WAYNE HUMMER INCOME FUND
Semi-Annual
Financial Statements
September 30, 1997
(Unaudited)
<PAGE>
WAYNE HUMMER INCOME FUND
PHOTO OF: DAVID P. POITRAS
Dear Wayne Hummer Income Fund Shareholder,
We are pleased to present the semi-annual financial statements for the Wayne
Hummer Income Fund for the period ended September 30, 1997.
OVERVIEW
Over the past several months, interest rates fell dramatically, inspiring a
strong bond market rally. Moderating economic growth and low levels of inflation
produced an outstanding environment for fixed income investors. At September 30,
1997, market yields on 3-year, 5-year and 10-year Treasury notes were
approximately 3/4 of a percentage point (75 basis points) lower than six months
earlier. The rally had a large and positive impact on the Fund's portfolio of
notes and bonds.
FUND PERFORMANCE
For the six-month and one-year periods ended September 30, 1997, the total
returns for the Fund were 6.81% and 9.19%, respectively. That compares favorably
to the performance of many sectors of the bond market. For example, the Merrill
Lynch Corporate and Government Index of 1 to 9.99 Year Maturities--the index to
which we compare the Fund's performance--posted total returns of 5.71% and 8.26%
over the same periods. During recent periods, the Fund's duration has been
longer than that of its benchmark index. This is the primary reason for the
Fund's superior performance relative to the performance of its Index.
During the six-month period ended September 30, 1997, the Fund paid income
dividends totaling $0.45 and the Fund's share price increased 3.7% to close at
$15.20. The SEC yield was 6.10%, which reflects the 30-day average of the net
annualized income earnings capability of every holding in the Fund's portfolio
(assuming each is held to maturity).
PORTFOLIO & STRATEGY
The strong bond market rally produced very desirable results for the Wayne
Hummer Income Fund. Evidence of this is illustrated from the total return
figures listed above--and detailed more thoroughly on the following pages. While
we were pleased by the strong rally, we used the market's strength as an
opportunity to shorten the duration and average life of the Fund's portfolio.
The portfolio's average life and duration stood at 6.46 and 4.85 years,
respectively, at quarter end, down from an average life of 7.73 year and a
portfolio duration of 5.31 years six months earlier.
Duration serves as a good measure of a portfolio's price volatility due to
interest rate changes. By reducing the duration of the Fund's portfolio of
investments, our goal is to reduce the price volatility of the portfolio. This
is consistent with our belief that current interest rates are relatively low.
We continue to allocate a large percentage of the portfolio to U.S. government
and government agency issues--currently over 40% of total assets. In our
opinion, the yield advantage of corporate bonds relative to government issues is
too narrow to warrant a greater allocation of the portfolio to the former. The
average credit quality of the portfolio remains relatively high as a result of
the high allocation of government securities.
ECONOMY
The economy grew at an annualized rate of approximately 4% during the first half
of 1997. Since then, many economic statistics suggest the economy is slowing,
which is consistent with our own forecast. We believe that economic growth will
be closer to 2.5% - 3% for the second half of the calendar year.
<PAGE>
Generally, a moderating economy is good news for the bond market. Slower growth
typically relieves inflationary pressures, which in turn helps reduce interest
rate levels. We believe the bond market's strong performance can be traced
directly to the slowing economy.
It is our opinion, however, that the good economic news is already reflected in
today's low interest rate levels and high bond prices. At the time of this
writing, 10-year Treasury notes are yielding less than 6%. Going forward, we are
looking for a modest increase in interest rates and have begun positioning the
portfolio accordingly.
Included in this report are detailed statements about the Fund and its financial
condition. We believe you will find them informative. Thank you for your
continued support.
Sincerely,
David P. Poitras
Vice President and Portfolio Manager
October 7, 1997
<PAGE>
PORTFOLIO HIGHLIGHTS
The chart below emphasizes the high quality of securities in the portfolio. The
average rating of our holdings is A.
PIE CHART:
PORTFOLIO QUALITY
AAA 44%
AA 6%
A 22%
BBB 28%
The investment philosophy of the Fund is to invest primarily in intermediate-
term fixed income securities. Average maturity is determined by the maturity or
reasonable call date.
Average maturity of the portfolio is 6.46 years.
PIE CHART:
MATURITY SCHEDULE
Less than 3 Years 17.82%
3-10 Years 73.76%
Over 10 Years 8.42%
Portfolio holdings are subject to change and may not represent future
portfolio composition.
<PAGE>
WAYNE HUMMER INCOME FUND VS.
MERRILL LYNCH CORPORATE AND GOVERNMENT INDEX
VALUE OF $10,000 INITIAL INVESTMENT
GRAPH:
WAYNE HUMMER MERRILL LYNCH
DATE INCOME FUND CORPORATE AND GOVERNMENT
12/1/92 10000 10000
12/31/92 10035 10130
3/31/93 10431 10531
6/30/93 10737 10751
9/30/93 11080 11004
12/31/93 11044 11022
3/31/94 10892 10812
6/30/94 10722 10751
9/30/94 10751 10836
12/31/94 10835 10831
3/31/95 11344 11303
6/30/95 11865 11868
9/30/95 12115 12062
12/31/95 12516 12491
3/31/96 12342 12389
6/30/96 12412 12462
9/30/96 12595 12681
12/31/96 12956 12993
3/31/97 12875 12987
6/30/97 13323 13368
9/30/97 13753 13729
<TABLE>
PERFORMANCE COMPARISON
<CAPTION>
MERRILL LYNCH CORPORATE AND GOVERNMENT
WAYNE HUMMER INCOME FUND INDEX OF 1 TO 9.99 YEAR MATURITIES
- -------------------------------------------------------------------------------------------------------------
PERIOD GROWTH TOTAL RETURN PERIOD GROWTH TOTAL RETURN
ENDED OF CUMU- AVERAGE ENDED OF CUMU- AVERAGE
9/30/97 $10,000 LATIVE ANNUAL 9/30/97 $10,000 LATIVE ANNUAL
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $10,919 9.19% 9.19% 1 Year $10,826 8.26% 8.26%
12/1/92- $13,753 37.53% 6.81% 12/1/92- $13,729 37.29% 6.78%
9/30/97 9/30/97
<FN>
NOTE: Performance data quoted herein represents past performance. Actual
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. This graph compares the results of $10,000 invested in Wayne Hummer Income
Fund on December 1, 1992, (inception date) with the Merrill Lynch Corporate and
Government Index. (1 to 9.99 year maturities).
</FN>
</TABLE>
<PAGE>
TAXPAYER RELIEF ACT OF 1997
The legislation was signed, now what?
Take advantage of the resources available at Wayne Hummer Investments LLC to
guide you through these changes. Your full-service Investment Executive can
assist you in sorting through the details to determine how these changes may
affect your financial plan.
THE MAIN ITEMS COVERED UNDER THIS TAX CUT ARE THE FOLLOWING:
O SAVINGS AND INVESTMENT INCENTIVES, INCLUDING IRAS AND A TAX RATE CUT ON
CAPITAL GAINS
O EDUCATIONAL TAX INCENTIVES
O CHANGES IN THE ESTATE AND GIFT TAX RATES
O TAX CREDITS FOR FAMILIES WITH CHILDREN
For detailed information about these and the many other components of the new
tax law and its affect on your investment strategy, contact your tax and legal
advisors as well as your Investment Executive at Wayne Hummer Investments LLC.
OVERVIEW OF IRA CHANGES
The Wayne Hummer Investments Individual Retirement Plan (IRA) allows you to
self-direct your investments and allocate them among mutual funds, stocks and
bonds.
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT (IRA)
Beginning in 1998, the traditional IRA will be expanded to make it even more
attractive as a retirement savings vehicle. The deductibility income phase-out
limits are increased gradually, and there are more reasons for penalty-free IRA
withdrawals. Also, spouses who are not covered by a plan at their place of
employment may be eligible to make fully deductible IRA contributions, provided
their joint income is less than $150,000. Partial deductions are allowed if
income is between $150,000 and $160,000.
NEW ROTH IRA
Although you cannot deduct contributions to the Roth IRA, all interest,
dividends and capital gains accumulate and can be withdrawn tax-free. Basically,
this allows you to simplify tax planning down the road when you retire. Wayne
Hummer Investments will offer the Roth IRA beginning January 1, 1998. Of course,
there are restrictions and eligibility requirements so contact your Investment
Executive for details.
CONVERSION FROM A TRADITIONAL IRA TO THE NEW ROTH IRA
Money in other IRAs, whether deductible or nondeductible, may be rolled over to
a Roth IRA without penalty, subject to certain rules. A special tax break is
given to taxpayers that convert an existing IRA before January 1, 1999. The
income from the conversion can be included in income ratably over the four years
beginning with the year of the conversion. Even if you do not currently have an
IRA with Wayne Hummer, your Investment Executive, along with our retirement
plans specialist, can provide you with the advantages of each IRA relative to
your particular situation.
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
SEPTEMBER 30, 1997 YEAR ENDED
ASSETS (UNAUDITED) MARCH 31, 1997
<S> <C> <C>
Investments, at value (Cost: $21,332,454 and $22,031,822, respectively)..... $21,687,046 $21,556,935
Cash....................................................................... 1,619 127,801
Interest receivable........................................................ 354,624 390,478
Receivable for Fund Shares sold............................................ 0 58,326
Deferred organizational costs (net of accumulated amortization of $58,000
and $52,000, respectively)............................................... 2,000 8,000
Prepaid expenses........................................................... 10,913 8,025
----------- -----------
Total assets................................................... 22,056,202 22,149,565
LIABILITIES AND NET ASSETS
Payable for investment purchased............................................. 0 96,293
Organizational costs payable................................................. 5,000 11,000
Dividends payable............................................................ 29,519 20,763
Due to Wayne Hummer Management Company....................................... 9,025 9,410
Accounts payable............................................................. 19,663 13,627
----------- -----------
Total liabilities.............................................. 63,207 151,093
----------- -----------
Net assets applicable to 1,466,982 and 1,500,981 Shares outstanding,
no par value, equivalent to $15.20 and $14.66 per Share, respectively..... $21,992,995 $21,998,472
=========== ===========
ANALYSIS OF NET ASSETS
Paid-in capital ............................................................. $22,726,986 $23,535,117
Net unrealized appreciation (depreciation) of investments.................... 354,592 (474,887)
Accumulated net realized loss on sales of investments........................ (1,088,583) (1,061,758)
----------- -----------
Net assets applicable to Shares outstanding.................................. $21,992,995 $21,998,472
=========== ===========
THE PRICING OF SHARES
Net asset value, offering and redemption price per Share
($21,992,995 / 1,446,982 Shares outstanding and $21,998,472 / 1,500,981
Shares outstanding, respectively)......................................... $15.20 $14.66
=========== ===========
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31,
INVESTMENT INCOME: (UNAUDITED) 1997
<S> <C> <C>
Interest................................................................... $ 785,286 $1,731,738
EXPENSES:
Management fee............................................................. 55,269 119,230
Transfer agent fees........................................................ 11,978 25,827
Professional fees.......................................................... 10,620 22,200
Portfolio accounting fees.................................................. 9,405 19,543
Printing and reporting fees................................................ 6,535 10,650
Amortization of organization costs......................................... 6,000 12,000
Custodian fees............................................................. 4,500 8,900
Trustee fees............................................................... 2,448 6,800
Other...................................................................... 4,888 15,695
--------- ----------
Total expenses................................................. 111,643 240,845
--------- ----------
Net investment income........................................................ 673,643 1,490,893
--------- ----------
Net realized loss on sales of investments.................................... (33,630) (141,101)
Change in net unrealized appreciation (depreciation)......................... 829,479 (312,194)
--------- ----------
Net realized and unrealized gain (loss) on investments....................... 795,849 (453,295)
--------- ----------
Net increase in net assets resulting from operations......................... $1,469,492 $1,037,598
========== ==========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31,
OPERATIONS: (UNAUDITED) 1997
<S> <C> <C>
Net investment income ..................................................... $ 673,643 $ 1,490,893
Net realized loss on sales of investments ................................. (33,630) (141,101)
Change in net unrealized appreciation (depreciation) ...................... 829,479 (312,194)
------------ ------------
Net increase in net assets resulting from operations ....................... 1,469,492 1,037,598
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ..................................................... (666,838) (1,479,285)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares sold ................................................. 604,195 2,190,162
Shares issued upon reinvestment of dividends .............................. 508,296 1,118,817
------------ ------------
1,112,491 3,308,979
Less payments for Shares redeemed ......................................... 1,920,622 6,267,431
------------ ------------
Decrease from Capital Share transactions .................................... (808,131) (2,958,452)
------------ ------------
Total decrease in net assets ................................................ (5,477) (3,400,139)
NET ASSETS:
Beginning of period ....................................................... 21,998,472 25,398,611
------------ ------------
End of period ............................................................. $ 21,992,995 $ 21,998,472
============ ============
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 1997 YEAR ENDED MARCH 31,
UNAUDITED 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $14.66 $14.95 $14.69 $15.10 $15.41
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.45 0.92 1.02 0.99 0.95
Net realized and unrealized gains
(losses) on investments................ 0.54 (0.29) 0.26 (0.42) (0.26)
------- ------- ------ ------ ------
Total from investment operations........... 0.99 0.63 1.28 0.57 0.69
LESS DISTRIBUTIONS:
Dividends from net investment income..... (0.45) (0.92) (1.02) (0.98) (0.95)
Dividends from net realized gain on
investments............................ 0.00 0.00 0.00 0.00(b) (0.05)
------- ------- ------ ------ ------
Total distributions.................. (0.45) (0.92) (1.02) (0.98) (1.00)
------- ------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD............. $15.20 $14.66 $14.95 $14.69 $15.10
======= ======= ====== ====== ======
TOTAL RETURN............................... 6.81% 4.32% 8.79% 4.16% 4.42%
RATIOS AND SUPPLEMENTARY DATA:
Net assets, end of period (000's)........ $21,993 $21,998 $25,398 $26,352 $33,652
Ratio of expenses to average net assets.. 1.01%(a) 1.01% 0.91% 0.94% 1.13%
Ratio of net investment income to
average net assets 6.10%(a) 6.25% 6.80% 6.70% 6.14%
Portfolio turnover rate.................. 18%(a) 39% 46% 32% 86%
<FN>
NOTES TO FINANCIAL HIGHLIGHTS:
(a) Determined on an annualized basis.
(b) Less than $.01 per share.
</FN>
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL
CORPORATE OBLIGATIONS (53.8%) AMOUNT VALUE
<S> <C> <C>
Auto & Machinery (4.2%)
Johnson Controls, Inc., 7.70%, due 03/01/15 $ 350,000 $375,365
Parker-Hannifin Corporation, 9.750%,
due 02/15/21 480,000 541,594
---------
916,959
Banks & Finance (7.4%)
Citicorp, 9.375%, due 03/01/16 149,000 154,430
Ford Motor Credit Company, 6.125%,
due 01/09/06 500,000 480,355
Norwest Corporation, 7.650%, due 03/15/05 360,000 380,826
St. Paul Bancorp, Inc., 7.125%, due 02/15/04 100,000 100,881
Sears Roebuck Acceptance Corp., 6.750%,
due 09/15/05 500,000 501,770
---------
1,618,262
Paper & Forest Products (8.9%)
Boise Cascade Corporation, 9.875%,
due 02/15/01 1,000,000 1,047,440
Champion International Corporation, 6.400%,
due 02/15/26 500,000 484,235
Georgia Pacific Corporation, 9.750%,
due 01/15/18 415,000 432,260
---------
1,963,935
Retail (2.4%)
Penney (J.C.) Company, Inc., 9.450%,
due 07/15/02 500,000 536,650
Telecommunications (4.5%)
Mountain States Telephone & Telegraph Co.,
5.500%, due 06/01/05 269,000 251,036
NYNEX Corporation, 9.550%, due 05/01/10 648,094 731,199
---------
982,235
Transportation (8.1%)
Canadian Pacific Limited, 8.850%, due 06/01/22 500,000 553,340
Union Pacific Corporation, 6.125%, due 01/15/04 200,000 193,258
United Air Lines, Inc., 9.760%, due 05/27/06 930,124 1,030,251
---------
1,776,849
Utilities (4.6%)
Commonwealth Edison Company
8.125%, due 01/15/07 500,000 510,425
8.875%, due 10/01/21 485,000 511,995
---------
1,022,420
<PAGE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
Miscellaneous (13.7%)
Browning-Ferris Industries, Inc., 6.375%,
due 01/15/08 $ 500,000 $ 487,470
CBI Industries, Inc., 6.250%, due 06/30/00 500,000 498,450
Crown, Cork & Seal Company, Inc., 8.375%,
due 01/15/05 100,000 108,782
Eastman Kodak Company, 9.750%,
due 10/01/04 325,000 382,798
Inco Ltd., Convertible Debenture, 7.750%,
due 03/15/16 500,000 525,000
Pennzoil Company, 10.250%, due 11/01/05 186,000 222,333
Reynolds Metals Company, 9.400%,
due 02/15/05 250,000 287,768
Xerox Corporation, 5.875%, due 06/15/37 500,000 503,195
---------
3,015,796
---------
TOTAL CORPORATE OBLIGATIONS (Cost: $11,679,890) 11,833,106
---------
MUNICIPALITY-TAXABLE (1.2%)
Virginia State Housing Development, 7.950%,
due 05/01/13 (Cost: $253,606) 250,000 267,488
MORTGAGE-BACKED SECURITIES (21.1%)
Collateralized Mortgage Obligations (14.5%)
Federal Home Loan Mortgage Corporation (11.3%)
7.500%, due 11/15/08 500,000 513,570
7.500%, due 02/15/20 400,000 408,248
8.000%, due 03/15/21 1,000,000 1,035,400
8.000%, due 04/15/22 500,000 525,770
---------
2,482,988
Federal National Mortgage Association (3.2%)
8.000%, due 02/25/07 500,000 526,910
8.500%, due 06/25/21 177,212 185,598
---------
712,508
Federal National Mortgage Association (4.0%)
11.250%, due 04/01/01 52,275 55,596
10.750%, due 09/01/15 124,449 136,289
10.500%, due 01/01/16 80,328 87,509
10.500%, due 06/01/19 275,093 301,873
9.000%, due 12/01/19 84,021 88,896
8.000%, due 12/01/22 200,883 206,967
---------
877,130
<PAGE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
Government National Mortgage Association (2.6%)
9.000%, due 11/15/01 $ 118,408 $ 124,075
9.000%, due 02/20/27 419,069 442,906
---------
566,981
---------
TOTAL MORTGAGE-BACKED SECURITIES (Cost: $4,583,598) 4,639,607
U.S. GOVERNMENT AND AGENCY ISSUES (22.5%)
Federal National Mortgage Association 750,000 770,145
6.820%, due 08/23/05
U.S. Treasury Note, 8.500%, due 11/15/00 1,555,000 1,667,209
U.S. Treasury Note, 6.500%, due 05/15/05 1,000,000 1,020,930
U.S. Treasury Note, 6.250%, due 02/15/07 1,045,000 1,050,121
U.S. Treasury Strips, 0%, due 02/15/21 2,000,000 438,440
---------
TOTAL U.S. GOVERNMENT AND AGENCY
ISSUES (Cost: $4,815,360) 4,946,845
---------
TOTAL INVESTMENTS (Cost: $21,332,454) (98.6%) 21,687,046
CASH AND OTHER ASSETS, LESS LIABILITIES (1.4%) 305,949
---------
NET ASSETS (100.0%) $21,992,995
=========
<FN>
NOTE TO PORTFOLIO OF INVESTMENTS:
(a) Based on the cost of investments of $21,332,454 for federal income tax
purposes at September 30, 1997, the aggregate gross unrealized appreciation was
$400,213, the aggregate gross unrealized depreciation was $45,621 and the net
unrealized depreciation of investments was $354,592.
</FN>
</TABLE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust"), is an open-end management
company organized as a Massachusetts business trust. The Trust consists of two
investment portfolios, the Wayne Hummer Income Fund and the Wayne Hummer Growth
Fund, each operating as a separate mutual fund. Presented herein are the
financial statements of the Wayne Hummer Income Fund (the "Fund"). The Fund
commenced investment operations on December 1, 1992, and may issue an unlimited
number of full and fractional units of beneficial interest (Shares) without par
value. The investment objective of the Fund is to achieve as high a level of
current income as is consistent with prudent investment management.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Fixed income securities are valued by using market quotations, or independent
pricing services that use prices provided by market makers or estimates of
market values obtained from yield data relating to instruments or securities
with similar characteristics. Other securities for which no market quotations
are available are valued at fair value as determined in good faith by the
Board of Trustees. Debt securities having a remaining maturity of less than
60 days are valued at cost (or, if purchased more than 60 days prior to
maturity, the value on the 61st day prior to maturity) adjusted for
amortization of premiums and accretion of discounts.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Interest income
is determined on an accrual basis, adjusted for amortization of premiums and
accretion of discounts. Realized gains and losses from security transactions are
reported on an identified cost basis.
DEFERRED ORGANIZATIONAL COSTS
Certain organizational costs are reimbursable by the Fund to Wayne Hummer
Management Company, the Fund's Investment Adviser. The costs are being amortized
on the straight-line method and repaid quarterly over a five-year period.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund Shares are sold and redeemed on a continuous basis at net asset value.
Net asset value per Share is determined on each day the New York Stock Exchange
is open for trading as of the close of trading on the Exchange and at 3:00 p.m.
Chicago time on each other day during which there is a sufficient degree of
trading in securities of the Fund's portfolio so as to affect materially the net
asset value of the Shares by dividing the value of net assets (total assets less
liabilities) by the total number of Shares outstanding.
Dividends from net investment income are declared and distributed monthly.
Capital gains dividends, if any, are paid at least annually. Dividends will be
reinvested in additional Shares unless a Shareholder requests payment in cash.
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences primarily relate to differing treatments for
mortgage-backed securities.
<PAGE>
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the
Internal Revenue Code available to investment companies and, in the manner
provided therein, to distribute all of its taxable income, as well as any net
realized gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
The accumulated net realized loss on sales of investments for federal
income tax purposes at March 31, 1997, amounting to $1,061,758, is avail able to
offset future capital gains. If not applied, $880,524 of the loss carry forward
expires in 2003, $51,741 expires in 2004 and $129,493 expires in 2005.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a
Portfolio Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"). The shareholders of the Investment Adviser are the
Voting Members of Wayne Hummer Investments LLC ("Distributor and Shareholder
Service Agent"). For advisory and management services and facilities furnished,
the Fund pays fees of .50 of 1% of the first $100 million of average daily net
assets, .40 of 1% of the next $150 million and .30 of 1% of the average daily
net assets in excess of $250 million. The Investment Adviser is obligated to
reimburse the Fund to the extent that the Fund's ordinary operating expenses,
including the fee of the Investment Adviser, exceed the lesser of (1) 1.50% of
the average daily net assets of the Fund or (2) the expense limitations
applicable to the Fund imposed by any state in which the Fund's Shares are sold.
During the period ended September 30, 1997, and the year ended March 31, 1997,
the Fund incurred management fees of $55,269 and $119,230, respectively.
For portfolio accounting services, the Fund pays the Investment Adviser a
fee based on the level of average daily net assets plus out-of-pocket expenses.
Wayne Hummer Investments LLC serves as Distributor and Shareholder Service
Agent without compensation from the Fund.
Certain trustees of the Fund are also officers or directors of the
Investment Adviser or Voting Members of the Distributor and Shareholder Service
Agent. During the period ended September 30, 1997, and the year ended March 31,
1997, the Fund made no direct payments to its officers and incurred trustee fees
for its unaffiliated trustees of $2,448 and $6,800, respectively.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
Purchases $1,937,847 $ 8,896,351
Proceeds from sales $2,557,825 $10,156,810
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statement of Changes
in Net Assets are in respect of the following number of shares:
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
Shares sold 40,407 147,250
Shares issued upon
reinvestment of dividends 33,957 75,320
--------- --------
74,364 222,570
Shares redeemed (128,363) (420,513)
--------- --------
Net decrease in Shares outstanding (53,999) (197,943)
========= ========
<PAGE>
BOARD OF TRUSTEES
Philip M. Burno
Chairman
Steven R. Becker
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
Eustace K. Shaw
This brochure must be
preceded or accompanied
by a current
prospectus of the
Wayne Hummer Investment Trust.
LOGO: Member of 100% No Load(TM) Mutual Fund Council
LOGO: Wayne Hummer Investments LLC
300 South Wacker
Chicago, Illinois
60606-6607
1.800.621.4477 (toll-free)
(312) 431.1700 (local)
200 E. Washington Street
Appleton, Wisconsin
54911-5468
1.800.678.0833 (toll-free)
(920) 734.1474 (local)
www.whummer.com
<PAGE>
WAYNE HUMMER INCOME FUND
Semi-Annual
Financial
Statements
September 30, 1997
(Unaudited)
WAYNE HUMMER INCOME FUND
300 South Wacker Drive
Chicago, IL 60606-6607
First Class
U.S. Postage
PAID
Berwyn, IL
Permit No. 150
<PAGE>
WAYNE HUMMER GROWTH FUND
Semi-Annual
Financial Statements
September 30, 1997
(Unaudited)
<PAGE>
WAYNE HUMMER GROWTH FUND
PHOTO OF: THOMAS J. ROWLAND
Dear Shareholder:
This report presents the semi-annual financial statements of the Wayne Hummer
Growth Fund on September 30,1997, the end of the first half of the Fund's fiscal
year 1998. The net asset value of a Fund share increased 27.2% from $26.45 on
September 30, 1996 to $33.65 on September 30, 1997. If dividends as well as
distributions from capital gains were reinvested during this period, the
increase was 34.6%. For the first half of this fiscal year this increase was
25.0%. During the first half of the current fiscal year, the Fund's Board of
Trustees declared a dividend of $.06 and a capital gain distribution of $1.02
payable to shareholders on April 23rd, and another dividend of $.05 payable on
July 18th.
In the January letter we noted that the Fund's relatively fully invested
position reflected a degree of confidence in the sustainability of the economic
conditions that had been driving the stock market ever higher, namely, low
inflation and lower interest rates. The market's continued advance since that
time has exceeded our most optimistic expectations, aided importantly by
declining interest rates. Leadership has also shifted to the small and mid-cap
sectors of the market, a welcome development for the Fund. We retain that
confidence in the fundamentals and we think the market can continue to do well
despite its already remarkable performance and its current high valuation as
measured by historic standards.
During the course of the Fund's current fiscal year, interest rates generally
have fallen by about 75 basis points. With the S&P 500 selling at about 21 times
expected 1997 operating earnings, the market is considered to be modestly
overvalued at current interest rates. Although third quarter operating earnings
are expected to show a modest acceleration from the previous quarter, momentum
for the current cycle has clearly peaked. This accounts for the seemingly
heightened focus on interest rate projections.
Interest rates reflect inflation expectations. The market has been waiting for
signs of an acceleration in inflation for a long time now. Though rates have
been in secular decline since 1982, the level of real rates (interest rates less
the inflation rate) has remained stubbornly high. The longer that inflation
fails to materialize, the more likely that we could see a compression in real
long-term interest rates. This, in turn, should be an important positive
development for the equity markets.
New to the financial markets this year was the introduction by the Treasury
Department of Treasury's Inflation Protection Securities (TIPS) in January. A
recent Business Week article by Dean Foust discusses these inflation indexed
bonds in terms of their predictive value as a barometer of future prices. He
concludes that the performance of TIPS is confirming that the significant drop
in interest rates in recent months reflects the market's growing belief that
inflation as a long-term threat is waning. A narrowing of the spread between
conventional bonds and indexed bonds of the same maturity is a measure of
reduced anticipated inflation over the term to maturity of the bond. This has
been the case in recent months.
As a corollary, a statistical analysis by John Manley of Smith Barney tracks the
relationship of the long bond yield to its 52-week moving average as a predictor
of stock market behavior. His work indicates that, in observations going back
over 30 years, this statistic is a strong predictor of stock market performance
over the ensuing 12-month period. At no time during the period covered by the
study has there been an occurrence when the 12-month stock market return was
negative following a period when the bond yield reached a level 10% or more
below its 52-week moving average. The current yield on the long bond is 6.34%.
The yield for the bond to trade at 10% below its moving average would be 6.04%,
a level certainly attainable in light of the market disruptions described below.
<PAGE>
While the markets exhibited considerable angst over the just passed tenth
anniversary of the 1987 crash, serious jitters were taking place on the other
side of the world in Asia. As of this writing, turmoil continues to rack the
stock and currency markets of Southeast Asia, spilling over into our equity
markets as well. The resulting capital flows to the safe harbor of U.S. dollar
investments is likely to defer whatever consideration might have been given to
tightening credit by the Federal Reserve Board. The likely result is a further
strengthening of the dollar with its attendant dampening effect on inflation.
Additionally, as the prospects for a federal budget surplus appear more likely,
further reducing Treasury borrowing requirements, the compression in real
long-term interest rates could become a reality sooner than anticipated. This
could ultimately extend the stock market's gains.
A new addition to the Fund in the mid-cap sector last quarter were the shares of
Viking Office Products. Viking is a leading direct marketer of office products
to small and medium sized businesses. The Company operates 20 distribution
centers in 10 countries and sells more than 10,000 office products to businesses
in the U.S., Europe and Australia. The Company operates no retail stores, has no
sales staff, does no outbound telemarketing and is not the lowest cost source of
the products it supplies. Viking does, however, enjoy returns on invested
capital in excess of 20% on a debt-free balance sheet.
Viking's well-executed business strategy emphasizes an extreme level of
very personalized customer service and intensive utilization of advances in
technology and printing to carry database marketing toward its ultimate goal of
printing a personalized, customized catalog for each customer. Such customer
attention has resulted in extremely high retention rates and steadily rising
revenues per active account.
Seventy percent of employees own Company stock. Viking chairman, Irwin Helford,
who owns 3.6 million shares of stock, has built sales from $15 million in the
mid-1980s to $1.3 billion in the latest fiscal year, and has produced among the
highest returns of any company in the office products or direct marketing
industries. The demographics of service sector employment growth among developed
economies offer significant opportunities for continuing growth for this well
managed company.
As always, we are pleased to be a part of your long-term investment planning.
Sincerely,
Thomas J. Rowland, CFA
President
Wayne Hummer Investment Trust
October 23, 1997
<PAGE>
WAYNE HUMMER GROWTH FUND VS. RUSSELL MID-CAP AND THE S&P 500
VALUE OF $10,000 INITIAL INVESTMENT (THOUSANDS)
GRAPH:
WAYNE
HUMMER
GROWTH RUSSELL
FUND MID-CAP S&P 500
1987 10 10 10
8.15 7.74 7.75
8.52 8.68 8.19
8.8 9.31 8.72
1988 8.64 9.22 8.76
8.72 9.27 9.02
9.17 9.96 9.66
9.72 10.87 10.5
1989 10.55 11.91 11.63
10.81 11.7 11.86
10.90 11.25 11.51
11.52 11.67 12.22
1990 10.13 9.35 10.54
11.35 10.36 11.48
12.8 12.48 13.15
13.02 12.55 13.1
1991 13.52 13.48 13.8
14.63 14.66 14.96
14.74 14.89 14.58
14.63 14.86 14.84
1992 15.51 15.44 15.33
16.14 17.06 16.1
16.2 17.99 16.8
16 18.27 16.87
1993 16.06 19.25 17.3
16.72 19.5 17.82
16.09 18.92 17.14
15.9 18.51 17.2
1994 16.62 19.57 18.05
16.57 19.09 18.04
18.19 21.08 19.8
18.66 22.84 21.67
1995 19.36 24.87 23.39
20.68 25.67 24.8
21.13 27.21 26.13
21.52 27.98 27.28
1996 21.91 28.86 28.12
23.14 30.55 30.48
23.59 30.29 31.29
27.02 34.4 36.75
1997 29.49 38.97 39.5
<TABLE>
<CAPTION>
WAYNE HUMMER GROWTH FUND RUSSELL MID-CAP S&P 500
PERIOD GROWTH TOTAL RETURN PERIOD GROWTH TOTAL RETURN PERIOD GROWTH TOTAL RETURN
ENDED OF CUMU- AVERAGE ENDED OF CUMU- AVERAGE ENDED OF CUMU- AVERAGE
9/30/97 $10,000 LATIVE ANNUAL 9/30/97 $10,000 LATIVE ANNUAL 9/30/97 $10,000 LATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $13,458 34.58% 34.58% 1 Year $13,506 35.06% 35.06% 1 Year $14,041 40.41% 40.41%
5 Year $19,006 90.06% 13.70% 5 Year $25,243 152.43% 20.35% 5 Year $25,671 156.71% 20.75%
10 Year $29,490 194.90% 11.42% 10 Year $38,971 289.71% 14.57% 10 Year $39,498 294.98% 14.72%
</TABLE>
NOTE: The Russell Mid-Cap and the S&P 500 Indices are unmanaged and all
returns include reinvested dividends.
WAYNE HUMMER GROWTH FUND
VALUE OF INITIAL $10,000 INVESTMENT
GRAPH:
VALUE OF VALUE OF
REINVESTED REINVESTED NET ASSET
CAPITAL GAINS DIVIDENDS VALUE
(ALL AMOUNTS IN THOUSANDS
10000 0 0
1984 9830 0 0
9350 58 0
9980 149 0
10170 245 0
1985 10670 357 0
11120 504 7
10530 536 6
12250 695 7
1986 13850 857 8
13880 926 397
12570 903 359
13330 1023 381
1987 16140 1309 461
15840 1436 1149
16930 1606 1228
13220 1323 1557
1988 13790 1430 1624
14190 1523 1676
13900 1540 1642
13740 1669 1821
1989 14450 1756 1915
15130 1935 2152
16360 2169 2327
16410 2306 2656
1990 16540 2324 2678
16960 2580 3224
14860 2343 2825
16000 2843 3600
1991 18040 3206 4059
18130 3365 4242
18740 3609 4385
20020 4142 4757
1992 20170 4173 4792
19840 4202 4883
20950 4560 5156
21640 4919 5355
1993 21720 4938 5374
21380 4949 5290
21400 5060 5295
22060 5486 5511
1994 21230 5279 5303
20910 5297 5223
21790 5628 5443
21340 5766 5649
1995 23430 6331 6202
23840 6565 6481
24660 6902 6704
25810 7481.71 7592.31
1996 26370 7644.04 7757.04
26040 7692.94 8800.4
26450 7919.35 8938.96
27500 8468.12 9773.04
1997 28030 8631.33 9961.39
30880 9622.23 12900.4
33650 10576.8 14057.5
NOTE: Performance Data quoted herein represents past performance. Actual
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.
<PAGE>
TAXPAYER RELIEF ACT OF 1997
The legislation was signed, now what?
Take advantage of the resources available at Wayne Hummer Investments LLC to
guide you through these changes. Your full-service Investment Executive can
assist you in sorting through the details to determine how these changes may
affect your financial plan.
THE MAIN ITEMS COVERED UNDER THIS TAX CUT ARE THE FOLLOWING:
O SAVINGS AND INVESTMENT INCENTIVES, INCLUDING IRAS AND A TAX RATE CUT ON
CAPITAL GAINS
O EDUCATIONAL TAX INCENTIVES
O CHANGES IN THE ESTATE AND GIFT TAX RATES
O TAX CREDITS FOR FAMILIES WITH CHILDREN
For detailed information about these and the many other components of the new
tax law and its affect on your investment strategy, contact your tax and legal
advisors as well as your Investment Executive at Wayne Hummer Investments LLC.
OVERVIEW OF IRA CHANGES
The Wayne Hummer Investments Individual Retirement Plan (IRA) allows you to
self-direct your investments and allocate them among mutual funds, stocks and
bonds.
TRADITIONAL INDIVIDUAL RETIREMENT ACCOUNT (IRA)
Beginning in 1998, the traditional IRA will be expanded to make it even more
attractive as a retirement savings vehicle. The deductibility income phase-out
limits are increased gradually, and there are more reasons for penalty-free IRA
withdrawals. Also, spouses who are not covered by a plan at their place of
employment may be eligible to make fully deductible IRA contributions, provided
their joint income is less than $150,000. Partial deductions are allowed if
income is between $150,000 and $160,000.
NEW ROTH IRA
Although you cannot deduct contributions to the Roth IRA, all interest,
dividends and capital gains accumulate and can be withdrawn tax-free. Basically,
this allows you to simplify tax planning down the road when you retire. Wayne
Hummer Investments will offer the Roth IRA beginning January 1, 1998. Of course,
there are restrictions and eligibility requirements so contact your Investment
Executive for details.
CONVERSION FROM A TRADITIONAL IRA TO THE NEW ROTH IRA
Money in other IRAs, whether deductible or nondeductible, may be rolled over to
a Roth IRA without penalty, subject to certain rules. A special tax break is
given to taxpayers that convert an existing IRA before January 1, 1999. The
income from the conversion can be included in income ratably over the four years
beginning with the year of the conversion. Even if you do not currently have an
IRA with Wayne Hummer, your Investment Executive, along with our retirement
plans specialist, can provide you with the advantages of each IRA relative to
your particular situation.
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
SEPTEMBER 30, YEAR ENDED
1997 MARCH 31,
<S> <C> <C>
ASSETS (UNAUDITED) 1997
Investments, at value (Cost: $67,284,886 and $64,503,522, respectively)...... $127,191,458 $104,028,097
Cash......................................................................... 86,192 72,025
Dividends receivable......................................................... 145,291 146,375
Prepaid expenses............................................................. 13,445 14,459
Insurance deposit............................................................ 3,846 3,846
Receivable for Fund Shares sold.............................................. 2,000 49,175
------------ ------------
Total assets................................................... 127,442,232 104,313,977
LIABILITIES AND NET ASSETS
Payable for investments purchased............................................ 217,344 0
Due to Wayne Hummer Management Company....................................... 79,323 72,075
Accounts payable............................................................. 32,805 27,424
------------ ------------
Total liabilities.............................................. 329,472 99,499
------------ ------------
Net assets applicable to 3,777,823 and 3,718,059 Shares outstanding,
no par value, equivalent to $33.65 and $28.03 per Share, respectively...... $127,112,760 $104,214,478
============ ============
ANALYSIS OF NET ASSETS
Paid-in capital.............................................................. $62,068,488 $60,727,226
Net unrealized appreciation of investments................................... 59,906,572 39,524,575
Undistributed net realized gain on sales of investments...................... 5,023,648 3,769,744
Undistributed net investment income.......................................... 114,052 192,933
------------ ------------
Net assets applicable to Shares outstanding.................................. $127,112,760 $104,214,478
============ ============
THE PRICING OF SHARES
Net asset value, offering and redemption price per Share
($127,112,760 / 3,777,823 Shares outstanding and $104,214,478 / 3,718,059
Shares outstanding, respectively)............................................ $ 33.65 $ 28.03
============ ============
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1997 MARCH 31,
INVESTMENT INCOME: (UNAUDITED) 1997
<S> <C> <C>
Dividends.................................................................. $ 849,625 $ 1,899,940
Interest................................................................... 61,152 108,484
----------- -----------
Total investment income........................................ 910,777 2,008,424
EXPENSES:
Management fee............................................................. 457,807 817,835
Transfer agent fees........................................................ 32,111 54,920
Professional fees ......................................................... 21,000 35,764
Custodian fees............................................................. 11,001 20,500
Trustee fees............................................................... 10,800 19,956
Portfolio accounting fees.................................................. 9,786 17,043
Registration costs......................................................... 5,092 10,293
Other...................................................................... 22,047 36,892
----------- -----------
Total expenses................................................. 569,644 1,013,203
----------- -----------
Net investment income........................................................ 341,133 995,221
----------- -----------
Net realized gain on sales of investments.................................... 5,023,648 4,861,756
Change in unrealized appreciation ........................................... 20,381,997 5,425,276
----------- -----------
Net gain on investments...................................................... 25,405,645 10,287,032
----------- -----------
Net increase in net assets resulting from operations......................... $25,746,778 $11,282,253
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1997 MARCH 31,
OPERATIONS: (UNAUDITED) 1997
<S> <C> <C>
Net investment income..................................................... $ 341,133 $ 995,221
Net realized gain on sales of investments................................. 5,023,648 4,861,756
Change in unrealized appreciation......................................... 20,381,997 5,425,276
------------ ------------
Net increase in net assets resulting from operations........................ 25,746,778 11,282,253
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income..................................................... (420,014) (1,127,423)
Net realized gain on investments.......................................... (3,769,744) (3,830,121)
------------ ------------
Total dividends to Shareholders............................................. (4,189,758) (4,957,544)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares sold................................................. 2,531,373 5,813,237
Shares issued upon reinvestment of dividends ............................. 4,072,066 4,796,167
------------ ------------
6,603,439 10,609,404
Less payments for Shares redeemed......................................... 5,262,177 15,327,845
------------ ------------
Increase (decrease) from Capital Share transactions......................... 1,341,262 (4,718,441)
Total increase in net assets................................................ 22,898,282 1,606,268
NET ASSETS:
Beginning of period ...................................................... 104,214,478 102,608,210
------------ ------------
End of period (including undistributed net investment income of $114,052
and $192,933, respectively)............................................... $127,112,760 $104,214,478
============ ============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
1997 YEAR ENDED MARCH 31,
(UNAUDITED) 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD..... $ 28.03 $ 26.37 $ 23.43 $ 21.23 $ 21.72
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................. 0.09 0.26 0.32 0.32 0.28
Net realized and unrealized gains
(losses) on investments............... 6.66 2.69 3.41 2.40 (0.42)
-------- -------- -------- ------- -------
Total from investment operations......... 6.75 2.95 3.73 2.72 (0.14)
LESS DISTRIBUTIONS:
Dividends from net investment income... (0.11) (0.29) (0.31) (0.31) (0.28)
Distributions from net realized
gain on investments.................. (1.02) (1.00) (0.48) (0.21) (0.07)
-------- -------- -------- ------- -------
Total distributions...................... (1.13) (1.29) (0.79) (0.52) (0.35)
-------- -------- -------- ------- -------
NET ASSET VALUE, END OF PERIOD........... $ 33.65 $ 28.03 $ 26.37 $ 23.43 $ 21.23
======== ======== ======== ======= =======
TOTAL RETURN............................. 25.01% 11.61% 16.15% 13.04% (0.69%)
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period (000's)...... $127,112 $104,214 $102,608 $94,770 $92,391
Ratio of expenses to average
net assets........................... 0.97%(a) 0.99% 1.06% 1.07% 1.07%
Ratio of net investment income to
average net assets................... 0.58%(a) 0.97% 1.29% 1.44% 1.33%
Portfolio turnover rate................ 7%(a) 9% 6% 3% 2%
Average commission rate................ $ 0.0600 $ 0.0551 -- -- --
<FN>
(a) Determined on an annualized basis.
</FN>
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
PORTFOLIO OF INVESTMENTS
September 30, 1997
<CAPTION>
NUMBER
OF
COMMON STOCKS (96.7%) SHARES VALUE
<S> <C> <C>
AUTO & MACHINERY (7.5%)
Illinois Tool Works, Inc. 130,000 $ 6,500,000
Regal-Beloit Corporation 100,000 3,075,000
----------
9,575,000
BANKS (4.9%)
First of America Bank Corporation 40,000 2,147,500
Northern Trust Corporation 70,000 4,138,750
----------
6,286,250
CHEMICAL (8.7%)
Avery Dennison Corporation 70,000 2,800,000
Morton International, Inc. 100,000 3,550,000
RPM, Inc. 100,000 2,050,000
Schulman (A.), Inc. 125,000 2,671,875
----------
11,071,875
COMMUNICATIONS EQUIPMENT (4.9%)
Andrew Corporation (c ) 60,000 1,571,250
QUALCOMM Incorporated (c) 40,000 2,547,500
Motorola, Inc. 30,000 2,156,250
----------
6,275,000
ELECTRICAL/ELECTRONICS (8.9%)
Applied Materials, Inc. (c) 40,000 3,810,000
Emerson Electric Co. 60,000 3,457,500
Sun Microsystems, Inc. (c) 40,000 1,872,500
Thomas & Betts Corporation 40,000 2,185,000
----------
11,325,000
FOOD, BEVERAGE & HOUSEHOLD (9.6%)
McCormick & Company, Incorporated 100,000 2,406,250
PepsiCo, Inc. 40,000 1,622,500
Rubbermaid Incorporated 100,000 2,556,250
Sara Lee Corporation 70,000 3,605,000
Smucker (The J. M.) Company Class B 80,000 2,065,000
----------
12,255,000
HEALTH CARE AND PHARMACEUTICALS (12.0%)
Abbott Laboratories 40,000 2,557,500
C. R. Bard, Inc. 60,000 2,036,250
MedPartners, Inc. (c) 43,862 940,292
Patterson Dental Company (c) 50,000 2,025,000
R. P. Scherer Corporation (c) 85,000 5,264,688
STERIS Corporation (c) 30,000 1,233,750
<PAGE>
<CAPTION>
NUMBER
OF
COMMON STOCKS (96.7%) SHARES VALUE
<S> <C> <C>
HEALTH CARE & PHARMACEUTICALS (CONTINUED)
Technol Medical Products, Inc. (c) 60,000 $1,207,500
----------
15,264,980
INSURANCE (9.6%)
AON Corporation 45,000 2,379,375
Cincinnati Financial Corporation 49,612 4,068,184
Ohio Casualty Corporation 40,000 1,855,000
Old Republic International Corporation 100,000 3,900,000
----------
12,202,559
MERCHANDISING & DISTRIBUTION (5.5%)
Arbor Drugs, Inc. 100,000 2,325,000
Fastenal Company 30,000 1,597,500
The Gap, Inc. 35,000 1,752,187
Viking Office Products, Inc. (c) 60,000 1,305,000
----------
6,979,687
OIL & GAS (2.4%)
Burlington Resources, Inc. 60,000 3,078,750
PAPER & FOREST PRODUCTS (7.1%)
Albany International Corp. Class A 100,000 2,512,500
Consolidated Papers, Inc. 55,000 3,052,500
Sonoco Products Company 100,000 3,393,750
----------
8,958,750
PUBLISHING & MEDIA (4.6%)
Interpublic Group of Companies, Inc. 112,500 5,772,656
SERVICES (4.1%)
H & R Block, Inc. 60,000 2,317,500
Choice Hotels International, Inc. (c) 100,000 1,925,000
Olsten Corporation 50,000 928,125
----------
5,170,625
MISCELLANEOUS (6.9%)
Autoliv, Inc. 40,920 1,739,100
Bacou USA, Inc. (c) 65,000 1,137,500
The Boeing Company 60,000 3,266,250
Pall Corporation 120,000 2,587,500
----------
8,730,350
----------
Total Common Stocks (Cost: $63,039,910) $ 122,946,482
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS (3.4%)
MATURITY DATE PRINCIPAL
RATE % (1997) AMOUNT VALUE
<S> <C> <C> <C> <C>
United States Treasury Bill 5.000 10/02 $ 354,000 $ 353,952
General Electric Capital Corp 5.592 10/06 502,000 501,616
General Electric Capital Corp 5.599 10/14 412,000 411,180
American Express Credit Corp. 5.594 10/21 502,000 500,466
United States Treasury Bill 5.157 10/23 777,000 774,591
United States Treasury Bill 5.183 10/30 405,000 403,339
United States Treasury Bill 5.244 11/06 202,000 200,961
United States Treasury Bill 5.265 11/13 404,000 401,526
United States Treasury Bill 4.602 11/20 110,000 109,311
United States Treasury Bill 4.960 12/26 582,000 575,278
United States Treasury Bill 5.498 02/05/98 13,000 12,756
------------
Total Short-Term Investments (Cost: $4,244,976) 4,244,976
------------
TOTAL INVESTMENTS (Cost: $67,284,886) (100.1%) 127,191,458
CASH AND OTHER ASSETS, LESS LIABILITIES (-0.1%) (78,698)
------------
NET ASSETS (100.0%) $127,112,760
============
<FN>
NOTES TO PORTFOLIO OF INVESTMENTS:
(a) Interest rates on money market instruments represent annualized yield
to date of maturity.
(b) Based on the cost of investments of $67,284,886 for federal income tax
purposes at September 30, 1997, the aggregate gross unrealized appreciation was
$60,283,907, the aggregate gross unrealized depreciation was $377,335 and the
net unrealized appreciation of investments was $59,906,572.
(c) Non-income producing security.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust"), is an open-end investment
company organized as a Massachusetts business trust. The Trust consists of two
investment portfolios, the Wayne Hummer Growth Fund and the Wayne Hummer Income
Fund, each operating as a separate mutual fund. Presented herein are the
financial statements of the Wayne Hummer Growth Fund (the "Fund"). The Fund
commenced investment operations on December 30, 1983, and may issue an unlimited
number of full and fractional units of beneficial interest (Shares) without par
value. The investment objective of the Fund is to achieve long-term capital
growth.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Investments are stated at value. Each listed and unlisted security for
which last sale information is regularly reported is valued at the last reported
sale price on that day. If there has been no sale on such day, the last reported
sale price prior to that day is utilized if such sale is between the closing bid
and asked price of the current day. If the last price on a prior day is not
between the current day's closing bid and asked price, then the value of such
security is taken to be the mean between the current day's closing bid and asked
price. Any unlisted security for which last sale information is not regularly
reported and any listed debt security which has an inactive listed market for
which over-the-counter market quotations are readily available is valued at the
highest closing bid price determined on the basis of reasonable inquiry, except
that debt securities having a remaining maturity of 60 days or less are valued
on an amortized cost basis. Restricted securities and any other securities or
other assets for which market quotations are not readily available are valued at
their fair value as determined in good faith under procedures established by the
Board of Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Dividend income
is recorded on the ex-dividend date, and interest income is recorded on the
accrual basis and includes amortization of money market instrument premium and
discount.
<PAGE>
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund Shares are sold and redeemed on a continuous basis at net asset value.
Net asset value per Share is determined on each day the New York Stock Exchange
is open for trading as of the close of trading on the Exchange and at 3:00 p.m.
Chicago time on each other day during which there is a sufficient degree of
trading in securities of the Fund's portfolio so as to affect materially the net
asset value of the Shares by dividing the value of net assets (total assets less
liabilities) by the total number of Shares outstanding.
Ordinary income dividends are normally declared and paid in April, July,
October, and December. Capital gains dividends, if any, are paid at least
annually. Dividends will be reinvested in additional Shares unless a Shareholder
requests payment in cash. Dividends payable to Shareholders are recorded by the
Fund on the ex-dividend date. On October 20, 1997, an ordinary income dividend
of $.04 per Share was declared, payable October 20, 1997, to Shareholders of
record on October 20, 1997.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the
Internal Revenue Code available to investment companies and, in the manner
provided therein, to distribute all of its taxable income, as well as any net
realized gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a
Portfolio Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"). The shareholders of the Investment Adviser are the
Voting Members of Wayne Hummer Investments LLC, ("Distributor and Shareholder
Service Agent"). For advisory and management services and facilities furnished,
the Fund pays fees of .80 of 1% on the first $100 million of average daily net
assets, .65 of 1% of the next $150 million of average daily net assets and .50
of 1% of the average daily net assets in excess of $250 million. The Investment
Adviser is obligated to reimburse the Fund to the extent that the Fund's
ordinary operating expenses, including the fee of the Investment Adviser, exceed
the lesser of (1) 1.50% of the average daily net assets of the Fund or (2) the
expense limitations applicable to the Fund imposed by any state in which the
Fund's Shares are sold. During the period ended September 30, 1997, and the year
ended March 31, 1997, the Fund incurred management fees of $457,807 and
$817,835, respectively.
For portfolio accounting services, the Fund pays the Investment Adviser a
fee based on the level of average daily net assets plus out-of-pocket expenses.
Wayne Hummer Investments LLC serves as Distributor and Shareholder Service
Agent without compensation from the Fund.
Certain trustees of the Fund are also officers or directors of the
Investment Adviser or Voting Members of the Distributor and Shareholder Service
Agent. During the period ended September 30, 1997, and the year ended March 31,
1997, the Fund made no direct payments to its officers and incurred trustee fees
for its unaffiliated trustees of $10,800 and $19,956, respectively.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1967
Purchases $3,980,844 $ 8,696,045
Proceeds from sales $8,855,043 $13,170,404
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statement of Changes
in Net Assets are in respect of the following number of shares:
SIX MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, 1997 MARCH 31, 1997
Shares sold 83,387 217,693
Shares issued upon reinvestment
of dividends 148,735 183,754
----------- -----------
232,122 401,447
Shares redeemed (172,358) (574,850)
----------- -----------
Net decrease in Shares outstanding (59,764) (173,403)
=========== ===========
<PAGE>
BOARD OF TRUSTEES
Philip M. Burno
Chairman
Steven R. Becker
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
Eustace K. Shaw
LOGO: Member of 100% No-Load(TM) Mutual Fund Council
LOGO: Wayne Hummer Investments LLC
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
300 South Wacker Drive
Chicago, Illinois
60606-6607
1.800.621.4477 (toll-free)
(312) 431.1700 (local)
200 E. Washington Street
Appleton, Wisconsin
54911-5468
1.800.678.0833 (toll-free)
(920) 734.1474 (local)
www.whummer.com
<PAGE>
WAYNE HUMMER GROWTH FUND
Semi-Annual
Financial
Statements
September 30, 1997
(Unaudited)
WAYNE HUMMER GROWTH FUND
300 South Wacker Drive
Chicago, IL 60606-6607
First Class
U.S. Postage
PAID
Berwyn, IL
Permit No. 150
