[wesmark logo]
Balanced Fund
Annual Report
January 31, 1999
[wesbanco logo]
President's Message
Dear Shareholder:
I am pleased to present the first Annual Report to Shareholders for WesMark
Balanced Fund. This report covers the period from April 20, 1998--the date the
fund began operation--through January 31, 1999. It gives you a complete picture
of the fund's operation, beginning with an overview of the stock and bond
markets and fund strategy by the portfolio manager, followed by a complete list
of fund holdings and the financial statements.
WesMark Balanced Fund gives you access to a diversified, professionally managed
portfolio of high-quality stocks and bonds. At the end of the reporting period,
more than 60% of the fund's $60.9 million in assets was invested in common and
preferred stocks. The rest of the fund's assets were invested across U.S.
government agency bonds, corporate bonds, commercial paper and a money market
mutual fund. I urge you to read the portfolio manager's discussion on the
following page, which will familiarize you with how your investment is managed.
During its initial nine months of operation, the fund produced a total return of
5.50%.* Contributing to the total return were a share price decrease of $0.19
and capital gains totaling $0.49 per share.
Thank you for selecting WesMark Balanced Fund to pursue your financial goals
through two key financial markets.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
March 15, 1999
* 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 Balanced Fund. This report covers the period from
April 20, 1998 (date of initial public investment) to January 31, 1999. The fund
provided a total return of 5.50%* during its 9/1//\\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 believe that the primary objective of the Balanced Fund is to strike a
balance between current income and growth of capital. This is very difficult
under current economic and financial market conditions. The dividend yield for
the Standard & Poor's 500 Index is at historic lows.** Bond yields have dropped
sharply in recent years. These circumstances make it difficult to attain what
was once considered a reasonable income return.
At fiscal year end, the average dividend yield for stocks held by the fund was
2.49%. As of January 31, 1999, the 30-day SEC yield was 2.5%. We allocated 61.4%
to stocks at year end. The bond portion of the fund is primarily mortgage
securities. The fund held 32.4% of its assets in mortgage securities issued by
the Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association. The yield for these securities is very high is relation to interest
rates on U.S. Treasury Notes. We expect to continue to have mortgage securities
represent a majority of the assets that are allocated toward bonds. Corporate
Bond securities represent only 0.6% of the fund. We plan to increase our
allocation to corporate bonds this year.
Our long-term goal is to maintain 50-60% of the assets in the fund invested in
common stocks. Under the most favorable market conditions, we can increase the
percentage allocated to stocks to as high as 70%. Under very unfavorable
conditions, the percentage of the fund allocated to stocks may decline to as low
as 30%.
* 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.
** The S&P Index is an unmanaged capitalization-weighted index of 500 stocks
designed to measure performance of the broad domestic economy through
changes in the aggregate market value of 500 stocks representing all major
industries. The index is unmanaged, and investments cannot be made in an
index.
WesMark Balanced Fund
Growth of $10,000 invested in WesMark Balanced Fund
The graph below illustrates the hypothetical investment of $10,000* in the
WesMark Balanced Fund (the "Fund") from April 20, 1998 (start of performance) to
January 31, 1999, compared to the Standard and Poor's 500 Index ("S&P 500")+,
the Lipper Balanced Funds Average ("LBFA")++ and the Lehman Brothers Government
Corporate Index (Total) ("LBGCI").+
The graphic presentation displayed here consists of a line graph. The
corresponding components of the line graph are listed in the upper left hand
corner. The WesMark Balanced Fund (the "Fund") is represented by a solid line.
The Standard & Poor's 500 Index ("S&P 500") is represented by a dotted line, the
Lipper Balanced Fund Average ("LBFA") is represented by a dashed line and the
Lehman Brothers Government Corporate Index ("LBGCI") is represented by a broken
line. The line graph is a visual representation of a comparison of change in
value of a $10,000 hypothetical investment in the Fund, the S&P 500, LBFA and
the LBGCI. The "x" axis reflects computation periods from 4/20/98 (the Fund's
start of performance) to 1/31/99. The "y" axis reflects the cost of the
investment, beginning with $10,000 and going up to $12,000, in increments of
$1,000. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the S&P 500, LBFA and the LBGCI. The
ending values were $10,550, $11,940, $10,870 and $11,066, respectively.
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, the LBFA and the LBGCI have been adjusted to reflect reinvestment of
dividends on securities in the index and average.
+ The S&P 500 and the LBGCI are not adjusted to reflect sales charges,
expenses, or other fees that the SEC requires to be reflected in the Fund's
performance. These indices are 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 Balanced Fund
Portfolio of Investments
January 31, 1999
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
Common Stocks--58.3%
Banks-Major Regional--2.5%
30,000 PNC Bank Corp. $ 1,535,625
Chemicals-Diversified--0.8%
10,000 Du Pont (E.I.) de Nemours & Co. 511,875
Diversified Operations--10.2%
65,000 Allied-Signal, Inc. 2,535,000
35,000 General Electric Co. 3,670,625
Total 6,205,625
Drugs & Healthcare--2.4%
10,000 Merck & Co., Inc. 1,467,500
Electronic Components-Semiconductor--4.9%
30,000 Texas Instruments, Inc. 2,966,250
Health Services--0.7%
5,550 McKesson HBOC, Inc. 416,944
Instruments-Control--3.2%
30,000 Honeywell, Inc. 1,955,625
Insurance Property & Casualty--1.4%
15,000 Chubb Corp. 881,250
Office-Auto & Equipment--4.1%
20,000 Xerox Corp. 2,480,000
Oil & Gas Equipment & Services--3.8%
70,000 Williams Cos., Inc. (The) 2,310,000
Oil Comp-Exploration & Production--2.7%
40,000 Burlington Resources, Inc. 1,210,000
25,000 Enron Oil & Gas Co. 431,250
Total 1,641,250
Oil Field Services--1.1%
30,000 Tidewater, Inc. 648,750
Oil-Integrated--6.4%
8,000 Atlantic Richfield Co. $ 459,000
90,000 Phillips Petroleum Co. 3,476,250
Total 3,935,250
Retail-Major Department Stores--2.0%
30,000 Sears, Roebuck & Co. 1,203,750
Telecommunications Equipment--0.8%
15,000 Scientific-Atlanta, Inc. 466,875
Utility-Electric Power--7.0%
80,000 DPL, Inc. 1,515,000
15,666 Duke Energy Corp. 968,355
25,000 GPU, Inc. 1,065,625
20,000 Utilicorp United, Inc. 700,000
Total 4,248,980
Utility-Gas Distribution--1.0%
30,000 AGL Resources, Inc. 603,750
Utility-Telephone--3.3%
30,000 GTE Corp. 2,025,000
Total Common Stocks (identified cost $28,596,675) 35,504,299
Preferred Stocks--3.1%
Finance--1.6%
15,000 Merrill Lynch Capital Trust III, Pfd. 377,813
25,000 Merrill Lynch Capital Trust IV, Pfd. 634,375
Total 1,012,188
Telecommunications-Cellular--1.1%
5,000 Airtouch Communications, Inc., Conv. Pfd., Series C, 4.25% 671,250
Utilities--0.4%
7,000 MCN Energy Corp., PRIDES, 8.00% 243,250
Total Preferred Stocks (identified cost $1,636,719) 1,926,688
Principal
Amount
or Shares Value
Corporate Bond--0.6%
$250,000 Rite Aid Corp., 5.25%, 9/15/2002 (identified cost $ 364,375
$280,849)
Government Agencies--32.4%
Federal Farm Credit Bank--3.5%
2,000,000 7.10%, 11/12/2002 2,136,796
Federal Home Loan Bank--1.4%
800,000 6.67%, 5/10/2001 828,257
Federal Home Loan Mortgage Corporation--19.2%
3,000,000 5.50%, 12/11/2013 3,001,146
1,941,444 6.00%, 10/1/2013 1,954,219
4,908,798 6.50%, 9/1/2018 4,981,252
1,749,427 6.50%, 3/1/2013 1,782,612
Total 11,719,229
Tennessee Valley Authority--8.3%
5,000,000 Tennessee Valley Authority, Bond, Series G, 5.375%, 5,039,690
11/13/2008
Total Government Agencies (identified cost $19,498,968) 19,723,972
Commercial Paper--3.3%
2,000,000 (a)Federated General Electric Co., 4.83%, 2/24/1999 (at 1,993,828
amortized cost)
Mutual Fund--1.8%
1,095,702 Federated U.S. Treasury Cash Reserves Fund (at net asset 1,095,702
value)
Total Investments (identified cost $53,102,741)(b) $60,608,864
</TABLE>
(a) Discount rate at time of purchase.
(b) The cost of investments for federal tax purposes amounts to $53,102,741. The
net unrealized appreciation of investments on a federal tax basis amounts to
$7,506,123 which is comprised of $9,500,389 appreciation and $1,994,266
depreciation at January 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($60,886,626) at January 31, 1999.
The following acronym is used throughout this portfolio:
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
(See Notes which are an integral part of the Financial Statements)
WesMark Balanced Fund
Statement of Assets and Liabilities
January 31, 1999
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified and tax cost $53,102,741) $60,608,864
Cash 126,863
Income receivable 177,687
Receivable for shares sold 153,600
Total assets 61,067,014
Liabilities:
Income distribution payable $114,826
Accrued expenses 65,562
Total liabilities 180,388
Net Assets for 6,208,096 shares outstanding $60,886,626
Net Assets Consist of:
Paid in capital $52,499,034
Net unrealized appreciation of investments 7,506,123
Accumulated net realized gain on investments 902,785
Distributions in excess of net investment income (21,316)
Total Net Assets $60,886,626
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$60,886,626 / 6,208,096 shares outstanding $9.81
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WesMark Balanced Fund
Statement of Operations
Period Ended January 31, 1999 (a)
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C>
Dividends $ 610,513
Interest 1,280,661
Total income 1,891,174
Expenses:
Investment advisory fee $339,662
Administrative personnel and services fee 64,592
Custodian fees 16,514
Transfer and dividend disbursing agent fees and expenses 30,097
Directors'/Trustees' fees 2,750
Auditing fees 14,252
Legal fees 1,538
Portfolio accounting fees 37,118
Share registration costs 37,491
Printing and postage 11,431
Insurance premiums 3,701
Miscellaneous 764
Total expenses 559,910
Waiver--
Waiver of investment advisory fee (39,892)
Net expenses 520,018
Net investment income 1,371,156
Realized and Unrealized Gain on Investments:
Net realized gain on investments 3,910,501
Net change in unrealized depreciation of investments (1,990,218)
Net realized and unrealized gain on investments 1,920,283
Change in net assets resulting from operations $ 3,291,439
</TABLE>
(a) For the period from April 20, 1998 (date of initial public investment) to
January 31, 1999.
(See Notes which are an integral part of the Financial Statements)
WesMark Balanced Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Period Ended
January 31, 1999(a)
Increase (Decrease) in Net Assets:
Operations--
<S> <C>
Net investment income $ 1,371,156
Net realized gain on investments ($3,910,679 as computed for federal tax purposes) 3,910,501
Net change in unrealized depreciation (1,990,218)
Change in net assets resulting from operations 3,291,439
Distributions to Shareholders--
Distributions from net investment income (1,392,294)
Distributions from net realized gains (3,007,894)
Change in net assets resulting from distributions to shareholders (4,400,188)
Share Transactions--
Proceeds from sale of shares 11,694,585
Proceeds from shares issued in connection with the merger of
Common Trust Funds 53,660,556(b)
Net asset value of shares issued to shareholders in payment of
distributions declared 245,179
Cost of shares redeemed (3,604,945)
Change in net assets resulting from share transactions 61,995,375
Change in net assets 60,886,626
Net Assets:
Beginning of period --
End of period $60,886,626
</TABLE>
(a) For the period from April 20, 1998 (date of initial public investment) to
January 31, 1999.
(b) Includes $9,496,341 of unrealized appreciation at April 20, 1998, related to
the acquisition of Common Trust Funds.
(See Notes which are an integral part of the Financial Statements)
WesMark Balanced Fund
Financial Highlights
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
Period Ended
January 31,
1999(a)
<S> <C>
Net asset value, beginning of period $ 10.00
Income from investment operations
Net investment income 0.24
Net realized and unrealized gain on investments 0.30
Total from investment operations 0.54
Less distributions
Distributions from net investment income (0.24)
Distributions from net realized gain on investments (0.49)
Total distributions (0.73)
Net asset value, end of period $ 9.81
Total return (b) 5.50%
Ratios to average net assets
Expenses 1.15%*
Net investment income 3.03%*
Expense waiver/reimbursement (c) 0.09%*
Supplemental data
Net assets, end of period (000 omitted) $60,887
Portfolio turnover 57%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 20, 1998 (date of initial
public investment) to January 31, 1999.
(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 Balanced Fund
Notes to Financial Statements
January 31, 1999
WesMark Fund (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 four portfolios. The financial statements included herein are
only those of Wesmark Balanced Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolios 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 capital appreciation and income.
On April 20, 1998, the Fund acquired a portfolio of a common trust fund managed
by WesBanco Bank Wheeling, the Fund's adviser. The acquisition was a tax-free
exchange of 5,366,055 shares of the Fund valued at $53,660,556 and unrealized
appreciation of $9,496,341.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
Investment Valuations--U.S. government securities, listed corporate bonds,
and other fixed income and asset-backed securities are generally valued at
the mean of the latest bid and asked price as furnished by an independent
pricing service. 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.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principals. These differences are primarily due to differing treatments for
paydown gains and losses. The following reclassifications have been made to
the financial statements.
Increase (Decrease)
Accumulated Net Undistributed Net
Realized Gain/Loss Investment Income
$178 $(178)
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
Federal Taxes--It is the Fund policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their 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).
<TABLE>
<CAPTION>
Transactions in shares were as follows:
Period Ended
<S> <C> January 31, 1999(a) Shares sold 1,184,327 Proceeds from shares issued in
connection with the merger of Common Trust Funds 5,366,055 Shares issued to
shareholders in payment of distributions declared 24,813 Shares redeemed
(367,099)
Net change resulting from share transactions 6,208,096 </TABLE> (a) Reflects
operations for the period from April 20, 1998 (date of initial
public investment) to January 31, 1999.
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
annually, to compensate Edgewood Services, Inc. For the period ended January
31, 1999, 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, 1999, the Fund 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, 1999, 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 $28,301,412 and $27,205,673, respectively.
Other Affiliated Parties and Transactions--Pursuant to an exemptive order
issued by the SEC, the Fund may invest in the Federated U.S. Treasury Cash
Reserves Fund. As of January 31, 1999, the Fund owned 0.04% of outstanding
shares of Federated U.S. Treasury Cash Reserves Fund, which is distributed by
an affiliate of the Fund's distributor.
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, 1999, were as follows:
Purchases $38,242,571
Sales $30,897,746
6. Year 2000 (Unaudited)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund Adviser and Administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund other service providers. At
this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Independent Auditors' Report
To the Board of Trustees of WESMARK FUNDS and Shareholders of WESMARK BALANCED
FUND:
We have audited the accompanying statement of assets and liabilities of WesMark
Balanced Fund (a portfolio of WesMark Funds), including the portfolio of
investments, as of January 31, 1999, and the related statement of operations,
changes in net assets and the financial highlights for the period from April 20,
1998 (date of initial public investment) to January 31, 1999. These financial
statements and financial highlights are the responsibility of WesMark Balanced
Fund's management. Our responsibility is to express an opinion of 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, 1999,
by correspondence with the custodian and brokers. An audit also includes
assessing the accounting principals 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
WesMark Balanced Fund as of January 31, 1999, the results of its operations, the
changes in its net assets and financial highlights for the respective stated
period in conformity with generally accepted accounting principles.
DELOITTE & TOUCHELLP
Pittsburgh, Pennsylvania
March 19, 1999
Trustees Officers
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
William J. Copeland
John F. Cunningham
Lawrence D. Ellis, M.D.
Edward C. Gonzales
Peter E. Madden
Charles F. Mansfield, Jr., J.D., S.J.D.
John E. Murray, Jr.
Marjorie P. Smuts
John S. Walsh
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.
[wesmark logo]
Annual Report
Dated January 31, 1999
[federated investors logo]
Cusip 951025303
G02160-12 (3/99)
[wesbanco logo]
[wesmark logo]
Bond Fund
Annual Report
January 31, 1999
[wesmark logo]
President's Message
Dear Shareholder:
I am pleased to present the first Annual Report to Shareholders for WesMark Bond
Fund. This report covers the period from April 20, 1998--the date the fund began
operation--through January 31, 1999. It gives you a complete picture of the
fund's operation, beginning with an overview of the bond market and fund
strategy by the portfolio manager, followed by a complete list of fund holdings
and the financial statements.
WesMark Bond Fund is managed to help your money earn income through a
diversified, professionally managed portfolio that consists primarily of
high-quality bonds. At the end of the reporting period, the fund's $117.6
million in net assets was invested most heavily in U.S. government
mortgage-backed bonds. I urge you to read the portfolio manager's discussion on
the following page, which will familiarize you with how your investment is
managed.
During its initial nine months of operation, the fund produced a total return of
5.70%.* Contributing to the total return were a share price increase of $0.11,
income totaling $0.43 per share, and capital gains totaling $0.02 per share.
Thank you for selecting WesMark Bond Fund to pursue your financial goals through
high-quality bonds.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
March 15, 1999
*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 Bond Fund. This report covers the period from April
20, 1998 (date of initial public investment) to January 31, 1999. The fund
provided a total return of 5.70%* during its 9/1//\\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.\\
The fund is designed to be a multi-sector bond fund. The fund can invest in U.S.
Treasury and Federal Agency notes and bonds, mortgage securities, and corporate
bonds. The fund will allocate assets in the fund into those sectors of the bond
market that we judge to be the most attractive based on the current economic
environment and yields on each sector in relation to historical norms.
Interest rates continued to decline throughout most of the year. We expect
inflation to remain low for an extended period and, as a consequence, we expect
interest rates to decline further. Currently, interest rates are relatively high
in relation to inflation. Interest rates may not decline much while the U.S.
economy grows at its current rate, but we expect that the growth rate will slow,
enabling interest rates to decline.
The fund has 86.6% of its assets invested in mortgage securities issued by the
Federal Home Loan Mortgage Corporation and Federal National Mortgage
Association. The yield for these securities is very high in relation to interest
rates for U.S. Treasury Notes. We expect that mortgage securities will continue
to represent a majority of the assets in the fund during 1999. Corporate
securities represented only 6.1% at year end. We plan to increase the allocation
this year. The fund has a very high quality with an average bond rating of AAA.
The weighted average duration for the fund is 4.07 years.
* 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 Bond Fund
Growth of $10,000 invested in WesMark Bond Fund
The graph below illustrates the hypothetical investment of $10,000* in the
WesMark Bond Fund (the "Fund") from April 20, 1998 (start of performance) to
January 31, 1999, compared to the Lipper Intermediate Government Funds Average
("LIGFA")+ and the Lehman Brothers Government/Corporate Index ("LBGCI").++
The graphic presentation displayed here consists of a line graph. The
corresponding components of the line graph are listed in the upper left hand
corner. The WesMark Bond Fund (the "Fund") is represented by a solid line. The
Lehman Brothers Government/Corporate Index ("LBGCI") is represented by a dotted
line and the Lipper Intermediate Government Funds Average ("LIGFA") is
represented by a dashed line. The line graph is a visual representation of a
comparison of change in value of a $10,000 hypothetical investment in the Fund,
the LBGCI and the LIGFA. The "x" axis reflects computation periods from 4/20/98
(the Fund's start of performance) to 1/31/99. The "y" axis reflects the cost of
the investment, beginning with $10,000 and going up to $12,000, in increments of
$1,000. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the LBGCI and the LIGFA. The ending values
were $10,570, $11,066 and $10,880, respectively.
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
LIGFA and the LBGCI have been adjusted to reflect reinvestment of dividends
on securities in the index and average.
+ 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.
++ LBGCI is not adjusted to reflect sales loads, expenses, or other fees that
the SEC requires to be reflected in the Fund's performance. Investments
cannot be made in an index.
<TABLE>
<CAPTION>
WesMark Bond Fund
Portfolio of Investments
January 31, 1999
<S> <C> <C>
Principal
Amount Value
Corporate Bonds--6.1%
Basic Materials--0.9%
$1,000,000 Worthington Industries, Inc., 7.125%, 5/15/2006 $ 1,058,967
Finance--1.6%
750,000 Merrill Lynch & Co., Inc., Note, 7.00%, 1/15/2007 799,276
1,000,000 National City Corp., Sub. Note, 6.625%, 3/1/2004 1,050,282
Total 1,849,558
Finance - Automotive--1.3%
500,000 Ford Motor Credit Corp., Note, 8.375%, 1/15/2000 513,212
1,000,000 General Motors Acceptance Corp., Note, 7.00%, 1,016,083
3/1/2000
Total 1,529,295
Instruments - Control--0.9%
1,000,000 Honeywell, Inc., 7.00%, 3/15/2007 1,092,727
Oil--0.5%
500,000 Union Oil of California, 9.125%, 2/15/2006 577,179
Retail--0.9%
1,000,000 Penney (J.C.) Co., Inc., Note, 7.60%, 4/1/2007 1,085,544
Total Corporate Bonds (identified cost $6,767,226) 7,193,270
Government Agencies--86.6%
Federal Farm Credit Bank--4.3%
5,000,000 6.46%, 4/2/2008 5,077,040
Federal Home Loan Bank--29.3%
3,000,000 5.475%, 1/12/2009 3,033,057
10,000,000 5.80%, 9/2/2008 10,366,630
6,335,000 5.83%, 9/30/2013 6,367,315
2,000,000 6.39%, 7/5/2005 2,126,590
4,000,000 6.50%, 9/9/2008 4,005,416
3,000,000 6.865%, 10/23/2007 3,066,396
$1,450,000 7.26%, 10/30/2002 $ 1,458,047
1,570,000 7.46%, 9/9/2004 1,742,240
2,000,000 7.87%, 10/20/2004 2,263,372
Total 34,429,063
Federal Home Loan Mortgage Corporation--31.3%
5,006,205 6.00%, 4/1/2013 5,040,648
12,733,188 6.50%, 3/1/2013 - 5/1/2013 12,974,737
4,000,000 6.69%, 4/23/2008 4,005,844
4,000,000 6.846%, 10/10/2007 4,084,832
10,483,247 7.00%, 7/1/2011 - 3/1/2018 10,761,331
Total 36,867,392
Federal National Mortgage Association--21.7%
8,754,652 6.00%, 10/1/2013 8,812,257
2,000,000 6.45%, 2/14/2002 2,028,034
7,637,446 6.50%, 5/1/2018 - 9/1/2018 7,742,232
2,000,000 6.54%, 10/3/2005 2,147,014
2,000,000 6.59%, 5/21/2008 2,051,710
1,000,000 6.85%, 4/5/2004 1,075,301
1,659,303 7.00%, 2/1/2018 1,700,620
Total 25,557,168
Total Government Agencies (identified cost $100,135,317) 101,930,663
Preferred Stocks--2.1%
Finance--2.1%
50,000 ML Preferred Capital Trust III, Pfd. $ 1,259,375
25,000 Merrill Lynch Capital Trust IV, Pfd. 634,375
20,500 Reliastar Financing I, Pfd. 527,875
Total Preferred Stock (identified cost $2,389,038) 2,421,625
Mutual Fund--4.1%
4,760,745 Federated Prime Obligations Fund (at net asset value) 4,760,745
Total Investments (identified cost $114,052,326)(a) $ 116,306,303
</TABLE>
(a) The cost of investments for federal tax purposes amounts to $114,052,326.
The net unrealized appreciation of investments on a federal tax basis
amounts to $2,253,977 which is comprised of $2,327,027 appreciation and
$73,050 depreciation at January 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($117,645,663) at January 31, 1999.
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
WesMark Bond Fund
Statement of Assets and Liabilities
January 31, 1999
<S> <C> <C>
Assets:
Total investments in securities, at value (identified and tax cost $114,052,326) $ 116,306,303
Income receivable 1,628,887
Receivable for shares sold 220,290
Total assets 118,155,480
Liabilities:
Payable for shares redeemed $ 34
Income distribution payable 416,912
Accrued expenses 92,871
Total liabilities 509,817
Net Assets for 11,639,910 shares outstanding $ 117,645,663
Net Assets Consist of:
Paid in capital $ 115,320,810
Net unrealized appreciation of investments 2,253,977
Accumulated net realized gain on investments 70,876
Total Net Assets $ 117,645,663
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$117,645,663 / 11,639,910 shares outstanding $10.11
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
WesMark Bond Fund
Statement of Operations
Period Ended January 31, 1999 (a)
<S> <C>
Investment Income:
Dividends $ 120,754
Interest 5,204,825
Total income 5,325,579
Expenses:
Investment advisory fee $ 504,656
Administrative personnel and services fee 119,961
Custodian fees 17,146
Transfer and dividend disbursing agent fees and expenses 41,104
Directors'/Trustees' fees 3,004
Auditing fees 14,008
Legal fees 1,541
Portfolio accounting fees 37,609
Share registration costs 50,310
Printing and postage 13,346
Insurance premiums 5,047
Miscellaneous 799
Total expenses 808,531
Waiver--
Waiver of investment advisory fee (55,469)
Net expenses 753,062
Net investment income 4,572,517
Realized and Unrealized Gain on Investments:
Net realized gain on investments 337,566
Net change in unrealized appreciation of investments 951,644
Net realized and unrealized gain on investments 1,289,210
Change in net assets resulting from operations $ 5,861,727
(a) For the period from April 20, 1998 (date of initial public investment) to
January 31, 1999.
(See Notes which are an integral part of the Financial Statements)
</TABLE>
<TABLE>
<CAPTION>
WesMark Bond Fund
Statement of Changes in Net Assets
Period Ended
January 31, 1999(a)
<S> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 4,572,517
Net realized gain on investments ($337,566 as computed for federal tax purposes) 337,566
Net change in unrealized appreciation 951,644
Change in net assets resulting from operations 5,861,727
Distributions to Shareholders--
Distributions from net investment income (4,572,517)
Distributions from net realized gains (266,690)
Change in net assets resulting from distributions to shareholders (4,839,207)
Share Transactions-- Proceeds from sale of shares 29,836,051 Proceeds from
shares issued in connection with the merger of Common Trust Funds 94,009,198(b)
Net asset value of shares issued to shareholders in payment of distributions
declared 1,030,624 Cost of shares redeemed (8,252,730)
Change in net assets resulting from share transactions 116,623,143
Change in net assets 117,645,663
Net Assets:
Beginning of period --
End of period $ 117,645,663
</TABLE>
(a) For the period from April 20, 1998 (date of initial public investment) to
January 31, 1999.
(b) Includes $1,302,333 of unrealized appreciation, at April 20, 1998, related
to the acquisition of Common Trust Funds.
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
WesMark Bond Fund
Financial Highlights
(For a share outstanding throughout the period)
Period Ended
January 31,
1999(a)
<S> <C>
Net asset value, beginning of period $10.00
Income from investment operations
Net investment income 0.43
Net realized and unrealized gain on investments 0.13
Total from investment operations 0.56
Less distributions
Distributions from net investment income (0.43)
Distributions from net realized gains (0.02)
Total distributions (0.45)
Net asset value, end of period $10.11
Total return (b) 5.70%
Ratios to average net assets
Expenses 0.90%*
Net investment income 5.47%*
Expense waiver/reimbursement (c) 0.07%*
Supplemental data
Net assets, end of period (000 omitted) $117,646
Portfolio turnover 39%
</TABLE>
* Computed on an annualized basis.
(a) Reflects operations for the period from April 20, 1998 (date of initial
public investment) to January 31, 1999.
(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 Bond Fund
Notes to Financial Statements
January 31, 1999
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 four portfolios. The financial statements included herein are
only those of Wesmark Bond Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolios 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 high current income consistent with preservation of capital.
On April 20, 1998, the Fund acquired the assets of two common trust funds
managed by WesBanco Bank Wheeling, the Fund's adviser. The acquisition was a
tax-free exchange of 9,400,919 shares of the Fund valued at $94,009,198 and
unrealized appreciation of $1,302,333.
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 -- U.S. government securities and listed corporate
bonds, are generally valued at the mean of the latest bid and asked price as
furnished by an independent pricing service. 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).
<TABLE>
<CAPTION>
Transactions in shares were as follows:
Period Ended
January 31, 1999(a)
<S> <C>
Shares sold 2,955,796
Proceeds from shares issued in connection with the merger of
Common Trust Funds 9,400,919
Shares issued to shareholders in payment of distributions declared 102,148
Shares redeemed (818,953)
Net change resulting from share transactions 11,639,910 </TABLE> (a) Reflects
operations for the period from April 20, 1998 (date of initial
public investment) to January 31, 1999.
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
annually, to compensate Edgewood Services, Inc. For the period ended January
31, 1999, 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, 1999, the Fund 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, 1999, 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 $51,910,245 and $47,149,470, respectively.
Other Affiliated Parties and Transactions -- Pursuant to an exemptive order
issued by the SEC, the Fund may invest in certain affiliated money market
funds. As of January 31, 1999, the Fund owned 0.05% of outstanding shares of
Federated Prime Obligations Fund, which is distributed by an affiliate of the
Fund's distributor.
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, 1999, were as follows:
Purchases $77,388,221
Sales $39,261,897
6. Year 2000 (Unaudited)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Independent Auditors' Report
To the Board of Trustees of WESMARK FUNDS
and Shareholders of WESMARK BOND FUND:
We have audited the accompanying statement of assets and liabilities of WesMark
Bond Fund (a portfolio of WesMark Funds), including the portfolio of
investments, as of January 31, 1999, and the related statement of operations,
changes in net assets and the financial highlights for the period from April 20,
1998 (date of initial public investment) to January 31, 1999. These financial
statements and financial highlights are the responsibility of WesMark Bond
Fund's management. Our responsibility is to express an opinion of 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, 1999,
by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
WesMark Bond Fund as of January 31, 1999, the results of its operations, the
changes in its net assets and financial highlights for the respective stated
period in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 19, 1999
Trustees Officers
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
William J. Copeland
John F. Cunningham
Lawrence D. Ellis, M.D.
Edward C. Gonzales
Peter E. Madden
Charles F. Mansfield, Jr.
John E. Murray, Jr., J.D., S.J.D.
Marjorie P. Smuts
John S. Walsh
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.
[wesmark logo]
Annual Report
Dated January 31, 1999 [federated investors logo] Cusip 951025402 G02160-11
(3/99) [wesmark logo]
[logo of WesMark Growth Fund]
Growth
Fund
Annual Report
January 31, 1999
[logo of WesMarkFunds]
President's Message
Dear Shareholder:
I am extremely pleased to present the second Annual Report to Shareholders for
WesMark Growth Fund. This report covers the 12-month period from February 1,
1998 through January 31, 1999. It gives you a complete picture of the fund's
operation, beginning with an overview of the stock market and fund strategy by
the fund's manager, followed by a complete list of fund holdings and the
financial statements.
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.
During the fiscal year, the fund produced a total return of 22.58%.*
Contributing to the total return were a share price increase of $1.59, income
totaling $0.06 per share, and capital gains totaling $0.79 per share. The fund's
net assets totaled $135 million at the end of the reporting period.
Thank you for pursuing your longer-term financial goals through the professional
management and diversification of WesMark Growth Fund.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
March 15, 1999
* 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
The year 1998 was remarkable in many respects. The term "record high" was
repeated many times in reporting on the stock market. The Standard & Poor's 500
completed its fourth consecutive year with a return above 20% which, of course,
was a record.* Surprisingly, the simple average of all New York Stock Exchange
listed stocks declined 4% for the year. The dramatic rise in price of a limited
number of stocks which were heavily weighted in the Standard & Poor's 500 Index
and other market indices accounted for most of the increase in value and created
a public image of a strongly rising stock market that was not a true reflection
of the actual change in price for most stocks.
The performance of the U.S. economy can only be described as awesome. Inflation
and interest rates continued to decline with reasonable expectations of further
declines in 1999. The unemployment rate fell to a 30-year low. The U.S. federal
budget was in surplus for the first time in quite a few years. Corporate profits
were weaker than 1997, but expectations for earnings growth in 1999 were
improving at year end. The exciting growth of the internet holds great promise
for the future.
Unfortunately, expectations may have exceeded reality. Price-earnings ratios are
at unsustainably high-levels for stocks of many companies with the greatest
growth prospects. The word "dividend" is rarely mentioned.
Our management philosophy as discussed in last year's letter remains a
cornerstone of our investment decisions. The return of 22.58% was disappointing
only to those who believe the Standard & Poor's 500 Index is representative of
the average stock. The fund has provided a cumulative return of 44.95% since
inception in April, 1997, for an average annual return of 22.86%.** We believe
that our investment philosophy will produce rewarding long-term rates of return.
Our primary focus will be to invest in companies with above average long-term
prospects and to have the patience to allow these investments time to contribute
a positive rate of return.
* The S&P Index is an unmanaged capitalization-weighted index of 500 Stocks
designed to measure performance of the broad domestic economy through
changes in the aggregate market value of 500 Stocks representing all major
industries. The index is unmanaged, and investments cannot be made in an
index.
** 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 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, 1999, compared to the Standard and Poor's 500 Index ("S&P 500")+ and
Lipper Growth Funds Average ("LGFA").++
The graphic presentation displayed here consists of a line graph. The
corresponding components of the line graph are listed in the upper left hand
corner. The WesMark Growth Fund (the "Fund") is represented by a solid line. The
Standard & Poor's 500 Index ("S&P 500") is represented by a dotted line and the
Lipper Growth Funds Average ("LGFA") is represented by a dashed line. The line
graph is a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Fund, the S&P 500 and the LGFA. The "x" axis
reflects computation periods from 4/14/97 (the Fund's start of performance) to
1/31/99. The "y" axis reflects the cost of the investment, beginning with
$10,000 and going up to $19,000, in increments of $3,000. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the S&P 500 and the LGFA. The ending values were $14,495, $18,814 and
$17,642, respectively.
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.
++ 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, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Shares Value
Common Stocks--91.7%
Banks - Major Regional--1.9%
$50,000 PNC Bank Corp. 2,559,375
Chemicals - Diversified--1.0%
25,000 Du Pont (E.I.) de Nemours & Co. 1,279,687
Computer Services--4.0%
140,000 First Data Corp. 5,363,750
Computers - Mini--2.9%
50,000 Hewlett-Packard Co. 3,918,750
Cosmetics & Toiletries--0.4%
10,000 Gillette Co. 587,500
Diversified Operations--6.8%
115,000 Allied-Signal, Inc. 4,485,000
45,000 General Electric Co. 4,719,375
Total 9,204,375
Electronic Components--7.2%
90,000 (a)EMC Corp. Mass 9,798,750
Electronic Components - Semiconductor--11.3%
85,000 (a)Adaptec, Inc. 1,965,625
40,000 Motorola, Inc. 2,890,000
105,000 Texas Instruments, Inc. 10,381,875
Total 15,237,500
Finance--0.5%
15,000 Countrywide Credit Industries, Inc. 712,500
Healthcare Services--5.1%
150,000 (a)HEALTHSOUTH Corp. 2,034,375
110,000 (a)Health Management Association, Class A 1,381,875
46,250 McKesson HBOC, Inc. 3,474,531
Total 6,890,781
Instruments - Control--2.9%
60,000 Honeywell, Inc. 3,911,250
Insurance Property & Casualty--2.3%
10,000 American International Group, Inc. 1,029,375
35,000 Chubb Corp. 2,056,250
Total 3,085,625
Networking Products--9.9%
120,000 (a)Cisco Systems, Inc. 13,387,500
Office - Auto & Equipment--2.3%
25,000 Xerox Corp. 3,100,000
Oil & Gas Drilling--2.2%
115,000 Transocean Offshore, Inc. 2,939,688
Oil & Gas Equipment & Services--2.2%
90,000 Williams Cos., Inc. (The) 2,970,000
Oil Comp - Exploration & Production--5.1%
90,000 Burlington Resources, Inc. 2,722,500
240,000 Enron Oil & Gas Co. 4,140,000
Total 6,862,500
Oil Field Services--0.9%
200,000 (a)Pride International, Inc. 1,275,000
Oil - Integrated--4.3%
150,000 Phillips Petroleum Co. 5,793,750
Retail - Major Department Stores--4.5%
100,000 (a)Saks, Inc. 3,681,250
60,000 Sears, Roebuck & Co. 2,407,500
Total 6,088,750
Telecommunications Equipment--8.3%
10,000 (a)Gilat Satellite Networks 629,375
150,000 Scientific-Atlanta, Inc. 4,668,750
120,000 Telefonaktiebolaget LM Ericsson, Class B, ADR 3,345,000
30,000 (a)Tellabs, Inc. 2,572,500
Total 11,215,625
Textile Apparel--2.1%
40,000 (a)Tommy Hilfiger Corp. 2,820,000
Transportation - Airline--2.5%
20,000 (a)AMR Corp. 1,175,000
40,000 Delta Air Lines, Inc. 2,182,500
Total 3,357,500
Transportation - Rail--1.1%
45,000 Burlington Northern Santa Fe 1,558,125
Total Common Stocks (identified cost $93,846,188) 123,918,281
(b)Commercial Paper--5.9%
Diversified Operations--2.2%
3,000,000 General Electric Co., 4.83%, 2/24/1999 2,990,743
Finance - Commercial--3.7%
5,000,000 General Electric Capital Corp., 4.90%, 2/22/1999 4,985,971
Total Commercial Paper (at amortized cost) 7,976,714
Mutual Fund--2.4%
3,192,566 Federated U.S. Treasury Cash Reserves Fund (at net 3,192,566
asset value)
Total Investments (identified cost $105,015,468)(c) 135,087,561
</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 $105,015,468.
The net unrealized appreciation of investments on a federal tax basis
amounts to $30,072,093, comprised of $38,048,195 appreciation and $7,976,102
depreciation at January 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($135,077,675) at January 31, 1999.
The following acronym is used throughout this portfolio: ADR--American
Depositary Receipt (See Notes which are an integral part of the Financial
Statements)
<TABLE>
<CAPTION>
WesMark Growth Fund
Statement of Assets and Liabilities
January 31, 1999 Assets:
<S> <C> <C>
Total investments in securities, at value
(identified and tax cost $105,015,468) $135,087,561
Cash 4,171
Income receivable 30,345
Receivable for shares sold 69,375
Deferred organizational costs 4,766
Total assets 135,196,218
Liabilities:
Payable for shares redeemed $30,017
Accrued expenses 88,526
Total liabilities 118,543
Net Assets for 10,604,008 shares outstanding $135,077,675
Net Assets Consist of:
Paid in capital $101,324,826
Net unrealized appreciation of investments 30,072,093
Accumulated net realized gain on investments 3,665,567
Undistributed net investment income 15,189
Total Net Assets $135,077,675
Net Asset Value, Offering Price and
Redemption Proceeds Per Share:
$135,077,675 / 10,604,008 shares outstanding $12.74
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WesMark Growth Fund
Statement of Operations
Year Ended January 31, 1999
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C>
Dividends $ 957,358
Interest 933,593
Total income 1,890,951
Expenses:
Investment advisory fee $ 927,701
Administrative personnel and services fee 178,406
Custodian fees 28,256
Transfer and dividend disbursing agent fees and expenses 48,211
Directors'/Trustees' fees 276
Auditing fees 16,143
Legal 3,615
Portfolio accounting fees 53,167
Share registration costs 14,315
Printing and postage 13,184
Insurance premiums 2,239
Miscellaneous 2,215
Total expenses 1,287,728
Waiver--
Waiver of investment advisory fee (8,076)
Net expenses 1,279,652
Net investment income 611,299
Realized and Unrealized Gain on Investments:
Net realized gain on investments 9,639,367
Net change in unrealized appreciation of investments 15,319,589
Net realized and unrealized gain on investments 24,958,956
Change in net assets resulting from operations 25,570,255
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WesMark Growth Fund
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended January Period Ended
31, 1999 January 31,
1998(a)
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 611,299 $ 826,665
Net realized gain on investments ($9,639,367 and $7,637,919,
respectively, as computed for federal tax purposes) 9,639,367 7,637,919
Net change in unrealized appreciation 15,319,589 7,252,504
Change in net assets resulting from operations 25,570,255 15,717,088
Distributions to Shareholders--
Distributions from net investment income (663,101) (759,674)
Distributions from net realized gains (8,229,788) (5,381,931)
Change in net assets resulting from distributions to shareholders (8,892,889) (6,141,605)
Share Transactions--
Proceeds from sale of shares 15,967,706 20,440,048
Proceeds from shares issued in connection with the
merger of Common Trust Funds -- 84,556,539(b)
Net asset value of shares issued to shareholders in payment
of distributions declared 4,442,945 5,383,211
Cost of shares redeemed (16,152,476) (5,913,147)
Change in net assets resulting from share transactions 4,258,175 104,466,651
Change in net assets 20,935,541 114,042,134
Net Assets:
Beginning of period 114,142,134 100,000
End of period (including undistributed net investment income
of $15,189 and $66,991, respectively) $135,077,675 $114,142,134
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
January 31, 1998.
(b) Includes $7,500,000 of unrealized appreciation at April 14, 1997 related to
the acquisition of the Common Trust Funds.
(See Notes which are an integral part of the Financial Statements)
WesMark Growth Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Ended Period Ended
January 31, January 31,
1999 1998(a)
<S> <C> <C>
Net asset value, beginning of period $ 11.15 $ 10.00
Income from investment operations
Net investment income 0.06 0.09
Net realized and unrealized gain on investments 2.38 1.71
Total from investment operations 2.44 1.80
Less distributions
Distributions from net investment income (0.06) (0.08)
Distributions from net realized gains (0.79) (0.57)
Total distributions (0.85) (0.65)
Net asset value, end of period $ 12.74 $ 11.15
Total return (b) 22.58% 18.24%
Ratios to average net assets
Expenses 1.04% 1.14%*
Net investment income 0.50% 0.99%*
Expense waiver/reimbursement (c) 0.01% 0.00%*(d)
Supplemental data
Net assets, end of period (000 omitted) $135,078 $114,142
Portfolio turnover 58% 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) Amount represents less than 0.01%.
(See Notes which are an integral part of the Financial Statements)
WesMark Growth Fund
Notes to Financial Statements
January 31, 1999
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 four portfolios. The financial statements included herein are
only those of WesMark Growth Fund (the "Fund"), a diversified portfolio. The
financial statements of the other portfolios 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 and unrealized appreciation of
$7,500,000.
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>
Year Ended Period Ended
January 31, 1999 January 31, 1998(a)
<S> <C> <C>
Shares sold 1,351,801 1,796,045
Proceeds from shares issued in connection
with the merger of Common Trust Funds -- 8,455,654
Shares issued to shareholders in
payment of distributions declared 373,063 495,313
Shares redeemed (1,356,413) (521,455)
Net change resulting from share transactions 368,451 10,225,557
</TABLE>
(a) Reflects operations for 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 0.75% 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
annually, to compensate Edgewood Services, Inc. For the year ended January
31, 1999, 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 year. The fee paid to WesBanco is used to finance
certain services for shareholders and to maintain shareholder accounts. For
the year ended January 31, 1999, the Fund 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, 1999, 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 $57,128,990 and $53,984,642, respectively.
Custodian Fees--WesBanco is the Fund's custodian. The fee is based on the
market value of the Fund securities held in custody plus certain securities
transaction charges.
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.
Other Affiliated Parties and Transactions--Pursuant to an exemptive order
issued by the SEC, the Fund may invest in the Federated U.S. Treasury Cash
Reserves Fund, which is distributed by an affiliate of the Fund's
distributor. As of January 31, 1999, the Fund owned 0.12% of outstanding
shares of Federated 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 securities for the year
ended January 31, 1999, were as follows:
Purchases $68,263,184
Sales $61,998,980
6. Year 2000 (Unaudited)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Independent Auditors' Report
To the Board of Trustees of WESMARK FUNDS and Shareholders of WESMARK GROWTH
FUND:
We have audited the accompanying statement of assets and liabilities of WesMark
Growth Fund (a portfolio of WesMark Funds), including the portfolio of
investments, as of January 31, 1999, and the related statement of operations for
the year then ended, the statements of changes in net assets for the year ended
January 31, 1999 and the period from April 14, 1997 (date of initial public
investment) to January 31, 1998, and the financial highlights for periods
presented. These financial statements and financial highlights are the
responsibility of WesMark Growth Fund's management. Our responsibility is to
express an opinion of these financial statements and financial highlights based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
January 31, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights present
fairly, in all material respects, the financial position of WesMark Growth Fund
as of January 31, 1999, the results of its operations for the year then ended,
the changes in its net assets for the year ended January 31, 1999 and the period
from April 14, 1997 (date of initial public investment) to January 31, 1998, and
its financial highlights for the respective stated periods, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
March 19, 1999
Trustees
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
William J. Copeland
John F. Cunningham
Lawrence D. Ellis, M.D.
Edward C. Gonzales
Peter E. Madden
Charles F. Mansfield, Jr.
John E. Murray, Jr., J.D., S.J.D.
Marjorie P. Smuts
John S. Walsh
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.
[logo of WesMark Growth Fund]
Annual Report
Dated January 31, 1999
[logo of WesBanco Wheeling]
[logo of Federated Investors]
EdgewoodServices, Inc., Distributor
Cusip 951025204
G02160-06 (3/99)
[Westmark logo]
West Virginia Municipal Bond Fund
Annual Report
January 31, 1999
[Westmark logo]
President's Message
Dear Shareholder:
I am extremely pleased to present the second Annual Report to Shareholders for
WesMark West Virginia Municipal Bond Fund. This report covers the 12-month
period from February 1, 1998 through January 31, 1999. It gives you a complete
picture of the fund's operation, beginning with an overview of the municipal
bond market and fund strategy by the fund's manager, 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.
During the fiscal year, the fund produced a total return of 5.46%.**
Contributing to the total return were a share price increase of $0.11, tax-free
income totaling $0.43 per share, and capital gains totaling $0.01 per share. The
fund's net assets totaled $67.4 million at the end of the reporting period.
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.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
March 15, 1999
* 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
The fund provided a total return of 5.46%* for the fiscal year ended January 31,
1999. The income return for the year was 4.27% and 100% of the income
distributed was exempt from federal and state income tax for West Virginia
residents. The taxable equivalent yield for West Virginia residents at the 28%
tax rate was 4.67%. As of January 31, 1999, the 30-day SEC yield was 3.36%. As
of year end 1998, we continued to maintain our focus on high quality bonds with
65.3% of the fund invested in bonds rated AAA. In comparision, at year end 1997,
the fund had 57% of its assets invested in bonds rated AAA.
Interest rates continued to decline throughout most of the year. We expect
inflation to remain low for an extended period and, as a consequence, we expect
interest rates to decline further. Currently, interest rates are relatively high
in relation to inflation. Interest rates may not decline much while the U.S.
economy grows at its current rate, but we expect that the growth rate will slow,
enabling interest rates to decline.
Our focus on intermediate term bonds is expected to help preserve the market
value of the fund should interest rates rise unexpectedly. The yield for the
fund remained very competitive with other funds invested in intermediate term
municipal bonds.
The yield on 5-year AAA general obligation municipal bonds declined less than
the yield on 5-year U.S. Treasury Notes during 1998. This wider yield spread for
municipal bonds occurred because of the large increase in new offerings of bonds
which were largely the result of refunding issues. We anticipate that the yield
spread from municipal bonds will decline during 1999 because we expect the rate
of new issuance to slow.
The economy of the state of West Virginia grew at a slower rate than the
national economy. Demographics of the population and a greater concentration in
more mature, cyclical industries contributed to this slower growth in the
state's economy. Nevertheless, the credit ratings of the state of West Virginia,
its agencies, and the larger cities and counties in the state, were maintained
during the year.
*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, 1999, compared to the Lehman Brothers 5
Year G.O. Bond Index ("LB5GO")+ and Lipper Intermediate Municipal Debt Funds
Average ("LIMDFA").++
The graphic presentation displayed here consists of a line graph. The
corresponding components of the line graph are listed in the upper left hand
corner. The WesMark West Virginia Municipal Bond Fund (the "Fund") is
represented by a solid line. The Lehman Brothers 5 Year G.O. Bond Index
("LB5GO") is represented by a dotted line and the Lipper Intermediate Municipal
Debt Funds Average ("LIMDFA") is represented by a dashed line. The line graph is
a visual representation of a comparison of change in value of a $10,000
hypothetical investment in the Fund, the LB5GO and the LIMDFA. The "x" axis
reflects computation periods from 4/14/97 (the Fund's start of performance) to
1/31/99. The "y" axis reflects the cost of the investment, beginning with
$10,000 and going up to $13,000, in increments of $1,000. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to the LB5GO and the LIMDFA. The ending values were $11,245, $11,557, and
$12,131, respectively.
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, 1999
<TABLE>
<CAPTION>
Principal Credit Amount Value
Rating*
<C> <S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Long-Term Municipals--98.1%
- ------------------------------------------------------------------------------------------------------------
West Virginia--98.1%
- ------------------------------------------------------------------------------------------------------------
$ 195,000 Beckley, WV, Nursing Facility Refunding Revenue NR $ 203,260
Bonds, 5.10% (Beckley Health Care Corp. Project),
(Nationsbank of Texas, N.A. LOC), 9/1/2004
- ------------------------------------------------------------------------------------------------------------
205,000 Beckley, WV, Nursing Facility Refunding Revenue NR 215,961
Bonds, 5.20% (Beckley Health Care Corp. Project),
(Nationsbank of Texas, N.A. LOC), 9/1/2005
- ------------------------------------------------------------------------------------------------------------
215,000 Beckley, WV, Nursing Facility Refunding Revenue NR 226,935
Bonds, 5.30% (Beckley Health Care Corp. Project),
(Nationsbank of Texas, N.A. LOC), 9/1/2006
- ------------------------------------------------------------------------------------------------------------
230,000 Beckley, WV, Nursing Facility Refunding Revenue NR 245,954
Bonds, 5.40% (Beckley Health Care Corp. Project),
(Nationsbank of Texas, N.A. LOC), 9/1/2007
- ------------------------------------------------------------------------------------------------------------
500,000 Berkeley County, WV Board of Education, GO UT, 4.50% AAA 507,134
(FGIC INS)/(Original Issue Yield: 5.30%), 6/1/2009
- ------------------------------------------------------------------------------------------------------------
360,000 Berkeley County, WV Board of Education, GO UT A+ 368,518
Refunding Bonds, 5.45%, 4/1/2000
- ------------------------------------------------------------------------------------------------------------
1,030,000 Berkeley County, WV Board of Education, GO UT, 5.75% AAA 1,114,726
(FGIC INS), 6/1/2003
- ------------------------------------------------------------------------------------------------------------
100,000 Brooke County, WV Board of Education, GO UT Refunding AAA 107,874
Bonds, 8.625% (AMBAC INS), 8/1/2000
- ------------------------------------------------------------------------------------------------------------
100,000 Brooke County, WV Board of Education, GO UT Refunding AAA 112,720
Bonds, 8.75% (AMBAC INS), 8/1/2001
- ------------------------------------------------------------------------------------------------------------
1,350,000 Cabell County, WV Board of Education, GO UT, 6.50% AAA 1,498,600
(MBIA INS), 5/1/2003
- ------------------------------------------------------------------------------------------------------------
500,000 Cabell County, WV Board of Education, GO UT, 4.60% A+ 516,149
(Original Issue Yield: 4.70%), 5/1/2003
- ------------------------------------------------------------------------------------------------------------
500,000 Cabell County, WV Board of Education, GO UT, 6.00% AAA 564,416
(MBIA INS), 5/1/2006
- ------------------------------------------------------------------------------------------------------------
$ 100,000 Cable, Putnam & Wayne County's, WV, Single Family AAA $ 117,182
Residence Mortgage Revenue Bonds, 7.375% (FGIC INS),
4/1/2010
- ------------------------------------------------------------------------------------------------------------
265,000 Charles Town, WV, Residential Mortgage Revenue Bonds, A1 277,259
6.20%, 3/1/2011
- ------------------------------------------------------------------------------------------------------------
355,000 Charles Town, WV, Revenue Refunding Bonds, 5.00% AA 367,367
(Original Issue Yield: 5.15%), 10/1/2013
- ------------------------------------------------------------------------------------------------------------
340,000 Charles Town, WV, Revenue Refunding Bonds, 5.00%, AA 354,970
10/1/2012
- ------------------------------------------------------------------------------------------------------------
865,000 Charleston, WV Building Commission, Subordinate NR 950,458
Bonds, 6.00% (Charleston Town Center Parking),
12/1/2010
- ------------------------------------------------------------------------------------------------------------
355,000 Charleston, WV, GO UT, 7.20%, 10/1/2003 A1 406,364
- ------------------------------------------------------------------------------------------------------------
2,235,000 Fairmont, WV Waterworks, Water Utility Improvement AAA 2,245,187
Revenue Bonds, 5.00% (AMBAC LOC), 7/1/2019
- ------------------------------------------------------------------------------------------------------------
250,000 Harrison County, WV Board of Education, GO UT, 6.20% AAA 259,331
(FGIC INS), 5/1/2000
- ------------------------------------------------------------------------------------------------------------
500,000 Harrison County, WV Board of Education, GO UT, 6.40% AAA 576,929
(FGIC INS)/(Original Issue Yield: 6.45%), 5/1/2006
- ------------------------------------------------------------------------------------------------------------
410,000 Harrison County, WV County Commission, Special AAA 460,313
Obligation Refunding Bonds, 6.35% (Original Issue
Yield: 6.45%), 5/15/2004
- ------------------------------------------------------------------------------------------------------------
420,000 Jackson County, WV, Revenue Bonds, 7.375% (FGIC INS), AAA 521,440
6/1/2010
- ------------------------------------------------------------------------------------------------------------
250,000 Jefferson County, WV Board of Education, School AAA 269,823
Improvement Bonds, 6.85% (FGIC INS), 7/1/2001
- ------------------------------------------------------------------------------------------------------------
750,000 Kanawha County, WV Commercial Development, Revenue A 829,936
Refunding Bonds, 6.50% (May Department Stores Co.),
6/1/2003
- ------------------------------------------------------------------------------------------------------------
2,025,000 Kanawha County, WV, Pollution Control Revenue Bonds, BAA2 2,297,346
7.35% (Union Carbide Corp.), 8/1/2004
- ------------------------------------------------------------------------------------------------------------
500,000 Lewis County, WV, Revenue Bonds, 10.375% (Crestview AAA 533,153
Manor Project), 8/1/2019
- ------------------------------------------------------------------------------------------------------------
$ 285,000 Logan County, WV, Revenue Bonds, 8.00% (Logan County NR $ 361,623
Health Care Center Limited Partnership Project),
12/1/2009
- ------------------------------------------------------------------------------------------------------------
100,000 Marion County, WV Single Family Mortgage, Revenue AAA 106,966
Bonds, 7.20% (FGIC INS), 8/1/2001
- ------------------------------------------------------------------------------------------------------------
355,000 Mason County, WV, Pollution Control Revenue Bond, AAA 366,621
5.45% (Ohio Power Co.)/(AMBAC INS)/(Original Issue
Yield: 5.47%), 12/1/2016
- ------------------------------------------------------------------------------------------------------------
785,000 Ohio County, WV Board of Education, GO UT Refunding AAA 801,892
Bonds, 5.125% (MBIA INS)/(Original Issue Yield:
5.375%), 6/1/2018
- ------------------------------------------------------------------------------------------------------------
535,000 Ohio County, WV Board of Education, GO UT Refunding A+ 546,981
Bonds, 5.125% (Original Issue Yield: 5.375%), 6/1/2018
- ------------------------------------------------------------------------------------------------------------
200,000 Ohio County, WV Board of Education, GO UT, 6.30%, A+ 212,552
6/1/2001
- ------------------------------------------------------------------------------------------------------------
475,000 Ohio County, WV Board of Education, GO UT, 7.00%, A+ 525,350
6/1/2002
- ------------------------------------------------------------------------------------------------------------
500,000 Ohio County, WV Board of Education, GO UT, 7.00%, A+ 564,906
6/1/2003
- ------------------------------------------------------------------------------------------------------------
530,000 Ohio County, WV Board of Education, GO UT, 7.00%, A+ 611,221
6/1/2004
- ------------------------------------------------------------------------------------------------------------
1,000,000 Ohio County, WV, Revenue Bonds, 4.85% (Ohio Valley A 1,032,132
Medical Center)/(American Capital Access INS),
1/1/2008
- ------------------------------------------------------------------------------------------------------------
500,000 Parkersburg, WV Waterworks & Sewer Systems, Revenue AAA 516,800
Refunding Bonds, 4.75% (FSA INS)/(Original Issue
Yield: 4.80%), 3/1/2002
- ------------------------------------------------------------------------------------------------------------
400,000 Parkersburg, WV Waterworks & Sewer Systems, Revenue AAA 416,832
Refunding Bonds, 4.85% (FSA INS)/(Original Issue
Yield: 4.90%), 3/1/2003
- ------------------------------------------------------------------------------------------------------------
500,000 Pleasants County, WV PCR, Refunding Revenue Bond, AAA 550,346
6.15% (West Penn Power Co.)/(AMBAC INS), 5/1/2015
- ------------------------------------------------------------------------------------------------------------
475,000 Pleasants County, WV PCR, Refunding Revenue Bonds, AAA 521,464
6.15% (Potomac Edison Co.)/(MBIA INS), 5/1/2015
- ------------------------------------------------------------------------------------------------------------
475,000 Raleigh County, WV, Refunding Revenue Bonds, 5.50%, NR 508,976
6/1/2006
- ------------------------------------------------------------------------------------------------------------
1,485,000 Randolph County, WV, Refunding Revenue Bonds, 5.20% AAA 1,518,813
(Davis Health Systems, Inc.)/(FSA INS), 11/1/2015
- ------------------------------------------------------------------------------------------------------------
$ 480,000 South Charleston, WV, Refunding Revenue Bonds, 4.70% AAA $ 494,922
(MBIA INS), 10/1/2001
- ------------------------------------------------------------------------------------------------------------
1,000,000 South Charleston, WV, Refunding Revenue Bonds, 7.625% BBB 1,180,452
(Union Carbide Corp.), 8/1/2005
- ------------------------------------------------------------------------------------------------------------
500,000 South Charleston, WV, Revenue Bonds, 5.50% (MBIA AAA 520,494
INS), 10/1/2009
- ------------------------------------------------------------------------------------------------------------
415,000 Taylor County, WV, GO UT Bonds, 8.40% (Original Issue NR 459,747
Yield: 8.45%), 5/1/2001
- ------------------------------------------------------------------------------------------------------------
175,000 Weirton, WV Municipal Hospital Building, Refunding AAA 181,039
Revenue Bonds, 5.75% (Weirton Medical Center, Inc.)/
(AMBAC INS)/(Original Issue Yield: 6.00%), 12/1/2003
- ------------------------------------------------------------------------------------------------------------
540,000 Weirton, WV Municipal Hospital Building, Revenue AAA 557,897
Bonds, 5.40% (Weirton Medical Center, Inc.)/(AMBAC
INS)/(Original Issue Yield: 5.55%), 12/1/2000
- ------------------------------------------------------------------------------------------------------------
675,000 Weirton, WV Municipal Hospital Building, Revenue AAA 698,751
Bonds, 5.75% (Weirton Medical Center, Inc.)/(AMBAC
INS)/(Original Issue Yield: 6.05%), 12/1/2004
- ------------------------------------------------------------------------------------------------------------
700,000 West Virginia State College, Revenue Bonds, 5.25% AAA 715,942
(AMBAC INS)/(Original Issue Yield: 5.40%), 4/1/2000
- ------------------------------------------------------------------------------------------------------------
800,000 West Virginia State College, Revenue Bonds, 5.50% AAA 834,851
(AMBAC INS)/(Original Issue Yield: 5.60%), 4/1/2001
- ------------------------------------------------------------------------------------------------------------
1,000,000 West Virginia State College, Revenue Bonds, 5.75% AAA 1,076,923
(AMBAC INS)/(Original Issue Yield: 5.85%), 4/1/2003
- ------------------------------------------------------------------------------------------------------------
200,000 West Virginia State College, Revenue Bonds, 5.75% AAA 218,341
(AMBAC INS)/(Original Issue Yield: 5.95%), 4/1/2004
- ------------------------------------------------------------------------------------------------------------
195,000 West Virginia Housing Development Fund, Refunding AAA 198,419
Revenue Bonds, 4.90%, 5/1/2004
- ------------------------------------------------------------------------------------------------------------
165,000 West Virginia Housing Development Fund, Refunding AAA 169,815
Revenue Bonds, 5.15%, 5/1/2006
- ------------------------------------------------------------------------------------------------------------
285,000 West Virginia Housing Development Fund, Refunding AAA 298,317
Revenue Bonds, 5.35%, 5/1/2008
- ------------------------------------------------------------------------------------------------------------
275,000 West Virginia Housing Development Fund, Refunding AAA 293,559
Revenue Bonds, 6.70%, 5/1/2009
- ------------------------------------------------------------------------------------------------------------
$ 735,000 West Virginia Housing Development Fund, Revenue AAA $ 767,101
Bonds, 5.35%, 11/1/2010
- ------------------------------------------------------------------------------------------------------------
500,000 West Virginia School Building Authority, Refunding AAA 524,529
Revenue Bonds, 4.80% (AMBAC INS)/(Original Issue
Yield: 4.85%), 7/1/2004
- ------------------------------------------------------------------------------------------------------------
3,720,000 West Virginia School Building Authority, Revenue AAA 4,008,787
Bonds, 5.625% (MBIA INS)/(Original Issue Yield:
5.90%), 7/1/2003
- ------------------------------------------------------------------------------------------------------------
180,000 West Virginia School Building Authority, Revenue AAA 186,152
Bonds, 5.70% (MBIA INS)/(Original Issue Yield:
5.75%), 7/1/2000
- ------------------------------------------------------------------------------------------------------------
150,000 West Virginia School Building Authority, Revenue AAA 158,119
Bonds, 5.80% (MBIA INS)/(Original Issue Yield:
5.90%), 7/1/2001
- ------------------------------------------------------------------------------------------------------------
855,000 West Virginia School Building Authority, Revenue AAA 910,351
Bonds, 6.25% (MBIA INS), 7/1/2001
- ------------------------------------------------------------------------------------------------------------
100,000 West Virginia School Building Authority, Revenue AAA 114,224
Bonds, 6.75% (MBIA INS)/(Original Issue Yield:
7.00%), 7/1/2004
- ------------------------------------------------------------------------------------------------------------
1,300,000 West Virginia School Building Authority, Revenue AAA 1,390,555
Bonds, 6.75% (MBIA INS)/(United States Treasury
PRF)/(Original Issue Yield: 7.148%), 7/1/2000 (@102)
- ------------------------------------------------------------------------------------------------------------
300,000 West Virginia School Building Authority, Revenue AAA 323,224
Bonds, 6.80% (MBIA INS)/(Original Issue Yield:
6.85%), 7/1/2001
- ------------------------------------------------------------------------------------------------------------
510,000 West Virginia School Building Authority, Revenue AAA 530,404
Refunding Bonds, 4.70% (AMBAC INS)/(Original Issue
Yield: 4.75%), 7/1/2003
- ------------------------------------------------------------------------------------------------------------
240,000 West Virginia State Building Commission Lease, AAA 247,531
(Series B), 4.60% (West Virginia Jail and
Correctional)/(AMBAC LOC)/ (Original Issue Yield:
4.65%), 7/1/2010
- ------------------------------------------------------------------------------------------------------------
150,000 West Virginia State Building Commission Lease, AAA 156,623
(Series C), 4.50% (West Virginia Jail &
Correctional)/(AMBAC LOC), 7/1/2007
- ------------------------------------------------------------------------------------------------------------
150,000 West Virginia State Building Commission Lease, AAA 155,597
(Series C), 4.50% (West Virginia Jail &
Correctional)/(AMBAC LOC)/ (Original Issue Yield:
4.55%), 7/1/2008
- ------------------------------------------------------------------------------------------------------------
$ 100,000 West Virginia State Building Commission Lease, AAA $ 104,564
Revenue Bonds (Series A), 6.50% (West Virginia
Regional Jail & Correction)/ (MBIA INS)/(Original
Issue Yield: 6.60%), 7/1/2000
- ------------------------------------------------------------------------------------------------------------
190,000 West Virginia State Building Commission Lease, AAA 197,240
Revenue Bonds, 4.50% (West Virginia Jail &
Correctional)/(AMBAC INS)/(Original Issue Yield:
4.55%), 7/1/2008
- ------------------------------------------------------------------------------------------------------------
870,000 West Virginia State Hospital Finance Authority, Aaa 911,105
Refunding Revenue Bonds, 5.00% (FSA INS), 8/1/2009
- ------------------------------------------------------------------------------------------------------------
1,000,000 West Virginia State Hospital Finance Authority, AAA 1,005,352
Refunding Revenue Bonds, 5.00% (West Virginia
University Hospital, Inc.)/(MBIA INS)/(Original
Issue Yield: 5.55%), 6/1/2016
- ------------------------------------------------------------------------------------------------------------
200,000 West Virginia State Hospital Finance Authority, AAA 217,929
Revenue Bonds (Series A), 5.60% (Cabell Huntington
Hospital)/ (AMBAC INS)/(Original Issue Yield: 5.75%),
1/1/2005
- ------------------------------------------------------------------------------------------------------------
300,000 West Virginia State Hospital Finance Authority, Aaa 310,352
Revenue Bonds, 4.70% (FSA LOC), 8/1/2006
- ------------------------------------------------------------------------------------------------------------
700,000 West Virginia State Hospital Finance Authority, AAA 734,098
Revenue Bonds, 4.90% (West Virginia University
Hospital, Inc.)/(MBIA INS)/(Original Issue Yield:
5.00%), 6/1/2004
- ------------------------------------------------------------------------------------------------------------
1,650,000 West Virginia State Hospital Finance Authority, AAA 1,759,446
Revenue Bonds, 5.00% (Charleston Area Medical
Center)/(MBIA INS)/ (Original Issue Yield: 5.10%),
9/1/2005
- ------------------------------------------------------------------------------------------------------------
1,000,000 West Virginia State Hospital Finance Authority, BBB- 1,035,806
Revenue Bonds, 5.00% (Fairmont General Hospital,
Inc.), 11/1/2004
- ------------------------------------------------------------------------------------------------------------
220,000 West Virginia State Hospital Finance Authority, AAA 233,375
Revenue Bonds, 5.00% (West Virginia University
Hospital, Inc.)/ (MBIA INS)/(Original Issue Yield:
5.10%), 6/1/2005
- ------------------------------------------------------------------------------------------------------------
1,750,000 West Virginia State Hospital Finance Authority, AAA 1,902,703
Revenue Bonds, 5.75% (Charleston Area Medical
Center)/(MBIA INS)/(Original Issue Yield: 5.98%),
9/1/2013
- ------------------------------------------------------------------------------------------------------------
180,000 West Virginia State Hospital Finance Authority, BBB- 199,275
Revenue Bonds, 6.75% (Original Issue Yield: 6.85%),
3/1/2014
- ------------------------------------------------------------------------------------------------------------
$1,500,000 West Virginia State Hospital Finance Authority, Aaa $ 1,570,514
Revenue Refunding Bonds, 4.75% (Department of Health
& Human Resources)/(FSA INS)/(Original Issue Yield:
4.80%), 8/1/2008
- ------------------------------------------------------------------------------------------------------------
500,000 West Virginia State Parkways Economic Development & AAA 510,426
Tourism Authority, Revenue Refunding Bonds, 4.80%
(FGIC INS), 5/15/2000
- ------------------------------------------------------------------------------------------------------------
500,000 West Virginia State University, Revenue Refunding AAA 521,569
Bonds, 5.50% (AMBAC INS)/(Original Issue Yield:
5.60%), 4/1/2001
- ------------------------------------------------------------------------------------------------------------
540,000 West Virginia State, 5.25%, 6/1/2000 AA- 540,894
- ------------------------------------------------------------------------------------------------------------
500,000 West Virginia State, GO UT, 5.50%, 6/1/2000 AA- 504,030
- ------------------------------------------------------------------------------------------------------------
100,000 West Virginia State, GO UT Bonds, 5.00%, 3/1/2000 AA- 102,049
- ------------------------------------------------------------------------------------------------------------
1,000,000 West Virginia State, GO UT Bonds, 5.30% (Original AA- 1,022,014
Issue Yield: 5.40%), 2/1/2000
- ------------------------------------------------------------------------------------------------------------
100,000 West Virginia State, GO UT Bonds, 6.00% (Original AA- 100,691
Issue Yield: 6.05%), 6/1/2002
- ------------------------------------------------------------------------------------------------------------
325,000 West Virginia State Board of Regents, Refunding AAA 358,749
Revenue Bonds, 6.00% (MBIA INS)/(Original Issue
Yield: 6.037%), 4/1/2004
- ------------------------------------------------------------------------------------------------------------
85,000 West Virginia State Board of Regents, Revenue Bonds, AAA 91,978
5.90% (MBIA INS), 4/1/2004
- ------------------------------------------------------------------------------------------------------------
775,000 West Virginia State Board of Regents, Revenue Bonds, A+ 849,581
5.90%, 4/1/2004
- ------------------------------------------------------------------------------------------------------------
250,000 West Virginia State Board of Regents, Revenue Bonds, AAA 256,769
7.25% (MBIA INS)/(Original Issue Yield: 7.30%),
4/1/2004
- ------------------------------------------------------------------------------------------------------------
250,000 West Virginia State Board of Regents, Revenue Bonds, AAA 251,794
7.25% (MBIA INS)/(Original Issue Yield: 7.527%),
4/1/2014
- ------------------------------------------------------------------------------------------------------------
400,000 West Virginia University, Refunding Bond (Series A), AAA 418,343
4.85% (AMBAC INS)/(Original Issue Yield: 4.95%),
5/1/2010
- ------------------------------------------------------------------------------------------------------------
1,000,000 West Virginia University, Revenue Bonds (Series B), AAA 1,016,292
5.00% (West Virginia University Project)/(AMBAC
INS)/(Original Issue Yield: 5.19%), 5/1/2015
- ------------------------------------------------------------------------------------------------------------
$ 100,000 West Virginia University, Revenue Bonds, 5.50% (AMBAC AAA $ 109,234
INS)/(Original Issue Yield: 5.55%), 4/1/2009
- ------------------------------------------------------------------------------------------------------------
2,040,000 West Virginia Various Forty-Four Municipalities, AAA 2,124,587
Series A, 5.00%, 8/1/2008
- ------------------------------------------------------------------------------------------------------------
225,000 West Virginia State Water Development Authority, AAA 238,311
Revenue Refunding Bonds, 5.30% (FSA INS), 11/1/2002
- ------------------------------------------------------------------------------------------------------------
550,000 West Virginia State Water Development Authority, AAA 563,011
Revenue Refunding Bonds, 5.80% (FSA INS)/(Original
Issue Yield: 5.85%), 11/1/2012
- ------------------------------------------------------------------------------------------------------------
765,000 West Virginia Water Development Authority, Water A- 839,256
Revenue Bonds, 7.70% (United States Treasury
PRF)/(Original Issue Yield: 7.822%), 11/1/2000 (@102)
- ------------------------------------------------------------------------------------------------------------
425,000 Wetzel County, WV Board of Education, GO UT, 7.00% AAA 490,957
(MBIA INS)/(Original Issue Yield: 7.15%), 5/1/2004
- ------------------------------------------------------------------------------------------------------------
500,000 Wheeling, WV Waterworks & Sewer Systems, Revenue Aaa 527,287
Refunding Bonds, 4.85% (FGIC INS)/(Original Issue
Yield: 4.90%), 6/1/2005
- ------------------------------------------------------------------------------------------------------------
500,000 Wheeling, WV Waterworks & Sewer Systems, Revenue Aaa 528,675
Refunding Bonds, 4.90% (FGIC INS)/(Original Issue
Yield: 5.00%), 6/1/2006
- ------------------------------------------------------------------------------------------------------------
370,000 Wheeling, WV Waterworks & Sewer Systems, Series-C AAA 373,657
Revenue Bonds, 5.75% (United States Treasury COL)/
(FGIC INS), 6/1/1999
- ------------------------------------------------------------------------------------------------------------
300,000 Wheeling, WV Waterworks & Sewer Systems, Series-C AAA 328,652
Revenue Bonds, 6.60% (FGIC INS)/(United States
Treasury PRF)/(Original Issue Yield: 6.691%),
6/1/2002 (@100)
- ------------------------------------------------------------------------------------------------------------
100,000 Wheeling, WV, GO UT, 7.50%, 6/1/1999 BAA1 101,494
- ------------------------------------------------------------------------------------------------------------
125,000 Wheeling, WV, GO UT, 7.50%, 6/1/2000 BAA1 131,779
- ------------------------------------------------------------------------------------------------------------
155,000 Wheeling, WV, GO UT, 7.50%, 6/1/2003 BAA1 177,864
- ------------------------------------------------------------------------------------------------------------
195,000 Wood County, WV Building Commission, Revenue AAA 221,955
Refunding Bonds, 6.625% (St. Joseph Hospital,
Parkersburg)/(AMBAC INS), 1/1/2006
- ------------------------------------------------------------------------------------------------------------
Total Long-Term Municipals (identified cost 66,169,103
$63,562,093)
- ------------------------------------------------------------------------------------------------------------
Shares Value
- ------------------------------------------------------------------------------------------------------------
Mutual Fund--0.5%
- ------------------------------------------------------------------------------------------------------------
329,749 Federated Tax-Free Obligations Fund (at net asset $ 329,749
value)
- ------------------------------------------------------------------------------------------------------------
Total Investments (identified cost $63,891,842)(a) $66,498,852
- ------------------------------------------------------------------------------------------------------------
</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 $63,891,842. The
net unrealized appreciation of investments on a federal tax basis amounts to
$2,607,010 which is comprised of $2,616,764 appreciation and $9,754
depreciation at January 31, 1999.
Note: The categories of investments are shown as a percentage of net assets
($67,433,665) at January 31, 1999.
The following acronyms are used throughout this portfolio:
AMBAC--American Municipal Bond Assurance Corporation COL --Collateralized FGIC
- --Financial Guaranty Insurance Company FSA --Financial Security Assurance GO
- --General Obligation 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, 1999
<TABLE>
<S> <C> <C>
Assets:
Total investments in securities, at value (identified and tax cost $63,891,842) $66,498,852
Cash 3,575
Income receivable 967,804
Receivable for shares sold 225,000
Deferred organizational costs 4,935
Total assets 67,700,166
Liabilities:
Income distribution payable $ 210,614
Accrued expenses 55,887
Total liabilities 266,501
Net Assets for 6,476,963 shares outstanding $67,433,665
Net Assets Consist of:
Paid in capital $64,822,030
Net unrealized appreciation of investments 2,607,010
Accumulated net realized gain on investments 4,448
Undistributed net investment income 177
Total Net Assets $67,433,665
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
$67,433,665 / 6,476,963 shares outstanding $10.41
</TABLE>
(See Notes which are an integral part of the Financial Statements)
WesMark West Virginia Municipal Bond Fund
Statement of Operations
<TABLE>
<S> <C> <C>
Year Ended January 31, 1999
Investment Income:
Interest $ 3,249,364
Expenses:
Investment advisory fee $ 396,975
Administrative personnel and services fee 95,429
Custodian fees 14,592
Transfer and dividend disbursing agent fees and expenses 40,350
Directors'/Trustees' fees 4,030
Auditing fees 14,505
Legal fees 3,454
Portfolio accounting fees 62,326
Share registration costs 23,591
Printing and postage 16,456
Insurance premiums 3,922
Miscellaneous 2,125
Total expenses 677,755
Waiver--
Waiver of investment advisory fee (191,388)
Net expenses 486,367
Net investment income 2,762,997
Realized and Unrealized Gain on Investments:
Net realized gain on investments 57,103
Net change in unrealized appreciation of investments 715,928
Net realized and unrealized gain on investments 773,031
Change in net assets resulting from operations $ 3,536,028
</TABLE>
(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>
Year Ended Period Ended
January 31, January 31,
1999 1998(a)
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations--
Net investment income $ 2,762,997 $ 2,171,782
Net realized gain on investments ($57,103 and $48,886,
respectively, as computed for federal tax purposes) 57,103 48,886
Net change in unrealized appreciation 715,928 1,849,155
Change in net assets resulting from operations 3,536,028 4,069,823
Distributions to Shareholders--
Distributions from net investment income (2,762,997) (2,171,782)
Distributions from net realized gains (57,098) (44,265)
Change in net assets resulting from distributions to shareholders (2,820,095) (2,216,047)
Share Transactions--
Proceeds from sale of shares 8,667,474 10,310,985
Proceeds from shares issued in connection with the merger
of Common Trust Funds -- 60,003,151(b)
Net asset value of shares issued to shareholders in payment of
distributions declared 212,751 185,660
Cost of shares redeemed (8,543,249) (5,972,816)
Change in net assets resulting from share transactions 336,976 64,526,980
Change in net assets 1,052,909 66,380,756
Net Assets:
Beginning of period 66,380,756 --
End of period (including undistributed net investment
income of $177 at January 31, 1999) $67,433,665 $66,380,756
</TABLE>
(a) For the period from April 14, 1997 (date of initial public investment) to
January 31, 1998.
(b) Includes $41,927 of unrealized appreciation at April 14, 1997 related to the
acquisition of the Common Trust Funds.
(See Notes which are an integral part of the Financial Statements)
WesMark West Virginia Municipal Bond Fund
Financial Highlights
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
Year Period
Ended Ended
January 31, January 31,
1999 1998(a)
<S> <C> <C>
Net asset value, beginning of period $ 10.30 $ 10.00
Income from investment operations
Net investment income 0.43 0.35
Net realized and unrealized gain on investments 0.12 0.31
Total from investment operations 0.55 0.66
Less distributions
Distributions from net investment income (0.43) (0.35)
Distributions from net realized gain on investments (0.01) (0.01)
Total distributions (0.44) (0.36)
Net asset value, end of period $ 10.41 $ 10.30
Total return (b) 5.46% 6.64%
Ratios to average net assets
Expenses 0.74% 0.74%*
Net investment income 4.20% 4.26%*
Expense waiver/reimbursement (c) 0.29% 0.30%*
Supplemental data
Net assets, end of period (000 omitted) $67,434 $66,381
Portfolio turnover 17% 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, 1999
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 four 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 portfolios 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 and unrealized appreciation
of $41,927.
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.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principals. These differences are primarily due to differing treatments for
market discount reclasses. The following reclassifications have been made to
the financial statements.
<TABLE>
<CAPTION>
Increase (Decrease)
Accumulated
Net Realized Undistributed Net
Paid-In Capital Gain/Loss Investment Income
<S> <C> <C>
$1 $(178) $177
</TABLE>
Net investment income, net realized gains/losses, and net assets were not
affected by this reclassification.
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).
<TABLE>
<CAPTION>
Transactions in shares were as follows:
Year Ended Period Ended
January 31, 1999 January 31, 1998(a)
<S> <C> <C>
Shares sold 840,868 1,013,112
Proceeds from shares issued in connection with the
merger of Common Trust Funds -- 6,000,315
Shares issued to shareholders in payment of
distributions declared 20,618 18,188
Shares redeemed (828,516) (587,622)
Net change resulting from share transactions 32,970 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 year ended
January 31, 1999, 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 year ended January 31, 1999, the Fund did not incur a
shareholder services fee.
Transfer and Dividend 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
size, type, and number of accounts and transactions made by shareholders.
Portfolio Accounting--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 year, 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, 1999, 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 $16,131,941 and $16,831,080, respectively.
Organizational Expenses--Organizational expenses of $6,169 were borne
initially by the Adviser. The Fund has reimbursed the Adviser for the
expenses. These expenses have been deferred and are being amortized over the
five-year period following the Fund's effective date.
Other Affiliated Parties and Transactions--Pursuant to an exemptive order
issued by the SEC, the Fund may invest in certain affiliated money market
funds. As of January 31, 1999, the Fund owned 0.01% of the outstanding shares
of the Federated Tax-Free Obligations Fund, which is distributed by an
affiliate of the Fund's distributor.
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 year ended January 31, 1999, were as follows:
<TABLE>
<S> <C>
Purchases $11,492,177
Sales $10,991,075
</TABLE>
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, 1999, 65% 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 28% of total investments.
7. Year 2000 (Unaudited)
Similar to other financial organizations, the Fund could be adversely affected
if the computer systems used by the Fund's service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. The Fund's Adviser and administrator are taking measures that they
believe are reasonably designed to address the Year 2000 issue with respect to
computer systems that they use and to obtain reasonable assurances that
comparable steps are being taken by each of the Fund's other service providers.
At this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
Independent Auditors' Report
To the Board of Trustees of WESMARK FUNDS and Shareholders of WESMARK
WESTVIRGINIAMUNICIPALBONDFUND:
We have audited the accompanying statement of assets and liabilities of WesMark
West Virginia Municipal Bond Fund (a portfolio of WesMark Funds), including the
portfolio of investments, as of January 31, 1999, and the related statement of
operations for the year then ended, the statements of changes in net assets for
the year ended January 31, 1999 and the period from April 14, 1997 (date of
initial public investment) to January 31, 1998, and the financial highlights for
the periods presented. These financial statements and financial highlights are
the responsibility of WesMark West Virginia Municipal Bond Fund's management.
Our responsibility is to express an opinion of these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
January 31, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights present
fairly, in all material respects, the financial position of WesMark West
Virginia Municipal Bond Fund as of January 31, 1999, the results of its
operations for the year then ended, the changes in its net assets for the year
ended January 31, 1999 and the period from April 14, 1997 (date of initial
public investment) to January 31, 1998, and its financial highlights for the
respective stated periods, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHELLP
Pittsburgh, Pennsylvania
March 19, 1999
Trustees
John F. Donahue
Thomas G. Bigley
John T. Conroy, Jr.
Nicholas P. Constantakis
William J. Copeland
John F. Cunningham
Lawrence D. Ellis, M.D.
Edward C. Gonzales
Peter E. Madden
Charles F. Mansfield, Jr.
John E. Murray, Jr., J.D., S.J.D.
Marjorie P. Smuts
John S. Walsh
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.
[Logo of WesMark]
Annual Report
Dated January 31, 1999
[Logo of Federated]
Cusip 951025105
G02160-05 (3/99)
[Logo of WesBanco]
