Government Investors Trust
Annual Report
March 31, 1996/Audited
GIT
GIT Investment Funds
<PAGE>
Letter to Shareholders
May 24, 1996
Dear Shareholder:
During the fiscal year covered by this report, the Federal
Reserve Board concluded that as a result of several previous
increases in the federal funds rate, inflation was under
control and the economy was moving at an acceptable pace.
The Fed thus reversed its strategy and lowered rates three
times between July 1995 and January 1996.
Government Investors Trust's seven day yield decreased from
4.88% on March 31, 1995 to 4.15% on March 29, 1996. Since
the end of March, interest rates have remained relatively
steady, reflected in the Trust's seven day yield of 4.19% as
of this writing. The Trust's short average maturity
positions it to take quick advantage of future interest rate
increases.
Government Investors Trust continues to provide investors
stability of principal and a high degree of liquidity. We
appreciate your confidence in GIT Investment Funds and
encourage you to look at all of our no load mutual funds.
Sincerely,
(signature)
A. Bruce Cleveland
President
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Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders, Government
Investors Trust:
We have audited the accompanying statement of assets and
liabilities of Government Investors Trust, including the
portfolio of investments, as of March 31, 1996, and the
related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years
in the period then ended, and the financial highlights for
each of the five years in the period then ended. These
financial statements and financial highlights are the
responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of
March 31, 1996, by correspondence with the custodian. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Government Investors
Trust at March 31, 1996, the results of its operations for
the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended,
in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Washington, DC
May 3, 1996
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Government Investors Trust
Portfolio of Investments - March 31, 1996
U.S. GOVERNMENT AGENCY OBLIGATIONS: 81.6% of Net Assets
Federal Home Loan Mortgage
Corporation Discount Notes,
5.14%, 4/1/96 $4,635,000 $4,635,000
Federal Home Loan Mortgage
Corporation Discount Notes,
5.07%, 4/8/96 5,000,000 4,995,071
Federal Home Loan Mortgage
Corporation Discount Notes,
5.12%, 4/11/96 5,000,000 4,992,889
Federal Home Loan Mortgage
Corporation Discount Notes,
5.19%, 4/22/96 5,000,000 4,984,863
Federal Home Loan Mortgage
Corporation Discount Notes,
5.27%, 4/30/96 3,000,000 2,987,264
Federal Home Loan Mortgage
Corporation Discount Notes,
5.27%, 5/13/96 5,000,000 4,969,258
Federal Home Loan Mortgage
Corporation Discount Notes,
5.16%, 5/28/96 5,000,000 4,959,150
Federal National Mortgage
Association Discount Notes,
5.30%, 4/23/96 5,000,000 4,983,806
Federal National Mortgage
Association Discount Notes,
5.14%, 4/25/96 5,000,000 4,982,867
Federal National Mortgage
Association Discount Notes,
5.16%, 5/10/96 4,210,000 4,186,465
Total U.S. Government
Agency Obligations (Cost $46,676,633) 46,676,633
Variable Rate Loan Guaranteed By a U.S. Government Agency:
0.1% of Net Assets
Farmers Mortgage Housing
Administration Loan, 9.08%*, 2/1/10
(Cost $32,539) 32,539 32,539
Repurchase Agreement: 17.9% of Net Assets
With Donaldson, Lufkin & Jenrette
Securities Corporation issued 3/29/96
at 5.3%, due 4/1/96 collateralized
by $10,477,228 in Federal National
Mortgage Association Medium-Term Notes
due 3/19/03. Total proceeds at maturity
are $10,245,523. (Cost $10,241,000) 10,241,000
TOTAL INVESTMENTS (Cost $56,950,172)= $56,950,172
Notes to Portfolio of Investments:
* Floating interest rate - rate disclosed
is as of March 31, 1996
= Aggregate cost for federal income tax purposes
The Notes to Financial Statements are an integral part of
these statements.
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Government Investors Trust
Statement of Assets and Liabilities
March 31, 1996
ASSETS
Investments, at value (Notes 1 and 2) (Cost $56,950,172)
Investment securities $46,709,172
Repurchase agreement 10,241,000
Total investments 56,950,172
Cash 205
Receivables
Interest 4,802
Capital shares sold 251,551
Share subscriptions (Note 1) 252,451
Total assets 57,459,181
LIABILITIES
Payables
Shares reserved for subscription (Note 1) 252,451
Dividends 6,094
Other liabilities 3,507
Total liabilities 262,052
NET ASSETS $57,197,129
CAPITAL SHARES OUTSTANDING 57,197,217
NET ASSET VALUE PER SHARE $1.000
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Government Investors Trust
Statement of Operations
For the Year Ended March 31, 1996
INVESTMENT INCOME (Note 1)
Interest income $3,358,224
EXPENSES (Notes 3 and 4)
Investment advisory fee 291,791
Custodian fees 31,139
Professional fees 59,157
Salaries and related expenses 189,865
Securities registration and blue sky expense 17,704
Telephone expense 11,553
Data processing and office equipment expense 72,640
Office and miscellaneous expenses 41,898
Depreciation and amortization 5,425
Custodian fees paid indirectly (10,966)
Total expenses 710,206
NET INVESTMENT INCOME 2,648,018
NET REALIZED GAIN ON INVESTMENTS --
TOTAL INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $2,648,018
The Notes to Financial Statements are an integral part of
these statements.
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Government Investors Trust
Statements of Changes in Net Assets
For the Years Ended March 31
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $2,648,018 $2,547,455
Net realized loss on investments -- (101)
Total increase in net assets
resulting from operations 2,648,018 2,547,354
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (2,648,018) (2,547,455)
CAPITAL SHARE TRANSACTIONS (Note 5) (7,343,984) (13,548,671)
TOTAL DECREASE IN NET ASSETS (7,343,984) (13,548,772)
NET ASSETS
Beginning of year 64,541,113 78,089,885
End of year $57,197,129 $64,541,113
Government Investors Trust
Financial Highlights
Selected data for a share outstanding throughout each period:
1992 1993 1994 1995 1996
Net asset value
beginning
of 31 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment
income $0.044 $0.024 $0.021 $0.037 $0.045
Total from
investment
operations $0.044 $0.024 $0.021 $0.037 $0.045
Distributions
from net
investment
income $(0.044)$(0.024)$(0.021)$(0.037)$(0.045)
Total
distributions $(0.044)$(0.024)$(0.021)$(0.037)$(0.045)
Net asset value
end of year $1.000 $1.000 $1.000 $1.000 $1.000
Total return 4.44% 2.44% 2.08% 3.80% 4.62%
Net assets end
of year
(thousands) $117,170 $88,911 $78,090 $64,541 $57,197
Ratio of expenses
to average
net assets* 1.06% 1.06% 1.11% 1.16% 1.23%
Ratio of net
investment
income to
average net
assets 4.41% 2.44% 2.08% 3.70% 4.52%
*For the year ended March 31, 1996, ratio reflects custodian
fees paid indirectly (Note 3).
The Notes to Financial Statements are an integral part of
these statements.
Government Investors Trust
Notes to Financial Statements
March 31, 1996
1. Summary of Significant Accounting Policies. Government
Investors Trust (the "Trust") is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end, diversified investment
management company. The Trust invests solely in securities
issued and guaranteed by the U.S. Government or any of its
agencies or instrumentalities or in repurchase agreements
backed by such securities.
Securities Valuation: The Trust uses the amortized cost
method of valuation whereby portfolio
securities are valued at acquisition cost as adjusted for
amortization of premium or accretion of discount rather than
at value based on market
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Notes to Financial Statements (continued)
factors. As required, the Trust monitors the difference
between market value and amortized cost to assure that this
valuation method fairly reflects market value. Investment
transactions are recorded on the trade date. The cost of
investments sold is determined on the identified cost basis
for financial statement and federal income tax purposes.
Investment Income: Interest income, net of amortization of
premium or discount, and other income (if any) are accrued
as earned.
Dividends and: Net investment income, determined
as gross investment income less expenses, is declared as a
dividend each business day. Declared dividends are
distributed to shareholders or reinvested in additional
shares as of the close of business at the end of each month.
Income Tax: In accordance with the requirement of
Subchapter M of the Internal Revenue Code applicable to
regulated investment companies, all of the taxable income of
the Trust is distributed to its shareholders, and therefore
no federal income tax provision is required. As of March
31, 1996, the Trust had available for federal income tax
purposes unused capital loss carryovers of $101 expiring
March 31, 2003.
Share Subscriptions: Shares purchased by check or otherwise
not paid for in immediately available funds are accounted
for as share subscriptions receivable and shares reserved
for subscriptions.
Use of Estimates: The preparation of the financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and reported amounts of increases and decreases
in net assets from operations during the reporting period.
Actual results could differ from those estimates.
2. Investment in Repurchase Agreements. When the Trust
purchases securities under agreements to resell, the
securities are held for safekeeping by the Trust's custodian
bank as collateral. Should the market value of the
securities purchased under such an agreement decrease below
the principal amount to be received at the termination of
the agreement plus accrued interest, the counterparty is
required to place an equivalent amount of additional
securities in safekeeping with the Trust's custodian bank.
Repurchase agreements may be terminated within seven days.
Pursuant to an Exemptive Order issued by the Securities and
Exchange Commission, the Trust, along with other registered
investment companies having Advisory and Services Agreements
with Bankers Finance Investment Management Corp. ("BFIMC"),
transfers uninvested cash balances into a joint trading
account. The aggregate balance in this joint trading
account is invested in one or more consolidated repurchase
agreements whose underlying securities are U.S. Treasury or
federal agency obligations.
3. Investment Advisory Fees and Other Transactions with
Affiliates. The Investment Adviser to the Trust, BFIMC,
earns an advisory fee equal to 0.5% per annum of the average
net assets of the Trust; the fees accrue daily and are
payable monthly. In order to meet the securities
registration requirements of certain states, BFIMC has
undertaken to reimburse the Trust by the amount, if any, by
which the total expenses of the Trust (less certain excepted
expenses) exceed the applicable expense limitation in any
state or other jurisdiction in which the Trust is subject to
regulation during the fiscal year. The Trust believes the
current applicable expense limitation is 2.5% per annum of
the average net assets of the Trust up to $30 million, 2% of
any amount of such net assets exceeding $30 million but not
exceeding $100 million, and 1.5% per annum of such amount in
excess of $100 million. BFIMC is responsible for the fees
and expenses of Trustees who are affiliated with BFIMC, the
rent expense of the Trust's principal executive office
premises and certain promotional expenses. For the year
ended March 31, 1996, outside Trustee fees of $18,000 were
paid by the Trust. At March 31, 1996, certain officers,
Trustees, companies and individuals affiliated with the
Trust own shares in the Trust aggregating 2.2% of the shares
outstanding.
Custodian fees are reduced under an expense offset
arrangement with the Trust's custodian. The amount of the
expense offset for the year ended March 31, 1996 was
$10,966.
4. Other Expenses. With the exception of certain expenses
of the Trust payable by it directly, all support services
are provided to the Trust under a Services Agreement between
the Trust and BFIMC, pursuant to which such services are
provided for amounts not exceeding the cost to BFIMC of the
support provided. For the year ended March 31, 1996,
operating expenses of $418,415 have been reimbursed to BFIMC
under the Services Agreement.
5. Capital Share Transactions. An unlimited number of
capital shares, without par value, are authorized.
Transactions in capital shares (in dollars and shares) for
the years ended March 31 were as follows:
Shares sold 98,828,888 210,702,717
Shares issued in reinvestment 2,540,729 2,447,951
Total shares issued 101,369,617 213,150,668
Shares redeemed (108,713,601) (226,699,339)
Net decrease (7,343,984) (13,548,671)
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Telephone Numbers
Shareholder Service
Washington, DC area: 703/528-6500
Toll-free nationwide: 800/336-3063
24-Hour ACCESS
Toll-free nationwide: 800/448-4422
The GIT Family of Mutual Funds
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Government Investors Trust
For more complete information on any GIT Investment Fund,
including charges and expenses, request a prospectus by
calling the numbers above. Read it carefully before you
invest or send money. This prospectus does not constitute an
offering by the distributor in any jurisdiction in which such
offering may not be lawfully made.
GIT
GIT INVESTMENT FUNDS
1655 Fort Myer Drive
Arlington Virginia 22209
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