and keeps all necessary records and documents relating to its
duties. WesBanco's fees for custody services are based upon the market
value of Fund securities held in custody plus certain securities
transaction charges.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, is transfer agent for shares of the
Fund and dividend disbursing agent for the Fund. Federated Services Company
also provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Deloitte & Touche LLP,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the Adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to guidelines established by the
Trustees. The Adviser may select brokers and dealers who offer brokerage
and research services. These services may be furnished directly to the Fund
or to the Adviser and may include: advice as to the advisability of
investing in securities; security analysis and reports; economic studies;
industry studies; receipt of quotations for portfolio evaluations; and
similar services. Research services provided by brokers and dealers may be
used by the Adviser or its affiliates in advising the Fund and other
accounts. To the extent that receipt of these services may supplant
services for which the Adviser or its affiliates might otherwise have paid,
it would tend to reduce their expenses. The Adviser and its affiliates
exercise reasonable business judgment in selecting brokers who offer
brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
PURCHASING SHARES
Except under certain circumstances described in the prospectus, shares are
sold at their net asset value on days the New York Stock Exchange is open
for business. The procedure for purchasing shares of the Fund is explained
in the prospectus under `Investing in the Fund.''
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule
12b-1 of the Investment Company Act of 1940 and a Shareholder Services
Plan. These arrangements permit the payment of fees to the Distributor, and
to stimulate distribution activities and to cause services to be provided
to shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Trustees expect that the Fund will
be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objective. By
identifying potential investors whose needs are served by the Fund's
objective, and properly servicing these accounts, it may be possible to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; and
(3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their accounts.
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing
office space, equipment, telephone facilities, and various personnel,
including clerical, supervisory, and computer, as is necessary or
beneficial to establish and maintain shareholders' accounts and records,
process purchase and redemption transactions, process automatic investments
of client account cash balances, answer routine client inquiries regarding
the Fund, assist clients in changing dividend options, account
designations, and addresses, and providing such other services as the Fund
may reasonably request.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds before shareholders
begin to earn dividends. Federated Shareholder Services Company acts as the
shareholder's agent in depositing checks and converting them to federal
funds.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
VALUING MUNICIPAL BONDS
The Trustees use an independent pricing service to value municipal bonds
and other portfolio securities. The independent pricing service takes into
consideration yield, stability, risk, quality, coupon rate, maturity, type
of issue, trading characteristics, special circumstances of a security or
trading market, and any other factors or market data it considers relevant
in determining valuations for normal institutional size trading units of
debt securities, and does not rely exclusively on quoted prices. In
addition, the Fund values short-term obligations according to the mean
between the bid and asked prices as furnished by an independent pricing
service, or for short-term obligations with remaining maturities of 60 days
or less at the time of purchase, at amortized cost.
VALUING FUTURES AND OPTIONS
The Fund will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
options trading on such exchanges, unless the Trustees determine in good
faith that another method of valuing option positions is necessary.
Over-the-counter put options will be valued at the mean between the bid and
the asked prices. Covered call options will be valued at the last sale
price on the national exchange on which such option is traded. Unlisted
call options will be valued at the latest bid price as provided by brokers.
REDEEMING SHARES
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under `Redeeming Shares.'' Redemption requests cannot be
executed on days on which the New York Stock Exchange is closed or on
federal holidays when wire transfers are restricted.
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio. To the extent
available, such securities will be readily marketable.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, under which the Fund is obligated to redeem shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will
pay all or a portion of the remainder of the redemption in portfolio
instruments, valued in the same way as the Fund determines net asset value.
The portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders of the Trust may be held
personally liable as partners under Massachusetts law for acts or
obligations of the Trust on behalf of the Fund. To protect shareholders of
the Fund, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations on behalf of the Fund, the Trust is required to use its
property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust on behalf of the Fund. Therefore,
financial loss resulting from liability as a shareholder of the Fund will
occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
o derive less than 30% of its gross income from the sale of
securities held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income
earned during the year.
SHAREHOLDERS' TAX STATUS
No portion of any income dividend paid by the Fund is eligible for the
dividends received deductions available to corporations.
CAPITAL GAINS
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value on
securities held to maturity. Sales would generally be made because of:
othe availability of higher relative yields;
odifferentials in market values;
onew investment opportunities;
ochanges in creditworthiness of an issuer; or
oan attempt to preserve gains or limit losses.
Distribution of long-term capital gains are taxed as such, whether
they are taken in cash or reinvested, and regardless of the length of
time the shareholder has owned the shares.
TOTAL RETURN
The average annual total return for the Fund is the average compounded rate
of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end of
the period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000 adjusted over
the period by any additional shares, assuming the monthly reinvestment of
all dividends and distributions.
YIELD
The yield for the Fund is determined by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the maximum offering price per share
on the last day of the period. This value is then annualized using semi-
annual compounding. This means that the amount of income generated during
the thirty-day period is assumed to be generated each month over a twelve-
month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by the Fund because of certain
adjustments required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other distributions paid
to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those
fees.
TAX-EQUIVALENT YIELD
The tax-equivalent yield of the Fund is calculated similarly to the yield,
but is adjusted to reflect the taxable yield that the Fund would have had
to earn to equal its actual yield assuming that income is 100% tax-exempt.
TAX-EQUIVALENCY TABLE
The Fund may also use a tax-equivalency table in advertising and sales
literature. The interest earned by the municipal bonds in the Fund's
portfolio generally remains free from federal regular income tax,* and is
often free from state and local taxes as well. As the tables on the next
page indicate, a `tax-free'' investment is an attractive choice for
investors, particularly in times of narrow spreads between tax-free and
taxable yields.
TAXABLE YIELD EQUIVALENT FOR 1996
STATE OF WEST VIRGINIA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
19.00% 34.00% 37.50% 42.50% 46.10%
SINGLE $1- $24,001- $58,151- $121,301- OVER
RETURN: 24,000 58,150 121,300 263,750 $263,750
Tax-Exempt
Yield Taxable Yield Equivalent
2.50% 3.09% 3.79% 4.00% 4.35% 4.64%
3.00% 3.70% 4.55% 4.80% 5.22% 5.57%
3.50% 4.32% 5.30% 5.60% 6.09% 6.49%
4.00% 4.94% 6.06% 6.40% 6.96% 7.42%
4.50% 5.56% 6.82% 7.20% 7.83% 8.35%
5.00% 6.17% 7.58% 8.00% 8.70% 9.28%
5.50% 6.79% 8.33% 8.80% 9.57% 10.20%
6.00% 7.41% 9.09% 9.60% 10.43% 11.13%
6.50% 8.02% 9.85% 10.40% 11.30% 12.06%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
TAXABLE YIELD EQUIVALENT FOR 1996
STATE OF WEST VIRGINIA
COMBINED FEDERAL AND STATE INCOME TAX BRACKET:
21.00% 34.50% 37.50% 42.50% 46.10%
JOINT $1- $40,101- $96,901- $147,701- OVER
RETURN: 40,100 96,900 147,700 263,750 $263,750
Tax-Exempt
Yield Taxable Yield Equivalent
2.50% 3.16% 3.82% 4.00% 4.35% 4.64%
3.00% 3.80% 4.58% 4.80% 5.22% 5.57%
3.50% 4.43% 5.34% 5.60% 6.09% 6.49%
4.00% 5.06% 6.11% 6.40% 6.96% 7.42%
4.50% 5.70% 6.87% 7.20% 7.83% 8.35%
5.00% 6.33% 7.63% 8.00% 8.70% 9.28%
5.50% 6.96% 8.40% 8.80% 9.57% 10.20%
6.00% 7.59% 9.16% 9.60% 10.43% 11.13%
6.50% 8.23% 9.92% 10.40% 11.30% 12.06%
Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were not
used to increase federal deductions.
The charts on the previous page are for illustrative purposes only. They
are not indicators of past or future performance of Fund shares.
* Some portion of the Fund's income may be subject to the federal
alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio
securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return as described below.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors, such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in net as set value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the
``intermediate municipal bond funds'' category in advertising and
sales literature.
O MORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates more
than 1,000 NASDAQ-listed mutual funds of all types, according to
their risk-adjusted returns. The maximum rating is five stars, and
ratings are effective for two weeks.
o LEHMAN BROTHERS FIVE-YEAR STATE GENERAL OBLIGATION BONDS is an
index comprised of all state general obligation debt issues with
maturities between four and six years. These bonds are rated A or
better and represent a variety of coupon ranges. Index figures
are total returns calculated for one, three, and twelve month
periods as well as year-to-date. Total returns are also
calculated as of the index inception, December 31, 1979.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by the Fund portfolio managers and their views and
analysis on how such developments could affect the Funds. In addition,
advertising and sales literature may quote statistics and give general
information about the mutual fund industry, including the growth of the
industry, from sources such as the Investment Company Institute (`ICI'').
For example, according to the ICI, twenty-seven percent of American
households are pursuing their financial goals through mutual funds. These
investors, as well as businesses and institutions, have entrusted over $3
trillion to the more than 5,500 funds available.
APPENDIX
STANDARD AND POOR'S RATINGS GROUP BOND RATING DEFINITIONS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Ratings Group. Capacity to pay interest and repay principal is extremely
strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard &
Poor's Ratings Group does not rate a particular type of obligation as a
matter of policy.
PLUS (+) OR MINUS (-):--The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC., BOND RATING DEFINITIONS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA--Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well.
NR--Not rated by Moody's Investors Service, Inc.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
NR--NR indicates that Fitch Investors Service, Inc. does not rate the
specific issue.
STANDARD AND POOR'S RATINGS GROUP NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATING DEFINITIONS
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATING DEFINITIONS
P-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
o Leading market positions in well established industries.
o High rates of return on funds employed.
o Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
o Broad margins in earning coverage of fixed financial charges and
high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
FITCH INVESTORS SERVICE, INC., SHORT-TERM DEBT RATING DEFINITIONS
F-1+--(Exceptionally Strong Credit Quality). Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1--(Very Strong Credit Quality). Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
F-2--(Good Credit Quality). Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1 ratings.
Cusip #
G01913-02 (1/97)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may any offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation, or sale
would be unlawful prior to registration or qualification under the
securities laws of any such State.
Subject to Completion, November 14, 1996
WESMARK GROWTH FUND
(A PORTFOLIO OF WESMARK FUNDS)
PROSPECTUS
The shares of WesMark Growth Fund (the `Fund'') offered by this prospectus
represent interests in a diversified portfolio of WesMark Funds (the
`Trust''), an open-end management investment company (a mutual fund). The
investment objective of the Fund is to appreciation of capital. The Fund
invests primarily in equity securities of companies with prospects for
above-average growth in earnings and dividends.
THE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS OF
WESBANCO BANK WHEELING OR ITS AFFILIATES, ARE NOT ENDORSED OR GUARANTEED BY
WESBANCO BANK WHEELING OR ITS AFFILIATES, AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER GOVERNMENT AGENCY. INVESTMENT IN THESE SHARES INVOLVES INVESTMENT
RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This prospectus contains the information you should read and know before
you invest in the Fund. Keep this prospectus for future reference.
The Fund has also filed a Statement of Additional Information dated January
, 1997 with the Securities and Exchange Commission. The information
- --
contained in the Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Statement of
Additional Information or a paper copy of this prospectus, if you have
received your prospectus electronically, free of charge, obtain other
information, or make inquiries about the Fund by writing or calling the
Fund at 1-800-368-3369. The Statement of Additional Information, material
incorporated by reference into this document, and other information
regarding the Fund is maintained electronically with the SEC at Internet
Web site (http://www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus dated January , 1997
---
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
Portfolio Investments 3
Investment Risks 8
Investment Limitations 8
WesMark Funds Information 9
Management of the Trust 9
Distribution of Fund Shares 10
Administration of the Fund 11
Brokerage Transactions 11
Expenses of the Fund 11
Net Asset Value 12
Investing in the Fund 12
Minimum Investment Required 12
What Shares Cost 12
Share Purchases 12
Systematic Investment Program 13
Exchanging Securities for Fund Shares 13
Certificates and Confirmations 13
Dividends and Capital Gains 13
Exchange Privilege 14
Redeeming Shares 14
Systematic Withdrawal Program 15
Redemption Before Purchase
Instruments Clear 16
Accounts with Low Balances 16
Shareholder Information 16
Voting Rights 16
Effect of Banking Laws 16
Tax Information 17
Federal Income Tax 17
State and Local Taxes 17
Performance Information 17
Performance Information for
Predecessor Common and
Collective Investment Funds 18
Addresses 19
SUMMARY OF FUND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price) ....................................................None
Maximum Sales Charge Imposed on Reinvested Dividends (as a percentage
of offering price) ........................................None
Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds,
as applicable) .........................................None
Redemption Fee (as a percentage of amount redeemed, if applicable)
......................................................None
Exchange Fee ..............................................None
ANNUAL FUND OPERATING EXPENSES*
(AS A PERCENTAGE OF PROJECTED AVERAGE NET ASSETS)
Management Fee................................................0.75%
12b-1 Fee (1).................................................0.00%
Total Other Expenses..........................................0.40%
Shareholder Services Fee (1) ............... 0.00%
Total Annual Fund Operating Expenses ...................1.15%
(1)The Fund has no present intention of paying or accruing 12b-1 fees
or shareholder servicing agent fees during the fiscal year ending
January 31, 1998. If the Fund were paying or accruing 12b-1 fees
or shareholder servicing agent fees, the Fund would be able to pay
up to 0.25% of its average daily net assets for 12b-1 fees and up
to 0.25% of its average daily net assets for shareholder servicing
agent fees.
* Annual Fund Operating Expenses are estimated based on average
expenses expected to be incurred during the fiscal year ending January
31, 1998. During the course of this period, expenses may be more or
less than the average amount shown.
The purpose of this table is to assist an investor in understanding
the various costs and expenses that a shareholder of the Fund will bear,
either directly or indirectly. For more complete descriptions of the
various costs and expenses, see `Investing in the Fund'' and ``WesMark
Funds Information.'' Wire-transferred redemptions may be subject to
additional fees.
EXAMPLE .............................. 1 year 3 years
You would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of
each time period. The Fund charges no redemption fees... $12
...................................$37
THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. THIS EXAMPLE IS BASED ON ESTIMATED DATA FOR THE FUND'S FISCAL YEAR
ENDING JANUARY 31, 1998
GENERAL INFORMATION
The Trust was established as a Massachusetts business trust under a
Declaration of Trust dated
March 1, 1996. The Declaration of Trust permits the Trust to offer separate
series of shares of beneficial interest representing interests in separate
portfolios of securities. The Trust currently consists of WesMark West
Virginia Municipal Bond Fund and WesMark Growth Fund. This prospectus
relates only to the WesMark Growth Fund. The shares in any one portfolio
may be offered in separate classes. As of the date of this prospectus, the
Board of Trustees (the `Trustees'') has not established classes of shares
of the Fund. The Fund is designed primarily for customers of WesBanco Bank
Wheeling and its affiliates and individual investors who desire a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing primarily in growth-oriented equity
securities. WesBanco Bank Wheeling is the investment adviser to the Fund
(`Adviser''). A minimum initial investment of $1,000 is required.
Subsequent investments must be in amounts of at least $100.
Fund shares are sold and redeemed at net asset value without a sales charge
imposed by the Fund.
INVESTMENT INFORMATION
INVESTMENT OBJECTIVE
The investment objective of the Fund is appreciation of capital. While
there is no assurance that the Fund will achieve its investment objective,
it endeavors to do so by following the investment policies described in
this prospectus. The investment objective cannot be changed without
approval of shareholders.
INVESTMENT POLICIES
The Fund pursues its investment objective by investing in a professionally
managed portfolio consisting primarily of equity securities of companies
with prospects for above-average growth in earnings and dividends. The
Fund's investment adviser selects equity securities on the basis of
traditional research techniques, including assessment of earnings and
dividend growth prospects and of the risk and volatility of each company's
business. Most often, these companies will be classified as `large'' or
`mid''-capitalization companies. The Fund's investment approach is based
on the conviction that, over the long term, the economy will continue to
expand and develop and that this economic growth will be reflected in the
growth of the revenues and earnings of publicly held corporations. Under
normal market conditions, the Fund will invest at least 65% of its assets
in equity securities of U.S. companies. Equity securities include common
stocks, preferred stocks, and securities (including debt securities) that
are convertible into common stocks. Unless indicated otherwise, the
investment policies may be changed by the Trustees without the approval of
shareholders. Shareholders will be notified before any material changes in
these policies become effective.
ACCEPTABLE INVESTMENTS. The securities in which the Fund invests
include, but are not limited to:
O common stocks of U.S. or foreign companies which are listed on the
New York Stock Exchange, American Stock Exchange, or other
domestic stock exchange or traded in over-the-counter markets, and
preferred stock which is convertible into common stock of such
companies;
o American Depositary Receipts (``ADRs'') of foreign companies
traded on the New York Stock Exchange or over-the-counter market.
The Fund may not invest more than 25% of its assets in ADRs (see
``Foreign Investments''); and
o convertible bonds or other corporate debt obligations rated, at
the time of purchase, investment grade (within the four highest
ratings categories for corporate debt) by a nationally recognized
statistical rating organization (``NRSRO''), such as Moody's
Investors Service, Inc. (``Moody's'') (Aaa, Aa, A, or Baa),
Standard & Poor's Ratings Group (``S&P'') (AAA, AA, A, or BBB), or
Fitch Investors Service, Inc. (``Fitch'') (AAA, AA, A, or BBB);
o put and call options on securities and indices and futures
contracts.
In addition, the Fund may invest in warrants, U.S government securities,
illiquid securities, restricted securities, securities of other investment
companies, short-term money market instruments, when-issued or delayed
delivery transactions, enter into repurchase agreements, borrow money, and
lend portfolio securities.
Bonds rated BBB by S&P or Fitch or Baa by Moody's are investment grade, but
have more speculative characteristics than A-rated bonds. Changes in
economic conditions or other circumstances are more likely to lead to
weakened capacity to make principal and interest payments than higher rated
bonds. A description of the rating categories is contained in the Appendix
to the Statement of Additional Information. The prices of fixed income
securities fluctuate inversely to the direction of interest rates
PORTFOLIO INVESTMENTS
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities which
are rated, at the time of purchase, investment grade by an NRSRO (such as
BBB or better by S&P or Fitch, or Baa or better by Moody's), or, if
unrated, are of comparable quality as determined by the Adviser.
Convertible securities are fixed income securities which may be exchanged
or converted into a predetermined number of the issuer's underlying common
stock at the option of the holder during a specified time period.
Convertible securities may take the form of convertible bonds, convertible
preferred stock or debentures, units consisting of "usable" bonds and
warrants or a combination of the features of several of these securities.
The investment characteristics of each convertible security vary widely,
which allows convertible securities to be employed for different investment
objectives. In selecting a convertible security, the Adviser evaluates the
investment characteristics of the convertible security as a fixed income
instrument, and the investment potential of the underlying security for
capital appreciation.
Convertible bonds and convertible preferred stocks generally retain the
investment characteristics of fixed income securities until they have been
converted but also react to movements in the underlying equity securities.
The holder is entitled to receive the fixed income of a bond or the
dividend preference of a preferred stock until the holder elects to
exercise the conversion privilege. Usable bonds are corporate bonds that
can be used in whole or in part, customarily at full face value, in lieu of
cash to purchase the issuer's common stock. Convertible securities are
senior to equity securities, and therefore have a claim to assets of the
corporation prior to the holders of common stock in the case of
liquidation. However, convertible securities are generally subordinated to
similar nonconvertible securities of the same company. The interest income
and dividends from convertible bonds and preferred stocks provide a stable
stream of income with generally higher yields than common stocks, but lower
than nonconvertible securities of similar quality. The Fund will exchange
or convert the convertible securities held in its portfolio into shares of
the underlying common stocks when, in the opinion of the Adviser, the
investment characteristics of the underlying common shares will assist the
Fund in achieving its investment objective. Otherwise, the Fund will hold
or trade the convertible securities.
AMERICAN DEPOSITARY RECEIPTS. The Fund may invest in ADRs. ADRs are
depositary receipts typically issued by a U.S. bank or trust company which
evidence ownership of underlying securities issued by a foreign
corporation. Generally, depositary receipts in registered form are
designed for use in the U.S. securities market and depositary receipts in
bearer form are designed for use in securities markets outside the United
States. Depositary receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted.
Ownership of unsponsored depositary receipts may not entitle the Fund to
financial or other reports from the issuer of the underlying security, to
which it would be entitled as the owner of sponsored depositary receipts.
Depositary receipts also involve the risks of other investments in foreign
securities.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may
invest in the securities of other investment companies (including closed-
end investment companies) but it will not own more than 3% of the total
outstanding voting stock of any investment company, invest more than 5% of
its total assets in any one investment company, or invest more than 10% of
its total assets in investment companies in general. The Fund will invest
in other investment companies primarily for the purpose of investing short-
term cash which has not yet been invested in other portfolio instruments.
It should be noted that investment companies incur certain expenses such as
management fees and, therefore, any investment by the Fund in shares of
another investment company would be subject to such duplicate expenses.
RESTRICTED AND ILLIQUID SECURITIES. The Fund may invest in restricted
securities. Restricted securities are any securities in which the Fund may
otherwise invest pursuant to its investment objective and policies but
which are subject to restrictions on resale under federal securities laws.
Certain restricted securities which the Trustees deem to be liquid will be
excluded from this limitation. However, the Fund will limit investments in
illiquid securities, including certain restricted securities not determined
by the Trustees to be liquid, non-negotiable time deposits, repurchase
agreements providing for settlement in more than seven days after notice,
and over-the-counter options to 15% of its net assets.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued or delayed delivery basis. These transactions
are arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time. The seller's failure to complete
these transactions may cause the Fund to miss a price or yield considered
to be advantageous. Settlement dates may be a month or more after entering
into these transactions, and the market values of the securities purchased
may vary from the purchase prices.
The Fund may dispose of a commitment prior to settlement if the Adviser
deems it appropriate to do so. In addition, the Fund may enter into
transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Fund may realize short-term profits
or losses upon the sale of such commitments.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may lend portfolio securities (up to one-third of the value of its
total assets) on a short-term or long-term basis, to broker/dealers, banks,
or other institutional borrowers of securities. The Fund will only enter
into loan arrangements with broker/dealers, banks, or other institutions
which the Adviser has determined are creditworthy and will receive
collateral in the form of cash or U.S. government securities equal to at
least 100% of the value of the securities loaned.
There is the risk that when lending portfolio securities, the securities
may not be available to the Fund on a timely basis and the Fund may,
therefore, lose the opportunity to sell the securities at a desirable
price. In addition, in the event that a borrower of securities would file
for bankruptcy or become insolvent, disposition of the securities may be
delayed pending court action.
PUT AND CALL OPTIONS. The Fund may purchase put and call options on its
portfolio securities. These options will be used as a hedge to attempt to
protect securities which the Fund holds, or will be purchasing, against
decreases or increases in value. The Fund may also write (sell) put and
call options on all or any portion of its portfolio to generate income for
the Fund. The Fund will write call options on securities either held in its
portfolio or for which it has the right to obtain without payment of
further consideration or for which it has segregated cash in the amount of
any additional consideration. In the case of put options, the Fund will
segregate cash or U.S. Treasury obligations with a value equal to or
greater than the exercise price of the underlying securities.
The Fund may generally purchase and write over-the-counter options on
portfolio securities in negotiated transactions with the buyers or writers
of the options since options on the portfolio securities held by the Fund
are not traded on an exchange. The Fund purchases and writes options only
with investment dealers and other financial institutions (such as
commercial banks or savings associations) deemed creditworthy by the
Adviser.
Over-the-counter options are two-party contracts with price and terms
negotiated between buyer and seller. In contrast, exchange-traded options
are third-party contracts with standardized strike prices and expiration
dates and are purchased from a clearing corporation. Exchange-traded
options have a continuous liquid market while over-the-counter options may
not.
FINANCIAL FUTURES AND OPTIONS ON FUTURES. The Fund may purchase and sell
financial futures contracts to hedge all or a portion of its portfolio of
long-term debt securities against changes in interest rates. Financial
futures contracts call for the delivery of particular debt instruments
issued or guaranteed by the U.S. Treasury or by specified agencies or
instrumentalities of the U.S. government at a certain time in the future.
The seller of the contract agrees to make delivery of the type of
instrument called for in the contract and the buyer agrees to take delivery
of the instrument at the specified future time.
The Fund may write call options and purchase put options on financial
futures contracts as a hedge to attempt to protect securities in its
portfolio against decreases in value resulting from anticipated increases
in market interest rates. When the Fund writes a call option on a futures
contract, it is undertaking the obligation of selling the futures contract
at a fixed price at any time during a specified period if the option is
exercised. Conversely, as purchaser of a put option on a futures contract,
the Fund is entitled (but not obligated) to sell a futures contract at the
fixed price during the life of the option.
The Fund may also write put options and purchase call options on financial
futures contracts as a hedge against rising purchase prices of portfolio
securities resulting from anticipated decreases in market interest rates.
The Fund will use these transactions to attempt to protect its ability to
purchase portfolio securities in the future at price levels existing at the
time it enters into the transactions. When the Fund writes a put option on
a futures contract, it is undertaking to buy a particular futures contract
at a fixed price at any time during a specified period if the option is
exercised. As a purchaser of a call option on a futures contract, the Fund
is entitled (but not obligated) to purchase a futures contract at a fixed
price at any time during the life of the option.
The Fund may not purchase or sell futures contracts or related options, for
other than bona fide hedging purposes, if immediately thereafter the sum of
the amount of margin deposits on the Fund's existing futures positions and
premiums paid for related options would exceed 5% of the market value of
the Fund's total assets. When the Fund purchases futures contracts, an
amount of cash and cash equivalents, equal to the underlying commodity
value of the futures contracts (less any related margin deposits), will be
deposited in a segregated account with the Fund's custodian (or the broker,
if legally permitted) to collateralize the position and thereby insure that
the use of such futures contracts is unleveraged.
RISKS. When the Fund uses financial futures and options on
financial futures as hedging devices, there is a risk that the
prices of the securities subject to the futures contracts may not
correlate perfectly with the prices of the securities in the Fund's
portfolio. This may cause the futures contract and any related
options to react differently than the portfolio securities to market
changes. In addition, the Adviser could be incorrect in its
expectations about the direction or extent of market factors such as
interest rate movements. In these events, the Fund may lose money on
the futures contract or option. It is not certain that a secondary
market for positions in futures contracts or for options will exist
at all times. Although the Adviser will consider liquidity before
entering into options transactions, there is no assurance that a
liquid secondary market on an exchange will exist for any particular
futures contract or option at any particular time. The Fund's
ability to establish and close out futures and options positions
depends on this secondary market.
U.S. GOVERNMENT SECURITIES The Fund may invest in U.S. government
securities, which generally include direct obligations of the U.S. Treasury
(such as U.S. Treasury bills, notes, and bonds) and obligations issued or
guaranteed by the U.S. government agencies or instrumentalities. These
securities include securities that are backed by: the full faith and credit
of the U.S. Treasury; securities that are supported by the issuer's right
to borrow from the U.S. Treasury; and securities that are supported by the
credit of the agency or instrumentality issuing the obligations.
TEMPORARY INVESTMENTS/MONEY MARKET INSTRUMENTS. For temporary defensive
purposes (up to 100% of total assets) and to maintain liquidity (up to 35%
of total assets), the Fund may invest in U.S. and foreign short-term money
market instruments, including:
o commercial paper rated A-1 or A-2 by S&P, Prime-1 or Prime-2 by
Moody's, or F-1 or F-2 by Fitch, and Europaper (dollar-denominated
commercial paper issued outside the United States) rated A-1, A-2,
Prime-1, or Prime-2;
o instruments of domestic and foreign banks and savings and loans
(such as certificates of deposit, demand and time deposits,
savings shares, and bankers' acceptances) if they have capital,
surplus, and undivided profits of over $100,000,000, or if the
principal amount of the instrument is insured by the Bank
Insurance Fund, which is administered by the Federal Deposit
Insurance Corporation ("FDIC"), or the Savings Association
Insurance Fund, which is also administered by the FDIC. These
instruments may include Eurodollar Certificates of Deposit
("ECDs"), Yankee Certificates of Deposit ("Yankee CDs"), and
Eurodollar Time Deposits ("ETDs");
o obligations of the U.S. government or its agencies or
instrumentalities;
o repurchase agreements;
o securities of other investment companies; and
o other short-term instruments which are not rated but are
determined by the Adviser to be of comparable quality to the other
obligations in which a Fund may invest.
REPURCHASE AGREEMENTS. The securities in which each Fund invests may be
purchased pursuant to repurchase agreements. Repurchase agreements are
arrangements in which banks, broker/dealers, and other recognized financial
institutions sell securities to a Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price. To the extent
that the original seller does not repurchase the securities from a Fund,
the Fund could receive less than the repurchase price on any sale of such
securities.
CREDIT RATINGS. The Fund may invest in unrated securities if they are
determined to be of comparable quality to the Fund's acceptable rated
investments. If a security is subsequently downgraded below the permissible
investment category for a Fund, the Adviser will determine whether it
continues to be an acceptable investment; if not, the security will be
sold. Bonds rated BBB by S&P or Fitch or Baa by Moody's are investment
grade, but have more speculative characteristics than A-rated bonds.
Changes in economic conditions or other circumstances are more likely to
lead to weakened capacity to make principal and interest payments than
higher rated bonds. A description of the rating categories is contained in
the Appendix to the Statement of Additional Information.
DIVERSIFICATION. With respect to 75% of the value of total assets, the
Fund will not invest more than 5% in securities of any one issuer, other
than cash, cash items or securities issued or guaranteed by the government
of the United States or its agencies or instrumentalities and repurchase
agreements collateralized by U.S. government securities or acquire more
than 10% of the outstanding voting securities of any one issuer. This
policy cannot be changed without the approval of holders of a majority of a
Fund's shares.
DERIVATIVE CONTRACTS AND SECURITIES. The term "derivative" has
traditionally been applied to certain contracts (including, futures,
forward, option and swap contracts) that "derive" their value from changes
in the value of an underlying security, currency, commodity or index.
Certain types of securities that incorporate the performance
characteristics of these contracts are also referred to as "derivatives."
The term has also been applied to securities "derived" from the cash flows
from underlying securities, mortgages or other obligations.
Derivative contracts and securities can be used to reduce or increase the
volatility of an investment portfolio's total performance. While the
response of certain derivative contracts and securities to market changes
may differ from traditional investments, such as stock and bonds,
derivatives do not necessarily present greater market risks than
traditional investments. The Fund will only use derivative contracts for
the purposes disclosed above in this prospectus. To the extent that the
Fund invests in securities that could be characterized as derivatives (such
as convertible securities, options, and futures contracts), they will only
do so in a manner consistent with its investment objectives, policies and
limitations.
PORTFOLIO TURNOVER. Although the Fund does not intend to invest for the
purpose of seeking short-term profits, securities will be sold whenever the
Fund's Adviser believes it is appropriate to do so in light of the Fund's
investment objective, without regard to the length of time a particular
security may have been held The Fund anticipates its portfolio turnover
rate to be approximately %. A higher rate of portfolio turnover involves
---
correspondingly greater transaction expenses which must be borne directly
by the Fund and, thus, indirectly by its shareholders. In addition, a high
rate of portfolio turnover may result in the realization of larger amounts
of capital gains which, when distributed to the Fund's shareholders, are
taxable to them. Nevertheless, transactions for a Fund's portfolio will be
based upon investment considerations and will not be limited by any other
considerations when the Fund's Adviser deems it appropriate to make changes
to the Fund's portfolio.
INVESTMENT RISKS
As with other mutual funds that invest primarily in equity securities,
the Fund is subject to market risks. That is, the possibility exists
that common stocks will decline over short or even extended periods of
time, and that United States equity market tends to be cyclical,
experiencing both periods when stock prices generally increase and
periods when stock prices generally decrease.
In the debt market, prices move inversely to interest rates. A decline
in market interest rates results in a rise in the market prices of
outstanding debt obligations. Conversely, an increase in market
interest rates results in a decline in market prices of outstanding
debt obligations. In either case, the amount of change in market prices
of debt obligations in response to changes in market interest rates
generally depends on the maturity of the debt obligations: the debt
obligations with the longest maturities will experience the greatest
market price changes.
SECURITIES OF FOREIGN ISSUERS. There may be certain risks associated
with investing in foreign securities. These include risks of adverse
political and economic developments (including possible governmental
seizure or nationalization of assets), the possible imposition of
exchange controls or other governmental restrictions, less uniformity
in accounting and reporting requirements than applied to U.S.
companies, and the possibility that there will be less information on
such securities and their issuers available to the public. In addition,
there are restrictions on foreign investments in other jurisdictions
and there tends to be difficulty in obtaining judgments from abroad and
effecting repatriation of capital invested abroad. Delays could occur
in settlement of foreign transactions, which could adversely affect
shareholder equity. Foreign securities may be subject to foreign taxes,
which reduce yield, and may be less marketable than comparable United
States securities. As a matter of practice, the Fund will not invest in
the securities of a foreign issuer if any risk identified above appears
to the Adviser to be substantial.
INVESTMENT LIMITATIONS
The Fund will not:
o borrow money or pledge securities except, under certain
circumstances, the Fund may borrow up to one-third of the value of
its total assets and pledge assets to secure such borrowings.
The above investment limitation cannot be changed without
shareholder approval.
WESMARK FUNDS INFORMATION
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES. The Trust is managed by a Board of Trustees. The Board
of Trustees is responsible for managing the business affairs of the Trust
and for exercising all of the powers of the Trust except those reserved for
the shareholders. An Executive Committee of the Board of Trustees handles
the Board's responsibilities between meetings of the Board.
INVESTMENT ADVISER. Pursuant to an investment advisory contract with the
WesMark Funds, investment decisions for the Fund are made by WesBanco Bank
Wheeling (the `Adviser'' or ``WesBanco''), the Fund's investment adviser,
subject to direction by the Trustees. The Adviser continually conducts
investment research and supervision for the Fund and is responsible for the
purchase or sale of portfolio instruments, for which it receives an annual
fee from the Fund.
ADVISORY FEES. The Adviser is entitled to receive an annual
investment advisory fee equal to 0.75% of the Fund's average daily
net assets. The investment advisory contract allows the voluntary
waiver, in whole or in part, of the investment advisory fee or the
reimbursement of expenses by the Adviser from time to time. The
Adviser can terminate any voluntary waiver of its fee or
reimbursement of expenses at any time at its sole discretion.
ADVISER'S BACKGROUND. WesBanco Bank Wheeling is a wholly-owned
subsidiary of WesBanco, Inc. (the ``Corporation''), a registered
bank holding company headquartered in Wheeling, West Virginia. The
Corporation and its subsidiaries provide a broad range of financial
services to individuals and businesses in West Virginia and Ohio
with 40 banking locations. The Adviser is a state chartered bank
which offers financial services that include, but are not limited
to, commercial and consumer loans, corporate, institutional and
personal trust services, and demand and time deposit accounts. The
Adviser employs an experienced staff of professional investment
analysts, portfolio managers and traders. The staff manages the
bond portfolios of the Corporation and its subsidiaries which
includes government, corporate, mortgage and municipal securities
with a total value of $500 million on December 31, 1995. In
addition, the Adviser provides investment management services to the
Trust Department of WesBanco and three other affiliate banks with
trust powers. The total assets of the trust departments of the
Corporation are valued at $1.5 billion. The Adviser has not
previously served as an investment adviser to a mutual fund.
As part of its regular banking operations, the Adviser may make
loans to public companies and municipalities. Thus, it may be
possible, from time to time, for the Fund to hold or acquire the
securities of issuers which are also lending clients of the Adviser.
The lending relationship will not be a factor in the selection of
securities.
Jerome B. Schmitt has been the portfolio manager for the Fund since
its inception. He has been employed by the Adviser since 1972 and
served as Senior Vice President of Trusts and Investments since
1991, and has been Executive Vice President since June 1995. He
received an M.A. in Economics from Ohio University and is a member
of the Institute of Chartered Financial Analysts. Mr. Schmitt is
responsible for supervising the activities of the Trust and
Investment Departments of the Adviser.
Both the Trust and the Adviser have adopted strict codes of ethics
governing the conduct of all employees who manage the Fund and its
portfolio securities. These codes recognize that such persons owe a
fiduciary duty to the Fund's shareholders and must place the
interests of shareholders ahead of the employees' own interest.
Among other things, the codes: require preclearance and periodic
reporting of personal securities transactions; prohibit personal
transactions in securities being purchased or sold, or being
considered for purchase or sale, by the Fund; prohibit purchasing
securities in initial public offerings; and prohibit taking profits
on securities held for less than sixty days. Violations of the
codes are subject to review by the Board of Trustees, and could
result in severe penalties.
DISTRIBUTION OF FUND SHARES
Edgewood Services, Inc. is the principal distributor (the "Distributor")
for shares of the Fund. Edgewood Services, Inc. is a New York corporation
and a wholly-owned subsidiary of Federated Investors. The Distributor is a
registered broker/dealer.
DISTRIBUTION PLAN. Under a distribution plan adopted in accordance with
the Investment Company Act of 1940's Rule 12b-1 (the "Plan"), the Fund may
pay to the Distributor an amount computed at an annual rate of 0.25% of the
average daily net asset value of the Fund's shares to finance any activity
which is principally intended to result in the sale of shares subject to
the Plan. However, the Plan will not be activated, and the Distributor has
no present intention to collect any fees pursuant to the Plan, unless and
until a separate class of shares of the Fund (which would not have a Rule
12b-1 Plan) is created and such trust clients' investments in the Fund are
converted to such class.
The Distributor may from time to time and for such periods as it deems
appropriate, voluntarily reduce its compensation under the Plan to the
extent the expenses attributable to the shares exceed such lower expense
limitation as the Distributor may, by notice to the Trust, voluntarily
declare to be effective.
The Distributor may select financial institutions, such as banks,
fiduciaries, custodians for public funds, investment advisers, and
broker/dealers ("brokers") to provide sales and support services as agents
for their clients or customers who beneficially own shares. Financial
institutions will receive fees from the Distributor based upon shares
subject to the Plan and owned by their clients or customers. The schedules
of such fees and the basis upon which such fees will be paid will be
determined from time to time by the Distributor.
The Fund's Plan is a compensation type plan. As such, the Fund makes no
payments to the Distributor except as described above. Therefore, the Fund
does not pay for unreimbursed expenses of the Distributor, including
amounts expended by the Distributor in excess of amounts received by it
from the Fund, interest, carrying or other financing charges in connection
with excess amounts expended, or the Distributor's overhead expenses.
However, the Distributor may be able to recover such amounts or may earn a
profit from future payments made by the Fund under the Plan.
SHAREHOLDER SERVICES ARRANGEMENTS. The Fund and WesBanco have entered into
a Shareholder Services Agreement (the `Services Agreement'') with respect
to the shares of the Fund to provide administrative support services to
customers who from time to time may be owners of record or beneficial
owners of the Fund's shares. In return for providing these support
services, WesBanco (or a financial institution which has an agreement with
WesBanco) may receive payments from the Fund at a rate not exceeding 0.25%
of the average daily net assets of the shares beneficially owned by the
financial institution's customers for whom it is holder of record or with
whom it has a servicing relationship. These administrative services may
include, but are not limited to, the following functions: providing office
space, equipment, telephone facilities, and various personnel, including
clerical, supervisory, and computer, as necessary or beneficial to
establish and maintain shareholder accounts and records; processing
purchase and redemption transactions and automatic investments of client
account cash balances; answering routine client inquiries regarding the
Fund; assisting clients in changing dividend options, account designations,
and addresses; and providing such other services as the Fund reasonably
requests. Certain trust clients, including ERISA plans, will not be
effected by the Services Agreement because the Services Agreement will not
be activated unless and until a separate `trust'' class of shares of the
Fund (which would not have a Services Agreement) is created and such trust
clients' investments in the Fund are converted to such class.
ADMINISTRATIVE ARRANGEMENTS. The Distributor may also pay financial
institutions as directed by the Adviser a fee based upon the average daily
net asset value of shares of their customers invested in the Fund for
providing administrative services. This fee is in addition to the amounts
paid under the Distribution Plan for administrative services, and, if paid,
will be reimbursed by the Adviser and not the Fund.
ADMINISTRATION OF THE FUND
ADMINISTRATIVE SERVICES. Federated Services Company, Pittsburgh,
Pennsylvania, a subsidiary of Federated Investors, provides the Fund with
the administrative personnel and services necessary to operate the Fund.
Such services include certain legal and accounting services. Federated
Services Company provides these at an annual rate as specified below:
Maximum Average Aggregate Daily
Administrative Fee Net Assets of the Trust
.150 of 1% on the first $250 million
.125 of 1% on the next $250 million
.100 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$75,000 per Fund. Federated Services Company may choose voluntarily to
waive a portion of its fee.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the Adviser will generally
utilize those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. In selecting among firms believed to meet these criteria, the
Adviser may give consideration to those firms which have sold or are
selling shares of the Fund and other mutual funds distributed by Edgewood
Services, Inc. or its affiliates. The Adviser makes decisions on portfolio
transactions and select brokers and dealers subject to review by the
Directors.
EXPENSES OF THE FUND
The Fund pays all of its own expenses and its allocable share of Trust
expenses. These expenses include, but are not limited to, the cost of:
organizing the Trust and continuing its existence; Trustees' fees;
investment advisory and administrative services; printing prospectuses and
other Fund documents for shareholders; registering the Trust, the Fund, and
shares of the Fund; taxes and commissions; issuing, purchasing,
repurchasing, and redeeming shares; fees for custodians, transfer agents,
dividend disbursing agents, shareholder servicing agents, and registrars;
printing, mailing, auditing, accounting, and legal expenses; reports to
shareholders and government agencies; meetings of Trustees and shareholders
and proxy solicitations therefor; distribution fees; insurance premiums;
association membership dues; and such nonrecurring and extraordinary items
as may arise. However, the Adviser may voluntarily waive and/or reimburse
some expenses.
NET ASSET VALUE
The Fund's net asset value per share fluctuates. It is determined by
dividing the sum of the market value of all securities and other assets,
less liabilities, by the number of shares outstanding.
INVESTING IN THE FUND
MINIMUM INVESTMENT REQUIRED
The minimum initial investment in the Fund by an investor is $1,000.
Subsequent investments must be in amounts of at least $100. These minimums
may be waived for purchases by the Trust Division of WesBanco for its
fiduciary or custodial accounts and WesBanco employees and members of their
immediate family. An institutional investor's minimum investment will be
calculated by combining all accounts it maintains with the Fund.
WHAT SHARES COST
Fund shares are sold at their net asset value next determined after an
order is received. There is no sales charge imposed by the Fund.
The net asset value is determined as of the close of trading (normally 4:00
p.m., Eastern time) on the New York Stock Exchange, Monday through Friday,
except on: (i) days on which there are not sufficient changes in the value
of a Fund's portfolio securities that its net asset value might be
materially affected; (ii) days during which no shares are tendered for
redemption and no orders to purchase shares are received; and (iii) the
following holidays: New Year's Day, Martin Luther King Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans' Day, Thanksgiving Day, and Christmas Day.
SHARE PURCHASES
Fund shares are sold on days on which the New York Stock Exchange and
Federal Reserve wire system are open for business. Shares of the Fund may
be purchased through WesBanco. In connection with the sale of Fund shares,
the Distributor may, from time to time, offer certain items of nominal
value to any shareholder or investor. The Fund reserves the right to reject
any purchase request.
BY TELEPHONE. To place an order to purchase Fund shares, call WesMark
Funds Shareholder Services at 1-800-368-3369. Texas residents must purchase
shares of the fund through the Distributor at 1-800-618-3573. The order
must be placed by 4:00 p.m. (Eastern time) for shares to be purchased at
that day's price, and payment is normally expected the next business day.
PAYMENT BY WIRE. To purchase shares by Federal Reserve Wire, contact your
account officer for wiring instructions. Wire orders will only be accepted
on days on which the Fund, WesBanco and the Federal Reserve Banks are open
for business.
BY MAIL. To purchase shares of the Fund by mail, investors may send a
check made payable to the Fund to: WesMark Funds Shareholder Services,
WesBanco Bank Wheeling, One Bank Plaza, Wheeling, West Virginia 26003.
Orders by mail are considered received after payment by check is converted
by WesBanco into federal funds. This is normally the next business day
after WesBanco receives the check.
SYSTEMATIC INVESTMENT PROGRAM
Once a Fund account has been opened, shareholders may add to their
investment on a regular basis in a minimum amount of $100. Under this
program, funds may be automatically withdrawn periodically from the
shareholder's checking account and invested in Fund shares at the net asset
value next determined after an order is received by the Fund. A shareholder
may apply for participation in this program through WesBanco or by writing
to the Fund.
EXCHANGING SECURITIES FOR FUND SHARES
The Fund may accept securities in exchange for Fund shares. The Fund will
allow such exchanges only upon prior approval of the Fund and a
determination by the Fund and the Adviser that the securities to be
exchanged are acceptable.
Any securities exchanged must meet the investment objective and policies of
the Fund, must have a readily ascertainable market value, and must be
liquid. The market value of any securities exchanged in an initial
investment, plus any cash, must be at least equal to the minimum investment
in the Fund.
Any interest earned on the securities prior to the exchange will be
considered in valuing the securities. All interest, dividends,
subscription or other rights attached to the securities become the property
of the Fund, along with the securities.
If an exchange is permitted, it will be treated as a sale for federal
income tax purposes. Depending upon the cost basis of the securities
exchanged for Fund shares, a gain or loss may be realized by the investor.
CERTIFICATES AND CONFIRMATIONS
As transfer agent for the Fund, Federated Shareholder Services Company
maintains a share account for each shareholder. Share certificates are not
issued.
Detailed confirmations of each purchase and redemption are sent to each
shareholder. Monthly confirmations are sent to report dividends paid during
that month.
DIVIDENDS AND CAPITAL GAINS
Dividends are declared and paid quarterly. Unless cash payments are
requested by contacting the Fund, dividends and capital gains are
automatically reinvested in additional shares of the Fund on payment dates
at net asset value. Distributions of net long-term capital gains realized
by the Fund will be made at least annually.
EXCHANGE PRIVILEGE
You may exchange shares of the Fund for shares of the WesMark West Virginia
Municipal Bond Fund at net asset value without a sales charge, provided you
have received a copy of the current prospectus of the WesMark West Virginia
Municipal Bond Fund, and you meet the investment minimum of the WesMark
West Virginia Municipal Bond Fund.
Upon receipt of proper instructions and all necessary supporting documents,
the Fund's shares you submit for exchange will be redeemed at the next-
determined net asset value. Written exchange instructions may require a
signature guarantee. An exchange is treated as a sale for federal income
tax purposes and, depending on the circumstances, you may realize a short
or long-term capital gain or loss. The exchange privilege may be terminated
at any time, and you will be notified of such termination. You may obtain
further information on the exchange privilege by calling WesMark Funds
Shareholder Services.
The WesMark Funds currently offer only one class of shares. If each of the
Funds should add a second class of shares, exchanges may be limited to
shares of the same class of each of the WesMark Funds.
An authorization form permitting the Fund to accept telephone exchange
requests must first be completed. It is recommended that investors request
this exchange privilege on the account application at the time of their
initial application. If not completed at the time of initial application,
authorization forms and information on this service can be obtained through
WesMark Funds Shareholder Services. Telephone exchange instructions may be
recorded.
An excessive number of exchanges may be disadvantageous to the Fund.
Therefore, the Fund, in addition to its right to reject any exchange
request, reserves the right to modify or terminate the exchange privilege
at any time. Shareholders would be notified prior to any modification or
termination.
REDEEMING SHARES
The Fund redeems shares at their net asset value next determined after the
Fund receives the redemption request. Redemptions will be made on days on
which the Fund computes its net asset value. Requests for redemptions must
be received in proper form and can be made by calling WesBanco or writing
directly to the Fund.
BY TELEPHONE. A shareholder may redeem shares of the Fund by calling his
account officer or by calling WesMark Funds Shareholder Services to request
the redemption. (Call 1-800-368-3369.) Shares will be redeemed at the net
asset value next determined after the Fund receives the redemption request
from WesBanco. Redemption requests must be received by WesBanco before 4:00
p.m. (Eastern time) in order for shares to be redeemed at that day's net
asset value. Proceeds will normally be wired the next business day or a
check will be sent to the address of record. WesBanco is responsible for
promptly submitting redemption requests and providing proper redemption
instructions to the Fund. If, at any time, the Fund should determine it
necessary to terminate or modify this method of redemption, shareholders
would be promptly notified.
An authorization form permitting the Fund to accept telephone redemption
requests must first be completed. It is recommended that investors request
this privilege at the time of their initial application. If not completed
at the time of initial application, authorization forms and information on
this service are available by calling WesMark Funds Shareholder Services.
Telephone redemption instructions may be recorded. If reasonable
procedures are not followed by the Fund, it may be liable for losses due to
unauthorized or fraudulent telephone instructions.
In the event of extraordinary economic or market changes, a shareholder may
experience difficulty in redeeming by telephone. If such a case should
occur, it is recommended that a redemption request be made in writing and
be sent by overnight mail to your account officer at WesBanco.
BY MAIL. Shareholders may redeem Fund shares by sending a written request
to WesMark Funds Shareholder Services to WesBanco Bank Wheeling, One Bank
Plaza, Wheeling, West Virginia 26003. The written request should include
the shareholder's name, the Fund name, the account number, and the share or
dollar amount requested. Shareholders should call the WesMark Funds
Shareholder Services at 1-800-368-3369 for assistance in redeeming by mail.
Shareholders requesting a redemption of any amount to be sent to an address
other than that on record with the Fund or a redemption payable other than
to the shareholder of record must have signatures on written redemption
requests guaranteed by:
o a trust company or commercial bank whose deposits are insured by
the Bank Insurance Fund (``BIF''), which is administered by the
Federal Deposit Insurance Corporation (``FDIC'');
o a member of the New York, American, Boston, Midwest, or Pacific
Stock Exchanges;
o a savings bank or savings association whose deposits are insured
by the Savings Association Insurance Fund (``SAIF''), which is
administered by the FDIC; or
o any other ``eligible guarantor institution,'' as defined in the
Securities Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting
signature guarantees from the above institutions. The Fund may elect in the
future to limit eligible signature guarantors to institutions that are
members of a signature guarantee program. The Fund and its transfer agent
reserve the right to amend these standards at any time without notice.
RECEIVING PAYMENT. Normally, a check for the proceeds is mailed to the
shareholder within one business day, but in no event more than seven
calendar days, after receipt of a proper written redemption request,
provided that the transfer agent has received payment for shares from the
shareholder.
SYSTEMATIC WITHDRAWAL PROGRAM
Shareholders who desire to receive payments of a predetermined amount may
take advantage of the Systematic Withdrawal Program. Under this program,
Fund shares are redeemed to provide for periodic withdrawal payments in an
amount directed by the shareholder. Depending upon the amount of the
withdrawal payments, the amount of dividends paid and capital gains
distributions with respect to Fund shares, and the fluctuation of the net
asset value of Fund shares redeemed under this program, redemptions may
reduce, and eventually deplete, the shareholder's investment in the Fund.
For this reason, payments under this program should not be considered as
yield or income on the shareholder's investment in the Fund. To be eligible
to participate in this program, a shareholder must have an account value of
at least $10,000. A shareholder may apply for participation in this program
through his financial institution or WesMark Funds Shareholder Services.
REDEMPTION BEFORE PURCHASE INSTRUMENTS CLEAR
When you purchase Fund shares by check or through the Automated Clearing
House System, the proceeds from the redemption of those shares are not
available, and the shares may not be exchanged, until WesMark Funds
Shareholder Services and/or the transfer agent is reasonably certain that
the purchase check has cleared, which could take up to seven calendar days.
ACCOUNTS WITH LOW BALANCES
Due to the high cost of maintaining accounts with low balances, the Fund
may redeem shares in any account and pay the proceeds to the shareholder if
the account balance falls below the required minimum value of $1,000 due to
shareholder redemptions. This requirement does not apply, however, if the
balance falls below $1,000 because of changes in the Fund's net asset
value. Before shares are redeemed to close an account, the shareholder is
notified in writing and allowed 30 days to purchase additional shares to
meet the minimum requirement.
SHAREHOLDER INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote. All shares of each
portfolio in the Trust have equal voting rights except that only shares of
the Fund are entitled to vote on matters affecting only the Fund.
As a Massachusetts business trust, the Trust is not required to hold annual
shareholder meetings. Shareholder approval will be sought only for certain
changes in the Trust's or the Fund's operation and for the election of
Trustees under certain circumstances.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of the shareholders shall be called by the
Trustees upon the written request of shareholders owning at least 10% of
the outstanding shares of the Trust.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit a bank holding company registered under the Bank Holding Company
Act of 1956 or any affiliate thereof from sponsoring, organizing or
controlling a registered, open-end investment company continuously engaged
in the issuance of its shares, and from issuing, underwriting, selling or
distributing securities in general. Such laws and regulations do not
prohibit such a holding company or affiliate from acting as investment
adviser, transfer agent, or custodian to such an investment company or from
purchasing shares of such a company as agent for and upon the order of
their customers.
Some entities providing services to the Fund, such as WesBanco Bank
Wheeling, are subject to such banking laws and regulations. They believe
that they may perform those services for the Fund contemplated by any
agreement entered into with the Fund without violating those laws or
regulations. Changes in either federal or state statutes and regulations
relating to the permissible activities of banks and their subsidiaries or
affiliates, as well as further judicial or administrative decisions or
interpretations of present or future statutes and regulations, could
prevent these entities from continuing to perform all or a part of the
above services. If this happens, the Trustees would consider alternative
means of continuing available services. It is not expected that
shareholders would suffer any adverse financial consequences as a result of
any of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will not pay federal income tax because it expects to meet
requirements of the Internal Revenue Code applicable to regulated
investment companies and to receive the special tax treatment afforded to
such companies. The Fund will be treated as a single, separate entity for
federal income tax purposes so that income (including capital gains) and
losses realized by the other Marshall Funds of the Corporation, if any,
will not be combined for tax purposes with those realized by any of the
other Marshall Funds, including the Fund.
Unless otherwise exempt, shareholders are required to pay federal income
tax on any dividends and other distributions received, including capital
gains distributions. These tax consequences apply whether dividends are
received in cash or as additional shares. Distributions representing long-
term capital gains, if any, will be taxable to shareholders as long-term
capital gains no matter how long shares are held. Information on the tax
status of dividends and distributions is provided annually.
STATE AND LOCAL TAXES
State laws differ on this issue, and shareholders are urged to consult with
their tax adviser regarding the status of their account under state and
local tax laws, including treatment of distributions as income or return of
capital.
PERFORMANCE INFORMATION
From time to time, the Fund advertises its total return, yield, and tax-
equivalent yield.
Total return represents the change, over a specific period of time, in the
value of an investment in the Fund after reinvesting all income and capital
gains distributions. It is calculated by dividing that change by the
initial investment and is expressed as a percentage.
The yield of the Fund is calculated by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the offering price per share of the
Fund on the last day of the period. This number is then annualized using
semi-annual compounding. The tax-equivalent yield of the Fund is calculated
similarly to the yield, but is adjusted to reflect the taxable yield that
the Fund would have had to earn to equal its actual yield, assuming a
specific tax rate. The yield and the tax-equivalent yield do not
necessarily reflect income actually earned by the Fund and, therefore, may
not correlate to the dividends or other distributions paid to shareholders.
From time to time, advertisements for the Fund may refer to ratings,
rankings, and other information in certain financial publications and/or
compare the Fund's performance to certain indices.
PERFORMANCE INFORMATION FOR PREDECESSOR COMMON AND COLLECTIVE
INVESTMENT FUNDS
The Fund is the successor to a common and a collective investment fund
(`CIFs'') that were or are currently managed by the Adviser. It is
anticipated that, at the Fund's commencement of operations, the assets from
the common and the collective investment funds will be transferred to the
Fund in exchange for Fund shares.
Set forth below are certain performance data for these CIFs. This
information is deemed relevant because the CIFs have been managed using
substantially the same investment objective, policies, and limitations as
those used by the Fund. However, the past performance data shown below is
not necessarily indicative of the Fund's future performance. The Fund is
actively managed, and its investments will vary from time to time. The
Fund's investments are not identical to the past portfolio investments of
the CIFs. Moreover, the CIFs did not incur expenses that correspond to the
advisory, administrative, and other fees to which the Fund is subject.
Accordingly, the performance information shown below has been adjusted to
reflect the anticipated total expense ratio for the Fund. This adjustment
has the effect of lessening the actual performance of the predecessor CIFs.
Average Annual Total Return
for the period
ending September 30, 1996*
Predecessor Common Funds 1 Year 5 Years 10 Years Since
Inception
WesBanco Common Trust Fund B
Inception: November 1967 22.41% 12.42% 12.66% 8.17%
WesBanco Equity Fund
Inception: June 1973 18.81% 11.45% 12.52% 11.92%
*The Average Annual Total Return for each Common Fund has been
adjusted to reflect each corresponding Fund's anticipated expenses,
net of voluntary waivers.
ADDRESSES
WesMark Growth Fund
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Distributor
Edgewood Services, Inc. Clearing Operations
P.O. Box 897
Pittsburgh, Pennsylvania 15230-0897
Investment Adviser
WesBanco Bank Wheeling One Bank Plaza
Wheeling, West Virginia 26003
Custodian
WesBanco Bank Wheeling One Bank Plaza
Wheeling, West Virginia 26003
Transfer Agent and Dividend Disbursing Agent
Federated Shareholder
Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Portfolio Accounting Services
Federated Services Company Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
Independent Auditors
Deloitte & Touche LLP 2500 One PPG Place
Pittsburgh, PA 15222
WESMARK GROWTH FUND
Prospectus
A Diversified Portfolio of WesMark Funds, an Open-End, Management
Investment Company
January , 1997
---
EDGEWOOD SERVICES, INC.
Distributor WesBanco Bank Wheeling
A subsidiary of FEDERATED INVESTORS Investment Adviser
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP #
G01912-01 (1/97)
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with
the Securities and Exchange Commission. These securities may not be
sold nor may any offers to buy be accepted prior to the time the
registration statement becomes effective. This Statement of Additional
Information shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities in
any State in which such offer, solicitation, or sale would be unlawful
prior to registration or qualification under the securities laws of any
such State.
Subject to Completion, November 14, 1996
WESMARK GROWTH FUND
(A PORTFOLIO OF WESMARK FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information should be read with the
prospectus of WesMark Growth Fund (the ``Fund') dated January ,
---
1997. This Statement is not a prospectus itself. You may request a copy
of the prospectus or a paper copy of this Statement of Additional
Information, if you have received it electronically, free of charge by
calling the WesMark Funds Shareholder Services at 1-800-368-3369 Terms
used but not defined herein have the same meaning as defined in the
prospectus.
FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
Statement dated January , 1997
---
EDGEWOOD SERVICES, INC
Distributor
A subsidiary of FEDERATED INVESTORS
General Information About the Fund 1
Investment Objective and Policies 1
Acceptable Investments 1
Equity Securities 1
U.S. Government Securities 1
Convertible Securities 1
Foreign Securities 1
When-Issued and Delayed Delivery Transactions 2
Repurchase Agreements 2
Reverse Repurchase Agreements 2
Futures and Options Transactions 2
Lending of Portfolio Securities 5
Restricted and Illiquid Securities 5
Warrants 6
Portfolio Turnover 6
Investment Limitations 6
WesMark Funds Management 8
Fund Ownership 12
Trustees Compensation 13
Trustee Liability 14
Investment Advisory Services 14
Adviser to the Fund 14
Advisory Fees 14
Other Services 14
Fund Administration 14
Custodian 14
Transfer Agent,Dividend Disbursing Agent, and
Portfolio Accounting Services 14
Independent Auditors 14
Brokerage Transactions 15
Purchasing Shares 15
Distribution and Shareholder Services Plans 15
Administrative Arrangements 15
Conversion to Federal Funds 16
Determining Net Asset Value 16
Determining Market Value of Securities 16
Valuing Futures and Options 16
Redeeming Shares 16
Redemption in Kind 16
Massachusetts Partnership Law 17
Tax Status 17
The Fund's Tax Status 17
Shareholders' Tax Status 17
Total Return 17
Yield 18
Performance Comparisons 18
Economic and Market Information 19
Appendix 20
GENERAL INFORMATION ABOUT THE FUND
The Fund is a portfolio in WesMark Funds (the `Trust'') which was
established as a Massachusetts business trust under a Declaration of Trust
dated March 1, 1996.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is appreciation of capital. The objective
cannot be changed without approval of shareholders.
ACCEPTABLE INVESTMENTS
The Fund invests primarily in a diversified portfolio of equity securities
of companies with prospects for above-average growth in earnings and
dividends.
EQUITY SECURITIES
The Fund may invest in equity securities of U.S. companies, including
common stocks, preferred stocks, and securities that are convertible into
common stocks.
U.S. GOVERNMENT SECURITIES
The types of U.S. government securities in which the Fund may invest
generally include direct obligations of the U.S. Treasury (such as U.S.
Treasury bills, notes, and bonds) and obligations issued or guaranteed by
U.S. government agencies or instrumentalities. These securities are backed
by:
the full faith and credit of the U.S. Treasury (such as Farmers Home
Administration and Government National Mortgage Association;
the issuer's right to borrow from the U.S. Treasury (such as Farmers
Home Administration);
the discretionary authority of the U.S. government to purchase certain
obligations of agencies or instrumentalities (such as Federal Home
Loan Banks and Farmers Home Administration); or
the credit of the agency or instrumentality issuing the obligations
(such as Federal Home Loan Banks, Farmers Home Administration, Farm
Credit Banks, Federal National Mortgage Association, and Federal Home Loan
Mortgage Corporation).
CONVERTIBLE SECURITIES
When owned as part of a unit along with warrants, which entitle the holder
to buy the common stock, convertible securities function as convertible
bonds, except that the warrants generally will expire before the bonds'
maturity. The Fund will exchange or convert the convertible securities held
in its portfolio into shares of the underlying common stocks when, in the
Adviser's opinion, the investment characteristics of the underlying common
shares will assist the Fund in achieving its investment objective.
Otherwise, the Fund will hold or trade the convertible securities. In
evaluating these matters with respect to a particular convertible security,
the Fund's Adviser considers numerous factors, including the economic and
political outlook, the value of the security relative to other investment
alternatives, trends in the determinants of the issuer's profits, and the
issuer's management capability and practices.
FOREIGN SECURITIES
Investments in foreign securities, particularly those of non-governmental
issuers, involve considerations which are not ordinarily associated with
investments in domestic issues. These considerations include the
possibility of expropriation, the unavailability of financial information
or the difficulty of interpreting financial information prepared under
foreign accounting standards, less liquidity and more volatility in foreign
securities markets, the impact of political, social, or diplomatic
developments, and the difficulty of assessing economic trends in foreign
countries. It may also be more difficult to enforce contractual
obligations abroad than would be the case in the United States because of
differences in the legal systems. Transaction costs in foreign securities
may be higher. the adviser will consider these and other factors before
investing in foreign securities and will not make such investments unless,
in its opinion, such investment will meet the Fund's standards and
objectives.
ECDs, ETDs, Yankee CDs, and Europaper are subject to somewhat different
risks than domestic issuers. Examples of these risks include
international, economic, and political developments, foreign governmental
restrictions that may adversely affect the payment of principal or
interest, foreign withholding or other taxes on interest income,
difficulties in obtaining or enforcing a judgment against the issuing bank
and the possible impact of interruptions in the flow of international
currency transactions. Different risks may also exist for ECDs, ETDs, and
Yankee CDs because the banks issuing instruments, or their domestic or
foreign branches, are not necessarily subject to the same regulatory
requirements that apply to domestic banks, such as reserve requirements,
loan limitations, examinations, accounting, auditing, and recordkeeping,
and the public availability of information. These factors will be
carefully considered by the Fund's adviser in selecting these investments.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Fund. No fees or expenses, other than
normal transaction costs, are incurred. However, liquid assets of the Fund
sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are marked
to market daily and are maintained until the transaction has been settled.
REPURCHASE AGREEMENTS
Repurchase agreements are arrangements in which banks, broker/dealers, and
other recognized financial institutions sell U.S. government securities or
certificates of deposit to the Fund and agree at the time of sale to
repurchase them at a mutually agreed upon time and price within one year
from the date of acquisition. The Fund requires its custodian to take
possession of the securities subject to repurchase agreements and these
securities will be marked to market daily. To the extent that the original
seller does not repurchase the securities from the Fund, the Fund could
receive less than the repurchase price on any sale of such securities. In
the event that such a defaulting seller filed for bankruptcy or became
insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that under the regular procedures
normally in effect for custody of the Fund's portfolio securities subject
to repurchase agreements, a court of competent jurisdiction would rule in
favor of the Fund and allow retention or disposition of such securities.
The Fund may only enter into repurchase agreements with banks and other
recognized financial institutions such as broker/dealers which are found by
the Adviser to be creditworthy pursuant to guidelines established by the
Trustees.
REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. These transactions
are similar to borrowing cash. In a reverse repurchase agreement, the Fund
transfers possession of a portfolio instrument to another person, such as a
financial institution, broker, or dealer, in return for a percentage of the
instrument's market value in cash, and agrees that on a stipulated date in
the future the Fund will repurchase the portfolio instrument by remitting
the original consideration plus interest at an agreed upon rate.
The use of reverse repurchase agreements may enable the Fund to avoid
selling portfolio instruments at a time when a sale may be deemed to be
disadvantageous, but the ability to enter into reverse repurchase
agreements does not ensure that the Fund will be able to avoid selling
portfolio instruments at a disadvantageous time.
When effecting reverse repurchase agreements, liquid assets of the Fund in
a dollar amount sufficient to make payment for the obligations to be
purchased are segregated at the trade date. These securities are marked to
market daily and are maintained until the transaction is settled.
FUTURES AND OPTIONS TRANSACTIONS
The Fund may engage in futures and options transactions as described below.
As a means of reducing fluctuations in the net asset value of shares of the
Fund, the Fund may attempt to hedge all or a portion of its portfolio by
buying and selling financial and stock index futures contracts, buying put
and call options on portfolio securities and put options on financial
futures contracts, and writing call options on futures contracts. The Fund
may also write covered put and call options on portfolio securities to
attempt to increase its current income or to hedge a portion of its
portfolio investments. The Fund will maintain its positions in securities,
option rights, and segregated cash subject to puts and calls until the
options are exercised, closed, or have expired. An option position on
futures contracts may be closed out over-the-counter or on a nationally
recognized exchange which provides a secondary market for options of the
same series. The Fund purchases and writes options only with investment
dealers and other financial institutions (such as commercial banks or
savings associations) deemed creditworthy by the Adviser.
FUTURES CONTRACTS
The Fund may purchase and sell financial futures contracts to hedge
against the effects of changes in the value of portfolio securities
due to anticipated changes in interest rates and market conditions
without necessarily buying or selling the securities. The Fund also
may purchase and sell stock index futures to hedge against changes in
prices. The Fund will not engage in futures transactions for
speculative purposes.
A futures contract is a firm commitment by two parties: the seller who
agrees to make delivery of the specific type of security called for in
the contract (`going short'') and the buyer who agrees to take
delivery of the security (`going long'') at a certain time in the
future. For example, in the fixed income securities market, prices
move inversely to interest rates. A rise in rates means a drop in
price. Conversely, a drop in rates means a rise in price. In order to
hedge its holdings of fixed income securities against a rise in market
interest rates, the Fund could enter into contracts to deliver
securities at a predetermined price (i.e., `go short'') to protect
itself against the possibility that the prices of its fixed income
securities may decline during the Fund's anticipated holding period.
The Fund would `go long'' (agree to purchase securities in the future
at a predetermined price) to hedge against a decline in market
interest rates.
Stock index futures contracts are based on indices that reflect the
market value of common stock of the firms included in the indices. An
index futures contract is an agreement pursuant to which two parties
agree to take or make delivery of an amount of cash equal to the
differences between the value of the index at the close of the last
trading day of the contract and the price at which the index contract
was originally written.
`MARGIN'' IN FUTURES TRANSACTIONS
Unlike the purchase or sale of a security, the Fund does not pay or
receive money upon the purchase or sale of a futures contract. Rather,
the Fund is required to deposit an amount of `initial margin'' in
cash or U.S. Treasury bills with its custodian (or the broker, if
legally permitted). The nature of initial margin in futures
transactions is different from that of margin in securities
transactions in that initial margin in futures transactions does not
involve the borrowing of funds by the Fund to finance the
transactions. Initial margin is in the nature of a performance bond or
good faith deposit on the contract which is returned to the Fund upon
termination of the futures contract, assuming all contractual
obligations have been satisfied.
A futures contract held by the Fund is valued daily at the official
settlement price of the exchange on which it is traded. Each day the
Fund pays or receives cash, called `variation margin,'' equal to the
daily change in value of the futures contract. This process is known
as `marking to market.'' Variation margin does not represent a
borrowing or loan by the Fund but is instead settlement between the
Fund and the broker of the amount one would owe the other if the
futures contract expired. In computing its daily net asset value, the
Fund will mark to market its open futures positions. The Fund is also
required to deposit and maintain margin when it writes call options on
futures contracts.
PUT OPTIONS ON FUTURES CONTRACTS
The Fund may purchase listed put options on financial futures
contracts to protect portfolio securities against decreases in value
resulting from market factors, such as an anticipated increase in
interest rates. Unlike entering directly into a futures contract,
which requires the purchaser to buy a financial instrument on a set
date at a specified price, the purchase of a put option on a futures
contract entitles (but does not obligate) its purchaser to decide on
or before a future date whether to assume a short position at the
specified price.
Generally, if the hedged portfolio securities decrease in value during
the term of an option, the related futures contracts will also
decrease in value and the option will increase in value. In such an
event, the Fund will normally close out its option by selling an
identical option. If the hedge is successful, the proceeds received by
the Fund upon the sale of the second option will be large enough to
offset both the premium paid by the Fund for the original option plus
the decrease in value of the hedged securities.
Alternatively, the Fund may exercise its put option to close out the
position. To do so, it would simultaneously enter into a futures
contract of the type underlying the option (for a price less than the
strike price of the option) and exercise the option. The Fund would
then deliver the futures contract in return for payment of the strike
price. If the Fund neither closes out nor exercises an option, the
option will expire on the date provided in the option contract, and
only the premium paid for the contract will be lost.
STOCK INDEX OPTIONS
The Fund may purchase put options on stock indices listed on national
securities exchanges or traded in the over-the-counter market to
protect against decreases in stock prices. A stock index fluctuates
with changes in the market values of the stocks included in the index.
The effectiveness of purchasing stock index options will depend upon
the extent to which price movements in the Fund's portfolio correlate
with price movements of the stock index selected. Because the value of
an index option depends upon movements in the level of the index
rather than the price of a particular stock, whether the Fund will
realize a gain or loss from the purchase of options on an index
depends upon movements in the level of stock prices in the stock
market generally or, in the case of certain indices, in an industry or
market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock
indices will be subject to the ability of the Adviser to predict
correctly movements in the directions of the stock market generally or
of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual stocks.
CALL OPTIONS ON FINANCIAL AND STOCK INDEX FUTURES CONTRACTS
In addition to purchasing put options on futures, the Equity Fund may
write (sell) listed and over-the-counter call options on financial and
stock index futures contracts (including cash-settled stock index
options) to hedge its portfolio against an increase in market interest
rates or a decrease in stock prices. When the Fund writes a call
option on a futures contract, it is undertaking the obligation of
assuming a short futures position (selling a futures contract) at the
fixed strike price at any time during the life of the option if the
option is exercised. As stock prices fall or market interest rates
rise, causing the prices of futures to go down, the Fund's obligation
under a call option on a future (to sell a futures contract) costs
less to fulfill, causing the value of the Fund's call option position
to increase. In other words, as the underlying futures price goes
down below the strike price, the buyer of the option has no reason to
exercise the call, so that the Fund keeps the premium received for the
option. This premium can substantially offset the drop in value of the
Fund's portfolio securities.
Prior to the expiration of a call written by the Fund, or exercise of
it by the buyer, the Fund may close out the option by buying an
identical option. If the hedge is successful, the cost of the second
option will be less than the premium received by the Fund for the
initial option. The net premium income of the Fund will then
substantially offset the decrease in value of the hedged securities.
The Fund will not maintain open positions in futures contracts it has
sold or call options it has written on futures contracts if, in the
aggregate, the value of the open positions (marked to market) exceeds
the current market value of its securities portfolio plus or minus the
unrealized gain or loss on those open positions, adjusted for the
correlation of volatility between the hedged securities and the
futures contracts. If this limitation is exceeded at any time, the
Fund will take prompt action to close out a sufficient number of open
contracts to bring its open futures and options positions within this
limitation.
PURCHASING PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may purchase put and call options on portfolio securities to
protect against price movements in particular securities in its
portfolio. A put option gives the Fund, in return for a premium, the
right (but not the obligation) to sell the underlying security to the
writer (seller) at a specified price during the term of the option. A
call option gives the Fund, in return for a premium, the right (but
not the obligation) to buy the underlying securities from the seller
at a specified price during the term of the option.
WRITING COVERED PUT AND CALL OPTIONS ON PORTFOLIO SECURITIES
The Fund may also write covered put and call options to generate
income and thereby protect against price movements in particular
securities in the Fund's portfolio. As the writer of a call option,
the Fund has the obligation upon exercise of the option during the
option period to deliver the underlying security upon payment of the
exercise price. When the Fund writes a put option on a futures
contract, it is undertaking to buy a particular futures contract at a
fixed price at any time during a specified period if the option is
exercised.
The Fund may only write call options either on securities held in its
portfolio or on securities which it has the right to obtain without
payment of further consideration (or has segregated cash in the amount
of any additional consideration). In the case of put options, the Fund
will segregate cash or U.S. Treasury obligations with a value equal to
or greater than the exercise price of the underlying securities.
OVER-THE-COUNTER OPTIONS
The Fund may purchase and write over-the-counter options on portfolio
securities in negotiated transactions with the buyers or writers of
the options when options on the portfolio securities held by the Fund
are not traded on an exchange. Over-the-counter options are two-party
contracts with price and terms negotiated between buyer and seller.
In contrast, exchange-traded options are third-party contracts with
standardized strike prices and expiration dates and are purchased from
a clearing corporation. Exchange-traded options have a continuous
liquid market while over-the-counter options may not. The Fund will
not buy call options or write put options, other than to close out
open option positions, without further notification to shareholders.
RISKS
When the Fund uses futures and options on futures as hedging devices,
there is a risk that the prices of the securities subject to the
futures contracts may not correlate perfectly with the prices of the
securities in the Fund's portfolio. This may cause the futures
contract and any related options to react differently than the
portfolio securities to market changes. In addition, the Adviser
could be incorrect in its expectations about the direction or extent
of market factors such as stock price movements. In these events, the
Fund may lose money on the futures contract or option.
It is not certain that a secondary market for positions in futures
contracts or for options will exist at all times. Although the Adviser
will consider liquidity before entering into these transactions, there is
no assurance that a liquid secondary market on an exchange or otherwise
will exist for any particular futures contract or option at any particular
time. The Fund's ability to establish and close out futures and options
positions depends on this secondary market.
The Fund may not purchase or sell futures contracts or related options if
immediately thereafter the sum of the amount of margin deposits on the
Fund's existing futures positions and premiums paid for related options
would exceed 5% of the market value of the Fund's total assets. When the
Fund purchases futures contracts, an amount of cash and cash equivalents,
equal to the underlying commodity value of the futures contracts (less any
related margin deposits), will be deposited in a segregated account with
the custodian (or the broker, if legally permitted) to collateralize the
position and thereby insure that the use of such futures contracts are
unleveraged. When the Fund sells futures contracts, it will either own or
have the right to receive the underlying future or security, or will make
deposits to collateralize the position as discussed above.
LENDING OF PORTFOLIO SECURITIES
The collateral received when the Fund lends portfolio securities must be
valued daily and, should the market value of the loaned securities
increase, the borrower must furnish additional collateral to the Fund.
During the time portfolio securities are on loan, the borrower pays the
Fund any dividends or interest paid on such securities. Loans are subject
to termination at the option of the Fund or the borrower. The Fund may pay
reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or
equivalent collateral to the borrower or placing broker. The Fund does not
have the right to vote securities on loan, but would terminate the loan and
regain the right to vote if that were considered important with respect to
the investment.
RESTRICTED AND ILLIQUID SECURITIES
The Fund may invest in restricted securities. Restricted securities are any
securities in which the Fund may otherwise invest pursuant to its
investment objective and policies but which are subject to restriction on
resale under federal securities laws. The Fund will not invest more than
15% of the value of its total assets in restricted securities; however,
certain restricted securities which the Trustees deem to be liquid will be
excluded from this 15% limitation.
The ability of the Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange
Commission (`SEC'') Staff position set forth in the adopting release for
Rule 144A under the Securities Act of 1933 (the `Rule''). The Rule is a
non-exclusive, safe-harbor for certain secondary market transactions
involving securities subject to restrictions on resale under federal
securities laws. The Rule provides an exemption from registration for
resales of otherwise restricted securities to qualified institutional
buyers. The Rule was expected to further enhance the liquidity of the
secondary market for securities eligible for resale under Rule 144A. The
Fund believes that the Staff of the SEC has left the question of
determining the liquidity of all restricted securities (eligible for resale
under Rule 144A) for determination by the Trustees. The Trustees consider
the following criteria in determining the liquidity of certain restricted
securities:
o the frequency of trades and quotes for the security;
o the number of dealers willing to purchase or sell the security and
the number of other potential buyers;
o dealer undertakings to make a market in the security; and
o the nature of the security and the nature of the marketplace
trades.
WARRANTS
The Fund may invest in warrants. Warrants provide an option to purchase
common stock at a specific price (usually at a premium above the market
value of the optioned common stock at issuance) valid for a specific period
of time. Warrants may have a life ranging from less than a year to twenty
years or may be perpetual. However, most warrants have expiration dates
after which they are worthless. In addition, if the market price of the
common stock does not exceed the warrant's exercise price during the life
of the warrant, the warrant will expire as worthless. Warrants have no
voting rights, pay no dividends, and have no rights with respect to the
assets of the corporation issuing them. The percentage increase or
decrease in the market price of the warrant may tend to be greater than the
percentage increase or decrease in the market price of the underlying
common stock. The Fund will not invest more than 5% of its net assets in
warrants. No more than 2% of the Fund's net assets, to be included within
the overall 5% limit on investments in warrants, may be warrants which are
not listed on the New York Stock Exchange or the American Stock Exchange.
Warrants acquired in units or attached to securities may be deemed to be
without value for purposes of this policy.
PORTFOLIO TURNOVER
Although the Funds do not intend to invest for the purpose of seeking
short-term profits, securities in their portfolios will be sold whenever
the investment adviser believes it is appropriate to do so in light of a
Fund's investment objective, without regard to the length of time a
particular security may have been held.
INVESTMENT LIMITATIONS
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as may be necessary
for clearance of purchases and sales of securities. The deposit or
payment by the Fund of initial or variation margin in connection with
futures contracts or related options transactions is not considered
the purchase of a security on margin.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities, except that the Fund may
borrow money in amounts up to one-third of the value of its total
assets, including the amounts borrowed.
The Fund will not borrow money or engage in reverse repurchase
agreements for investment leverage, but rather as a temporary,
extraordinary, or emergency measure or to facilitate management of the
portfolio by enabling the Fund to meet redemption requests when the
liquidation of portfolio securities is deemed to be inconvenient or
disadvantageous. The Fund will not purchase any securities while
borrowings in excess of 5% of its total assets are outstanding. During
the period any reverse repurchase agreements are outstanding, but only
to the extent necessary to assure completion of the reverse repurchase
agreements, the Fund will restrict the purchase of portfolio
instruments to money market instruments maturing on or before the
expiration date of the reverse repurchase agreements.
UNDERWRITING
The Fund will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its
investment objective, policies, and limitations.
INVESTING IN REAL ESTATE
The Fund will not buy or sell real estate, although it may invest in
municipal bonds secured by real estate or interests in real estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities. However, the Fund may
purchase put and call options on portfolio securities and on financial
futures contracts. In addition, the Fund reserves the right to hedge
the portfolio by entering into financial futures contracts and to sell
puts and calls on financial futures contracts.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets except portfolio securities
up to one-third of the value of its total assets. The Fund may,
however, acquire publicly or non-publicly issued municipal bonds or
temporary investments or enter into repurchase agreements in
accordance with its investment objective, policies, and limitations or
the Declaration of Trust.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such
purchase, 25% or more of the value of its total assets would be
invested in any one industry. However, the Fund may invest as
temporary investments more than 25% of the value of its assets in cash
or cash items, securities issued or guaranteed by the U.S. government,
its agencies, or instrumentalities, or instruments secured by these
money market instruments, such as repurchase agreements.
The above investment limitations cannot be changed without shareholder
approval. The following limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified before
any material change in these limitations becomes effective.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate its assets except
to secure permitted borrowings. For purposes of this limitation, the
following are not deemed to be pledges: margin deposits for the
purchase and sale of financial futures contracts and related options
and segregation or collateral arrangements made in connection with
options activities or the purchase of securities on a when-issued
basis.
INVESTING IN ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
obligations, including repurchase agreements providing for settlement
in more than seven days after notice, over-the-counter options and
certain restricted securities and municipal leases not determined by
the Trustees to be liquid.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no
more than 3% of the total outstanding voting stock of any investment
company, invest no more than 5% of its total assets in any one
investment company, and invest no more than 10% of its total assets in
investment companies in general. The Fund will purchase securities of
investment companies only in open-market transactions involving only
customary broker's commissions. However, these limitations are not
applicable if the securities are acquired in a merger, consolidation,
or acquisition of assets.
Except with respect to borrowing money, if a percentage limitation is
adhered to at the time of investment, a later increase or decrease in
percentage resulting from any change in value or net assets will not result
in a violation of such restriction.
The Fund does not expect to borrow money or pledge securities in excess of
5% of the value of its total assets in the coming fiscal year.
For purposes of its policies and limitations, the Fund considers
certificates of deposit and demand and time deposits issued by a U.S.
branch of a domestic bank or savings association having capital, surplus,
and undivided profits in excess of $100,000,000 at the time of investment
to be `cash items.''
WESMARK FUNDS MANAGEMENT
Officers and Trustees are listed with their addresses, birthdates, present
positions with WesMark Funds, and principal occupations.
John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp. and Federated Global Research Corp.; Chairman, Passport
Research, Ltd.; Chief Executive Officer and Director or Trustee of the
Funds. Mr. Donahue is the father of J. Christopher Donahue, Executive Vice
President of the Trust.
Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Chairman of the Board, Children's Hospital of Pittsburgh; formerly, Senior
Partner, Ernst & Young LLP; Director, MED 3000 Group, Inc.; Trustee,
University of Pittsburgh; Director or Trustee of the Funds.
John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President, John
R. Wood and Associates, Inc., Realtors; Partner or Trustee in private real
estate ventures in Southwest Florida; President, Naples Property
Management, Inc. and Northgate Village Development Corporation; Director or
Trustee of the Funds.
William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
formerly, Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp.;
Director, Ryan Homes, Inc.; Director or Trustee of the Funds.
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director or
Trustee of the Funds.
Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine, University of Pittsburgh; Medical Director,
University of Pittsburgh Medical Center - Downtown; Member, Board of
Directors, University of Pittsburgh Medical Center; formerly, Hematologist,
Oncologist, and Internist, Presbyterian and Montefiore Hospitals; Director
or Trustee of the Funds.
Edward L. Flaherty, Jr.@
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney of Counsel, Miller, Ament, Henny & Kochuba; Director, Eat'N Park
Restaurants, Inc.; formerly, Counsel, Horizon Financial, F.A., Western
Region; Director or Trustee of the Funds.
Edward C. Gonzales *
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
President, Treasurer, and Trustee
Vice Chairman, Treasurer, and Trustee, Federated Investors; Vice President,
Federated Advisers, Federated Management, Federated Research, Federated
Research Corp., Federated Global Research Corp. and Passport Research,
Ltd.; Executive Vice President and Director, Federated Securities Corp.;
Trustee, Federated Shareholder Services Company; Trustee or Director of
some of the Funds; President, Executive Vice President and Treasurer of
some of the Funds.
Peter E. Madden
One Royal Palm Way
100 Royal Palm Way
Palm Beach, FL
Birthdate: March 16, 1942
Trustee
Consultant; Former State Representative, Commonwealth of Massachusetts;
formerly, President, State Street Bank and Trust Company and State Street
Boston Corporation; Director or Trustee of the Funds.
Gregor F. Meyer
Miller, Ament, Henny & Kochuba
205 Ross Street
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney, Member of Miller, Ament, Henny & Kochuba; Chairman, Meritcare,
Inc.; Director, Eat'N Park Restaurants, Inc.; Director or Trustee of the
Funds.
John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner, Mollica,
Murray and Hogue; Director or Trustee of the Funds.
Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, International Politics; Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., National Defense University, U.S. Space Foundation
and Czech Management Center; President Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory Council for Environmental Policy and
Technology, Federal Emergency Management Advisory Board and Czech
Management Center; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public relations/Marketing consultant; Conference Planning, Manchester
Craftsmen's Guild; Restaurant Consultant, Frick Art & History Center;
Conference Coordinator, University of Pittsburgh Art History Department;
Director or Trustee of the Funds.
J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Executive Vice President
President and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; President and Director, Federated
Research Corp. and Federated Global Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated Shareholder Services Company and
Federated Shareholder Services; Director, Federated Services Company;
President or Executive Vice President of the Funds; Director or Trustee of
some of the Funds. Mr. Donahue is the son of John F. Donahue, Chairman and
Trustee of the Trust.
John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Executive Vice President and Secretary
Executive Vice President, Secretary, and Trustee, Federated Investors;
Trustee, Federated Advisers, Federated Management, and Federated Research;
Director, Federated Research Corp. and Federated Global Research Corp.;
Trustee, Federated Shareholder Services Company; Director, Federated
Services Company; President and Trustee, Federated Shareholder Services;
Director, Federated Securities Corp.; Executive Vice President and
Secretary of the Funds.
Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Chairman and
Director, Federated Securities Corp.; President or Vice President of some
of the Funds; Director or Trustee of some of the Funds.
C. Christine Thomson
Federated Investors Tower
Pittsburgh, PA
Birthdate: September 1, 1957
Vice President and Assistant Treasurer
Vice President and Assistant Treasurer of some of the Funds.
* This Trustee is deemed to be an "interested person" as defined in the
Investment Company Act of 1940.
@ Member of the Executive Committee. The Executive Committee of the Board
of Trustees handles the responsibilities of the Board between meetings of
the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: 111 Corcoran Funds; Annuity Management Series; Arrow
Funds; Automated Government Money Trust; Blanchard Funds; Blanchard
Precious Metals Fund, Inc.; Cash Trust Series II; Cash Trust Series, Inc. ;
DG Investor Series; Edward D. Jones & Co. Daily Passport Cash Trust;
Federated Adjustable Rate U.S. Government Fund, Inc.; Federated American
Leaders Fund, Inc.; Federated ARMs Fund; Federated Equity Funds; Federated
Equity Income Fund, Inc.; Federated Fund for U.S. Government Securities,
Inc.; Federated GNMA Trust; Federated Government Income Securities, Inc.;
Federated Government Trust; Federated High Income Bond Fund, Inc.;
Federated High Yield Trust; Federated Income Securities Trust; Federated
Income Trust; Federated Index Trust; Federated Institutional Trust;
Federated Insurance Series; Federated Investment Portfolios; Federated
Investment Trust; Federated Master Trust; Federated Municipal Opportunities
Fund, Inc.; Federated Municipal Securities Fund, Inc.; Federated Municipal
Trust; Federated Short-Term Municipal Trust; Federated Short-Term U.S.
Government Trust; Federated Stock and Bond Fund, Inc.; Federated Stock
Trust; Federated Tax-Free Trust; Federated Total Return Series, Inc.;
Federated U.S. Government Bond Fund; Federated U.S. Government Securities
Fund: 1-3 Years; Federated U.S. Government Securities Fund: 2-5 Years;
Federated U.S. Government Securities Fund: 5-10 Years; Federated Utility
Fund, Inc.; First Priority Funds; Fixed Income Securities, Inc.; High Yield
Cash Trust; Intermediate Municipal Trust; International Series, Inc.;
Investment Series Funds, Inc.; Investment Series Trust; Liberty Term
Trust, Inc. - 1999; Liberty U.S. Government Money Market Trust; Liquid Cash
Trust; Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income Trust;
Newpoint Funds; Peachtree Funds; RIMCO Monument Funds; Targeted Duration
Trust; Tax-Free Instruments Trust; The Planters Funds; The Starburst Funds;
The Starburst Funds II; The Virtus Funds; Trust for Financial Institutions;
Trust for Government Cash Reserves; Trust for Short-Term U.S. Government
Securities; Trust for U.S. Treasury Obligations; and World Investment
Series, Inc.
FUND OWNERSHIP
Officers and Trustees own less than 1% of the Fund's outstanding shares.
TRUSTEES COMPENSATION
AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM
TRUST TRUST*
John F. Donahue $ 0
Chairman and Trustee
Thomas G. Bigley $ 0
Trustee
John T. Conroy, Jr. $ 0
Trustee
William J. Copeland $ 0
Trustee
James E. Dowd $ 0
Trustee
Lawrence D. Ellis, M.D. $ 0
Trustee
Edward L. Flaherty, Jr. $ 0
Trustee
Edward C. Gonzales $ 0
President, Treasurer, and
Trustee
Peter E. Madden $ 0
Trustee
Gregor F. Meyer $ 0
Trustee
John E. Murray, Jr. $ 0
Trustee
Wesley W. Posvar $ 0
Trustee
Marjorie P. Smuts$ 0
Trustee
*The aggregate compensation is provided for the Trust which is comprised of
two portfolios. Information is furnished for the fiscal year ending January
31, 1996.
TRUSTEE LIABILITY
The Trust's Declaration of Trust provides that the Trustees are not liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their office.
INVESTMENT ADVISORY SERVICES
ADVISER TO THE FUND
The Fund's investment adviser is WesBanco Bank Wheeling. It is a wholly-
owned subsidiary of WesBanco, Inc. The Adviser shall not be liable to the
Fund or any shareholder for any losses that may be sustained in the
purchase, holding, lending, or sale of any security or for anything done or
omitted by it, except acts or omissions involving willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties imposed upon
it by its contract with the Fund.
Because of internal controls maintained by the Adviser to restrict the flow
of non-public information, Fund investments are typically made without any
knowledge of the Adviser's or its affiliates' relationships with an issuer.
ADVISORY FEES
For its advisory services, the Adviser receives an annual investment
advisory fee as described in the prospectus.
STATE EXPENSE LIMITATIONS
The Adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose shares
are registered for sale in those states. If the Fund's normal
operating expenses (including the investment advisory fee, but not
including brokerage commissions, interest, taxes and extraordinary
expenses) exceed 2-1/2% per year of the first $30 million of average
net assets, 2% per year of the next $70 million of average net assets,
and 1-1/2% per year of the remaining average net assets, the Adviser
will reimburse the Fund for its expenses over the limitation.
If the Fund's monthly projected operating expenses exceed this expense
limitation, the investment advisory fee paid will be reduced by the
amount of the excess, subject to an annual adjustment. If the expense
limitation is exceeded, the amount to be reimbursed by the Adviser
will be limited, in any single fiscal year, by the amount of the
investment advisory fee.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
OTHER SERVICES
FUND ADMINISTRATION
Federated Services Company, a subsidiary of Federated Investors, provides
administrative personnel and services to the Fund for a fee as described in
the prospectus.
CUSTODIAN
WesBanco Bank Wheeling is custodian for the securities and cash of the
Fund. Under the custodian agreement, WesBanco holds the Fund's portfolio
securities and keeps all necessary records and documents relating to its
duties. WesBanco's fees for custody services are based upon the market
value of Fund securities held in custody plus certain securities
transaction charges.
TRANSFER AGENT, DIVIDEND DISBURSING AGENT, AND PORTFOLIO ACCOUNTING
SERVICES
Federated Services Company, through its registered transfer agent,
Federated Shareholder Services Company, is transfer agent for shares of the
Fund and dividend disbursing agent for the Fund. Federated Services Company
also provides certain accounting and recordkeeping services with respect to
the Fund's portfolio investments.
INDEPENDENT AUDITORS
The independent auditors for the Fund are Deloitte & Touche LLP,
Pittsburgh, Pennsylvania.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order
at a favorable price. In working with dealers, the Adviser will generally
use those who are recognized dealers in specific portfolio instruments,
except when a better price and execution of the order can be obtained
elsewhere. The Adviser makes decisions on portfolio transactions and
selects brokers and dealers subject to guidelines established by the
Trustees. The Adviser may select brokers and dealers who offer brokerage
and research services. These services may be furnished directly to the Fund
or to the Adviser and may include: advice as to the advisability of
investing in securities; security analysis and reports; economic studies;
industry studies; receipt of quotations for portfolio evaluations; and
similar services. Research services provided by brokers and dealers may be
used by the Adviser or its affiliates in advising the Fund and other
accounts. To the extent that receipt of these services may supplant
services for which the Adviser or its affiliates might otherwise have paid,
it would tend to reduce their expenses. The Adviser and its affiliates
exercise reasonable business judgment in selecting brokers who offer
brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are
reasonable in relationship to the value of the brokerage and research
services provided.
Although investment decisions for the Fund are made independently from
those of the other accounts managed by the Adviser, investments of the type
the Fund may make may also be made by those other accounts. When the Fund
and one or more other accounts managed by the Adviser are prepared to
invest in, or desire to dispose of, the same security, available
investments or opportunities for sales will be allocated in a manner
believed by the Adviser to be equitable to each. In some cases, this
procedure may adversely affect the price paid or received by the Fund or
the size of the position obtained or disposed of by the Fund. In other
cases, however, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of the Fund.
PURCHASING SHARES
Except under certain circumstances described in the prospectus, shares are
sold at their net asset value on days the New York Stock Exchange is open
for business. The procedure for purchasing shares of the Fund is explained
in the prospectus under `Investing in the Fund.''
DISTRIBUTION AND SHAREHOLDER SERVICES PLANS
With respect to the Fund, the Trust has adopted a Plan pursuant to Rule
12b-1 of the Investment Company Act of 1940 and a Shareholder Services
Plan. These arrangements permit the payment of fees to the Distributor, and
to stimulate distribution activities and to cause services to be provided
to shareholders by a representative who has knowledge of the shareholder's
particular circumstances and goals. These activities and services may
include, but are not limited to, marketing efforts; providing office space,
equipment, telephone facilities, and various clerical, supervisory,
computer, and other personnel as necessary or beneficial to establish and
maintain shareholder accounts and records; processing purchase and
redemption transactions and automatic investments of client account cash
balances; answering routine client inquiries; and assisting clients in
changing dividend options, account designations, and addresses.
By adopting the Distribution Plan, the Trustees expect that the Fund will
be able to achieve a more predictable flow of cash for investment purposes
and to meet redemptions. This will facilitate more efficient portfolio
management and assist the Fund in pursuing its investment objective. By
identifying potential investors whose needs are served by the Fund's
objective, and properly servicing these accounts, it may be possible to
curb sharp fluctuations in rates of redemptions and sales.
Other benefits, which may be realized under either arrangement, may
include: (1) providing personal services to shareholders; (2) investing
shareholder assets with a minimum of delay and administrative detail; and
(3) enhancing shareholder recordkeeping systems; and (4) responding
promptly to shareholders' requests and inquiries concerning their accounts.
ADMINISTRATIVE ARRANGEMENTS
The administrative services include, but are not limited to, providing
office space, equipment, telephone facilities, and various personnel,
including clerical, supervisory, and computer, as is necessary or
beneficial to establish and maintain shareholders' accounts and records,
process purchase and redemption transactions, process automatic investments
of client account cash balances, answer routine client inquiries regarding
the Fund, assist clients in changing dividend options, account
designations, and addresses, and providing such other services as the Fund
may reasonably request.
CONVERSION TO FEDERAL FUNDS
It is the Fund's policy to be as fully invested as possible so that maximum
interest may be earned. To this end, all payments from shareholders must be
in federal funds or be converted into federal funds before shareholders
begin to earn dividends. Federated Shareholder Services Company acts as the
shareholder's agent in depositing checks and converting them to federal
funds.
DETERMINING NET ASSET VALUE
Net asset value generally changes each day. The days on which net asset
value is calculated by the Fund are described in the prospectus.
DETERMINING MARKET VALUE OF SECURITIES
Market or fair values of the Fund's portfolio securities, other than
options, are determined as follows:
o for equity securities, according to the last sale price on a
national securities exchange, if applicable;
o in the absence of recorded sales for listed equity securities,
according to the mean between the last closing bid and asked
prices;
o for unlisted equity securities, latest bid prices;
o for bonds and other fixed income securities, as determined by an
independent pricing service;
o for short-term obligations, according to the mean between bid and
asked prices as furnished by an independent pricing service, or
for short-term obligations with remaining maturities of 60 days or
less at the time of purchase, at amortized cost; or
o for all other securities, at fair value as determined in good
faith by the Board Members.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may reflect: institutional
trading in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics, and other market data.
VALUING FUTURES AND OPTIONS
The Fund will value futures contracts, options and put options on financial
futures at their market values established by the exchanges at the close of
options trading on such exchanges, unless the Trustees determine in good
faith that another method of valuing option positions is necessary.
Over-the-counter put options will be valued at the mean between the bid and
the asked prices. Covered call options will be valued at the last sale
price on the national exchange on which such option is traded. Unlisted
call options will be valued at the latest bid price as provided by brokers.
REDEEMING SHARES
The Fund redeems shares at the next computed net asset value after the Fund
receives the redemption request. Redemption procedures are explained in the
prospectus under `Redeeming Shares.'' Redemption requests cannot be
executed on days on which the New York Stock Exchange is closed or on
federal holidays when wire transfers are restricted.
REDEMPTION IN KIND
Although the Fund intends to redeem shares in cash, it reserves the right
under certain circumstances to pay the redemption price in whole or in part
by a distribution of securities from the Fund's portfolio. To the extent
available, such securities will be readily marketable.
The Trust has elected to be governed by Rule 18f-1 of the Investment
Company Act of 1940, under which the Fund is obligated to redeem shares for
any one shareholder in cash only up to the lesser of $250,000 or 1% of the
Fund's net asset value during any 90-day period.
Any redemption beyond this amount will also be in cash unless the Trustees
determine that payments should be in kind. In such a case, the Fund will
pay all or a portion of the remainder of the redemption in portfolio
instruments, valued in the same way as the Fund determines net asset value.
The portfolio instruments will be selected in a manner that the Trustees
deem fair and equitable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving their securities and selling them
before their maturity could receive less than the redemption value of their
securities and could incur certain transaction costs.
MASSACHUSETTS PARTNERSHIP LAW
Under certain circumstances, shareholders of the Trust may be held
personally liable as partners under Massachusetts law for acts or
obligations of the Trust on behalf of the Fund. To protect shareholders of
the Fund, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of shareholders for such acts or
obligations of the Trust. These documents require notice of this disclaimer
to be given in each agreement, obligation, or instrument the Trust or its
Trustees enter into or sign on behalf of the Fund.
In the unlikely event a shareholder is held personally liable for the
Trust's obligations on behalf of the Fund, the Trust is required to use its
property to protect or compensate the shareholder. On request, the Trust
will defend any claim made and pay any judgment against a shareholder for
any act or obligation of the Trust on behalf of the Fund. Therefore,
financial loss resulting from liability as a shareholder of the Fund will
occur only if the Trust cannot meet its obligations to indemnify
shareholders and pay judgments against them from the assets of the Fund.
TAX STATUS
THE FUND'S TAX STATUS
The Fund will pay no federal income tax because it expects to meet
requirements of Subchapter M of the Internal Revenue Code applicable to
regulated investment companies and to receive the special tax treatment
afforded to such companies. To qualify for this treatment, the Fund must,
among other requirements:
o derive at least 90% of its gross income from dividends, interest,
and gains from the sale of securities;
o derive less than 30% of its gross income from the sale of
securities held less than three months;
o invest in securities within certain statutory limits; and
o distribute to its shareholders at least 90% of its net income
earned during the year.
SHAREHOLDERS' TAX STATUS
No portion of any income dividend paid by the Fund is eligible for the
dividends received deductions available to corporations.
CAPITAL GAINS
Capital gains or losses may be realized by the Fund on the sale of
portfolio securities and as a result of discounts from par value on
securities held to maturity. Sales would generally be made because of:
othe availability of higher relative yields;
odifferentials in market values;
onew investment opportunities;
ochanges in creditworthiness of an issuer; or
oan attempt to preserve gains or limit losses.
Distribution of long-term capital gains are taxed as such, whether
they are taken in cash or reinvested, and regardless of the length of
time the shareholder has owned the shares.
TOTAL RETURN
The average annual total return for the Fund is the average compounded rate
of return for a given period that would equate a $1,000 initial investment
to the ending redeemable value of that investment. The ending redeemable
value is computed by multiplying the number of shares owned at the end of
the period by the net asset value per share at the end of the period. The
number of shares owned at the end of the period is based on the number of
shares purchased at the beginning of the period with $1,000 adjusted over
the period by any additional shares, assuming the monthly reinvestment of
all dividends and distributions.
YIELD
The yield for the Fund is determined by dividing the net investment income
per share (as defined by the Securities and Exchange Commission) earned by
the Fund over a thirty-day period by the maximum offering price per share
on the last day of the period. This value is then annualized using semi-
annual compounding. This means that the amount of income generated during
the thirty-day period is assumed to be generated each month over a twelve-
month period and is reinvested every six months. The yield does not
necessarily reflect income actually earned by the Fund because of certain
adjustments required by the Securities and Exchange Commission and,
therefore, may not correlate to the dividends or other distributions paid
to shareholders.
To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the
Fund, the performance will be reduced for those shareholders paying those
fees.
PERFORMANCE COMPARISONS
The Fund's performance depends upon such variables as:
o portfolio quality;
o average portfolio maturity;
o type of instruments in which the portfolio is invested;
o changes in interest rates and market value of portfolio
securities;
o changes in the Fund's expenses; and
o various other factors.
The Fund's performance fluctuates on a daily basis largely because net
earnings and offering price per share fluctuate daily. Both net earnings
and offering price per share are factors in the computation of yield and
total return as described below.
Investors may use financial publications and/or indices to obtain a more
complete view of the Fund's performance. When comparing performance,
investors should consider all relevant factors, such as the composition of
any index used, prevailing market conditions, portfolio compositions of
other funds, and methods used to value portfolio securities and compute
offering price. The financial publications and/or indices which the Fund
uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund
categories by making comparative calculations using total return.
Total return assumes the reinvestment of all capital gains
distributions and income dividends and takes into account any
change in net as set value over a specific period of time. From
time to time, the Fund will quote its Lipper ranking in the
``growth funds'' category in advertising and sales literature.
o RUSSELL 1000 GROWTH INDEX consists of those Russell 2000 securities
with a greater-than-average growth orientation. Securities in this
index tend to exhibit higher price-to-book and price-earnings ratios,
lower dividend yields and higher forecasted growth rates.
o RUSSELL 2000 INDEX is a broadly diversified index consisting of
approximately 2,000 small capitalization common stocks that can be
used to compare to the total returns of funds whose portfolios are
invested primarily in small capitalization common stocks.
o CONSUMER PRICE INDEX is generally considered to be a measure of
inflation.
o DOW JONES INDUSTRIAL AVERAGE ("DJIA") is an unmanaged index
representing share prices of major industrial corporations, public
utilities, and transportation companies. Produced by the Dow Jones
& Company, it is cited as a principal indicator of market
conditions.
o STANDARD & POOR'S DAILY STOCK PRICE INDEX OF 500 COMMON STOCKS, a
composite index of common stocks in industry, transportation,
financial, and public utility companies. The Standard & Poor's
index assumes reinvestment of all dividends paid by stocks listed
on the index. Taxes due on any of these distributions are not
included, nor are brokerage or other fees calculated in the
Standard & Poor's figures.
o MORNINGSTAR, INC., an independent rating service, is the publisher
of the bi-weekly Mutual Fund Values. Mutual Fund Values rates
more than 1,000 NASDAQ-listed mutual funds of all types, according
to their risk-adjusted returns. The maximum rating is five stars,
and ratings are effective for two weeks.
o BANK RATE MONITOR NATIONAL INDEX, Miami Beach, Florida, is a
financial reporting service which publishes weekly average rates
of 50 leading bank and thrift institution money market deposit
accounts. The rates published in the index are an average of the
personal account rates offered on the Wednesday prior to the date
of publication by ten of the largest banks and thrifts in each of
the five largest Standard Metropolitan Statistical Areas. Account
minimums range upward from $2,500 in each institution and
compounding methods vary. If more than one rate is offered, the
lowest rate is used. Rates are subject to change at any time
specified by the institution.
o THE S&P/BARRA VALUE INDEX AND THE S&P/BARRA GROWTH INDEX are
constructed by Standard & Poor's and BARRA, Inc., an investment
technology and consulting company, by separating the S&P 500 Index
into value stocks and growth stocks. The S&P/BARRA Growth and
S&P/BARRA Value Indices are constructed by dividing the stocks in
the S&P 500 Index according to their price-to-book ratios. The
S&P/BARRA Growth Index, contains companies with higher price-to-
earnings ratios, low dividends yields, and high earnings growth
(concentrated in electronics, computers, health care, and drugs).
The Value Index contains companies with lower price-to-book ratios
and has 50% of the capitalization of the S&P 500 Index. These
stocks tend to have lower price-to-earnings ratios, high dividend
yields, and low historical and predicted earnings growth
(concentrated in energy, utility and financial sectors). The
S&P/BARRA Value and S&P/BARRA Growth Indices are capitalization-
weighted and rebalanced semi-annually. Standard & Poor's/BARRA
calculates these total return indices with dividends reinvested.
o STANDARD & POOR'S MIDCAP 400 STOCK PRICE INDEX, a composite index
of 400 common stocks with market capitalizations between $200
million and $7.5 billion in industry, transportation, financial,
and public utility companies. The Standard & Poor's index assumes
reinvestment of all dividends paid by stocks listed on the index.
Taxes due on any of these distributions are not included, nor are
brokerage or other fees calculated in the Standard & Poor's
figures.
Advertising and other promotional literature may include charts, graphs and
other illustrations using the Fund's returns, or returns in general, that
demonstrate basic investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment. In addition, the Fund can
compare its performance, or performance for the types of securities in
which it invests, to a variety of other investments, such as bank savings
accounts, certificates of deposit, and Treasury bills.
ECONOMIC AND MARKET INFORMATION
Advertising and sales literature for the Fund may include discussions of
economic, financial and political developments and their effect on the
securities market. Such discussions may take the form of commentary on
these developments by the Fund portfolio managers and their views and
analysis on how such developments could affect the Funds. In addition,
advertising and sales literature may quote statistics and give general
information about the mutual fund industry, including the growth of the
industry, from sources such as the Investment Company Institute (`ICI'').
For example, according to the ICI, twenty-seven percent of American
households are pursuing their financial goals through mutual funds. These
investors, as well as businesses and institutions, have entrusted over $3
trillion to the more than 5,500 funds available.
APPENDIX
STANDARD AND POOR'S RATINGS GROUP BOND RATING DEFINITIONS
AAA--Debt rated AAA has the highest rating assigned by Standard & Poor's
Ratings Group. Capacity to pay interest and repay principal is extremely
strong.
AA--Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A--Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB--Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
NR--Indicates that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard &
Poor's Ratings Group does not rate a particular type of obligation as a
matter of policy.
PLUS (+) OR MINUS (-):--The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
MOODY'S INVESTORS SERVICE, INC., BOND RATING DEFINITIONS
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there may
be other elements present which make the long-term risks appear somewhat
larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
BAA--Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well.
NR--Not rated by Moody's Investors Service, Inc.
FITCH INVESTORS SERVICE, INC., LONG-TERM DEBT RATING DEFINITIONS
AAA--Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA--Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated F-1+.
A--Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB--Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
NR--NR indicates that Fitch Investors Service, Inc. does not rate the
specific issue.
STANDARD AND POOR'S RATINGS GROUP NOTE RATINGS
SP-1--Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus sign (+) designation.
SP-2--Satisfactory capacity to pay principal and interest.
MOODY'S INVESTORS SERVICE, INC. SHORT-TERM LOAN RATINGS
MIG1/VMIG1--This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broad based access to the market for refinancing.
MIG2/VMIG2--This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
STANDARD AND POOR'S RATINGS GROUP COMMERCIAL PAPER RATING DEFINITIONS
A-1--This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) sign designation.
A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
MOODY'S INVESTORS SERVICE, INC., COMMERCIAL PAPER RATING DEFINITIONS
P-1--Issuers rated PRIME-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations.
PRIME-1 repayment capacity will normally be evidenced by the following
characteristics:
o Leading market positions in well established industries.
o High rates of return on funds employed.
o Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
o Broad margins in earning coverage of fixed financial charges and
high internal cash generation.
o Well-established access to a range of financial markets and
assured sources of alternate liquidity.
P-2--Issuers rated PRIME-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, will
be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
FITCH INVESTORS SERVICE, INC., SHORT-TERM DEBT RATING DEFINITIONS
F-1+--(Exceptionally Strong Credit Quality). Issues assigned this rating
are regarded as having the strongest degree of assurance for timely
payment.
F-1--(Very Strong Credit Quality). Issues assigned this rating reflect an
assurance for timely payment only slightly less in degree than issues rated
F-1+.
F-2--(Good Credit Quality). Issues carrying this rating have a
satisfactory degree of assurance for timely payment, but the margin of
safety is not as great as for issues assigned F-1+ and F-1 ratings.
Cusip #
G01912-02(1/97)
PART C. OTHER INFORMATION.
Item 24. Financial Statements and Exhibits:
(a) Financial Statements (to be filed by Amendment)
(b) Exhibits:
(1) Conformed Copy of Declaration of Trust of the
Registrant; +
(i) Form of Amendment No. 1 to the Declaration of
Trust; +
(2) Copy of By-Laws of the Registrant; +
(3) Not applicable;
(4) Not applicable;
(5) Conformed Copy of Investment Advisory Contract of the
Registrant; +
(i) Form of Exhibit B of the Investment Advisory
Contract; +
(6) Conformed Copy of Distributor's Contract of the
Registrant; +
(i) Form of Exhibit B of the Distributor's
Contract; +
(7) Not applicable;
(8) Conformed Copy of Custodian Contract of the Registrant;
+
(9) (i) Conformed Copy of Agreement for Fund
Accounting, Administrative Services, and
Transfer Agency Services of the Registrant; +
(ii)Conformed Copy of Shareholder Services
Agreement of the Registrant; +
(iii)Copy of Amendment No. 1 to Schedule A of the
Shareholder Services Agreement; +
(iv)Conformed Copy of Electronic Communications
and Recordkeeping Agreement; +
(10) Copy of Opinion and Consent of Counsel as to legality
of shares being registered; (to be filed by Amendment)
(11) Copy of Consent of Independent Auditors; (to be filed
by Amendment)
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding; (to be
filed by Amendment)
(14) Not applicable;
(15) (i)Conformed Copy of Distribution Plan; +
(ii) Form of Exhibit B of the Distribution Plan;
+
(iii)Copy of Dealer Agreement; (to be filed by
Amendment)
(16) Not applicable to current filing;
(17) Not applicable to current filing;
(18) Not applicable to current filing;
(19) Conformed copy of Power of Attorney; +
Item 25. Persons Controlled by or Under Common Control with Registrant
None
+ All exhibits have been filed electronically.
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of
Shares of beneficial interest
(no par value)
WesMark West Virginia
Municipal Bond Fund
---
WesMark Growth Fund
---
Item 27. Indemnification:
Indemnification is provided to Officers and Trustees of the
Registrant pursuant to Section 4 of Article XI of Registrant's
Declaration of Trust. The Investment Advisory Contract between
the Registrant and WesBanco Bank Wheeling ("Adviser") provides
that, in the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties
under the Investment Advisory Contract on the part of Adviser,
Adviser shall not be liable to the Registrant or to any
shareholder for any act or omission in the course of or connected
in any way with rendering services or for any losses that may be
sustained in the purchase, holding, or sale of any security.
Registrant's Trustees and Officers are covered by an Investment
Trust Errors and Omissions Policy.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to Trustees, Officers,
and controlling persons of the Registrant by the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant
is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Act and, therefore, is unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by Trustees, Officers, or controlling persons of the
Registrant in connection with the successful defense of any act,
suit, or proceeding) is asserted by such Trustees, Officers, or
controlling persons in connection with the shares being
registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final
adjudication of such issues.
Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940 for
Trustees, Officers, and controlling persons of the Registrant by
the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware of the position of the Securities and
Exchange Commission as set forth in Investment Company Act
Release No. IC-11330. Therefore, the Registrant undertakes that
in addition to complying with the applicable provisions of the
Declaration of Trust or otherwise, in the absence of a final
decision on the merits by a court or other body before which the
proceeding was brought, that an indemnification payment will not
be made unless in the absence of such a decision, a reasonable
determination based upon factual review has been made (i) by a
majority vote of a quorum of non-party Trustees who are not
interested persons of the Registrant or (ii) by independent legal
counsel in a written opinion that the indemnitee was not liable
for an act of willful misfeasance, bad faith, gross negligence,
or reckless disregard of duties. The Registrant further
undertakes that advancement of expenses incurred in the defense
of a proceeding (upon undertaking for repayment unless it is
ultimately determined that indemnification is appropriate)
against an Officer, Trustee, or controlling person of the
Registrant will not be made absent the fulfillment of at least
one of the following conditions: (i) the indemnitee provides
security for his undertaking; (ii) the Registrant is insured
against losses arising by reason of any lawful advances; or
(iii) a majority of a quorum of disinterested non-party Trustees
or independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee will
be entitled to indemnification.
Item 28. Business and Other Connections of Investment Adviser:
For a description of the other business of the investment
adviser, see the section entitled "WesMark Funds Information -
Management of the Trust''in Part A.
The principal executive officers and directors of the Trust's
Investment Adviser are set forth in the following tables. Unless
otherwise noted, the position listed under other Substantial
Business, Profession, Vocation, or Employment is with WesBanco
Bank Wheeling.
(1) (2) (3)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
Edward M. George Chairman of the President and CEO,
Board WesBanco, Inc.
Dennis P. Yaeger Vice Chairman Executive Vice
President, WesBanco, Inc.
Paul M. Limbert President, CEO, Executive Vice
and Director President, WesBanco,
Inc.
Donald K. Jebbia President, Elm Former President and
Grove Branch CEO, WesBanco Bank Elm
Grove
George M. Molnar President, Weirton
Branch/Director
Larry P. Finneran Vice President,
Weirton Branch
Jon M. Rogers Executive Vice President,
New Martinsville Branch
Stephen E. Hannig Senior Vice President,
Retail Marketing
John W. Moore, Jr. Senior Vice President, Senior Vice President,
Human Resources Human Resources,
WesBanco, Inc.
David L. Pell Senior Vice President/
Senior Loan Officer
Jerome B. Schmitt Senior Vice President, Senior Vice President,
Trusts and Investment WesBanco, Inc.
Edward G. Sloane, Jr. Vice President and
Controller
Edward G. Sloane, Sr. Senior Vice President, Vice President,
Information Technology Information Technology
WesBanco, Inc.
Lloyd E. Walker Senior Vice President-
Loans, Elm Grove Branch
Paul J. Becka Vice President,
Information Technology
Greg Wm. Adkins Vice President,
Commercial/Mortgage Loans
J. Kevin Diserio Vice President and
Branch Manager
John D. Faulkner Vice President,
Bank Operations
Thomas B. McGaughy Vice President, Trusts
Douglas A. Molnar Vice President,
Marketing
Kristine N. Molnar Senior Vice President,
Commercial/Mortgage Loans
Edward G. Sloane, Jr. Vice President and
Controller
Francine Swiger Senior Vice President,
Consumer Credit Department
James E. Altmeyer Director Owner, Altmeyer Funeral
Homes, Inc.
Ray A. Byrd Director Lawyer
D. Duane Cummins, Ph.D.Director President, Bethany
College
Donald R. Donnell Director President, Starvaggi
Industries, Inc.
James C. Gardill Director Lawyer; Chairman of the
Board, WesBanco, Inc.
Thomas M. Hazlett Director Lawyer
Roland L. Hobbs Director Former Chairman,
President and CEO,
WesBanco, Inc.
John M. Karras Director Owner, Karras Painting
Co.
James E. Kepner Director Vice President, Kepner
Funeral Homes
Rizal V. Pangilinan Director Ophthalmologist; eye
surgeon
C. Jack Savage Director Owner, Savage
Construction Co.
H. Mendel Spears Director Senior Vice President/
Agent, Acordia of West
Virginia
Joan C. Stamp Director Not applicable
Carter C. Strauss Director Owner, Herman Strauss,
Inc., recycler of
ferrous and nonferrous
materials
James G. Squibb Director General Manager,
WTRF-TV
Thomas L. Thomas, M.D. Director Physician
John A. Welty Director Secretary/Treasurer,
Welty Buick, Pontiac,
GMC Truck
Gary E. West Director Owner, Valley Welding
Co. and various
corporations dealing in
petroleum products
William E. Witschey Director Owner, Witschey's
Market, Inc., and
Witschey's Shop'N Save
John E. Wright, III Director President and COO,
Wheeling-Nisshin
Steel Co.
Item 29. Principal Underwriters:
(a)Edgewood Services, Inc. the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Excelsior
Institutional Trust (formerly, UST Master Funds, Inc.),
Excelsior Tax-Exempt Funds, Inc. (formerly, UST Master Tax-
Exempt Funds, Inc.), Excelsior Institutional Trust, FTI
Funds, Marketvest Funds, and Marketvest Funds, Inc.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
James J. Dolan Trustee and President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
R. Jeffrey Niss Senior Vice President and --
Federated Investors Tower Trustee, Edgewood Services,
Pittsburgh, PA 15222-3779 Inc.
Douglas L. Hein Trustee, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Frank E. Polefrone Trustee, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Newton Heston, III Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, Assistant Secretary
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Kenneth W. Pegher, Jr. Treasurer, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
(c) Not applicable
Item 30. Location of Accounts and Records:
All accounts and records required to be maintained by Section 31(a) of the
Investment Company Act of 1940 and Rules 31a-1 through 31a-3 promulgated
thereunder are maintained at one of the following locations:
Registrant Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Shareholder Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Accounting Services")
Federated Services Company Federated Investors Tower
("Administrator") Pittsburgh, PA 15222-3779
WesBanco Bank Wheeling One Bank Plaza
("Adviser" and `Custodian'') Wheeling, WV 26003
Item 31. Management Services: Not applicable.
Item 32. Undertakings:
Registrant hereby undertakes to file a post-effective amendment,
using financial statements which need not be certified, within
four to six months from the effective date of Registrant's 1933
Act Registration Statement.
Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, WESMARK FUNDS, has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 14th day of November, 1996.
WESMARK FUNDS
BY: /s/ C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
November 14, 1996
Pursuant to the requirements of the Securities Act of 1933,
Registration Statement has been signed below by the following person in the
capacity and on the date indicated:
NAME TITLE DATE
By:/s/ C. Todd Gibson
C. Todd Gibson Attorney In Fact November 14, 1996
ASSISTANT SECRETARY For the Persons
Listed Below
NAME TITLE
John F. Donahue* Chairman and Trustee
(Chief Executive Officer)
Edward C. Gonzales* President and Treasurer
(Principal Financial and
Accounting Officer)
Thomas G. Bigley* Trustee
John T. Conroy, Jr.* Trustee
William J. Copeland* Trustee
James E. Dowd* Trustee
Lawrence D. Ellis, M.D.* Trustee
Edward L. Flaherty, Jr.* Trustee
Peter E. Madden* Trustee
Gregor F. Meyer* Trustee
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
EXHIBIT 1 UNDER FORM N-1A
EXHIBIT 3(A) UNDER ITEM 601/REG. S-K
WESMARK FUNDS
DECLARATION OF TRUST
TABLE OF CONTENTS
Page
ARTICLE I. NAMES AND DEFINITIONS ......................................1
Section 1. Name .................................................1
Section 2. Definitions ..........................................1
ARTICLE II. PURPOSE OF TRUST..........................................2
ARTICLE III. BENEFICIAL INTEREST.......................................2
Section 1. Shares of Beneficial Interest.........................2
Section 2. Ownership of Shares ..................................2
Section 3. Investment in the Trust ..............................3
Section 4. No Pre-emptive Rights; Action by Shareholder..........3
Section 5. Establishment and Designation of Series or Class .....3
ARTICLE IV. THE TRUSTEES .............................................5
Section 1. Management of the Trust ..............................5
Section 2. Election of Trustees by Shareholders .................5
Section 3. Term of Office of Trustees ...........................5
Section 4. Termination of Service and Appointment of Trustees ...6
Section 5. Number of Trustees ...................................6
Section 6. Effect of Death, Resignation, etc. of a Trustee ......6
Section 7. Ownership of Assets ..................................6
ARTICLE V. POWERS OF THE TRUSTEES ...................................6
Section 1. Powers ...............................................6
Section 2. Principal Transactions ...............................9
Section 3. Trustees and Officers as Shareholders.................9
Section 4. Parties to Contract...................................9
Page
ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION .....................10
Section 1. Trustee Reimbursement...............................10
Section 2. Trustee Compensation ...............................10
ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES, PRINCIPAL
UNDERWRITER AND TRANSFER AGENT .............................11
Section 1. Investment Adviser .................................11
Section 2. Administrative Services ............................11
Section 3. Principal Underwriter ..............................11
Section 4. Transfer Agent .....................................12
ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS ................12
Section 1. Voting Powers ......................................12
Section 2. Meetings............................................12
Section 3. Quorum and Required Vote ...........................13
Section 4. Action by Written Consent ..........................13
Section 5. Additional Provisions ..............................13
ARTICLE IX. CUSTODIAN ...............................................13
ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS ...........................13
Section 1. Distributions ......................................13
Section 2. Redemptions and Repurchases ........................14
Section 3. Net Asset Value of Shares...........................15
Section 4. Suspension of the Right of Redemption...............15
Section 5. Trust's Right to Redeem Shares .....................15
ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION .............15
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders ...............................................15
Section 2. Limitation of Personal Liability and Indemnification of
Trustees, Officers, Employees or Agents of the Trust .......16
Section 3. Express Exculpatory Clauses and Instruments ........16
Page
ARTICLE XII. MISCELLANEOUS............................................17
Section 1. Trust is not a Partnership .........................17
Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety
............................................................17
Section 3. Establishment of Record Dates ......................17
Section 4. Termination of Trust ...............................18
Section 5. Offices of the Trust, Filing of Copies, Headings,
Counterparts ...............................................18
Section 6. Applicable Law .....................................18
Section 7. Amendments -- General ..............................19
Section 8. Amendments -- Series and Classes....................19
Section 9. Use of Name ........................................20
WESMARK FUNDS
DECLARATION OF TRUST
Dated February 29, 1996
DECLARATION OF TRUST made by the undersigned, and by the holders of
shares of beneficial interest to be issued hereunder as herinafter
provided.
WHEREAS, the Trustees desire to establish a trust fund for the
investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed
under this Declaration of Trust IN TRUST as herein set forth below.
ARTICLE I
NAMES AND DEFINITIONS
Section 1. Name. This Trust shall be known as the WesMark Funds, and the
Trustees may conduct the business of the Trust under that name or any
other name as they may determine from time to time.
Section 2. Definitions. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings
given them in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to the Massachusetts Business Trust
established by this Declaration of Trust, as amended from time to
time, inclusive of each and every Series and Class established
hereunder;
(c) "Class" refers to a class of Shares established and designated
under or in accordance with the provisions of Article III;
(d) "Series" refers to a series of Shares established and designated
under or in accordance with the provisions of Article III;
(e) "Series Company" refers to the form of a registered open-end
investment company described in Section 18(f)(2) of the 1940 Act
or in any successor statutory provision;
(f) "Shareholder" means a record owner of Shares of any Series or
Class;
(g) "Trustees" refer to the individual Trustees in their capacity as
Trustees hereunder of the Trust and their successor or successors
for the time being in office as such Trustees;
(h) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from
time to time, or if more than one Series or Class of Shares is
authorized by the Trustees, the equal proportionate units into
which each Series or Class of Shares shall be divided from time
to time and includes fractions of Shares as well as whole Shares;
(i) The "1940 Act" refers to the Investment Company Act of 1940, and
the Rules and Regulations thereunder, (including any exemptions
granted thereunder) as amended from time to time; and
(j) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to operate as an investment company, and
provide investors a continuous source of managed investments by
investing primarily in securities, derivative securities, and also in
debt instruments, commodities, commodity contracts and options
thereon, and other property.
ARTICLE III
BENEFICIAL INTEREST
Section 1. Shares of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into transferable Shares, without
par value. Subject to the provisions of Section 5 of this Article
III, each Share shall have voting rights as provided in Article VIII
hereof, and holders of the Shares of any Series shall be entitled to
receive dividends, when and as declared with respect thereto in the
manner provided in Article X, Section 1 hereof. The Shares of any
Series may be issued in one or more Classes, as the Trustees may
authorize pursuant to Article XII, Section 8 hereof. Unless the
Trustees have authorized the issuance of Shares of a Series in two or
more Classes, each Share of a Series shall represent an equal
proportionate interest in the assets and liabilities and the income
and the expenses of the Series with each other Share of the same
Series, none having priority or preference over another. If the
Trustees have authorized the issuance of Shares of a Series in two or
more Classes, then the Classes may have such variations as to
dividend, redemption, and voting rights, net asset values, expenses
borne by the Classes, and other matters as the Trustees have
authorized provided that each Share of a Class shall represent an
equal proportionate interest in the assets and liabilities and the
income and the expenses of the Class with each other Share of the
same Class, none having priority or preference over another. The
number of Shares authorized shall be unlimited. The Trustees may from
time to time divide or combine the Shares of any Series or Class into
a greater or lesser number without thereby changing the proportionate
beneficial interests in the Series or Class.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
in the books of the Trust or a transfer agent which books shall be
maintained separately for the Shares of each Series or Class. The
Trustees may make such rules as they consider appropriate for the
transfer of Shares and similar matters. The record books of the Trust
or any transfer agent, as the case may be, shall be conclusive as to
who are the Shareholders of each Series or Class and as to the number
of Shares of each Series or Class held from time to time by each.
Section 3. Investment in the Trust. The Trustees shall accept investments
in the Trust from such persons and on such terms as they may from time
to time authorize. After the date of the initial contribution of
capital (which shall occur prior to the initial public offering of
Shares), the number of Shares to represent the initial contribution
shall be considered as outstanding and the amount received by the
Trustees on account of the contribution shall be treated as an asset
of the Trust to be allocated among any Series or Classes in the manner
described in Section 5(a) of this Article. Subsequent to such initial
contribution of capital, Shares (including Shares which may have been
redeemed or repurchased by the Trust) may be issued or sold at a price
which will net the relevant Series or Class, as the case may be,
before paying any taxes in connection with such issue or sale, not
less than the net asset value (as defined in Article X, Section 3)
thereof; provided, however, that the Trustees may in their discretion
impose a sales charge upon investments in or redemptions from the
Trust, and upon reinvestments of dividends and capital gains in
Shares.
Section 4. No Pre-emptive Right; Action by Shareholder. Shareholders
shall have no pre-emptive or other right to subscribe to any
additional Shares or other securities issued by the Trust. No action
may be brought by a Shareholder on behalf of the Trust unless a prior
demand regarding such matter has been made on the Trustees of the
Trust.
Section 5. Establishment and Designation of Series or Class. Without
limiting the authority of the Trustees set forth in Article XII,
Section 8, inter alia, to establish and designate any additional
Series or Class or to modify the rights and preferences of any
existing Series or Class, the initial Series shall be, and is
established and designated as, WesMark West Virginia Municipal Bond
Fund.
Shares of any Series or Class established in this Section 5 shall have
the following relative rights and preferences:
(a) Assets belonging to Series or Class. All consideration received
by the Trust for the issue or sale of Shares of a particular
Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to that
Series or Class for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account of
the Trust. Such consideration, assets, income, earnings, profits
and proceeds thereof, from whatever source derived, including,
without limitation, any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds, in whatever form the same
may be, are herein referred to as "assets belonging to" that
Series or Class. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which
are not readily identifiable as belonging to any particular
Series or Class (collectively "General Assets"), the Trustees
shall allocate such General Assets to, between or among any one
or more of the Series or Classes established and designated from
time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable, and any General Assets
so allocated to a particular Series or Class shall belong to that
Series or Class. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series or
Classes for all purposes.
(b) Liabilities Belonging to Series or Class. The assets belonging
to each particular Series or Class shall be charged with the
liabilities of the Trust in respect to that Series or Class and
all expenses, costs, charges and reserves attributable to that
Series or Class, and any general liabilities of the Trust which
are not readily identifiable as belonging to any particular
Series or Class shall be allocated and charged by the Trustees to
and among any one or more of the Series or Classes established
and designated from time to time in such manner and on such basis
as the Trustees in their sole discretion deem fair and equitable.
The liabilities, expenses, costs, charges and reserves so charged
to a Series or Class are herein referred to as "liabilities
belonging to" that Series or Class. Each allocation of
liabilities belonging to a Series or Class by the Trustees shall
be conclusive and binding upon the Shareholders of all Series or
Classes for all purposes.
(c) Dividends, Distributions, Redemptions, Repurchases
and Indemnification. Notwithstanding any other provisions of
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this Declaration of Trust, including, without limitation, Article
X, no dividend or distribution (including, without limitation,
any distribution paid upon termination of the Trust or of any
Series or Class) with respect to, nor any redemption or
repurchase of the Shares of any Series or Class shall be effected
by the Trust other than from the assets belonging to such Series
or Class, nor except as specifically provided in Section 1 of
Article XI hereof, shall any Shareholder of any particular Series
or Class otherwise have any right or claim against the assets
belonging to any other Series or Class except to the extent that
such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series or Class.
(d) Voting. Notwithstanding any of the other provisions of this
Declaration of Trust, including, without limitation, Section 1 of
Article VIII, only Shareholders of a particular Series or Class
shall be entitled to vote on any matters affecting such Series or
Class. Except with respect to matters as to which any particular
Series or Class is affected materially differently or as
otherwise required by applicable law, all of the Shares of each
Series or Class shall, on matters as to which such Series or
Class is entitled to vote, vote with other Series or Classes so
entitled as a single class. Notwithstanding the foregoing, with
respect to matters which would otherwise be voted on by two or
more Series or Classes as a single class, the Trustees may, in
their sole discretion, submit such matters to the Shareholders of
any or all such Series or Classes, separately.
(e) Fraction. Any fractional Share of a Series or Class shall carry
proportionately all the rights and obligations of a whole Share
of that Series or Class, including rights with respect to voting,
receipt of dividends and distributions, redemption of Shares and
termination of the Trust or of any Series or Class.
(f) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series or Class shall
have the right to exchange said Shares for Shares of one or more
other Series or Classes in accordance with such requirements and
procedures as may be established by the Trustees.
(g) Combination of Series or Classes. The Trustees shall have the
authority, without the approval of the Shareholders of any Series
or Class, unless otherwise required by applicable law, to combine
the assets and liabilities belonging to a single Series or Class
with the assets and liabilities of one or more other Series or
Classes.
(h) Elimination of Series or Classes. The Trustees shall have the
authority, without the approval of Shareholders of any Series or
Class, unless otherwise required by applicable law, to amend this
Declaration of Trust to abolish that Series or Class and to
rescind the establishment and designation thereof.
ARTICLE IV
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the Trust
shall be managed by the Trustees, and they shall have all powers
necessary and desirable to carry out that responsibility. The
Trustees who shall serve as Trustees are the undersigned.
Section 2. Election of Trustees by Shareholders. Unless otherwise
required by the 1940 Act or any court or regulatory body of competent
jurisdiction, or unless the Trustees determine otherwise, a Trustee
shall be elected by the Trustees, and Shareholders shall have no right
to elect Trustees.
Section 3. Term of Office of Trustees. The Trustees shall hold office
during the lifetime of this Trust, and until its termination as
hereinafter provided; except (a) that any Trustee may resign his
office at any time by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may
be removed at any time by written instrument signed by at least two-
thirds of the number of Trustees prior to such removal, specifying the
date when such removal shall become effective; (c) that any Trustee
who requests in writing to be retired or who has become mentally or
physically incapacitated may be retired by written instrument signed
by a majority of the other Trustees, specifying the date of his
retirement; and (d) a Trustee may be removed at any special meeting of
Shareholders of the Trust by a vote of two-thirds of the outstanding
Shares. Any removals shall be effective as to the Trust and each
Series and Class hereunder.
Section 4. Termination of Service and Appointment of Trustees. In case of
the death, resignation, retirement, removal or mental or physical
incapacity of any of the Trustees, or in case a vacancy shall, by
reason of an increase in number, or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit. An appointment of a
Trustee may be made by the Trustees then in office in anticipation of
a vacancy to occur by reason of retirement, resignation or increase in
number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date
of said retirement, resignation or increase in number of Trustees. As
soon as any Trustee so appointed shall have accepted this Trust, the
trust estate shall vest in the new Trustee or Trustees, together with
the continuing Trustees, without any further act or conveyance, and he
shall be deemed a Trustee hereunder. Any appointment authorized by
this Section 4 is subject to the provisions of Section 16(a) of the
1940 Act.
Section 5. Number of Trustees. The number of Trustees, not less than
three (3) nor more than twenty (20) serving hereunder at any time,
shall be determined by the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally
incapacitated, the other Trustees shall have all the powers hereunder
and the certificate signed by a majority of the other Trustees of such
vacancy, absence or incapacity shall be conclusive, provided, however,
that no vacancy which reduces the number of Trustees below three (3)
shall remain unfilled for a period longer than six calendar months.
Section 6. Effect of Death, Resignation, etc. of a Trustee. The death,
resignation, retirement, removal, or mental or physical incapacity of
the Trustees, or any one or more of them, shall not operate to annul
the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
Section 7. Ownership of Assets. The assets belonging to each Series or
Class shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustee. All of the assets belonging to
each Series or Class or owned by the Trust shall at all times be
considered as vested in the Trustees. No Shareholder shall be deemed
to have a severable ownership interest in any individual asset
belonging to any Series or Class or owned by the Trust or any right of
partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in a Series or Class.
ARTICLE V
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do
any and all acts and to make and execute any and all contracts and
instruments that they may consider necessary or appropriate in
connection with the management of the Trust or a Series or Class. The
Trustees shall not be bound or limited by present or future laws or
customs in regard to trust investments, but shall have full authority
and power to make any and all investments which they, in their
uncontrolled discretion, shall deem proper to accomplish the purpose
of this Trust. Without limiting the foregoing, the Trustees shall
have the following specific powers and authority, subject to any
applicable limitation in the 1940 Act or in this Declaration of Trust
or in the By-Laws of the Trust:
(a) To buy, and invest funds in their hands in securities and other
property, including, but not limited to, common stocks, preferred
stocks, bonds, debentures, warrants and rights to purchase
securities, options, certificates of beneficial interest, money
market instruments, notes or other evidences of indebtedness
issued by any corporation, trust or association, domestic or
foreign, or issued or guaranteed by the United States of America
or any agency or instrumentality thereof, by the government of
any foreign country, by any State of the United States, or by any
political subdivision or agency or instrumentality of any State
or foreign country, or "when-issued" or "delayed-delivery"
contracts for any such securities, or any repurchase agreement or
reverse repurchase agreement, or debt instruments, commodities,
commodity contracts and options thereon, or to retain assets
belonging to each and every Series or Class in cash, and from
time to time to change the investments of the assets belonging to
each Series or Class;
(b) To adopt By-Laws of the Trust not inconsistent with the
Declaration of Trust providing for the conduct of the business of
the Trust and to amend and repeal them to the extent that they do
not reserve that right to the Shareholders;
(c) To elect and remove such officers of the Trust and appoint and
terminate such agents of the Trust as they consider appropriate;
(d) To appoint or otherwise engage a bank or other entity permitted
by the 1940 Act, as custodian of any assets belonging to any
Series or Class subject to any conditions set forth in this
Declaration of Trust or in the By-Laws;
(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment
advisers, sub-investment advisers, principal underwriters,
administrative service agents, and such other agents as the
Trustees may from time to time appoint or otherwise engage;
(f) To provide for the distribution of any Shares of any Series or
Class either through a Principal Underwriter in the manner
hereinafter provided for or by the Trust itself, or both;
(g) To set record dates in the manner hereinafter provided for;
(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the
Trust and to any agent, custodian or underwriter;
(i) To sell or exchange any or all of the assets belonging to one or
more Series or Classes, subject to the provisions of Article XII,
Section 4(b) hereof;
(j) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute
and deliver powers of attorney to such person or persons,
including the investment adviser of the Trust as the Trustees
shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the
Trustees shall deem proper;
(k) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities or other
property;
(l) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form;
or either in its own name or in the name of a custodian or a
nominee or nominees, subject in either case to proper safeguards
according to the usual business practice of Massachusetts
business trusts or investment companies;
(m) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern, any
security of which belongs to any Series or Class; to consent to
any contract, lease, mortgage, purchase, or sale of property by
such corporation or concern, and to pay calls or subscriptions
with respect to any security which belongs to any Series or
Class;
(n) To engage in and to prosecute, compound, compromise, abandon, or
adjust, by arbitration or otherwise, any actions, suits,
proceedings, disputes, claims, demands, and things relating to
the Trust, and out of the assets belonging to any Series or Class
to pay, or to satisfy, any debts, claims or expenses incurred in
connection therewith, including those of litigation, upon any
evidence that the Trustees may deem sufficient (such powers shall
include without limitation any actions, suits, proceedings,
disputes, claims, demands and things relating to the Trust
wherein any of the Trustees may be named individually and the
subject matter of which arises by reason of business for or on
behalf of the Trust);
(o) To make distributions of income and of capital gains to
Shareholders;
(p) To borrow money;
(q) From time to time to issue and sell the Shares of any Series or
Class either for cash or for property whenever and in such
amounts as the Trustees may deem desirable, but subject to the
limitation set forth in Section 3 of Article III.
(r) To purchase insurance of any kind, including, without limitation,
insurance on behalf of any person who is or was a Trustee,
officer, employee or agent of the Trust, or is or was serving at
the request of the Trust as a trustee, director, officer, agent
or employee of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against
him or incurred by him in any such capacity or arising out of
his status as such;
(s) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options with respect to or otherwise deal in any property
rights relating to any or all of the assets belonging to any
Series or Class;
The Trustees shall have all of the powers set forth in this Section 1
with respect to all assets and liabilities of each Series and Class.
Section 2. Principal Transactions. The Trustees shall not cause the Trust
on behalf of any Series or Class to buy any securities (other than
Shares) from or sell any securities (other than Shares) to, or lend
any assets belonging to any Series or Class to any Trustee or officer
or employee of the Trust or any firm of which any such Trustee or
officer is a member acting as principal unless permitted by the 1940
Act, but the Trust may employ any such other party or any such person
or firm or company in which any such person is an interested person in
any capacity not prohibited by the 1940 Act.
Section 3. Trustees and Officers as Shareholders. Any Trustee, officer,
employee or other agent of the Trust may acquire, own and dispose of
Shares of any Series or Class to the same extent as if he were not a
Trustee, officer, employee or agent; and the Trustees may issue and
sell or cause to be issued or sold Shares of any Series or Class to
and buy such Shares from any such person or any firm or company in
which he is an interested person subject only to the general
limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in
the By-Laws.
Section 4. Parties to Contract. The Trustees may enter into any contract
of the character described in Article VII or in Article IX hereof or
any other capacity not prohibited by the 1940 Act with any
corporation, firm, partnership, trust or association, although one or
more of the shareholders, Trustees, officers, employees or agents of
the Trust or their affiliates may be an officer, director, trustee,
partner, shareholder or interested person of such other party to the
contract, and no such contract shall be invalidated or rendered
voidable by reason of the existence of any such relationship, nor
shall any person holding such relationship be liable merely by reason
of such relationship for any loss or expense to the Trust or any
Series or Class under or by reason of said contract or accountable for
any profit realized directly or indirectly therefrom, in the absence
of actual fraud. The same person (including a firm, corporation,
partnership, trust or association) may be the other party to contracts
entered into pursuant to Article VII or Article IX or any other
capacity not prohibited by the 1940 Act, and any individual may be
financially interested or otherwise an interested person of persons
who are parties to any or all of the contracts mentioned in this
Section 4.
ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION
Section 1. Trustee Reimbursement. The Trustees shall be reimbursed from
the assets belonging to each particular Series or Class for all of
such Trustees' expenses as such expenses are allocated to and among
any one or more of the Series or Classes pursuant to Article III,
Section 5(b), including, without limitation, expenses of organizing
the Trust or any Series or Class and continuing its or their
existence; fees and expenses of Trustees and officers of the Trust;
fees for investment advisory services, administrative services and
principal underwriting services provided for in Article VII, Sections
1, 2 and 3; fees and expenses of preparing and printing Registration
Statements under the Securities Act of 1933 and the 1940 Act and any
amendments thereto; expenses of registering and qualifying the Trust
and any Series or Class and the Shares of any Series or Class under
federal and state laws and regulations; expenses of preparing,
printing and distributing prospectuses and any amendments thereto sent
to shareholders, underwriters, broker-dealers and to investors who may
be considering the purchase of Shares; expenses of registering,
licensing or other authorization of the Trust or any Series or Class
as a broker-dealer and of its or their officers as agents and salesmen
under federal and state laws and regulations; interest expenses,
taxes, fees and commissions of every kind; expenses of issue
(including cost of share certificates), purchases, repurchases and
redemptions of Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents,
dividend disbursing agents, Shareholder servicing agents and
registrars; printing and mailing costs; auditing, accounting and legal
expenses; reports to Shareholders and governmental officers and
commissions; expenses of meetings of Shareholders and proxy
solicitations therefor; insurance expenses; association membership
dues and nonrecurring items as may arise, including all losses and
liabilities by them incurred in administering the Trust and any Series
or Class, including expenses incurred in connection with litigation,
proceedings and claims and the obligations of the Trust under Article
XI hereof and the By-Laws to indemnify its Trustees, officers,
employees, shareholders and agents, and any contract obligation to
indemnify Principal Underwriters under Section 3 of Article VII; and
for the payment of such expenses, disbursements, losses and
liabilities, the Trustees shall have a lien on the assets belonging to
each Series or Class prior to any rights or interests of the
Shareholders of any Series or Class. This section shall not preclude
the Trust from directly paying any of the aforementioned fees and
expenses.
Section 2. Trustee Compensation. The Trustees shall be entitled to
compensation from the Trust from the assets belonging to any Series or
Class for their respective services as Trustees, to be determined from
time to time by vote of the Trustees, and the Trustees shall also
determine the compensation of all officers, employees, consultants and
agents whom they may elect or appoint. The Trust may pay out of the
assets belonging to any Series or Class any Trustee or any
corporation, firm, partnership, trust or other entity of which a
Trustee is an interested person for services rendered in any capacity
not prohibited by the 1940 Act, and such payments shall not be deemed
compensation for services as a Trustee under the first sentence of
this Section 2 of Article VI.
ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES, PRINCIPAL UNDERWRITER AND
TRANSFER AGENT
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Section 1. Investment Adviser. Subject to a Majority Shareholder Vote by
the relevant Series or Class to the extent such vote is required by
law, the Trustees may in their discretion from time to time enter into
an investment advisory contract whereby the other party to such
contract shall undertake to furnish the Trustees investment advisory
services for such Series or Class upon such terms and conditions and
for such compensation as the Trustees may in their discretion
determine. Subject to a Majority Shareholder Vote by the relevant
Series or Class to the extent such vote is required by law, the
investment adviser may enter into a sub-investment advisory contract
to receive investment advice and/or statistical and factual
information from the sub-investment adviser for such Series or Class
upon such terms and conditions and for such compensation as the
Trustees, in their discretion, may agree. Notwithstanding any
provisions of this Declaration of Trust, the Trustees may authorize
the investment adviser or sub-investment adviser or any person
furnishing administrative personnel and services as set forth in
Article VII, Section 2 (subject to such general or specific
instructions as the Trustees may from time to time adopt) to effect
purchases, sales or exchanges of portfolio securities belonging to a
Series or Class on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and
all without further action by the Trustees). Any such purchases,
sales and exchanges shall be deemed to have been authorized by the
Trustees. The Trustees may also authorize the investment adviser to
determine what firms shall be employed to effect transactions in
securities for the account of a Series or Class and to determine what
firms shall participate in any such transactions or shall share in
commissions or fees charged in connection with such transactions.
Section 2. Administrative Services. The Trustees may in their discretion
from time to time contract for administrative personnel and services
whereby the other party shall agree to provide the Trustees
administrative personnel and services to operate the Trust or a Series
or Class on a daily basis, on such terms and conditions as the
Trustees may in their discretion determine. Such services may be
provided by one or more entities.
Section 3. Principal Underwriter. The Trustees may in their discretion
from time to time enter into an exclusive or nonexclusive contract or
contracts providing for the sale of the Shares of a Series or Class to
net such Series or Class not less than the amount provided in Article
III, Section 3 hereof, whereby a Series or Class may either agree to
sell the Shares to the other party to the contract or appoint such
other party its sales agent for such shares. In either case, the
contract shall be on such terms and conditions (including
indemnification of Principal Underwriters allowable under applicable
law and regulation) as the Trustees may in their discretion determine
not inconsistent with the provisions of this Article VII; and such
contract may also provide for the repurchase or sale of Shares of a
Series or Class by such other party as principal or as agent of the
Trust and may provide that the other party may maintain a market for
shares of a Series or Class.
Section 4. Transfer Agent. The Trustees may in their discretion from
time to time enter into transfer agency and Shareholder services
contracts whereby the other party shall undertake to furnish transfer
agency and Shareholder services. The contracts shall be on such terms
and conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of
the By-Laws. Such services may be provided by one or more entities.
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. Subject to the provisions set forth in Article
III, Section 5(d), the Shareholders shall have power to vote, (i) for
the election of Trustees as provided in Article IV, Section 2; (ii)
for the removal of Trustees as provided in Article IV, Section 3(d);
(iii) with respect to any investment adviser or sub-investment adviser
as provided in Article VII, Section 1; (iv) with respect to the
amendment of this Declaration of Trust as provided in Article XII,
Section 7; and (v) with respect to such additional matters relating to
the Trust as may be required by law, by this Declaration of Trust, or
the By-Laws of the Trust or any regulation of the Trust or the
Securities and Exchange Commission or any State, or as the Trustees
may consider desirable. Each whole Share shall be entitled to one
vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote.
There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. A proxy with respect to
Shares held in the name of two or more persons shall be valid if
executed by any one of them unless at or prior to exercise of the
proxy the Trust receives a specific written notice to the contrary
from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or
prior to its exercise and the burden of proving invalidity shall rest
on the challenger. At all meetings of Shareholders, unless inspectors
of election have been appointed, all questions relating to the
qualification of votes and the validity of proxies and the acceptance
or rejection of votes shall be decided by the chairman of the meeting.
Unless otherwise specified in the proxy, the proxy shall apply to all
shares of the Trust (or each Series or Class) owned by the
Shareholder. Any proxy may be in written form, telephonic or
electronic form, including facsimile, and all such forms shall be
valid when in conformance with procedures established and implemented
by the officers of the Trust. Until Shares of a Series or Class are
issued, the Trustees may exercise all rights of Shareholders of such
Series or Class with respect to matters affecting such Series or
Class, and may take any action with respect to the Trust or such
Series or Class required or permitted by law, this Declaration of
Trust or any By-Laws of the Trust to be taken by Shareholders.
Section 2. Meetings. A Shareholders' meeting shall be held as specified
in Section 2 of Article IV at the principal office of the Trust or
such other place as the Trustees may designate. Special meetings of
the Shareholders may be called by the Trustees or the Chief Executive
Officer of the Trust and shall be called by the Trustees upon the
written request of Shareholders owning at least one-tenth of the
outstanding Shares of all Series and Classes entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any
meeting.
Section 3. Quorum and Required Vote. Except as otherwise provided by law,
the presence in person or by proxy of the holders of (a) one-half of
the Shares of the Trust on all matters requiring a Majority
Shareholder Vote, as defined in the Investment Company Act of 1940, or
(b) one-third of the Shares of the Trust on all other matters
permitted by law, in each case, entitled to vote without regard to
Class shall constitute a quorum at any meeting of the Shareholders,
except with respect to any matter which by law requires the separate
approval of one or more Series or Classes, in which case the presence
in person or by proxy of the holders of one-half or one-third, as set
forth above, of the Shares of each Series or Class entitled to vote
separately on the matter shall constitute a quorum. When any one or
more Series or Class is entitled to vote as a single Series or Class,
more than one-half, or one-third, as appropriate, of the Shares of
each such Series or Class entitled to vote shall constitute a quorum
at a Shareholders' meeting of that Series or Class. If a quorum shall
not be present for the purpose of any vote that may properly come
before the meeting, the Shares present in person or by proxy and
entitled to vote at such meeting on such matter may, by plurality
vote, adjourn the meeting from time to time to such place and time
without further notice than by announcement to be given at the meeting
until a quorum entitled to vote on such matter shall be present,
whereupon any such matter may be voted upon at the meeting as though
held when originally convened. Subject to any applicable requirement
of law or of this Declaration of Trust or the By-Laws, a plurality of
the votes cast shall elect a Trustee, and all other matters shall be
decided by a majority of the votes cast and entitled to vote thereon.
Section 4. Action by Written Consent. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders
may be taken without a meeting if a majority of Shareholders entitled
to vote on the matter (or such larger proportion thereof as shall be
required by applicable law or by any express provision of this
Declaration of Trust or the By-Laws) consents to the action in
writing. Such consents shall be treated for all purposes as a vote
taken at a meeting of Shareholders.
Section 5. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE IX
CUSTODIAN
The Trustees may, in their discretion, from time to time enter into
contracts providing for custodial and accounting services to the Trust
or any Series or Class. The contracts shall be on the terms and
conditions as the Trustees may in their discretion determine not
inconsistent with the provisions of this Declaration of Trust or of
the By-Laws. Such services may be provided by one or more entities,
including one or more sub-custodians.
ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions.
(a) The Trustees may from time to time declare and pay dividends to
the Shareholders of any Series or Class, and the amount of such
dividends and the payment of them shall be wholly in the
discretion of the Trustees. The frequency of dividends and
distributions to Shareholders may be determined by the Trustees
pursuant to a standing resolution, or otherwise. Such dividends
may be accrued and automatically reinvested in additional Shares
(or fractions thereof) of the relevant Series or Class or another
Series or Class, or paid in cash or additional Shares of the
relevant Series or Class, all upon such terms and conditions as
the Trustees may prescribe.
(b) The Trustees may distribute in respect of any fiscal year as
dividends and as capital gains distributions, respectively,
amounts sufficient to enable any Series or Class to qualify as a
regulated investment company and to avoid any liability for
federal income or excise taxes in respect of that year.
c) The decision of the Trustees as to what constitutes income and
what constitutes principal shall be final, and except as
specifically provided herein the decision of the Trustees as to
what expenses and charges of any Series or Class shall be charged
against principal and what against the income shall be final.
Any income not distributed in any year may be permitted to
accumulate and as long as not distributed may be invested from
time to time in the same manner as the principal funds of any
Series or Class.
(d) All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the holders of
that Series or Class in proportion to the number of Shares of
that Series or Class held by such holders and recorded on the
books of the Trust or its transfer agent at the date and time of
record established for that payment.
Section 2. Redemptions and Repurchases.
(a) In case any Shareholder of record of any Series or Class at
any time desires to dispose of Shares of such Series or Class
recorded in his name, he may deposit a written request (or such
other form of request as the Trustees may from time to time
authorize) requesting that the Trust purchase his Shares,
together with such other instruments or authorizations to effect
the transfer as the Trustees may from time to time require, at
the office of the transfer agent, or as otherwise provided by the
Trustees and the Trust shall purchase his Shares out of assets
belonging to such Series or Class. The purchase price shall be
the net asset value of his shares reduced by any redemption
charge or deferred sales charge as the Trustees from time to time
may determine.
Payment for such Shares shall be made by the Trust to the
Shareholder of record within that time period required under the
1940 Act after the request (and, if required, such other
instruments or authorizations of transfer) is received, subject
to the right of the Trustees to postpone the date of payment
pursuant to Section 4 of this Article X. If the redemption is
postponed beyond the date on which it would normally occur by
reason of a declaration by the Trustees suspending the right of
redemption pursuant to Section 4 of this Article X, the right of
the Shareholder to have his Shares purchased by the Trust shall
be similarly suspended, and he may withdraw his request (or such
other instruments or authorizations of transfer) from deposit if
he so elects; or, if he does not so elect, the purchase price
shall be the net asset value of his Shares determined next after
termination of such suspension (reduced by any redemption charge
or deferred sales charge), and payment therefor shall be made
within the time period required under the 1940 Act.
(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not
exceeding the net asset value per Share (reduced by any
redemption charge or deferred sales charge) determined (1) next
after the purchase or contract of purchase is made or (2) at some
later time.
(c) The Trust may pay the purchase price (reduced by any
redemption charge or deferred sales charge) in whole or in part
by a distribution in kind of securities from the portfolio of the
relevant Series or Class, taking such securities at the same
value employed in determining net asset value, and selecting the
securities in such manner as the Trustees may deem fair and
equitable.
Section 3. Net Asset Value of Shares. The net asset value of each Share
of a Series or Class outstanding shall be determined at such time or
times as may be determined by or on behalf of the Trustees. The power
and duty to determine net asset value may be delegated by the Trustees
from time to time to one or more of the Trustees or officers of the
Trust, to the other party to any contract entered into pursuant to
Section 1 or 2 of Article VII or to the custodian or to a transfer
agent or other person designated by the Trustees.
The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent)
obtained by dividing the value, as of such time, of the net assets
belonging to such Series or Class (i.e., the value of the assets
belonging to such Series or Class less the liabilities belonging to
such Series or Class exclusive of capital and surplus) by the total
number of Shares outstanding of the Series or Class at such time in
accordance with the requirements of the 1940 Act and applicable
provisions of the By-Laws of the Trust in conformity with generally
accepted accounting practices and principles.
The Trustees may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with
the 1940 Act.
Section 4. Suspension of the Right of Redemption. The Trustees may
declare a suspension of the right of redemption or postpone the date
of payment for the whole or any part of any period in accordance with
the 1940 Act.
Section 5. Trust's Right to Redeem Shares. The Trust shall have the right
to cause the redemption of Shares of any Series or Class in any
Shareholder's account for their then current net asset value and
promptly make payment to the shareholder (which payment may be reduced
by any applicable redemption charge or deferred sales charge), if (a)
at any time the total investment in the account does not have a
minimum dollar value determined from time to time by the Trustees in
their sole discretion, (b) at any time a Shareholder fails to furnish
certified Social Security or Tax Identification Numbers, or (c) at any
time the Trustees determine in their sole discretion that failure to
so redeem may have materially adverse consequences to the other
Shareholders or the Trust or any Series or Class thereof.
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Personal Liability and Indemnification of
Shareholders. The Trustees, officers, employees or agents of the
Trust shall have no power to bind any Shareholder of any Series or
Class personally or to call upon such Shareholder for the payment of
any sum of money or assessment whatsoever, other than such as the
Shareholder may at any time agree to pay by way of subscription for
any Shares or otherwise.
No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for
any debt, claim, action, demand, suit, proceeding, judgment, decree,
liability or obligation of any kind, against or with respect to the
Trust or any Series or Class arising out of any action taken or
omitted for or on behalf of the Trust or such Series or Class, and the
Trust or such Series or Class shall be solely liable therefor and
resort shall be had solely to the property of the relevant Series or
Class of the Trust for the payment or performance thereof.
Each Shareholder or former Shareholder of any Series or Class (or
their heirs, executors, administrators or other legal representatives
or, in case of a corporation or other entity, its corporate or other
general successor) shall be entitled to be held harmless from and
indemnified against to the full extent of such liability and the costs
of any litigation or other proceedings in which such liability shall
have been determined, including, without limitation, the fees and
disbursements of counsel if, contrary to the provisions hereof, such
Shareholder or former Shareholder of such Series or Class shall be
held to be personally liable. Such indemnification shall come
exclusively from the assets of the relevant Series or Class.
The Trust shall, upon request by a Shareholder or former Shareholder,
assume the defense of any claim made against any Shareholder for any
act or obligation of the Trust or any Series or Class and satisfy any
judgment thereon.
Section 2. Limitation of Personal Liability and Indemnification
of Trustees, Officers, Employees or Agents of the Trust. No Trustee,
officer, employee or agent of the Trust shall have the power to bind
any other Trustee, officer, employee or agent of the Trust personally.
The Trustees, officers, employees or agents of the Trust in incurring
any debts, liabilities or obligations, or in taking or omitting any
other actions for or in connection with the Trust, are, and each shall
be deemed to be, acting as Trustee, officer, employee or agent of the
Trust and not in his own individual capacity.
Trustees and officers of the Trust shall be liable for their willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee or officer, as
the case may be, and for nothing else.
Each person who is or was a Trustee, officer, employee or agent of the
Trust shall be entitled to indemnification out of the assets of the
Trust (or of any Series or Class) to the extent provided in, and
subject to the provisions of, the By-Laws, provided that no
indemnification shall be granted in contravention of the 1940 Act.
Section 3. Express Exculpatory Clauses and Instruments.
(a) All persons extending credit to, contracting with or having any
claim against the Trust or a particular Series or Class shall
only look to the assets of the Trust or the assets of that
particular Series or Class for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees,
nor any of the Trust's officers, employees or agents, whether
past, present or future, shall be liable therefor.
(b) The Trustees shall use every reasonable means to assure that all
persons having dealings with the Trust or any Series or Class
shall be informed that the property of the Shareholders and the
Trustees, officers, employees and agents of the Trust or any
Series or Class shall not be subject to claims against or
obligations of the Trust or any other Series or Class to any
extent whatsoever. The Trustees shall cause to be inserted in
any written agreement, undertaking or obligation made or issued
on behalf of the Trust or any Series or Class (including
certificates for Shares of any Series or Class) an appropriate
reference to the provisions of this Declaration of Trust,
providing that neither the Shareholders, the Trustees, the
officers, the employees nor any agent of the Trust or any Series
or Class shall be liable thereunder, and that the other parties
to such instrument shall look solely to the assets belonging to
the relevant Series or Class for the payment of any claim
thereunder or for the performance thereof; but the omission of
such provisions from any such instrument shall not render any
Shareholder, Trustee, officer, employee or agent liable, nor
shall the Trustee, or any officer, agent or employee of the Trust
or any Series or Class be liable to anyone for such omission.
If, notwithstanding this provision, any Shareholder, Trustee,
officer, employee or agent shall be held liable to any other
person by reason of the omission of such provision from any such
agreement, undertaking or obligation, the Shareholder, Trustee,
officer, employee or agent shall be indemnified and reimbursed by
the Trust.
ARTICLE XII
MISCELLANEOUS
Section 1. Trust is not a Partnership. It is hereby expressly declared
that a trust and not a partnership is created hereby.
Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety. The
exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. Subject to the provisions
of Article XI, the Trustees shall not be liable for errors of judgment
or mistakes of fact or law. The Trustees may take advice of counsel
or other experts with respect to the meaning and operation of this
Declaration of Trust, and subject to the provisions of Article XI,
shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall
not be required to give any bond as such, nor any surety if a bond is
required.
Section 3. Establishment of Record Dates. The Trustees may close the
Share transfer books of the Trust maintained with respect to any
Series or Class for a period not exceeding ninety (90) days preceding
the date of any meeting of Shareholders of the Trust or any Series or
Class, or the date for the payment of any dividend or the making of
any distribution to Shareholders, or the date for the allotment of
rights, or the date when any change or conversion or exchange of
Shares of any Series or Class shall go into effect or the last day on
which the consent or dissent of Shareholders of any Series or Class
may be effectively expressed for any purpose; or in lieu of closing
the Share transfer books as aforesaid, the Trustees may fix in advance
a date, not exceeding ninety (90) days preceding the date of any
meeting of Shareholders of the Trust or any Series or Class, or the
date for the payment of any dividend or the making of any distribution
to Shareholders of any Series or Class, or the date for the allotment
of rights, or the date when any change or conversion or exchange of
Shares of any Series or Class shall go into effect, or the last day on
which the consent or dissent of Shareholders of any Series or Class
may be effectively expressed for any purpose, as a record date for the
determination of the Shareholders entitled to notice of, and, to vote
at, any such meeting and any adjournment thereof, or entitled to
receive payment of any such dividend or distribution, or to any such
allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of shares, or to exercise the right to
give such consent or dissent, and in such case such Shareholders and
only such Shareholders as shall be Shareholders of record on the date
so fixed shall be entitled to such notice of, and to vote at, such
meeting, or to receive payment of such dividend or distribution, or to
receive such allotment or rights, or to change, convert or exchange
Shares of any Series or Class, or to exercise such rights, as the case
may be, notwithstanding, after such date fixed aforesaid, any transfer
of any Shares on the books of the Trust maintained with respect to any
Series or Class. Nothing in the foregoing sentence shall be construed
as precluding the Trustees from setting different record dates for
different Series or Classes.
Section 4. Termination of Trust.
(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraphs (b), (c) and (d) of this
Section 4.
(b) The Trustees may, by majority action, with the approval of a
Majority Shareholder Vote of each Series or Class entitled to
vote as determined by the Trustees under Section 5(d) of Article
III, sell and convey the assets of the Trust or any Series or
Class to another trust or corporation. Upon making provision for
the payment of all outstanding obligations, taxes and other
liabilities, accrued or contingent, belonging to each Series or
Class, the Trustees shall distribute the remaining assets
belonging to each Series or Class ratably among the holders of
the outstanding Shares of that Series or Class. The Trustees
shall make a good faith determination that a conveyance of a part
of the assets of a Series or Class is in the best interest of
Shareholders of the relevant Series or Class.
(c) The Trustees may at any time sell and convert into money all
the assets of the Trust or any Series or Class without
Shareholder approval, unless otherwise required by applicable
law. Upon making provision for the payment of all outstanding
obligations, taxes and other liabilities, accrued or contingent,
belonging to each Series or Class, the Trustees shall distribute
the remaining assets belonging to each Series or Class ratably
among the holders of the outstanding Shares of that Series or
Class.
(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b)
and (c), the Trust or the applicable Series or Class shall
terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder or with respect thereto
and the right, title and interest of all parties shall be
canceled and discharged.
Section 5. Offices of the Trust, Filing of Copies, Headings, Counterparts.
The Trust shall maintain a usual place of business in Massachusetts,
which, initially, shall be c/o Donnelly, Conroy & Gelhaar, One Post
Office Square, Boston, Massachusetts 02109-2105, and shall continue to
maintain an office at such address unless changed by the Trustees to
another location in Massachusetts. The Trust may maintain other
offices as the Trustees may from time to time determine. The original
or a copy of this instrument and of each declaration of trust
supplemental hereto shall be kept at the office of the Trust where it
may be inspected by any Shareholder. A copy of this instrument and of
each supplemental declaration of trust shall be filed by the Trustees
with the Massachusetts Secretary of State and the Boston City Clerk,
as well as any other governmental office where such filing may from
time to time be required. Headings are placed herein for convenience
of reference only and in case of any conflict, the text of this
instrument, rather than the headings shall control. This instrument
may be executed in any number of counterparts each of which shall be
deemed an original.
Section 6. Applicable Law. The Trust set forth in this instrument is
created under and is to be governed by and construed and administered
according to the laws of The Commonwealth of Massachusetts. The Trust
shall be of the type commonly called a Massachusetts business trust,
and without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust.
Section 7. Amendments -- General. All rights granted to the Shareholders
under this Declaration of Trust are granted subject to the reservation
of the right to amend this Declaration of Trust as herein provided,
except that no amendment shall repeal the limitations on personal
liability of any Shareholder or Trustee or repeal the prohibition of
assessment upon the Shareholders without the express consent of each
Shareholder or Trustee involved. Subject to the foregoing, the
provisions of this Declaration of Trust (whether or not related to the
rights of Shareholders) may be amended at any time, so long as such
amendment does not adversely affect the rights of any Shareholder with
respect to which such amendment is or purports to be applicable and so
long as such amendment is not in contravention of applicable law,
including the 1940 Act, by an instrument in writing signed by a
majority of the then Trustees (or by an officer of the Trust pursuant
to the vote of a majority of such Trustees). Any amendment to this
Declaration of Trust that adversely affects the rights of Shareholders
may be adopted at any time by an instrument signed in writing by a
majority of the then Trustees (or by any officer of the Trust pursuant
to the vote of a majority of such Trustees) when authorized to do so
by the vote of the Shareholders holding a majority of the Shares
entitled to vote. Subject to the foregoing, any such amendment shall
be effective as provided in the instrument containing the terms of
such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a
certificate (which may be a part of such instrument) executed by a
Trustee or officer to the effect that such amendment has been duly
adopted. Copies of the amendment to this Declaration of Trust shall
be filed as specified in Section 5 of this Article XII. A restated
Declaration of Trust, integrating into a single instrument all of the
provisions of the Declaration of Trust which are then in effect and
operative, may be executed from time to time by a majority of the
Trustees and shall be effective upon filing as specified in Section 5.
Section 8. Amendments -- Series and Classes. The establishment and
designation of any Series or Class of Shares in addition to those
established and designated in Section 5 of Article III hereof shall be
effective upon the execution by a majority of the then Trustees,
without the need for Shareholder approval, of an amendment to this
Declaration of Trust, taking the form of a complete restatement or
otherwise, setting forth such establishment and designation and the
relative rights and preferences of any such Series or Class, or as
otherwise provided in such instrument.
Without limiting the generality of the foregoing, the Declaration of
the Trust may be amended without the need for Shareholder approval to:
(a) create one or more Series or Classes of Shares (in addition
to any Series or Classes already existing or otherwise) with such
rights and preferences and such eligibility requirements for
investment therein as the Trustees shall determine and reclassify
any or all outstanding Shares as Shares of particular Series or
Classes in accordance with such eligibility requirements;
(b) combine two or more Series or Classes of Shares into a
single Series or Class on such terms and conditions as the
Trustees shall determine;
(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without
limitation the power to provide for the issue of Shares of any
Series or Class in connection with any merger or consolidation of
the Trust with another trust or company or any acquisition by the
Trust of part or all of the assets of another trust or company;
(d) change the designation of any Series or Class of Shares;
(e) change the method of allocating dividends among the various
Series and Classes of Shares;
(f) allocate any specific assets or liabilities of the Trust or
any specific items of income or expense of the Trust to one or
more Series and Classes of Shares; and
(g) specifically allocate assets to any or all Series or Classes
of Shares or create one or more additional Series or Classes of
Shares which are preferred over all other Series or Classes of
Shares in respect of assets specifically allocated thereto or any
dividends paid by the Trust with respect to any net income,
however determined, earned from the investment and reinvestment
of any assets so allocated or otherwise and provide for any
special voting or other rights with respect to such Series or
Classes.
Section 9. Use of Name. The Trust acknowledges that WesBanco Wheeling has
reserved the right to grant the non-exclusive use of the name "WesMark
Funds''or any derivative thereof to any other investment company,
investment company portfolio, investment adviser, distributor, or
other business enterprise, and to withdraw from the Trust or one or
more Series or Classes any right to the use of the name `WesMark
Funds".
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
day and year first above written.
/s/ John F. Donahue /s/ Edward L. Flaherty, Jr.
John F. Donahue Edward L. Flaherty, Jr.
/s/ Thomas G. Bigley /s/ Edward C. Gonzales
Thomas G. Bigley Edward C. Gonzales
/s/ John T. Conroy, Jr. /s/ Peter E. Madden
John T. Conroy, Jr. Peter E. Madden
/s/ William J. Copeland /s/ Gregor F. Meyer
William J. Copeland Gregor F. Meyer
/s/ James E. Dowd /s/ John E. Murray, Jr.
James E. Dowd John E. Murray, Jr.
/s/ Lawrence D. Ellis, M.D. /s/ Wesley W. Posvar
Lawrence D. Ellis, M.D. Wesley W. Posvar
/s/ Marjorie P. Smuts
Marjorie P. Smuts
COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )
I hereby certify that on FEBRUARY 29, 1996, before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County
of Allegheny, personally appeared JOHN F. DONAHUE, THOMAS G. BIGLEY,
JOHN T. CONROY, JR., WILLIAM J. COPELAND, JAMES E. DOWD, LAWRENCE D.
ELLIS, M.D., EDWARD L. FLAHERTY, JR., EDWARD C. GONZALES, PETER E.
MADDEN, GREGOR F. MEYER, JOHN E. MURRAY, JR., WESLEY W. POSVAR,
MARJORIE P. SMUTS who acknowledged the foregoing Declaration of Trust
to be their act.
Witness my hand and notarial seal the day and year above written.
/s/ Samuel C. Webb, Jr.
Notary Public
My Commission Expires November 22, 1999.
Exhibit 1(i) under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K
WESMARK FUNDS
Amendment No. 1
DECLARATION OF TRUST
dated February 29, 1996
This Declaration of Trust is amended as follows:
Strike the first paragraph of Section 5 of Article III from the
Declaration of Trust and substitute in its place the following:
"Section 5. Establishment and Designation of Series or Class.
Without limiting the authority of the Trustees set forth in
Article XII, Section 8, inter alia, to establish and designate
any additional Series or Class or to modify the rights and
preferences of any existing Series or Class, the Series of the
Trust are established and designated as:
WesMark West Virginia Municipal Bond Fund
WesMark Growth Fund''
The undersigned Assistant Secretary of WesMark Funds hereby
certifies that the above stated Amendment is a true and correct Amendment
to the Declaration of Trust, as adopted by the Board of Trustees on the
---
day of November, 1996.
WITNESS the due execution hereof this day of November, 1996.
---
C. Todd Gibson
Assistant Secretary
EXHIBIT 2 UNDER FORM N-1A
EXHIBIT 3(B) UNDER ITEM 601/REG. S-K
WESMARK FUNDS
BY-LAWS
TABLE OF CONTENTS
Page
ARTICLE I: OFFICERS AND THEIR ELECTION.................................1
Section 1 Officers...............................................1
Section 2 Election of Officers...................................1
Section 3 Resignations and Removals and Vacancies................1
ARTICLE II: POWERS AND DUTIES OF TRUSTEES AND OFFICERS..................1
Section 1 Trustees...............................................1
Section 2 Chairman of the Trustees ("Chairman") .................1
Section 3 President .............................................1
Section 4 Vice President ........................................2
Section 5 Secretary .............................................2
Section 6 Treasurer .............................................2
Section 7 Assistant Vice President ..............................2
Section 8 Assistant Secretaries and Assistant Treasurers ........2
Section 9 Salaries ..............................................2
ARTICLE III: POWERS AND DUTIES OF THE EXECUTIVE AND OTHER COMMITTEES...3
Section 1 Executive and Other Committees ........................3
Section 2 Vacancies in Executive Committee ......................3
Section 3 Executive Committee to Report to Trustees..............3
Section 4 Procedure of Executive Committee ......................3
Section 5 Powers of Executive Committee .........................3
Section 6 Compensation ..........................................3
Section 7 Action by Consent of the Board of Trustees, Executive
Committee
or Other Committee ...........................................3
ARTICLE IV: SHAREHOLDERS' MEETINGS.....................................4
Section 1 Special Meetings ......................................4
Section 2 Notices ...............................................4
Section 3 Place of Meeting ......................................4
Section 4 Action by Consent .....................................4
Section 5 Proxies ...............................................4
Page
ARTICLE V: TRUSTEES' MEETINGS.........................................4
Section 1 Number and Qualifications of Trustees ...............4
Section 2 Special Meetings ....................................5
Section 3 Regular Meetings ....................................5
Section 4 Quorum and Vote .....................................5
Section 5 Notices .............................................5
Section 6 Place of Meeting ....................................5
Section 7 Teleconference Meetings; Action by Consent ..........5
Section 8 Special Action ......................................5
Section 9 Compensation of Trustees ............................6
ARTICLE VI: SHARES....................................................6
Section 1 Certificates ..........................................6
Section 2 Transfer of Shares ....................................6
Section 3 Equitable Interest Not Recognized .....................6
Section 4 Lost, Destroyed or Mutilated Certificates..............6
Section 5 Transfer Agent and Registrar: Regulations..............7
ARTICLE VII: INSPECTION OF BOOKS.......................................7
ARTICLE VIII: AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC............7
Section 1 Agreements, Etc .......................................7
Section 2 Checks, Drafts, Etc ...................................7
Section 3 Endorsements, Assignments and Transfer of Securities ..7
Section 4 Evidence of Authority .................................8
ARTICLE IX: INDEMNIFICATION OF TRUSTEES AND OFFICERS...................8
Section 1 General ...............................................8
Section 2 Compromise Payment ....................................8
Section 3 Indemnification Not Exclusive; Definitions ............8
ARTICLE X: SEAL........................................................9
ARTICLE XI: FISCAL YEAR................................................9
ARTICLE XII: AMENDMENTS................................................9
Page
ARTICLE XIII: WAIVERS OF NOTICE........................................9
ARTICLE XIV: REPORT TO SHAREHOLDERS....................................9
ARTICLE XV: BOOKS AND RECORDS.........................................10
ARTICLE XVI: TERMS....................................................10
WESMARK FUNDS
BY-LAWS
ARTICLE I
OFFICERS AND THEIR ELECTION
Section 1. Officers. The officers of the Trust shall be elected by the
Board of Trustees, and shall be a President, one or more Vice
Presidents, a Treasurer, a Secretary and such other officers as the
Trustees may from time to time elect. The Board of Trustees, in its
discretion, may also elect a Chairman of the Board of Trustees (who
must be a Trustee). It shall not be necessary for any Trustee or
other officer to be a holder of shares in any Series or Class of the
Trust.
Section 2. Election of Officers. The President, Vice President(s),
Treasurer and Secretary shall be elected annually by the Trustees, and
serve until a successor is so elected and qualified, or until earlier
resignation or removal. The Chairman of the Trustees,if there is one,
shall be elected annually by and from the Trustees, and serve until a
successor is so elected and qualified, or until earlier resignation or
removal.
Two or more offices may be held by a single person except the offices
of President and Secretary. The officers shall hold office until
their successors are elected and qualified.
Section 3. Resignations and Removals and Vacancies. Any officer of the
Trust may resign by filing a written resignation with the President
(or Chairman, if there is one) of the Trustees or with the Trustees or
with the Secretary, which shall take effect on being so filed or at
such time as may be therein specified. The Trustees may remove any
officer, with or without cause, by a majority vote of all of the
Trustees. The Trustees may fill any vacancy created in any office
whether by resignation, removal or otherwise, subject to the
limitations of the Investment Company Act of 1940.
ARTICLE II
POWERS AND DUTIES OF TRUSTEES AND OFFICERS
Section 1. Trustees. The business and affairs of the Trust shall be
managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility.
Section 2. Chairman of the Trustees ("Chairman"). The Chairman, if there
be a Chairman, shall preside at the meetings of Shareholders and of
the Board of Trustees. He shall have general supervision over the
business of the Trust and policies of the Trust. He shall employ and
define the duties of all employees of the Trust, shall have power to
discharge any such employees, shall exercise general supervision over
the affairs of the Trust and shall perform such other duties as may be
assigned to him from time to time by the Trustees. The Chairman shall
appoint a Trustee or officer to preside at such meetings in his
absence.
Section 3. President. The President shall be the chief executive officer
of the Trust. The President, in the absence of the Chairman, or if
there is no Chairman, shall perform all duties and may exercise any
of the powers of the Chairman subject to the control of the Trustees.
He shall counsel and advise the Chairman and shall perform such other
duties as may be assigned to him from time to time by the Trustees,
the Chairman or the Executive Committee. The President shall have the
power to appoint one or more Assistant Secretaries or other junior
officers, subject to ratification of such appointments by the Board.
The President shall have the power to sign, in the name of and on
behalf of the Trust, powers of attorney, proxies, waivers of notice of
meeting, consents and other instruments relating to securities or
other property owned by the Trust, and may, in the name of and on
behalf of the Trust, take all such action as the President may deem
advisable in entering into agreements to purchase securities or other
property in the ordinary course of business, and to sign
representation letters in the course of buying securities or other
property.
Section 4. Vice President. The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform
all duties and may exercise any of the powers of the President subject
to the control of the Trustees. Each Vice President shall perform
such other duties as may be assigned to him from time to time by the
Trustees, the Chairman, the President, or the Executive Committee.
Each Vice President shall be authorized to sign documents on behalf of
the Trust. The Vice President shall have the power to sign, in the
name of and on behalf of the Trust and subject to Article VIII,
Section 1, powers of attorney, proxies, waivers of notice of meeting,
consents and other instruments relating to securities or other
property owned by the Trust, and may, in the name of and on behalf of
the Trust, take all such action as the Vice President may deem
advisable in entering into agreements to purchase securities or other
property in the ordinary course of business, and to sign
representation letters in the course of buying securities or other
property.
Section 5. Secretary. The Secretary shall keep or cause to be kept in
books provided for that purpose the Minutes of the Meetings of
Shareholders and of the Trustees; shall see that all Notices are duly
given in accordance with the provisions of these By-Laws and as
required by law; shall be custodian of the records and of the Seal of
the Trust (if there be a Seal) and see that the Seal is affixed to all
documents, the execution of which on behalf of the Trust under its
Seal is duly authorized; shall keep directly or through a transfer
agent a register of the post office address of each shareholder of
each Series or Class of the Trust, and make all proper changes in such
register, retaining and filing his authority for such entries; shall
see that the books, reports, statements, certificates and all other
documents and records required by law are properly kept and filed; and
in general shall perform all duties incident to the Office of
Secretary and such other duties as may from time to time be assigned
to him by the Trustees, Chairman, the President, or the Executive
Committee.
Section 6. Treasurer. The Treasurer shall be the principal financial and
accounting officer of the Trust responsible for the preparation and
maintenance of the financial books and records of the Trust. He shall
deliver all funds and securities belonging to any Series or Class to
such custodian or sub-custodian as may be employed by the Trust for
any Series or Class. The Treasurer shall perform such duties
additional to the foregoing as the Trustees, Chairman, the President
or the Executive Committee may from time to time designate.
Section 7. Assistant Vice President. The Assistant Vice President or
Vice Presidents of the Trust shall have such authority and perform
such duties as may be assigned to them by the Trustees, the Executive
Committee, the President, or the Chairman.
Section 8. Assistant Secretaries and Assistant Treasurers. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers
shall perform the duties of the Secretary and of the Treasurer,
respectively, in the absence of those Officers and shall have such
further powers and perform such other duties as may be assigned to
them respectively by the Trustees or the Executive Committee, the
President, or the Chairman.
Section 9. Salaries. The salaries of the Officers shall be fixed from
time to time by the Trustees. No officer shall be prevented from
receiving such salary by reason of the fact that he is also a Trustee.
ARTICLE III
POWERS AND DUTIES OF THE EXECUTIVE AND OTHER COMMITTEES
Section 1. Executive and Other Committees. The Trustees may elect from
their own number an Executive Committee to consist of not less than
two members. The Executive Committee shall be elected by a resolution
passed by a vote of at least a majority of the Trustees then in
office. The Trustees may also elect from their own number other
committees from time to time, the number composing such committees and
the powers conferred upon the same to be determined by vote of the
Trustees. Any committee may make rules for the conduct of its
business.
Section 2. Vacancies in Executive Committee. Vacancies occurring in the
Executive Committee from any cause shall be filled by the Trustees by
a resolution passed by the vote of at least a majority of the Trustees
then in office.
Section 3. Executive Committee to Report to Trustees. All action by the
Executive Committee shall be reported to the Trustees at their meeting
next succeeding such action.
Section 4. Procedure of Executive Committee. The Executive Committee
shall fix its own rules of procedure not inconsistent with these By-
Laws or with any directions of the Trustees. It shall meet at such
times and places and upon such notice as shall be provided by such
rules or by resolution of the Trustees. The presence of a majority
shall constitute a quorum for the transaction of business, and in
every case an affirmative vote of a majority of all the members of the
Committee present shall be necessary for the taking of any action.
Section 5. Powers of Executive Committee. During the intervals between
the Meetings of the Trustees, the Executive Committee, except as
limited by the By-Laws of the Trust or by specific directions of the
Trustees, shall possess and may exercise all the powers of the
Trustees in the management and direction of the business and conduct
of the affairs of the Trust in such manner as the Executive Committee
shall deem to be in the best interests of the Trust, and shall have
power to authorize the Seal of the Trust (if there is one) to be
affixed to all instruments and documents requiring same.
Notwithstanding the foregoing, the Executive Committee shall not have
the power to elect or remove Trustees, increase or decrease the number
of Trustees, elect or remove any Officer, declare dividends, issue
shares or recommend to shareholders any action requiring shareholder
approval.
Section 6. Compensation. The members of any duly appointed committee
shall receive such compensation and/or fees as from time to time may
be fixed by the Trustees.
Section 7. Action by Consent of the Board of Trustees, Executive
Committee or Other Committee. Subject to Article V, Section 2 of
these By-Laws, any action required or permitted to be taken at any
meeting of the Trustees, Executive Committee or any other duly
appointed Committee may be taken without a meeting if consents in
writing setting forth such action are signed by all members of the
Board or such committee and such consents are filed with the records
of the Trust. In the event of the death, removal, resignation or
incapacity of any Board or committee member prior to that Trustee
signing such consent, the remaining Board or committee members may re-
constitute themselves as the entire Board or committee until such time
as the vacancy is filled in order to fulfill the requirement that such
consents be signed by all members of the Board or committee.
ARTICLE IV
SHAREHOLDERS' MEETINGS
Section 1. Special Meetings. A special meeting of the shareholders of the
Trust or of a particular Series or Class shall be called by the
Secretary whenever ordered by the Trustees, the Chairman or requested
in writing by the holder or holders of at least one-tenth of the
outstanding shares of the Trust or of the relevant Series or Class,
entitled to vote. If the Secretary, when so ordered or requested,
refuses or neglects for more than two days to call such special
meeting, the Trustees, Chairman or the shareholders so requesting may,
in the name of the Secretary, call the meeting by giving notice
thereof in the manner required when notice is given by the Secretary.
Section 2. Notices. Except as above provided, notices of any special
meeting of the shareholders of the Trust or a particular Series or
Class, shall be given by the Secretary by delivering or mailing,
postage prepaid, to each shareholder entitled to vote at said meeting,
a written or printed notification of such meeting, at least seven
business days before the meeting, to such address as may be registered
with the Trust by the shareholder. No notice of any meeting to
shareholders need be given to a shareholder if a written waiver of
notice, executed before or after the meeting by such shareholder or
his or her attorney that is duly authorized, is filed with the records
of the meeting. Notice may be waived as provided in Article XIII of
these By-Laws.
Section 3. Place of Meeting. Meetings of the shareholders of the Trust or
a particular Series or Class, shall be held at the principal place of
business of the Trust in Pittsburgh, Pennsylvania, or at such place
within or without The Commonwealth of Massachusetts as fixed from time
to time by resolution of the Trustees.
Section 4. Action by Consent. Any action required or permitted to be
taken at any meeting of shareholders may be taken without a meeting,
if a consent in writing, setting forth such action, is signed by a
majority of the shareholders entitled to vote on the subject matter
thereof, and such consent is filed with the records of the Trust.
Section 5. Proxies. Any shareholder entitled to vote at any meeting of
shareholders may vote either in person, by telephone, by electronic
means including facsimile, or by proxy. Every written proxy shall be
subscribed by the shareholder or his duly authorized attorney and
dated, but need not be sealed, witnessed or acknowledged. All proxies
shall be filed with and verified by the Secretary or an Assistant
Secretary of the Trust or, the person acting as Secretary of the
Meeting.
ARTICLE V
TRUSTEES' MEETINGS
Section 1. Number and Qualifications of Trustees. The number of Trustees
can be changed from time to time by a majority of the Trustees to not
less than three nor more than twenty. The term of office of a Trustee
shall not be affected by any decrease in the number of Trustees made
by the Trustees pursuant to the foregoing authorization. Each Trustee
shall hold office for the life of the Trust, or as otherwise provided
in the Declaration of Trust.
Section 2. Special Meetings. Special meetings of the Trustees shall be
called by the Secretary at the written request of the Chairman, the
President, or any Trustee, and if the Secretary when so requested
refuses or fails for more than twenty-four hours to call such meeting,
the Chairman, the President, or such Trustee may in the name of the
Secretary call such meeting by giving due notice in the manner
required when notice is given by the Secretary.
Section 3. Regular Meetings. Regular meetings of the Trustees may be held
without call or notice at such places and at such times as the
Trustees may from time to time determine, provided that any Trustee
who is absent when such determination is made shall be given notice of
the determination.
Section 4. Quorum and Vote. A majority of the Trustees shall constitute a
quorum for the transaction of business. The act of a majority of the
Trustees present at any meeting at which a quorum is present shall be
the act of the Trustees unless a greater proportion is required by the
Declaration of Trust or these By-Laws or applicable law. In the
absence of a quorum, a majority of the Trustees present may adjourn
the meeting from time to time until a quorum shall be present. Notice
of any adjourned meeting need not be given.
Section 5. Notices. The Secretary or any Assistant Secretary shall give,
at least two days before the meeting, notice of each meeting of the
Board of Trustees, whether Annual, Regular or Special, to each member
of the Board by mail, telegram, telephone or electronic facsimile to
his last known address. It shall not be necessary to state the
purpose or business to be transacted in the notice of any meeting
unless otherwise required by law. Personal attendance at any meeting
by a Trustee other than to protest the validity of said meeting shall
constitute a waiver of the foregoing requirement of notice. In
addition, notice of a meeting need not be given if a written waiver of
notice executed by such Trustee before or after the meeting is filed
with the records of the meeting.
Section 6. Place of Meeting. Meetings of the Trustees shall be held at
the principal place of business of the Trust in Pittsburgh,
Pennsylvania, or at such place within or without The Commonwealth of
Massachusetts as fixed from time to time by resolution of the
Trustees, or as the person or persons requesting said meeting to be
called may designate, but any meeting may adjourn to any other place.
Section 7. Teleconference Meetings; Action by Consent. Except as
otherwise provided herein or from time to time in the 1940 Act or in
the Declaration of Trust, any action to be taken by the Trustees may
be taken by a majority of the Trustees within or without
Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all
persons participating in the meeting can communicate with each other
simultaneously, and participation by such means shall constitute
presence in person at a meeting. Any action by the Trustees may be
taken without a meeting if a written consent thereto is signed by all
the Trustees and filed with the records of the Trustees' meetings.
Such consent shall be treated as a vote of the Trustees for all
purposes.Written consents may be executed in counterparts, which when
taken together, constitute a validly executed consent of the Trustees.
Section 8. Special Action. When all the Trustees shall be present at any
meeting, however called, or whenever held, or shall assent to the
holding of the meeting without notice, or after the meeting shall sign
a written assent thereto on the record of such meeting, the acts of
such meeting shall be valid as if such meeting had been regularly
held.
Section 9. Compensation of Trustees. The Trustees may receive a stated
salary for their services as Trustees, and by resolution of Trustees a
fixed fee and expenses of attendance may be allowed for attendance at
each Meeting. Nothing herein contained shall be construed to preclude
any Trustee from serving the Trust in any other capacity, as an
officer, agent or otherwise, and receiving compensation therefor.
ARTICLE VI
SHARES
Section 1. Certificates. If certificates for shares are issued, all
certificates for shares shall be signed by the Chairman, President or
any Vice President and by the Treasurer or Secretary or any Assistant
Treasurer or Assistant Secretary and sealed with the seal of the
Trust, if the Trust has a seal. The signatures may be either manual
or facsimile signatures and the seal, if there is one, may be either
facsimile or any other form of seal. Certificates for shares for
which the Trust has appointed an independent Transfer Agent and
Registrar shall not be valid unless countersigned by such Transfer
Agent and registered by such Registrar. In case any officer who has
signed any certificate ceases to be an officer of the Trust before the
certificate is issued, the certificate may nevertheless be issued by
the Trust with the same effect as if the officer had not ceased to be
such officer as of the date of its issuance. Share certificates of
each Series or Class shall be in such form not inconsistent with law
or the Declaration of Trust or these By-Laws as may be determined by
the Trustees.
Section 2. Transfer of Shares. The shares of each Series and Class of the
Trust shall be transferable, so as to affect the rights of the Trust
or any Series or Class, only by transfer recorded on the books of the
Trust or its transfer agent, in person or by attorney.
Section 3. Equitable Interest Not Recognized. The Trust shall be entitled
to treat the holder of record of any share or shares of a Series or
Class as the absolute owner thereof and shall not be bound to
recognize any equitable or other claim or interest in such share or
shares of a Series or Class on the part of any other person except as
may be otherwise expressly provided by law.
Section 4. Lost, Destroyed or Mutilated Certificates. In case any
certificate for shares is lost, mutilated or destroyed, the Trustees
may issue a new certificate in place thereof upon indemnity to the
relevant Series or Class against loss and upon such other terms and
conditions as the Trustees may deem advisable.
Section 5. Transfer Agent and Registrar: Regulations. The Trustees shall
have power and authority to make all such rules and regulations as
they may deem expedient concerning the issuance, transfer and
registration of certificates for shares and may appoint a Transfer
Agent and/or Registrar of certificates for shares of each Series or
Class, and may require all such share certificates to bear the
signature of such Transfer Agent and/or of such Registrar.
ARTICLE VII
INSPECTION OF BOOKS
The Trustees shall from time to time determine whether and to what extent,
and at what times and places, and under what conditions and
regulations the accounts and books of the Trust maintained on behalf
of each Series and Class or any of them shall be open to the
inspection of the shareholders of any Series or Class; and no
shareholder shall have any right of inspecting any account or book or
document of the Trust except that, to the extent such account or book
or document relates to the Series or Class in which he is a
Shareholder or the Trust generally, such Shareholder shall have such
right of inspection as conferred by laws or authorized by the Trustees
or by resolution of the Shareholders of the relevant Series or Class.
ARTICLE VIII
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.
Section 1. Agreements, Etc. The Trustees or the Executive Committee may
authorize any Officer or Agent of the Trust to enter into any
Agreement or execute and deliver any instrument in the name of the
Trust on behalf of any Series or Class, and such authority may be
general or confined to specific instances; and, unless so authorized
by the Trustees or by the Executive Committee or by the Declaration of
Trust or these By-Laws, no Officer, Agent or Employee shall have any
power or authority to bind the Trust by any Agreement or engagement or
to pledge its credit or to render it liable pecuniarily for any
purpose or for any amount.
Section 2. Checks, Drafts, Etc. All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be
signed by such Officers, Employees, or Agents, as shall from time to
time be designated by the Trustees or the Executive Committee, or as
may be specified in or pursuant to the agreement between the Trust on
behalf of any Series or Class and the custodian appointed, pursuant to
the provisions of the Declaration of Trust.
Section 3. Endorsements, Assignments and Transfer of Securities. All
endorsements, assignments, stock powers, other instruments of transfer
or directions for the transfer of portfolio securities or other
property, whether or not registered in nominee form, shall be made by
such Officers, Employees, or Agents as may be authorized by the
Trustees or the Executive Committee.
Section 4. Evidence of Authority. Anyone dealing with the Trust shall be
fully justified in relying on a copy of a resolution of the Trustees
or of any committee thereof empowered to act in the premises which is
certified as true by the Secretary or an Assistant Secretary under the
seal of the Trust.
ARTICLE IX
INDEMNIFICATION OF TRUSTEES AND OFFICERS
Section 1. General. The Trust shall indemnify each of its Trustees and
officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or otherwise)
(hereinafter referred to as a "Covered Person") against all
liabilities and expenses, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties,
and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or
other proceeding, whether civil, criminal, administrative, or
investigative, and any appeal therefrom, before any court or
administrative or legislative body, in which such Covered Person may
be or may have been involved as a party or otherwise or with which
such person may be or may have been threatened, while in office or
thereafter, by reason of being or having been such a Covered Person,
except that no Covered Person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such Covered Person's office.
Expenses, including counsel fees so incurred by any such Covered
Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalities), may be paid from time to time
by the Trust in advance of the final disposition of any such action,
suit or proceeding upon receipt of an undertaking by or on behalf of
such Covered Person to repay amounts so paid to the Trust if it is
ultimately determined that indemnification of such expenses is not
authorized under this Article, provided that (a) such Covered Person
shall provide security for his undertaking, (b) the Trust shall be
insured against losses arising by reason of such Covered Person's
failure to fulfill his undertaking or (c) a majority of the non-party
Trustees who are not interested persons of the Trust (provided that a
majority of such Trustees then in office act on the matter), or
independent legal counsel in a written opinion, shall determine, based
on a review of readily available facts (but not a full trial-type
inquiry), that there is reason to believe such Covered Person
ultimately will be entitled to indemnification.
Section 2. Compromise Payment. As to any matter disposed of (whether by a
compromise payment, pursuant to a consent decree or otherwise) without
an adjudication in a decision on the merits by a court, or by any
other body before which the proceeding was brought, that such Covered
Person is liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disreagrd of the
duties involved in the conduct of such Covered Person's office,
indemnification shall be provided if (a) approved as in the best
interest of the Trust, after notice that it involves such
indemnification, by at least a majority of non-party Trustees who are
not interested persons of the Trust (provided that a majority of such
Trustees then in office act on the matter), upon a determination,
based upon a review of readily available facts (but not a full trial-
type inquiry) that such Covered Person is not liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct
of such Covered Person's office, or (b) there has been obtained an
opinion in writing of independent legal counsel, based upon a review
of readily available facts (but not a full trial-type inquiry) to the
effect that such indemnification would not protect such Covered Person
against any liability to the Trust to which such Covered Person would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Any approval pursuant to this Section shall not prevent the recovery
from any Covered Person of any amount paid to such Covered Person in
accordance with this Section as indemnification if such Covered Person
is subsequently adjudicated by a court of competent jurisdiction to
have been liabile to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved inthe conduct of such Covered Person's office.
Section 3. Indemnification Not Exclusive; Definitions. The right of
indemnification hereby provided shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As
used in this Article IX, the term "Covered Person" shall include such
person's heirs, executors and administrators. For purposes of this
Article IX, the term "non-party Trustee" is a Trustee against whom
none of the actions, suits or other proceedings in question or another
action, suit or other proceeding on the same or similar grounds is
then or has been pending. Nothing contained in this Article IX shall
affect any rights to indemnification to which personnel of the Trust,
other than Trustees and officers, and other persons may be entitled by
contract or otherwise under law, nor the power of the Trust to
purchase and maintain liability insurance on behalf of such persons.
ARTICLE X
SEAL
The seal of the Trust, if there is one, shall consist either of a flat-
faced die with the word "Massachusetts", together with the name of the
Trust and the year of its organization cut or engraved thereon, or any
other indication that the Trust has a seal that has been approved by
the Trustees, but, unless otherwise required by the Trustees, the seal
shall not be necessary to be placed on, and its absence shall not
impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE XI
FISCAL YEAR
The fiscal year of the Trust and each Series or Class shall be as
designated from time to time by the Trustees.
ARTICLE XII
AMENDMENTS
These By-Laws may be amended by a majority vote of all of the Trustees.
ARTICLE XIII
WAIVERS OF NOTICE
Whenever any notice whatever is required to be given under the provisions
of any statute of The Commonwealth of Massachusetts, or under the
provisons of the Declaration of Trust or these By-Laws, a waiver
thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, or presence
at a meeting to which such person was entitled notice of, shall be
deemed equivalent thereto. A notice shall be deemed to have been
given if telegraphed, cabled, or sent by wireless when it has been
delivered to a representative of any telegraph, cable or wireless
company with instructions that it be telegraphed, cabled, or sent by
wireless. Any notice shall be deemed to be given if mailed at the
time when the same shall be deposited in the mail.
ARTICLE XIV
REPORT TO SHAREHOLDERS
The Trustees, so long as required by applicable law, shall at least semi-
annually submit to the shareholders of each Series or Class a written
financial report of the transactions of that Series or Class including
financial statements which shall at least annually be certified by
independent public accountants.
ARTICLE XV
BOOKS AND RECORDS
The books and records of the Trust and any Series or Class, including the
stock ledger or ledgers, may be kept in or outside the Commonwealth of
Massachusetts at such office or agency of the Trust as may from time
to time be determined by the Secretary of the Trust, as set forth in
Article II, Section 5 of these By-Laws.
ARTICLE XVI
TERMS
Terms defined in the Declaration of Trust and not otherwise defined herein
are used herein with the meanings set forth or referred to in the
Declaration of Trust.
Exhibit 5 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
WESMARK FUNDS
INVESTMENT ADVISORY CONTRACT
This Contract is made this 1st day of March, 1996, between WesBanco
Bank Wheeling, a state-chartered bank having its principal place of
business in Wheeling, West Virginia (the "Adviser"), and WesMark Funds, a
Massachusetts business trust having its principal place of business in
Pittsburgh, Pennsylvania (the `Trust'').
WHEREAS the Trust is an open-end management investment company as that
term is defined in the Investment Company Act of 1940, as amended, and
is registered as such with the Securities and Exchange Commission; and
WHEREAS Adviser is engaged in the business of rendering investment
advisory and management services.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Trust hereby appoints Adviser as Investment Adviser for each
of the portfolios ("Funds") of the Trust which executes an exhibit to this
Contract, and Adviser accepts the appointments. Subject to the direction of
the Trustees of the Trust, Adviser shall provide investment research and
supervision of the investments of the Funds and conduct a continuous
program of investment evaluation and of appropriate sale or other
disposition and reinvestment of each Fund's assets.
2. Adviser, in its supervision of the investments of each of the
Funds will be guided by each of the Fund's investment objective and
policies and the provisions and restrictions contained in the Declaration
of Trust and By-Laws of the Trust and as set forth in the Registration
Statements and exhibits as may be on file with the Securities and Exchange
Commission.
3. Each Fund shall pay or cause to be paid all of its own expenses
and its allocable share of Trust expenses, including, without limitation,
the expenses of organizing the Trust and continuing its existence; fees and
expenses of Trustees and officers of the Trust; fees for investment
advisory services and administrative personnel and services; expenses
incurred in the distribution of its shares ("Shares"), including expenses
of administrative support services; fees and expenses of preparing and
printing its Registration Statements under the Securities Act of 1933 and
the Investment Company Act of 1940, as amended, and any amendments thereto;
expenses of registering and qualifying the Trust, the Funds, and Shares of
the Funds under federal and state laws and regulations; expenses of
preparing, printing, and distributing prospectuses (and any amendments
thereto) to shareholders; interest expense, taxes, fees, and commissions of
every kind; expenses of issue (including cost of Share certificates),
purchase, repurchase, and redemption of Shares, including expenses
attributable to a program of periodic issue; charges and expenses of
custodians, transfer agents, dividend disbursing agents, shareholder
servicing agents, and registrars; printing and mailing costs, auditing,
accounting, and legal expenses; reports to shareholders and governmental
officers and commissions; expenses of meetings of Trustees and shareholders
and proxy solicitations therefor; insurance expenses; association
membership dues and such nonrecurring items as may arise, including all
losses and liabilities incurred in administering the Trust and the Funds.
Each Fund will also pay its allocable share of such extraordinary expenses
as may arise including expenses incurred in connection with litigation,
proceedings, and claims and the legal obligations of the Trust to indemnify
its officers and Trustees and agents with respect thereto.
4. Each of the Funds shall pay to Adviser, for all services rendered
to each Fund by Adviser hereunder, the fees set forth in the exhibits
attached hereto.
5. The net asset value of each Fund's Shares as used herein will be
calculated to the nearest 1/10th of one cent.
6. The Adviser may from time to time and for such periods as it
deems appropriate reduce its compensation (and, if appropriate, assume
expenses of one or more of the Funds) to the extent that any Fund's
expenses exceed such lower expense limitation as the Adviser may, by notice
to the Fund, voluntarily declare to be effective.
7. This Contract shall begin for each Fund as of the date of
execution of the applicable exhibit and shall continue in effect with
respect to each Fund presently set forth on an exhibit (and any subsequent
Funds added pursuant to an exhibit during the initial term of this
Contract) for two years from the date of this Contract set forth above and
thereafter for successive periods of one year, subject to the provisions
for termination and all of the other terms and conditions hereof if: (a)
such continuation shall be specifically approved at least annually by the
vote of a majority of the Trustees of the Trust, including a majority of
the Trustees who are not parties to this Contract or interested persons of
any such party cast in person at a meeting called for that purpose; and (b)
Adviser shall not have notified a Fund in writing at least sixty (60) days
prior to the anniversary date of this Contract in any year thereafter that
it does not desire such continuation with respect to that Fund. If a Fund
is added after the first approval by the Trustees as described above, this
Contract will be effective as to that Fund upon execution of the applicable
exhibit and will continue in effect until the next annual approval of this
Contract by the Trustees and thereafter for successive periods of one year,
subject to approval as described above.
8. Notwithstanding any provision in this Contract, it may be
terminated at any time with respect to any Fund, without the payment of any
penalty, by the Trustees of the Trust or by a vote of the shareholders of
that Fund on sixty (60) days' written notice to Adviser.
9. This Contract may not be assigned by Adviser and shall
automatically terminate in the event of any assignment. Adviser may employ
or contract with such other person, persons, corporation, or corporations
at its own cost and expense as it shall determine in order to assist it in
carrying out this Contract.
10. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties under this
Contract on the part of Adviser, Adviser shall not be liable to the Trust
or to any of the Funds or to any shareholder for any act or omission in the
course of or connected in any way with rendering services or for any losses
that may be sustained in the purchase, holding, or sale of any security.
11. This Contract may be amended at any time by agreement of the
parties provided that the amendment shall be approved both by the vote of a
majority of the Trustees of the Trust, including a majority of the Trustees
who are not parties to this Contract or interested persons of any such
party to this Contract (other than as Trustees of the Trust) cast in person
at a meeting called for that purpose, and, where required by Section
15(a)(2) of the Act, on behalf of a Fund by a majority of the outstanding
voting securities of such Fund as defined in Section 2(a)(42) of the Act.
12. The Adviser acknowledges that all sales literature for investment
companies (such as the Trust) are subject to strict regulatory oversight.
The Adviser agrees to submit any proposed sales literature for the Trust
(or any Fund) or for itself or its affiliates which mentions the Trust (or
any Fund) to the Trust's distributor for review and filing with the
appropriate regulatory authorities prior to the public release of any such
sales literature, provided, however, that nothing herein shall be construed
so as to create any obligation or duty on the part of the Adviser to
produce sales literature for the Trust (or any Fund). The Trust agrees to
cause its distributor to promptly review all such sales literature to
ensure compliance with relevant requirements, to promptly advise Adviser of
any deficiencies contained in such sales literature, to promptly file
complying sales literature with the relevant authorities, and to cause such
sales literature to be distributed to prospective investors in the Trust.
13. Adviser is hereby expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
that the obligations pursuant to this Contract of a particular Fund and of
the Trust with respect to that particular Fund be limited solely to the
assets of that particular Fund, and Adviser shall not seek satisfaction of
any such obligation from any other Fund, the shareholders of any Fund, the
Trustees, officers, employees or agents of the Trust, or any of them.
14. The parties hereto acknowledge that WesBanco Bank Wheeling, has
reserved the right to grant the non-exclusive use of the name "WesMark
Funds" or any derivative thereof to any other investment company,
investment company portfolio, investment adviser, distributor or other
business enterprise, and to withdraw from the Trust and one or more of the
Funds the use of the name "WesMark Funds". The name "WesMark Funds" will
continue to be used by the Trust and each Fund so long as such use is
mutually agreeable to WesBanco Bank Wheeling and the Trust.
15. This Contract shall be construed in accordance with and governed
by the laws of the Commonwealth of Pennsylvania.
16. This Contract will become binding on the parties hereto upon
their execution of the attached exhibits to this Contract.
EXHIBIT A
to the
Investment Advisory Contract
WESMARK WEST VIRGINIA MUNCIPAL BOND FUND
For all services rendered by Adviser hereunder, the above-named Fund
of the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .60 of 1% of the average daily net assets of the
Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .60 of 1% of 1%
applied to the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser monthly.
Witness the due execution hereof this 1st day of March, 1996.
Attest: WESBANCO BANK WHEELING
/s/ Thomas B. McGaughy By: /s/ Jerome B. Schmitt
Asst. Secretary Executive Vice President
Attest: WESMARK FUNDS
/s/ S. Elliott Cohan By: /s/ Richard B. Fisher
Assistant Secretary Vice President
Exhibit 5(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
EXHIBIT B
to the
Investment Advisory Contract
WESMARK GROWTH FUND
For all services rendered by Adviser hereunder, the above-named Fund
of the Trust shall pay to Adviser and Adviser agrees to accept as full
compensation for all services rendered hereunder, an annual investment
advisory fee equal to .75 of 1% of the average daily net assets of the
Fund.
The portion of the fee based upon the average daily net assets of the
Fund shall be accrued daily at the rate of 1/365th of .75 of 1% applied to
the daily net assets of the Fund.
The advisory fee so accrued shall be paid to Adviser monthly.
Witness the due execution hereof this 1st day of December, 1996.
Attest: WESBANCO BANK WHEELING
By:
Secretary Executive Vice President
Attest: WESMARK FUNDS
By:
Assistant Secretary Vice President
EXHIBIT 6 UNDER FORM N-1A
EXHIBIT 1 UNDER ITEM 601/REG. S-K
WESMARK FUNDS
DISTRIBUTOR'S CONTRACT
AGREEMENT made this March 1, 1996 by and between WesMark Funds (the
"Trust"), a Massachusetts business trust, and EDGEWOOD SERVICES, INC.
(`ESI''), a New York Corporation.
In consideration of the mutual covenants hereinafter contained, it
is hereby agreed by and between the parties hereto as follows:
1. The Trust hereby appoints ESI as its agent to sell and distribute
shares of the Trust which may be offered in one or more series (the
"Funds") consisting of one or more classes (the "Classes") of shares
(the "Shares"), as described and set forth on one or more exhibits
to this Agreement, at the current offering price thereof as
described and set forth in the current Prospectuses of the Trust.
ESI hereby accepts such appointment and agrees to provide such other
services for the Trust, if any, and accept such compensation from
the Trust, if any, as set forth in the applicable exhibits to this
Agreement.
2. The sale of any Shares may be suspended without prior notice
whenever in the judgment of the Trust it is in its best interest to
do so.
3. Neither ESI nor any other person is authorized by the Trust to give
any information or to make any representation relative to any Shares
other than those contained in the Registration Statement,
Prospectuses, or Statements of Additional Information ("SAIs") filed
with the Securities and Exchange Commission, as the same may be
amended from time to time, or in any supplemental information to
said Prospectuses or SAIs approved by the Trust. ESI agrees that any
other information or representations other than those specified
above which it or any dealer or other person who purchases Shares
through ESI may make in connection with the offer or sale of Shares,
shall be made entirely without liability on the part of the Trust.
No person or dealer, other than ESI, is authorized to act as agent
for the Trust for any purpose. ESI agrees that in offering or
selling Shares as agent of the Trust, it will, in all respects, duly
conform to all applicable state and federal laws and the rules and
regulations of the National Association of Securities Dealers, Inc.,
including its Rules of Fair Practice. ESI will submit to the Trust
copies of all sales literature before using the same and will not
use such sales literature if disapproved by the Trust.
4. This Agreement is effective with respect to each Class as of the
date of execution of the applicable exhibit and shall continue in
effect with respect to each Class presently set forth on an exhibit
and any subsequent Classes added pursuant to an exhibit during the
initial term of this Agreement for one year from the date set forth
above, and thereafter for successive periods of one year if such
continuance is approved at least annually by the Trustees of the
Trust including a majority of the members of the Board of Trustees
of the Trust who are not interested persons of the Trust and have no
direct or indirect financial interest in the operation of any
Distribution Plan relating to the Trust or in any related documents
to such Plan ("Disinterested Trustees") cast in person at a meeting
called for that purpose. If a Class is added after the first annual
approval by the Trustees as described above, this Agreement will be
effective as to that Class upon execution of the applicable exhibit
and will continue in effect until the next annual approval of this
Agreement by the Trustees and thereafter for successive periods of
one year, subject to approval as described above.
5. This Agreement may be terminated with regard to a particular Fund or
Class at any time, without the payment of any penalty, by the vote
of a majority of the Disinterested Trustees or by a majority of the
outstanding voting securities of the particular Fund or Class on not
more than sixty (60) days' written notice to any other party to this
Agreement. This Agreement may be terminated with regard to a
particular Fund or Class by ESI on sixty (60) days' written notice
to the Trust.
6. This Agreement may not be assigned by ESI and shall automatically
terminate in the event of an assignment by ESI as defined in the
Investment Company Act of 1940, as amended, provided, however, that
ESI may employ such other person, persons, corporation or
corporations as it shall determine in order to assist it in carrying
out its duties under this Agreement.
7. ESI shall not be liable to the Trust for anything done or omitted by
it, except acts or omissions involving willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties imposed
by this Agreement.
8. This Agreement may be amended at any time by mutual agreement in
writing of all the parties hereto, provided that such amendment is
approved by the Trusteesof the Trust including a majority of the
Disinterested Trustees of the Trust cast in person at a meeting
called for that purpose.
9. This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
10. (a) Subject to the conditions set forth below, the Trust agrees to
indemnify and hold harmless ESI and each person, if any, who
controls ESI within the meaning of Section 15 of the Securities
Act of 1933 and Section 20 of the Securities Act of 1934, as
amended, against any and all loss, liability, claim, damage and
expense whatsoever (including but not limited to any and all
expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever) arising out of or based
upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any
Prospectuses or SAIs (as from time to time amended and
supplemented) or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such
statement or omission was made in reliance upon and in
conformity with written information furnished to the Trust
about ESI by or on behalf of ESI expressly for use in the
Registration Statement, any Prospectuses and SAIs or any
amendment or supplement thereof.
If any action is brought against ESI or any controlling person
thereof with respect to which indemnity may be sought against
the Trust pursuant to the foregoing paragraph, ESI shall
promptly notify the Trust in writing of the institution of such
action and the Trust shall assume the defense of such action,
including the employment of counsel selected by the Trust and
payment of expenses. ESI or any such controlling person thereof
shall have the right to employ separate counsel in any such
case, but the fees and expenses of such counsel shall be at the
expense of ESI or such controlling person unless the employment
of such counsel shall have been authorized in writing by the
Trust in connection with the defense of such action or the
Trust shall not have employed counsel to have charge of the
defense of such action, in any of which events such fees and
expenses shall be borne by the Trust. Anything in this
paragraph to the contrary notwithstanding, the Trust shall not
be liable for any settlement of any such claim of action
effected without its written consent. The Trust agrees promptly
to notify ESI of the commencement of any litigation or
proceedings against the Trust or any of its officers or
Trustees or controlling persons in connection with the issue
and sale of Shares or in connection with the Registration
Statement, Prospectuses, or SAIs.
(b) ESI agrees to indemnify and hold harmless the Trust, each of
its Trustees, each of its officers who have signed the
Registration Statement and each other person, if any, who
controls the Trust within the meaning of Section 15 of the
Securities Act of 1933, but only with respect to statements or
omissions, if any, made in the Registration Statement or any
Prospectus, SAI, or any amendment or supplement thereof in
reliance upon, and in conformity with, information furnished to
the Trust about ESI by or on behalf of ESI expressly for use in
the Registration Statement or any Prospectus, SAI, or any
amendment or supplement thereof. In case any action shall be
brought against the Trust or any other person so indemnified
based on the Registration Statement or any Prospectus, SAI, or
any amendment or supplement thereof, and with respect to which
indemnity may be sought against ESI, ESI shall have the rights
and duties given to the Trust, and the Trust and each other
person so indemnified shall have the rights and duties given to
ESI by the provisions of subsection (a) above.
(c) Nothing herein contained shall be deemed to protect any person
against liability to the Trust or its shareholders to which
such person would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance
of the duties of such person or by reason of the reckless
disregard by such person of the obligations and duties of such
person under this Agreement.
(d) Insofar as indemnification for liabilities may be permitted
pursuant to Section 17 of the Investment Company Act of 1940,
as amended, for Trustees, officers, ESI and controlling persons
of the Trust by the Trust pursuant to this Agreement, the Trust
is aware of the position of the Securities and Exchange
Commission as set forth in the Investment Company Act Release
No. IC-11330. Therefore, the Trust undertakes that in addition
to complying with the applicable provisions of this Agreement,
in the absence of a final decision on the merits by a court or
other body before which the proceeding was brought, that an
indemnification payment will not be made unless in the absence
of such a decision, a reasonable determination based upon
factual review has been made (i) by a majority vote of a quorum
of non-party Disinterested Trustees, or (ii) by independent
legal counsel in a written opinion that the indemnitee was not
liable for an act of willful misfeasance, bad faith, gross
negligence or reckless disregard of duties. The Trust further
undertakes that advancement of expenses incurred in the defense
of a proceeding (upon undertaking for repayment unless it is
ultimately determined that indemnification is appropriate)
against an officer, Trustee, ESI or controlling person of the
Trust will not be made absent the fulfillment of at least one
of the following conditions: (i) the indemnitee provides
security for his undertaking; (ii) the Trust is insured against
losses arising by reason of any lawful advances; or (iii) a
majority of a quorum of non-party Disinterested Trustees or
independent legal counsel in a written opinion makes a factual
determination that there is reason to believe the indemnitee
will be entitled to indemnification.
11. ESI is hereby expressly put on notice of the limitation of liability
as set forth in the Declaration of Trust and agrees that the
obligations assumed by the Trust pursuant to this Agreement shall be
limited in any case to the Trust and its assets and ESI shall not
seek satisfaction of any such obligation from the shareholders of
the Trust, the Trustees, officers, employees or agents of the Trust,
or any of them.
12. If at any time the Shares of any Fund are offered in two or more
Classes, ESI agrees to adopt compliance standards as to when a class
of shares may be sold to particular investors.
13. This Agreement will become binding on the parties hereto upon the
execution of the attached exhibits to the Agreement.
Exhibit A
to the
Distributor's Contract
WESMARK FUNDS
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
The following provisions are hereby incorporated and made part of
the Distributor's Contract dated March 1, 1996, between WesMark Funds
and Edgewood Services, Inc. with respect to the Class of shares set
forth above.
1. The Trust hereby appoints ESI to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, ESI is authorized to
select a group of financial institutions ("Financial Institutions")
to sell Shares at the current offering price thereof as described
and set forth in the respective prospectuses of the Trust.
2. During the term of this Agreement, the Trust will pay ESI for
services pursuant to this Agreement, a monthly fee computed at the
annual rate of .25 of 1% of the average aggregate net asset value of
the Shares held during the month. For the month in which this
Agreement becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the number
of days that the Agreement is in effect during the month.
3. ESI may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class'
expenses exceed such lower expense limitation as ESI may, by notice
to the Trust, voluntarily declare to be effective.
4. ESI will enter into separate written agreements with various firms
to provide certain of the services set forth in Paragraph 1 herein.
ESI, in its sole discretion, may pay Financial Institutions a
periodic fee in respect of Shares owned from time to time by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid shall be determined from time to time
by ESI in its sole discretion.
5. ESI will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts
paid to Financial Institutions and the purpose for such
expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1996 between WesMark Funds and
Edgewood Service, Inc., WesMark Funds executes and delivers this
Exhibit on behalf of the WesMark West Virginia Municipal Bond Fund,
and with respect to the class thereof, first set forth in this
Exhibit.
Witness the due execution hereof this 1st day of March, 1996.
ATTEST: WESMARK FUNDS
/s/ John W. McGonigle By: /s/ Edward C. Gonzales
Secretary President
(SEAL)
ATTEST: EDGEWOOD SERVICES, INC.
/s/ S. Elliott Cohan By: /s/R. Jeffrey Niss
Secretary Senior Vice President
(SEAL)
Exhibit 6(i) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
Exhibit B
to the
Distributor's Contract
WESMARK FUNDS
WESMARK GROWTH FUND
The following provisions are hereby incorporated and made part of
the Distributor's Contract dated March 1, 1996, between WesMark Funds
and Edgewood Services, Inc. with respect to the Class of shares set
forth above.
1. The Trust hereby appoints ESI to engage in activities principally
intended to result in the sale of shares of the above-listed Class
("Shares"). Pursuant to this appointment, ESI is authorized to
select a group of financial institutions ("Financial Institutions")
to sell Shares at the current offering price thereof as described
and set forth in the respective prospectuses of the Trust.
2. During the term of this Agreement, the Trust will pay ESI for
services pursuant to this Agreement, a monthly fee computed at the
annual rate of .25 of 1% of the average aggregate net asset value of
the Shares held during the month. For the month in which this
Agreement becomes effective or terminates, there shall be an
appropriate proration of any fee payable on the basis of the number
of days that the Agreement is in effect during the month.
3. ESI may from time-to-time and for such periods as it deems
appropriate reduce its compensation to the extent any Class'
expenses exceed such lower expense limitation as ESI may, by notice
to the Trust, voluntarily declare to be effective.
4. ESI will enter into separate written agreements with various firms
to provide certain of the services set forth in Paragraph 1 herein.
ESI, in its sole discretion, may pay Financial Institutions a
periodic fee in respect of Shares owned from time to time by their
clients or customers. The schedules of such fees and the basis upon
which such fees will be paid shall be determined from time to time
by ESI in its sole discretion.
5. ESI will prepare reports to the Board of Trustees of the Trust on a
quarterly basis showing amounts expended hereunder including amounts
paid to Financial Institutions and the purpose for such
expenditures.
In consideration of the mutual covenants set forth in the
Distributor's Contract dated March 1, 1996 between WesMark Funds and
Edgewood Service, Inc., WesMark Funds executes and delivers this
Exhibit on behalf of the WesMark Growth Fund, and with respect to the
class thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of December, 1996.
ATTEST: WESMARK FUNDS
By:
Secretary President
(SEAL)
ATTEST: EDGEWOOD SERVICES, INC.
By:
Secretary Senior Vice President
(SEAL)
Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
CUSTODIAN CONTRACT
Between
WESMARK FUNDS
and
WESBANCO BANK WHEELING
TABLE OF CONTENTS
Page
1.Employment of Custodian and Property to be Held by It.......... 1
2.Duties of the Custodian With Respect to Property
of the Funds Held by the Custodian..................................1
2.1 Holding.................................................... 1
2.2 Delivery of
Securities................................................... 2
2.3 Registration of
Securities.............................................. 4
2.4 Bank Accounts......................... 4
2.5 Payments for
Shares...................................................... 4
2.6 Availability of Federal Funds............................... 4
2.7 Collection of
Income....................................................... 5
2.8 Payment of Fund
Moneys................................................ 5
2.9 Liability for Payment in Advance of
Receipt of Securities
Purchased............................................. 6
2.10 Payments for Repurchases or Redemptions
of Shares of a
Fund............................................................... 6
2.11 Appointment of
Agents................................................. 6
2.12 Deposit of Fund Assets in Securities System...................
7
2.13 Segregated
Account....................................................... 8
2.14 Joint Repurchase
Agreements......................................... 8
2.15 Ownership Certificates for Tax Purposes........................
8
2.16
Proxies....................................................................
...... 9
2.17 Communications Relating to Fund Portfolio Securities..... 9
2.18 Proper
Instructions......................................................... 9
2.19 Actions Permitted Without Express Authority............... 9
2.20 Evidence of
Authority...................................................
3.Duties of Custodian with Respect to the Books of Account and
Regulatory Reporting 10
4. Records 10
5. Opinion of Funds' Auditors 11
6.Reports to Trust by Auditors 11
7.Compensation of Custodian 11
8.Responsibility of Custodian 11
9.Effective Period, Termination and Amendment 13
10. Successor Custodian 13
11. Interpretive and Additional Provisions 14
12. Massachusetts Law to Apply 14
13. Notices 14
14. Counterparts 14
15. Limitations of Liability 15
CUSTODIAN CONTRACT
This Contract between WesMark Fund, (the "Trust"), a Massachusetts
business trust, on behalf of the portfolios (hereinafter collectively
called the "Funds" and individually referred to as a "Fund") of the Trust,
organized and existing under the laws of the Commonwealth of Massachusetts,
having its principal place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, and WESBANCO BANK WHEELING, a West
Virginia bank, having its principal place of business in Wheeling, West
Virginia, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It.
The Trust hereby employs the Custodian as the custodian of the assets of
each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of income, payments
of principal or capital distributions received by them with respect to all
securities owned by the Funds from time to time, and the cash consideration
received by them for shares ("Shares") of beneficial interest of the Funds
as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of the Funds held or received by the Funds and
not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 2.18), the Custodian shall from time to time employ one or more
sub-custodians upon the terms specified in the Proper Instructions,
provided that the Custodian shall have no more or less responsibility or
liability to the Trust or any of the Funds on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian has
to the Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian.
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property,
including all securities owned by each Fund, other than securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System", or securities which are
10/1/92 -5- [CUSTCON]DGIS1092
subject to a joint repurchase agreement with affiliated funds pursuant
to Section 2.14. The Custodian shall maintain records of all
receipts, deliveries and locations of such securities, together with a
current inventory thereof, and shall conduct periodic physical
inspections of certificates representing stocks, bonds and other
securities held by it under this Contract in such manner as the
Custodian shall determine from time to time to be advisable in order
to verify the accuracy of such inventory. With respect to securities
held by any agent appointed pursuant to Section 2.11 hereof, and with
respect to securities held by any sub-custodian appointed pursuant to
Section 1 hereof, the Custodian may rely upon certificates from such
agent as to the holdings of such agent and from such sub-custodian as
to the holdings of such sub-custodian, it being understood that such
reliance in no way relieves the Custodian of its responsibilities
under this Contract. The Custodian will promptly report to the Trust
the results of such inspections, indicating any shortages or
discrepancies uncovered thereby, and take appropriate action to remedy
any such shortages or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and receipt
of payment therefor;
10/1/92 -6- [CUSTCON]DGIS1092
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other similar
offers for portfolio securities of a Fund, in accordance with the
provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in
any such case, the cash or other consideration is to be delivered
to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name of
a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Section 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to the
broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery custom"; provided that in any
10/1/92 -7- [CUSTCON]DGIS1092
such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
as may arise from the Custodian's own failure to act in
accordance with the standard of reasonable care or any higher
standard of care imposed upon the Custodian by any applicable law
or regulation if such above-stated standard of reasonable care
were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
(10) For delivery in connection with any loans of portfolio securities
of a Fund, but only against receipt of adequate collateral in the
form of (a) cash, in an amount specified by the Trust, (b)
certificated securities of a description specified by the Trust,
10/1/92 -8- [CUSTCON]DGIS1092
registered in the name of the Fund or in the name of a nominee of
the Custodian referred to in Section 2.3 hereof or in proper form
for transfer, or (c) securities of a description specified by the
Trust, transferred through a Securities System in accordance with
Section 2.12 hereof;
(11) For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against receipt
of amounts borrowed, except that in cases where additional
collateral is required to secure a borrowing already made,
further securities may be released for the purpose;
(12) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions for a Fund;
(13) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
10/1/92 -9- [CUSTCON]DGIS1092
organization or organizations, regarding account deposits in
connection with transaction for a Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of a
Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the securities to
be delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned exclusively
to the Fund, unless the Trust has authorized in writing the
appointment of a nominee to be used in common with other registered
investment companies affiliated with the Fund, or in the name or
nominee name of any agent appointed pursuant to Section 2.11 or in the
name or nominee name of any sub-custodian appointed pursuant to
10/1/92 -10- [CUSTCON]DGIS1092
Section 1. All securities accepted by the Custodian on behalf of a
Fund under the terms of this Contract shall be in "street name" or
other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of each Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of each Fund,
other than cash maintained in a joint repurchase account with other
affiliated funds pursuant to Section 2.14 of this Contract or by a
particular Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940, as amended,
(the "1940 Act"). Funds held by the Custodian for a Fund may be
deposited by it to its credit as Custodian in the Banking Department
of the Custodian or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust company
and the funds to be deposited with each such bank or trust company
shall be approved by vote of a majority of the Board of Trustees
("Board") of the Trust. Such funds shall be deposited by the
Custodian in its capacity as Custodian for the Fund and shall be
withdrawable by the Custodian only in that capacity. If requested by
the Trust, the Custodian shall furnish the Trust, not later than
twenty (20) days after the last business day of each month, an
internal reconciliation of the closing balance as of that day in all
10/1/92 -11- [CUSTCON]DGIS1092
accounts described in this section to the balance shown on the daily
cash report for that day rendered to the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements with
the Transfer Agent of each Fund, as will enable the Custodian to
receive the cash consideration due to each Fund and will deposit into
each Fund's account such payments as are received from the Transfer
Agent. The Custodian will provide timely notification to the Trust
and the Transfer Agent of any receipt by it of payments for Shares of
the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time to
time by the Trust and the Custodian in the amount of checks, clearing
house funds, and other non-federal funds received in payment for
Shares of the Funds which are deposited into the Funds' accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to
which each Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer
securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and
shall credit such income, as collected, to each Fund's custodian
10/1/92 -12- [CUSTCON]DGIS1092
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and
other income items requiring presentation as and when they become
due and shall collect interest when due on securities held
hereunder. The collection of income due the Funds on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Trust. The Custodian will have no duty
or responsibility in connection therewith, other than to provide
the Trust with such information or data as may be necessary to
assist the Trust in arranging for the timely delivery to the
Custodian of the income to which each Fund is properly entitled.
(2) The Trust shall promptly notify the Custodian whenever income due
on securities is not collected in due course and will provide the
Custodian with monthly reports of the status of past due income.
The Trust will furnish the Custodian with a weekly report of
accrued/past due income for the fund. Once an item is identified
as past due and the Trust has furnished the necessary claim
documentation to the Custodian, the Custodian will then initiate
a claim on behalf of the Trust. The Custodian will furnish the
Trust with a status report monthly unless the parties otherwise
agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out moneys of each Fund in the following cases
only:
10/1/92 -13- [CUSTCON]DGIS1092
(1) Upon the purchase of securities, futures contracts or options on
futures contracts for the account of a Fund but only (a) against
the delivery of such securities, or evidence of title to futures
contracts, to the Custodian (or any bank, banking firm or trust
company doing business in the United States or abroad which is
qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in Section
2.3 hereof or in proper form for transfer, (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.12 hereof or (c) in the
case of repurchase agreements entered into between the Trust and
any other party, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase for the
account of the Fund of securities owned by the Custodian along
with written evidence of the agreement by the Custodian to
repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of securities
owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by the
Trust as set forth in Section 2.10 hereof;
10/1/92 -14- [CUSTCON]DGIS1092
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of the
Executive Committee of the Trust on behalf of a Fund signed by
an officer of the Trust and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased.
In any and every case where payment for purchase of securities for the
account of a Fund is made by the Custodian in advance of receipt of
the securities purchased, in the absence of specific written
instructions from the Trust to so pay in advance, the Custodian shall
10/1/92 -15- [CUSTCON]DGIS1092
be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.10 Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust and any applicable votes of the Board of the
Trust pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment
to holders of shares of such Fund who have delivered to the Transfer
Agent a request for redemption or repurchase of their shares including
without limitation through bank drafts, automated clearinghouse
facilities, or by other means. In connection with the redemption or
repurchase of Shares of the Funds, the Custodian is authorized upon
receipt of instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by the redeeming shareholders.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, and any applicable state law or regulation,
to act as a custodian, as its agent to carry out such of the
provisions of this Section 2 as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities
hereunder.
10/1/92 -16- [CUSTCON]DGIS1092
2.12 Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission ("SEC")
under Section 17A of the Exchange Act, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if
any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall identify
by book-entry those securities belonging to each Fund;
(3) The Custodian shall pay for securities purchased for the account of
each Fund upon (i) receipt of advice from the Securities System
that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund.
The Custodian shall transfer securities sold for the account of a
Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account,
10/1/92 -17- [CUSTCON]DGIS1092
and (ii) the making of an entry on the records of the Custodian
to reflect such transfer and payment for the account of the Fund.
Copies of all advices from the Securities System of transfers of
securities for the account of a Fund shall identify the Fund, be
maintained for the Fund by the Custodian and be provided to the
Trust at its request. Upon request, the Custodian shall furnish
the Trust confirmation of each transfer to or from the account of
a Fund in the form of a written advice or notice and shall
furnish to the Trust copies of daily transaction sheets
reflecting each day's transactions in the Securities System for
the account of a Fund.
(4) The Custodian shall provide the Trust with any report obtained by
the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate, required
by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting from use of the Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure
of the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Trust, it shall be entitled to be subrogated to
10/1/92 -18- [CUSTCON]DGIS1092
the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that a Fund has not been made whole for any such loss or
damage.
(7) The authorization contained in this Section 2.12 shall not relieve
the Custodian from using reasonable care and diligence in making
use of any Securities System.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of each Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the Trust, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered
under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions for a Fund, (ii) for purpose of
segregating cash or government securities in connection with options
purchased, sold or written for a Fund or commodity futures contracts
or options thereon purchased or sold for a Fund, (iii) for the purpose
of compliance by the Trust or a Fund with the procedures required by
10/1/92 -19- [CUSTCON]DGIS1092
any release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions, a certified copy
of a resolution of the Board or of the Executive Committee signed by
an officer of the Trust and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.14 Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or maintain any assets
of a Fund and any affiliated funds which are subject to joint
repurchase transactions in an account established solely for such
transactions for the Fund and its affiliated funds. For purposes of
this Section 2.14, "affiliated funds" shall include all investment
companies and their portfolios for which subsidiaries or affiliates of
Federated Investors serve as investment advisers, distributors or
administrators in accordance with applicable exemptive orders from the
SEC. The requirements of segregation set forth in Section 2.1 shall
be deemed to be waived with respect to such assets.
2.15 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of a Fund held by it and in
connection with transfers of securities.
10/1/92 -20- [CUSTCON]DGIS1092
2.16 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.17 Communications Relating to Fund Portfolio Securities. The Custodian
shall transmit promptly to the Trust all written information
(including, without limitation, pendency of calls and maturities of
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund and
the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the securities being held
for the Fund. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Trust all written information
received by the Custodian from issuers of the securities whose tender
or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Trust desires to take action with
respect to any tender offer, exchange offer or any other similar
transaction, the Trust shall notify the Custodian in writing at least
three business days prior to the date on which the Custodian is to
take such action. However, the Custodian shall nevertheless exercise
its best efforts to take such action in the event that notification is
received three business days or less prior to the date on which action
is required. For securities which are not held in nominee name, the
Custodian will act as a secondary source of information and will not
10/1/92 -21- [CUSTCON]DGIS1092
be responsible for providing corporate action notification to the
Trust.
2.18 Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person or
persons as the Board shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been
given by a person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved. The Trust
shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as
to the authorization by the Board of the Trust accompanied by a
detailed description of procedures approved by the Board, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board and
the Custodian are satisfied that such procedures afford adequate
safeguards for a Fund's assets.
2.19 Actions Permitted Without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Trust in such form that it may be allocated to the
affected Fund;
10/1/92 -22- [CUSTCON]DGIS1092
(2) surrender securities in temporary form for securities in definitive
form;
(3) endorse for collection, in the name of a Fund, checks, drafts and
other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of each Fund
except as otherwise directed by the Trust.
2.20 Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper reasonably believed by it to be genuine and to
have been properly executed on behalf of a Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of the
Trust as conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination of or any
action by the Board pursuant to the Declaration of Trust as described
in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the
contrary.
3. Duties of Custodian With Respect to the Books of Account
and Regulatory Reporting.
10/1/92 -23- [CUSTCON]DGIS1092
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Trust to keep the
books of account of each Fund and appointed to report on behalf of each
Fund to the Board, the SEC and other regulatory bodies.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations of the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and specifically including identified cost records used for tax
purposes. All such records shall be the property of the Trust and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Trust
and employees and agents of the SEC. In the event of termination of this
Contract, the Custodian will deliver all such records to the Trust, to a
successor Custodian, or to such other person as the Trust may direct. The
Custodian shall supply daily to the Trust a tabulation of securities owned
by a Fund and held by the Custodian and shall, when requested to do so by
the Trust and for such compensation as shall be agreed upon between the
Trust and the Custodian, include certificate numbers in such tabulations.
When requested by the Trust and for such compensation as shall be agreed
upon between the Trust and the Custodian, this tabulation shall include
certificate numbers. In addition, the Custodian shall electronically
transmit daily to the Trust information pertaining to security trading and
other investment activity and all other cash activity of a Fund.
10/1/92 -24- [CUSTCON]DGIS1092
5. Opinion of Funds' Independent Auditors.
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions from
each Fund's independent auditors with respect to its activities hereunder
in connection with the preparation of the Fund's registration statement,
periodic reports, or any other reports to the SEC and with respect to any
other requirements of such Commission.
6. Reports to Trust by Independent Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent auditors for each Fund on
the accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian for the Fund
under this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Trust, to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination and, if there are no such inadequacies, the reports shall
so state.
7. Compensation of Custodian.
10/1/92 -25- [CUSTCON]DGIS1092
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Trust and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in
carrying out the provisions of this Contract; provided, however, that the
Custodian shall be held to any higher standard of care which would be
imposed upon the Custodian by any applicable law or regulation if such
above stated standard of reasonable care was not part of this Contract.
The Custodian shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in violation of applicable
federal or state laws or regulations, and is in good faith and without
negligence. Subject to the limitations set forth in Section 15 hereof, the
Custodian shall be kept indemnified by the Trust but only from the assets
of the Fund involved in the issue at hand and be without liability for any
action taken or thing done by it in carrying out the terms and provisions
of this Contract in accordance with the above standards.
In order that the indemnification provisions contained in this
Section 8 shall apply, however, it is understood that if in any case the
Trust may be asked to indemnify or save the Custodian harmless, the Trust
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the Custodian will
use all reasonable care to identify and notify the Trust promptly
10/1/92 -26- [CUSTCON]DGIS1092
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification. The Trust shall have the
option to defend the Custodian against any claim which may be the subject
of this indemnification, and in the event that the Trust so elects it will
so notify the Custodian and thereupon the Trust shall take over complete
defense of the claim, and the Custodian shall in such situation initiate no
further legal or other expenses for which it shall seek indemnification
under this Section. The Custodian shall in no case confess any claim or
make any compromise in any case in which the Trust will be asked to
indemnify the Custodian except with the Trust's prior written consent.
Notwithstanding the foregoing, the responsibility of the Custodian
with respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may,
in the reasonable opinion of the Custodian, result in the Custodian or its
nominee assigned to a Fund being liable for the payment of money or
incurring liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take such action, to
provide indemnity to the Custodian in an amount and form satisfactory to
the Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee from
and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) (referred to herein as authorized
10/1/92 -27- [CUSTCON]DGIS1092
charges) incurred or assessed against it or its nominee in connection with
the performance of this Contract, except such as may arise from it or its
nominee's own failure to act in accordance with the standard of reasonable
care or any higher standard of care which would be imposed upon the
Custodian by any applicable law or regulation if such above-stated standard
of reasonable care were not part of this Contract. To secure any
authorized charges and any advances of cash or securities made by the
Custodian to or for the benefit of a Fund for any purpose which results in
the Fund incurring an overdraft at the end of any business day or for
extraordinary or emergency purposes during any business day, the Trust
hereby grants to the Custodian a security interest in and pledges to the
Custodian securities held for the Fund by the Custodian, in an amount not
to exceed 10 percent of the Fund's gross assets, the specific securities to
be designated in writing from time to time by the Trust or the Fund's
investment adviser. Should the Trust fail to make such designation, or
should it instruct the Custodian to make advances exceeding the percentage
amount set forth above and should the Custodian do so, the Trust hereby
agrees that the Custodian shall have a security interest in all securities
or other property purchased for a Fund with the advances by the Custodian,
which securities or property shall be deemed to be pledged to the
Custodian, and the written instructions of the Trust instructing their
purchase shall be considered the requisite description and designation of
the property so pledged for purposes of the requirements of the Uniform
Commercial Code. Should the Trust fail to cause a Fund to repay promptly
any authorized charges or advances of cash or securities, subject to the
provision of the second paragraph of this Section 8 regarding
indemnification, the Custodian shall be entitled to use available cash and
10/1/92 -28- [CUSTCON]DGIS1092
to dispose of pledged securities and property as is necessary to repay any
such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided,
may be amended at any time by mutual agreement of the parties hereto and
may be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take effect
not sooner than sixty (60) days after the date of such delivery or mailing;
provided, however that the Custodian shall not act under Section 2.12
hereof in the absence of receipt of an initial certificate of the Secretary
or an Assistant Secretary that the Board of the Trust has approved the
initial use of a particular Securities System as required in each case by
Rule 17f-4 under the Investment Company Act of 1940, as amended; provided
further, however, that the Trust shall not amend or terminate this Contract
in contravention of any applicable federal or state regulations, or any
provision of the Declaration of Trust and further provided, that the Trust
may at any time by action of its Board (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10/1/92 -29- [CUSTCON]DGIS1092
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust,
the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer,
all securities then held by it hereunder for each Fund and shall transfer
to separate accounts of the successor custodian all of each Fund's
securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the
Board of the Trust, deliver at the office of the Custodian and transfer
such securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or
trust company, which is a "bank" as defined in the 1940 Act, doing business
in Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published
report, of not less than $100,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
10/1/92 -30- [CUSTCON]DGIS1092
relative thereto and all other property held by it under this Contract for
each Fund and to transfer to separate accounts of such successor custodian
all of each Fund's securities held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to
or of the Board to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties
and the provisions of this Contract relating to the duties and obligations
of the Custodian shall remain in full force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and
the Trust may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Declaration of Trust. No interpretive
or additional provisions made as provided in the preceding sentence shall
be deemed to be an amendment of this Contract.
10/1/92 -31- [CUSTCON]DGIS1092
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Custodian
at 225 Franklin Street, Boston, Massachusetts, 02110, or to such other
address as the Trust or the Custodian may hereafter specify, shall be
deemed to have been properly delivered or given hereunder to the respective
address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of
liability as set forth in Article XI of the Declaration of Trust and agrees
10/1/92 -32- [CUSTCON]DGIS1092
that the obligations and liabilities assumed by the Trust and any Fund
pursuant to this Contract, including, without limitation, any obligation or
liability to indemnify the Custodian pursuant to Section 8 hereof, shall be
limited in any case to the relevant Fund and its assets and that the
Custodian shall not seek satisfaction of any such obligation from the
shareholders of the relevant Fund, from any other Fund or its shareholders
or from the Trustees, Officers, employees or agents of the Trust, or any of
them. In addition, in connection with the discharge and satisfaction of
any claim made by the Custodian against the Trust, for whatever reasons,
involving more than one Fund, the Trust shall have the exclusive right to
determine the appropriate allocations of liability for any such claim
between or among the Funds.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative
and its seal to be hereunder affixed as of the 1st day of March, 1996.
ATTEST: WESMARK FUNDS
/s/ S. Elliott Cohan By /s/ Richard B. Fisher
Assistant Secretary Vice President
ATTEST: WESBANCO BANK WHEELING
10/1/92 -33- [CUSTCON]DGIS1092
/s/ Thomas B. McGaughy By /s/ Jerome B. Schmitt
Assistant Secretary Vice President
EXHIBIT 9(I) UNDER FORM N-1A
EXHIBIT 10 UNDER ITEM 601/REG. S-K
AGREEMENT
FOR
FUND ACCOUNTING SERVICES,
ADMINISTRATIVE SERVICES,
AND
TRANSFER AGENCY SERVICES
AGREEMENT made as of March 1, 1996, by and between WesMark Funds, a
Massachusetts business trust, having its principal office and place of
business at Federated Investors Tower, Pittsburgh, PA 15222-3779 (the
`Investment Company''), and FEDERATED SERVICES COMPANY, a Pennsylvania
corporation, having its principal office and place of business at Federated
Investors Tower, Pittsburgh, Pennsylvania 15222-3779 on behalf of itself
and its subsidiaries (the `Company'').
WHEREAS, the Investment Company is a Massachusetts business trust
consisting of one or more portfolios (such portfolios individually referred
to herein as a `Fund'' and collectively as ``Funds''), which operates and
is registered under the Investment Company Act of 1940, as amended (the
`1940 Act''), with authorized and issued shares of capital stock or
beneficial interest (`Shares'');
WHEREAS, the Investment Company desires to retain the Company as fund
accountant to provide fund accounting services (as herein defined)
including certain pricing, accounting and recordkeeping services for each
of the Funds, including any classes of shares issued by any Fund
(`Classes''), and the Company desires to accept such appointment;
WHEREAS, the Investment Company desires to appoint the Company as its
administrator to provide it with administrative services (as herein
defined), and the Company desires to accept such appointment;
WHEREAS, the Investment Company desires to appoint the Company as its
transfer agent and dividend disbursing agent to provide it with transfer
agency services (as herein defined), and agent in connection with certain
other activities, and the Company desires to accept such appointment; and
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties
hereto agree as follows:
SECTION ONE: FUND ACCOUNTING.
ARTICLE 1. APPOINTMENT.
The Investment Company hereby appoints the Company to provide certain
pricing and accounting services to the Funds, and/or the Classes, for the
period and on the terms set forth in this Agreement. The Company accepts
such appointment and agrees to furnish the services herein set forth in
return for the compensation as provided in Article 3 of this Section.
ARTICLE 2. THE COMPANY'S DUTIES.
Subject to the supervision and control of the Investment Company's Board
of Trustees or Directors (`Board''), the Company will assist the
Investment Company with regard to fund accounting for the Investment
Company, and/or the Funds, and/or the Classes, and in connection therewith
undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide
a price for a security which the Company believes should be
available by market quotation, the Company may obtain a price by
calling brokers designated by the investment adviser of the fund
holding the security, or if the adviser does not supply the names of
such brokers, the Company will attempt on its own to find brokers to
price those securities; thirdly, for securities for which no market
price is available, the Pricing Committee of the Board will
determine a fair value in good faith. Consistent with Rule 2a-4 of
the 40 Act, estimates may be used where necessary or appropriate.
The Company's obligations with regard to the prices received from
outside pricing services and designated brokers or other outside
sources, is to exercise reasonable care in the supervision of the
pricing agent. The Company is not the guarantor of the securities
prices received from such agents and the Company is not liable to
the Fund for potential errors in valuing a Fund's assets or
calculating the net asset value per share of such Fund or Class when
the calculations are based upon such prices. All of the above
sources of prices used as described are deemed by the Company to be
authorized sources of security prices. The Company provides daily to
the adviser the securities prices used in calculating the net asset
value of the fund, for its use in preparing exception reports for
those prices on which the adviser has comment. Further, upon receipt
of the exception reports generated by the adviser, the Company
diligently pursues communication regarding exception reports with
the designated pricing agents;
B. Determine the net asset value per share of each Fund and/or Class,
at the time and in the manner from time to time determined by the
Board and as set forth in the Prospectus and Statement of Additional
Information (``Prospectus') of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate realized capital gains or losses of each of the Funds
resulting from sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Investment Company, including for each Fund, and/or
Class, as required under Section 31(a) of the 1940 Act and the Rules
thereunder in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Investment
Company are the property of the Investment Company and further
agrees to surrender promptly to the Investment Company such records
upon the Investment Company's request;
G. At the request of the Investment Company, prepare various reports or
other financial documents in accordance with generally accepted
accounting principles as required by federal, state and other
applicable laws and regulations; and
H. Such other similar services as may be reasonably requested by the
Investment Company.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section
One, shall hereafter be referred to as `Fund Accounting Services.''
ARTICLE 3. COMPENSATION AND ALLOCATION OF EXPENSES.
A. The Funds will compensate the Company for Fund Accounting Services
in accordance with the fees agreed upon from time to time between
the parties hereto. Such fees do not include out-of-pocket
disbursements of the Company for which the Funds shall reimburse the
Company. Out-of-pocket disbursements shall include, but shall not be
limited to, the items agreed upon between the parties from time to
time.
B. The Fund and/or the Class, and not the Company, shall bear the cost
of: custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes
and fees payable to federal, state and other governmental agencies;
fees of Trustees or Directors of the Investment Company; independent
auditors expenses; legal and audit department expenses billed to the
Company for work performed related to the Investment Company, the
Funds, or the Classes; law firm expenses; organizational expenses;
or other expenses not specified in this Article 3 which may be
properly payable by the Funds and/or Classes.
C. The compensation and out-of-pocket expenses attributable to the Fund
shall be accrued by the Fund and shall be paid to the Company no
less frequently than monthly, and shall be paid daily upon request
of the Company. The Company will maintain detailed information about
the compensation and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
E. The fee for the period from the effective date of this Agreement
with respect to a Fund or a Class to the end of the initial month
shall be prorated according to the proportion that such period bears
to the full month period. Upon any termination of this Agreement
before the end of any month, the fee for such period shall be
prorated according to the proportion which such period bears to the
full month period. For purposes of determining fees payable to the
Company, the value of the Fund's net assets shall be computed at the
time and in the manner specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time
subcontract to, employ or associate with itself such person or
persons as the Company may believe to be particularly suited to
assist it in performing Fund Accounting Services. Such person or
persons may be affiliates of the Company, third-party service
providers, or they may be officers and employees who are employed by
both the Company and the Investment Company; provided, however, that
the Company shall be as fully responsible to each Fund for the acts
and omissions of any such subcontractor as it is for its own acts
and omissions. The compensation of such person or persons shall be
paid by the Company and no obligation shall be incurred on behalf of
the Investment Company, the Funds, or the Classes in such respect.
SECTION TWO: ADMINISTRATIVE SERVICES.
ARTICLE 4. APPOINTMENT.
The Investment Company hereby appoints the Company as Administrator for
the period on the terms and conditions set forth in this Agreement. The
Company hereby accepts such appointment and agrees to furnish the services
set forth in Article 5 of this Agreement in return for the compensation set
forth in Article 9 of this Agreement.
ARTICLE 5. THE COMPANY'S DUTIES.
As Administrator, and subject to the supervision and control of the
Board and in accordance with Proper Instructions (as defined hereafter)
from the Investment Company, the Company will provide facilities,
equipment, and personnel to carry out the following administrative services
for operation of the business and affairs of the Investment Company and
each of its Funds:
A. prepare, file, and maintain the Investment Company's governing
documents and any amendments thereto, including the Charter (which
has already been prepared and filed), the By-laws and minutes of
meetings of the Board and Shareholders;
B. prepare and file with the Securities and Exchange Commission and the
appropriate state securities authorities the registration statements
for the Investment Company and the Investment Company's shares and
all amendments thereto, reports to regulatory authorities and
shareholders, prospectuses, proxy statements, and such other
documents all as may be necessary to enable the Investment Company
to make a continuous offering of its shares;
C. prepare, negotiate, and administer contracts (if any) on behalf of
the Investment Company with, among others, the Investment Company's
investment advisers and distributors, subject to any applicable
restrictions of the Board or the 1940 Act;
D. calculate performance data of the Investment Company for
dissemination to information services covering the investment
company industry;
E. prepare and file the Investment Company's tax returns;
F. coordinate the layout and printing of publicly disseminated
prospectuses and reports;
G. perform internal audit examinations in accordance with a charter to
be adopted by the Company and the Investment Company;
H. assist with the design, development, and operation of the Investment
Company and the Funds;
I. provide individuals reasonably acceptable to the Board for
nomination, appointment, or election as officers of the Investment
Company, who will be responsible for the management of certain of
the Investment Company's affairs as determined by the Investment
Company's Board; and
J. consult with the Investment Company and its Board on matters
concerning the Investment Company and its affairs.
The foregoing, along with any additional services that the Company shall
agree in writing to perform for the Investment Company under this Section
4, shall hereafter be referred to as "Administrative Services."
ARTICLE 6. RECORDS.
The Company shall create and maintain all necessary books and records in
accordance with all applicable laws, rules and regulations, including but
not limited to records required by Section 31(a) of the Investment Company
act of 1940 and the rules thereunder, as the same may be amended from time
to time, pertaining to the Administrative Services performed by it and not
otherwise created and maintained by another party pursuant to contract with
the Investment Company. Where applicable, such records shall be maintained
by the Company for the periods and in the places required by Rule 31a-2
under the 1940 Act. The books and records pertaining to the Investment
Company which are in the possession of the Company shall be the property of
the Investment Company. The Investment Company, or the Investment
Company's authorized representatives, shall have access to such books and
records at all times during the Company's normal business hours. Upon the
reasonable request of the Investment Company, copies of any such books and
records shall be provided promptly by the Company to the Investment Company
or the Investment Company's authorized representatives.
ARTICLE 7. DUTIES OF THE FUND.
The Fund assumes full responsibility for the preparation, contents and
distribution of its own offering document and for complying with all
applicable requirements the 1940 Act, the Internal Revenue Code, and any
other laws, rules and regulations of government authorities having
jurisdiction.
ARTICLE 8. EXPENSES.
The Company shall be responsible for expenses incurred in providing
office space, equipment, and personnel as may be necessary or convenient to
provide the Administrative Services to the Investment Company, including
the compensation of the Company employees who serve as trustees or
directors or officers of the Investment Company. The Investment Company
shall be responsible for all other expenses incurred by the Company on
behalf of the Investment Company, including without limitation postage and
courier expenses, printing expenses, travel expenses, registration fees,
filing fees, fees of outside counsel and independent auditors, or other
professional services, organizational expenses, insurance premiums, fees
payable to persons who are not the Company's employees, trade association
dues, and other expenses properly payable by the Funds and/or the Classes.
ARTICLE 9. COMPENSATION.
For the Administrative Services provided, the Investment Company hereby
agrees to pay and the Company hereby agrees to accept as full compensation
for its services rendered hereunder an administrative fee at an annual rate
per Fund, as specified below.
The compensation and out of pocket expenses attributable to the Fund
shall be accrued by the Fund and paid to the Company no less frequently
than monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation and out
of pocket expenses by the Fund.
MAX. ADMIN. AVERAGE DAILY NET ASSETS
FEE OF THE FUNDS
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
(Average Daily Net Asset break-points are on a complex-wide basis)
However, in no event shall the administrative fee received during any
year of the Agreement be less than, or be paid at a rate less than would
aggregate $75,000 per Fund and $30,000 per Class. The minimum fee set forth
above in this Article 9 may increase annually upon each March 1 anniversary
of this Agreement over the minimum fee during the prior 12 months, as
calculated under this agreement, in an amount equal to the increase in
Pennsylvania Consumer Price Index (not to exceed 6% annually) as last
reported by the U.S. Bureau of Labor Statistics for the twelve months
immediately preceding such anniversary.
ARTICLE 10. RESPONSIBILITY OF ADMINISTRATOR.
A. The Company shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Investment Company in
connection with the matters to which this Agreement relates, except
a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this
Agreement. The Company shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Investment
Company) on all matters, and shall be without liability for any
action reasonably taken or omitted pursuant to such advice. Any
person, even though also an officer, director, trustee, partner,
employee or agent of the Company, who may be or become an officer,
director, trustee, partner, employee or agent of the Investment
Company, shall be deemed, when rendering services to the Investment
Company or acting on any business of the Investment Company (other
than services or business in connection with the duties of the
Company hereunder) to be rendering such services to or acting solely
for the Investment Company and not as an officer, director, trustee,
partner, employee or agent or one under the control or direction of
the Company even though paid by the Company.
B. The Company shall be kept indemnified by the Investment Company and
be without liability for any action taken or thing done by it in
performing the Administrative Services in accordance with the above
standards. In order that the indemnification provisions contained
in this Article 10 shall apply, however, it is understood that if in
any case the Investment Company may be asked to indemnify or hold
the Company harmless, the Investment Company shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the Company will use all
reasonable care to identify and notify the Investment Company
promptly concerning any situation which presents or appears likely
to present the probability of such a claim for indemnification
against the Investment Company. The Investment Company shall have
the option to defend the Company against any claim which may be the
subject of this indemnification. In the event that the Investment
Company so elects, it will so notify the Company and thereupon the
Investment Company shall take over complete defense of the claim,
and the Company shall in such situation initiate no further legal or
other expenses for which it shall seek indemnification under this
Article. the Company shall in no case confess any claim or make any
compromise in any case in which the Investment Company will be asked
to indemnify the Company except with the Investment Company's
written consent.
SECTION THREE: TRANSFER AGENCY SERVICES.
ARTICLE 11. TERMS OF APPOINTMENT.
Subject to the terms and conditions set forth in this Agreement, the
Investment Company hereby appoints the Company to act as, and the Company
agrees to act as, transfer agent and dividend disbursing agent for each
Fund's Shares, and agent in connection with any accumulation, open-account
or similar plans provided to the shareholders of any Fund
(`Shareholder(s)''), including without limitation any periodic investment
plan or periodic withdrawal program.
ARTICLE 12. DUTIES OF THE COMPANY.
The Company shall perform the following services in accordance with
Proper Instructions as may be provided from time to time by the Investment
Company as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase
of shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the ``Custodian'). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate
to the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the
provisions of its governing document and the then-current
Prospectus of the Fund. The Company shall prepare and mail or
credit income, capital gain, or any other payments to
Shareholders. As the Dividend Disbursing Agent, the Company
shall, on or before the payment date of any such distribution,
notify the Custodian of the estimated amount required to pay
any portion of said distribution which is payable in cash and
request the Custodian to make available sufficient funds for
the cash amount to be paid out. The Company shall reconcile the
amounts so requested and the amounts actually received with the
Custodian on a daily basis. If a Shareholder is entitled to
receive additional Shares by virtue of any such distribution or
dividend, appropriate credits shall be made to the
Shareholder's account, for certificated Funds and/or Classes,
delivered where requested; and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Investment Company, each Fund and Class
and its Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall
notify the Funds on a daily basis of the total amount of
redemption requests processed and monies paid to the Company by
the Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to
procedures described in the then-current Prospectus of the
Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor,
and shall effect such redemption at the price applicable to the
date and time of receipt of documents complying with said
procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission (``SEC') a record of the
total number of Shares of the Fund and/or Class which are
authorized, based upon data provided to it by the Fund, and
issued and outstanding. The Company shall also provide the Fund
on a regular basis or upon reasonable request with the total
number of Shares which are authorized and issued and
outstanding, but shall have no obligation when recording the
issuance of Shares, except as otherwise set forth herein, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Investment Company or the Fund to include a record for each
Shareholder's account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall forthwith
upon the Fund's demand, turn over to the Fund and cease to
retain in the Company's files, records and documents created
and maintained by the Company pursuant to this Agreement, which
are no longer needed by the Company in performance of its
services or for its protection. If not so turned over to the
Fund, such records and documents will be retained by the
Company for six years from the year of creation, during the
first two of which such documents will be in readily accessible
form. At the end of the six year period, such records and
documents will either be turned over to the Fund or destroyed
in accordance with Proper Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the
following information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for ``blue sky''purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies,
and, if required, mail to Shareholders, such notices for
reporting dividends and distributions paid as are required to
be so filed and mailed and shall withhold such sums as are
required to be withheld under applicable federal and state
income tax laws, rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other conformable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund (and/or Class) sold in
each state (``blue sky reporting'). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's (and/or Class's) state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
ARTICLE 13. DUTIES OF THE INVESTMENT COMPANY.
A. Compliance
The Investment Company or Fund assume full responsibility for the
preparation, contents and distribution of their own and/or their
classes' Prospectus and for complying with all applicable
requirements of the Securities Act of 1933, as amended (the ``1933
Act''), the 1940 Act and any laws, rules and regulations of
government authorities having jurisdiction.
B. Share Certificates
The Investment Company shall supply the Company with a sufficient
supply of blank Share certificates and from time to time shall renew
such supply upon request of the Company. Such blank Share
certificates shall be properly signed, manually or by facsimile, if
authorized by the Investment Company and shall bear the seal of the
Investment Company or facsimile thereof; and notwithstanding the
death, resignation or removal of any officer of the Investment
Company authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile
signature of such officer until otherwise directed by the Investment
Company.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
ARTICLE 14. COMPENSATION AND EXPENSES.
A. Annual Fee
For performance by the Company pursuant to Section Three of this
Agreement, the Investment Company and/or the Fund agree to pay the
Company an annual maintenance fee for each Shareholder account as
agreed upon between the parties and as may be added to or amended
from time to time. Such fees may be changed from time to time
subject to written agreement between the Investment Company and the
Company. Pursuant to information in the Fund Prospectus or other
information or instructions from the Fund, the Company may sub-
divide any Fund into Classes or other sub-components for
recordkeeping purposes. The Company will charge the Fund the same
fees for each such Class or sub-component the same as if each were a
Fund.
B. Reimbursements
In addition to the fee paid under Article 14.A. above, the
Investment Company and/or Fund agree to reimburse the Company for
out-of-pocket expenses or advances incurred by the Company for the
items agreed upon between the parties, as may be added to or amended
from time to time. In addition, any other expenses incurred by the
Company at the request or with the consent of the Investment Company
and/or the Fund, will be reimbursed by the appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than
monthly, and shall be paid daily upon request of the Company. The
Company will maintain detailed information about the compensation
and out-of-pocket expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Investment Company and/or the Funds and a duly
authorized officer of the Company.
SECTION FOUR: GENERAL PROVISIONS.
ARTICLE 15. PROPER INSTRUCTIONS.
As used throughout this Agreement, a ``Proper Instruction'' means a
writing signed or initialed by one or more person or persons as the Board
shall have from time to time authorized. Each such writing shall set forth
the specific transaction or type of transaction involved. Oral instructions
will be deemed to be Proper Instructions if (a) the Company reasonably
believes them to have been given by a person previously authorized in
Proper Instructions to give such instructions with respect to the
transaction involved, and (b) the Investment Company, or the Fund, and the
Company promptly cause such oral instructions to be confirmed in writing.
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Investment
Company, or the Fund, and the Company are satisfied that such procedures
afford adequate safeguards for the Fund's assets. Proper Instructions may
only be amended in writing.
ARTICLE 16. ASSIGNMENT.
Except as provided below, neither this Agreement nor any of the rights
or obligations under this Agreement may be assigned by either party without
the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. With regard to Transfer Agency Services, the Company may without
further consent on the part of the Investment Company subcontract
for the performance of Transfer Agency Services with
(1) its subsidiary, Federated Shareholder Service Company, a
Delaware business trust, which is duly registered as a transfer
agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended, or any succeeding statute (``Section
17A(c)(1)''); or
(2) such other provider of services duly registered as a transfer
agent under Section 17A(c)(1) as Company shall select.
The Company shall be as fully responsible to the Investment Company
for the acts and omissions of any subcontractor as it is for its own
acts and omissions.
C. With regard to Fund Accounting Services, Administrative Services and
Custody Procurement Services, the Company may without further
consent on the part of the Investment Company subcontract for the
performance of such services with Federated Administrative Services,
a wholly-owned subsidiary of the Company.
D. The Company shall upon instruction from the Investment Company
subcontract for the performance of services under this Agreement
with an Agent selected by the Investment Company, other than as
described in B. and C. above; provided, however, that the Company
shall in no way be responsible to the Investment Company for the
acts and omissions of the Agent.
ARTICLE 17. DOCUMENTS.
A. In connection with the appointment of the Company under this
Agreement, the Investment Company shall file with the Company the
following documents:
(1) A copy of the Charter and By-Laws of the Investment Company and
all amendments thereto;
(2) A copy of the resolution of the Board of the Investment Company
authorizing this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Investment Company or the Funds in the forms approved by the
Board of the Investment Company with a certificate of the
Secretary of the Investment Company as to such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following
documents:
(1) Each resolution of the Board of the Investment Company
authorizing the original issuance of each Fund's, and/or
Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document
and the By-Laws of the Investment Company;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for
fund accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such
forms;
(6) Such other certificates, documents or opinions which the
Company may, in its discretion, deem necessary or appropriate
in the proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
ARTICLE 18. REPRESENTATIONS AND WARRANTIES.
A. Representations and Warranties of the Company
The Company represents and warrants to the Fund that:
(1) it is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Pennsylvania;
(2) It is duly qualified to carry on its business in each
jurisdiction where the nature of its business requires such
qualification, and in the Commonwealth of Pennsylvania;
(3) it is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this
Agreement;
(4) all requisite corporate proceedings have been taken to
authorize it to enter into and perform its obligations under
this Agreement;
(5) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement;
(6) it is in compliance with federal securities law requirements
and in good standing as an administrator and fund accountant;
and
B. Representations and Warranties of the Investment Company
The Investment Company represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Investment Company is an open-end investment company
registered under the 1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each
Fund being offered for sale.
ARTICLE 19. STANDARD OF CARE AND INDEMNIFICATION.
A. Standard of Care
With regard to Sections One and Three, the Company shall be held to
a standard of reasonable care in carrying out the provisions of this
Contract. The Company shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Investment Company) on
all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws
or regulations, and is in good faith and without negligence.
B. Indemnification by Investment Company
The Company shall not be responsible for and the Investment Company
or Fund shall indemnify and hold the Company, including its
officers, directors, shareholders and their agents, employees and
affiliates, harmless against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liabilities arising
out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Investment Company
or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or
subcontractors and furnished to it by or on behalf of the
Fund, its Shareholders or investors regarding the
purchase, redemption or transfer of Shares and Shareholder
account information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or
subcontractors from Advisers, Sub-advisers or other third
parties contracted by or approved by the Investment
Company of Fund for use in the performance of services
under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Investment Company.
(3) The reliance on, or the carrying out by the Company or its
agents or subcontractors of Proper Instructions of the
Investment Company or the Fund.
(4) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be
registered in such state or in violation of any stop order or
other determination or ruling by any federal agency or any
state with respect to the offer or sale of such Shares in such
state.
Provided, however, that the Company shall not be protected by
this Article 19.B. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties or failure to
meet the standard of care set forth in 19.A. above.
C. Reliance
At any time the Company may apply to any officer of the Investment
Company or Fund for instructions, and may consult with legal counsel
with respect to any matter arising in connection with the services
to be performed by the Company under this Agreement, and the Company
and its agents or subcontractors shall not be liable and shall be
indemnified by the Investment Company or the appropriate Fund for
any action reasonably taken or omitted by it in reliance upon such
instructions or upon the opinion of such counsel provided such
action is not in violation of applicable federal or state laws or
regulations. The Company, its agents and subcontractors shall be
protected and indemnified in recognizing stock certificates which
are reasonably believed to bear the proper manual or facsimile
signatures of the officers of the Investment Company or the Fund,
and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 19 shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party
seeking indemnification shall promptly notify the other party of
such assertion, and shall keep the other party advised with respect
to all developments concerning such claim. The party who may be
required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The
party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be
required to indemnify it except with the other party's prior written
consent.
ARTICLE 20. TERM AND TERMINATION OF AGREEMENT.
A. The initial term of this Agreement shall commence on the date
hereof, and extend for a period of three years following the
first date upon which each of the Investment Company's existing
Funds have sufficient average daily net assets, in each case,
such that the Company will begin to earn a sum not less than
its minimum annualized administrative fee per existing Fund,
pursuant to Article 9 of this Agreement ("Initial Term").
B. During any term of this Agreement, each time the Investment
Company adds a new Fund, an additional term shall commence on
the first date upon which the new Fund has sufficient average
daily net assets such that the Company will begin to earn a sum
not less than its minimum annualized administrative fee in
connection with the new Fund pursuant to Article 9 of this
Agreement ("Additional Term"). Such Additional Term shall
extend to the later to occur of (i) the second anniversary of
the commencement of the Additional Term, or (ii) the expiration
of the Initial Term.
C. During any term of this Agreement, each time the Investment
Company adds a Class to any Fund, an additional term shall
commence on the later to occur of (i) the first date upon which
the relevant Fund has sufficient average daily net assets such
that the Company will begin to earn a sum not less than its
minimum annualized administrative fee pursuant to Article 9 of
this Agreement, or (ii) the effective date of the registration
statement or post-effective amendment registering the new Class
("Class Term"). Such Class Term shall extend to the later to
occur of (i) the second anniversary of the commencement of the
Class Term, or (ii) the expiration of the Initial Term.
D. Upon the expiration of any term, this Agreement shall be
automatically renewed each year for an additional term of one
year, unless notice of termination has been delivered by either
party to the other no less than one year before the beginning
of any such additional term.
Funds that merge or dissolve during the Initial Term, Additional Term,
or Class Term, as applicable, shall cease to be a party on the effective
date of such merger or dissolution.
ARTICLE 21. AMENDMENT.
This Agreement may be amended or modified by a written agreement
executed by both parties.
ARTICLE 22. INTERPRETIVE AND ADDITIONAL PROVISIONS.
In connection with the operation of this Agreement, the Company and the
Investment Company may from time to time agree on such provisions
interpretive of or in addition to the provisions of this Agreement as may
in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, provided that
no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the Charter. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
ARTICLE 23. GOVERNING LAW.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts,
without regard to the conflict of laws principles thereof.
ARTICLE 24. NOTICES.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Investment Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Company at Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779,
or to such other address as the Investment Company or the Company may
hereafter specify, shall be deemed to have been properly delivered or given
hereunder to the respective address.
ARTICLE 25. COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
ARTICLE 26. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF THE
COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them
personally, and the obligations of this Agreement are not binding upon any
of the Trustees or Shareholders of the Company, but bind only the
appropriate property of the Fund, or Class, as provided in the Declaration
of Trust.
ARTICLE 27. MERGER OF AGREEMENT.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
ARTICLE 28. SUCCESSOR AGENT.
If a successor agent for the Investment Company shall be appointed by
the Investment Company, the Company shall upon termination of this
Agreement deliver to such successor agent at the office of the Company all
properties of the Investment Company held by it hereunder. If no such
successor agent shall be appointed, the Company shall at its office upon
receipt of Proper Instructions deliver such properties in accordance with
such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Company on or before
the date when such termination shall become effective, then the Company
shall have the right to deliver to a bank or trust company, which is a
`bank'' as defined in the 1940 Act, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $2,000,000, all properties held by the
Company under this Agreement. Thereafter, such bank or trust company shall
be the successor of the Company under this Agreement.
ARTICLE 29. FORCE MAJEURE.
The Company shall have no liability for cessation of services hereunder
or any damages resulting therefrom to the Fund as a result of work
stoppage, power or other mechanical failure, natural disaster, governmental
action, communication disruption or other impossibility of performance.
ARTICLE 30. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign all
of or a substantial portion of its business to a successor, or to a party
controlling, controlled by, or under common control with such party.
Nothing in this Article 30 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
ARTICLE 31. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
ARTICLE 32. LIMITATIONS OF LIABILITY OF TRUSTEES AND SHAREHOLDERS OF
THE INVESTMENT COMPANY.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Investment Company and signed by an authorized officer of
the Investment Company, acting as such, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be
deemed to have been made by any of them individually or to impose any
liability on any of them personally, and the obligations of this Agreement
are not binding upon any of the Trustees or Shareholders of the Investment
Company, but bind only the property of the Fund, or Class, as provided in
the Declaration of Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first above
written.
WESMARK FUNDS
By: /s/ S. Elliott Cohan
S. Elliott Cohan
Assistant Secretary
FEDERATED SERVICES COMPANY
By:/s/ Thomas J. Ward
Thomas J. Ward
Secretary
Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
SHAREHOLDER SERVICES AGREEMENT
AGREEMENT made as of the 1st day of March, 1996, by and between
WESMARK FUNDS, a Massachusetts business trust, having its principal office
and place of business at Federated Investors Tower, Pittsburgh, PA 15222-
3779 (the "Trust"), on behalf of the portfolios (individually referred to
herein as a "Fund" and collectively as "Funds") of the Trust set forth in
Schedule A hereto, and WesBanco Bank Wheeling (hereinafter `WesBanco'') a
West Virginia bank having its principal office and place of business in
Wheeling, West Virginia.
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940
Act"), with authorized and issued Shares of common stock ("Shares"); and
WHEREAS, the Trust wishes to retain WesBanco to provide certain
shareholder services for each of the portfolios of the Trust, including any
classes of Shares issued by any Fund ("Classes"), on whose behalf the Trust
executes an exhibit to this Agreement and the WesBanco is willing to
furnish such services;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto agree as follows:
Article 1. Appointment.
The Trust hereby appoints WesBanco to provide certain shareholder
services to the Funds for the period and on the terms set forth in this
Agreement. WesBanco accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Article 3.
Article 2. Services and Duties.
Subject to the supervision and control of the Trust's Board of
Trustees, WesBanco will assist the Trust, the Funds, and/or the Classes
with regard to shareholder services and in connection therewith undertakes
to do the following specific services:
A.Establishing new accounts;
B.Processing transactions including purchases, redemptions, and
exchanges;
C.Maintaining files, i.e., processing change of addresses,
adding/changing wiring instructions or systematic
investment/withdrawal plans;
D.Reviewing the activity in applicable accounts;
E.Providing training and supervision of its personnel;
F.Maintaining and distributing current copies of prospectuses and
shareholder reports to current shareholders;
G.Serving as liaison between WesBanco, Transfer Agent (or Sub-
Transfer Agent), Portfolio Recordkeepers and Legal Counsel in
connection with shareholder matters;
2
H.Responding to customers' questions about the Funds and/or Classes;
I.Maintaining files of shareholder inquiries and correspondence;
J.Verifying shareholder signatures in conjunction with redemptions or
changes in account classifications; and
K.Surveying shareholders for information concerning satisfaction with
mutual fund products and services.
Nothing contained herein shall be construed to authorize WesBanco to
act as Transfer Agent of the Funds and/or Classes (it being understood that
Federated Services Company or its designee provides such services) or to
perform any services hereunder primarily intended to result in the sale of
shares of the Trust, the Funds or the Classes.
Article 3. Compensation and Allocation of Expenses.
A.Each Fund will compensate WesBanco for its services rendered
pursuant toArticle 2 of this Agreement in accordance with the fees
set forth on Fee Schedule B, annexed hereto and incorporated
herein. No Fund will bear out-of-pocket expenses of WesBanco.
B.The fee for the period from the effective date of application of
this Agreement with respect to a Fund or a Class to the end of the
initial month shall be prorated according to the proportion that
such period bears to the full month period. Upon any termination
of this Agreement before the end of any month, the fee for such
3
period shall be prorated according to the proportion which such
period bears to the full month period. For purposes of determining
fees payable to WesBanco, the value of a Fund's net assets shall be
computed at the time and in the manner specified in each Fund's
Prospectus.
C.WesBanco in its sole discretion may from time to time employ or
associate with itself such person or persons as WesBanco may
believe to be particularly suited to assist it in performing
services under this Agreement. Such person or persons may be
officers and employees who are employed by both WesBanco and the
Trust. The compensation of such person or persons shall be paid by
WesBanco and no obligation shall be incurred on behalf of the
Trust, the Funds, or the Classes in such respect.
D.Assignment. This Agreement and the rights and duties hereunder
shall not be assignable with respect to the Trust without the prior
written consent of the other party.
Article 4. Standard of Care/Indemnification.
A.Standard of Care
WesBanco shall be held to a standard of reasonable care in carrying
out the provisions of this Agreement; provided, however that WesBanco
shall be held to any higher standard of care which would be imposed
upon WesBanco by any applicable law or regulation even though such
stated standard of care was not part of this Agreement.
4
B.Indemnification by the Trust
WesBanco shall not be responsible for and the Trust shall indemnify
and hold WesBanco harmless against any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of
or attributable to: (1) The Trust's refusal or failure to comply with
the terms of this Agreement; or (2) The offer or sale of Shares in
violation of any requirement under the federal securities law or
regulations or the securities laws or regulations of any state that
such Shares be registered in such state or in violation of any stop
order or other determination or ruling by any federal agency or in any
state with respect to the offer or sale of such Shares in such state,
provided, however, that WesBanco shall not be protected by this
Article 5.B. from liability for any act or omission resulting from
WesBanco's lack of good faith, negligence, willful misconduct, or
failure to meet the standard of care set forth in Article 5.A., above,
or for violations of federal or state securities law arising out of or
attributable to conduct or activity of WesBanco.
C.Indemnification by WesBanco
WesBanco shall indemnify and hold the Trust harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributed to WesBanco's
refusal or failure to comply with the terms of this Agreement
provided, however, that the Trust shall not be protected by this
Article 5.C. from liability for any act or omission resulting from the
Trust's lack of good faith, negligence, or willful misconduct.
5
D.Notification
In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
Article 5. Termination of Agreement.
This Agreement may be terminated by either party upon sixty (60) days
written notice to the other.
Article 6. Limitations of Liability
A.Limitations of Liability of Trustees, Officers, Employees, Agents
and Shareholders of the Trust.
WesBanco is expressly put on notice of the limitation of liability as
set forth in the Trust's Declaration of Trust and agrees that the
obligations asumed to be the Trust's pursuant to this agreement shall be
limited in any case to the Trust and its assets and that WesBanco shall not
6
seek satisfaction of any such obligations from trustees, officers,
employees, agents or shareholders of the Trust.
Article 7. Amendment.
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the
Board of Trustees of the Trust.
Article 8. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, WesBanco and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion
be consistent with the general tenor of this Agreement. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable Federal or state
regulations or any provision of the Trust's Declaration of Trust. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Agreement.
Article 9. Miscellaneous.
A.Pennsylvania Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth
7
of Pennsylvania, without regard to the conflict of laws principles
thereof.
Article 10. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to WesBanco at 1
Bank Plaza, Wheeling, West Virginia, 26003-3565, or to such other address
as the Trust or WesBanco may hereafter specify, shall be deemed to have
been properly delivered or given hereunder to the respective address.
Article 11. Counterparts.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
Article 12. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
8
ATTEST: WESMARK FUNDS
/s/ John W. McGonigle By:/s/ Richard B. Fisher
Secretary Vice President
ATTEST: WESBANCO BANK WHEELING
/s/ Thomas B. McGaughy By:/s/ Jerome B. Schmitt
Assistant Secretary Vice President
Schedule A
Shareholder Services Agreement
between
WESMARK FUNDS
and
WESBANCO BANK WHEELING
9
WESMARK FUNDS (the "Trust") consists of the following portfolios and
classes:
Name
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
Schedule B
Shareholder Services Agreement
between
WESMARK FUNDS
and
WESBANCO BANK WHEELING
Compensation for Shareholder Services
10
For the services described in this Agreement, each Fund or class shall pay
the WesBanco an annual fee of 0.25 of 1% of its average daily net assets.
WesBanco may voluntarily waive all or a portion of its fee at any time
without notice.
Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AMENDMENT NO. 1
to
SCHEDULE A
of the
SHAREHOLDER SERVICES AGREEMENT
between
WESMARK FUNDS and WESBANCO BANK WHEELING
contract dated March 1, 1996
WESMARK FUNDS (the `Trust'') consists of the following portfolios and
classes:
Name
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
WESMARK GROWTH FUND
EXHIBIT 15 (I) UNDER FORM N-1A
EXHIBIT 1 UNDER ITEM 601/REG. S-K
WESMARK FUNDS
DISTRIBUTION PLAN
This Distribution Plan ("Plan") is adopted as of March 1, 1996, by
the Board of Trustees of WesMark Funds (the "Trust"), a Massachusetts
business trust with respect to certain classes of shares ("Classes")
of the portfolios of the Trust (the "Funds") set forth in exhibits
hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended ("Act"), so as to allow the Trust to
make payments as contemplated herein, in conjunction with the
distribution of Classes of the Funds ("Shares").
2. This Plan is designed to finance activities of Edgewood Services,
Inc. ("ESI") principally intended to result in the sale of Shares to
include: (a) providing incentives to financial institutions
("Financial Institutions") to sell Shares; (b) advertising and
marketing of Shares to include preparing, printing and distributing
prospectuses and sales literature to prospective shareholders and
with Financial Institutions; and (c) implementing and operating the
Plan. In compensation for services provided pursuant to this Plan,
ESI will be paid a fee in respect of the following Classes set forth
on the applicable exhibit.
3. Any payment to ESI in accordance with this Plan will be made
pursuant to the "Distributor's Contract" entered into by the Trust
and ESI. Any payments made by ESI to Financial Institutions with
funds received as compensation under this Plan will be made pursuant
to the "Financial Institution Agreement" entered into by ESI and the
Institution.
4. ESI has the right (i) to select, in its sole discretion, the
Financial Institutions to participate in the Plan and (ii) to
terminate without cause and in its sole discretion any Financial
Institution Agreement.
5. Quarterly in each year that this Plan remains in effect, ESI shall
prepare and furnish to the Board of Trustees of the Trust, and the
Board of Trustees shall review, a written report of the amounts
expended under the Plan and the purpose for which such expenditures
were made.
6. This Plan shall become effective with respect to each Class
(i) after approval by majority votes of: (a) the Trust's Board of
Trustees; (b) the members of the Board of the Trust who are not
interested persons of the Trust and have no direct or indirect
financial interest in the operation of the Trust's Plan or in any
related documents to the Plan ("Disinterested Trustees"), cast in
person at a meeting called for the purpose of voting on the Plan;
and (c) the outstanding voting securities of the particular Class ,
as defined in Section 2(a)(42) of the Act and (ii) upon execution of
an exhibit adopting this Plan with respect to such Class.
7. This Plan shall remain in effect with respect to each Class
presently set forth on an exhibit and any subsequent Classes added
pursuant to an exhibit during the initial year of this Plan for the
period of one year from the date set forth above and may be
continued thereafter if this Plan is approved with respect to each
Class at least annually by a majority of the Trust's Board of
Trustees and a majority of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on such Plan.
If this Plan is adopted with respect to a Class after the first
annual approval by the Trustees as described above, this Plan will
be effective as to that Class upon execution of the applicable
exhibit pursuant to the provisions of paragraph 6(ii) above and will
continue in effect until the next annual approval of this Plan by
the Trustees and thereafter for successive periods of one year
subject to approval as described above.
8. All material amendments to this Plan must be approved by a vote of
the Board of Trustees of the Trust and of the Disinterested
Trustees, cast in person at a meeting called for the purpose of
voting on it.
9. This Plan may not be amended in order to increase materially the
costs which the Classes may bear for distribution pursuant to the
Plan without being approved by a majority vote of the outstanding
voting securities of the Classes as defined in Section 2(a)(42) of
the Act.
10. This Plan may be terminated with respect to a particular Class at
any time by: (a) a majority vote of the Disinterested Trustees; or
(b) a vote of a majority of the outstanding voting securities of the
particular Class as defined in Section 2(a)(42) of the Act; or (c)
by ESI on 60 days' notice to the Trust.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Trustees of the Trust shall be committed to the
discretion of the Disinterested Trustees then in office.
12. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan
shall be subject to termination, without penalty, pursuant to the
provisions of Paragraph 10 herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the Commonwealth of Pennsylvania.
EXHIBIT A
to the
Distribution Plan
WESMARK FUNDS
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
This Distribution Plan is adopted by WesMark Funds with respect to
the Class of Shares of the portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
ESI will be paid a monthly fee computed at the annual rate of .25 of
1% of the average aggregate net asset value of the WesMark West
Virginia Municipal Bond Fund held during the month.
Witness the due execution hereof this 1st day of March, 1996.
WESMARK FUNDS
By: /s/ Edward C. Gonzales
President
Exhibit 15(ii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT B
to the
Distribution Plan
WESMARK FUNDS
WESMARK GROWTH FUND
This Distribution Plan is adopted by WesMark Funds with respect to
the Class of Shares of the portfolio of the Trust set forth above.
In compensation for the services provided pursuant to this Plan,
ESI will be paid a monthly fee computed at the annual rate of .25 of
1% of the average aggregate net asset value of the WesMark Growth Fund
held during the month.
Witness the due execution hereof this 1st day of December, 1996.
WESMARK FUNDS
By:
President
EXHIBIT 19 UNDER FORM N-1A
EXHIBIT 24 UNDER ITEM 601/REG. S-K
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of WESMARK FUNDS
and the
------
Deputy General Counsel of Federated Investors, and each of them, their true
and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution for them and in their names, place and stead, in any and
all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933,
the Securities Exchange Act of 1934 and the Investment Company Act of 1940,
by means of the Securities and Exchange Commission's electronic disclosure
system known as EDGAR; and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to sign and perform each and every act and
thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as each of them might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents,
or any of them, or their or his substitute or substitutes, may lawfully do
or cause to be done by virtue thereof.
SIGNATURES TITLE DATE
/s/JOHN F. DONAHUE Chairman and TrusteeOctober 24, 1996
John F. Donahue (Chief Executive Officer)
/s/EDWARD C. GONZALES President and TreasurerOctober 24, 1996
Edward C. Gonzales (Principal Financial and
Accounting Officer)
/s/THOMAS G. BIGLEY Trustee October 24, 1996
Thomas G. Bigley
/s/JOHN T. CONROY, JR. Trustee October 24, 1996
John T. Conroy, Jr.
/s/WILLIAM J. COPELAND Trustee October 24, 1996
William J. Copeland
SIGNATURES TITLE DATE
/s/JAMES E. DOWD Trustee October 24, 1996
James E. Dowd
/s/LAWRENCE D. ELLIS, M.D. Trustee October 24, 1996
Lawrence D. Ellis, M.D.
/s/EDWARD L. FLAHERTY, JR. Trustee October 24, 1996
Edward L. Flaherty, Jr.
/s/PETER E. MADDEN Trustee October 24, 1996
Peter E. Madden
/s/GREGOR F. MEYER Trustee October 24, 1996
Gregor F. Meyer
/s/JOHN E. MURRAY, JR. Trustee October 24, 1996
John E. Murray, Jr.
/s/WESLEY W. POSVAR Trustee October 24, 1996
Wesley W. Posvar
/s/MARJORIE P. SMUTS Trustee October 24, 1996
Marjorie P. Smuts
Sworn to and subscribed before me this 24th day of October, 1996.
/s/MARIE M. HAMM
Marie M. Hamm
Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
ELECTRONIC COMMUNICATIONS AND RECORDKEEPING
AGREEMENT
BETWEEN
FEDERATED SERVICES COMPANY
AND
WESBANCO BANK WHEELING
AGREEMENT, made this 1st day of March, 1996, between FEDERATED
SERVICES COMPANY on behalf of itself and its subsidiaries ("Federated"),
with offices at Federated Investors Tower, Pittsburgh, Pennsylvania 15222-
3779, and WesBanco Bank Wheeling, on behalf of itself and its affiliates
and subsidiaries (the "Institution"), with offices at 1 Bank Plaza,
Wheeling, West Virginia 26003-3565.
WHEREAS, Institution desires to perform certain services on behalf of
its customers who are or may become Shareholders (as hereafter defined) of
mutual funds for which Federated or its affiliates act as transfer agent;
and administrator, distributor or adviser ("the Funds");
WHEREAS, performance of such services may require access to
Federated's electronic communication and recordkeeping systems or may
require Federated or the Funds to act upon information about Shareholders
(as hereafter defined) or their Accounts (as hereafter defined) supplied by
Institution;
WHEREAS, Federated is willing to provide such access or rely upon such
information as hereinafter provided, subject to the agreement of
Institution to provide indemnification to Federated;
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and for good and valuable consideration, receipt of which is hereby
acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
SECTION 1
CERTAIN DEFINITIONS
SECTION 1.1 Account. "Account" shall mean any shareholder account in
any Fund for which Institution provides services on behalf of its customers
who are or may become shareholders of the Funds.
SECTION 1.2 Authorized Person. "Authorized Person" shall mean each
agent or employee of Institution who is duly authorized to give
Instructions (as such term is defined below at Section 1.3) pursuant to
this Agreement.
SECTION 1.3 Instruction(s). "Instruction(s)" shall mean any
instruction or communication including, but not limited to, an oral or
written instruction or communication, and any such instruction or
communication originated by facsimile indicating that such transmission
originated from Institution, and instructions or communications received
electronically. Instructions may include, but are not limited to, the
following:
(a) communicating account openings through computer terminals located
on the Institution's premises (the "computer terminals"), through
a toll-free telephone number or otherwise;
(b) communicating account closings via the computer terminals,
through a toll-free telephone number or otherwise;
(c) entering purchase transactions through the computer terminals,
through a toll-free telephone number or otherwise;
(d) entering redemption transactions through the computer terminals,
through a toll-free telephone number or otherwise;
(e) electronically transferring and receiving funds for purchasing
and redeeming shares of a Fund, and confirming and reconciling
all such transactions; and
(f) account maintenance activity in Fund accounts.
SECTION 1.4 Shareholder. "Shareholder" shall mean the shareholder of
record of any Account.
SECTION 2
OBLIGATIONS OF INSTITUTION
SECTION 2.1 Authorization by Institution; Confirmation of Oral
Instructions. Institution hereby authorizes Federated to accept, rely upon
and act upon all Instructions received by Federated from or reasonably
believed to be from Institution, all without the delivery by Institution of
written authorization of the Shareholder. Institution authorizes Federated
to accept, rely upon and act upon oral Instructions by any person
identifying himself as an Authorized Person and to tape record such
Instructions. Institution shall confirm all oral Instructions on the same
day as given by facsimile, however, Federated may rely on the oral
Instructions regardless of whether such facsimile is received.
SECTION 2.2 Certificate of Authorized Persons. Institution shall
provide a certificate signed by two authorized officers of Institution,
setting forth the name and specimen signature of each Authorized Person
(the "Certificate"). Institution shall promptly notify Federated if any
such present Authorized Person ceases to be an Authorized Person and shall
send to Federated a new Certificate in similar form in the event that other
or additional Authorized Persons are elected or appointed. Until Federated
receives any such new Certificate, Federated may rely upon Instructions
received from or reasonably believed to be received from the present
Authorized Persons as set forth in the Certificate or in any subsequently
issued Certificate.
SECTION 2.3 Duties, Functions and Responsibilities. Institution
shall undertake the duties, functions and responsibilities contemplated
hereby in a businesslike and competent manner. Institution shall conduct
its activities under this Agreement in accordance with (a) all applicable
laws, rules and regulations; (b) the then-current registration statements
of the Funds; and (c) industry standards.
SECTION 2.4 Information about Shareholders. Institution shall
provide to Federated, with respect to each Account, the following
information, and any subsequent changes to such information, which
Institution hereby certifies is, and shall remain, true and correct: (a)
the full and complete name of the Shareholder for Internal Revenue Service
information reporting; (b) the Shareholder's address; (c) the Shareholder's
Taxpayer Identification Number or notice of foreign status and applicable
backup or penalty withholding status; and (d) the state or country code of
tax residence of the Shareholder (if different from address). Institution
shall provide Federated with such information in writing or by electronic
transmission and any other medium that Federated reasonably requests.
SECTION 2.5 Reconciling to Fund Records. The book entry records of
the shareholder recordkeeping agent for each Fund shall be determinative
with respect to each Account. Institution will notify Federated in writing
of any discrepancy between its records and the records of Federated and the
Fund within a reasonable period of time after it becomes aware of such
discrepancy. Notwithstanding anything to the contrary, Institution solely
shall be responsible and liable for any discrepancies between its records
and the records of Federated and the Funds, provided that such discrepancy
is not solely a result of the negligence of Federated or the Funds.
SECTION 2.6 Retirement Accounts To the extent Institution provides
any processing required in connection with acceptance of retirement plan
accounts, including Individual Retirement Accounts ("IRA's") as defined
under section 408 of the Internal Revenue Code, as amended, Institution
agrees to be responsible for all required documentation in connection with
such accounts, specifically including acceptance on behalf of the
retirement plan custodian. Federated hereby authorizes Institution to
provide such authorization in the name of such custodian or trustee.
ARTICLE 3
OBLIGATIONS OF FEDERATED
SECTION 3.1 Acceptance of Instructions. Federated may, for all
Accounts, accept, rely upon and act upon all Instructions received by
Federated from or reasonably believed to be from Institution, all without
the delivery by Institution of written Instructions executed by a
Shareholder.
SECTION 3.2 Reliance by Federated. Federated may conclusively rely
upon any Instructions received by it by any person whom Federated
reasonably believes to be an Authorized Person.
SECTION 3.3 Incomplete or Unclear Instructions. Federated shall not
be required to act on any Instructions that, in its sole determination, are
incomplete or unclear, and may defer action on such Instructions until
Federated has resolved any question to its reasonable satisfaction.
Federated shall notify Institution, by telephone or by facsimile, within
one business day after it fails to act on any Instructions that it has
determined are incomplete or unclear.
SECTION 3.4 Limitation of Access to Federated's Electronic
Communication and Recordkeeping Systems. Federated may limit access to its
electronic communication and recordkeeping systems. Notwithstanding any
such limitation, Federated may act and rely upon all Instructions in any
form received by Federated from or reasonably believed to be from an
Authorized Person.
SECTION 3.5 Processing Instructions and Communications. Federated
shall correctly process any Instructions from Institution and execute the
Institution's Instructions within a reasonable period of time of receipt,
subject to any conditions or restrictions in the currently effective
registration statement of each Fund or other applicable restrictions.
SECTION 3.6 Performance as Transfer Agent. Federated shall perform
all of its obligations under the Transfer Agency Agreement dated as of
March 1, 1996.
ARTICLE 4
WARRANTIES AND REPRESENTATIONS OF INSTITUTION
SECTION 4.1 Organization and Authority. Institution warrants and
represents that it is a corporation duly organized in its state of
incorporation and has the power and authority to conduct its business.
Institution is a bank chartered under the laws of the State of West
Virginia. The execution, delivery and performance by Institution of this
Agreement has been duly authorized by all necessary corporate action of
Institution. This Agreement, when executed and delivered, will constitute
the legal, valid and binding obligation of Institution, enforceable against
it in accordance with its terms.
SECTION 4.2 Adequate Facilities. Institution warrants and represents
that it has adequate facilities, equipment, procedures, controls and
skilled personnel to responsibly perform its duties and obligations
hereunder.
SECTION 4.3 Authorization from Shareholders; and Notification to
Shareholders. Institution warrants and represents that:
4.3.1 each Shareholder has authorized Institution to act as
Shareholder's agent and to take any actions contemplated in this
Agreement with respect to each Account of each Shareholder;
4.3.2 such authorization or notification will inform the
Shareholder of all material facts relating to Federated's
electronic communication and recordkeeping systems, including (i)
that Institution is the agent of the Shareholder and that errors
by Institution in providing Instructions or in the use of
Federated's electronic communication and recordkeeping systems
are the responsibility of Institution, and not the Funds or
Federated; (ii) that only Institution is liable to the
Shareholder for actions taken or initiated by Institution; and
(iii) that Institution, the Funds, and Federated are not liable
to the Shareholder for any loss resulting from an erroneous
transaction if the Shareholder does not challenge the transaction
within 30 days after a confirmation of the transaction is sent to
the Shareholder;
4.3.3 Institution shall refrain from issuing Instructions with
respect to a Shareholder's Account immediately upon receipt of
notice that the Shareholder has revoked authorization to give
such Instructions;
4.3.4 all Instructions, including, but not limited to, changes in
registration, transfers, exchanges and liquidations, will be duly
authorized by the Shareholder of such Account and shall be lawful
and not submitted for any improper, inappropriate or illegal
purpose; and
4.3.5 Federated is properly authorized to effect changes in its or
the Funds records upon receipt of Instructions.
SECTION 4.4 Insurance. Institution warrants and represents that
Institution maintains adequate fidelity insurance, errors and omissions
insurance and other insurance coverage appropriate for the Institution's
duties and obligations under this Agreement. Upon written request,
Institution will provide evidence of such insurance coverage and on each
such policy or bond.
SECTION 4.5 Taxpayer Identification. Institution warrants and
represents that each Taxpayer Identification Number or certificate of
foreign status provided by Institution to the Funds and Federated has been
certified, under penalties of perjury, by the Shareholder on the
appropriate Internal Revenue Service form or an acceptable substitute.
Institution agrees that it shall promptly advise the Funds or Federated of
any other matter that may affect the responsibilities of the Funds or
Federated to Shareholders pursuant to the Internal Revenue Code of 1986, as
amended. Institution further agrees that it shall maintain adequate
documentation to verify the foregoing for each Account.
SECTION 4.6 Authority of Authorized Persons. Institution warrants
and represents that:
4.6.1 each Authorized Person set forth on the Certificate has been
duly authorized by a duly elected officer of Institution to
provide Instructions pursuant to this Agreement;
4.6.2 Institution shall adopt, implement and maintain procedures
reasonably designed to ensure the accuracy and integrity of all
Instructions, including, but not limited to, procedures (i)
requiring all Instructions on behalf of Institution to originate
from a specific office (or offices) designated by Institution;
and (ii) limiting the use of each computer terminal used for
transmitting Instructions to Federated's electronic
communication and recordkeeping systems to Authorized Persons
with adequate training and supervision. Upon Federated's
request, Institution shall provide Federated with copies of its
security procedures with respect to the foregoing and shall use
and safeguard any access passwords, codes, manuals or other
information it obtains with respect to Federated's electronic
communication and recordkeeping systems and the data thereon in a
manner consonant with the protection of its own proprietary
business records.
SECTION 4.7 Institution's Financial Condition. Institution
represents and warrants that it shall deliver to Federated its
audited annual report, its quarterly financial reports and such
other financial statements as Federated shall reasonably request
which indicate the Institution's financial condition and, if
applicable, net capital ratio. Institution further represents
and warrants that such statements fairly represent its financial
condition and/or net capital ratio on the date of such statements
and that there has been no material adverse change in its
financial condition and/or net capital ratio since that date.
SECTION 4.8 Confidentiality. Institution shall treat as confidential
all data it receives through Federated's electronic communication and
recordkeeping systems, except to the extent required by applicable law,
rule or regulation.
ARTICLE 5
WARRANTIES AND REPRESENTATIONS OF
FEDERATED SERVICES COMPANY AND ITS
SUBSIDIARY FEDERATED SERVICES COMPANY
SECTION 5.1 Organization and Authority. Federated Services Company
warrants and represents that it is a business trust duly organized in the
State of Delaware and has the power and authority to conduct its business.
The execution, delivery and performance by Federated Services Company of
this Agreement has been duly authorized by all necessary corporate action
of Federated Services Company. This Agreement, when executed and
delivered, will constitute the legal, valid and binding obligation of
Federated Services Company, enforceable against it in accordance with its
terms.
SECTION 5.2 Proper Registration. Federated Services Company warrants
that it has duly registered as transfer agent pursuant to the Securities
Exchange Act of 1934, that its registration remains in full force and
effect, and that it will take all action required to maintain such
registration as a transfer agent, including, without limitation, making all
required filings to the Securities and Exchange Commission and complying
with all rules of the Securities and Exchange Commission applicable to
transfer agents.
SECTION 5.3 Adequate Facilities. Federated Services Company warrant
and represent that they have adequate facilities, equipment, procedures,
controls and skilled personnel to responsibly perform their duties and
obligations hereunder.
SECTION 5.4 Confidentiality. Federated Services Company shall treat
as confidential all data they receive from Institution through Federated's
electronic communication and recordkeeping systems, except to the extent
required by applicable law, rule or regulation.
ARTICLE 6
INDEMNIFICATION
SECTION 6.1 Indemnification by Institution. Institution shall
indemnify and hold harmless the Funds, the Funds' custodian, the Funds'
transfer agent, the Funds' underwriter, the Funds' investment adviser,
Federated, each of their affiliated companies, and all of the divisions,
subsidiaries, directors, trustees, officers, agents, subcontractors,
employees and assigns of each of the foregoing (collectively, "Indemnified
Fund Parties"), against and from any and all demands, damages, liabilities,
and losses, or any threatened, pending or completed actions, claims, suits,
complaints, proceedings, or investigations (including reasonable attorneys'
fees and other costs, including all expenses of litigation or arbitration,
judgments, fines or amounts paid in settlement), to which any of them may
be or become subject as a result or arising out of: (a) any action
reasonably taken by Federated in reliance upon the Institution's
Instructions; (b) any act or omission by Institution or its agents which
constitutes negligence, gross negligence, or willful misconduct; (c) any
breach of the Institution's representations or warranties contained in this
Agreement; (d) the Institution's failure to comply with any of the terms of
this Agreement; (e) the Institution's action or inaction relating to any
duties, functions, procedures or responsibilities undertaken by Institution
pursuant to this Agreement or otherwise, including that which may arise out
of the malfunction of equipment, systems, programs and telephone lines; (f)
the failure by Institution to obtain written authorization from a
Shareholder to facilitate any transaction through Federated's electronic
communication and recordkeeping systems; and (g) Federated's reasonable
acceptance of and reliance on any Instruction without supporting
documentation. Institution shall make all payments hereunder promptly upon
presentation by an Indemnified Fund Party of an invoice therefor, which
invoice relates to any payment, including any partial payment, made by the
Indemnified Fund Party in respect of any and all demands, damages,
liabilities, and losses, or any threatened, pending or completed actions,
claims, suits, complaints, proceedings, or investigations (including
reasonable attorneys fees and other costs, including all expenses of
litigation or arbitration, judgments, fines or amounts paid in settlement),
to which any of them may be or become subject which give rise to
indemnification by Institution under this Agreement. At the request of any
of the Indemnified Fund Parties, Institution shall provide for an
appropriate defense against any circumstances which may give rise to
indemnification by Institution under this Agreement. Institution
represents and warrants that at all times it has sufficient financial
resources, whether through a fidelity bond or otherwise, to meet all of its
indemnification obligations arising under this Agreement. In no event
shall Institution be liable for demands, damages, liabilities and losses
arising out of failure of its equipment or force majeure.
SECTION 6.2 Indemnification by Federated. Federated shall indemnify
and hold harmless Institution, each of the Institution's affiliated
companies, and all of the divisions, subsidiaries, directors, officers,
agents, employees and assigns of each of the foregoing (collectively,
"Indemnified Institution Parties"), against and from any and all demands,
damages, liabilities, and losses, or any threatened, pending or completed
actions, claims, suits, complaints, proceedings, or investigations
(including reasonable attorneys fees and other costs, including all
expenses of litigation or arbitration, judgments, fines or amounts paid in
settlement) to which any of them may be or become subject as a result or
arising out of: (a) any act or omission by Federated or its agents which
constitutes negligence, gross negligence or willful misconduct; (b) any
breach of Federated's representations or warranties contained in this
Agreement; or (c) Federated's failure to comply with any of the terms of
this Agreement. An Indemnified Institution Party may make demand for
indemnification for any payment, including any partial payment, made by the
Indemnified Fund Party in respect of any and all demands, damages,
liabilities, and losses, or any threatened, pending or completed actions,
claims, suits, complaints, proceedings, or investigations (including
reasonable attorneys fees and other costs, including all expenses of
litigation or arbitration, judgments, fines or amounts paid in
settlement), to which any of them may be or become subject which give rise
to indemnification by Institution under this Agreement. At the request of
any of the Indemnified Institution Parties, Federated shall provide for an
appropriate defense against any and all demands, damages, liabilities, and
losses, or any threatened, pending or completed actions, claims, suits,
complaints, proceedings, or investigations (including reasonable attorneys
fees and other costs, including all expenses of litigation or arbitration,
judgments, fines or amounts paid in settlement) to which any of them may be
or become subject which give rise to indemnification by Federated under
this Agreement. In no event shall Federated be liable for demands,
damages, liabilities and losses arising out of failure of its equipment or
force majeure.
SECTION 6.3 Contribution, Cooperation, Good Faith. The parties
recognize that certain circumstances will arise where a loss may not be
clearly attributable to one party or the other. The parties agree to
cooperate with each other and to act in good faith in examining the facts
of such situations, and understand that in certain of such situations it
will be appropriate for both the Fund Indemnified Parties and the
Indemnified Institution Parties to contribute to effect a resolution of the
matter.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1 Termination. Either party may terminate this Agreement
upon 30 days' written notice to the other party. The obligations of Article
6 shall survive the termination of this Agreement.
SECTION 7.2 Force Majeure. Federated and Institution shall have no
liability for cessation of services hereunder or any damages resulting
therefrom to Institution as a result of work stoppage, power or other
mechanical failure, natural disaster, governmental action, communication
disruption or other impossibility of performance.
SECTION 7.3 Choice of Law and Venue. This Agreement shall be
governed by, and construed in accordance with, the laws of The Commonwealth
of Pennsylvania, without regard to conflict of law. The venue shall be The
Western District of Pennsylvania.
SECTION 7.4 Assignment. This Agreement may not be transferred or
assigned by either party without the prior written consent of the other
party (other than pursuant to a consolidation, merger, transfer of all or
substantially all the assets or other business combination transaction) and
any purported transfer or assignment without such consent will be void.
SECTION 7.5 Notice. Whenever notice is required under this
Agreement, it shall be given in writing by first class mail, return receipt
requested, to Federated at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779, attention: Assistant Vice President, Transfer
Agency Services, Federated Services Company, attention: Tom Schmitt; and
to WesBanco Bank Wheeling at 1 Bank Plaza, attention: Jerome B. Schmitt.
SECTION 7.6 Integrity of Data. Institution shall take all reasonable
steps to protect and insure the integrity of the data it transmits into
Federated's electronic communication and recordkeeping systems and to
prevent the damage of records maintained by others, including the Funds or
Federated.
SECTION 7.7 Entire Agreement. This Agreement sets forth the entire
agreement and understanding between the parties as to the subject matter
hereof and supersedes all oral communications and prior writings with
respect thereto, and neither of the parties shall be bound by any
conditions, warranties, or representations with respect to such subject
matter other than as expressly provided herein, or as duly set forth on or
subsequent to the effective date hereof in writing and signed by a proper
and duly authorized representative of the party to be bound thereby.
SECTION 7.8 Attorneys' Fees. If any dispute arising out of this
Agreement is litigated between the parties hereto, the prevailing party
shall be entitled to recover its reasonable attorneys' fees in addition to
any other relief to which it may be entitled.
SECTION 7.9 Waiver of Remedies. A waiver of a breach or a default
under this Agreement shall not be a waiver of any subsequent default.
Failure of either party to enforce compliance with any term or condition of
this Agreement shall not constitute a waiver of such term or condition.
SECTION 7.10 Captions. Captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
SECTION 7.11 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed
an original.
SECTION 7.12 Severability. If any provision of this Agreement is
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 7.13 Amendment. No amendment, modification or waiver in
respect of this Agreement will be effective unless in writing and executed
by each of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written by their respective officers
hereunto duly authorized.
FEDERATED SERVICES COMPANY
By: /s/ R. Jeffrey Niss
Name: R. Jeffrey Niss
Title: President
Attest: By: /s/ Thomas J. Ward
Name: Thomas J. Ward
Title: Secretary
WESBANCO BANK WHEELING
By: /s/ Jerome B. Schmitt
Name: Jerome B. Schmitt
Title: Executive Vice President
Attest: By: /s/ Thomas B. McGaughy
Name: Thomas B. McGaughy
Title: Assistant Secretary
SCHEDULE A
CERTIFICATE OF AUTHORIZED INDIVIDUALS
1st day of March, 1996
NAME, TITLE SIGNATURE, FACSIMILE SIGNATURE
The undersigned hereby attest that they are officers of WesBanco Bank
Wheeling and are duly authorized to, and do so designate the aforelisted
individuals as Authorized Persons under the Electronic Communications and
Recordkeeping Agreement between WesBanco Bank Wheeling and Federated
Services Company this designation to be effective as of May 1, 1996.
By:
Name:
Title:
By:
Name:
Title:
