As Filed with the
Commission on January 27, 1998
Registration No. 2-63713
SEC File No. 811-2910
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. 21 [X]
Registration Statement Under The Investment Company Act
of 1940 [X]
Amendment No. 23
Mosaic Government Money Market 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
Mosaic Government Money Market
1655 Fort Myer Drive
Arlington, Virginia 22209
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] on February 1, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
Title of Securities Being Registered: Mosaic Government Money Market
<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 Mosaic Government Money Market,
Investment Objective, Investment Policies (including
Specialized Investment Techniques and Investment
Considerations)
Item 5 Management of the Trust
Item 5A Not applicable
Item 6 The Trust and Its Shares, Dividends,
Performance Information, Taxes
(including Federal Tax Considerations
and State Tax Considerations), Net
Asset Value, Shareholder Account Transactions
How to Open a New Account, How to Purchase
Additional Shares, How to Redeem Shares and
rear cover page
Item 7 How to Purchase Additional Shares
Item 8 How to Redeem Shares
(Additional Charges and How to Close An Account)
Item 9 Not applicable
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,
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 Shareholder Transactions, Redemptions,
Declaration of Dividends, Determination
of Net Asset Value
Item 20 Additional Tax Matters
Item 21 Not applicable
Item 22 Yield Calculations
Item 23 Annual and Semi-Annual Reports are
incorporated by reference and discussed
in Financial Statements and Report of
Independent Auditors, Legal Matters & Inde-
pendent Auditors, Additional Information
Part C, Other Information
Items 24 through 32 follow Part B
<PAGE>
Prospectus/February 1, 1998
1655 Fort Myer Drive, Arlington, Virginia 22209-3108
Mosaic Government Money Market Trust
Mosaic Government Money Market
Mosaic Government Money Market is a money market mutual fund whose goal
is to obtain the highest possible current income, consistent with
investment solely in short-term debt securities issued or guaranteed by
agencies and instrumentalities of the United States Government.
Investments in the Trust are neither insured nor guaranteed by the
United States Government. The Trust is managed for a stable $1.00 share
price, although there can be no assurance that this share price will be
maintained.
Features
o No commissions or sales charges
o $1,000 minimum initial investment
o No "12b-1" expenses
o Checking privileges
o Dividends accrue every day and can be paid by check,
electronic funds transfer, or reinvested monthly.
o Invest or withdraw funds by phone or by mail
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. The
Commission maintains a Worldwide Web site that contains reports, proxy
information statements and other information regarding the Trust at
http://www.sec.gov.
<i>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.</i>
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.
MADISON MOSAIC
Investment Advisor
<PAGE>
Table of Contents
About Mosaic Government Money Market 3
Expense Summary 3
Financial Highlights 4
Investment Objective 4
Investment Policies 4
Management of the Trust 6
The Trust and Its Shares 6
Dividends 7
Performance Information 7
Taxes 7
Net Asset Value 7
Shareholder Account Transactions 8
How to Open a New Account 8
How to Purchase Additional Shares 9
How to Redeem Shares 9
Other Fees and Services 11
Custodian
Star Bank, N.A.
Cincinnati, OH 45202
Independent Auditors
Deloitte & Touche LLP
Telephone Numbers
Shareholder Services
Washington, DC area: 703-528-6500
Toll-free nationwide: 888-670-3600
Mosiac Tiles (24-Hour automated information)
Toll-free nationwide: 800-336-3063
<PAGE>
About Mosaic Government Money Market
Mosaic Government Money Market (the "Trust") is a diversified open-end
management investment company, commonly known as a money market fund.
The Trust was organized as a Massachusetts business trust under a
Declaration of Trust dated February 14, 1979, then known as Government
Investors Trust. The Trust is managed by Madison Mosaic, a wholly-owned
subsidiary of Madison Investment Advisors, Inc. (the "Advisor"), of the
same address as the Trust. Only one series of the Trust's shares is
currently authorized.
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" below).
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 Fee 0.50%
Other Expenses* 0.40%
Total Fund Operating Expenses 0.90%
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: $9 $29 $50 $111
The hypothetical example shown above is based on the 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 (fees for certain wire transfers, stop
payments on checks, bounced investment checks, and retirement plans are
described on pages 8-11).
Financial Highlights
The financial highlights data for a share outstanding and other
performance information for the six-month fiscal year ended September
30, 1997 appearing below is derived from the financial statements
audited by Deloitte & Touche LLP, independent auditors, whose report
appears in the Annual Report to Shareholders. This report is
incorporated by reference in the Statement of Additional Information and
can be obtained by calling the Trust. The tabulation below of
information for the fiscal years ended March 31, 1988, 1989, 1990, 1991,
1992, 1993, 1994, 1995, 1996 and 1997 has been derived from the
financial statements audited by Ernst & Young LLP. The Trust
experienced no net gains or losses on securities and provided no
distributions from capital gains or returns of capital for the fiscal
years shown below.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net
Net asset Distributions Net asset Net assets Ratio of investment
value Net Total from from net Total value at at end expenses income to
beginning investment investment investment distri- end Total of period to average average
Year ended of period income operations income butions of period return (thousands) net assets net assets
Sep. 30, 97 $1.000 $0.023 $0.023 $(0.023) $(0.023) $1.000 2.33% $50,793 0.90%1 4.58%1
Mar 31, 972 1.000 0.043 0.043 (0.043) (0.043) 1.000 4.38 54,687 1.05 4.29
Mar 31, 96 1.000 0.045 0.045 (0.045) (0.045) 1.000 4.62 57,197 1.23 4.52
Mar 31, 95 1.000 0.037 0.037 (0.037) (0.037) 1.000 3.80 64,541 1.16 3.70
Mar 31, 94 1.000 0.021 0.021 (0.021) (0.021) 1.000 2.08 78,090 1.11 2.08
Mar 31, 93 1.000 0.024 0.024 (0.024) (0.024) 1.000 2.44 88,911 1.06 2.44
Mar 31, 92 1.000 0.044 0.044 (0.044) (0.044) 1.000 4.44 117,170 1.06 4.41
Mar 31, 91 1.000 0.067 0.067 (0.067) (0.067) 1.000 6.96 153,206 1.05 6.69
Mar 31, 90 1.000 0.080 0.080 (0.080) (0.080) 1.000 8.28 173,438 1.04 7.99
Mar 31, 89 1.000 0.072 0.072 (0.072) (0.072) 1.000 7.48 171,144 1.01 7.21
Mar 31, 88 1.000 0.060 0.060 (0.060) (0.060) 1.000 6.19 184,255 1.01 6.01
</TABLE>
1 Annualized.
2 Effective July 31, 1996, the investment advisory services
transferred to Bankers Finance Advisors, LLC/Madison Investment
Advisors, Inc. from Bankers Finance Investment Management Corp.
Investment Objective
The investment objective of the Trust is to obtain the highest possible
current income, consistent with the relative safety of U.S. Government
securities and with providing liquidity and price stability to
shareholders' investments in the Trust. Considerations of relative
safety, liquidity and price stability limit the Trust's investments to
shorter-term U.S. Government securities which may not yield as high a
level of current income as is normally available from longer-term or
lower-rated securities. The Trust's investment objective may be changed
without shareholder approval; however, shareholders will receive prior
written notice of any material change. There is no assurance that the
Trust's investment objective will be achieved.
Investment Policies
The Trust's fundamental investment policies, which may not be changed
without a shareholder vote, limit its investments to securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
The Trust expects that a substantial portion of its assets will be
invested in repurchase agreements collateralized by U.S. Government
securities. The Trust intends normally to hold portfolio securities to
maturity; historically, securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities have involved little
risk to principal and interest if held to maturity.
The Trust will limit purchases of investments to securities having a
maximum effective maturity of 13 months or less. The Trust will not
purchase any investment which would, at the time of purchase, cause the
average effective maturity of the Trust to exceed 90 days. As used in
this Prospectus, the term "effective maturity" means either the actual
time between purchase and the stated maturity date of the investment,
the time between its scheduled interest rate adjustment dates, or the
time between its purchase settlement and its future resale arranged at
the time of purchase under fixed terms. The Trust's portfolio will be
managed in conformity with regulations of the Securities and Exchange
Commission applicable to funds seeking to maintain a constant share
price of $1.00. The Trust will not invest more than 10 percent of its
total assets in securities which cannot be liquidated in seven days.
The Trust normally expects to hold investments to maturity, except to
the extent liquidity requirements indicate otherwise.
U.S. Government Securities. U.S. Government securities include a
variety of securities which are issued or guaranteed by the U.S.
Treasury, various agencies of the federal government and various
instrumentalities which have been established or sponsored by the U.S.
Government, and certain interests in the foregoing types of securities.
Treasury securities include notes, bills and bonds. Obligations of the
Government National Mortgage Association, the Federal Home Loan Banks,
the Federal Farm Credit System, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Small
Business Administration and the Student Loan Marketing Association are
also considered U.S. Government securities. Except for Treasury
securities, these obligations may or may not be backed by the "full
faith and credit" of the United States.
Some federal agencies have authority to borrow from the U.S. Treasury
while others do not. In the case of securities not backed by the full
faith and credit of the United States, the investor must look
principally to the agency issuing or guaranteeing the obligation for
ultimate repayment, and may not be able to assert a claim against the
United States itself in the event the agency or instrumentality does not
meet its commitments.
Specialized Investment Techniques
To achieve its investment objective, the Trust may use certain
specialized investment techniques, including investment in specialized
kinds of government agency securities, investment in "floating rate"
government securities, use of repurchase agreement transactions,
investment in matched purchase/sale transactions and investments
purchased for forward delivery. These techniques may involve certain
risks, some of which are summarized below, and discussed further in the
Statement of Additional Information.
Certain specialized government agency securities may provide higher
yields than are available from more common types of government-backed
investments. However, such specialized investments may be available
from a few sources, in limited amounts, or only in very large
denominations; they may also require special capabilities in portfolio
servicing and in legal matters relating to government guarantees. Such
securities may have limited marketability, which might make it difficult
for the Trust to dispose of them advantageously; accordingly, the Trust
intends normally to hold such securities to maturity or pursuant to
repurchase agreements.
"Floating rate" government agency securities pay an interest rate which
is adjusted (i.e., "floats") at regular intervals in a fixed
relationship to a published interest rate such as the "prime" rate of a
given bank. Such securities may offer higher yields than are available
from short-term securities and may be less susceptible to market value
fluctuations than securities of longer stated maturities which do not
float. The stated maturities of floating rate securities, which could
be as long as 30 years, may limit their investment flexibility. Such
securities may be available only in large denominations, may require
specialized servicing and accounting capabilities, and may have limited
marketability, which might make it difficult for the Trust to dispose of
them advantageously.
Repurchase agreements involve the 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 agreement transactions to those financial institutions and
securities dealers who are deemed creditworthy pursuant to guidelines
adopted by the Trust's Board of 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 end up holding 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 Considerations
The Trust's investment policies may involve certain risks. For example,
the market value of the fixed income securities in which the Trust
invests will tend to decline as prevailing interest rates rise and
increase as prevailing interest rates fall. The magnitude of this
change increases with the maturity of portfolio securities. The Trust
may invest in "floating rate" government agency securities, in
repurchase agreements, in matched purchase/sale transactions and in
investments purchased for forward delivery, all of which may involve
certain risks; see "Specialized Investment Techniques" above and in the
Statement of Additional Information.
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. Madison Mosaic (previously known as Bankers Finance
Advisors, LLC) is a wholly-owned subsidiary of Madison Investment
Advisors, Inc., 6411 Mineral Point Road, Madison, Wisconsin ("Madison").
Madison Mosaic administers approximately $200 million in assets and
manages the Mosaic family of mutual funds, which includes stock, bond
and money market portfolios. Madison, a registered investment advisory
firm for over 24 years, provides professional portfolio management
services to a number of clients, including stock and bond mutual funds,
and has approximately $3 billion under management. The Advisor is
responsible for the day-to-day administration of the Trust's activities.
The Advisor is controlled by Madison. The Advisor purchased the
investment management assets of Bankers Finance Investment Management
Corp., the previous adviser to the Trust, effective July 31, 1996. 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 the Trust.
The Advisor may, in turn, compensate certain financial organizations for
services resulting in shareholder purchases of Trust shares.
Distributor. GIT Investment Services, Inc. of the same address as the
Trust acts as the Trust's distributor for marketing the Trust's shares.
Purchases and redemptions of Trust shares are accomplished by the Trust.
The Trust will provide shareholders with transaction confirmations and
quarterly statements.
Services Agreement. Under a separate Services Agreement with the Trust,
the Advisor provides certain operational and other support services for
which it receives a fixed fee intended to be at or below the cost of
providing such services, calculated as a percentage of the average daily
net assets of the Trust. As of the date of this prospectus, such fee is
0.38%. Such fee is subject to review and approval at least annually by
the Trustees. Such fee pays for the Trust's expenses, 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.
Transfer and Dividend Paying Agent. The Trust acts as its own transfer
agent and dividend paying agent.
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, under certain circumstances, may 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.
Only one series of the Trust's shares is currently authorized. 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 Trust'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 effective yield.
Both figures are based on historical data and are not intended to
indicate future performance.
For advertising purposes, the yield is calculated according to a
standard formula prescribed by the Securities and Exchange Commission.
This formula divides the net income earned on one share during a given
seven-day period by the initial value of that share (normally $1.00),
and expresses the result as an annualized percentage.
The Trust's "effective yield" is calculated in a similar manner, except
that the net income earned during a seven-day period is assumed to be
reinvested at the same rate over a full year. This calculation results
in a slightly higher yield figure which shows the effect of compounding.
The Trust may also cite the ranking or performance of its Portfolio as
reported in the public media or by independent performance measurement
firms. Further information on the methods used to calculate the Trust's
yield may be found in the Trust's Statement of Additional Information.
Taxes
Federal
For federal income tax purposes, the Trust intends to maintain its
status under Subchapter M of the Internal Revenue Code (the "Code") as a
regulated investment company. It does this by distributing to
shareholders 100% of its net income and net capital gains, if any, by
the end of its fiscal year. The Code also requires the Trust to
distribute at least 98% of its net income and capital gains realized
from the sale of investments by calendar year-end in order to avoid a 4%
excise tax.
Although the Trust does not invest in a manner that would
normally result in any capital gains, the capital gain distribution must
be 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.
The Trust is generally permitted to "pass-through" this exemption to
shareholders. The Trust will send shareholders an annual notice of the
percentage of U.S. Government securities which are exempt from
state and local income taxes.
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% of dividends and capital gain distributions. Investors are advised
to retain all statements received from the Trust and to maintain
accurate records of their investments.
Net Asset Value
The net asset value per share of the Trust is calculated at the close of
the New York Stock Exchange each day it 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 the Trust's outstanding shares. The Trust's securities
are valued according to the "amortized cost" method, which is intended
to stabilize the share price at $1.00.
Shareholder Account Transactions
Please call a Mosaic Account Executive if you have any questions. Our
local number in the Washington, DC area is (703) 528-6500 and our toll-
free nationwide number is (888) 670-3600.
Confirmations and Statements
Daily Transaction Confirmation. All purchases and redemptions are
confirmed in writing with a transaction confirmation. Transaction
confirmations are usually mailed within a day or two after the
transaction is posted to the account.
Quarterly Statement. Quarterly statements are mailed at the end of each
calendar quarter. The statements reflect account activity for the most
recent quarter. At the end of the calendar year, the statement will
reflect account activity for the entire year.
It is strongly recommended that shareholders retain all daily
transaction confirmations until they receive their quarterly statements.
Likewise, shareholders should retain all of the quarterly statements
until they receive the year-end statement showing the activity for the
entire year.
Changes to an Account
To make any changes to an account, it is recommended that shareholders
call an Account Executive to discuss the changes to be made and inquire
about any necessary documentation. Though some changes may be made by
phone, generally, in order to make any changes to an account, Mosaic may
require a written request signed by all of the shareholders with their
signatures guaranteed.
Telephone Transactions. The options to initiate exchanges and certain
redemptions and to obtain account balance information by telephone are
available automatically to all shareholders. Mosaic 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 changes, must be authorized
in writing.
Certificates. Certificates will not be issued to represent shares in
the Trust.
How to Open a New Account
Minimum Initial Investment
$1,000 for a regular account
$500 for an IRA account
$100 for an Education IRA Plus account
By Check
New accounts may be opened by completing an application and forwarding
it along with a check payable to Mosaic Funds to:
Mosaic Funds
1655 Fort Myer Drive, Suite 1000
Arlington, VA 22209-3108
By Wire
Please call Mosaic before money is wired to ensure proper and timely
credit.
When a new account is opened by wire, the shareholder is required to
submit a signed application promptly thereafter. Payment of redemption
proceeds is not permitted until a signed application is received in
proper form by Mosaic. Please wire money to:
Star Bank, NA
Cinti/Trust
ABA # 0420-0001-3
Credit Mosaic Acct # 48038-8883
(Shareholder name and account number)
Wire Fee. There may be a charge of $6.00 for processing incoming wires
of less than $1,000.
By 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.
How to Purchase Additional Shares
Purchase Price. Share prices (net asset values) are determined every
day that the NY Stock Exchange is open. Purchases are priced at the
next share price determined after the purchase request is received in
proper form by Mosaic.
Purchases and Uncollected Funds. To protect shareholders from 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 purchases
by Electronic Funds Transfer "EFT") used for purchase of the shares has
cleared. Such deposit items are considered "uncollected," until Mosaic
has determined that they have actually been paid by the bank on which
they were drawn. Purchases made by 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.
By Check
Subsequent investments may be made for $50 or more. Please make check
payable to Mosaic Funds and mail it along with an investment slip or an
indication as to which fund and account it should be credited.
Mosaic Funds
PO Box 640393
Cincinnati, OH 45264-0393
By Wire
Shareholders should call Mosaic before the money is wired to ensure
proper and timely credit.
Please wire money to:
Star Bank, NA
Cinti/Trust
ABA # 0420-0001-3
Credit Mosaic Acct # 48038-8883
(Shareholder name and account number)
Wire Fee. There may be a charge of $6.00 for processing incoming wires
of less than $1,000.
By Automatic Investment Plan
Shareholders may elect to have an automatic investment plan whereby
Mosaic will automatically initiate a credit to their Mosaic account and
debit the bank account they designate each month. The automatic
investment is processed as an electronic funds transfer (EFT). To
establish an automatic investment plan, complete the appropriate section
of the application or call an Account Executive for information. The
minimum monthly amount for an EFT is $100. Shareholders may change the
amount or discontinue the automatic investment plan any time.
How to Redeem Shares
Redemption Price. Share prices (net asset values) are determined every
day that the NY Stock Exchange is open. Redemptions are priced at the
next share price determined after the redemption request is received in
proper form by Mosaic.
Signature Guarantees. To protect shareholder investments, Mosaic
requires signature guarantees for certain redemptions. A signature
guarantee helps Mosaic ensure the identity of the authorized
shareholder(s). Shareholders who anticipate the need to transact large
amounts of money are encouraged to establish pre-authorized bank wire
instructions on their account. Redemptions by wire to a pre-authorized
bank and account may be in any amount and do not require a signature
guarantee. Pre-authorized bank wire instructions can be established by
completing the appropriate section of a new application or by calling an
Account Executive to inquire about any necessary documents. A signature
guarantee may be required to add or change bank wire instruction on an
account. A signature guarantee is required for any redemption when (1)
the proceeds are to be greater than $50,000 (unless proceeds are being
wired to a pre-authorized bank and account), (2) the proceeds are to be
delivered to someone other than the shareholder of record, (3) the
proceeds are to be delivered to an address other than the address of
record, or (4) there has been any change to the registration or account
privilege within the last 15 days. Mosaic 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 from 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 EFT) used
for purchase of the shares has cleared. Such deposited items are
considered "uncollected," until Mosaic 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 Telephone or By Mail
Upon request by telephone or in writing, a redemption check up to
$50,000 may be sent to the shareholder and address of record only. A
redemption request for more than $50,000 or for proceeds to be sent to
anyone or anywhere other than the shareholder and address of record,
must be made in writing, signed by all shareholders with their
signatures guaranteed. See section Signature Guarantees above.
Redemption requests in proper form received by mail and telephone are
normally processed within one business day.
Stop Payment Fee. To stop payment on a check issued by Mosaic, call our
Shareholder Service department. Normally, the Fund charges a fee of
$28.00, or the cost of stop payment, if greater, for stop payment
requests on a check issued by Mosaic on behalf of a shareholder.
Certain documents may be required before such a request can be
processed.
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. Shareholders who anticipate the need
to transact large amounts of money are encouraged to establish pre-
authorized bank wire instructions on their account. Redemptions by wire
to a pre-authorized bank and account may be in any amount and do not
require a signature guarantee. Pre-authorized bank wire instructions
can be established by completing the appropriate section of a new
application or by calling an Account Executive to inquire about any
necessary documents. A signature guarantee may be required to add or
change bank wire instruction on an account. 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.
Eastern time the day before the wire will be sent.
Wire Fee. There will be a $10 fee for redemptions by wire to domestic
banks. 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 Exchange
Shareholders may redeem shares from one Mosaic account and concurrently
invest the proceeds in another Mosaic account by telephone when the
account registration and tax identification number remain the same.
There is no charge for this service.
By Customer Check
A shareholder who has requested check writing privileges and submitted a
signature card may write checks in any amount payable to anyone.
A confirmation statement showing the amount and number of each check
written is sent to the shareholder. Mosaic does not return canceled
checks, but will provide copies of specifically requested checks. A fee
of $1.00 per copy is charged for frequent requests or a request for
numerous copies.
Stop Payment Fee. To stop payment on a customer check that you have
written, call an Account Executive. Mosaic 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.
Ordering Customer Checks. When you complete a signature card for check
writing privileges 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.
By Systematic Withdrawal Plan
Shareholders may elect to have a systematic withdrawal plan whereby
Mosaic will automatically redeem shares in their Mosaic account and send
proceeds to a designated recipient. To establish a systematic
withdrawal plan, complete the appropriate section of the application or
call an Account Executive for information. The minimum amount for a
systematic withdrawal is $100. Shareholders may change the amount or
discontinue the systematic withdrawal plan anytime.
Electronic Funds Transfer Systematic Withdrawal. A systematic
withdrawal can be processed as an electronic funds transfer, commonly
known as EFT, to credit a bank account or financial institution.
Check Systematic Withdrawal. Or it can be processed as a check which is
mailed to anyone designated by the shareholder
How to Close an Account
To close an account, shareholders should call an Account Executive and
request that the account be closed. Shareholders cannot close their
account by writing a check. When an account is closed, shares will be
redeemed at the next determined net asset value. An account may be
closed by telephone, wire transfer or by mail as explained above in the
section "How To Redeem Shares."
Other Fees and Services
Returned Investment Check Fee. Shareholders will be charged (by
redemption of shares) $10.00 for items deposited for investment that are
returned unpaid for any reason.
Minimum Balance. Mosaic 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 the balance to avoid having the
account closed.
Other Fees. Mosaic 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") and Roth 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.
Annual IRA Fee. Mosaic currently charges an annual fee of $12 per
shareholder (not per IRA account) invested in an IRA or Roth IRA at
Mosaic. This fee may be prepaid by the shareholder. A separate
application is required for IRA accounts.
Education IRAs
Education IRAs may be established with a reduced minimum investment of
$100 as long as the shareholder establishes and maintains an "Education
IRA Plus" automatic investment plan of at least $100 monthly. The
"Education IRA Plus" will be invested to reach the annual $500 Education
IRA limit, with the remainder invested in an account established by the
parent or guardian of the Education IRA beneficiary.
Education IRA Fee. Mosaic does not charge an annual fee on Education
IRA Plus accounts that have an active automatic investment plan of at
least $100 monthly, or on Education IRA accounts of $5,000 or greater.
All other Education IRA accounts will be charged an annual fee of $12
per shareholder (not per Education IRA account). This fee may be
prepaid by the shareholder.
Keogh Plans
Mosaic 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.
Annual Keogh Fee. Currently Mosaic charges an annual fee of $12 per
shareholder (not per Keogh account) invested in a Keogh at Mosaic.
Mosaic also offers SEP IRAs, SIMPLEs, 401(k) and 403(b) retirement
plans. Call Mosaic's shareholder service department for further
information on the retirement plans available through Mosaic, including
minimum investments.
<PAGE>
Statement of Additional Information
Dated February 1, 1998
For use with Prospectus dated February 1, 1998
Mosaic Government Money Market
1655 Fort Myer Drive
Arlington, VA 22209-3108
(888) 670-3600
(703) 528-6500
This Statement of Additional Information is not a Prospectus. This
Statement of Additional Information should be read in conjunction with
the Prospectus of Mosaic Government Money Market 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 Mosaic Government Money Market") 2
SUPPLEMENTAL INVESTMENT POLICIES ("Investment Objective" and "Investment
Policies") 2
INVESTMENT LIMITATIONS ("Investment Policies") 4
THE INVESTMENT ADVISOR ("Management of the Trust") 4
ORGANIZATION OF THE TRUST ("The Trust and Its Shares") 5
TRUSTEES AND OFFICERS ("Management of the Trust") 6
ADMINISTRATIVE AND OTHER EXPENSES ("Management of the Trust") 7
PORTFOLIO TRANSACTIONS ("Management of the Trust") 8
SHAREHOLDER TRANSACTIONS ("Shareholder Transactions") 8
REDEMPTIONS ("How to Redeem Shares") 9
RETIREMENT PLANS ("Other Fees and Services") 10
DECLARATION OF DIVIDENDS ("Dividends") 10
DETERMINATION OF NET ASSET VALUE ("Net Asset Value") 11
ADDITIONAL TAX MATTERS ("Taxes") 11
YIELD CALCULATIONS ("Performance Information") 12
CUSTODIANS AND SPECIAL CUSTODIANS 13
LEGAL MATTERS AND INDEPENDENT AUDITORS ("Financial Highlights") 13
ADDITIONAL INFORMATION 13
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT AUDITORS
("Financial Highlights") 13
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
Mosaic Government Money Market (the "Trust") is an open-end diversified
management investment company which invests solely in short-term debt
securities issued or guaranteed by agencies and intrumentalities of the
U.S. Government. It may use a variety of investment techniques with the
objective of providing as high a yield as is available from U.S.
Government securities and the investment quality associated with these
securities (see "Supplemental Investment Policies"). Prior to May 12,
1997, the Trust was known as Government Investors Trust.
SUPPLEMENTAL INVESTMENT POLICIES
The Trust seeks to achieve its investment objective through investment
in securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and in participation interests in and repurchase
agreements based on such securities. The investment objective of the
Trust is described in the Prospectus (see "Investment Objective").
Reference should also be made to the Prospectus for general information
concerning the Trust's investment policies (see "Investment Policies").
Unless described herein or in the Prospectus, the Trust will not invest
in "derivative" securities. Any deviation from this policy must be
approved by the Trustees in advance.
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. Investments in Specialized Kinds of Government Agency Securities.
These agency securities often provide higher yields than are available
from more common types of Government-backed investments. However, such
specialized investments may only be available from a few sources, in
limited amounts, or only in very large denominations; they may also
require specialized capability in portfolio servicing and in legal
matters related to Government guarantees. While frequently offering
attractive yields, the limited-activity markets of many of these
securities means that if the Trust were forced to liquidate any of them
it might not be able to do so advantageously; accordingly, the Trust
intends to normally hold such securities to maturity or pursuant to
repurchase agreements.
2. Investment in "Floating Rate" Government Agency Securities. These
Government agency securities may offer particular advantages towards the
achievement of the objectives of the Trust by providing for an interest
rate which is adjusted (i.e., "floats") at regular intervals according
to some published interest rate. Such securities frequently offer
higher yields than are available on short-term securities but less risk
of market value fluctuations than securities of longer maturities which
do not float. Interest rates, and thus income to the Trust, on these
securities will normally float downward when interest rates are falling
and float upward when their reference rates of interest rise.
Generally, such investments float in relation to the "prime" interest
rate of New York or other money center banks and often are adjusted
upward or downward periodically, although some such securities float in
relationship to other published interest rates or at more or less
frequent intervals. These floating rate securities may have stated
maturities of up to 30 years, although 10-year stated maturities are
more typical. Floating rate securities may be comparable in some
respects to short-term securities, but their longer stated maturities
reduce investment flexibility, making them less attractive than short-
term securities to some investors.
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 restrictions on 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, 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 to
meet cash requirements from redemption requests. During the period of
any reverse repurchase agreement, the Trust would recognize fluctuations
in value of the underlying securities to the same extent as if those
securities were held by the Trust outright. If the Trust engages in
reverse repurchase agreement transactions, it will maintain in a
segregated account designated Government securities 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 except for purposes of meeting redemption
requests. The Trust will not enter into any reverse repurchase
agreement, if as a result, reverse repurchase agreements in the
aggregate would exceed 10% of the Trust's total assets.
4. Investment in Matched Purchase/Sale Transactions. The Trust may
invest by means of matched purchase/sale transactions containing two
elements: the purchase of U.S. Government securities and a simultaneous
sale of those securities by means of a future delivery contract at a
fixed price for later delivery to a different institution (securities
dealer, bank, etc.). During the interval between the actual dates they
are bought and sold, the securities will be held by a custodian of the
Trust. The transactions are thus self-liquidating and produce a known
yield, similar to a repurchase agreement; this yield is comprised of the
interest earned on the securities while they are held plus the price
differential between the purchase and sale. The sale price may be more
or less than the price at which the securities could otherwise be sold
on the day delivery is due. These arbitrage transactions may be
attractive if market conditions create opportunities for higher yields
than on repurchase agreements. It is contrary to the Trust's policies
for it to hold a future delivery contract for the sale of securities
which it does not own. Established markets are available for future
delivery contracts, including financial futures exchanges and the over-
the-counter market.
5. Investments Purchased for Forward Delivery. Institutional investors
such as the Trust often enter into commitments to take delivery of
securities at a future time under specified terms of purchase. Such
transactions sometimes appear advantageous because they may provide an
opportunity to acquire an investment otherwise unavailable, or with more
attractive terms than are currently available or anticipated for the
future. Such transactions, however, can involve a risk that the yields
available in the market when the delivery takes place may actually be
higher than those obtained in the transaction itself, and a risk that
the investor's available cash may be less than projected, possibly
necessitating a disadvantageous resale of the securities purchased or of
other portfolio securities at a loss to the Trust. Securities purchased
for forward delivery do not accrue interest until they are delivered.
The Trust intends to enter into forward delivery transactions when it
deems them advisable, but to reduce its exposure to price instability
through changes in interest rates before the transactions are completed,
it has a policy that these commitments will only be undertaken in
connection with securities having maturities of one year or less.
U.S. Government Securities. As used in the Prospectus and in this
Statement of Additional Information, the term "U.S. Government
securities" refers to a variety of securities which are issued or
guaranteed by the United States Treasury, by various agencies of the
United States Government, and by various instrumentalities which have
been established or sponsored by the United States Government, and to
certain interests in the foregoing types of U.S. Government securities.
Except for U.S. Treasury securities, these obligations, even those which
are guaranteed by federal agencies or instrumentalities, may or may not
be backed by the "full faith and credit" of the United States. In the
case of securities not backed by the full faith and credit of the United
States, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment, and may not be able
to assert a claim against the United States itself in the event the
agency or instrumentality does not meet its commitments.
Treasury securities include Treasury bills, Treasury notes and Treasury
bonds. Some of the Government agencies which issue or guarantee
securities are the Department of Housing and Urban Development, the
Department of Health and Human Services, the Government National
Mortgage Association, the Farmers Home Administration, the Department of
Transportation, the Department of Energy, the Department of the
Interior, the Department of Commerce, the Department of Defense and the
Small Business Administration. Other Government agencies and
instrumentalities which issue or guarantee securities include the
Export-Import Bank, the Federal Farm Credit System, the Federal Home
Loan Banks, the Federal National Mortgage Association, the Federal Home
Loan Mortgage Corporation and the Student Loan Marketing Association.
International development organizations which operate under sponsorship
of the U.S. Government and which issue or guarantee securities (although
the Trust does not presently intend to hold such securities in its
portfolio) include the Inter-American Development Bank, the Asian
Development Bank and the International Bank for Reconstruction and
Development.
When used herein, the term "U.S. Government securities" includes
securities issued or guaranteed by any of the foregoing entities or by
any other agency or instrumentality established or sponsored by the
United States Government, and participation interests (with unaffiliated
persons) in and instruments evidencing deposit or safekeeping for any of
the foregoing. Participation interests are pro-rata interests in U.S.
Government securities held by others; instruments evidencing deposit or
safekeeping are documentary receipts for such original securities held
in custody by others.
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.
INVESTMENT LIMITATIONS
The Trust has adopted as fundamental policies the following limitations
on its investment activities, which 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 U.S.
Treasury bills, notes, bonds, or other debt obligations issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities (including international membership development banks
and negotiable certificates of deposit the principal amount of which is
insured by the Federal Deposit Insurance Corporation or participation
interests (with unaffiliated persons) therein, or instruments evidencing
deposit or safekeeping of U.S. Government securities (see "Supplemental
Investment Policies"); any of these securities may be subject 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 imposed by the Government agency or instrumentality involved or
for other reasons, to the extent the Trustees permit; however, the Trust
may not invest in securities for which there is no readily available
market, if at the time of acquisition more than 15% of the Trust's net
assets would be invested in such securities.
2. Borrowing and Lending. The Trust may not obtain bank loans, except
for extraordinary or emergency purposes. The Trust may enter into
reverse repurchase agreements in amounts not exceeding 25% of its total
assets (including the proceeds of the reverse repurchase transactions)
for purposes of purchasing other securities. The Trust may not obtain
loans or enter into reverse repurchase agreements in total amounts
exceeding one-third of such total assets for any purpose, including the
meeting of cash withdrawal requests or for extraordinary purposes. The
Trust may not mortgage, pledge or hypothecate any assets to secure bank
loans, except in amounts not exceeding 15% of its net assets taken at
cost, and only for extraordinary or emergency purposes. 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 Trustees is continuously maintained in amounts not less than the
value of the securities loaned.
3. Other Activities. The Trust may not act as an underwriter, make
short sales (or maintain a short position), or write put or call options
or combinations thereof. Nor may the Trust purchase securities on
margin (except for customary credit used in transaction clearance),
invest in commodities or in real estate, or acquire shares of other
investment companies, except that the foregoing prohibition against
investment in "commodities" by the Trust does not preclude the use of
financial futures contracts to make purchases or sales of U.S.
Government securities, provided the transactions would otherwise be
permitted under the Trust's investment policies.
The Trust may not knowingly take any investment action which has the
effect of eliminating its tax exemption under Sub-Chapter M of the
Internal Revenue Code (see "Additional Tax Matters").
Notwithstanding the fundamental policies described above, as a matter of
operating policy, in order to comply with certain applicable State
restrictions, the Trust will not pledge, mortgage or hypothecate in
excess of 10% of its net assets at market value. The Trust has adopted
the additional restriction, notwithstanding Paragraph 1 above, that it
will not invest more than 10% of its net assets at the time of purchase
in illiquid assets and securities for which there is no readily
available market (which include fully insured certificates of deposit,
unless the Trustees determine they are readily marketable) and in
repurchase agreements and matched purchase/sale transactions that cannot
be terminated within seven days. Matched purchase/sales generally
involve the purchase of liquid securities coupled with a sale for future
delivery. Future delivery contracts traded on an organized exchange
(such as the Chicago Board of Trade or the International Monetary
Market) are considered liquid, while such contracts executed in the
over-the-counter market may be illiquid, if a readily available futures
market has not developed. Liquidity of a matched purchase/sale
transaction requires liquidity of both of its parts; the securities
purchased and the future delivery sale contract. The sale contract may
be liquid by the existence of a readily available market for it or by a
contractual provision permitting delivery at any time within seven days.
THE INVESTMENT ADVISOR
Madison Mosaic (previously known as Bankers Finance Advisors, LLC), 1655
Fort Myer Drive, Arlington, Virginia 22209-3108, is the investment
adviser 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 wholly-owned subsidiary of Madison Investment Advisors,
Inc. ("Madison"), 6411 Mineral Point Road, Madison, Wisconsin. Madison
is a registered investment advisor and has numerous advisory clients.
Madison was founded in 1973 and has no business affiliates other than
those described in the Prospectus and this Statement of Additional
Information. Madison operates Madison Scottsdale in Scottsdale,
Arizona.
The Investment Advisory Agreement is subject to annual review and
approval by the Trustees, including a majority of those Trustees 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 shareholders held
in July 1996.
The Investment Advisory Agreement may be terminated at any time, without
penalty, by the Trustees or by the vote of a majority of the outstanding
voting securities, 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
Mosaic 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.
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 Mosaic Equity Trust, Mosaic Income Trust and
Mosaic Tax-Free Trust.
Management. Frank E. Burgess is President, Treasurer and Director of
Madison and Vice President of the Adviser. Mr. Burgess owns a majority
of the controlling interest of Madison, which, in turn, controls the
Adviser. Mr. Burgess is also a Trustee and Vice President of the Trust.
Mr. Burgess holds the same positions with Mosaic Equity Trust, Mosaic
Income Trust and Mosaic 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 Mosaic Equity Trust, Mosaic Income Trust
and Mosaic 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 1/2 percent per annum of the average daily net
assets of the Trust's portfolio during the month. Such percentage does
not decrease as net assets increase. 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 to reimburse the Trust for all of its expenses,
excluding securities transaction commissions and expenses, taxes,
interest and extraordinary and non-recurring expenses, which exceed
during any fiscal year one and one-half percent of the Trust's daily
average net assets up to $40 million and one percent of the amount, if
any, by which such assets exceed $40 million.
In addition, 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 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 may elect to do so.
The Investment Advisory Agreement permits sharing of the Adviser's fee
with other persons, subject to the prior approval of such arrangements
by the Trustees, including a majority of those who are not interested
persons of the Trust. Under regulations of the Securities and Exchange
Commission such arrangements are permissible in connection with the
distribution of investment company shares, if the payments of the shared
fee amounts are made out of the investment adviser's own resources.
Prior to its implementation the Trustees will approve any arrangement to
share the Advisor's fees and will satisfy themselves that such payments
are made from the Advisor's own resources. During the fiscal years
ending March 31, 1995, 1996 and 1997, and September 30, 1997, the
Advisor received advisory fees of $506,333, $410,098, $273,026, and
$129,459, respectively, from the Trust.
ORGANIZATION OF THE TRUST
The Declaration of Trust, dated February 14, 1979, 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 (see "The Trust and Its Shares"), including the series of shares
currently authorized.
Shares 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 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 into a greater or lesser
number of shares without thereby changing the proportionate interests in
the Trust. Upon any liquidation of the Trust, the shareholders are
entitled to share pro-rata in the liquidation proceeds available for
distribution.
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 November
28, 1997, no person was known to the Trust to own beneficially or of
record 5% or more of its shares.
Because there is not a 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 questions
requiring a shareholder vote. The selection of the Trust's independent
auditors will be submitted to a vote of ratification by the shareholders
at any annual meetings held by the Trust. Any change in the Declaration
of Trust, in the Investment Advisory Agreement (except for reductions of
the Advisor's fee), in the Services Agreement, or in the fundamental
investment limitations of the Trust must be approved by a majority of
the shareholders before it can become effective. A "majority" is
constituted by either 50 percent of all shares of the Trust or 67
percent of the shares voted at an annual meeting or special meeting of
shareholders at which at least 50 percent of the shares are present or
represented by proxy.
The Declaration of Trust provides that two-thirds of the holders of
record of the Trust's shares may remove a Trustee from office by votes
cast in person or by proxy at a meeting called for the purpose. A
Trustee may also be removed from office provided two-thirds of the
holders of record of the Trust's shares file declarations in writing
with the Trust's Custodian.
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.
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
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 entity
which controls the Advisor. Prior to forming Madison in 1973, he was
Assistant Vice President and Trust Officer of M&I Bank of Madison,
Wisconsin. Mr. Burgess received his BS from Iowa State University and
his law degree from the University of Wisconsin. He is a member of the
State Bar of Wisconsin. b. 8/4/42.
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.
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.
Lorence D. Wheeler***
P.O. 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 Mosaic 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 Mosaic Funds.
Jay R. Sekelsky
6411 Mineral Point Road, Madison, WI 53705
Vice President
Vice President of Mosaic 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 Mosaic 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 Mosaic 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 who may be compensated by the Trust has
been fixed at $6,000 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. 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") totalling $15,000. Mr. Imhoff and Mr. Wheeler received annual
compensation from the Trust and from other investment companies managed
by the Advisor or Madison totalling $18,000 through June 13, 1997, and
thereafter will be compensated in the same amount as Mr. Kleppe.
During the last fiscal year of the Trust, the Trustees were compensated as
follows:
Aggregate Total Compensation from
Compensation Trust and Fund Complex
from Trust Paid to Trustees (a)
Frank E. Burgess 0 0
Thomas S. Kleppe $6,000 $15,000
James R. Imhoff, Jr. $6,000 $18,000
Lorence D. Wheeler $6,000 $18,000
(a) Prior to June 13, 1997, the complex was comprised of 4 trusts and
three corporations with a total of 16 funds and/or series. As of June
13, 1997, the complex is comprised of 4 trusts and one corporation with
a total of 15 funds and/or series.
***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 November
28, 1997, the Trustees and officers of the Trust directly or indirectly
owned as a group less than five percent of the outstanding shares of the
Trust.
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 which are satisifed pursuant to the Services Agreement
described below. 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 accountants, 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, and of trade association membership;
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 Adviser 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 percentage fee calculated as a percentage of average daily net
assets, reviewed and approved at least annually by the Trustees. Such
fee is expected to approximate or be below 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 Mosaic Equity Trust, Mosaic Income Trust, and Mosaic Tax-
Free Trust.
Distribution Agreement. GIT Investment Services, Inc. acts as the
Trust's Distributor pursuant to a Distribution Agreement, dated February
11, 1983, without compensation under such Agreement. This Agreement has
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 Agreement provides for distribution of the Trust's shares
without a sales charge to the investor. The Distributor may act as the
Trust's agent for any sales of its shares, but the Trust may also sell
its shares directly to any person. 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, and decisions as to
the execution of these transactions, including selection of market,
broker or dealer and the negotiation of commissions are to be made by
the Advisor, subject to review by the officers and Trustees.
In general, in the purchase and sale of portfolio securities the Trust
seeks 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 did
not pay any brokerage commissions.
The Trust expects that most portfolio transactions will be made directly
with a dealer acting as a principal thus, not involving the payment of
commissions; however, any purchases from an underwriter or selling group
could involve payments of fees and concessions to the underwriting or
selling 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.
Although the Trust intends normally to hold its investments to maturity,
the short maturities of these investments are expected to result in a
relatively high rate of portfolio turnover. The actual turnover rate
will not be a limiting factor in the Trust's decisions as to purchases
and sales of portfolio securities.
SHAREHOLDER TRANSACTIONS
The Prospectus describes the basic procedures for investing in the Trust
(see "How to Purchase Shares" and "How to Redeem Shares"). The
following information concerning other investment procedures is
presented to supplement the information contained in the Prospectus.
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 change its 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.
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 Trust fall, 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.
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.
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.
It is the shareholder's obligation to inform the Trust of address
changes. The Trust will exercise reasonable care to ascertain the
correct address of lost shareholders. The Trust will conduct two
database searches and use at least one information database service.
The search will be conducted at no cost to the shareholder. The Trust
will not, however, perform such searches if the shareholder's account is
less than $25, if the shareholder is not a natural person or the Trust
has received documentation that the shareholder is deceased. If a lost
shareholder cannot be located after such procedures, such shareholder's
account may be escheated to the state of the shareholder's last
residence. No interest will accrue on amounts represented by uncashed
distribution or redemption checks.
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 a Traditional IRA or Roth
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.
Education IRAs. The Trust offers Education IRA accounts as of January
1, 1998. The Education IRA should be established in conjunction with an
Education IRA Plus account with a minimum $100 monthly investment in
order to avoid an annual $12 custodian fee.
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 offers
prototype Keogh, SIMPLE, 401(k) and 403(b) retirement plans. The Trust
may waive the initial investment minimum for Education IRA, 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 Fund reflected since the
previously declared dividends.
In order to facilitate its objective of stabilizing the price of its
shares at $1.00, the Trust intends normally to reflect any portfolio
realized gains and losses and unrealized appreciation and depreciation,
to the extent the Trust deems the amount material, in daily dividends,
rather than in share prices.
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 (the close of the New York
Stock Exchange) 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 Martin Luther King, Jr.'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, 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.
The Trust's securities are valued at their amortized cost, pursuant to
regulations of the Securities and Exchange Commission ("SEC") intended
to permit the price of the Trust's shares to be stabilized at $1.00.
These regulations require the Trust to limit its investments to
securities that the Trustees determine represent minimal credit risks,
to limit its maturities to those appropriate to its objective of
maintaining a stable share price, and in any event to the maturity
restrictions provided in the Trust's investment policies described in
the Prospectus.
These regulations also require the Trust to periodically compute the
market values of its portfolio securities. If for any reason, including
a change in market interest rates, the market value computation differs
by more than 1/2 of 1 percent from the $1.00 per share price, the
Trustees are required to meet and consider steps to restore the market
price to $1.00 per share. Such steps could include adjusting dividends,
selling portfolio securities before maturity to realize capital gains or
losses, shortening the portfolio's maturity, or redeeming shares in
kind. Such steps could result in dilution of shareholders' interests.
In determining market values for this purpose, the Trustees may
authorize reliance upon an independent pricing service or other
valuation technique, which 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.
Should the SEC change its rules governing the "amortized cost" valuation
method, the Trust reserves the right to use the "penny rounding" method
of valuation pursuant to the terms of the Trust's exemptive order issued
by the SEC.
ADDITIONAL TAX MATTERS
Federal Income Tax. To qualify as a "regulated investment company" and
avoid Trust-level federal income tax under the Internal Revenue Code
(the "Code"), the Trust must, among other things, distribute 100% of its
net income and net capital gains in the fiscal year in which it is
earned. The Code also requires the distribution of at least 98% of
undistributed 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. The Trust intends to distribute all
taxable income to the extent it is realized to avoid imposition of
federal excise taxes.
To qualify as a regulated investment company under the Code, the Trust
must also 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. Should it fail to qualify as a "regulated
investment company" under the Code, the Trust would be taxed as a
corporation with no allowable deduction for the distribution of
dividends.
Shareholders of the Trust, however, will be subject to federal income
tax on any ordinary net income and net capital gains realized by the
Trust 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
dividends paid by the Trust to its shareholders is expected to be
subject to the dividends received deduction for corporations (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 the Trust.
For tax purposes, the Trust 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 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.
The Trust reserves the right to involuntarily redeem any of its shares
if, in its judgment, ownership of the Trust's shares has or may become
concentrated as to make the Trust a personal holding company under the
Code.
YIELD CALCULATIONS
For advertising and certain other purposes, the Trust's yield is
calculated according to a standard formula prescribed by the Securities
and Exchange Commission. The yield is calculated by dividing the net
income (including the benefit of any expenses waived or reimbursed by
the Advisor) earned on one share during a given seven-day period,
exclusive of any capital changes, by the initial value of that share
(normally $1.00), and expressing the result (called the "base period
return") as an annualized percentage. The base period return is
annualized by multiplying it by 365 and dividing the product by seven.
The Trust's "effective yield" is calculated in a similar manner, except
that the net income earned during a seven-day period is assumed to be
reinvested at the same rate over a full year, thereby generating
additional earnings from compounding. The effective yield is computed
by adding one to the base period return, raising the result to the power
equal to 365 divided by seven, and subtracting one from the result,
which is then expressed as a percentage.
The Trust's standardized yield for the seven-day period ending December
15, 1997 was 4.73% and its annual effective yield for the same period
was 4.84%.
Performance Comparisons. From time to time, in advertisements or in
reports to shareholders and others, the Trust may compare the
performance of its portfolio to that of recognized market indices or may
cite the ranking or performance of its portfolio 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.
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, and 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.
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 Trust will be compared to mutual funds
categorized as "U.S. Government Money Market Funds". If this category
should be changed by Lipper Analytical Services, Inc., comparisons will
be made thereafter based on the revised category.
Average Maturities. The Trust also calculates average maturity
information for its portfolio. The "average maturity" of the 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
1:00 p.m.). Thus, the average maturity represents a dollar-weighted
average of the effective maturities of the portfolio investments. The
"mean average maturity" of the 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 Trust's yield is not fixed. In fact the
yield tends to fluctuate daily and so annualized rates of return should
not be considered representations of what an investment may earn in any
future period. Actual dividends will tend to reflect changes in money
market interest rates, and will also depend upon the level of the
Trust's expenses, any 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 may be either higher or lower
than past yields and there is no assurance that any historical yield
level will continue.
CUSTODIANS AND SPECIAL CUSTODIANS
Star Bank, N.A., 425 Walnut Steet, 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.
From time to time, the Trust may appoint as Special Custodians, 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
DeWitt Ross and Stevens, S.C., 8000 Excelsior Drive, Madison, Wisconsin
53717-1914, acts as legal counsel to the Trust. Sullivan & Worcester
LLP, 1025 Connecticut Avenue, NW, Washington, DC 20036, serves as review
counsel to the Trust's independent Trustees.
Deloitte & Touche LLP, 117 Campus Drive, Princeton, NJ 08540, 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
Deloitte & Touche LLP, Independent Auditors for the fiscal year ended
September 30, 1997, appear in the Trust's Annual Report to shareholders
for the fiscal year ended September 30, 1997, which is incorporated
herein by reference. Excluded from such incorporation by reference is
the Trust's letter to shareholders appearing in such Report. Such
Report has been filed with the Securities and Exchange Commission.
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.
<PAGE>
Part C
February 1, 1998
Mosaic Tax-Free Trust
Cross Reference Sheet (Continued)
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 December 3, 1997, and incorporated herein by
reference is the Trust's Annual Report to Shareholders for the
fiscal year ended September 30, 1997.
Included in such Reports to Shareholders are: Statement
of Net Assets and Liabilities, Statement of Operations, Statements
of Changes in Net Assets, Financial Highlights, Notes to Financial Statements
and Report of Deloitte & Touche LLP, Independent Auditors.
Included in Part C: Consent of Independent Auditors (Because
the Statements of Changes in Net Assets involved more than one
fiscal year and were audited by different Independent Accountants,
a separate consent from both Ernst & Young LLP and Deloitte &
Touche LLP is included)
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)
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 Mosaic Government Money Market 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 December 29, 1997 is as follows:
Title of Class Number of Holders of Record
Shares of Beneficial Interest 2,894
27. Indemnification
Previously Filed
28. Business and Other Connections of Investment Advisor effective
December 29, 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 Principal of GIT Investment
Services, Inc. of the same
address as the Trust.
29. Principal Underwriters
(a) The registrant does not utilize the services of an underwriter.
GIT Investment Services, Inc., the distributor of the Trust, also acts
as distributor for Mosaic Equity Trust, Mosaic Tax-Free Trust and Mosaic
Income 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
Peggy L. Hicks Treasurer None
1700 N. Moore St.
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 (Madison Mosaic). 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. Certain records may be maintained at
the offices of the Advisor's parent, Madison Investment
Advisors, Inc., 6411 Mineral Point Road, Madison, WI 53705.
31. Management Services
Discussed in Parts A and B
32. Undertakings
(a) Not Applicable
(b) Not Applicable
(c) Not Applicable
<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 the 27 day of January,
1998.
Mosaic Government Money Market 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, 1/27/98
John Rashke, Esquire
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's Form NSAR, current financial statement and prospectus and is
qualified in its entirety by reference to such source materials.
</LEGEND>
<CIK> 0000310407
<NAME> MOSAIC GOVERNMENT MONEY MARKET
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 50,504
<INVESTMENTS-AT-VALUE> 50,504
<RECEIVABLES> 290
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 50,793
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50,793
<SHARES-COMMON-STOCK> 50,793
<SHARES-COMMON-PRIOR> 54,687
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 50,793
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,426
<OTHER-INCOME> 0
<EXPENSES-NET> 235
<NET-INVESTMENT-INCOME> 1,191
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,191
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,191
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 35,364
<NUMBER-OF-SHARES-REDEEMED> 40,405
<SHARES-REINVESTED> 1,147
<NET-CHANGE-IN-ASSETS> 3,894
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 129
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 235
<AVERAGE-NET-ASSETS> 51,626
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.023
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.023
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.91
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
Exhibit 11
INDEPENDENT AUDITORS' CONSENT
Mosaic Government Money Market Trust:
We consent to the incorporation by reference in this Post-Effective
Amendment No. 21 to Registration Statement No. 2-63713 of Mosaic
Government Money Market Trust of our report dated November 21, 1997
appearing in the Annual Report to Shareholders for the six-month period
ended September 30, 1997 and to the references to us under the headings
"Financial Highlights" in the Prospectus and "Legal Matters and
Independent Auditors" and "Financial Statements and Report of
Independent Auditors" in the Statement of Additional Information, both
of which are part of such Registration Statement.
(signature)
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 27, 1998
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption
"Financial Highlights" in the Prospectus and to the incorporation
by reference in this Post-Effective Amendment Number 21 to
Registration Statement Number 2-63713 (Form N-1A) of Mosaic
Government Money Market Trust of our report dated May 2, 1997,
included in the March 31, 1997 Annual Report to
shareholders.
(signature)
Ernst & Young LLP
Washington, DC
January 27, 1998
