Mosaic Government Money Market
Annual Report
March 31, 1997
<PAGE>
Mosaic Government Money Market Trust
Letter to Shareholders
May 9, 1997
Dear Shareholder,
As outlined in our letter of last fall, concerns over a
growing economy and accompanying wage pressures have
preoccupied Federal Reserve policy makers for some time.
These mounting concerns, as well as fresh evidence of wage
inflation, led the Fed to initiate a course of monetary
tightening in late March of 1997, with the target interest
rate on Fed Funds raised by 25 basis points to 5.50%.
Though widely anticipated by investors worldwide, this event
caused the interest rate markets to sell off in anticipation
of additional future rate increases by the Fed. As of this
writing, the consensus forecasts a high likelihood of
additional increases in the Fed Funds Rate, perhaps as much
as one-half to three-quarters of one percent by year-end
1997.
During the six-month period covered by this report, the
seven-day yield from Mosaic Government Money Market Trust
(formerly known as Government Investors Trust) rose from
4.23% at September 30, 1996 to 4.59% at March 31, 1997.
Part of this yield increase is due to the overall rise in
short-term interest rates during the period, while the
balance is due to a modest extension of average maturity
from 26 to 34 days at the respective dates. This modest
increase in average maturity is a strategic decision
designed to capture more attractive yields as rates rise.
During the fiscal year ended March 31, 1997, the seven-day
yield increased from 4.17% to 4.59%.
Looking ahead, the issues of a strong economy and tight
labor markets will continue to be foremost in investor's
minds as they gauge the Fed's future intentions. For many
reasons, however, we doubt that this course of monetary
tightening will be as severe as the 1994-1995 experience,
when short-term interest rates effectively doubled before
the Fed was finished. First, we begin this tightening with
interest rates at a much higher level than the 3% Fed Funds
rate of early 1994. Second, by most measures other than
wages, inflation has remained remarkably tame, and will
likely continue to surprise on the weak side. And finally,
with market interest rates already providing an historically
big "cushion" against future inflation, so-called "real
yields" are quite attractive at today's levels. We will
monitor future developments closely, and expect to further
increase the average maturity of the Trust to capture higher
yields over the coming few months.
We appreciate your confidence in Mosaic Government Money
Market Trust and reaffirm our commitment to provide you with
competitive money market returns, safety of principal, and
liquidity.
Sincerely,
(signature)
Christopher C. Berberet, CFA
Vice President
Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders, Mosaic Government
Money Market Trust (formerly known as Government Investors
Trust):
We have audited the accompanying statement of assets and
liabilities of Mosaic Government Money Market Trust,
including the portfolio of investments, as of March 31,
1997, and the related statement of operations for the year
then ended, the statement of changes in net assets for each
of the two years in the period then ended, and the financial
highlights for each of the five years in the period then
ended. These financial statements and financial highlights
are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation
of securities owned as of March 31, 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 Mosaic Government Money
Market Trust at March 31, 1997, the results of its
operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in
the period then ended, in conformity with generally accepted
accounting principles.
(signature)
Ernst & Young LLP
Washington, DC
May 2, 1997
<PAGE>
Mosaic Government Money Market Trust
Portfolio of Investments - March 31, 1997
Principal
Amount Value
U.S. GOVERNMENT AGENCY OBLIGATIONS: 91.3% of Net Assets
Federal Farm Credit Bank Discount Notes,
5.20%, 4/17/97 $ 1,750,000 $ 1,745,956
Federal Farm Credit Bank Discount Notes,
5.15%, 4/21/97 1,000,000 997,139
Federal Farm Credit Bank Discount Notes,
5.17%, 4/21/97 750,000 747,846
Federal Farm Credit Bank Discount Notes,
5.25%, 5/09/97 1,500,000 1,491,687
Federal Farm Credit Bank Discount Notes,
5.50%, 5/12/97 500,000 496,868
Federal Farm Credit Bank Discount Notes,
5.25%, 5/19/97 400,000 397,200
Federal Farm Credit Bank Discount Notes,
5.25%, 5/20/97 445,000 441,820
Federal Farm Credit Bank Discount Notes,
5.26%, 5/22/97 500,000 496,274
Federal Farm Credit Bank Discount Notes,
5.24%, 5/29/97 2,000,000 1,983,116
Federal Home Loan Bank Discount Notes,
5.42%, 5/15/97 2,500,000 2,483,439
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, 4/01/97 565,000 565,000
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, 4/01/97 515,000 515,000
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, 4/01/97 1,800,000 1,800,000
Federal Home Loan Mortgage Corporation
Discount Notes, 5.45%, 4/03/97 1,500,000 1,499,546
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, 4/04/97 2,000,000 1,999,125
Federal Home Loan Mortgage Corporation
Discount Notes, 5.25%, 4/11/97 2,580,000 2,576,238
Federal Home Loan Mortgage Corporation
Discount Notes, 5.45%, 4/16/97 1,500,000 1,496,593
Federal Home Loan Mortgage Corporation
Discount Notes, 5.23%, 4/17/97 1,400,000 1,396,746
Federal Home Loan Mortgage Corporation
Discount Notes, 5.23%, 4/21/97 1,000,000 997,094
Federal Home Loan Mortgage Corporation
Discount Notes, 5.20%, 4/25/97 3,000,000 2,989,600
Federal Home Loan Mortgage Corporation
Discount Notes, 5.18%, 5/01/97 3,000,000 2,987,050
Federal Home Loan Mortgage Corporation
Discount Notes, 5.22%, 5/02/97 2,000,000 1,991,010
Federal Home Loan Mortgage Corporation
Discount Notes, 5.19%, 5/09/97 1,535,000 1,526,591
Federal Home Loan Mortgage Corporation
Discount Notes, 5.15%, 5/14/97 1,000,000 993,849
Federal Home Loan Mortgage Corporation
Discount Notes, 5.23%, 5/19/97 1,000,000 993,027
Federal Home Loan Mortgage Corporation
Discount Notes, 5.16%, 5/20/97 2,000,000 1,985,953
Federal Home Loan Mortgage Corporation
Discount Notes, 5.26%, 5/20/97 605,000 600,669
Federal Home Loan Mortgage Corporation
Discount Notes, 5.27%, 5/27/97 1,500,000 1,487,703
Federal Home Loan Mortgage Corporation
Discount Notes, 5.28%, 6/03/97 2,000,000 1,981,520
Federal National Mortgage Association
Discount Notes, 5.25%, 4/10/97 2,000,000 1,997,375
Federal National Mortgage Association
Discount Notes, 5.25%, 4/18/97 1,510,000 1,506,256
Federal National Mortgage Association
Discount Notes, 5.22%, 5/12/97 1,000,000 994,055
Federal National Mortgage Association
Discount Notes, 5.26%, 5/16/97 2,000,000 1,986,850
Federal National Mortgage Association
Discount Notes, 5.26%, 5/23/97 945,000 937,820
Federal National Mortgage Association
Discount Notes, 5.50%, 5/29/97 825,000 817,690
TOTAL GOVERNMENT AGENCY OBLIGATIONS (Cost $49,903,705) 49,903,705
VARIABLE RATE LOAN GUARANTEED BY A U.S. GOVERNMENT AGENCY: 0.04%
of Net Assets
Farmers Home Administration Loan, 8.83%*,
2/1/10 (Cost $19,339) 19,339 19,339
REPURCHASE AGREEMENT: 8.8% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation
issued 3/31/97 at 6.250%, due 4/1/97 collateralized by
$4,931,753 in United States Treasury Notes due 7/31/97.
Proceeds at maturity are $4,788,831. (Cost $4,788,000) 4,788,000
TOTAL INVESTMENTS (Cost $54,711,044)+ $54,711,044
Notes to Portfolio of Investments:
* Floating interest rate - rate disclosed is as of March 31,
1997
+ Aggregate cost for federal income tax purposes
<PAGE>
Mosaic Government Money Market Trust
Statement of Assets and Liabilities
March 31, 1997
ASSETS
Investments, at cost $ 54,711,044
Investments, at value (Notes 1 and 2)
Investment securities $ 49,923,044
Repurchase agreement 4,788,000
Total investments 54,711,044
Cash 192
Receivables
Interest 993
Share subscriptions (Note 1) 275,076
Total assets 54,987,305
LIABILITIES
Payables
Shares reserved for subscription
(Note 1) 275,076
Capital shares redeemed 18,651
Dividends 5,543
Other liabilities 988
Total liabilities 300,258
NET ASSETS $ 54,687,047
CAPITAL SHARES OUTSTANDING 54,687,135
NET ASSET VALUE PER SHARE $1.000
Mosaic Government Money Market Trust
Statement of Operations
For the Year Ended March 31, 1997
INVESTMENT INCOME (Note 1)
Interest Income $ 2,927,519
EXPENSES (Notes 3 and 4)
Investment advisory fee 273,026
Transfer agent and administrative
expenses 220,999
Auditing fees 19,509
Trustees' fees 18,000
Custodian fees 14,946
Securities registration and blue
sky expenses 11,762
Printing costs 7,000
Fidelity bond 4,995
Legal fees 4,830
Custodian fees paid indirectly 4,869
Total expenses 570,198
NET INVESTMENT INCOME 2,357,321
TOTAL INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,357,321
The Notes to Financial Statements are an integral part of
these statements.
<PAGE>
Mosaic Government Money Market Trust
Statements of Changes in Net Assets
For the years ended March 31
1997 1996
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $ 2,357,321 $ 2,648,018
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (2,357,321) (2,648,018)
CAPITAL SHARE TRANSACTIONS
(Note 5) (2,510,082) (7,343,984)
TOTAL DECREASE IN NET ASSETS (2,510,082) (7,343,984)
NET ASSETS
Beginning of year 57,197,129 64,541,113
End of year $ 54,687,047 $ 57,197,129
Mosaic Government Money Market Trust
Financial Highlights
Selected data for a share outstanding throughout each year:
<TABLE>
Year ended March 31,
<C> <C> <C> <C> <C>
1997* 1996 1995 1994 1993
Net asset
value
beginning
of period $1.000 1.000 1.000 1.000 1.000
Net
investment
income $0.043 0.045 0.037 0.021 0.024
Total from
investment
operations $0.043 0.045 0.037 0.021 0.024
Distributions
from net
investment
income $(0.043)(0.045)(0.037)(0.021)(0.024)
Total
Distributions$(0.043)(0.045)(0.037)(0.021)(0.024)
Net asset
value end
of year $1.000 1.000 1.000 1.000 1.000
Total
Return 4.38% 4.62% 3.80% 2.08% 2.44%
Net assets
at end of
period
(thousands) $54,687 57,197 64,541 78,090 88,911
Ratio of
expenses to
average net
assets1 1.05% 1.23% 1.16% 1.11% 1.06%
Ratio of
net
investment
income to
average
net assets 4.29% 4.52% 3.70% 2.08% 2.44%
</TABLE>
1 For the year ended March 31, 1996 and thereafter, ratio
reflects custodian fees paid indirectly (Note 3).
* Effective July 31, 1996, the investment advisory services
transferred to Bankers Finance Advisors, LLC from Bankers
Finance Investment Management Corp. (See Note 3).
<PAGE>
Mosaic Government Money Market Trust
Notes to Financial Statements
March 31, 1997
1. Summary of Significant Accounting Policies. Mosaic
Government Money Market Trust (the "Trust"), formerly known
as Government Investors Trust, is registered with the
Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end, diversified investment
management company. The Trust invests solely in securities
issued and guaranteed by the U.S. Government or any of its
agencies or instrumentalities or in repurchase agreements
backed by such securities.
Securities Valuation: The Trust uses the amortized cost
method of valuation whereby portfolio securities are valued
at acquisition cost as adjusted for amortization of premium
or accretion of discount rather than at value based on
market factors. As required, the Trust monitors the
difference between market value and amortized cost to assure
that this valuation method fairly reflects market value.
Investment transactions are recorded on the trade date. The
cost of investments sold is determined on the identified
cost basis for financial statement and federal income tax
purposes.
Investment Income: Interest income, net of amortization of
premium or discount, and other income (if any) are accrued
as earned.
Dividends: Net investment income, determined as gross
investment income less expenses, is declared as a dividend
each business day. Dividends are distributed to
shareholders or reinvested in additional shares as of the
close of business at the end of each month.
Income Tax: In accordance with the requirement of Subchapter
M of the Internal Revenue Code applicable to regulated
investment companies, all of the taxable income of the Trust
is distributed to its shareholders, and therefore no federal
income tax provision is required. As of March 31, 1997, the
Trust had available for federal income tax purposes unused
capital loss carryover of $101 expiring March 31, 2003.
Share Subscriptions: Shares purchased by check or otherwise
not paid for in immediately available funds are accounted
for as share subscriptions receivable and shares reserved
for subscriptions.
Use of Estimates: The preparation of the financial
statements in conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and reported amounts of increases and decreases
in net assets from operations during the reporting period.
Actual results could differ from those estimates.
2. Investment in Repurchase Agreements. When the Trust
purchases securities under agreements to resell, the
securities are held for safekeeping by the Trust's custodian
bank as collateral. Should the market value of the
securities purchased under such an agreement decrease below
the principal amount to be received at the termination of
the agreement plus accrued interest, the counterparty is
required to place an equivalent amount of additional
securities in safekeeping with the Trust's custodian bank.
Repurchase agreements may be terminated within seven days.
Pursuant to an Exemptive Order issued by the Securities and
Exchange Commission, the Trust, along with other registered
investment companies having Advisory and Services Agreements
with the same advisor, transfers uninvested cash balances
into a joint trading account. The aggregate balance in this
joint trading account is invested in one or more
consolidated repurchase agreements whose underlying
securities are U.S. Treasury or federal agency obligations.
3. Investment Advisory Fees and Other Transactions with
Affiliates. The Investment Advisor to the Trust, Bankers
Finance Advisors, LLC ("the Advisor"), earns an advisory fee
equal to 0.5% per annum of the average net assets of the
Trust; the fees are accrued daily and are paid monthly. The
Advisory Agreement between the Trust and the Advisor was
approved at the special meeting of the Trust's shareholders
on July 29, 1996. The Advisor purchased the investment
management assets of Bankers Finance Investment Management
Corp. ("BFIMC"), the Trust's previous investment advisor,
effective July 31, 1996.
The Advisor has undertaken to reimburse the Trust by the
amount, if any, by which the total expenses of the Trust
(less certain excepted expenses) exceed 1.5% per annum of
the average net assets of the Trust up to $40 million and 1%
per annum of such amount in excess of $40 million. The
Advisor is responsible for the fees and expenses of Trustees
who are affiliated with the Advisor, the rent expense of the
Trust's principal executive office premises and certain
promotional expenses. For the year ended March 31, 1997,
outside Trustee fees of $18,000 were paid by the Trust.
Fees are reduced under an expense offset arrangement with
the Trust's custodian. The amount of the expense offset for
the year ended March 31, 1997 was $4,869.
4. Other Expenses. With the exception of certain expenses
of the Trust payable by it directly, all support services
are provided to the Trust under a Services Agreement between
the Trust and the Advisor, pursuant to which such services
are provided for amounts not exceeding the cost to the
Advisor. Common expenses incurred by the Trust, Mosaic Tax-
Free Trust, Mosaic Income Trust and Mosaic Equity Trust
("the Trusts") are allocated among the funds based on the
ratio of net assets of each fund to the combined net assets
of the Trusts. For the year ended March 31, 1997, operating
expenses of $297,172 have been reimbursed to the Advisor and
BFIMC under the Services Agreement.
5. Capital Share Transactions. An unlimited number of
capital shares, without par value, are authorized.
Transactions in capital shares (in dollars and shares) for
the years ended March 31 were as follows:
1997 1996
Shares sold 60,347,031 98,828,888
Shares issued in
reinvestment of dividends 2,268,110 2,540,729
Total shares issued 62,615,141 101,369,617
Shares redeemed (65,125,223) (108,713,601)
Net decrease (2,510,082) (7,343,984)
