As Filed with the
Commission on March 27, 1997
Registration No. 2-80808
SEC File No. 811-3616
Securities and Exchange Commission
Washington, D.C.
Form N-1A
Registration Statement Under The Securities Act of 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 17 X
Registration Statement Under The Investment Company Act
of 1940 X
Amendment No. 19
GIT Income Trust
(Exact Name of Registrant as Specified in Charter)
1655 Fort Myer Drive, Arlington, Virginia 22209
Registrant's Telephone Number: (703) 528-3600
W. Richard Mason, Secretary
GIT Income Trust
1655 Fort Myer Drive
Arlington, Virginia 22209
(Name and Address of Agent for Service)
Copy to:
David Leahy, Esquire
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Approximate Date of Proposed Public Offering
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to Rule 485(b)
_____ on July 31, 1996 pursuant to Rule 485(b)
______60 days after filing pursuant to Rule 485(a)(1)
_____ on July 31, 1996 pursuant to Rule 485(a)(1)
_____ 75 days after filing pursuant to Rule 485(a)(2)
__X__ on June 13, 1997 pursuant to Rule 485(a)(2)
The Registrant has registered an indefinite number of
its shares pursuant to Rule 24f-2 under the Investment
Company Act of 1940. The Registrant's Notice under Rule
24f-2 for the fiscal year ended March 31, 1996 was filed on
May 20, 1996.
<PAGE>
Cross-Reference Sheet
Form N1-A
Part A, Information Required in a Prospectus
Item 1 Inside cover Page
Item 2 Expense Summary
Item 3 Financial Highlights
Item 4 Inside cover, About Tax-Free Trust
Investment Objective, Investment
Policies (including Investment
Considerations, Portfolio-Specific
Considerations and Specialized
Investment Techniques)
Item 5 Management of the Trust
Item 5A Incorporated by reference in the
Registrant's annual report
Item 6 The Trust and Its Shares, Dividends,
Performance Information, Taxes
(including Federal Tax Considerations
and State Tax Considerations), Net
Asset Value, How to Purchase and
Redeem Shares (Telephone Transactions)
and rear cover page
Item 7 How to Purchase and Redeem Shares
(Purchasing Shares)
Item 8 How to Purchase and Redeem Shares
(Redeeming Shares, Additional Charges
and Closing An Account)
Item 9 Not applicable
Part A applicable to the Trust's other two portfolios,
effective July 31, 1996, was previously filed and
is incorporated herein by reference.
Part B, Items Required in a Statement of
Additional Information
Item 10 Cover page
Item 11 Table of Contents (Cover page)
Item 12 Introductory Information
Item 13 Supplemental Investment Policies,
Municipal Securities, Special
Considerations Regarding State
Portfolios, Investment Limitations
Item 14 The Investment Advisor, Trustees and
Officers
Item 15 Organization of the Trust, Trustees and
Officers
Item 16 The Investment Advisor, Administrative
and Other Expenses, Custodians and
Special Custodians,
Item 17 Portfolio Transactions
Item 18 Organization of the Trust
Item 19 Share Purchases, Share Redemptions,
Declaration of Dividends, Determination
of Net Asset Value
Item 20 Additional Tax Matters
Item 21 Not applicable
Item 22 Yield and Total Return Calculations
Item 23 Annual and Semi-Annual Reports are
incorporated by reference and discussed
in Financial Statements and Independent
Auditors' Report, Legal Matters & Inde-
pendent Auditors, Additional Information
Part C, Other Information
Items 24 through 32 follow Part B
<PAGE>
GIT Income Trust
Madison Bond Fund Portfolio
Prospectus
June 13, 1997
GIT
GIT Investment Funds
<PAGE>
Table of Contents
About GIT Income Trust 2
Expense Summary 2
Financial Highlights 3
Investment Objective 3
Investment Policies 4
Management of the Trust 7
The Trust and Its Shares 8
Dividends 8
Performance Information 8
Taxes 9
Net Asset Value 9
How to Purchase and Redeem Shares 9
Office
1655 Ft. Myer Drive
Arlington, VA 22209
Custodian
Star Bank, N.A.
Cincinnati, OH 45202
Auditors
Ernst & Young LLP
Telephone Numbers
Shareholder Services
Washington, DC area: 703-528-6500
Toll-free nationwide: 800-336-3063
<PAGE>
Prospectus/June 13, 1997
1655 Fort Myer Drive, Arlington, Virginia 22209-3108
GIT Income Trust
Madison Bond Fund Portfolio
GIT Income Trust is a mutual fund whose goal is to provide
monthly dividends to its shareholders by investing in bonds and
other debt securities in accordance with the investment quality
policies of each of its portfolios. The Trust offers shares of
three separate portfolios: the Madison Bond Fund Portfolio,
the Government Portfolio, and the Maximum
Income Portfolio. The Government Portfolio and Maximum
Income Portfolio are offered pursuant to a separate prospectus.
The Madison Bond Fund Portfolio (the "Portfolio") has two investment
objectives: (1) Production of current income consistent with its quality
standards and (2) Preservation of capital. To achieve its objectives, the
Portfolio will invest in investment grade bonds with an average dollar
weighted maturity not to exceed 10 years.
Features
*No commissions or sales charges
*No "12b-1" expenses
*Invest or withdraw funds by mail or wire transfer
*$1,000 minimum initial investment
*Dividends can be paid by check or direct
deposit, or reinvested monthly
*Checking privileges
This Prospectus is intended to be a concise statement of
information which investors should know before investing. After
reading the Prospectus, it should be retained for future
reference. A paper copy of the prospectus is available to
investors who received an electronic prospectus without charge by
calling or writing the Trust.
A Statement of Additional Information concerning the Trust,
bearing the same date as this Prospectus, has been filed with the
Securities and Exchange Commission and is incorporated herein by
reference. It is available without charge by calling or writing
the Trust.
Shares of the Trust are not deposits or obligations of, or
guaranteed or endorsed by, any bank. Shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Bankers Finance Advisors, LLC.
Investment Advisor
<PAGE>
About GIT Income Trust
GIT Income Trust (the "Trust") is a diversified, open-end
management investment company, commonly known as a mutual fund.
The Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated November 18, 1982. The Trust is
managed by Bankers Finance Advisors, LLC (the
"Advisor") of the same address as the Trust.
The Trust offers shares of three separate portfolios: the
Portfolio, the Government Portfolio and the
Maximum Income Portfolio. The Government and Maximum
Income Portfolios are managed independently of the
Portfolio and are offered pursuant to a separate prospectus.
Expense Summary
The purpose of this table is to assist investors in understanding
the various costs and expenses that an investor will bear
directly or indirectly (see also "Management of the Trust").
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases None
Redemption Fee None
Exchange Fee None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.500%
12b-1 Fees None
Other expenses 0.75%
Total Fund Operating Expenses 1.25%
Example
1 Year 3 Years 5 Years 10 Years
You would pay the
following expenses on
a $1,000 investment,
assuming (1) a five
percent annual return
and (2) redemption
at the end of each
time period: $13 $40 $69 $151
The hypothetical example shown above is based on the restated
expense levels listed under the caption "Annual Fund Operating
Expenses" and is intended to provide the investor with an
understanding of the level of expenses that might be incurred
in the future. The five percent return used in the example is
arbitrary and is for illustrative purposes only. It should not be
considered representative of the Trust's past or future
performance, nor should the expenses in the example be
considered representative of future expenses, which may
actually be greater or less than those shown. Additional
fees and transaction charges described elsewhere in this
prospectus, if applicable, will increase the level
of expenses that can be incurred.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the year)
The following Financial Highlights of Madison Bond Fund, Inc.,
economic predecessor of the Trust's Madison Bond Fund Portfolio,*
have been audited by Williams, Young & Associates, LLC,
independent public accountants. The Independent Auditor's Report
and additional information about the performance of the Fund is
contained in the Madison Bond Fund, Inc. Annual Report to
shareholders which may be obtained without charge by calling or
writing the Trust.
<TABLE>
<CAPTION>
Period Ended December 31,
-------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992 1991 1990**
NET ASSET VALUE:
Beginning of year... $21.17 $19.62 $21.21 $21.14 $21.87 $20.55 $20.00
<CAPTION>
INCOME FROM INVESTMENT OPERATIONS:
<S> <C> <C> <C> <C> <C> <C> <C>
Net investment income.. $1.07 $ 1.17 $ 1.15 $ 1.03 $ 1.08 $ 1.22 $ .51
Net realized & unrealized gains
or (losses) on securities (.55) 1.55 (1.59) .24 (.21) 1.58 .55
Total from invstmt operations $ .52 2.72 $ (.44)$ 1.27 $ .87 $ 2.80 $ 1.06
<CAPTION>
LESS DISTRIBUTIONS:
<S> <C> <C> <C> <C> <C> <C> <C>
Dividends from net income. $(1.06)$(1.17)$(1.15)$(1.03)$(1.04)$(1.27)$ (.51)
Capital gains distributions. .00 .00 .00 (.17) (.15) (.21) .00
Return of capital .00 .00 .00 .00 (.41) .00 .00
<CAPTION>
NET ASSET VALUE:
<S> <C> <C> <C> <C> <C> <C> <C>
End of year $20.63 $21.17 $19.62 $21.21 $21.14 $21.87 $20.55
TOTAL RETURN 2.55% 14.11% (2.11%) 6.04% 4.08% 14.01% 5.35%
<CAPTION>
RATIOS:
<S> <C> <C> <C> <C> <C> <C> <C>
Operating expenses to
average net assets 1.51% 1.35% 1.18% 1.19% 1.51% 1.54% 1.57%
Net income to average net assets 4.86% 5.49% 5.50% 4.92% 5.40% 6.36% 3.65%
Portfolio turnover rate 94.24%57.99% 78.29% 67.59% 95.80% 55.70% .00%
</TABLE>
*Madison Bond Fund, Inc. merged into the Portfolio on or
about the effective date of this Prospectus. The Portfolio
was created so that Madison Bond Fund, Inc. could reorganize
as a series of the Trust. The Portfolio had negligible
assets prior to the merger.
**Madison Bond Fund, Inc. began operations on April 23, 1990.
Investment Objective
The investment objectives of the Portfolio are (1) production of
current income consistent with its quality standards and (2)
preservation of capital. The Portfolio seeks to achieve its objectives
by investing in corporate debt securities, obligations of the
U.S. Government and its agencies and instrumentalities and money
market instruments. The Portfolio will invest at least 65% of its
assets in bonds with the total portfolio having an average dollar
weighted maturity of ten years or less.
Although the investment objective of the Portfolio may be changed
without shareholder approval, shareholders will be notified in
writing prior to any material change. There can be no assurance
that the objective of the Portfolio will be achieved.
Investment Policies
To achieve current income, the Portfolio intends to invest
in corporate debt securities and obligations of
the U.S. Government and its agencies.
The Advisor believes that capital preservation can best be
achieved through flexibility of investment strategies. Although
the careful selection of bonds and money market instruments is
the primary factor affecting the investment return of the Portfolio,
the percentage of the Portfolio's assets which may be invested at any
particular time in corporate bonds, U.S. Government and Government
Agency bonds and money market instruments, and the average
weighted maturity of the total portfolio will depend on
management's judgment regarding the risks in the general market.
The Portfolio's advisor monitors many factors affecting the
market outlook, including economic, monetary and interest rate
trends, market momentum, institutional psychology and historical
similarities to current conditions.
The Portfolio will normally invest at least 65% of its assets in bonds with
the total portfolio having an average dollar weighted maturity of 10 years
or less. If the Advisor believes that market risks are high and bond
prices in general are vulnerable to decline, the Portfolio may take
certain temporary defensive actions such as reducing the average
maturity of the Portfolio's bond holdings and increasing the Portfolio's
cash reserves. Such "cash reserves"' are defined as short-term
investments such as U.S. Treasury Bills, high-grade commercial
paper, (rated in the top two rating classes by Standard & Poor's
or Moody's) bank certificates of deposit or repurchase
agreements. The objective of shortening maturities and holding
substantial cash reserves, as defined above, is to reduce the
Portfolio's exposure to bond price depreciation during periods of rising
interest rates, and to maintain desired liquidity while awaiting
more attractive investment conditions in the bond market.
Under such circumstances, up to 100 percent of the Portfolio
may be so invested. To the extent that the Portfolio is so
invested, it is not invested in accordance with policies designed
to achieve its stated investment objective.
The Advisor believes that the ability and willingness to shorten
maturities and hold substantial cash reserves during periods of
market vulnerability is the most distinguishing feature in
comparing the Portfolio's investment philosophy and strategies
with those of most mutual funds with similar investment
objectives. In the Advisor's opinion, such other mutual funds
generally do not shorten maturities dramatically during volatile
times. When the Advisor anticipates that interest rates will be
stable or falling, the Advisor intends to maintain the average
dollar weighted maturity in the 5-10 year range. During periods
when interest rates are rising or the Advisor anticipates
rising interest rates, the average dollar weighted
maturity may be shortened dramatically to 1-2 years. The
willingness to make these strategic shifts differentiates
the Portfolio's strategy from most other funds. It is the general
intention of the Portfolio to maintain such defensive positions
temporarily or until the Advisor perceives that a period of market
vulnerability has passed. Adoption or maintenance of a
defensive posture may, however, cause the Portfolio to
underperform the general market during particular
periods.
Changes in the level of interest rates will directly affect
the market value of fixed income securities and the value of your
Portfolio shares. A decline in interest rates will tend to increase
market value of securities, while a rise in interest rates will tend
to decrease their value. The longer the maturity of a security the
greater the price fluctuation may be. Limiting the average weighted
maturity of the portfolio to ten years and shortening the average
maturity during periods of rising interest rates tend to reduce the
extent to which the value of Portfolio shares will fluctuate. The
shorter the maturity of a bond, generally the less volatile its
market price will be.
Corporate Debt Securities. The Portfolio may invest in
corporate debt securities accorded one of the four highest quality
ratings by Standard & Poor's or Moody's or, if unrated, judged by
the Advisor to be a comparable quality. Bonds rated AAA, AA, or A
by Standard & Poor's or Aaa, Aa, or A by Moody's indicate strong
to high capacity of the issuer to pay interest and repay
principal. The fourth highest rating, (e.g. BBB by
Standard & Poor's or Baa by Moody's) indicates adequate capacity
to pay interest and repay principal, but suggests that adverse
economic conditions may weaken the issuer's ability to meet
these obligations. Securities rated Baa by Moody's and BBB by
Standard & Poor's are regarded as having some speculative
characteristics. These bonds are also more sensitive to economic
changes than higher grade bonds. If a BBB or Baa bond held in the
Portfolio is downgraded by Standard and Poor's or by Moody's, the
bond will be sold within twelve months following the
downgrade.
U.S. Government Securities. The Portfolio may invest in securities
guaranteed by the U.S. Government, including direct obligations
of the U.S. Treasury (Treasury bills, notes and bonds) and certain
federal agency obligations. The payment of principal and interest
on these securities is unconditionally guaranteed by the U.S.
Government, and thus they are considered the highest quality rated
debt security. Securities issued by U.S. Government instrumentalities
and certain federal agencies are neither direct obligations of, nor
guaranteed by, the Treasury. However, they generally involve
federal sponsorship in one way or another. These agencies and
instrumentalities include, but are not limited to, Federal Land
Banks, Federal Home Administration, Federal Home Loan Banks,
Federal National Mortgage Association and Government National
Mortgage Association.
Money Market Securities. The Portfolio may invest in money
market securities which include a) commercial paper (including
variable rate master demand notes) rated at least A-2 by
Standard and Poor's Corporation or Prime-2
by Moody's, or if not so rated, issued by a corporation which has
outstanding debt obligations rated at least in the top two
ratings by Standard and Poor's and Moody's; b) debt obligations
(other than commercial paper) of corporate issuers which
obligations are rated at least AA by Standard or Poor's or Aa by
Moody's; and c) obligations of or guaranteed by the U.S.
government, its agencies or instrumentalities. Money market
securities are subject to the limitation that they mature within
one year of the date of their purchase. Government money market
securities include treasury bills, notes and bonds issued by the
U.S. government and backed by the full faith and credit of the
United States, as well as securities issued or guaranteed as to
principal and interest by agencies and instrumentalities of the
U.S. government.
Other Policies. In order to ensure diversification, the Trust's
fundamental investment policies stipulate certain restrictions.
No more than five percent of each Portfolio's assets may be
invested in the securities of one issuer (excluding U.S.
Government securities) as of the date of purchase. No more than
10 percent of any Portfolio's assets may be invested in illiquid
securities, including restricted securities, other securities for
which no readily available market exists, and repurchase agreements
that cannot be terminated within seven days. No more
than 25 percent of the total assets of the Portfolio may be
invested in the securities of issuers in a single industry.
The Portfolio will be invested in debt securities with
maturities which, in the judgment of the Advisor, will provide
the highest yields available from debt securities over the life
of the investment. The Advisor may adjust this
maturity, however, and may sell securities prior to maturity.
Such sales may result in realized capital gains or losses. The
Trust does not intend, however, to engage in extensive
short-term trading.
Specialized Investment Techniques
To achieve its objectives, the Portfolio may use certain
specialized investment techniques, including investment in
"when-issued" securities, securities with variable interest
rates, loans of portfolio securities, financial futures
contracts, foreign securities and repurchase agreements.
"When-issued" securities are purchased or sold with payment and
delivery scheduled to take place at a future time, usually 15 to
45 days from the date the transaction is arranged. When investing
in "when-issued" securities, the Trust relies on the other party
to complete the transaction. Should the other party fail to do
so, the Trust might lose a more advantageous investment
opportunity.
Repurchase agreements involve a sale of securities to the Trust
by a financial institution or securities dealer, simultaneous
with an agreement by that institution to repurchase the same
securities at the same price, plus interest, at a later date. The
Trust will limit repurchase agreements to those financial
institutions and securities dealers who are considered
creditworthy under guidelines adopted by the Trustees. The
Advisor will follow a procedure designed to ensure that all
repurchase agreements acquired by the Trust are always at least
100 percent collateralized as to principal and interest. When
investing in repurchase agreements, the Trust relies on the other
party to complete the transaction on the scheduled date by
repurchasing the securities. Should the other party fail to do
so, the Trust would hold securities it did not intend to own.
Were it to sell such securities, the Trust might incur a loss. In
the event of insolvency or bankruptcy of the other party to a
repurchase agreement, the Trust could encounter difficulties and
might incur losses upon the exercise of its rights under the
repurchase agreement.
Investment Risk Considerations
The investment policies of the Trust involve certain risks. For
example, the market value of bonds and other debt securities
tends to rise when prevailing interest rates decline and fall
when prevailing interest rates rise. Longer maturities increase
the magnitude of these changes. Investments with the highest
yields may have longer maturities and lower credit ratings than
other securities, increasing the possibility of fluctuations in
value per share. Investments with lower credit ratings may have
limited marketability, making it difficult for the Trust to
dispose of such securities advantageously, and may present the
risk of default, which could result in a loss of principal and
interest.
Management of the Trust
The Trustees. Under the terms of the Declaration of Trust, which
is governed by the laws of the Commonwealth of Massachusetts, the
Trustees are ultimately responsible for the conduct of the
Trust's affairs. They serve indefinite terms of unlimited
duration and they appoint their own successors, provided that
always at least two-thirds of the Trustees have been elected by
shareholders. The Declaration of Trust provides that a Trustee
may be removed at any special meeting of shareholders by a vote
of two-thirds of the Trust's outstanding shares.
The Advisor. Bankers Finance Advisors, LLC is a division of Madison
Investment Advisors, Inc., 6411 Mineral Point Road, Madison,
Wisconsin ("Madison"). Bankers Finance Advisors, LLC
administers approximately $200 million in assets and manages the
GIT family of mutual funds, which includes stock, bond and money
market portfolios. Madison, a licensed investment advisory firm for
over 23 years, provides professional portfolio management services
to a number of clients, including stock and bond mutual funds, and
has approximately $2.8 billion under management.
The Advisor is responsible for the day-
to-day administration of the Trust's activities. Investment
decisions regarding each of the Trust's portfolios can be
influenced in various manners by a number of individuals. The
individuals primarily responsible for the management of the
Trust's Portfolios are Chris Berberet and Jay Sekelsky.
Mr. Berberet, vice president, has served as vice president of Madison
since 1992. Prior to joining Madison, he was the Director of Fixed
Income Management for the ELCA Board of Pensions in
Minneapolis, Minnesota. Mr. Sekelsky, vice president, has served
as a principal of Madison since 1990. Prior to joining Madison,
he was vice president for Wellington Management Group of Boston,
Massachusetts. Messrs. Berberet and Sekelsky began managing the
Trust's Portfolios in 1996.
The Advisor is controlled by Madison. The Advisor has the
same address as the Trust.
Compensation. For its services under its Investment Advisory
Agreement with the Trust, the Advisor receives a fee, payable
monthly, calculated as 1/2 percent per annum of the average daily
net assets of each portfolio. The Advisor may, in turn,
compensate certain financial organizations for services resulting
in purchases of Trust shares.
Distributor. GIT Investment Services, Inc. of the same address as
the Trust acts as the Trust's Distributor. The Distributor is
wholly owned by A. Bruce Cleveland, controlling owner of the
previous investment advisor to GIT Income Trust.
Services Agreement. Under a separate Services Agreement with the
Trust, the Advisor provides operational and other support
services for a fee subject to annual review and approval by the
Trustees. (See "Expense Summary")
Transfer Agent and Dividend Paying Agent. The Trust acts as its
own transfer agent and dividend paying agent.
Expenses. The Trust is responsible for all expenses not assumed
by the Advisor, including the costs of the following: shareholder
services; legal, custodian and audit fees; trade association
memberships; accounting; certain Trustees' fees and expenses;
fees for registering the Trust's shares; the preparation of
prospectuses, proxy materials and reports to shareholders; and the
expense of holding shareholder meetings.
The Trust and Its Shares
Under the terms of the Declaration of Trust, the Trustees may
issue an unlimited number of whole and fractional shares of
beneficial interest without par value for each series of shares
they have authorized. All shares issued will be fully paid and
nonassessable and will have no preemptive or conversion rights.
Under Massachusetts law, the shareholders may, under certain
circumstances, be held personally liable for the Trust's
obligations. The Declaration of Trust, however, provides
indemnification out of Trust property of any shareholder held
personally liable for obligations of the Trust.
Shares in three series are authorized by the Trustees: the
Madison Bond Fund Portfolio, the Government Portfolio
and the Maximum Income Portfolio. Shares of each portfolio
are of a single series and class, each representing an equal
proportionate share in the assets, liabilities, income and
expense of the respective portfolio, and each having the same
rights as any other share within the series.
Each share has one vote and fractional shares have fractional
votes. Except as otherwise required by applicable regulations,
any matter submitted to a shareholder vote will be voted upon by
all shareholders without regard to series or class. For matters
where the interests of separate series or classes are not
identical, the question will be voted on separately by each
affected series or class. Voting is not cumulative.
The Trust does not intend to have regular shareholder meetings.
Shareholder inquiries can be made to the offices of the Trust at
the address on the cover of this prospectus.
Dividends
The Portfolio's net income is declared as dividends each
business day. Dividends are paid in the form of additional shares
credited to investor accounts at the end of each calendar month,
unless a shareholder elects in writing to receive a monthly
dividend payment by check or direct deposit. Any net realized
capital gains will be distributed at least annually.
Performance Information
From time to time the Trust advertises its yield and total
return. Both figures are based on historical data and are not
intended to indicate future performance. Historical performance
information for the Portfolio for periods prior to the June 13,
1997 is based on the performance of Madison Bond Fund,
Inc., the economic predecessor to the Portfolio.
For advertising purposes, the yield is calculated according to a
standard formula prescribed by the Securities and Exchange
Commission. This formula divides the theoretical net income per
share during a 30-day period by the share price on the last day
of the period.
While yield calculations ignore changes in share price, total
return takes such changes into account, assuming that dividends
and other distributions are reinvested when paid.
In addition to average annual total return, the Trust may quote
total return over various periods and may quote the aggregate
total return for a period. The Trust may also cite the ranking or
performance of a portfolio as reported in the public media or by
independent performance measurement firms.
Further information on the methods used to calculate each
Portfolio's yield and total return may be found in the Trust's
Statement of Additional Information. The Trust's Annual Report
contains additional performance information. A copy of the Annual
Report may be obtained without charge by calling or writing the
Trust at the telephone number and address on the cover of this
prospectus.
Taxes
Federal
For federal income tax purposes, the Portfolio intends to maintain
its status under Subchapter M of the Internal Revenue Code as a
regulated investment company by distributing to shareholders 100
percent of its net income and net capital gains for each
portfolio by the end of its fiscal year. The Internal Revenue
Code also requires each portfolio to distribute at least 98
percent of undistributed net income and capital gains realized
from the sale of investments by calendar year-end in order to
avoid a 4% excise tax. The capital gain distribution is determined
as of October 31 each year. Capital gain distributions, if any,
are taxable to the shareholder. The Trust will send shareholders
an annual notice of dividends and other distributions paid during
the year.
State and Local
At the state and local level, dividend income and capital gains
are generally considered taxable income. Interest on certain U.S.
Government securities held by the Trust would be exempt from
state and local income taxes if held directly by the shareholder.
Because tax laws vary from state to state, shareholders should
consult their tax advisors concerning the impact of mutual fund
ownership in their own tax jurisdictions.
Cost Basis
Because the Portfolio's share price fluctuates, a redemption of
shares by the shareholder creates a capital gain or loss which has
tax consequences. It is the shareholder's responsibility to
calculate the cost basis of shares purchased. Shareholders are
advised to retain all statements received from the Trust and to
maintain accurate records of their investments.
Certification of Tax Identification Number
Shareholders who fail to provide a valid social security or tax
identification number may be subject to federal withholding at a
rate of 31 percent of reportable income such as dividends, capital
gains and redemptions.
At the state and local level, dividend income and capital gains
are generally considered taxable income. Interest on certain U.S.
Government securities held by the Trust would be exempt from
state and local income taxes if held directly by the shareholder.
Because tax laws vary from state to state, shareholders should
consult their tax advisors concerning the impact of mutual fund
ownership in their own tax jurisdictions.
Net Asset Value
The net asset value per share of each portfolio is calculated as
of 4 p.m. Washington, DC time each day the New York Stock
Exchange is open for trading. Net asset value per share is
determined by adding the value of all securities and other
assets, subtracting liabilities and dividing the result by the
total number of outstanding shares for the portfolio.
For purposes of calculating net asset value, securities for which
current market quotations are readily available are valued at the
mean between their bid and asked prices. Securities for which
current quotations are not readily available are valued at their
fair value as determined by the Trustees. Securities having a
remaining effective maturity of 60 days or less are valued at
amortized cost, subject to the Trustees' determination that this
method reflects their fair value. The Trustees may use an
independent pricing service for determination of security values.
Shareholder Transactions
Transactions into or out of the Trust are recorded in shares
and maintained to an accuracy of 1/1000th of a share.
Certificates will not be issued to represent shares in the Trust.
For institutions needing to maintain separate information on accounts
under their management, the Trust will provide a subaccounting report.
The option to initiate inter-fund exchanges and redemptions and
to obtain account balance information by telephone is available
automatically to all shareholders. The Trust will employ
reasonable security procedures to confirm that instructions
communicated by telephone are genuine; and if it does not, it may be
liable for losses due to unauthorized or fraudulent transactions.
These procedures can include, among other things, requiring one
or more forms of personal identification prior to acting upon
telephone instructions, providing written confirmations and
recording all telephone transactions. Certain transactions,
including account registration or address changes, must be
authorized in writing.
How to Purchase and Redeem Shares
Purchasing Shares
Purchases are priced at the net asset value per share
next determined after the purchase order is received by the Trust
in proper form and funds are received by the Trust's Custodian.
This is normally one or two business days after an investment is
received. Each shareholder is given an account with a
balance denominated in shares.
Purchases and Uncollected Funds. To protect shareholders
against loss or dilution resulting from deposit items that
are returned unpaid, the proceeds of any redemption may be
delayed 10 days or more until it can be determined that the
check or other deposit item (including Automatic Monthly
Investments) used for purchase of the shares has cleared.
Such deposit items are considered "uncollected," until the
Trust has determined that they have actually been paid by
the bank on which they were drawn. Purchases made with cash,
federal funds wire or U.S. Treasury check are considered
collected when received and not subject to the 10 day hold.
All purchases earn dividends from the day after the day of
credit to a shareholder's account, even while not collected.
New Accounts. The minimum initial investment is $1,000.
By Check: New accounts may be opened by completing an
application and forwarding it with a check to:
GIT Income Trust
1655 Fort Myer Drive, Suite 1000
Arlington, VA 22209-3108
By wire. Federal funds wires should be sent to Star Bank, N.A.,
Cinti/Trust, ABA No. 0420-0001-3, for credit as follows:
GIT Madison Bond Fund Account No. 48038-8883
(Investor name and account number)
Please call the Trust before the funds are wired to ensure
proper and timely credit. The Trust must be notified by 1
p.m. Washington, DC time, to credit the shareholder's
account the same day.
There is a charge of $6.00 for processing incoming wires of
less than $1,000.
When a new account is opened by telephone for funds wired to
the Trust, the investor will be required to submit a signed
application promptly thereafter. Payment of redemption
proceeds is not permitted until a signed application
is on file with the Trust.
By Inter-Fund Exchange. Shareholders may open a new account
by exchange from an existing account when the account
registration and tax identification number will remain
the same. A new account application is required only when
the account registration or tax identification number will
differ from that on the application for the original account.
Exchanges may only be made into funds that are
sold in the shareholder's state of residence.
Subsequent Investments. Subsequent investments may be made in any
amount, but the Trust reserves the right to return investments of
less than $50.00. Checks should be payable to GIT Income Trust and sent to:
GIT Income Trust
P.O. Box 640393
Cincinnati, OH 45264-0393
Please include an investment deposit slip or a clear indication
of the account to be credited.
By Inter Fund Exchange. Shareholders may redeem shares
from one GIT account and concurrently invest the proceeds
in another GIT account by telephone when the account registration
and tax identification number remain the same. There is no charge for
this service.
By Automatic Monthly Investment. Shareholders may elect to
have regular monthly investments in any fixed amount of $100
or more. GIT will automatically initiate an Electronic
Funds Transfer to credit the shareholder's GIT account and
debit a bank account of their choice. You can change the
amount or discontinue the automatic investment anytime.
Redeeming Shares
Redemptions are processed on any day the New York Stock
Exchange is open and are effected at the net asset value per
share next determined after the redemption request is received in
proper form. Redemptions may be made by mail
or by wire transfer or telephone pursuant to preauthorized
instructions.
Signature Guarantees
To protect shareholder investments, the Trust requires signature
guarantees for some redemptions. Signature guarantees help
the Trust ensure the identity of the authorized
shareholder(s). Signature guarantees are required for any
redemption whereby the proceeds are to be delivered to (1) a
person other than the shareholder of record (2) an address
other than the address of record or (3) a bank and bank
account number other than previously designated. The Trust
accepts signature guarantees from banks with FDIC insurance,
certain credit unions, trust companies, and members of a
domestic stock exchange. A guarantee from a notary public
is not an acceptable signature guarantee.
Redemptions and Uncollected Funds. To protect shareholders
against loss or dilution resulting from deposit items that
are returned unpaid, the proceeds of any redemption may be
delayed 10 days or more until it can be determined that the
check or other deposit item (including Automatic Monthly
Investments)used for purchase of the shares has cleared.
Such deposited items are considered "uncollected," until the
Trust has determined that they have actually been paid
by the bank on which they were drawn. Purchases made with
cash, federal funds wire or U.S. Treasury check are
considered collected when received and not subject
to the 10 day hold.
By Wire. With one business day's notice, funds can be sent
by wire transfer to the bank and account designated on the
account application or by subsequent written authorization.
Redemption by wires can be arranged by calling the
telephone numbers on the cover of this prospectus. Requests
for wire transfer must be made by 4:00 p.m. EST the day
before the wire will be sent.
Wire Fees: Wires of $10,000 or more will be processed to
U.S. domestic banks without charge. Wire transfers for
lesser amounts will be processed for a fee of $10. Wire
transfers sent to a foreign bank for any amount will be
processed for a fee of $30 or the cost of the wire if
greater.
By Telephone or By Mail. Upon request by telephone or in
writing, redemptions may be sent to the shareholder of
record to the address of record by check of the Trust.
Redemption requests received by mail and telephone are
normally processed within one business day.
Stop Payment on Check Issued By the Trust.
Call the Trust to place a stop payment on a check issued
by the Trust.
Normally, the Trust charges a fee of $28.00, or the cost of
stop payment, if greater, for stop payment requests on a check
issued by the Trust on behalf of a shareholder. Certain
documents may be needed before such a request can be processed.
By Customer Check. A shareholder who has requested checkwriting
privileges and submitted a signature card may write checks in any amount
payable to any party. Checks of $500 or more are processed free
of charge. There is a charge (by redemption of shares) of $5.00
for checks written for under $500. An initial supply of preprinted
checks will be sent free of charge. The cost of check reorders and of
printing special checks will be charged to the shareholder's
account.
A confirmation statement showing the amount and number of each
check written is sent to the shareholder. The Trust does
not return canceled checks, but will provide copies of
specifically requested checks. A fee of $1.00 per copy is charged
for more than one check copy per year.
Stop Payments on Customer Checks.
The Trust will honor stop payment requests on unpaid
customer checks written by shareholders for a fee of $5.00. Oral
stop payment requests are effective for 14 calendar days, at
which time they will be canceled unless confirmed in writing.
Written stop payment orders are effective for six months and may
be extended by written request for another six months.
Automatic Periodic Redemptions. Shareholders may request one
or more automatic periodic redemptions of a fixed or readily
determinable sum, or of the actual dividends paid. Such
payments may be sent to the shareholder or to any other
payee preauthorized in writing by the shareholder. There is
no charge for this service, but the Trust reserves the right
to impose a charge, or to impose a minimum amount for
periodic redemptions.
Closing an Account
An account may be closed by telephone, wire transfer or by
mail as explained above.
A shareholder who wishes to close an account should request that
the account be closed, rather than redeeming the amount believed
to be the account balance. When an account is closed, shares
will be redeemed at the next determined net asset value.
Minimum Balance. The Trust reserves the right to
involuntarily redeem accounts with balances of less than
$700. Prior to closing any such account, the shareholder
will be given 30 days written notice, during which time the
shareholder may increase his or her balance to avoid having
the account closed.
Transaction Charges
Bounced Investment Checks. Shareholders will be charged (by
redemption of shares) $10.00 for items deposited for
investment that are returned unpaid for any reason. The
Trust charges $5.00 to process each bearer bond coupon
deposited.
Broker Fees. Shareholders who purchase or redeem shares
through a securities broker may be charged a transaction fee
by the broker for the handling of the transaction if the
broker so elects. Such charges are retained by the
broker and not transmitted to the Trust. However,
shareholders may engage in any transaction directly with the
Trust to avoid such charges.
Additional Charges: The Trust reserves the right to impose
additional charges, upon 30 days written notice, to cover
the costs of unusual transactions. Services for which
charges could be imposed include, but are not limited to,
processing items sent for special collection, international
wire transfers, research and processes for retrieval of
documents or copies of documents.
Retirement Plans
IRAs. Individual Retirement Accounts ("IRAs") may be opened with
a reduced minimum investment of $500. Even though they may be
nondeductible or partially deductible, IRA contributions up to
the allowable annual limits may be made, and the earnings on such
contributions will accumulate tax-free until distribution. The
Trust currently charges an annual fee of $12 per shareholder
(not per IRA account) invested in an IRA at GIT. This fee may
be prepaid by the shareholder. A separate application is required
for IRA accounts.
Keogh Plans. The Trust also offers Keogh (or H.R. 10) plans for
self-employed individuals and their employees, which enable them
to obtain tax-sheltered retirement benefits similar to those
available to employees covered by other qualified retirement
plans. Currently the Trust charges an annual fee of
$15 per shareholder (not per Keogh account) invested in
a Keogh at GIT.
The Trust also offers SEP IRAs, SIMPLEs, 401(k) and 403(b)
retirement plans. Further information on the retirement plans
available through the Trust, including minimum investments, may
be obtained by calling the Trust's shareholder service
department.
<PAGE>
Telephone Numbers
Shareholder Service
Washington, DC area: 703/528-6500
Toll-free nationwide: 800/336-3063
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
Madison Bond Fund 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
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Dated June 13, 1997
For use with Government Portfolio and Maximum
Income Portfolio Prospectus dated July 31, 1996 and
with Madison Bond Fund Portfolio Prospectus
dated June 13, 1997
GIT INCOME TRUST
1655 Fort Myer Drive
Arlington, VA 22209-3108
(800) 336-3063
(703) 528-6500
This Statement of Additional Information is not a Prospectus. It
should be read in conjunction with the Prospectus of GIT Income
Trust bearing the date indicated above (the "Prospectus"). A copy
of the Prospectus may be obtained from the Trust at the address
and telephone numbers shown.
Table of Contents
Introductory Information
("About GIT Income Trust") 2
Supplemental Investment Policies
("Investment Objectives" and "Investment Policies") 2
Investment Limitations
("Investment Policies") 5
The Investment Advisor
("Management of the Trust") 6
Organization of the Trust
("The Trust and Its Shares") 7
Trustees and Officers
("Management of the Trust") 8
Administrative and Other Expenses
("Management of the Trust") 9
Portfolio Transactions
("Management of the Trust") 10
Shareholder Transactions
("How to Purchase and Redeem Shares") 10
Redemptions
("How to Purchase and Redeem Shares") 11
Retirement Plans
("How to Purchase and Redeem Shares") 12
Declaration of Dividends
("Dividends") 12
Determination of Net Asset Value
("Net Asset Value") 13
Additional Tax Matters
("Taxes") 13
Yield and Total Return Calculations
("Performance Information") 14
Custodians and Special Custodians 15
Legal Matters and Independent Auditors
("Financial Highlights") 16
Additional Information 16
Financial Statements and Report of Independent Auditors
("Financial Highlights") 16
Quality Ratings
("Investment Policies") 16
Note: The items appearing in parentheses above are cross
references to sections in the Prospectus which correspond to the
sections of this Statement of Additional Information.
Introductory Information
GIT Income Trust (the "Trust") issues three series of shares:
Government Portfolio shares, Maximum Income Portfolio shares
and Madison Bond Fund Portfolio shares.
Government Portfolio shares represent interests in a portfolio of
Government Securities (the "Government Portfolio"). Maximum
Income Portfolio shares represent interests in a portfolio of
lower-grade debt securities, rated not lower than CCC or Caa or
of equivalent quality (the "Maximum Income Portfolio").
Madison Bond Fund Portfolio shares represent interests in a
portfolio of investment grade corporate debt securities, Government
Securities and short-term fixed income securities. These
Portfolios are described more fully below (see "Supplemental
Investment Policies").
Supplemental Investment Policies
The investment objectives of the Trust are described in the
Prospectus (see "Investment Objective"). Reference should also be
made to the Prospectus for general information concerning the
Trust's investment policies for each of its Portfolios (see
"Investment Policies"). The Trust seeks to achieve its investment
objectives through diversified investment by each of its
Portfolios, principally in debt securities.
Unless described herein or in the Prospectus, the Trust will
not invest in what are generally considered to be risky "derivative"
securities. Any deviation from this policy must be approved
by the Trustees in advance.
The quality rating classifications for debt securities of "High
Grade," "Upper Medium Grade," "Lower Medium Grade" and "Low
Grade" are defined below (see "Quality Ratings"). For unrated
debt securities the Advisor may make its own determinations of
those investments it assigns to each quality rating
classification, as part of the exercise of its investment
discretion on behalf of the Trust, but such determinations will
be made by reference to the rating criteria followed by
recognized rating agencies (see "Quality Ratings"). Any unrated
securities purchased for the Maximum Income Portfolio will be of
comparable quality to the rated securities that may be purchased
for the same Portfolio. The Advisor's quality classification
procedures will be subject to review by the Trustees.
Basic Investment Policies. The Government Portfolio seeks to
invest solely in U.S. Government securities. The Maximum Income
Portfolio seeks to invest in debt securities offering the highest
yields, subject to the minimum quality rating for this Portfolio
described below. To the extent the investments selected for this
Portfolio have higher yields than alternative investments, they
may be less liquid, have lower-quality ratings and entail more
risk that their value could fall than comparable investments with
lower yields. (See "Quality Ratings" for the investment
characteristics of lower-rated securities.)
The Madison Bond
Fund Portfolio invests in corporate debt securities and obligations
of the U.S. Government and its Agencies. Eligible corporate debt
securities must be accorded one of the four highest
quality ratings by Standard & Poor's or Moody's or, if
unrated, judged by the Advisor to be of comparable
quality. Bonds rated A, AA, or AAA by Standard & Poor's or
Aaa, Aa, or A by Moody's indicate strong to high capacity
of the company to pay interest and repay principal.
However, the fourth highest rating, BBB, or Baa indicates
adequate capacity to pay interest and repay principal but
suggests that adverse economic conditions may weaken the
company's ability to meet these obligations. Securities
rated Baa are regarded by Moody's as having some
speculative characteristics.
Other Policies. The Trust will not invest more than 25% of the
assets of a Portfolio in any one industry. Although the
investment policies of the Trust contemplate that each of its
Portfolios will be principally invested in longer-term debt
securities, investment management considerations will mean that a
portion of each Portfolio will normally be invested in short-term
investments. The short-term investments in which the Trust may
invest are described below. The Trust also reserves the right to
maintain a portion of the assets of any Portfolio in uninvested
cash when deemed advisable.
During defensive periods the Trust may also invest up to 100% of
its assets in short-term investments, including without
limitation in U.S. Government securities and the money market
obligations of domestic banks, their branches and other domestic
depository institutions (see "Investment Limitations").
Short-Term Investments. The "short-term investments" in which the
Trust may invest are limited to the following U.S. dollar
denominated investments: (1) U.S. Government securities; (2)
obligations of banks having total assets of $750 million or more;
(3) commercial paper having a quality rating appropriate to the
respective Portfolio of the Trust; and (4) repurchase agreements
involving any of the foregoing securities or long-term debt
securities of the type in which the respective Portfolio of the
Trust could invest directly.
Bank obligations eligible as short-term investments are
certificates of deposit ("CDs"), bankers acceptances ("BAs") and
other obligations of banks having total assets of $750 million or
more (including assets of affiliates). CDs are generally short-
term interest-bearing negotiable certificates issued by banks
against funds deposited with the issuing bank for a specified
period of time. Such CDs may be marketable or may be redeemable
upon demand of the holder; some redeemable CDs may have penalties
for early withdrawal, while others may not. Federally insured
bank deposits are presently limited to $100,000 of insurance per
depositor per bank, so the interest or principal of CDs may not
be fully insured. BAs are time drafts drawn against a business,
often an importer, and "accepted" by a bank, which agrees
unconditionally to pay the draft on its maturity date. BAs are
negotiable and trade in the secondary market.
The Trust will not invest in non-transferable time deposits
having penalties for early withdrawal if such time deposits
mature in more than seven calendar days, and such time deposits
maturing in two business days to seven calendar days will be
limited to 10% of the respective Portfolio's total assets.
"Commercial paper" describes the unsecured promissory notes
issued by major corporations to finance short-term credit needs.
Commercial paper is issued in maturities of nine months or less
and usually on a discount basis. Commercial paper may be rated A-
1, P-1, A-2, P-2, A-3 or P-3 (see "Quality Ratings").
Specialized Investment Techniques. In order to achieve its
investment objective, the Trust may use, when the Advisor deems
appropriate, certain specialized investment techniques. Such
specialized investment techniques principally include those
identified in the Prospectus (see "Investment Policies"), which
are described more fully below:
1. When-Issued Securities. The Trust may purchase and sell
securities on a when-issued or delayed delivery basis. When-
issued and delayed delivery transactions arise when securities
are bought or sold with payment for and delivery of the
securities scheduled to take place at a future time. Frequently
when newly issued debt securities are purchased, payment and
delivery may not take place for 15 to 45 days after the Trust
commits to the purchase. Fluctuations in the value of securities
contracted for future purchase settlement may increase changes in
the value of the respective Portfolio, because such value changes
must be added to changes in the values of those securities
actually held in the Portfolio during
the same period. When-issued transactions represent a form of
leveraging; the Trust will be at risk as soon as the when-issued
purchase commitment is made, prior to actual delivery of the
securities purchased.
When engaging in when-issued or delayed delivery transactions,
the Trust must rely upon the buyer or seller to complete the
transaction at the scheduled time; if the other party fails to do
so, then the Trust might lose a purchase or sale opportunity that
could be more advantageous than alternative opportunities
available at the time of the failure. If the transaction is
completed, intervening changes in market conditions or the
issuer's financial condition could make it less advantageous than
investment alternatives otherwise available at the time of
settlement.
While the Trust will only commit to securities purchases that it
intends to complete, it reserves the right, if deemed advisable,
to sell any securities purchase contracts before settlement of
the transaction; in any such case the Trust could realize either
a gain or a loss, despite the fact that the original transaction
was never completed. When fixed yield contracts are made for the
purchase of when-issued securities, the Trust will maintain in a
segregated account designated investments which are liquid or
mature prior to the scheduled settlement and cash sufficient in
aggregate value to provide adequate funds for completion of the
scheduled purchase.
2. Securities with Variable Interest Rates. Some of the
securities purchased by the Trust may carry variable interest
rates. Securities with variable interest rates normally are
adjusted periodically to pay an interest rate which is a fixed
percentage of some base rate, such as the "prime" interest rate
of a specified bank. The rate adjustments may be specified either
to occur on fixed dates, such as the beginning of each calendar
month, or to occur whenever the base rate changes. Certain of
these variable rate securities may be payable by the issuer upon
demand of the holder, generally within seven days of the date of
demand; others may have a fixed stated maturity with no demand
feature.
Variable rate securities may offer higher yields than are
available from shorter-term securities, but less risk of market
value fluctuations than longer-term securities having fixed
interest rates. When interest rates generally are falling, the
yields of variable rate securities will tend to fall, while when
rates are generally rising variable rate yields will tend to
rise.
Variable rate securities may not be rated and may not have a
readily available secondary market. To the extent these
securities are illiquid, they will be subject to the Trust's 10%
limitation on investments in illiquid securities (see "Investment
Limitations"). The Trust's ability to obtain payment after the
exercise of demand rights could be adversely affected by
subsequent events prior to repayment of the investment at par.
The Advisor will monitor on an ongoing basis the revenues and
liquidity of issuers of variable rate securities and the ability
of such issuers to pay principal and interest pursuant to any
demand feature.
3. Repurchase Agreement Transactions. A repurchase agreement
involves the acquisition of securities from a financial
institution, such as a bank or securities dealer, with the right
to resell the same securities to the financial institution on a
future date at a fixed price. Repurchase agreements are a highly
flexible medium of investment, in that they may be for very short
periods, including frequently maturities of only one day. Under
the Investment Company Act of 1940 repurchase agreements are
considered loans, and the securities involved may be viewed as
collateral. It is the Trust's policy to limit the financial
institutions with which it engages in repurchase agreements to
banks, savings and loan associations and securities dealers
meeting financial responsibility standards prescribed in
guidelines adopted by the Trustees.
When investing in repurchase agreements, the Trust could be
subject to the risk that the other party may not complete the
scheduled repurchase and the Trust would then be left holding
securities it did not expect to retain. If those securities
decline in price to a value less than the amount due at the
scheduled time of repurchase, then the Trust could suffer a loss
of principal or interest. The Advisor will follow procedures
designed to assure that repurchase agreements acquired by the
Trust are always at least 100% collateralized as to principal and
interest. It is the Trust's policy to require delivery of
repurchase agreement collateral to its Custodian or, in the case
of book entry securities held by the Federal Reserve System, that
such collateral is registered in the Custodian's name or in
negotiable form. In the event of insolvency or bankruptcy of the
other party to a repurchase agreement, the Trust could encounter
difficulties and might incur losses upon the exercise of its
rights under the repurchase agreement.
To the extent the Trust requires cash to meet redemption requests
and determines that it would not be advantageous to sell
Portfolio securities to meet those requests, or to the extent the
Trust wishes to obtain cash for a more advantageous investment,
then it may sell its Portfolio securities to another investor
with a simultaneous agreement to repurchase them. Such a
transaction is commonly called a "reverse repurchase agreement."
It would have the practical effect of constituting a loan to the
Trust, the proceeds of which would be used either for other
investments or to meet cash requirements from redemption
requests. If the Trust engages in reverse repurchase agreement
transactions, it will either maintain in a segregated account
designated High Grade investments which are liquid or mature
prior to the scheduled repurchase and cash sufficient in
aggregate value to provide adequate funds for completion of the
repurchase. It is the Trust's current operating policy not to
engage in reverse repurchase agreements for any purpose, if as a
result reverse repurchase agreements in the aggregate would
exceed 5% of the Trust's total assets.
4. Loans of Portfolio Securities. The Trust, in certain
circumstances, may be able to earn additional income by loaning
Portfolio securities to a broker-dealer or financial institution.
The Trust may make such loans only if cash or U.S. Government
securities, equal in value to 100% of the market value of the
securities loaned, are delivered to the Trust by the borrower and
maintained in a segregated account at full market value each
business day. During the term of any securities loan, the
borrower will pay to the Trust all interest income earned on the
loaned securities; at the same time the Trust will also be able
to invest any cash portion of the collateral or otherwise will
charge a fee for making the loan, thereby increasing its overall
return. It is the Trust's policy that it shall have the option to terminate any
loan of Portfolio securities at any time upon seven days' notice
to the borrower. In making a loan of securities, the Trust would
be exposed to the possibility that the borrower of the securities
might be unable to return them when required, which would leave
the Trust with the collateral maintained against the loan; if the
collateral were of insufficient value, the Trust could suffer a
loss. The Trust may pay fees for the placement, administration
and custody of securities loans, as it deems appropriate.
Any loans by the Trust of Portfolio securities will be made in
accordance with applicable guidelines established by the
Securities and Exchange Commission or the Trustees. In
determining whether to lend securities to a particular broker,
dealer or other financial institution, the Advisor will consider
the creditworthiness of the borrowing institution. The Trust will
not enter into any securities lending agreement having a duration
of greater than one year.
5. Financial Futures Contracts. The Trust may use financial
futures contracts, including contracts traded on a regulated
commodity market or exchange, to purchase or sell securities
which the Trust would be permitted to purchase or sell by other
means. A futures contract on a security is a binding contractual
commitment which, if held to maturity, will result in an
obligation to make or accept delivery, during a particular month,
of securities having a standardized face value and rate of
return. By purchasing a futures contract, the Trust will legally
obligate itself to accept delivery of the underlying securities
and pay the agreed price; by selling a futures contract it will
legally obligate itself to make delivery of the security against
payment of the agreed price. The Trust will use financial futures
contracts only where it intends to take or make the required
delivery of securities; however, if it is economically more
advantageous to do so, the Trust may acquire or sell the same
securities in the open market prior to the time the purchase or
sale would otherwise take place according to the contract and
concurrently liquidate the corresponding futures position by
entering into another futures transaction that precisely offsets
the original futures position.
A financial futures contract for a purchase of securities is
called a "long" position, while a financial futures contract for
a sale of securities is called a "short" position. Short futures
contracts may be used as a hedge against a decline in the value
of an investment by locking in a future sale price for the
securities specified for delivery against the contract. Long
futures contracts may be used to protect against a possible
decline in interest rates. Hedges may be implemented by futures
transactions for either the securities held or for comparable
securities that are expected to parallel the price movements of
the securities being hedged. Customarily, most futures contracts
are liquidated prior to the required settlement date by disposing
of the contract; such transactions may result in either a gain or
a loss, which when part of a hedging transaction, would be
expected to offset corresponding losses or gains on the hedged
securities.
The Trust intends to use financial futures contracts as a
defense, or hedge, against anticipated interest rate changes and
not for speculation. A futures contract sale is intended to
protect against an expected increase in interest rates and a
futures contract purchase is intended to offset the impact of an
interest rate decline. By means of futures transactions, the
Trust may arrange a future purchase or sale of securities under
terms fixed at the time the futures contract is made.
The Trust will incur brokerage fees in connection with its
futures transactions, and it will be required to deposit and
maintain cash or U.S. Government securities with brokers as
margin to guarantee performance of its futures obligations. When
purchasing securities by means of futures contracts the Trust
will maintain in separate accounts (including brokerage accounts
used to maintain the margin required by the contracts) High Grade
investments which are liquid or which mature prior to the
scheduled purchase and cash sufficient in aggregate value to
provide adequate funds for completion of the purchase. While
futures will be utilized to reduce the risks of interest rate
fluctuations, futures trading itself entails certain other risks.
Thus, while the Trust may benefit from the use of financial
futures contracts, unanticipated changes in interest rates may
result in a poorer overall performance than if the Trust had not
entered into any such contracts.
6. Foreign Securities. The Trust may invest a portion of a
Portfolio's assets in securities of foreign issuers that are
listed on a recognized domestic or foreign exchange without
restriction. Foreign investments involve certain special
considerations not typically associated with domestic
investments. Foreign investments may be denominated in foreign
currencies and may require the Trust to hold temporary foreign
currency bank deposits while transactions are completed; although
the Trust might therefore benefit from favorable currency
exchange rate changes, it could also be affected adversely by
changes in exchange rates, by currency control regulations and by
costs incurred when converting between various currencies.
Furthermore, foreign issuers may not be subject to the uniform
accounting, auditing and financial reporting requirements
applicable to domestic issuers, and there may be less publicly
available information about such issuers.
In general, foreign securities markets have substantially less
volume than comparable domestic markets and therefore foreign
investments may be less liquid and more volatile in price than
comparable domestic investments. Fixed commissions in foreign
securities markets may result in higher commissions than for
comparable domestic transactions, and foreign markets may be
subject to less governmental supervision and regulation than
their domestic counterparts. Foreign securities transactions are
subject to documentation and delayed settlement risks arising
from difficulties in international communications. Moreover,
foreign investments may be adversely affected by diplomatic,
political, social or economic circumstances or events in other
countries, including civil unrest, expropriation or
nationalization, unanticipated taxes, economic controls, and acts
of war. Individual foreign economies may also differ from the
United States economy in such measures as growth, productivity,
inflation, national resources and balance of payments position.
Maturities. As used in this Statement of Additional Information
and in the Prospectus, the term "effective maturity" means either
the actual stated maturity of the investment, the time between
its scheduled interest rate adjustment dates (for variable rate
securities), or the time between its purchase settlement and
scheduled future resale settlement pursuant to a resale or
optional resale under fixed
terms arranged in connection with the purchase, whichever period
is shorter. A "stated maturity" means the time scheduled for
final repayment of the entire principal amount of the investment
under its terms. "Short-term" means a maturity of one year or
less, while "long-term" means a longer maturity.
Policy Review. If, in the judgment of a majority of the Trustees
of the Trust, unanticipated future circumstances make inadvisable
continuation of the Trust's policy of seeking high current income
from investment principally in long-term debt securities, or
continuation of the more specific policies of each Portfolio,
then the Trustees may change any such policies without
shareholder approval, subject to the limitations provided
elsewhere in this Statement of Additional Information (see
"Investment Limitations") and after giving 30 days' written
notice to the Trust's shareholders affected by the change.
Except for the fundamental investment limitations placed upon the
Trust's activities, the Trustees reserve the right to review and
change the other investment policies and techniques employed by
the Trust, from time to time as they deem appropriate, in
response to market conditions and other factors. Reference should
be made to "Investment Limitations" for a description of those
fundamental investment policies which may not be changed without
shareholder approval. Such fundamental policies would permit the
Trust, after notice to shareholders but without a shareholder
vote, to adopt policies permitting a wide variety of investments,
including money market instruments, all types of common and
preferred equity securities, all types of long-term debt
securities, convertible securities, and certain types of option
contracts. In the event of such a policy change, a change in the
Trust's name might be required. There can be no assurance that
the Trust's present objectives will be achieved.
Investment Limitations
The Trust has adopted as fundamental policies the following
limitations on its investment activities, which apply to each of
its Portfolios; these fundamental policies may not be changed
without a majority vote of the Trust's shareholders, as defined
in the Investment Company Act of 1940 (see "Organization of the
Trust").
1. Permissible Investments. Subject to the investment policies
from time to time adopted by the Trustees, the Trust may purchase
any type of securities under such terms as the Trust may
determine; and any such securities may be acquired pursuant to
repurchase agreements with financial institutions or securities
dealers or may be purchased from any person, under terms and
arrangements determined by the Trust, for future delivery. Any of
these securities may have limited markets and may be purchased
with restrictions on transfer; however, the Trust may not make
any investment (including repurchase agreements) for which there
is no readily available market and which may not be redeemed,
terminated or otherwise converted into cash within seven days,
unless after making the investment not more than 10% of the
Trust's net assets would be so invested. Securities of foreign
issuers not listed on a recognized domestic or foreign exchange
are considered to be illiquid securities and fall within this 10%
limitation.
2. Restricted Investments. Not more than 5% of the value of the
total assets of a Portfolio of the Trust may be invested in the
securities of any one issuer (other than securities issued or
guaranteed by the United States Government or any of its agencies
or instrumentalities and excluding cash and cash items); nor may
securities be purchased when as a result more than 10% of the
voting securities of the issuer would be held by the Trust. To
the extent the Trust purchases securities other than obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, obligations which provide income exempt from
federal income taxes, and short-term obligations of domestic
banks, their branches, and other domestic depository
institutions, the Trust will limit its investments so that not
more than 25% of the assets of each of its Portfolios are
invested in any one industry. For purposes of these restrictions,
the issuer is deemed to be the specific legal entity having
ultimate responsibility for performance of the obligations
evidenced by the security and whose assets and revenues
principally back the security. Any security that does not have a
governmental jurisdiction or instrumentality ultimately
responsible for its repayment may not be purchased by the Trust
when the entity responsible for such repayment has been in
operation for less than three years, if such purchase would
result in more than 5% of the total assets of the respective
Portfolio of the Trust being invested in such securities.
The Trust may not purchase the securities of other investment
companies, except for shares of unit investment trusts holding
securities of the type purchased by the Trust itself and then
only if the value of such shares of any one investment company
does not exceed 5% of the value of the total assets of the
Trust's Portfolio in which the shares are included and the
aggregate value of all such shares does not exceed 10% of the
value of such total assets, except in connection with an
investment company merger, consolidation, acquisition or
reorganization. The Trust may not purchase any security for
purposes of exercising management or control of the issuer,
except in connection with a merger, consolidation, acquisition or
reorganization of an investment company. The Trust may not
purchase or retain the securities of any issuer if, to the
knowledge of the Trust's management, the holdings of those of the
Trust's officers, Trustees and officers of its Advisor who
beneficially hold one-half percent or more of such securities,
together exceed 5% of such outstanding securities.
3. Borrowing and Lending. It is a fundamental policy of the Trust
that it may borrow (including engaging in reverse repurchase
agreement transactions) in amounts not exceeding 25% of its total
assets for investment purposes. The Trust may not otherwise issue
senior securities representing indebtedness and may not pledge,
mortgage or hypothecate any assets to secure bank loans, except
in amounts not exceeding 15% of its net assets taken at cost.
The Trust may loan its Portfolio securities in an amount not in
excess of one-third of the value of the Trust's gross assets,
provided collateral satisfactory to the Trust's Advisor is
continuously maintained in amounts not less than the value of the
securities loaned. The Trust may not lend money (except to
governmental units), but is not precluded from entering into
repurchase agreements or purchasing debt securities.
4. Other Activities. The Trust may not act as an underwriter
(except for activities in connection with the acquisition or
disposition of securities intended for or held by one of the
Trust's Portfolios), make short sales or maintain a short
position (unless the Trust owns at least an equal amount of such
securities, or securities convertible or exchangeable into such
securities, and not more than 25% of the Trust's net assets is
held as collateral for such sales). Nor may the Trust purchase
securities on margin (except for customary credit used in
transaction clearance), invest in commodities, purchase interests
in real estate, real estate limited partnerships or invest in
oil, gas or other mineral exploration or development programs or
oil, gas or mineral leases. However, the Trust may purchase
securities secured by real estate or interests therein and may
use financial futures contracts, including contracts traded on a
regulated commodity market or exchange, to purchase or sell
securities which the Trust would be permitted to purchase or sell
by other means and where the Trust intends to take or make the
required delivery. The Trust may acquire put options in
conjunction with a purchase of Portfolio securities; it may also
purchase put options and write call options covered by securities
held in the respective Portfolio (and purchase offsetting call
options in closing purchase transactions), provided that the put
option purchased or call option written at all times remains
covered by Portfolio securities, whether directly or by
conversion or exchange rights; but it may not otherwise invest in
or write puts and calls or combinations thereof. Investments in
warrants, valued at the lower of cost or market, may not exceed
5% of the Trust's net assets and included within that amount, but
not to exceed 2% of the value of the Trust's assets, may be
warrants which are not listed on the New York or American Stock
Exchanges.
Except as otherwise specifically provided, the foregoing
percentage limitations need only be met when the investment is
made or other relevant action is taken. As a matter of operating
policy in order to comply with certain applicable state
restrictions, but not as a fundamental policy, the Trust will not
pledge, mortgage or hypothecate in excess of 10% of a Portfolio's
total assets taken at market value. Although permitted to do so
by its fundamental policies, it is the Trust's current policy not
to acquire put options or write call options for the Government
and Maximum Income Portfolios.
Notwithstanding the Trust's fundamental policies, it does not
presently intend to borrow (including engaging in reverse
repurchase agreement transactions) for investment purposes nor to
borrow (including engaging in reverse repurchase agreement
transactions) for any purpose in amounts in excess of 5% of its
total assets. If the Trust were to borrow for the purpose of
making additional investments, such borrowing and investment
would constitute "leverage." Leverage would exaggerate the impact
of increases or decreases in the value of a Portfolio's total
assets on its net asset value, and thus increase the risk of
holding the Trust's shares. Furthermore, if bank borrowings by
the Trust for any purpose exceeded one-third of the value of the
Trust's total assets (net of liabilities other than the bank
borrowings), then the Investment Company Act of 1940 would
require the Trust, within three business days, to liquidate
assets and commensurately reduce bank borrowings until the
borrowing level was again restored to such one-third level. Funds
borrowed for leverage purposes would be subject to interest costs
which might not be recovered by interest, dividends or
appreciation from the respective securities purchases. The Trust
might also be required to maintain minimum bank balances in
connection with such borrowings or to pay line-of-credit
commitment fees or other fees to continue such borrowings; either
of these requirements would increase the cost of the borrowing.
In connection with the Trust's limitation on the industry
concentration of its investments, domestic banks and their
branches may include the domestic branches of foreign banks, to
the extent such domestic branches are subject to the same
regulation as United States banks; but they will not include the
foreign branches of domestic banks unless the obligations of such
foreign branches are unconditionally guaranteed by the domestic
parent.
If the Trust alters any of the foregoing current operating
policies (relating to financial futures contracts, options,
warrants or borrowing), it will notify shareholders of the policy
revision at least 30 days prior to its implementation and
describe the new investment techniques to be employed. In the
implementation of its investment policies the Trust will not
consider securities to be readily marketable unless they have
readily available market quotations.
The Investment Advisor
Effective July 31, 1996, Bankers Finance Advisors, LLC, 1655 Fort Myer
Drive, Arlington, Virginia 22209-3108, is the investment Advisor
to the Trust and is called the "Advisor" throughout this
Statement of Additional Information and the Prospectus. The
Advisor is responsible for the investment management of the Trust
and is authorized to execute the Trust's portfolio
transactions, to select the methods and firms with which such
transactions are executed, to oversee the Trust's operations, and
otherwise to administer the affairs of the Trust as it deems
advisable. In the execution of these responsibilities, the
Advisor is subject to the investment policies and limitations of
the Trust described in the Prospectus and this Statement of
Additional Information, to the terms of the Declaration of Trust
and the Trust's By-Laws, and to written directions given from
time to time by the Trustees.
The Advisor is a Wisconsin limited liability company owned by
Madison Investment Advisors, Inc. ("Madison"), whose
principal offices are at 6411 Mineral Point Road, Madison,
Wisconsin. Madison is a registered investment Advisor which
has numerous advisory clients. Madison was founded in 1973 and
has no other business affiliations other than those described
in the Prospectus and this Statement of Additional Information.
This investment advisory agreement between the Trust, on behalf
of the portfolios, and the Advisor is subject to annual review
and approval by the Trustees, including a majority of those who
are not "interested persons," as defined in the Investment
Company Act of 1940. The investment advisory agreement was
approved by shareholders for an initial two year term at a special
meeting of the Government and Maximum Income Portfolio's
shareholders held in July 1996 and by the initial shareholder of
the Madison Bond Fund Portfolio in 1997.
The investment advisory agreement may be terminated at any time,
without penalty, by the Trustees 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 that series or class (see
"Organization of the Trust"), or by the Advisor, upon sixty days'
written notice to the other party. The investment advisory
agreement may not be assigned by the Advisor, and will
automatically terminate upon any assignment.
Background of the Advisor. The Advisor was formed in 1996 by
Madison for the purpose of providing investment management
services to the GIT family of mutual funds, including the Trust.
The Advisor purchased the investment management assets of the
former Advisor to the Trust, Bankers Finance Investment
Management Corp. on July 31, 1996. With respect to the
Government Portfolio and the Maximum Income Portfolio,
for periods prior to July 31, 1996, references in this
Statement of Additional Information and in the Prospectus
to the "Advisor" refer to Bankers Finance Investment Management
Corp. The Advisor also serves as the investment Advisor to
Government Investors Trust, GIT Equity Trust and GIT Tax-Free
Trust.
Management. Frank E. Burgess is President, Treasurer and
Director of Madison and Vice President of the Advisor.
Mr. Burgess owns a majority of the common stock of Madison,
which, in turn, controls the Advisor. Mr. Burgess is also a Trustee and
Vice President of the Trust. Mr. Burgess holds the same positions
with Government Investors Trust, GIT Equity Trust and
GIT Tax-Free Trust. Katherine L. Frank is President and Treasurer
of the Advisor and Vice President of Madison. Ms. Frank holds the
same positions with Government Investors Trust, GIT Equity Trust and
GIT Tax-Free Trust.
Advisory Fee and Expense Limitations. For its services under the
Investment Advisory Agreement, the Advisor receives a fee,
payable monthly, calculated as 5/8 percent per annum of the
average daily net assets of the Government and Maximum
Income Portfolios and 1/2 percent per annum of the
average daily net assets of the Madison Bond Fund Portfolio during
the month. The Advisor may waive or reduce such fee during any
period. The Advisor may also reduce such fee on a permanent
basis, without any requirement for consent by the Trust or its
shareholders, under such terms as it may determine, by written
notice thereof to the Trust.
The Advisor has agreed, in any event, to be
responsible for the fees and expenses of the Trustees and
officers of the Trust who are affiliated with the Advisor, the
rent expenses of the Trust's principal executive office premises,
and its various promotional expenses (including the distribution
of Prospectuses to potential shareholders). Other than investment
management and the related expenses, and the foregoing items, the
Advisor is not obligated to provide or pay for any other services
to the Trust, although it has discretion to elect to do so. The
Investment Advisory Agreement permits the Advisor to make
payments out of its fee to other persons.
During the fiscal year ended March 31, 1997, the Advisor received
advisory fees of $xx,xxx with respect to the Government Portfolio
and $xx,xxx with respect to the Maximum Income Portfolio. During
the fiscal year ended March 31, 1996, the Advisor received
advisory fees of $46,093 with respect to the Government Portfolio
and $42,986 with respect to the Maximum Income Portfolio. During
the fiscal year ended March 31, 1995, the Advisor received
advisory fees of $48,356 with respect to the Government Portfolio
and $44,235 with respect to the Maximum Income Portfolio.
During the fiscal years ended December 31, 1996, 1995 and
1994, Madison, as the Advisor to Madison Bond Fund, Inc.,
the predecessor to the Madison Bond Fund Portfolio, received
advisory fees of $23,878, $30,159 and $41,658, respectively.
Organization of The Trust
The Trust's Declaration of Trust, dated November 18, 1982, has
been filed with the Secretary of State of the Commonwealth of
Massachusetts and the Clerk of the City of Boston, Massachusetts.
The Prospectus contains general information concerning the
Trust's form of organization and its shares, including the series
of shares currently authorized (see "The Trust and Its Shares").
Series and Classes of Shares. The Trustees may authorize at any
time the creation of additional series of shares (the proceeds of
which would be invested in separate, independently managed
Portfolios) and additional classes of shares within any series
(which would be used to distinguish among the rights of different
categories of shareholders, as might be required by future
regulations, methods of share distribution or other unforeseen
circumstances) with such preferences, privileges, limitations,
and voting and dividend rights as the Trustees may determine. All
consideration received by the Trust for shares of any additional
series or class, and all assets in which such consideration is
invested, would belong to that series or class (but classes may
represent proportionate undivided interests in a series), and
would be subject to the liabilities related thereto. The
Investment Company Act of 1940 would require the Trust to submit
for the approval of the shareholders of any such additional
series or class, any adoption of an investment advisory contract
or any changes in the Trust's fundamental investment policies
related to the series or class.
The Trustees may divide or combine the shares of any series into
a greater or lesser number of shares without thereby changing the
proportionate interests in the series. Any assets, income and
expenses of the Trust not readily identifiable as belonging to a
particular series are allocated by or under the direction of the
Trustees in such a manner as they deem fair and equitable. Upon
any liquidation of the Trust or of a series of its shares, the
shareholders are entitled to share pro-rata in the liquidation
proceeds available for distribution. Shareholders of each series
have an interest only in the assets allocated to that series.
Voting Rights. The voting rights of shareholders are not
cumulative, so that holders of more than 50 percent of the shares
voting can, if they choose, elect all Trustees being selected,
while the holders of the remaining shares would be unable to
elect any Trustees. As of March 10, 1997, Firstcinco, Trustee,
P.O. Box 118, Cincinnati, Ohio 45201 held 9% of the Government
Portfolio. No shareholders owned more than five percent of the
Maximum Income Portfolio.
Shareholder votes relating to the election of Trustees, approval
of the Trust's selection of independent auditors and any
contract with a principal underwriter, as well as any other
matter in which the interests of all shareholders are
substantially identical, will be voted upon without regard to
series or classes of shares. Matters that do not affect any
interest of a series or class of shares will not be voted upon by
the unaffected shareholders. Certain other matters in which the
interests of more than one series or class of shares are
affected, but where such interests are not substantially
identical, will be voted upon separately by each series or class
affected and will require a majority vote of each such series or
class to be approved by it. When a matter is voted upon
separately by more than one series or class of shares, it may be
approved with respect to a series or class even if it fails to receive a
majority vote of any other series or class or fails to receive a
majority vote of all shares entitled to vote on the matter.
Because there is no requirement for annual elections of Trustees,
the Trust does not anticipate having regular annual shareholder
meetings; shareholder meetings will be called as necessary to
consider matters requiring votes by the shareholders. The
selection of the Trust's independent auditors will be submitted
to a vote of ratification at any annual meeting held by the
Trust. Any change in the Declaration of Trust, in the Investment
Advisory Agreement (except for reductions of the Advisor's fee)
or in the fundamental investment policies of the Trust
must be approved by a majority of the affected shareholders
before it can become effective. For this purpose, a "majority"
of the shares of the Trust means either the vote, at an annual
or special meeting of the shareholders, of 67 percent or more
of the shares present at such meeting if the holders of more
than 50 percent of the outstanding shares of the Trust are
present or represented by proxy or the vote of 50 percent
of the outstanding shares of the Trust, whichever is less.
Voting groups will be comprised of separate series and
classes of shares or of all of the Trust's shares, as appropriate
to the matter being voted upon.
The Declaration of Trust provides that two-thirds of the holders
of record of the Trust's shares may remove a Trustee from office
either by declarations in writing filed with the Trust's
Custodian or by votes cast in person or by proxy at a meeting
called for the purpose. The Trustees are required to promptly
call a meeting of shareholders for the purpose of voting on
removal of a Trustee if requested to do so in writing by the
record holders of at least 10% of the Trust's outstanding shares.
Ten or more persons who have been shareholders for at least six
months and who hold shares with a total value of at least $25,000
(or 1% of the Trust's net assets, if less) may require the
Trustees to assist a shareholder solicitation to call such a
meeting by providing either a shareholder mailing list or an
estimate of the number of shareholders and approximate cost of
the shareholder mailing, in which latter case, unless the
Securities and Exchange Commission determines otherwise, the
shareholders desiring the solicitation may require the Trustees
to undertake the mailing if those shareholders provide the
materials to be mailed and assume the cost of the mailing.
Shareholder Liability. Under Massachusetts law, the shareholders
of an entity such as the Trust may, under certain circumstances,
be held personally liable for its obligations. The Declaration of
Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and requires that notice of such
disclaimer be given in each agreement, obligation or instrument
entered into or executed by the Trust or the Trustees. The
Declaration of Trust provides for indemnification out of the
Trust property of any shareholder held personally liable for the
obligations of the Trust. The Declaration of Trust also provides
that the Trust shall, upon request, assume the defense of any
claim made against any shareholder for any act or obligation of
the Trust and satisfy any judgment thereof. Thus, the risk of a
shareholder incurring financial loss on account of status as a
shareholder is limited to circumstances in which the Trust itself
would be unable to meet its obligations.
Liability of Trustees and Others. The Declaration of Trust
provides that the officers and Trustees of the Trust will not be
liable for any neglect, wrongdoing, errors of judgment, or
mistakes of fact or law, except that they shall not be protected
from liability arising out of willful misfeasance, bad faith,
gross negligence, or reckless disregard of their duties to the
Trust. Similar protection is provided to the Advisor under the
terms of the Investment Advisory Agreement and the Services
Agreement. In addition, protection from personal liability for
the obligations of the Trust itself, similar to that provided to
shareholders, is provided to all Trustees, officers, employees
and agents of the Trust.
Trustees and Officers
The Trustees and executive officers of the
Trust and their principal occupations during the past five years
are shown below:
Frank E. Burgess ##
6411 Mineral Point Road, Madison, WI 53705
Trustee and Vice President
President and Director of Madison Investment Advisors, Inc.,
the advisor to Bascom Hill Investors, Inc., Bascom Hill
BALANCED Fund, Inc. and Madison Bond Fund, Inc.; director of
such funds since their inception. Prior to founding Madison
Investment Advisors, Inc. in 1973, he was Assistant Vice
President and Trust Officer of M&I Bank of Madison,
Wisconsin. He is a member of the State Bar of Wisconsin. b.
8/4/42.
James R. Imhoff, Jr.***
429 Gammon Place, Madison, WI 53719
Trustee
Chairman and CEO of First Weber Group, Inc. of Madison, WI,
a residential real estate company; Chairman of the Wisconsin
Real Estate Board of the Department of Regulation and
Licensing; Director to the University of Wisconsin School of
Business, Center for Urban Land Economics Research; Director
of the Park Bank, Wisconsin; formerly President of the
Wisconsin Realtors Association and the Greater Madison Board
of Realtors and Director of the National Association of
Realtors. An alumnus of the Marquette University School of
Business. b. 5/20/44.
Thomas S. Kleppe***
7100 Darby Road, Bethesda, MD 20817
Trustee
Private Investor; formerly Visiting Professor at the
University of Wyoming, Secretary of the U.S. Department of
the Interior, Administrator of the U.S. Small Business
Administration, U.S. Congressman from North Dakota, Vice
President and Director of Dain, Kalman & Quail, investment
bankers, and President of Gold Seal Co., manufacturers of
household cleaning products. Attended Valley City State
College of North Dakota. b. 7/1/19.
Lorence D. Wheeler***
PO Box 431, Madison, WI 53701
Trustee
President of Credit Union Benefits Services, Inc., a
provider of retirement plans and related services for credit
union employees nationwide. Previously a shareholder of the
law firm of Bell, Metzner & Gierart, SC. Mr. Wheeler
received his law degree from the University of Wisconsin.
b. 1/31/38.
Katherine L. Frank
6411 Mineral Point Road, Madison, WI 53705
President
President of GIT Investment Funds, Vice President
of Madison Investment Advisors, Inc. A graduate
of Macalester College, St. Paul, Minnesota.
Julia M. Nelson
1655 Fort Myer Drive, Arlington, VA 22209-3108
Vice President
Vice President of GIT Investment Funds.
Jay R. Sekelsky
6411 Mineral Point Road, Madison, WI 53705
Vice President
Vice President of GIT Investment Funds and of
Madison Investment Advisors, Inc. Formerly Vice President
of Wellington Management Group of Boston, MA.
Mr. Sekelsky holds a BBA in Accounting and an MBA in
Finance from the University of Wisconsin.
Christopher C. Berberet
6411 Mineral Point Road, Madison, WI 53705
Vice President
Vice President of GIT Investment Funds and of
Madison Investment Advisors, Inc. Formerly the
Director of Fixed Income Management for the
ELCA Board of Pensions, Minneapolis, MN. A
graduate of the University of Wisconsin.
W. Richard Mason
1655 Ft. Myer Drive, Arlington, VA 22209
Secretary
Secretary of GIT Investment Funds, GIT Investment
Services, Inc., Presidential Savings Bank, FSB and
Presidential Service Corporation. Formerly Assistant
General Counsel for the Investment Company
Institute. Mr. Mason holds a BS in Foreign Service
from Georgetown University and received his law
degree from The George Washington University. He is
a member of the District of Columbia and Texas bars.
## Trustee deemed to be an "interested person" of the Trust as the
term is defined in the Investment Company Act of 1940. Only those
persons named in the table of Trustees and officers who are not
interested persons of the Trust are eligible to be compensated by
the Trust.
The compensation of each non-interested Trustee
has been fixed at $4,000 per year, to be pro-rated
according to the number of regularly scheduled meetings each
year. Four Trustees' meetings are currently scheduled to take
place each year. The Trustees have stipulated that their compensation
will be at 25% of the regular rate until the net assets of the Trust reach
$25 million and 50% of the regular rate until the net assets of the
Trust reach $50 million. In addition to such compensation, those Trustees
who may be compensated by the Trust shall be reimbursed for any
out-of-pocket expenses incurred by them in connection with the
affairs of the Trust. Mr. Kleppe will receive annual compensation
from the Trust and from the other investment companies managed
by the Advisor or Madison (see "the Investment Advisor") totaling
$15,000. Mr. Imhoff and Mr. Wheeler will receive annual
compensation from the Trust and from other investment companies
managed by the Advisor or Madison totaling $18,000.
During the last fiscal year of the Trust, the Trustees were compensated
as follows:
Total
Pension or Compensation
Retirement from
Aggregate Benefits Estimated Portfolios
Compensa- Accrued as Annual and Fund
tion part of Benefits Complex
from Portfolios Upon Paid to
Portfolios Expense Retirement Trustees(a)
Frank E. Burgess 0 0 0 0
Thomas S. Kleppe 1,000 0 0 15,000
James R. Imhoff, Jr.(b) 750 0 0 14,250
Lorence D. Wheeler(b) 750 0 0 14,250
(a) Prior to the effective date of this Statement of Additional
Information, the complex was comprised of 4 trusts and three
corporations with a total of 16 funds and/or series. As of the
effective date of this Statement of Additional Information,
the complex is comprised of 4 trusts with a total of 15 funds
and/or series.
(b) Messrs. Imhoff and Wheeler joined the Board of Trustees on
July 31, 1996.
***Member of the Audit Committee of the Trust. The Audit Committee
is responsible for reviewing the results of each audit of the
Trust by its independent auditors and for recommending the
selection of independent auditors for the coming year.
Under the Declaration of Trust, the Trustees are entitled to be
indemnified by the Trust to the fullest extent permitted by law
against all liabilities and expenses reasonably incurred by them
in connection with any claim, suit or judgment or other liability
or obligation of any kind in which they become involved by virtue
of their service as Trustees of the Trust, except liabilities
incurred by reason of their willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of their office.
As of March 21, 1997, the Trustees and officers of the Trust
directly or indirectly owned as a group less than 10% of the
Government Portfolio and less than 1% of the Maximum Income
Portfolio.
Administrative and Other Expenses
Except for certain expenses assumed by the Advisor (see "The
Investment Advisor"), the Trust is responsible for payment from
its assets of all of its expenses. These expenses can include any
of the business or other expenses of organizing, maintaining and
operating the Trust. Certain expense items which may represent
significant costs to the Trust include the payment of the
Advisor's fee; the expense of shareholder accounting, customer
services, and calculation of net asset value; the fees of the
Custodian; of the Trust's independent auditors; and of legal
counsel to the Trust; the expense of registering the Trust and
its shares; of printing and distributing prospectuses and
periodic financial reports to current shareholders; of trade
association membership; and the expense of preparing shareholder
reports, proxy materials and of holding shareholder meetings of
the Trust. The Trust is also responsible for any extraordinary or
non-recurring expenses it may incur.
Services Agreement. The Trust does not have any officers or
employees who are paid directly by the Trust. The Trust has
entered into a Services Agreement with the Advisor for the
provision of operational and other services required by the
Trust. Such services may include the functions of shareholder
servicing agent and transfer agent; bookkeeping and portfolio
accounting services; the handling of telephone inquiries, cash
withdrawals and other customer service functions including
monitoring wire transfers; and providing to the Trust appropriate
supplies, equipment and ancillary services necessary to the
conduct of its affairs. The Trust is registered with the
Securities and Exchange Commission as the transfer agent for its
shares and acts as its own dividend-paying agent; while transfer
agent personnel and facilities are included among those provided
to the Trust under the Services Agreement, the Trust itself is
solely responsible for its transfer agent and dividend payment
functions and for the supervision of those functions by its
officers.
All such services provided to the Trust by the Advisor are
rendered at a flat fee reviewed and approved annually
by the Trustees. Such fee is expected to approximate
the cost of providing such services. The term "cost"
includes both direct expenditures and the related overhead
costs, such as depreciation, employee supervision, rent and the like;
reimbursements to the Advisor pursuant to the Services Agreement
are in addition to and independent of payments made pursuant to
the Investment Advisory Agreement. The Advisor provides
such services to GIT Equity Trust, GIT Tax-Free Trust and
Government Investors Trust.
Distribution Agreement. GIT Investment Services, Inc. acts as the
Trust's Distributor and principal underwriter under a
Distribution Agreement, dated January 11, 1983, as amended and
restated as of July 3, 1985. The Distribution Agreement had an
initial term of two years and may thereafter continue in effect
only if approved annually by the Trustees, including a majority
of those who are not "interested persons," as defined in the
Investment Company Act of 1940. The Distributor may act as the
Trust's agent for any sales of its shares. The Trust may also
sell its shares directly to any party. The Distributor makes the
Trust's shares continuously available to the general public in those
States where it has qualified to do so, but has assumed no
obligation to purchase any of the Trust's shares. The Distributor
is wholly owned by A. Bruce Cleveland, its President.
Portfolio Transactions
Decisions as to the purchase and sale of securities for the
Trust, and decisions as to the execution of these transactions,
including selection of market, broker or dealer and the
negotiation of commissions are, where applicable, to be made by
the Advisor, subject to review by the officers and Trustees of
the Trust.
In general, in the purchase and sale of Portfolio securities the
Trust will seek to obtain prompt and reliable execution of orders
at the most favorable prices or yields. In determining the best
price and execution, the Advisor may take into account a dealer's
operational and financial capabilities, the type of transaction
involved, the dealer's general relationship with the Advisor, and
any statistical, research or other services provided by the
dealer to the Advisor. To the extent such non-price factors are
taken into account the execution price paid may be increased, but
only in reasonable relation to the benefit of such non-price
factors to the Trust as determined in good faith by the Advisor.
Brokers or dealers who execute Portfolio transactions for the
Trust may also sell its shares; however, any such sales will not
be either a qualifying or disqualifying factor in the selection
of brokers or dealers. During its three most recent fiscal years,
the Trust paid no aggregate brokerage commissions.
Owing to the nature of the market for debt securities, the Trust
expects that most Portfolio transactions will be made directly
with an underwriter, issuer or dealer acting as a principal, and
thus will not involve the payment of commissions, although
purchases from an underwriter will involve payments of fees and
concessions by the issuer to the underwriting group. The Trust
also reserves the right to purchase Portfolio securities through
an affiliated broker, when deemed in the Trust's best interests
by the Advisor, provided that: (1) the transaction is in the
ordinary course of the broker's business; (2) the transaction
does not involve a purchase from another broker or dealer; (3)
compensation to the broker in connection with the transaction is
not in excess of one percent of the cost of the securities
purchased; and (4) the terms to the Trust for purchasing the
securities, including the cost of any commissions, are not less
favorable to the Trust than terms concurrently available from
other sources. Any compensation paid in connection with such a
purchase will be in addition to fees payable to the Advisor under
the Investment Advisory Agreement. The Trust does not anticipate
that any such purchases through affiliates will represent a
significant portion of its total activity; no such transactions
took place during the Trust's three most recent fiscal years.
The Trust does not expect to engage in a significant amount of
short-term trading, but securities may be purchased and sold in
anticipation of market fluctuations, as well as for other
reasons. The Trust anticipates that annual Portfolio turnover for
each of its Portfolios generally will not exceed 100%. The actual
turnover rate, however, will not be a limiting factor if the
Trust deems it desirable to conduct purchases and sales of
Portfolio securities. Reference should be made to the Prospectus
for actual rates of Portfolio turnover (see "Financial Highlights").
In valuing brokerage services, the Advisor makes a judgment
of the usefulness of research and other information and
services provided by a broker to the Advisor in managing the
Portfolio's investment portfolio. In some cases, the
information, e.g. data or recommendations concerning
particular securities, relates to the specific transaction
placed with the broker, but, for the greater part, the
research and services consist of a wide variety of
information concerning companies, industries, investment
strategy and economic, financial and political conditions
and prospects, some of which may be provided by
means of payment for the use of electronic services
providing such information, useful to the Advisor in
advising the Portfolio and other clients of the Advisor.
In compensating brokers for their services, the Advisor
takes into account the value of the information received for
use in advising the Portfolio. It is understood by the
Portfolio that other clients of the advisor might also
benefit from the information and services obtained. Where
the Portfolio and one or more clients of the Advisor are
simultaneously engaged in the purchase or sale of the same
security, the transactions will, to the extent possible, be averaged
as to price and allocated equitably. In most
cases, it is believed that coordination and the ability to
participate in volume transactions will be to the benefit of
the Portfolio.
Shareholder Transactions
The Prospectuses describe the basic procedures for investing in
the Trust (see "How to Purchase and Redeem Shares"). The
following information concerning other investment procedures is
presented to supplement the information contained in the
Prospectuses.
Shareholder Service Policies. The Trust's policies concerning
shareholder services are subject to change from time to time.
Minimum Initial Investment and Minimum Balance.
The Trust reserves the right to change the minimum account size below
which an account is subject to a monthly service charge or to
involuntary closing by the Trust. The Trust may also institute a
minimum amount for subsequent investments by 30 days written
notice to its shareholders.
Special Service Charges. The Trust further reserves the right,
after 30 days written notice to shareholders, to impose special
service charges for services that are not regularly afforded to
shareholders, such service charges may include but are not limited
to fees for stop payment orders and returned checks. The Trust's
standard service charges are also subject to adjustment from time
to time.
Share certificates will not be issued.
Subaccounting Services. The Trust offers subaccounting services
to institutions. The Trustees reserve the right to determine from
time to time such guidelines as they deem appropriate to govern
the level of subaccounting service that can be provided to
individual institutions in differing circumstances. Normally, the
Trust's minimum initial investment to open an account will not
apply to subaccounts; however, the Trust reserves the right to
impose the same minimum initial investment requirement that would
apply to regular accounts, if it deems that the cost of carrying
a particular subaccount or group of subaccounts is otherwise
likely to be excessive. The Trust may provide and charge for
subaccounting services which it determines exceed those services
which can be provided without charge; the availability and cost
of such additional services will be determined in each case by
negotiation between the Trust and the parties requesting the additional
services. The Trust is not presently aware of any such services for which a
charge will be imposed.
Crediting of Investments. The Trust reserves the right to reject
any investment in the Trust for any reason and may at any time suspend
all new investment in the Trust. The Trust may also, in its discretion or
at the instance of the Advisor, decline to give recognition as an
investment to funds wired for credit to either type of account,
until such funds are actually received by the Trust. Under
present federal regulatory guidelines, the Advisor may be
responsible for any losses resulting from changes in the Trust's
net asset value which are incurred by the Trust as a result of
failure to receive funds from a shareholder to whom recognition for
investment was given in advance of receipt of payment.
If shares are purchased to be paid for by wire and the wire is
not received by the Trust or if shares are purchased by a check
which, after deposit, is returned unpaid or proves uncollectible,
then the share purchase may be canceled immediately or the
purchased shares may be immediately redeemed. The shareholder that
gave notice of the intended wire or submitted the check will be
held fully responsible for any losses so incurred by the Trust,
the Advisor or the Distributor.
As a condition of the Trust's public offering (which the investor
will be deemed to have accepted by submitting an order for the
purchase of the Trust's shares) the Distributor shall have the
investor's power of attorney coupled with an interest,
authorizing the Distributor to redeem sufficient shares from any
fund of the shareholder for which it acts as a principal underwriter
or distributor, or to liquidate sufficient other assets held in
any brokerage account of the shareholder with the Distributor, and
to apply the proceeds thereof to the payment of all amounts due
to the Trust from the shareholder arising from any such losses. Any
such redemptions or liquidations will be limited to the amount of
the actual loss incurred by the Trust at the time the share
purchase is canceled and will be preceded by notice to the
shareholder and an opportunity for the shareholder to make restitution
of the amount of the loss. The Trust will retain any profits
resulting from such cancellations or redemptions and, if the
purchase payment was by a check actually received, will absorb
any such losses unless they prove recoverable.
Checks. Checks drawn on foreign banks will not be considered
received in federal funds until the Trust has actual receipt of
payment in immediately available U.S. dollars after submission of
the check for collection; collection of such checks through the
international banking system may require 30 days or more.
Wire. Funds received by wire are normally converted into shares in the
Trust at the net asset value next determined.
Purchase Orders from Brokers. An order to purchase shares
which is received by the Trust from a securities broker will
be considered received in proper form for the net asset
value per share determined as of the close of business of
the New York Stock Exchange on the day of the order,
provided the broker received the order from its customer
prior to that time and transmitted it to the Trust prior to
4 p.m. EST. Shareholders who invest in the Trust through a
broker may be charged a commission for handling the
transaction. A shareholder may deal directly with the Trust
anytime to avoid the fee.
Redemptions
The value of shares redeemed will
be determined according to the share net asset value next
calculated after the request has been received in proper form.
(See "Determination of Net Asset Value.") Thus, any such request
received in proper form prior to 4 p.m. Washington, DC time on a
business day will reflect the net asset value calculated at that
time; later withdrawal requests will be processed to reflect the
share net asset value figure calculated on the next day the
calculation is made. The Trust calculates net asset values each
day the New York Stock Exchange is open for trading.
Net asset value determinations will apply as of the day the
redemption order is submitted in proper form. A redemption
request may not be deemed to be in proper form unless a signed
account application has been properly submitted to the Trust by
the shareholder or such an application is submitted with the
withdrawal request.
A shareholder draft check drawn against an account will not be
considered in proper form unless sufficient collected funds are
available in the account on the day the check is presented for
payment.
The "day of withdrawal" for share redemptions refers to the day
on which corresponding funds are paid out by the Trust, whether
by wire transfer, exchange between accounts, check, or debit of
the investor's account to cover a customer checks presented for
payment.
Shareholders should be aware that it is possible, should the share
net asset value of the respective Portfolio fall as a result of
normal market value changes, that amounts available for
withdrawal from an account could be less than the amount of the
original investment. All redemptions from the Trust will be
affected by the redemption of the appropriate number of whole and
fractional shares having a net asset value equal to the amount
withdrawn.
The Trust will use its best efforts in normal circumstances to
handle withdrawals within the times previously given. However, it
may for any reason it deems sufficient suspend the right of
redemption or postpone payment for any shares in the Trust for
any period up to seven days. The Trust's sole responsibility with
regard to withdrawals shall be to process, within the
aforementioned time period, redemption requests in proper form.
Neither the Trust, its affiliates, nor the Custodian can accept
responsibility for any act or event which has the effect of
delaying or preventing timely transfers of payment to or from
shareholders. By law, payment for shares in the Trust may be
suspended or delayed for more than seven days only during any
period when the New York Stock Exchange is closed, other than
customary weekend and holiday closings; when trading on such
Exchange is restricted, as determined by the Securities and
Exchange Commission; or during any period when the Securities and
Exchange Commission has by order permitted such suspension.
Unless the shareholder's current address is on file with the
Trust in the original account Application or by means of
subsequent written notice signed by the authorized signers for
the account, then the Trust may require signed written
instructions to process withdrawals and account closings. In
response to verbal requests, however, redemption proceeds will
normally be mailed to the shareholder at the address shown on the
Trust's records, provided an original signed Application has been
received.
When an account is closed, the Trust reserves the right
to make payment by check of any final dividends declared to the
date of the redemption to close the account, but not yet paid, on
the same day such dividends are paid to other shareholders,
rather than at the time the account is closed.
Inter Fund Exchange. Funds exchanged between shareholder
accounts will earn its final days dividend on the day of exchange.
Same-day exchanges can only be made in circumstances that
would permit same-day wire redemptions from the account
being debited. All exchanges will be effected at the net asset
value per share of the respective accounts next determined after
the exchange request is received in proper form. If an
exchange is to be made between shareholder accounts that are
not held in the same name and tax identification number or do not
have the same mailing address or signatories, then the Trust may
require any transfer between them to be made by making a
redemption from one account and a corresponding investment in the
other using the same procedures that would apply to any other
withdrawal or investment.
The Trust reserves the right, when it deems such action necessary
to protect the interests of its shareholders, to refuse to honor
withdrawal requests made by anyone purporting to act with the
authority of another person or on behalf of a corporation or
other legal entity. Each such individual must provide a corporate
resolution or other appropriate evidence of his or her authority
or identity satisfactory to the Trust. The Trust reserves the
right to refuse any third party redemption requests.
If, in the opinion of the Trustees, extraordinary conditions
exist which make cash payments undesirable, payments for any
shares redeemed may be made in whole or in part in securities and
other property of the Trust; except, however, that the Trust has
elected, pursuant to rules of the Securities and Exchange
Commission, to permit any shareholder of record to make
redemptions wholly in cash to the extent the shareholder's
redemptions in any 90-day period do not exceed the lesser of 1%
of the aggregate net assets of the Trust or $250,000. Any
property of the Trust distributed to shareholders will be valued
at fair value. In disposing of any such property received from
the Trust, a shareholder might incur commission costs or other
transaction costs. There is no assurance that a shareholder
attempting to dispose of any such property would actually receive
the full net asset value for it. Except as described herein,
however, the Trust intends to pay for all share redemptions in
cash.
Retirement Plans
General information on retirement plans offered by the Trust is
provided in the Prospectus (see "Retirement Plans"). Additional
information concerning these retirement plans is provided below.
IRAs. The minimum initial contribution for an IRA plan with the
Trust is $500. Spousal IRAs are accepted by creating two
accounts, one for each spouse. For IRAs opened in connection with
a payroll deduction or SEP plan, the Trust may waive the initial
investment minimum on a case-by-case basis.
The Trust's annual account maintenance fee is deducted from the
account at the end of each year or at the time of the account's
closing unless prepaid by the shareholder.
Other Retirement Plans or Retirement Plan Accounts. The Trust
does not intend to impose any monthly minimum balance charge with
respect to IRA, Keogh or 403(b) accounts. The Trust offers
prototype Keogh, SEP IRA, SIMPLE, 401(k) and 403(b) retirement
plans. The Trust may waive the initial investment minimum for
prototype or other retirement plan accounts on a case by case
basis.
Declaration of Dividends
Substantially all of the Trust's accumulated net income is
declared as dividends, when calculated, each business day.
Calculation of accumulated net income for each of the Trust's
portfolios will be made just prior to calculation of the
portfolio's net asset value (see "Determination of Net Asset
Value"). The amount of such net income will reflect the interest
income (plus any discount earned less premium amortized), and
expenses accrued by the Portfolio reflected since the previously
declared dividends.
Realized capital gains and losses and unrealized appreciation and
depreciation are reflected as changes in net asset value per
share of the Trust's portfolios. Premium on securities purchased
is amortized daily as a charge against income.
Dividends are payable to shareholders of record at the time as of
which they are determined. Dividends are paid in the form of
additional shares of the Trust credited to the respective investor
account at the end of each calendar month (or normally when the
account is closed, if sooner), unless the shareholder makes a
written election to receive dividends in cash.
Notice of payment of dividends will be mailed to each shareholder
quarterly. For tax purposes each shareholder will also receive an
annual summary of dividends paid by the Trust and the extent to
which they constitute capital gains dividends (see "Additional
Tax Matters"). Any investor purchasing shares in an account of
the Trust as of a particular net asset value determination (4
p.m., Washington, DC time) on a given day will not be considered a
shareholder of record for the dividend declaration made that day;
but an investor withdrawing as of such determination will be
considered a shareholder of record with respect to the shares
withdrawn. A "business day" will be any day the New York Stock
Exchange is open for trading.
Net realized capital gains, if any, will be distributed to
shareholders at least annually as capital gains dividends.
Determination of Net Asset Value
The net asset value of each portfolio of the Trust, and of the
respective shares, is calculated each day the New York Stock
Exchange is open for trading. Net asset value is not calculated
on New Year's Day, the observance of Washington's Birthday
(President's Day), Good Friday, the observance of Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day
and on other days the New York Stock Exchange is closed for
trading. The net asset value calculation is made as of a specific time
of day, as described in the Prospectus.
Net asset value per share of each portfolio is determined by
adding the value of all its securities and other assets,
subtracting its liabilities and dividing the result by the total
number of outstanding shares that represent an interest in the
portfolio. These calculations are performed by the Trust and for
its account, pursuant to the Services Agreement (see
"Administrative and Other Expenses"). The Trust's shares are
redeemed at net asset value. Shares of the Trust are offered at
net asset value.
Securities for which current market quotations are readily
available are valued at the mean between their bid and ask
prices; securities for which current market quotations are not
readily available are valued at their fair value as determined in
good faith by the Trustees. Securities having a remaining
effective maturity of 60 days or less are valued at their
amortized cost, subject to the Trustees' determination that this
method reflects their fair value. The Trustees may authorize
reliance upon an independent pricing service for the
determination of securities values. An independent pricing
service may price securities with reference to market
transactions in comparable securities and to historical
relationships among the prices of comparable securities; such
prices may also reflect an allowance for the impact upon prices
of the larger transactions typical of trading by institutions.
The Trust's shares are priced by rounding their value to the
nearest one-tenth of one cent.
Valuation of Futures Contracts. Although initial margin must be
posted when financial futures contracts are acquired and a
maintenance margin may be required as the value of the contracts
changes, such margin deposits remain an asset of the respective
portfolio. Any financial futures contracts held by the portfolio
will be marked to the market each business day, so that the
difference between the contract price of the futures contracts
and their corresponding current market price will be reflected
daily as unrealized gains or losses. When a futures contract is
liquidated by acquiring an offsetting contract, then either a
gain or a loss will be realized, reflecting the difference
between the prices of the original and the offsetting contracts.
If a futures contract is held until delivery and settlement is
made, then the transaction will be treated as a purchase or sale
of the underlying securities at the contract price.
Futures contracts are valued at the daily settlement price
determined by the commodity exchange where they are traded, if
available, or otherwise at fair value, taking into account the
most recent settlement, bid or asked prices available, as
determined in good faith by the Trustees or by the Advisor
according to procedures approved by the Trustees.
Valuation of Options Held or Written. Options held by a Portfolio
and liabilities for options written by a portfolio are valued in
the same manner as futures contracts, if they are traded on a
commodity exchange. Other options are valued at the last reported
sale price of the options, or if no sales are reported, at the
mean between the last reported bid and asked prices for the
current day, if available, or otherwise at fair value as
determined in good faith by the Trustees or by the Advisor
according to procedures approved by the Trustees.
When put or call options are written, the premium received is
reflected on the portfolio's books as a cash asset that is offset
by a deferred credit liability, so that the premium received has
no impact on net asset value at that time. The deferred credit
amount is then marked to the market value of the outstanding
option contract daily. If an option contract on securities is
exercised, then the Trust will reflect, as appropriate, either a
purchase or sale of the securities (when a call is exercised, the
securities may be either held by the Portfolio or purchased for
delivery in the open market). The purchase or sale price for the
securities will be equal to the exercise price of the option,
adjusted by the amount of the option premium previously received;
the previously established deferred credit liability will then be
extinguished. If an option contract on financial futures is
exercised, the portfolio will acquire either a long or a short
position in the underlying futures contract; a gain or loss will
then be recognized equal to the option premium previously
received, reduced by the difference between the option exercise
price and the current market value of the futures contract, and
the previously established deferred credit liability will be
extinguished. If an option expires without being exercised (or if
it is offset by a closing purchase transaction), then the
portfolio will recognize the deferred credit as a gain (reduced
by the cost of any closing purchase transaction).
Additional Tax Matters
To qualify as a "regulated investment company" and avoid Trust-
level federal income tax under the Internal
Revenue Code (the "Code"), each Portfolio must, among
other things, distribute 100% of its net income and net
capital gains. The Code also requires the distribution of at least
98% of net income for the calendar year and capital gains determined
as of October 31 each year before the calendar year end in order to
avoid a 4% excise tax. Each Portfolio intends to distribute all
taxable income to the extent it is realized and avoid imposition
of federal income and excise taxes.
Each Portfolio must derive at least 90% of its gross income from
dividends, interest, gains from the sale or disposition of
securities, and certain other types of income, and derive less
than 30% of its gross income from the sale or disposition of
securities held for less than three months. Should it fail to
qualify as a "regulated investment company" under the Code, the
Portfolio would be taxed as a corporation with no allowable deduction
for the distribution of dividends.
Shareholders of each Portfolio, however, will be subject to federal
income tax on any ordinary net income and net capital gains
realized by each Portfolio and distributed to shareholders as regular
or capital gains dividends, whether distributed in cash or in the
form of additional shares. Generally, dividends declared by the
Trust during October, November or December of any calendar year
and paid to shareholders before February 1 of the following year
will be treated for tax purposes as received in the year the
dividend was declared. No portion of the regular dividends paid
by a Portfolio is expected to be eligible for the dividends
received deduction for corporate shareholders (70% of dividends
received).
Shareholders who fail to comply with the interest and dividends
"back-up" withholding provisions of the Code (by filing Form W-9
or its equivalent, when required) or who have been determined by
the Internal Revenue Service to have failed to properly report
dividend or interest income may be subject to a 31% withholding
requirement on transactions with each Portfolio.
For tax purposes, each Portfolio will send shareholders an annual
notice of dividends paid during the prior year. Investors are
advised to retain all statements received from the Trust to
maintain accurate records of their investment. Shareholders of
each portfolio of the Trust will be subject to federal income tax
on the net capital gains, if any, realized by each portfolio and
distributed to shareholders as capital gains dividends.
Shareholders should carefully consider the tax implications of
buying each portfolio's shares just prior to declaration of a regular
or capital gains dividend. Prior to the declaration, the value of
the distribution will be reflected in net asset value per share
and thus will be paid for by the shareholder when the shares are
purchased; when the dividend is declared the amount to be
distributed will be deducted from net asset value, lowering the
value of the shareholder's investment by the same amount, but the
shareholder will nevertheless be taxed on the amount of the
dividend without any offsetting deduction for the drop in share
value until the shares are ultimately redeemed. A loss on the
sales of shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gains
dividend received.
Special rules apply to the taxation of financial futures
contracts and options that may be acquired or written by a
portfolio. The holding period of securities purchased may be affected
by hedging transactions, such as the purchase of puts or the sale
of calls against those securities. Hedging transactions involving
debt securities and either futures or options contracts are
considered "mixed straddles" under the Code, meaning that any
losses realized from one part of the transaction may only be
deducted to the extent that they exceed any unrecognized gains in
offsetting positions.
Each portfolio reserves the right to involuntarily redeem any of its
shares if, in its judgment, ownership of such portfolio's shares has
or may become so concentrated as to make such portfolio a personal
holding company under the Code.
State and Local Taxes. Dividends paid by each portfolio are generally
expected to be subject to any state or local taxes on income.
Interest on U.S. Government securities may be entitled to an
exemption from State and local income taxes that is otherwise
available to the shareholder if he had purchased U.S. Government
securities directly. Shareholders should consult their tax
Advisors about the status of distributions from each portfolio in
their own tax jurisdictions.
Yield and Total Return Calculations
In order to provide a basis for comparisons of the Trust's
portfolios with similar funds, with comparable market indices,
and with investments such as savings accounts, savings
certificates, taxable and tax-free bonds, money market funds and
money market instruments, the Trust calculates yields and total
return for each of its portfolios.
Standardized Yield. For advertising and certain other purposes,
the yield of each portfolio is calculated according to a
standardized formula prescribed by the Securities and Exchange
Commission. Such standardized yields are calculated by adding one
to the respective Portfolio's total daily theoretical net income
per share during a given 30-day period divided by the portfolio's
maximum offering price per share on the last day of the period,
raising the result to the sixth power, subtracting one, and
multiplying the result by two. Such standardized yields may be
calculated daily; weekly, as of each Friday; and monthly, as of
the last day of each month.
For purposes of such yield calculations, the daily theoretical
gross income of each obligation in a portfolio is determined as
1/360 of the obligation's yield to maturity (or put or call date
in certain cases), based upon its current value (defined as the
obligation's closing market value that day, plus any accrued
interest), multiplied by such current value. A portfolio's daily
theoretical gross income is the sum of the daily theoretical
gross income amounts computed for each of the obligations in the
portfolio. A portfolio's total daily theoretical net income per
share during a given 30-day period is the portfolio's daily
theoretical gross income, less daily expenses accrued (as reduced
by any expenses waived or reimbursed by the Advisor), totaled
for each day in the period and divided by the average number of
shares outstanding during the period.
Total Return. Average annual total return is calculated by
finding the compounded annual rate of return over a given period
that would be required to equate an assumed initial investment in
the portfolio to the ending redeemable value the investment would
have had at the end of the period, taking into account the effect
of the changes in the portfolio's share price during the period
and any recurring fees charged to shareholder accounts, and
assuming the reinvestment of all dividends and other
distributions at the applicable share price when they were paid.
Non-annualized aggregate total returns may also be calculated by
computing the simple percentage change in value that equates an
assumed initial investment in the portfolio with its redeemable
value at the end of a given period, determined in the same manner
as for average annual total return calculations.
Representative Yield and Total Return Quotations. As of December 31,
1996, the standardized 30-day yield of the Government Portfolio
was 4.90% per annum and of the Maximum Income Portfolio was 8.16%
per annum.
For the year ended December 31, 1996, the average annualized total
return of the Government Portfolio was 0.34% and of the Maximum
Income Portfolio was 6.84%. For the calendar quarter ending December
31, 1996, the non-annualized aggregate total return of the
Government Portfolio was 2.78% and of the Maximum Income
Portfolio was 0.96%.
For the five years ended December 31, 1996, the average annualized
total return of the Government Portfolio was 5.04% and its non-
annualized aggregate total return was 27.85%.
For the five years ended December 31, 1996, the average annualized
total return of the Maximum Income Portfolio was 8.94% and its
non-annualized aggregate total return was 53.46%.
For the ten years ended December 31, 1996, the average annualized
total return of the Government Portfolio was 6.27% and its non-
annualized aggregate total return was 83.77%.
For the ten years ended through December 31, 1996, the average
annualized total return of the Maximum Income Portfolio was 6.96%
and its non-annualized aggregate total return was 96.01%.
As of December 31, 1996, the one year total return of
Madison Bond Fund, Inc., economic predecessor to the Madison
Bond Fund Portfolio, was 2.55%. The five year average
annualized total return and average annualized
total return since inception on April 23, 1990 was 4.81% and
6.45%, respectively. For the calendar quarter ended
December 31, 1996, the non-annualized aggregate total return
was 2.65%. The non-annualized aggregate total return
since inception was 51.93%.
Performance Comparisons. From time to time, in advertisements or
in reports to shareholders and others, the Trust may compare the
performance of its portfolios to that of recognized market
indices or may cite the ranking or performance of its portfolios
as reported in recognized national periodicals, financial
newsletters, reference publications, radio and television news
broadcasts, or by independent performance measurement firms.
The Trust may also compare the performance of its portfolios to
that of other funds managed by the same Advisor. It may compare
its performance to that of other types of investments,
substantiated by representative indices and statistics for those
investments.
Market indices which may be used include those compiled by major
securities firms, such as Solomon Brothers, Shearson Lehman
Hutton, the First Boston Corporation, and Merrill Lynch; other
indices compiled by securities rating or valuation services, such
as Ryan Financial Corporation and Standard and Poor's
Corporation, may also be used. Periodicals which report market
averages and indices, performance information, and/or rankings
may include: The Wall Street Journal, Investors Daily, The New
York Times, The Washington Post, Barron's, Financial World
Magazine, Forbes Magazine, Money Magazine, Kiplinger's Personal
Finance, and the Bank Rate Monitor. Independent performance
measurement firms include Lipper Analytical Services, Inc., Frank
Russel Company, SCI and CDA Investment Technologies.
When the Trust uses Lipper Analytical Services, Inc. in making
performance comparisons in advertisements or in reports to
shareholders or others, the performance of the Government
Portfolio will be compared to mutual funds categorized as
"General U.S. Government Funds", the performance of the
Maximum Income Portfolio will be compared to mutual funds
categorized as "High Current Yield Funds" and the performance
of the Madison Bond Fund Portfolio will be compared to
mutual funds categorized as "Intermediate Corporate Debt
Funds". If any of these categories should be changed by
Lipper Analytical Services, Inc., comparisons will be made
thereafter based on the revised categories.
In addition, a variety of newsletters and reference publications
provide information on the performance of mutual funds, such as
the Donoghue's Money Fund Report, No-Load Fund Investor,
Wiesenberger Investment Companies Service, the Mutual Fund Source
Book, the Mutual Fund Directory, the Switch Fund Advisory, Mutual
Fund Investing, the Mutual Fund Observer, Morningstar, the Bond
Fund Survey. Financial news is broadcast by the Financial News
Network, Cable News Network, Public Broadcasting System, and the
three major television networks, NBC, CBS and ABC, as well as by
numerous independent radio and television stations.
The Trust may also disclose the contents of each of its portfolios as
frequently as daily in advertisements and elsewhere.
Average Maturities. The Trust also calculates average maturity
information for each of its portfolios. The "average maturity" of
a Portfolio on any day is determined by multiplying the number of
days then remaining to the effective maturity (see "Supplemental
Investment Policies") of each investment in the Portfolio by the
value of that investment, summing the results of these
calculations, and dividing the total by the aggregate value of
the portfolio that day (determined as of 4 p.m. Washington, DC
time). Thus, the average maturity represents a dollar-weighted
average of the effective maturities of portfolio investments. The
"mean average maturity" of a portfolio over some period, such as
seven days, a month or a year, represents the arithmetic mean
(i.e., simple average) of the daily average maturity figures for
the portfolio during the respective period.
It should be noted that the investment results of the Trust's
portfolios will tend to fluctuate over time, and so historical
yields and total returns should not be considered representations
of what an investment may earn in any future period. Actual
distributions to shareholders will tend to reflect changes in
market interest rates, and will also depend upon the level of the
Trust's expenses, realized or unrealized investment gains and
losses, and the relative results of the Trust's investment
policies. Thus, at any point in time future yields and total
returns may be either higher or lower than past results, and
there is no assurance that any historical performance record will
continue.
Custodians and Special Custodians
Star Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202, is
Custodian for the cash and securities of the Trust. The Custodian
maintains custody of the Trust's cash and securities, handles its
securities settlements and performs transaction processing for
cash receipts and disbursements in connection with the
purchase and sale of the Trust's shares.
The Trust may appoint as Special Custodians, from time to time,
certain banks, trust companies, and firms which are members of
the New York Stock Exchange and trade for their own account in
the types of securities purchased by the Trust. Such Special
Custodians will be used by the Trust only for the purpose of
providing custody and safekeeping services of relatively short
duration for designated types of securities which, in the opinion
of the Trustees or of the Advisor would most suitably be held by
such Special Custodians rather than by the Custodian. In the
event any such Special Custodian is used, it shall serve the
Trust only in accordance with a written agreement with the Trust
meeting the requirements of the Securities and Exchange
Commission for custodians and approved and reviewed at least
annually by the Trustees, and, if a securities dealer, only if it
delivers to the Custodian its receipt for the safekeeping of each
lot of securities involved prior to payment by the Trust for such
securities.
The Trust may also maintain deposit accounts for the handling of
cash balances of relatively short duration with various banks, as
the Trustees or officers of the Trust deem appropriate, to the
extent permitted by the Investment Company Act of 1940.
Legal Matters and Independent Auditors
Sullivan & Worcester LLP, 1025 Connecticut Avenue, NW,
Washington, DC, 20036 acts as legal counsel to
the Trust.
Ernst & Young LLP, 1225 Connecticut Avenue, NW, Washington,
DC 20036 serves as independent auditors to the Trust.
From time to time the Trust may be or become involved in
litigation in the ordinary conduct of its business. Material
items of litigation having consequences of possible or
unspecified damages, if any, are disclosed in the notes to the
Trust's financial statements (see "Financial Statements and
Report of Independent Auditors'").
Additional Information
The Trust issues semi-annual and annual reports to its
shareholders and may issue other reports, such as quarterly
reports, as it deems appropriate; the annual reports are audited
by the Trust's independent auditors.
Statements contained in this Statement of Additional Information
and in the Prospectus as to the contents of contracts and other
documents are not necessarily complete. Investors should refer to
the documents themselves for definitive information as to their
detailed provisions. The Trust will supply copies of its
Declaration of Trust and By-Laws to interested persons upon
request.
The Trust and shares in the Trust have been registered with the
Securities and Exchange Commission in Washington, DC, by the
filing of a Registration Statement. The Registration Statement
contains certain information not included in the Prospectus or
not included in this Statement of Additional Information and is
available for public inspection and copying at the offices of
such Commission.
Financial Statements and Report of Independent Auditors
Audited Financial Statements for the Trust, together with the
Report of Ernst & Young LLP, Independent Auditors for the fiscal
year ended March 31, 1997, appear in the Trust's Annual Report to
shareholders for the fiscal year ended March 31, 1997, which is
incorporated herein by reference. Such report has been filed with
the Securities and Exchange Commission and is furnished to
investors with this Statement of Additional Information.
Additional copies of such Report are available upon request at no
charge by writing or calling the Trust at the address and
telephone number shown on the cover page above.
Audited Financial Statements for Madison Bond Fund, Inc., the
economic predecessor to the Madison Bond Fund Portfolio,
together with the Report of Williams, Young & Associates, LLC,
Independent Auditors for its fiscal year ended December 31, 1996,
appear in Madison Bond Fund, Inc.'s Annual Report to
shareholders for the fiscal year ended December 31, 1996, which is
incorporated herein by reference. Such report has been filed with
the Securities and Exchange Commission and is furnished to
investors with this Statement of Additional Information.
Additional copies of such report are available upon request at no
charge by writing or calling the Trust at the address and
telephone number shown on the cover page above.
Quality Ratings
All U.S. Government securities that may be acquired by the Trust
are expected to be classified as "High Grade" investments. Any
obligation of a bank or savings and loan association having total
assets of at least $750 million (or the foreign currency
equivalent) as of the end of its most recent fiscal year,
provided it earned a profit during that year, is eligible to be
classified "High Grade"; but the actual classification of such
obligations will be subject to such additional liquidity,
profitability and other tests as the Advisor deems appropriate in
the circumstances.
The Trust will determine the grade or credit quality of other
securities it may acquire principally by reference to the ratings
assigned by the two principal private organizations which rate
Municipal Securities: Moody's Investors Service, Inc. ("Moody's")
and Standard and Poor's Corporation ("S&P"). In cases where both
Moody's and S&P rate an issue, it will be graded according to
whichever of the assigned ratings the Advisor deems appropriate;
in cases where neither organization rates the issue it will be
graded by the Advisor following standards which, in its judgment,
are comparable to those followed by Moody's and S&P. All grading
procedures followed by the Advisor will be subject to review by
the Trustees.
Corporate Obligations. For corporate obligations, Moody's uses
ratings Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C; S&P uses ratings
AAA, AA, A, BBB, BB, B, CCC, CC and C. Notes and bonds rated Aaa
or AAA are judged to be of the best quality; interest and
principal are secure and prices respond only to market rate
fluctuations. Notes and bonds rated Aa or AA are also judged to
be of high quality, but margins of protection for interest and
principal may not be quite as good as for the highest rated
securities.
Notes and bonds rated A are considered upper medium grade by each
organization; protection for interest and principal is deemed
adequate but susceptible to future impairment, and market prices
of such obligations, while moving primarily with market rate
fluctuations, also may respond to economic conditions and issuer
credit factors.
Notes and bonds rated Baa or BBB are considered medium grade
obligations; protection for interest and principal is adequate
over the short term, but these bonds may have speculative
characteristics over the long term and therefore may be more
susceptible to changing economic conditions and issuer credit
factors than they are to market rate fluctuations.
Notes and bonds rated Ba or BB are considered to have immediate
speculative elements and their future can not be considered well
assured; protection of interest and principal may be only
moderate and not secure over the long term; the position of these
bonds is characterized as uncertain.
Notes and bonds rated B or lower by each organization are
generally deemed to lack desirable investment characteristics;
there may be only small assurance of payment of interest and
principal or adherence to the original terms of issue over any
long period.
Issues rated Caa or CCC and below may also be highly speculative,
of poor standing and may even be in default or present other
elements of immediate danger to payment of interest and
principal.
Obligations rated Baa or above by Moody's or rated BBB or above
by S&P are considered "investment grade" securities, whereas
lower rated obligations are considered "speculative grade"
securities.
Commercial Paper. Commercial paper is rated by Moody's with
"Prime" or "P" designations, as P-1, P-2 or P-3, all of which are
considered investment grades. In assigning its rating, Moody's
considers a number of credit characteristics of the issuer,
including: (1) industry position; (2) rates of return; (3)
capital structure; (4) access to financial markets; and (5)
backing by affiliated companies. P-1 issuers have superior
repayment capacity and credit characteristics; P-2 issuers have
strong repayment capacity but more variable credit
characteristics; while P-3 issuers have acceptable repayment
capacity, but highly variable credit characteristics and may be
highly leveraged.
S&P rates commercial paper as A-1, A-2 or A-3. To receive a
rating from S&P the issuer must have adequate liquidity to meet
cash requirements, long-term senior debt rated A or better
(except for occasional situations in which a BBB rating is
permitted), and at least two additional channels of borrowing.
The issuer's basic earnings and cashflow must have an upward
trend (except for unusual circumstances) and, typically, the
issuer's industry is well established and it has a strong
position within the industry. S&P assigns the individual ratings
A-1, A-2 and A-3 based upon its assessment of the issuer's
relative strengths and weaknesses within the group of ratable
companies.
For purposes of its investment criteria, the Trust considers only
commercial paper rated A-1, P-1, or of a credit standing deemed
equivalent by the Advisor, to be "High Grade."
<PAGE>
Part C
June 13, 1997
GIT Income Trust
24(a) Financial Statements
Included in Part A: Financial Highlights
Included in Part B: Filed with the Securities and Exchange
Commission pursuant to Section 30 of the Investment Company
Act of 1940 on May 31, 1996 and incorporated herein by
reference is the Trust's Annual Report to Shareholders for the
fiscal year ended March 31, 1996, as well as the unaudited
Semi-Annual Report to Shareholders for the six-months
ended September 30, 1996. Also incorporated therein
by reference is Madison Bond Fund, Inc.'s Annual Report
to Shareholders for the fiscal year ended December
31, 1996 filed with the Commission on March 3, 1997.
Included in such Annual Report to Shareholders are: Statement
of Assets and Liabilities, Statement of Operations, Statement
of Changes in Net Assets, Financial Highlights, Portfolio of
Investments, Notes to Financial Statements and Report of Ernst
& Young LLP, Independent Auditors.
Included in Part C: Consent of Independent Auditors
24(b) Exhibits
Exhibit No. Description of Exhibit
1 Declaration of Trust*
2 By-Laws*
3 Not Applicable
4 Not Applicable
5 Investment Advisory Agreement*
6 Distribution Agreement*
7 Not Applicable
8 Custodian Agreement with Fee Schedule*
9 Services Agreement*
10 Consent of Counsel*
11 Consent of Independent Auditors (Filed
herewith, see also item 32)
12 Not Applicable
13 Not Applicable
14 Prototype Retirement Plan*
15 Not Applicable
16 Computation of Performance Data*
17 Financial Data Schedules (Filed Herewith)
18 Not Applicable
* Previously filed by GIT Income Trust.
25. Persons Controlled by or Under Common Control with Registrant.
None
26. Number of Holders of Securities.
The number of holders of record of securities of the
Registrant as of March 12, 1997 is as follows:
Title of Class Number of Holders of Record
Shares of Beneficial Interest 830
27. Indemnification
Previously Filed
28. Business and Other Connections of Investment Advisor effective
March 15, 1997.
Name Position with Other Business
Advisor
Frank E. Burgess Director President and Director of
Madison Investment Advisors,
Inc., 6411 Mineral Point
Road, Madison, WI 53705
Katherine L. Frank President Vice President of Madison
Investment Advisors, Inc.
6411 Mineral Point
Road, Madison, WI 53705
Jay R. Sekelsky Vice President Vice President of Madison
Investment Advisors, Inc.
6411 Mineral Point
Road, Madison, WI 53705
Chris Berberet Vice President Vice President of Madison
Investment Advisors, Inc.
6411 Mineral Point
Road, Madison, WI 53705
W. Richard Mason Secretary Secretary of Presidential
Savings Bank, FSB and
Presidential Service
Corporation, 4600 East-West
Highway, Bethesda, MD
20814; Secretary of GIT
Investment Services, Inc.
of the same
address as the Trust.
Julia M. Nelson Vice President None
29. Principal Underwriters
(a) GIT Investment Services, Inc., the principal underwriter
of the Trust, also acts as principal underwriter to GIT Equity Trust,
GIT Tax-Free Trust and Government Investors Trust.
(b)
Name and Principal Position and Offices Position and Offices
Business Address with Underwriters with Registrant
A. Bruce Cleveland Chairman, President None
1655 Ft. Myer Dr.
Arlington, VA 22209
W. Richard Mason Secretary Secretary
1655 Ft. Myer Dr.
Arlington, VA 22209
(c) Not Applicable
30. Location of Accounts and Records
The books, records and accounts of the Registrant will be
maintained at 1655 Ft. Myer Drive, Arlington, VA 22209, at
which address are located the offices of the Registrant and
of Bankers Finance Advisors, LLC. Additional
records and documents relating to the affairs of the
Registrant are maintained by the Star Bank, N.A. of
Cincinnati, OH, the Registrant's Custodian, at the
Custodian's offices located at 425 Walnut Street,
Cincinnati, OH 45202. Pursuant to the Custodian Agreement
(see Article IX, Section 12), such materials will remain the
property of the Registrant and will be available for
inspection by the Registrant's officers and other duly
authorized persons.
31. Management Services
Previously Filed and discussed in Parts A and B. See item 28 above.
32. Undertakings
(a) Not Applicable
(b) Not Applicable
(c) The Registrant shall furnish to each person to whom a
prospectus is delivered a copy of the Registrant's latest
Annual Report to shareholders upon such person's request and
without charge.
(d) The Registrant shall file the consent of Ernst & Young,
LLP, independent auditors, with regard to financial
information as of March 31, 1997 included in the
definitive registration statement with such definitive
registration statement.
<PAGE>
Performance Data (as of December 31, 1996)
Maximum Government Madison Bond
30-Day Yield
Income 49,774.62 32,299.86
Expenses 7,204.58 7,083.46
Avg Daily Shares O/S 896,423.657 644,688.625
Max Offering Price 8.16 9.68
30-Day Yield 7.08% 4.90% n/a
Total Return
12/30/96 Factor 2,881.924 3,043.120 1,518.757
9/30/96 Factor 2,854.386 2,960.782 1,479.549
12/30/95 Factor 2,697.456 3,032.701 1,480.992
12/30/91 Factor 1,877.988 2,380.208 1,201.095
12/30/86 Factor 1,470.313 1,655.943
Inception Factor 1,000.000 1,000.000 1,000.000
Aggregate Returns
Quarterly Return 0.96% 2.78% 2.65%
One-Year Return 6.84% 0.34% 2.55%
Five-Year Return 53.46% 27.85% 26.45%
Ten-Year Return 96.01% 83.77% n/a
Annualized Returns
Five-Year Return 8.94% 5.04% 4.81%
Ten-Year Return 6.96% 6.27% n/a
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant has
duly caused this Post-Effective Amendment to the
Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the County of
Arlington, Commonwealth of Virginia, on March 27,
1997.
GIT Income Trust
By: (signature)
Katherine L. Frank
President
Pursuant to the requirements of the Securities Act of 1933,
this Post-Effective Amendment to the Registration Statement
has been signed below by the following persons in the
capacities and on the date indicated.
Trustee (Date)
Frank E. Burgess*
Trustee
Lorence Wheeler* (Date)
Trustee
Thomas S. Kleppe * (Date)
Trustee
James Imhoff* (Date)
(Signature), * Attorney-In-Fact 3/27/97
David Leahy, Esquire
Williams, Young & Associates, LLC
2901 West Beltline Highway
P.O. Box 8700
Madison, WI 53708
608-274-1980
Fax 608-274-8085
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the
use of our report dated January 24, 1997, and to all
references to our Firm included in or made a part of the
Registration Statement on Form N-1A.
WILLIAMS, YOUNG & ASSOCIATES, LLC
(signature)
Madison, Wisconsin
March 25, 1997
Member of the Institute of Profit Advisors
<TABLE> <S> <C>
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<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.
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<NAME> GIT INCOME TRUST
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<NAME> GOVERNMENT PORTFOLIO
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 6,419,356
<INVESTMENTS-AT-VALUE> 6,261,777
<RECEIVABLES> 79,323
<ASSETS-OTHER> 629
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,341,729
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,668
<TOTAL-LIABILITIES> 2,668
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 6,846,158
<SHARES-COMMON-STOCK> 664,427
<SHARES-COMMON-PRIOR> 706,487
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (349,518)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (157,579)
<NET-ASSETS> 6,339,061
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 212,287
<OTHER-INCOME> 0
<EXPENSES-NET> 51,643
<NET-INVESTMENT-INCOME> 160,644
<REALIZED-GAINS-CURRENT> (36,092)
<APPREC-INCREASE-CURRENT> (78,930)
<NET-CHANGE-FROM-OPS> (115,022)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 160,644
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 252,957
<NUMBER-OF-SHARES-REDEEMED> 804,161
<SHARES-REINVESTED> 149,185
<NET-CHANGE-IN-ASSETS> (402,019)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (313,425)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20,202
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 51,691
<AVERAGE-NET-ASSETS> 6,461,354
<PER-SHARE-NAV-BEGIN> 9.705
<PER-SHARE-NII> 0.237
<PER-SHARE-GAIN-APPREC> (0.164)
<PER-SHARE-DIVIDEND> 0.237
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.541
<EXPENSE-RATIO> 1.425
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
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<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> 0000710978
<NAME> GIT INCOME TRUST
<SERIES>
<NUMBER> 1
<NAME> MAXIMUM INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 6,284,310
<INVESTMENTS-AT-VALUE> 6,360,748
<RECEIVABLES> 188,552
<ASSETS-OTHER> 51
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,549,351
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27,734
<TOTAL-LIABILITIES> 27,734
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,047,277
<SHARES-COMMON-STOCK> 908,831
<SHARES-COMMON-PRIOR> 948,038
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,602,098)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 76,438
<NET-ASSETS> 6,521,617
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 314,052
<OTHER-INCOME> 3,750
<EXPENSES-NET> 53,094
<NET-INVESTMENT-INCOME> 264,708
<REALIZED-GAINS-CURRENT> (38,938)
<APPREC-INCREASE-CURRENT> 48,351
<NET-CHANGE-FROM-OPS> 9,413
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 264,708
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 719,809
<NUMBER-OF-SHARES-REDEEMED> 1,215,984
<SHARES-REINVESTED> 218,292
<NET-CHANGE-IN-ASSETS> (277,883)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (2,563,160)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 20,567
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 53,144
<AVERAGE-NET-ASSETS> 6,579,783
<PER-SHARE-NAV-BEGIN> 7.162
<PER-SHARE-NII> 0.286
<PER-SHARE-GAIN-APPREC> 0.014
<PER-SHARE-DIVIDEND> 0.286
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 7.176
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