Mosaic Government Money Market Trust
Letter to Shareholders
March 31, 1998
Dear Shareholder:
While there are numerous reasons to invest in government money market
securities, stability and safety are certainly high on most people's
list. For the six-month period ended March 31, 1998, investors from
around the world continued to look to U.S. government bonds for these
qualities. The solidity of the U.S. economy, particularly in comparison
to the serious problems still in evidence for Asian nations, made the
type of securi-ties in Mosaic Government Money Market all the more
appealing.
The yield of your fund is heavily related to the monetary policy of the
Federal Reserve. For the past six months, the Federal Reserve has held
steady on rates. In brief, this lack of action reflects a balance
between the inflationary pressures of our strong economy and the
deflationary pressures that the Asia economic crisis have engendered.
The results have been a relatively static interest rate environment,
which has been reflected in your fund's yield.
During the six-month period covered by this report, the seven-day yield
from Government Money Market was steady from 4.60% on September 30, 1998
to 4.62% on March 31, 1998. Reflective of this stability, we have
maintained the average maturity of the Fund in a range of 30-40 days.
What is our outlook? Forecasting interest rate moves over very short
periods is difficult, at best. There is so much "noise" that affects
the market day-to-day. We prefer to focus on more intermediate to long-
term trends and avoid the "sound bite" of the day. Right now, we
consider the intermediate to longer-term course in bond yields to be
downward, with some notable risks which bear close watching.
Inflation, however you measure it, is trending down and will likely be
low and stable for the foreseeable future. With inflation largely under
control, we expect long-term interest rates to possibly be as low as 5%
on long-term government securities by the year 2000, with rates on
short-term money market securities similar or slightly lower.
The U.S. economy continues to perform admirably, with solid economic
growth, a low rate of unemployment and strong gains in productivity. It
doesn't get much better than this from an economic standpoint, but the
"new economy" can't be expected to continue forever.
We appreciate your confidence in Mosaic Government Money Market 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
Mosaic Government Money Market Trust
Statement of Net Assets - March 31, 1998 (unaudited)
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<S> <C> <C>
Principal Market
Amount Value
U.S. GOVERNMENT AGENCY OBLIGATIONS: 96.3% of Net Assets
Federal Farm Credit Bank Discount Notes, 5.35%, 4/30/97 $1,000,000 $995,690
Federal Home Loan Mortgage Corp. Discount Notes, 5.37%, 4/1/98 1,000,000 1,000,000
Federal Home Loan Mortgage Corp. Discount Notes, 5.40%, 4/1/98 1,000,000 1,000,000
Federal Home Loan Mortgage Corp. Discount Notes, 5.35%, 4/10/98 1,000,000 998,663
Federal Home Loan Mortgage Corp. Discount Notes, 5.42%, 5/7/98 2,000,000 1,989,160
Federal Home Loan Mortgage Corp. Discount Notes, 5.38%, 4/13/98 1,500,000 1,497,310
Federal Home Loan Mortgage Corp. Discount Notes, 5.48%, 4/21/98 1,500,000 1,495,433
Federal Home Loan Mortgage Corp. Discount Notes, 5.45%, 5/13/98 1,500,000 1,490,463
Federal Home Loan Mortgage Corp. Discount Notes, 5.38%, 5/14/98 1,500,000 1,490,318
Federal Home Loan Mortgage Corp. Discount Notes, 5.41%, 5/14/98 1,000,000 993,583
Federal Home Loan Mortgage Corp. Discount Notes, 5.42%, 5/28/98 1,000,000 991,418
Federal Home Loan Mortgage Corp. Discount Notes, 5.41%, 6/16/98 2,000,000 1,977,158
Federal Home Loan Mortgage Corp. Discount Notes, 5.42%, 6/30/98 1,500,000 1,479,675
Federal Home Loan Mortgage Corp. Discount Notes, 5.41%, 4/10/98 1,000,000 998,647
Federal Home Loan Mortgage Corp. Discount Notes, 5.43%, 4/30/98 1,000,000 995,626
Federal Home Loan Mortgage Corp. Discount Notes, 5.33%, 5/8/98 1,500,000 1,491,783
Federal National Mortgage Assoc. Discount Notes, 5.42%, 4/8/98 1,750,000 1,748,156
Federal National Mortgage Assoc. Discount Notes, 5.33%, 4/17/98 500,000 498,815
Federal National Mortgage Assoc. Discount Notes, 5.34%, 4/17/98 1,750,000 1,745,847
Federal National Mortgage Assoc. Discount Notes, 5.37%, 4/20/98 1,000,000 997,166
Federal National Mortgage Assoc. Discount Notes, 5.41%, 4/20/98 1,020,000 1,017,087
Federal National Mortgage Assoc. Discount Notes, 5.38%, 4/24/98 1,500,000 1,494,844
Federal National Mortgage Assoc. Discount Notes, 5.34%, 4/27/98 1,750,000 1,743,251
Federal National Mortgage Assoc. Discount Notes, 5.32%, 4/29/98 2,500,000 2,489,655
Federal National Mortgage Assoc. Discount Notes, 5.35%, 5/4/98 2,000,000 1,990,192
Federal National Mortgage Assoc. Discount Notes, 5.35%, 5/11/98 2,000,000 1,988,111
Federal National Mortgage Assoc. Discount Notes, 5.36%, 5/22/98 1,500,000 1,488,610
Federal National Mortgage Assoc. Discount Notes, 5.36%, 5/26/98 2,000,000 1,983,622
Federal National Mortgage Assoc. Discount Notes, 5.41%, 5/27/98 2,000,000 1,983,169
Federal National Mortgage Assoc. Discount Notes, 5.40%, 6/12/98 2,000,000 1,978,400
Federal National Mortgage Assoc. Discount Notes, 5.41%, 6/19/98 2,000,000 1,976,255
TOTAL GOVERNMENT AGENCY OBLIGATIONS (Cost $46,008,107) 46,008,107
REPURCHASE AGREEMENT: 3.3% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation
issued 3/31/98 at 5.80%, due 4/1/98 collateralized by $1,602,420
in United States Treasury Notes due 5/31/99. Proceeds at
maturity are $1,571,205. (Cost $1,571,000) 1,571,000
TOTAL INVESTMENTS (Cost $47,579,107)+ $47,579,107
CASH, RECEIVABLES, LESS LIABILITIES: 0.40% of Assets 197,837
TOTAL NET ASSETS $47,776,944
CAPITAL SHARES OUTSTANDING 47,777,032
NET ASSET VALUE PER SHARE $1.00
</TABLE>
Notes to Statement of Net Assets:
* Floating interest rate -- rate disclosed is as of March 31, 1998
+ Aggregate cost for federal income tax purposes as of March 31, 1998
The Notes to Financial Statements are an integral part of these
statements.
Mosaic Government Money Market Trust
Statement of Operations
For Six Month Period Ended March 31, 1998 (unaudited)
INVESTMENT INCOME (Note 1)
Interest Income $1,352,995
EXPENSES (Notes 3 and 4)
Investment advisory fee 121,790
Transfer agent and administrative expenses 65,802
Registration and professional fees 27,978
Total expenses 215,570
NET INVESTMENT INCOME 1,137,425
TOTAL INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,137,425
The Notes to Financial Statements are an integral part of these statements.
Mosaic Government Money Market Trust
Statements of Changes in Net Assets
(unaudited)
Six Month Six Month
Period Ended Period Ended Year Ended
March. 31, 1998 Sept. 30, 1997 March 31, 1997
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $1,137,425 $1,191,458 $2,357,321
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (1,137,426) (1,191,458) (2,357,321)
CAPITAL SHARE TRANSACTIONS (Note 5)(3,015,895) (3,894,207) (2,510,082)
TOTAL DECREASE IN NET ASSETS (3,015,896) (3,894,207) (2,510,082)
NET ASSETS
Beginning of period 50,792,840 54,687,047 57,197,129
End of period $47,776,944 $50,792,840 $54,687,047
Mosaic Government Money Market Trust
Financial Highlights
(unaudited)
Selected data for a share outstanding throughout each year:
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Net
Net asset Distributions Net asset Net assets Ratio of investment
Year value Net Total from from net Total value at at end expenses income to
ended beginning investment investment investment distri- end Total of period to average average
Mar. 31 of period income operations income butions of period return (thousands) net assets net assets
1998(4) $1.000 $0.023 $0.023 $(0.023) $(0.023) $1.000 2.33% $47,777 0.88%(2) 4.68%(2)
1997(1) $1.000 $0.023 0.023 (0.023) (0.023) 1.000 2.33 50,793 0.90(2) 4.58(2)
1997(3) 1.000 0.043 0.043 (0.043) (0.043) 1.000 4.38 54,687 1.05 4.29
1996 1.000 0.045 0.045 (0.045) (0.045) 1.000 4.62 57,197 1.23 4.52
1995 1.000 0.037 0.037 (0.037) (0.037) 1.000 3.80 64,541 1.16 3.70
1994 1.000 0.021 0.021 (0.021) (0.021) 1.000 2.08 78,090 1.11 2.08
1993 1.000 0.024 0.024 (0.024) (0.024) 1.000 2.44 88,911 1.06 2.44
</TABLE>
(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).
(4) For the six month period ended March 31, 1998.
The Notes to Financial Statements are an integral part of these
statements.
Mosaic Government Money Market Trust
Notes to Financial Statements
March 31, 1998
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: Effective April 1, 1997, the Trust changed its fiscal
year end to September 30.
Securities Value: 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, Madison Mosaic, LLC
(formerly known as 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 ended 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 March 31, 1998,
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.
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 expenses. For the six months ended March 31,1998,
operating expenses of $93,780 have been reimbursed to the Advisor 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) were as follows:
Six Months Ended Six Months Ended Year Ended
March 31, 1998 Sept. 30, 1997 March 31, 1997
Shares sold 24,895,106 35,363,902 60,347,031
Shares issued in
reinvestment of
dividends 1,098,584 1,146,625 2,268,110
Total shares issued 25,993,690 36,510,527 62,615,141
Shares redeemed (29,009,585) (40,404,734) (65,125,223)
Net decrease (3,015,895) (3,894,207) (2,510,082)
