Mosaic Government Money Market
Annual Report
September 30, 1997
<PAGE>
Mosaic Government Money Market Trust
Letter to Shareholders
September 30, 1997
Dear Shareholder,
Six months ago, concerns over economic strength, rising inflationary
pressures and the resulting potential for Federal Reserve tightening had
caused a significant bond market sell-off. Consensus forecasts for
potential increases in the Federal Funds Rate were anywhere from one-
half to three-quarters of a percent. Since then, however, increasingly
benign inflationary measures have caused bond prices to increase
steadily, testing new one year highs in September. Currently, consensus
forecasts for increases in the Federal Funds Rate have fallen to near
zero.
During the six-month period covered by this report, the seven-day yield
from Mosaic Government Money Market Trust rose from 4.59% at March 31,
1997 to 4.63% at September 30, 1997. Over the same period, the fund's
average maturity was increased slightly from 34 to 41 days. By
maintaining a slightly longer average maturity as short-term interest
rates fell during the last six months, we were able to maintain a more
attractive portfolio yield. During the twelve-month period, the seven-
day yield increased from 4.23% at September 30, 1996 to 4.63% at
September 30, 1997.
Looking ahead, global weakness and a late summer economic lull have
temporarily reduced the probability of Fed action prior to year end.
However, the economy is still operating at high capacity, labor markets
are tight, and potential wage pressures loom on the horizon. Over the
next six months, investors will emphasize growth signals as they attempt
to gauge the Fed's future intentions. Increasingly, the market is
expecting a continuation of the best case economic scenario -- moderate
economic growth with low inflation. This optimistic mindset lays the
groundwork for negative surprises. The combination of short-term
maturities and the added security of a 100% government portfolio make
Mosaic Government Money Market a relatively safe haven from these
events.
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
<PAGE>
Independent Auditors' Report
To the Board of Trustees and Shareholders
of Mosaic Government Money Market Trust:
We have audited the accompanying statement of net assets of the Mosaic
Government Money Market Trust (the "Trust") as of September 30, 1997,
and the related statements of operations and changes in net assets and
the financial highlights for the six-month 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 audit.
The financial statements of the Trust for the year ended March 31, 1997
and 1996 and the financial highlights for each of the years in the five
year period ended March 31, 1997 were audited by other auditors whose
report, dated May 2, 1997, expressed an unqualified opinion on those
financial statements and financial highlights.
We conducted our audit 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. Our procedures included
confirmation of securities owned at September 30, 1997, by
correspondence with the custodian and broker. 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 audit provides a reasonable basis for
our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
Mosaic Government Money Market Trust as of September 30, 1997, the
results of its operations, the changes in its net assets, and its
financial highlights for the six-month period then ended in conformity
with generally accepted accounting principles.
(signature)
Deloitte & Touche LLP
Princeton, New Jersey
November 21, 1997
<PAGE>
Mosaic Government Money Market Trust
Statement of Net Assets - September 30, 1997
<TABLE>
<S> <C> <C>
Principal Market
Amount Value
U.S. GOVERNMENT AGENCY OBLIGATIONS: 93.8% of Net Assets
Federal Farm Credit Bank Discount Notes, 5.36%, 10/3/97 $1,000,000 $999,702
Federal Farm Credit Bank Discount Notes, 5.41%, 10/7/97 730,000 729,342
Federal Farm Credit Bank Discount Notes, 5.37%,10/10/97 230,000 229,691
Federal Farm Credit Bank Discount Notes, 5.40%, 10/30/97 2,500,000 2,489,125
Federal Farm Credit Bank Discount Notes, 5.43%, 11/3/97 1,485,000 1,477,608
Federal Farm Credit Bank Discount Notes, 5.41%, 11/6/97 2,000,000 1,989,180
Federal Farm Credit Bank Discount Notes, 5.40%, 11/18/97 2,000,000 1,985,600
Federal Farm Credit Bank Discount Notes, 5.40%, 11/25/97 250,000 247,938
Federal Farm Credit Bank Discount Notes, 5.41%, 12/2/97 2,000,000 1,981,336
Federal Farm Credit Bank Discount Notes, 5.41%, 12/4/97 680,000 673,459
Federal Farm Credit Bank Discount Notes, 5.41%, 12/8/97 885,000 875,956
Federal Farm Credit Bank Discount Notes, 5.41%, 12/22/97 2,000,000 1,975,354
Federal Home Loan Bank Discount Notes, 5.45%,10/24/97 1,000,000 996,518
Federal Home Loan Bank Discount Notes, 5.48%, 10/29/97 200,000 199,148
Federal Home Loan Bank Discount Notes, 5.40%, 10/31/97 1,000,000 995,500
Federal Home Loan Bank Discount Notes, 5.40%, 11/7/97 1,500,000 1,491,675
Federal Home Loan Bank Discount Notes, 5.43%, 11/28/97 1,500,000 1,486,878
Federal Home Loan Mortgage Corp. Discount Notes, 5.36%, 10/9/97 2,000,000 1,997,618
Federal Home Loan Mortgage Corp. Discount Notes, 5.36%, 10/10/97 1,000,000 998,660
Federal Home Loan Mortgage Corp. Discount Notes, 5.36%, 10/14/97 2,000,000 1,996,129
Federal Home Loan Mortgage Corp. Discount Notes, 5.48%, 10/28/97 1,000,000 995,890
Federal National Mortgage Assoc. Discount Notes, 5.36%, 10/16/97 1,000,000 997,767
Federal National Mortgage Assoc. Discount Notes, 5.40%, 10/17/97 1,000,000 997,600
Federal National Mortgage Assoc. Discount Notes, 5.45%, 10/20/97 2,500,000 2,492,809
Federal National Mortgage Assoc. Discount Notes, 5.43%, 10/22/97 450,000 448,575
Federal National Mortgage Assoc. Discount Notes, 5.48%, 10/30/97 1,305,000 1,299,239
Federal National Mortgage Assoc. Discount Notes, 5.41%, 11/10/97 1,500,000 1,490,983
Federal National Mortgage Assoc. Discount Notes, 5.43%, 11/10/97 500,000 496,983
Federal National Mortgage Assoc. Discount Notes, 5.41%, 11/12/97 1,000,000 993,688
Federal National Mortgage Assoc. Discount Notes, 5.41%, 11/20/97 1,500,000 1,488,729
Federal National Mortgage Assoc. Discount Notes, 5.40%, 11/24/97 2,000,000 1,983,800
Federal National Mortgage Assoc. Discount Notes, 5.40% 12/9/97 1,000,000 989,650
Federal National Mortgage Assoc. Discount Notes, 5.40% 12/10/97 2,000,000 1,979,000
Federal National Mortgage Assoc. Discount Notes, 5.40%,12/15/97 1,750,000 1,730,313
Federal National Mortgage Assoc. Discount Notes, 5.43%, 12/18/97 1,500,000 1,482,352
Federal National Mortgage Assoc. Discount Notes, 5.39%, 1/16/98 2,000,000 1,967,959
TOTAL GOVERNMENT AGENCY OBLIGATIONS (Cost $47,651,784) 47,651,784
VARIABLE RATE LOAN GUARANTEED BY A U.S. GOVERNMENT AGENCY: 0.03% of Net Assets
Farmers Home Administration Loan, 8.83%*, 2/1/10 (Cost $12,740) 12,740 12,740
REPURCHASE AGREEMENT: 5.6% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation issued 9/30/97
at 5.95%, due 10/1/97 collateralized by $2,895,780 in United States Treasury Notes
due 5/31/99. Proceeds at maturity are $2,839,469. (Cost $2,839,000) 2,839,000
TOTAL INVESTMENTS (Cost $50,503,524)+ $50,503,524
CASH, RECEIVABLES, LESS LIABILITIES: 0.57% of Assets 289,316
TOTAL NET ASSETS $50,792,840
CAPITAL SHARES OUTSTANDING $50,792,928
NET ASSET VALUE PER SHARE $1.00
</TABLE>
Notes to Statement of Net Assets:
* Floating interest rate -- rate disclosed is as of September 30, 1997
+ Aggregate cost for federal income tax purposes as of September 30,
1997
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Mosaic Government Money Market Trust
Statement of Operations
For Six Month Period Ended September 30, 1997
INVEST INCOME (Note 1)
Interest Income $1,426,231
EXPENSES (Notes 3 and 4)
Investment advisory fee 129,459
Transfer agent and administrative expenses 60,448
Auditing fees 15,000
Securities registration and blue sky expenses 13,060
Trustees' fees 9,000
Custodian fees 4,327
Printing costs 2,549
Legal fees 580
Fidelity bond 350
Total expenses 234,773
NET INVESTMENT INCOME 1,191,458
TOTAL INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $1,191,458
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Mosaic Government Money Market Trust
Statements of Changes in Net Assets
<TABLE>
<S> <C> <C> <C>
Six Month
Period Ended Year Ended Year Ended
Sept. 30, 1997 March 31, 1997 March 31, 1996
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $ 1,191,458 $ 2,357,321 $ 2,648,018
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (1,191,458) (2,357,321) (2,648,018)
CAPITAL SHARE TRANSACTIONS (Note 5) (3,894,207) (2,510,082) (7,343,984)
TOTAL DECREASE IN NET ASSETS (3,894,207) (2,510,082) (7,343,984)
NET ASSETS
Beginning of year 54,687,047 57,197,129 64,541,113
End of year $50,792,840 $54,687,047 $57,197,129
</TABLE>
The Notes to Financial Statements are an integral part of these
statements.
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>
1997-1 1997-3 1996 1995 1994
Net asset
value
beginning
of period $1.000 1.000 1.000 1.000 1.000
Net
investment
income $0.023 0.043 0.045 0.037 0.021
Total from
investment
operations $0.023 0.043 0.045 0.037 0.021
Distributions
from net
investment
income $(0.023)(0.043)(0.045)(0.037)(0.021)
Total
Distributions$(0.023)(0.043)(0.045)(0.037)(0.021)
Net asset
value end
of year $1.000 1.000 1.000 1.000 1.000
Total
Return 2.33% 4.38% 4.62% 3.80% 2.08%
Net assets
at end of
period
(thousands) $50,793 54,687 57,197 64,541 78,090
Ratio of
expenses to
average net
assets1 0.90%2 1.05% 1.23% 1.16% 1.11%
Ratio of
net
investment
income to
average
net assets 4.58%2 4.29% 4.52% 3.70% 2.08%
1 For the six month period ended September 30, 1997.
2 Annualized.
3 Effective July 31, 1996, the investment advisory services transferred
to Bankers Finance Advisors, LLC from Bankers Finance Investment Mangagement
Corp. (see Note 3).
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Mosaic Government Money Market Trust
Notes to Financial Statements
September 30, 1997
1. Summary of Significant Accounting Policies. Mosaic Government Money
Market Trust (the "Trust"), known as Government Investors Trust prior to
May 15, 1997, 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.
Fiscal Year: Beginning April 1, 1997, the Trust's fiscal year will end
on September 30. This six-month Annual Report is the only financial
statement the Trust will provide for its short fiscal year beginning
April 1, 1997 and ending September 30, 1997 and serves to adjust the
Trust's financial reporting schedule.
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 recorded 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.
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.
Change of Independent Auditor. Effective for fiscal years beginning on
or after April 1, 1997, the Trust's Independent Auditor is Deloitte &
Touche LLP. Financial information appearing in this Report for fiscal
years beginning prior to April 1, 1997 were audited by another
independent auditor.
2. Investment in Repurchase Agreements. When the Trust purchases
securities under agreements to resell, the securities are held in
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, a
wholly owned subsidiary of Madison Investment Advisors, Inc. ("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 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. No amounts were reimbursed to the Trust by the Advisor for the
period eneded September 30, 1997. The Advisor is responsible for the
fees and expenses of Trustees who are affiliated with the Advisor, and
certain promotional expenses. For the six months ended September 30,
1997, outside Trustee fees of $9,000 were paid by the Trust.
4. Other Expenses. With the exception of certain expenses of the Trust
payable by it directly, all support services for the period covered by
the Report were 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") were allocated among the funds based
on the ratio of net assets of each fund to the combined net assets of
the Trusts. For the six months ended September 30,1997, operating
expenses of $105,314 have been reimbursed to the Advisor under the
Services Agreement. Effective October 1, 1997, the Services Agreement
was amended by the Trustees to provide for a single fee equal to 0.38%
of average net assets for all such other expenses.
5. Capital Share Transactions. An unlimited number of capital shares,
without par value, are authorized. Transactions in capital shares (in
dollars and shares) were as follows:
Six Months Ended Year Ended
Sept. 30, 1997 March 31, 1997
Shares sold 35,363,902 60,347,031
Shares issued in
reinvestment of dividends 1,146,625 2,268,110
Total shares issued 36,510,527 62,615,141
Shares redeemed (40,404,734) (65,125,223)
Net decrease (3,894,207) (2,510,082)
<PAGE>
<PAGE>
Telephone Numbers
Shareholder Service
Washington, DC area: 703 528-6500
Toll-free nationwide: 1 888 670-3600
Mosaic Tiles (24 hours automated information)
Toll-free nationwide: 1 800 336-3063
The Mosaic Family of Mutual Funds
Mosaic Equity Trust
Mosaic Investors Fund
Mosaic Balanced Fund
Mosaic Mid-Cap Growth Fund
Mosaic Worldwide Growth Fund
Mosaic Income Trust
Mosaic High Yield Fund
Mosaic Government Fund
Mosaic Tax-Free Trust
Mosaic Tax-Free Arizona Fund
Mosaic Tax-Free Maryland Fund
Mosaic Tax-Free Missouri Fund
Mosaic Tax-Free Virginia Fund
Mosaic Tax-Free National Fund
Mosaic Tax-Free Money Market
Mosaic Government Money Market
For more complete information on any Mosaic Fund, including charges and
expenses, request a prospectus by calling the numbers above. Read it
carefully before you invest or send money.
1655 Ft. Myer Drive, 10th floor
Arlington, Virginia 22209-3108
http://www.mosaicfunds.com
</TABLE>
