<PAGE>
As filed with the Securities and Exchange Commission on May 17, 1999
Registration No. 2-87153 and 811-3880
____________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [_]
Pre-Effective Amendment No. __ [_]
Post-Effective Amendment No. 19 [X]
and/or
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [_]
Amendment No. 19 [X]
(Check appropriate box or boxes)
WAYNE HUMMER INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
300 SOUTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices, including Zip Code)
(Name and Address of Agent for Service)
COPY TO:
ROBERT J. MORAN
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[ ] On (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a) (1)
[ ] On (date) pursuant to paragraph (a) (1)
[X] 75 days after filing pursuant to paragraph (a) (2)
[ ] On (date) pursuant to paragraph (a) (2) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Wayne Hummer Investment Trust
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Prospectus
July 31, 1999
Wayne Hummer CorePortfolio Fund A fund seeking total return by
investing in a passively-managed
portfolio of large-cap stocks.
Wayne Hummer Growth Fund A fund seeking long-term capital
growth, with current income as a
secondary objective.
Wayne Hummer Income Fund A fund seeking a high level of current
income in a manner consistent with
prudent capital management.
Wayne Hummer Money Market Fund A fund seeking to maximize current
income to the extent consistent with
preservation of capital and maintenance
of liquidity.
As with all mutual fund shares, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the accuracy or
adequacy of the disclosure in this prospectus. Any representation to the
contrary is a criminal offense.
300 South Wacker
Drive
Chicago, Illinois
60606
800-621-4477
(R)"Wayne Hummer" and are registered service marks of Wayne Hummer
Investments L.L.C.
<PAGE>
Table of Contents
<TABLE>
<S> <C>
Overview of the Funds....................................................... 1
Fund Profile: Wayne Hummer CorePortfolio Fund............................. 1
Fund Profile: Wayne Hummer Growth Fund.................................... 3
Fund Profile: Wayne Hummer Income Fund.................................... 5
Fund Profile: Wayne Hummer Money Market Fund.............................. 7
Fees and Expenses......................................................... 9
Principal Investment Strategies and Risks................................... 10
Principal Investment Strategies........................................... 10
Wayne Hummer CorePortfolio Fund......................................... 10
Wayne Hummer Growth Fund................................................ 11
Wayne Hummer Income Fund................................................ 11
Wayne Hummer Money Market Fund.......................................... 12
Principal Securities in Which the Funds Invest............................ 13
Principal Risks of the Funds' Investments................................. 15
How the Investment Adviser Manages Risk................................... 16
Management and Organization................................................. 17
Investment Adviser and Portfolio Managers................................. 17
About Your Account.......................................................... 19
Share Price............................................................... 19
How to Buy Fund Shares.................................................... 19
Investment Minimums....................................................... 21
Sales Charges............................................................. 22
Shareholder Services and Account Features................................. 23
How to Sell Fund Shares................................................... 25
Transactions Through Broker-Dealers....................................... 26
Distributions............................................................. 26
Taxes..................................................................... 27
Financial Highlights........................................................ 28
</TABLE>
<PAGE>
Overview of the Funds
This section provides a general overview of each Fund, including its
investment objective, principal investment strategies, primary risks, and
certain historical performance information. There can be no assurance that a
Fund will meet its investment objective(s). An investment in a Fund is not a
deposit of a bank and is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other governmental agency.
Fund Profile: Wayne Hummer CorePortfolio Fund
Investment Objective
The Wayne Hummer CorePortfolio Fund ("CorePortfolio Fund") seeks to achieve
total return. The CorePortfolio Fund's investment objective may be changed by
the Board of Trustees without shareholder approval.
Principal Investment Strategies
The CorePortfolio Fund invests in common stocks of companies whose shares
are traded on U.S. stock exchanges and that are included in Standard & Poor's
500 Composite Stock Price Index ("S&P 500"). The CorePortfolio Fund is not
managed according to traditional methods of "active" investment management,
which involve the purchase and sale of securities based upon economic,
financial, and market analysis and the judgement of the portfolio manager.
Instead, the CorePortfolio Fund utilizes a "passive" investment model to select
investments.
Primary Risks
As with any investment, it is possible to lose money by investing in the
CorePortfolio Fund. The primary risks of investing in the CorePortfolio Fund
include:
- Stock Market Risk. Stock market risk is the potential that the
CorePortfolio Fund's total return, like the stock market generally, will
go up and down within a wide range. These up and down movements are also
possible in the price of the individual stocks that the CorePortfolio
Fund holds.
- Investment Style Risk. Investment style risk is the chance that returns
from large-cap stocks will trail returns from other asset classes or the
overall stock market.
- Nondiversification Risk. Nondiversification risk is the possibility that,
because the CorePortfolio Fund may invest a greater percentage of its
assets in a particular company, or in a small number of companies, the
CorePortfolio Fund may be subject to greater risks and larger losses than
diversified funds which invest in a large number of companies.
- Model Risk. Model risk is the possibility that poor security selection by
the investment adviser's proprietary model will cause the CorePortfolio
Fund to underperform other funds with similar investment objectives.
Performance/Risk Information
The bar chart and table below provide an indication of the risk of investing
in the CorePortfolio Fund. The bar chart shows the performance in each calendar
year over a ten-year period of the model by which the CorePortfolio Fund is
invested. The table shows how the model's average annual returns for one, five,
and ten calendar years compare with those of a broad-based securities market
index
<PAGE>
over the same periods. The CorePortfolio Fund's shares are sold subject to a
sales charge (load). This sales charge is not reflected in the bar chart below.
If this sales charge was reflected, the CorePortfolio Fund's returns would have
been less than those shown. Of course, the past performance of the model does
not indicate how it will perform in the future.
The return of the model for the most recent calendar quarter ended March 31,
1999 was 7.51%. During the period shown in the bar chart, the model's highest
quarterly return was 21.74% (quarter ended December 31, 1998), and the model's
lowest quarterly return was -11.70% (quarter ended September 30, 1990).
Average Annual Total Returns for Years Ended December 31
<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
------ ------- --------
<S> <C> <C> <C>
Performance of CorePortfolio Model/1/............. 33.54% 27.06% 20.30%
S&P 500 Index..................................... 28.58% 24.05% 19.19%
</TABLE>
- --------
/1/The performance data for the CorePortfolio Model was derived by applying
the procedures of the model to the historical information concerning stocks
which comprised the S&P 500 during the period under consideration. The
performance data does not reflect the performance of an actual fund or pool of
assets and, therefore, does not reflect the effects of operations and cash
flows which may adversely affect the performance of a fund operated under the
model. The performance data of the model has, however, been restated to reflect
annual operating expenses of 0.75% of average daily net assets.
2
<PAGE>
Fund Profile: Wayne Hummer Growth Fund
Investment Objectives
The Wayne Hummer Growth Fund ("Growth Fund") seeks to achieve long-term
capital growth. Current income is a secondary objective. The Growth Fund's
investment objectives may be changed by the Board of Trustees without
shareholder approval.
Principal Investment Strategies
The Growth Fund invests primarily in common stocks of U.S. companies. The
investment adviser places an emphasis on the common stocks of medium-sized
companies that have above-average earnings growth potential and that are
attractively priced.
Primary Risks
As with any investment, it is possible to lose money by investing in the
Growth Fund. The primary risks of investing in the Growth Fund include:
- Stock Market Risk. Stock market risk is the potential that the Growth
Fund's total return, like the stock market generally, will go up and down
within a wide range. These up and down movements are also possible in the
price of the individual stocks that the Growth Fund holds.
- Investment Style Risk. Investment style risk is the chance that returns
from growth stocks will trail returns from other asset classes or the
overall stock market.
- Manager Risk. Manager risk is the possibility that poor security
selection will cause the Growth Fund to underperform other funds with
similar investment objectives.
Performance/Risk Information
The bar chart and table below provide an indication of the risk of investing
in the Growth Fund. The bar chart shows the Growth Fund's performance in each
calendar year over a ten-year period. The table shows how the Growth Fund's
average annual returns for one, five, and ten calendar years compare with those
of a broad-based securities market index and an index of funds with investment
objectives similar to those of the Growth Fund over the same periods. The
Growth Fund's shares are sold subject to a sales charge (load). This sales
charge is not reflected in the bar chart below. If this sales charge was
reflected, the Growth Fund's returns would have been less than those shown. Of
course, the Growth Fund's past performance does not indicate how it will
perform in the future.
3
<PAGE>
The Growth Fund's return for the most recent calendar quarter ended March
31, 1999 was -0.41%. During the period shown in the bar chart, the Growth
Fund's highest quarterly return was 21.72% (quarter ended December 31, 1998),
and the Growth Fund's lowest quarterly return was -18.54% (quarter ended
December 31, 1987).
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
24.04% 5.01% 28.86% 10.36% 3.58% -0.91% 24.82% 11.88% 30.19% 17.55%
</TABLE>
Average Annual Total Returns for Years Ended December 31
<TABLE>
<CAPTION>
5 10 Life of
1 Year Years Years Fund/1/
------ ------ ------ -------
<S> <C> <C> <C> <C>
Wayne Hummer Growth Fund..................... 17.55% 16.19% 15.05% 13.85%
S&P 500 Index................................ 28.58% 24.05% 19.19% 17.84%
Russell Mid-Cap Index........................ 10.09% 17.34% 16.69% 16.03%
</TABLE>
- --------
/1/The Fund began operations on December 30, 1983.
4
<PAGE>
Fund Profile: Wayne Hummer Income Fund
Investment Objective
The Wayne Hummer Income Fund ("Income Fund") seeks to achieve a high level
of current income in a manner consistent with prudent investment management.
Principal Investment Strategies
The Income Fund invests primarily in publicly traded, investment-grade debt
securities. Under normal market conditions, the Income Fund invests at least
65% of its assets in securities with an average life of between three and ten
years, and expects that the dollar-weighted average life of its portfolio will
be between three and ten years.
Primary Risks
As with any investment, it is possible to lose money by investing in the
Income Fund. The other primary risks of investing in the Income Fund include:
- Interest Rate Risk. Interest rate risk is the risk that the value of the
Income Fund's investments will go down when interest rates rise.
- Spread Risk. Spread risk is the potential that the differential or
"spread" between interest rates paid by corporate fixed income securities
and rates paid by government securities will change, causing a change in
the relative value of those securities.
- Credit Risk. Credit risk is the potential that an issuer of a debt
security may default on the payment of the security's principal and/or
interest.
- Investment Style Risk. Investment style risk is the chance that returns
from investment-grade debt securities will trail returns from other asset
classes or the overall bond market.
- Manager Risk. Manager risk is the possibility that poor security
selection will cause the Income Fund to underperform other funds with
similar investment objectives.
Performance/Risk Information
The bar chart and table below provide an indication of the risk of investing
in the Income Fund. The bar chart shows the Income Fund's performance in each
calendar year since the Fund commenced operations. The table shows how the
Income Fund's average annual returns for one and five calendar years and for
the period since the Fund commenced operations compare with those of a broad-
based securities market index over the same period. The Income Fund's shares
are sold subject to a sales charge (load). This sales charge is not reflected
in the bar chart below. If this sales charge were reflected, the Income Fund's
returns would have been less than those shown. Of course, the Income Fund's
past performance does not indicate how it will perform in the future.
5
<PAGE>
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
----------------------------------------
<S> <C> <C> <C> <C> <C>
10.69% -2.47% 15.54% 3.50% 9.02% 7.37%
</TABLE>
The Income Fund's return for the most recent calendar quarter ended March
31, 1999 was -1.07%. During the period shown in the bar chart, the Income
Fund's highest quarterly return was 4.71% (quarter ended March 31, 1995), and
the Income Fund's lowest quarterly return was -1.95% (quarter ended March 31,
1994).
Average Annual Total Returns for Years Ended December 31
<TABLE>
<CAPTION>
1 Year 5 Years Life of Fund/1/
------ ------- ---------------
<S> <C> <C> <C>
Wayne Hummer Income Fund.................. 7.37% 6.43% 7.09%
Merrill Lynch Intermediate Corporate and
Government Index of 1-9.99 Year
Maturities............................... 8.46% 6.65% 7.14%
</TABLE>
- --------
/1 /The Fund began operations on December 1, 1992.
6
<PAGE>
Fund Profile: Wayne Hummer Money Market Fund
Investment Objective
The Wayne Hummer Money Market Fund ("Money Market Fund") seeks to maximize
current income in a manner consistent with preservation of capital and
maintenance of liquidity.
Principal Investment Strategies
The Money Market Fund seeks to maintain a stable net asset value of $1.00
per share by investing in various money market instruments maturing in 397 days
or less from the time of purchase.
Primary Risks
Although the Money Market Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Money Market Fund.
Performance/Risk Information
The bar chart and table below provide an indication of the risk of investing
in the Money Market Fund. On July 30, 1999, the Wayne Hummer Money Fund Trust
(the "Predecessor Fund") was merged into the Money Market Fund solely to change
its form of legal entity; all historical performance information set forth
below reflects the performance of the Predecessor Fund. The bar chart shows the
Predecessor Fund's performance in each calendar year over a ten-year period.
The table shows the Predecessor Fund's average annual returns for one, five,
and ten calendar years and since the Fund's inception. Of course, the
Predecessor Fund's past performance does not indicate how the Money Market Fund
will perform in the future.
ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.72% 7.68% 5.43% 3.10% 2.45% 3.53% 5.31% 4.82% 5.00% 4.98%
</TABLE>
The Predecessor Fund's return for the most recent calendar quarter ended
March 31, 1999 was 1.08%. During the period shown in the bar chart, the
Predecessor Fund's highest quarterly return was 2.25% (quarter ended June 30,
1989), and the Predecessor Fund's lowest quarterly return was 0.60% (quarter
ended June 30, 1993).
7
<PAGE>
Average Annual Total Returns for Years Ended December 31
<TABLE>
<CAPTION>
Life of
1 Year 5 Years 10 Years Fund/1/
------ ------- -------- -------
<S> <C> <C> <C> <C>
Predecessor Fund.......................... 4.98% 4.73% 5.05% 5.49%
</TABLE>
- --------
/1 /The Predecessor Fund began operations on April 2, 1982.
The Predecessor Fund's seven-day yield as of December 31, 1998 was 4.56%.
Investors may call 1-800-621-4477 to obtain the Money Market Fund's current
seven-day yield.
8
<PAGE>
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy
and sell shares of the Funds. For the CorePortfolio Fund, the expenses shown
are estimates for the current fiscal year. For the Growth Fund and Income Fund,
the expenses shown are annual fund operating expenses based upon those incurred
in the fiscal year ended March 31, 1999. For the Money Market Fund, the
expenses shown are estimates based upon the annual fund operating expenses of
the Predecessor Fund, which was reorganized as the Wayne Hummer Money Market
Fund in July 1999.
Shareholder Fees (fees paid directly from your investment)
<TABLE>
<CAPTION>
CorePortfolio Money
and Growth Income Market
Funds Fund Fund
------------- ------ ------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases... 2.00%* 1.00%* NONE
Maximum Deferred Sales Charge (Load)............... NONE NONE NONE
Sales Charge (Load) Imposed on Reinvested
Dividends......................................... NONE NONE NONE
Redemption Fees.................................... NONE NONE NONE
Exchange Fees...................................... 2.00%* 1.00%* NONE
</TABLE>
- --------
* The sales charge is eliminated for purchases of $1,000,000 or more. See "How
to Buy Fund Shares" later in this prospectus.
Annual Fund Operating Expenses (expenses deducted from the Funds' assets)
<TABLE>
<CAPTION>
Money
CorePortfolio Growth Income Market
Fund Fund Fund Fund***
------------- ------ ------ -------
<S> <C> <C> <C> <C>
Management Fees............................ 0.40% 0.76% 0.50% 0.50%
Distribution (12b-1) Fees.................. NONE NONE NONE NONE
Other Expenses (primarily custodian,
transfer agent, and professional fees).... 0.35%* 0.18% 0.51% 0.21%
----- ----- ----- -----
Total Fund Operating Expenses............ 0.75%** 0.94% 1.01% 0.71%
===== ===== ===== =====
</TABLE>
- --------
* "Other Expenses" are based on estimated amounts for the current fiscal year.
** The investment adviser has entered into an expense limitation agreement with
the Trust, under which it will limit expenses of the CorePortfolio Fund,
excluding interest, taxes, brokerage and extraordinary expenses, subject to
possible reimbursement to the investment adviser within five years. The
expense limit for the CorePortfolio Fund is shown as "Net Expenses."
*** The information in this table for the Money Market Fund is an estimate
based upon the historical operating expenses of the Predecessor Fund, which
was reorganized as the Money Market Fund in July 1999.
9
<PAGE>
Example
The following example is intended to help you to compare the cost of
investing in the Funds with the cost of investing in other mutual funds. It
illustrates the hypothetical expenses you would incur over various periods if
you invested $10,000 in a Fund. This example assumes that each Fund provides a
return of 5% a year, and that its operating expenses remain the same. These
results apply whether or not you redeem your investment at the end of each
period.
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
<S> <C> <C> <C> <C>
CorePortfolio Fund.............................. $ 8 $24 N/A N/A
Growth Fund..................................... $10 $30 $52 $115
Income Fund..................................... $10 $32 $56 $124
Money Market Fund*.............................. $ 7 $23 $40 $ 88
</TABLE>
- --------
* The information in this example for the Money Market Fund is based upon the
historical performance and operating expenses of the Predecessor Fund,
which was reorganized as the Money Market Fund in July 1999.
The above example should not be considered to represent actual expenses or
performance from the past or in the future. Actual future expenses may be
higher or lower than those shown.
Principal Investment Strategies and Risks
This section explains the strategies that the investment adviser uses in
pursuing each Fund's investment objective(s). It also explains how the
investment adviser implements these strategies. In addition, this section
discusses several important risks faced by investors in each Fund. The Funds'
Board of Trustees oversees the management of the Funds and may change a Fund's
investment strategies in the interest of shareholders.
Principal Investment Strategies
Wayne Hummer CorePortfolio Fund
The CorePortfolio Fund invests in common stocks of companies whose shares
are traded on U.S. stock exchanges and that are included in the S&P 500. The
CorePortfolio Fund is not managed according to traditional methods of "active"
investment management, which involve the purchase and sale of securities based
upon economic, financial, and market analysis and the judgment of the
portfolio manager. Instead, the CorePortfolio Fund utilizes a "passive"
investment model which operates as follows:
1. Initially, and at the end of each fiscal quarter of the Fund, the
Adviser will determine the market capitalization weightings of the
Economic Sectors of the S&P 500 and of the individual stocks comprising
the S&P 500. (The Economic Sectors of the S&P 500 currently are: Basic
Materials, Capital Goods, Communication Services, Consumer Cyclicals,
Consumer Staples, Energy, Financials, Health Care, Technology,
Transportation, and Utilities.)
2. The Adviser will select the two largest companies in each sector, based
upon the companies' market capitalization weightings. If any Sectors
have a weighting of less than 3% of the S&P 500, only the single largest
company will be used.
10
<PAGE>
3. The Adviser will then add the capitalization weightings of the two
companies in each Sector and then divide the capitalization weighting of
each company in the Sector to determine each company's weighting in the
Sector.
4. The Adviser will then multiply the company's weighting in the Sector by
the capitalization weighting of the Sector to determine the company's
weighting in the overall portfolio.
5. If companies each comprising 5% or less of the portfolio do not, in
total, comprise 50% or more of the portfolio after Step 4, the Adviser
will add an additional company to each Sector, descending from the
largest Sector, until the total of such companies' share of the
portfolio equals or exceeds 50% of the portfolio.
Throughout each fiscal quarter, additional cash flows will be invested
according to the weightings that were determined at the end of the most recent
fiscal quarter. Such investment of cash flows will be made only when sufficient
investable cash exists to purchase a round lot in each stock. While awaiting
investment, cash may be hedged through the purchase of S&P Index options.
Furthermore, the Adviser will generally hold cash in the portfolio in an amount
which it feels is adequate to meet anticipated net redemptions.
Wayne Hummer Growth Fund
The Growth Fund invests primarily in common stocks of U.S. companies. The
investment adviser places an emphasis on the common stocks of medium-sized
companies that have above-average earnings growth potential and that are
attractively priced. Such companies may benefit from greater market
recognition. To manage the risk of the Fund's portfolio, the investment adviser
allocates the Fund's investments among many industries and companies. The
investment adviser chooses the securities of companies it believes will benefit
from favorable long-term economic, demographic, social, or political trends
that it believes are not reflected in such companies' share prices. In
selecting specific investments for the Fund, the investment adviser evaluates
several factors, including growth prospects, financial condition, management,
profitability, competitive position, product developments, productivity, input
costs and sources, return on assets and equity, regulatory issues, and insider
ownership. The investment adviser also considers the weightings of the various
industry sectors within the Fund and the growth prospects of the various
sectors.
The investment adviser will buy and sell securities whenever necessary to
achieve the Growth Fund's investment objective. During any period when the
investment adviser foresees changing market or economic conditions, the
investment adviser may shift the portfolio's emphasis, which could increase the
rate of portfolio turnover. In general, the greater the volume of buying and
selling by the Growth Fund, the greater the impact that brokerage commissions
and other transaction costs will have on its return. Also, funds with high
turnover rates may be more likely to generate capital gains that must be
distributed to shareholders as income subject to taxes.
Wayne Hummer Income Fund
The Income Fund invests primarily in publicly traded, investment-grade
(rated not less than BBB by S&P or Baa by Moody's) debt securities, securities
issued by the U.S. government or its agencies, and mortgage-backed securities.
The investment adviser pursues the Income Fund's investment objective by
following an approach that involves: (1) modest portfolio changes in
anticipation of changes in interest rates; (2) fundamental, value-based
research; and
11
<PAGE>
(3) comparative sector analysis. When assessing the appropriate maturity,
rating, and sector weighting of the Fund's portfolio, the investment adviser
considers a variety of factors that are expected to influence economic activity
and interest rates. Individual fixed-income investments are selected based upon
the terms of the securities--such as yield, redemption features, liquidity, and
current and expected future credit quality. The investment adviser also varies
the Fund's allocation to various fixed-income sectors based upon the relative
value offered by each sector. When making portfolio management decisions, the
investment adviser relies on the knowledge, experience, research, and judgment
of its own staff.
When selecting investments for the Income Fund, the investment adviser may
take full advantage of the entire range of maturities of fixed-income
securities and may adjust the Income Fund's average maturity from time to time,
depending upon the investment adviser's assessment of relative yields on
securities of different maturities and expectations of future changes in
interest rates. Generally, the Income Fund's average maturity will be shorter
when interest rates are expected to rise and longer when interest rates are
expected to fall.
Under normal market conditions, the Income Fund invests at least 65% of its
assets in securities with an average life of between three and ten years, and
expects that the dollar-weighted average life of its portfolio will be between
three and ten years. Average life is the weighted average period over which the
investment adviser expects the principal to be paid, and differs from stated
maturity in that average life estimates the effect of expected principal
prepayments and call provisions. Securities without prepayment or call
provisions generally have an average life equal to their stated maturity.
The Income Fund will not normally engage in the trading of securities for
the purpose of realizing short-term profits, but will adjust its portfolio as
considered advisable in view of prevailing or anticipated market conditions and
its investment objective. Frequency of portfolio turnover will not be a
limiting factor should the investment adviser deem it desirable to purchase or
sell securities. In general, the greater the volume of buying and selling by
the Income Fund, the greater the impact that brokerage commissions and other
transaction costs will have on its return. Also, funds with high turnover rates
may be more likely to generate capital gains that must be distributed to
shareholders as income subject to taxes.
Wayne Hummer Money Market Fund
The Money Market Fund seeks to maintain a stable net asset value of $1.00
per share by investing exclusively in money market instruments maturing 397
days or less from time of purchase. The Money Market Fund may also invest in
nonconvertible corporate debt securities (e.g., bonds and debentures) and
mortgage-backed securities maturing in 397 days or less from the date of their
acquisition by the Fund. Such securities with a remaining maturity of less than
one year tend to become extremely liquid and are traded as money market
securities. Such issues tend to have greater liquidity and considerably less
market value fluctuations than longer term issues.
The investment adviser pursues the Money Market Fund's investment objective
by investing only in those short-term fixed income securities that present the
Fund with minimal credit risk. All investments are of the highest credit
quality as determined by one or more nationally-recognized ratings agencies.
Generally, the investment adviser makes modest changes in the average life of
the Fund's portfolio based on anticipated changes in the interest rates. Thus,
the highest yielding securities consistent with the desired maturity and credit
quality are selected for the Fund's portfolio of investments.
12
<PAGE>
Maturity selection is further refined to ensure that adequate liquidity is
produced on a daily basis. When making portfolio management decisions, the
investment adviser relies on the knowledge, experience, research, and judgment
of its own staff.
The Money Market Fund is managed so that the average maturity of all its
investments on a dollar-weighted basis is generally between 15 and 75 days and
not more than 90 days depending upon the investment adviser's evaluation of
market trends and other conditions. The Fund's investments are generally
distributed evenly or "laddered" within this maturity range. The Fund's
securities normally mature within six months, and in no event will the Fund
invest in securities maturing more than 397 days from the date of acquisition.
As a general policy, the Money Market Fund will hold securities until
maturity. Although the Fund generally does not seek profits through short-term
trading, it may dispose of any security prior to its maturity if, on the basis
of a revised credit evaluation of the issuer or other circumstances or
considerations, the investment adviser believes such disposition is advisable.
In addition, the Fund may attempt, from time to time, to increase its yield by
trading to take advantage of variations in the markets for short-term money
market instruments.
Principal Securities in Which the Funds Invest
Equity securities. Common stocks are the most prevalent type of equity
security. Common stockholders receive the residual value of the issuer's
earnings and assets after the issuer pays its creditors and any preferred
stockholders. As a result, changes in an issuer's earnings directly influence
the value of its common stock. Other equity securities in which the
CorePortfolio and Growth Funds may invest include preferred stocks, convertible
securities, and warrants to purchase common stocks or other equity interests.
Although they may possess certain equity characteristics, the Income Fund may
consider preferred stocks, convertible securities, and certain warrants to
purchase common stocks or other equity interests as fixed-income securities.
Fixed-Income Securities. Fixed-income securities pay interest, dividends, or
distributions at a specified rate. The rate may be fixed or adjusted
periodically. The issuer must also repay the principal amount of the security,
normally within a specified time. Eligible fixed-income securities include U.S.
dollar-denominated domestic and foreign corporate bonds, U.S. and Canadian
government bonds (including obligations of their agencies and
instrumentalities), securities of certain supranational agencies, such as the
International Development Bank, municipal obligations, mortgage- and asset-
backed securities, collateralized mortgage obligations, and comparable
instruments.
Mortgage-Backed Securities. The Income Fund and Money Market Fund each
may invest in mortgage-backed securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities. Mortgage-backed securities
are securities representing interests in a pool of mortgages. Principal and
interest payments made on the mortgages in the underlying mortgage pool are
passed through to the Funds.
Unscheduled prepayments of principal shorten the securities' weighted
average life and may lower total return. The value of these securities also
may change because of changes in the market's perception of the
creditworthiness of the federal agency that issued them. Some mortgage-
backed securities, such as GNMA certificates, are
13
<PAGE>
backed by the full faith and credit of the U.S. Treasury, while others,
such as Freddie Mac certificates, are not.
The Income Fund and the Money Market Fund may purchase or sell
collateralized mortgage obligations ("CMOs"), which are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Depending on the type of CMOs in which the Income Fund invests, the
investment may be subject to a greater or lesser risk of prepayment than
other types of mortgage-related securities.
With respect to GNMA securities and other mortgage-backed securities,
average life is likely to be substantially less than the stated maturity of
the mortgages in the underlying pools. With respect to obligations with
call provisions, average life is typically the next call date on which the
obligation reasonably may be expected to be called. During periods of
rising interest rates, the average life of mortgage-backed securities and
callable obligations may increase substantially because they are not likely
to be prepaid, which may result in greater net asset value fluctuation.
Asset-Backed Securities. The Income Fund and Money Market Fund each may
purchase or sell debt obligations known as asset-backed securities. Asset-
backed securities are securities which represent a participation in, or are
secured by and payable from, a stream of payments generated by particular
assets, most often a pool or pools of similar assets (e.g., trade
receivables). The credit quality of most asset-backed securities depends
primarily on the credit quality of the assets underlying such securities,
how well the entity issuing the security is insulated from the credit risk
of the originator or any other affiliated entities, and the amount and
quality of any credit support provided to the securities. The rate of
principal payment on asset-backed securities generally depends on the rate
of principal payments received on the underlying assets, which in turn may
be affected by a variety of economic and other factors. As a result, the
yield on any asset-backed security is difficult to predict with precision
and actual yield to maturity may be more or less than the anticipated yield
to maturity.
Lower-Rated Securities. Like higher-rated securities, securities rated
in the BBB or Baa categories are considered to have adequate capacity to
pay principal and interest, although they may have fewer protective
provisions than higher-rated securities. Such securities may be adversely
affected by severe economic circumstances and are considered to have more
speculative characteristics with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation
than securities in the higher rating categories. When the investment
adviser believes such securities are likely to yield relatively high income
in relation to cost, the Income Fund may invest in preferred stock and
other debt securities (including those convertible into or carrying
warrants to purchase common stocks or other equity interests, and privately
placed debt securities). Without regard to quality, the Income Fund may
invest up to 25% of its total assets (not including cash) in preferred
stock. The Income Fund also may invest up to 20% of its total assets in
fixed-income securities that are rated below investment grade or are
nonrated. (See "Risks Associated with Noninvestment-Grade Securities"
below.)
Short-Term Investments. Eligible short-term investments include U.S.
government securities (including securities of its agencies and
instrumentalities), certificates of deposit, commercial paper, and other
similar fixed-income securities with remaining maturities of 397 days or less
from the time of purchase.
14
<PAGE>
Principal Risks of the Funds' Investments
Stock Market Risk. As mutual funds investing primarily in common stocks, the
CorePortfolio Fund and the Growth Fund are subject to stock market risk. Stock
market risk is the potential that the Funds' total return, like the stock
market generally, will go up and down within a wide range.
Interest Rate Risk. Because the Income Fund invests in longer-term bonds and
other fixed-income securities, the Income Fund is subject to interest rate
risk. Interest rate risk is the risk that the value of the Income Fund's fixed-
income investments will decline due to rising interest rates (bond prices move
in the opposite direction of interest rates). The longer the Income Fund's
average maturity, the greater its interest rate risk. Because the Money Market
Fund invests in short-term fixed-income securities, the Fund is also subject to
interest rate risk.
Reinvestment Risk. Each Fund may invest to some extent in debt securities
and/or cash equivalents. Therefore, each Fund is exposed to reinvestment risk.
This can result when a Fund invests the proceeds from new share sales, or from
matured or called bonds, at market interest rates that are below the Fund's
current earnings rate.
Credit Risk. The Funds' investments in fixed-income securities, including
cash equivalents, also expose the Funds to credit risk. Credit risk is the risk
that an issuer of a fixed-income security may be unable to meet its obligation
to make interest and principal payments due to changing financial or market
conditions. Generally, lower-rated bonds provide higher current yield but are
considered speculative and carry greater credit risk than higher-rated bonds.
Prepayment Risk. Both the Income Fund and the Money Market Fund may invest
in various types of mortgage- and asset-backed securities. As such, these Funds
are subject to prepayment risk, which is the risk that the issuer of a
mortgage- or asset-backed security will exercise its right to pay principal on
an obligation held by a Fund earlier than expected. This may happen when there
is a decline in interest rates. These prepayments must then be reinvested at
lower rates. Prepayments may also shorten the effective maturities of mortgage-
and asset-backed securities, especially during periods of declining interest
rates. On the other hand, during periods of rising interest rates, a reduction
in prepayments may increase the effective maturities of these securities,
subjecting them to the risk of decline in market value in response to rising
interest rates and potentially increasing the volatility of the Fund.
Prepayment risk causes mortgage- and asset-backed securities to have
significantly greater price and yield volatility than traditional fixed-income
securities.
Risks Associated with Noninvestment-Grade Securities. Because the Income
Fund may invest up to 20% of its total assets in fixed-income securities that
are rated below investment grade, the Income Fund is subject to the risks
associated with noninvestment-grade fixed-income securities. Securities rated
below investment grade, also known as "high yield, high risk" securities or
"junk bonds," generally entail greater risks than investment-grade securities.
For example, their prices are more volatile, their values are more negatively
impacted by economic downturns, and their trading market may be more limited.
Spread Risk. Because the Income Fund invests in both corporate and
government fixed-income securities, the Income Fund is subject to the risk that
the differential or "spread" between interest rates of corporate and government
fixed-income securities will
15
<PAGE>
How the Investment Adviser Manages Risk
narrow or broaden unexpectedly. In such circumstances, the value of certain
portfolio securities, and of the portfolio as a whole, may be adversely
affected.
Investment Style Risk. Each Fund is subject to investment style risk, which
is the risk that returns from the types of securities in which a Fund invests
will trail returns from other asset classes or the overall market for that
asset class.
Nondiversification Risk. The CorePortfolio Fund may invest a greater
percentage of its assets in a particular company, or in a small number of
companies than diversified funds, which invest in a larger number of companies.
Therefore, the CorePortfolio Fund may be subject to greater risks and larger
losses than diversified funds if individual securities held by the
CorePortfolio Fund decline in value.
Manager Risk. Each actively managed Fund (the Growth Fund, the Income Fund,
and the Money Market Fund) is subject to manager risk, which is the risk that
poor security selection will cause the Fund to underperform other mutual funds
with similar investment objectives.
Model Risk. Model risk is the possibility that poor security selection by
the investment adviser's proprietary model will cause the CorePortfolio Fund to
underperform other funds with similar investment objectives.
Impact of Year 2000. Similar to other mutual funds, financial and business
organizations, and individuals around the world, the Funds could be adversely
affected if the computer systems used by the investment adviser and/or the
Funds' other service providers do not properly process and calculate date-
related information and data from and after January 1, 2000. This is commonly
known as the "Year 2000 Problem." The investment adviser is taking steps that
it believes are reasonably designed to address the Year 2000 Problem with
respect to the computer systems that it uses and to obtain reasonable
assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, there can be no assurance that these steps
will be sufficient to avoid any adverse impact on the Funds. In addition, there
can be no assurance that the Year 2000 problem will not affect the companies in
which the Funds invest or worldwide markets and economies.
Hedging Strategies. The CorePortfolio Fund and the Growth Fund may purchase
put and call options traded on national securities exchanges, including put and
call options on stock indices, and may write (sell) covered call options on
securities held in its investment portfolio. The Income Fund may purchase put
and call options traded on national securities exchanges or the Chicago Board
Options Exchange, including put and call options on stock indices and interest
rates and options on financial futures contracts, and may write covered call
options on securities held in its investment portfolio. Each of these Funds
will use option transactions primarily to hedge its investment portfolio and to
protect its portfolio securities from unexpected market downturns. The
aggregate market value of portfolio securities underlying options written by
the Funds may not exceed 25% of the CorePortfolio Fund or the Growth Fund's net
assets or 5% of the Income Fund's net assets.
The Income Fund may also enter into financial futures contracts for the
future delivery of a financial instrument, such as a security, or the cash
value of a securities index to hedge against anticipated future changes in
interest
16
<PAGE>
rates or equity market conditions that might otherwise adversely affect the
value of securities that the Income Fund holds or intends to purchase. The
Income Fund will not enter into any futures contracts or options on futures
contracts if the aggregate of the contract value of the outstanding futures
contracts of the Income Fund and futures contracts subject to outstanding
options written by the Income Fund would exceed 50% of the total assets of the
Income Fund.
The effectiveness of these investment techniques depends on the investment
adviser's ability to predict movements in interest rates and stock prices. The
risks involved in purchasing put or call options include the possible loss of
the entire premium paid. The risks involved in writing covered call options
include the possible inability to effect closing transactions at favorable
prices and the inability to participate in any appreciation of the underlying
securities above the exercise price.
Temporary Defensive Positions. The Growth Fund and Income Fund each may,
from time to time, take temporary defensive measures that are inconsistent with
their respective principal investment strategies in response to adverse market,
economic, political, or other conditions. For example, the Growth Fund may
purchase put and call options (including stock index options), write covered
call options, invest all or part of its assets in shares of fixed-income
securities such as investment-grade commercial paper and corporate bonds,
United States government securities, certificates of deposit, bankers'
acceptances, variable rate notes, and other money market instruments (such as
short-term corporate debt instruments), or retain cash. The Income Fund may
hold cash or cash equivalents. In taking such measures, a Fund may not achieve
its investment objective.
Management and Organization
Investment Adviser and Portfolio Managers
The Funds' investment adviser is Wayne Hummer Management Company, 300 South
Wacker Drive, Chicago, Illinois 60606. The investment adviser chooses the
Funds' investments and provides the Funds with operating facilities and
portfolio accounting services under the direction of the Board of Trustees.
Wayne Hummer Management Company was organized in 1981 and also serves as
investment adviser to various individual, institutional, and fiduciary
accounts.
As compensation for its advisory and management services to the Funds, the
investment adviser receives an annual fee that is computed and accrued daily
and payable monthly. The effective annual investment advisory fees paid by each
Fund for its most recently completed fiscal year are shown below:
<TABLE>
<CAPTION>
Aggregate Fee as a Percentage
Fund of Average Net Assets
---- -----------------------------
<S> <C>
Growth Fund................................. 0.76%
Income Fund................................. 0.50%
Money Market Fund........................... 0.50%*
</TABLE>
17
<PAGE>
- --------
* The effective annual investment advisory fees paid by the Money Market Fund
are estimated based upon such fees paid by the Wayne Hummer Money Fund
Trust, which was reorganized as the Money Market Fund in May 1999. The Money
Market Fund pays an annual investment advisory fee, computed daily and
payable monthly, based upon its average daily net assets as follows: 0.500%
for the first $500 million, 0.425% for the next $250 million, 0.375% for the
next $250 million, 0.350% for the next $500 million, 0.325% for the next
$500 million, and 0.275% for all assets over $2.0 billion.
The CorePortfolio Fund commenced investment operations on August 2, 1999. As
compensation for its advisory and management services to the CorePortfolio
Fund, the investment adviser receives a fee that is computed and accrued daily
and payable monthly at an annual rate of 0.40% of average daily net assets. In
addition, the Trust pays Standard & Poor's, a division of McGraw-Hill
Companies, Inc., an annual license fee of the greater of $10,000 or 0.01% of
average daily net assets of the CorePortfolio Fund for use of the S&P 500. As
part of the investment advisory contract between the Trust and the investment
adviser, the investment adviser has agreed to waive its advisory fee and to
reimburse the operating expenses of any Fund as may be necessary to limit the
ordinary operating expenses of the CorePortfolio Fund to 0.75% of average daily
net assets, the Growth Fund and Income Fund to 1.50% of average daily net
assets, and the Money Market Fund to 1.00% of average daily net assets.
Expenses that are not subject to these limitations are interest, taxes,
brokerage commissions, and extraordinary items.
Thomas J. Rowland is the portfolio manager of the Growth Fund and the co-
portfolio manager of the CorePortfolio Fund. Mr. Rowland, a voting member of
Wayne Hummer Investments L.L.C. (Wayne Hummer), the Funds' distributor, joined
Wayne Hummer in 1987. He has been the portfolio manager of the Growth Fund
since 1996, and was a co-manager of the Fund from 1987 to 1996. He serves as
president of the investment adviser and of the Funds. Prior to joining Wayne
Hummer, Mr. Rowland spent 14 years with CNA Financial Corporation as a
portfolio manager, research analyst, and securities trader. In addition, he
spent five years with the trust department at Harris Trust & Savings Bank. He
received a BBA in finance from the University of Notre Dame and an MBA from
Northwestern University. He is a CFA(R) charterholder and is a Fellow of the
Financial Analysts Federation and a member of the Association for Investment
Management and Research and the Investment Analysts Society of Chicago.
David P. Poitras is the portfolio manager of the Income Fund and of the
Money Market Fund. Mr. Poitras, a voting member of Wayne Hummer, joined Wayne
Hummer in 1985. He has been the portfolio manager of the Income Fund since 1992
and of the Money Market Fund since 1987. He serves as a Trustee and vice
president of the Funds. He earned a Bachelor of Science degree in finance from
Northern Illinois University. He is a member of the Municipal Bond Club of
Chicago and the Bond Club of Chicago.
David D. Cox is the co-portfolio manager of the CorePortfolio Fund with Mr.
Rowland. Mr. Cox joined Wayne Hummer Management Company in 1994. He earned a
Bachelor of Science degree in accounting and economics from Babson College. He
is a Level III candidate in the CFA(R) program, and a member of the Association
of Investment Management and Research and the Investment Analysts Society of
Chicago.
18
<PAGE>
About Your Account
This section provides information regarding your Fund account, including how
to buy and sell Fund shares. Other shareholder services are explained as well.
This section also covers certain distribution and income tax information.
Share Price
Each Fund's share price, called its net asset value (NAV), is calculated as
of the close of regular session trading (generally, 3:00 p.m. Chicago time) on
each day the New York Stock Exchange (NYSE) is open for trading and at 3:00
p.m. Chicago time on each other day during which a sufficient degree of trading
has occurred in the securities held by a particular Fund so as to materially
affect such Fund's NAV. The price at which you purchase, exchange, or redeem
Fund shares is based on the next calculation of NAV after your order is
received in proper form. The Money Market Fund's NAV normally remains constant
at $1.00 per share.
The portfolio securities and assets of the CorePortfolio Fund, the Growth
Fund, and the Income Fund are generally valued based upon market quotations
from the primary market in which they are traded or, if market quotations are
not readily available, by a method that the Board of Trustees believes
accurately reflects fair value. 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 or accretion of discounts. The securities held by the
Money Market Fund are valued using the amortized cost method.
The Funds may suspend the determination of net asset value, the processing
of orders, and the payment of redemption proceeds, and may postpone the payment
date for redeemed shares for more than seven days under the following unusual
circumstances: (1) the NYSE is closed (other than on weekends or holidays) or
trading is restricted; (2) an emergency exists as determined by the Securities
and Exchange Commission (the "SEC"), making disposal of portfolio securities or
the valuation of net assets not reasonably practicable; or (3) during any
period when the SEC has by order permitted a suspension of redemption for the
protection of shareholders.
How to Buy Fund Shares
You may purchase Fund shares using any of the options explained in the table
below. In addition, subsequent share purchases may be made using one or more of
the various shareholder service plans or privileges described under "Shareholder
Services and Account Features" later in this prospectus.
19
<PAGE>
<TABLE>
<CAPTION>
Opening a New Fund Account Adding to an Existing Fund Account
<C> <S> <C>
By Check . Make out a check for your . Make out a check for your
investment amount, payable to investment amount, payable to
"Wayne Hummer Investments "Wayne Hummer Investments L.L.C."
L.L.C."
. Deliver your check and your . Include a note specifying the
completed application Fund name, your account number,
(including a note specifying and the name(s) in which the
the Fund name) to your Wayne account is registered.
Hummer investment executive,
or mail them to:
Wayne Hummer Investments L.L.C. . Deliver your check and your note
300 South Wacker Drive to your Wayne Hummer investment
Chicago, Illinois 60606 executive, or mail them to:
Wayne Hummer Investments L.L.C.
300 South Wacker Drive
Chicago, Illinois 60606
By Wire . Deliver your completed . Instruct your bank to wire the
application to your Wayne amount of your investment to:
Hummer investment executive
or mail it to:
Wayne Hummer Investments L.L.C. Harris Trust Bank
300 South Wacker Drive ABA # 071000288
Chicago, Illinois 60606 FBO Wayne Hummer Investments L.L.C.
Account #4429445
FFC [name] and [account #]
. Obtain your account number by Specify the Fund name, your account
calling your Wayne Hummer number, and the name(s) in which
investment executive or Wayne the account is registered. Your
Hummer Investments L.L.C. bank may charge a fee to wire
funds.
. Instruct your bank to wire
the amount of your investment
to:
Harris Trust Bank
ABA # 071000288
FBO Wayne Hummer
Investments L.L.C.
Account #4429445
FFC [name] and [account #]
Specify the Fund name, the new
account number, and the name(s)
in which the account is
registered. Your bank may
charge a fee to wire funds.
By Phone . Call your Wayne Hummer . Call your Wayne Hummer investment
investment executive executive (investment by phone is
(investment by phone is available only if you have a free
available only if you have a credit balance in an existing
free credit balance in an brokerage account with Wayne
existing brokerage account Hummer Investments L.L.C.)
with Wayne Hummer Investments
L.L.C.)
</TABLE>
20
<PAGE>
Orders received by Wayne Hummer with payment prior to the close of trading
on the NYSE (generally 3:00 p.m. Chicago time) will be effected that business
day. Orders received after that time will be effected the next business day.
Income Fund and Money Market Fund shares begin to earn dividends on the
business day following the day on which your order is effected. As used in this
prospectus, "business day" means any day that the NYSE is open for business. If
you purchase Fund shares by check, Wayne Hummer advances federal funds on your
behalf to pay for such shares. If your check is subsequently dishonored, Wayne
Hummer has the right to redeem your shares and to retain any dividends paid or
distributions made with respect to such shares.
Investment Minimums
<TABLE>
<CAPTION>
Initial Purchases Subsequent Purchases
----------------- -----------------------------------------------
<S> <C> <C>
CorePortfolio and Growth
Funds
Regular Account $1,000.00 minimum $500.00 minimum
($100.00 monthly minimum if you use Systematic
Investment Plan or Payroll Direct Deposit Plan)
Retirement Accounts $500.00 minimum $200.00 minimum
Income Fund
Regular Account $2,500.00 minimum $1,000.00 minimum
($100.00 monthly minimum if you use Systematic
Investment Plan or Payroll Direct Deposit Plan)
Retirement Account $2,000.00 minimum $500.00 minimum
Money Market Fund
Regular Account $500.00 minimum $500.00 minimum
($100.00 minimum for Automatic Sweep Program)
($100.00 monthly minimum if you use Systematic
Investment Plan or Payroll Direct Deposit Plan)
Retirement Account $500.00 minimum $100.00 minimum
</TABLE>
Investments may be made in any amount in excess of these minimums. The above
investment minimums may be lower for custodian accounts and accounts that are
part of an employer-sponsored and administered 401(k) plan. Purchases of Fund
shares will be effected through your Wayne Hummer brokerage account, and all
shares purchased are entered and credited to your account. Your purchase will
be effected at the net asset value next determined after Wayne Hummer receives
your request in proper form. The Funds reserve the right, in their sole
discretion, to vary at any time the initial and subsequent investment minimums,
to withdraw the offering, or to refuse any purchase order. The Funds may
suspend the determination of net asset value, which would delay the processing
of your purchase order, in certain unusual circumstances, as described under
"Share Price" above.
21
<PAGE>
Sales Charges
<TABLE>
<CAPTION>
Sales Charge as a
Percentage of Sales Charge as
Public Offering a Percentage of
Purchase Amount Price NAV
--------------- ----------------- ---------------
<S> <C> <C>
CorePortfolio and Growth Funds
Less than $1 million........................ 2.00% 2.02%
$1 million or greater....................... NONE NONE
Income Fund
Less than $1 million........................ 1.00% 1.01%
$1 million or greater....................... NONE NONE
</TABLE>
The sales charge may be eliminated by:
. purchasing shares in an amount of $1 million or greater;
. purchasing through a trust, pension plan, profit sharing plan, 401(k)
plan, or other benefit plan that makes an initial investment in one or
more Funds aggregating $250,000 or more or that has 20 or more
participants. (Sales of shares to such plans must be made in connection
with a payroll deduction system of plan funding or other system
acceptable to Wayne Hummer Investments L.L.C.);
. combining concurrent purchases of shares to reach $1 million or more:
--by you, your spouse, and your children under age 21 or
--in the CorePortfolio Fund, the Growth Fund, and the Income Fund; or
. signing a letter of intent to purchase not less than $1,000,000 of Fund
shares within 13 months.
In addition, CorePortfolio Fund, Growth Fund, and Income Fund shares may be
purchased at net asset value, without a sales charge, to the extent such a
purchase, which must be at least $5,000, is paid for with the proceeds from the
redemption of shares of a nonaffiliated mutual fund. A qualifying purchase of
Fund shares must occur within 21 days of the prior redemption, and the Funds
must receive a copy of the confirmation of the redemption transaction. Wayne
Hummer Investments L.L.C. may compensate broker-dealers in connection with such
purchases. This privilege may be revoked at any time.
Purchases of shares of the Money Market Fund are not subject to a sales
charge. No sales charge will be assessed on purchases of additional shares in
the same Fund by shareholders whose original shares were purchased before July
30, 1999, or on shares which are purchased through the reinvestment of income
and capital gain distributions.
Letter of Intent. You may purchase CorePortfolio Fund, Growth Fund, and
Income Fund shares without a sales charge under a letter of intent to purchase
not less than $1,000,000 of Fund shares within 13 months. The letter of intent
imposes no obligation to purchase or sell additional Fund shares.
If your investment qualifies for a reduction or elimination of the sales
charge, you or your investment professional should notify your Wayne Hummer
investment executive at the time of purchase. If you do not so notify your
Wayne Hummer investment executive, you will receive the reduced sales charge
only on additional purchases, and not retroactively on previous purchases.
22
<PAGE>
Shareholder Services and Account Features
This section describes the various services that are available to you as a
shareholder. These services may cease to be offered at any time.
Systematic Investment Plan. Shareholders (except those holding Fund shares
through retirement plan accounts) may arrange to have a pre-authorized amount
($100 minimum) drawn on their bank accounts and automatically invested in a
specific Fund or Funds on a specified day of each month. To participate in the
systematic investment plan, call your Wayne Hummer investment executive for an
authorization agreement, which contains details about the plan. You may stop
participating in the systematic investment plan at any time by notifying your
Wayne Hummer investment executive.
Payroll Direct Deposit Plan. After establishing a Fund account that meets
the applicable minimum initial investment requirement, you may purchase
additional Fund shares through the Funds' Payroll Direct Deposit Plan. Under
this plan, you may make periodic investments ($100 minimum) automatically from
your paycheck into your existing Fund account. By enrolling in this plan, you
authorize your employer to deduct a specified amount from your paycheck and
deposit it into the Fund's bank account for the purchase of additional Fund
shares. In most cases, your Fund account will be credited on the day after the
Fund's bank receives your investment. You may also use this plan for other
direct deposits, such as social security checks, military allotments, and
annuity payments.
To enroll in the Payroll Direct Deposit Plan, call your Wayne Hummer
investment executive, who will give you the necessary information. Your
employer must have available for its employees direct deposit capabilities
through the Automated Clearing House for you to participate in this plan. Once
you enroll in this plan, you may alter the amount or frequency of your deposit
or stop your participation in this plan by notifying your employer.
Exchange Privilege. The Funds allow you the unlimited privilege of
exchanging your CorePortfolio Fund, Growth Fund, Income Fund, or Money Market
Fund shares for each other. Share exchanges into the CorePortfolio Fund, the
Growth Fund, or the Income Fund are subject to a sales charge of 2.00% for the
CorePortfolio Fund or the Growth Fund, and 1.00% for the Income Fund. If the
shares of the Fund into which you are exchanging carries an equal or greater
load, you will receive a credit for the load that you previously paid. You will
not, however, receive a credit if the shares of the Fund into which you are
exchanging carries a lesser load. This sales charge may be waived in certain
other circumstances, as described under "Sales Charges" above. The Funds cannot
guarantee that you will be able to exchange your Fund shares by telephone
during emergency situations or unusual market conditions. You may only exchange
Fund shares if the Fund into which you want to exchange your investment is
available for sale in the state in which you live. Exchanges will be effected
at the net asset value, plus the applicable sales charge, if any, next
determined after Wayne Hummer receives your exchange request in proper form.
For federal income tax purposes, an exchange of one Fund's shares for the
shares of another Fund will be treated as a sale of the Fund's shares, and any
gain on the transaction will be subject to federal income tax. To learn more
about the exchange privilege, contact your Wayne Hummer investment executive.
Automatic Sweep Program (Money Market Fund only). The Money Market Fund, in
conjunction with Wayne Hummer, maintains a "sweep program" that allows you to
23
<PAGE>
automatically purchase and redeem Money Market Fund shares. Wayne Hummer and
the Money Market Fund bear the expenses of maintaining the automatic sweep
program.
Under this program, if you have a free credit cash balance of $100 or more in
your Wayne Hummer brokerage account, such balance is automatically invested in
Money Market Fund shares on a specified day of each week (currently, Friday),
or if the specified day is not a business day, then on the prior business day.
If you have a free credit cash balance of $500 or more arising from cash
deposits into your Wayne Hummer brokerage account from dividend and interest
payments that you have not directed to be disbursed from your Wayne Hummer
brokerage account to you, or from any other source, such balance is
automatically invested in Money Market Fund shares on the day of receipt in
your account if deposited in your account prior to 3:00 p.m. Chicago time. If
you have a free credit cash balance of $500 or more arising from the sale of
securities that do not settle on the day of the transaction (such as most
common and preferred stock transactions) or from principal repayments on debt
securities, such balance is automatically invested in Money Market Fund shares
on the business day on which the proceeds are received in your brokerage
account.
To enroll in the automatic sweep program, contact your Wayne Hummer investment
executive. You may terminate your participation in the automatic sweep program
at any time by contacting your Wayne Hummer investment executive.
Redemption by Check (Money Market Fund only). Shareholders of the Money
Market Fund (except those holding Fund shares through a retirement plan
account) may establish a special checking account with
State Street Bank and Trust Company ("State Street") to redeem Money Market
Fund shares by check. Redeeming Money Market Fund shares by check enables you
to earn the dividends declared on your shares until the check is presented to
State Street for payment. To set up a checking account with State Street and to
request checks, contact the Fund or your Wayne Hummer investment executive.
You may write checks payable to any party in amounts of $500 or more, up to
a maximum of $250,000. A check representing a redemption request will be
processed ahead of any other redemption instructions issued by you and before
any automatic redemptions are effected in your account pursuant to the
automatic sweep program. Checks that have been honored will be returned
periodically to you by State Street Bank and Trust Company, the Funds'
Custodian and Transfer and Dividend Paying Agent.
Currently, the Fund does not charge for normal use of the check redemption
privilege other than as set forth below. If (1) the amount of your check is
greater than the value in your account; (2) your check is for an amount less
than $500; or (3) your check is for an amount greater than $250,000, your check
will be dishonored, and State Street will return it unpaid to the person to
whom you wrote your check. The Fund may charge you its costs for (1) each stop
payment; (2) each check written for an amount under $500; (3) each check
written in excess of $250,000; and (4) each check returned because there are
insufficient shares in your Fund account. In addition, the Fund reserves the
right to impose a charge for the check-writing privilege at a future date, to
charge for excessive use of the check-writing privilege, to charge for its
costs for stop payment requests and checks returned for any reason, and to make
other additional charges to recover the costs of providing the check-writing
privilege. All charges will be deducted
24
<PAGE>
from any existing or future credit balance in your Wayne Hummer brokerage
account.
Retirement Plans. Wayne Hummer provides several prototype self-directed
retirement plans, including an Individual Retirement Account Plan, a Simplified
Employee Pension Plan, and a Defined Contribution Plan (formerly "Keogh Plan"),
through which you may invest in the Funds on a tax-sheltered basis. Orders for
Fund shares that you purchase for your retirement account must be placed by
Wayne Hummer. You may combine your Fund investments with your other investments
purchased through Wayne Hummer in your retirement account. For minimum
retirement plan investment amounts, see the table entitled "Investment
Minimums" earlier in this section.
You may get additional information on retirement plans provided by Wayne
Hummer, including a description of applicable service fees and limitations on
contributions and withdrawals, by calling Wayne Hummer at 1-800-621-4477 or by
writing to Wayne Hummer Investments L.L.C., Attention: Retirement Plans
Department, 300 South Wacker Drive, Chicago, Illinois 60606.
How to Sell Fund Shares
Redemption Procedures. You may redeem your shares at any time without charge
at the net asset value next determined after Wayne Hummer receives your
redemption request in proper form. By opening a brokerage account with Wayne
Hummer, you are agreeing with the Trust and Wayne Hummer that neither the Trust
nor Wayne Hummer is responsible for the authenticity of redemption instructions
or the delivery of redemption proceeds by check from Wayne Hummer. The value of
your shares upon redemption may be more or less than what you paid for them.
The value of an investment in the Money Market Fund will normally remain
constant at $1.00 per share.
You may sell Fund shares through your Wayne Hummer investment executive by
telephone, by mail, or in person. The telephone redemption procedure may be
terminated by the Funds or Wayne Hummer at any time. Your redemption request
must include the Fund name, your account number, the name(s) in which the
account is registered, and the dollar value or number or shares that you want
to redeem.
If Wayne Hummer receives your redemption request prior to the close of
trading on the NYSE on a day when the Fund's shares are priced, your request
will be effected that day and the proceeds credited to your brokerage account
the next business day. If Wayne Hummer receives your redemption request after
the close of trading or on a day when the Fund's shares are not priced, your
request will be effected the next business day. Shares of the Money Market Fund
or the Income Fund covered by a redemption request received in proper form
before 3:00 p.m. Chicago time will continue to accrue dividends declared
through the close of business on the date of receipt. Shares of the Money
Market Fund covered by a redemption request received in proper form after 3:00
p.m. Chicago time will continue to accrue dividends declared through the close
of business on the next business day following the date of receipt.
When you make your redemption request, you may instruct Wayne Hummer to
transmit your redemption proceeds by mail. In that case, Wayne Hummer normally
will mail your investment proceeds on the day they are credited to your
brokerage account, or, if you make your request to transmit your investment
proceeds by mail subsequent to your redemption request, your investment
proceeds will be mailed on the next business day after receipt of your request
to transmit your investment proceeds by mail. In either event, payment will be
made within seven days after
25
<PAGE>
your redemption is effected or your request to transmit your investment
proceeds is received for redemptions of CorePortfolio Fund, Growth Fund, or
Income Fund shares, or three business days after your redemption is effected,
or you request the Fund to transmit your investment proceeds by mail for
redemptions of Money Market Fund shares.
The Funds may suspend the right of redemption and may postpone the date of
payment for shares for more than seven days under certain unusual
circumstances, as described under "Share Price" above. At various times, the
Funds may be requested to redeem shares for which good payment has not been
received. For example, if you purchased shares by check, your check may not
have been cleared through the banking system even though Wayne Hummer had
advanced federal funds to effect your purchase. In such event, your redemption
request may be delayed for up to 15 days while the Fund awaits assurance that
good payment has been collected.
Automatic Redemption of Fund Investments. Due to the relatively high cost of
maintaining smaller accounts, the Funds reserve the right to redeem shares
(other than shares purchased for a retirement plan provided by Wayne Hummer)
for their then current value if at any time the value of your Fund investment
falls below a certain amount, unless the value of your Fund investment falls
below the specified minimum due to a decline in the market value of a Fund's
assets. This amount is $750 for the CorePortfolio Fund or the Growth Fund,
$2,000 for the Income Fund, and $500 for the Money Market Fund. If your Fund
investment falls below the applicable minimum, you will first be notified that
the value of your total investment is less than the minimum and will be allowed
two months to make an additional investment before your account will be
automatically redeemed. The proceeds of any such redemption will be credited to
your brokerage account and will be mailed to you by check.
Automatic Redemptions to Satisfy Debit Balances (Money Market Fund only).
Redemptions of Money Market Fund shares will be automatically effected on a
daily basis by Wayne Hummer to satisfy debit balances of $10 or more existing
in your brokerage account just prior to 3:00 p.m. Chicago time. After
application of any free credit cash balances in your account to such debit
balances, the number of shares needed to satisfy the remaining debit balance
will be redeemed at the net asset value determined at 3:00 p.m. Chicago time
that day. If more than one redemption transaction is processed on a specific
day and the number of shares available for redemption is insufficient to
satisfy all redemption transactions, redemptions by check, if presented, will
take precedence over redemption to satisfy debit balances resulting from
activity in your brokerage account. The automatic redemption of shares to
settle debit balances in your brokerage account for purchases of other
securities may occur prior to the settlement date of such purchases. As a
result, your redemption proceeds may remain uninvested in your brokerage
account until the settlement date.
Transactions Through Broker-Dealers
You may purchase or redeem shares through broker-dealers or agents appointed
by Wayne Hummer, who may charge a fee for such services. The Funds may agree to
modify or waive their purchase and redemption procedures or requirements to
facilitate these transactions.
Distributions
The CorePortfolio Fund, the Growth Fund, and the Income Fund distribute to
shareholders substantially all of their net ordinary income and
26
<PAGE>
any capital gains realized from the sale of portfolio securities. The
CorePortfolio Fund and the Growth Fund normally declare ordinary income
dividends in April, July, October, and December. The Income Fund declares
ordinary income dividends daily and pays such dividends monthly. These Funds
pay net realized capital gains, if any, in late April and December. The Money
Market Fund declares as daily dividends all of the Fund's undistributed net
investment income and pays such dividends monthly. The Money Market Fund does
not expect to realize any long-term gains or losses.
You have the option of receiving dividends and capital gains distributions
in cash, or you can have them automatically reinvested in more shares of the
Funds. Dividends and capital gains distributions are automatically reinvested
in Fund shares at net asset value on the payable date, without a sales charge,
unless you instruct Wayne Hummer otherwise. Such instructions take effect
within 10 days after they are received in writing by Wayne Hummer.
Distributions are taxable to you whether they are received in cash or
reinvested in additional shares, as described under "Taxes" below.
Taxes
As with any investment, you should consider the tax consequences of
investing in the Funds. Any time you sell or exchange shares of a Fund in a
taxable account, it is considered a taxable event. Depending upon the purchase
price and the sale price, you may have a gain or loss on the transaction.
The following discussion does not apply to tax-deferred accounts, nor is it
a complete analysis of the federal tax implications of investing in the Funds.
You may wish to consult your own tax adviser. Additionally, foreign, state, or
local taxes may apply to your investment, depending upon the laws of your place
of residence. Shareholders who are non-resident aliens are subject to U.S.
withholding tax on ordinary income dividends at a rate of 30% or such lower
rate as prescribed by an applicable tax treaty.
Dividends and distributions of the Funds are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of a Fund. Exchanges among Funds are also taxable events.
Distributions may be taxable at different rates depending upon the length of
time a Fund holds a security. Dividends representing net investment income and
net short-term capital gains, if any, are taxable to you as ordinary income.
Long-term capital gains distributions, if any, are taxable to individual
shareholders at a maximum 20% capital gains rate regardless of the length of
time that shareholders have owned Fund shares. In certain states, a portion of
the dividends and distributions (depending upon the sources of a Fund's income)
may be exempt from state and local taxes. Dividends received by shareholders of
the Income Fund attributable to interest income received by the Income Fund
from municipal obligations will be subject to federal income tax.
A dividend or distribution received shortly after the purchase of shares
reduces the net asset value of such shares by the amount of the dividend and,
although in effect a return of capital, is taxable to you. Any dividends or
capital gain distributions declared in October, November, or December with a
record date in such month and paid during the following January are taxable as
if paid on December 31 of the calendar year in which they were declared. The
Trust is required by law to withhold federal income tax at a rate of 31% from
taxable distributions and redemption proceeds paid to shareholders who do not
furnish their correct taxpayer identification numbers (for individuals, their
social security numbers) and in certain other circumstances.
27
<PAGE>
Information with regard to the tax status of income dividends and capital
gains distributions will be mailed to shareholders on or before January 31 of
each year. Account tax information will also be sent to the Internal Revenue
Service.
Financial Highlights
The following financial highlights table is intended to help you understand
the Funds' financial performance for the past five years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned each year on an
investment in each Fund (assuming reinvestment of all dividends and
distributions). This information has been derived from the financial statements
audited by Ernst & Young LLP, independent accountants, whose report, along with
each Fund's financial statements, is included in the Funds' most recent annual
report to shareholders. You may have the Funds' annual report sent to you
without charge by contacting Wayne Hummer.
<TABLE>
<CAPTION>
Wayne Hummer Growth Fund
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 Gains 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/Supplemental Data
Net Assets, End of Year
(000's).................... $139,494 $140,743 $104,214 $102,608 $94,770
Ratio of Total Expenses to
Average Net Assets......... 0.94% 0.96% 0.99% 1.06% 1.07%
Ratio of Net Income to
Average Net Assets......... 0.41% 0.58% 0.97% 1.29% 1.44%
Portfolio Turnover Rate... 12% 7% 9% 6% 3%
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Wayne Hummer Income Fund
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)
Distributions from Realized
Capital Gains................ 0.00 0.00 0.00 0.00 0.00/1/
Returns of Capital............
------- ------- ------- ------- -------
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/Supplemental Data
Net Assets, End of Year
(000's)...................... $20,327 $21,304 $21,998 $25,398 $26,352
Ratio of Total Expenses to
Average Net Assets........... 1.01% 1.01% 1.01% 0.91% 0.94%
Ratio of Net Income to Average
Net Assets................... 5.78% 6.00% 6.25% 6.80% 6.70%
Portfolio Turnover Rate..... 37% 28% 39% 46% 32%
</TABLE>
- --------
/1 /Less than $0.01 per share.
29
<PAGE>
<TABLE>
<CAPTION>
Wayne Hummer Money Market Fund/1/
Year Ended March 31,
------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment
Operations
Net Investment Income... 0.04 0.04 0.04 0.05 0.04
Less Dividends from Net
Investment Income...... (0.04) (0.04) (0.04) (0.05) (0.04)
-------- -------- -------- -------- --------
Net Asset Value, End of
Year..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return.............. 4.82% 5.07% 4.80% 5.18% 4.24%/2/
Ratios/Supplemental Data
Net Assets, End of Year
(000's)................ $350,973 $298,908 $238,238 $226,273 $155,248
Ratio of Total Expenses
to Average Net Assets.. 0.71% 0.72% 0.74% 0.79% 0.80%
Ratio of Net Income to
Average Net Assets..... 4.70% 4.96% 4.70% 5.04% 4.16%
</TABLE>
- --------
/1 /The information in this table represents the performance of the Predecessor
Fund, which was merged into the Money Market Fund on July 31, 1999 solely to
change its form of legal entity.
/2 /The total return includes the effect of the capital contribution of $0.0011
per share from Wayne Hummer. The return without the capital contribution
would have been 4.12%.
30
<PAGE>
DISTRIBUTOR AND SHAREHOLDER SERVICE AGENT:
Wayne Hummer Investments L.L.C.
300 South Wacker Drive
Chicago, Illinois 60606
INVESTMENT ADVISER AND PORTFOLIO ACCOUNTING AGENT:
Wayne Hummer Management Company
300 South Wacker Drive
Chicago, Illinois 60606
AUDITORS:
Ernst & Young LLP
233 South Wacker Drive
Chicago, Illinois 60606
COUNSEL:
Vedder, Price, Kaufman & Kammholz
222 North LaSalle Street
Chicago, Illinois 60601
CUSTODIAN AND TRANSFER AND DIVIDEND PAYING AGENT:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
----------------
The CorePortfolio Fund is not S&P without regard to the Fund. S&P
sponsored, endorsed, sold or has no obligation to take the needs
promoted by Standard & Poor's, a of the Fund or its shareholders into
division of The McGraw-Hill consideration in determining,
Companies, Inc. ("S&P"). S&P makes composing or calculating the S&P 500
no representation or warranty, Index.S&P is not responsible for and
express or implied, to the has notparticipated in the
shareholders of the Fund or any determination of the prices and
member of the public regarding the amount of the Fund or the timing of
advisability of investing in the issuance or sale of the Fund's
securities generally or in the Fund shares or in the determination or
particularly or the ability of the calculation of the equation by which
S&P 500 Index to track general stock the Fund is to be converted into
market performance. S&P's only cash. S&P has no obligation or
relationship to the Fund is the liability in connection with the
licensing of certain trademarks and administration, marketing or trading
trade names of S&P and of the S&P of the Fund or its shares.
500 Index which is determined,
composed and calculated by
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, SHAREHOLDERS OF THE FUND OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR
ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT
SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
31
<PAGE>
For More Information
If you would like more information about the Wayne Hummer Investment Trust
or any of the Funds, the following documents are available for free upon
request:
Annual/Semiannual Reports to Shareholders
Additional information about the Funds' investments is available in the
Funds' annual and semiannual reports to shareholders. In these reports, you
will find a discussion of the market conditions and investment strategies that
significantly affected the Growth Fund's and the Income Fund's performance
during their most recent fiscal year.
Statement of Additional Information (SAI)
The SAI provides more detailed information about the Funds.
The current annual and semiannual reports and the SAI are incorporated by
reference into (and are thus legally a part of) this prospectus.
To receive a free copy of the latest annual or semiannual report or the SAI, or
to request additional information about the Wayne Hummer Investment Trust or
any of the Funds, please contact Wayne Hummer as follows:
Wayne Hummer Investments L.L.C.
300 South Wacker Drive
Chicago, IL 60606
Telephone:
1-800-621-4477
World Wide Web:
www.whummer.com
Information provided by the Securities and Exchange Commission (SEC)
You can review and copy information about the Funds (including the SAI) at the
SEC's Public Reference Room in Washington, D.C. To find out more about this
public service, call the SEC at 1-800-SEC-0330. Reports and other information
about the Funds are also available on the SEC's web site (www.sec.gov), or you
can receive copies of this information, for a fee, by writing the Public
Reference Section, Securities and Exchange Commission, Washington, D.C. 20549-
6009.
Investment Company Act File No.: 811-3880
<PAGE>
Wayne Hummer Investment Trust
(the "Trust")
Wayne Hummer CorePortfolio Fund
Wayne Hummer Growth Fund
Wayne Hummer Income Fund
Wayne Hummer Money Market Fund
(each a "Fund" and, collectively, the "Funds")
300 South Wacker Drive
Chicago, Illinois 60606
800-621-4477
Statement of Additional Information
July 31, 1999
This Statement of Additional Information ("SAI") is not a prospectus. It should
be read in conjunction with the Trust's current prospectus (dated July 31,
1999), as supplemented from time to time (the "Prospectus"). The Trust's
financial statements and the Report of Independent Auditors thereon from the
Funds' current Annual Report to Shareholders are incorporated by reference into
this SAI. You can get a free copy of the Prospectus and/or the Annual Report to
Shareholders by writing or calling the Trust.
/(R)/"Wayne Hummer" and wh [LOGO] are registered service marks of Wayne Hummer
Investments L.L.C.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------
Page
----
<S> <C>
Fund History...............................................................B-1
Investment Strategies, Policies, and Risks.................................B-1
Fundamental and Nonfundamental Investment Policies....................B-1
Investment Strategies and Associated Risks............................B-4
Management of the Trust...................................................B-14
Trustees.............................................................B-14
Officers.............................................................B-15
Trustee Compensation.................................................B-15
Investment Advisory and Other Services....................................B-16
Investment Adviser...................................................B-16
Distributor and Shareholder Service Agent............................B-17
Portfolio Accounting Services........................................B-19
Brokerage Allocation......................................................B-19
Shareholder Rights and Liabilities........................................B-20
Trust Name................................................................B-22
Purchase, Redemption, and Pricing of Shares...............................B-22
Offering Price.......................................................B-23
Redemption in Kind...................................................B-24
Taxes.....................................................................B-24
Performance Information...................................................B-25
Independent Auditors......................................................B-27
Custodian and Transfer and Dividend Paying Agent..........................B-27
Legal Counsel.............................................................B-27
Reports to Shareholders...................................................B-27
APPENDIX...................................................................A-1
</TABLE>
<PAGE>
Fund History
Wayne Hummer Investment Trust is a Massachusetts business trust. The Trust
is registered with the Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940 (the "1940 Act") as an open-end, diversified,
management investment company. The Trust currently consists of four series:
the Wayne Hummer CorePortfolio Fund (CorePortfolio Fund), the Wayne Hummer
Growth Fund (Growth Fund), the Wayne Hummer Income Fund (Income Fund), and the
Wayne Hummer Money Market Fund (Money Market Fund). The Trust was organized on
September 29, 1983. Shares of the Growth Fund were first offered to the public
on December 30, 1983, and shares of the Income Fund were first offered to the
public on December 1, 1992. The Board of Trustees voted to change the name of
the Trust from "Wayne Hummer Growth Fund Trust" to "Wayne Hummer Investment
Trust," effective December 1, 1992.
The Money Market Fund was originally organized as a separate Massachusetts
business trust, the Wayne Hummer Money Fund Trust ("WHMFT"), on December 4,
1981. In July 1999, WHMFT was reorganized as the Wayne Hummer Money Market
Fund, a series of the Wayne Hummer Investment Trust. Shares of the
CorePortfolio Fund were first offered to the public on August 2, 1999.
Investment Strategies, Policies, and Risks
Fundamental and Nonfundamental Investment Policies
The investment objective and certain principal investment strategies of
each Fund are described in the Prospectus for the Wayne Hummer Investment Trust.
The following fundamental investment policies may not be changed without
approval by holders of "a majority of the Fund's outstanding voting shares." As
defined in the 1940 Act, this means the vote of 67% or more of the Fund's shares
present at a meeting, if the holders of more than 50% of the Fund's shares are
present or represented by proxy, or more than 50% of the Fund's shares,
whichever is less.
The following investment restrictions, which cannot be changed without
shareholder approval, apply only to the CorePortfolio Fund, the Growth Fund, and
the Income Fund.
Each Fund may not:
(1) Invest in the securities of an issuer, if immediately after and as a
result of such investment, the Fund owns more than 10% of the outstanding
securities, or more than 10% of the outstanding voting securities, of such
issuer.
(2) Concentrate its investments in any particular industry; provided that
if it is deemed appropriate for the attainment of the Fund's investment
objectives, up to 25% of its total assets may be invested in any one industry.
(3) Make investments for the purpose of exercising control or management.
(4) Purchase or sell real estate, commodities or commodity contracts,
except that the Income Fund may enter into options on financial futures
contracts.
(5) Purchase any securities on margin, except that the Fund may obtain
such short-term credit as may be necessary for the clearance of purchases and
sales of portfolio securities, except with respect to the Income Fund which may
make margin deposits in connection with transactions on options, futures and
options on futures.
(6) Make short sales of securities or maintain a short position.
(7) Make loans to other persons; provided that the Fund may use repurchase
agreements, and provided further that the acquisition of bonds, debentures, or
other corporate debt securities and investment in government obligations, short-
term commercial paper, certificates of deposit, bankers' acceptances, variable
rate notes or other money market instruments that are a portion of an issue to
the public shall not be deemed to be the making of a loan and provided further
that the Fund may lend its portfolio securities as set forth in paragraph (8)
below.
B-1
<PAGE>
(8) Lend any of its assets, except portfolio securities. This shall not
prevent the Fund from purchasing or holding U.S. Government Obligations, money
market instruments, variable rate demand notes, bonds, debentures, notes,
certificates of indebtedness, or other debt securities, entering into repurchase
agreements, or engaging in other transactions where permitted by the Fund's
investment objective, policies, and limitations or the Trust's Declaration of
Trust.
(9) Mortgage, pledge, hypothecate or in any manner transfer (except as
provided in paragraph (8) above), as security for indebtedness, any securities
owned or held by the Fund except as may be necessary in connection with
borrowings permitted under the investment policies of the Fund.
(10) Underwrite securities of other issuers except insofar as the Fund
technically may be deemed an underwriter under the Securities Act of 1933, as
amended, in selling portfolio securities.
(11) (Growth Fund and Income Fund only.) Invest in the securities of any
one issuer (other than the United States, its agencies or instrumentalities), if
immediately after and as a result of such investment, as to 75% of the Fund's
total assets, more than 5% of the Fund's total assets would be invested in the
securities of such issuer.
(12) The Fund will not issue senior securities except that the Fund may
borrow money directly or through reverse repurchase agreements in amounts up to
one-third of the value of its total assets, including the amount borrowed. The
Fund will not borrow money or engage in reverse repurchase agreements for
investment leverage, but rather as a temporary, extraordinary, or emergency
measure or to facilitate management of the portfolio by enabling the Fund to
meet redemption requests when the liquidation of portfolio securities is deemed
to be inconvenient or disadvantageous. The Fund will not purchase any securities
while any borrowings in excess of 5% of its total assets are outstanding.
In addition to the fundamental investment policies listed above, the Growth
Fund and/or the Income Fund are subject to the following non-fundamental
restrictions and policies, which may be changed by the Board of Trustees without
shareholder approval.
Each Fund may not:
(13) Invest more than 15% of its net assets in securities in illiquid
securities, including repurchase agreements maturing in more than seven days.
(14) (Income Fund only) Under normal market conditions the Income Fund will
invest at least 65% of its assets in securities with an average life of between
three and ten years, such that the dollar-weighted average life of its portfolio
will be expected to be between three and ten years. For purposes of this Policy,
average life is the weighted average period over which Wayne Hummer Management
Company (the "Investment Adviser") expects the principal to be paid, and differs
from stated maturity in that it estimates the effect of expected principal
prepayments and call provisions. With respect to Government National Mortgage
Association ("GNMA") securities and other mortgage-backed securities, average
life is likely to be substantially less than the stated maturity of the
mortgages in the underlying pools. With respect to obligations with call
provisions, average life typically will be the next call date on which the
obligation reasonably may be expected to be called. Securities without
prepayment or call provisions generally will have an average life equal to their
stated maturity.
The Income Fund also may invest in other preferred or debt securities
(including those convertible into or carrying warrants to purchase common stocks
or other equity interests and privately placed debt securities) that the
Investment Adviser considers likely to yield relatively high income in relation
to cost.
The following fundamental investment restrictions, which cannot be changed
without shareholder approval, apply only to the Money Market Fund.
The Fund may not:
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(1) Purchase the securities of issuers whose principal business is in the
same industry (other than United States Government securities, United
States Government agency or instrumentality securities or bank money
instruments) if immediately after such purchase the value of the
Trust's investments in such industry would exceed 25% of the value of
its total assets (taken at market value at the time of each
investment). For purposes of this subparagraph, the personal credit
and business credit businesses of finance companies will be considered
separate industries and, as to utilities, the water, gas, electric and
telephone businesses will be considered separate industries.
(2) Make loans, except that securities owned or held by the Trust may be
loaned pursuant to the next paragraph; provided, however, that the
Trust may purchase money market securities and enter into repurchase
agreements with banks, brokers and dealers.
(3) Lend any of its assets, except portfolio securities. This shall not
prevent the Fund from purchasing or holding U.S. Government
Obligations, money market instruments, variable rate demand notes,
bonds, debentures, notes, certificates of indebtedness, or other debt
securities, entering into repurchase agreement, or engaging in other
transactions where permitted by the Fund's investment objective,
policies, and limitations or the Trust's Declaration of Trust.
(4) Purchase any securities on margin, except for use of short-term
credits necessary for clearance of purchases and sales of Portfolio
securities; make short sales of securities or maintain a short
position or write, purchase or sell puts, calls, straddles, spreads or
combinations thereof.
(5) Issue senior securities or borrow money except as a temporary measure
for extraordinary purposes and then only in amounts not in excess of
5% of the value of its net assets. In addition, the Fund may enter
into reverse repurchase agreements and otherwise borrow up to one-
third of the value of its total assets, including the amount borrowed,
in order to meet redemption requests without immediately selling any
portfolio instruments.
(6) Mortgage, pledge or hypothecate or in any manner transfer (except as
provided in paragraph (7) above) as security for indebtedness any
securities owned or held by the Trust except as may be necessary in
connection with borrowings mentioned in paragraph (5) above.
(7) Act as an underwriter of securities.
(8) Purchase or sell real estate (other than money market securities
secured by real estate or interests therein or money market securities
issued by companies which invest in real estate, or interests therein)
or commodities or commodity contracts.
In addition, the Money Market Fund is subject to the following non-
fundamental investment restriction, which may be changed by the Board of
Trustees without shareholder approval.
The Fund may not:
(1) Invest more than 10% of its assets in securities (including repurchase
agreements maturing in more than seven days) which are considered
illiquid.
The Money Market Fund may follow other non-fundamental operational policies
that are more restrictive than its fundamental investment limitations, as set
forth above, in order to comply with applicable laws and regulations, including
the provisions of and regulations under the 1940 Act. In particular, the Money
Market Fund will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Money Market Fund will also determine
the effective maturity of its investments, as well as its ability to consider a
security as having received the requisite short-term ratings by nationally
recognized ratings services, according to Rule 2a-7. The Money Market Fund may
change these operational policies to reflect changes in the laws and regulations
without the approval of its shareholders.
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If any applicable percentage restriction contained in the foregoing
investment restrictions is satisfied at the time the securities subject thereto
are purchased, a Fund will not be required to dispose of such securities in the
event that the percentage restriction subsequently is exceeded due to a
fluctuation in the value of such securities or other securities of the portfolio
or a fluctuation in the number of outstanding securities of the issuer.
Notwithstanding the foregoing, with respect to the CorePortfolio Fund, the
Growth Fund, and the Income Fund, if the percentage restrictions contained in
paragraphs (9) or (12) are violated due to a subsequent fluctuation in portfolio
value, a Fund will be entitled, as a condition that must be a part of all loans
subject to paragraph (8) and all borrowings subject to paragraph (12), to reduce
within three business days the outstanding amount of such loans or borrowings in
order once again to satisfy such percentage restriction. Notwithstanding the
foregoing, with respect to the Money Market Fund, if the percentage restrictions
contained in paragraphs (3) or (5) above are violated due to a subsequent
fluctuation in the portfolio value, the Fund will be entitled, as a condition
that must be part of all loans subject to paragraph (3) and all borrowings
subject to paragraph (5), to reduce within three business days the outstanding
amount of such loans or borrowings in order once again to satisfy such
percentage restriction.
Investment Strategies and Associated Risks
The following section describes the Funds' investment strategies, including
strategies to invest in a particular type of security, that are not principal
strategies and the risks of such strategies. Unless otherwise noted, consistent
with their respective investment objective(s), policies and restrictions, each
Fund may employ the strategies discussed in this section.
Cash Equivalents and Short-Term Investments
United States Government Securities. Subject to its respective investment
objective and policies, each Fund may invest to some extent in U.S. Government
Securities, including securities issued by its agencies and instrumentalities.
United States Government Securities are marketable debt securities which are
issued by and are a direct obligation of the United States Treasury. Securities
issued or guaranteed by the U.S. Government or its agencies or instrumentalities
include U.S. Treasury securities, which differ only in their interest rates,
maturities, and times of issuance. Treasury Bills have initial maturities of
one year or less; Treasury Notes have initial maturities of one to ten years;
and Treasury Bonds generally have initial maturities greater than ten years.
All Treasury securities are direct obligations of the United States Government
and generally are considered the safest forms of investment, since no borrower
has a higher credit rating than the United States Government.
United States Government Agency and Instrumentality Securities. Subject to
its respective investment objective and policies, each Fund may invest to some
extent in United States Government Agency and Instrumentality Securities.
United States Government Agency and Instrumentality Securities are marketable
debt securities issued or guaranteed by agencies and instrumentalities of the
United States Government. Although these securities are not direct obligations
of the United States Government, some are supported by the full faith and credit
of the Treasury, such as Government National Mortgage Association pass-through
certificates; others are supported to the extent of the right of the issuer to
borrower from the Treasury, such as Federal Home Loan Bank bonds and notes;
while others solely depend on the credit of the agency or instrumentality and
not the Treasury, such as Federal National Mortgage Association debentures and
notes. While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law.
Variable Rate Securities. Subject to its respective investment objective
and policies, each Fund may invest to some extent in Variable Rate Securities.
United States Government Agencies and Instrumentalities may also issue
securities having rates of interest that are adjusted periodically or that
"float" continuously or periodically according to formulae intended to minimize
fluctuation in values of the instruments ("Variable Rate Securities"). The
interest rate on a Variable Rate Security is ordinarily determined by reference
to, or is a percentage of, an objective standard such as a bank's prime rate,
the 90-day U.S. Treasury Bill rate, or the rate of return on commercial paper or
bank certificates of deposit. Generally, the changes in the interest rates on
Variable Rate Securities reduce the fluctuation in the market value of such
securities. Accordingly, as interest rates decrease or increase, the potential
for capital appreciation or depreciation is less than for fixed-rate
obligations.
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The maturity of Variable Rate Securities are determined in accordance with
the SEC rules that allow the trust to consider certain of such instruments as
having maturities shorter than the maturity date on the face of the instrument
if they are guaranteed by the U.S. Government or its agencies or
instrumentalities.
Time Deposits, Certificates of Deposit and Bankers' Acceptances. Subject
to its respective investment objective and policies, each Fund may invest to
some extent in time deposits ("TDs"), certificates of deposits ("CDs"), and
bankers' acceptances. TDs are non-negotiable deposits maintained in a banking
institution for a specified period of time (in no event longer than seven days)
at a stated interest rate. CDs generally are short-term, interest-bearing
negotiable certificates evidencing the obligation of a commercial bank to repay
funds deposited with it for a specified period of time. TDs maturing in more
than seven days will be considered illiquid for purposes of each Fund's
respective limitation on investment in illiquid securities. Investments in TDs
generally are limited to domestic banks having total assets in excess of one
billion U.S. dollars or to foreign branches of such domestic banks, and
investments in CDs and bankers' acceptances are limited to domestic or Canadian
banks having total assets in excess of one billion dollars. CDs issued by
domestic branches of domestic banks do not benefit materially, and TDs issued by
foreign branches of domestic banks do not benefit at all, from insurance from
the Bank Insurance Fund or the Savings Association Insurance Fund administered
by the Federal Deposit Insurance Corporation ("FDIC").
Variable rate certificates of deposit are certificates of deposit on which
the interest rate is periodically adjusted prior to their stated maturity,
usually at 30, 90 or 180 day intervals, based upon a specified market rate that
is considered by the issuers to be representative of the then-prevailing
certificate of deposit rate. As a result of these adjustments, the interest
rate on these obligations may be increased or decreased periodically. Variable
rate certificates of deposit also may contain provisions whereby the issuing
banks agree to repurchase such instruments at par on any coupon date, on any
rate adjustment date, or on any date after a specified holding period. Variable
rate certificates of deposit normally carry a higher initial interest rate than
fixed rate certificates of deposit with shorter maturities because the issuing
bank pays a premium for the use of the money for a longer period of time. With
respect to variable rate certificates of deposit maturing in one year or less
from the time of purchase, the Trust uses the period remaining until the next
rate adjustment date for purposes of determining the average weighted maturity.
Bankers' acceptances are time drafts drawn on a commercial bank by a
borrower, usually in connection with an international commercial transaction (to
finance the import, export, transfer or storage of goods). The borrower, as
well as the bank which unconditionally guarantees to pay the draft at its face
amount on the maturity date, is liable for payment. Most acceptances have
maturities of six months or less, and are traded in secondary markets prior to
maturity.
The Money Market Fund may not invest in any security issued by a commercial
bank unless the bank is organized and operating in the United States, has total
assets of at least $1 billion, and is a member of the FDIC, although the
securities in which the Trust invests may not be insured by the FDIC. The Money
Market Fund may not invest in money market instruments issued by foreign banks
or foreign branches of domestic banks.
Both domestic banks and foreign branches of domestic banks are subject to
extensive but different governmental regulations which may limit both the amount
and types of loans which may be made and interest rates which may be charged.
In addition, the profitability of the banking industry is largely dependent upon
the availability and cost of funds for the purpose of financing lending
operations under prevailing money market conditions. General economic
conditions, as well as exposure to credit losses arising from possible financial
difficulties of borrowers, play an important part in the operations of this
industry.
As a result of the foregoing Federal and state laws and regulations,
domestic banks, among other things, are required to maintain specified levels of
reserves, limited in amounts which they can loan a single borrower, and subject
to other regulations designed to promote financial soundness. However, not all
such laws and regulations apply to foreign branches of domestic banks.
Repurchase Agreements. Subject to its applicable investment objective(s),
policies and restrictions, each Fund may enter into repurchase agreements.
Repurchase Agreements are instruments under which the purchaser (e.g., the Fund)
acquires ownership of the obligation (underlying security), and the seller (a
broker-dealer or bank) agrees,
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<PAGE>
at the time of the sale, to repurchase the obligation at a mutually agreed upon
time and price, thereby determining the yield during the purchaser's holding
period. This results in a fixed rate of return for the period. Repurchase
agreements usually are for short periods, frequently less than one week. The
securities underlying a repurchase agreement will be marked-to-market every
business day, so that the value of such securities is at least equal to the
investment value of the repurchase agreement, including any accrued interest
thereon. The Funds must take physical possession of the security or receive
written confirmation of the purchase and a custodial or safekeeping receipt from
a third party or be recorded as the owner of the security through the Federal
Reserve Book-Entry System.
Should the value of the underlying securities decline, the issuer of the
repurchase agreement is required to provide the Fund with additional securities
so that the aggregate value of the underlying securities is equal to the
repurchase price. In the event of a bankruptcy or other default of a seller of
a repurchase agreement, a Fund might have expenses in enforcing its rights, and
could experience losses, including a decline in the value of the underlying
securities and loss of income. Repurchase agreements will be limited to
transactions with financial institutions believed by the Investment Adviser to
present minimal credit risk.
The Funds each may enter into repurchase agreements with a securities
dealer or a bank that is a member of the Federal Reserve System. The Money
Market Fund may only enter into repurchase agreements with respect to underlying
United States Government or United States Government agency or instrumentality
securities, certificates of deposit, commercial paper or bankers' acceptances in
which the Trust may otherwise invest, as described above. The Trust's
Investment Adviser will monitor on an on-going basis the creditworthiness of the
broker-dealers and banks with which the Funds may engage in repurchase
agreements. Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of each Fund's respective limitation on
investment in illiquid securities.
Commercial Paper. Subject to its respective investment objective and
policies, each Fund may invest to some extent in commercial paper issued in
reliance on the exemption from Section 3(a)(3) ("Section 3(a)(3) paper") of the
Securities Act of 1933, as amended (the "Securities Act"). Such commercial
paper is generally issued by major corporations, and may be issued only to
finance current transactions and must mature in nine months or less. Although
Section 3(a)(3) paper is not restricted as to the types of investors to whom it
may be sold, it is purchased primarily by institutional investors through
investment dealers, and individual investor participation in the commercial
paper market is very limited.
As discussed more fully below, the Fund also may invest in money market
instruments issued in reliance on the exemption from registration afforded by
Section 4(2) of the Securities Act ("Section 4(2) paper"), which are restricted
as to disposition under the federal securities laws. Section 4(2) paper
generally is sold to institutional investors such as the Fund who agree that
they are purchasing the paper for investment and not with a view to a public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper is often resold to other institutional investors through or
with the assistance of investment dealers or on an automated trading system
operated by the National Association of Securities Dealers, Inc., which provides
liquidity to the Section 4(2) paper market. The Investment Adviser generally
believes there is no significant difference between Section 3(a)(3) and Section
4(2) commercial paper in terms of market or trading characteristics or of the
quality of the issuers and that, despite the legal restrictions thereon, Section
4(2) paper has typically been no less liquid or saleable than Section 3(a)(3)
paper.
Section 4(2) Paper and Other "Restricted" Securities. The Money Market
Fund may invest in money market instruments issued in a private placement under
Section 4(2) of the Securities Act. Securities issued pursuant to Section 4(2)
include instruments similar in nature to commercial paper, but which are not
entitled to the exemption afforded commercial paper by Section 3(a)(3) of the
Securities Act because they were issued to finance other than current
transactions or were issued with a maturity greater than nine months. The
Investment Adviser considers Section 4(2) paper generally to be liquid. If a
particular investment in Section 4(2) paper is determined not to be liquid,
however, based on specified standards, the investment will be included within
the Fund's limitation on investments in illiquid securities. The Board of
Trustees has approved guidelines and procedures adopted by the Investment
Adviser, and has delegated the day-to-day function of determining and monitoring
the liquidity of securities to the Investment Adviser. The Board, however, will
retain oversight and be ultimately responsible for the determination.
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In addition to Section 4(2) paper, other types of "restricted" money market
instruments that meet the Money Market Fund's credit, maturity, and other
investment criteria (such as high quality bonds with less than one year
remaining to maturity) could be purchased or sold by the Fund in a private
placement.
Hybrid Securities
Convertible Securities. Subject to its respective investment objective and
policies, the Growth Fund and the Income Fund each may invest to some extent in
convertible securities, the ratings of which correspond to other permissible
Fund investments. A convertible security is a bond, debenture, note or other
security that entitles the holder to acquire common stock or other equity
securities of the same or a different issuer. A convertible security generally
entitles the holder to receive interest paid or accrued until the convertible
security matures or is redeemed, converted, or exchanged. Before conversion,
convertible securities have characteristics similar to non-convertible debt
securities. Convertible securities rank senior to common stock in a
corporation's capital structure and, therefore, generally entail less risk than
the corporation's common stock, although the extent to which such risk is
reduced depends in large measure upon the degree to which the convertible
security sells above its value as a fixed income security.
A convertible security may be subject to redemption at the option of the
issuer at a predetermined price. If a convertible security held by a Fund is
called for redemption, the Fund would be required to permit the issuer to redeem
the security and convert it to underlying common stock, or would sell the
convertible security to a third party. The Funds generally would invest in
convertible securities for their favorable price characteristics and total
return potential and would normally not exercise an option to convert.
Fixed-Income Securities
High-Yield, High-Risk Fixed-Income Securities. Subject to its specific
investment objective and policies, the Income Fund may invest up to 20% of its
assets in fixed-income securities below investment grade offering high current
income. Although some risk is inherent in all securities ownership, holders of
fixed-income securities have a claim on the assets of the issuer prior to the
holders of common stock. Therefore, an investment in fixed-income securities
generally entails less risk than an investment in common stock of the same
issuer. However, high-yield (high-risk), fixed-income securities ordinarily
will be in the lower rating categories of recognized rating agencies or will be
non-rated.
Lower rated and non-rated securities, which are sometimes referred to by
the popular press as "junk bonds," have widely varying characteristics and
qualities. These lower-rated or non-rated fixed-income securities are
considered, on balance, as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation and generally will involve more credit risk than
securities in the higher rating categories. The market values of such lower
rated or non-rated securities tend to react to individual corporate developments
to a greater extent than do those of higher rated securities, which react
primarily to fluctuations in the general level of interest rates. Such
securities also tend to be more sensitive to economic conditions than higher
rated securities. Adverse publicity and investor perceptions regarding lower-
rated and non-rated securities, whether or not based on fundamental analysis,
may depress the prices for such securities.
These and other factors adversely affecting the market value of high-yield
securities may adversely affect the Income Fund's net asset value. High-yield
securities frequently are issued by corporations in the growth stage of their
development. They may also be issued in connection with a corporate
reorganization or a corporate takeover. Companies that issue such high-yielding
securities often are highly leveraged and may not have available to them more
traditional methods of financing. Therefore, the risk associated with acquiring
the securities of such issuers generally is greater than is the case with
higher-rated securities. For example, during an economic downturn or recession,
highly leveraged issuers of high-yield securities may experience financial
stress. During such periods, such issuers may not have sufficient revenues to
meet their interest payment obligations. The issuer's ability to service its
debt obligations may also be adversely affected by specific corporate
developments, the issuer's inability to meet specific projected business
forecasts, or the unavailability of additional financing among other factors.
The risk of loss from default by the issuer is significantly greater for the
holders of high-yield securities because such securities are generally unsecured
and are often subordinated to other creditors of the issuer.
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The Income Fund may have difficulty disposing of certain high-yield
securities because they may have a thin trading market. Because not all dealers
maintain markets in all high yield securities, the Income Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market may have an
adverse effect on the market price of such securities. The Income Fund's ability
to dispose of particular issues may also make it more difficult for the Income
Fund to obtain accurate market quotations for purposes of valuing its assets.
Market quotations generally are available on many high-yield issues only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales.
Zero Coupon Securities and Pay-In-Kind Bonds. The Income Fund and the
Money Market Fund each may invest in zero coupon securities, pay-in-kind bonds,
and deferred interest bonds. The zero coupon securities in which the Fund may
invest are U.S. Treasury notes and bonds that have been stripped of their
unmatured interest coupons, the unmatured interest coupons or interests in such
U.S. Treasury securities or coupons. Zero coupon securities are debt obligations
that do not entitle the holder to any periodic payments of interest prior to
maturity or a specified cash payment date when the securities begin paying
current interest (the "cash payment date") and therefore are issued and traded
at a discount from their face amount or par value. The buyer receives only the
right to receive a fixed payment on a certain date in the future. The market
prices of zero coupon securities are generally more volatile than the market
prices of securities that pay interest periodically and are likely to respond to
changes in interest rates to a greater degree than do securities paying interest
currently having similar maturities and credit quality.
Zero coupon securities and pay-in-kind bonds involve additional special
considerations. Zero coupon, pay-in-kind, or deferred interest bonds carry
additional risk in that, unlike bonds that pay interest throughout the period to
maturity, the Income Fund will realize no cash until the cash payment date
unless a portion of such securities are sold and, if the issuer defaults, the
Income Fund may obtain no return at all on its investment. In addition, pay-in-
kind bonds are generally issued by corporations whose cash flows are currently
insufficient to service the intended debt and whose balance sheets already
reflect a significant amount of debt. The utilization of pay-in-kind bonds has
the effect of adding to this debt burden and results in greater risk to the
investor.
Current federal income tax law requires the holder of a zero coupon
security or of certain pay-in-kind bonds (bonds which pay interest through the
issuance of additional bonds) to accrue income with respect to these securities
prior to the receipt of cash payments. To maintain its qualification as a
registered investment company and avoid liability for federal income and excise
taxes, the Income Fund will be required to distribute income accrued with
respect to these securities and may be required to dispose of portfolio
securities under disadvantageous circumstances to generate cash to satisfy these
distribution requirements.
Municipal Obligations. The Income Fund may invest in Municipal
Obligations, the ratings of which correspond with the ratings of other
permissible Income Fund investments. Municipal Obligations are debt obligations
issued by states, territories, and possessions of the United States and the
District of Columbia and their political subdivisions, agencies, and
instrumentalities, or multi-state agencies or authorities, which bear fixed,
variable or floating rates of interest. Although many Municipal Obligations are
exempt from federal income tax, the Fund intends to invest in taxable Municipal
Obligations. Municipal Obligations generally include debt obligations issued to
obtain funds for various public purposes, and certain industrial development
bonds issued by or on behalf of public authorities. Municipal Obligations also
include municipal lease/purchase agreements, which are similar to installment
purchase contracts for property or equipment, issued by municipalities. Although
such agreements are obligations of a municipality, no assurance can be given
that the municipality will appropriate funds for such lease payments.
Municipal Obligations are classified as general obligation bonds, revenue
or "special obligation" bonds, or notes. General obligation bonds are secured by
the issuer's pledge of its full faith, credit, and taxing power for the payment
of principal and interest. Revenue or special obligation bonds are payable from
the revenue derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise or other specific revenue
source, but not from the general taxing power. Industrial development bonds, in
most cases, are revenue bonds that do not carry the pledge of the credit of the
issuing municipality, but generally are guaranteed by the corporate entity on
whose behalf they are issued. Notes are short-term instruments that are
obligations of the issuing municipalities or agencies and are sold in
anticipation of a bond sale, collection of taxes, or receipt of other revenues.
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The Fund may also purchase certificates of participation in trusts that
hold Municipal Obligations. A certificate of participation gives the Fund an
undivided interest in the Municipal Obligation in the proportion that the Fund's
interest bears to the total principal amount of the Municipal Obligation. These
certificates of participation may have a variable or fixed rate. A certificate
of participation may be backed by an irrevocable letter of credit or guarantee
of a financial institution that satisfies rating agencies as to the credit
quality of the Municipal Obligation supporting the payment of principal and
interest on the certificate of participation. Payments of principal and interest
would be dependent upon the underlying Municipal Obligation and may be
guaranteed under a letter of credit to the extent of such credit. The quality
rating by a rating service of an issue of certificates of participation is based
primarily upon the rating of the Municipal Obligation held by the trust and the
credit rating of the issuer of any letter of credit and of any other guarantor
providing credit support to the issue.
Pass-Through Securities
The Income Fund and The Money Market Fund each may invest in various fixed-
income obligations backed by a pool of mortgages or mortgage loans, which are
divided into two or more separate bond issues.
Collateralized Mortgage Obligations. The Income Fund may purchase or sell
collateralized mortgage obligations ("CMOs"). CMOs are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Income Fund invests, the investment may be subject to a greater or lesser
risk of prepayment than other types of mortgage-related securities. The issuer
of a series of CMOs may elect to be treated as a Real Estate Mortgage Investment
Conduit (a "REMIC"), which has certain special tax attributes.
Mortgage-Backed Securities. The Income Fund and Money Market Fund each may
invest in mortgage-backed securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities. Mortgage-backed securities are
securities representing interests in a pool of mortgages. Principal and interest
payments made on the mortgages in the underlying mortgage pool are passed
through to the Income Fund.
Unscheduled prepayments of principal shorten the securities' weighted
average life and may lower total return. (When a mortgage in the underlying
mortgage pool is prepaid, an unscheduled principal prepayment is passed through
to the Income Fund. This principal is returned to the Income Fund at par. As a
result, if a mortgage security were trading at a premium, its total return would
be lowered by prepayments, and if a mortgage security were trading at a
discount, its total return would be increased by prepayments). The value of
these securities also may change because of changes in the market's perception
of the creditworthiness of the federal agency that issued them. Some mortgage-
backed securities, such as GNMA certificates, are backed by the full faith and
credit of the U.S. Treasury, while others, such as Freddie Mac certificates, are
not.
Asset-Backed Securities. The Income Fund and Money Market Fund each may
purchase or sell debt obligations known as asset-backed securities. Asset-backed
securities are securities which represent a participation in, or are secured by
and payable from, a stream of payments generated by particular assets, most
often a pool or pools of similar assets (e.g., trade receivables). The credit
quality of most asset-backed securities depends primarily on the credit quality
of the assets underlying such securities, how well the entity issuing the
security is insulated from the credit risk of the originator or any other
affiliated entities, and the amount and quality of any credit support provided
to the securities. The rate of principal payment on asset-backed securities
generally depends on the rate of principal payments received on the underlying
assets, which in turn may be affected by a variety of economic and other
factors. As a result, the yield on any asset-backed security is difficult to
predict with precision and actual yield to maturity may be more or less than the
anticipated yield to maturity.
Asset-backed securities may be classified either as pass-through
certificates or collateralized obligations. Pass-through certificates are asset-
backed securities which represent an undivided fractional ownership interest in
an underlying pool of assets. Pass-through certificates usually provide for
payments of principal and interest received to
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be passed through to their holders, usually after deduction for certain costs
and expenses incurred in administering the pool. Because pass-through
certificates represent an ownership interest in the underlying assets, the
holders thereof bear directly the risk of any defaults by the obligors on the
underlying assets not covered by any credit support.
Asset-backed securities issued in the form of debt instruments, also known
as collateralized obligations, are generally issued as the debt of a special
purpose entity organized solely for the purpose of owning such assets and
issuing such debt. Such assets are most often trade, credit card or automobile
receivables. The assets collateralizing such asset-backed securities are pledged
to a trustee or custodian for the benefit of the holders thereof. Such issuers
generally hold no assets other than those underlying the asset-backed securities
and any credit support provided. As a result, although payments on such asset-
backed securities are obligations of the issuers, in the event of defaults on
the underlying assets not covered by any credit support, the issuing entities
are unlikely to have sufficient assets to satisfy their obligations on the
related asset-backed securities.
The underlying assets (e.g., loans) are often subject to prepayments, which
shorten the securities' weighted average life and may lower their return. If the
credit support or enhancement is exhausted, losses or delays in payment may
result if the required payments of principal and interest are not made. The
value of these securities also may change because of changes in the market's
perception of the creditworthiness of the servicing agent for the pool, the
originator of the pool, or the financial institution providing the credit
support or enhancement.
Hedging Transactions
The CorePortfolio Fund, Growth Fund, and the Income Fund each may engage in
hedging strategies. The Investment Adviser may cause the Funds to use a variety
of financial instruments, including options on securities, financial futures
contracts, and options on financial futures contracts, to attempt to hedge a
Fund's holdings.
Options on Securities and Indices. Subject to their applicable investment
objective(s), policies, and restrictions, the CorePortfolio Fund, the Growth
Fund, and the Income Fund each may invest in options. The Funds may enter into
closing transactions, exercise their options, or permit them to expire. Each of
the Funds intend to engage in such transactions at times when it appears
advantageous to its Investment Adviser to do so in order to hedge against the
effects of market conditions and to protect the value of its assets. Neither
Fund currently engages in or currently plans to engage in the practice of
writing covered call options.
A put option gives the holder (buyer) the "right to sell" a security at a
specified price (the exercise price) at any time until a certain date (the
expiration date). In effect, the buyer of a put option who also owns the related
stock is protected by ownership of a put option against any decline in that
security's price below the exercise price, less the amount paid for the option.
The ability to purchase put options allows a Fund to protect capital gains in an
appreciated security it owns, without being required to sell that security. If
the market price of the related investment is above the exercise price and, as a
result, the put is not exercised or sold, the put will become worthless at its
expiration date. A call option gives the holder (buyer) the "right to purchase"
a security at a specified price (the exercise price) at any time until a certain
date (the expiration date). At times a Fund may wish to establish a position in
securities upon which call options are available. By purchasing a call option, a
Fund is able to fix the cost of acquiring the stock at the cost of the call
option plus the exercise price of the option. The Fund will benefit only if the
market price of the related investments is above the call price plus the premium
during the exercise period, and the call is either exercised or sold at a
profit. This procedure also provides some protection from an unexpected downturn
in the market because a Fund would be at risk only for the amount of the premium
paid for the call option which the Trust's Investment Adviser may, if it
chooses, permit to expire.
When the Fund writes (sells) a covered call option, it will receive a
premium from the buyer of the option and will be obligated to sell the related
securities at the specified price if the option is exercised before the
expiration date. A call option is considered "covered" when the writer (seller),
in this case the Fund, already owns the underlying securities. In determining
whether a covered call option will be written on one of a Fund's securities, the
Investment Adviser will consider the reasonableness of the anticipated premium
and the likelihood that a liquid secondary market will exist for the option. The
Funds do not consider a security covered by a call to be "pledged," as that term
is used in paragraph (9) above, limiting the pledging or mortgaging of Fund
assets. If an option written (sold) by a Fund is not
B-10
<PAGE>
exercised, the Fund will profit from the premium received and, in the event of a
decline in the market value of the related securities, will be able to offset
depreciation in such securities to the extent of the premium received. While
holding securities during the term of a related option written by a Fund, the
Fund may be exposed to possible decreases in the value of such securities that
may otherwise have been avoided if the securities had been sold. In the event
the market value of the related securities increases and the holder does
exercise the call option, a Fund will recognize capital appreciation in the
related securities only to the extent of the exercise price plus the amount of
premium paid and may forfeit an opportunity to realize profit from any increase
in the value of the underlying security above the exercise price plus the
premium.
As part of their options transactions, the CorePortfolio Fund, the Growth
Fund, and the Income Fund each may also purchase index options. Through the
purchase of index options, a Fund can achieve many of the same objectives as
through the purchase of options on individual securities. Options on securities
indices are similar to options on a security, except that, rather than the right
to take or make delivery of a security at a specified price, an option on a
securities index gives the holder the right to receive, upon exercise of an
option, an amount of cash if the closing level of the securities index upon
which the option is based is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. The value of a stock
index option will generally vary directly in the case of a call, and inversely
in the case of a put, with movements in the underlying index, and the percentage
fluctuations in the value of an option may be many times greater than those of
the underlying index. The Investment Adviser may purchase call index options as
a hedge against a general increase in the price of securities in connection with
either sales of portfolio securities or deferrals of purchases of securities it
may desire to purchase at a later date. Put index options may be purchased as a
hedge against a general decline in the value of securities, rather than selling
portfolio securities. Any protection provided by stock index options is
effective only against changes in the level of a stock index and not necessarily
against a change in the value of individual securities. Thus, the effectiveness
of the use of stock index options as a hedge is dependent on the extent to which
price movements of individual securities that are being hedged correlate with
price movements in the underlying stock index. Unless a stock index option can
be sold or exercised at a profit prior to expiration, a Fund will forfeit its
entire investment in the option, often in a relatively short period of time. Any
profit that may be realized from the sale or exercise of stock index options
will be reduced by related transaction costs.
Financial Futures Contracts. The Income Fund may enter into financial
futures contracts for the future delivery of a financial instrument, such as a
security, or the cash value of a securities index. This investment technique is
designed primarily to hedge (i.e., protect) against anticipated future changes
in interest rates or equity market conditions that otherwise might affect
adversely the value of securities that the Income Fund holds or intends to
purchase. A "sale" of a futures contract means the undertaking of a contractual
obligation to deliver the securities or the cash value of an index called for by
the contract at a specified price during a specified delivery period. A
"purchase" of a futures contract means the undertaking of a contractual
obligation to acquire the securities or cash value of an index at a specified
price during a specified delivery period. At the time of delivery, in the case
of fixed income securities pursuant to the contract, adjustments are made to
recognize differences in value arising from the delivery of securities with a
different interest rate than that specified in the contract. In some cases,
securities called for by a futures contract may not have been issued at the time
the contract was written. The Income Fund will not enter into any futures
contracts or options on futures contracts if the aggregate of the contract value
of the outstanding futures contracts of the Income Fund, and futures contracts
subject to outstanding options written by the Income Fund, would exceed 50% of
the total assets of the Income Fund.
Although some futures contracts by their terms call for the actual delivery
or acquisition of securities, in most cases a party will close out the
contractual commitment before delivery without having to make or take delivery
of the security by purchasing (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, if effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities. All transactions in the
futures market are made, offset, or fulfilled through a clearing house
associated with the exchange on which the contracts are traded. The Income Fund
will incur brokerage fees when it purchases or sells contracts and will be
required to maintain margin deposits. At the time the Income Fund enters into a
futures contract, it is required to deposit with its custodian, on behalf of the
broker, a specified amount of cash or eligible securities, called "initial
margin." The initial margin required for a futures contract is set by the
exchange on which the contract is traded. Subsequent payments, called "variation
margin," to and from the broker are
B-11
<PAGE>
made on a daily basis as the market price of the futures contract fluctuates.
The costs incurred in connection with futures transactions could reduce the
Income Fund's return.
Futures contracts entail risks. If the Investment Adviser's judgment about
the general direction of interest rates or markets is wrong, a Fund's overall
performance may be poorer than if no such contracts had been entered into by the
Fund. There may be an imperfect correlation between movements in prices of
futures contracts and portfolio securities being hedged. In addition, the market
prices of futures contracts may be affected by certain factors. If participants
in the futures market elect to close out their contracts through offsetting
transactions rather than meet margin requirements, distortions in the normal
relationship between the securities and futures markets could result. Price
distortions could also result if investors in futures contracts decide to make
or take delivery of underlying securities rather than engage in closing
transactions because of the resultant reduction in the liquidity of the futures
market. In addition, because, from the point of view of speculators, the margin
requirements in the futures markets are less onerous than margin requirements in
the cash market, increased participation by speculators in the futures market
could cause temporary price distortions. Due to the possibility of price
distortions in the futures market, and because of the imperfect correlation
between movements in the prices of securities and movements in the prices of
futures contracts, a correct forecast of market trends by the Investment Adviser
may still not result in a successful hedging transaction. If any of these events
should occur, the Income Fund could lose money on the financial futures
contracts and also on the value of its portfolio securities.
Options on Financial Futures Contracts. The Income Fund may purchase and
write call and put options on financial futures contracts. An option on a
futures contract gives the purchaser the right, in return for the premium paid,
to assume a position in a futures contract at a specified exercise price at any
time during the period of the option. Upon exercise, the writer of the option
delivers the futures contract to the holder at the exercise price. The Income
Fund would be required to deposit with its custodian initial margin and
maintenance margin with respect to put and call options on futures contracts
written by it. Options on futures contracts involve risks similar to those risks
relating to transactions in financial futures contracts described above. Also,
an option purchased by the Income Fund may expire worthless, in which case the
Income Fund would lose the premium paid therefor.
Other Investment Policies and Techniques
Cash Management. The Trust has received permission from the SEC to allow
the CorePortfolio Fund, the Growth Fund, and the Income Fund each to invest, for
cash management purposes, up to 25% of each investing Fund's respective total
net assets in the Money Market Fund, provided that such investment is consistent
with the Funds' investment policies and restrictions. Based upon the Funds'
assets invested in the Money Market Fund, the Investment Adviser will credit the
Growth Fund and/or the Income Fund or waive its investment advisory and any
other fees earned as a result of the Funds' investments in the Money Market
Fund. The investing Fund will bear expenses of the Money Market Fund on the same
basis as all of the shareholders of the Money Market Fund.
Delayed Delivery Transactions. The Income Fund may purchase or sell
portfolio securities on a when-issued or delayed delivery basis. When-issued or
delayed delivery transactions involve a commitment by the Income Fund to
purchase or sell securities with payment and delivery to take place in the
future in order to secure what is considered to be an advantageous price or
yield to the Income Fund at the time of entering into the transaction. When the
Income Fund enters into a delayed delivery transaction, it becomes obligated to
purchase securities, and it has all of the rights and risks attendant to
ownership of a security, although delivery and payment occur at a later date.
The value of fixed income securities to be delivered in the future will
fluctuate as interest rates vary. At the time the Income Fund makes the
commitment to purchase a security on a when-issued or delayed delivery basis, it
will record the transaction and reflect the liability for the purchase and the
value of the security in determining its net asset value. Likewise, at the time
the Income Fund makes the commitment to sell a security on a delayed delivery
basis, it will record the transaction and include the proceeds to be received in
determining its net asset value; accordingly, any fluctuations in the value of
the security sold pursuant to a delayed delivery commitment are ignored in
calculating net asset value, so long as the commitment remains in effect. The
Income Fund generally has the ability to close out a purchase obligation on or
before the settlement date, rather than take delivery of the security.
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<PAGE>
To the extent the Income Fund engages in when-issued or delayed delivery
purchases, it will do so for the purpose of acquiring portfolio securities
consistent with its investment objectives and policies and not for the purpose
of investment leverage or to speculate in interest rate changes. The Income Fund
will only make commitments to purchase securities on a when-issued or delayed
delivery basis with the intention of actually acquiring the securities, but it
reserves the right to sell these securities before the settlement date if deemed
advisable. Because the Income Fund is required to set aside cash or liquid high
grade securities to satisfy its commitments to purchase when-issued or delayed
delivery securities, flexibility to manage the Income Fund's investments may be
limited if commitments to purchase when-issued or delayed delivery securities
were to exceed 25% of the value of its assets.
Lending of Fund Securities. Subject to its applicable investment
objective(s), policies, and restrictions, each Fund may lend its portfolio
securities under the following conditions: (i) the collateral to be received
from the borrower will be invested in short-term securities, the income from
which will increase the return to the Fund; (ii) the Fund will retain all rights
of beneficial ownership as to the loaned portfolio securities, including voting
rights and rights to dividends, interest or other distributions, and will have
the right to regain record ownership of loaned securities to exercise such
beneficial rights; (iii) such loans will be terminable within three business
days; and (iv) upon termination of the loan, the Fund will receive securities
which are of the same class and issue as those loaned. In the event that the
borrower of such loaned securities fails financially, the Fund might experience
a delay in recovery, incur expenses in enforcing its rights and experience
losses, including a substitution of securities and loss of income. The Fund may
pay reasonable fees to persons not affiliated with the Fund, as defined in the
1940 Act, in connection with the arranging of such loans.
Temporary Defensive Positions. The Growth Fund and Income Fund each may,
from time to time, take temporary defensive measures that are inconsistent with
their respective principal investment strategies in response to adverse market,
economic, political, or other conditions. For example, the Growth Fund may
purchase put and call options (including stock index options), write covered
call options, invest all or part of its assets in shares of fixed-income
securities such as investment-grade commercial paper and corporate bonds, United
States government securities, certificates of deposit, bankers' acceptances,
variable rate notes, and other money market instruments (such as short-term
corporate debt instruments), or it may retain cash. The Income Fund may hold
cash or cash equivalents. In taking such measures, a Fund may not achieve its
investment objective.
Ratings
The Growth Fund may make limited investments in bonds and convertible
debentures rated not less than BBB by S&P or Baa by Moody's. The Growth Fund may
also invest on a temporary defensive basis all or part of its assets in
investment-grade commercial paper.
The Income Fund may invest in securities that are given ratings by Moody's
and/or S&P. After purchase by the Income Fund, such a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Income Fund. Neither event will require a sale of such security by the
Income Fund. However, the Investment Adviser will consider such event in its
determination of whether the Income Fund should continue to hold the security.
To the extent that the ratings given by Moody's and/or S&P may change as a
result of changes in such organizations or their rating systems, the Income Fund
will attempt to use comparable ratings as standards for investments in
accordance with the investment policies contained in the Prospectus.
The Money Market Fund will limit its investments in order to comply with
applicable laws and regulations, in particular to comply with the various
requirements of SEC Rule 2a-7, which regulates money market funds. The Money
Market Fund will determine its ability to consider a security as having received
the requisite short-term ratings by nationally recognized ratings services
according to Rule 2a-7. In general, the Money Market Fund will purchase only
those securities rated in one of the two highest short-term categories
(determined without regard for sub-categories or gradations) by two nationally
recognized ratings services or which the Fund determines otherwise to be
eligible for purchase under the requirements of Rule 2a-7.
See the Appendix to this Statement of Additional Information for an
explanation of ratings.
B-13
<PAGE>
Management of the Trust
The executive officers of the Trust manage its day-to-day operations and
are accountable to the Board of Trustees. The Board of Trustees sets broad
policies for the Trust and chooses its executive officers. The following is a
list of the trustees and executive officers of the Trust and a statement of
their present positions and principal occupations during the past five years.
Unless otherwise noted, the address of each of the following trustees and
executive officers is 300 South Wacker Drive, Chicago, Illinois 60606. Trustees
who are "interested persons," as defined in the 1940 Act, are indicated with an
asterisk.
Trustees
Steven R. Becker/*/ (48), Principal, Wayne Hummer Investments L.L.C. (Wayne
Hummer); prior to April 1, 1996, Partner, Wayne Hummer & Co.; Director and
former Vice President, Wayne Hummer Management Company.
Charles V. Doherty/*/ (65), 3 First National Plaza, Suite 1400, Chicago,
Illinois 60602; Managing Director, Madison Asset Group, Chicago, Illinois
(registered investment adviser); Director, Lakeside Bank, Chicago, Illinois
(Illinois state-chartered bank); Director, Knight Trimark Group, Inc. (holding
company for securities broker); Director, Howe Barnes Securities, Inc.
(securities broker); Director, Brauvin Capital Corp. (REIT); Director,
NationsBank Financial Products.
Joel D. Gingiss (56), 207 Hazel, Highland Park, Illinois 60035; Assistant
State's Attorney, Lake County, Illinois, September 1993 to present; formerly
Chairman of the Board of Directors and President, Gingiss International, Inc.
(franchisor of Gingiss Formalwear Stores); past President, International
Franchise Association.
Patrick B. Long (56), 58 Parkland Plaza, Ann Arbor, Michigan 48103;
Chairman and Chief Executive Officer, KMS Industries, Inc. (fusion energy
research); Chairman and Director, OG Technologies, Inc. (surface measurement
technology company); Chairman and Director, AVIQS LLC (machine vision company).
David P. Poitras/*/ (38), Vice President of the Trust; formerly President,
Wayne Hummer Money Fund Trust, August 1993 - May 1999; Vice President, Wayne
Hummer Management Company since May, 1992; Principal, Wayne Hummer; prior to
April 1, 1996, Partner, Wayne Hummer & Co.; Bond Department Manager, Wayne
Hummer.
James J. Riebandt (49), 3025 Salt Creek Lane, Arlington Heights, Illinois
60005; Member, Riebandt & DeWald, Inc. (law firm).
Eustace K. Shaw (73), 200 First Avenue E., Newton, Iowa 50208; Chairman of
the Board of Directors, B. F. Shaw Printing Co.; formerly publisher, Newton
Daily News.
Messrs. Becker, Doherty, Gingiss, and Poitras are members of the Trust's
Executive Committee. The Executive Committee is elected by the Board of Trustees
and is composed of four trustees, two of whom are "interested persons," as
defined in the 1940 Act. The Executive Committee is empowered to exercise such
powers and authority of the Board of Trustees, as the Board may determine, when
the Board of Trustees is not in session and as are consistent with law.
Officers
Information about Mr. Poitras, Vice President of the Trust, appears above
under "Trustees." The remaining officers of the Trust are as follows:
Thomas J. Rowland (53), President of the Trust; President, Wayne Hummer
Management Company; formerly Vice President, Wayne Hummer Money Fund Trust, July
1987-May 1999; formerly Vice President of the Trust and Wayne Hummer Management
Company; Member, Wayne Hummer; prior to April 1, 1996, Partner, Wayne Hummer &
Co.
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<PAGE>
Jean M. Maurice (36), Treasurer of the Trust; formerly Treasurer, Wayne
Hummer Money Fund Trust, March 1988-May 1999; formerly Administrative Assistant
for the Trust and Wayne Hummer Money Fund Trust.
Robert J. Moran (53), Secretary of the Trust; Partner, Vedder, Price,
Kaufman & Kammholz (law firm).
Trustee Compensation
The individuals in the following table serve on the Trust's Board of
Trustees. The Trust pays each Trustee who is not affiliated with Wayne Hummer
Management Company (each an "Outside Trustee" and collectively, the "Outside
Trustees") $10,000 per year, plus $1,000 per meeting attended, and reimburses
each Outside Trustee for the travel and other expenses that he incurs in
attending meetings. Each Fund pays a proportionate share of the Outside
Trustees' compensation. The trustees who are not Outside Trustees and the
officers of the Trust are compensated by Wayne Hummer Management Company, not
the Trust.
The following table provides compensation details for each of the trustees.
The table shows the aggregate compensation that each trustee entitled to
compensation received from each Fund and the total amount of compensation paid
to each such trustee by all Wayne Hummer Trusts. All information shown is for
the fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
Pension or
Retirement Benefit Total Compensation
Aggregate Compensation from Accrued As Part of From Fund Complex
Trustee Each Fund * Fund Expenses Paid to Trustees *
- -------------------- --------------------------- ------------------- -------------------
<S> <C> <C> <C>
Charles V. Doherty Growth Fund $6,200 $0 $13,000
Income Fund $ 800
Money Market Fund $6,000
Joel D. Gingiss Growth Fund $6,200 $0 $13,000
Income Fund $ 800
Money Market Fund $6,000
Patrick B. Long Growth Fund $4,765 $0 $11,000
Income Fund $ 735
Money Market Fund $5,500
Eustace K. Shaw Growth Fund $4,765 $0 $11,000
Income Fund $ 735
Money Market Fund $5,500
- --------------------
</TABLE>
* Based upon annual trustee compensation of $2,000, plus $500 per meeting
attended for the period of April 1, 1998 through December 31, 1998, and annual
trustee compensation of $5,000, plus $500 per meeting attended for the period
January 1, 1999 through March 31, 1999 for service on the Boards of the Wayne
Hummer Investment Trust and WHMFT. WHMFT was reorganized as the Wayne Hummer
Money Market Fund in July 1999. The amounts shown in the table with respect to
the Money Market Fund are estimates based upon the compensation paid to each
trustee for his service on the board of WHMFT. Neither Mr. Poitras nor Mr.
Riebandt were Trustees during this period.
As of June 30, 1999, the trustees and officers as a group beneficially
owned less than 1% of the outstanding shares of the Trust. As of June 30, 1999,
the Wayne Hummer Employees Profit Sharing Trust (the "Retirement Plan") owned of
record and beneficially _____% of the outstanding shares of the Growth Fund and
_____% of the outstanding shares of the Income Fund, which constitutes _____% of
the aggregate outstanding shares of the Trust. Messrs. Rowland, Cannova, Reilly,
Kratzer, and Poitras, as trustees of the Retirement Plan, may be deemed to have
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<PAGE>
beneficial ownership of the percentage of shares of the Funds and the Trust as
stated above. Messrs. Rowland, Kratzer and Poitras are Members of Wayne Hummer,
the Trust's Distributor. Messrs. Poitras and Rowland also are officers of the
Trust and Wayne Hummer Management Company.
As of June 30, 1999, there were no shareholders of record, nor was the
Trust aware of any beneficial shareholders, who held 5% or more of the Trust's
shares.
Investment Advisory and Other Services
Investment Adviser. Subject to the review of the Board of Trustees, Wayne
Hummer Management Company acts as investment adviser to the Trust and provides
the Trust with operating facilities and management services (the "Investment
Adviser") under the terms of an Investment Advisory and Management Agreement.
The shareholders of the Investment Adviser are the voting members of Wayne
Hummer Investments L.L.C. ("Wayne Hummer"), a Delaware limited liability
company, who own shares in proportion to their percentage of voting membership
interest. Wayne Hummer, a registered broker-dealer firm, acts as the Trust's
distributor and shareholder service agent (see "Distributor and Shareholder
Service Agent" below). As noted above under "Management of the Trust," certain
of the members of Wayne Hummer are also officers, directors, or employees of the
Investment Adviser, as well as officers and "interested persons," as defined in
the 1940 Act, of the Trust. Moreover, Wayne Hummer may be deemed to be an
affiliated person of the Investment Adviser and the Trust.
Harry Flagg Baum, Director; Steven R. Becker, Director; G. Ted Becker,
Treasurer; Philip M. Burno, Director; Philip Wayne Hummer, Director and
Chairman, David P. Poitras, Vice President; William A. Rogers, Director and
Secretary; Thomas J. Rowland, President; Mark H. Dierkes, Vice President; and
Damaris E. Martinez, Vice President, Administration are the executive officers
and directors of the Investment Adviser.
The services and facilities provided and paid for by the Investment Adviser
under the Investment Management and Advisory Agreement include investment
advisory and portfolio management services; administrative services, office
space, and basic facilities for management of the Trust's affairs (other than
distribution of the Trust's shares and the furnishing of shareholder services,
as described below); and compensation of all officers, trustees of the Trust who
are "interested persons," as defined in the 1940 Act, of the Trust, and other
personnel of the Trust for their services to the Trust. The Trust pays all other
expenses incurred in its operation that are properly payable by the Trust.
Certain of these expenses may be advanced on behalf of the Trust by the
Investment Adviser or the Shareholder Service Agent and will be reimbursed to
such party by the Trust.
As compensation for its investment advisory and management services to the
Funds, the Investment Adviser receives from each Fund an annual investment
advisory fee, computed and accrued daily and payable monthly, based upon each
Fund's respective average daily net assets as follows:
<TABLE>
<CAPTION>
Name of Fund Average Daily Net Asset Value Fund Management Fee
- ------------ ----------------------------- -------------------
<S> <C> <C>
CorePortfolio Fund For all assets 0.400%
Growth Fund For the first $100 million 0.800%
For the next $150 million 0.650%
For all assets over $250 million 0.500%
Income Fund For the first $100 million 0.500%
For the next $150 million 0.400%
For all assets over $250 million 0.300%
Money Market Fund For the first $500 million 0.500%
For the next $250 million 0.425%
</TABLE>
B-16
<PAGE>
<TABLE>
<CAPTION>
Name of Fund Average Daily Net Asset Value Fund Management Fee
- ------------ ----------------------------- -------------------
<S> <C> <C>
For the next $250 million 0.375%
For the next $500 million 0.350%
For the next $500 million 0.325%
For the next $500 million 0.300%
For all assets over $2.5 billion 0.275%
</TABLE>
For the fiscal years ended March 31, 1999, 1998, and 1997, the Growth Fund
paid the Investment Adviser $1,030,442, $950,496, and $817,835, respectively,
under the Investment Advisory and Management Agreement. For the fiscal years
ended March 31, 1999, 1998, and 1997, the Income Fund paid the Investment
Adviser $103,836, $110,478, and $119,230, respectively, under the Investment
Advisory and Management Agreement. For the fiscal years ended March 31, 1999,
1998, and 1997. WHMFT, which was reorganized as the Money Market Fund in July
1999, paid the Investment Adviser $1,587,540 in 1999, $1,311,192 in 1998, and
$1,097,662 in 1997 under an Investment Advisory and Management Agreement between
WHMFT and the Investment Adviser. The Investment Advisory and Management
Agreement between the Money Market Fund and the Investment Adviser contains
substantially the same terms and conditions, including the fees payable under
the agreement.
The Investment Adviser has agreed to waive its fee to the extent that a
Fund's ordinary operating expenses during any fiscal year, including its own
fee, exceed 0.75% of the average daily net assets of the CorePortfolio Fund,
1.5% of the respective average daily net assets of the Growth Fund or the Income
Fund, or 1.0% of the average daily net assets of the Money Market Fund, computed
on an annual basis. Expenses that are not subject to this limitation are
interest, taxes, brokerage commissions, and extraordinary items such as
litigation costs. For the fiscal years ended March 31, 1999, 1998, and 1997, the
Investment Adviser was not required to reimburse the Funds for any expenses in
excess of any applicable expense limitation or to waive its fees.
The Adviser has entered into an expense limitation agreement with the
Trust, pursuant to which the Adviser has agreed to waive or limit its fees so
that the total annual ordinary operating expenses of the CorePortfolio Fund
(which excludes interest, taxes, brokerage commissions, and extraordinary
expenses, such as litigation or other expenses not incurred in the ordinary
course of the Fund's business) do not exceed 0.75% of the Fund's average daily
net assets. In addition, the Adviser has paid organizational expenses of the
Fund in the amount of $15,000.
The expense limitation agreement provides that these expense limitations
shall continue so long as the Investment Advisory and Management Agreement is in
effect. The Fund will at a later date reimburse the Adviser for management fees
waived, organization expenses, and other expenses assumed by the Adviser during
the previous five years, but only if, after such reimbursement, the Fund's
expense ratio does not exceed 0.75% of the Fund's average daily net assets. The
Investment Manager will only be reimbursed for fees waived or expenses assumed
after the effective date of the expense limitation agreement.
Distributor and Shareholder Service Agent. Pursuant to a Distribution
Agreement, Wayne Hummer, 300 South Wacker Drive, Chicago, Illinois 60606, an
affiliate of the Investment Adviser, is the principal underwriter and
distributor of the Funds' shares in the continuous offering of the Trust's
shares. Wayne Hummer also acts as the Funds' Shareholder Service Agent pursuant
to a Shareholder Service Agreement.
Under these agreements, Wayne Hummer directly or through other firms, as
discussed below, provides information and services to existing and potential
shareholders such as processing new shareholder account applications; converting
funds into or advancing federal funds for the purchase of shares as well as
transmitting purchase orders to the Trust's transfer agent; maintaining records
of shareholders' transactions for federal and state tax and securities law
purposes as well as for other purposes; preparing and transmitting federal and
state tax informational returns relating to share transactions to shareholders
and governmental agencies; recording dividends on shareholders' brokerage
accounts with Wayne Hummer and forwarding cash dividends to shareholders;
generating and transmitting transaction confirmations (if required) and periodic
statements to shareholders; transmitting redemption requests to the Trust's
transfer agent and transmitting the proceeds of redemption of shares pursuant to
shareholder instructions when such redemption is effected through Wayne Hummer
other than in connection with the check writing privilege of the Money
B-17
<PAGE>
Market Fund; transmitting proxy materials and reports to the Funds'
shareholders; maintaining the automatic share purchase and redemptions "sweep
program," as described in the Funds' Prospectus; providing telephonic and
written communications with respect to shareholder account inquiries and serving
as the primary interface with existing and potential shareholders in answering
questions concerning the Trust and their transactions with the Trust; and
providing literature distribution, advertising, and promotion as is necessary or
appropriate for providing information and services to existing and potential
shareholders.
Wayne Hummer may be reimbursed by the Trust for certain out-of-pocket costs
in connection with its services to existing shareholders as Shareholder Service
Agent, including such costs as postage; data entry, modification and printout;
stationery; tax forms; and all external forms or printed material. However,
Wayne Hummer does not receive a fee from the Trust, nor is it reimbursed by the
Trust for any expenses it incurs in its capacity as Distributor of the Trust's
shares.
Wayne Hummer may appoint various broker-dealer firms to assist in providing
distribution services for the Trust and may appoint broker-dealers and other
firms (including depository institutions such as commercial banks and savings
and loan associations) to provide administrative services for their clients as
shareholders of the Trust under service agreements. Wayne Hummer may pay these
broker-dealers and other firms a fee for their services.
As of January 1, 1991 the Investment Adviser entered into an agreement with
Wayne Hummer whereby the Investment Adviser agreed to pay to Wayne Hummer the
following: (a) for distribution services rendered to the Trust under the
Distribution Agreement, an amount equal to 35% of the gross revenues generated
from the rendering of investment advisory services to the Trust, not to exceed
in the aggregate for a particular fiscal year, however, the net profit (before
taxes and before payment of the fees so payable) earned by the Investment
Adviser for such year for the rendering of such advisory services, and (b) for
services rendered by Wayne Hummer to Trust shareholders under the Shareholder
Service Agreement, an amount equal to 130% of the unreimbursed overhead and
labor expenses incurred by Wayne Hummer in rendering such services.
Wayne Hummer receives no compensation from the Funds as Distributor and
pays all expenses of distribution of the Trust's shares not otherwise paid by
dealers or other financial services firms. As discussed in the Prospectus, Wayne
Hummer retains the applicable sales charge upon the purchase of CorePortfolio
Fund, Growth Fund and Income Fund shares and pays out all of this sales charge
or may allow concessions or discounts to firms for the sale of CorePortfolio
Fund, Growth Fund and Income Fund shares on applicable sales.
Prior to April 1, 1996, Wayne Hummer & Co. was the Trust's Distributor and
Shareholder Service Agent. Effective as of April 1, 1996, Wayne Hummer & Co.,
which was organized as an Illinois limited partnership, was reorganized as a
Delaware limited liability company and is now known as Wayne Hummer Investments
L.L.C. Each of the general partners of Wayne Hummer & Co. became voting members
of Wayne Hummer Investments L.L.C. The following persons, all of whom, except as
specified, are located at 300 South Wacker Drive, Chicago, Illinois 60606, have
been members or employees of Wayne Hummer, and partners of Wayne Hummer's
predecessor Wayne Hummer & Co., for at least the past five years, and are
presently members of Wayne Hummer: William B. Hummer; Philip Wayne Hummer; Harry
Flagg Baum; William A. Rogers; Philip M. Burno; Joseph A. Piekarczyk; G. Ted
Becker; Steven R. Becker; W. Douglas Carroll; Richard J. Kosarek; Raymond L.
Kratzer; Jean E. Williams; Linda C. Becker; Thomas J. Rowland; Laura A. Kogut;
David P. Poitras; Richard Wholey, Jr.; Peder H. Culver; Daniel G. Hack; Ronald
A. Tyrpin; Larry H. Weisz; Floyd E. Siegel and Scott Park. The George E. Barnes
Family Trust (George E. Barnes, grantor of the Family Trust, was a founding
partner of Wayne Hummer & Co. and was a general partner through March, 1986. Mr.
Barnes' address is 46-730 Amir Drive, Palm Desert, California 92260.) is a Class
C Member of Wayne Hummer and prior to April 1, 1996 had been a limited partner
of Wayne Hummer since April, 1986. Robert F. Kahlfeldt, 2 S 484 Burning Trail,
Wheaton, Illinois 60187, is a non-voting member of Wayne Hummer. Prior to
January 1, 1999, he was a voting member of Wayne Hummer, and prior to April 1,
1996, he was a general partner of Wayne Hummer & Co.
Portfolio Accounting Services. The Investment Adviser also provides the
Trust with certain portfolio accounting services under the terms of a Portfolio
Accounting Services Agreement (the "Accounting Agreement") between the
Investment Adviser and the Trust. Under this agreement, the Investment Adviser
maintains the accounting
B-18
<PAGE>
books and records for each Fund constituting the record forming the basis for
that Fund's financial statements; maintains capital stock accounts for each
Fund; prepares a daily trial balance for each Fund; calculates the daily net
asset value of each Fund; maintains all records of a financial nature for each
Fund's transactions; and processes special ledgers and other reports when
requested. The Accounting Agreement continues in effect until terminated by
either the Investment Adviser or the Trust upon 60 days' prior written notice.
In addition, the Trust may terminate the Accounting Agreement without prior
written notice to preserve the integrity of its records from material and
continuing errors and omissions on the part of the Investment Adviser.
Under the Accounting Agreement, the Investment Adviser receives, as
compensation for its accounting services to the Trust, an annual fee, computed
and accrued daily and payable monthly, equal to 0.01 of 1% of each Fund's
respective average daily net assets. Such fee shall not exceed $15,000 per Fund
per year. In addition, the Investment Adviser receives an equipment fee of $50
per Fund per month and is reimbursed for its out-of-pocket costs for obtaining
securities pricing services, the license for use of portfolio accounting
software, and other out-of-pocket costs that are incurred in providing pricing
and software services. The Investment Adviser has agreed to waive the accounting
services fee applicable to the CorePortfolio Fund for the period beginning on
the date that shares of the CorePortfolio Fund are first offered to the public
and ending on July 31, 2000. For the services provided under the Accounting
Agreement, each Fund paid the Investment Adviser the dollar amounts set forth in
the table below for the last three fiscal years:
<TABLE>
<CAPTION>
Fiscal Year Ended 3/31
-------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Growth Fund $20,728 $19,640 $17,043
Income Fund $18,577 $18,709 $19,543
Money Market Fund/*/ $25,202 $24,602 $21,852
</TABLE>
- -----------------
/*/ Amounts shown for the Money Market Fund were actually paid by WHMFT, which
was reorganized as the Wayne Hummer Money Market Fund in July 1999. The Money
Market Fund has entered in to a fund accounting agreement under substantially
the same terms and conditions as WHMFT, including the fees payable under the
Accounting Agreement.
The Accounting Agreement was initially approved at the October 25, 1994
meeting of the Board of Trustees by a majority of the trustees who are neither
parties to the Accounting Agreement nor "interested persons," as defined in the
1940 Act, of any such party and shall continue in effect, as amended from time
to time, until terminated. The Accounting Agreement may be terminated by either
party upon sixty days' prior written notice; provided, however, that the Trust
may terminate the Accounting Agreement without prior notice to preserve the
integrity of its records from material and continuing errors and omissions on
the part of the Investment Adviser.
Brokerage Allocation
The Investment Adviser determines the securities to be purchased, sold, and
held by the Trust and places all orders subject to the general supervision of
the Board of Trustees. Transactions are allocated among various brokers and
dealers by the Investment Adviser in its best judgment. In placing such orders,
the Investment Adviser primarily is concerned with obtaining the best
combination of price and execution. This does not mean that the Trust must base
its execution decisions solely on whether the lowest possible price or
commission costs may be obtained. In seeking to achieve the best combination of
price and execution, an effort will be made to evaluate the overall quality and
reliability of broker-dealers and the services they provide, including their
general execution capability, reliability, and integrity; willingness to take
positions in securities; general operational capabilities; and financial
condition. For the CorePortfolio Fund and the Growth Fund, the Investment
Adviser is authorized, consistent with Section 28(e) of the Securities Exchange
Act of 1934, to pay a commission to a broker-dealer that may be greater than the
commission another broker-dealer would have charged for effecting the
transaction if the Investment Adviser determines that the commission is
reasonable in relation to the value of brokerage and research services provided.
For each Fund, when the execution and prices offered by two or more brokers or
dealers are comparable, the Investment Adviser may, in its discretion, purchase
and sell portfolio securities from and to brokers or dealers that provide the
Investment Adviser with
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<PAGE>
research, statistical, or other services. Such services may include advice
concerning the value of securities; the advisability of investing in,
purchasing, or selling securities; the availability of securities or the
purchasers or sellers of securities; and furnishing analysis and reports
concerning issuers and industries, securities, economic factors, trends, and
portfolio strategy. It is not possible to place a monetary value on such
research services. Since such research and statistical services only supplement
the Investment Adviser's own research efforts and any information received must
be analyzed, weighed, and reviewed by the Investment Adviser's staff, the
receipt of such information is not expected materially to reduce the Investment
Adviser's cost of performing its advisory contract with the Trust. The
information received may be used by the Adviser for its other clients and/or
made available to Wayne Hummer for use in serving its customers. Additionally,
information available to Wayne Hummer may be made available to the Investment
Adviser in serving the Trust and its other clients. Portfolio securities will
not be purchased from or sold to Wayne Hummer or the Investment Adviser or an
affiliate, as defined in the 1940 Act, of either, except pursuant to special
procedures adopted under Rule 17a-7 promulgated under the 1940 Act.
The investment decisions for the Funds are reached independently from one
another or other of the Investment Adviser's clients ("Clients"). The Funds may,
however, make investments in certain securities at the same time as one or all
of the Funds. When the Funds and/or Clients have funds available for investment
in or wish to sell securities, the Investment Adviser, to the extent permitted
by applicable laws and regulations, may aggregate the securities to be sold or
purchased in order to obtain the best combination of price and execution. In
such event, allocation of the securities so purchased or sold, as well as the
costs incurred in the transaction, will be made by the Investment Adviser in a
manner it considers to be equitable and consistent with its fiduciary
obligations to the Trust and/or its clients. In some cases this procedure may
affect the size or price of the position available to the Trust. It is the
opinion of the Management of the Trust that the benefits available outweigh any
disadvantages that may arise from concurrent transactions.
The total brokerage commissions and other transaction costs paid by the
Trust in connection with the purchase or sale of portfolio securities for the
Growth Fund for the fiscal years ended March 31, 1999, 1998, and 1997, were
$53,138, $18,432 and $24,203, respectively. For the fiscal years ended March 31,
1999, 1998, and 1997, the Trust paid no brokerage commissions or other
transaction costs in connection with the purchase or sale of portfolio
securities for the Income Fund.
For the Money Market Fund, securities normally are purchased directly from
the issuer or from an underwriter or a market maker for money market
instruments. Usually, no brokerage commissions are paid by the Fund for such
purchases. Purchases from underwriters of securities may include a concession
paid by the issuer to the underwriter. The purchase price paid to dealers
serving as primary market makers for money market instruments may include a
spread between the bid and asked prices. During the three fiscal years ended
March 31, 1999, all transactions for WHMFT, which was reorganized as the Wayne
Hummer Money Market Fund in July 1999, were at net prices and there were no
commissions paid by the Trust.
Shareholder Rights and Liabilities
The Trust's Agreement and Declaration of Trust ("Trust Agreement") permits
the Trust to issue an unlimited number of full and fractional units of
beneficial interest in one or more separate series. Only four series are
currently established, which are designated as the "Wayne Hummer CorePortfolio
Fund," the "Wayne Hummer Growth Fund," the "Wayne Hummer Income Fund," and the
"Wayne Hummer Money Market Fund." Each Fund share is without par value,
represents a proportionate interest in that Fund equal to the proportionate
interest represented by each other share in that Fund, and is entitled to such
dividends and distributions as are declared by the trustees. Upon liquidation of
a Fund, shareholders are entitled to share pro rata in the net assets of the
Fund available for distribution. Shares do not have cumulative voting,
preemptive, or conversion rights. Shares when issued as described herein are
fully paid and nonassessable, except as expressly set forth below. Certificates
representing the shares are not issued. Rather, State Street Bank and Trust
Company, the Trust's transfer agent, maintains a record of each shareholder's
ownership. Shareholders will receive confirmations of all purchases and sales of
Trust shares made for their account, including reinvestment of dividends or
other distributions.
At a meeting held on June 30, 1999, the Trust's shareholders approved a
proposal authorizing the Board of Trustees to amend the Trust's Agreement and
Declaration of Trust to permit the Trustees, without further shareholder
B-20
<PAGE>
action, to issue one or more additional classes of shares in any present or
future series of the Trust. Any such additional class or classes of shares would
have such preferences or special or relative rights and privileges as the
Trustees may determine and would participate in all other respects on an equal
proportionate basis with all other classes of shares, including as to investment
income, realized and unrealized gains and losses on investments, and all other
Trust operating expenses. All classes of shares will vote together as a single
class at shareholder meetings, except that shares of a class that is affected in
a materially different way from shares of other classes by a matter will vote as
a separate class on that matter and that holders of shares of a class that is
not affected by a matter will not vote on that matter. There is no present
intention that the Trust will create additional classes of shares pursuant to
this authority. Furthermore, the terms of any such arrangement and the
determination whether to implement it will be made in light of then existing
business conditions.
The Trust Agreement provides that on any matter submitted to a vote of the
shareholders, all shares entitled to vote will be voted in the aggregate and not
by Fund, except if the trustees have determined that the matter affects only one
Fund or as required by the 1940 Act. Thus, voting with respect to certain
matters will be by Fund (such as approval of the Investment Advisory and
Management Agreement) and with respect to other matters will be by all Trust
shareholders in the aggregate (such as election of trustees and the ratification
of the selection of independent auditors).
As a general rule, the Trust will not hold annual or other meetings of
Trust shareholders. Under the Trust Agreement, shareholders are entitled to vote
in connection with the following matters: (1) for the election or removal of
trustees if a meeting is called for such purpose; (2) with respect to the
adoption of any contract for which approval is required by the 1940 Act (such as
the Trust's Investment Advisory and Management Agreement); (3) with respect to
any termination of the Trust to the extent and as provided in the Trust
Agreement; (4) with respect to any amendment of the Trust Agreement (other than
amendments changing the name of the Trust, supplying any omission, curing any
ambiguity, or curing, correcting, or supplementing any defective or inconsistent
provision thereof); (5) as to whether or not a court action, proceeding, or
claim should or should not be brought or maintained derivatively or as a class
action on behalf of the Trust or the shareholders, to the same extent as the
stockholders of a Massachusetts business corporation; and (6) with respect to
such additional matters relating to the Trust as may be required by law, the
Trust Agreement, the By-Laws of the Trust, any registration of the Trust with
the SEC or any state, or as the trustees may consider necessary or desirable.
The Trust will, however, in accordance with the 1940 Act, hold a
shareholders meeting for the election of trustees when less than a majority of
the trustees holding office have been elected by shareholders. In addition, if,
as a result of a vacancy in the Board of Trustees, less than two-thirds of the
trustees holding office have been elected by the shareholders, that vacancy will
be filled only by a vote of the shareholders.
A shareholders meeting will also be held to remove a trustee or trustees
from office upon the written request of the holders of not less than 10% of the
Trust's outstanding shares. Trustees may be removed from office by a vote of the
holders of at least two-thirds of the outstanding shares at a meeting duly
called for that purpose. Upon the written request of the holders of shares
having a net asset value of $25,000 or constituting 1% of the outstanding shares
of each Fund stating that such shareholders wish to communicate with the other
shareholders for the purpose of obtaining the signatures necessary to demand a
meeting to consider removal of a trustee, the Trust has undertaken to provide a
list of shareholders or to disseminate appropriate materials (at the expense of
the requesting shareholders).
The Trust Agreement provides that shareholders will not be subject to any
personal liability to any person extending credit to, contracting with, or
having any claims against the Trust and that every written agreement,
obligation, instrument, or undertaking made by the Trust will contain a
provision that such written agreement, obligation, instrument, or undertaking is
not binding upon the shareholders personally. The law firm of Ropes & Gray,
Boston, Massachusetts, which supervised the organization of the Trust under
Massachusetts law, is of the opinion that, pursuant to Massachusetts law,
shareholders will not be liable personally for contract claims under any such
agreement, obligation, instrument, or undertaking governed by Massachusetts law
and containing such provision when adequate notice of such provision is given.
With respect to other claims, a shareholder may be held personally liable to the
extent that claims are not satisfied by the Trust. Upon payment of any such
liability, however, the Trust Agreement provides that shareholders will be
entitled to reimbursement from the general assets of the Trust.
B-21
<PAGE>
The trustees intend to conduct the operations of the Trust, with the advice
of counsel, in such a way so as to avoid, as far as possible, ultimate liability
of the shareholders for liabilities of the Trust. The Trust is covered by
insurance, which the trustees consider adequate to cover foreseeable tort
claims. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is considered remote, since it is limited to circumstances
in which the provisions limiting liability are inoperative and the Trust itself
is unable to meet its obligations.
Trust Name
Pursuant to an agreement with the Investment Adviser, the Trust has been
granted a non-exclusive license ("License") to use the trade name and service
mark "Wayne Hummer" (the "Name"), a registered service mark of Wayne Hummer and
the logo "WH" ("Logo"), also a registered service mark of Wayne Hummer, without
charge for as long as the Trust is solvent, Wayne Hummer Management Company is
the Investment Adviser to the Trust, and Wayne Hummer is the Trust's Distributor
and Shareholder Service Agent. If Wayne Hummer Management Company ceases to act
as Investment Adviser or if Wayne Hummer ceases to act as Distributor and
Shareholder Service Agent, then the Trust will be required to change its name
and to deliver to Wayne Hummer Management Company for destruction all materials
in which the Name and/or Logo are used. Wayne Hummer Management Company may
exercise control over use of the Name and/or Logo, and the Trust has agreed to
indemnify Wayne Hummer Management Company against expenses or losses which may
arise from the Trust's misuse of the Name and/or Logo or out of any breach of
the License regarding the use of the Name and/or Logo.
Purchase, Redemption, and Pricing of Shares
Reducing or Eliminating the Front-end Sales Charge. You can reduce or
eliminate the applicable front-end sales charge on shares of the CorePortfolio
Fund, the Growth Fund, and the Income Fund, as follows.
Quantity Discounts. Purchase of more than $1 million can reduce or
eliminate the sales charge you pay. You can combine purchases of shares made on
the same day by you, your spouse, and your children under age 21. In addition,
purchases made at one time by a trustee or fiduciary for a single trust estate
or a single fiduciary account can be combined.
Accumulated Purchases. If you make an additional purchase of shares, you
can count previous share purchases still invested in a Fund in calculating the
applicable sales charge on the additional purchase.
Concurrent Purchases. You can combine concurrent purchases of shares of the
CorePortfolio Fund, the Growth Fund, and the Income Fund in calculating the
applicable sales charge.
Letter of Intent. You can sign a Letter of Intent committing to purchase $1
million of shares within a 13 month period to combine such purchases in
calculating the sales charge. The Trust's custodian will hold shares in escrow
equal to the maximum applicable sales charge. If you complete the Letter of
Intent, the custodian will release the shares in escrow to your account. If you
do not fulfill the Letter of Intent, the custodian will redeem the appropriate
amount from the shares held in escrow to pay the sales charges that were not
applied to your purchases.
Purchase by Affiliates of the Trust. The following individuals and their
immediate family members may buy shares at NAV without any sales charge because
there are nominal sales efforts associated with their purchases:
. officers and trustees/directors of the Trust, Wayne Hummer Investments
L.L.C., or Wayne Hummer Management Company and their immediate family
members;
. trustees/directors of any fund sponsored by Wayne Hummer Management
Company; and
. bona fide, full-time employees of Wayne Hummer Management Company,
Wayne Hummer Investments L.L.C., or Focused Investments, L.L.C. and
their immediate family members.
B-22
<PAGE>
Offering Price. Each Fund's share price, called its net asset value
(NAV), is calculated as of the close of regular session trading (generally 3:00
p.m. Chicago time) on each day the New York Stock Exchange (NYSE) is open for
trading and at 3:00 p.m. Chicago time on each other day during which there is a
sufficient degree of trading in securities held by a particular Fund so as to
affect materially such Fund's NAV. The NAV per share for each Fund is computed
by dividing the value of the Fund's portfolio holdings, plus any other assets
minus all liabilities by the total number of such Fund's shares outstanding.
Expenses, including the fees payable to the Investment Adviser and the
Distributor and Shareholder Service Agent, are accrued daily. The Money Market
Fund's NAV is normally $1.00 per share.
In valuing the securities of the CorePortfolio Fund and the Growth Fund,
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 used
if such sale is between the closing bid and asked price of the current day. If
the last sale price on a prior day is not between the current day's closing bid
and asked prices, then the value of such security is taken to be the mean
between the current day's bid and asked prices.
In valuing the Income Fund's securities, 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. Any
unlisted security for which last sale information is not regularly reported, or
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. Restricted
securities and any other securities or other assets for which market quotations
are not readily available are valued by appraisal at their fair values, as
determined in good faith under procedures established by and under the general
supervision and responsibility of the Board of Trustees. Debt securities having
a remaining maturity of less than sixty days are valued at cost adjusted for
amortization of premiums and accretion of discounts.
Securities held by the Money Market Fund are valued using the amortized
cost method. The amortized cost method does not take into account unrealized
securities gains or losses. This means that securities held by the Money Market
Fund are initially valued at cost and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuating interest rates on the market value of the securities.
While the amortized cost method provides certainty in valuation, it may
result in periods during which the value of an instrument, as determined by
amortized cost, is higher or lower than the price the Fund would receive if it
sold the instrument. During such periods, the yield to investors in the Fund
may differ somewhat from that obtained in a similar investment vehicle that uses
available indications as to market value to value its portfolio securities. For
example, if the use of amortized cost resulted in a lower (higher) aggregate
portfolio value on a particular day, a prospective investor in such portfolio
could obtain a somewhat higher (lower) yield and ownership interest than would
result from investment in such similar portfolio, and existing investors would
receive less (more) investment income and ownership interest. The Fund expects,
however, that certain procedures adopted by the Board of Trustees, as described
below, will tend to minimize such differences.
The trustees have established procedures designed to stabilize, to the
extent reasonably possible, the Money Market Fund's price per share, as computed
for the purpose of sales and redemptions, at $1.00. However, there can be no
assurance that the Money Market Fund will be able to maintain a stable NAV of
$1.00 per share. Such procedures include review of the securities holdings by
the trustees, at such intervals as they may deem appropriate, to determine
whether the NAV per share of the Money Market Fund calculated by using available
market quotations or market equivalents deviates more than .50% from $1.00 per
share based on amortized cost and, if so, whether such deviation may result in
material dilution or is otherwise unfair to investors or existing shareholders.
In such review, investments for which market quotations are readily
available will be valued at the most recent bid-asked mean or yield equivalent
for such securities or for securities of comparable maturity, quality and type,
as obtained from one or more of the major market makers for the securities to be
valued. If market quotations are not readily available for an investment, the
investment will be valued pursuant to a security valuation matrix system that
classifies investments by type, days to maturity, and quality, and which is
considered dependable in producing a fair value of such investments.
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<PAGE>
If any deviation between the Money Market Fund's NAV based upon available
market quotations or market equivalents and $1.00 per share based on amortized
cost exceeds .50%, then the trustees promptly will consider what action, if any,
will be initiated. If the trustees determine that a deviation exists that may
result in material dilution or other unfair results to investors or existing
shareholders, then the trustees will take such corrective action as they
consider necessary and appropriate, including selling Fund instruments prior to
maturity to realize gains or losses or to shorten average portfolio maturity,
withholding dividends or payment of distributions, redeeming shares in kind, or
establishing a NAV per share by using available market quotations or by using
estimates of value reflecting current market conditions selected by the Board of
Trustees as appropriate indicators of value.
In addition, if the Money Market Fund incurs a loss or liability that the
trustees determine to be significant with respect to the maintenance of a NAV of
$1.00 per share, then the trustees may (1) reduce the number of shares of the
Fund by that number of shares that represents the amount of such loss or
liability by reducing the number of shares of each shareholder on a pro rata
basis, (2) offset the pro rata amount of such loss or liability from the accrued
dividend account of each shareholder, and/or (3) establish an account in the
amount of such loss or liability and offset such account and to defer the
declaration of dividends until sufficient income is obtained to reduce such
account to zero.
Redemption in Kind (Money Market Fund only). The Money Market Fund has
made an election pursuant to Rule 18f-1 under the 1940 Act to enable the Fund to
elect to limit payments in cash for large redemptions. Under the provisions of
Rule 18f-1, the Fund may limit cash redemptions with respect to each shareholder
during any 90-day period to the lesser of (1) $250,000 or (2) 1% of the NAV of
the applicable portfolio at the beginning of such period. If deemed advisable by
the Board of Trustees, the Fund may pay the redemption price in excess of the
amounts described above in whole or in part in securities owned by the
applicable portfolio. The market value of such securities shall be determined
as of the close of trading on the NYSE on the business day on which the
redemption is effective. In such case a shareholder might incur transaction
costs if he or she sold the securities received.
Taxes
Information concerning the tax consequences to Fund shareholders of buying,
holding, exchanging, and selling the Funds' shares may be found in the
Prospectus under the subheading "Taxes."
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
This special tax status means that each Fund will not be liable for federal tax
on income and capital gains distributed to shareholders. To preserve its tax
status, each Fund must comply with certain requirements. If a Fund fails to
meet these requirements in any taxable year, it will be subject to tax on its
taxable income at corporate rates, and all distributions from earnings and
profits, including any distributions of net tax-exempt income and net long-term
capital gains, will be taxable to shareholders as ordinary income. In addition,
the Fund could be required to recognize unrealized gains, pay substantial taxes
and interest, and make substantial distributions before regaining its tax status
as a regulated investment company.
Any loss recognized on the disposition of a Fund's shares that were held
for six months or less will be treated as a long-term capital loss to the extent
that the shareholder has received only long-term capital gain distributions on
such shares.
A Fund's options, futures, and foreign currency transactions are subject to
special tax provisions that may accelerate or defer recognition of certain gains
or losses, change the character of certain gains or losses, or alter the holding
periods of certain of the Fund's securities.
The mark-to-market rules of the Code may require a Fund to recognize
unrealized gains and losses on certain options and futures held by a Fund at the
end of its fiscal year. Under these provisions, 60% of any capital gain net
income or loss recognized will generally be treated as long-term and 40% as
short-term. In addition, the straddle rules of the Code would require deferral
of certain losses realized on positions of a straddle to the extent that a Fund
had unrealized gains in offsetting positions at year end.
B-24
<PAGE>
A 4% excise tax is imposed on the excess of the required distribution for a
calendar year over the distributed amount for such calendar year. The required
distribution generally is the sum of 98% of a Fund's net investment income for
the calendar year plus 98% of its capital gain net income for the one-year
period ending October 31. Each Fund intends to declare or distribute dividends
during the calendar year in an amount sufficient to prevent imposition of the 4%
excise tax.
Performance Information
In advertising, sales literature, and other publications, the Funds'
performance may be quoted in terms of total return, average annual total return,
yield, and effective yield, which may be compared with various indices and
investments, other performance measures or rankings, other mutual funds, or
indices or averages of other mutual funds.
Average annual total return and total return measure both the net income
generated by, and the effect of any realized and unrealized appreciation or
depreciation of, the underlying investments of the Funds. Yield is an
annualized measure of the net investment income per share earned over a specific
one-month or 30-day period, expressed as a percentage of the net asset value of
the particular Fund.
Each Fund's average annual total return quotation is computed in accordance
with a standardized method prescribed by rules of the SEC. The average annual
total return for a specific period is determined by assuming a hypothetical
$1,000 investment in the Fund's shares on the first day of the period at the
then-effective net asset value per share ("initial investment"), and computing
the ending redeemable value ("redeemable value") of that investment at the end
of the period. The redeemable value is then divided by the initial investment,
and this quotient is taken to the Nth root (N representing the number of years
in the period) and 1 is subtracted from the result, which is then expressed as a
percentage. The calculation assumes that all income and capital gains dividends
by the Funds have been reinvested at net asset value on the reinvestment dates
during the period.
Average annual total return figures for the Growth Fund for the one-,
five-, and ten-year periods ended March 31, 1999 are 6.37%, 16.99%, and 14.42%,
respectively, and from the date the Growth Fund commenced operations through
March 31, 1999 (a 183-month period) the average annual total return is 13.58%.
Average annual total return figures for the Income Fund for the one- and five-
year periods ended March 31, 1999 are 4.74% and 6.62%, respectively, and from
the date the Income Fund commenced operations through March 31, 1999 (a 76-month
period) the average annual total return is 6.62%.
The calculation of the Fund's total return is not subject to a standardized
formula. Total return performance for a specific period is calculated by first
taking an investment (assumed to be $1,000) in the Fund's shares on the first
day of the period at the then-effective net asset value per share ("initial
investment") and computing the ending redeemable value ("redeemable value") of
that investment at the end of the period. The total return percentage is then
determined by subtracting the initial investment from the redeemable value and
dividing the difference by the initial investment and expressing the result as a
percentage. This calculation assumes that all income and capital gains
distributions by the Fund have been reinvested at net asset value on the
reinvestment dates during the period. Total return may also be shown as the
increased dollar value of the hypothetical investment over the period.
Total return figures for the Growth Fund for the one-, five-, and ten-year
periods ended March 31, 1999, are 6.37%, 119.14%, and 284.72%, respectively,
and from the date the Growth Fund commenced operations through March 31, 1999 (a
183-month period), the total return is 597.14%. Total return figures for the
Income Fund for the one-and five-year periods ended March 31, 1999, are 4.74%
and 37.76%, respectively, and from the time the Income Fund commenced operations
through March 31, 1999 (a 76-month period) is 50.04%.
The yield for each particular Fund is computed in accordance with certain
standardized accounting practices specified by SEC rules. These practices are
not necessarily consistent with those that the Funds use to prepare their annual
and interim financial statements in accordance with generally accepted
accounting principles. The Growth Fund's yield based upon the one-month period
ended March 31, 1999 was 0.30%. The Income Fund's yield based upon the one-
month period ended March 31, 1999 was 5.66%. Each Fund's yield is computed by
dividing the net investment
B-25
<PAGE>
income per share earned during the specific one-month or 30-day period by the
offering price per share on the last day of the period, according to the
following formula:
Yield = 2[(((a-b)/cd)+1)(6)-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the offering price per share on the last day of the period.
The Money Market Fund's yield is computed in accordance with a standard
method prescribed by rules of the SEC. Under that method, the yield quotation
is based on a seven-day period. In computing yield, the Money Market Fund's net
investment income per share (accrued interest on portfolio securities, plus or
minus amortized purchase discount or premium, less accrued expenses) is divided
by the price per share (expected to remain constant at $1.00) at the beginning
of the period ("base period return") and the result is divided by seven and
multiplied by 365, and the resulting yield figure is carried to the nearest one
hundredth of one percent.
The Money Market Fund's effective yield is determined by taking the base
period return (computed as described above) and calculating the effect of
assumed compounding. The formula for the effective yield is: [(base period
return + 1) 365/7] - 1.
Realized capital gains or losses and unrealized appreciation or
depreciation of the Money Market Fund's investments are not included in the
calculation of yield or effective yield. The Money Market Fund's yield
fluctuates, and the publication of an annualized yield quotation is not a
representation as to what an investment in the Money Market Fund will actually
yield for any given future period. Actual yields will depend not only on
changes in interest rates on money market instruments during the period in which
the investment in the Money Market Fund is held, but also on such matters as
Money Market Fund expenses.
Yield fluctuations may reflect changes in the Money Market Fund's net
income, and portfolio changes resulting from net purchases or net redemptions of
the Money Market Fund's shares may affect the yield. Accordingly, the Money
Market Fund's yield may vary from day to day, and the yield stated for a
particular past period is not necessarily representative of its future yield.
Since the Money Market Fund uses the amortized cost method of net asset value
computation, it does not anticipate any change in yield resulting from any
unrealized gains or losses or unrealized appreciation or depreciation not
reflected in the yield computation, or change in net asset value during the
period used for computing yield. If any of these conditions should occur, yield
quotations would be suspended. The Money Market Fund's yield is not guaranteed,
and its principal is not insured. Although the Money Market Fund uses its best
efforts to maintain its net asset value at $1.00 per share, there can be no
assurance that it will be able to do so.
A particular Fund's performance quotations are based upon historical
results, and are not necessarily representative of future performance. The
particular Fund's shares are sold at net asset value, and performance figures
and net asset value will fluctuate. Factors affecting the Trust's performance
include general market conditions, operating expenses and investment management.
Shares of each particular Fund are redeemable at net asset value, which may be
more or less than original cost.
Independent Auditors
The Trust's independent auditors are Ernst & Young LLP, 233 South Wacker
Drive, Chicago, Illinois 60606, who audit and report on the Trust's annual
financial statements, review certain regulatory reports and the Trust's federal
income tax return, and perform other professional accounting, auditing, tax and
advisory services when engaged to do so by the Trust. The selection of
independent auditors is subject to ratification by the Trust's shareholders,
should a meeting of shareholders be held.
B-26
<PAGE>
Custodian and Transfer and Dividend Paying Agent
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, acts as Custodian for the Trust's assets and as the Trust's
Transfer and Dividend Paying Agent.
The Custodian is responsible for holding all securities and cash of the
Trust, receiving and paying for securities purchased, receiving payment for and
delivering securities sold upon payment therefor, receiving and collecting
income from investments, making all payments covering expenses of the Trust, and
performing other administrative duties, all as directed by authorized persons.
The Custodian does not exercise any supervisory function in such matters as
purchase and sale of portfolio securities, payment of dividends, or payment of
expenses of the Trust. The Trust has authorized the Custodian to deposit
certain portfolio securities in central depository systems as permitted under
federal law. The Trust may invest in obligations of the Custodian and may
purchase or sell securities from or to the Custodian.
Legal Counsel
The law firm of Vedder, Price, Kaufman & Kammholz, Chicago, Illinois, acts
as legal counsel for the Trust. The law firm of Bell, Boyd & Lloyd, Chicago,
Illinois, acts as special counsel to the Outside Trustees.
Reports to Shareholders
Shareholders will receive annual audited financial statements and semi-
annual unaudited financial statements. To reduce expenses, only one copy of
most Reports may be mailed to all accounts with the same social security or
taxpayer identification number or to all shareholders in the same household.
Shareholders may call or write Wayne Hummer to request that copies of reports be
mailed to each account with a common taxpayer number or to two or more
shareholders in the same household.
B-27
<PAGE>
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER AND BOND RATINGS
Description of Moody's Investors Service, Inc.'s two highest bond ratings:
AAA--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group, they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities, fluctuation of
protective elements may be of greater amplitude, or there may be other elements
present which make the long-term risks appear somewhat greater than in Aaa
securities.
Description of Standard & Poor's Corporation's two highest bond ratings:
AAA--Bonds rated AAA are highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Marketwise they
move with interest rates, and hence provide the maximum safety on all counts.
AA--Bonds rated AA also qualify as high-grade obligations and, in the
majority of instances, differ from AAA issues only in a small degree. Here,
too, prices move with the long-term money market.
Description of Moody's Investors Service, Inc.'s three highest commercial paper
ratings:
Among the factors considered by Moody's Investors Service, Inc. in
assigning commercial paper ratings are the following: (1) evaluation of the
management of the issuer; (2) economic evaluation of the issuer's industry or
industries and an appraisal of the risks which may be inherent in certain areas;
(3) evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
Relative differences in strength and weakness in respect to these criteria would
establish a rating in one of three classifications: Prime-1; Prime-2; or
Prime-3.
Description of Standard & Poor's Corporation's three highest commercial paper
ratings:
Commercial paper rated "A" by Standard & Poor's Corporation has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long-term senior debt is generally rated "A" or better. The
issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry. The reliability and quality
of management are unquestioned. Relative strength or weakness of the above
factors determine whether the issuer's commercial paper is rated A-1, A-2 or
A-3.
A-1
<PAGE>
WAYNE HUMMER INVESTMENT TRUST
PART C
OTHER INFORMATION
<TABLE>
<CAPTION>
Item 23. Exhibits
<S> <C>
(a) (1) Agreement and Declaration of Trust dated September 29, 1983/(1)/
(2) Written Instrument Amending The Agreement and Declaration of Trust dated
December 16, 1983/(1)/
(3) Written Instrument Amending The Agreement and Declaration of Trust dated
July 19, 1988/(1)/
(4) Written Instrument Amending The Agreement and Declaration of Trust dated
November 24, 1992/(1)/
(5) Written Instrument Amending The Agreement and Declaration of Trust dated
________________ ___, 1999/**/
(b) (1) Amended and Restated By-Laws/(1)/
(2) Written Instrument Amending By-laws dated January 23, 1999/*/
(c) Not Applicable
(d) (1) Investment Advisory and Management Agreement dated April 29, 1988/(1)/
(2) Amendment to Investment Advisory and Management Agreement dated
November 24, 1992/(1)/
(3) Amendment to Investment Advisory and Management Agreement dated
January 23, 1999/*/
(4) Amendment to Investment Advisory and Management Agreement dated
May 7, 1999/*/
(5) Form of Expense Limitation Agreement/*/
(e) (1) Distribution and Shareholder Service Agreement/(1)/
(2) Distribution Agreement dated August 1, 1988/(1)/
(3) Acknowledgment and Consent of Assignment/(2)/
(4) Amended and Restated Distribution Agreement dated January 23, 1999/*/
(5) Letter Agreement Relating to Distribution Agreement dated May 7, 1999/*/
(f) Not Applicable
(g) (1) Custodian Agreement/(1)/
(2) Amendments to Custodian Agreement dated October 1987/(1)/
(3) Amendments to Custodian Agreement dated June 1988/(1)/
(4) Amendment to Custodian Agreement dated November 24, 1992/(1)/
(5) Amendment to Custodian Agreement dated January 23, 1999/*/
(6) Amendment to Custodian Agreement dated May 9, 1999/*/
(h) (1) (i) Transfer and Dividend Paying Agency Agreement/(1)/
(ii) Amendment to Transfer and Dividend Paying Agency Agreement
dated November 24, 1992/(1)/
(iii) Amendment to Transfer and Dividend Paying Agency Agreement
dated January 23, 1999/*/
(iv) Amendment to Transfer and Dividend Paying Agency Agreement
dated May 7, 1999/*/
(2) (i) Trade Name and Service Mark License Agreement/(1)/
(ii) Amended and Restated Trade Name and Service Mark Agreement
dated January 23, 1999/*/
(iii) Letter Agreement Relating to Amended and Restated Trade Name
and Service Mark Agreement dated January 23, 1999/*/
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(3) Shareholder Service Agreement dated August 1, 1988/(1)/
(4) (i) Portfolio Accounting Services Agreement/(1)/
(ii) Amendment to Portfolio Accounting Services Agreement dated
January 23, 1999/*/
(iii) Amended and Restated Portfolio Accounting Services Agreement
dated May 7, 1999/*/
(i) (1) Opinion and Consent of Vedder, Price, Kaufman & Kammholz with respect
to the Wayne Hummer Growth Fund and the Wayne Hummer Income Fund/(3)/
(2) Opinion and Consent of Vedder, Price, Kaufman & Kammholz with respect to
the Wayne Hummer Money Market Fund and the Wayne Hummer
CorePortfolio Fund/**/
(j) Consent of Ernst & Young LLP/**/
(k) Not Applicable
(l) (1) Investment Letter from Wayne Hummer Management Company to the
Registrant/(1)/
(2) Subscription Agreement for the Wayne Hummer Money Market Fund/*/
(3) Subscription Agreement for the Wayne Hummer CorePortfolio Fund/**/
(m) Not Applicable
(n) Financial Data Schedules/**/
(o) Not Applicable
(p) Powers of Attorney
(1) Joel D. Gingiss/*/
(2) Patrick B. Long/*/
(3) Eustace K. Shaw/*/
(4) Charles V. Doherty/*/
(5) James J. Riebandt/*/
</TABLE>
/(1)/ Previously filed with Post-Effective Amendment No. 15 on or about July 27,
1995.
/(2)/ Previously filed with Post-Effective Amendment No. 16 on May 31, 1996.
/(3)/ Previously filed with Post-Effective Amendment No.__ on ________.
/*/ Filed herewith.
/**/ To be filed by amendment.
Item 24. Persons Controlled by or under Common Control with Registrant
Not Applicable
Item 25. Indemnification
The information required by this item is incorporated herein by
reference to Item 4 of Part II of Pre-effective Amendment No. 1 to the Form N-1
Registration Statement for Wayne Hummer Growth Trust (renamed Wayne Hummer
Investment Trust), File No. 2-87153, filed on or about December 29, 1983.
Item 26. Business and Other Connections of Investment Adviser
Wayne Hummer Management Company, Registrant's investment adviser and
portfolio accounting agent, is a corporation organized under the laws of
Illinois on November 30, 1981. Wayne Hummer Management Company acted as
investment adviser and portfolio accounting agent to Wayne Hummer Money Fund
Trust, a registered investment company that was reorganized as a series of
Registrant in May 1999, and as investment adviser to other institutional,
corporate, fiduciary, and individual accounts. Set forth below is information
as to any
<PAGE>
other business, vocation, or employment of a substantial nature in which each
director or officer of the Registrant's investment adviser is, or at any time
during the past two fiscal years has been, engaged for his own account or in the
capacity of director, officer, employee, partner, or trustee:
<TABLE>
<CAPTION>
Name and Affiliation with Principal Business Capacity
Wayne Hummer Investments LLC ------------------ --------
- ----------------------------
<S> <C> <C>
Harry Flagg Baum, Director Wayne Hummer Investments Voting Member
L.L.C., securities brokerage firm
Steven R. Becker, Director Wayne Hummer Investments Voting Member
L.L.C., securities brokerage firm
Wayne Hummer Money Fund Trustee
Trust
Registrant Trustee
G. Ted Becker, Treasurer Wayne Hummer Investments Voting Member
L.L.C., securities brokerage firm
[Philip M. Burno, Director Wayne Hummer Investments Voting Member
L.L.C., securities brokerage firm
Wayne Hummer Money Fund Former Chairman of the Board of
Trust Trustee
Registrant Former Chairman of the Board of
Trustees]
Philip Wayne Hummer, Chairman Wayne Hummer Investments, Voting Member
and Director L.L.C., securities brokerage firm
David P. Poitras, Vice President Wayne Hummer Investments Voting Member
L.L.C., securities brokerage firm
Wayne Hummer Money Fund
Trust, registered investment Former President
company
Registrant Vice President
William A. Rogers, Secretary and Wayne Hummer Investments Voting Member
Director L.L.C., securities brokerage firm
Thomas J. Rowland, President Wayne Hummer Investments Voting Member
L.L.C., securities brokerage firm
Mark H. Dierkes, Vice President Wayne Hummer Investments Employee
L.L.C., securities brokerage firm
Damaris E. Martinez, Vice President Wayne Hummer Investments Employee
L.L.C., securities brokerage firm
</TABLE>
The principal business address of each company or other entity named
above is 300 South Wacker Drive, Chicago, Illinois 60606.
Item 27. Principal Underwriters
<PAGE>
(a) Not Applicable
(b) The members of Wayne Hummer are:
Positions and Offices Positions and Offices
Name with Wayne Hummer with Registrant
- ---- --------------------- ----------------------
William B. Hummer Voting Member None
Philip Wayne Hummer Voting Member None
Harry Flagg Baum Voting Member None
William A. Rogers Voting Member None
Philip M. Burno Voting Member Former Chairman of the
Board of Trustees
Joseph A. Piekarczyk Voting Member None
G. Ted Becker Voting Member None
Steven R. Becker Voting Member Trustee
W. Douglas Carroll Voting Member None
Richard J. Kosarek Voting Member None
Raymond L. Kratzer Voting Member None
Jean E. Williams Voting Member None
George E. Barnes Family Trust Class C Member None
Thomas J. Rowland Voting Member President
Linda C. Becker Voting Member None
Laura A. Kogut Voting Member None
David A. Poitras Voting Member Vice President
Richard Wholey, Jr. Voting Member None
Peder H. Culver Voting Member None
Daniel G. Hack Voting Member None
Ronald A. Tyrpin Voting Member None
Floyd E. Siegel Voting Member None
Larry H. Weisz Voting Member None
Scott ___. Park Voting Member None
The principal business address of each Member listed above is 300 South
Wacker Drive, Chicago, Illinois 60606. George E. Barnes, grantor of the George
E. Barnes Family Trust, was a founding partner of Wayne Hummer & Co., was a
General Partner until April 1, 1986, and had been a limited partner from April
1986 through
<PAGE>
April 1996. Mr. Barnes, whose address is 46-730 Amir Drive, Palm Desert,
California 92260, was formerly a Trustee of Registrant.
(c) Not Applicable
Item 28. Location of Accounts and Records
All accounts, books, and other documents required to be maintained pursuant
to Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are in the physical possession of Registrant's investment adviser,
Wayne Hummer Management Company; Registrant's distributor and shareholder
service agent, Wayne Hummer; and Registrant's transfer and dividend paying agent
and custodian, State Street Bank and Trust Company. The address of Wayne Hummer
Management Company and of Wayne Hummer is 300 South Wacker Drive, Chicago,
Illinois 60606. The address of State Street Bank and Trust Company is 225
Franklin Street, Boston, Massachusetts 02110.
Item 29. Management Services
Not Applicable
Item 30. Undertakings
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Fund has duly caused this Post-Effective Amendment to its
Registration Statement to be signed on its behalf by the undersigned, duly
authorized, in the City of Chicago and State of Illinois on the 23rd day of
January, 1999.
WAYNE HUMMER INVESTMENT TRUST
By: /s/ Thomas J. Rowland
-------------------------------------------
Thomas J. Rowland, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below on
January 23, 1999 by the following persons in the capacities indicated.
Signature Title
- --------- -----
/s/ Thomas J. Rowland President (Principal Executive Officer)
- --------------------------
Thomas J. Rowland
/s/ Jean M. Maurice Treasurer (Principal Financial and
- -------------------------- Accounting Officer)
Jean M. Maurice
/s/ Steven R. Becker Trustee
- --------------------------
Steven R. Becker
/s/ Philip M. Burno Trustee
- --------------------------
Philip M. Burno
/s/ Joel D. Gingiss Trustee
- --------------------------
Joel D. Gingiss
/s/ Patrick B. Long Trustee
- --------------------------
Patrick B. Long
/s/ Eustace K. Shaw Trustee
- --------------------------
Eustace K. Shaw
/s/ Charles V. Doherty Trustee
- --------------------------
Charles V. Doherty
<PAGE>
EXHIBIT INDEX
-------------
(b) (2) Written Instrument Amending By-laws dated January 23, 1999
(d) (3) Amendment to Investment Advisory and Management Agreement dated
January 23, 1999
(4) Amendment to Investment Advisory and Management Agreement dated
May 7, 1999
(5) Form of Expense Limitation Agreement
(e) (4) Amended and Restated Distribution Agreement dated January 23,
1999
(5) Letter Agreement Relating to Distribution Agreement dated May 7,
1999
(g) (5) Amendment to Custodian Agreement dated January 23, 1999
(6) Amendment to Custodian Agreement dated May 7, 1999
(h) (1) (iii) Amendment to Transfer and Dividend Paying Agency
Agreement dated January 23, 1999
(iv) Amendment to Transfer and Dividend Paying Agency
Agreement dated May 7, 1999
(2) (ii) Amended and Restated Trade Name and Service Mark
Agreement dated January 23, 1999
(iii) Letter Agreement Relating to Amended and Restated Trade
Name and Service Mark Agreement dated January 23, 1999
(4) (ii) Amendment to Portfolio Accounting Services Agreement
dated January 23, 1999
(l) (2) Subscription Agreement for the Wayne Hummer Money Market Fund
(p) (1) Power of Attorney for Joel D. Gingiss
(2) Power of Attorney for Patrick B. Long
(3) Power of Attorney for Eustace K. Shaw
(4) Power of Attorney for Charles V. Doherty
(5) Power of Attorney for James J. Riebandt
<PAGE>
Exhibit (b)(2)
WAYNE HUMMER INVESTMENT TRUST
WRITTEN INSTRUMENT AMENDING
BY-LAWS
The undersigned, being at least a majority of the Board of Trustees of
Wayne Hummer Investment Trust, a business trust organized under the laws of the
Commonwealth of Massachusetts (the "Trust"), pursuant to Section 12 of the By-
Laws of the Trust (Amended and Restated as of December 1, 1992) (the "By-Laws")
do hereby further amend the By-Laws as follows:
1. Section 8 of the By-Laws is deleted in its entirety and a new Section
8 is substituted in its place to read as follows:
Section 8. Record Date
The Trustees may fix in advance, a time, which shall not be more than
75 days before the date of any meeting of shareholders or the date for the
payment of any dividend or making of any other distribution to
shareholders, as the record date for determining the shareholders having
the right to notice and to vote at such meeting and any adjournment thereof
or the right to receive such dividend or distribution, and in such case
only shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date.
2. This Amendment shall become effective as of January 23, 1999.
* * * * * *
<PAGE>
IN WITNESS WHEREOF, the undersigned have this 23rd day of January, 1999
signed these presents.
/s/ Steven R. Becker
--------------------
Steven R. Becker
/s/ Philip M. Burno
-------------------
Philip M. Burno
/s/ Joel D. Gingiss
-------------------
Joel D. Gingiss
/s/ Charles V. Doherty
----------------------
Charles V. Doherty
/s/ Patrick B. Long
-------------------
Patrick B. Long
/s/ Eustace K. Shaw
-------------------
Eustace K. Shaw
2
<PAGE>
Exhibit (d)(3)
AMENDMENT TO
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
--------------------------------------------
AMENDMENT made as of this 23rd day of January, 1999, by and between WAYNE
HUMMER MANAGEMENT COMPANY ("Adviser") and WAYNE HUMMER INVESTMENT TRUST (the
"Fund").
WITNESSETH THAT:
---------------
WHEREAS, the Adviser and the Fund are parties to an Investment Advisory and
Management Agreement dated April 29, 1988 and amended November 24, 1992 (the
"Agreement") which governs the terms and conditions under which the Adviser
provides investment advisory and management services to the Fund:
NOW THEREFORE, the Adviser and the Fund hereby amend the terms of the
Investment Advisory and Management Agreement and mutually agree to the
following:
1. The third WHEREAS clause shall be replaced with the following new
third WHEREAS clause:
"WHEREAS, the Fund currently offers Shares in three (3) portfolios,
the Growth Portfolio, the Income Portfolio and the Money Market
Portfolio (hereinafter referred to, together with any other portfolios
of the Fund which may be established later and served by the Adviser
hereunder, collectively as the "Portfolios" and individually as a
"Portfolio"); and
2. Section 2. Subsequent Appointments of Adviser shall be amended as
follows: the words "Initial Portfolio" in the third line of the first
sentence shall be replaced with the words "current Portfolios."
3. Section 6. Compensation shall be replaced with the following new
Section 6:
"Compensation. Subject to the provisions of paragraph 7 of this
Agreement, each Portfolio will pay to the Adviser for the services
provided and the expenses assumed by the Adviser pursuant to the
Agreement, as full compensation therefor, a fee based
<PAGE>
on average daily net assets of each Portfolio, computed and accrued
daily and paid monthly at the following annual rates:
(a) For the Growth Portfolio:
.80 of 1% of the first $100 million of average daily net assets;
plus
.65 of 1% of the next $150 million of average daily net assets;
plus
.50 of 1% of the average daily net assets in excess of $250
million.
(b) For the Income Portfolio:
.50 of 1% of the first $250 million of average daily net assets;
plus
.30 of 1% of the average daily net assets in excess of $250
million.
(c) For the Money Market Portfolio:
Portion of Average Daily Net Assets
of Money Market Fund Portfolio Fee
------------------------------------ ---
Up to $500 million 0.50%
In excess of $500 million but
not exceeding $750 million 0.425%
In excess of $750 million but
not exceeding $1 billion 0.375%
In excess of $1 billion but
not exceeding $1.5 billion 0.350%
In excess of $1.5 billion but
not exceeding $2 billion 0.325%
In excess of $2 billion but
not exceeding $2.5 billion 0.300%
2
<PAGE>
In excess of $2.50 billion 0.275%
In addition to the compensation provided above, each Portfolio
shall reimburse the Adviser on a monthly basis for those expenses
which each Portfolio has agreed to bear pursuant to the provisions of
paragraph 4 of this Agreement, which expenses may from time to time be
incurred by the Adviser for the benefit of each Portfolio in the
performance of the Adviser's duties pursuant to paragraph 3
hereunder."
4. Except as specifically amended herein, the Agreement shall remain in
full force and effect. This Amendment shall not limit the rights of
the parties to the Agreement and the parties hereto acknowledge the
binding effect of the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
WAYNE HUMMER INVESTMENT TRUST
ATTEST
/s/ Jean M. Maurice By /s/ David P. Poitras
- ---------------------------------------------- -----------------------------
WAYNE HUMMER MANAGEMENT
ATTEST COMPANY
/s/ Jean M. Maurice By /s/ Thomas J. Rowland
- ---------------------------------------------- -----------------------------
3
<PAGE>
Exhibit (d) (4)
AMENDMENT TO
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
--------------------------------------------
AGREEMENT made as of this 7th day of May, 1999, by and between WAYNE HUMMER
MANAGEMENT COMPANY ("Adviser") and WAYNE HUMMER INVESTMENT TRUST (the "Fund").
WITNESSETH THAT:
----------------
WHEREAS, the Adviser and the Fund are parties to an Investment Advisory and
Management Agreement dated April 29, 1988 and amended November 24, 1992 and
January 23, 1999 (the "Agreement") which governs the terms and conditions under
which the Adviser provides investment advisory and management services to the
Fund:
NOW THEREFORE, the Adviser and the Fund hereby amend the terms of the
Agreement and mutually agree to the following:
1. The third WHEREAS clause shall be replaced with the following new
third WHEREAS clause:
"WHEREAS, the Fund currently offers Shares in four (4) portfolios, the
Wayne Hummer Growth Fund portfolio, the Wayne Hummer Income Fund
portfolio, the Wayne Hummer Money Market Fund portfolio and the Wayne
Hummer CorePortfolio Fund portfolio (hereinafter referred to, together
with any other portfolios of the Fund which may be established later
and served by the Adviser hereunder, collectively as the "Portfolios"
and individually as a "Portfolio"); and
2. Section 2. Subsequent Appointments of Adviser shall be amended as
follows: the words "Initial Portfolio" in the third line of the first
sentence shall be replaced with the words "current Portfolios."
3. Section 6. Compensation shall be replaced with the following new
Section 6:
"Compensation. Subject to the provisions of paragraph 7 of this
Agreement, each Portfolio will pay to the Adviser for the services
provided and the expenses assumed by the Adviser pursuant to the
Agreement, as full compensation therefor, a fee based
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on average daily net assets of each Portfolio, computed and accrued
daily and paid monthly at the following annual rates:
(1) For the Growth Portfolio:
.80 of 1% of the first $100 million of average daily net assets;
plus
.65 of 1% of the next $150 million of average daily net assets;
plus
.50 of 1% of the average daily net assets in excess of $250
million.
(2) For the Income Portfolio:
.50 of 1% of the first $250 million of average daily net assets;
plus
.30 of 1% of the average daily net assets in excess of $250
million.
(3) For the Money Market Portfolio:
Portion of Average Daily Net Assets
of Money Market Fund Portfolio Fee
----------------------------------- ------
Up to $500 million 0.50%
In excess of $500 million but not exceeding $750 million 0.425%
In excess of $750 million but not exceeding $1 billion 0.375%
In excess of $1 billion but not exceeding $1.5 billion 0.350%
In excess of $1.5 billion but not exceeding $2 billion 0.325%
In excess of $2 billion but not exceeding $2.5 billion 0.300%
In excess of $2.50 billion 0.275%
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(4) For the CorePortfolio Portfolio, .40% of average daily assets.
In addition to the compensation provided above, each Portfolio shall
reimburse the Adviser on a monthly basis for those expenses which each Portfolio
has agreed to bear pursuant to the provisions of paragraph 4 of this Agreement,
which expenses may from time to time be incurred by the Adviser for the benefit
of each Portfolio in the performance of the Adviser's duties pursuant to
paragraph 3 hereunder."
4. Section 7. Expense Limitation shall be replaced with the following
new Section 7:
"7. Expense Limitation. In the event the operating expenses of a
particular Portfolio of the Fund, including all investment advisory
and administrative fees with respect to such portfolio, for any fiscal
year (pro rated appropriately in the event that the first fiscal year
of such Portfolio is for less than 12 calendar months) ending on a
date of which this Agreement is in effect exceed either (i) the
expense limitations applicable to such Portfolio imposed by the
securities laws or regulations thereunder of any state in which the
Fund's Shares are qualified for sale, as such limitations may be
raised or lowered from time to time, or (ii) (a) 1.5% of the
Portfolio's average daily net assets in the case of the Growth
Portfolio and the Income Portfolio, (b) 1% in the case of the Money
Market Portfolio, and (c) .75 of 1% in the case of the CorePortfolio
Portfolio, the Adviser shall reduce its investment advisory fee to the
extent of its share of such excess expenses and, if required, pursuant
to any such laws or regulations, will reimburse the Portfolio for its
share of annual operating expenses (as appropriately pro rated) in
excess of any expense limitation that may be applicable; provided,
however, there shall be excluded from such expenses the amount of any
interest, taxes, brokerage commission, and extraordinary expenses
(including, but not limited to, legal claims and liability and
litigation costs and any indemnification related thereto) paid or
payable by the Fund and allocable to such Portfolio. Such reduction,
if any, shall be computed and accrued daily, shall be settled on a
monthly basis and shall be based upon the expense limitation
applicable to the Portfolio as of the end of the last business day of
the month. Should two or more such expense limitations be applicable
as of the end of the last business day of the month, the expense
limitation which results in the larger reduction in the Adviser's fees
shall be applicable."
5. Except as specifically amended herein, the Agreement shall remain in
full force and effect. This Amendment shall not limit the rights of
the parties to the Agreement and the parties hereto acknowledge the
binding effect of the Agreement.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
WAYNE HUMMER INVESTMENT TRUST
ATTEST
By
- -------------------------------- -----------------------------
WAYNE HUMMER MANAGEMENT COMPANY
ATTEST
By
- -------------------------------- -----------------------------
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Exhibit (d) (5)
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of May 7, 1999 by and between
Wayne Hummer Management Company, an Illinois corporation (the "Adviser") and
Wayne Hummer Investment Trust (the "Trust"), on behalf of the Wayne Hummer
CorePortfolio Fund series of the Trust (the "Fund").
WHEREAS, the Trust is a Massachusetts business trust, and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management company of the series type, and the Fund is a series of the
Trust; and
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory
and Management Agreement, most recently amended on May 7, 1999 ("Advisory
Agreement"), pursuant to which the Adviser provides investment management
services to the Fund for compensation based on the value of the average daily
net assets of the Fund; and
WHEREAS, the Trust and the Adviser have determined that it is appropriate
and in the best interests of the Fund and its shareholders to maintain the
expenses of the Fund at a level below the level to which the Fund may otherwise
be subject; and
WHEREAS, the Adviser has agreed to pay, on behalf of the Trust, the
organizational expenses of the Fund up to the amount of Fifteen Thousand Dollars
($15,000) ("Organizational Expenses"), which expenses the Trust has agreed to
repay to the Adviser so long as such repayment does not unduly increase the
expenses of the Fund;
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
------------------
1.1 Applicable Expense Limit. To the extent that the ordinary operating
expenses incurred by the Fund in any fiscal year, including but not limited to
investment advisory fees of the Adviser, but excluding interest, taxes,
brokerage commissions, other investment-related costs and extraordinary
expenses, such as litigation and other expenses not incurred in the ordinary
course of the Fund's business ("Fund Operating Expenses"), exceed the Operating
Expense Limit, as defined in Section 1.2 below, such excess amount (the "Excess
Amount") shall be the liability of the Adviser to the extent set forth in this
Agreement.
1.2 Operating Expense Limit. The Operating Expense Limit in any year with
respect to the Fund shall be 0.75% of the average daily net assets of the Fund.
1.3 Duration of Operating Expense Limit. The Operating Expense Limit with
respect to the Fund shall remain in effect during the term of this Agreement.
<PAGE>
1.4 Method of Computation. To determine the Adviser's obligation with
respect to the Excess Amount, each day the Fund Operating Expenses for the Fund
shall be annualized. If the annualized Fund Operating Expenses for any day of
the Fund exceed the Operating Expense Limit of the Fund, the Adviser shall waive
or reduce its investment advisory fee, in an amount sufficient to pay that day's
Excess Amount. The Trust may offset amounts owed to the Fund pursuant to this
Agreement against the advisory fee payable to the Adviser. Furthermore, to the
extent that the Excess Amount exceeds such waived or reduced investment advisory
fees, the Adviser shall, if required pursuant to the securities laws or
regulations of any state in which the Fund's shares are qualified for sale, or
may, voluntarily, reimburse the Fund for any operating expenses.
1.5 Year-End Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the investment advisory fees
waived or reduced and other payments remitted by the Adviser to the Fund with
respect to the previous fiscal year shall equal the Excess Amount.
1.6 Organizational Expenses. The Adviser shall pay the Organizational
Expenses of the Fund, up to the amount of fifteen thousand dollars ($15,000).
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
-------------------------------------------------------
2.1 Reimbursement. If on any day during which the Advisory Agreement is in
effect, the estimated annualized Fund Operating Expenses of the Fund for that
day are less than the Operating Expense Limit, the Adviser shall be entitled to
reimbursement by the Fund of the investment advisory fees waived or reduced, the
Organizational Expenses, and any other expense reimbursements or similar
payments remitted by the Adviser to the Fund pursuant to Section 1 hereof (the
"Reimbursement Amount") during any of the previous five (5) years, to the extent
that the Fund's annualized Operating Expenses plus the amount so reimbursed
equals, for such day, the Operating Expense Limit, provided that such amount
paid to the Adviser will in no event exceed the total Reimbursement Amount and
will not include any amounts previously reimbursed.
2.2 Year-End Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses of a Fund for
the prior fiscal year (including any reimbursement payments hereunder with
respect to such fiscal year) do not exceed the Operating Expense Limit.
3. TERM AND TERMINATION OF AGREEMENT.
---------------------------------
This Agreement may be terminated by the Trust or, after August 1, 2003, by
the Investment Manager, without payment of any penalty, upon sixty (60) days'
prior written notice to the Trust at its principal place of business. In any
event, the Agreement shall terminate upon the termination of the Advisory
Agreement. The obligation of the Adviser under Section 1.5 of this Agreement and
of the Trust under Section 2 of this Agreement shall survive the termination of
the Agreement solely as to expenses and obligations incurred prior to the date
of such termination.
4. MISCELLANEOUS.
-------------
2
<PAGE>
4.1 Captions. The captions in this Agreement are included for convenience
of reference only and in no other way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
4.2 Interpretation. Nothing herein contained shall be deemed to require
the Trust or the Funds to take any action contrary to the Trust's Declaration of
Trust or By-Laws, or any applicable statutory or regulatory requirement to which
it is subject or by which it is bound, or to relieve or deprive the Trust's
Board of Trustees of its responsibility for and control of the conduct of the
affairs of the Trust or the Fund.
4.3 Definitions. Any question of interpretation of any term or provision
of this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation of expenses, having a
counterpart in or otherwise derived from the terms and provisions of the
Management Agreement or the 1940 Act, shall have the same meaning as and be
resolved by reference to such Management Agreement or the 1940 Act.
4.4 Amendments. This Agreement may be amended only by a written agreement
signed by each of the parties hereto.
4.5 Limitation of Liability. This Agreement is executed by or on behalf of
the Trust, and Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Agreement and Declaration of Trust, as
amended, of the Trust and agrees that the obligations assumed by the Trust
pursuant to this Agreement shall be limited in all cases to the Trust and its
assets, and Adviser shall not seek satisfaction of any such obligations from the
Trustees, Officers or shareholders of the Trust.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
WAYNE HUMMER INVESTMENT TRUST
ON BEHALF OF ITS
WAYNE HUMMER COREPORTFOLIO FUND
By:
-------------------------------
Name:
Title:
WAYNE HUMMER MANAGEMENT COMPANY
By:
-------------------------------
Name:
Title:
3
<PAGE>
Exhibit (e)(4)
AMENDED AND RESTATED
WAYNE HUMMER INVESTMENT TRUST
DISTRIBUTION AGREEMENT
This AMENDED AND RESTATED DISTRIBUTION AGREEMENT (the "Agreement") made as
of this 23rd day of January, 1999 between WAYNE HUMMER INVESTMENT TRUST, a
Massachusetts business trust (the "Trust"), and WAYNE HUMMER INVESTMENTS L.L.C.,
a Delaware limited liability company (the "Distributor");
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is an open-end, diversified, management investment
company registered under the Investment Company Act of 1940 (the "1940 Act"),
the units of beneficial interest ("Shares") of which are registered under the
Securities Act of 1933 (the "1933 Act"); and
WHEREAS, the Trust is authorized to issue Shares in one or more separate
series with each such series representing the interests in a separate portfolio
of securities and other assets (each series, a "Portfolio" and all such series
together with any other series hereinafter created, the "Portfolios");
WHEREAS, the Trust currently offers Shares in two Portfolios, the Wayne
Hummer Growth Fund Portfolio and the Wayne Hummer Income Fund Portfolio and,
commencing on June 1, 1999, will offer Shares in a third Portfolio, the Wayne
Hummer Money Market Fund Portfolio;
WHEREAS, the Trust and the Distributor entered into a Distribution
Agreement dated August 1, 1988 (the "Original Agreement") and now wish to amend
and restate the Original Agreement; and
WHEREAS, the Trust desires to continue to retain the Distributor as the
principal distributor for Shares of the Portfolios and the Distributor is
willing to continue to act in such capacity;
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. The Trust hereby appoints the Distributor as its exclusive agent for
the distribution of its Shares of beneficial interest. Such Shares may be
distributed by the Distributor in any state or jurisdiction where they may be
legally offered.
2. The Distributor hereby accepts such appointment and agrees that it
will use its best efforts to sell the Shares. The Distributor may offer Shares
through one or more of its subsidiaries that are licensed to sell Shares, and
through registered representatives of selected broker-dealer firms
<PAGE>
which are members of the National Association of Securities Dealers, Inc. and
which have entered into selling agreements with the Distributor (the "Firms").
3. The Trust agrees to execute such documents and to furnish such
information as may be reasonably necessary to register or qualify the Shares for
sale in the states or jurisdictions which the Distributor may reasonably request
(it being understood that the Trust shall not be required without its consent to
qualify to do business in any jurisdiction or to comply with any requirement
which in its opinion is unduly burdensome).
4. The Trust, on behalf of its Portfolios, will pay or cause to be paid:
(a) expenses of any registration or qualification of the Shares for sale under
the federal securities laws and the securities laws of any state or other
jurisdiction in which the Shares shall be sold; (b) the expenses of any reports
or acts required by law in connection with such registration or qualification;
and (c) the expenses incidental to the issuance of the Shares, such as issue
taxes, and fees of the transfer agent. In addition, the Trust, on behalf of its
Portfolios, will pay or cause to be paid, expenses incurred in connection with
the preparation, printing and distribution of any report or communication to
Shareholders in their capacity as such.
5. The Distributor will pay all expenses related to its registration or
qualification as a broker-dealer under federal, state or other applicable law
and, except as set forth in Section 4 above, all expenses related to the
distribution of the Shares other than: (a) expenses which a Portfolio of the
Trust may bear pursuant to any "Distribution Plan and Agreement" Pursuant to
Rule 12b-1 under the 1940 Act between the Distributor and the Trust; (b)
expenses which one or more of the Firms may bear pursuant to any agreements
between such Firms and the Distributor; or (c) costs which are reimbursable
under any other agreement in effect from time to time between the Trust and the
Distributor, including the Shareholder Service Agreement dated July 1, 1988 as
from time to time amended.
6. Shares of any Portfolio offered for sale or sold by the Distributor
shall be so offered or sold at a price per share determined in accordance with
the then current Prospectus relating to the sale of such Shares except as
departure from such prices shall be permitted by the rules and regulations of
the Securities and Exchange Commission ("SEC"); provided, however, that any
public offering price for the Shares shall be the net asset value per Share plus
a sales charge in the amount, if any, set forth in the then current Prospectus
of the Trust relating to such Shares. The net asset value per Share shall be
determined in the manner and at the times set forth in the then current
Prospectus of the Trust relating to such Shares.
The price the Trust shall receive for all Shares purchased from it shall be
the net asset value used in determining the public offering price applicable to
the sale of such Shares. The excess, if any, of the sales price over the net
asset value of the Shares sold by the Distributor as agent shall be retained by
the Distributor as a commission for its services hereunder. The Distributor may
allow discounts, commissions, fees or other concessions to Firms, and may allow
them to others in its discretion, in such amounts as the Distributor shall
determine from time to time. Except as may be
2
<PAGE>
otherwise determined by the Distributor and the Trust from time to time as
provided in the then current Prospectus, such discounts, commissions, fees or
other concessions shall be uniform to all Firms.
The Distributor will require each Firm to conform to the provisions hereof
and the Registration Statement (and related Prospectus) at the time in effect
with respect to the public offering price of the Shares, and neither the
Distributor nor any such Firms shall withhold the placing of purchase orders so
as to make a profit thereby.
7. (a) The Trust agrees, as long as the Shares of any Portfolio may
legally be issued, to fill all orders confirmed by the Distributor in accordance
with the provisions of this Agreement. However, the Trust reserves the right to
suspend or withdraw the offering of Shares of any Portfolio of the Trust at any
time in its absolute discretion, subject to applicable laws, rules and
regulations.
(b) The Distributor shall order Shares from the Trust only to the
extent that it shall have received purchase orders therefor. The Distributor
will not make, or authorize any Firms or others to make, any short sales of the
Shares.
(c) The Distributor, as agent of and for the account of the Trust,
may repurchase Shares at such prices and upon such terms and conditions as shall
be specified in the current Prospectus of the Trust.
(d) The Distributor shall comply with all applicable laws, rules and
regulations, and with the Trust's Declaration of Trust, Bylaws and Registration
Statement insofar as any of the foregoing relate to its activities hereunder.
(e) The Trust and the Distributor shall agree upon procedures
relating to the sale of Shares, payment therefor, delivery of confirmations and
other related matters.
8. Notwithstanding the Distributor's appointment as exclusive agent for
distribution of the Shares, the Trust in its absolute discretion may: (a) issue
Shares in connection with the acquisition of assets or shares or securities of
another trust, corporation or entity, or in connection with a merger or
consolidation with any other trust, corporation or entity, as and to the extent
permitted by the Declaration of Trust and any applicable laws; (b) issue or sell
Shares directly to the shareholders of its Portfolios upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; or (c) issue or
sell Shares at net asset value to the shareholders of any other investment
company, for which the Distributor shall act as a distributor, who wish to
exchange all or a portion of their investment in shares of such other investment
company for Shares of any Portfolio of the Trust.
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<PAGE>
9. (a) The Trust agrees to file from time to time such registration
statements and amendments thereto as may be required under the federal
securities laws or by the rules and regulations of the SEC thereunder. Any such
registration statement, as from time to time amended, relating to the Trust,
which may be declared effective by the SEC, is herein referred to as the
"Registration Statement," and any prospectus and statement of additional
information relating to the Trust as a part of the Registration Statement are
referred to as the "Prospectus" and "SAI," respectively.
(b) The Trust will furnish to the Distributor from time to time its
current Prospectus, SAI and such other information with respect to the Trust,
its Portfolios or its Shares as the Distributor may reasonably request for use
in connection with the sale of the Shares.
(c) The Trust authorizes the Distributor in connection with the sale
or arranging for the sale of the Shares to give only such information and to
make only such statements or representations as are contained in the Trust's
current Prospectus or SAI or in sales literature or advertisements furnished or
approved by the Trust. The Trust shall not be responsible in any way for any
other information, statements or representations given or made by the
Distributor, its employees, agents or representatives, or any of the selected
broker-dealer firms which have entered into selling agreements with the
Distributor.
10. (a) The Trust agrees to indemnify and hold harmless the Distributor,
and any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act, against any and all losses, claims, damages and liabilities
(including reasonable legal and other expenses of defending any actions) arising
out of: (i) any untrue or alleged untrue statement of a material fact contained
in its Registration Statement, Prospectus, SAI or in any sales literature or
advertisements furnished or approved by the Trust, and utilized by the
Distributor; or (ii) any omission or alleged omission to state in the foregoing
documents the material facts required to be stated or necessary to make the
statements therein not misleading, unless such untrue or alleged untrue
statement or omission or alleged omission of fact was made in conformity with
information given to the Trust by the Distributor specifically for use in such
documents.
(b) The Distributor agrees to indemnify and hold harmless the Trust
and any person who controls the Trust within the meaning of Section 15 of the
1933 Act and each officer and Trustee of the Trust to the same extent and in the
same manner as the Trust has agreed to indemnify the Distributor as outlined in
the preceding paragraph, but only with respect to information given to the Trust
by the Distributor specifically for use in the Trust's Registration Statement,
Prospectus, SAI, sales literature or advertising. The Distributor also agrees to
indemnify and hold harmless the Trust against any and all losses, claims,
damages and liabilities (including reasonable legal and other expenses of
defending any actions) arising out of or based upon any acts or deeds of the
Distributor (including any employee, agent or sales representative of the
Distributor) which are outside the scope of the Distributor's authority pursuant
to this Agreement.
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<PAGE>
(c) The indemnity agreements in this Section 10 shall remain
operative and in full force and effect regardless of the expiration or
termination of this Agreement but only with respect to statements made,
omissions or actions occurring prior to such expiration or termination.
(d) Nothing contained herein shall relieve either party of any
liability to the other or to the Trust's shareholders to which they would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence, in the performance of their duties or by reason of their reckless
disregard of their obligations and duties under this Agreement.
11. This Agreement shall remain in full force and effect until July 31,
2000. It may be continued thereafter from year to year provided that such
continuance is specifically approved at least annually in a manner consistent
with the 1940 Act.
12. (a) Either party may terminate this Agreement with respect to any or
all Portfolios of the Trust at any time, without the payment of any penalty, on
not less than 30 days written notice to the other party. The Trust's decision to
terminate this Agreement may be reached by vote of a majority of the Board of
Trustees, including a majority of the Trustees who are not "interested persons"
of the Trust, as that term is defined by the 1940 Act, or by vote of a "majority
of the outstanding voting securities" of the affected Portfolios, as that term
is defined by the 1940 Act. In addition, without prejudice to any other remedies
of the Trust, the Trust may terminate this Agreement with respect to any or all
Portfolios of the Trust at any time in its absolute discretion immediately upon
any failure by the Distributor to fulfill its obligations hereunder.
(b) Termination of this Agreement with respect to any Portfolio shall
in no way affect the continued validity of this Agreement or the performance
thereunder with respect to any other Portfolios.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
13. (a) This Agreement may be amended by mutual consent of the parties.
(b) Where the effect of a requirement of the 1940 Act, which is
reflected in any provision of this Agreement, is relaxed by a rule, regulation,
order or change of interpretive position by the SEC, whether of special or
general application, such provision shall be deemed to incorporate the effect of
such rule, regulation, order or change of interpretive position.
14. Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed postpaid, to the other party at the principal office of
such party. Until further notice to the other party, it is agreed that the
address of both the Trust and the Distributor is 300 S. Wacker Drive, Chicago,
Illinois 60606.
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<PAGE>
15. Nothing contained in this Agreement shall prevent the Distributor, or
any affiliated person of the Distributor, from rendering distribution services
to other investment companies; acting as distributor to other persons, firms or
corporations; or engaging in other business activities.
16. The Trustees of the Trust and the shareholders of each Portfolio shall
not be liable for any obligations of the Trust or any Portfolio under this
Agreement, and the Distributor or any other person, in asserting rights or
claims under this Agreement, shall look only to the assets and property of the
Trust or such Portfolio in settlement of such right or claim, and not to such
Trustees or shareholders.
17. This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, except that the provisions of Paragraph 16
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Trust and the Distributor have executed this
Agreement in the City of Chicago, Illinois on the date set forth above.
Attest: WAYNE HUMMER INVESTMENT TRUST
/s/ Jean M. Maurice By: /s/ Thomas J. Rowland
- --------------------- ------------------------
Secretary Its President
Attest: WAYNE HUMMER INVESTMENTS L.L.C.
/s/ W. A. Rogers By: /s/ Raymond L.Kratzer
- ------------------ -----------------------
Secretary Its Chief Executive Officer
6
<PAGE>
Exhibit (e) (5)
May 7, 1999
Wayne Hummer Investments L.L.C.
300 South Wacker Drive
Chicago, Illinois 60606
Ladies and Gentlemen:
This is to advise you that Wayne Hummer Investment Trust (the "Fund") has
established a new series of shares to be known as Wayne Hummer CorePortfolio
Fund (the "New Series"). In accordance with the contemplation of adding
portfolios in the third WHEREAS clause of the Amended and Restated Distribution
Agreement dated January 23, 1999 and the third WHEREAS clause of the Shareholder
Service Agreement dated August 1, 1998 between the Fund and Wayne Hummer
Investments L.L.C., the Fund hereby requests that you act as Distributor and
Shareholder Service Agent for the New Series under the terms of the respective
contracts.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one to the Fund and retaining one copy for your
records.
WAYNE HUMMER INVESTMENT TRUST
By: /s/ Philip M. Burno
-------------------------
Philip M. Burno, Chairman
Agreed to this 7th day of May, 1999.
WAYNE HUMMER INVESTMENTS L.L.C.May 6, 1999
By: /s/ Raymond L. Kratzer
--------------------------------
Chief Executive Officer
<PAGE>
Exhibit (g)(5)
AMENDMENT TO CUSTODIAN AGREEMENT
--------------------------------
AMENDMENT made as of this 23rd day of January, 1999, by and between STATE
STREET BANK AND TRUST COMPANY ("Custodian") and WAYNE HUMMER INVESTMENT TRUST
(the "Fund").
WITNESSETH THAT:
----------------
WHEREAS, the Custodian and the Fund are parties to a Custodian Agreement
dated December 15, 1983 (as amended to date, the "Agreement") which governs the
terms and conditions under which the Custodian maintains custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Agreement and mutually agree to the following:
1. Section 1. Appointment of Custodian and Property to be Held by It
shall be replaced with the following new Section 1:
"Section 1. Appointment of Custodian and Property to be Held by
It The Fund hereby appoints the Custodian as custodian of the Fund's
assets and the Custodian hereby accepts such appointment all subject
to and in accordance with the provisions hereof. The Custodian hereby
acknowledges that the Fund intends to issue units of beneficial
interest ("Shares") in three series designated as the Growth
Portfolio, the Income Portfolio and the Money Market Portfolio and
that the Fund may issue Shares in additional or different series from
time to time. The Custodian hereby agrees that all such series
(individually a "Portfolio" and collectively the "Portfolios") shall
be subject to this Agreement. The Fund agrees to deliver to the
Custodian all securities and cash owned by it from time to time, all
payments of income and payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from
time to time, and the cash consideration received by the Fund for the
issuance and sale of its Shares from time to time. The Custodian shall
not be responsible for any property of the Fund held or received by
the Fund and not delivered to the Custodian."
2. The compensation of the Custodian shall be adjusted as detailed on the
Schedule
<PAGE>
attached to this Amendment to the Agreement.
3. This Amendment shall become effective as of the date that the Money
Market Portfolio first has shareholders as a result of a public offering of
its shares (on or about June 1, 1999).
4. Except as specifically amended herein, the Agreement (as previously
amended) shall remain in full force and effect. This Amendment shall not limit
the rights of the parties to the Agreement and the parties hereto acknowledge
the effect of the Agreement.
* * *
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST WAYNE HUMMER INVESTMENT TRUST
____________________________ By _____________________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
____________________________ By _____________________________________________
Assistant Secretary Vice President
2
<PAGE>
Exhibit (g) (6)
AMENDMENT TO CUSTODIAN AGREEMENT
--------------------------------
AMENDMENT made as of this 7th day of May, 1999, by and between STATE STREET
BANK AND TRUST COMPANY ("Custodian") and WAYNE HUMMER INVESTMENT TRUST (the
"Fund").
WITNESSETH THAT:
---------------
WHEREAS, the Custodian and the Fund are parties to a Custodian Agreement
dated December 15, 1983, as amended to date, (the "Agreement") which governs the
terms and conditions under which the Custodian maintains custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Agreement and mutually agree to the following:
1. Section 1. Appointment of Custodian and Property to be Held by It
shall be replaced with the following new Section 1:
"Section 1. Appointment of Custodian and Property to be Held by
It The Fund hereby appoints the Custodian as custodian of the Fund's
assets and the Custodian hereby accepts such appointment all subject
to and in accordance with the provisions hereof. The Custodian hereby
acknowledges that the Fund intends to issue units of beneficial
interest ("Shares") in four (4) series designated as the Wayne Hummer
Growth Fund portfolio, the Wayne Hummer Income Fund portfolio, the
Wayne Hummer Money Market Fund portfolio and the Wayne Hummer
CorePortfolio Fund portfolio, and that the Fund may issue Shares in
additional or different series from time to time. The Custodian hereby
agrees that all such series (individually a "Portfolio" and
collectively the "Portfolios") shall be subject to this Agreement. The
Fund agrees to deliver to the Custodian all securities and cash owned
by it from time to time, all payments of income and payments of
principal or capital distributions received by it with respect to all
securities owned by the Fund from time to time, and the cash
consideration received by the Fund for the issuance and sale of its
<PAGE>
Shares from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not
delivered to the Custodian."
2. The compensation of the Custodian shall be adjusted as detailed on the
Schedule attached to this Amendment to the Agreement.
3. This Amendment shall become effective as of the date that the Wayne
Hummer Money Market Fund portfolio and/or the Wayne Hummer CorePortfolio Fund
Portfolio first has shareholders as a result of a public offering of its or
their shares (on or about July 31, 1999).
4. Except as specifically amended herein, the Agreement (as previously
amended) shall remain in full force and effect. This Amendment shall not limit
the rights of the parties to the Agreement and the parties hereto acknowledge
the binding effect of the Agreement.
* * *
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST WAYNE HUMMER INVESTMENT TRUST
- ----------------------- By____________________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
- ----------------------- By___________________________________________
Assistant Secretary Vice President
2
<PAGE>
Exhibit (h)(1)(iii)
AMENDMENT TO THE TRANSFER AND
-----------------------------
DIVIDEND PAYING AGENCY AGREEMENT
--------------------------------
AMENDMENT made as of this 23rd day of January, 1999, by and between STATE STREET
BANK AND TRUST COMPANY ("State Street") and WAYNE HUMMER INVESTMENT TRUST (the
"Fund").
WITNESSETH THAT:
----------------
WHEREAS, State Street and the Fund are parties to a Transfer and Dividend
Paying Agency Agreement dated December 15, 1983 (the "Agreement") which governs
the terms and conditions under which State Street acts as agent for the Fund in
connection with the issue, redemption and transfer of shares of the Fund and
processes certain distributions of the Fund, including but not limited to
dividends of the Fund;
NOW THEREFORE, State Street and the Fund hereby amend the terms of the
Agreement and mutually agree to the following:
1. Paragraph 1, subparagraph (d) is hereby amended and restated in its
entirety as follows:
"Portfolios" shall hereinafter mean collectively the series of shares of
the Fund designated from time to time by the Board of Trustees of the Fund
(as of the date of this Amendment three (3) series of the Fund's Shares
have been designated, the "Growth Portfolio", the "Income Portfolio" and
the "Money Market Portfolio").
<PAGE>
2. Paragraph 4 is hereby amended and restated in its entirety as follows:
4. Authorized Shares. The Fund certifies to State Street that, as of
the close of business on the date of this Amendment, the Fund is authorized
to issue an unlimited number of Shares in its Growth Portfolio, its Income
Portfolio and its Money Market Portfolio.
3. The compensation of State Street shall be adjusted as detailed on the
Schedule attached to this Amendment to the Agreement.
4. This Amendment shall become effective as of the date that the Money
Market Portfolio first has shareholders as a result of a public offering of its
shares (on or about June 1, 1999). Except as specifically amended herein, the
Agreement shall remain in full force and effect. This Amendment shall not limit
the rights of the parties to the Agreement and the parties hereto acknowledge
the binding effect of the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
WAYNE HUMMER INVESTMENT TRUST
ATTEST
By By
--------------------------------- ---------------------------------
STATE STREET BANK AND TRUST COMPANY
ATTEST
By
- ----------------------------------- ---------------------------------
Assistant Secretary Vice President
2
<PAGE>
- --------------------------------------------------------------------------------
National Financial Data Services, Inc.
Fee information For Services As Plan, Transfer & Dividend Disbursing Agent For
State Street Bank & Trust Co.
The Wayne Hummer Funds
- --------------------------------------------------------------------------------
Effective From January 1, 1999 Through December 1, 1999
- --------------------------------------------------------------------------------
Account Maintenance Fees
- ------------------------
Wayne Hummer Money Fund Trust $9.50 Per Year*
Wayne Hummer Growth Fund $7.85 Per Year*
Wayne Hummer Income Fund $7.85 Per Year*
Future Income/Equity Fund(s) $7.85 Per Year*
A monthly minimum account maintenance fee applies for each fund/cusip at the
following rates:
Wayne Hummer Money Fund Trust $2,500
Wayne Hummer Growth Fund $2,600
Wayne Hummer Income Fund $1,750
Future Income/Equity Fund(s) $1,750
Out-Of-Pocket Expenses
- ----------------------
Out-Of-Pocket expenses include but are not limited to: mailing expenses
(statements, stationary, checks, certificates, sales literature, printing,
postage, etc.), automated telephone servicing charges, custom programming,
telecommunication expenses, equipment/software expenses (client-site only),
microfiche, freight and all other expenses incurred on the fund's behalf. Due to
the pass-through nature of Out-Of-Pocket expenses, all charges are subject to
change.
*Fees are billed monthly at 1/12 of the annual rate.
The Wayne Hummer Funds National Financial Data Services, Inc.
By: /s/ Jean M. Maurice By: /s/
-------------------- ----------------------
Title: Treasurer Title: SR VP & COO
---------------- -------------------
Date: 1/26/99 Date: 1/22/99
---------------- -------------------
<PAGE>
Exhibit (h) (1) (iv)
AMENDMENT TO THE TRANSFER AND
-----------------------------
DIVIDEND PAYING AGENCY AGREEMENT
--------------------------------
AMENDMENT made as of this 7th day of May, 1999, by and between STATE STREET
BANK AND TRUST COMPANY ("State Street") and WAYNE HUMMER INVESTMENT TRUST (the
"Fund").
WITNESSETH THAT:
----------------
WHEREAS, State Street and the Fund are parties to a Transfer and Dividend
Paying Agency Agreement dated December 15, 1983 as from time to time amended
(the "Agreement"), which governs the terms and conditions under which State
Street acts as agent for the Fund in connection with the issue, redemption and
transfer of shares of the Fund and processes certain distributions of the Fund,
including but not limited to dividends of the Fund;
NOW THEREFORE, State Street and the Fund hereby amend the terms of the
Agreement and mutually agree to the following:
1. Paragraph 1, subparagraph (d) is hereby amended and restated in its
entirety as follows:
"Portfolios" shall hereinafter mean collectively the series of
shares of the Fund designated from time to time by the Board of
Trustees of the Fund (as of the date of this Amendment four (4) series
of the Fund's Shares have been designated, the "Wayne Hummer Growth
Fund" portfolio, the "Wayne Hummer Income Fund" portfolio, the "Wayne
Hummer Money Market Fund" portfolio, and the "Wayne Hummer
CorePortfolio Fund" portfolio).
2. Paragraph 4 is hereby amended and restated in its entirety as follows:
4. Authorized Shares. The Fund certifies to State Street that,
as of the close of business on the date of effectiveness of this
Amendment, the Fund is authorized to issue an unlimited number of
Shares in its Wayne Hummer Growth Fund Portfolio, its Wayne Hummer
Income Fund portfolio, its Wayne Hummer Money Market Fund portfolio
and its Wayne Hummer CorePortfolio Fund portfolio.
<PAGE>
3. The compensation of State Street shall be adjusted as detailed on the
Schedule attached to this Amendment to the Agreement.
4. This Amendment shall become effective as of the date that the Wayne
Hummer Money Market Fund portfolio and/or the Wayne Hummer CorePortfolio
Fund portfolio first has shareholders as a result of a public offering
of its or their shares (on or about July 31, 1999). Except as
specifically amended herein, the Agreement shall remain in full force
and effect. This Amendment shall not limit the rights of the parties to
the Agreement and the parties hereto acknowledge the binding effect of
the Agreement.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
WAYNE HUMMER INVESTMENT
TRUST
ATTEST
By By
----------------------------- ------------------------------
STATE STREET BANK AND TRUST
COMPANY
ATTEST
By
- ------------------------------- ------------------------------
Assistant Secretary Vice President
2
<PAGE>
Exhibit (h)(2)(ii)
AMENDED AND RESTATED
TRADE NAME
AND
SERVICE MARK LICENSE AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (the "Agreement") made this 23rd day of
January, 1999, by and between Wayne Hummer Management Company, an Illinois
Corporation, having its principal office and place of business at 300 South
Wacker Drive, Chicago, Illinois 60604, hereinafter for convenience referred to
as "Adviser," and Wayne Hummer Investment Trust, a Massachusetts business trust
having its principal office and place of business at 300 South Wacker Drive,
Chicago, Illinois 60604, hereinafter for convenience referred to as "Fund."
WHEREAS, Adviser has obtained a license together with the right sublicense
the trade name and service mark "Wayne Hummer" and the stylized logo "WH" for
financial and investment services and organizations, by mesne license from Wayne
Hummer Investments L.L.C., a Delaware limited liability company, hereinafter
referred to as "Owner"; and
WHEREAS, Fund desires the right to use said trade name and service mark for
the described businesses and services;
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration by each of the parties to the other in hand paid, the
receipt of which is hereby acknowledged, and of the following mutual promises,
covenants and undertakings, the parties hereto have agreed and do hereby agree
as follows:
1. Adviser hereby grants to Fund and each series thereof a non-exclusive,
royalty-free right and license to use (a) the trade name and service mark "Wayne
Hummer," and (b) the stylized
<PAGE>
logo "WH," hereinafter collectively referred to as the "Licensed Name and Mark,"
for financial and investment business and services, hereinafter referred to as
the "Licensed Businesses and Services," in the territory consisting of the
United States of America, its territories and dependencies, hereinafter referred
to as the "Licensed Territory."
2. The nature and quality of the Licensed Businesses and Services in
connection with which the Licensed Name and Mark may be used, including but not
limited to the manner of use by Fund, shall have the approval of Adviser.
3. Upon execution of this Agreement and from time to time thereafter,
Adviser and/or Owner will furnish Fund with written standards of quality for the
Licensed Businesses and Services; and Fund agrees to meet the standards of
quality so established. Owner shall be the sole judge of whether or not Fund has
met or is meeting the standards of quality so established.
4. Adviser and Owner shall each have the right to inspect the premises of
Fund where the Licensed Businesses and Services are being conducted and offered,
at reasonable intervals and during regular business hours in order to determine
that said written standards of quality are being met.
5. Fund shall obtain the written approval of Adviser with respect to all
signs, brochures, bulletins, promotional materials, advertising or the like
bearing the Licensed Name and Mark prior to the use thereof; and such approval
of Adviser shall not be unreasonably withheld. For the term of this Agreement,
Fund shall not use a name or mark identical with or confusingly similar to the
Licensed Name and Mark except as permitted by the license hereof.
6. Fund shall have the right to terminate this Agreement at any time upon
thirty (30) days' written notice to Adviser.
2
<PAGE>
7. In the event that Fund shall substantially breach any of the terms of
this Agreement, Adviser shall have the right to terminate the license granted
hereunder by ninety (90) days' written notice to Fund specifying the breach
complained of, provided that, if during such ninety (90) day period Fund shall
correct the breach, then this license shall continue as if no notice had been
given.
8. Adviser shall have the right to terminate this Agreement immediately
in the event of the bankruptcy of Fund, or upon the appointment of a receiver
for the assets of Fund, or in the event Fund shall make an assignment for the
benefit of creditors, or in the event that Adviser shall cease to act as the
investment adviser to the Fund, or in the event that Owner shall cease to act as
the distributor and shareholder service agent for the Fund.
9. Fund agrees: (a) that nothing contained in this Agreement shall give
Fund any right, title or interest in the Licensed Name and Mark, except the
right to use the Licensed Name and Mark in accordance with the terms of this
Agreement; (b) that the Licensed Name and Mark is the sole property of Owner;
and (c) that any and all uses of the Licensed Name and Mark by Fund shall inure
to the benefit of Owner.
10. Fund agrees not to raise or to cause to be raised any questions
concerning or objections to the validity of the Licensed Name and Mark or any
registrations thereof or to the right of Owner thereto, on any grounds
whatsoever.
11. In the event of cancellation or termination of this Agreement in
accordance with Paragraphs 6, 7 or 8 hereof, Fund shall thereupon cease to use
and shall never again use the Licensed Name and Mark and to deliver to Adviser,
free of any charge to adviser, all signs, brochures, bulletins, promotional
materials, advertising or the like bearing the Licensed Name and Mark that are
then in the possession of Fund.
3
<PAGE>
12. In the event of cancellation or termination in accordance with the
provisions of Paragraphs 6, 7 or 8 hereof, Fund's obligations and agreements set
forth in Paragraphs 9, 10 and 11 hereof shall remain in full force and effect.
13. Fund agrees to notify Adviser of any adverse use in the Licensed
Territory of a name or names or a mark or marks confusingly similar to the
Licensed Name and Mark and agrees to take no action of any kind with respect
thereto except by the express written authorization of Adviser and concurrence
by Owner; and Owner agrees to protect Fund against any unauthorized use, in the
Licensed Territory, of the Licensed Name and Mark, or any name or mark
confusingly similar thereto, to the extent that Owner, upon being given notice
of activities deemed to constitute an infringement of the Licensed Name and Mark
and upon concurring in the determination that such activities constitute
infringement, which concurrence shall not be unreasonably withheld, shall file
suit or resolve the matter within ninety (90) days of such notification. In any
suit brought by Owner for infringement of the Licensed Name and Mark, Fund shall
have the right to be represented by counsel of its own selection and at its own
expense.
14. The license herein granted shall not be assignable or transferable in
any manner whatsoever nor shall Fund have the right to grant any sublicenses.
15. This Agreement embodies the entire understanding of the parties and
supersedes any prior understanding or agreement entered into by the parties
either written or oral. No variation or modification of this Agreement or waiver
of the terms or provisions hereof shall be operative or valid unless in writing
and signed by both parties.
16. All notices, disclosures and other communications hereunder shall be
in writing and shall be deemed to be duly given if delivered or mailed by
certified mail addressed to the parties as
4
<PAGE>
indicated hereinabove or to such other address as either of the parties may
furnish to the other in writing.
17. This Agreement is executed by or on behalf of the Fund and the Adviser
is hereby expressly put on notice of the limitation of Shareholder liability as
set forth in the Fund's Agreement and Declaration of Trust filed with the
Secretary of the Commonwealth of Massachusetts and agrees that the obligations
assumed by the Fund pursuant to this Agreement shall be limited in all cases to
the Fund and its assets, and the Adviser shall not seek satisfaction of any such
obligations from the Shareholders or any Shareholder of the Fund. In addition,
the Adviser shall not seek satisfaction of any such obligations from the
Trustees or Officers of the Fund or any individual Trustee or Officer.
18. This Agreement shall be construed in accordance with applicable
federal law and (except as to paragraph 17 hereof which shall be construed in
accordance with the laws of the Commonwealth of Massachusetts) the laws of the
State of Illinois and shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors, subject to paragraph 14
hereof.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their duly authorized representatives as of the day and
year first set forth above.
WAYNE HUMMER INVESTMENT TRUST
By: /s/ Thomas J. Rowland
---------------------
WAYNE HUMMER MANAGEMENT COMPANY
By: /s/ Thomas J. Rowland
---------------------
CONSENTED TO:
WAYNE HUMMER INVESTMENTS L.L.C.
By: /s/ Raymond L. Kratzer
----------------------
Date: January 23, 1999
6
<PAGE>
Exhibit (h)(2)(iii)
January 23, 1999
Wayne Hummer Management Company
Wayne Hummer Money Fund Trust
Wayne Hummer Investment Trust
300 South Wacker Drive
Chicago, Illinois 60604
Re: Amended and Restated Trade Name and Service Mark
License Agreement Dated January 23, 1999
Gentlemen:
This letter is to provide the standards of minimum quality which are
required pursuant to the subject agreement. This letter is being sent to you in
duplicate with the request that you acknowledge receipt by signing and dating
one copy of the letter and returning it to us for our files.
I. A TRADENAME is the business name which identifies your service
organization; and the following requirements are to be met under the
tradename aspect of the license;
(A) EXCLUSIVITY - Only the tradename Wayne Hummer Management
Company, Wayne Hummer Money Fund Trust, Wayne Hummer Investment
Trust, Wayne Hummer Growth Fund, Wayne Hummer Income Fund and/or
Wayne Hummer Money Market Fund, as applicable, is to be used;
and no others. It is not permitted to abbreviate, alter or
combine this tradename with other words or phrases. For example,
it is specifically not allowed by the license to use such
phrases as "Wayne Hummer Funds" or "Wayne Hummer organization."
(B) DISTINCTION - The words "Wayne Hummer" are preferably used in a
different typeface or a different color from the words "Income
Fund," "Growth Fund, etc."
(C) BUSINESS SIGNS AND CALLING CARDS - The tradename permitted in
Paragraph A hereinabove may not be used in conjunction with any
other
<PAGE>
Page 2
January 23, 1999
company name except "Wayne Hummer Investments L.L.C.," and no
other words may be used in larger or bolder typeface on the same
sign, at the same location, or on a calling card.
(D) PREMISES - A licensee shall maintain quarters in first class
downtown office space, the decor to be approved by licensor.
Management of the premises shall be the responsibility of
licensee.
II. A SERVICE MARK identifies particular financial services as
originating with a specific business organization; and the following
rules must be followed:
(A) SERVICE MARK SHOULD BE DISTINGUISHED - When it appears in
printed material, the service mark "Wayne Hummer" or the
stylized "WH" is preferably distinguished from the surrounding
copy by the use of quotation marks, or capitalization either
fully or initially, by the use of italics or other
differentiating typeface, by underline, color, or artwork.
(B) SERVICE MARK SHOULD BE USED IN ADJECTIVE SENSE - The service
mark should not be used as a noun or verb, as a nominative
possessive, in the plural, or as a descriptive adjective to
modify any words other than the common or generic name of the
service.
(C) UNIFORMITY - The service mark should never be abbreviated,
altered or combined with other words or phrases other than as
set forth in Paragraph B immediately hereinabove.
(D) NOTICE - Proper notice of federal registration shall be
uniformly employed; and until a mark has been federally
registered, the superscript notation "Wayne Hummer" may be used.
Alternately a footnote reference on each separate literature
piece shall identify the mark, at least once by the phrase, "A
service mark of Wayne Hummer Investments L.L.C."
(E) PRINTED MATTER - All office signs, promotional literature and
other printed matter which is to be distributed or displayed to
the public shall be submitted in printer's proof to licensor for
approval at least two weeks before final printing is scheduled
to commence. Licensee shall follow instructions from licensor
absolutely and without fail and with regard to correcting the
proofs.
III. The financial and management services offered by any license or sub-
licensee shall, at all times, comply with the Investment Advisers
Act of 1940, the Investment
<PAGE>
Page 3
January 23, 1999
Company Act of 1940, and Rules and Regulations promulgated under
either of such acts, and any state security law, whenever applicable.
Sincerely,
Wayne Hummer Investments L.L.C.
By: /s/ Raymond L. Kratzer
-----------------------------
Its: Chief Executive Officer
Acknowledged:
Wayne Hummer Management Company
By: /s/ Thomas J. Rowland
----------------------------------
Its: President
Dated: January 23, 1999
Wayne Hummer Money Fund Trust
By: /s/ David P. Poitras
----------------------------------
Its: President
Dated: January 23, 1999
Wayne Hummer Investment Trust for
itself and Wayne Hummer Growth Fund
Wayne Hummer Income Fund
Wayne Hummer Money Market Fund
By: /s/ Thomas J. Rowland
----------------------------------
Its: President
Dated: January 23, 1999
<PAGE>
Exhibit (h)(4)(ii)
January 23, 1999
Wayne Hummer Management Company
300 South Wacker Drive
Chicago, Illinois 60606
Ladies and Gentlemen:
This is to advise you that Wayne Hummer Investment Trust (the "Fund") has
established a new series of shares to be known as Wayne Hummer Money Market
Fund. In accordance with the contemplation of adding portfolios in the third
WHEREAS clause of the Portfolio Accounting Services Agreement dated November 1,
1994 (the "Agreement") among the Fund, Wayne Hummer Money Fund Trust and Wayne
Hummer Management Company, the Fund hereby requests that you provide portfolio
accounting services for the new series under the terms of the Agreement.
Please indicate your acceptance of the foregoing by executing two copies of
this Letter Agreement, returning one to the Fund and retaining one copy for your
records.
WAYNE HUMMER INVESTMENT TRUST
By: /s/ Philip M. Burno
---------------------------
Phillip M. Burno, Chairman
Agreed to this 23rd day of January, 1999.
WAYNE HUMMER MANAGEMENT COMPANY
By: /s/ Thomas J. Rowland
--------------------------------------
Chief Executive Officer
<PAGE>
Exhibit (l) (2)
WAYNE HUMMER INVESTMENT TRUST
MONEY MARKET FUND PORTFOLIO
Subscription Agreement
1. Share Subscription. The undersigned agrees to purchase from Wayne
Hummer Investment Trust (the "Trust") the number of shares (the "Shares") of the
Trust's Wayne Hummer Money Market portfolio (the "Money Market Fund"), without
par value, set forth at the end of this Agreement on the terms and conditions
set forth herein and in the Preliminary Prospectus ("Preliminary Prospectus")
described below, and hereby tenders the amount of the price required to purchase
these shares at a price of $1.00 per share.
The undersigned understands that the Trust has filed an amendment to
its registration statement with the Securities and Exchange Commission on Form
N-1A, which contains the Preliminary Prospectus which describes the Trust and
the Shares. By its signature hereto, the undersigned hereby acknowledges receipt
of a copy of the Preliminary Prospectus.
The undersigned recognizes that the Trust will not be fully
operational until such time as it commences the public offering of its shares.
Accordingly, a number of features of the Trust described in the Preliminary
Prospectus, including, without limitation, the declaration and payment of
dividends, and redemption of shares upon request of shareholders, are not, in
fact, in existence at the present time and will not be instituted until the
Trust's registration under the Securities Act of 1933 is made effective.
2. Representations and Warranties. The undersigned hereby represents and
warrants as follows:
(a) It is aware that no Federal or state agency has made any findings
or determination as to the fairness for investment, nor any recommendation or
endorsement, of the Shares;
(b) It has such knowledge and experience of financial and business
matters as will enable it to utilize the information made available to it in
connection with the offering of the Shares, to evaluate the merits and risks of
the prospective investment and to make an informed investment decision;
(c) It recognizes that the Money Market Fund has only recently been
organized and has no financial or operating history and, further, that
investment in the Money Market Fund involves certain risks, and it has taken
full cognizance of and understands all of the risks related to the purchase of
the Shares, and it acknowledges that it has suitable financial resources and
anticipated income to bear the economic risk of such an investment;
(d) It is purchasing the Shares for its own account, for investment,
and not with any intention of redemption, distribution, or resale of the Shares,
either in whole or in part;
<PAGE>
(e) It will not sell the Shares purchased by it without registration
of the Shares under the Securities Act of 1933 or exemption therefrom;
(f) This Agreement and the Preliminary Prospectus and such material
documents relating to the Trust's Income Fund as it has requested have been
provided to it by the Trust and have been reviewed carefully by it; and
(g) It has also had the opportunity to ask questions of, and receive
answers from, representatives of the Trust concerning the Income Fund and the
terms of the offering.
3. Reservation of Rights. The undersigned recognizes that the Trust
reserves the unrestricted right to reject or limit any subscription and to close
the offer at any time.
4. Costs of Organization. The undersigned also acknowledges that the
costs of organization of the Income Fund will be borne by the Trust and will be
amortized over a period not to exceed five years beginning with the commencement
of the public offering by the Income Fund. If, during that period of
amortization, the undersigned redeems any Shares purchased under this form of
agreement (hereinafter the "Initial Shares"), the undersigned agrees that the
undersigned will bear any unamortized portion of those costs of organization in
the same proportion as the number of Initial Shares then being redeemed bears to
the number of Initial Shares outstanding at the time of redemption.
5. Subscription. Number of shares: Ten. Subscription price $1.00 per
share for an aggregate price of $10.00.
IN WITNESS WHEREOF, the undersigned has executed this instrument this
25/th/ day of January, 1999.
WAYNE HUMMER MANAGEMENT COMPANY,
an Illinois corporation
By: /s/ Thomas J. Rowland
---------------------------
Its: President
-------------------------
2
<PAGE>
Exhibit (p)(1)
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Thomas J. Rowland, Jean W. Maurice, Steven R. Becker, or any of them,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign the Registration Statement of Wayne Hummer Investment Trust,
a Massachusetts business trust, on Form N-1A under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as all intents and purposes as he might or could do
in person, hereby ratifying and confirming all said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
DATED: January 23, 1999
/s/ Joel D. Gingiss
-------------------
Joel D. Gingiss
<PAGE>
Exhibit (p)(2)
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Thomas J. Rowland, Jean W. Maurice, Steven R. Becker, or any of them,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign the Registration Statement of Wayne Hummer Investment Trust,
a Massachusetts business trust, on Form N-1A under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as all intents and purposes as he might or could do
in person, hereby ratifying and confirming all said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
DATED: January 23, 1999
/s/ Patrick B. Long
-------------------
Patrick B. Long
<PAGE>
Exhibit (p)(3)
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Thomas J. Rowland, Jean W. Maurice, Steven R. Becker, or any of them,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign the Registration Statement of Wayne Hummer Investment Trust,
a Massachusetts business trust, on Form N-1A under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as all intents and purposes as he might or could do
in person, hereby ratifying and confirming all said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
DATED: January 23, 1999
/s/ Eustace K. Shaw
-------------------
Eustace K. Shaw
<PAGE>
Exhibit (p)(4)
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Thomas J. Rowland, Jean W. Maurice, Steven R. Becker, or any of them,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign the Registration Statement of Wayne Hummer Investment Trust,
a Massachusetts business trust, on Form N-1A under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as all intents and purposes as he might or could do
in person, hereby ratifying and confirming all said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
DATED: January 23, 1999
/s/ Charles V. Doherty
----------------------
Charles V. Doherty
<PAGE>
Exhibit (p)(5)
LIMITED POWER OF ATTORNEY
-------------------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints Thomas J. Rowland, Jean W. Maurice, Steven R. Becker, or any of them,
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities to sign the Registration Statement of Wayne Hummer Investment Trust,
a Massachusetts business trust, on Form N-1A under the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended, and any or all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully as all intents and purposes as he might or could do
in person, hereby ratifying and confirming all said attorney-in-fact and agent
may lawfully do or cause to be done by virtue hereof.
DATED: May 7, 1999
/s/ James J. Reibandt
---------------------
James J. Riebandt
