Mosaic Government Money Market
Letter to Shareholders
March 31, 1999
Dear Shareholder:
During the six months ended March 31, 1999, Mosaic Government Money Market
continued to provide shareholders with the safety and income that are the
Fund's hallmarks. The Fund began the six-month period with a 7-day yield of
4.19% and ended the period yielding 3.93%. This relatively small drop in
yield reflects the economic environment in which the Fund operates. Over the
course of the six months, interest rates as measured by the Federal Funds
Rate declined from about 5.25% to 4.75% at March 31.
Over the period covered by this report, the average maturity of the Fund's
holdings was extended to 40 days. This position was slightly longer than the
Fund had maintained previously, as we took advantage of a stable interest
rate environment by seeking the higher yield available at the longer range of
the Fund's allowable holding period.
Looking forward, inflation in nearly all sectors of the U.S. economy remains
well behaved. From raw materials to labor costs to productivity, good news
abounds on the inflation front. Meanwhile, rising interest rates threaten to
slow mortgage-refinancing activity and dampen the housing market. The lone
dark cloud on the inflation front is the recent jump in oil prices. However,
this may prove positive for bond prices as expensive fuel acts as a de facto
"tax" on consumers, slowing spending and acting as a drag on the economy. It
is interesting to note that during the prior three years, the economy has
exhibited surprisingly strong economic growth in the first quarter followed
by a somewhat weaker second quarter. Thus far, 1999 has followed the same
pattern.
The bond market outlook is not without risk, as nearly all sectors of the
U.S. economy are showing solid growth, including manufacturing, which looks
to be rebounding from a lackluster second half 1998. As the world watches the
fighting in the Balkans, several Asian equity markets are showing early signs
of recovery from last year's crisis conditions. The combined effects of
stronger than anticipated domestic growth and moderating global financial
stress have reduced the potential for further Federal Reserve easing at this
time. We anticipate relatively stable money market yields over the next few
months. As a result, we will continue to manage the Fund with an eye on
maximizing yield while maintaining the safety inherent in limiting our
holdings to notes issued by the U.S. Government and its agencies.
With the world's most stable and productive economy hitting on all cylinders,
U.S. government bonds continue their powerful appeal to domestic and
international investors. We appreciate your confidence in Mosaic Government
Money Market as a convenient means of owning a mix of these securities and
reaffirm our commitment to providing you with competitive money market
returns, safety of principal and liquidity.
Sincerely,
(signature)
Christopher C. Berberet, CFA
Vice President
Mosaic Government Money Market
Statement of Net Assets - March 31, 1999 (unaudited)
<TABLE>
<S> <C> <C>
Principal Market
Amount Value
U.S. GOVERNMENT AGENCY OBLIGATIONS: 95.2% of Net Assets
Federal Home Loan Bank, 4.73%, 4/12/99 $1,500,000 $1,497,832
Federal Home Loan Mortgage Corp Discount Notes, 4.72%, 4/14/99 1,000,000 998,296
Federal Home Loan Mortgage Corp Discount Notes, 4.69%, 4/14/99 1,000,000 998,306
Federal Home Loan Mortgage Corp Discount Notes, 4.69%, 4/15/99 2,000,000 1,996,352
Federal Home Loan Mortgage Corp Discount Notes, 4.76%, 4/26/99 4,000,000 3,986,778
Federal Home Loan Mortgage Corp Discount Notes, 4.73%, 5/7/99 2,000,000 1,990,540
Federal Home Loan Mortgage Corp Discount Notes, 4.75%, 5/14/99 2,000,000 1,988,653
Federal Home Loan Mortgage Corp Discount Notes, 4.76%, 5/20/99 2,500,000 2,483,803
Federal Home Loan Mortgage Corp Discount Notes, 4.75%, 5/20/99 2,500,000 2,483,837
Federal Home Loan Mortgage Corp Discount Notes, 4.73%, 6/11/99 2,000,000 1,981,343
Federal National Mortgage Association Discount Notes, 4.77%, 4/5/99 2,000,000 1,998,940
Federal National Mortgage Association Discount Notes, 4.76%, 4/8/99 2,000,000 1,998,149
Federal National Mortgage Association Discount Notes, 4.74%, 4/19/99 1,000,000 997,630
Federal National Mortgage Association Discount Notes, 4.65%, 4/28/99 2,000,000 1,993,025
Federal National Mortgage Association Discount Notes, 4.66%, 5/5/99 2,000,000 1,991,198
Federal National Mortgage Association Discount Notes, 4.72%, 5/6/99 1,750,000 1,741,969
Federal National Mortgage Association Discount Notes, 4.71%, 5/10/99 2,000,000 1,989,795
Federal National Mortgage Association Discount Notes, 4.72%, 5/12/99 2,000,000 1,989,249
Federal National Mortgage Association Discount Notes, 4.74%, 5/17/99 2,250,000 2,236,373
Federal National Mortgage Association Discount Notes, 4.78%, 5/24/99 2,500,000 2,482,407
Federal National Mortgage Association Discount Notes, 4.78%, 6/4/99 1,000,000 991,502
Federal National Mortgage Association Discount Notes, 4.76%, 6/4/99 1,500,000 1,487,306
Federal National Mortgage Association Discount Notes, 4.65%, 4/19/99 2,500,000 2,464,802
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (Cost $44,768,085) 44,768,085
REPURCHASE AGREEMENT: 2.5% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation issued 03/31/99
at 4.75% due 04/01/99 collateralized by $1,196,461 in United States Treasury
Notes due 2/15/05. Proceeds at maturity are $1,173,155 (Cost $1,173,000) 1,173,000
TOTAL INVESTMENTS: (Cost $45,941,085)+ $45,941,085
CASH AND RECEIVABLES LESS LIABILITIES: 2.3% of Net Assets 1,082,530
NET ASSETS: 100% $47,023,615
CAPITAL SHARES OUTSTANDING 47,023,703
NET ASSET VALUE PER SHARE $1.00
Notes to Statement of Net Assets:
+ Aggregate cost for federal income tax purposes as of March 31, 1999
</TABLE>
Mosaic Government Money Market
Statement of Operations
For the Six-Months Ended March 31, 1999 (unaudited)
INVESTMENT INCOME (Note 1)
Interest Income $1,173,370
EXPENSES (Notes 3 and 4)
Investment advisory fee 116,331
Transfer agent, administrative, registration and professional fees 88,412
Total expenses 204,743
NET INVESTMENT INCOME 968,627
TOTAL INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 968,627
Mosaic Government Money Market
Statements of Changes in Net Assets
For the period indicated (unaudited)
<TABLE>
<S> <C> <C>
Six-Months
Ended Year Ended
March 31, 1999 Sept. 30, 1998
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $ 968,627 $ 2,224,374
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (968,627) (2,224,374)
CAPITAL SHARE TRANSACTIONS (Note 5) 511,586 (4,280,811)
TOTAL INCREASE (DECREASE) IN NET ASSETS 511,586 (4,280,811)
NET ASSETS
Beginning of period 46,512,029 50,792,840
End of period $47,023,615 $46,512,029
</TABLE>
Mosaic Government Money Market
Financial Highlights
(unaudited)
Selected data for a share outstanding throughout each year:
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ratio of net
Net asset Total Distributions Net asset Net assets Ratio of investment
Year value Net from from net Total value end of expenses income to
ended beginning investment investment investment distri- end of Total year to average average
Sep. 30 of year income operations income butions year return (thousands) net assets net assets
1999-4 $1.00 $0.02 $0.02 $(0.02) $(0.02) $1.00 4.19%-2 $47,024 0.88%-2 4.15%-2
1998 1.00 0.05 0.05 (0.05) (0.05) 1.00 4.76 46,512 0.87-3 4.66-3
1997-1 1.00 0.02 0.02 (0.02) (0.02) 1.00 2.33 50,793 0.90-2 4.58-2
Fiscal Years Ended March 31
1997 $1.00 $0.04 $0.04 $(0.04) $(0.04) $1.00 4.38% $54,687 1.05% 4.29%
1996 1.00 0.05 0.05 (0.05) (0.05) 1.00 4.62 57,197 1.23 4.52
1995 1.00 0.04 0.04 (0.04) (0.04) 1.00 3.80 64,541 1.16 3.70
</TABLE>
1 For the six-months ended September 30, 1997.
2 Annualized.
3 Had a portion of expenses not been waived for the year ending 1998 the
ratio of expenses and net investment income to average net assets would have
been 0.88% and 4.65%, respectively.
4 For the six-months ended March 31, 1999.
Mosaic Government Money Market
Notes to Financial Statements (unaudited)
March 31, 1999
1. Summary of Significant Accounting Policies. Mosaic Government Money Market
(the "Fund"), known as Government Investors Trust prior to May 15, 1997, is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 as an open-end, diversified investment management
company. The Fund invests solely in securities issued and guaranteed by the
U.S. Government or any of its agencies or instrumentalities or in repurchase
agreements backed by such securities. Because the Fund is 100% no-load, its
shares are offered and redeemed at the net asset value per share.
Fiscal Year: Effective April 1, 1997, the Fund changed its fiscal year end
to September 30.
Securities Value: The Fund uses the amortized cost method of valuation
whereby portfolio securities are valued at acquisition cost as adjusted for
amortization of premium or accretion of discount rather than at value based
on market factors. As required, the Fund monitors the difference between
market value and amortized cost to assure that this valuation method fairly
reflects market value. Investment transactions are recorded on the trade
date. The cost of investments sold is determined on the identified cost basis
for financial statement and federal income tax purposes.
Investment Income: Interest income, net of amortization of premium or
discount, and other income (if any) are recorded as earned.
Dividends: Net investment income, determined as gross investment income less
expenses, is declared as a dividend each business day. Dividends are
distributed to shareholders or reinvested in additional shares as of the
close of business at the end of each month.
Income Tax: In accordance with the requirement of Subchapter M of the
Internal Revenue Code applicable to regulated investment companies,
substantially all of the taxable income of the Fund is distributed to its
shareholders, and therefore no federal income tax provision is required.
Use of Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
Change of Independent Auditor. Effective for fiscal years beginning on and
after April 1, 1997, the Fund's Independent Auditor is Deloitte & Touche LLP.
Financial information appearing in this Report for fiscal years beginning
prior to April 1, 1997 were audited by another independent auditor.
2. Investment in Repurchase Agreements. When the Fund purchases securities
under agreements to resell, the securities are held in safekeeping by the
Fund's custodian bank as collateral. Should the market value of the
securities purchased under such an agreement decrease below the principal
amount to be received at the termination of the agreement plus accrued
interest, the counterparty is required to place an equivalent amount of
additional securities in safekeeping with the Fund's custodian bank.
Repurchase agreements may be terminated within seven days. Pursuant to an
Exemptive Order issued by the Securities and Exchange Commission, the Fund,
along with other registered investment companies having Advisory and Services
Agreements with the same advisor, transfers uninvested cash balances into a
joint trading account. The aggregate balance in this joint trading account is
invested in one or more consolidated repurchase agreements whose underlying
securities are U.S. Treasury or federal agency obligations.
3. Investment Advisory Fee and Other Transactions with Affiliates. The
Investment Advisor to the Fund, Madison Mosaic, LLC, a wholly owned
subsidiary of Madison Investment Advisors, Inc. ("the Advisor"), earns an
advisory fee equal to 0.5% per annum of the average net assets of the Fund.
The fee is accrued daily and paid monthly.
The Advisor will reimburse the Fund for the amount of any expenses of the
Fund (less certain excepted expenses) that exceed 1.5% per annum of the
average net assets of the Fund up to $40 million and 1% per annum of such
amount in excess of $40 million. No amounts were reimbursed to the Fund by
the Advisor for the six-months ended March 31, 1999.
4. Other Expenses. Effective October 1, 1997, all expenses and support
services are provided by the Advisor under a Services Agreement for fees
based on a percentage of average net assets. The fee equals 0.38%. The fee is
accrued daily and paid monthly.
The Advisor is responsible for the fees and expenses of trustees who are
affiliated with the Advisor and certain promotional expenses.
5. Capital Share Transactions. An unlimited number of capital shares, without
par value, are authorized. Transactions in capital shares (in dollars and
shares) were as follows:
Six-Months Ended Year Ended
March 31, 1999 Sept. 30, 1998
Shares sold 28,314,489 50,027,489
Shares issued in
reinvestment of dividends 928,849 2,143,986
Total shares issued 29,243,338 52,171,475
Shares redeemed (28,731,752) (56,452,286)
Net increase (decrease) 511,586 (4,280,811)
