GIT Income Trust
Maximum Income Portfolio
Government Portfolio
Semi-Annual Report
September 30, 1995/Unaudited
GIT
GIT Investment Funds
<PAGE>
Letter to Shareholders
November 11, 1995
Dear Shareholder:
A "soft landing" still seems to be in the cards for the
economy. Slow to moderate growth coupled with low inflation
have provided the underpinnings for a rally in the bond
market that carried the yield on the 30-year bond to 6.50%
from 7.43% at our last report. Industrial commodity prices
have weakened on soft demand, and may still have further to
drop. This could lead to better news on the inflation
front. The dollar, a source of concern previously, has
stabilized. The possibility of a balanced budget could lead
to even lower rates.
The improvement in inflation led the Federal Reserve to
lower the Federal Funds rate 25 basis points in July. While
rate adjustments by the Fed seem to be on hold for now,
softer growth or further improvement in the rate of
inflation could prompt another round of easing.
At September 30, 1995, the Government Portfolio had a 30-day
yield of 4.58% compared with 5.49% at March 31, 1995. The
total return for the period was 6.45%. The Maximum Income
Portfolio returned 7.68% for the period with a 30-day yield
of 8.67%.
The current domestic environment for the government bond
market is favorable and the uncertainty regarding the
economic situations of our major trading partners
contributes to the attractiveness of the U.S. debt markets.
One sign of strength in the economy that may cause some
concern is housing: Sales are firming as a result of lower
rates and this may lead to increased demand at the consumer
retail level.
Our structure for the Government Portfolio currently favors
an overweighting in the intermediate maturity spectrum of
the yield curve. This will temper the downside should
yields rise and provide some upside in the event the Federal
Reserve lowers the funds rate.
The high-yield bond market in which our Maximum Income
Portfolio operates continues to see firm demand with strong
inflows into mutual funds. Over the reporting period, the
supply swelled as issuers ran to capture some of the
liquidity in the market. Deals that approached "venture
capital" quality failed to get priced, however, showing a
degree of discipline in the market. In the secondary
market, cyclical issuers came under pressure as the economy
softened and as pricing weakened for industrial commodities.
The Maximum Income Portfolio is diversified across 14 areas
as of this writing with exposure in cable television, radio
broadcasting, and wireless communications among others.
These industries provide growth opportunities in the high-
yield market. The textile sector has undergone dramatic
changes, with those companies investing in state-of-the-art
plant and equipment emerging as strong competitors while at
the same time raising the cost of entry into the market
place. The portfolio does have some exposure to cyclical
issues, but with a focus on companies with some pricing
power, and those which have started to "deleverage" their
balance sheets.
The outlook for the high-yield market is cautiously
optimistic as demand remains firm. Further economic
weakness could pose some risk for the high-yield market,
however. We continue to focus on those companies that
provide attractive rates of return without assuming an undue
degree of risk.
We appreciate your confidence in GIT Investment Funds, and
encourage you to look at all 13 of our no-load offerings.
Sincerely,
(signature)
A. Bruce Cleveland
President
<PAGE>
Maximum Income Portfolio
Portfolio of Investments - September 30, 1995
(Unaudited)
<PAGE>
Maximum Income Portfolio
Portfolio of Investments - September 30, 1995
(Unaudited)
Credit Rating Principal
Moody's S&P<F1> Amount Value
CORPORATE DEBT SECURITIES: 83.2% of Net Assets
CABLE TELEVISION: 5.4%
B3 B Cablevision Systems
Corporation, Senior
Subordinated Debentures,
9.875%, 2/15/13 $250,000 $261,250
B3 BB- CAI Wireless Systems, Inc.,
Senior Notes, 12.25%, 9/15/02 100,000 104,000
CHEMICALS: 3.9%
B1 B NL Industries Inc., Senior
Secured Notes, 11.75%,
10/15/03 250,000 263,750
COMMUNICATIONS: 15.7%
B2 B+ Century Communications
Corporation, Senior
Subordinated Debentures,
11.875%, 10/15/03 250,000 265,625
B3 B- Chancellor Broadcasting Co.,
Senior Subordinated Notes,
12.5%, 10/1/04 250,000 263,750
B2 BB- Mobile Telecommunications
Technologies Corporation,
Senior Notes, 13.5%, 12/15/02 250,000 280,000
B2 B SFX Broadcasting, Inc., Senior
Subordinated Notes, 11.375%,
10/1/00 250,000 260,625
FOREST & PAPER PRODUCTS: 7.8%
B2 B+ Container Corporation of America,
Senior Notes, 10.75%, 5/1/02 250,000 263,125
B1 B Riverwood International
Corporation, Senior Subordinated
Notes, 11.25%, 6/15/02 250,000 268,125
HOMEBUILDING: 7.4%
B1 B Continental Homes Holding Corp.,
Senior Notes, 12%, 8/1/99 250,000 260,000
B2 B NVR Inc., Senior Notes, 11%,
4/15/03 250,000 242,500
LODGING: 3.7%
B3 B Motels of America Inc., Senior
Subordinated Notes, 12%,
4/15/04 250,000 250,000
RAILROAD EQUIPMENT: 3.7%
B3 B Johnstown America Industries,
Inc., Senior Subordinated Notes,
11.75%, 8/15/05 250,000 250,000
RESTAURANTS: 3.6%
B1 B+ Carrols Corporation, Senior
Notes, 11.5%, 8/15/03 250,000 247,500
RETAIL-FOOD: 10.2%
Ba3 BB- Penn Traffic Company, Senior
Notes, 10.25%, 2/15/02 250,000 240,000
B3 B+ Stater Brothers Holdings Inc.,
Senior Notes, 11%, 3/1/01 250,000 251,875
B3 B Super Markets General Holding
Co., Subordinated Notes,
11.625%, 6/15/02 200,000 205,000
STEEL: 10.8%
B2 B GS Technologies Operating
Company, Senior Notes, 12%,
9/1/04 250,000 247,500
B1 B+ IVACO, Senior Notes, 11.5%,
9/15/05 250,000 246,875
B1 B+ WCI Steel, Inc., Senior Notes,
10.5%, 3/1/02 250,000 240,000
TEXILES-APPAREL: 11.2%
B1 B+ Fieldcrest Cannon, Inc.,
Senior Subordinated Notes,
11.25%, 6/15/04 250,000 262,500
Ba3 BB- Tultex Corporation, Senior
Notes, 10.625%, 3/15/05 250,000 261,250
B3 B+ West Point Stevens, Inc.,
Senior Subordinated Notes,
9.375%, 12/15/05 250,000 243,125
TOTAL CORPORATE DEBT SECURITIES
(Cost $5,579,693)<F2> 5,678,375
REPURCHASE AGREEMENT:
18.0% of Net Assets
With Donaldson, Lufkin & Jenrette
Securities Corporation issued
9/29/95 at 6.25%, due 10/2/95
collaterized by $1,255,775
United States Treasury Bills due 11/16/95.
Total proceeds at maturity are $1,231,641.
(Cost $1,231,000)<F2> 1,231,000
TOTAL INVESTMENTS
(Cost $6,810,693)<F2> $6,909,375
See Notes to Portfolio of Investments.
<PAGE>
Government Portfolio
Portfolio of Investments - September 30, 1995
(Unaudited)
Credit Rating Principal
Moody's S&P<F1> Amount Value
U.S. GOVERNMENT OBLIGATIONS: 95.8% of Net Assets
Aaa AAA United States Treasury
Bonds, 7.5%, 11/15/24 $1,000,000 $1,112,970
Aaa AAA United States Treasury Bonds,
7.625%, 2/15/25 1,000,000 1,132,340
Aaa AAA United States Treasury Notes,
6.75%, 5/31/97 1,000,000 1,013,750
Aaa AAA United States Treasury Notes,
7.125%, 2/29/00 1,000,000 1,041,870
Aaa AAA United States Treasury Notes,
6.125%, 7/31/00 1,750,000 1,756,563
Aaa AAA United States Treasury Notes,
7.75%, 2/15/01 1,000,000 1,076,410
TOTAL U.S. GOVERNMENT OBLIGATIONS
(COST $6,897,564)<F2> 7,133,903
REPURCHASE AGREEMENT: 2.9% of Net Assets
With Donaldson, Lufkin & Jenrette
Securities Corporation issued 9/29/95
at 6.25%, due 10/2/95 collateralized
by $221,367 United States Treasury Bills
due 11/16/95. Proceeds at maturity are
$217,113. (Cost $217,000)<F2> 217,000
TOTAL INVESTMENTS (Cost $7,114,564)<F2> $7,350,903
Notes to Portfolio of Investments:
[FN]
<F1>
Moody's Moody's Investors Service, Inc.
S&P Standard & Poor's Corporation
<F2>
Aggregate cost for federal income tax purposes and net
unrealized appreciation of investments is as follows:
Maximum
Income Government
Portfolio Portfolio
Aggregate cost $6,810,693 $7,114,564
Gross unrealized appreciation $ 116,885 $ 242,782
Gross unrealized depreciation 18,203 6,443
Net unrealized appreciation $ 98,682 $ 236,339
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Statements of Assets and Liabilities
September 30, 1995
(Unaudited)
ASSETS
Maximum
Income Government
Portfolio Portfolio
Investments, at cost $6,810,693 $7,114,564
Investments, at value (Notes 1 and 2)
Investment securities $5,678,375 $7,133,903
Repurchase agreement 1,231,000 217,000
Total investments 6,909,375 7,350,903
Cash 838 744
Interest receivable 166,890 96,182
Total assets 7,077,103 7,447,829
LIABILITIES
Payables
Investment securities purchased 246,400 --
Dividends 9,194 1,876
Other liabilities 34 39
Total liabilities 255,628 1,915
NET ASSETS (Note 5) $6,821,475 $7,445,914
CAPITAL SHARES OUTSTANDING 952,303 750,680
NET ASSET VALUE PER SHARE $7.163 $9.919
Statements of Operations
Fir the Six Months Ended September 30, 1995
(Unaudited)
Maximum
Income Government
Portfolio Portfolio
INVESTMENT INCOME (Note 1)
Interest income $347,159 $245,287
EXPENSES (Notes 3 and 4)
Investment advisory fee 21,544 23,459
Custodian fees 1,343 1,476
Professional fees 3,292 3,647
Salaries and related expenses 12,359 13,691
Securities registration
and blue sky expenses 5,833 5,870
Telephone expense 746 818
Data processing and office
equipment expenses 6,210 6,612
Office and miscellaneous expenses 2,756 2,907
Depreciation and amortization 367 438
Total expenses 54,450 58,918
NET INVESTMENT INCOME 292,709 186,369
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments 96,277 82,320
Net unrealized appreciation
of investments 124,277 203,736
NET GAIN ON INVESTMENTS 220,554 286,056
TOTAL INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $513,263 $472,425
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Statements of Changes in Net Assets
Maximum Income Portfolio
Six Months Ended
Sept. 30, 1995 Year Ended
(Unaudited) March 31, 1995
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
Net investment income $292,709 $607,704
Net realized gain (loss)
on investments 96,277 (740,266)
Net unrealized appreciation
of investments 124,277 373,832
Total increase in net assets
resulting from operations 513,263 241,270
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (292,709) (607,704)
CAPITAL SHARE TRANSACTIONS (Note 7) (125,466) (609,412)
TOTAL INCREASE (DECREASE)
IN NET ASSETS 95,088 (975,846)
NET ASSETS
Beginning of period 6,726,387 7,702,233
End of period $6,821,475 $6,726,387
Government Portfolio
Six Months Ended
Sept. 30, 1995 Year Ended
(Unaudited) March 31, 1995
INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
Net investment $186,369 $320,146
Net realized gain (loss)
on investments 82,320 (565,914)
Net unrealized appreciation
of investments 203,736 437,937
Total increase in net assets
resulting from operations 472,425 192,169
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (186,369) (320,146)
CAPITAL SHARE TRANSACTIONS
(Note 7) (493,131) (795,057)
TOTAL INCREASE (DECREASE)
IN NET ASSETS (207,075) (923,034)
NET ASSETS
Beginning of period 7,652,989 8,576,023
End of period $7,445,914 $7,652,989
Financial Highlights
Selected data for a share outstanding thoughout each year:
Year ended
Mar. 31 1991 1992 1993 1994 1995 1995<F1>
Maximum Income Portfolio
Net asset value
beginning of
year $7.181 $6.775 $7.255 $7.455 $7.285 $6.938
Net investment
income $0.781 $0.689 $0.674 $0.606 $0.597 $0.302
Net realized &
unrealized
gains
(losses) on
securities $(0.406) $0.480 $0.200 $(0.170) $(0.347) $0.225
Total from
investment
operations $0.375 $1.169 $0.874 $0.436 $0.250 $0.527
Distributions
from net
investment
income $(0.781)$(0.689)$(0.674)$(0.606)$0.597)$(0.302)
Distributions
from capital
gains -- -- -- -- -- --
Total
distribu-
tions $(0.781)$(0.689)$(0.674)$(0.606)$0.597)$(0.302)
Net asset
value end
of year $6.775 $7.255 $7.455 $7.285 $6.938 $7.163
Total return 5.91% 18.08% 12.69% 5.89% 3.75% 15.37%<F2>
Net assets end
of year
(thousands) $5,405 $6,456 $7,329 $7,702 $6,726 $6,821
Ratio of
expenses
to average
net assets 1.66% 1.54% 1.52% 1.54% 1.52% 1.58%<F2>
Ratio of net
investment
income to
average net
assets 11.57 9.95% 9.26% 8.02% 8.56% 8.47%<F2>
Portfolio
turnover 54% 124% 73% 251% 243% 120%
Government Portfolio
Net asset value
beginning of
year $9.867 $10.119 $10.300 $10.621 $9.695 $9.551
Net investment
income $0.710 $0.654 $0.501 $0.363 $0.391 $0.243
Net realized &
unrealized
gains
(losses) on
securities $0.292 $0.222 $0.854 ($0.151)($0.144) $0.368
Total from
investment
operations $1.002 $0.876 $1.355 $0.212 $0.247 $0.611
Distributions
from net
investment
income $(0.710)$(0.654)$(0.501)$(0.363)($0.391)$(0.243)
Distributions
from capital
gains $(0.040)$(0.041)$(0.533)$(0.775) -- --
Total
distribu-
tions $(0.750)$(0.695)$(1.034)$(1.138)($0.391)$(0.243)
Net asset
value end
of year $10.119 $10.300 $10.621 $9.695 $9.551 $9.919
Total return 10.57% 8.84% 13.96% 1.95% 2.67% 12.90%<F2>
Net assets end
of year
(thousands) $6,059 $7,375 $9,734 $8,576 $7,653 $7,446
Ratio of
expenses
to average
net assets 1.65% 1.53% 1.52% 1.54% 1.52% 1.56%<F2>
Ratio of net
investment
income to
average net
assets 7.13% 6.28% 4.78% 3.53% 4.12% 4.95%<F2>
Portfolio
turnover 116% 123% 357% 287% 318% 101%
[FN]
<F1>Six months ended September 30, 1995
<F2>Annualized
The Notes to Financial Statements are an integral part of
these statements.
<PAGE>
GIT Income Trust
Notes to Financial Statements
September 30, 1995
(Unaudited)
1. Summary of Significant Accounting Policies. GIT Income
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 maintains two separate portfolios whose principal
objectives are to obtain high current income (under policies
described in its current prospectus). The Maximum Income
Portfolio invests in long-term debt securities which may
include securities rated as low as "Caa" or "CCC" by Moody's
Investors Service, Inc. or Standard & Poor's Corporation,
respectively. The Government Portfolio invests in
securities of the U. S. Government and its agencies.
Securities Valuation: Securities having maturities of 60
days or less are valued at amortized cost, which
approximates market value. Securities having longer
maturities, for which market quotations are readily
available, are valued at the mean between their bid and
asked prices. Securities for which market quotations are
not readily available are valued at their fair value as
determined in good faith by the Trustees. 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.
Repurchase Agreements are valued at amortized cost, which
approximates market value.
Investment Income: Interest income, net of amortization of
premium or discount, and other income (if any) are accrued
as earned.
Dividends and Income Tax: Net investment income, determined
as gross investment income less expenses, is declared as a
regular 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.
Capital gains distributions reflecting net realized gains of
each portfolio (if any) are declared and paid twice annually
at calendar and fiscal year end. In accordance with the
provisions of Subchapter M of the Internal Revenue Code
applicable to regulated investment companies, all of the
taxable income of each portfolio is distributed to its
shareholders, and therefore no federal income tax provision
is required. As of March 31, 1995, the Maximum Income and
Government Portfolios had available for federal income tax
purposes unused capital loss carryovers of $3,240,019 and
$566,489, respectively.
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.
2. Investments 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 0.625% per annum of the
average net assets of each of the Trust's portfolios; the
fees accrue daily and are payable monthly. In order to meet
the securities registration requirements of certain states,
the Adviser 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
<PAGE>
Notes to Financial Statements (continued)
annum of the average net assets of each portfolio 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. The Adviser is
responsible for the fees and expenses of Trustees who are
affiliated with the Adviser, the rent expense of the Trust's
principal executive office premises and certain promotional
expenses. For the six months ended September 30, 1995,
outside Trustee fees were $750 for each Portfolio. At
September 30, 1995, certain officers, Trustees, companies
and individuals affiliated with the Trust have investments
in the Trust aggregating 1.2% of the Maximum Income
Portfolio shares outstanding and 0.2% of the Government
Portfolio shares outstanding.
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. Common expenses incurred by the Trust are
allocated among the portfolios based on the ratio of net
assets of each portfolio to the combined net assets. For
the six months ended September 30, 1995, operating expenses
of $32,906 for the Maximum Income Portfolio and $35,459 for
the Government Portfolio have been reimbursed to BFIMC under
the Services Agreement. As of September 30, 1995, expenses
of $49,625 for the Maximum Income Portfolio and $63,052 for
the Government Portfolio have been incurred by BFIMC on
behalf of the portfolios, the billings of which have been
deferred.
5. Net Assets. At September 30, 1995, net assets include
the following:
Maximum Income Government
Portfolio Portfolio
Net paid in capital on shares
of beneficial interest $9,866,535 $7,693,745
Accumulated net realized losses (3,143,742) (484,170)
Net unrealized appreciation
of investments 98,682 236,339
Total net assets $6,821,475 $7,445,914
6. Investment Transactions. Purchases and sales of
securities other than short-term securities for the six
months ended September 30, 1995 were as follows:
Maximum Income Government
Portfolio Portfolio
Purchases $8,101,457 $7,493,482
Sales 8,495,690 7,731,324
7. Capital Share Transactions. An unlimited number of
capital shares, without par value, are authorized.
Transactions in capital shares were as follows:
Maximum Income Portfolio Government Portfolio
Six Months Six Months
Ended Ended
Sept. 30, Year ended Sept. 30, Year ended
1995 1995 1995 1995
(Unaudited) (Unaudited)
In Dollars
Shares sold $972,836 $3,563,512 $427,101 $1,891,049
Shares issued in
reinvestment
of dividends 234,544 480,421 173,151 294,883
Total shares
issued 1,207,380 4,043,933 600,252 2,185,932
Shares
redeemed (1,332,846) (4,653,345)(1,093,383) (2,980,989)
Net decrease $(125,466) $(609,412) $(493,131) $(795,057)
In Shares
Shares sold 136,943 510,956 43,540 200,394
Shares issued in
reinvestment
of dividends 32,846 69,036 17,618 31,146
Total shares
issued 169,789 579,992 61,158 231,540
Shares
redeemed (187,022) (667,780) (111,788) (314,806)
Net decrease (17,233) (87,788) (50,630) (83,266)
<PAGE>
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
GIT Equity Trust
Special Growth Portfolio
Select Growth Portfolio
Equity Income Portfolio
Worldwide Growth Portfolio
GIT Income Trust
Maximum Income Portfolio
Government Portfolio
GIT Tax-Free Trust
Arizona Portfolio
Maryland Portfolio
Missouri Portfolio
Virginia Portfolio
National Portfolio
Money Market Portfolio
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
http://www.gitfunds.com
