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<PAGE> PAGE 2
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SIGNATURE RICHARD MASON
TITLE GENERAL COUNSEL
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's Financial Statements and prospectus and is qualified in its
entirety by reference to such source documents.
</LEGEND>
<CIK> 0000310407
<NAME> GOVERNMENT INVESTORS TRUST
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 54,551,740
<INVESTMENTS-AT-VALUE> 54,551,740
<RECEIVABLES> 126,492
<ASSETS-OTHER> 617
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 54,678,849
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186,148
<TOTAL-LIABILITIES> 186,148
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 54,492,788
<SHARES-COMMON-STOCK> 54,492,788
<SHARES-COMMON-PRIOR> 57,197,216
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (87)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 54,492,701
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,487,001
<OTHER-INCOME> 0
<EXPENSES-NET> 320,262
<NET-INVESTMENT-INCOME> 1,166,739
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,166,739
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 25,965,661
<NUMBER-OF-SHARES-REDEEMED> 29,792,796
<SHARES-REINVESTED> 1,122,707
<NET-CHANGE-IN-ASSETS> (2,704,428)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (87)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 139,244
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 323,262
<AVERAGE-NET-ASSETS> 55,710,732
<PER-SHARE-NAV-BEGIN> 1.000
<PER-SHARE-NII> 0.021
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.021
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 1.080
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Results of Votes Taken at Shareholder Meeting of
Government Investors Trust
A special meeting of the Trust's shareholders was held on
July 29, 1996. Of the 55,989,421 shares outstanding, the
following shares were voted at the meeting:
1. Approval of an advisory agreement with Bankers Finance
Advisors, LLC/ Madison Investment Advisors, Inc.
For: 26,154,106 Against: 510,247 Abstain: 1,568,272
2. Election of Trustees
For Withhold Authority
Frank E. Burgess 26,954,567 1,278,061
James R. Imhoff, Jr. 26,932,097 1,300,531
Thomas S. Kleppe 26,843,944 1,388,684
Lorence D. Wheeler 26,935,573 1,297,055
3. Ratification of the selection of Ernst & Young LLP as
independent auditors of the Trust for the year ending March
31, 1997:
For: 25,894,858 Against: 394,203 Abstain: 1,943,563
Investment Advisory Agreement
This Agreement is made by and between Madison Investment
Advisors, Inc. (d.b.a. Bankers Finance Advisors, LLC), a
Wisconsin Corporation, Bankers Finance Advisors, LLC, a
Wisconsin limited liability company having its principal place
of business in Arlington, Virginia (the foregoing entities
referred to collectively as the "Advisor"), and Government
Investors Trust, a Massachusetts business trust created pursuant to a
Declaration of Trust filed with the Clerk of the City of Boston,
Massachusetts (the "Trust").
The parties hereto, intending so to be legally bound,
agree with each other as follows:
1. Appointment and Acceptance. The Trust hereby appoints
the Advisor to manage the investment of its assets and to
administer its affairs; and the Advisor hereby accepts such
appointment. The Advisor shall employ its best efforts to
supervise the investment management of the Trust.
2. Discretion of the Advisor. In the performance of its
duties hereunder the Advisor shall have full authority to act as
it deems advisable, except that it shall be bound by the terms
of the Declaration of Trust and By-Laws of the Trust, and by any
written direction given by the Trustees of the Trust not
inconsistent with this Agreement; and it shall be guided by the
investment policies of the Trust from time to time duly in
effect. Subject only to the foregoing, the Advisor shall have
full authority to purchase and sell securities for the Trust;
the Advisor may determine the persons with whom such securities
transactions are to be made and the terms thereof.
3. Other Activities of the Advisor. The Advisor and any
of its affiliates shall be free to engage in any other lawful
activity, including the rendering to others of services similar
to those rendered to the Trust hereunder; and the Advisor or any
interested person thereof shall be free to invest in the Trust
as a shareholder, to become an officer or Trustee of the Trust
if properly elected, or to enter into any other relationship
with the Trust approved by the Trustees and in accordance with
law.
The Advisor agrees that it will not deal with itself or
with any affiliated person or promoter or principal underwriter
of the Trust (or any affiliated person of the foregoing) acting
as a principal, in effecting securities transactions for the
account of the Trust. It is further agreed that in effecting
any such transaction with such a person acting as a broker or
agent, compensation to such person shall be permitted, provided
that the transaction is in the ordinary course of such person's
business and the amount of such compensation does not exceed one
percent of the purchase or sale price of the securities
involved.
If the Advisor or any affiliate thereof provides any other
goods or services which otherwise would be paid for by the Trust
pursuant to this Agreement, then the Trust shall pay the Advisor
or such affiliate the cost reasonably allocated by the Advisor
or affiliate to such goods or services.
4. Investment by Advisor. The Advisor shall not take,
and shall not permit any of its shareholders, officers,
directors or employees to take long or short positions in the
shares of the
<PAGE>
Trust, except for the purchase of shares of the Trust for
investment purposes at the same price as that available to the
public at the time of purchase, or in connection with the
original capitalization of the Trust. In connection with
purchases or sales of portfolio securities for the account of
the Trust neither the Advisor nor any officer, director or
employee of the Advisor shall act as a principal or receive any
commission therefor.
5. Expenses of the Trust. The Trust shall pay all of its
expenses not expressly assumed by the Advisor herein. Without
limitation, the expenses of the Trust, assumed by the Trust
hereby, shall include the following:
a. Expenses related to the continued existence of the
Trust.
b. Fees and expenses of the Trustees (except those
affiliated with the Advisor), the officers and the
administrative employees of the Trust.
c. Fees paid to the Advisor hereunder.
d. Fees and expenses of preparing, printing and
distributing official filings, reports, prospectuses and
documents required pursuant to applicable state and Federal
securities law and expenses of reports to shareholders.
e. Fees and expenses of custodians, transfer agents,
dividend disbursing agents, shareholder servicing agents,
registrars, and similar agents.
f. Expenses related to the issuance, registration,
repurchase, exchange and redemption of shares and certificates
representing shares.
g. Auditing, accounting, legal, insurance, portfolio
administration, association membership, printing, postage, and
other administrative expenses.
h. Expenses relating to qualification or licensing of the
Trust, shares in the Trust, or officers, employees and agents of
the Trust under applicable state and Federal securities
law.
i. Expenses related to shareholder meetings and proxy
solicitations and materials.
j. Interest expense, taxes and franchise fees, and all
brokerage commissions and other costs related to purchase and
sales of portfolio securities.
In addition, the Trust shall assume all losses and
liabilities incurred in the administration to the Trust and of
its investment portfolio; and it shall pay such non-recurring
expenses as may arise through litigation, administrative
proceedings, claims against the Trust, the indemnification of
Trustees, officers, employees, shareholders and agents, or
otherwise.
6. Compensation to the Advisor. For its services
hereunder, the Trust shall pay to the Advisor a management fee
equal to: one-half (1/2) percent per annum of the average daily
net assets of the Trust during each respective month. Such fee
shall be payable monthly as of the last day of the month and
shall be the sum of the daily fees calculated as one-three
hundred sixty-fifth
<PAGE>
(1/365), except in leap years one-three hundred sixty-sixth
(1/366), of the annual fee based upon each portfolio's net
assets calculated for the day.
With respect to any portfolio of the Trust subsequently
authorized by the Trustees, the management fee provided herein
may be revised upward or downward by mutual agreement between
the parties at the time the additional portfolio is authorized,
provided such revision is approved by the Trustees, including
the vote of a majority of those Trustees who are not interested
persons of the Trust, cast in person at a meeting called for
that purpose. The Advisor shall have the right to waive any
portion of its management fee during any period, and it may
permanently reduce the amount of the fee under such terms as it
may determine by written notice thereof to the Trust. The
Advisor shall have the right to share its management fee with
others or make payments out of its management fee to others, as
it solely determines.
7. Limitation of Expenses of the Trust. In addition to
investment management expenses related to the Trust, the Advisor
shall pay the fees and expenses of any Trustees and officers of
the Trust affiliated with the Advisor, all promotional expenses
of the Trust to the extent not paid for by the Trust pursuant to
a Plan of Distribution, the rent expense of the Trust's
principal executive office premises, and the expenses of
formation of the Trust.
The Advisor shall further reimburse the Trust for all of
its expenses, excluding securities transaction commissions and
expenses, taxes, interest, and extra-ordinary and non-recurring
expenses, which exceed during any fiscal year one and one-half
percent (1-1/2%) of the Trust's daily average net assets up to
$40,000,000 and one percent (1%) of the amount, if any, by which
such assets exceed $40,000,000. Any such required reimbursement
shall be made within a reasonable period following the close of
the fiscal year to which it relates; and the Advisor may elect
to pay all or a portion of any such reimbursement it anticipates
will be required at any time or from time to time during the
fiscal year to which the reimbursement relates.
8. Limitation of Advisor's Liability. The Advisor shall
not be liable for any loss incurred in connection with its
duties hereunder, nor for any action taken, suffered or omitted
and believed by it to be advisable or within the scope of its
authority or discretion, except for acts or omissions involving
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties assumed by it under this Agreement.
9. Limitation of Trust's Liability. The Advisor
acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its
Declaration of Trust. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust
and to its assets and that the Advisor shall not seek
satisfaction of any such obligation from the shareholders of the
Trust nor from any Trustee, officer, employee or agent of the
Trust.
10. Term of Agreement. This Agreement shall continue in
effect for two years from the date of its execution; and it
shall continue in force thereafter (but subject to the
termination provisions below), provided that it is specifically
approved at least annually by the Trustees of the Trust or by a
majority vote of the outstanding securities of each series and
class of the Trust's shares with respect to which it is to
continue in effect, and in either case by the vote of a majority
of the Trustees who are not interested persons of the Trust,
cast in person at a meeting called for that purpose.
<PAGE>
11. Termination by Notice. Notwithstanding any provision
of this Agreement, it may be terminated at any time, without
penalty, by the Trustees of the Trust or, with respect to any
series or class of the Trust's shares, by the vote of a majority
of the outstanding voting securities of such series or class, or
by the Advisor, upon sixty days written notice to the other
party.
12. Termination Upon Assignment. This Agreement may not
be assigned by the Adviser and shall automatically terminate
immediately upon any assignment. Nothing herein shall prevent
the Advisor from employing any other persons or agents,
including Madison Investment Advisors, Inc., at its own expense,
to assist it in the performance of its duties hereunder.
13. Name of the Trust. In consideration of its formation
of the Trust and the related expenses, the Advisor has retained
the rights to the name "Government Investors Trust" (and any
similar name), which rights the Trust hereby acknowledges. The
Trust, however, shall have the exclusive right to the use of the
name "Government Investors Trust" (although its rights to the
initials "GIT" of such name shall be non-exclusive) so long as
this contract shall remain in force, except that the Advisor may
withdraw such rights from the Trust at any time, effective
immediately or at a time specified, upon written notice to the
Trust. In the event of such notice, the Trust agrees that it
will cause the question of continuation of this Agreement to be
put to a vote of the shareholders of the Trust as soon as
practicable after such notice has been given.
14. Use of Terms. The terms "affiliated person",
"interested person", "assignment", "broker", and "majority of
the outstanding voting securities" as used herein, shall have
the same meanings as in the Investment Company Act of 1940 and
any applicable regulations thereunder.
15. Control of Advisor. Bankers Finance Advisors, LLC is
controlled by Madison Investment Advisors, Inc. a registered
investment advisor located in Madison, Wisconsin. As such, it
is expected that Bankers Finance Advisors, LLC and Madison
Investment Advisors, Inc. will work closely together in the
management of the portfolios including but not limited to
portfolio management, research, securities trading, and other
investment management responsibilities.
In Witness Whereof, the parties have caused this Agreement
to be signed on their behalf by their respective officers duly
authorized and their respective seals to be affixed hereto, this 31 day
of July, 1996.
Madison Investment Advisors, Inc.
By: (signature)
Katherine L. Frank, its Vice President
Bankers Finance Advisors, LLC
By: (signature)
Frank E. Burgess, Member
By: (signature)
Katherine L. Frank, Madison Investment Advisors, Inc
Member
Government Investors Trust
By: (signature)
Thomas S. Kleppe, Trustee
By: (signature)
James Imhoff, Jr., Trustee
By: (signature)
Lorence Wheeler, Trustee
By: (signature)
Frank E. Burgess, Trustee
Services Agreement
This Agreement is made by and between Bankers Finance
Advisors, LLC, a Wisconsin limited liability company
having its principal place of business in Arlington, Virginia
("BFA"), and Government Investors Trust, a Massachusetts
business trust created pursuant to a Declaration of Trust filed
with the Clerk of the City of Boston, Massachusetts
(the "Trust").
The parties hereto, intending so to be legally bound, agree
with each other as follows:
1. Provision of Services. BFA hereby undertakes to provide
the Trust with such operational support services as it may
require in the conduct of its business, to extent which BFA
(or any other person), acting as the Trust's investment
adviser, has not undertaken to provide such services. Such
services may include the functions of shareholder servicing
agent and transfer agent, bookkeeping and portfolio
accounting services, the handling of telephone inquires,
cash withdrawals and other customer service functions
(including processing and monitoring wire transfers), and
providing to the Trust appropriate supplies, equipment and
ancillary services necessary to the conduct of its affairs.
Such services may also include providing or arranging for
and making reimbursable expenditures with respect to any
activities intended to be financed by the Trust pursuant to
its Plan of Distribution. The Trust hereby engages BFA to
provide it with such services.
2. Scope of Authority. BFA shall be at all times, in the
performance of its functions hereunder, subject to any
direction and control of the Trustees of the Trust and of
its officers, and to the terms of its Declaration of Trust
and By-Laws, except only that it shall have no obligation to
provide to the Trust any services that are clearly outside
the scope of those contemplated in this Agreement. In the
performance of its duties hereunder, BFA shall be authorized
to take such action not inconsistent with the express
provisions hereof as it deems advisable. It may contract
with other persons to provide to the Trust any of the
services contemplated herein under such terms as it deems
reasonable and shall have the authority to direct the
activities of such other persons in the manner it deems
appropriate.
3 Other Activities of BFA. BFA and any of its affiliates
shall be free to engage in any other lawful activity,
including the rendering to others services similar to those
to be rendered to the Trust hereunder; and BFA or any
interested person thereof shall be free to invest in the
Trust as a shareholder, to become an officer or Trustee
thereof if properly elected, or to enter into any other
relationship with the Trust approved by the Trustee and in
accordance with law.
BFA agrees that it will not deal with the Trust in any
transaction in which BFA acts as a principal, except to the
extent as may be permitted by the terms of this Agreement.
The records BFA maintains on behalf of the Trust are the
sole property of the Trust and will be surrendered promptly
to the Trust upon its request pursuant to Rule 31a-3 of the
Investment Company Act of 1940.
4. Compensation to BFA. BFA shall have no responsibility
hereunder to bear at its own expense any costs or expenses
of the Trust. The Trust shall reimburse to BFA monthly all
of BFA's costs involved in the provision of services to the
Trust hereunder, as the term "cost" is more fully described
herein. The "cost" of services provided to the Trust
hereunder shall be deemed to include both the relevant
direct expenditures by BFA (including the cost of goods and
services obtained from others) and the related overhead
costs, such as depreciation, interest, employee supervision,
rent and like cost. Where only a portion of a specific
expenditure by BFA is related to services provided to the
Trust hereunder, then BFA may allocate such amount between
the Trust and the other activities of BFA on a reasonable
basis, which may involve the use of assumptions and
approximations not subject to precise verification without
undue cost, provided that a majority of the Trustees,
including a majority of the Trustees who are not interested
persons of the Trust approve the basis upon which such
allocations are made. BFA may, in its discretion, defer
billing to and payment by the Trust of any costs which are
reimbursable to it hereunder, and no such deferment shall
affect the right of BFA to receive reimbursement from the
Trust when the cost are billed.
5. Relationship to Investment Adviser. It is understood by
the parties hereto that concurrently with the execution of
this Agreement, the Trust has entered into an Investment
Advisory Agreement with Bankers Finance Advisors, LLC,
in its separate capacity as the investment
adviser to the Trust (the "Adviser") pursuant to which the
Adviser will provide management services to the Trust and
administer its affairs. BFA has entered into this Agreement
to perform certain services at its cost in consideration of
the Trust's employment of it as the Adviser as aforesaid.
If at any time the Adviser ceases to act as investment
adviser to the Trust under terms substantially those of the
Investment Advisory Agreement or if at any time the Adviser
ceases to be a subsidiary owned at least 50% (in terms of
voting rights) under common control with BFA, then this
Agreement shall immediately terminate as of a date 30 days
from the date of such event, unless within such 30-day
period BFA gives written notice to the Trust that it waives
such termination. The Trust specifically acknowledges and
accepts the relationship between separate capacities of BFA
hereunder and as the Adviser.
6. Limitation of BFA's Liability. BFA shall not be liable
for any loss incurred in connection with any of its services
hereunder, nor for any action taken, suffered or omitted and
believed by it to be advisable or within the scope of its
authority of discretion, except for acts or omissions
involving willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties assumed by it under this
Agreement.
7. Force Majeure. It is specifically agreed by the parties
that if BFA is delayed in the performance of any of the
services to be performed by it hereunder or prevented
entirely or in part from performing such services due to
causes or events beyond its control, then such delay or non-
performance may either be excused and the reasonable time
for performance thereby extended as necessary, or if such
delay or non-performance continues for 30 days then the
Trust may cancel this Agreement immediately thereafter or at
any time prior to the cessation of delay or resumption of
performance by BFA; but BFA shall not otherwise be liable
for and the Trust shall otherwise hold it harmless from any
such delay or non-performance. "Causes or events beyond
control" shall include, without limitation, the following:
Acts of God; interruption of power or other utility,
transportation or communications services; malfunction of
computer equipment; acts of civil or military authority;
sabotage national emergencies, war, explosion, flood,
accident, earthquake, fire, or other catastrophe; strike or
other labor problem; shortage of suitable parts, material,
labor or transportation; or present or future law,
governmental order, rule, regulations or official policy.
8. Limitation of Trust's Liability. BFA acknowledges that
it has received notice of and accepts the limitations upon
the Trust's liability set forth in its Declaration of Trust.
BFA agrees that the Trust's obligations hereunder in any
case shall be limited to the Trust and to its assets and
that BFA shall not seek satisfaction of any such obligation
from the shareholders of the Trust nor from any Trustee,
officer, employee or agent of the Trust.
9. Term of Agreement. This Agreement shall continue in
effect for two years from the date of its execution; and it
shall continue in force thereafter (but subject to the
termination provisions below), provided that it is
specifically approved at least annually by the Trustees of
the Trust or a majority vote of the outstanding securities
of each series and class of the Trust's shares with respect
to which it is to continue in effect, and in either case by
either case by the vote of a majority of the Trustees who
are not interested persons of the Trust, cast in person at a
meeting called for that purpose.
10. Termination by Notice. Notwithstanding any provision of
this Agreement, it may be terminated at any time without
penalty, by the Trustees of the Trust or, with respect to
any series or class of the Trust's shares, by the vote of
the majority of the outstanding voting securities of such
series or class, or by BFA, upon thirty days written notice
to the other party.
11. Termination upon Assignment. This Agreement may not be
assigned by BFA and shall automatically terminate upon any
such assignment; except that BFA may assign or transfer its
interest herein to a wholly-owned subsidiary of BFA, or to
another entity operated substantially under common control
with BFA, provided BFA represents to the Trust that
substantial continuity of management, personnel and services
previously available to the Trust will be maintained
following such assignment or transfer and that the Trustees
of the Trust (including a majority of the Trustees who are
not interested persons of the Trust) accept such
representation. Nothing herein shall limit the right of BFA
to obtain goods and services from other persons as described
in Section 2 above.
12. Use of Terms. The terms "affiliated person," "interested
persons," "assignment," and "majority of the outstanding
voting securities," as used herein, shall have the same
meanings as in the Investment Company Act of 1940 and any
applicable regulations thereunder. In Witness Whereof, the
parties have caused this Agreement to be signed in their
behalf by their respective officers duly authorized and
their respective seals to affixed hereto, this 31 day of July, 1996
Bankers Finance Advisors LLC
By: (signature) Katherine L. Frank
Its President/Manager
Government Investors Trust
By (signature) Thomas S. Kleppe
Trustee
By (signature) James Imhoff, Jr.
Trustee
By (signature) Lorence Wheeler
Trustee
By (signature) Frank E. Burgess
Trustee
