Dear Shareholder,
We are pleased to report on the performance of your investment in the
Treasurers' Government Money Market Fund for the year ended September 30,
1997. During the year the Fund provided competitive money market returns
with maximum safety and liquidity. While the assets have not grown we remain
optimistic that institutional investors will discover the benefits of
utilizing the Fund to meet cash management goals.
Short-term interest rates remained at historically low levels
throughout 1997. In this low rate environment, available money
market yields continued to be relatively modest.
Although past performance is no guarantee of future results the table
below presents the Fund's 7 day average yields at the end of the
year.
7 Day Average Yields (9/30/97)
<TABLE>
<CAPTION>
Current Compound
<S> <C> <C>
Treasurers' Government Money Market Fund 5.14% 5.27%
</TABLE>
Thank you for choosing the Treasurers' Government Money Market Fund.
We look forward to the continued opportunity to meet your investment
needs.
James A. Casselberry, Jr.
President
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investment securities, at acquisition cost
and value (Note2) $ 111,194
Interest receivable 16
Prepaid organizational expenses, net (Note 3 10,684
Total assets 121,894
LIABILITES:
Payable to related party (Note 3) 10,684
Total liabilities 10,684
Net assets $ 111,210
Net assets consist of capital shares $ 111,210
Shares of beneficial interest outstanding
(Unlimited number of shares authorized, no par value) 111,210
Net asset value, redemption price and
offering price per share (Note 2) $ 1.00
</TABLE>
PORTFOLIO OF INVESTMENTS
September 30, 1997
<TABLE>
<CAPTION>
Face Market
Amount Repurchase Agreement (1) - 100% Value
<S> <C> <C>
$111,194 Repurchase Agreement - Fifth Third Bank,5.10%,
dated 9/30/97, due 10/1/97, repurchase proceeds $111,210 $111,194
Total Investment Securities $111,194
</TABLE>
(1) Repurchase agreement is fully collateralized by U.S. Government
obligations
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
For the Year Ended September 30, 1997
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest Income $ 6,315
EXPENSES: (Note 3)
Management fees 301
Administration fees 20
Transfer agent fees 106
Portfolio accounting and pricing 9,379
Professional fees 11,809
Insurance expense 3,000
Trustees fees and expenses 8,236
Registration fees 108
Amortization of organization expenses 4,700
Total Expenses 37,659
Less fees waived and expenses reimbursed
by the Manager (37,659)
Net Expense 0
Net investment income and increase
in net assets from operations $ 6,315
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Year
Ended Ended
9/30/97 9/30/96
<S> <C> <C>
OPERATIONS, DIVIDENTS & CAPITAL SHARE ACTIVITY:
Net investment income $ 6,315 $ 6,183
Dividends to shareholders from investment income (6,315) (6,183)
Proceeds from shares sold 0 100,318
Shares issued in reinvestment of dividends 6,315 6,183
Less payments for shares redeemed (26,606) (75,000)
TOTAL (DECREASE)INCREASE IN NET ASSETS (20,291) 31,501
NET ASSETS:
Beginning of period (Note 1) 131,501 100,000
End of period $111,210 $131,501
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
Year Year
Ended Ended
9/30/97 9/30/96
<S> <C> <C>
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHTOUT THE PERIOD
Net asset value at beginning of period $1.000 $1.000
Net investment income .051 .052
Distributions from net investment income (.051) (.052)
Net asset value at end of period $1.000 $1.000
Total Return 5.06% 5.27%
Net assets at end of period $111,210 $131,501
RATIOS
Net of expenses waived or absorbed by manager (Annualized) (Note 3)
Ratio of net expenses to average net assets 0.00% 0.00%
Ratio of net investment income to average net assets 5.06% 5.25%
Assuming no fee waivers or expense absorption (Annualized) (Note 3)
Ratio of expenses to average net assets 30.19% 14.42%
Ratio of net investment income to average net assets (25.13%) (9.17%)
</TABLE>
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
September 30, 1997
(1) Organization
The Millennium Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as an open-end
diversified management investment company established as a
Massachusetts business trust under a Declaration of Trust dated
August 19, 1994. The Trust has established one fund series, the
Treasurers' Government Money Market Fund (the "Fund"). The Trust was
capitalized on January 17, 1995, when 100,000 shares of the Fund were
issued at $1.00 per share to Janis S. England, chairman and
controlling member of Millennium Financial LLC, the Fund's investment
manager. The Fund was effectively in operation for all of 1996 since
it commenced operations on October 2, 1995. The Fund had no
operations prior to the public offering of shares except for the
initial issuance of shares; accordingly no financial statement
information is presented for the period prior to fiscal 1996. The
Fund's investment objective is to seek high current income,
consistent with protection of capital.
(2) Significant Accounting Policies
The following is a summary of the Fund's significant accounting
policies:
Security valuation - Securities are valued on the amortized cost
basis, which approximates market value. This involves initially
valuing a security at its original cost and thereafter assuming a
constant amortization to maturity of any discount or premium. This
method of valuation is expected to enable the Fund to maintain a
constant net asset value per share.
Repurchase agreements - Repurchase agreements which are
collateralized by U.S. Government obligations, are valued at cost
which, together with accrued interest, approximates market.
Collateral for repurchase agreements is held in safekeeping in the
customer-only account of the Fund's custodian, at the Federal Reserve
Bank of Cleveland. At the time the Fund enters into a repurchase
agreement, the seller agrees that the value of the underlying
securities, including accrued interest, will be equal to or exceed
the face amount of the repurchase agreement. In the event of a
bankruptcy or other default of the seller of a repurchase agreement,
the Fund could experience both delays in liquidating the underlying
security and losses. These losses would equal the face amount of the
repurchase agreement(s) and accrued interest, net of any proceeds
received in liquidation of the underlying securities. To minimize
the possibility of loss, the Fund enters into repurchase agreements
only with institutions deemed to be creditworthy.
Security transactions - Investment transactions are accounted for on
the trade date. Securities sold are valued on a specific
identification basis.
Fund share valuation, investment income and distributions to
shareholders - The net asset value per share of the Fund is
calculated daily by dividing the total value of the Fund's assets,
less liabilities, by the number of shares outstanding. Interest
income is accrued as earned. Distributions from net investment
income are declared daily and paid on or about the first business day
of each month.
Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Federal income tax - It is the Fund's policy to comply with the
special provisions of the Internal Revenue Code applicable to
regulated investment companies. As provided therein, in any fiscal
year in which a Fund so qualifies and distributes at least 90% of its
taxable net income, the Fund (but not the shareholders) will be
relieved of Federal income tax on the income distributed.
Accordingly, no provision for income taxes has been made.
<PAGE>
In order to avoid imposition of the excise tax applicable to
regulated investment companies, it is also the Fund's intention to
declare as dividends in each calendar year at least 98% of its net
investment income (earned during the calendar year) and 98% of its
net realized capital gains (earned during the twelve months ended
October 31) plus undistributed amounts from prior years.
(3) Transactions with Affiliates
The President of the Trust is the chairman and controlling
shareholder of Trias Capital Management, Inc. ("Trias"), the Trust's
investment manager. The Treasurer of the Trust is the chairman and
controlling member of Millennium Financial LLC ("MFL"), the Trust's
administrator, and Millennium Capital LLC ("MCL"), the Trust's
principal underwriter.
Investment Management Agreement - The Fund's investments are managed
by Trias pursuant to the terms of a management agreement effective
June 1, 1997. Under the terms of the management agreement, the Fund
pays Trias a fee, which is computed and accrued daily and paid
monthly at the annual rate of .20% of its average daily net assets.
Since June 1, 1997, Trias voluntarily waived its advisory fees and
absorbed all Fund expenses.
Prior to June 1, 1997 the Fund's investments were managed by MFL.
The Fund paid MFL a fee, at the annual rate of .25% of its average
daily net assets. Under a subadvisory agreement, MFL retained
Countrywide Investments, Inc. (the "Sub-Adviser") to manage the
Fund's investments and provide fund accounting services. MFL paid
the Sub-Adviser a fee equal to an annual rate of .12% of the Fund's
average daily net assets. In order to reduce the operating expenses
of the Fund, MFL voluntarily waived its advisory fees and MFL
absorbed all other Fund expenses.
Administration Agreement - The Fund's business affairs are managed by
MFL pursuant to the terms of an administration agreement effective
June 1, 1997. Under the terms of the administration agreement, the
Fund pays MFL a fee, which is computed and accrued daily and paid
monthly at the annual rate of .05% of its average daily net assets.
In order to reduce the operating expenses of the Fund, MFL
voluntarily waived its administration fee.
Transfer Agent and Shareholder Service Agreement - MFL served as
transfer agent and shareholder service agent for a fee at the annual
rate of .10% of the Fund's average daily net assets. MFL voluntarily
waived its transfer agent fees. Under the terms of the Transfer,
Dividend Disbursing, Shareholder Service and Plan Agency Agreement
between the Trust and Countrywide Fund Services, Inc. ("CFS"), CFS
maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent and performs other shareholder service
functions. For these services, beginning fiscal 1998, CFS will
receive a monthly fee at an annual rate of $20 per shareholder
account, subject to a minimum monthly fee not to exceed $1,500. In
addition the Fund will pay out-of-pocket expenses including, but not
limited to, postage and supplies.
Accounting Services Agreement - Under the terms of the Accounting
Services Agreement between the Trust and CFS, CFS calculates the
daily net asset value per share and maintains the books and records
of the Fund. For these services, CFS will receive a monthly fee,
based on current assets levels, of $1,000 per month beginning fiscal
1998.
Prepaid Organizational Expenses - Expenses paid by MFL amounting to
$23,500, were incurred in connection with the organization of the
Trust and the initial offering of shares. Such organizational
expenses are capitalized and amortized on a straight-line basis over
five years. As of January 17, 1995, all outstanding shares of the
Fund were held by the chairman and controlling member of MFL, who
purchased these initial shares in order to provide the Trust with its
required capital. In the event any of the initial shares of the Fund
are redeemed by the chairman and controlling member of MFL or by any
subsequent owner at any time prior to the complete amortization of
organizational expenses, the redemption proceeds payable with respect
to such shares will be reduced by the pro rata share of the
unamortized deferred organizational expenses as of the date of such
redemption.
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Trustees of the
Treasurers' Government Money Market Fund of Millennium Income Trust:
We have audited the accompanying financial statements of the
Treasurers' Government Money Market Fund of Millennium Income Trust (
a Massachusetts business trust), including the portfolio of
investments as of September 30, 1997, and the related statement of
operations, the statements of changes in net assets, and the
financial highlights for the periods indicated thereon. These
financial statements and financial highlights are the responsibility
of the Trust's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of investments owned as of
September 30, 1997, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of the Treasurers' Government Money Market Fund of
the Millennium Income Trust as of September 30, 1997, the results of
its operations, the changes in its net assets, and the financial
highlights for the periods indicated thereon, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
Cincinnati, Ohio,
November 26, 1997
