[Graphic]
WEST VIRGINIA
MUNICIPAL BOND
FUND
ANNUAL REPORT
JANUARY 31, 1998
[Graphic]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the first Annual Report to shareholders for the WesMark
West Virginia Municipal Bond Fund. This report covers the period from April 14,
1997 -- the date the fund began operations --through January 31, 1998. It gives
you a complete picture of the fund's operations, beginning with an overview of
the municipal bond market and fund strategy by the fund's managers, followed by
a complete list of fund holdings and the financial statements.
WesMark West Virginia Municipal Bond Fund is managed to help your money earn
income free from federal income tax and West Virginia state income tax.* To
pursue that objective, it invests in a portfolio of high-quality bonds issued by
West Virginia municipalities. I urge you to read the co-portfolio managers'
discussion on the following page, which will familiarize you with how your
investment is managed.
During its initial 9 1/2 months of operation, the fund produced a total return
of 6.64%.** Contributing to the total return were a share price increase of
$0.30, income totaling $0.35 per share, and capital gains totaling $0.01 per
share.
Thank you for selecting WesMark West Virginia Municipal Bond Fund to help you
keep more of your investment income where it belongs -- in your pocket. You are
among tax-sensitive West Virginia residents who have entrusted more than $66
million to the fund. We will make every effort to ensure that your relationship
with us meets or exceeds your expectations.
Sincerely,
[Graphic]
Edward C. Gonzales
President
March 15, 1998
* Income may be subject to the federal alternative minimum tax.
** Performance quoted represents past performance and is not indicative of
future results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
INVESTMENT REVIEW
It is our pleasure to review with you the results of the first year of
operations for the WesMark West Virginia Municipal Bond Fund. This report covers
the period from April 14, 1997 (date of initial public investment) to January
31, 1998. The fund provided a total return of 6.64%* during its 91*2 month
reporting period. We think it is important that you understand our investment
approach so that you can feel comfortable with your investment regardless of
short-term market fluctuations.
Our investment approach is to limit the impact of bond market volatility on the
net asset value of the fund. We believe the primary objective of the fund is to
generate reasonable income that is exempt from federal income tax and the West
Virginia income taxes for residents of West Virginia. We intend for this fund to
be an intermediate-term bond fund.
We intend to focus on high-quality bonds. At fiscal year-end, 57% of the fund
was invested in bonds rated AAA. The weighted average rating for bonds in the
fund was AA. A large proportion of the bonds held in the fund are insured. Our
knowledge of the credit-worthiness of issuers in this state should enable us to
select those issues that provide relatively high yields.
The bond market today reflects positive investor psychology regarding inflation.
The yield on long-term bonds is almost the same as the yield for short-term
bonds. This reflects the widespread view that inflation is still declining and
is unlikely to rise anytime soon. Currently, Treasury Inflation Protected
Securities (TIPS) yield 3.7%, while 10-year U.S. Treasury notes yield 5.5%.
Since TIPS are adjusted for annual inflation, the yield on these securities
reflects the real interest rate based on current economic conditions. The
10-year treasury note includes not only the real rate of return but also an
inflation premium. The bond market has built in expected inflation of less than
2.0% for the next 10 years. We are uncomfortable with this assumption. The U.S.
economy is expected to continue growing vigorously this year. The labor market
is giving warning signals of rising wages. Commodity prices remain weak but,
ultimately, inflation will reflect wages since this is the major cost for most
corporations. We doubt that productivity gains will be sustained at recent
levels. If wages accelerate and productivity gains slow, the outcome may be a
significant change in bond market psychology.
We believe that our focus on intermediate-term bonds will provide a satisfactory
yield while preserving the value of your investment.
[Graphic]
Jerome B. Schmitt
Co-Portfolio Manager
[Graphic]
David B. Ellwood
Co-Portfolio Manager
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
GROWTH OF $10,000 INVESTED IN WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
The graph below illustrates the hypothetical investment of $10,000* in the
WesMark West Virginia Municipal Bond Fund (the "Fund") from April 14, 1997
(start of performance) to January 31, 1998 compared to the Lehman Brothers 5
Year G.O. Bond Index ("LB5GO")+ and Lipper Intermediate Municipal Debt Funds
Average ("LIMDFA").++
"Graphic representation "A" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The
LB5GO and the LIMDFA have been adjusted to reflect reinvestment of dividends
on securities in the index and average.
+ The LB5GO is not adjusted to reflect sales charges, expenses, or other fees
that the SEC requires to be reflected in the Fund's performance.
The index is unmanaged.
++ Lipper figures represent the average of the total returns reported by all of
the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
LONG-TERM MUNICIPALS -- 99.8%
<C> <S> <C> <C>
WEST VIRGINIA -- 98.3%
$ 195,000 Beckley, WV, Nursing Facility Refunding Revenue Bonds,
5.10% (Beckley Health Care Corp. Project)/(Nationsbank of
Texas, N.A. LOC), 9/1/2004 NR $ 199,921
205,000 Beckley, WV, Nursing Facility Refunding Revenue Bonds,
5.20% (Beckley Health Care Corp. Project)/(Nationsbank of
Texas, N.A. LOC), 9/1/2005 NR 210,810
215,000 Beckley, WV, Nursing Facility Refunding Revenue Bonds,
5.30% (Beckley Health Care Corp. Project)/(Nationsbank of
Texas, N.A. LOC), 9/1/2006 NR 221,872
230,000 Beckley, WV, Nursing Facility Revenue Refunding Bonds,
5.40% (Beckley Health Care Corp. Project)/(Nationsbank of
Texas, N.A. LOC), 9/1/2007 NR 238,346
500,000 Berkeley County, WV Board of Education, GO UT, 4.50%
(FGIC INS)/(Original Issue Yield: 5.30%), 6/1/2009 AAA 496,902
500,000 Berkeley County, WV Board of Education, GO UT Refunding
Bonds, 5.35%, 4/1/1999 A+ 507,722
360,000 Berkeley County, WV Board of Education, GO UT Refunding
Bonds, 5.45%, 4/1/2000 A+ 369,968
1,030,000 Berkeley County, WV Board of Education, GO UT, 5.75%
(FGIC INS), 6/1/2003 AAA 1,105,038
400,000 Berkeley County, WV Board of Education, GO UT, 7.20%
(BIG INS), 4/1/1999 AAA 415,056
100,000 Brooke County, WV Board of Education, GO UT Refunding
Bonds, 8.625% (AMBAC INS), 8/1/2000 AAA 110,623
100,000 Brooke County, WV Board of Education, GO UT Refunding
Bonds, 8.75% (AMBAC INS), 8/1/2001 AAA 114,959
1,350,000 Cabell County, WV Board of Education, GO UT, 6.50% (MBIA
INS), 5/1/2003 AAA 1,493,551
500,000 Cabell County, WV Board of Education, GO UT, 4.60%
(Original Issue Yield: 4.70%), 5/1/2003 A+ 507,425
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 500,000 Cabell County, WV Board of Education, GO UT, 6.00% (MBIA
INS), 5/1/2006 AAA $ 554,458
100,000 Cable, Putnam & Wayne County's, WV, Single Family
Residence Mortgage Revenue Bonds, 7.375% (FGIC INS),
4/1/2010 AAA 115,360
300,000 Charles Town, WV, Residential Mortgage Revenue Bonds,
6.20%, 3/1/2011 NR 313,421
865,000 Charleston, WV Building Commission, Subordinate Bonds,
6.00% (Charleston Town Center Parking), 12/1/2010 NR 917,480
355,000 Charleston, WV, GO UT, 7.20%, 10/1/2003 NR 405,323
450,000 Clarksburg, WV, Revenue Refunding Bonds, 5.25% (Asset
GTD)/(Original Issue Yield: 5.30%), 9/1/1999 AA 460,215
250,000 Harrison County, WV Board of Education, GO UT, 6.20%
(FGIC INS), 5/1/2000 AAA 262,213
500,000 Harrison County, WV Board of Education, GO UT, 6.40%
(FGIC INS)/(Original Issue Yield: 6.45%), 5/1/2006 AAA 567,796
500,000 Harrison County, WV Building Commission, Revenue
Refunding Bonds, 4.50% (United Hospital Center)/(AMBAC
INS), 4/1/2001 AAA 504,973
410,000 Harrison County, WV County Commission, Special Obligation
Refunding Bonds, 6.35% (Original Issue Yield: 6.45%),
5/15/2004 AAA 450,186
250,000 Jefferson County, WV Board of Education, School
Improvement Bonds, 6.85% (FGIC INS), 7/1/2001 AAA 272,049
750,000 Kanawha County, WV Commercial Development, Revenue
Refunding Bonds, 6.50% (May Department Stores Co.),
6/1/2003 A 828,251
2,025,000 Kanawha County, WV, Pollution Control Revenue Bonds,
7.35% (Union Carbide Corp.), 8/1/2004 NR 2,297,229
500,000 Lewis County, WV, Revenue Bonds, 10.375% (Crestview
Manor Project), 8/1/2019 NR 561,956
285,000 Logan County, WV, Revenue Bonds, 8.00% (Logan County
Health Care Center Limited Partnership Project), 12/1/2009 NR 360,659
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 100,000 Marion County, WV Single Family Mortgage, Revenue Bonds,
7.20% (FGIC INS), 8/1/2001 AAA $ 109,201
185,000 Ohio County, WV Board of Education, 5.125%, 6/1/2018 AAA 185,000
200,000 Ohio County, WV Board of Education, GO UT, 6.30%,
6/1/2001 A+ 213,576
475,000 Ohio County, WV Board of Education, GO UT, 7.00%,
6/1/2002 A+ 530,577
500,000 Ohio County, WV Board of Education, GO UT, 7.00%,
6/1/2003 A+ 569,083
530,000 Ohio County, WV Board of Education, GO UT, 7.00%,
6/1/2004 A+ 614,002
250,000 Ohio County, WV Building Commission, Revenue Refunding
Bonds, 9.50% (Ohio Valley Medical Center)/(Original Issue
Yield: 9.615%), 1/1/2005 NR 250,515
500,000 Parkersburg, WV Waterworks & Sewer Systems, Revenue
Refunding Bonds, 4.75% (FSA INS)/(Original Issue Yield:
4.80%), 3/1/2002 AAA 513,422
400,000 Parkersburg, WV Waterworks & Sewer Systems, Revenue Refunding
Bonds, 4.85% (FSA INS)/(Original Issue Yield:
4.90%), 3/1/2003 AAA 413,819
500,000 Pleasants County, WV, Pollution Control Revenue Bonds,
6.30% (Potomac Edison Co.), 11/1/2007 A 501,114
2,500,000 Pleasants County, WV, Pollution Control Revenue Bonds,
6.375% (Monongahela Power Co.)/(Original Issue Yield:
6.413%), 11/1/2007 A 2,505,518
500,000 Pleasants County, WV PCR, Refunding Revenue Bond, 6.15%
(West Penn Power Co.)/(AMBAC INS), 5/1/2015 AAA 545,401
475,000 Pleasants County, WV PCR, Refunding Revenue Bonds, 6.15%
(Potomac Edison Co.)/(MBIA INS), 5/1/2015 AAA 516,912
475,000 Raleigh County, WV, Refunding Revenue Bonds, 5.50%,
6/1/2006 NR 494,278
120,000 South Charleston, WV, GO UT Bonds, 5.75%, 9/1/1998 NR 121,304
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 480,000 South Charleston, WV, Refunding Revenue Bonds, 4.70%
(MBIA INS), 10/1/2001 AAA $ 487,404
1,000,000 South Charleston, WV, Refunding Revenue Bonds, 7.625%
(Union Carbide Corp.), 8/1/2005 BBB 1,179,370
250,000 South Charleston, WV, Revenue Bonds, 3.85%, 3/1/1999 NR 249,572
200,000 South Charleston, WV, Revenue Bonds, 3.85%, 3/1/2000 NR 198,571
500,000 South Charleston, WV, Revenue Bonds, 5.50% (MBIA INS),
10/1/2009 AAA 518,895
415,000 Taylor County, WV, GO UT Bonds, 8.40% (Original Issue
Yield: 8.45%), 5/1/2001 NR 469,053
100,000 Upshur County, WV Charleston School District, 6.50%,
3/1/1998 NR 100,220
500,000 Wayne County, WV Board of Education, GO UT Bonds,
4.40%, 6/1/1999 A+ 502,747
655,000 Wayne County, WV Board of Education, GO UT Bonds,
4.50%, 6/1/2000 A+ 660,748
175,000 Weirton, WV Municipal Hospital Building, Refunding
Revenue Bonds, 5.75% (Weirton Medical Center Inc.)/
(AMBAC INS)/(Original Issue Yield: 6.00%), 12/1/2003 AAA 182,628
540,000 Weirton, WV Municipal Hospital Building, Revenue Bonds,
5.40% (Weirton Medical Center Inc.)/(AMBAC INS)/
(Original Issue Yield: 5.55%), 12/1/2000 AAA 559,169
675,000 Weirton, WV Municipal Hospital Building, Revenue Bonds,
5.75% (Weirton Medical Center Inc.)/(AMBAC INS)/(Original
Issue Yield: 6.05%), 12/1/2004 AAA 705,278
700,000 West Virgina State College, Revenue Bonds, 5.25% (AMBAC
INS)/(Original Issue Yield: 5.40%), 4/1/2000 AAA 719,584
800,000 West Virgina State College, Revenue Bonds, 5.50% (AMBAC
INS)/(Original Issue Yield: 5.60%), 4/1/2001 AAA 836,797
1,000,000 West Virgina State College, Revenue Bonds, 5.75% (AMBAC
INS)/(Original Issue Yield: 5.85%), 4/1/2003 AAA 1,076,099
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 200,000 West Virgina State College, Revenue Bonds, 5.75% (AMBAC
INS)/(Original Issue Yield: 5.95%), 4/1/2004 AAA $ 216,908
200,000 West Virginia HFA, Revenue Bonds (Series A), 5.60% (Cabell
Huntington Hospital)/(AMBAC INS)/(Original Issue Yield:
5.75%), 1/1/2005 AAA 214,545
480,000 West Virginia HFA, Revenue Bonds, 4.50% (Charleston Area
Medical Center)/(MBIA INS)/(Original Issue Yield: 4.70%),
9/1/2001 AAA 484,095
300,000 West Virginia HFA, Revenue Bonds, 4.70% (FSA LOC),
8/1/2006 NR 302,722
700,000 West Virginia HFA, Revenue Bonds, 4.90% (West Virginia University
Hospital Inc.)/(MBIA INS)/(Original Issue Yield:
5.00%), 6/1/2004 AAA 723,824
1,650,000 West Virginia HFA, Revenue Bonds, 5.00% (Charleston Area
Medical Center)/(MBIA INS)/(Original Issue Yield: 5.10%),
9/1/2005 AAA 1,719,691
220,000 West Virginia HFA, Revenue Bonds, 5.00% (West Virginia University
Hospital Inc.)/(MBIA INS)/(Original Issue Yield:
5.10%), 6/1/2005 AAA 228,606
1,750,000 West Virginia HFA, Revenue Bonds, 5.75% (Charleston Area
Medical Center)/(MBIA INS)/(Original Issue Yield: 5.98%),
9/1/2013 AAA 1,863,999
180,000 West Virginia HFA, Revenue Bonds, 6.75% (Original Issue
Yield: 6.85%), 3/1/2014 BBB- 192,920
500,000 West Virginia HFA, Revenue Bonds, 7.875% (Cabell Hospital)/
(Original Issue Yield: 8.007%), 1/1/2019 (@102) NR 527,994
1,500,000 West Virginia HFA, Revenue Refunding Bonds, 4.75%
(Department of Health & Human Resources)/(FSA INS)/
(Original Issue Yield: 4.80%), 8/1/2008 NR 1,520,622
195,000 West Virginia Housing Development Fund, Refunding
Revenue Bonds, 4.90%, 5/1/2004 AAA 197,500
165,000 West Virginia Housing Development Fund, Refunding
Revenue Bonds, 5.15%, 5/1/2006 AAA 168,772
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 285,000 West Virginia Housing Development Fund, Refunding
Revenue Bonds, 5.35%, 5/1/2008 AAA $ 296,149
275,000 West Virginia Housing Development Fund, Refunding
Revenue Bonds, 6.70%, 5/1/2009 AAA 295,407
735,000 West Virginia Housing Development Fund, Revenue Bonds,
5.35%, 11/1/2010 AAA 751,236
500,000 West Virginia School Building Authority, Refunding Revenue
Bonds, 4.80% (AMBAC INS)/(Original Issue Yield: 4.85%),
7/1/2004 AAA 518,420
3,720,000 West Virginia School Building Authority, Revenue Bonds,
5.625% (MBIA INS)/(Original Issue Yield: 5.90%), 7/1/2003 AAA 4,003,378
180,000 West Virginia School Building Authority, Revenue Bonds,
5.70% (MBIA INS)/(Original Issue Yield: 5.75%), 7/1/2000 AAA 187,405
150,000 West Virginia School Building Authority, Revenue Bonds,
5.80% (MBIA INS)/(Original Issue Yield: 5.90%), 7/1/2001 AAA 158,839
855,000 West Virginia School Building Authority, Revenue Bonds,
6.25% (MBIA INS), 7/1/2001 AAA 916,726
100,000 West Virginia School Building Authority, Revenue Bonds,
6.75% (MBIA INS)/(Original Issue Yield: 7.00%), 7/1/2004 AAA 114,881
1,300,000 West Virginia School Building Authority, Revenue Bonds,
6.75% (MBIA INS)/(United States Treasury PRF)/(Original
Issue Yield: 7.148%), 7/1/2010 (@102) AAA 1,409,325
300,000 West Virginia School Building Authority, Revenue Bonds,
6.80% (MBIA INS)/(Original Issue Yield: 6.85%), 7/1/2001 AAA 327,185
510,000 West Virginia School Building Authority, Revenue Refunding
Bonds, 4.70% (AMBAC INS)/(Original Issue Yield: 4.75%),
7/1/2003 AAA 525,219
100,000 West Virginia State Building Commission Lease, Revenue
Bonds (Series A), 6.50% (West Virginia Regional Jail and
Correction)/(MBIA INS)/(Original Issue Yield: 6.60%),
7/1/2000 AAA 106,086
550,000 West Virginia State Hospital Finance Authority, Refunding
Revenue Bonds, 5.00%, 8/1/2009 NR 564,650
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 1,000,000 West Virginia State Hospital Finance Authority, Revenue
Bonds, 5.00% (Fairmont General Hospital, Inc.), 11/1/2004 BBB- $ 1,015,958
1,000,000 West Virginia State Parkways Economic Development and
Tourism Authority, Revenue Refunding Bonds, 4.80% (FGIC
INS), 5/15/2000 AAA 1,019,712
400,000 West Virginia State Parkways Economic Development and
Tourism Authority, Revenue Refunding Bonds, 6.80% (FGIC
INS), 7/1/1998 AAA 405,071
500,000 West Virginia State University, Revenue Refunding Bonds,
5.50% (AMBAC INS)/(Original Issue Yield: 5.60%), 4/1/2001 AAA 522,695
540,000 West Virginia State, 5.25%, 6/1/2000 AA- 542,431
500,000 West Virginia State, GO UT, 5.50%, 6/1/2000 AA- 502,663
100,000 West Virginia State, GO UT Bonds, 5.00%, 3/1/2000 AA- 102,140
400,000 West Virginia State, GO UT Bonds, 5.25% (Original Issue
Yield: 5.60%), 3/1/1999 AA- 400,510
1,000,000 West Virginia State, GO UT Bonds, 5.30% (Original Issue
Yield: 5.40%), 2/1/2000 AA- 1,026,333
100,000 West Virginia State, GO UT Bonds, 6.00% (Original Issue
Yield: 6.05%), 6/1/2002 AA- 101,100
325,000 West Virginia University Board of Regents, Refunding
Revenue Bonds, 6.00% (MBIA INS)/(Original Issue Yield:
6.037%), 4/1/2004 AAA 354,088
100,000 West Virginia University Board of Regents, Revenue Bonds,
5.90% (MBIA INS), 4/1/2004 AAA 106,907
905,000 West Virginia University Board of Regents, Revenue Bonds,
5.90%, 4/1/2004 A+ 973,034
250,000 West Virginia University Board of Regents, Revenue Bonds,
7.25% (MBIA INS)/(Original Issue Yield: 7.30%), 4/1/2004 AAA 264,630
250,000 West Virginia University Board of Regents, Revenue Bonds,
7.25% (MBIA INS)/(Original Issue Yield: 7.527%), 4/1/2014 AAA 259,844
100,000 West Virginia University, 5.50%, 4/1/2009 AAA 107,433
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 400,000 West Virginia University, Refunding Bond (Series A), 4.85%
(Original Issue Yield: 4.95%), 5/1/2010 AAA $ 407,516
2,100,000 West Virginia Various Fourty-Four Municipalities, Series A,
5.00%, 8/1/2008 AAA 2,151,750
225,000 West Virginia Water Development Authority, Revenue
Refunding Bonds, 5.30% (FSA INS), 11/1/2002 AAA 237,632
550,000 West Virginia Water Development Authority, Revenue
Refunding Bonds, 5.80% (FSA INS)/(Original Issue Yield:
5.85%), 11/1/2012 AAA 565,165
110,000 West Virginia Water Development Authority, Water Revenue
Bonds, 6.625%, 11/1/1998 A- 112,157
765,000 West Virginia Water Development Authority, Water Revenue
Bonds, 7.70% (United States Treasury PRF)/(Original Issue
Yield: 7.822%), 11/1/2029 (@102) A- 854,512
425,000 Wetzel County, WV Board of Education, GO UT, 7.00% (MBIA
INS)/(Original Issue Yield: 7.15%), 5/1/2004 AAA 487,293
350,000 Wheeling, WV Waterworks & Sewer Systems, Revenue Bonds,
5.55% (United States Treasury COL)/(FGIC INS), 6/1/1998 AAA 352,099
500,000 Wheeling, WV Waterworks & Sewer Systems, Revenue
Refunding Bonds, 4.85% (FGIC INS)/(Original Issue Yield:
4.90%), 6/1/2005 NR 519,030
500,000 Wheeling, WV Waterworks & Sewer Systems, Revenue Refunding Bonds,
4.90% (FGIC INS)/(Original Issue Yield:
5.00%), 6/1/2006 NR 521,159
370,000 Wheeling, WV Waterworks & Sewer Systems, Series-C
Revenue Bonds, 5.75% (United States Treasury COL)/(FGIC
INS), 6/1/1999 AAA 379,340
300,000 Wheeling, WV Waterworks & Sewer Systems, Series-C
Revenue Bonds, 6.60% (FGIC INS)/(United States Treasury
PRF)/(Original Issue Yield: 6.691%), 6/1/2012 (@100) AAA 330,498
100,000 Wheeling, WV, GO UT, 7.50%, 6/1/1999 NR 104,555
125,000 Wheeling, WV, GO UT, 7.50%, 6/1/2000 NR 134,482
</TABLE>
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT CREDIT
OR SHARES RATING* VALUE
<C> <S> <C> <C>
LONG-TERM MUNICIPALS -- CONTINUED
WEST VIRGINIA -- CONTINUED
$ 155,000 Wheeling, WV, GO UT, 7.50%, 6/1/2003 NR $ 176,749
225,000 Wood County, WV Building Commission, Revenue
Refunding Bonds, 6.625% (St. Joseph Hospital,
Parkersburg)/(AMBAC INS), 1/1/2006 AAA 253,123
TOTAL LONG-TERM MUNICIPALS (IDENTIFIED COST $63,331,250) 65,222,332
MUTUAL FUND--1.5%
1,028,888 Tax-Free Obligations Fund (AT NET ASSET VALUE) 1,028,888
TOTAL INVESTMENTS (IDENTIFIED COST $64,360,138)(A) $ 66,251,220
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
(a) The cost of investments for federal tax purposes amounts to $64,360,138. The
unrealized appreciation of investments on a federal tax basis amounts to
$1,891,082 at January 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($66,380,756) at January 31, 1998.
The following acronyms are used throughout this portfolio:
AMBAC --American Municipal Bond Assurance Corporation BIG --Bond Investors
Guaranty COL --Collateralized FGIC --Financial Guaranty Insurance Company FSA
- --Financial Security Assurance GO --General Obligation GTD --Guaranty HFA
- --Housing Finance Authority INS --Insured LOC --Letter of Credit MBIA
- --Municipal Bond Investors Assurance PCR --Pollution Control Revenue PRF
- --Prerefunded UT --Unlimited Tax
(See Notes which are an integral part of the Financial Statements)
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $ 66,251,220
$64,360,138)
Income receivable 989,708
Deferred organizational costs 5,243
Total assets 67,246,171
LIABILITIES:
Payable for investments purchased $ 623,866
Income distribution payable 212,091
Accrued expenses 29,458
Total liabilities 865,415
NET ASSETS for 6,443,993 shares outstanding $ 66,380,756
NET ASSETS CONSIST OF:
Paid in capital $ 64,485,053
Net unrealized appreciation of investments 1,891,082
Accumulated net realized gain on investments 4,621
Total Net Assets $ 66,380,756
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$66,380,756 / 6,443,993 shares outstanding $10.30
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF OPERATIONS
PERIOD ENDED JANUARY 31, 1998(A)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 2,549,039
EXPENSES:
Investment advisory fee $ 305,555
Administrative personnel and services fee 76,435
Custodian fees 8,100
Transfer and dividend disbursing agent fees and expenses 26,504
Auditing fees 15,000
Legal fees 742
Portfolio accounting fees 44,716
Share registration costs 34,576
Printing and postage 11,747
Insurance premiums 1,849
Miscellaneous 4,810
Total expenses 530,034
Waivers --
Waiver of investment advisory fee (152,777)
Net expenses 377,257
Net investment income 2,171,782
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 48,886
Net change in unrealized appreciation of investments 1,891,082
Net realized and unrealized gain on investments 1,939,968
Change in net assets resulting from operations $ 4,111,750
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
January 31, 1998.
(See Notes which are an integral part of the Financial Statements)
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD
ENDED
JANUARY 31,
1998(A)
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 2,171,782
Net realized gain (loss) on investments ($48,886 as computed
for federal tax purposes) 48,886
Net change in unrealized appreciation/depreciation 1,891,082
Change in net assets resulting from operations 4,111,750
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (2,171,782)
Distributions from net realized gains (44,265)
Change in net assets resulting from distributions to shareholders (2,216,047)
SHARE TRANSACTIONS--
Proceeds from sale of shares 70,272,209
Net asset value of shares issued to shareholders in payment of distributions 185,660
declared
Cost of shares redeemed (5,972,816)
Change in net assets resulting from share transactions 64,485,053
Change in net assets 66,380,756
NET ASSETS:
Beginning of period --
End of period $ 66,380,756
</TABLE>
* For the period from April 14, 1997 (date of initial public investment) to
January 31, 1998.
(See Notes which are an integral part of the Financial Statements)
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD
ENDED
JANUARY 31,
1998(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.35
Net realized and unrealized gain (loss) on investments 0.31
Total from investment operations 0.66
LESS DISTRIBUTIONS
Distributions from net investment income (0.35)
Distributions from net realized gain on investments (0.01)
Total distributions (0.36)
NET ASSET VALUE, END OF PERIOD $10.30
TOTAL RETURN(B) 6.64%
RATIOS TO AVERAGE NET ASSETS
Expenses 0.74%*
Net investment income 4.26%*
Expense waiver/reimbursement(c) 0.30%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $66,381
Portfolio turnover 6%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 14, 1997 (date of initial
public investment) to January 31, 1998.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
WESMARK WEST VIRGINIA MUNICIPAL BOND FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
1. ORGANIZATION
WesMark Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of two portfolios. The financial statements included herein are
only those of WesMark West Virginia Municipal Bond Fund (the "Fund"), a
non-diversified portfolio. The financial statements of the other portfolio are
presented separately. The assets of each portfolio are segregated and a
shareholder's interest is limited to the portfolio in which shares are held. The
investment objective of the Fund is to provide current income which is exempt
from federal income tax and the income taxes imposed by the State of West
Virginia.
On April 14, 1997, the Fund acquired a portfolio of a common trust fund managed
by the Adviser. The acquisition was accomplished by a tax-free exchange of
6,000,315 shares of the Fund valued at $60,003,151.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS -- Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. Short-term securities are valued at the prices
provided by an independent pricing service. However, short-term securities with
remaining maturities of sixty days or less at the time of purchase may be valued
at amortized cost, which approximates fair market value. Investments in other
open-end regulated investment companies are valued at net asset value.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS -- Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized as
required by the Internal Revenue Code, as amended (the "Code"). Distributions to
shareholders are recorded on the ex-dividend date.
FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis are
marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results could differ from
those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
JANUARY 31,
1998(A)
<S> <C>
Shares sold 7,013,427
Shares issued to shareholders in payment of distributions 18,188
declared
Shares redeemed (587,622)
Net change resulting from share transactions 6,443,993
</TABLE>
(a) Reflects operations for the period from April 14, 1997 (date of initial
public investment) to January 31, 1998.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- WesBanco Bank Wheeling, the Fund's investment adviser
(the "Adviser" or "WesBanco") receives for its services an annual investment
advisory fee equal to 0.60% of the Fund's average daily net assets. The Adviser
may voluntarily choose to waive any portion of its fee. The Adviser can modify
or terminate this voluntary waiver at any time at its sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ") provides the Fund
with certain administrative personnel and services. The fee paid to FServ is
based on the level of average aggregate net assets of the Trust for the period.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Fund will compensate Edgewood Services, Inc., the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of the Fund's shares. The Plan provides that the Fund may incur distribution
expenses up to 0.25% of the average daily net assets of the Fund shares,
annually, to compensate Edgewood Services, Inc. For the period ended January 31,
1998, the Fund did not incur a distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services Agreement
with WesBanco, the Fund will pay WesBanco up to 0.25% of average daily net
assets of the Fund for the period. The fee paid to WesBanco is used to finance
certain services for shareholders and to maintain shareholder accounts. For the
period ended January 31, 1998, the Fund shares did not incur a shareholder
services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through its
subsidiary, Federated Shareholder Services Company ("FSSC") serves as transfer
and dividend disbursing agent for the Fund. The fee paid to FSSC is based on the
size, type, and number of accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records for
which it receives a fee. The fee is based on the level of the Fund's average
daily net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES -- WesBanco is the Fund's custodian. The fee is based on the
market value of Fund securities held in custody plus certain securities
transaction charges.
INTERFUND TRANSACTIONS -- During the period ended January 31, 1998, the Fund
engaged in purchase and sale transactions with mutual funds and/or common trust
fund that have a common investment adviser (or affiliated investment advisers),
common Directors/Trustees, and/or common Officers. These purchase and sale
transactions were made at current market value pursuant to Rule 17a-7 under the
Act amounting to $71,472,024 and $14,730,843, respectively. $55,712,292 of these
purchase transactions were attributable to a conversion of the assets of common
trust fund into the fund.
ORGANIZATIONAL EXPENSES -- Organizational expenses of $6,169 were borne
initially by the Adviser. The Fund has reimbursed the Adviser for these
expenses. These expenses have been deferred and are being amortized over the
five-year period following the Fund's effective date. For the year ended January
31, 1998, the Fund expensed $926 of organizational expenses.
OTHER AFFILIATED PARTIES AND TRANSACTIONS -- Pursuant to an exemptive order
issued by the SEC, the Fund may invest in the Federated Tax-Free Obligations
Fund. As of January 31, 1998, the Fund owned 0.04% of the outstanding shares of
the Federated Tax-Free Obligations Fund.
GENERAL -- Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term and conversion
securities, for the period ended January 31, 1998, were as follows:
PURCHASES $12,360,335
SALES $ 3,903,615
6. CONCENTRATION OF CREDIT RISK
Since the Fund invests a substantial portion of its assets in issuers located in
one state, it will be more susceptible to factors adversely affecting issuers of
that state than would be a comparable tax-exempt mutual fund that invests
nationally. In order to reduce the credit risk associated with such factors, at
January 31, 1998, 54% of the securities in the portfolio of investments are
backed by letters of credit or bond insurance of various financial institutions
and financial guaranty assurance agencies. The percentage of investments insured
by or supported (backed) by a letter of credit from any one institution or
agency did not exceed 26% of total investments.
7. SUBSEQUENT EVENT
Subsequent to the year ended January 31, 1998, the Trust added WesMark Bond Fund
and WesMark Balanced Fund to the series, which became effective March 24, 1998.
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of the WESMARK FUNDS
and Shareholders of WESMARK WEST VIRGINIA MUNICIPAL BOND FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of WesMark West Virginia Municipal Bond Fund (a
portfolio of WesMark Funds) as of January 31, 1998, and the related statements
of operations and changes in net assets and the financial highlights for the
period from April 14, 1997 (date of initial public investment) to January 31,
1998. These financial statements and financial highlights are the responsibility
of the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of January 31, 1998,
by correspondence with the custodian and brokers; where replies were not
received, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of WesMark West
Virginia Muncipal Bond Fund as of January 31, 1998, the results of its
operations, the changes in its net assets and its financial highlights for the
period ended January 31, 1998, in conformity with generally accepted accouting
principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 18, 1998
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Edward C. Gonzales
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Edward C. Gonzales
President and Treasurer
J. Christopher Donahue
Executive Vice President
John W. McGonigle
Executive Vice President and Secretary
Richard B. Fisher
Vice President
C. Christine Thomson
Vice President and Assistant Treasurer
C. Todd Gibson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves risk, including possible
loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, and other information.
[Graphic]
ANNUAL REPORT
DATED JANUARY 31, 1998
Federated Investors
Edgewood Services, Inc., Distributor
Cusip 951025105
G02160-05 (3/98)
[Graphic]
[Graphic]
WESMARK GROWTH FUND
GROWTH FUND
ANNUAL REPORT
JANUARY 31, 1998
[Graphic]
PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the first Annual Report to shareholders for the WesMark
Growth Fund. This report covers the period from April 14, 1997--the date the
fund began operations--through January 31, 1998. It gives you a complete picture
of the fund's operations, beginning with an overview of the stock market and
fund strategy by the fund's managers, followed by a complete list of fund
holdings and the financial statements.
As its name indicates, WesMark Growth Fund is managed to help your money grow
over time. To pursue that objective, the fund invests in a diversified portfolio
of stocks selected for their long-term potential to provide above-average
returns. I urge you to read the co-portfolio managers' discussion on the
following page, which will familiarize you with how your investment is managed.
During its initial 9 1/2 months of operation, the fund produced a total return
of 18.24%.* Contributing to the total return were a share price increase of
$1.15, income totaling $0.08 per share, and capital gains totaling $0.57 per
share. Of course, while the fund's return was positive, there will be periods of
fluctuation, which is a natural consequence of stock investing.
Thank you for pursuing your longer-term financial goals through the WesMark
Growth Fund. You are among investors who have entrusted the fund with more than
$114 million. We will make every effort to ensure that your relationship with us
meets and even exceeds your expectations.
Sincerely,
[Graphic]
Edward C. Gonzales
President
March 15, 1998
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
INVESTMENT REVIEW
It is our pleasure to review with you the results of the first year of
operations for the WesMark Growth Fund. This report covers the period from April
14, 1997 (date of initial public investment) to January 31, 1998. The fund
provided a total return of 18.24%* during the 91*2 month reporting period. We
think it is important that you understand our investment approach so that you
can feel comfortable with your investment regardless of short-term market
fluctuations. We are pleased to be able to introduce the fund in a rising
market, but our portfolio decisions will continue to be based on the same
thought process, regardless of short-term results.
Our investment approach is to identify companies that possess the
characteristics that we believe will provide above-average long-term returns. We
want to continue to invest in companies that are experiencing demand for their
products so that revenue growth is greater than the growth of the U.S. economy.
More importantly, revenue growth typically will continue to provide the
opportunity to generate high and rising profit margins. This should also result
in a high return on equity. We find that companies in the electronics,
telecommunications, healthcare, and energy sectors are currently the most likely
to meet our criteria, and accordingly these sectors comprise a large portion of
the fund.
The final buy or sell decision is based on our evaluation of relative value. At
what price does a growth company become a sound long-term investment? We think
that stock prices are ultimately determined not only by earnings per share
growth but also by interest rates and a risk premium based on the economic and
political environment. The fund has held a large percentage of its assets in
cash equivalents which at year end was 20.1%. We do not intend to invest in
stocks for short-term investment performance if we are not comfortable that
long-term returns are expected to be rewarding. We believe many fund managers
are investing in stocks based on the perception that individual companies are
likely to exceed estimated earnings per share during the next quarter. In our
opinion, good companies can be poor investments if the purchase price is too
high.
The price to earnings ratio for the Standard & Poor's 500 Index** at year end
was 21.8. Historically, stock returns during periods that began at such high
valuation levels have produced below-average returns.
* Performance quoted represents past performance and is not indicative of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
** Standard & Poor's 500 Index is a composite index measuring changes in stock
market conditions based on the average performance of 500 widely held common
stocks in industry, transportation, financial, and public utility. This index is
unmanaged, and investments cannot be made in an index.
We expect the U.S. economy will continue to grow vigorously. The labor market is
beginning to give warning signals regarding wage inflation. Eventually, we
believe that rising costs may be difficult to recover in a very competitive
global economy. We anticipate that somewhat slower earnings per share growth
will make stock selection much more challenging in 1998. We will continue to
remain focused on our portfolio management approach and believe that this will
result in positive long-term results with less than average volatility.
[Graphic]
Jerome B. Schmitt
Co-Portfolio Manager
[Graphic]
David B. Ellwood
Co-Portfolio Manager
WESMARK GROWTH FUND
GROWTH OF $10,000 INVESTED IN WESMARK GROWTH FUND
The graph below illustrates the hypothetical investment of $10,000* in the
WesMark Growth Fund (the "Fund") from April 14, 1997 (start of performance) to
January 31, 1998 compared to the Standard and Poor's 500 Index ("S&P 500")+ and
Lipper Growth Funds Average ("LGFA").++
"Graphic representation "B" omitted. See Appendix."
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
* Represents a hypothetical investment of $10,000 in the Fund. The Fund's
performance assumes the reinvestment of all dividends and distributions. The S&P
500 and the LGFA have been adjusted to reflect reinvestment of dividends on
securities in the index and average.
+ The S&P 500 is not adjusted to reflect sales charges, expenses, or other
fees that the SEC requires to be reflected in the Fund's performance. The
index is unmanaged.
++ The Lipper figures represent the average of the total returns reported by all
of the mutual funds designated by Lipper Analytical Services, Inc. as falling
into the respective categories indicated. These figures do not reflect sales
charges.
WESMARK GROWTH FUND
PORTFOLIO OF INVESTMENTS
JANUARY 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
COMMON STOCKS--81.2%
CABLE TELEVISION--3.5%
135,000 (a)U.S. West Media Group $ 4,007,813
CHEMICAL-SPECIALTY--1.6%
55,000 Morton International, Inc. 1,815,000
COMPUTER SERVICES--7.7%
60,000 Electronic Data Systems Corp. 2,497,500
155,000 First Data Corp. 4,746,875
30,000 HBO & Co. 1,569,375
Total 8,813,750
COMPUTER SOFTWARE--0.9%
20,000 (a)Network Associates, Inc. 1,080,000
COMPUTERS-MINI--2.6%
50,000 Hewlett-Packard Co. 3,000,000
DIVERSIFIED OPERATIONS--3.1%
75,000 Allied-Signal, Inc. 2,920,312
30,000 Norrell Corp. 596,250
Total 3,516,562
ELECTRONIC COMPONENTS--3.5%
90,000 (a)EMC Corp. Mass 2,930,625
50,000 (a)Silicon Valley Group, Inc. 1,118,750
Total 4,049,375
ELECTRONIC COMPONENTS-SEMICONDUCTOR--6.0%
125,000 (a)Adaptec, Inc. 2,789,062
32,000 (a)Lam Research Corp. 730,000
60,000 Texas Instruments, Inc. 3,277,500
Total 6,796,562
</TABLE>
WESMARK GROWTH FUND
<TABLE>
<CAPTION>
SHARES VALUE
COMMON STOCKS--CONTINUED
<C> <S> <C>
HEALTHCARE SERVICES--2.1%
50,000 (a)HEALTHSOUTH Corp. $ 1,121,875
52,500 (a)Health Management Association, Class A 1,256,719
Total 2,378,594
INSURANCE - LIFE & HEALTH--0.7%
20,000 Reliastar Financial Corp. 830,000
INSTRUMENTS - CONTROL--2.5%
40,000 Honeywell, Inc. 2,802,500
MACHINERY - FARM--3.0%
65,000 Deere & Co. 3,428,750
MEDICAL PRODUCTS & SUPPLY--3.5%
60,000 Johnson & Johnson 4,016,250
NETWORKING PRODUCTS--4.0%
72,000 (a)Cisco Systems, Inc. 4,540,500
OIL & GAS EQUIPMENT & SERVICES--1.3%
50,000 Williams Cos., Inc. (The) 1,425,000
OIL & GAS DRILLING--1.7%
50,000 Transocean Offshore, Inc. 1,987,500
OIL COMP-EXPLORATION & PRODUCTION--4.4%
90,000 Burlington Resources, Inc. 3,847,500
75,000 Lomak Petroleum, Inc. 1,195,313
Total 5,042,813
OIL FIELD SERVICES--3.5%
70,000 (a)Pride International, Inc. 1,491,875
60,000 Tidewater, Inc. 2,452,500
Total 3,944,375
OIL - INTEGRATED--5.4%
140,000 Phillips Petroleum Co. 6,160,000
</TABLE>
WESMARK GROWTH FUND
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMON STOCKS--CONTINUED
TELECOMMUNICATIONS EQUIPMENT--8.8%
70,000 Lucent Technologies, Inc. $ 6,195,000
100,000 Scientific-Atlanta, Inc. 1,556,250
60,000 Telefonaktiebolaget LM Ericsson, Class B, ADR 2,317,500
Total 10,068,750
TELECOMMUNICATIONS SERVICES--3.8%
55,000 SBC Communications, Inc. 4,276,250
TELECOMMUNICATIONS - CELLULAR--3.5%
90,000 (a)Airtouch Communications, Inc. 3,948,750
TEXTILE APPAREL--1.1%
30,000 (a)Tommy Hilfiger Corp. 1,306,875
TRANSPORTATION - RAIL--2.7%
35,000 Burlington Northern Santa Fe 3,036,250
UTILITY - GAS DISTRIBUTION--0.3%
20,000 AGL Resources, Inc. 396,250
TOTAL COMMON STOCKS (IDENTIFIED COST $77,915,965) 92,668,469
(B)COMMERCIAL PAPER--14.1%
BROKERAGE--4.5%
$ 5,100,000 Merrill Lynch & Co., Inc., 5.55%, 2/6/1998 5,096,068
FINANCE - AUTOMOTIVE--5.4%
5,000,000 Ford Motor Credit Co., 5.49%, 2/9/1998 4,993,933
1,200,000 General Motors Acceptance Corp., 5.45%, 2/2/1998 1,199,818
Total 6,193,751
FINANCE - COMMERCIAL--2.6%
3,000,000 General Electric Capital Services, Inc., 5.47%, 2,995,442
2/11/1998
TELECOMMUNICATIONS--1.6%
1,800,000 AT&T Corp., 5.42%, 2/17/1998 1,795,664
TOTAL COMMERCIAL PAPER (AT AMORTIZED COST) 16,080,925
</TABLE>
WESMARK GROWTH FUND
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
OR SHARES VALUE
<C> <S> <C>
(B)GOVERNMENT AGENCIES--6.2%
$ 3,300,000 Federal Home Loan Bank, Discount Note, 5.32%, 2/25/1998 $ 3,291,710
3,800,000 Federal Home Loan Bank, Discount Note, 5.34%, 2/27/1998 3,785,345
TOTAL GOVERNMENT AGENCIES (AT AMORTIZED COST) 7,077,055
MUTUAL FUNDS--0.0%
48,214 U.S. Treasury Cash Reserves Fund (at net asset value) 48,214
TOTAL INVESTMENTS (IDENTIFIED COST $101,122,159)(C) $ 115,874,663
</TABLE>
(a) Non-income producing security.
(b) Each issue shows the rate of discount at the time of purchase for discount
issues, or the coupon for interest bearing issues.
(c) The cost of investments for federal tax purposes amounts to $101,122,159.
The net unrealized appreciation of investments on a federal tax basis amounts to
$14,752,504, comprised of $18,321,318 appreciation and $3,568,814 depreciation
at January 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($114,142,134) at January 31, 1998.
The following acronym is used in this portfolio:
ADR--American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
WESMARK GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Total investments in securities, at value (identified and tax cost $ 115,874,663
$101,122,159)
Income receivable 92,782
Receivable for shares sold 81,924
Deferred organizational costs 4,766
Total assets 116,054,135
LIABILITIES:
Payable for investments purchased $ 1,273,263
Payable for shares redeemed 548,595
Accrued expenses 90,143
Total liabilities 1,912,001
NET ASSETS for 10,235,557 shares outstanding $ 114,142,134
NET ASSETS CONSIST OF:
Paid in capital $ 97,066,651
Net unrealized appreciation of investments 14,752,504
Accumulated net realized gain on investments 2,255,988
Undistributed net investment income 66,991
Total Net Assets $ 114,142,134
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
$114,142,134 / 10,235,557 shares outstanding $11.15
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WESMARK GROWTH FUND
STATEMENT OF OPERATIONS
PERIOD ENDED JANUARY 31, 1998(A)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends $ 615,604
Interest 1,163,998
Total income 1,779,602
EXPENSES:
Investment advisory fee $ 629,221
Administrative personnel and services fee 125,848
Custodian fees 16,057
Transfer and dividend disbursing agent fees and expenses 37,178
Auditing fees 15,000
Legal fees 670
Portfolio accounting fees 49,671
Share registration costs 57,988
Printing and postage 14,418
Insurance premiums 3,034
Miscellaneous 6,577
Total expenses 955,662
Waivers --
Waiver of investment advisory fee (2,725)
Net expenses 952,937
Net investment income 826,665
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 7,637,919
Net change in unrealized appreciation of investments 14,752,504
Net realized and unrealized gain on investments 22,390,423
Change in net assets resulting from operations $ 23,217,088
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
January 31, 1998.
(See Notes which are an integral part of the Financial Statements)
WESMARK GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD ENDED
JANUARY 31, 1998*
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS--
Net investment income $ 826,665
Net realized gain on investments ($7,637,919, as computed for
federal
tax purposes) 7,637,919
Net change in unrealized appreciation 14,752,504
Change in net assets resulting from operations 23,217,088
DISTRIBUTIONS TO SHAREHOLDERS--
Distributions from net investment income (759,674)
Distributions from net realized gains (5,381,931)
Change in net assets resulting from distributions to shareholders (6,141,605)
SHARE TRANSACTIONS-- Proceeds from sale of shares 97,496,587 Net asset value of
shares issued to shareholders in payment of distributions declared 5,383,211
Cost of shares redeemed (5,913,147)
Change in net assets resulting from share transactions 96,966,651
Change in net assets 114,042,134
NET ASSETS:
Beginning of period 100,000
End of period (including undistributed net investment income of $ 114,142,134
$66,991)
</TABLE>
* For the period from April 14, 1997 (date of initial public investment) to
January 31, 1998.
(See Notes which are an integral part of the Financial Statements)
WESMARK GROWTH FUND
FINANCIAL HIGHLIGHTS
- ----------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
JANUARY 31,
1998(A)
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.09
Net realized and unrealized gain on investments 1.71
Total from investment operations 1.80
LESS DISTRIBUTIONS
Distributions from net investment income (0.08)
Distributions from net realized gain on investment transactions (0.57)
Total distributions (0.65)
NET ASSET VALUE, END OF PERIOD $11.15
TOTAL RETURN(B) 18.24%
RATIOS TO AVERAGE NET ASSETS
Expenses 1.14%*
Net investment income 0.99%*
Expense waiver/reimbursement(c) 0.00%*
SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $114,142
Average commission rate paid(d) $0.0148
Portfolio turnover 58%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 14, 1997 (date of initial
public investment) to January 31, 1998.
(b) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(c) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.
(See Notes which are an integral part of the Financial Statements)
WESMARK GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
1. ORGANIZATION
WesMark Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended (the "Act") as an open-end, management investment company. The
Trust consists of two portfolios. The financial statements included herein are
only those of WesMark Growth Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolio are presented separately. The assets
of each portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held. The investment objective of the Fund is
appreciation of capital. The Fund invests primarily in equity securities of
companies with prospects for above-average growth in earnings and dividends.
On April 14, 1997, the Fund acquired two portfolios of common trust funds
managed by the Adviser. The acquisition was a tax-free exchange of 8,455,654
shares of the Fund valued at $84,556,539.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS -- Listed equity securities are valued at the last sale
price reported on a national securities exchange. Short-term securities are
valued at the prices provided by an independent pricing service. However,
short-term securities with remaining maturities of sixty days or less at the
time of purchase may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies
are valued at net asset value.
INVESTMENT INCOME, EXPENSES, AND DISTRIBUTIONS -- Interest income and
expenses are accrued daily. Bond premium and discount, if applicable, are
amortized as required by the Internal Revenue Code, as amended (the "Code").
Dividend income and distributions to shareholders are recorded on the
ex-dividend date.
FEDERAL TAXES -- It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS -- The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses, and revenues reported in the financial statements. Actual results
could differ from those estimated.
OTHER -- Investment transactions are accounted for on the trade date.
3. SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
JANUARY 31,
1998(A)
<S> <C>
Shares sold 10,251,699
Shares issued to shareholders in payment of distributions declared 495,313
Shares redeemed (521,455)
Net change resulting from share transactions 10,225,557
</TABLE>
(a) Reflects operations for period from April 14, 1997 (date of public
investment) to January 31, 1998.
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE -- WesBanco Bank Wheeling, the Fund's investment
adviser (the "Adviser" or "WesBanco"), receives for its services an annual
investment advisory fee equal to 0.75% of the Fund's average daily net
assets. The Adviser may voluntarily choose to waive any portion of its fee.
The Adviser can modify or terminate this voluntary waiver at any time at its
sole discretion.
ADMINISTRATIVE FEE -- Federated Services Company ("FServ") provides the Fund
with certain administrative personnel and services. The fee paid to FServ is
based on the level of average aggregate net assets of the Trust for the
period.
DISTRIBUTION SERVICES FEE -- The Fund has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan,
the Fund will compensate Edgewood Services, Inc., the principal distributor,
from the net assets of the Fund to finance activities intended to result in
the sale of the Fund's shares. The Plan provides that the Fund may incur
distribution expenses up to 0.25% of the average daily net assets of the Fund
shares, annually, to compensate Edgewood Services, Inc. For the period ended
January 31, 1998, the Fund did not incur a distribution services fee.
SHAREHOLDER SERVICES FEE -- Under the terms of a Shareholder Services
Agreement with WesBanco, the Fund will pay WesBanco up to 0.25% of average
daily net assets of the Fund for the period. The fee paid to WesBanco is used
to finance certain services for shareholders and to maintain shareholder
accounts. For the period ended January 31, 1998, the Fund shares did not
incur a shareholder services fee.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES -- FServ, through
its subsidiary, Federated Shareholder Services Company ("FSSC"), serves as
transfer and dividend disbursing agent for the Fund. The fee paid to FSSC is
based on the size, type, and number of accounts and transactions made by
shareholders.
PORTFOLIO ACCOUNTING FEES -- FServ maintains the Fund's accounting records
for which it receives a fee. The fee is based on the level of the Fund's
average daily net assets for the period, plus out-of-pocket expenses.
INTERFUND TRANSACTIONS -- During the period ended January 31, 1998, the Fund
engaged in purchase and sale transactions with mutual funds and/or common
trust funds that have a common investment adviser (or affiliated investment
advisers), common Directors/Trustees, and/or common Officers. These purchase
and sale transactions were made at current market value pursuant to Rule
17a-7 under the Act amounting to $152,788,712 and $42,467,127, respectively.
$76,957,809 of these purchase transactions were attributable to a conversion
of the assets of two common trust funds into the fund.
CUSTODIAN FEES -- WesBanco is the Fund's custodian. The fee is based on the
level of the Fund's average daily net assets for the period, plus
out-of-pocket expenses.
ORGANIZATIONAL EXPENSES -- Organizational expenses of $5,607 were borne
initially by the Administrator. The Fund has reimbursed the Administrator for
these expenses. These expenses have been deferred and are being amortized
over the five-year period following the Fund's effective date. For the period
ended January 31, 1998, the Fund expensed $841 of organizational expenses.
OTHER AFFILIATED PARTIES AND TRANSACTIONS -- Pursuant to an exemptive Order
issued by the SEC, the Fund may invest in the U.S. Treasury Cash Reserves
Fund.
GENERAL -- Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
5. INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term and conversion
securities, for the period ended January 31, 1998, were as follows:
PURCHASES $71,948,315
SALES $51,117,035
6. SUBSEQUENT EVENT
Subsequent to the year ended January 31, 1998, the Trust added WesMark Bond Fund
and WesMark Balanced Fund to the series, which became effective March 24, 1998.
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of the WESMARK FUNDS and Shareholders of WESMARK GROWTH
FUND:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of WesMark Growth Fund (a portfolio of WesMark
Funds) as of January 31, 1998, and the related statements of operations and
changes in net assets and the financial highlights for the period from April 14,
1997 (date of initial public investment) to January 31, 1998. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of January 31, 1998,
by correspondence with the custodian and brokers; where replies were not
received, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of WesMark Growth Fund
as of January 31, 1998, the results of its operations, the changes in its net
assets and its financial highlights for the period ended January 31, 1998, in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 18, 1998
TRUSTEES
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
James E. Dowd
Lawrence D. Ellis, M.D.
Edward L. Flaherty, Jr.
Edward C. Gonzales
Peter E. Madden
John E. Murray, Jr.
Wesley W. Posvar
Marjorie P. Smuts
OFFICERS
John F. Donahue
Chairman
Edward C. Gonzales
President and Treasurer
J. Christopher Donahue
Executive Vice President
John W. McGonigle
Executive Vice President and Secretary
Richard B. Fisher
Vice President
C. Christine Thomson
Vice President and Assistant Treasurer
C. Todd Gibson
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.
[Graphic]
WESMARK GROWTH FUND
ANNUAL REPORT
DATED JANUARY 31, 1998
Federated Investors
Edgewood Services, Inc., Distributor
[Graphic]
Cusip 951025204
G02160-06 (3/98)
[Graphic]
A. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graphic presentation. The WesMark West Virginia Municipal Bond Fund is
represented by a solid line, whereas Lehman Brothers 5 Year G.O. Bond Index is
represented by a dotted line and Lipper Intermediate Municipal Debt Funds
Average is represented by a broken line. The line graph is a visual
representation of a comparison of change in value of a hypothetical investment
of $10,000 in the WesMark West Virginia Municipal Bond Fund and Lehman Brothers
5 Year G.O. Bond Index and Lipper Intermediate Municipal Debt Funds Average for
the period from April 14, 1997 (start of performance) to January 31, 1998. The
"y" axis reflects the cost of the investment. The "x" axis reflects computation
periods from the ending of the hypothetical investment in the WesMark West
Virginia Municipal Bond Fund as compared to the Lehman Brothers 5 Year G.O. Bond
Index and Lipper Intermediate Debt Funds Average; the ending values are $10,664,
$10,759, and $10,831, respectively. Beneath the list of components that
correspond to the line graph is the following total return data for the WesMark
West Virginia Municipal Bond Fund: cumulative total return for the period from
April 14, 1997 (start of performance) to January 31, 1998 is 6.64%.
B. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graphic presentation. The WesMark Growth Fund is represented by a solid
line, whereas Standard & Poor's 500 Index is represented by a dotted line and
Lipper Growth Funds Average is represented by a broken line. The line graph is a
visual representation of a comparison of change in value of a hypothetical
investment of $10,000 in the WesMark Growth Fund and Standard & Poor's 500 Index
and Lipper Growth Funds Average for the period from April 14, 1997 (start of
performance) to January 31, 1998. The "y" axis reflects the cost of the
investment. The "x" axis reflects computation periods from the ending value of
the hypothetical investment in the WesMark Growth Fund as compared to Standard &
Poor's 500 Index and Lipper Growth Funds Average; the ending values are $11,824,
$13,359, and $12,726, respectively. Beneath the list of components that
correspond to the line graph is the following total return data for the WesMark
Growth Fund: cumulative total return for the period from April 14, 1997 (start
of performance) to January 31, 1998 is 18.24%.
