WAYNE HUMMER(R)
MONEY MARKET FUND
SEMI-ANNUAL FINANCIAL STATEMENTS
September 30, 1999 (Unaudited)
Dear Fellow Shareholder:
We are pleased to present the semi-annual financial statements of the Wayne
Hummer Money Market Fund (the "Fund") for the six-month period ended September
30, 1999. Net assets under management at the end of the period totaled
$336,080,169, a slight decrease during the first six months of the fiscal year.
Since its inception, the Fund has continued to meet its objectives of liquidity
and stability, which are the most important considerations of short-term
investing.
The seven-day current yield on the Fund's portfolio for the period ended
September 30, 1999, was 4.70%; if dividends were reinvested the effective yield
was 4.80%, an increase of about 50 basis points for this six month period. This
increase in the Fund's yield is reflective of higher market interest rates.
Since these figures represent historical data, future yields may be higher or
lower.
We continue to follow a conservative approach to portfolio management, investing
exclusively in those short-term, fixed-income securities that present the Fund
with minimal credit risk. In other words, all investments are of the highest
credit quality.
A large percentage of the Fund's portfolio is invested in commercial paper -
about 70% as of September 30, 1999. Commercial paper offers superior yields and
high-credit quality, thus the heavy portfolio weighting. We allocate the balance
of the portfolio to short-term corporate notes, U. S. government and agency
securities, and banker's acceptances.
Generally, we maintain an average portfolio maturity between 30 and 60 days,
ensuring a prudent balance of both superior liquidity and high yield. More
complete details about the portfolio are presented on the following pages.
We appreciate your continued support of the Fund and ask that you call or write
us if you have any questions about the Fund or your account.
Sincerely,
/s/ David P. Poitras
David P. Poitras
Portfolio Manager
Wayne Hummer Money Market Fund
October 22, 1999
An investment in the Fund is not a deposit or obligation of or guaranteed or
insured by the U.S. Government, any bank, the Federal Deposit Insurance
Corporation, or any other agency. There can be no assurance that the Fund will
be able to maintain a stable net asset value of $1.00 per share.
Photo of: DAVID P. POITRAS
<PAGE>
FUND OVERVIEW
THE PRIMARY OBJECTIVE OF THE WAYNE HUMMER MONEY MARKET FUND (THE "FUND") IS TO
MAXIMIZE CURRENT INCOME WHILE PRESERVING CAPITAL AND MAINTAINING LIQUIDITY. THE
FUND IS AN EXCELLENT VEHICLE FOR SHORT-TERM CASH MANAGEMENT AND FOR INVESTORS
WHO NEED STABILITY OF PRINCIPAL. THE FUND SEEKS TO MAINTAIN A STABLE $1.00 NET
ASSET VALUE PER SHARE AT ALL TIMES, ALTHOUGH THERE IS NO GUARANTEE THAT WE WILL
BE ABLE TO DO SO.
The Fund's prospectus contains detailed information about permissible
investments.
SERVICES AVAILABLE TO SHAREHOLDERS
Social Security Direct Deposit Plan
Instead of receiving a monthly check or sending it to your bank, you may use the
Wayne Hummer Money Fund Trust to directly deposit your social security benefits.
You can easily access the money you need, while the rest continues to earn
dividends. Contact your Wayne Hummer Investment Executive for complete details.
Payroll Direct Deposit Plan
You may authorize your employer to deduct a specified amount from your payroll
check to purchase additional shares of the Fund. Complete details are available
from the Fund or your Wayne Hummer Investment Executive.
Systematic Investment Plan
What better way to start early and save regularly than with a Systematic
Investment Plan. You may have subsequent purchases invested automatically each
month. Your bank can send money from your bank account to the Fund. Request an
application with full details from your Investment Executive or call the Fund
directly.
IRA or Retirement Plans
Shares of the Wayne Hummer Money Fund Trust are a suitable addition to your IRA
or pension plan. Contact your Wayne Hummer Investment Executive for complete
details on the expanded options available for retirement planning, including the
Roth IRA.
Checkwriting Privileges
After completing a request for checkwriting privileges, you may write checks in
any amount from $500 to $250,000. Your full investment in the Trust will
continue to earn dividends until your check is presented to our bank for
collection. A checkwriting authorization card will be sent to you upon request.
Internet Address: www.whummer.com
Those who enjoy using the computer to access information will find the
prospectus and current rates for the Fund, along with information on the other
Wayne Hummer Funds, on our website. Other services available through Wayne
Hummer Investments LLC are also on-line.
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30,
1999 MARCH 31,
(UNAUDITED) 1999
------------ ------------
ASSETS
Investments, at amortized cost ............. $334,488,631 $349,914,520
Cash ....................................... 249,627 149,991
Interest receivable ........................ 1,867,700 1,469,649
Prepaid expenses ........................... 112,191 52,373
Insurance deposit .......................... 18,775 18,775
------------ ------------
Total assets ........................... 336,736,924 351,605,308
LIABILITIES AND NET ASSETS
Dividends payable .......................... 471,748 404,139
Due to Wayne Hummer
Management Company ...................... 139,664 150,110
Accounts payable ........................... 45,343 77,602
------------ ------------
Total liabilities ..................... 656,755 631,851
------------ ------------
Net assets applicable to Shares
outstanding, equivalent to $1.00
per Share ............................... $336,080,169 $350,973,457
============ ============
STATEMENT OF OPERATIONS
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1999 MARCH 31,
(UNAUDITED) 1999
----------- -----------
Interest income .............................. $ 8,811,167 $17,146,469
Expenses:
Management fee ............................. 869,661 1,587,540
Transfer agent fees ........................ 83,000 170,534
Shareholder service agent fees ............. 76,000 144,044
Professional fees .......................... 69,321 69,598
Registration costs ......................... 34,165 68,061
Custodian fees ............................. 32,500 60,700
Printing costs ............................. 23,215 51,978
Trustee fees ............................... 16,000 24,800
Portfolio accounting fees .................. 12,021 25,202
Insurance costs ............................ 8,750 21,900
Other ...................................... 6,000 13,200
----------- -----------
Total expenses ........................... 1,230,633 2,237,557
----------- -----------
Net increase in net assets resulting
from operations ............................ $ 7,580,534 $14,908,912
=========== ===========
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31,
(UNAUDITED) 1999
------------- -------------
<S> <C> <C>
Operations:
Net investment income .................................................................. $ 7,580,534 $ 14,908,912
Dividends to Shareholders from net investment income ..................................... (7,580,534) (14,908,912)
Capital Share transactions (dollar amounts and number of Shares are the same):
Proceeds from Shares sold .............................................................. 420,470,215 823,747,509
Shares issued upon reinvestment of dividends ........................................... 7,302,643 14,412,717
------------- -------------
427,772,858 838,160,226
Less payments for Shares redeemed ...................................................... (442,666,146) (786,095,100)
------------- -------------
Increase (decrease) due to Capital Share transactions .................................. (14,893,288) 52,065,126
Net assets at beginning of the period .................................................... 350,973,457 298,908,331
------------- -------------
Net assets at end of the period .......................................................... $ 336,080,169 $ 350,973,457
============= =============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
SIX MONTHS
SEPTEMBER 30, 1999 YEAR ENDED MARCH 31,
(UNAUDITED) 1999 1998 1997 1996
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.................... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income................................. 0.02 0.04 0.04 0.04 0.05
Less dividends from net investment income (0.02) (0.04) (0.04) (0.04) (0.05)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.......................... $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
TOTAL RETURN............................................ 2.20% 4.82% 5.07% 4.80% 5.18%
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period ($000's)...................... 336,080 350,973 298,908 238,238 226,273
Ratio of total expenses to average net assets........... 0.71% (a) 0.71% 0.72% 0.74% 0.79%
Ratio of net investment income to average net assets.... 4.36% (a) 4.70% 4.96% 4.70% 5.04%
(a) Determined on an annualized basis.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
</TABLE>
PORTFOLIO OF INVESTMENTS
September 30, 1999
COMMERCIAL PAPER (69.8%) VALUE
- ------------------------ ---------
BANKING (8.3%)
Citicorp
5.82% - 5.85%, 01/10/00 - 01/18/00 $ 6,640,700
First Chicago Financial Corp.
5.92% - 5.97%, 01/18/00 - 01/21/00 13,017,058
J.P. Morgan & Co., Inc.
4.87% - 5.54%, 10/15/99 - 01/19/00 5,246,491
Northern Trust Corporation
5.39%, 10/21/99 2,991,167
----------
27,895,416
BUSINESS FINANCE (9.7%)
Ford Motor Credit Co.
5.25% - 5.43%, 10/04/99 - 12/31/99 11,421,597
General Electric Capital Corp.
5.35% - 5.99%, 10/12/99 - 02/08/00 11,291,379
General Motors Acceptance Corp.
5.27%, 11/10/99 7,234,203
National Rural Utilities Cooperative
Finance Corp.
5.96%, 02/18/00 2,541,861
----------
32,489,040
CHEMICALS (6.8%)
DuPont (E.I.) de Nemours & Co.
5.20% - 5.21%, 10/19/99 - 11/03/99 11,252,534
Nalco Chemical Company
5.37% - 5.39%, 10/04/99 - 10/07/99 11,626,772
----------
22,879,306
ELECTRIC AND GAS UTILITIES (10.4%)
Duke Energy Corporation
5.28% - 5.83%, 10/22/99 - 01/24/00 12,834,668
IPALCO Enterprises, Inc.
5.33% - 5.42%, 10/05/99 - 11/15/99 15,043,849
LG&E Capital Corp.
5.94%, 02/22/00 7,132,976
----------
35,011,493
ELECTRONICS (4.2%)
Avnet Inc.
5.44% - 5.48%, 10/14/99 - 10/27/99 7,122,025
Hewlett-Packard Company
5.41% - 5.42%, 10/12/99 - 12/22/99 6,978,777
----------
14,100,802
OIL AND GAS (5.0%)
Chevron Transport Corp.
5.13% - 5.35%, 10/18/99 - 12/14/99 16,971,803
PERSONAL FINANCE (3.1%)
Associates Corp. of North America
5.91%, 01/12/00 1,386,884
Associates Financial Services Co.
of Puerto Rico
5.23% - 5.53%, 10/07/99 - 12/06/99 8,956,108
----------
10,342,992
VALUE
---------
MISCELLANEOUS (22.3%)
BellSouth Telecommunications, Inc.
5.85%. 01/27/00 4,907,239
H.J. Heinz Company
5.48% - 5.49%, 01/18/00 - 01/26/00 7,867,537
Illinois Tool Works Inc.
5.38% - 5.41%, 10/26/99 - 11/16/99 14,872,053
Schering Corp.
5.37%, 10/13/99 4,991,183
Snap-On Inc.
5.46%, 11/29/99 9,912,483
Wal-Mart Stores, Inc.
5.40% - 5.41%, 11/09/99 - 11/22/99 15,403,531
Walt Disney Company
4.88% - 4.94%, 10/06/99 - 11/19/99 16,908,837
-----------
74,862,863
-----------
TOTAL COMMERCIAL PAPER 234,553,715
-----------
US GOVERNMENT & AGENCY ISSUES (13.2%)
- -------------------------------------
MORTGAGE-BACKED SECURITIES (0.4%)
Federal National Mortgage Association
5.39% - 5.40%, 11/01/99 - 04/01/00 1,533,098
----------
OTHER (12.8%)
Federal Farm Credit Banks
5.04% - 5.38%, 10/01/99 - 12/01/99 6,798,108
Federal Home Loan Banks
4.86% - 6.04%, 10/26/99 - 09/01/00 3,507,216
Federal Home Loan Banks (a)
5.41%, 10/06/99 2,000,000
Federal Home Loan Mortgage Corp.
5.47%, 01/27/00 654,920
Federal Home Loan Mortgage Corp. (a)
5.36%, 10/6/99 2,000,000
Federal National Mortgage Association
4.92% - 5.75%, 10/01/99 - 04/20/00 22,026,366
Student Loan Marketing Association (a)
5.36%, 10/05/99 4,996,964
Tennessee Valley Authority
5.06% - 5.39%, 10/01/99 830,000
Other
4.53%, 02/03/00 55,144
----------
42,868,718
----------
TOTAL U.S. GOVERNMENT & AGENCY ISSUES 44,401,816
----------
4
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
CORPORATE AND BANK NOTES (12.7%) VALUE
---------
BANKING (0.4%)
Morgan Guaranty Trust Co. of NY
4.85%, 10/08/99 $1,500,251
PERSONAL FINANCE (2.5%)
American General Finance Corp.
5.89%, 05/15/00 502,685
Associates Corp. of North America
5.17% - 5.78%, 03/30/00 - 06/15/00 2,678,323
Commercial Credit Co.
5.19%, 03/01/00 1,003,697
Norwest Financial Inc.
5.05% - 5.06%, 11/19/99 4,105,287
----------
8,289,992
BUSINESS FINANCE (3.1%)
Ford Motor Credit Co.
6.10%, 01/15/00 4,684,012
General Electric Capital Corp.
6.01%, 04/15/00 1,004,430
General Motors Acceptance Corp.
5.84%, 01/11/00 2,672,994
Pitney Bowes Credit Corp.
5.95%, 09/29/00 2,000,000
----------
10,361,436
TELECOMMUNICATIONS (1.0%)
AT&T Corporation
5.55%, 01/11/00 2,013,248
BellSouth Telecommunications, Inc.
4.96% - 5.10%, 02/01/00 1,507,229
----------
3,520,477
MISCELLANEOUS (5.7%)
Illinois Tool Works Inc.
5.49%, 03/01/00 2,002,983
McDonald's Corporation
5.61%, 12/20/99 10,016,271
Merrill Lynch & Co., Inc.
5.68%, 02/07/00 998,008
Sara Lee Corporation
5.00% - 6.15%, 11/09/99 5,015,188
Wal-Mart Stores, Inc.
5.08%, 10/01/99 1,060,000
----------
19,092,450
----------
TOTAL CORPORATE AND BANK NOTES 42,764,606
----------
BANKERS ACCEPTANCE (3.8%) VALUE
---------
Northern Trust Corporation
5.24% - 5.49%, 10/25/99 - 12/20/99 $12,768,494
-----------
TOTAL INVESTMENTS (99.5%) 334,488,631
CASH AND OTHER ASSETS,
LESS LIABILITIES (0.5%) 1,591,538
----------
NET ASSETS (100.0%) $336,080,169
============
NOTES TO PORTFOLIO OF INVESTMENTS:
(a) Short-term floating rate security. The rates shown are the current rates at
September 30, 1999. The dates shown represent the next interest rate change
date.
(b) Interest rates represent annualized yield to date of maturity.
(c) For each security, cost (for financial reporting and federal income tax
purposes) and carrying value are the same. Likewise, carrying value
approximates principal amounts.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
On July 30, 1999, the Wayne Hummer Money Fund Trust was merged into the Wayne
Hummer Money Market Fund, a separate portfolio of Wayne Hummer Investment
Trust (the "Trust") solely to change its form of legal entity. The Trust is
an open-end management company organized as a Massachusetts business trust.
The Trust consists of four investment portfolios, the Wayne Hummer
CorePortfolio Fund, the Wayne Hummer Growth Fund, the Wayne Hummer Income
Fund and the Wayne Hummer Money Market Fund, each operating as a separate
mutual fund. Presented herein are the financial statements of the Wayne
Hummer Money Market Fund (the "Fund"). The Predecessor Fund commenced
investment operations on April 2, 1982. The Fund may issue an unlimited
number of full and fractional units of beneficial interest ("Shares") without
par value. The investment objective of the Fund is to maximize current income
to the extent consistent with preservation of capital and maintenance of
liquidity.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Investments are stated at value. The Fund utilizes the amortized cost method
to determine value. In the event that a deviation of 1/2 of 1% or more exists
between a Portfolio's $1.00 per Share net asset value and the net asset value
as calculated by valuing the Portfolio securities based upon market
quotations, if available, or otherwise based upon a matrix system approved by
the Board of Trustees, or if there is any other deviation which the Fund
believes would result in a material dilution to Shareholders or purchasers,
the Board of Trustees of the Fund promptly will consider what action should
be taken.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Investment income
is recorded on the accrual basis and includes amortization of premium and
discount on investments.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles may require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. In those cases, actual results may differ from estimates.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Fund Shares are sold and redeemed on a continuous basis at net asset value.
Net asset value per Share is determined on each day the New York Stock
Exchange is open for trading as of the close of trading on the Exchange by
dividing the value of net assets (total assets less liabilities) by the total
number of Shares outstanding. Dividends are declared daily and distributed
monthly in the form of additional Shares at net asset value unless the
Shareholder elects to have dividends paid in cash, in which case they are
credited monthly to the Shareholder's brokerage account with Wayne Hummer
Investments LLC.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a Portfolio
Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"), and a Distribution Agreement and a Shareholder
Service Agreement with Wayne Hummer Investments LLC ("Distributor and
Shareholder Service Agent"). The shareholders of the Investment Adviser are
the Voting Members of the Distributor and Shareholder Service Agent. For
advisory and management services and facilities furnished, the Fund pays fees
on a declining annual basis ranging from .50 of 1% on the first $500 million
of average daily net assets to .275 of 1% of average daily net assets in
excess of $2.5 billion. The Investment Adviser is obligated to reimburse the
Fund to the extent that the Fund's ordinary operating expenses, including the
fee of the Investment Adviser, exceed 1% of average daily net assets on an
annual basis. During the period ended September 30, 1999 and the year ended
March 31, 1999, the Fund incurred management fees of $869,661 and $1,587,540,
respectively.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
For portfolio accounting services, the Fund pays the Investment Adviser a fee
based on the level of average daily net assets plus out-of-pocket expenses.
The Fund reimburses the Shareholder Service Agent for the approximate cost of
processing Fund Share transactions and maintaining Shareholder accounts.
Certain trustees of the Fund are also officers or directors of the Investment
Adviser or Voting Members of the Distributor and Shareholder Service Agent.
During the period ended September 30, 1999 and the year ended March 31, 1999,
the Fund made no direct payments to its officers and incurred trustee fees
for its unaffiliated trustees of $16,000 and $24,800, respectively.
RESULTS OF THE SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of the Shareholders was held at the offices of Wayne Hummer
Investments LLC, 300 South Wacker Drive, Chicago, Illinois on June 30, 1999.
Wayne Hummer Money Fund Trust shareholders were asked to vote on four separate
issues: to elect seven trustees, to modify or eliminate certain fundamental
investment policies, to approve the Agreement and Plan of Reorganization of the
Trust, and to approve the amended Investment Advisory and Management Agreement.
The following are the results:
1. ELECTION OF SEVEN TRUSTEES. ALL SEVEN WERE ELECTED.
FOR WITHHELD
----------- ---------
Steven R. Becker 190,261,347 3,363,502
Charles V. Doherty 190,274,350 3,350,499
Joel D. Gingiss 190,191,266 3,433,583
Patrick B. Long 190,211,243 3,413,606
David P. Poitras 190,017,792 3,607,057
James J. Riebandt 190,337,522 3,287,327
Eustace K. Shaw 190,442,734 3,182,115
2. TO APPROVE OF CHANGES TO THE TRUST'S FUNDAMENTAL INVESTMENT POLICIES. These
items were approved.
FOR AGAINST ABSTAIN
--------- --------- --------
Types of Securities 183,517,860 5,787,573 4,319,416
Diversification 182,929,255 6,525,049 4,170,545
Investment in one issuer 177,947,383 9,776,979 5,900,487
Investing for control 178,989,949 9,738,551 4,896,349
Portfolio lending 175,709,255 12,797,950 5,117,644
Other investment
companies 178,621,205 10,302,565 4,701,079
Investment in real estate
or oil interests 178,728,437 10,405,351 4,491,061
Unseasoned issuers 174,291,239 13,651,979 5,681,631
Restricted and illiquid
securities 175,245,782 12,986,232 5,392,835
Borrowing securities 175,254,912 13,370,521 4,999,416
Senior securities 181,607,888 7,275,088 4,741,873
Pledging portfolio securities 174,736,830 13,458,069 5,429,950
Securities of issuers in
which affiliates of the Trust
hold an interest 178,374,564 9,574,300 5,675,985
7
<PAGE>
RESULTS OF THE SPECIAL MEETING OF SHAREHOLDERS (CONTINUED)
3. TO APPROVE THE AGREEMENT AND PLAN OF REORGANIZATION. This item was approved.
FOR AGAINST ABSTAIN
----------- --------- ---------
183,796,463 5,390,879 4,437,507
4. TO APPROVE THE AMENDED INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT. This
item was approved.
FOR AGAINST ABSTAIN
----------- --------- ---------
182,942,505 5,608,321 5,074,023
BOARD OF TRUSTEES
Steven R. Becker
Chairman
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
David P. Poitras
James J. Riebandt
Eustace K. Shaw
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
LOGO: Wayne Hummer Investment LLC
300 South Wacker
Chicago, Illinois
60606-6607
1.800.678.0833 (toll-free)
(920) 734.1474 (local)
200 E. Washington Street
Appleton, Wisconsin
54911-5468
1.800.678.0833 (toll-free)
(920) 734.1474 (local)
www.whummer.com
8
<PAGE>
WAYNE HUMMER(R)
GROWTH FUND
SEMI-ANNUAL FINANCIAL STATEMENTS
September 30, 1999 (Unaudited)
Dear Fellow Shareholder:
This report presents the semi-annual financial statements of the Wayne Hummer
Growth Fund on September 30, 1999. The net asset value of a Fund share increased
20.0% from $30.93 on September 30, 1998 to $37.13 on September 30, 1999. If
dividends as well as distributions from capital gains were reinvested during
this period, the increase was 27.9%. During this same period the total return
for the Russell Mid-Cap Index was 19.5%. For the first half of this fiscal year
the increase on this same basis was 5.5%, compared to 1.5% for the Russell
Index.
During the first half of the current fiscal year, the Fund's Board of Trustees
declared a dividend of $.03 per share and a capital gain distribution of $1.52
payable to shareholders on April 27, and another dividend of $.02 payable on
July 26.
It's evident from the above return numbers that much of the market's progress
over the past twelve months was front-end loaded. The first half benefited from
a receding angst, as the earlier financial crises in many emerging markets gave
way to recovery and restored hope. This, together with continued strong U.S.
economic growth, allowed the market to continue apace, setting a new high as
recently as July. Market performance since then has been an entirely different
story, as most of the major market indices went into significant decline,
sufficient to label it a market correction (generally regarded to be 10% or
more). The S&P 500 declined each month of the just concluded quarter. This was
the first such string since the fall of 1990, when Iraq invaded Kuwait.
With September living up to its reputation of being the worst of months for the
stock market, and October having its own share of skeletons in the closet,
market participants seemed to settle into a gloom as they contemplated or
contrived a host of goblins intent on waking the long slumbering bear.
Haunted by the specter of Federal Reserve tightening, as fears of inflation have
again emerged from deep repose, the authorities have spooked us into maintaining
a vigilance for future rate hikes. A sharp, unexpected spike in the most
recently released Producer Price Index followed a recent glittering in the gold
market, a harbinger of domestic inflationary pressures. Stock and fixed income
participants alike were bothered by a vague sense that prices were too high.
When the bell tolled the end of the third quarter, the stock market (S&P 500)
had declined 6.3% for the period. However, consider that by the end of
September, fully 60% of stocks on the New York Stock Exchange had declined 20%
or more from their 52-week highs, with over 36% down more than 30%. For NASDAQ
stocks, the picture looked even bleaker. More than 70% of its issues were down
20% or more from their 52-week highs, with 52% down 30% or more.
The bond market, too, was experiencing its worst performance since its 1994 bear
market, and now shows a negative return for the year. To gauge the significance
of this, consider that 1994 was the single year, in the 20 years since Paul
Volker first stiffened the Federal Reserve in its battle against inflation, that
the bond market registered a negative return.
Despite market jitters, fears of an over-heated economy seem misplaced, as the
most recent estimates of second quarter GDP growth center on a relatively anemic
1.6% rate. This would be the weakest quarter in four years. And though gold has
strengthened, its price is at about where it began the year. Nor do we foresee
an impending economic recession. The market does, however, evince increasing
sensitivity to the perceived direction of interest rates. Much of this bull
market's gain has come from a dramatic expansion of price/earnings ratios,
driven by the long secular decline in interest rates. We believe that earnings
growth can continue to drive market gains, albeit at a more moderate rate than
in recent years, as the economic outlook, in our view, remains healthy.
A notable bright spot in the market, and in our Fund, continues to be the
technology sector. Despite broad weakness across its component stocks, the
performance of the NASDAQ Index itself ranked among the best
Photo of: THOMAS J. ROWLAND
<PAGE>
of the major stock market barometers for the past year. This reflects the fact
that its performance is heavily influenced by a relatively few large technology
companies that have seen their share prices rise dramatically.
Until a few years ago, our Fund had relatively little exposure to stocks in this
sector. We have made numerous references in the past to the important role that
productivity has played in the low inflation, low interest rate environment that
has characterized the current long U.S. economic expansion. Technology has been
the driver of productivity gains that have enabled this healthy economic growth
over an extended period, so far with muted inflationary pressures. Tech stocks
now represent nearly a quarter of the equity market value of the Fund, roughly
reflecting their weighting in the market generally.
Four of the Fund's ten largest holdings are technology issues. All are
associated in various capacities with the new "information age" and
communications technologies. All are integral either to the functioning and/or
functionality of the burgeoning internet and e-commerce, or to the expansion of
wireless communication. They have contributed significantly to our Fund's
performance over the past year. Qualcomm Inc., now the Fund's largest holding,
Sun Microsystems, Applied Materials and ADC Telecommunications posted gains of
689.3%, 273.4%, 207.7%, and 98.5%, respectively, during the past year.
The Fund's emphasis is identifying and making investments in promising companies
that would generally be characterized as mid-capitalization companies. Except
for ADC, each of the companies cited above has seen its market value balloon
since being acquired for the Fund, such that each now qualifies as a large cap
company. We point this out only because size alone is not a criteria for
eliminating a stock from the Fund. That determination is left to an ongoing
assessment of a company's future prospects and the appropriate valuation
associated with those prospects, or to diversification considerations.
As always, we are pleased to be a part of your long-term investment planning.
Sincerely,
/s/ Thomas J. Rowland, CFA
Thomas J. Rowland, CFA
President
Wayne Hummer Investment Trust
October 25, 1999
PERFORMANCE SUMMARY
RESULTS AT A GLANCE (WITH DIVIDENDS REINVESTED):
ANNUALIZED RETURNS FOR THE 1 YEAR 3 YEAR 5 YEAR 10 YEAR
FOLLOWING PERIODS:
WAYNE HUMMER GROWTH FUND 25.38% 18.52% 17.02% 13.21%
(assuming 2% sales charge)
WAYNE HUMMER GROWTH FUND 27.94% 19.32% 17.49% 13.44%
(at net asset value)
RUSSELL MID-CAP INDEX 19.46% 14.89% 17.46% 13.90%
S&P 500 INDEX 27.79% 25.08% 25.02% 16.80%
NOTE: The Russell Mid-Cap and the S&P 500 are unmanaged and all returns include
reinvested dividends. Past performance does not guarantee future results.
Actual investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost.
2
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
SEPTEMBER 30, YEAR ENDED
1999 MARCH 31,
(UNAUDITED) 1999
------------ ------------
<S> <C> <C>
ASSETS
Investments, at value (Cost: $72,514,546 and $68,616,554, respectively) .................. $141,534,788 $139,310,996
Cash ..................................................................................... 23,943 47,212
Dividends receivable ..................................................................... 117,550 126,050
Prepaid expenses ......................................................................... 87,211 32,628
Insurance deposit ........................................................................ 3,846 3,846
Receivable for Fund Shares sold .......................................................... 4,040 111,500
------------ ------------
Total assets ......................................................................... 141,771,378 139,632,232
LIABILITIES AND NET ASSETS
Due to Wayne Hummer Management Company ................................................... 89,024 90,992
Accounts payable ......................................................................... 23,399 47,546
------------ ------------
Total liabilities .................................................................... 112,423 138,538
------------ ------------
Net assets applicable to 3,814,888 and 3,804,922 Shares outstanding,
no par value, equivalent to $37.13 and $36.66 per Share, respectively .................. $141,658,955 $139,493,694
============ ============
ANALYSIS OF NET ASSETS
Paid-in capital .......................................................................... $ 63,183,388 $ 62,948,383
Net unrealized appreciation of investments ............................................... 69,020,242 70,694,442
Undistributed net realized gain on sales of investments .................................. 9,435,502 5,763,961
Undistributed net investment income ...................................................... 19,823 86,908
------------ ------------
Net assets applicable to Shares outstanding .............................................. $141,658,955 $139,493,694
============ ============
THE PRICING OF SHARES
Net asset value and redemption price per Share ($141,658,955 / 3,814,888
Shares outstanding and $139,493,694 / 3,804,922 Shares
outstanding, respectively) ............................................................. $ 37.13 $ 36.66
Maximum offering price per Share (net asset value, plus 2.02% of
net asset value or 2% of offering price)* .............................................. $ 37.89 N/A
============ ============
*Sales charge of 2% was effective August 1, 1999 for new accounts.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31,
(UNAUDITED) 1999
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................................... $ 761,697 $ 1,641,249
Interest ....................................................................... 68,535 188,094
----------- -----------
Total investment income ...................................................... 830,232 1,829,343
EXPENSES:
Management fee ................................................................. 555,249 1,030,442
Professional fees .............................................................. 47,730 60,581
Transfer agent fees ............................................................ 26,451 49,056
Printing costs ................................................................. 17,665 31,293
Trustee fees ................................................................... 13,500 23,300
Custodian fees ................................................................. 11,800 23,300
Portfolio accounting fees ...................................................... 10,809 20,728
Registration costs ............................................................. 5,200 18,681
Other .......................................................................... 5,740 18,037
----------- -----------
Total expenses ............................................................... 694,144 1,275,418
----------- -----------
Net investment income ............................................................ 136,088 553,925
----------- -----------
Net realized gain on sales of investments ........................................ 9,435,500 8,564,539
Change in unrealized appreciation ................................................ (1,674,200) (862,439)
----------- -----------
Net gain on investments .......................................................... 7,761,300 7,702,100
----------- -----------
Net increase in net assets resulting from operations ............................. $ 7,897,388 $ 8,256,025
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1999 MARCH 31,
(UNAUDITED) 1999
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ............................................................ $ 136,088 $ 553,925
Net realized gain on sales of investments ........................................ 9,435,500 8,564,539
Change in net unrealized appreciation ............................................ (1,674,200) (862,439)
------------- -------------
Net increase in net assets resulting from operations ............................. 7,897,388 8,256,025
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ............................................................ (203,173) (607,453)
Net realized gain on investments ................................................. (5,763,959) (5,823,502)
------------- -------------
Total dividends to Shareholders .................................................. (5,967,132) (6,430,955)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares sold ........................................................ 4,382,163 10,389,176
Shares issued upon reinvestment of dividends ..................................... 5,746,039 6,216,025
------------- -------------
10,128,202 16,605,201
Less payments for Shares redeemed ................................................ 9,893,197 19,679,491
------------- -------------
Increase (decrease) from Capital Share transactions .............................. 235,005 (3,074,290)
------------- -------------
Total increase (decrease) in net assets .......................................... 2,165,261 (1,249,220)
NET ASSETS:
Beginning of period ................................................................ 139,493,694 140,742,914
------------- -------------
End of period (including undistributed net investment income of
$19,823 and $86,908, respectively) ............................................... $ 141,658,955 $ 139,493,694
============= =============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, 1999 YEAR ENDED MARCH 31,
(UNAUDITED) 1999 1998 1997 1996
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $36.66 $36.10 $28.03 $26.37 $23.43
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.03 0.14 0.19 0.26 0.32
Net realized and unrealized gain
on investments......................... 2.01 2.09 10.57 2.69 3.41
------- ------- ------- ------- -------
Total from investment operations 2.04 2.23 10.76 2.95 3.73
LESS DISTRIBUTIONS:
Dividends from net investment income..... (0.05) (0.16) (0.20) (0.29) (0.31)
Distributions from net realized gain on investments (1.52) (1.51) (2.49) (1.00) (0.48)
------- ------- ------- ------- -------
Total distributions.......... (1.57) (1.67) (2.69) (1.29) (0.79)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............. $37.13 $36.66 $36.10 $28.03 $26.37
======= ======= ======= ======= =======
TOTAL RETURN (b)........................... 5.54% 6.37% 40.57% 11.61% 16.15%
RATIOS AND SUPPLEMENTARY DATA:
Net assets, end of period ($000's)......... $141,659 $137,494 $140,743 $104,214 $102,608
Ratio of expenses to average net assets.... 0.95% (a) 0.94% 0.96% 0.99% 1.06%
Ratio of net investment income to average net assets 0.19% (a) 0.41% 0.58% 0.97% 1.29%
Portfolio turnover rate.................... 6% 12% 7% 9% 6%
(a) Determined on an annualized basis.
(b) Excludes 2% sales charge.
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
PORTFOLIO OF INVESTMENTS
September 30, 1999
NUMBER
OF
COMMON STOCKS (97.2%) SHARES VALUE
- --------------------- --------- ---------
AUTO & MACHINERY 7.8%
Autoliv, Inc. 40,920 $ 1,539,615
Illinois Tool Works, Inc. 100,000 7,456,250
Regal-Beloit Corporation 100,000 2,050,000
----------
11,045,865
BANKING 4.1%
Northern Trust Corporation 70,000 5,845,000
CHEMICAL 3.7%
Avery Dennison Corporation 70,000 3,692,500
RPM, Inc. 125,000 1,523,437
----------
5,215,937
COMMUNICATIONS EQUIPMENT 10.9%
ADC Telecommunications, Inc. (b) 100,000 4,193,750
Andrew Corporation (b) 100,000 1,737,500
QUALCOMM Incorporated (b) 50,000 9,459,375
----------
15,390,625
ELECTRICAL/ELECTRONICS 16.8%
Applied Materials, Inc. (b) 80,000 6,230,000
Emerson Electric Co. 50,000 3,159,375
Kronos, Inc. (b) 47,000 1,724,313
Photronics, Inc. (b) 60,000 1,346,250
Sun Microsystems, Inc. (b) 100,000 9,300,000
Thomas & Betts Corporation 40,000 2,040,000
----------
23,799,938
FOOD, BEVERAGE & HOUSEHOLD 4.6%
McCormick & Company, Incorporated 100,000 3,306,250
PepsiCo, Inc. 60,000 1,815,000
Smucker (The J. M.) Company Class B 80,000 1,470,000
----------
6,591,250
HEALTH CARE AND PHARMACEUTICALS 16.9%
Abbott Laboratories 50,000 1,837,500
C. R. Bard, Inc. 60,000 2,823,750
Cardinal Health, Inc. 100,000 5,450,000
HCR Manor Care, Inc. (b) 40,000 692,500
Health Management Associates,Inc.(b)120,000 885,000
Patterson Dental Company (b) 75,000 3,717,187
Perclose, Inc. (b) 25,000 1,164,062
STERIS Corporation (b) 60,000 825,000
Sybron International Corporation (b) 75,000 2,015,625
Watson Pharmaceuticals, Inc. (b) 35,000 1,069,687
Wesley Jessen VisionCare, Inc. (b) 110,000 3,430,625
----------
23,910,936
INSURANCE 6.3%
AON Corporation 67,500 1,995,469
Cincinnati Financial Corporation 90,000 3,377,813
NUMBER
OF
SHARES VALUE
--------- ---------
INSURANCE (CONTINUED)
Ohio Casualty Corporation 80,000 $ 1,350,000
Old Republic International
Corporation 150,000 2,165,625
----------
8,888,907
MERCHANDISING & DISTRIBUTION 10.4%
Borders Group, Inc. (b) 90,000 1,321,875
CVS Corporation 100,000 4,081,250
Fastenal Company 70,000 3,298,750
The Gap, Inc. 75,000 2,400,000
LA-Z-Boy Incorporated 110,000 2,096,875
Office Depot, Inc. (b) 150,000 1,528,125
----------
14,726,875
PAPER & FOREST PRODUCTS 3.8%
Consolidated Papers, Inc. 110,000 2,956,250
Sonoco Products Company 110,000 2,509,375
----------
5,465,625
PUBLISHING & MEDIA 5.4%
Interpublic Group of Companies, Inc.185,000 7,608,125
MISCELLANEOUS 6.5%
Bacou USA, Inc. (b) 65,000 1,084,688
H & R Block, Inc. 60,000 2,606,250
Burlington Resources, Inc. 60,000 2,205,000
Cintas Corporation 10,000 578,125
Pall Corporation 120,000 2,782,500
----------
9,256,563
----------
Total Common Stocks (Cost: $68,725,404) 137,745,646
SHORT-TERM INVESTMENTS (2.7%)
United States Treasury Bills
4.39% - 4.52%, 10/07/99 - 11/04/99 3,789,142
----------
TOTAL INVESTMENTS
(Cost: $72,514,546) (99.9%) 141,534,788
CASH AND OTHER ASSETS,
LESS LIABILITIES (0.1%) 124,167
----------
NET ASSETS (100.0%) $141,658,955
============
NOTES TO PORTFOLIO OF INVESTMENTS:
(a) Interest rates on short-term investments represent annualized yield to date
of maturity.
(b) Non-income producing security.
(c) Based on the cost of investments of $72,514,546 for federal income tax
purposes at September 30, 1999, the aggregate gross unrealized appreciation
was $74,119,545, the aggregate gross unrealized depreciation was $5,099,303
and the net unrealized appreciation of investments was $69,020,242.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust"), is an open-end investment
company organized as a Massachusetts business trust. The Trust consists of
four investment portfolios, Wayne Hummer CorePortfolio Fund, Wayne Hummer
Growth Fund, Wayne Hummer Income Fund and Wayne Hummer Money Market Fund,
each operating as a separate mutual fund. Presented herein are the financial
statements of the Wayne Hummer Growth Fund (the "Fund"). The Fund commenced
investment operations on December 30, 1983, and may issue an unlimited number
of full and fractional units of beneficial interest (Shares) without par
value. The investment objective of the Fund is to achieve long-term capital
growth.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Investments are stated at value. Each listed and unlisted security for which
last sale information is regularly reported is valued at the last reported
sale price on that day. If there has been no sale on such day, the last
reported sale price prior to that day is utilized if such sale is between the
closing bid and asked price of the current day. If the last price on a prior
day is not between the current day's closing bid and asked price, then the
value of such security is taken to be the mean between the current day's
closing bid and asked price. Any unlisted security for which last sale
information is not regularly reported and any listed debt security which has
an inactive listed market for which over-the-counter market quotations are
readily available is valued at the highest closing bid price determined on
the basis of reasonable inquiry, except that debt securities having a
remaining maturity of 60 days or less are valued on an amortized cost basis.
Restricted securities and any other securities or other assets for which
market quotations are not readily available are valued at their fair value as
determined in good faith under procedures established by the Board of
Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on the
accrual basis and includes amortization of money market instrument premium
and discount.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles may require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. In those cases, actual results may differ from estimates.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Prior to August 1, 1999, the Fund Shares were sold and redeemed on a
continuous basis at net asset value. Effective August 1, 1999, the Fund
Shares are sold subject to a 2% sales charge for new accounts opened after
this date. Net asset value per Share is determined on each day the New York
Stock Exchange is open as of the close of regular trading on the Exchange by
dividing the value of net assets (total assets less liabilities) by the total
number of Shares outstanding.
Ordinary income dividends are normally declared and paid in April, July,
October, and December. Capital gains dividends, if any, are paid at least
annually. Dividends will be reinvested in additional Shares unless a
Shareholder requests payment in cash. Dividends payable to Shareholders are
recorded by the Fund on the ex-dividend date. On October 22, 1999, an
ordinary income dividend of $0.02 per Share was declared, payable October 25,
1999, to Shareholders of record on October 21, 1999.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a Portfolio
Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"). The shareholders of the Investment Adviser are the
Voting Members of Wayne Hummer Investments LLC ("Distributor and Shareholder
Service Agent"). For advisory and management services and facilities
furnished, the Fund pays fees of .80 of 1% on the first $100 million of
average daily net assets, .65 of 1% of the next $150 million of average daily
net assets and .50 of 1% of the average daily net assets in excess of $250
million. The Investment Adviser is obligated to reimburse the Fund to the
extent that the Fund's ordinary operating expenses, including the fee of the
Investment Adviser, exceeds 1.50% of the average daily net assets of the
Fund. During the period ended September 30, 1999 and the year ended March 31,
1999, the Fund incurred management fees of $555,249 and $1,030,442,
respectively.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS CONTINUED
For portfolio accounting services, the Fund pays the Investment Adviser a
fee based on the level of average daily net assets plus out-of-pocket
expenses.
Wayne Hummer Investments LLC serves as Distributor and Shareholder Service
Agent without compensation from the Fund.
Certain trustees of the Fund are also officers or directors of the
Investment Adviser or Voting Members of the Distributor and Shareholder
Service Agent. During the period ended September 30, 1999 and the year
ended March 31, 1999, the Fund made no direct payments to its officers and
incurred trustee fees for its unaffiliated trustees of $13,500 and $23,300,
respectively.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ --------------
Purchases $ 7,817,088 $15,664,291
Proceeds from sales $14,917,968 $22,220,224
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statement of Changes in
Net Assets are in respect of the following number of shares:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ --------------
Shares sold 115,111 298,220
Shares issued upon reinvestment
of dividends 153,792 174,372
----------- -----------
268,903 472,592
Shares redeemed (258,937) (566,280)
----------- -----------
Net increase (decrease) in
Shares outstanding 9,966 (93,688)
=========== ===========
RESULTS OF THE SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of the Shareholders was held at the offices of Wayne Hummer
Investments LLC, 300 South Wacker Drive, Chicago, Illinois on June 30, 1999. The
Wayne Hummer Growth Fund shareholders were asked to vote on four separate
issues: to elect seven trustees, to modify or eliminate certain fundamental
investment policies, to authorize the Trustees to amend the Declaration of Trust
to enable the Trustees to create additional classes of shares, and to ratify the
appointment of Ernst & Young LLP as auditors.
The following are the results:
1. ELECTION OF SEVEN TRUSTEES. All seven were elected.
FOR WITHHELD
--------- --------
Steven R. Becker 2,034,936 23,724
Charles V. Doherty 2,043,342 15,318
Joel D. Gingiss 2,046,853 11,807
Patrick B. Long 2,037,503 21,157
David P. Poitras 2,040,154 18,506
James J. Riebandt 2,049,517 9,143
Eustace K. Shaw 2,050,936 7,724
2. TO APPROVE OF CHANGES TO THE TRUST'S FUNDAMENTAL INVESTMENT POLICIES.
These items were approved.
FOR AGAINST ABSTAIN
--------- -------- --------
Other investment companies 1,965,231 57,718 34,862
Portfolio lending 1,916,851 99,699 41,261
Pledging portfolio securities 1,913,245 105,912 38,654
Borrowing 1,925,314 94,765 37,732
Issuing senior securities 1,933,527 89,230 35,054
Restricted securities 1,952,265 73,838 31,708
7
<PAGE>
RESULTS OF THE SPECIAL MEETING OF SHAREHOLDERS (CONTINUED)
3. TO APPROVE THE AUTHORIZATION OF AN AMENDMENT TO THE DECLARATION OF TRUST TO
PERMIT THE TRUSTEES TO ESTABLISH ADDITIONAL CLASSES OF SHARES OF THE TRUST.
This item was approved.
FOR AGAINST ABSTAIN
------- -------- -------
1,944,274 69,868 43,669
4. TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS OF EACH PORTFOLIO
OF THE TRUST FOR THE FISCAL YEAR TO END MARCH 31, 2000. This item was
approved.
FOR AGAINST ABSTAIN
------- -------- -------
2,007,559 17,815 33,286
BOARD OF TRUSTEES
Steven R. Becker
Chairman
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
David P. Poitras
James J. Riebandt
Eustace K. Shaw
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
LOGO: Wayne Hummer Investment LLC
300 South Wacker
Chicago, Illinois
60606-6607
1.800.621.4477 (toll-free)
(312) 431.1700 (local)
200 E. Washington Street
Appleton, Wisconsin
54911-5468
1.800.678.0833 (toll-free)
(414) 734.1474 (local)
www.whummer.com
8
<PAGE>
WAYNE HUMMER(R)
INCOME FUND
SEMI-ANNUAL FINANCIAL STATEMENTS
September 30, 1999 (Unaudited)
PERFORMANCE COMMENTARY
The following discussion with portfolio manager David P. Poitras details the
investment environment and strategies that affected the Wayne Hummer Income Fund
over the past six months. Mr. Poitras has been the Fund's portfolio manager
since its inception on December 1, 1992. He also manages the Wayne Hummer Money
Market Fund portfolio.
PLEASE DESCRIBE THE RECENT INVESTMENT CLIMATE FOR FIXED INCOME SECURITIES.
Interest rates rose approximately 50 basis points over the past six months,
pushing bond prices lower and extending a slide that began last year. Bond
prices began falling during October of 1998. At that time, the yield on 10-year
treasury notes was 4.15%. Today, those same notes yield more than 6%. In terms
of dollar prices, the average ten-year treasury note has fallen by 15 points, or
$150 per $1,000 par value, over the past year.
WHAT CAUSED BOND PRICES TO FALL?
That question can be partially answered by looking back to the events of 1998.
Last year, interest rates fell to record low levels as concerns over problems in
overseas markets drove investors to the safety of U.S. treasury securities. The
Federal Reserve Bank made three quick, short-term interest rate cuts, primarily
to quell investor skittishness. The net result was higher bond prices and record
low interest rates.
We view this year's fall in bond prices (and rise in interest rates) as an
unwinding of last year's events. This year, the Fed reversed direction, raising
short-term interest rates twice by a total of 50 basis points or 1 1/42%. Also,
foreign markets are in much better shape today than last year. We believe much
of the "flight to quality" witnessed last year has been reversed.
In addition, the strong U.S. economy is adding downward pressure to the bond
market. Economic growth in the U.S. has been very healthy over the past several
years. Many fixed income investors are concerned that inflation will accelerate
if the economy does not slow. Often, extended periods of economic growth cause
inflation to accelerate. Generally, rising inflation results in higher interest
rates and lower bond prices.
HOW DID THE WAYNE HUMMER INCOME FUND PERFORM IN THIS ENVIRONMENT?
Over the past six months, the Fund paid monthly dividends totaling $0.4045 per
share. At quarter end, the SEC yield of the Fund was 6.22%. The Fund's price per
share ended the quarter at $14.84, down from $15.21 on March 31, 1999.
Prices of all fixed income investments were negatively impacted by the rise in
interest rates -- the Wayne Hummer Income Fund was no exception. The Fund
produced a total return of .24% over the past 6-months and -.71% over the past
twelve months. While the returns were disappointing, we believe that steps taken
earlier to reduce the portfolio's price volatility to interest rate changes
helped mitigate the impact of rising interest rates.
PLEASE DESCRIBE THOSE STRATEGIES.
Last year, when interest rates were falling to record low levels, we reduced the
portfolio's duration to 3.9 years. In addition, we added many "put bonds" and
"cushion bonds" to the portfolio. Put bonds are periodically redeemable at the
holder's option. Cushion bonds are high coupon callable bonds; the price of
these bonds is relatively low due to the call feature. The characteristics of
both -- put bonds and cushion bonds -- provide price protection when interest
rates rise. We took these steps to lessen the negative impact of rising interest
rates.
PHOTO OF: DAVID P. POITRAS
<PAGE>
NOW THAT RATES ARE HIGHER, HAVE YOU CHANGED STRATEGIES?
Yes. This year, while interest rates were rising, we extended the portfolio's
duration, primarily through the purchase of longer-term treasury bonds. By doing
so, our goal is to lock in higher interest rates for longer periods of time. The
duration of the Fund's portfolio is now approximately 4.5 years.
WHAT IS YOUR FORECAST FOR THE NEAR TERM?
We are comfortable with today's interest rate levels. The bond market rallied
too far in 1998, pushing interest rates too low. The market has since corrected
and now offers reasonable opportunities. Near-term, we do not expect huge
changes in interest rates. However the market continues to exhibit a pronounced
downward tone, which in our opinion, is an opportunity to purchase bonds at
attractive levels.
WHAT ARE YOUR STRATEGIES GOING FORWARD?
We will continue to extend the duration of the Fund's portfolio, especially if
interest rates rise further. We will do so through the purchase of longer-term
treasury and corporate issues. The character of the portfolio -- the heavy
weighting in AAA-rated securities, and the heavy allocation to corporate issues
- -- will not change over the near-term.
We appreciate your continued support.
/s/ David P. Poitras
David P. Poitras
Portfolio Manager
October 22, 1999
PERFORMANCE SUMMARY
RESULTS AT A GLANCE (WITH DIVIDENDS REINVESTED) :
ANNUALIZED RETURNS FOR THE 1 YEAR 3 YEAR 5 YEAR SINCE INCEPTION
FOLLOWING PERIODS: (12/1/92-9/30/99)
WAYNE HUMMER INCOME FUND (1.70%) 5.74% 6.72% 6.00%
(assuming a 1% sales charge)
WAYNE HUMMER INCOME FUND (.71%) 6.09% 6.94% 6.15%
(at net asset value)
MERRILL LYNCH CORPORATE AND .73% 6.38% 7.09% 6.39%
GOVERNEMENT INDEX OF 1-9.99
YEAR MATURITIES
NOTE: Past performance does not guarantee future results. Actual investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.
2
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
SEPTEMBER 30,
1999 MARCH 31,
(UNAUDITED) 1999
------------ ------------
<S> <C> <C>
ASSETS
Investments, at value (Cost: $18,983,269 and $19,954,146, respectively) ............... $ 18,576,993 $ 20,053,231
Cash ................................................................................... 6,090 684
Interest receivable .................................................................... 314,957 314,709
Receivable for securities sold ......................................................... 1,974 5,842
Prepaid expenses ....................................................................... 18,795 12,182
------------ ------------
Total assets ............................................................... 18,918,809 20,386,648
LIABILITIES AND NET ASSETS
Dividends payable ...................................................................... 27,317 23,743
Due to Wayne Hummer Management Company ................................................. 7,744 8,624
Accounts payable ....................................................................... 13,742 26,900
------------ ------------
Total liabilities .......................................................... 48,803 59,267
------------ ------------
Net assets applicable to 1,271,696 and 1,336,873 Shares outstanding,
no par value, equivalent to $14.84 and $15.21 per Share, respectively ................ $ 18,870,006 $ 20,327,381
============ ============
ANALYSIS OF NET ASSETS
Paid-in capital ........................................................................ $ 20,056,726 $ 21,016,670
Net unrealized appreciation (depreciation) of investments .............................. (406,276) 99,085
Accumulated net realized loss on sales of investments .................................. (780,444) (788,374)
------------ ------------
Net assets applicable to Shares outstanding ............................................ $ 18,870,006 $ 20,327,381
============ ============
THE PRICING OF SHARES
Net asset value and redemption price per Share ($18,870,006 / 1,271,696
Shares outstanding and $20,327,381 / 1,336,873
Shares outstanding, respectively) .................................................... $ 14.84 $ 15.21
Maximum offering price per Share (net asset value, plus 1.01% of
net asset value or 1% of offering price)* ............................................ $ 14.99 NA
============ ============
* Sales charge of 1% was effective August 1, 1999 for new accounts.
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1999 MARCH 31,
(UNAUDITED) 1999
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Interest ....................................................................... $ 662,920 $ 1,411,842
EXPENSES:
Management fee ................................................................. 49,657 103,836
Professional fees .............................................................. 15,880 23,644
Transfer agent fees ............................................................ 10,236 24,053
Portfolio accounting fees ...................................................... 8,893 18,577
Registration costs ............................................................. 5,022 10,500
Printing costs ................................................................. 4,004 13,440
Custodian fees ................................................................. 3,800 7,838
Trustee fees ................................................................... 1,600 3,600
Other .......................................................................... 1,680 4,260
----------- -----------
Total expenses ....................................................... 100,772 209,748
----------- -----------
Net investment income ............................................................ 562,148 1,202,094
----------- -----------
Net realized gain (loss) on sales of investments ................................. (12,729) 119,756
Change in net unrealized appreciation (depreciation) ............................. (505,361) (358,228)
----------- -----------
Net realized and unrealized loss on investments .................................. (518,090) (238,472)
----------- -----------
Net increase in net assets resulting from operations ............................. $ 44,058 $ 963,622
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
3
</TABLE>
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
1999 MARCH 31,
OPERATIONS: (UNAUDITED) 1999
------------ ------------
<S> <C> <C>
Net investment income ........................................................ $ 562,148 $ 1,202,094
Net realized gain (loss) on sales of investments ............................. (12,729) 119,756
Change in net unrealized appreciation ........................................ (505,361) (358,228)
------------ ------------
Net increase in net assets resulting from operations ........................... 44,058 963,622
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income ........................................................ (541,489) (1,196,917)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares sold .................................................... 786,822 1,772,995
Shares issued upon reinvestment of dividends
408,991 913,838
------------ ------------
1,195,813 2,686,833
Less payments for Shares redeemed ............................................ 2,155,757 3,429,770
------------ ------------
Decrease from Capital Share transactions ....................................... (959,944) (742,937)
------------ ------------
Total decrease in net assets ................................................... (1,457,375) (976,232)
NET ASSETS:
Beginning of period .......................................................... 20,327,381 21,303,613
------------ ------------
End of period ................................................................ $ 18,870,006 $ 20,327,381
============ ============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
(For a Share outstanding throughout each period)
SIX MONTHS ENDED
SEPTEMBER 30, 1999 YEAR ENDED MARCH 31,
(UNAUDITED) 1999 1998 1997 1996
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD....... $15.21 $15.38 $14.66 $14.95 $14.69
INCOME FROM INVESTMENT OPERATIONS:
Net investment income.................... 0.41 0.89 0.94 0.92 1.02
Net realized and unrealized gain (loss) on investments (0.37) (0.17) 0.72 (0.29) 0.26
------ ------ ------ ------ ------
Total from investment operations..... 0.04 0.72 1.66 0.63 1.28
LESS DISTRIBUTIONS:
Dividends from net investment income..... (0.41) (0.89) (0.94) (0.92) (1.02)
Dividends from net realized gain on investments 0.00 0.00 0.00 0.00 0.00
------ ------ ------ ------ ------
Total distributions.................. (0.41) (0.89) (0.94) (0.92) (1.02)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD............. $14.84 $15.21 $15.38 $14.66 $14.95
====== ====== ====== ====== ======
TOTAL RETURN (b)........................... 0.24% 4.74% 11.25% 4.32% 8.79%
RATIOS AND SUPPLEMENTARY DATA
Net assets, end of period (000's)........ $18,870 $20,327 $21,304 $21,998 $25,398
Ratio of expenses to average net assets.. 1.01% (a) 1.01% 1.01% 1.01% 0.91%
Ratio of net investment income to average net assets 5.66% (a) 5.78% 6.00% 6.25% 6.80%
Portfolio turnover rate.................. 16% (a) 37% 28% 39% 46%
NOTES TO FINANCIAL HIGHLIGHTS:
(a) Determined on an annual basis.
(b) Excludes 1% sales charges.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
4
<PAGE>
PORTFOLIO OF INVESTMENTS
September 30, 1999
PRINCIPAL
CORPORATE OBLIGATIONS (58.3%) AMOUNT VALUE
- ----------------------------- --------- ---------
AUTO & MACHINERY (5.0%)
Johnson Controls, Inc., 7.70%,
due 03/01/15 $ 410,000 $ 418,229
Parker-Hannifin Corporation, 9.75%,
due 02/15/21 480,000 519,974
---------
938,203
BANKS & FINANCE (7.6%)
Ford Motor Credit Company, 6.125%,
due 01/09/06 500,000 478,025
Norwest Corporation, 7.65%,
due 03/15/05 360,000 371,653
St. Paul Bancorp, Inc., 7.125%,
due 02/15/04 100,000 99,755
Sears Roebuck Acceptance Corp., 6.75%,
due 09/15/05 500,000 488,700
---------
1,438,133
OIL AND GAS (3.6%)
Northwest Natural Gas Company, 6.80%,
due 05/21/07 200,000 201,310
Pennzoil Company, 10.25%,
due 11/01/05 436,000 481,763
---------
683,073
PAPER & FOREST PRODUCTS (4.0%)
Champion International
Corporation, 6.40%, due 02/15/26 500,000 479,050
Georgia Pacific Corporation, 9.50%,
due 05/15/22 250,000 267,083
---------
746,133
RETAIL (3.5%)
Dayton Hudson Corporation, 5.865%,
due 08/15/27 655,000 654,155
TELECOMMUNICATIONS (4.6%)
Mountain States Telephone
& Telegraph Co.,
5.50%, due 06/01/05 269,000 251,268
NYNEX Corporation, 9.55%,
due 05/01/10 556,874 612,867
---------
864,135
TRANSPORTATION (10.2%)
Canadian Pacific Limited, 8.85%,
due 06/01/22 500,000 519,725
Union Pacific Corporation, 6.125%,
due 01/15/04 500,000 483,285
United Air Lines, Inc., 9.76%,
due 05/27/06 860,729 932,557
---------
1,935,567
MISCELLANEOUS (19.8%)
American General Corp., 7.75%,
due 04/01/05 285,000 290,384
Browning-Ferris Industries, Inc., 6.375%,
due 01/15/08 500,000 420,870
CBI Industries, Inc., 6.25%,
due 06/30/00 250,000 250,253
Continental Corp., 7.25%,
due 03/01/03 260,000 258,203
Crown, Cork & Seal Company, Inc., 8.375%,
due 01/15/05 400,000 413,596
Eastman Kodak Company, 9.75%,
due 10/01/04 428,000 482,480
PRINCIPAL
AMOUNT VALUE
--------- ---------
MISCELLANEOUS (CONTINUED)
Inco Ltd., Convertible Debenture, 7.75%,
due 03/15/16 $ 500,000 $ 454,375
Ingersoll-Rand Company, 6.015%,
due 02/15/28 500,000 499,150
Union Carbide Corp., 6.79%,
due 06/01/25 170,000 166,746
Xerox Corporation, 5.875%,
due 06/15/37 500,000 500,200
---------
3,736,257
---------
TOTAL CORPORATE OBLIGATIONS
(Cost: $11,228,448) 10,995,656
----------
MUNICIPALITY-TAXABLE (1.4%)
- -------------------------------------------------------
Virginia State Housing Development
Authority, 7.95%,
due 05/01/13 (Cost: $254,187) 250,000 259,557
---------
MORTGAGE-BACKED SECURITIES (17.5%)
- -------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (15.1%)
Federal Home Loan Mortgage Corporation (11.7%)
7.50%, due 11/15/08 500,000 504,790
8.50%, due 05/01/17 159,799 166,430
8.00%, due 03/15/21 1,000,000 1,024,100
8.00%, due 04/15/22 500,000 516,700
---------
2,212,020
Federal National Mortgage Association (3.4%)
8.00%, due 02/25/07 500,000 514,335
8.50%, due 06/25/21 120,780 124,906
---------
639,241
FEDERAL NATIONAL MORTGAGE ASSOCIATION (1.7%)
11.25%, due 04/01/01 14,934 15,872
10.75%, due 09/01/15 5,932 6,469
10.50%, due 01/01/16 39,793 43,199
10.50%, due 06/01/19 91,475 99,526
9.00%, due 12/01/19 54,115 56,483
8.00%, due 12/01/22 105,429 107,905
---------
329,454
---------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (0.7%)
9.00%, due 11/15/01 16,238 16,924
9.00%, due 02/20/27 109,370 113,151
---------
130,075
---------
TOTAL MORTGAGE-BACKED SECURITIES
(Cost: $3,324,973) 3,310,790
---------
5
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
PRINCIPAL
AMOUNT VALUE
--------- ---------
U.S. GOVERNMENT AND AGENCY ISSUES (21.3%)
- -------------------------------------------------------
U.S. Treasury Note, 6.125%,
due 12/31/01 $ 200,000 $ 201,746
U.S. Treasury Note, 6.25%,
due 02/15/07 420,000 423,641
Federal Home Loan Mortgage Corporation
7.10%, due 04/10/07 750,000 770,152
U.S. Treasury Note, 6.125%,
due 08/15/07 1,850,000 1,851,517
U.S. Treasury Note, 7.50%,
due 11/15/16 690,000 763,934
---------
TOTAL U.S. GOVERNMENT AND AGENCY
ISSUES (Cost: $4,175,661) 4,010,990
---------
TOTAL INVESTMENTS
(Cost: $18,983,269) (98.5%) 18,576,993
CASH AND OTHER ASSETS,
LESS LIABILITIES (1.5%) 293,013
-----------
NET ASSETS (100.0%) $18,870,006
===========
NOTE TO PORTFOLIO OF INVESTMENTS:
(a) Based on the cost of investments of $18,983,269 for federal income tax
purposes at September 30, 1999, the aggregate gross unrealized appreciation
was $80,859, the aggregate gross unrealized depreciation was $487,135 and
the net unrealized depreciation of investments was $406,276.
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust") is an open-end management company
organized as a Massachusetts business trust. The Trust consists of four
investment portfolios, the Wayne Hummer CorePortfolio Fund, the Wayne Hummer
Growth Fund, the Wayne Hummer Income Fund, and the Wayne Hummer Money Market
Fund, each operating as a separate mutual fund. Presented herein are the
financial statements of the Wayne Hummer Income Fund (the "Fund"). The Fund
commenced investment operations on December 1, 1992, and may issue an
unlimited number of full and fractional units of beneficial interest (Shares)
without par value. The investment objective of the Fund is to achieve as high
a level of current income as is consistent with prudent capital management.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Fixed income securities are valued by using market quotations, or independent
pricing services that use prices provided by market makers or estimates of
market values obtained from yield data relating to instruments or securities
with similar characteristics. Other securities for which no market quotations
are available are valued at fair value as determined in good faith by the
Board of Trustees. Debt securities having a remaining maturity of less than
60 days are valued at cost (or, if purchased more than 60 days prior to
maturity, the market value on the 61st day prior to maturity) adjusted for
amortization of premiums and accretion of discounts.
SECURITY TRANSACTIONS
AND INVESTMENT INCOME
Security transactions are accounted for on the trade
date. Interest income is determined on an accrual basis, adjusted for
amortization of premiums and accretion of discounts. Realized gains and
losses from security transactions are reported on an identified cost basis.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles might require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. In those cases, actual results may differ from estimates.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Prior to August 1, 1999, the Fund Shares were sold on a continuous basis at
net asset value. Effective August 1, 1999, the Fund Shares are sold subject
to a 1% sales charge for new accounts opened after this date. Net asset value
per Share is determined on each day the New York Stock Exchange is open for
trading as of the close of regular trading on the Exchange by dividing the
value of net assets (total assets less liabilities) by the total number of
Shares outstanding.
Dividends from net investment income are declared daily
and distributed monthly. Capital gains dividends, if any, are paid at least
annually. Dividends will be reinvested in additional Shares unless a
Shareholder requests payment in cash.
Income and capital gain distributions are determined in accordance with
income tax regulations that may differ from generally accepted accounting
principles. These differences primarily relate to differing treatments for
mortgage-backed securities.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FEDERAL INCOME TAXES (CONTINUED)
The accumulated net realized loss on sales of investments for federal income
tax purposes at March 31, 1999, amounting to $788,374, is available to offset
future capital gains. If not applied, $607,140 of the loss carry forward
expires in 2003, $51,741 expires in 2004 and $129,493 expires in 2005.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a Portfolio
Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"). The shareholders of the Investment Adviser are the
Voting Members of Wayne Hummer Investments LLC ("Distributor and Shareholder
Service Agent"). For advisory and management services and facilities
furnished, the Fund pays fees of .50 of 1% of the first $100 million of
average daily net assets, .40 of 1% of the next $150 million and .30 of 1% of
the average daily net assets in excess of $250 million. The Investment
Adviser is obligated to reimburse the Fund to the extent that the Fund's
ordinary operating expenses, including the fee of the Investment Adviser,
exceed 1.50% of the average daily net assets of the Fund. During the period
ended September 30, 1999 and the year ended March 31, 1999, the Fund incurred
management fees of $49,657 and $103,836, respectively.
For portfolio accounting services, the Fund pays the Investment Adviser a
fee based on the level of average daily net assets plus out-of-pocket
expenses.
Wayne Hummer Investments LLC serves as Distributor and Shareholder Service
Agent without compensation from the Fund.
Certain trustees of the Fund are also officers or directors of the
Investment Adviser or Voting Members of the Distributor and Shareholder
Service Agent. During the period ended September 30, 1999 and the year
ended March 31, 1999, the Fund made no direct payments to its officers and
incurred trustee fees for its unaffiliated trustees of $1,600 and $3,600,
respectively.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) are as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
--------------- -------------
Purchases $1,588,878 $7,615,503
Proceeds from sales $1,773,408 $9,174,534
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statement of Changes in
Net Assets are in respect of the following number of shares:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 MARCH 31, 1999
---------------- -------------
Shares sold 52,089 114,578
Shares issued upon
reinvestment of dividends 27,345 59,060
----------- -----------
79,434 173,638
Shares redeemed (144,611) (221,489)
----------- -----------
Net decrease in Shares outstanding (65,177) (47,851)
=========== ===========
RESULTS OF THE SPECIAL MEETING OF SHAREHOLDERS
A Special Meeting of the Shareholders was held at the offices of Wayne Hummer
Investments LLC, 300 South Wacker Drive, Chicago, Illinois on June 30, 1999. The
Wayne Hummer Income Fund shareholders were asked to vote on four separate
issues: to elect seven trustees, to modify or eliminate certain fundamental
investment policies, to authorize the Trustees to amend the Declaration of Trust
to enable the Trustees to create additional classes of shares, and to ratify the
appointment of Ernst & Young LLP as auditors.
The following are the results:
1. ELECTION OF SEVEN TRUSTEES. All seven were elected.
FOR WITHHELD
-------- --------
Steven R. Becker 869,587 13,927
Charles V. Doherty 871,771 11,743
Joel D. Gingiss 871,771 11,743
Patrick B. Long 870,831 12,683
David P. Poitras 872,214 11,300
James J. Riebandt 872,214 11,300
Eustace K. Shaw 872,214 11,300
7
<PAGE>
RESULTS OF THE SPECIAL MEETING OF SHAREHOLDERS (CONTINUED)
2. TO APPROVE OF CHANGES TO THE TRUST'S FUNDAMENTAL INVESTMENT POLICIES. These
items were approved.
FOR AGAINST ABSTAIN
-------- -------- --------
Other investment companies 838,596 31,351 13,567
Portfolio lending 830,417 37,543 15,554
Pledging portfolio securities 823,535 44,542 15,437
Borrowing 819,122 47,290 17,102
Issuing senior securities 827,089 42,050 14,375
3. TO APPROVE THE AUTHORIZATION OF AN AMENDMENT TO THE DECLARATION OF TRUST TO
PERMIT THE TRUSTEES TO ESTABLISH ADDITIONAL CLASSES OF SHARES OF THE TRUST.
This item was approved.
FOR AGAINST ABSTAIN
-------- -------- --------
838,707 32,205 12,602
4. TO RATIFY THE APPOINTMENT OF ERNST & YOUNG LLP AS AUDITORS OF EACH PORTFOLIO
OF THE TRUST FOR THE FISCAL YEAR TO END MARCH 31, 2000. This item was
approved.
FOR AGAINST ABSTAIN
-------- -------- --------
855,799 17,869 9,846
BOARD OF TRUSTEES
Steven R. Becker
Chairman
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
David P. Poitras
James J. Riebandt
Eustace K. Shaw
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
LOGO: Wayne Hummer Investment LLC
300 South Wacker
Chicago, Illinois
60606-6607
1.800.621.4477 (toll-free)
(312) 431.1700 (local)
200 E. Washington Street
Appleton, Wisconsin
54911-5468
1.800.678.0833 (toll-free)
(414) 734.1474 (local)
www.whummer.com
8
<PAGE>
WAYNE HUMMER(R)
COREPORTFOLIO FUND
SEMI-ANNUAL FINANCIAL STATEMENTS
September 30, 1999 (Unaudited)
Dear Fellow Shareholder:
We are very pleased to present our first shareholder report for the Wayne Hummer
CorePortfolio Fund (the "Fund"). This information is for the period ended
September 30, 1999.
Fund operations were commenced on August 2, 1999. For the period of August 2,
1999 through September 30, 1999, the net asset value of a Fund Share decreased
2.9%, which compared with a decrease of 3.2% for the S&P 500 Index. Along with
the performance results, we also display a listing of the holdings of the fund,
as well as a chart showing the allocation of the portfolio among the broad
sectors of the economy.
The market, as measured by the S&P 500, declined during the reporting period.
Fears of higher interest rates and a possible economic slowdown weighed on the
stock market. While these concerns may continue to pressure the market in the
near term, we still view the market's longer-term prospects in a positive light.
We continue to have low inflation, low interest rates, and a strong economy.
These factors should sustain continuing gains in corporate earnings. Earnings
ultimately drive markets, and, as such, we believe continued corporate earnings
growth can support stock prices. We certainly do not see signs of a bear market
in the making.
The Fund's strategy is to invest in a portfolio of the largest companies in each
of the eleven Standard & Poor's economic sectors. We feel that the stocks held
in the Fund are core holdings that could be a part of anyone's long-term
investment plan. These companies are leaders in their respective industries and
the economy as a whole, which means that they are typically the largest and
generally the most consistently profitable corporations. The companies in the
portfolio have an average market capitalization of $197 billion versus an
average of $106 billion for the S&P 500 Index. In addition, the companies have
an expected long-term growth rate in earnings of 16% versus 10% for the S&P 500
as determined by I/B/E/S International (a common source of analysts' earnings
expectations data). As we proceed toward the new millennium, we continue to
believe that the future earnings growth prospects of these companies are still
very strong, which should warrant higher share prices.
Again, we welcome you as a new shareholder and appreciate the confidence you
have placed in us. We are pleased to be part of your long-term investment
planning.
Sincerely,
/s/ Thomas J. Rowland, CFA /s/ David D. Cox
Thomas J. Rowland, CFA David D. Cox
President Portfolio Manager
Wayne Hummer Investment Trust
October 25, 1999
"Standard & Poor's(R)" and "S&P 500(R)" are trademarks of The McGraw Hill
Companies, Inc. and have been licensed for use by Wayne Hummer Management
Company. The Wayne Hummer CorePortfolio Fund is not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the Wayne Hummer CorePortfolio Fund.
Photos of: Thomas J. Rowland and David D. Cox
<PAGE>
TOP 10 STOCK HOLDINGS AS OF 9/30/99
(as a % of net assets)
Microsoft Corporation.................... 11.55%
General Electric Company................. 7.49
Intel Corporation........................ 6.16
International Business Machines Corporation 5.50
Citigroup Inc............................ 5.48
Wal-Mart Stores, Inc..................... 5.45
American International Group, Inc........ 4.96
Procter & Gamble Company................. 4.46
Coca-Cola Company........................ 4.25
Merck & Co., Inc......................... 3.76
TOTAL RETURNS FOR THE SINCE
FOLLOWING PERIOD: INCEPTION
(08/02/99-
9/30/99)
Wayne Hummer CorePortfolio Fund
(assuming a 2% sales charge)..... (4.80%)
Wayne Hummer CorePortfolio Fund
(at net asset value)............. (2.86%)
S&P 500 Index....................... (3.18%)
Past performance does not guarantee future results. Actual investment return and
principal value of an investment will fluctuate so that an investor's shares,
when redeemed may be worth more or less than their original cost.
ASSET ALLOCATION BY ECONOMIC SECTOR AS OF 9/30/99
(% of total net assets)
[Pie Chart]
Communications Services 7%
Transportation 1%
Utilities 3%
Cash 2%
Basic Materials 3%
Consumer Cyclical 12%
Consumer Staples 12%
Energy 6%
Financial 14%
Healthcare 11%
Technology 23%
Capital Goods 9%
2
<PAGE>
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<CAPTION>
SEPTEMBER 30,
1999
(UNAUDITED)
------------
<S> <C>
ASSETS
Investments, at value (Cost: $16,002,507) .................................................................... $ 15,514,598
Cash ......................................................................................................... 720,590
Dividends receivable ......................................................................................... 19,985
Prepaid expenses ............................................................................................. 2,839
Expenses reimbursable in excess of expense limitation ........................................................ 500
Receivable for Fund Shares sold .............................................................................. 187,166
------------
Total assets ............................................................................................. 16,445,678
LIABILITIES AND NET ASSETS
Due to Wayne Hummer Management Company ....................................................................... 4,803
Payable for securities purchased ............................................................................. 593,590
Accounts payable ............................................................................................. 4,101
------------
Total liabilities ........................................................................................ 602,494
------------
Net assets applicable to 1,663,705 Shares outstanding,
no par value, equivalent to $9.52 per Share .............................................................. $ 15,843,184
============
ANALYSIS OF NET ASSETS
Paid-in capital .............................................................................................. $ 16,313,713
Net unrealized depreciation of investments ................................................................... (487,909)
Undistributed net investment income .......................................................................... 17,380
------------
Net assets applicable to Shares outstanding .................................................................. $ 15,843,184
============
THE PRICING OF SHARES
Net asset value and redemption price per Share ($15,843,184 /1,663,705 Shares outstanding) ................... $ 9.52
Maximum offering price per Share (net asset value, plus 2.02% of net asset value or 2% of offering price)..... $ 9.71
============
</TABLE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
THE PERIOD FROM
AUGUST 2, 1999
TO SEPTEMBER 30,
1999
(UNAUDITED)
---------
<S> <C>
INVESTMENT INCOME:
Dividends ........................................................ $ 32,921
EXPENSES:
Management fee ................................................... 8,288
Transfer agent fees .............................................. 2,426
Custodian fees ................................................... 1,626
Professional fees ................................................ 1,600
Printing costs ................................................... 1,000
Trustee fees ..................................................... 600
Registration costs ............................................... 400
Portfolio accounting fees ........................................ 325
Other ............................................................ 601
---------
Total expenses ................................................. 16,866
Less reimbursement of expenses in excess of the expense limitation (1,325)
---------
Net expenses ................................................... 15,541
Net investment income .............................................. 17,380
Change in unrealized depreciation .................................. (487,909)
---------
Net decrease in net assets resulting from operations ............... ($470,529)
=========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
FOR THE PERIOD
AUGUST 2, 1999 TO
SEPTEMBER 30,
1999,
(UNAUDITED)
------------
<S> <C>
OPERATIONS:
Net investment income ........................................................... $ 17,380
Change in unrealized depreciation ............................................... (487,909)
------------
Net decrease in net assets resulting from operations ............................ (470,529)
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares sold ..................................................... 16,408,582
Less payments for Shares redeemed ............................................. 94,869
------------
Increase from Capital Share transactions ...................................... 16,313,713
------------
Total increase in net assets .................................................. 15,843,184
NET ASSETS:
Beginning of period ............................................................. 0
------------
End of period (including undistributed net investment income of $17,380) ........ $ 15,843,184
============
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
(For a Share outstanding throughout the period)
AUGUST 2, 1999 TO
SEPTEMBER 30,
1999,
(UNAUDITED)
-----------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................................................... $ 9.80
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................................................ 0.01
Net realized and unrealized gains on investments................................................. (0.29)
------
Total from investment operations............................................................... (0.28)
LESS DISTRIBUTIONS:
Dividends from net investment income............................................................. 0.00
Distributions from net realized gains on investments............................................. 0.00
------
Total distributions............................................................................ 0.00
------
NET ASSET VALUE, END OF PERIOD..................................................................... $ 9.52
======
TOTAL RETURN....................................................................................... (2.86%)
RATIOS AND SUPPLEMENTARY DATA:
Net assets, end of period (000's).................................................................. $15,843
Ratio of expenses to average net assets............................................................ 0.75%(a) (b)
Ratio of net investment income to average net assets............................................... 0.84%(a)
Portfolio turnover rate............................................................................ 0%
(a) Determined on an annualized basis.
(b) During the period ended September 30, 1999, expenses in excess of the
expense limitation were reimbursable from the Investment Adviser. Absent
the expense limitaion, the ratio of expenses to average net assets would
have increased and the ratio of net investment income to average net assets
would have decreased by 0.05%.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
4
</TABLE>
<PAGE>
PORTFOLIO OF INVESTMENTS
September 30, 1999
NUMBER
OF
COMMON STOCKS (97.9%) SHARES VALUE
- --------------------- --------- ---------
BASIC MATERIALS 2.9%
Dow Chemical Company 1,092 $ 124,079
Du Pont (E.I. ) de Nemours
and Company 5,583 339,865
---------
463,944
CAPITAL GOODS 9.1%
General Electric Company 10,007 1,186,455
Tyco International Ltd. 2,509 259,054
---------
1,445,509
COMMUNICATION SERVICES 7.3%
AT&T Corp. 13,443 584,770
MCI WorldCom, Inc. (b) 7,880 566,375
---------
1,151,145
CONSUMER CYCLICALS 9.6%
Ford Motor Company 4,945 248,177
Home Depot, Inc. 6,047 414,975
Wal-Mart Stores, Inc. 18,147 863,117
---------
1,526,269
CONSUMER STAPLES 11.7%
Coca-Cola Company 14,001 672,923
Philip Morris Companies Inc. 13,735 469,565
Procter and Gamble Company 7,541 706,969
---------
1,849,457
ENERGY 5.9%
Exxon Corporation 7,315 555,483
Royal Dutch Petroleum Company 6,460 381,544
---------
937,027
FINANCIAL 14.0%
American International Group, Inc. 9,039 785,828
Bank of America Corporation 10,211 568,625
Citigroup Inc. 19,736 868,384
---------
2,222,837
HEALTHCARE 10.5%
Bristol-Myers Squibb Company 7,743 522,653
Merck & Co., Inc. 9,200 596,275
Pfizer Inc. 15,133 543,842
---------
1,662,770
TECHNOLOGY 23.2%
International Business
Machines Corporation 7,180 871,473
Intel Corporation 13,130 975,723
Microsoft Corporation (b) 20,198 1,829,181
---------
3,676,377
TRANSPORTATION 0.8%
Burlington Northern
Santa Fe Corporation 2,442 67,155
Union Pacific Corporation 1,281 61,568
---------
128,723
NUMBER
OF
SHARES VALUE
--------- ---------
UTILITIES 2.9%
Duke Energy Corporation 3,360 $ 185,220
Enron Corp. 6,432 265,320
---------
450,540
---------
TOTAL INVESTMENTS
(Cost: $16,002,507) (97.9%) 15,514,598
CASH AND OTHER ASSETS,
LESS LIABILITIES (2.1%) 328,586
-----------
NET ASSETS (100.0%) $15,843,184
===========
NOTES TO PORTFOLIO OF INVESTMENTS:
(a) Based on the cost of investments of $16,002,507 for federal income tax
purposes at September 30, 1999, the aggregate gross unrealized appreciation
was $242,357, the aggregate gross unrealized depreciation was $730,266 and
the net unrealized depreciation of investments was $487,909.
(b) Non-income producing security.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION:
Wayne Hummer Investment Trust (the "Trust"), is an open-end investment
company organized as a Massachusetts business trust. The Trust consists of
four investment portfolios, Wayne Hummer CorePortfolio Fund, Wayne Hummer
Growth Fund, Wayne Hummer Income Fund and Wayne Hummer Money Market Fund,
each operating as a separate mutual fund. Presented herein are the financial
statements of the Wayne Hummer CorePortfolioFund (the "Fund"). The Fund
commenced investment operations on August 2, 1999 and may issue an unlimited
number of full and fractional units of beneficial interest (Shares) without
par value. The investment objective of the Fund is to achieve long-term
capital growth by investing in a passively-managed portfolio of large-cap
stocks.
1. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION
Investments are stated at value. Each listed and unlisted security for which
last sale information is regularly reported is valued at the last reported
sale price on that day. If there has been no sale on such day, the last
reported sale price prior to that day is utilized if such sale is between the
closing bid and asked price of the current day. If the last price on a prior
day is not between the current day's closing bid and asked price, then the
value of such security is taken to be the mean between the current day's
closing bid and asked price. Any unlisted security for which last sale
information is not regularly reported and any listed debt security which has
an inactive listed market for which over-the-counter market quotations are
readily available is valued at the highest closing bid price determined on
the basis of reasonable inquiry, except that debt securities having a
remaining maturity of 60 days or less are valued on an amortized cost basis.
Restricted securities and any other securities or other assets for which
market quotations are not readily available are valued at their fair value as
determined in good faith under procedures established by the Board of
Trustees.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date, and interest income is recorded on the
accrual basis and includes amortization of money market instrument premium
and discount.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles may require management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. In those cases, actual results may differ from estimates.
2. FUND SHARE VALUATION AND DIVIDENDS TO SHAREHOLDERS
Net asset value per Share is determined on each day the New York Stock
Exchange is open as of the close of trading on the Exchange by dividing the
value of net assets (total assets less liabilities) by the total number of
Shares outstanding.
Ordinary income dividends are normally declared and paid in April, July,
October, and December. Capital gains dividends, if any, are paid at least
annually. Dividends will be reinvested in additional Shares unless a
Shareholder requests payment in cash. Dividends payable to Shareholders are
recorded by the Fund on the ex-dividend date.
3. FEDERAL INCOME TAXES
It is the Fund's policy to comply with the special provisions of the Internal
Revenue Code available to investment companies and, in the manner provided
therein, to distribute all of its taxable income, as well as any net realized
gain on sales of investments. Such provisions were complied with and
therefore no federal income tax provision is required.
4. TRANSACTIONS WITH AFFILIATES
The Fund has an Investment Advisory and Management Agreement and a Portfolio
Accounting Services Agreement with Wayne Hummer Management Company
("Investment Adviser"). The shareholders of the Investment Adviser are the
Voting Members of Wayne Hummer Investments LLC, ("Distributor and Shareholder
Service Agent"). For advisory and management services and facilities
furnished, the Fund pays fees of .40 of 1% of average daily net assets. The
Investment Adviser is obligated to reimburse the Fund to the extent that the
Fund's ordinary operating expenses, including the fee of the Investment
Adviser, exceeds 0.75% of the average daily net assets of the Fund. During
the period ended September 30, 1999, the Fund incurred management fees of
$8,288 and the Investment Adviser was obligated to reimburse the Fund for
excess expenses of $1,000.
For portfolio accounting services, the Fund pays the Investment Adviser a fee
based on the level of average daily net assets plus out-of-pocket expenses.
The Investment Adviser has agreed to waive fees attributed to the Fund until
July 31, 2000.
Wayne Hummer Investments LLC serves as Distributor and Shareholder Service
Agent without compensation from the Fund.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Certain trustees of the Fund are also officers or directors of the Investment
Adviser or Voting Members of the Distributor and Shareholder Service Agent.
During the period ended September 30, 1999, the Fund made no direct payments
to its officers and incurred trustee fees for its unaffiliated trustees of
$600.
5. INVESTMENT TRANSACTIONS
Investment transactions (excluding money market instruments) for the period
August 2, 1999 to September 30, 1999 are as follows:
Purchases $16,002,507
Proceeds from sales $ 0
6. FUND SHARE TRANSACTIONS
Proceeds and payments on Fund Shares as shown in the Statement of Changes in
Net Assets are in respect of the following number of shares for the period
August 2, 1999 to September 30, 1999:
Shares sold 1,673,061
Shares issued upon reinvestment of dividends 0
-----------
1,673,061
Shares redeemed (9,356)
-----------
Net increase in Shares outstanding 1,663,705
===========
7
<PAGE>
BOARD OF TRUSTEES
Steven R. Becker
Chairman
Charles V. Doherty
Joel D. Gingiss
Patrick B. Long
David P. Poitras
James J. Riebandt
Eustace K. Shaw
This brochure must be preceded or accompanied by a current prospectus of the
Wayne Hummer Investment Trust.
LOGO: Wayne Hummer Investment LLC
300 South Wacker
Chicago, Illinois
60606-6607
1.800.621.4477 (toll-free)
(312) 431.1700 (local)
200 E. Washington Street
Appleton, Wisconsin
54911-5468
1.800.678.0833 (toll-free)
(414) 734.1474 (local)
www.whummer.com