WCT Equity Fund
A Portfolio of the WCT Funds
Shares of WCT Equity Fund, like shares of all mutual funds, are not bank
deposits, federally insured, or guaranteed. WCT Fund shares may lose value.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.
CONTENTS
Fund Goals, Strategies and Risks 1
What are the Main Risks of Investing in the Fund? 1
What are the Fund's Fees and Expenses? 2
What are Equity Securities? 3
Portfolio Turnover 3
Temporary Defensive Investments 3
What do Shares Cost? 4
How is the Fund Sold? 5
How to Purchase Shares 5
How to Redeem and Exchange Shares 7
Exchange Privileges 8
Account and Share Information 9
Dividends and Capital Gains 9
Accounts With Low Balances 10
Tax Information 10
Who Manages the Fund 10
Financial Highlights 12
Report of Independent Public Accountants 22
DECEMBER 31, 1998
Fund Goals, Strategies and Risks
WHAT IS THE FUND'S GOAL?
The Fund's goal is to provide long-term capital appreciation.
WHAT IS THE FUND'S STRATEGY?
The Fund invests in value-oriented common and preferred stocks of large and
medium-sized companies with market capitalizations in excess of $1.5 billion.
The Fund may also occasionally invest in stocks of companies with smaller
capitalizations that have value characteristics. These value characteristics may
include a price-to-earnings ratio less than stocks in the S&P 500, higher-than-
average dividend yields, or lower-than-average price-to-book value. In addition,
these companies may have under-appreciated assets, or are involved in company
turnarounds and/or corporate restructurings. The Fund will invest at least 80%
of its assets in equity securities .
What are the Main Risks of Investing in the Fund?
STOCK MARKET RISKS
The value of the stocks in the Fund's portfolio will go up and down. These
fluctuations could be a sustained trend or a drastic movement. Fluctuations in
the Fund's portfolio may reflect changes in individual portfolio stocks or
general changes in stock valuations and will result in changes in the Fund's
share price. The Adviser attempts to manage market risk through diversification
by limiting the amount the Fund invests in each stock.
Equity risk is also related to the size of the company issuing stock. Companies
may be categorized as having a small, medium, or large capitalization (market
value). The potential risks are higher with small- and medium-capitalization
companies and lower with large-capitalization companies. Therefore, you should
expect that investments in the Fund will be more volatile than broad stock
market indices such as the S&P 500 or funds that invest exclusively in large-
capitalization companies.
What are the Fund's Fees and Expenses?
WCT EQUITY FUND
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
Shareholder Fees
Fees Paid Directly From Your Investment
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) 4.50%
Maximum Deferred Sales Charge (Load) (as a percentage of original purchase price or None
redemption proceeds, as applicable)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends (and other Distributions) None
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses (Before Waivers)1
Expenses That are Deducted From Fund Assets (as a percentage of average net assets)
Management Fee2 0.75%
Distribution (12b-1) Fee3 0.25%
Shareholder Services Fee4 0.25%
Other Expenses 0.48%
Total Annual Fund Operating Expenses 1.73%
1 Although not contractually obligated to do so, the adviser, distributor and shareholders services provider waived
certain amounts. These are shown below along with the net expenses of the Fund actually paid for the fiscal year ending
October 31, 1998.
Waiver of Fund Expenses 0.60%
Total Actual Annual Operating Expenses (after waivers) 1.13%
2 The adviser voluntarily waived a portion of the management fee. The adviser can terminate this voluntary waiver at any time. The
management fee paid by the Fund (after the voluntary waiver) was 0.50% for the period ended October 31, 1998.
3 The Fund did not pay or accrue the distribution (12b-1) fee during the fiscal period ended October 31, 1998. The Fund has no
present intention of paying or accruing the distribution (12b-1) fee during the period ending October 31, 1999.
4 The Fund did not pay or accrue the Shareholder Services Fee during the period from December 16, 1997 (date of initial public
investment) to April 30, 1998. Theshareholder services fee for the Fund has been voluntary reduced. This voluntary reduction can
be terminated at any time. The shareholder services fee paid by the Fund (after the voluntary reduction) was 0.15% for the period
from May 1 to October31,1998.
</TABLE>
EXAMPLE
The following Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses are before waivers as shown above and remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your costs would be:
Calendar Period Fund
1 Year $ 618
3 Year $ 970
5 Year $ 1,346
10 Year $ 2,399
What are Equity Securities?
EQUITY SECURITIES
Equity securities are the fundamental unit of ownership of a company. They
represent a share of the issuer's earnings and assets, after the issuer pays its
liabilities. Generally, issuers have discretion as to the payment of any
dividends or distributions. As a result, investors cannot predict the income
they will receive from equity securities. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business. The
following describes the types of equity securities in which the Fund invests.
Common Stocks
Common stocks are the most prevalent type of equity security. Common
stockholders receive the residual value of the issuer's earnings and assets
after the issuer pays its creditors and any preferred stockholders. As a result,
changes in an issuer's earnings directly influence the value of its common
stock.
Preferred Stocks
Preferred stocks have the right to receive specified dividends or distributions
before the issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock. The Fund will treat such
redeemable preferred stock as a fixed income security.
Portfolio Turnover
Although the Fund does not intend to invest for the purpose of seeking short-
term profits, securities will be sold without regard to the length of time they
have been held when the Fund's Adviser or Sub-Adviser believe it is appropriate
to do so in light of the Fund's investment goal. A higher portfolio turnover
rate involves greater transaction expenses which must be borne directly by the
Fund (and thus, indirectly by its shareholders), and impact Fund performance. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to the Fund's
shareholders, are taxable to them.
Temporary Defensive Investments
To minimize potential losses and maintain liquidity to meet shareholder
redemptions during adverse market conditions, the Fund may temporarily depart
from its principal investment strategy by investing up to 100% of Fund assets in
cash or short- term, high quality money market instruments (e.g., commercial
paper, repurchase agreements, etc.). This may cause the Fund to temporarily
forego greater investment returns for the safety of principal.
What do Shares Cost?
You can purchase, redeem, or exchange shares of the Fund any day the New York
Stock Exchange (NYSE) and Federal Reserve wire system are open. When the Fund
receives your transaction request in proper form, it is processed at the next
determined public offering price.
The public offering price is the net asset value (NAV) plus the applicable sales
charge. NAV is determined at the end of regular trading (normally 4:00 p.m.
eastern time) each day the NYSE and Federal Reserve wire system are open, except
Columbus Day and Veterans Day. The NAV is determined based upon the market value
of the Fund's portfolio securities.
Fund shares are sold at NAV plus a sales charge, as follows:
Purchase Amount Sales Charge as a Sales Charge as a
Percentage of Public Percentage of NAV
Offering Price
Less than $100,000 4.50% 4.71%
$100,000 but less 3.75% 3.90%
than$250,000
$250,000 but less 2.50% 2.56%
than$500,000
$500,000 but less 2.00% 2.04%
than$750,000
$750,000 but less 1.00% 1.01%
than $1 million
$1 million or greater 0.00% 0.00%
The minimum initial investment in the Fund by a trust customer of West Coast
Trust Company or other financial institution is $5,000. The minimum initial
investment for individual investors is $1,000. Subsequent investments by all
investors must be in amounts of at least $100. The Fund may waive the initial
minimum investment from time to time. An institutional investor's minimum
investment will be calculated by combining all accounts it maintains with the
Fund.
Keep in mind that financial intermediaries may charge you fees for their
services in connection with your share transactions.
The sales charge at purchase may be reduced or eliminated by:
. quantity purchases of shares;
. combining concurrent purchases of shares by you, your spouse, and your
children under age 21;
. accumulating purchases (in calculating the sales charge on an additional
purchase, you may count the current value of previous share purchases still
invested in the Fund);
. signing a letter of intent to purchase a specific dollar amount of shares
within 13 months (call the Fund for an application and more information);
. reinvesting redemption proceeds within 30 days;or
. investing the proceeds, within 60 days, from a redemption of unaffiliated
mutual fund shares sold with a sales charge.
If your investment qualifies for a reduction or elimination of the sales charge,
you or your investment professional must notify the Fund's distributor at the
time of purchase. If the distributor is not notified, you will receive the
reduced sales charge only on additional purchases, and not retroactively on your
previous purchases.
In addition, no sales charge is imposed on:
. purchases by West Coast Trust for accounts in which it holds or manages
assets;
. trust companies and trust departments of other financial institutions;
. banks and savings and loan associations for their own accounts;
. trustees, employees, emeritus trustees and retired employees of the Trust,
West Coast Trust, West Coast Bancorp, and Edgewood Services, Inc. and their
respective subsidiaries, and their spouses and children under 21; and
. customers, employees and employee benefit plans of Becker Capital Management,
Inc. and their spouses and children under 21.
How is the Fund Sold?
The Fund's Distributor, Edgewood Services, Inc. markets the shares described in
this prospectus to institutions or individuals, directly or through financial
intermediaries. When the Distributor receives sales charges and marketing fees,
it may pay some or all of them to financial intermediaries. The Distributor and
its affiliates may pay out of their assets other amounts (including items of
material value) to financial intermediaries for marketing and servicing shares.
The Distributor is a subsidiary of Federated Investors, Inc. (Federated).
RULE 12B-1 PLAN
The Fund has adopted a Rule 12b-1 Plan, which allows it to pay marketing fees to
the Distributor and financial intermediaries for the sale, distribution and
customer servicing of the Fund's shares. The Fund is not presently paying or
accruing 12b-1 fees. The Fund will not pay or accrue these fees until a separate
class of shares has been created for certain institutional investors. Once the
Fund begins accruing the 12b-1 fee, Fund expenses will rise.
How to Purchase Shares
You may purchase shares through an investment professional
or directly from the Fund.
THROUGH WEST COAST TRUST
Trust customers placing an order to purchase shares of the Fund may open an
account by calling West Coast Trust at 1-888-5-WCT-FUND (1-888-592-8386).
Information needed to establish the account will be taken over the telephone.
DIRECTLY FROM THE FUND
. Individual investors may establish an account with the Fund by submitting a
completed account application available from West Coast Trust Shareholder
Servicing Center at WCT Funds, POBox8612, Boston, MA 02266-8612 or by calling
WestCoast Trust at 1-888-5-WCT-FUND (1-888-592-8386); and
. Send your payment to the Fund by Federal Reserve wire or check.
You will become the owner of shares and your shares will be priced at the next
calculated NAV after the Fund receives your wire or your check. If your check
does not clear, your purchase will be canceled and you could be liable for any
losses or fees the Fund or its transfer agent incurs.
An institution may establish an account and placean order by calling the Fund
and the Shares will be priced at the NAV on the day the Fund receives the order.
By Wire
Send your wire to:
State Street Bank and Trust Company
Boston, MA
ABA Number 011000028
Account Number 72097967
Wire Order Number, Dealer Number, or Group Number
Dollar Amount
For Credit to: WCT Equity Fund
Account Name and Number
You cannot purchase shares by wire on holidays when wire transfers are
restricted.
By Check
Make your check payable to "WCT Equity Fund," note your account number on the
check, and mail it to:
WCT Funds
P.O. Box 8612
Boston, MA 02266-8612
If you send your check by a private courier or overnight delivery service that
requires a street address, send it to:
WCT Funds
c/o Federated Services Company
1099 Hingham Street
Rockland, MA 02266
Payment should be made in U.S. dollars and drawn on a U.S. bank. The Fund will
not accept third- party checks (checks originally payable to someone other than
the Fund). If your check does not clear, your purchase will be canceled and you
could be liable for any losses or fees the Fund or its transfer agent incurs.
THROUGH AN INVESTMENT PROFESSIONAL
. Establish an account with the investment professional; and
. Submit your purchase order to the investment professional before the end of
regular trading on the NYSE (normally 4:00 p.m. Eastern time). You will
receive the next calculated NAV if the investment professional forwards the
order to the Fund on the same day and the Fund receives payment within three
business days. You will become the owner of the shares and receive dividends
when the Fund receives your payment.
. Financial intermediaries should send payments according to the instructions in
the sections ByWire or By Check.
THROUGH AN EXCHANGE
An investor may exchange shares of the Fund into any other portfolio of the
Trust, when and if created, subject to the minimum initial investment
requirements for the other portfolio. In addition, shares of the Fund may also
be exchanged for certain other funds administered or distributed by subsidiaries
of Federated that are not advised by West Coast Trust ("Federated Funds"). For
further information on the availability of Federated Funds for exchange, call
West Coast Trust Shareholder Servicing Center at 1-888-5-WCT-FUND (1-888-592-
8386). Both accounts must have a common owner.
BY SYSTEMATIC INVESTMENT PROGRAM
Once you have opened an account, you may automatically purchase additional
shares on a regular basis by completing the Systematic Investment Program
section of the account application or contacting the Fund or your investment
professional.
BY AUTOMATED CLEARINGHOUSE (ACH)
Once you have opened an account, you may purchase additional shares through a
depository institution that is an ACH member. This purchase option can be
established by completing the appropriate sections of the account application.
RETIREMENT INVESTMENTS
You may purchase shares as retirement investments (such as qualified plans and
IRAs). For further details, contact the West Coast Trust Shareholder Servicing
Center at 1-888-5-WCT-FUND (1-888-592-8386). We suggest that you discuss these
retirement investments with your tax adviser.
You may be charged an IRA account fee.
How to Redeem and Exchange Shares
You should redeem or exchange shares:
. through an investment professional if you purchased shares through an
investment professional;or
. directly from the Fund if you purchased shares directly from the Fund.
DIRECTLY FROM WEST COAST TRUST
By Telephone
You may redeem or exchange shares by calling the West Coast Shareholder
Servicing Center at 1-888-5-WCT-FUND (1-888-592-8386) once you have completed
the appropriate authorization form for telephone transactions. If you call
before the end of regular trading on the NYSE (normally 4:00 p.m. Eastern time)
you will receive a redemption amount based on that day's NAV.
By Mail
You may redeem or exchange shares by mailing a written request to the Fund.
You will receive a redemption amount based on the next calculated NAV after your
written request is received by the Fund in proper form.
Send requests by mail to:
WCT Funds
P.O. Box 8612
Boston, MA 02266-86012
Send requests by private courier or overnight delivery to:
WCT Funds
c/o Federated Services Company
1099 Hingham Street
Rockland, MA 02266
All requests must include:
. Fund Name, registered account name andnumber;
. amount to be redeemed or exchanged;
. signatures of all shareholders exactly as registered;and
. if exchanging, the Fund/Class Name, registered account name and number into
which you are exchanging.
Signature Guarantees
Signatures must be guaranteed if:
. your redemption is to be sent to an address other than the address of record;
. your redemption is to be sent to an address of record that was changed within
the last thirty days;or
. a redemption is payable to someone other than the shareholder(s) of record.
Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or a broker/dealer that is a domestic stock
exchange member, but not by a notary public.
THROUGH AN INVESTMENT PROFESSIONAL
Submit your redemption or exchange request to your investment professional by
the end of regulartrading on the NYSE (normally 4:00 p.m. Eastern time). The
redemption amount you will receive is based upon the next calculated NAV
afterthe Fund receives the order from your investment professional.
PAYMENT OPTIONS
Your redemption proceeds will be mailed by check to your address of record.
However, the following payment options are available if you complete the
appropriate authorization form. These payment options require a signature
guarantee if they were not established prior to redeeming shares:
. an electronic transfer to your depository account at a financial institution
that is an ACH member;or
. wire payment to your account at a domestic commercial bank that is a Federal
Reserve System member.
LIMITATIONS ON REDEMPTION PROCEEDS
Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. However, payment may be delayed up to seven
days:
. to allow your purchase payment to clear;
. during periods of market volatility; or
. when a shareholder's trade activity or amount adversely impacts the Fund's
ability to manage its assets.
REDEMPTION IN KIND
Although the Fund intends to pay share redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole orinpart by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, the Fund is obligated to pay share redemptions to any one
shareholder in cash only up to the lesser of $250,000 or 1% of the net assets of
the Fund during any 90-day period.
Any share redemption payment greater than this amount will also be in cash
unless the Fund's Board determines that payment should be in kind. In such a
case, the Fund will pay all or a portion of the remainder of the redemption in
portfolio securities, valued in the same way as the Fund determines its NAV. The
portfolio securities will be selected in a manner that the Fund's Board deems
fair and equitable and, to the extent available, such securities will be readily
marketable.
Redemption in kind is not as liquid as a cash redemption. If redemption is
made in kind, shareholders receiving the portfolio securities and selling them
before their maturity could receive less than the redemption value of the
securities and could incur certain transaction costs.
RETIREMENT DISTRIBUTIONS
A minimum of 10% of the value of your retirement distribution (redemption) will
be withheld for taxes in the absence of your specific instructions.
Exchange Privileges
You may exchange shares of the Fund into shares of certain Federated Funds with
common account owners. To do this, you must:
. meet any minimum initial investment requirements;and
. receive a prospectus for the fund into which you wish to exchange.
An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction. Signatures must be guaranteed if you request an exchange
into another fund with a different shareholder registration.
The Fund may modify or terminate the exchange privilege at any time. The
Fund's management or Adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading which is
detrimental to the Fund and other shareholders. If this occurs, the Fund may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing other Federated Funds.
SYSTEMATIC WITHDRAWAL/EXCHANGE PROGRAM
You may automatically redeem or exchange shares on a regular basis by completing
the appropriate form or contacting your investment professional or the Fund.
Your account value must have an account value of at least $10,000 to be eligible
to participate in this program. This program may reduce, and eventually deplete,
your account, and the payments should not be considered yield or income.
Generally, it is not advisable to continue to purchase shares subject to a sales
charge while redeeming shares using this program.
ADDITIONAL CONDITIONS
Telephone Transactions
The Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. The Fund will notify you if it changes
telephone transaction privileges.
Account and Share Information
CONFIRMATIONS AND ACCOUNT STATEMENTS
You will receive confirmation of purchases, redemptions and exchanges (except
for systematic transactions). In addition, you will receive periodic statements
reporting all account activity, including systematic transactions, dividends and
capital gains paid. The Fund does not issue share certificates.
Dividends and Capital Gains
The Fund declares and pays any dividends quarterly to shareholders. Dividends
are paid to all shareholders invested in the Fund on the record date.
In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
shares without a sales charge, unless you elect cash payments.
If you purchase shares just before the Fund declares a dividend or capital
gain distribution, you will pay the full price for the shares and then receive a
portion of the price back in the form of a distribution, whether or not you
reinvest the distribution in shares. Therefore, you should consider the tax
implications of purchasing shares shortly before the Fund declares a dividend or
capital gain. Contact your investment professional or the Fund for information
concerning when dividends and capital gains will be paid.
Accounts With Low Balances
Non-retirement accounts may be closed if redemptions or exchanges cause the
account balance to fall below the minimum initial investment amount. Before an
account is closed, the shareholder will be notified and allowed 30 days to
purchase additional shares to meet the minimum.
Tax Information
The Fund sends you an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. Fund distributions of
dividends and capital gains are taxable to you whether paid in cash or
reinvested in the Fund. Capital gains distributions are taxable at different
rates depending upon the length of time the Fund holds its assets.
Fund distributions are expected to be both dividends and capital gains.
Redemptions and exchanges are taxable sales.
Please consult your tax adviser regarding your federal, state, and local tax
liability.
Who Manages the Fund?
The WCT Funds are governed by a Board of Trustees. The Board selects and
oversees the Adviser, West Coast Trust Company, Inc. The Adviser manages the
Fund's assets, including buying and selling portfolio securities. The Adviser's
address is 1000 Broadway, Suite 1100, Portland, Oregon 97205.
ADVISORY FEES
The Fund's Adviser receives an annual maximum investment advisory fee equal to
0.75% of the Fund's average daily net assets. The Adviser may voluntary choose
to waive a portion of its fee or reimburse the Fund for certain operating
expenses. The Adviser can terminate this voluntary waiver of its advisory fee at
any time at its sole discretion. The Adviser has delegated daily management of
the Fund assets to the Sub-Adviser, Becker Capital Management, Inc., who is paid
by the Adviser and not by the Fund.
ADVISER'S BACKGROUND
The Adviser is a wholly-owned subsidiary of West Coast Bancorp ("Bancorp").
Organized in 1981, Bancorp held approximately $1.2 billion in total assets as of
October 31, 1998, and is the second largest bank holding company based in
Oregon. Through its subsidiaries, The Commercial Bank, Valley Commercial Bank,
The Bank of Newport, The Bank of Vancouver and West Coast Trust, Bancorp offers
a full range of commercial banking services, including trust services to
individuals, partnerships, corporations, and institutions and acts as fiduciary
of estates and conservatorships, and as a trustee under various wills, trusts,
and pension and profit-sharing plans. In addition, Bancorp and its subsidiaries
offer tax-deferred annuities, single-premium whole life insurance, other
insurance investment products and securities products. The Adviser has not
previously served as an investment adviser to a mutual fund.
The Adviser manages common and collective funds with assets totaling
approximately $33.7 million as of October 31, 1998.
SUB-ADVISER
Pursuant to the terms of an investment sub-advisory agreement between the
Adviser and Becker Capital Management, Inc., the Sub-Adviser will make all
investments on behalf of the Fund, and shall take such steps as may be necessary
to implement the same, including the placement of purchases and sale orders on
behalf of the Fund. For the services provided and the expenses incurred by the
Sub-Adviser pursuant to the sub-advisory agreement, the Sub-Adviser is entitled
to receive an annual sub-advisory fee equal to 0.50% of the daily assets of the
Fund payable by the Adviser from the advisory fees. The Sub-Adviser may elect to
waive some or all of its fee. Inno event shall the Fund be responsible for any
fees due to the Sub-Adviser for its services to the Adviser.
SUB-ADVISER'S BACKGROUND
The Sub-Adviser is a registered investment advisory firm founded in 1976 as P.E.
Becker Inc. In 1992, the Sub-Adviser changed its name to Becker Capital
Management, Inc. The Sub-Adviser manages assets totaling approximately $2.0
billion for individuals, corporate pensions and profit sharing trusts, multi-
employer trusts and endowment funds. The Sub-Adviser is a 100% employee owned
firm. The Sub-Adviser is currently a sub-adviser for another mutual fund.
DONALD L. WOLCOTT
Donald L. Wolcott, Chartered Financial Analyst, has been the Fund's portfolio
manager since November17, 1997. Mr. Wolcott is a Vice President and Portfolio
Manager of Becker Capital Management, Inc., and has served in that capacity
since 1987. His responsibilities include the management of portfolios for
taxable individuals and charitable foundations and Mr. Wolcott also participates
in strategic asset allocation decisions for the firm's balanced account
portfolios. Mr. Wolcott received a B.A. in business from the University
of Nebraska.
YEAR 2000 READINESS
The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December31,
1999. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Fund.
While it is impossible to determine in advance all of the risks to the Fund,
the Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors ordisruptions in Fund share
transactions or Fund communications.
The Fund's service providers are making changes to their computer systems to
fix any Year 2000 problems. In addition, they are working to gather information
from third-party providers to determine their Year 2000 readiness.
Year 2000 problems would also increase the risks of the Fund's investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities the Fund
may purchase.
The financial impact of these issues for the Fund is still being determined.
There can be no assurance that potential Year 2000 problems would not have a
material adverse effect on the Fund.
Financial Information
FINANCIAL HIGHLIGHTS
The following financial highlights will help you understand the Fund's financial
performance for its past five fiscal years, or since inception, if the life of
the Fund is shorter. Some of the information is presented on a per share basis.
Total returns represent the rate an investor would have earned (or lost) on an
investments in the Fund, assuming reinvestment of any dividends and capital
gains.
This information has been audited by ArthurAndersen LLP, whose report, along
with the Fund's audited financial statements, is included in this prospectus.
Financial Highlights
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Reference is made to the Report of Independent Auditors/Public Accountants on
page 22.
Period Ended October 31 1998/1/
Net Asset Value, Beginning of Period $10.09
Income From Investment Operations:
Net investment income 0.12
Net realized and unrealized (loss) on investments (0.75)
TOTAL FROM INVESTMENT OPERATIONS (0.63)
Less Distributions:
Distributions from net investment income (0.10)
Net Asset Value, End of Period $ 9.36
Total Return2 (6.25%)
Ratios to Average Net Assets:
Expenses 1.13%/3/
Net investment income 1.27%/3/
Expense waiver4 0.35%/3/
Supplemental Data:
Net assets, end of period (000 omitted) $49,106
Portfolio turnover 69%
1 Reflects operations for the period from December 16, 1997 (date of initial
public investment) to October 31, 1998. For the period from November 17, 1997
(start of business) to December 15, 1997, the investment income was
distributed to Federated Services Company, the Fund's Administrator.
2 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
3 Computed on an annualized basis.
4 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
Portfolio of Investments
OCTOBER 31, 1998
Shares Value
COMMON STOCKS91.8%
Chemicals1.8%
37,000 Millennium Chemicals, Inc. $ 901,875
Commercial Services1.5%
25,000 Standard Register 717,187
Consumer Durables7.6%
60,000 Clayton Homes, Inc. 926,250
18,000 Ford Motor Co. 976,500
15,000 General Motors Corp. 945,938
16,000 Goodyear Tire & Rubber Co. 862,000
TOTAL 3,710,688
Electronic Technology9.6%
45,000 1 Andrew Corp. 736,875
12,000 Intel Corp. 1,070,250
65,000 1 LSI Logic Corp. 983,125
25,000 Rockwell International Corp. 1,026,562
50,000 Tektronix, Inc. 893,750
TOTAL 4,710,562
Finance14.6%
23,000 Allstate Corp. 990,438
58,002 Comdisco, Inc. 895,406
13,000 Federal National Mortgage Association 920,562
26,000 GATX Corp. 897,000
16,000 PNC Bank Corp. 800,000
22,000 SAFECO Corp. 952,875
20,000 SLM Holding Corp. 801,250
Washington Federal, Inc. 934,063
35,000
TOTAL 7,191,594
Health Technology3.6%
20,000 Bard (C.R.), Inc. 853,750
33,000 Mallinckrodt, Inc. 940,500
TOTAL 1,794,250
Non-Energy Minerals1.2%
36,300 Quanex Corp. 612,562
COMMON STOCKScontinued
Oil15.5%
Atlantic Richfield Co. $ 1,033,125
15,000
52,000 Enron Oil & Gas Co. 867,750
Halliburton Co. 1,078,125
30,000
45,000 Occidental Petroleum Corp. 894,375
20,000 Repsol SA, ADR 1,000,000
50,000 Sante Fe International Corp. 921,875
30,000 Ultramar Diamond Shamrock Corp. 808,125
35,000 YPF Sociedad Anonima, ADR 1,012,813
TOTAL 7,616,188
Process Industries5.3%
30,000 Tenneco, Inc. 911,250
19,100 Weyerhaeuser Co. 894,119
25,000 Willamette Industries, Inc. 775,000
TOTAL 2,580,369
Producer Manufacturing9.7%
40,000 Case Corp. 880,000
20,000 Caterpillar, Inc. 900,000
13,500 Eaton Corp. 913,781
22,500 1 Gulfstream Aerospace Corp. 995,625
35,000 1 Raychem Corp. 1,069,687
TOTAL 4,759,093
Real Estate1.8%
30,000 Mack-Cali Realty Corp. 888,750
Retail Trade4.0%
30,000 Dillards, Inc., Class A 931,875
52,900 1 Toys 'R' Us, Inc. 1,034,856
TOTAL 1,966,731
Technology Services5.5%
40,000 Arrow Electronics, Inc. 872,500
1 Marshall Industries 862,500
30,000
Xerox Corp. 968,750
10,000
TOTAL 2,703,750
Transportation6.5%
12,000 1 AMR Corp. 804,000
40,000 Knightbridge Tankers Ltd. 870,000
COMMON STOCKScontinued
Transportationcontinued
33,900 Teekay Shipping Corp. $ 593,250
32,000 Tidewater, Inc. 906,000
TOTAL 3,173,250
Utilities3.6%
16,000 Enron Corp. 844,000
12,000 Telecomunicacoes Brasileiras SA, ADR 911,250
TOTAL 1,755,250
TOTAL COMMON STOCKS (IDENTIFIED COST $37,298,714) 45,082,099
Mutual Funds4.6%
1,868,334 SSGA US Government Money Market Fund, Series A 1,868,334
404,180 Seven Seas Money Market Fund 404,180
TOTAL MUTUAL FUNDS (AT NET ASSET VALUE) 2,272,514
2 TOTAL INVESTMENTS (IDENTIFIED COST $39,571,228) $ 47,354,613
1 Non-income producing security.
2 The cost of investments for federal tax purposes amounts to $39,665,756. The
net unrealized appreciation of investments on a federal tax basis amounts to
$7,688,857 which is comprised of $10,287,353 appreciation and $2,598,496
depreciation at October 31, 1998.
Note: The categories of investments are shown as a percentage of net assets
($49,105,954) at October 31, 1998.
The following acronyms are used throughout this portfolio:
ADR--American Depositary Receipt
SA --Support Agreement
See Notes which are an integral part of the Financial Statements
Statement of Assets and Liabilities
OCTOBER 31, 1998
<TABLE>
<CAPTION>
Assets:
<S> <C> <C>
Total investments in securities, at value (identified cost $39,571,228 and tax
cost $39,665,756) $ 47,354,613
Income receivable 79,651
Receivable for investments sold 4,991,142
Receivable for shares sold 4,939
TOTAL ASSETS 52,430,345
Liabilities:
Payable for investments purchased $ 3,130,471
Payable for shares redeemed 31,914
Accrued expenses 162,006
TOTAL LIABILITIES 3,324,391
Net Assets for 5,246,904 shares outstanding $ 49,105,954
Net Assets Consist of:
Paid in capital $ 37,322,384
Net unrealized appreciation of investments 7,783,385
Accumulated net realized gain on investments 3,905,629
Undistributed net investment income 94,556
TOTAL NET ASSETS $ 49,105,954
Net Asset Value, Offering Price and Redemption Proceeds Per Share:
Net Asset Value Per Share ($49,105,954 / 5,246,904 shares outstanding) $ 9.36
Offering Price Per Share (100/95.50 x $9.36)/1/ $ 9.80
Redemption Proceeds Per Share $ 9.36
</TABLE>
1 See "What Shares Cost" in the Prospectus.
See Notes which are an integral part of the Financial Statements
Statement of Operations
FOR THE PERIOD ENDED OCTOBER 31, 1998/1/
<TABLE>
<CAPTION>
Investment Income:
<S> <C> <C> <C>
Dividends (net of foreign taxes withheld of $16,086) $ 1,113,854
Interest 87,019
TOTAL INCOME 1,200,873
Expenses:
Investment advisory fee $ 376,233
Administrative personnel and services fee 75,247
Custodian fees 15,600
Transfer and dividend disbursing agent fees and expenses 32,000
Directors'/Trustees' fees 4,000
Auditing fees 15,001
Legal fees 5,001
Portfolio accounting fees 48,000
Shareholder services fee 69,008
Share registration costs 51,305
Printing and postage 10,499
Insurance premiums 3,501
Miscellaneous 12,000
TOTAL EXPENSES 717,395
Waivers:
Waiver of investment advisory fee $ (125,411)
Waiver of shareholder services fee (26,975)
TOTAL WAIVERS (152,386)
Net expenses 565,009
Net investment income 635,864
Realized and Unrealized Gain on Investments:
Net realized gain on investments 3,905,629
Net change in unrealized appreciation of investments 7,783,385
Net realized and unrealized gain on investments 11,689,014
Change in net assets resulting from operations $ 12,324,878
</TABLE>
1 Reflects operations for the period from December 16, 1997 (date of initial
public investment) to October 31, 1998.
See Notes which are an integral part of the Financial Statements
Statement of Changes in Net Assets
<TABLE>
<S> <C>
Period Ended October 31 1998/1/
Increase (Decrease) in Net Assets:
Operations:
Net investment income $ 635,864
Net realized gain on investments ($4,000,157, as computed for federal tax purposes) 3,905,629
Net change in unrealized appreciation 7,783,385
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 12,324,878
Distributions to Shareholders:
Distributions from net investment income (541,308)
Share Transactions:
Proceeds from sale of shares 53,909,696
Net asset value of shares issued to shareholders in payment of distributions declared 264,287
Cost of shares redeemed (16,951,599)
Change in net assets resulting from share transactions 37,222,384
Change in net assets 49,005,954
Net Assets:
Beginning of period 100,000
End of period (including undistributed net investment income of $94,556) $ 49,105,954
</TABLE>
1 For the period from December 16, 1997 (date of initial public investment) to
October 31, 1998.
See Notes which are an integral part of the Financial Statements
Notes to Financial Statements
OCTOBER 31, 1998
ORGANIZATION
WCT 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 one portfolio. The financial statements included herein are only
those of WCT Equity Fund (the "Fund"), a diversified portfolio. The investment
objective of the Fund is to provide long-term capital appreciation.
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 theCode 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 DeliveryTransactions
The Fund may engage in when-issued or delayed deliverytransactions. 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 tradedate.
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>
<S> <C> <C>
Period Ended October 31, December 15,
1998/1/ 1997
Seeded share/2/ -- 10,000
Shares sold 6,998,669 --
Shares issued to shareholders in payment of distributions declared 26,439 --
Shares redeemed (1,788,204) --
NET CHANGE RESULTING FROM SHARE TRANSACTIONS 5,236,904 10,000
</TABLE>
1 Reflects operations from December 16, 1997 (date of initial public investment)
to October 31, 1998.
2 Reflects the issuance of 10,000 shares at $10.00 per share to the
Administrator on November 17, 1997 (start of business).
INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fee
West Coast Trust Company, Inc., the Fund's investment adviser (the "Adviser"),
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.
Under the terms of a sub-advisory agreement between the Adviser and Becker
Capital Management, Becker Capital Management receives an annual fee from the
Adviser equal to 0.50% of the Fund's average daily net assets. In addition,
Becker Capital Management may voluntarily choose to reduce its compensation. For
the period ended October 31, 1998, Becker Capital Management, Inc. earned a sub-
advisory fee of $203,303.47.
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 Fund for the period.
Distribution Services Fee
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Act. Under the terms of the Plan, the Fund will compensate Edgewood
Services, Inc., the principal distributor, from the net assets of the Fund to
finance activities intended to result in the sale of the Fund's shares. The Plan
provides that the Fund may incur distribution expenses up to 0.25% of the
average daily net assets of the Fund shares, annually, to compensate Edgewood
Services, Inc. For the period ended October 31, 1998, the Fund did not incur a
distribution services fee.
Shareholder Services Fee
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSS"), the Fund will pay FSS up to 0.25% of average daily net
assets of the Fund shares for the period. The fee paid to FSS is used to finance
certain services for shareholders and to maintain shareholder accounts. FSS may
voluntarily choose to waive any portion of its fee. FSS can modify or terminate
this vountary waiver at any time at its sole discretion. For the period from
December 16, 1997 to April30, 1998, the Fund did not incur a shareholder
services fee.
Transfer and Dividend Disbursing Agent Fees and Expenses
FServ, through its subsidiary, 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.
General
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
period ended October 31, 1998, were as follows:
Purchases $ 71,607,491
Sales $ 38,214,405
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.
Report of Independent Public Accountants
TO THE BOARD OF TRUSTEES OF WCT FUNDS
AND SHAREHOLDERS OF WCT EQUITY FUND:
We have audited the accompanying statement of assets and liabilities of WCT
Equity Fund (an investment portfolio of WCT Funds, a Massachusetts business
trust), including the schedule of portfolio investments, as of October 31, 1998,
the related statement of operations for the period then ended, the statement of
changes in net assets for the period then ended, and the financial highlights
for the period presented. These financial statements and financial highlights
are the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.
We conducted our audit in accordance with generally accepted 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 securities owned as of October 31, 1998, by
correspondence with the custodian and brokers. As to securities purchased but
not received, we requested confirmation from brokers and when replies were not
received, we carried out alternative auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of WCT
Equity Fund (an investment portfolio of WCT Funds) as of October31, 1998, the
results of its operations for the period then ended, the changes in its net
assets for the period then ended, and its financial highlights for the period
presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
December 23, 1998
WCT Equity Fund
A Portfolio of the WCT Funds
[WCT FUNDS LOGO]
DECEMBER 31, 1998
An investment in WCT Equity Fund is not a deposit of a bank and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
A Statement of Additional Information (SAI) dated December 31, 1998 is
incorporated by reference into this prospectus. Additional information about the
Fund's investments is available in the Funds' annual and semi-annual reports to
shareholders. The annual report discusses market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year. To obtain the SAI, the annual and semi-annual reports and other
information without charge write to or call West Coast TrustServicing Center at
1-888-5-WCT-FUND (1-888-592-8386).
You can obtain information about WCT Funds by visiting or writing the Public
Reference Room of the Securities and Exchange Commission in Washington, DC,
20549-6009, or from the SEC's Internet Web site at: http://www.sec.gov. You
cancall 1-800-SEC-0330 for information on the Public Reference Room's operations
and copying charges.
Edgewood Services, Inc.
Distributor
SEC File No. 811-08335
Cusip 9293E100
G02161-01 (12/98) [RECYCLED PAPER LOGO]
WCT EQUITY FUND
(A PORTFOLIO OF WCT FUNDS)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information (SAI) is not a prospectus. Read
this SAI in conjunction with the prospectus for WCT Equity Fund (a
portfolio of WCT Funds) dated December 31, 1998. This SAI incorporates by
reference the Fund's Annual Report. You may obtain the prospectus or Annual
Report without charge by calling 1-888-5-WCT-FUND (1-888-592-8386).
5800 CORPORATE DRIVE
PITTSBURGH, PENNSYLVANIA 15237-7010
CUSIP 92923E100G00714-02(00/98)
EDGEWOOD SERVICES, INC.
Distributor
.
<PAGE>
Table of Contents
HOW ARE THE FUNDS ORGANIZED 1
SECURITIES IN WHICH THE FUNDS INVEST 1
SECURITIES DESCRIPTIONS, TECHNIQUES AND
RISKS 2
INVESTMENT LIMITATIONS 4
DETERMINING MARKET VALUE OF SECURITIES 5
WHAT DO SHARES COST? 6
HOW IS THE FUND SOLD? 6
HOW TO BUY SHARES 7
ACCOUNT AND SHARE INFORMATION 7
EFFECT OF BANKING LAWS 8
TAX INFORMATION 8
WHO MANAGES AND PROVIDES SERVICES TO THE FUND 9
HOW DOES THE FUND MEASURE PERFORMANCE 14
PERFORMANCE COMPARISONS 15
FINANCIAL INFORMATION 15
<PAGE>
16
HOW ARE THE FUNDS ORGANIZED
The Fund is a diversified portfolio of WCT Funds (Trust). The Trust is an
open-end management investment company that was established under the laws of
the Commonwealth of Massachusetts on July 1, 1997.
This Statement contains additional information about the Trust and the
Fund. This Statement uses the same terms as defined in the prospectus.
SECURITIES IN WHICH THE FUND INVESTS
Following is a table that indicates which types of securities are a:
o P = PRINCIPAL investment of the Fund; (shaded in chart)
o A = ACCEPTABLE (but not principal) investment of the Fund
- -------------------------------------- -----------
- -------------------------------------- -----------
- --------------------------------------- ----------
AMERICAN DEPOSITARY RECEIPTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
BANK INSTRUMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
BORROWING A
- --------------------------------------- ----------
- --------------------------------------- ----------
COMMON STOCK P
- --------------------------------------- ----------
- --------------------------------------- ----------
CONVERTIBLE SECURITIES A
- --------------------------------------- ----------
- --------------------------------------- ----------
FOREIGN SECURITIES A
- --------------------------------------- ----------
- --------------------------------------- ----------
WHEN-ISSUED AND DELAYED DELIVERY A
TRANSACTIONS
- --------------------------------------- ----------
- --------------------------------------- ----------
ILLIQUID AND RESTRICTED SECURITIES A
- --------------------------------------- ----------
- --------------------------------------- ----------
LENDING OF PORTFOLIO SECURITIES A
- --------------------------------------- ----------
- --------------------------------------- ----------
PREFERRED STOCKS A
- --------------------------------------- ----------
- --------------------------------------- ----------
PRIME COMMERCIAL PAPER A
- --------------------------------------- ----------
- --------------------------------------- ----------
REPURCHASE AGREEMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
REVERSE REPURCHASE AGREEMENTS A
- --------------------------------------- ----------
- --------------------------------------- ----------
SECURITIES OF OTHER INVESTMENT A
COMPANIES
- --------------------------------------- ----------
- --------------------------------------- ----------
U.S. GOVERNMENT SECURITIES A
- --------------------------------------- ----------
- --------------------------------------- ----------
WARRANTS A
- --------------------------------------- ----------
<PAGE>
SECURITIES DESCRIPTIONS, TECHNIQUES AND RISKS
As used in this section, the term Adviser means Adviser or Sub-Adviser, as
applicable.
BANK INSTRUMENTS are unsecured interest bearing deposits with banks. Bank
instruments include bank accounts, time deposits, certificates of deposit and
banker's acceptances. Instruments denominated in U.S. dollars and issued by
non-U.S. branches of U.S. or foreign banks are commonly referred to as
EURODOLLAR instruments. Instruments denominated in U.S. dollars and issued by
U.S. branches of foreign banks are referred to as YANKEE instruments. BORROWING.
The Fund may borrow money from banks or through reverse repurchase agreements in
amounts up to one-third of total assets and pledge some assets as collateral.
The Fund will pay interest on borrowed money and may incur other transaction
costs. These expenses could exceed the income received or capital appreciation
realized by the Fund from any securities purchased with borrowed money. With
respect to borrowings, the Fund is required to maintain continuous asset
coverage to 300% of the amount borrowed. If the coverage declines to less than
300%, the Fund must sell sufficient portfolio securities to restore the coverage
even if it must sell the securities at a loss.
COMMERCIAL PAPER is an issuer's draft or note with a maturity of less than
nine months. Companies typically issue commercial paper to Fund current
expenditures. Most issuers constantly reissue their commercial paper and use the
proceeds (or bank loans) to repay maturing paper. Commercial paper may default
if the issuer cannot continue to obtain liquidity in this fashion. The short
maturity of commercial paper reduces both the market and credit risk as compared
to other debt securities of the same issuer.
CONVERTIBLE SECURITIES are fixed income securities that the Fund has the
option to exchange for equity securities at a specified CONVERSION PRICE. The
option allows the Fund to realize additional returns if the market price of the
equity securities exceeds the conversion price. For example, the Fund may hold
fixed income securities convertible into shares of common stock at a conversion
price of $10 per share. If the market value of the shares reached $12, the Fund
could realize an additional $2 per share by converting its fixed income
securities.
Convertible securities have lower yields than comparable fixed income
securities to compensate for the value of the conversion option. In addition,
the conversion price exceeds the market value of the underlying equity
securities at the time a convertible security is issued. Thus, convertible
securities may provide lower returns than non-convertible fixed income
securities or equity securities depending upon changes in the price of the
underlying equity securities. However, convertible securities permit the Fund to
realize some of the potential appreciation of the underlying equity securities
with less risk of losing its initial investment. The Fund treats convertible
securities as both fixed income and equity securities for purposes of its
investment policies and limitations, because of their unique characteristics.
DEPOSITARY RECEIPTS. American Depositary Receipts (ADRs) are receipts,
issued by a U.S. bank, that represent an interest in shares of a foreign-based
corporation. ADRs provide a way to buy shares of foreign-based companies in the
U.S. rather than in overseas markets. Depositary Receipts may not be denominated
in the same currency as the underlying securities into which they may be
converted, and are subject to currency risks. Depositary Receipts involve many
of the same risks of investing directly in foreign securities.
FOREIGN SECURITIES. Foreign securities pose additional risks over
U.S.-based securities for a number of reasons. Foreign economic, governmental,
and political systems may be less favorable than those of the United States.
Foreign governments may exercise greater control over their economies,
industries, and citizen's rights. Specific risk factors related to foreign
securities include: inflation, structure and regulation of financial markets,
liquidity and volatility of investments, taxation policies, currency exchange
rates and regulations, and accounting standards. Because the Fund may invest up
to 20% of its net assets in foreign securities, you should expect that these
factors may adversely affect the value of an investment in the Fund. The Fund
may incur higher costs and expenses when making foreign investments, which will
impact the Fund's total return.
LENDING OF PORTFOLIO SECURITIES. In order to generate additional income,
the Fund may lend portfolio securities. When the Fund lends portfolio
securities, it will receive either cash or liquid securities as collateral from
the borrower. The Fund will reinvest cash collateral in short-term liquid
securities that qualify as an otherwise acceptable investment for the Fund. If
the market value of the loaned securities increases, the borrower must furnish
additional collateral to the Fund. During the time portfolio securities are on
loan, the borrower pays the Fund any dividends or interest paid on such
securities. Loans are subject to termination at the option of the Fund or the
borrower. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest earned
on the cash or equivalent collateral to a securities lending agent or broker.
When the Fund lends its portfolio securities, it may not be able to get them
back from the borrower on a timely basis. If this occurs, the Fund may lose
certain investment opportunities.
PREFERRED STOCKS have the right to receive specified dividends or
distributions before the payment of dividends or distributions on common stock.
Some preferred stocks also participate in dividends and distributions paid on
common stock. Preferred stocks may provide for the issuer to redeem the stock on
a specified date. The Fund may treat such redeemable preferred stock as a fixed
income security.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS. The Fund's
custodian is required to take possession of the securities subject to repurchase
agreements. These securities are marked to market daily. To the extent that the
original seller defaults and does not repurchase the securities from the Fund,
the Fund could receive less than the repurchase price on any sale of such
securities. In the event that such a defaulting seller files for bankruptcy or
becomes insolvent, disposition of such securities by the Fund might be delayed
pending court action. The Fund believes that, under the procedures normally in
effect for custody of the portfolio securities subject to repurchase agreements,
a court of competent jurisdiction would rule in favor of the Fund and allow
retention or disposition of such securities. The Fund will only enter into
repurchase agreements with banks and other recognized financial institutions,
such as broker/dealers, which are deemed by the Adviser to be creditworthy.
Reverse repurchase agreement transactions are similar to borrowing cash. In a
reverse repurchase agreement, the Fund sells a portfolio security to another
person, such as a financial institution, broker, or dealer, in return for a
percentage of the instrument's market value in cash, and agrees that on a
stipulated date in the future the Fund will repurchase the portfolio at a price
equal to the original sale price plus interest. The Fund may use reverse
repurchase agreements for liquidity and may enable the Fund to avoid selling
portfolio instruments at a time when a sale may be deemed to be disadvantageous.
When effecting reverse repurchase agreements, liquid assets of the Fund, in a
dollar amount sufficient to make payment for the obligations to be purchased,
are segregated at the trade date. These securities are marked to market daily
and maintained until the transaction is settled.
TEMPORARY INVESTMENTS. There may be times when market conditions warrant a
defensive position. During these market conditions the Fund may temporarily
invest without limit in short-term debt obligations (money market instruments).
These investments include commercial paper, bank instruments, U.S. government
obligations, repurchase agreements, and securities of other investment
companies. The Fund's temporary investments must be of comparable quality to its
primary investments.
WARRANTS give the Fund the option to buy the issuer's stock or other equity
securities at a specified price. The Fund may buy the designated shares by
paying the exercise price before the warrant expires. Warrants may become
worthless if the price of the stock does not rise above the exercise price by
the expiration date. Rights are the same as warrants, except they are typically
issued to existing stockholders.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS. These transactions are made
to secure what is considered to be an advantageous price or yield. Settlement
dates may be a month or more after entering into these transactions, and the
market values of the securities purchased may vary from the purchase prices.
Other than normal transaction costs, no fees or expenses are incurred. However,
liquid assets of the Fund are segregated on the Fund's records at the trade date
in an amount sufficient to make payment for the securities to be purchased.
These assets are marked to market daily and are maintained until the transaction
has been settled.
INVESTMENT LIMITATIONS
FUNDAMENTAL LIMITATIONS
The following investment limitations are fundamental and cannot be changed
without the vote of a majority of shareholders.
SELLING SHORT AND BUYING ON MARGIN
The Fund will not sell any securities short or purchase any securities on
margin, but may obtain such short-term credits as may be necessary for clearance
of purchases and sales of portfolio securities.
ISSUING SENIOR SECURITIES AND BORROWING MONEY
The Fund will not issue senior securities except that the Fund may borrow
money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets; provided that, while borrowings
exceed 5% of the Fund's total assets, any such borrowings will be repaid before
any additional investments are made.
The Fund will not borrow money or engage in reverse repurchase agreements
for investment leverage.
PLEDGING ASSETS
The Fund will not mortgage, pledge, or hypothecate any assets except to
secure permitted borrowings. In those cases, the Fund may pledge assets having a
market value not exceeding the lesser of the dollar amounts borrowed or 15% of
the total assets at the time of the pledge. For purposes of this limitation, the
purchase of securities on a when-issued basis will not be deemed to be a pledge.
INVESTING IN REAL ESTATE
The Fund will not purchase or sell real estate, although it may invest in
the securities of companies whose business involves the purchase or sale of real
estate or in securities which are secured by real estate or interests in real
estate.
INVESTING IN COMMODITIES
The Fund will not purchase or sell commodities, commodity contracts, or
commodity futures contracts.
UNDERWRITING
The Fund will not underwrite any issue of securities or participate in the
marketing of securities of other issuers, except as the Fund may be deemed to be
an underwriter under the Securities Act of 1933 in connection with the sale of
securities in accordance with the Fund's investment objective, policies, and
limitations.
DIVERSIFICATION OF INVESTMENTS
With respect to securities comprising 75% of the value of its total assets,
the Fund will not purchase securities of any one issuer (other than cash, cash
items, securities issued or guaranteed by the government of the United States or
its agencies or instrumentalities and repurchase agreements collateralized by
such U.S. government securities; and securities of other investment companies)
if, as a result, more than 5% of the value of the its total assets would be
invested in the securities of that issuer, or it would own more than 10% of the
outstanding voting securities of that issuer.
CONCENTRATION OF INVESTMENTS
The Fund will not purchase securities if, as a result of such purchases,
25% or more of the value of its total assets would be invested in any one
industry. The Fund may at times invest 25% or more of the value of its total
assets in securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities.
LENDING CASH OR SECURITIES
The Fund will not lend any of its assets, except portfolio securities up to
one-third of the value of its total assets, but it may purchase or hold
corporate or government bonds, notes, bonds debentures, notes, certificates of
indebtedness, or other debt securities of an issuer, repurchase agreements, or
other transactions which are permitted by the Fund's investment objective and
policies, or the Trust's Declaration of Trust.
NON-FUNDAMENTAL LIMITATIONS
The following investment limitations are non-fundamental and, therefore,
may be changed by the Trustees without shareholder approval. Shareholders will
be notified before any material change in these limitations becomes effective.
INVESTING IN ILLIQUID AND RESTRICTED SECURITIES
The Fund will not invest more than 15% of its net assets in illiquid
securities, including certain restricted securities (except for Section 4(2)
commercial paper and certain other restricted securities which meet the criteria
for liquidity as established by the Trustees), non-negotiable time deposits, and
repurchase agreements providing for settlement in more than seven days after
notice. PURCHASING SECURITIES TO EXERCISE CONTROL
The Fund will not purchase securities of a company for purpose of
exercising control or management.
INVESTING IN SECURITIES OF OTHER INVESTMENT COMPANIES
The Fund will limit its investment in other investment companies to no more
than 3% of the total outstanding voting stock of any investment company, will
invest no more than 5% of total assets in any one investment company, and will
invest no more than 10% of its total assets in investment companies in general,
unless permitted to exceed these limits by an exemptive order of the SEC. The
Fund will purchase securities of closed-end investment companies only in open
market transactions involving only customary broker's commissions. However,
these limitations are not applicable if the securities are acquired in a merger,
consolidation, reorganization, or acquisition of assets. DETERMINING MARKET
VALUE OF SECURITIES Market values of the Fund's portfolio securities are
determined as follows:
o for equity securities, according to the last sale price in the market in
which they are primarily traded (either a national securities exchange or the
over-the-counter market), if available;
o in the absence of recorded sales for equity securities, according to the
mean between the last closing bid and asked prices;
o for short-term obligations, according to the mean between bid and asked
prices as furnished by an independent pricing service, except that short-term
obligations with remaining maturities of less than 60 days at the time of
purchase may be valued at amortized cost or at fair market value as determined
in good faith by the Board; and
o for all other securities, at fair value as determined in good faith by
the Board.
Prices provided by independent pricing services may be determined without
relying exclusively on quoted prices and may consider: institutional trading in
similar groups of securities, yield, quality, stability, risk, coupon rate,
maturity, type of issue, trading characteristics, and other market data or
factors. From time to time, when prices cannot be obtained from an independent
pricing service, securities may be valued based on quotes from broker-dealers or
other financial institutions that trade the securities.
TRADING IN FOREIGN SECURITIES. Trading in foreign securities may be
completed at times which vary from the closing of the New York Stock Exchange
(NYSE). In computing its NAV, the Fund values foreign securities at the latest
closing price on the exchange on which they are traded immediately prior to the
closing of the NYSE. Certain foreign currency exchange rates may also be
determined at the latest rate prior to the closing of the NYSE. Foreign
securities quoted in foreign currencies are translated into U.S. dollars at
current rates. Occasionally, events that affect these values and exchange rates
may occur between the times at which they are determined and the closing of the
NYSE. If such events materially affect the value of portfolio securities, these
securities may be valued at their fair value as determined in good faith by the
Fund's Board, although the actual calculation may be done by others. WHAT DO
SHARES COST?
The Fund's net asset value (NAV) per share fluctuates and is based on the
market value of all securities and other assets of the Fund.
REDUCING OR ELIMINATING THE FRONT-END SALES CHARGE. You can reduce or
eliminate the applicable front-end sales charge, as follows:
QUANTITY DISCOUNTS. Larger purchases reduce the sales charge you pay. You
can combine purchases of shares made on the same day by you, your spouse, and
your children under age 21. In addition, purchases made at one time by a trustee
or fiduciary for a single trust estate or a single fiduciary account can be
combined.
ACCUMULATED PURCHASES. If you make an additional purchase of shares, you
can count previous share purchases still invested in the Fund in calculating the
applicable sales charge on the additional purchase.
CONCURRENT PURCHASES. You can combine concurrent purchases of two or more
WCT Funds, when and if created, or two or more Federated Funds (as defined in
the prospectus) in calculating the applicable sales charge.
LETTER OF INTENT. You can sign a letter of intent committing to purchase a
certain amount of shares within a 13 month period in order to combine such
purchases in calculating the applicable sales charge. The Fund's custodian will
hold shares in escrow equal to the maximum applicable sales charge. If you
complete your commitment, the escrowed shares will be released to your account.
If you do not complete your commitment within 13 months, the custodian will
redeem an appropriate number of escrowed shares to pay for the applicable sales
charge.
REINVESTMENT PRIVILEGE. You may reinvest, within 30 days, your share
redemption proceeds at the next determined NAV, without any sales charge. This
sales charge elimination is offered because a sales charge was previously
assessed.
PURCHASES WITH PROCEEDS FROM REDEMPTIONS OF UNAFFILIATED MUTUAL FUND
SHARES. You may purchase shares of the Fund at net asset value with the proceeds
from redemption of shares of a mutual fund which was sold with a sales charge or
commission. The purchase must be made within 60 days of the redemption, and the
distributor must be notified by you in writing, or by your financial
institution, at the time the purchase is made. To provide adequate proof, you
must provide a statement showing the value liquidated from the other mutual
fund. This offer is not available for the redemption of mutual fund shares that
were or would be subject to a contingent deferred sales charge upon redemption.
PURCHASES BY AFFILIATES OF THE FUND. Shares of the Fund may be purchased at
net asset value by West Coast Trust for accounts in which West Coast Trust holds
or manages assets, by trust companies, trust departments of other financial
institutions and by banks and savings and loans for their own accounts.
Trustees, emeritus trustees, employees and retired employees of the Trust, West
Coast Trust, West Coast Bancorp and its subsidiaries, or Edgewood Services, Inc.
or their affiliates, or any bank or investment dealer who has a sales agreement
with Edgewood Services, Inc. with regard to the Fund, and their spouses and
children under 21, may also buy shares at net asset value. In addition,
customers, employee benefit plans, and employees of Becker Capital Management,
Inc. and their spouses and children under 21 may also buy shares at net asset
value.
HOW IS THE FUND SOLD?
Under the distributor's contract with the Fund, the Distributor (Edgewood
Services, Inc.), located at Federated Investors Tower, 1001 Liberty Avenue,
Pittsburgh, PA
15222-3779, offers shares on a continuous, best-efforts basis.
FRONT-END SALES CHARGE REALLOWANCES
The Distributor receives a front-end sales charge on certain share sales.
The Distributor generally pays up to 85% of this charge to investment
professionals for sales and/or administrative services. Any payments to
investment professionals in excess of 85% of the front-end sales charge are
considered supplemental payments. The Distributor retains any portion not paid
to a financial intermediary.
SHAREHOLDER SERVICES
The Fund may pay Federated Shareholder Services, a subsidiary of Federated,
for providing shareholder services and maintaining shareholder accounts.
Federated Shareholder Services may select others to perform these services for
their customers and may pay them fees.
RULE 12B-1 PLAN
As a compensation-type plan, the Rule 12b-1 Plan is designed to pay the
Distributor (who may then pay investment professionals such as banks,
broker/dealers, trust departments of bank, and registered investment advisers)
for marketing activities (such as advertising, printing and distributing
prospectuses, and providing incentives to investment professional) to promote
sales of shares so that overall Fund assets are maintained or increased. This
helps the Fund achieve economies of scale, reduce per share expenses, and
provide cash for orderly portfolio management and share redemptions. Also, the
Fund's service providers that receive asset-based fees also benefit from stable
or increasing Fund assets.
The Fund may compensate the Distributor more or less than its actual
marketing expenses. In no event will the Fund pay for any expenses of the
Distributor that exceed the maximum Rule 12b-1 Plan fee.
SUPPLEMENTAL PAYMENTS
Investment professionals may be paid fees out of the assets of the
Distributor and/or Federated Shareholder Services (but not out of Fund assets).
The Distributor and/or Federated Shareholder Services may be reimbursed by the
Adviser or its affiliates.
Investment professionals receive such fees for providing
distribution-related or shareholder services such as sponsoring sales, providing
sales literature, conducting training seminars for employees, and engineering
sales-related computer software programs and systems. Also, investment
professionals may be paid cash or promotional incentives, such as reimbursement
of certain expenses of qualified employees and their spouses to attend
informational meetings about the Fund or other special events at
recreational-type facilities, or items of material value. These payments will be
based upon the amount of Shares the investment professional sells or may sell
and/or upon the type and nature of sales or marketing support furnished by the
financial intermediary.
HOW TO BUY SHARES
SUBACCOUNTING SERVICES
Investment professionals are encouraged to open single master accounts.
However, certain investment professionals may wish to use the transfer agent's
subaccounting system to minimize their internal recordkeeping requirements. The
transfer agent may charge a fee based on the level of subaccounting services
rendered. Investment professionals holding shares in a fiduciary, agency,
custodial, or similar capacity may charge or pass through subaccounting fees as
part of or in addition to normal trust or agency account fees. They may also
charge fees for other services they provide that may be related to the ownership
of shares. This information should, therefore, be read together with any
agreement between the customer and the financial intermediary with regard to the
services provided, the fees charged for those services, and any restrictions and
limitations imposed.
ACCOUNT AND SHARE INFORMATION
VOTING RIGHTS
Each share of the Fund gives the shareholder one vote in Trustee elections
and other matters submitted to shareholders for vote. All shares of the Trust
have equal voting rights, except that in matters affecting only a particular
fund or class, only shares of that fund or class are entitled to vote.
Trustees may be removed by the Trustees or by shareholders at a special
meeting. A special meeting of shareholders will be called by the Trustees upon
the written request of shareholders who own at least 10% of the Trust's
outstanding shares of all series entitled to vote.
As of December 9, 1998, the following shareholders owned of record,
beneficially, or both, 5% or more of outstanding Shares: West Coast Trust
Company, Salem, Oregon, owned approximately 4,939,300 (95.12%) shares.
Shareholders owning 25% or more of outstanding shares may be in control and be
able to affect the outcome of certain matters presented for a vote of
shareholders.
EFFECT OF BANKING LAWS
The Glass-Steagall Act and other banking laws and regulations presently
prohibit a bank holding company registered under the Bank Holding Company Act of
1956 or any affiliate thereof from sponsoring, organizing or controlling, a
registered, open-end investment company continuously engaged in the issuance of
its shares, and from issuing, underwriting, selling or distributing securities
in general. Such laws and regulations do not prohibit such a holding company or
affiliate from acting as investment adviser, transfer agent or custodian to such
an investment company or from purchasing shares of such a company as agent for
and upon the order of their customers.
Some entities providing services to the Trust are subject to such banking
laws and regulations. They believe that they may perform those services for the
Fund contemplated by any agreement entered into with the Trust without violating
those laws or regulations. Changes in either federal or state statutes and
regulations relating to the permissible activities of banks and their
subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present or future statutes and regulations,
could prevent these entities from continuing to perform all or a part of the
above services. If this happens, the Trustees would consider alternative means
of continuing available investment services. It is not expected that
shareholders would suffer any adverse financial consequences as a result of any
of these occurrences.
TAX INFORMATION
FEDERAL INCOME TAX
The Fund will pay no federal income tax because it expects to meet
requirements of Subchapter M of the Internal Revenue Code (Code) applicable to
regulated investment companies and to receive the special tax treatment afforded
such companies. If these requirements are not met, it will not receive special
tax treatment and will pay federal income tax.
The Fund will be treated as a single, separate entity for federal income
tax purposes so that income earned and capital gains and losses realized by the
Trust's other portfolios will be separate from those realized by the Fund.
FOREIGN INVESTMENTS
If the Fund purchases foreign securities, their investment income may be
subject to foreign withholding or other taxes that could reduce the return on
these securities. Tax treaties between the United States and foreign countries,
however, may reduce or eliminate the amount of foreign taxes to which the Fund
would be subject. The effective rate of foreign tax cannot be predicted since
the amount of Fund assets to be invested within various countries is uncertain.
However, the Fund intends to operate so as to qualify for treaty-reduced tax
rates when applicable.
Distributions from the Fund may be based on estimates of book income for
the year. Book income generally consists solely of the coupon income generated
by the portfolio, whereas tax basis income includes gains or losses attributable
to currency fluctuation. Due to differences in the book and tax treatment of
fixed income securities denominated in foreign currencies, it is difficult to
project currency effects on an interim basis. Therefore, to the extent that
currency fluctuations cannot be anticipated, a portion of distributions to
shareholders could later be designated as a return of capital, rather than
income, for income tax purposes, which may be of particular concern to simple
trusts.
If the Fund invests in the stock of certain foreign corporations, they may
constitute Passive Foreign Investment Companies (PFIC), and the Fund may be
subject to federal income taxes upon disposition of PFIC investments.
WHO MANAGES AND PROVIDES SERVICES TO THE FUND?
BOARD OF TRUSTEES
The Board is responsible for managing the Trust's business affairs and for
exercising all the Trust's powers except those reserved for the shareholders.
Information about each Board member is provided below and includes the following
data: name, address, birthdate, present position(s) held with the Trust,
principal occupations for the past five years and total compensation received as
a Trustee from the Trust for its most recent fiscal year. The Trust is comprised
of one fund. As of December 9, 1998, the Fund's Board and Officers as a group
owned less than 1% of the Fund's outstanding shares.
An asterisk (*) denotes a Trustee who is deemed to be an interested person
as defined in the Investment Company Act of 1940. The following symbol (#)
denotes a Member of the Board's Executive Committee, which handles the Board's
responsibilities between its meetings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
NAME AGGREGATE
BIRTHDATE COMPENSATION
ADDRESS PRINCIPAL OCCUPATIONS FROM TRUST
POSITION WITH TRUST FOR PAST 5 YEARS
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
JOHN F. DONAHUE*## Chief Executive Officer and Director or $0
Birthdate: July 28, 1924 Trustee of the Federated Fund Complex.
Federated Investors Chairman and Director, Federated Investors,
Tower Inc.; Chairman and Trustee, Federated
1001 Liberty Avenue Advisers, Federated Management, and
Pittsburgh, PA Federated Research; Chairman and Director,
Chairman and Trustee Federated Research Corp., and Federated
Global Research Corp.; Chairman, Passport
Research, Ltd.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
THOMAS G. BIGLEY Director or Trustee of the Federated Fund $0
Birthdate: February 3, Complex; Director, Member of Executive
1934 Committee, Children's Hospital of
15 Old Timber Trail Pittsburgh; formerly: Senior Partner, Ernst
Pittsburgh, PA & Young LLP; Director, MED 3000 Group,
TRUSTEE Inc.; Director, Member of Executive
Committee, University of Pittsburgh.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
JOHN T. CONROY, JR. Director or Trustee of the Federated Fund $0
Birthdate: June 23, 1937 Complex; President, Investment Properties
Wood/IPC Commercial Corporation; Senior Vice President,
Dept. John R. Wood and Associates, Inc.,
John R. Wood Realtors; Partner or Trustee in private
Associates, Inc. real estate ventures in Southwest Florida;
Realtors formerly: President, Naples Property
3255 Tamiami Trial Management, Inc. and Northgate Village
North Naples, FL Development Corporation.
TRUSTEE
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
WILLIAM J. COPELAND Director or Trustee of the Federated Fund $0
Birthdate: July 4, 1918 Complex; Director and Member of the
One PNC Plaza-23rd Floor Executive Committee, Michael Baker, Inc.;
Pittsburgh, PA formerly: Vice Chairman and Director, PNC
TRUSTEE Bank, N.A., and PNC Bank Corp.; Director,
Ryan Homes, Inc.
Retired: Director, United Refinery;
Director, Forbes Fund; Chairman, Pittsburgh
Foundation; Chairman, Pittsburgh Civic
Light Opera.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
JAMES E. DOWD, ESQ. Director or Trustee of the Federated Fund $0
Birthdate: May 18, 1922 Complex; Attorney-at-law; Director, The
571 Hayward Mill Road Emerging Germany Fund, Inc.
Concord, MA
TRUSTEE Retired: President, Boston Stock Exchange,
Inc.; Regional Administrator, United States
Securities and Exchange Commission.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
LAWRENCE D. ELLIS, M.D.* Director or Trustee of the Federated Fund $0
Birthdate: October 11, Complex; Professor of Medicine, University
1932 of Pittsburgh; Medical Director, University
3471 Fifth Avenue of Pittsburgh Medical Center - Downtown;
Suite 1111 Hematologist, Oncologist, and Internist,
Pittsburgh, PA Presbyterian and Montefiore Hospitals;
TRUSTEE Member, National Board of Trustees,
Leukemia Society of America.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
EDWARD L. FLAHERTY, Director or Trustee of the Federated Fund $0
JR., ESQ. # Complex; Attorney, of Counsel, Miller,
Birthdate: June 18, 1924 Ament, Henny & Kochuba; Director, Eat'N
Miller, Ament, Henny & Park Restaurants, Inc.; formerly: Counsel,
Kochuba Horizon Financial, F.A., Western Region;
205 Ross Street Partner, Meyer and Flaherty.
Pittsburgh, PA
TRUSTEE
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
PETER E. MADDEN Director or Trustee of the Federated Fund $0
Birthdate: March 16, Complex; formerly: Representative,
1942 Commonwealth of Massachusetts General
One Royal Palm Way Court; President, State Street Bank and
100 Royal Palm Way Trust Company and State Street Corporation.
Palm Beach, FL
TRUSTEE Retired: Director, VISA USA and VISA
International; Chairman and Director,
Massachusetts Bankers Association;
Director, Depository Trust Corporation.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
JOHN E. MURRAY, JR., Director or Trustee of the Federated Fund $0
J.D., S.J.D. Complex; President, Law Professor, Duquesne
Birthdate: December 20, University; Consulting Partner, Mollica &
1932 Murray.
President, Duquesne
University Retired: Dean and Professor of Law,
Pittsburgh, PA University of Pittsburgh School of Law;
TRUSTEE Dean and Professor of Law, Villanova
University School of Law.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
WESLEY W. POSVAR Director or Trustee of the Federated Fund $0
Birthdate: September Complex; President, World Society of
14, 1925 Ekistics, Athens; Professor, International
1202 Cathedral of Politics; Management Consultant; Trustee,
Learning Carnegie Endowment for International Peace,
University of Pittsbugh RAND Corporation, Online Computer Library
Pittsbugh, PA Center, Inc., National Defense University
TRUSTEE and U.S. Space Foundation; President
Emeritus, University of Pittsburgh;
Founding Chairman, National Advisory
Council for Environmental Policy and
Technology, Federal Emergency Management
Advisory Board and Czech Management Center,
Prague.
Retired: Professor, United States Military
Academy; Professor, United States Air Force
Academy.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
MARJORIE P. SMUTS Director or Trustee of the Federated Fund $0
Birthdate: June 21, 1935 Complex; Public
4905 Bayard Street Relations/Marketing/Conference Planning.
Pittsburgh, PA
TRUSTEE Retired: National Spokesperson, Aluminum
Company of America; business owner.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
J. CHRISTOPHER DONAHUE## President or Executive Vice President of $0
Birthdate: April 11, the Federated Fund Complex; Director or
1949 Trustee of some of the Funds in the
Federated Investors Federated Fund Complex; President and
Tower Director, Federated Investors, Inc.;
1001 Liberty Avenue President and Trustee, Federated Advisers,
Pittsburgh, PA Federated Management, and Federated
EXECUTIVE VICE PRESIDENT Research; President and Director, Federated
Research Corp. and Federated Global
Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Shareholder Services Company; Director,
Federated Services Company.
- ------------------------- -- --------------------------------------------- -- ------------ --
<PAGE>
- ------------------------- -- --------------------------------------------- -- ------------ --
EDWARD C. GONZALES* Trustee or Director of some of the Funds in $0
Birthdate: October 22, the Federated Fund Complex; President,
1930 Executive Vice President and Treasurer of
Federated Investors some of the Funds in the Federated Fund
Tower Complex; Vice Chairman, Federated
1001 Liberty Avenue Investors, Inc.; Vice President, Federated
Pittsburgh, PA Advisers, Federated Management, Federated
PRESIDENT, TREASURER Research, Federated Research Corp.,
AND CHIEF FINANCIAL Federated Global Research Corp. and
OFFICER Passport Research, Ltd.; Executive Vice
TRUSTEE President and Director, Federated
Securities Corp.; Trustee, Federated
Shareholder Services Company.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
JOHN W. MCGONIGLE Executive Vice President and Secretary of $0
Birthdate: October 26, the Federated Fund Complex; Executive Vice
1938 President, Secretary, and Director,
Federated Investors Federated Investors, Inc.; Trustee,
Tower Federated Advisers, Federated Management,
1001 Liberty Avenue and Federated Research; Director, Federated
Pittsburgh, PA Research Corp. and Federated Global
EXECUTIVE VICE Research Corp.; Director, Federated
PRESIDENT AND SECRETARY Services Company; Director, Federated
Securities Corp.
- ------------------------- -- --------------------------------------------- -- ------------ --
- ------------------------- -- --------------------------------------------- -- ------------ --
RICHARD B. FISHER President or Vice President of some of the $0
Birthdate: May 17, 1923 Funds in the Federated Fund Complex;
Federated Investors Director or Trustee of some of the Funds in
Tower the Federated Fund Complex; Executive Vice
1001 Liberty Avenue President, Federated Investors, Inc.;
Pittsburgh, PA Chairman and Director, Federated Securities
VICE PRESIDENT Corp.
- ------------------------- -- --------------------------------------------- -- ------------ --
## Mr. Donahue is the father of J. Christopher Donahue, Executive Vice President of the Trust
</TABLE>
INVESTMENT ADVISER
The Adviser conducts investment research and makes investment decisions for
the Fund.
The Adviser and the Sub-Adviser shall not be liable to the Trust, the Fund,
or any Fund shareholder for any losses that may be sustained in the purchase,
holding, or sale of any security or for anything done or omitted by it, except
acts or omissions involving willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties imposed upon it by its contract with the Trust.
ADVISORY FEES. Gross income includes, in general, discount earned on U.S.
Treasury bills and agency discount notes, interest earned on all
interest-bearing obligations, and dividend income recorded on the ex-dividend
date but does not include capital gains or losses or reduction for expenses.
The Adviser must waive the portion of its advisory fee that increases the
Fund's aggregate annual operating expenses above .75% of its average daily net
assets. The Fund's operating expenses include the advisory fee but exclude
interest, taxes, brokerage commissions, expenses of registering the Fund and its
shares under federal and state laws, expenses of withholding taxes, and
extraordinary expenses. Because of internal controls maintained by West Coast
Trust Company, Inc. and Becker Capital Management, Inc. to restrict the flow of
non-public information, Fund investments are typically made without any
knowledge of West Coast Trust or Becker Management Capital, Inc.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the Adviser looks for prompt execution of the order at a
favorable price. The Adviser will generally use those who are recognized dealers
in specific portfolio instruments, except when a better price and execution of
the order can be obtained elsewhere. The Adviser may select brokers and dealers
based on whether they also offer research services (as described below). In
selecting among firms believed to meet these criteria, the Adviser may give
consideration to those firms which have sold or are selling shares of the Fund
and other funds distributed by the Distributor and its affiliates. The Adviser
makes decisions on portfolio transactions and selects brokers and dealers
subject to review by the Fund's Board.
RESEARCH SERVICES. Research services may include advice as to the
advisability of investing in securities; security analysis and reports; economic
studies; industry studies; receipt of quotations for portfolio evaluations; and
similar services. Research services may be used by the Adviser or by the
Sub-Adviser in advising other accounts. To the extent that receipt of these
services may replace services for which the Adviser or Sub-Adviser might
otherwise have paid, it would tend to reduce their expenses. The Adviser and
Sub-Adviser exercise reasonable business judgment in selecting those brokers who
offer brokerage and research services to execute securities transactions. They
determine in good faith that commissions charged by such persons are reasonable
in relationship to the value of the brokerage and research services provided.
Investment decisions for the Fund are made independently from those of
other accounts managed by the Adviser and Sub-Adviser. When the Fund and one or
more of those accounts invests in, or disposes of, the same security, available
investments or opportunities for sales will be allocated among the Fund and the
account(s) in a manner believed by the Adviser and Sub-Adviser to be equitable.
While the coordination and ability to participate in volume transactions may
benefit the Fund, it is possible that this procedure could adversely impact the
price paid or received and/or the position obtained or disposed of by the Fund.
ADMINISTRATOR
Federated Services Company, a subsidiary of Federated Investors, Inc.,
provides administrative personnel and services (including certain legal and
financial reporting services) necessary to operate the Fund. Federated Services
Company provides these at the following annual rate as specified below:
MAXIMUM AVERAGE AGGREGATE DAILY NET
ADMINISTRATIVE FEE ASSETS OF THE TRUST
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of $750 million
The administrative fee received during any fiscal year shall be at least
$75,000. Federated Services Company may voluntarily waive a portion of its fee
and may reimburse the Fund for expenses.
Federated Services Company also provides certain accounting and
recordkeeping services with respect to the Fund's portfolio investments for a
fee based on Fund assets, plus out-of-pocket expenses.
CUSTODIAN
State Street Bank and Trust Company, Boston, Massachusetts, is custodian
for the securities and cash of the Fund. Foreign instruments purchased by the
Fund are held by foreign banks participating in a network coordinated by State
Street Bank.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Federated Services Company, through its registered transfer agent
subsidiary, Federated Shareholder Services Company, maintains all necessary
shareholder records. The Fund pays the transfer agent a fee based on the size,
type, and number of accounts and transactions made by shareholders.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP is the independent public accountant for the Fund.
FEES PAID BY THE FUND FOR SERVICES
FOR THE PERIOD FROM NOVEMBER 17, 1997 (START OF BUSINESS) TO OCTOBER 31, 1998
Advisory Fee..................$376,233
Sub-Advisory Fee..............$203,303
Brokerage Commissions...............$0
Administrative Fee.............$75,247
12b-1 Fee...........................$0
Shareholder Services Fee.......$42,033
If the Fund's expenses are capped at a particular level, the cap does not
include reimbursement to the Fund of any expenses incurred by shareholders who
use the transfer agent's subaccounting facilities.
HOW DOES THE FUND MEASURE PERFORMANCE?
The Fund may advertise share performance by using the Securities and
Exchange Commission's (SEC) standard method for calculating performance
applicable to all mutual funds. The SEC also permits this standard performance
information to be accompanied by non-standard performance information.
Unless otherwise stated, any quoted share performance reflects the effect
of non-recurring charges, such as maximum sales charges, which, if excluded,
would increase the total return and yield. The performance of shares depends
upon such variables as: portfolio quality; average portfolio maturity; type and
value of portfolio securities; changes in interest rates; changes or differences
in the Fund's expenses; and various other factors.
Share performance fluctuates on a daily basis largely because net earnings
and offering price per share fluctuate daily. Both net earnings and offering
price per share are factors in the computation of yield and total return.
TOTAL RETURN
Total return represents the change (expressed as a percentage) in the value
of shares over a specific period of time, and includes the investment of income
and capital gains distributions.
The average annual total return for shares is the average compounded rate
of return for a given period that would equate a $1,000 initial investment to
the ending redeemable value of that investment. The ending redeemable value is
computed by multiplying the number of shares owned at the end of the period by
the NAV per share at the end of the period. The number of shares owned at the
end of the period is based on the number of shares purchased at the beginning of
the period with $1,000, less any applicable sales charge, adjusted over the
period by any additional shares, assuming the annual reinvestment of all
dividends and distributions.
When shares of a fund are in existence for less than a year, the fund may
advertise cumulative total return for that specific period of time, rather than
annualizing the total return.
YIELD
The yield of shares is calculated by dividing: (i) the net investment
income per share earned by the shares over a thirty-day period; by (ii) the
maximum offering price per share on the last day of the period. This number is
then annualized using semi-annual compounding. This means that the amount of
income generated during the thirty-day period is assumed to be generated each
month over a 12-month period and is reinvested every six months. The yield does
not necessarily reflect income actually earned by shares because of certain
adjustments required by the SEC and, therefore, may not correlate to the
dividends or other distributions paid to shareholders.
To the extent investment professional and broker/dealers charge fees in
connection with services provided in conjunction with an investment in shares,
the share
performance is lower for shareholders paying those fees.
PERFORMANCE COMPARISONS
Advertising and sales literature may include:
o references to ratings, rankings, and financial publications and/or
performance comparisons of shares to certain indices;
o charts, graphs and illustrations using the Fund's returns, or returns in
general, that demonstrate investment concepts such as tax-deferred compounding,
dollar-cost averaging and systematic investment;
o discussions of economic, financial and political developments and their
impact on the securities market, including the portfolio manager's views on how
such developments could impact the Fund; and
o information about the mutual fund industry from sources such as the
Investment Company Institute.
The Fund may compare its performance, or performance for the types of
securities in which it invests, to a variety of other investments, including
federally insured bank products such as bank savings accounts, certificates of
deposit, and Treasury bills.
The Fund may quote information from reliable sources regarding individual
countries and regions, world stock exchanges, and economic and demographic
statistics.
You may use financial publications and/or indices to obtain a more complete
view of share performance. When comparing performance, you should consider all
relevant factors such as the composition of the index used, prevailing market
conditions, portfolio compositions of other funds, and methods used to value
portfolio securities and compute offering price. The financial publications
and/or indices which the Fund uses in advertising may include:
S&P 500 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.
S&P 400 MID CAP INDEX is an unmanaged capitalization weighted index that
measures the performance of the mid-range of the U.S. stock market.
FINANCIAL INFORMATION
The Financial Statements for the Fund for the fiscal year ended October 31,
1998 are incorporated herein by reference to the Annual Report to Shareholders
of WCT Equity Fund dated October 31, 1998.
<PAGE>
ADDRESSES
WCT EQUITY FUND
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, Pennsylvania 15237-7010
Distributor
EDGEWOOD SERVICES, INC. Clearing Operations
P.O. Box 897,
Pittsburgh, Pennsylvania 15230-0897
Investment Adviser
WEST COAST TRUST COMPANY, INC. 1000 Broadway, Suite 1100
Portland, Oregon 97205
Sub-Investment Adviser
BECKER CAPITAL MANAGEMENT, INC. 1211 SW Fifth Avenue, Suite 2185
Portland, Oregon 97205
Custodian
STATE STREET BANK AND TRUST COMPANY P.O. Box 1713
Boston, Massachusetts 02266-1713
Transfer Agent and Dividend Disbursing Agent
FEDERATED SHAREHOLDER SERVICES COMPANY P.O. Box 8600
Boston, Massachusetts 02266-8600
Independent Public Accountants
ARTHUR ANDERSEN LLP 225 Franklin Street
Boston, Massachusetts 02110-2812
