Wayne Hummer Growth Fund
Semi-Annual
Financial Statements
September 30, 1998
(Unaudited)
<PAGE>
Wayne Hummer Growth Fund
Photo of: Thomas J. Rowland
Dear Fellow Shareholder:
This report presents the semi-annual financial statements of the Wayne Hummer
Growth Fund on September 30, 1998, the end of the first half of the Fund's
fiscal year 1999. The net asset value of a Fund share decreased 8.1% from $33.65
on September 30, 1997 to $30.93 on September 30, 1998. If dividends as well as
distributions from capital gains were reinvested during this period, the
decrease was 1.3%. For the first half of this fiscal year the decrease on this
same basis was 12.3%. During the first half of the current fiscal year, the
Fund's Board of Trustees declared a dividend of $.05 per share and a capital
gain distribution of $.78 payable to shareholders on April 23rd, and another
dividend of $.04 payable on July 17th.
For the past year or more, much has been made of the developing financial crises
unfolding in the Asian markets, with Japan being of particular concern. Now the
contagion has spread to Latin America. Until the last quarter it appeared that
the upward trend in our markets was impervious to the continuing deterioration
of economic fundamentals in far corners of the globe. Investors appeared
sanguine about possible ripple effects of these developments on the U.S.
economy, with the stock market shrugging off any developing setbacks in short
order. But the confluence of lowered expectations for corporate profit growth,
economic and capital market deterioration in an expanding list of foreign
countries, a slowing U.S. economy, the initiation of an impeachment inquiry
directed at President Clinton and, finally, the government engineered private
bailout of a major hedge fund company, was more than the bull market could bear.
The result was the worst quarterly performance by stocks in several years. It
would seem that over-optimism through mid-summer in the face of these growing
crises around the world had set our stock markets up for a correction.
In this latest quarter the stock market finally exhibited more than just a
cursory reaction to these developments. In the words of a Wall Street Journal
reporter, "the market has gone from incredible heights to flashes of mortality",
and all in the span of a few short weeks. It became a quarter of heightened
volatility which encompassed record index highs in July and a finish which
resulted in the biggest drop by the S&P 500 since the third quarter of 1990, and
its first quarterly loss since the final quarter of 1994. This index registered
a negative return of 10.0% for the quarter. At the end of the quarter the index
was more than 14% below its all time high set on July 17. This number masks the
carnage in the broader market of stocks. At the recent market lows set at the
beginning of September, fully 45% of the stocks in the S&P 500 Index had
declined 30% or more from their 52-week highs. Among NASDAQ issues, nearly 80%
had declined 30% or more. While the S&P was up 7.4% on a year-over-year basis,
the erosion of momentum is evident from the fact that on the same basis it had
been up 30% and 48% at the end of June and March, respectively.
The Federal Reserve Board recently responded to the markets' angst with its
second interest rate cut within a span of three weeks. This signals a shift in
its focus from controlling inflation to stabilization of global financial
markets and maintaining our own economy on a growth track amid increasing
concerns of a developing recession. Further rate cuts appear likely as the
economy slows further and damage control to contain the emerging markets' debt
crises is implemented. Canada and Latin America, particularly Brazil and Mexico,
represent larger components of our foreign trade than do the Asian markets.
Disruptions in the capital markets of these countries further diminish
industrial country economic growth prospects. Already we have seen a significant
erosion in our manufacturing sector, impacted not only by a drop in exports but
also from an influx of cheaper foreign goods as capital flight to the dollar
extended its trade-weighted rise of 30% since April of 1995.
The latest Federal Reserve Board action followed signs that Japan appears
finally to be taking steps to follow through on reform of its banking system,
which is mired in bad loans, and stimulating its domestic economy to help
promote Asian economic recovery. The U.S. would appear to have a great deal of
flexibility with respect to its policy options in dealing with the current
situation. The lowest bond rates in thirty years, low inflation, rising real
incomes, positive economic growth and projections of growing budget surpluses in
the years ahead provide, in addition to monetary policy flexibility, an
opportunity to cut taxes to stimulate the economy as necessary.
In terms of valuations, the fact that the blue chip market leaders have joined
in the market sell-off means that most market segments have now experienced
notable price corrections. With lower earnings expectations now priced into the
market, and with the likelihood of lower interest rates offsetting the pressure
of reduced earnings, the stage could be set for the market to begin focusing on
the next earnings expansion phase.
Continued volatility is likely for the next several months. The heightened
market risk in this type of environment is evident from the better performance
of some of the Fund's more defensive issues, those less impacted from a slowdown
in economic growth domestically, and also insulated from the turmoil in
international markets. A case in point is CVS Corporation, up nearly 13% in the
quarter. CVS became a holding in the Fund's portfolio as a result of its $1.5
billion acquisition of Arbor Drugs for stock in April. The much larger CVS
operates over 4000 drug stores in 24 states through its wholly-owned
subsidiaries CVS Pharmacies, Revco and now Arbor Drugs. The inclusion of issues
like CVS in the Fund highlights the merits of industry diversification across
economic sectors in mitigating the impact of gyrations in the market like we
have seen of late.
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, 1998
<PAGE>
FUND OVERVIEW
Established December 30, 1983, the investment objective of the Wayne Hummer
Growth Fund ("the Fund") is to achieve long-term growth and current income is a
secondary objective. An emphasis has been placed on identifying promising
investments that would generally be characterized as mid-capitalization stocks.
The Fund's prospectus contains detailed information about permissible
investments.
SERVICES AVAILABLE TO SHAREHOLDERS
PAYROLL DIRECT DEPOSIT PLAN
You may authorize your employer to deduct a specified amount from your payroll
check to purchase additional shares of the Fund. Complete details are available
from the Fund or your Wayne Hummer Investment Executive.
SYSTEMATIC INVESTMENT PLAN
What better way to start early and save regularly than with a Systematic
Investment Plan. You may have subsequent purchases invested automatically each
month. Your bank can send money from your bank account to the Fund. Request an
application with full details from your Investment Executive or call the Fund
directly.
SOCIAL SECURITY DIRECT DEPOSIT PLAN
Instead of receiving a monthly check or sending it to your bank, you may use the
Wayne Hummer Growth Fund to directly deposit your social security benefits. You
will have to recognize a capital gain or loss each time you redeem from the
Fund. Contact your Wayne Hummer Investment Executive for complete details.
IRA OR RETIREMENT PLANS
Shares of the Wayne Hummer Growth Fund are a suitable addition to your IRA or
pension plan. Contact your Wayne Hummer Investment Executive for complete
details on the expanded options available for retirement planning, including the
Roth IRA.
INTERNET ADDRESS: WWW. WHUMMER.COM
Those who enjoy using the computer to access information will find the
prospectus and current rates for the Fund, along with information on the other
Wayne Hummer Funds, on our website. Other services available through Wayne
Hummer Investments LLC are also on-line.
TAXABLE TRANSACTIONS FOR NON-RETIREMENT ACCOUNTS
Each time you sell shares of the Fund, you must calculate the gain or loss
attributed to that transaction. The Fund can provide you with the average cost
basis of the shares sold if you opened the account after January 1, 1991. If you
have not been getting an average cost statement and you have been calculating
the cost basis on your account using the average cost method, you can provide
the Fund with your most recent calculation. We will update our system so that
any future redemptions will generate an Average Cost Statement that will be
mailed to you in February. Contact the Fund or your Invesment Executive for more
information.
<PAGE>
WAYNE HUMMER GROWTH FUND VS.
RUSSELL MID-CAP AND THE S&P 500
VALUE OF $10,000 INITIAL INVESTMENT (THOUSANDS)
FOR THE TEN YEAR PERIOD ENDED 9/30/98
GRAPH:
WAYNE
HUMMER
GROWTH RUSSELL
FUND MID-CAP S&P 500
09/30/88 -1.76% -0.93% 0.38%
12/31/88 0.87% 0.48% 3.05%
03/31/89 5.17% 7.46% 7.06%
06/30/89 6.05% 9.14% 8.70%
09/30/89 8.53% 9.53% 10.71%
12/31/89 2.48% -1.71% 2.04%
03/31/90 0.79% -3.86% -2.99%
06/30/90 5.67% 3.70% 6.14%
09/30/90 -12.02% -19.83% -13.70%
12/31/90 12.05% 10.74% 8.87%
03/31/91 12.75% 20.48% 14.60%
06/30/91 1.71% 0.57% -0.44%
09/30/91 3.87% 7.41% 5.39%
12/31/91 8.17% 8.78% 8.38%
03/31/92 0.75% 1.56% -2.50%
06/30/92 -0.72% -0.21% 1.79%
09/30/92 6.02% 3.89% 3.25%
12/31/92 4.07% 10.50% 5.07%
03/31/93 0.37% 5.44% 4.32%
06/30/93 -1.29% 1.58% 0.41%
09/30/93 0.43% 5.35% 2.56%
12/31/93 4.10% 1.30% 3.00%
03/31/94 -3.76% -2.96% -3.81%
06/30/94 -1.20% -2.16% 0.34%
09/30/94 4.55% 5.69% 4.92%
12/31/94 -0.33% -2.43% -0.02%
03/31/95 9.79% 10.41% 9.73%
06/30/95 2.57% 8.37% 9.44%
09/30/95 3.74% 8.87% 7.96%
12/31/95 6.84% 3.22% 6.01%
03/31/96 2.17% 6.02% 5.37%
06/30/96 1.82% 2.82% 4.43%
09/30/96 1.82% 3.13% 3.08%
12/31/96 5.62% 5.85% 8.36%
03/31/97 1.93% -0.82% 2.68%
06/30/97 14.54% 13.56% 17.43%
09/30/97 9.14% 13.28% 7.50%
12/31/97 2.17% 1.11% 2.88%
03/31/98 10.06% 10.81% 13.95%
06/30/98 3.00% -1.51% 3.26%
09/30/98 -12.28% -14.83% -9.95%
<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
9/30/98 $10,000 LATIVE ANNUAL 9/30/98$10,000 LATIVE ANNUAL 9/30/98 $10,000 LATIVE ANNUAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $ 9,867 -1.33% -1.33% 1 Year $ 9,399 -6.01% -6.01% 1 Year $10,906 9.06% 9.06%
5 Year $18,110 81.10% 12.61% 5 Year $19,030 90.30% 13.73% 5 Year $24,782 147.82% 19.90%
10 Year $33,666 236.66% 12.91% 10 Year$39,710 297.10% 14.79% 10 Year $49,051 390.51% 17.24%
Note: The Russell Mid-Cap and the S&P 500 are unmanaged and all returns include reinvested dividends.
</TABLE>
Wayne Hummer Growth Fund Value of Initial $10,000 Investment
FOR THE PERIOD 12/30/98 THRU 9/30/98
GRAPH:
Value of Value of Net
Reinvested Reinvested Asset
Capital Dividends Value
Gains
10,000 0 -
9,830 0 -
1984 9,350 58 -
9,980 149 -
10,170 245 -
10,670 357 -
1985 11,120 504 7
10,530 536 6
12,250 695 7
13,850 857 8
1986 13,880 926 397
12,570 903 359
13,330 1,023 381
16,140 1,309 461
1987 15,840 1,436 1,149
16,930 1,606 1,228
13,220 1,323 1,557
13,790 1,430 1,624
1988 14,190 1,523 1,676
13,900 1,540 1,642
13,740 1,669 1,821
14,450 1,756 1,915
1989 15,130 1,935 2,152
16,360 2,169 2,327
16,410 2,306 2,656
16,540 2,324 2,678
1990 16,960 2,580 3,224
14,860 2,343 2,825
16,000 2,843 3,600
18,040 3,206 4,059
1991 18,130 3,365 4,242
18,740 3,609 4,385
20,020 4,142 4,757
20,170 4,173 4,792
1992 19,840 4,202 4,883
20,950 4,560 5,156
21,640 4,919 5,355
21,720 4,938 5,374
1993 21,380 4,949 5,290
21,400 5,060 5,295
22,060 5,486 5,511
21,230 5,279 5,303
1994 20,910 5,297 5,223
21,790 5,628 5,443
21,340 5,766 5,649
23,430 6,331 6,202
1995 23,840 6,565 6,481
24,660 6,902 6,704
25,810 7,482 7,592
26,370 7,644 7,757
1996 26,040 7,693 8,800
26,450 7,919 8,939
27,500 8,468 9,773
28,030 8,631 9,961
1997 30,880 9,622 12,900
33,650 10,576.8 14,057.5
32,800 10,675.8 16,072.44
36,100 11,750 17,689.48
35,300 11,578.339 18,683.7128
30,930 10,208 16,370
Note: Past performance does not guarantee future results. 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>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
September 30, Year ended
1998 March 31,
(Unaudited) 1998
----------- ----------
<S> <C> <C>
Assets
Investments, at value (Cost: $68,157,205 and $68,828,291, respectively)..... $119,283,665 $140,385,172
Cash....................................................................... 36,911 148,272
Dividends receivable....................................................... 125,559 141,550
Prepaid expenses........................................................... 7,848 13,575
Insurance deposit.......................................................... 3,845 3,845
Receivable for investments sold............................................ 33,644 0
Receivable for Fund Shares sold .......................................... 35,527 175,897
--------- ---------
Total assets............................................................. 119,526,999 140,868,311
Liabilities and Net Assets
Due to Wayne Hummer Management Company....................................... 76,397 88,870
Accounts payable............................................................. 51,544 36,527
--------- ---------
Total liabilities........................................................ 127,941 125,397
--------- ---------
Net assets applicable to 3,859,935 and 3,898,610 Shares outstanding,
no par value, equivalent to $30.93 and $36.10 per Share, respectively...... $119,399,058 $140,742,914
========= =========
Analysis of Net Assets
Paid-in capital.............................................................. $64,926,821 $ 66,022,673
Net unrealized appreciation of investments................................... 51,126,460 71,556,881
Undistributed net realized gain on sales of investments...................... 3,250,101 3,022,924
Undistributed net investment income.......................................... 95,676 140,436
--------- ---------
Net assets applicable to Shares outstanding.................................. $119,399,058 $140,742,914
========= =========
The Pricing of Shares
Net asset value, offering and redemption price per Share ($119,399,058 / 3,859,935 Shares
outstanding and $140,742,914 / 3,898,610 Shares outstanding, respectively). $ 30.93 $ 36.10
========= =========
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Six months ended Year ended
September 30, 1998 March 31,
(Unaudited) 1998
----------- ----------
<S> <C> <C>
Investment income:
Dividends.................................................................. $ 827,829 $ 1,695,994
Interest................................................................... 103,498 195,926
--------- ---------
Total investment income .............................................. 931,327 1,891,920
Expenses:
Management fee............................................................. 514,234 950,496
Transfer agent fees........................................................ 28,089 59,111
Professional fees.......................................................... 25,244 46,500
Printing costs............................................................. 15,462 28,958
Custodian fees............................................................. 14,400 23,601
Registration costs......................................................... 10,606 19,649
Portfolio accounting fees.................................................. 10,512 19,640
Trustee fees............................................................... 9,000 18,200
Other...................................................................... 9,425 18,332
--------- ---------
Total expenses........................................................... 636,972 1,184,487
--------- ---------
Net investment income........................................................ 294,355 707,433
--------- ---------
Net realized gain on sales of investments.................................... 3,269,741 8,587,034
Change in unrealized appreciation............................................ (20,430,421) 32,032,306
--------- ---------
Net gain (loss) on investments............................................... (17,160,680) 40,619,340
--------- ---------
Net increase (decrease) in net assets resulting from operations.............. ($16,866,325) $ 41,326,773
========= =========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Six months ended Year ended
September 30, 1998 March 31,
(Unaudited) 1998
----------- ----------
<S> <C> <C>
Operations:
Net investment income........................................................ $ 294,355 $ 707,433
Net realized gain on sales of investments.................................... 3,269,741 8,587,034
Change in unrealized appreciation............................................ (20,430,421) 32,032,306
---------- ----------
Net increase (decrease) in net assets resulting from operations.............. (16,866,325) 41,326,773
Dividends to Shareholders from:
Net investment income........................................................ (339,115) (759,930)
Net realized gain on investments............................................. (3,042,564) (9,333,854)
---------- ----------
Total dividends to Shareholders................................................ (3,381,679) (10,093,784)
Capital Share transactions:
Proceeds from Shares sold.................................................... 4,344,078 7,179,953
Shares issued upon reinvestment of dividends ................................ 3,282,009 9,780,680
---------- ----------
7,626,087 16,960,633
Less payments for Shares redeemed............................................ 8,721,939 11,665,186
---------- ----------
Increase (decrease) from Capital Share transactions.......................... (1,095,852) 5,295,447
---------- ----------
Total increase (decrease) in net assets...................................... (21,343,856) 36,528,436
Net assets:
Beginning of the period........................................................ 140,742,914 104,214,478
---------- ----------
End of the period (including undistributed net investment income of $95,676
and $140,436, respectively)................................................. $ 119,399,058 $ 140,742,914
========== ==========
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
Six months ended
September 30, 1998 Year ended March 31,
(Unaudited) 1998 1997 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............ $ 36.10 $ 28.03 $ 26.37 $ 23.43 $ 21.23
Income from investment operations:
Net investment income......................... 0.07 0.19 0.26 0.32 0.32
Net realized and unrealized gains (losses) on
investments (4.37) 10.57 2.69 3.41 2.40
------ ------ ------ ------ ------
Total from investment operations......... (4.30) 10.76 2.95 3.73 2.72
Less distributions:
Dividends from net investment income.......... (0.09) (0.20) (0.29) (0.31) (0.31)
Distributions from net realized gains on investments (0.78) (2.49) (1.00) (0.48) (0.21)
------ ------ ------ ------ ------
Total distributions...................... (0.87) (2.69) (1.29) (0.79) (0.52)
------ ------ ------ ------ ------
Net asset value, end of period.................. $ 30.93 $ 36.10 $ 28.03 $ 26.37 $ 23.43
================== ======== ======== ======== ========
Total return.................................... (12.25%) 40.57% 11.61% 16.15% 13.04%
Ratios and Supplementary Data:
Net assets, end of period (000's)............... $ 119,399 $140,743 $104,214 $102,608 $94,770
Ratio of expenses to average net assets......... 0.96% (a) 0.96% 0.99% 1.06% 1.07%
Ratio of net investment income to average net assets 0.44% (a) 0.58% 0.97% 1.29% 1.44%
Portfolio turnover rate......................... 8% (a) 7% 9% 6% 3%
Average commission rate......................... $ 0.0556 $ 0.0569 $ 0.0551 -- --
Notes to Financial Highlights:
(a) Determined on an annualized basis.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
NUMBER
OF
COMMON STOCKS (97.1%) SHARES VALUE
--------- -------------
AUTO & MACHINERY (7.3%)
Illinois Tool Works, Inc. 120,000 $ 6,540,000
Regal-Beloit Corporation 100,000 2,225,000
-------------
8,765,000
BANKS (4.0%)
Northern Trust Corporation 70,000 4,777,500
CHEMICAL (7.4%)
Avery Dennison Corporation 70,000 3,058,125
Morton International, Inc. 100,000 2,187,500
RPM, Inc. 125,000 1,804,688
Schulman (A.), Inc. 125,000 1,765,625
----------
8,815,938
COMMUNICATIONS EQUIPMENT (3.2%)
ADC Telecommunications, Inc. (b) 50,000 1,056,250
Andrew Corporation (b ) 100,000 1,325,000
QUALCOMM Incorporated (b) 30,000 1,438,125
-----------
3,819,375
ELECTRICAL/ELECTRONICS (8.5%)
Applied Materials, Inc. (b) 80,000 2,020,000
Emerson Electric Co. 50,000 3,112,500
Sun Microsystems, Inc. (b) 70,000 3,486,875
Thomas & Betts Corporation 40,000 1,522,500
----------
10,141,875
FOOD, BEVERAGE & HOUSEHOLD (8.2%)
McCormick & Company, Incorporated 100,000 2,906,250
PepsiCo, Inc. 60,000 1,766,250
Rubbermaid Incorporated 50,000 1,196,875
Sara Lee Corporation 40,000 2,160,000
Smucker (The J. M.) Company Class B 80,000 1,720,000
----------
9,749,375
HEALTH CARE AND PHARMACEUTICALS (17.4%)
Abbott Laboratories 80,000 3,475,000
C. R. Bard, Inc. 60,000 2,212,500
Cardinal Health, Inc. 75,000 7,743,750
Health Management Associates, Inc. (b) 60,000 1,095,000
Patterson Dental Company (b) 75,000 2,775,000
Perclose, Inc. (b) 50,000 825,000
STERIS Corporation (b) 60,000 1,695,000
NUMBER
OF
SHARES VALUE
--------- ------------
HEALTH CARE & PHARMACEUTICALS (CONTINUED)
Sybron International Corporation (b) 50,000 $ 956,250
----------
20,777,500
INSURANCE (8.9%)
AON Corporation 45,000 2,902,500
Cincinnati Financial Corporation 90,000 2,767,500
Ohio Casualty Corporation 40,000 1,550,000
Old Republic International Corporation1 50,000 3,375,000
----------
10,595,000
MERCHANDISING & DISTRIBUTION (9.2%)
CVS Corporation 100,000 4,381,250
Fastenal Company 70,000 1,750,000
The Gap, Inc. 50,000 2,637,500
Office Depot, Inc. (b) 100,000 2,243,750
----------
11,012,500
OIL & GAS (1.9%)
Burlington Resources, Inc. 60,000 2,242,500
PAPER & FOREST PRODUCTS (6.1%)
Albany International Corp. Class A 101,003 1,836,983
Consolidated Papers, Inc. 110,000 2,763,750
Sonoco Products Company 110,000 2,640,000
----------
7,240,733
PUBLISHING & MEDIA (4.5%)
Interpublic Group of Companies, Inc. 100,000 5,393,750
SERVICES (2.1%)
H & R Block, Inc. 60,000 2,482,500
MISCELLANEOUS (8.4%)
Autoliv, Inc. 40,920 1,125,300
Bacou USA, Inc. (b) 65,000 1,121,250
The Boeing Company 60,000 2,058,750
National City Corporation 48,000 3,165,000
Pall Corporation 120,000 2,662,500
----------
10,132,800
----------
Total Common Stocks (Cost: $64,819,886) $ 115,946,346
<PAGE>
Value
---------
SHORT-TERM INVESTMENTS (2.8%)
United States Treasury Bills
4.48% - 4.97%, 10/01/98 - 12/17/98 $ 3,337,319
----------
TOTAL INVESTMENTS (Cost: $68,157,205) (99.9%) 119,283,665
CASH AND OTHER ASSETS, LESS LIABILITIES (0.1%) 115,393
----------
NET ASSETS (100.0%) $ 119,399,058
==========
Notes to Portfolio of Investments:
(a) Interest rates on short-term investments represent annualized yield to date
of maturity.
(b) Non-income producing security.
(c) Based on the cost of investments of $68,157,205 for federal income tax
purposes at September 30, 1998, the aggregate gross unrealized appreciation was
$55,116,905, the aggregate gross unrealized depreciation was $3,990,445 and the
net unrealized appreciation of investments was $51,126,460.
<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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. In those cases, actual results may differ from estimates.
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 as of the close of trading on the Exchange 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 19, 1998, an ordinary
income dividend of $0.03 per Share was declared, payable October 20, 1998, to
Shareholders of record on October 19, 1998.
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
1.50% of the average daily net assets of the Fund. During the period ended
September 30, 1998, and the year ended March 31, 1998, the Fund incurred
management fees of $514,234 and $950,496, 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, 1998, and the year ended March 31, 1998,
the Fund made no direct payments to its officers and incurred trustee fees for
its unaffiliated trustees of $9,000 and $18,200, respectively.
<PAGE>
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
Six months ended Year ended
September 30, 1998 March 31, 1998
----------------- -------------
Purchases $5,313,355 $ 8,693,169
Proceeds from sales $8,145,846 $15,787,737
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, 1998 March 31, 1998
------------------ --------------
Shares sold 125,777 222,095
Shares issued upon reinvestment of dividends 90,995 324,771
------------------ --------------
216,772 546,866
Shares redeemed (255,447) (366,315)
------------------ --------------
Net decrease in Shares outstanding (38,675) (180,551)
================== ==============
BOARD OF TRUSTEES
Philip M. Burno
Chairman
Steven R. Becker
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
Eustace K. Shaw
Graphic: Member of 100% No-Load(TM) Mutual Fund Council
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)
(414) 734.1474 (LOCAL)
WWW.WHUMMER.COM
<PAGE>
LOGO:
WH Wayne Hummer Investments LLC
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
<PAGE>
Wayne Hummer Growth Fund
Semi-Annual Financial Statements
September 30, 1998 (Unaudited)
WAYNE HUMMER
GROWTH FUND
300 South Wacker Drive
Chicago, IL 60606-6607
<PAGE>
WAYNE
HUMMER
INCOME
FUND
Semi-Annual
Financial Statements
Unaudited
September 30, 1998
<PAGE>
WAYNE HUMMER INCOME FUND
Photo of: David P. Poitras
PERFORMANCE COMMENTARY
The following discussion with portfolio manager David P. Poitras details the
investment environment and the strategies that affected the Wayne Hummer Income
Fund over the past six months. Mr. Poitras has been the Fund's portfolio manager
since its inception on December 1, 1992. He also manages the Wayne Hummer Money
Fund Trust.
Q: Please discuss the Fund's recent performance.
A: Rising fixed income securities prices--especially U.S. Treasury
securities--brought about desirable results for the Wayne Hummer Income
Fund. For the six and twelve month periods ended September 30, 1998, the
Fund generated total returns of 5.73% and 10.13%, respectively. The
return on the Fund's benchmark index was 6.38% and 10.41%, respectively.
The Fund paid income dividends totaling $0.45 per share during the past
six months. At September 30, 1998, the SEC yield of the Fund was 5.39%.
Q: What accounted for the Fund's strong performance?
A: Falling interest rates produced a large and positive impact on the
Fund's fixed income holdings--when interest rates fall, bonds prices
rise. Rates on intermediate-term U.S. Treasury securities fell by more
than 120 basis points, or 1.2%. Interest rates on U.S. agencies,
corporate notes and bonds, and mortgage-backed securities also fell, but
not to the same degree as U.S. Treasuries.
Q: What caused interest rates to fall?
A: Many things affected the fixed income markets. Globally, several
countries are struggling with ailing economies--Russia, Brazil and most
of Asia, for example. Most of the world's equity markets have fallen
sharply. Domestically, problem loans have hurt several banks. Many
banks, brokerage firms and hedge funds have incurred huge security
trading losses in foreign markets. Taken together, these ills may
negatively impact the U.S. economy. Generally, a weaker economy results
in lower interest rates.
Q: Why did Treasury interest rates fall more than interest rates on other
securities?
A: The answer is threefold: First, most investors view the Treasury market
as the safest haven during difficult and uncertain times. Second, the
U.S. Treasury is actually running a budget surplus, so the issuance of
Treasury securities is down. Less supply often means higher prices.
Third, if the economy does slow down, the credit quality of many
corporate issuers will come under pressure. Many investors sold
corporate notes as a result.
Q: Yields on Treasury securities fell more than yields on other securities.
How did that affect the Fund?
A: Over the past six and twelve month periods, the Fund's total return
lagged the total return of its benchmark index--the Merrill Lynch
Corporate and Government Index of 1 to 9.99 Year Maturities--by 65 and
28 basis points, respectively. The benchmark index is more heavily
weighted in Treasury securities than the Fund's portfolio and its return
does not include any expenses. Therefore, the benchmark produced a
slightly better total return.
<PAGE>
Q: Do you view this as an opportunity?
A: Absolutely. We think the corporate bond market is very attractive
relative to the Treasury market. The yield advantage of corporate
securities relative to Treasuries has not been this wide in many years.
Recently, we increased the Fund's allocation of corporate issues to
approximately 65%, up from 59% at March 31, 1998. We currently have 15%
of the portfolio's assets allocated to U.S. Treasury and agency
securities and 19% to mortgage-backed securities.
Q: What other strategies did you employ to manage the fund?
A: Throughout the quarter, we maintained a duration of approximately four
years--slightly longer than the 3.2 year duration of the Fund's
benchmark index. The longer duration helped the performance of the
portfolio as interest rates fell. (Generally, when interest rates fall,
longer-duration portfolios produce a greater rise in value than shorter-
duration portfolios. On the other hand, in a rising interest rate
environment, shorter-duration portfolios maintain their value better.)
We also increased our holdings of "put" bonds. "Put" bonds are
periodically redeemable at the holder's option--thereby providing price
protection if interest rates rise and desirable performance if interest
rates fall. At September 30, 1998, over 12% of the Fund's assets were
invested in "puttable" corporate notes.
Q: What strategies will you follow in the coming months?
A: As opportunities arise, we anticipate increasing the Fund's allocation
of corporate notes. Absent a dramatic change in interest rates, we
expect to maintain the Fund's current duration of approximately four
years.
PORTFOLIO HIGHLIGHTS
The investment philosophy of the Fund is to invest primarily in intermediate-
term fixed-income securities.
Top 10 Bond Holdings as of 9/30/98:
(% of Total Net Assets)
1. U.S. Treasury Note, 6.125%, 12/31/01
2. United Air Lines, Inc., 9.760%, 05/27/06
3. Federal Home Loan Mtg. Corp., 8.00%, 03/15/21
4. Boise Cascade Corp., 9.875%, 02/15/01
5. Federal National Mortgage Assoc., 6.82%, 08/23/05
6. NYNEX Corporation, 9.55%, 05/01/10
7. Dayton Hudson Corp., 5.685%, 8/15/27
8. Canadian Pacific Ltd., 8.850%, 06/01/22
9. Parker Hannifin Corp., 9.75%, 02/15/21
10. Pennzoil Co., 10.25%, 11/01/05
The top ten holdings comprise 40.7% of total net assets.
Average maturity is determined by the maturity or reasonable
call date. The average maturity of the portfolio on September 30, 1998 was 5.29
years.
Maturity Schedule
PIE CHART: Over Ten Years 5%
Less than 3 Years 20%
3-10 Years 75%
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
of 1 to 9.99 Year Maturities
From Inception to the Period Ended September 30, 1998
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
12/31/97 14126 14024
3/31/98 14324 14255
6/30/98 14598 14524
9/30/98 15145 15164
PERFORMANCE COMPARISON
Merrill Lynch Corporate and Government
Wayne Hummer Income Fund Index of 1 to 9.99 Years
- ------------------------------------- ----------------------------------------
Period Growth Total Return Period Growth Total Return
Ended of Cum. Average Ended of Cum. Average
9/30/98 $10,000 Annual 9/30/98 $10,000 Annual
- ------------------------------------- ----------------------------------------
1 Year $11,013 10.13% 10.13% 1 Year $11,041 10.41% 10.41%
5 Year $13,669 36.69% 6.45% 5 Year $13,774 37.74% 6.61%
12/1/92 $15,145 51.45% 7.38% 12/1/92 $15,159 51.59% 7.39%
- - 9/30/98 - 9/30/98
Note: This graph compares the results of $10,000 invested in Wayne Hummer
Income Fund on December 1, 1992, with the Merrill Lynch Corporate and
Government Index, which is unmanaged and all returns include reinvested
dividends. Past performance does not guarantee future results. Actual
investment return and principal value of an investment will fluctate so
that an investor's shares, when redeemed, may be worth more or less than
their original cost.
<PAGE>
Fund Overview
Established in 1992, the investment objective of the Wayne Hummer Income Fund
(the "Fund") is to achieve as high a level of current income as is consistent
with prudent investment management. The Fund invests primarily in
intermediate-term corporate and U.S. Government & Agency securities.
The Fund's prospectus contains detailed information about permissible
investments.
Services Available to Shareholders
Payroll Direct Deposit Plan
You may authorize your employer to deduct a specified amount from your payroll
check to purchase additional shares of the Fund. Complete details are available
from the Fund or your Wayne Hummer Investment Executive.
Systematic Investment Plan
What better way to start early and save regularly than with a Systematic
Investment Plan. You may have subsequent purchases invested automatically each
month. Your bank can send money from your bank account to the Fund. Request an
application with full details from your Investment Executive or call the Fund
directly.
Social Security Direct Deposit Plan
Instead of receiving a monthly check or sending it to your bank, you may use the
Wayne Hummer Income Fund to directly deposit your social security benefits. You
can easily access the money you need, while the rest continues to earn
dividends. You will have to recognize a capital gain or loss each time you
redeem from the Fund, so this service is used by those who do not need the
social security benefits for current income.
IRA or Retirement Plans
Shares of the Wayne Hummer Income Fund are a suitable addition to your IRA or
pension plan. Contact your Wayne Hummer Investment Executive for complete
details on the expanded options available for retirement planning, including the
Roth IRA.
Internet Address: www. whummer.com
Those who enjoy using the computer to access information will find the
prospectus and current rates for the Fund, along with information on the other
Wayne Hummer Funds, on our website. Other services available through Wayne
Hummer Investments LLC are also on-line.
<PAGE>
Statement of Assets and Liabilities
September 30, 1998 Year ended
Assets (Unaudited) March 31, 1998
------------------ --------------
Investments, at value (Cost: $19,780,500
and $20,751,010, respectively) $ 20,725,843 $ 21,208,323
Cash 13,396 43,956
Interest receivable 316,798 290,136
Receivable for Fund Shares sold 18,025 2,137
Prepaid expenses 6,925 9,445
------------------ --------------
Total assets 21,080,987 21,553,997
Liabilities and Net Assets
Payable for investments purchased 0 197,755
Dividends payable 26,788 23,152
Due to Wayne Hummer Management Company 8,556 9,157
Accounts payable 20,492 20,320
------------------ --------------
Total liabilities 55,836 250,384
------------------ --------------
Net assets applicable to 1,330,734 and
1,384,724 Shares outstanding, no par
value, equivalent to $15.80 and $15.38
per Share, respectively $ 21,025,151 $ 21,303,613
================== ==============
Analysis of Net Assets
Paid-in capital $ 20,925,776 $ 21,759,607
Net unrealized appreciation of investments 945,343 457,313
Accumulated net realized loss on sales of
investments (845,968) (913,307)
------------------ --------------
Net assets applicable to Shares outstanding $ 21,025,151 $ 21,303,613
================== ==============
The Pricing of Shares
Net asset value, offering and redemption
price per Share ($21,025,151 divided by
1,330,734 Shares outstanding and $21,303,613
divided by 1,384,724 Shares outstanding,
respectively) $ 15.80 $ 15.38
================== ==============
Statement of Operations
Six months ended Year ended
September 30, 1998 March 31,
Investment income: (Unaudited) 1998
------------------ --------------
Interest $ 723,609 $ 1,549,115
Expenses:
Management fee 52,656 110,478
Transfer agent fees 13,553 25,820
Professional fees 11,400 20,740
Portfolio accounting fees 9,353 18,709
Printing and reporting fees 4,685 12,532
Custodian fees 4,039 8,200
Trustee fees 2,400 2,748
Amortization of organization costs 0 8,000
Other 8,280 15,939
------------------ --------------
Total expenses 106,366 223,166
------------------ --------------
Net investment income 617,243 1,325,949
------------------ --------------
Net realized gain on sales of investments 62,162 126,040
Change in net unrealized appreciation 488,030 932,199
------------------ --------------
Net realized and unrealized gain on investments 550,192 1,058,239
------------------ --------------
Net increase in net assets resulting from
operations $ 1,167,435 $ 2,384,188
================== ==============
See accompanying notes to financial statements.
<PAGE>
Statement of Changes in Net Assets
Six months ended Year ended
September 30, 1998 March 31,
Operations: (Unaudited) 1998
------------------ --------------
Net investment income $ 617,243 $ 1,325,949
Net realized gain on sales of investments 62,162 126,040
Change in net unrealized appreciation 488,030 932,199
------------------ --------------
Net increase in net assets resulting from
operations 1,167,435 2,384,188
Dividends to Shareholders from:
Net investment income (612,066) (1,303,537)
Capital Share transactions:
Proceeds from Shares sold 712,113 2,085,019
Shares issued upon reinvestment of
dividends 465,592 991,735
------------------ --------------
1,177,705 3,076,754
Less payments for Shares redeemed 2,011,536 4,852,264
------------------ --------------
Decrease from Capital Share transactions (833,831) (1,775,510)
------------------ --------------
Total decrease in net assets (278,462) (694,859)
Net assets:
Beginning of period 21,303,613 21,998,472
------------------ --------------
End of period $ 21,025,151 $ 21,303,613
================== ==============
Financial Highlights
(For a Share outstanding throughout each period)
<TABLE>
<CAPTION>
Six months ended
September 30, 1998 Year ended March 31,
Unaudited 1998 1997 1996 1995
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 15.38 $ 14.66 $ 14.95 $ 14.69 $ 15.10
Income from investment operations:
Net investment income 0.45 0.94 0.92 1.02 0.99
Net realized and unrealized gains (losses)
on investments 0.42 0.72 (0.29) 0.26 (0.42)
------------------ -------- -------- -------- --------
Total from investment operations 0.87 1.66 0.63 1.28 0.57
Less distributions:
Dividends from net investment income (0.45) (0.94) (0.92) (1.02) (0.98)
Dividends from net realized gain on
investments 0.00 0.00 0.00 0.00 0.00(b)
------------------ -------- -------- -------- --------
Total distributions (0.45) (0.94) (0.92) (1.02) (0.98)
------------------ -------- -------- -------- --------
Net asset value, end of period $ 15.80 $ 15.38 $ 14.66 $ 14.95 $ 14.69
================== ======== ======== ======== ========
Total return 5.73% 11.25% 4.32% 8.79% 4.16%
Ratios and Supplementary Data:
Net assets, end of period (000's) $ 21,025 $ 21,304 $ 21,998 $ 25,398 $ 26,352
Ratio of expenses to average net assets 1.01%(a) 1.01% 1.01% 0.91% 0.94%
Ratio of net investment income to average
net assets 5.87%(a) 6.00% 6.25% 6.80% 6.70%
Portfolio turnover rate 46%(a) 28% 39% 46% 32%
Notes to Financial Highlights:
(a) Determined on an annualized basis.
(b) Less than $.01 per share.
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Portfolio of Investments
September 30, 1998
Principal
CORPORATE OBLIGATIONS (63.6%) Amount Value
--------- ---------
Auto & Machinery (4.9%)
Johnson Controls, Inc.,
7.70%, due 03/01/15 $ 410,000 $ 482,488
Parker-Hannifin Corporation,
9.75%, due 02/15/21 480,000 548,078
---------
1,030,566
Banks & Finance (7.5%)
Ford Motor Credit Company,
6.125%, due 01/09/06 500,000 518,715
Norwest Corporation,
7.65%, due 03/15/05 360,000 407,488
St. Paul Bancorp, Inc.,
7.125%, due 02/15/04 100,000 107,919
Sears Roebuck Acceptance Corp.,
6.75%, due 09/15/05 500,000 536,490
---------
1,570,612
Oil and Gas (5.0%)
Northwest Natural Gas Company,
6.80%, due 05/21/07 200,000 211,860
Occidental Petroleum Corporation,
8.50%, due 09/15/04 100,000 103,231
Pennzoil Company,
10.25%, due 11/01/05 436,000 543,823
Standard Oil Co.,
9.00%, due 06/01/19 176,000 180,039
---------
1,038,953
Paper & Forest Products (7.3%)
Boise Cascade Corporation,
9.875%, due 02/15/01 1,000,000 1,015,730
Champion International Corporation,
6.40%, due 02/15/26 500,000 528,125
---------
1,543,855
Retail (3.1%)
Dayton Hudson Corporation,
5.865%, due 08/15/27 655,000 658,314
Telecommunications (4.7%)
Mountain States Telephone & Telegraph Co.,
5.50%, due 06/01/05 269,000 269,904
NYNEX Corporation,
9.55%, due 05/01/10 603,633 726,847
---------
996,751
Transportation (8.8%)
Canadian Pacific Limited,
8.85%, due 06/01/22 500,000 575,350
Union Pacific Corporation,
6.125%, due 01/15/04 200,000 204,954
Principal
Amount Value
--------- ---------
Transportation (continued)
United Air Lines, Inc.,
9.76%, due 05/27/06 $ 897,031 $1,075,836
---------
1,856,140
Utilities (4.9%)
Commonwealth Edison Company
8.125%, due 01/15/07 500,000 510,920
8.875%, due 10/01/21 485,000 511,558
---------
1,022,478
Miscellaneous (17.4%)
American General Corp.,
7.75%, due 04/01/05 285,000 321,204
Browning-Ferris Industries, Inc.,
6.375%, due 01/15/08 500,000 524,590
CBI Industries, Inc.,
6.25%, due 06/30/00 250,000 255,068
Continental Corp.,
7.25%, due 03/01/03 260,000 269,508
Crown, Cork & Seal Company, Inc.,
8.375%, due 01/15/05 400,000 444,052
Eastman Kodak Company,
9.75%, due 10/01/04 418,000 521,321
Inco Ltd., Convertible Debenture,
7.75%, due 03/15/16 500,000 440,625
Ingersoll-Rand Company,
6.015%, due 02/15/28 190,000 193,173
Union Carbide Corp.,
6.79%, due 06/01/25 170,000 182,622
Xerox Corporation,
5.875%, due 06/15/37 500,000 505,770
---------
3,657,933
---------
TOTAL CORPORATE OBLIGATIONS (Cost: $12,783,037) 13,375,602
---------
MUNICIPALITY-TAXABLE (1.3%)
Virginia State Housing Development Authority,
7.95%, due 05/01/13 (Cost: $253,885) 250,000 274,770
---------
MORTGAGE-BACKED SECURITIES (19.2%)
Collateralized Mortgage Obligations (15.5%)
Federal Home Loan Mortgage Corporation (12.1%)
7.50%, due 11/15/08 500,000 533,860
7.50%, due 02/15/20 400,000 405,652
8.00%, due 03/15/21 1,000,000 1,071,940
8.00%, due 04/15/22 500,000 533,245
---------
2,544,697
<PAGE>
Principal
Amount Value
--------- ---------
Federal National Mortgage Association (3.4%)
8.00%, due 02/25/07 $ 500,000 $ 534,275
8.50%, due 06/25/21 181,834 192,404
---------
726,679
Federal National Mortgage Association (2.6%)
11.25%, due 04/01/01 23,763 25,343
10.75%, due 09/01/15 36,196 39,616
10.50%, due 01/01/16 71,576 77,989
10.50%, due 06/01/19 155,820 170,442
9.00%, due 12/01/19 58,780 61,781
8.00%, due 12/01/22 161,414 165,260
---------
540,431
Government National Mortgage Association (1.1%)
9.00%, due 11/15/01 41,102 42,995
9.00%, due 02/20/27 177,751 187,520
---------
230,515
---------
TOTAL MORTGAGE-BACKED SECURITIES (Cost: $3,930,110) 4,042,322
---------
Principal
Amount Value
--------- ---------
U.S. GOVERNMENT AND AGENCY ISSUES (14.5%)
U.S. Treasury Note,
6.125%, due 12/31/01 $1,325,000 $1,393,344
Federal National Mortgage Association
6.82%, due 08/23/05 750,000 833,340
U.S. Treasury Note,
6.25%, due 02/15/07 270,000 303,072
U.S. Treasury Note,
6.125%, due 08/15/07 450,000 503,393
---------
TOTAL U.S. GOVERNMENT AND AGENCY
ISSUES (Cost: $2,813,468) 3,033,149
---------
TOTAL INVESTMENTS (Cost: $19,780,500) (98.6%) 20,725,843
CASH AND OTHER ASSETS, LESS LIABILITIES (1.4%) 299,308
---------
NET ASSETS (100.0%) $21,025,151
=========
Note to Portfolio of Investments:
(a) Based on the cost of investments of $19,780,500 for federal income tax
purposes at September 30, 1998, the aggregate gross unrealized appreciation was
$1,020,517, the aggregate gross unrealized depreciation was $75,174 and the net
unrealized appreciation of investments was $945,343.
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.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles might require management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. In those cases, actual results may differ from estimates.
ORGANIZATION COSTS
Certain organizational costs were reimbursed by the Fund to Wayne Hummer
Management Company, the Fund's Investment Adviser. The costs were amortized on
the straight-line method and repaid quarterly over a five-year period.
<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 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 that may differ from generally accepted accounting principles.
These differences primarily relate to differing treatments for mortgage-backed
securities.
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, 1998, amounting to $913,307, is available to offset
future capital gains. If not applied, $732,073 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 1.50% of the average daily
net assets of the Fund. During the period ended September 30, 1998, and the year
ended March 31, 1998, the Fund incurred management fees of $52,656 and $110,478,
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, 1998, and the year ended March 31,
1998, the Fund made no direct payments to its officers and incurred trustee
fees for its unaffiliated trustees of $2,400 and $2,748, respectively.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
Six months ended Year ended
September 30, 1998 March 31, 1998
------------------ --------------
Purchases $ 4,754,240 $ 6,111,511
Proceeds from sales $ 5,743,662 $ 7,431,205
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, 1998 March 31, 1998
------------------ --------------
Shares sold 46,133 136,895
Shares issued upon
reinvestment of
dividends 30,105 65,451
------------------ --------------
76,238 202,346
Shares redeemed 130,228 (318,603)
------------------ --------------
Net decrease in
Shares outstanding (53,990) (116,257)
================== ==============
7. FEDERAL TAX STATUS OF 1998 DIVIDENDS
The income dividend is taxable as ordinary income. The dividends paid to
you, whether received in cash or reinvested in Shares, must be included on
your federal income tax return and must be reported by the Fund to the
Internal Revenue Service in accordance with the U.S. Treasury Department
regulations.
<PAGE>
BOARD OF TRUSTEES
Philip M. Burno
Chairman
Steven R. Becker
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
Eustace K. Shaw
Graphic: Member of 100% No-Load(TM) Mutual Fund Council
LOGO:
WH Wayne Hummer Investments LLC
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
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)
(414) 734.1474 (local)
www.whummer.com
<PAGE>
Wayne Hummer
Income Fund
300 South Wacker Drive
Chicago, IL 60606-6607
Semi-Annual Financial Statements
September 30, 1998
(Unaudited)