Wayne
Hummer
Growth
Fund
Annual
Financial Statements
Audited
March 31, 1999
<PAGE>
Wayne
Hummer
Growth
Fund
Photo of: Thomas J. Rowland
Annual
Financial Statements
March 31, 1999
(Audited)
Dear Shareholder
This annual report of the Wayne Hummer Growth Fund (the "Fund") covers its
fifteenth complete fiscal year, which ended March 31, 1999. The report contains
a chart which compares a hypothetical $10,000 investment in the Fund for the
past ten years with a like amount invested in "the market", as well as
management's discussion and analysis of the Fund's performance during the fiscal
year. As proxies for "the market" we again present both the Standard & Poor's
Composite Stock Price Index (the S&P 500) and the Russell Mid-Cap Index.
For the fiscal year ended March 31, 1999, the value of a fund share increased to
$36.66 from $36.10 on March 31, 1998, or 1.0%. If distributions to shareholders
of income and capital gains were reinvested, the Fund's total return was 6.4%.
During this same period the total return of the S&P 500 was 18.5% and the
Russell Midcap Index, -1.1%, as the mid-cap sector of the market continued to
lag the stocks of large market capitalization companies.
The S&P 500, like the Dow Jones Industrial Average, is widely recognized and
commonly cited in the financial media as a barometer of stock market activity.
Stocks in the S&P 500 represent a broad distribution by industry group,
comparable to that of stocks traded on the New York Stock Exchange. In fact, as
of the end of the last calendar year, almost 87% of the companies represented in
the S&P 500 were listed on the New York Stock Exchange. At the same time the
median market value of companies comprising the S&P 500 was $7.8 billion. By way
of comparison, while 80% of the companies represented in the Russell Midcap
Index were listed on the NYSE, their median market value was $2.7 billion.
As noted here previously, for the past several years an emphasis has been placed
on identifying and acquiring promising investments that would generally be
characterized as mid-capitalization stocks. Stocks in the Fund's portfolio have
a median market capitalization of $3.5 billion. Consequently, we believe that
the Russell Mid-Cap Index more closely represents this significant
characteristic of the Fund. Additionally, economic sector representation in the
Russell Midcap Index better reflects the historical portfolio emphasis of the
Fund in a number of important respects. For example, the Fund, by design, has
under-weighted technology stocks because of the higher risks associated with the
more rapid product obsolescence that often characterizes companies in this
sector. Also, the Russell better captures the Fund's greater emphasis on
manufacturing firms, exemplified by ownership in Midwest companies.
The graph at the top of page one of this report depicts the relative performance
of your Fund against both of the stock market indices discussed above. As noted,
the total return of the Fund of 6.4% surpassed the negative 1.1% return of the
Russell Index by 7.5 percentage points. This positive variance would have been
higher by the amount of the Fund's expense ratio of just under 1.0% for the past
year, reflecting the fact that the index results bear no expenses.
<PAGE>
Two significant determinants of better market performance over the past year
were large market capitalization and exposure to the technology sector. These
factors account for much of the positive variance in your Fund's performance
against the Russell Index. Generally, the larger companies in the Fund performed
better than the smaller companies, and the Fund had a greater representation of
larger companies in its mix than did the index. More importantly, the Fund's
technology representation, generally large companies as well, rose sharply in
the last half of the year. This was due more to the significantly better than
market performance of its constituent stocks than to addition through new
purchases. The Fund's technology sector, on a linked quarterly return basis,
rose nearly 90% for the year, which brought its weighting in the Fund to a level
roughly equal to that of the technology sector in the index.
The Fund has historically tended to trail the indices in strong markets and
produced better relative results in a declining market environment. A standard
measure of volatility (or risk) is beta. A lower value connotes less volatility;
a higher value, greater volatility when compared to the market. The market beta,
or central value, is 1.0. The Fund's beta has consistently fallen in a range of
.75-.95. Management believes that the Fund's volatility, as measured by beta,
indicates its lower risk compared to funds with higher volatility.
As always, we are pleased to be a part of your long-term investment planning.
Sincerely,
/s/ Thomas J. Rowland, CFA
Thomas J. Rowland, CFA
President
Wayne Hummer Investment Trust
April 26, 1999
PORTFOLIO HIGHLIGHTS
Top 10 Stock Holdings as of 03/31/99:
(% of Total Net Assets)
1. Interpublic Group of Companies, Inc. 5.6%
2. Sun Microsystems, Inc. 5.4
3. Illinois Tool Works, Inc. 5.3
4. Cardinal Health, Inc. 4.7
5. Northern Trust Corporation 4.5
6. Applied Materials, Inc. 3.5
7. ADC Telecommunications, Inc. 3.4
8. CVS Corporation 3.4
9. GAP, Inc. 2.9
10. Avery Dennison Corporation 2.9
Portfolio Transactions for the quarter ended 03/31/99
Shares
------------------------
Holdings on
Additions Change 03/31/99
- ---------------------------------------------------------
Borders Group, Inc. 90,000 90,000
Health Management Associates, Inc. 20,000 120,000
LA-Z-BOY, Inc. 100,000 100,000
Photronics, Inc. 43,200 43,200
Watson Pharmaceuticals, Inc. 35,000 35,000
Reductions
- ----------
Abbott Labs, Inc. 15,000 50,000
Albany International Corp. 36,200 -0-
Boeing Company 40,000 -0-
GAP, Inc. 15,000 60,000
National City Corp. 8,000 40,000
QUALCOMM Incorporated 5,000 25,000
Sara Lee Corp. 30,000 50,000
Sun Microsystems, Inc. 10,000 60,000
<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.
See the prospectus for more information about the Fund's investment strategy and
risks.
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 quarterly
performance updates, 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 transactions. 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 Investment Executive for
more information.
<PAGE>
Line Chart:
WAYNE HUMMER GROWTH FUND VS.
RUSSELL MID-CAP AND THE S&P 500
Wayne S&P 500 Russell Mid-Cap
Hummer
Growth
Fund
3/31/1988 10 10 10
10.61 10.87 10.91
11.51 12.03 11.95
11.79 12.28 11.75
11.89 11.91 11.3
12.56 12.64 11.71
11.05 10.91 9.39
12.38 11.88 10.4
13.96 13.61 12.53
14.2 13.55 12.6
14.75 14.28 13.53
15.96 15.48 14.72
16.08 15.09 14.95
15.96 15.36 14.92
16.92 15.86 15.5
17.61 16.67 17.13
17.67 17.39 18.06
17.45 17.46 18.34
17.52 17.91 19.33
18.24 18.44 19.58
17.55 17.74 19
17.34 17.8 18.59
18.13 18.68 19.65
18.07 18.67 19.17
19.84 20.49 21.16
20.35 22.42 22.93
21.11 24.21 24.97
22.56 25.66 25.77
23.05 27.04 27.32
23.47 28.24 28.09
23.9 29.11 28.97
25.24 31.54 30.67
25.72 32.39 30.42
29.47 38.03 34.54
32.16 40.89 39.13
32.86 42.07 39.56
36.16 47.93 43.84
36.17 49.52 43.18
31.73 44.59 36.78
38.62 54.08 43.56
3/31/1999 38.47 56.78 43.35
<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
3/31/99 $10,000 lative Annual 3/31/99 $10,000 lative Annual 3/31/99 $10,000 lative Annual
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 Year $10,637 6.37% 6.37% 1 Year $ 9,888 -1.12% -1.12% 1 Year $11,847 18.47% 18.47%
5 Year $21,914 119.14% 16.99% 5 Year $22,817 128.17% 17.94% 5 Year $32,050 220.50% 26.23%
10 Year $38,472 284.72% 14.42% 10 Year $43,349 333.49% 15.80% 10 Year $56,715 467.15% 18.95%
Note: The Russell Mid-Cap and the S&P 500 are unmanaged and all returns
include reinvested dividends
</TABLE>
Mountain Chart:
WAYNE HUMMER GROWTH FUND
VALUE OF INITIAL $10,000 INVESTMENT
Value of Net Value of
Reinvested Asset Reinvested
Capital Gains Value Dividends
12/30/1983 10000 0 0
9830 0 0
9350 58 0
9980 149 0
10170 245 0
10670 357 0
11120 504 7
10530 536 6
12250 695 7
13850 857 8
13880 926 397
12570 903 359
13330 1023 381
16140 1309 461
15840 1436 1149
16930 1606 1228
13220 1323 1557
13790 1430 1624
14190 1523 1676
13900 1540 1642
13740 1669 1821
14450 1756 1915
15130 1935 2152
16360 2169 2327
16410 2306 2656
16540 2324 2678
16960 2580 3224
14860 2343 2825
16000 2843 3600
18040 3206 4059
18130 3365 4242
18740 3609 4385
20020 4142 4757
20170 4173 4792
19840 4202 4883
20950 4560 5156
21640 4919 5355
21720 4938 5374
21380 4949 5290
21400 5060 5295
22060 5486 5511
21230 5279 5303
20910 5297 5223
21790 5628 5443
21340 5766 5649
23430 6331 6202
23840 6565 6481
24660 6902 6704
25810 7481.71 7592.31
26370 7644.04 7757.04
26040 7692.94 8800.4
26450 7919.35 8938.96
27500 8468.12 9773.04
28030 8631.33 9961.39
30880 9622.23 12900.4
33650 10576.8 14057.5
32800 10675 16072
36100 11750 17689
35300 11578 18684
30930 10208 16370
36810 12291 20898.4
3/31/1999 36660 12241 20813.3
For the Period 12/30/83 thru 3/31/99
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>
STATEMENT OF ASSETS AND LIABILITIES
Year ended
March 31,
1999
------------
Assets
Investments, at value (Cost: $68,616,554) ..................... $139,310,996
Cash ........................................................ 47,212
Receivable for Fund Shares sold ............................. 111,500
Dividends receivable ........................................ 126,050
Prepaid expenses ............................................ 32,628
Insurance deposit ........................................... 3,846
------------
Total assets .............................................. 139,632,232
Liabilities and Net Assets
Due to Wayne Hummer Management Company ........................ 90,992
Accounts payable .............................................. 47,546
------------
Total liabilities ......................................... 138,538
------------
Net assets applicable to 3,804,922 Shares outstanding,
no par value, equivalent to $36.66 per Share ................ $139,493,694
============
Analysis of Net Assets
Paid-in capital ............................................... $ 62,948,383
Net unrealized appreciation of investments .................... 70,694,442
Undistributed net realized gain on sales of investments ....... 5,763,961
Undistributed net investment income ........................... 86,908
------------
Net assets applicable to Shares outstanding ................... $139,493,694
============
The Pricing of Shares
Net asset value, offering and redemption price per Share
($139,493,694 / 3,804,922 Shares outstanding) ............... $ 36.66
============
STATEMENT OF OPERATIONS
Year ended
March 31,
1999
-----------
Investment income:
Dividends ..................................................... $ 1,641,249
Interest ...................................................... 188,094
-----------
Total investment income ..................................... 1,829,343
Expenses:
Management fee ................................................ 1,030,442
Professional fees ............................................. 60,581
Transfer agent fees ........................................... 49,056
Printing costs ................................................ 31,293
Custodian fees ................................................ 23,300
Trustee fees .................................................. 23,300
Portfolio accounting fees ..................................... 20,728
Registration costs ............................................ 18,681
Other ......................................................... 18,037
-----------
Total expenses .............................................. 1,275,418
-----------
Net investment income ........................................... 553,925
-----------
Net realized gain on sale of investments ........................ 8,564,539
Change in net unrealized appreciation ........................... (862,439)
-----------
Net gain on investments ......................................... 7,702,100
-----------
Net increase in net assets resulting from operations ............ $ 8,256,025
===========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
Year ended March 31,
1999 1998
<S> <C> <C>
Operations:
Net investment income .............................................................. $ 553,925 $ 707,433
Net realized gain on sale of investments ........................................... 8,564,539 8,587,034
Change in net unrealized appreciation .............................................. (862,439) 32,032,306
------------- -------------
Net increase in net assets resulting from operations ................................. 8,256,025 41,326,773
Dividends to Shareholders from:
Net investment income .............................................................. (607,453) (759,930)
Net realized gain on investments ................................................... (5,823,502) (9,333,854)
------------- -------------
Total dividends to Shareholders ...................................................... (6,430,955) (10,093,784)
Capital Share transactions:
Proceeds from Shares sold .......................................................... 10,389,176 7,179,953
Shares issued upon reinvestment of dividends ....................................... 6,216,025 9,780,680
------------- -------------
16,605,201 16,960,633
Less payments for Shares redeemed .................................................. 19,679,491 11,665,186
------------- -------------
Increase (decrease) from Capital Share transactions .................................. (3,074,290) 5,295,447
Total increase (decrease) in net assets .............................................. (1,249,220) 36,528,436
Net assets:
Beginning of year .................................................................. 140,742,914 104,214,478
------------- -------------
End of year (including undistributed net investment income of
$86,908 and $140,436 at March 31, 1999 and 1998, respectively) ................... $ 139,493,694 $ 140,742,914
============= =============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each year)
<CAPTION>
Year ended March 31,
1999 1998 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .................. $ 36.10 $ 28.03 $ 26.37 $ 23.43 $ 21.23
Income from investment operations:
Net investment income ............................. 0.14 0.19 0.26 0.32 0.32
Net realized and unrealized gain
on investments .................................. 2.09 10.57 2.69 3.41 2.40
----------- ----------- ----------- ----------- ----------
Total from investment operations .................... 2.23 10.76 2.95 3.73 2.72
Less distributions:
Dividends from net investment income .............. (0.16) (0.20) (0.29) (0.31) (0.31)
Distributions from net realized
gain on investments ............................... (1.51) (2.49) (1.00) (0.48) (0.21)
----------- ----------- ----------- ----------- ----------
Total distributions ................................. (1.67) (2.69) (1.29) (0.79) (0.52)
----------- ----------- ----------- ----------- ----------
Net asset value, end of year ........................ $ 36.66 $ 36.10 $ 28.03 $ 26.37 $ 23.43
=========== =========== =========== =========== ==========
Total Return ........................................ 6.37% 40.57% 11.61% 16.15% 13.04%
Ratios and Supplementary Data:
Net assets, end of year ($000's) .................. 139,494 140,743 104,214 102,608 94,770
Ratio of expenses to average net assets ........... 0.94% 0.96% 0.99% 1.06% 1.07%
Ratio of net investment income to
average net assets ................................ 0.41% 0.58% 0.97% 1.29% 1.44%
Portfolio turnover rate ........................... 12% 7% 9% 6% 3%
See accompanying notes to financial statements.
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS
March 31, 1999
Number
of
COMMON STOCKS (98.3%) Shares Value
--------- ---------
Auto & Machinery 7.7%
Autoliv, Inc. 40,920 $ 1,537,057
Illinois Tool Works, Inc. 120,000 7,425,000
Regal-Beloit Corporation 100,000 1,806,250
----------
10,768,307
Banking 6.4%
National City Corporation 40,000 2,655,000
Northern Trust Corporation 70,000 6,216,875
----------
8,871,875
Chemical 6.7%
Avery Dennison Corporation 70,000 4,025,000
Morton International, Inc. 100,000 3,675,000
RPM, Inc. 125,000 1,664,063
----------
9,364,063
Communications Equipment 6.5%
ADC Telecommunications, Inc. (b) 100,000 4,768,750
Andrew Corporation (b) 100,000 1,231,250
QUALCOMM Incorporated (b) 25,000 3,109,375
----------
9,109,375
Electrical/Electronics 12.5%
Applied Materials, Inc. (b) 80,000 4,935,000
Emerson Electric Co. 50,000 2,646,875
Photronics, Inc. (b) 43,200 804,600
Sun Microsystems, Inc. (b) 60,000 7,496,250
Thomas & Betts Corporation 40,000 1,502,500
----------
17,385,225
Food, Beverage & Household 5.7%
McCormick & Company, Incorporated 100,000 2,900,000
PepsiCo, Inc. 60,000 2,351,250
Sara Lee Corporation 50,000 1,237,500
Smucker (The J. M.) Company Class B 80,000 1,450,000
----------
7,938,750
Health Care and Pharmaceuticals 17.3%
Abbott Laboratories 50,000 2,340,625
C. R. Bard, Inc. 60,000 3,026,250
Cardinal Health, Inc. 100,000 6,600,000
HCR Manor Care, Inc. (b) 40,000 912,500
Health Management
Associates, Inc. (b) 120,000 1,462,500
Patterson Dental Company (b) 75,000 3,243,750
Perclose, Inc. (b) 50,000 1,550,000
STERIS Corporation (b) 60,000 1,597,500
Sybron International Corporation (b) 75,000 1,875,000
Watson Pharmaceuticals, Inc. (b) 35,000 1,544,375
----------
24,152,500
Insurance 7.5%
AON Corporation 45,000 2,846,250
Cincinnati Financial Corporation 90,000 3,279,375
<PAGE>
Number
of
Shares Value
--------- ---------
Insurance (Continued)
Ohio Casualty Corporation 40,000 $ 1,560,000
Old Republic International
Corporation 150,000 2,737,500
----------
10,423,125
Merchandising & Distribution 13.0%
Borders Group, Inc. (b) 90,000 1,265,625
CVS Corporation 100,000 4,750,000
Fastenal Company 70,000 2,454,375
The Gap, Inc. 60,000 4,038,750
LA-Z-Boy, Incorporated 100,000 1,900,000
Office Depot, Inc. (b) 100,000 3,681,250
----------
18,090,000
Oil & Gas 1.7%
Burlington Resources, Inc. 60,000 2,396,250
Paper & Forest Products 3.7%
Consolidated Papers, Inc. 110,000 2,585,000
Sonoco Products Company 110,000 2,530,000
----------
5,115,000
Publishing & Media 5.6%
Interpublic Group of
Companies, Inc. 100,000 7,787,500
Services 2.0%
H & R Block, Inc. 60,000 2,842,500
Miscellaneous 2.0%
Bacou USA, Inc. (b) 65,000 853,125
Pall Corporation 120,000 1,987,500
----------
2,840,625
----------
Total Common Stocks (Cost: $66,390,653) 137,085,095
SHORT-TERM INVESTMENTS (1.6%)
United States Treasury Bills
4.38% - 4.80%, 04/01/99 - 05/20/99
(Cost: $2,225,901) 2,225,901
-----------
TOTAL INVESTMENTS
(Cost: $68,616,554) (99.9%) 139,310,996
CASH AND OTHER ASSETS,
LESS LIABILITIES (0.1%) 182,698
------------
NET ASSETS (100.0%) $139,493,694
============
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 $68,616,554 for federal income tax
purposes at March 31, 1999, the aggregate gross unrealized appreciation was
$74,046,445, the aggregate gross unrealized depreciation was $3,352,003 and
the net unrealized appreciation of investments was $70,694,442.
See accompanying notes to financial statements.
<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 April 26, 1999, an ordinary
income dividend of $0.03 per Share and a long-term capital gain dividend of
$1.52 per Share were declared, payable April 27, 1999, to Shareholders of
record on April 26, 1999.
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, exceeds 1.50% of the average daily net assets of the
Fund. During the year ended March 31, 1999, the Fund incurred management fees
of $1,030,442.
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 year ended March 31, 1999, the Fund made no direct payments to its
officers and incurred trustee fees for its unaffiliated trustees of $23,300.
<PAGE>
5. Investment Transactions
Investment transactions (excluding money market instruments) are as follows:
Year ended
March 31, 1999
--------------
Purchases $15,664,291
Proceeds from sales $22,220,224
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:
Year Ended March 31,
1999 1998
-------- --------
Shares sold 298,220 222,095
Shares issued upon reinvestment
of dividends 174,372 324,771
-------- --------
472,592 546,866
Shares redeemed (566,280) (366,315)
-------- --------
Net decrease in Shares outstanding (93,688) 180,551
======== ========
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 U.S. Treasury Department regulations. An
amount equal to 100% of ordinary income dividends paid during 1998 qualifies
for the dividends-received deduction available to corporations as provided by
the Internal Revenue Code.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Wayne Hummer Growth Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Wayne Hummer Growth Fund as of March 31, 1999,
and the related statements of operations for the year then ended and changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the fiscal years since 1995. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31,1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wayne
Hummer Growth Fund as of March 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
periods then ended, and financial highlights for each of the fiscal years since
1995, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
April 26, 1999
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.
WH 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)
(414) 734.1474 (local)
www.whummer.com
<PAGE>
Wayne Hummer Growth Fund
Annual Financial Statements
March 31, 1999
(Audited)
Wayne Hummer Growth Fund
300 South Wacker Drive
Chicago, Illinois
60606-6607
First Class
U.S. Postage
PAID
Berwyn, IL
Permit No. 150
<PAGE>
Wayne
Hummer
Income
Fund
Annual
Financial Statements
Audited
March 31, 1999
<PAGE>
Wayne
Hummer
Income
Fund
Photo of: David P. Poitras
PERFORMANCE COMMENTARY
Welcome to the Wayne Hummer Income Fund (the Fund) annual report. This report
details the operations of the Fund for the fiscal year ended March 31, 1999.
Overview The past twelve months have been a difficult period for the bond
markets. Tremendous volatility impacted the Fund's portfolio of notes and bonds,
volatility in both interest rates, and yield spreads -- or the differences in
yields between treasury securities and other securities.
First, interest rates. Long-term treasury yields fell from a high of over 6%
during April 1998, to a low of approximately 4.70% in October. Since the lows of
October, however, interest rates have been moving progressively higher, and
currently stand near 5.60%.
Second, yield spreads. During the later half of 1998, worldwide economic
problems -- and the implied credit quality concerns -- drove investors to the
safety of U.S. treasury securities. Investor preference for U.S. treasuries
caused the corporate and mortgage-backed securities markets to perform poorly.
Fund Performance & Strategy
For the 6-month and 1-year time periods ended March 31, 1999, the Fund
produced total returns (dividend income plus or minus changes in the Fund's
share price) of -1.08% and 4.74%, respectively. 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 .17% and 6.57% over the same
periods.
Widening yield spreads, as discussed above, negatively affected the
performance of the Wayne Hummer Income Fund. The Fund's portfolio is more
heavily weighted in corporate securities than our benchmark index. In addition,
the benhmark's return does not include any operating expenses. For these
reasons, the benchmark produced superior total returns.
The Fund paid income dividends totaling $.89 per share over the past twelve
months, equivalent to a distribution rate per share of 5.86%*. The SEC yield at
March 31 was 5.66%. (The SEC yield is an annualized calculation of income return
on a fund's capital investment that is based on a trailing 30-day period.)
Please refer to the following pages for detailed reports of the Fund's
performance, securities portfolio and financial statements.
PORTFOLIO FOCUS & FUTURE STRATEGY
The continued strength of the U.S. economy has surprised many, and in fact, is
the primary reason for the recent increase in interest rate. Historically,
rising inflation has been an acompaniment of strong economic growth --
generally, higher inflation results in higher interest rates and lower bond
prices.
While we recognize the economy's resiliency, our forecast suggest that
interest rates should not rise substantially higher. In fact, we used the recent
rise in interest rates as an aopportunity to extend the Fund's portfolio. We did
so, primarily, through the purchase of intermediate-term treasury and corporate
notes.
Long-time shareholders will recall that we often employ a strategy of
modifying the Fund's character as interest rates change; reducing the average
life and duration of the portfolio as interest rates fall, and lengthening the
average life and duration as rates rise. By doing so, we hope to lock in higher
rates for longer periods of time when interest rates are high. We hope to
mitigate the Fund's sensitivity to price fluctuations by shortening the
portfolio when rates are low.
<PAGE>
(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.) Currently, the Fund's duration stands at 4.25 years, up from 3.94
years at year-end 1998.
We believe the corporate bond sector offers considerable value at this time.
Thus, we intend to maintain the Fund's heavy weighting in corporate securities,
currently over 55% of the portfolio. Typical of our management style, the
portfolio's credit quality remains relatively high; Moody's and/or Standard &
Poor's rate approximately 45% of the Fund's portfolio triple-A.
As always, we will manage the portfolio in a manner consistent with the
Fund's objective: To generate a high level of current income, consistent with
prudent investment management. We appreciate your continued support.
/s/ David P. Poitras
David P. Poitras
Portfolio Manager
* Distribution rate per share is based upon dividends per share declared
during the period divided by the net asset value per share.
** Source, Merrill Lynch. The Merrill Lynch Corporate and Government Index of
1 to 9.99 Year Maturities is a performance benchmark composed of government and
corporate notes rated BBB or higher.
PORTFOLIO HIGHLIGHTS
The investment philosophy of the Fund is to invest primarily in
intermediate-term fixed-income securities.
Top 10 Bond Holdings as of 3/31/99:
(% of Total Net Assets)
1. U.S. Treasury Note, 6.125%, 08/15/07
2. U.S. Treasury Note, 6.125%, 12/31/01
3. Federal Home Loan Mtg. Corp., 8.00%, 03/15/21
4. United Air Lines, Inc., 9.760%, 05/27/06
5. Federal Home Loan Mortgage Corp., 7.10%, 04/10/07
6. NYNEX Corporation, 9.55%, 05/01/10
7. Dayton Hudson Co., 5.865%, 08/15/27
8. U.S. Treasury Note, 6.25%, 02/15/07
9. Parker Hannifin Corp., 9.75%, 02/15/21
10. Federal Home Loan Mortgage Corp., 8.00%, 04/15/22
The top ten holdings comprise 40.9% of total net assets.
Average maturity is determined by the maturity or reasonable call date. The
average maturity of the portfolio on March 31, 1999 was 5.32 years.
Pie Chart:
Maturity Schedule
Over 10 Years 7%
3-10 Years 74%
Less than 3 Years 19%
Portfolio holdings are subject to change and may not represent future
portfolio composition.
WAYNE HUMMER INCOME FUND VS.
MERRILL LYNCH CORPORATE AND GOVERNMENT INDEX
of 1 to 9.99 Year Maturities
Income Merrill Lynch
Fund Corporate
and Government
12/1/1992 10000 10000
12/31/1992 10035 10130.2
3/31/1993 10431 10531.1
6/30/1993 10737 10751.2
9/30/1993 11080 11004.3
12/31/1993 11044 11022.5
3/31/1994 10892 10812
6/30/1994 10722 10750.9
9/30/1994 10751 10836.5
12/31/1994 10835 10831.1
3/31/1995 11344 11303.2
6/30/1995 11865 11867.8
9/30/1995 12115 12062.4
12/31/1995 12516 12490.9
3/31/1996 12342 12389.2
6/30/1996 12412 12462.1
9/30/1996 12595 12680.8
12/31/1996 12956 12993.3
3/31/1997 12875 12986.6
6/30/1997 13323 13368.1
9/30/1997 13753 13728.6
12/31/1997 14126 14024
3/31/1998 14324 14255
6/30/1998 14598 14524
9/30/1998 15145 15164
12/31/1998 15167 15368.7
3/31/1999 15004 15340.5
From Inception to the Period Ended March 31, 1999
<TABLE>
PERFORMANCE COMPARISON
<CAPTION>
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
3/31/99 $10,000 Annual 3/31/99 $10,000 Annual
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 Year $10,474 4.74% 4.74% 1 Year $10,656 6.56% 6.56%
5 Year $13,776 37.76% 6.62% 5 Year $14,043 40.43% 7.02%
12/1/92 - $15,004 50.04% 6.62% 12/1/92 - $15,186 51.86% 6.82%
3/31/99 3/31/99
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
of 1 to 9.99 years, which is unmanaged. All returns include reinvested
dividends. 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.
</TABLE>
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.
See the prospectus for more information about the Fund's investment strategy and
risks.
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. Contact your Wayne Hummer Investment Executive for
complete details.
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, 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 Investment Executive for
more information.
<PAGE>
Statement of Assets and Liabilities
March 31,
Assets 1999
------------
Investments, at value (Cost: $19,954,146) .................... $ 20,053,231
Interest receivable .......................................... 314,709
Receivable for securities sold ............................... 5,842
Cash ......................................................... 684
Prepaid expenses ............................................. 12,182
------------
Total assets ................................... 20,386,648
Liabilities and Net Assets
Dividends payable ............................................ 23,743
Due to Wayne Hummer Management Company ....................... 8,624
Accounts payable ............................................. 26,900
------------
Total liabilities .............................. 59,267
------------
Net assets applicable to 1,336,873 Shares outstanding,
no par value, equivalent to $15.21 per Share ............... $ 20,327,381
============
Analysis of Net Assets
Paid-in capital .............................................. $ 21,016,670
Net unrealized appreciation of investments ................... 99,085
Accumulated net realized loss on sales of investments ........ (788,374)
------------
Net assets applicable to Shares outstanding .................. $ 20,327,381
============
The Pricing of Shares
Net asset value, offering and redemption price per Share
($20,327,381 / 1,336,873 Shares outstanding) ............... $ 15.21
============
Statement of Operations
Year
Ended
March 31,
Investment income: ........................................... 1999
-----------
Interest ................................................... $ 1,411,842
Expenses:
Management fee ............................................. 103,836
Transfer agent fees ........................................ 24,053
Professional fees .......................................... 23,644
Portfolio accounting costs ................................. 18,577
Printing costs ............................................. 13,440
Registration costs ......................................... 10,500
Custodian fees ............................................. 7,838
Trustee fees ............................................... 3,600
Other ...................................................... 4,260
-----------
Total expenses ................................. 209,748
-----------
Net investment income ........................................ 1,202,094
-----------
Net realized gain on sales of investments .................... 119,756
Change in net unrealized appreciation ........................ (358,228)
-----------
Net realized and unrealized loss on investments .............. (238,472)
-----------
Net increase in net assets resulting from operations ......... $ 963,622
===========
See accompanying notes to financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
Year ended March 31,
Operations: 1999 1998
- -----------
------------ ------------
<S> <C> <C>
Net investment income ............................................. 1,202,094 $ 1,325,949
Net realized gain on sales of investments ......................... 119,756 126,040
Change in net unrealized appreciation ............................. (358,228) 932,199
------------ ------------
Net increase in net assets resulting from operations ................ 963,622 2,384,188
Dividends to Shareholders from:
Net investment income ............................................. (1,196,917) (1,303,537)
Capital Share transactions:
Proceeds from Shares sold ......................................... 1,772,995 2,085,019
Shares issued upon reinvestment of dividends ...................... 913,838 991,735
------------ ------------
2,686,833 3,076,754
Less payments for Shares redeemed ................................. 3,429,770 4,852,264
------------ ------------
Decrease from Capital Share transactions ............................ (742,937) (1,775,510)
------------ ------------
Total decrease in net assets ........................................ (976,232) (694,859)
Net assets:
Beginning of year ................................................. 21,303,613 21,998,472
------------ ------------
End of year ....................................................... $ 20,327,381 $ 21,303,613
============ ============
</TABLE>
<TABLE>
Financial Highlights
<CAPTION>
(For a Share outstanding throughout each period)
Year ended March 31,
1999 1998 1997 1996 1995
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ............... $ 15.38 $ 14.66 $ 14.95 $ 14.69 $ 15.10
Income from investment operations:
Net investment income .......................... 0.89 0.94 0.92 1.02 0.99
Net realized and unrealized gain
(loss) on investments ........................ (0.17) 0.72 (0.29) 0.26 (0.42)
---------- ---------- ---------- ---------- ----------
Total from investment operations ........... 0.72 1.66 0.63 1.28 0.57
Less distributions:
Dividends from net investment income ........... (0.89) (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(a)
---------- ---------- ---------- ---------- ----------
Total distributions ........................ (0.89) (0.94) (0.92) (1.02) (0.98)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year ..................... $ 15.21 $ 15.38 $ 14.66 $ 14.95 $ 14.69
========== ========== ========== ========== ==========
Total Return ..................................... 4.74% 11.25% 4.32% 8.79% 4.16%
Ratios and Supplementary Data
Net assets, end of year (000's) ................ $ 20,327 $ 21,304 $ 21,998 $ 25,398 $ 26,352
Ratio of expenses to average net assets ........ 1.01% 1.01% 1.01% 0.91% 0.94%
Ratio of net investment income to
average net assets ........................... 5.78% 6.00% 6.25% 6.80% 6.70%
Portfolio turnover rate ........................ 37% 28% 39% 46% 32%
Notes to Financial Highlights:
(a) Less than $.01 per share.
See accompanying notes to financial statements.
</TABLE>
PORTFOLIO OF INVESTMENTS
March 31, 1999
Principal
CORPORATE OBLIGATIONS (55.6%) Amount Value
--------- ---------
Auto & Machinery (4.8%)
Johnson Controls, Inc., 7.70%,
due 03/01/15 410,000 $ 441,959
Parker-Hannifin Corporation,
9.75%, due 02/15/21 480,000 531,490
---------
973,449
Banks & Finance (7.4%)
Ford Motor Credit Company, 6.125%,
due 01/09/06 500,000 496,915
Norwest Corporation, 7.65%,
due 03/15/05 360,000 384,142
St. Paul Bancorp, Inc., 7.125%,
due 02/15/04 100,000 104,505
Sears Roebuck Acceptance Corp.,
6.75%, due 09/15/05 500,000 510,750
---------
1,496,312
Oil and Gas (4.7%)
Northwest Natural Gas Company,
6.80%, due 05/21/07 200,000 205,394
Occidental Petroleum Corporation,
8.50%, due 09/15/04 100,000 101,036
Pennzoil Company, 10.25%,
due 11/01/05 436,000 467,235
Standard Oil Co., 9.00%,
due 06/01/19 176,000 176,718
---------
950,383
Paper & Forest Products (3.8%)
Champion International
Corporation, 6.40%, due 02/15/26 500,000 501,725
Georgia Pacific Corporation,
9.50%, due 05/15/22 250,000 270,670
---------
772,395
Retail (3.2%)
Dayton Hudson Corporation, 5.865%,
due 08/15/27 655,000 656,408
Telecommunications (4.7%)
Mountain States Telephone
& Telegraph Co.,
5.50%, due 06/01/05 269,000 259,058
NYNEX Corporation, 9.55%,
due 05/01/10 603,633 692,657
---------
951,715
Transportation (9.8%)
Canadian Pacific Limited, 8.85%,
due 06/01/22 500,000 526,210
Union Pacific Corporation, 6.125%,
due 01/15/04 500,000 491,900
United Air Lines, Inc., 9.76%,
due 05/27/06 860,730 977,220
---------
1,995,330
Miscellaneous (17.2%)
American General Corp., 7.75%,
due 04/01/05 285,000 305,654
Browning-Ferris Industries,
Inc., 6.375%, due 01/15/08 500,000 441,220
<PAGE>
Principal
Amount Value
--------- ---------
Miscellaneous (continued)
CBI Industries, Inc., 6.25%,
due 06/30/00 250,000 $ 251,705
Continental Corp.,
7.25%, due 03/01/03 260,000 261,895
Crown, Cork & Seal Company, Inc.,
8.375%, due 01/15/05 400,000 434,768
Eastman Kodak Company, 9.75%,
due 10/01/04 428,000 507,167
Inco Ltd., Convertible Debenture,
7.75%, due 03/15/16 500,000 437,500
Ingersoll-Rand Company, 6.015%,
due 02/15/28 190,000 191,490
Union Carbide Corp., 6.79%,
due 06/01/25 170,000 169,553
Xerox Corporation, 5.875%,
due 06/15/37 500,000 497,685
---------
3,498,637
---------
TOTAL CORPORATE OBLIGATIONS
(Cost: $11,272,863) 11,294,629
----------
MUNICIPALITY-TAXABLE (1.3%)
- -------------------------------------------------------
Virginia State Housing Development Authority,
7.95%, due 05/01/13 (Cost: $254,033)250,000 266,743
---------
MORTGAGE-BACKED SECURITIES (19.1%)
- -------------------------------------------------------
Collateralized Mortgage Obligations (16.3%)
Federal Home Loan Mortgage Corporation (12.9%)
7.50%, due 11/15/08 500,000 522,300
8.50%, due 05/01/17 184,389 194,603
7.50%, due 02/15/20 330,295 331,570
8.00%, due 03/15/21 1,000,000 1,048,060
8.00%, due 04/15/22 500,000 531,155
---------
2,627,688
Federal National Mortgage Association (3.4%)
8.00%, due 02/25/07 500,000 523,605
8.50%, due 06/25/21 148,706 156,572
---------
680,177
Federal National Mortgage Association (1.9%)
11.25%, due 04/01/01 19,480 20,775
10.75%, due 09/01/15 10,693 11,702
10.50%, due 01/01/16 41,893 45,633
10.50%, due 06/01/19 118,314 129,275
9.00%, due 12/01/19 54,831 57,878
8.00%, due 12/01/22 121,577 124,454
---------
389,717
---------
Government National Mortgage Association (0.9%)
9.00%, due 11/15/01 27,003 28,245
9.00%, due 02/20/27 152,807 160,761
---------
189,006
---------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost: $3,829,888) 3,886,588
---------
<PAGE>
Principal
Amount Value
--------- ---------
U.S. GOVERNMENT AND AGENCY ISSUES (19.1%)
- -------------------------------------------------------
U.S. Treasury Note, 6.125%,
due 12/31/01 1,050,000 $1,077,447
Federal Home Loan Mortgage Corp.,
7.10%, due 04/10/07 750,000 810,840
U.S. Treasury Note, 6.25%, due
02/15/07 520,000 547,342
U.S. Treasury Note, 6.125%, due
08/15/07 1,375,000 1,439,542
---------
TOTAL U.S. GOVERNMENT AND AGENCY
ISSUES (Cost: $3,867,262) 3,875,171
---------
SHORT-TERM INVESTMENTS (3.6%)
- -------------------------------------------------------
U.S. Treasury Bill, 4.40%, due 04/22/99
(Cost: $730,100) 732,000 730,100
---------
TOTAL INVESTMENTS
(Cost: $19,954,146) (98.7%) 20,053,231
CASH AND OTHER ASSETS,
LESS LIABILITIES (1.3%) 274,150
-----------
NET ASSETS (100.0%) $20,327,381
===========
Note to Portfolio of Investments:
(a) Based on the cost of investments of $19,954,146 for federal income tax
purposes at March 31, 1999, the aggregate gross unrealized appreciation was
$333,205, the aggregate gross unrealized depreciation was $234,120 and the net
unrealized appreciation of investments was $99,085.
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.
<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 daily 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, 1999, amounting to $788,374, is available
to offset future capital gains. If not applied, $607,140 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 year
ended March 31, 1999, the Fund incurred management fees of $103,836.
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 year ended March 31, 1999, the Fund made no
direct payments to its officers and incurred trustee fees for its
unaffiliated trustees of $3,600.
5. Investment Transactions
Investment transactions (excluding money market instruments) are as follows:
Year ended
March 31, 1999
--------------
Purchases $7,615,503
Proceeds from sales $9,174,534
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:
Year ended Year ended
March 31, 1999 March 31, 1998
-------------- --------------
Shares sold 114,578 136,895
Shares issued upon reinvestment
of dividends 59,060 65,451
-------- --------
173,638 202,346
Shares redeemed (221,489) (318,603)
-------- --------
Net decrease in Shares outstanding (47,851) (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>
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Trustees
Wayne Hummer Income Fund
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Wayne Hummer Income Fund as of March 31, 1999,
and the related statements of operations for the year then ended and changes in
net assets for each of the two years in the period then ended, and financial
highlights for each of the fiscal years since 1995. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31,1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Wayne
Hummer Income Fund as of March 31, 1999, the results of its operations for the
year then ended, the changes in its net assets for each of the two years in the
periods then ended, and financial highlights for each of the fiscal years since
1995, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
April 26, 1999
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.
WH Logo
Wayne Hummer InvestmentsLLC
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
Annual Financial Statements
March 31, 1999
(Audited)
Wayne Hummer
Income Fund
300 South Wacker Drive
Chicago, IL 60606-6607
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