1933 Act File No. 333-16157
1940 Act File No. 811-7925
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933..... X
Pre-Effective Amendment No. ...........................
Post-Effective Amendment No.__2___ __X__
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 3 ......................................... X
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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, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) _ _ on
____________________ pursuant to paragraph (b) ___ 60 days after filing pursuant
to paragraph (a) (i) ___ on ________________ pursuant to paragraph (a) (i) _X_
75 days after filing pursuant to paragraph (a) (ii) ___ on ________________
pursuant to paragraph (a) (ii) of Rule 485.
If appropriate, check the folling box:
___ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Copies To:
Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
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CROSS-REFERENCE SHEET
This amendment to the Registration Statement of WesMark Funds, which
consists of four portfolios, (1) WesMark West Virginia Municipal Bond Fund, (2)
WesMark Growth Fund, (3) WesMark Balanced Fund, and (4) WesMark Bond Fund. This
Registration Statement pertains to the WesMark Balanced Fund and WesMark Bond
Fund only and is comprised of the following:
PART A. INFORMATION REQUIRED IN A PROSPECTUS.
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Prospectus Heading
(Rule 404(c) Cross Reference)
Item 1. Cover Page....................(1-4)Cover Page.
Item 2. Synopsis (1-4)Summary of Fund Expenses.
Item 3. Condensed Financial
Information (1-4)Performance Information.
Item 4. General Description of
Registrant....................(1-4)General Information;
(1-4)Investment Information;
(1-4)Investment Objective;
(1-4)Investment Policies; (1)West
Virginia Municipal Securities;
(1,2)Investment Risks;
(1)Non-Diversification;
(3,4)Additional Investment
Risks;(1-4)Investment Limitations;
(3,4)Appendix.
Item 5. Management of the Fund........(1-4)WesMark Funds Information; (1-4)Management of the Trust; (1-4)
Distribution of Fund Shares; (1-4)Administration of the Fund;
(1-4)Expenses of the Fund.
Item 6. Capital Stock and Other
Securities....................(1-4)Dividends and Capital Gains; (1-4)Shareholder Information;
(1-4)Voting Rights; (1-4)Effect of
Banking Laws; (1-4)Tax Information; (1-4)Federal Income Tax;
(1)West Virginia Taxes; (1,2)Other
State and Local Taxes; (3,4) State and Local Taxes.
Item 7. Purchase of Securities Being
Offered.......................(1-4)Net Asset Value; (1-4)Investing
in the Fund; (1-4)Minimum Investment
Required; (1-4)What Shares Cost;
(1-4)Share Purchases; (1-4)Systematic
Investment Program; (1-4)Exchanging
Securities for Fund Shares;
(1-4)Exchange Privilege; (1-4)
Confirmations and Account Statements.
Item 8. Redemption or Repurchase......(1-4)Redeeming Shares; (1-4)Systematic Withdrawal Program;
(1-4)Accounts with Low Balances.
Item 9. Pending Legal Proceedings None.
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.
Item 10. Cover Page....................(1-4)Cover Page.
Item 11. Table of Contents (1-4)Table of Contents.
Item 12. General Information and
History.......................(1-4)General Information About the Fund; (1-4)Massachusetts Partnership Law.
Item 13. Investment Objectives and
Policies......................(1-4)Investment Objective and Policies; (1)West Virginia
Investment Risks; (1-4)Investment Limitations.
Item 14. Management of the Fund........(1-4)WesMark Funds Management; (1-4)Trustees Compensation.
Item 15. Control Persons and Principal
Holders of Securities (1-4)Fund Ownership.
Item 16. Investment Advisory and Other
Services......................(1-4)Investment Advisory Services; (1-4)Other Services.
Item 17. Brokerage Allocation (1-4)Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered.................(1-4)Purchasing Shares; (1-4)Determining Net Asset Value; (1-4)Redeeming Shares.
Item 20. Tax Status (1-4)Tax Status.
Item 21. Underwriters..................(1-4)Distribution and Shareholder Services Plans.
Item 22. Calculation of Performance
Data..........................(1-4)Total Return; (1-4)Yield; (1)Tax-Equivalent Yield; (1-4)Performance Comparisons;
(1-2)Appendix.
Item 23. Financial Statements..........(1,2) Filed in Part A; (3,4) To be filed by Amendment.
</TABLE>
[IN RED INK ON THE LEFT SIDE PANEL] 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
PRELIMINARY PROSPECTUS
DATED January __, 1998
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The shares of WesMark Balanced 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 capital appreciation and income. The Fund invests
primarily in equity and debt 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 the principal amount invested.
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 March __, 1998 with the
Securities and Exchange Commission ("SEC"). 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 March __, 1998
<PAGE>
Table of Contents
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I
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
Portfolio Investments
Investment Risks
Investment Limitations
WesMark Funds Information
Management of the Trust
Distribution of Fund Shares
Administration of the Fund
Brokerage Transactions
Expenses of the Fund
Net Asset Value
Investing in the Fund
Minimum Investment Required
What Shares Cost
Share Purchases
Systematic Investment Program
Exchanging Securities for Fund Shares
Certificates and Confirmations
Dividends and Capital Gains
Exchange Privilege
Redeeming Shares
Systematic Withdrawal Program
Redemption Before Purchase
Instruments Clear
Accounts with Low Balances
Shareholder Information
Voting Rights
Effect of Banking Laws
Tax Information
Federal Income Tax
State and Local Taxes
Performance Information
Performance Information for
Common Trust Funds
Appendix
Addresses
<PAGE>
30
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 (1).........................................................0.60%
12b-1 Fee (2)............................................................. 0.00%
Total Other Expenses.......................................................0.63%
Shareholder Services Fee (2)........................ 0.00%
Total Annual Fund Operating Expenses (3)..........................1.23%
(1) The estimated management fee has been reduced to reflect the
anticipated voluntary waiver of the management fee by the investment
adviser. The adviser may terminate this voluntary waiver at any time at
its sole discretion. The maximum management fee is 0.75%.
(2)The Fund has no present intention of paying or accruing 12b-1 fees or
shareholder services fees during the fiscal year ending January 31,
1999. If the Fund were paying or accruing 12b-1 fees or shareholder
services 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 services fees.
(3)Total Fund Operating Expenses are estimated to be 1.38% 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, 1999. 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... $13 $39
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,
1999.
<PAGE>
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, WesMark Growth Fund, WesMark Bond Fund and WesMark
Balanced Fund. This prospectus relates only to the WesMark Balanced 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 of equity and debt 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 capital appreciation and income. 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 invests in a diversified portfolio of equity and debt securities as
described below. Under normal circumstances, the asset mix of the Fund will
range between 30-70% of its total assets in common stocks and convertible
securities, 30-70% in preferred stock and bonds, and 0-40% in money market
instruments. Unless indicated otherwise, the investment policies and limitations
described below may be changed by the Trustees without shareholder approval.
Shareholders will be notified before any material change becomes effective.
Acceptable Investments. The Fund invests primarily in securities of larger,
well-established companies which have a history of lower volatility in earnings.
Therefore, the corporate bonds and taxable municipal bonds in which the Fund
invests, including those purchased through and collateralizing repurchase
agreements, will generally be rated in one of the top four rating categories by
a nationally recognized statistical rating organization ("NRSRO") such as
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's ("S&P"), or Fitch
Investors Service, Inc. ("Fitch") or unrated, but determined by the Fund's
Adviser to be of comparable quality. The Fund may invest no more than 35% of its
assets in corporate bonds rated below the top four categories or which are
unrated but determined to be of comparable quality by the Adviser. Bonds rated
"BBB" by S&P or Fitch, or "Baa" by Moody's have speculative characteristics. A
description of the ratings categories is contained in the Appendix to this
prospectus. Permitted investments include:
ocommon stocks of U.S. 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;
oconvertible 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 NRSRO, such as Aaa, Aa, A, or
Baa by Moody's, AAA, AA, A, or BBB by S&P, or AAA, AA, A, or BBB by
Fitch;
oAmerican 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 total assets in ADRs ;
onotes, bonds, and discount notes of the U.S. government, its
agencies or instrumentalities;
omortgage-backed securities;
ocommercial paper that matures in 270 days or less and is rated A-1
or A-2 by S&P, P-1 or P-2 by Moody's, or F-1 or F-2 by
Fitch;
oother securities; and
orepurchase agreements collateralized by acceptable investments.
Common Stocks. The domestic and foreign common stocks in which the Fund
invests are selected by the Adviser on the basis of traditional research
techniques, including assessment of earnings and dividend growth,
prospects and the risk and volatility of the company's industry. However,
other factors, such as product position, market share, or profitability,
will also be considered by the Adviser.
Corporate Bonds. The corporate bonds in which the Fund invests will be rated
investment grade by an NRSRO, or of comparable quality in the
judgment of the Adviser.
The prices of fixed income securities generally fluctuate inversely to the
direction of interest rates.
Reducing Risks of Lower-Rated Securities. The Adviser believes that the risks of
investing in lower-rated securities can be reduced. The professional portfolio
management techniques used by the Fund to attempt to reduce these risks include:
Credit Research. The Adviser will perform its own credit analysis in
addition to using nationally recognized statistical rating organizations
and other resources, including discussions with the issuer's management,
the judgment of other investment analysts, and its own informed judgment.
The Adviser's credit analysis will consider the issuer's financial
soundness, its responsiveness to changes in interest rates and business
conditions, and its anticipated cash flow, interest or dividend coverage
and earnings. In evaluating an issuer, the Adviser places special emphasis
on the estimated current value of the issuer's assets rather than
historical costs.
Diversification. The Fund invests in securities of many different issuers,
industries, and economic sectors to reduce portfolio risk. Economic
Analysis. The Adviser will analyze current developments and trends in the
economy and in the financial markets. When investing in lower-rated
securities, timing and selection are critical, and analysis of the business
cycle can be important. 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. The Fund may also invest in
such securities that are rated below investment grade or are of comparable
quality. A description of the ratings categories is contained in the Appendix to
this prospectus. There is no minimum rating applicable to corporate securities
purchased or held by the Fund, and the Fund may, from time to time, purchase or
hold such securities in the lowest category, including securities in default.
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. Bonds that are not determined to be investment grade are
high-yield, high-risk bonds, typically subject to greater market fluctuations
and greater risk of loss of income and principal due to an issuer's default. To
a greater extent than investment grade bonds, lower rated bonds tend to reflect
short-term corporate, economic, and market developments, as well as investor
perceptions of the issuer's credit quality. In addition, lower rated bonds may
be more difficult to dispose of or to value than higher rated, lower-yielding
bonds. Changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity to make principal and interest payments than higher
rated bonds. 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. U.S. Government Obligations. The U.S.
government obligations in which the Fund invests are either issued or guaranteed
by the U.S. government, its agencies, or instrumentalities. These securities
include, but are not limited to:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
o notes, bonds, and discount notes issued or guaranteed by U.S.
government agencies and instrumentalities supported by the full faith
and credit of the United States;
o notes, bonds, and discount notes of other U.S. government agencies or
instrumentalities which receive or have access to federal
funding; and
o notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities. Some
obligations issued or guaranteed by agencies or instrumentalities of the U.S.
government are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These agencies and instrumentalities are supported by:
o the issuer's right to borrow an amount limited to a specific line of
credit from the U.S. Treasury;
o discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
Mortgage-Backed Securities. The Fund may also invest in various mortgage-backed
securities. These types of investments may include adjustable rate mortgage
securities, collateralized mortgage obligations, real estate mortgage investment
conduits, or other securities collateralized by or representing an interest in
real estate mortgages (collectively, "mortgage securities"). Many mortgage
securities are issued or guaranteed by government agencies. Prepayments on
mortgage securities may result in a capital loss to the Fund to the extent that
the prepaid mortgage securities were purchased at a market premium over their
stated amount. Conversely, the prepayment of mortgage securities purchased at a
market discount from their stated principal amount will accelerate the
recognition of interest income by the Fund, which would be taxed as ordinary
income when distributed to the shareholders. Adjustable Rate Mortgage Securities
("ARMS"). ARMS are pass-through mortgage securities representing interests in
adjustable rather than fixed interest rate mortgages. The ARMS in which the Fund
invests are issued by the Government National Mortgage Association ("GNMA"), the
Federal National Mortgage Association ("FNMA"), and the Federal Home Loan
Mortgage Corporation ("FHLMC") and are actively traded. The underlying mortgages
which collateralize ARMS issued by GNMA are fully guaranteed by the Federal
Housing Administration ("FHA") or Veterans Administration ("VA"), while those
collateralizing ARMS issued by FHLMC or FNMA are typically conventional
residential mortgages conforming to strict underwriting size and maturity
constraints. Collateralized Mortgage Obligations ("CMOs"). CMOs are bonds issued
by single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies related to
the construction industry. CMOs purchased by the Fund may be:
o collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government;
o collateralized by pools of mortgages in which payment of principal
and interest is guaranteed by the issuer and such guarantee is
collateralized by U.S. government securities; or
o securities in which the proceeds of the issuance are invested in
mortgage securities and payment of the principal and interest is
supported by the credit of an agency or instrumentality of the U.S.
government.
All CMOs purchased by the Fund are investment grade, as rated by a NRSRO or are
of comparable quality as determined by the Adviser. Real Estate Mortgage
Investment Conduits ("REMICs"). REMICs are offerings of multiple class real
estate mortgage-backed securities which qualify and elect treatment as such
under provisions of the Internal Revenue Code (the "Code"). Issuers of REMICs
may take several forms, such as trusts, partnerships, corporations,
associations, or segregated pools of mortgages. Once REMIC status is elected and
obtained, the entity is not subject to federal income taxation. Instead, income
is passed through the entity and is taxed to the person or persons who hold
interests in the REMIC. A REMIC interest must consist of one or more classes of
"regular interests," some of which may offer adjustable rates of interest, and a
single class of "residual interests." To qualify as a REMIC, substantially all
the assets of the entity must be in assets directly or indirectly secured
principally by real property. Resets of Interest. The interest rates paid on the
ARMS, CMOs, and REMICs in which the Fund invests generally are readjusted at
intervals of one year or less to an increment over some predetermined interest
rate index. There are two main categories of indices: those based on U.S.
Treasury securities and those derived from a calculated measure, such as a cost
of funds index or a moving average of mortgage rates. Commonly utilized indices
include the one-year and five-year constant maturity Treasury Note rates, the
three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on
longer-term Treasury securities, the National Median Cost of Funds, the
one-month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a specific bank, or commercial paper rates. Some indices, such as the
one-year constant maturity Treasury Note rate, closely mirror changes in market
interest rate levels. Others tend to lag changes in market rate levels and tend
to be somewhat less volatile. To the extent that the adjusted interest rate on
the mortgage security reflects current market rates, the market value of an
adjustable rate mortgage security will tend to be less sensitive to interest
rate changes than a fixed rate debt security of the same stated maturity. Hence,
adjustable rate mortgage securities which use indices that lag changes in market
rates should experience greater price volatility than adjustable rate mortgage
securities that closely mirror the market. Certain residual interest tranches of
CMOs may have adjustable interest rates that deviate significantly from
prevailing market rates, even after the interest rate is reset, and are subject
to correspondingly increased price volatility. In the event the Fund purchases
such residual interest mortgage securities, it will factor in the increased
interest and price volatility of such securities when determining its
dollar-weighted average duration. Caps and Floors. The underlying mortgages
which collateralize the ARMS, CMOs, and REMICs in which the Fund invests will
frequently have caps and floors which limit the maximum amount by which the loan
rate to the residential borrower may change up or down: (1) per reset or
adjustment interval; and (2) over the life of the loan. Some residential
mortgage loans restrict periodic adjustments by limiting changes in the
borrower's monthly principal and interest payments rather than limiting interest
rate changes. These payment caps may result in negative amortization. The value
of mortgage securities in which the Fund invests may be affected if market
interest rates rise or fall faster and farther than the allowable caps or floors
on the underlying residential mortgage loans. Additionally, even though the
interest rates on the underlying residential mortgages are adjustable,
amortization and prepayments may occur, thereby causing the effective maturities
of the mortgage securities in which the Fund invests to be shorter than the
maturities stated in the underlying mortgages.
Commercial Paper The Fund may purchase Commercial Paper, which is a
short-term debt obligation that matures in 270 days or less, is issued by
banks, corporations or other institutions, and is rated one of the two
highest rating categories for short-term obligations by an NRSRO or, if
unrated, are of comparable quality to securities having such ratings.
Restricted and Illiquid Securities. The Fund may invest in restricted and
illiquid 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. Investing in Securities of
Other Investment Companies. The Fund may invest its assets in securities of
other investment companies as an efficient means of carrying out its investment
policies. It should be noted that investment companies incur certain expenses,
such as management fees, and , therefore, any investment by the Fund in shares
of other investment companies may be subject to such duplicate expenses.
Temporary Investments. For temporary defensive purposes, the Fund may invest up
to 100% of its total assets in cash and cash items including: short-term money
market instruments; securities issued and/or guaranteed as to payment of
principal and interest by the U.S. government, its agencies or
instrumentalities; and repurchase agreements. The Fund may also hold the
instruments described above in such amounts as necessary: to provide funds for
the settlement of portfolio transactions; pending investment of cash receipts in
the ordinary course of business; and to meet requests for redemption of Fund
shares. Repurchase Agreements. The securities in which the 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 the 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 the Fund, the Fund could
receive less than the repurchase price on any sale of such securities.
When-Issued or 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 on a short-term or long-term
basis up to one-third of the value of its total assets 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 under guidelines established by the
Trustees 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. Put and
Call Options. The Fund may purchase put options on financial futures contracts
and put options on portfolio securities. Financial futures may include index
futures. These options will be used as a hedge to attempt to protect securities
which the Fund holds against decreases in value. For the immediate future, the
Fund will enter into futures contracts directly only when it desires to exercise
a financial futures put option in its portfolio rather than either closing out
the option or allowing it to expire. The Fund will only purchase puts on
financial futures contracts which are traded on a nationally recognized
exchange. The Fund will generally purchase over-the-counter put options on
portfolio securities in negotiated transactions with the writers of the options
since options on the portfolio securities held by the Fund are typically not
traded on an exchange. The Fund purchases options only from investment dealers
and other financial associations (such as commercial banks or savings and loan
institutions) deemed creditworthy by the Adviser. In general, over-the-counter
put options differ from exchange traded put options in the following respects.
Over-the-counter put options are two party contracts with price and terms
negotiated between buyer and seller, and such options are endorsed and/or
guaranteed by third parties (such as a New York Stock Exchange member).
Additionally, over-the-counter strike prices are adjusted to reflect dividend
payments, initial strike prices are generally set at market, and option premiums
(which are all time premiums) are amortized on a straight line basis over the
life of the option. In contrast, exchange traded options are third-party
contracts with standardized strike prices and expiration dates and are purchased
from the Clearing Corporation. Strike prices are not adjusted for dividends, and
options are marked to market, thereby obviating the need to amortize the time
premium. Exchange traded options have a continuous liquid market while
over-the-counter options do not. The Fund may also write call options on all or
any portion of its portfolio in an effort to generate income for the Fund. The
Fund will write call options on securities either held in its portfolio or 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. The call
options which the Fund writes and sells must be listed on a recognized options
exchange. Although the Fund reserves the right to write covered call options on
its entire portfolio, it will not write such options on more than 25% of its
total assets unless a higher limit is authorized by the Trustees. The Fund may
attempt to hedge the portfolio by entering into financial futures contracts and
to write calls on financial futures contracts.
Risks of Put and Calls. When the Fund writes a call option, the Fund
risks not participating in any rise in the value of the underlying
security. In addition, when the Fund purchases puts on financial
futures contracts to protect against declines in prices of portfolio
securities, 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 of investments. This may cause
the futures contract and its corresponding put 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 such an
event, the Fund may lose the purchase price of the put option. Finally,
it is not certain that a secondary market for options will exist at all
times. Although the Adviser will consider liquidity before entering
into option transactions, there is no assurance that a liquid secondary
market on an exchange will exist for any particular option or at any
particular time. The Fund's ability to establish and close out option
positions depends on this secondary market.
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 stocks and bonds, derivatives do not
necessarily present greater market risks than traditional investments. The Fund
will only use derivative contracts for the purposes disclosed in the applicable
prospectus sections above. To the extent that the Fund invests in securities
that could be characterized as derivatives, such as asset-backed securities and
mortgage-backed securities, including ARMS, CMOs, and REMICs, it will only do so
in a manner consistent with its investment objectives, policies and limitations.
Additional Investment Risks
Debt Market. 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.
Mortgage-Backed Securities. Mortgage-backed securities generally pay back
principal and interest over the life of the security. At the time the Fund
reinvests the payments and any unscheduled prepayments of principal received,
the Fund may receive a rate of interest which is actually lower than the rate of
interest paid on these securities ("prepayment risks"). Mortgage-backed
securities are subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage loans or the
collateral supporting mortgage-backed securities may be prepaid without penalty
or premium. Prepayment risks on mortgage-backed securities tend to increase
during periods of declining mortgage interest rates because many borrowers
refinance their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other factors,
such as the frequency with which people sell their homes or elect to make
unscheduled payments on their mortgages. While mortgage-backed securities
generally entail less risk of a decline during periods of rapidly rising
interest rates, mortgage-backed securities may also have less potential for
capital appreciation than other similar investments (e.g., investments with
comparable maturities) because as interest rates decline, the likelihood
increases that mortgages will be prepaid. Furthermore, if mortgage-backed
securities are purchased at a premium, mortgage foreclosures and unscheduled
principal payments may result in some loss of a holder's principal investment to
the extent of the premium paid. Conversely, if mortgage-backed securities are
purchased at a discount, both a scheduled payment of principal and an
unscheduled prepayment of principal would increase current and total returns and
would accelerate the recognition of income, which would be taxed as ordinary
income when distributed to shareholders.
Stock Market. 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
the United States equity market tends to be cyclical, experiencing both periods
when stock prices generally increase and periods when stock prices generally
decrease. 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 will not
exceed 200%. 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 the 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.
<PAGE>
Investment Limitations
The following investment limitations cannot be changed without shareholder
approval. The Fund will not:
o borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for at
least a percentage of its cash value with an agreement to buy it back
on a set date) except, under certain circumstances, the Fund may
borrow up to one-third of the value of its net assets; nor
o with respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer
(other than cash; cash items; securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities; and securities of other investment companies) if as a
result more than 5% of the value of its total assets would be
invested in the securities of that issuer, or it would own more than
10% of the outstanding voting securities of that issuer.
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 46 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 $563 million on December 31, 1997. 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 $1.9
billion. 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 a co-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 1996. Mr.
Schmitt is a Chartered Financial Analyst and received an M.A. in
Economics from Ohio University. Mr. Schmitt is responsible for
supervising the activities of the Trust and Investment Departments of
the Adviser. David B. Ellwood has been a co-portfolio manager for the
Fund since its inception. He has been employed by the Adviser since
1982 and has been Assistant Vice President and Senior Investment
Officer since May 1996. Mr. Ellwood is a Chartered Financial Analyst
and received a B.S. degree in Business Administration from Wheeling
Jesuit College. Mr. Ellwood is responsible for portfolio management,
investment research and assisting in the supervision of the investment
activities of the Investment Department. 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 "trust" shares of the Fund (which would not have a Rule 12b-1
Plan) is created and 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. Supplemental Payments to Financial
Institutions. In addition to payments made pursuant to the Plan and Services
Agreement, Edgewood Services, Inc. and Federated Shareholder Services, from
their own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount of
Shares the financial institution sells or may sell, and/or upon the type and
nature of sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Fund' s Adviser or its
affiliates 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% 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
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 Trustees.
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.
<PAGE>
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 1-888-898-0600. 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 an application (for a
new account) and a check made payable to the Fund at: 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.
Confirmations and Account Statements
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends paid.
The Fund will not issue share certificates.
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 any of the other WesMark Funds
at net asset value without a sales charge, provided you have received a copy of
the current prospectus of the WesMark Fund you wish to purchase, and you meet
the applicable investment minimum. 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 at 1-800-368-3369 to
request the redemption. 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 at: 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.
<PAGE>
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 WesMark Funds,
if any, will not be combined for tax purposes with those realized by any of the
other WesMark 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 and 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 yield does 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 have been
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 December 31, 1997, was ____%. The Fund's
average annual total return for the five-year period ended December 31, 1997,
and for the period from _______________________, 199_ (date of commencement of
operations of the common trust fund) to December 31, 1997 was ____% and ____%,
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.
<PAGE>
Appendix
Standard & Poor's ("S&P") Corporate Bond Rating Definitions
AAA-Debt rated "AAA" has the highest rating assigned by S&P. 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. BB,
B, CCC, CC-Debt rated "BB", "B", "CCC", and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions. CI-The rating "CI" is reversed for income bonds on which no interest
is being paid. D-Debt rated "D" is in default, and payment of interest and/or
repayment of principal is in arrears.
Moody's Investors Service, Inc. Corporate 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
edged." Interest payments are protected by a large or 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 near 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. Ba-Bonds which are "Ba" are judged to have speculative
elements; their future cannot be considered well assured. Often the protection
of interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class. B-Bonds which are rated "B"
generally lack characteristics of a desirable investment. Assurance of interest
and principal payments or of maintenance of other terms of the contract over any
long period of time may be small. Caa-Bonds which are rated "Caa" are of poor
standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. Ca-Bonds which are "Ca" represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. C-Bonds which are rated "C" are the
lowest rated class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Fitch Investors Service, Inc. Investment Grade Bond 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 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. BB-Bonds are considered speculative.
The obligor's ability to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and financial alternatives
can be identified which could assist the obligor in satisfying its debt service
requirements. B-Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue. CCC-Bonds have certain identifiable
characteristics which, if not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic environment. CC-Bonds
are minimally protected. Default in payment of interest and/or principal seems
probable over time. C-Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D-Bonds are in default on interest and/or principal payments.
Such bonds are extremely speculative and should be valued on the basis of
their ultimate recovery value in liquidation or reorganization of the
obligor. "DDD" represents the highest potential for recovery on these
bonds, and "D" represents the lowest potential for recovery.
<PAGE>
Addresses
WesMark Balanced 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
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospectus
A Diversified Portfolio of WesMark
Funds, an Open-End, Management
Investment Company
March __, 1998
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]EDGEWOOD SERVICES, INC.
Distributor WesBanco Bank Wheeling
A subsidiary of FEDERATED INVESTORS Investment Adviser
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP___________
G01912-__ (3/98)
[IN RED INK ON THE LEFT SIDE PANEL] 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
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED January __, 1998
WesMark Balanced Fund
(A Portfolio of WesMark Funds)
Statement of Additional Information
This Statement of Additional Information should be read with the prospectus
of WesMark Balanced Fund (the "Fund") dated March __, 1998. 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 March __, 1998
EDGEWOOD SERVICES, INC.
Distributor
A subsidiary of FEDERATED INVESTORS
Cusip ____________
G01912-__ (3/98)
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
1
General Information About the Fund 1
Investment Objective and Policies 1
Types of Investments 1
Convertible Securities 1
Futures and Options Transactions 1
Investing in Securities of Other Investment
Companies 3
When-Issued and Delayed Delivery
Transactions 3
Lending of Portfolio Securities 3
Repurchase Agreements 3
Reverse Repurchase Agreements 3
Portfolio Turnover 4
Investment Limitations 4
WesMark Funds Management 6
Fund Ownership 9
Trustees Compensation 10
Trustee Liability 10
Investment Advisory Services 10
Adviser to the Fund 10
Advisory Fees 11
Other Services 11
Fund Administration 11
Custodian 11
Transfer Agent,Dividend Disbursing Agent, and
Portfolio Accounting Services 11
Independent Auditors 11
Brokerage Transactions 11
Purchasing Shares 12
Distribution and Shareholder Services Plans 12
Administrative Arrangements 12
Conversion to Federal Funds 12
Determining Net Asset Value 12
Determining Market Value of Securities 12
Valuing Futures and Options 13
Redeeming Shares 13
Redemption in Kind 13
Massachusetts Partnership Law 13
Tax Status 14
The Fund's Tax Status 14
Shareholders' Tax Status 14
Total Return 14
Yield 14
Performance Comparisons 14
Economic and Market Information 15
<PAGE>
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 captial appreciation and income. The
objective cannot be changed without approval of shareholders.
Types of Investments
The Fund invests in a diversified portfolio of equity and debt securities which
includes domestic common and preferred stocks and other equity securities,
convertible securities, domestically-issued corporate and government debt
obligations, mortgage-backed securities, obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities and repurchase agreements.
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.
Futures and Options Transactions
The Fund may attempt to hedge all or a portion of its portfolio by buying and
selling financial futures contracts, buying put options on portfolio securities
and listed put options on futures contracts, and writing call options on futures
contracts. The Fund may also write covered call options on portfolio securities
to attempt to increase its current income. The Fund currently does not intend to
invest more than 5% of its total assets in options transactions. 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. In the fixed income securities
market, price generally moves inversely to interest rates. Thus, a rise in rates
generally means a drop in price. Conversely, a drop in rates generally 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. Put Options On Financial Futures Contracts
The Fund may purchase listed put options on financial futures contracts. 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 would purchase put options on futures contracts 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 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. Call Options On Financial
Futures Contracts
In addition to purchasing put options on futures, the Fund may write listed call
options on futures contracts 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. 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 Options On Portfolio
Securities
The Fund may purchase put 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 to sell the underlying security to
the writer (seller) at a specified price during the term of the option.
Writing Covered Call Options On Portfolio Securities
The Fund may also write covered 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. The Fund may only sell 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). Investing in Securities of Other Investment Companies
The Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.
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 other 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. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
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. There is a 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.
Repurchase Agreements
The Fund requires its custodian to take possession of the securities subject to
repurchase agreements, and these securities are 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 a defaulting seller files for bankruptcy or
becomes insolvent, disposition of 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 will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Adviser to be
creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Fund may also 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. The securities are marked to market daily and
maintained until the transaction is settled.
<PAGE>
Portfolio Turnover
The Fund normally holds or disposes of portfolio securities in order to achieve
its investment objectives. Securities held by the Fund are selected because they
are considered to represent real value and will be held or disposed of
accordingly. The Adviser will not generally seek profits through short-term
trading. The Fund will not attempt to set or meet a portfolio turnover rate
since any turnover would be incidental to transactions undertaken in an attempt
to achieve the Fund's investment objectives. The Adviser does not anticipate
that the Fund's portfolio turnover rate will exceed 200%.
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.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, securities issued or guaranteed by the government
of the United States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government securities; and
securities of other investment companies) if, as a result, more than 5% of
the value of the its total assets would be invested in the securities of
that issuer, or it would own more than 10% of the outstanding voting
securities of that issuer.
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 debt securities 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.
Writing Covered Call Options and Purchasing Put Options
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the
amount of any further payment. The Fund will not purchase put options on
securities unless the securities are held in the Fund's portfolio.
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, pledge or lend 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."
<PAGE>
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
15 Old Timber Trail
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.; Director, Member of
Executive Committee, 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; formerly, 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.
<PAGE>
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director 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.
<PAGE>
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 and
Murray; 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 and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; 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; Treasurer of some of
the Funds.
<PAGE>
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 referred to in the list of Trustees and Officers, "Funds" includes the
following investment companies:
111 Corcoran Funds; 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 Obligations Trust II; 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;
WesMark Funds; and World Investment Series, Inc.
Fund Ownership
Officers and Trustees own less than 1% of the Fund's outstanding shares.
<PAGE>
Trustees Compensation
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 andTrustee
Peter E. Madden $0
Trustee
John E. Murray, Jr. $0
Trustee
Wesley W. Posvar $0
Trustee
Marjorie P. Smuts $0
Trustee
* Information is furnished for the fiscal year ending January 31, 1998.
#The aggregate compensation is provided for the Trust which is comprised of four
portfolios.
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.
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 available;
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 bonds and other fixed income securities, at the last sale price
on a national securities exchange, if available, otherwise 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
o for all other securities, at fair value as determined in good faith by
the Trustees.
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. Although the transfer agent does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
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 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
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distributions represents amounts that would qualify for the dividends received
deduction to the Fund if the Fund were a regular corporation and to the extent
designated by the Fund as so qualifying. These dividends and any short-term
capital gains are taxable as ordinary income.
Capital Gains
Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held 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:
[TO BE DETERMINED]
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 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.
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,
thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $3.5 trillion to the more than 6,000 funds available.
[IN RED INK ON THE LEFT SIDE PANEL] 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
PRELIMINARY PROSPECTUS
DATED January __, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The shares of WesMark Bond Fund (the "Fund") offered by this prospectus
represent interests in a 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 high current income consistent with preservation of capital. The Fund
invests primarily in a portfolio of investment grade bonds. 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 the principal
amount invested. 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 March __,
1998 with the Securities and Exchange Commission ("SEC"). 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 March __, 1998
<PAGE>
Table of Contents
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1
Summary of Fund Expenses 1
General Information 2
Investment Information 2
Investment Objective 2
Investment Policies 2
Investment LimitationsError! Bookmark not defined.
WesMark Funds Information 9
Management of the Trust 20
Distribution of Fund Shares 21
Administration of the Fund 11
Expenses of the Fund 22
Net Asset Value 12
Investing in the Fund 23
Minimum Investment Required 23
What Shares Cost 23
Share Purchases 23
Systematic Investment Program24
Exchanging Securities for Fund Shares 24
Certificates and Confirmations24
Dividends and Capital Gains 24
Exchange Privilege 14
Redeeming Shares 14
Systematic Withdrawal Program26
Redemption Before Purchase
Instruments Clear 16
Accounts with Low Balances 27
Shareholder Information 27
Voting Rights 27
Effect of Banking Laws 27
Tax Information 28
Federal Income Tax 28
State and Local Taxes 29
Performance Information 18
Addresses 31
<PAGE>
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)..........................................0.50%
12b-1 Fee (2)............................................................. 0.00%
Total Other Expenses.......................................................0.42%
Shareholder Services Fee (2)........................ 0.00%
Total Annual Fund Operating Expenses (after waiver) (3)...........0.92%
(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 services fees during the fiscal year ending January 31,
1999. If the Fund were paying or accruing 12b-1 fees or shareholder
services 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 services fees.
(3)Total Fund Operating Expenses are estimated to be 1.02% 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, 1999. 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... $9 $29
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,
1999.
<PAGE>
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, WesMark Growth Fund, WesMark Balanced Fund and
WesMark Bond Fund. This prospectus relates only to WesMark 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,
diversified portfolio of investment grade bonds. 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 to provide high current income
consistent with preservation 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. 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
Acceptable Investments. The Fund invests primarily in a professionally
managed, diversified portfolio of bonds, which includes all permitted
types of debt instruments. Under normal circumstances, at least 65% of the
Fund's net assets will be invested in such bonds. Additionally, at least
65% of the Fund's net assets will be invested in investment grade
securities, including repurchase agreements collateralized by such
investment grade securities. Investment grade securities are generally
described as securities that are rated in one of the top four ratings
categories by a nationally recognized statistical rating organization
("NRSRO"), such as Moody's Investors Service, Inc. ("Moody's), Standard &
Poor's ("S&P"), or Fitch Investors Service, Inc. ("Fitch") or that are
unrated but determined by the Fund's Adviser to be of comparable quality.
Permitted investments include:
o domestic corporate debt obligations;
o obligations of the United States;
o notes, bonds, and discount notes of U.S. government agencies or
instrumentalities;
o mortgage-backed securities;
o commercial paper that matures in 270 days or less and is rated A-1 or
A-2 by S&P, P-1 or P-2 by Moody's, or F-1 or F-2 by Fitch;
o preferred stock and other equity-related securities which generally
have bond-like attributes, including zero coupon and/or convertible
securities;
o convertible securities;
o other securities; and
o repurchase agreements collateralized by acceptable investments.
Under normal circumstances, the Fund will not invest more than 10% of its total
assets in equity securities.
Corporate Debt Obligations
The corporate debt obligations in which the Fund invests will be rated
investment grade by an NRSRO, or of comparable quality in the judgment of the
Adviser.
The prices of fixed income securities generally fluctuate inversely to the
direction of interest rates.
U.S. Government Obligations
The U.S. government obligations in which the Fund invests are either issued or
guaranteed by the U.S. government, its agencies, or instrumentalities. These
securities include, but are not limited to:
o direct obligations of the U.S. Treasury, such as U.S. Treasury bills,
notes, and bonds;
o notes, bonds, and discount notes issued or guaranteed by U.S.
government agencies and instrumentalities supported by the full faith
and credit of the United States;
o notes, bonds, and discount notes of U.S. government agencies or
instrumentalities which receive or have access to federal funding; and
o notes, bonds, and discount notes of other U.S. government
instrumentalities supported only by the credit of the instrumentalities.
Some obligations issued or guaranteed by agencies or instrumentalities of the
U.S. government are backed by the full faith and credit of the U.S. Treasury. No
assurances can be given that the U.S. government will provide financial support
to other agencies or instrumentalities, since it is not obligated to do so.
These agencies and instrumentalities are supported by:
o the issuer's right to borrow an amount limited to a specific line of
credit
o from the U.S. Treasury;
o discretionary authority of the U.S. government to purchase certain
obligations of an agency or instrumentality; or
o the credit of the agency or instrumentality.
<PAGE>
Mortgage-Backed Securities
The Fund may also invest in various mortgage-backed securities. These types of
investments may include adjustable rate mortgage securities, collateralized
mortgage obligations, real estate mortgage investment conduits, or other
securities collateralized by or representing an interest in real estate
mortgages (collectively, "mortgage securities"). Many mortgage securities are
issued or guaranteed by government agencies. Prepayments on mortgage securities
may result in a capital loss to the Fund to the extent that the prepaid mortgage
securities were purchased at a market premium over their stated amount.
Conversely, the prepayment of mortgage securities purchased at a market discount
from their stated principal amount will accelerate the recognition of interest
income by the Fund, which would be taxed as ordinary income when distributed to
the shareholders. Adjustable Rate Mortgage Securities ("ARMS"). ARMS are
pass-through mortgage securities representing interests in adjustable rather
than fixed interest rate mortgages. The ARMS in which the Fund invests are
issued by the Government National Mortgage Association ("GNMA"), the Federal
National Mortgage Association ("FNMA"), and the Federal Home Loan Mortgage
Corporation ("FHLMC") and are actively traded. The underlying mortgages which
collateralize ARMS issued by GNMA are fully guaranteed by the Federal Housing
Administration ("FHA") or Veterans Administration ("VA"), while those
collateralizing ARMS issued by FHLMC or FNMA are typically conventional
residential mortgages conforming to strict underwriting size and maturity
constraints.
Collateralized Mortgage Obligations ("CMOs"). CMOs are bonds issued by
single-purpose, stand-alone finance subsidiaries or trusts of financial
institutions, government agencies, investment bankers, or companies related to
the construction industry. CMOs purchased by the Fund may be:
o collateralized by pools of mortgages in which each mortgage is
guaranteed as to payment of principal and interest by an agency or
instrumentality of the U.S. government;
o collateralized by pools of mortgages in which payment of principal and
interest is guaranteed by the issuer and such guarantee is
collateralized by U.S. government securities; or
o securities in which the proceeds of the issuance are invested in
mortgage securities and payment of the principal and interest is
supported by the credit of an agency or instrumentality of the U.S.
government.
All CMOs purchased by the Fund are investment grade, as rated by a NRSRO or are
of comparable quality as determined by the Adviser.
Real Estate Mortgage Investment Conduits ("REMICS"). REMICs are offerings of
multiple class real estate mortgage-backed securities which qualify and elect
treatment as such under provisions of the Internal Revenue Code (the "Code").
Issuers of REMICs may take several forms, such as trusts, partnerships,
corporations, associations, or segregated pools of mortgages. Once REMIC status
is elected and obtained, the entity is not subject to federal income taxation.
Instead, income is passed through the entity and is taxed to the person or
persons who hold interests in the REMIC. A REMIC interest must consist of one or
more classes of "regular interests," some of which may offer adjustable rates of
interest, and a single class of "residual interests." To qualify as a REMIC,
substantially all the assets of the entity must be in assets directly or
indirectly secured principally by real property.
Resets of Interest. The interest rates paid on the ARMs, CMOs, and REMICs in
which the Fund invests generally are readjusted at intervals of one year or less
to an increment over some predetermined interest rate index. There are two main
categories of indices: those based on U.S. Treasury securities and those derived
from a calculated measure, such as a cost of funds index or a moving average of
mortgage rates. Commonly utilized indices include the one-year and five-year
constant maturity Treasury Note rates, the three-month Treasury Bill rate, the
180-day Treasury Bill rate, rates on longer-term Treasury securities, the
National Median Cost of Funds, the one-month or three-month London Interbank
Offered Rate (LIBOR), the prime rate of a specific bank, or commercial paper
rates. Some indices, such as the one-year constant maturity Treasury Note rate,
closely mirror changes in market interest rate levels. Others tend to lag
changes in market rate levels and tend to be somewhat less volatile.
To the extent that the adjusted interest rate on the mortgage security reflects
current market rates, the market value of an adjustable rate mortgage security
will tend to be less sensitive to interest rate changes than a fixed rate debt
security of the same stated maturity. Hence, adjustable rate mortgage securities
which use indices that lag changes in market rates should experience greater
price volatility than adjustable rate mortgage securities that closely mirror
the market. Certain residual interest tranches of CMOs may have adjustable
interest rates that deviate significantly from prevailing market rates, even
after the interest rate is reset, and are subject to correspondingly increased
price volatility. In the event the Fund purchases such residual interest
mortgage securities, it will factor in the increased interest and price
volatility of such securities when determining its dollar-weighted average
duration.
Caps and Floors. The underlying mortgages which collateralize the ARMs, CMOs,
and REMICs in which the Fund invests will frequently have caps and floors which
limit the maximum amount by which the loan rate to the residential borrower may
change up or down: (1) per reset or adjustment interval, and (2) over the life
of the loan. Some residential mortgage loans restrict periodic adjustments by
limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes.
These payment caps may result in negative amortization. The value of mortgage
securities in which the Fund invests may be affected if market interest rates
rise or fall faster and farther than the allowable caps or floors on the
underlying residential mortgage loans. Additionally, even though the interest
rates on the underlying residential mortgages are adjustable, amortization and
prepayments may occur, thereby causing the effective maturities of the mortgage
securities in which the Fund invests to be shorter than the maturities stated in
the underlying mortgages.
Commercial Paper The Fund may purchase Commercial Paper, which is a short-term
debt obligation that matures in 270 days or less, is issued by banks,
corporations or other institutions, and is rated one of the two highest rating
categories for short-term obligations by an NRSRO or, if unrated, are of
comparable quality to securities having such ratings.
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. The Fund may also invest in such securities that are
rated below investment grade or are of comparable quality. A description of the
ratings categories is contained in the Appendix to this prospectus. There is no
minimum rating applicable to corporate securities purchased or held by the Fund,
and the Fund may, from time to time, purchase or hold such securities in the
lowest category, including securities in default. 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. Bonds that are not determined to be investment grade
are high-yield, high-risk bonds, typically subject to greater market
fluctuations and greater risk of loss of income and principal due to an issuer's
default. To a greater extent than investment grade bonds, lower rated bonds tend
to reflect short-term corporate, economic, and market developments, as well as
investor perceptions of the issuer's credit quality. In addition, lower rated
bonds may be more difficult to dispose of or to value than higher rated,
lower-yielding bonds. Changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than higher rated bonds. Zero Coupon Convertible Securities
Zero coupon convertible securities are debt securities which are issued at a
discount to their face amount and do not entitle the holder to any periodic
payments of interest prior to maturity. Rather, interest earned on zero coupon
convertible securities accretes at a stated yield until the security reaches its
face amount at maturity. Zero coupon convertible securities are convertible into
a specific number of shares of the issuer's common stock. In addition, zero
coupon convertible securities usually have put features that provide the holder
with the opportunity to put the bonds back to the issuer at a stated price
before maturity. Generally, the prices of zero coupon convertible securities may
be more sensitive to market interest rate fluctuations than conventional
convertible securities.
Federal income tax law requires the holder of a zero coupon convertible security
to recognize income with respect to the security prior to the receipt of cash
payments. To maintain its qualification as a regulated investment company and
avoid liability of federal income taxes, the Fund will be required to distribute
income accrued with respect to zero coupon convertible securities which it owns,
and may have to sell portfolio securities (perhaps at disadvantageous times) in
order to generate cash to satisfy these distribution requirements.
Restricted and Illiquid Securities
The Fund may invest in restricted and illiquid 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 to 15% of its net assets.
The Fund may invest in commercial paper issued in reliance on the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933. Section
4(2) commercial paper is restricted as to disposition under the federal
securities laws, and is generally sold to institutional investors, such as the
Fund, who agree that they are purchasing the paper for investment purposes and
not with a view to public distribution. Any resale by the purchaser must be in
an exempt transaction. Section 4(2) commercial paper is normally resold to other
institutional investors like the Fund through or with the assistance of the
issuer or investment dealers who make a market in Section 4(2) commercial paper,
thus providing liquidity. The Fund believes that Section 4(2) commercial paper,
and possibly certain other restricted securities which meet the criteria for
liquidity established by the Trustees, are quite liquid. The Fund intends,
therefore, to treat the restricted securities which meet the criteria for
liquidity established by the Trustees, including Section 4(2) commercial paper,
as determined by the Adviser, as liquid and not subject to the investment
limitations applicable to illiquid securities.
Investing In Securities Of Other Investment Companies
The Fund may invest its assets in securities of other investment companies as an
efficient means of carrying out its investment policies. It should be noted that
investment companies incur certain expenses, such as management fees, and ,
therefore, any investment by the Fund in shares of other investment companies
may be subject to such duplicate expenses. Temporary Investments
The Fund may also invest temporarily in cash and cash items during times of
unusual market conditions for defensive purposes and to maintain liquidity.
Repurchase Agreements
The securities in which the Fund invests may be purchased pursuant to 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. 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.
Repurchase agreements are included within the definition of investment grade
securities.
When-Issued or 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 the transaction 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 in 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
on a short-term or long-term basis up to one-third of the value of its total
assets 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 under
guidelines established by the Trustees 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.
Put and Call Options
The Fund may purchase put options on financial futures contracts and put options
on portfolio securities. Financial futures may include index futures. These
options will be used as a hedge to attempt to protect securities which the Fund
holds against decreases in value. For the immediate future, the Fund will enter
into futures contracts directly only when it desires to exercise a financial
futures put option in its portfolio rather than either closing out the option or
allowing it to expire. The Fund will only purchase puts on financial futures
contracts which are traded on a nationally recognized exchange.
The Fund will generally purchase over-the-counter put options on portfolio
securities in negotiated transactions with the writers of the options since
options on the portfolio securities held by the Fund are typically not traded on
an exchange. The Fund purchases options only from investment dealers and other
financial associations (such as commercial banks or savings associations) deemed
creditworthy by the Adviser.
In general, over-the-counter put options differ from exchange traded put options
in the following respects. Over-the-counter put options are two party contracts
with price and terms negotiated between buyer and seller, and such options are
endorsed and/or guaranteed by third parties (such as a New York Stock Exchange
member). Additionally, over-the-counter strike prices are adjusted to reflect
dividend payments, initial strike prices are generally set at market, and option
premiums (which are all time premiums) are amortized on a straight line basis
over the life of the option. In contrast, exchange traded options are
third-party contracts with standardized strike prices and expiration dates and
are purchased from the Clearing Corporation. Strike prices are not adjusted for
dividends, and options are marked to market, thereby obviating the need to
amortize the time premium. Exchange traded options have a continuous liquid
market while over-the-counter options do not.
The Fund may also write call options on all or any portion of its portfolio in
an effort to generate income for the Fund. The Fund will write call options on
securities either held in its portfolio or 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. The call options which the Fund
writes and sells must be listed on a recognized options exchange. Although the
Fund reserves the right to write covered call options on its entire portfolio,
it will not write such options on more than 25% of its total assets unless a
higher limit is authorized by its Trustees.
The Fund may attempt to hedge the portfolio by entering into financial futures
contracts and to write calls on financial futures contracts.
Risks of Puts and Calls. When the Fund writes a call option, the Fund risks
not participating in any rise in the value of the underlying security. In
addition, when the Fund purchases puts on financial futures contracts to
protect against declines in prices of portfolio securities, 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 its corresponding put 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
such an event, the Fund may lose the purchase price of the put option.
Finally, it is not certain that a secondary market for options will exist at
all times. Although the Adviser will consider liquidity before entering into
option transactions, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option or at any particular time.
The Fund's ability to establish and close out option positions depends on
this secondary market.
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 (including those
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.
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 in the applicable prospectus
sections above. To the extent that the Fund invests in securities that could be
characterized as derivatives, such as asset-backed securities and
mortgage-backed securities, including ARMS, CMOs, and REMICs, it will only do so
in a manner consistent with its investment objectives, policies and limitations.
Additional Investment Risks
Debt Market. 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.
Mortgage-Backed Securities. Mortgage-backed securities generally pay back
principal and interest over the life of the security. At the time the Fund
reinvests the payments and any unscheduled prepayments of principal received,
the Fund may receive a rate of interest which is actually lower than the rate of
interest paid on these securities ("prepayment risks"). Mortgage-backed
securities are subject to higher prepayment risks than most other types of debt
instruments with prepayment risks because the underlying mortgage loans or the
collateral supporting mortgage-backed securities may be prepaid without penalty
or premium. Prepayment risks on mortgage-backed securities tend to increase
during periods of declining mortgage interest rates because many borrowers
refinance their mortgages to take advantage of the more favorable rates.
Prepayments on mortgage-backed securities are also affected by other factors,
such as the frequency with which people sell their homes or elect to make
unscheduled payments on their mortgages. While mortgage-backed securities
generally entail less risk of a decline during periods of rapidly rising
interest rates, mortgage-backed securities may also have less potential for
capital appreciation than other similar investments (e.g., investments with
comparable maturities) because as interest rates decline, the likelihood
increases that mortgages will be prepaid. Furthermore, if mortgage-backed
securities are purchased at a premium, mortgage foreclosures and unscheduled
principal payments may result in some loss of a holder's principal investment to
the extent of the premium paid. Conversely, if mortgage-backed securities are
purchased at a discount, both a scheduled payment of principal and an
unscheduled prepayment of principal would increase current and total returns and
would accelerate the recognition of income, which would be taxed as ordinary
income when distributed to shareholders.
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 will not exceed
200%. 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 the 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 Limitations
The following investment limitations cannot be changed without shareholder
approval. The Fund will not:
o borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for at
least a percentage of its cash value with an agreement to buy it back
on a set date) except, under certain circumstances, the Fund may
borrow up to one-third of the value of its net assets; nor
o with respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer
(other than cash; cash items; securities issued or guaranteed by the
government of the United States or its agencies or instrumentalities
and repurchase agreements collateralized by such U.S. government
securities; and securities of other investment companies) if as a
result more than 5% of the value of its total assets would be
invested in the securities of that issuer, or it would own more than
10% of the outstanding voting securities of that issuer.
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 46 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 $563 million on December 31, 1997. 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 $1.9
billion. 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 a co-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 1996. Mr.
Schmitt is a Chartered Financial Analyst and received an M.A. in
Economics from Ohio University. Mr. Schmitt is responsible for
supervising the activities of the Trust and Investment Departments of
the Adviser. David B. Ellwood has been a co-portfolio manager for the
Fund since its inception. He has been employed by the Adviser since
1982 and has been Assistant Vice President and Senior Investment
Officer since May 1996. Mr. Ellwood is a Chartered Financial Analyst
and received a B.S. degree in Business Administration from Wheeling
Jesuit College. Mr. Ellwood is responsible for portfolio management,
investment research and assisting in the supervision of the investment
activities of the Investment Department.
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 "trust" shares of the Fund (which would not have a Rule 12b-1
Plan) is created and 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. Supplemental Payments to Financial
Institutions. In addition to payments made pursuant to the Plan and Services
Agreement, Edgewood Services, Inc. and Federated Shareholder Services, from
their own assets, may pay financial institutions supplemental fees for the
performance of substantial sales services, distribution-related support
services, or shareholder services. The support may include sponsoring sales,
educational and training seminars for their employees, providing sales
literature, and engineering computer software programs that emphasize the
attributes of the Fund. Such assistance will be predicated upon the amount of
Shares the financial institution sells or may sell, and/or upon the type and
nature of sales or marketing support furnished by the financial institution. Any
payments made by the distributor may be reimbursed by the Fund' s Adviser or its
affiliates 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% 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
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 1-888-898-0600. 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 an application (for a
new account) and a check made payable to the Fund at: 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.
Confirmations and Account Statements
Shareholders will receive detailed confirmations of transactions (except for
systematic program transactions). In addition, shareholders will receive
periodic statements reporting all account activity, including dividends paid.
The Fund will not issue share certificates.
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 any of the other WesMark Funds
at net asset value without a sales charge, provided you have received a copy of
the current prospectus of the WesMark Fund you wish to purchase, and you meet
the applicable investment minimum. 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 at 1-800-368-3369 to
request the redemption. 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 at: 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 WesMark Funds,
if any, will not be combined for tax purposes with those realized by any of the
other WesMark 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 and 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 yield does 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 Common Trust Funds
The Fund is the successor to common trust funds ("CTFs") that were managed by
the Adviser. It is anticipated that, at the Fund's commencement of operations,
the assets from the CTFs will have been transferred to the Fund in exchange for
Fund shares. Set forth below are certain performance data for these CTFs. This
information is deemed relevant because the CTFs have been managed using
substantially the same investment objective, policies, and limitations as those
used by the Fund. The CTFs were not registered under the Investment Company Act
of 1940. For this and other reasons, 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 CTFs.
Moreover, the CTFs 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.
Average Annual Total Return
for the period ending December 31, 1997*
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
CTFs 1 Year 5 Years 10 Years Since Inception
WesBanco Common Trust Fund ___
Inception: __________ _____% _____% _____% _____%
WesBanco _______ Fund
Inception: _________ _____% _____% _____% _____%
</TABLE>
*The Average Annual Total Return for each CTF has been adjusted to reflect the
Fund's anticipated expenses, net of voluntary waivers.
<PAGE>
Appendix
Standard & Poor's ("S&P") Corporate Bond Rating Definitions
AAA-Debt rated "AAA" has the highest rating assigned by S&P. 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. BB,
B, CCC, CC-Debt rated "BB", "B", "CCC", and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions. CI-The rating "CI" is reversed for income bonds on which no interest
is being paid. D-Debt rated "D" is in default, and payment of interest and/or
repayment of principal is in arrears.
Moody's Investors Service, Inc. Corporate 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
edged." Interest payments are protected by a large or 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 near 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. Ba-Bonds which are "Ba" are judged to have speculative
elements; their future cannot be considered well assured. Often the protection
of interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class. B-Bonds which are rated "B"
generally lack characteristics of a desirable investment. Assurance of interest
and principal payments or of maintenance of other terms of the contract over any
long period of time may be small. Caa-Bonds which are rated "Caa" are of poor
standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. Ca-Bonds which are "Ca" represent
obligations which are speculative in a high degree. Such issues are often in
default or have other marked shortcomings. C-Bonds which are rated "C" are the
lowest rated class of bonds, and issues so rated can be regarded as having
extremely poor prospects of ever attaining any real investment standing.
Fitch Investors Service, Inc. Investment Grade Bond 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 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. BB-Bonds are considered speculative.
The obligor's ability to pay interest and repay principal may be affected over
time by adverse economic changes. However, business and financial alternatives
can be identified which could assist the obligor in satisfying its debt service
requirements. B-Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue. CCC-Bonds have certain identifiable
characteristics which, if not remedied, may lead to default. The ability to meet
obligations requires an advantageous business and economic environment. CC-Bonds
are minimally protected. Default in payment of interest and/or principal seems
probable over time. C-Bonds are in imminent default in payment of interest or
principal. DDD, DD, and D-Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or reorganization of the
obligor. "DDD" represents the highest potential for recovery on these bonds, and
"D" represents the lowest potential for recovery.
<PAGE>
Addresses
WesMark 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
<PAGE>
Prospectus
A Diversified Portfolio of WesMark
Funds, an Open-End, Management
Investment Company
March __, 1998
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]EDGEWOOD SERVICES, INC.
Distributor WesBanco Bank Wheeling
A subsidiary of FEDERATED INVESTORS Investment Adviser
Federated Investors Tower
Pittsburgh, PA 15222-3779
CUSIP ______________
G01913-__ (3/98)
[IN RED INK ON THE LEFT SIDE PANEL] 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
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED January __, 1998
WesMark Bond Fund
(A Portfolio of WesMark Funds)
Statement of Additional Information
This Statement of Additional Information should be read with the prospectus
of WesMark Bond Fund (the "Fund") dated March __, 1998. 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 March __, 1998
EDGEWOOD SERVICES, INC.
Distributor
A subsidiary of FEDERATED INVESTORS
Cusip __________
G01913-__ (3/98)
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
1
General Information About the Fund 1
Investment Objective and Policies1
Acceptable Investments 1
Convertible Securities 1
Futures and Options Transactions 1
Investing in Securities of Other Investment
Companies 3
When-Issued and Delayed Delivery Transactions 3
Lending of Portfolio Securities3
Repurchase Agreements 3
Reverse Repurchase Agreements 3
Portfolio Turnover 4
Investment Limitations 4
WesMark Funds Management 6
Fund Ownership 9
Trustees Compensation 10
Trustee Liability 10
Investment Advisory Services 10
Adviser to the Fund 10
Advisory Fees 11
Other Services 11
Fund Administration 11
Custodian 11
Transfer Agent,Dividend Disbursing Agent, and
Portfolio Accounting Services11
Independent Auditors 11
Brokerage Transactions 11
Purchasing Shares 12
Distribution and Shareholder Services Plans 12
Administrative Arrangements 12
Conversion to Federal Funds 12
Determining Net Asset Value 12
Valuing Futures and Options 12
Redeeming Shares 13
Redemption in Kind 13
Massachusetts Partnership Law 13
Tax Status 13
The Fund's Tax Status 13
Shareholders' Tax Status 13
Total Return 14
Yield 14
Performance Comparisons 14
Economic and Market Information15
<PAGE>
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 high current income consistent
with preservation of capital. The objective cannot be changed without approval
of shareholders.
Acceptable Investments
As a matter of investment policy, which may be changed without shareholder
approval, the Fund will, under normal circumstances, invest at least 65% of the
value of its net assets in investment grade bonds. Permitted investments
include:
odomestically-issued corporate debt obligations;
omortgage-backed securities;
oobligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities; and
orepurchase agreements.
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.
Futures and Options Transactions
The Fund may attempt to hedge all or a portion of its portfolio by buying and
selling financial futures contracts, buying put options on portfolio securities
and listed put options on futures contracts, and writing call options on futures
contracts. The Fund may also write covered call options on portfolio securities
to attempt to increase its current income. The Fund currently does not intend to
invest more than 5% of its total assets in options transactions.
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. In the fixed income securities market, price generally moves
inversely to interest rates. Thus, a rise in rates generally means a
drop in price. Conversely, a drop in rates generally 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.
Put Options on Financial Futures Contracts
The Fund may purchase listed put options on financial futures
contracts. 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 would purchase put options on futures contracts 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 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.
Call Options on Financial Futures Contracts
In addition to purchasing put options on futures, the Fund may write
listed call options on futures contracts 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. 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 Options on Portfolio Securities
The Fund may purchase put 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 to sell
the underlying security to the writer (seller) as a specified price
during the term of the option.
Writing Covered Call Options on Portfolio Securities
The Fund may also write covered 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. The Fund may only sell 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).
Investing in Securities of Other Investment Companies
The Fund may invest in the securities of affiliated money market funds as an
efficient means of managing the Fund's uninvested cash.
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 other 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. The Fund does not intend to
engage in when-issued and delayed delivery transactions to an extent that would
cause the segregation of more than 20% of the total value of its assets.
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.
There is a 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.
Repurchase Agreements
The Fund requires its custodian to take possession of the securities subject to
repurchase agreements, and these securities are 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 a defaulting seller files for bankruptcy or
becomes insolvent, disposition of 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 will
only enter into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Adviser to be
creditworthy pursuant to guidelines established by the Trustees.
Reverse Repurchase Agreements
The Fund may also 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. The securities are marked-to-market daily and
maintained until the transaction is settled.
Portfolio Turnover
The Fund will not attempt to set or meet a portfolio turnover rate since any
turnover would be incidental to transactions undertaken in an attempt to achieve
the Fund's investment objectives. Securities in the Fund's portfolio will be
sold whenever the 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 Adviser does not anticipate that portfolio
turnover will result in adverse tax consequences. Any such trading will increase
the Fund's portfolio turnover rate and transaction costs. The Adviser does not
anticipate that the Fund's portfolio turnover rate will exceed 200%.
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.
Diversification of Investments
With respect to securities comprising 75% of the value of its total
assets, the Fund will not purchase securities of any one issuer (other
than cash, cash items, securities issued or guaranteed by the government
of the United States or its agencies or instrumentalities and repurchase
agreements collateralized by such U.S. government securities; and
securities of other investment companies) if, as a result, more than 5% of
the value of the its total assets would be invested in the securities of
that issuer, or it would own more than 10% of the outstanding voting
securities of that issuer.
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 debt securities 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.
Writing Covered Call Options and Purchasing Put Options
The Fund will not write call options on securities unless the securities
are held in the Fund's portfolio or unless the Fund is entitled to them in
deliverable form without further payment or after segregating cash in the
amount of any further payment. The Fund will not purchase put options on
securities unless the securities are held in the Fund's portfolio.
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, pledge or lend 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."
<PAGE>
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
15 Old Timber Trail
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.; Director, Member of
Executive Committee, 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; formerly, 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.
<PAGE>
James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director 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.
<PAGE>
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 and
Murray; 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 and U.S. Space Foundation; President
Emeritus, University of Pittsburgh; Founding Chairman, National Advisory Council
for Environmental Policy and Technology, Federal Emergency Management Advisory
Board and Czech Management Center, Prague; Director or Trustee of the Funds.
Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: June 21, 1935
Trustee
Public Relations/Marketing/Conference Planning; 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; Treasurer of some of
the Funds.
<PAGE>
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 referred to in the list of Trustees and Officers, "Funds" includes the
following investment companies:
111 Corcoran Funds; 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 Obligations Trust II; 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;
WesMark Funds; and World Investment Series, Inc.
Fund Ownership
Officers and Trustees own less than 1% of the Fund's outstanding shares.
<PAGE>
Trustees Compensation
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 andTrustee
Peter E. Madden $0
Trustee
John E. Murray, Jr. $0
Trustee
Wesley W. Posvar $0
Trustee
Marjorie P. Smuts $0
Trustee
* Information is furnished for the fiscal year ending January 31, 1998.
#The aggregate compensation is provided for the Trust which is comprised of four
portfolios.
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.
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 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.
<PAGE>
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. Although the transfer agent does not charge for
telephone redemptions, it reserves the right to charge a fee for the cost of
wire-transferred redemptions of less than $5,000.
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 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
Shareholders are subject to federal income tax on dividends and capital gains
received as cash or additional shares. The dividends received deduction for
corporations will apply to ordinary income distributions to the extent the
distributions represents amounts that would qualify for the dividends received
deduction to the Fund if the Fund were a regular corporation and to the extent
designated by the Fund as so qualifying. These dividends and any short-term
capital gains are taxable as ordinary income.
Capital Gains
Long-term capital gains distributed to shareholders will be treated as
long-term capital gains regardless of how long shareholders have held 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:
[TO BE DETERMINED]
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.
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,
thirty-seven percent of American households are pursuing their financial goals
through mutual funds. These investors, as well as businesses and institutions,
have entrusted over $3.5 trillion to the more than 6,000 funds available.
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 (1.);
(i) Form of Amendment No. 1 to the Declaration of Trust (2.);
(2) Copy of By-Laws of the Registrant (1.); (3) Not
applicable; (4) Not applicable; (5) Conformed Copy of
Investment Advisory Contract of the Registrant (1.);
(i) Conformed Copy of Exhibit B to the Investment
Advisory Contract (2.); (6) Conformed Copy of Distributor's
Contract of the Registrant (1.);
(i) Conformed Copy of Exhibit B to the Distributor's
Contract (2.); (ii) Conformed Copy of Exhibits C & D to
the Distributor's Contract;+
(7) Not applicable;
(8) Conformed Copy of Custodian Contract of the Registrant
(1.); (i) Conformed Copy of Exhibit 1 to the Custody
Contract (Schedule of Fees);+
(9) (i) Conformed Copy of Agreement for Fund Accounting, Administrative
Services, and Transfer Agency Services of the Registrant
(1.);
(ii) Conformed Copy of Schedule A (Fund Accounting
Fees) of the Registrant;+ (iii) Conformed Copy of
Schedule B (Fees and Expenses of Transfer Agency) of the
Registrant;+
(iv) Conformed Copy of Shareholder Services Agreement of the
Registrant (1.);
(v) Copy of Amendment No. 1 to Schedule A of the Shareholder Services
Agreement (1.);
(vi) Copy of Amendment No. 2 to Schedule A of the Shareholder Services
Agreement;+
(vii) Conformed Copy of Electronic Communications and Recordkeeping
Agreement (2.);
(10) Conformed Copy of Opinion and Consent of Counsel as to legality of shares
being registered (2.);
(11) Not applicable;
(12) Not applicable;
(13) Conformed Copy of Initial Capital Understanding (2.);
(14) Not applicable;
- -------------------------------------
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed November 14, 1996 (File Nos. 333-16157 and
811-7925).
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 4, 1997 (File Nos. 333-16157
and 811-7925).
<PAGE>
(15) (i) Conformed Copy of Distribution Plan (1.); (ii)
Conformed Copy of Exhibit B to the Distribution Plan
(2.);
(iii) Conformed Copy of Exhibits C & D to the
Distribution Plan;+ (iv) Copy of Dealer Agreement (to
be filed by amendment);
(16) (i) Copy of Schedule for Computation of Fund Performance Data for
WesMark West Virginia Municipal Bond Fund (3.);
(ii) Copy of Schedule for Computation of Fund Performance Data for
WesMark Growth Fund (3.);
(17) Copy of Financial Data Schedules (3.); (18) Not
applicable; (19) Conformed copy of Power of Attorney (1.).
Item 25. Persons Controlled by or Under Common Control with Registrant
None
Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of December 23, 1997
-------------- -----------------------
Shares of beneficial interest
(no par value)
WesMark West Virginia
Municipal Bond Fund 461
WesMark Growth Fund 1,252
WesMark Balanced Fund Not Currently Effective
WesMark Bond Fund Not Currently Effective
Item 27. Indemnification: (1.)
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.
- -------------------------------------
+ All exhibits have been filed electronically.
1. Response is incorporated by reference to Registrant's Initial Registration
Statement on Form N-1A filed November 14, 1996 (File Nos. 333-16157 and
811-7925).
2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A filed February 4, 1997 (File Nos. 333-16157
and 811-7925).
3. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 1 on Form N-1A filed September 25, 1997 (File Nos. 333-16157
and 811-7925).
<PAGE>
(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/Director WesBanco, Inc.
Paul M. Limbert Vice Chairman
of the Board/Director
Dennis P. Yaeger Vice Chairman
of the Board
Kristine N. Molnar President, CEO, and Director
Shirley A. Bucan Secretary
Donald K. Jebbia President, Elm Former President and
Grove Branch CEO, WesBanco Bank Elm
Grove
Jon M. Rogers Executive Vice President,
New Martinsville Office
Jerome B. Schmitt Executive Vice President,
Trusts and Investment
Stephen E. Hannig Senior Vice President,
Retail Banking
Thomas B. McGaughy Senior Vice President,
Assistant Secretary, Trusts
John W. Moore, Jr. Senior Vice President,
Human Resources
David L. Pell Senior Vice President/
Senior Loan Officer
Edward G. Sloane, Sr. Senior Vice President/MIS
Francine Swiger Senior Vice President
Lloyd E. Walker, Jr. Senior Vice President-
Loans & Assistant Compliance
Officer, Elm Grove Branch
Gregory W. Adkins Vice President
Paul J. Becka Vice President,
Information Technology
J. Kevin Diserio Vice President
John D. Faulkner Vice President
Lawrence P. Finneran Vice President/Manager,
Hancock County
Wyatt K. Hoffman Vice President - Credit Quality
(1) (2) (3)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
- ---- ------------- ----------------------
Peter W. Jaworski Vice President - Credit Risk Management
W. Taylor McCluskey Vice President & Senior
Trust Officer
Kevin D. McFarland Vice President
Andrew M. Mihalyo Vice President - Consumer
Credit
Douglas A. Molnar Vice President,
Marketing
Edward G. Sloane, Jr. Vice President and
Controller
James G. Thompson Vice President -
Weirton Office
R. Bruce Bandi Assistant Vice President &
Senior Trust Officer
Roanne M. Burech Assistant Vice President -
Financial Services
Janet D. Campeti Assistant Vice President -
Operations
Mary Ruth Cilles Assistant Vice President -
Operations
David B. Dalzell, Jr. Assistant Vice President &
Senior Trust Officer
David B. Ellwood Assistant Vice President
Patricia A. Lowe Assistant Vice President
John M. McGee Assistant Vice President
Cynthia M. Perring Assistant Vice President &
Senior Trust Officer
Robert F. Pretulovich Assistant Vice President/
Branch Manager, Weirton Main
Street Office
Matthew W. Pribus Assistant Vice President -
Operations
Frederick J. Quinn Assistant Vice President/
Loans, Weirton Main
Street Office
Roger E. Winters Assistant Vice President &
Senior Trust Officer
James E. Altmeyer Director President, Altmeyer
Funeral Homes, Inc.
(1) (2) (3)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
Ray A. Byrd Director Partner, Schrader,
Byrd, Companion &
Gurley
Fred T. Chambers Director Funeral Director,
Chambers and James
Funeral Homes
D. Duane Cummins, Ph.D. Director President, Bethany
College
Donald R. Donell Director President, Starvaggi
Industries, Inc.
James C. Gardill Director Chairman of the Board,
WesBanco, Inc.;
Partner, Phillips,
Gardill, Kaiser &
Altmeyer
Thomas M. Hazlett Director Partner, Kinder,
Harper, Hazlett &
Hinzey
Roland L. Hobbs Director Chairman, Wheeling Park
Commission; Former
Chairman, President and
CEO, WesBanco, Inc.
John M. Karras Director President, Karras
Painting Company, Inc.
John W. Kepner Director Vice President, Kepner
Funeral Homes, Inc.
Goerge M. Molnar Director Retired; Formerly,
President, Weirton
Office, WesBanco Bank
Wheeling
Rizal V. Pangilinan Director Ophthalmologist
C. Jack Savage Director President, Savage
Construction Company
James G. Squibb, Jr. Director President and General
Manager, WTRF-TV
Joan C. Stamp Director
Carter C. Strauss Director President, Strauss
Industries, Inc.
Robert D. Wable Director President, Wable Ford -
Mercury, Inc.
John A. Welty Director Secretary/Treasurer,
Welty Buick, Pontiac,
GMC Trucks
(1) (2) (3)
Other Substantial
Position with Business, Profession,
Name the Adviser Vocation or Employment
Gary E. West Director Chairman, Valley
National Gases, Inc.
William E. Witschey Director President, Witschey's
Market, Inc.
John E. Wright, III Director President and COO,
Wheeling-Nisshin, Inc.
Item 29. Principal Underwriters:
(a) Edgewood Services, Inc. the Distributor for shares of the
Registrant, acts as principal underwriter for the following
open-end investment companies, including the Registrant: BT
Advisor Funds, BT Institutional Funds, BT Investment Funds, BT
Pyramid Mutual Funds, Excelsior Funds, Excelsior Funds, Inc.,
(formerly, UST Master Funds, Inc.), Excelsior Institutional
Trust, Excelsior Tax-Exempt Funds, Inc. (formerly, UST Master
Tax-Exempt Funds, Inc.), Deutsche Portfolios, FTI Funds,
FundManager Portfolios, Great Plains Funds, Marketvest Funds,
Marketvest Funds, Inc., Old Westbury Funds, Inc., Robertsons
Stephens Investment Trust, WesMark Funds and WCT Funds.
(b)
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
Lawrence Caracciolo Director, President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
J. Christopher Donahue Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Schmitt Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Sholes 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
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Distributor With Registrant
S. Elliott Cohan Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas J. Ward 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 Services Company Federated Investors Tower
("Transfer Agent, Dividend Pittsburgh, PA 15222-3779
Disbursing Agent and Portfolio
Accounting Services")
Federated Administrative Services 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 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.
Registrant hereby undertakes to file a post-effective amendment on
behalf of the WesMark Balanced Fund and WesMark Bond Fund, using
financial statements for the WesMark Balanced Fund and WesMark Bond
Fund which need not be certified, within four to six months from the
effective date of this Post-Effective Amendment No. 2.
<PAGE>
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 Amendment to its 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 8th day of January, 1998.
WESMARK FUNDS
BY: /s/ C. Todd Gibson
C. Todd Gibson, Assistant Secretary
Attorney in Fact for John F. Donahue
January 8, 1998
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 January 8, 1998
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
John E. Murray, Jr.* Trustee
Wesley W. Posvar* Trustee
Marjorie P. Smuts* Trustee
* By Power of Attorney
......Exhibit 6(ii) under Form N-1A
......Exhibit 1 under Item 601/Reg. S-K
Exhibit C
to the
Distributor's Contract
WESMARK FUNDS
WesMark Balanced 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
Balanced Fund, and with respect to the class thereof, first set forth in this
Exhibit.
Witness the due execution hereof this 1st day of December, 1997.
WesMark Funds
By: /s/ J. Christopher Donahue
Name: J. Christopher Donahue
Title: Executive Vice President
Edgewood Services, Inc.
By: /s/ Lawrence Caracciolo
Name: Lawrence Caracciolo
Title: President
<PAGE>
Exhibit D
to the
Distributor's Contract
WESMARK FUNDS
WesMark 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 Bond
Fund, and with respect to the class thereof, first set forth in this Exhibit.
Witness the due execution hereof this 1st day of December, 1997.
WesMark Funds
By: /s/ J. Christopher Donahue
Name: J. Christopher Donahue
Title: Executive Vice President
Edgewood Services, Inc.
By: /s/ Lawrence Caracciolo
Name: Lawrence Caracciolo
Title: President
...... Exhibit 8(i) under Form N-1A
...... Exhibit 10 under Item 601/Reg. S-K
Exhibit 1 to
Custodian Contract dated March 1, 1996
between WesBanco Bank Wheeling and
WesMark Funds
SCHEDULE OF FEES
The Custodian shall be entitled to the following fees for the performance
of the services provided under the Contract:
Annual Fees:
3.00 basis points on each Fund's total assets up to $20 million 2.00 basis
points on each Fund's total assets on next $20 million 1.00 basis points on each
Fund's total assets in excess of $40 million
Transaction Fees:
$15.00 per transaction
Out-of-Pocket Expenses:
Telephone charges, postage and insurance, forms, envelopes, xerox copies,
supplies, etc., as incurred
Other:
Unusual or extraordinary services (e.g., expenses incurred in connection with
fund consolodation or merger, extraordinary shipments and the preparation of
special reports based on time expended and responsibilities assumed)
WESBANCO BANK WHEELING WESMARK FUNDS
By:/s/ Jerome B. Schmitt By:/s/ Edward C. Gonzales
Name: Jerome B. Schmitt Name: Edward C. Gonzales
Title: Executive Vice President Title: President
...... Exhibit 9(ii) under Form N-1A
...... Exhibit 10 under Item 601/Reg. S-K
SCHEDULE A
WesMark Funds
STANDARD DOMESTIC FUNDS
Fund Accounting
Fee Schedule
I. Annual Fees for Portfolio Record Keeping/Fund Accounting Services
First $100 Million 3.0 Basis Points
$100 Million - $300 Million 2.0 Basis Points
$300 Million - $500 Million 1.0 Basis Points
Over $500 Million 0.5 Basis Points
Fund Minimum $39,000
Additional Class of Shares $12,000
(Plus pricing charges and other out-of-pocket expenses)
II. Out-of-Pocket Expenses
Out-of-pocket expenses include, but are not limited to, the following:
postage (including overnight courier service), statement stock, envelopes,
telephones, telecommunication charges (including FAX), travel, duplicating,
forms, supplies, microfiche, computer access charges, client specific system
enhancements ,access to the shareholder recordkeeping system, security pricing
services, variable rate change notification services, paydown factor
notification services
FAS:/s/ DLH
FAS:/s/ CCT
<PAGE>
...... Exhibit 9(iii) under Form N-1A
...... Exhibit 10 under Item 601/Reg. S-K
SCHEDULE B
WesMark Funds
Fees and Expenses
Transfer Agency
I. Fees
Base Fee* Annual fee per fund, class or other subdivision. $20,000
Account Fee* Annual account charge (includes system access
and funds control reconcilement)
Daily dividend fund $16.00
Non-daily dividend fund $10.00
Other Account Fees* Services or features not covered above.
Account Activity Processing (includes account establishment,
transaction and maintenance processing) $3.50
Account Servicing (includes shareholder servicing
and corresondence) $4.50
Contingent deferred sales charge (monthly and
quarterly funds only) $5.00
II. Out-of-Pocket Expenses
Out-of-pocket expenses include but are not limited to postage (including
overnight courier service), statement stock, envelopes, telecommunication
charges (including Fax), travel, duplicating, forms, supplies, microfiche,
computer access charges, client specific enhancements, disaster recovery, closed
account fees, processing fees (including check encoding), and expenses incurred
at the specific direction of the fund. Postage for mass mailings is due seven
days in advance of the mailing date.
*All fees are annualized and will be prorated on a monthly basis for billing
purposes. Out-of-pocket expenses are not covered by these fees.
FSSC:/s/TPS
FAS:/s/ CCT
Exhibit 9(vi) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K
AMENDMENT NO. 2
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
WesMark Balanced Fund
WesMark Bond Fund
As revised: December 1, 1997
Exhibit 15(iii) under Form N-1A
Exhibit 1 under Item 601/Reg. S-K
EXHIBIT C
to the
Distribution Plan
WesMark Funds
WesMark Balanced 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 Balanced Fund held during
the month.
Witness the due execution hereof this 1st day of December, 1997.
WesMark Funds
By:/s/ J. Christopher Donahue
Name: J. Christopher Donahue
Title: Executive Vice President
<PAGE>
EXHIBIT D
to the
Distribution Plan
WesMark Funds
WesMark 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 Bond Fund held during the
month.
Witness the due execution hereof this 1st day of December, 1997.
WesMark Funds
By:/s/ J. Christopher Donahue
Name: J. Christopher Donahue
Title: Executive Vice President
