Government Investors Trust
1655 Ft. Myer Drive
Arlington, Virginia 22209
703-528-3600
Semi-Annual Report
September 30, 1996
(Unaudited)
Letter to Shareholders
November 15, 1996
Dear Shareholder:
Short-term interest rates have been fairly stable since our last letter, as
the Federal Reserve has wrestled with conflicting evidence regarding trends in
economic growth and inflation. After showing surprising strength in the second
quarter of 1996, the U.S. economy seemed to settle into a more sustainable
growth trend during the third quarter. This allowed fears of inflation to
abate, and the Fed has made no changes in interest rates at its last several
meetings.
During the six-month period covered by this report, the seven-day yield from
Government Investors Trust moved only from 4.15% on March 29 to 4.23% on
September 30, 1996. During this same period, the fund's average maturity rose
from 22 to 26 days.
Concerns over tightness in the U.S. labor market continue to guide the
direction of short-term interest rates. With the rate of unemployment quite
low and hourly earnings creeping higher, wage pressures may force the Fed
to tighten interest rates to control inflation. We will monitor this situation
closely and will adjust the maturity of the portfolio to best capture higher
yields should they occur. Most other indicators of Fed policy predict a steady
path ahead.
We appreciate your confidence in Government Investors Trust and reaffirm our
commitment to provide you with competitive money market returns, safety of
principal and liquidity.
Sincerely,
(signature)
Christopher C. Berberet
Vice President
<PAGE>
Government Investors Trust
Portfolio of Investments - September 30, 1996
(Unaudited)
Principal
Amount Value
U.S. Government Agency Obligations: 87.8% of
Net Assets
Federal Home Loan Mortgage Corporation
Discount Notes, 5.31%, 10/28/96 $5,000,000 $4,980,088
Federal Home Loan Mortgage Corporation
Discount Notes, 5.24%, 10/30/96 5,000,000 4,978,894
Federal Home Loan Mortgage Corporation
Discount Notes, 5.36%, 11/04/96 4,000,000 3,979,751
Federal National Mortgage Association
Discount Notes, 5.32%, 10/15/96 5,000,000 4,989,656
Federal National Mortgage Association
Discount Notes, 5.26%, 10/16/96 6,500,000 6,485,754
Federal National Mortgage Association
Discount Notes, 5.27%, 10/22/96 7,500,000 7,476,944
Federal National Mortgage Association
Discount Notes, 5.21%, 10/23/96 5,000,000 4,984,081
Federal National Mortgage Association
Discount Notes, 5.19%, 10/29/96 10,000,000 9,959,633
Total Government Agency Obligations (Cost $47,834,801)= 47,834,801
Variable Rate Loan Guaranteed by U.S. Government Agencies: 0.05% of Net Assets
Farmers Home Administration Loan, 8.83%*,
2/1/10 (Cost $25,939)= 25,939 25,939
Repurchase Agreement: 12.3% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation issued
9/30/96 at 5.65%, due 10/1/96 collateralized by $6,821,331 in
United States Treasury Notes due 8/15/97. Proceeds at maturity are
$6,692,050.12. (Cost $6,691,000)= 6,691,000
Total Investments (Cost $54,551,740)= $54,551,740
Notes to Portfolio of Investments:
* Floating interest rate -- rate disclosed is as of September 30, 1996
= Aggregate cost for federal income tax purposes
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Government Investors Trust
Statement of Assets and Liabilities
September 30, 1996
(Unaudited)
Assets
Investments, at value (Notes 1 and 2) (Cost $54,551,740)
Investment securities $47,860,740
Repurchase agreement 6,691,000
Total investments 54,551,740
Cash 617
Receivables
Interest 1,260
Capital shares sold 2,000
Share subscriptions (Note 1) 123,232
Total assets 54,678,849
Liabilities
Payables
Shares reserved for subscription (Note 1) 123,232
Capital shares redeemed 56,104
Dividends 5,047
Other liabilities 1,765
Total liabilities 186,148
Net Assets $54,492,701
Capital Shares Outstanding 54,492,788
Net Asset Value Per Share $1.000
Government Investors Trust
Statement of Operations
For the Six Months Ended September 30, 1996
(Unaudited)
Investment Income (Note 1)
Interest income $1,487,001
Expenses (Notes 3 and 4)
Investment advisory fees 139,244
Custodian fees 8,929
Professional fees 26,751
Salaries and related expenses 78,252
Securities registration and blue sky expense 13,168
Telephone expense 5,777
Data processing and office equipment expense 32,435
Office and miscellaneous expenses 17,011
Depreciation and amortization 1,986
Fees paid indirectly (3,291)
Total expenses 320,262
Net Investment Income 1,166,739
Total Increase In Net Assets Resulting From Operations $1,166,739
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Government Investors Trust
Statements of Changes in Net Assets
Six Months
Ended 9/30/96 Year Ended
(Unaudited) 3/31/96
Increase in Net Assets Resulting From Operations
Net investment income $1,166,739 $2,648,018
Total increase in net assets
resulting from operations 1,166,739 2,648,018
Distributions to Shareholders
From net investment income (1,166,739) (2,648,018)
Capital Share Transactions (Note 5) (2,704,428) (7,343,984)
Total Decrease In Net Assets (2,704,428) (7,343,984)
Net Assets
Beginning of year 57,197,129 64,541,113
End of year $54,492,701 $57,197,129
Government Investors Trust
Financial Highlights
Selected data for a share outstanding throughout each period:
1992 1993 1994 1995 1996 1996***
Net asset value
beginning
of 31 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Net investment
income $0.044 $0.024 $0.021 $0.037 $0.045 $0.021
Total from
investment
operations $0.044 $0.024 $0.021 $0.037 $0.045 $0.021
Distributions
from net
investment
income $(0.044)$(0.024)$(0.021)$(0.037)$(0.045)$(0.021)
Total
distributions $(0.044)$(0.024)$(0.021)$(0.037)$(0.045)$(0.021)
Net asset value
end of year $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
Total return 4.44% 2.44% 2.08% 3.80% 4.62% 4.22%**
Net assets end
of year
(thousands) $117,170 $88,911 $78,090 $64,541 $57,197 $54,493
Ratio of expenses
to average
net assets* 1.06% 1.06% 1.11% 1.16% 1.23% 1.16%**
Ratio of net
investment
income to
average net
assets 4.41% 2.44% 2.08% 3.70% 4.52% 4.19%**
*For the year ended March 31, 1996, ratio reflects custodian
fees paid indirectly (Note 3).
**Annualized
***For the six months ended September 30, 1996 (unaudited). Effective July 31,
1996, the investment advisory services transferred to Bankers Finance
Advisors, LLC from Bankers Finance Investment Management Corp. (See Note 3).
Government Investors Trust
Notes to Financial Statements
September 30, 1996
(Unaudited)
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 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: Net investment income, determined as gross investment income less
expenses, is declared as a dividend each business day. 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 carryover 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 the same advisor, 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 Advisor to the Trust, Bankers Finance Advisors, LLC ("the
Advisor"), earns an advisory fee equal to 0.5% per annum of the average net
assets of the Trust; the fees are accrued daily and are paid monthly. The
Advisory Agreement between the Trust and the Advisor was approved at the
special meeting of the Trust's shareholders on July 29, 1996. The Advisor
purchased the investment management assets of Bankers Finance Investment
Management Corp. ("BFIMC"), the Trust's previous investment advisor, effective
July 31, 1996.
The Advisor has undertaken to reimburse the Trust by the amount, if any, by
which the total expenses of the Trust (less certain excepted expenses) exceed
1.5% per annum of the average net assets of the Trust up to $40 million and 1%
per annum of such amount in excess of $40 million. The Advisor is responsible
for the fees and expenses of Trustees who are affiliated with the Advisor, the
rent expense of the Trust's principal executive office premises and certain
promotional expenses. For the six months ended September 30, 1996, outside
Trustee fees of $9,000 were paid by the Trust.
Fees are reduced under an expense offset arrangement with the Trust's
custodian. The amount of the expense offset for the six months ended September
30, 1996 was $3,291.
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 the Advisor, pursuant to which such
services are provided for amounts not exceeding the cost to the Advisor. For
the six months ended September 30, 1996, operating expenses of $181,018 have
been reimbursed to the Advisor and 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) were as follows:
Six Months
Ended Sept. Year ended
30, 1996 March 31,
(Unaudited) 1996
Shares sold 25,965,661 98,828,888
Shares issued in reinvestment of dividends 1,122,707 2,540,729
Total shares issued 27,088,368 101,369,617
Shares redeemed (29,792,796) (108,713,601)
Net decrease (2,704,428) (7,343,984)
Government Investors Trust
Special Information
September 30, 1996
(Unaudited)
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
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