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<TITLE>Mosaic Government Money Market Semi-Annual Report March 31, 2000</TITLE>
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<p><strong>Semi-annual Report<br>
March 31, 2000 (Unaudited)</strong><br>
</p>
<p><big><big>Mosaic<br>
Government Money Market</big></big><br>
<br>
</p>
<hr>
<p><strong>Contents</strong></p>
<p>Letter to Shareholders . . . . . . . . . . .. . . . . . . . . . . . . . . .
1<br>
Statement of Net Assets . . . . . . . . . . . . . . . . . . . . . . . . . 3<br>
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 5<br>
Statements of Changes in Net Assets . . . . . . . . . . . . . . . 6<br>
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7<br>
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . 8<br>
</p>
<hr>
<p><em>Letter to Shareholders</em><br>
</p>
<p>Dear Shareholders:</p>
<p>The six-month period ended March 31, 2000 straddled the feared Y2K transition, saw the
end of one of the worst years for bonds since WWII, and entered the new year under the
cloud of inflationary fears and Federal Reserve rate hikes. Overall, Mosaic
Government Money Market proved to be a sanctuary of calm throughout this period. As
the Federal Reserve Board <br>
raised rates, the yield of your fund responded, ending the period with a seven-day yield
of 5.03% and an effective annual yield of 5.15%. This compares to the seven-day
yield of 4.23% and effective annual yield of 4.32% at the beginning of the period. </p>
<p>The first quarter of the year saw considerable Fed action and even more concern about
their future actions. The most visible sign of the Fed's action was the emergence of
an inverted yield curve, a relatively unusual (but hardly unprecedented) situation in
which short-term yields are temporarily higher than long-term yields.</p>
<p>Among the highlights of the period:</p>
<p><em>Y2K Transition Painless</em>: Already it is difficult to recall the anxiety
produced over the transition to Y2K and the fear of computer failures. While the
kind of short-term government notes held in your fund are considered appropriate shelters
during periods of uncertainty, in retrospect, Y2K had as little impact on your investment
as it did on most computers.</p>
<p><em>The Fed Raises Rates:</em> Alan Greenspan has been satisfied to increase rates at
quarter point increments each of the last five announcements, for a total increase of
1.25% since last fall. Expectations are that the continued strength in the economy
will inspire more increases later this year. These increases are rapidly translated
to higher yield in your fund. </p>
<p><em>The Yield Curve Inverts:</em> Historically, longer-term rates fall below
shorter/intermediate term rates (hence, the inversion) when the Fed is increasing its
overnight rate. The rationale is that "tight money" will ultimately slow
the economy. Bond traders anticipate this well in advance and drive long bond rates
lower (prices higher) long before the economy actually slows. </p>
<p>The inversion is thought to predict a softening economy. However, this time
declining longer rates have been primarily caused by the Government's "promise"
to redeem Treasury debt due to budget surpluses. On the other hand, non-government
bond yield curves are not inverted at all. Rates for the vast majority of agencies
and corporate bonds are higher now than at <br>
year-end.So what is this telling us? The economy is stronger by all measures than when the
Fed started to tighten nine months ago. The stock market is well ahead of where it
was at the start of the tightening. Consumer confidence remains extremely high.
Borrowing at all levels is accelerating. Housing is still very hot. In
short, it appears that the increases in short term interest rates have not been enough to
attain the desired results.</p>
<p><br>
<strong>Year 2000 Outlook</strong></p>
<p>Barring an unforeseen and unlikely collapse in the stock market, rate increases will
continue into the year 2000. In recent meetings the Fed Chairman has voiced his
continued concern over economic strength (7.3% GDP growth in the fourth quarter of 1999)
and persistent stock market advances. Momentum is mounting for more aggressive rate
increases at 0.50% increments. The Fed's job is clearly not done.</p>
<p>At Mosaic, we continue to manage Government Money Market as a conservative choice for
investors who seek capital preservation and the secure yield available in short-term
government notes. We thank you for your continued confidence.</p>
<p>Sincerely,</p>
<p>(signature)</p>
<p>Christopher C. Berberet, CFA<br>
Vice President</p>
<hr>
<strong>STATEMENT OF NET ASSETS</strong> <em>(unaudited)</em>
PRINCIPAL MARKET
AMOUNT VALUE
U.S. Government Agency Obligations: 97.0% of net assets
Federal Home Loan Bank, 5.80%, 4/7/00 $2,000,000 1,998,711
Federal Home Loan Bank, 5.67%, 4/12/00 2,000,000 1,997,165
Federal Home Loan Bank, 5.70%, 4/19/00 2,000,000 1,994,933
Federal Home Loan Bank, 5.75%, 4/24/00 2,500,000 2,491,615
Federal Home Loan Bank, 5.85%, 5/3/00 1,638,000 1,630,015
Federal Home Loan Bank, 5.80%, 5/12/00 1,500,000 1,490,575
Federal Home Loan Mortgage Corp, 5.72%, 4/4/00 1,000,000 999,841
Federal Home Loan Mortgage Corp, 5.71%, 4/4/00 1,500,000 1,499,762
Federal Home Loan Mortgage Corp, 5.80%, 4/25/00 1,500,000 1,494,683
Federal Home Loan Mortgage Corp, 5.25%, 5/2/00 2,500,000 2,488,279
Federal Home Loan Mortgage Corp, 5.93%, 5/9/00 2,500,000 2,485,175
Federal Home Loan Mortgage Corp, 5.82%, 5/11/00 1,500,000 1,490,785
Federal Home Loan Mortgage Corp, 5.91%, 5/19/00 3,000,000 2,977,345
Federal Home Loan Mortgage Corp, 5.80%, 5/25/00 667,000 661,412
Federal Home Loan Mortgage Corp, 5.87%, 6/8/00 1,500,000 1,483,858
Federal Home Loan Mortgage Corp, 6.02%, 6/29/00 2,000,000 1,970,903
Federal National Mortgage Association, 5.70%, 4/6/00 2,500,000 2,498,812
Federal National Mortgage Association, 5.75%, 4/20/00 878,000 875,616
Federal National Mortgage Association, 5.69%, 4/20/00 1,000,000 997,313
Federal National Mortgage Association, 5.74%, 4/27/00 2,342,000 2,333,038
Federal National Mortgage Association, 5.79%, 5/4/00 2,000,000 1,990,029
Federal National Mortgage Association, 5.75%, 5/11/00 1,000,000 993,931
Federal National Mortgage Association, 5.81%, 5/18/00 2,500,000 2,481,859
Federal National Mortgage Association, 5.82%, 5/25/00 2,500,000 2,478,983
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(cost $43,804,638) $43,804,638
REPURCHASE AGREEMENT: 2.8% of net assets
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 3/31/00 at 5.25% due 4/3/00
collateralized by $1,306,917 in United States
Treasury Notes due 2/15/26. Proceeds at
maturity are $1,281,560. (cost $1,281,000) 1,281,000
TOTAL INVESTMENTS (cost $45,085,638)+ $45,085,638
LIABILITIES LESS CASH AND RECEIVABLES: 0.2% of net assets 94,722
NET ASSETS: 100% $45,180,360
CAPITAL SHARES OUTSTANDING 45,180,530
NET ASSET VALUE PER SHARE $1.00
Notes to Statement of Net Assets:
+ Aggregate cost for federal income tax purposes as of March 31, 2000
<hr>
<strong>STATEMENT OF OPERATIONS</strong> <em>(unaudited)</em>
For the six month period ended March 31, 2000
INVESTMENT INCOME (Note 1)
Interest income 1,250,386
EXPENSES (Notes 3 and 4)
Investment advisory fees 111,002
Transfer agent and administrative expenses 84,361
Total expenses 195,363
NET INVESTMENT INCOME 1,055,023
TOTAL INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,055,023
<hr>
<strong>STATEMENTS OF CHANGES IN NET ASSETS</strong> <em>(unaudited)</em>
For the periods indicated
Six Month Year Ended
Period Ended Sept. 30,
March 31, 2000 1999
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $1,055,023 $1,886,999
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income (1,055,023) (1,886,999)
CAPITAL SHARE TRANSACTIONS (Note 5) 1,835,686 (3,167,355)
TOTAL INCREASE IN NET ASSETS 1,835,686 (3,167,355)
NET ASSETS
Beginning of period 43,344,674 46,512,029
End of period $45,180,360 $43,344,674
<hr>
<strong>FINANCIAL HIGHLIGHTS</strong> <em>(unaudited)</em>
Selected data for a share outstanding for the periods indicated.
Six Six
Months Year Months
Ended Ended Ended Year Ended
Mar. 31, Sept. 30, Sept. 30, March 31,
2000 1999 1998 1997 1997 1996
Net asset value
beginning of
period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Investment operations:
Net investment income 0.02 0.04 0.05 0.02 0.04 0.05
Total from investment
operations 0.02 0.04 0.05 0.02 0.04 0.05
Less distributions:
From net investment
income (0.02) (0.04) (0.05) (0.02) (0.04) (0.05)
Total distributions (0.02) (0.04) (0.05) (0.02) (0.04) (0.05)
Net asset value,
end of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
Total return (%) 4.76-1 4.19 4.76 4.66-1 4.38 4.62
Ratios and
supplemental data
Net assets, end
of period
(in thousands) $45,180 $43,345 $46,512 $50,793 $54,687 $57,197
Ratio of expenses
to average
net assets (%) 0.87-1 0.88 0.87-2 0.90-1 1.05 1.23
Ratio of net
investment income
to average net
assets (%) 4.68-1 4.11 4.66-2 4.58-1 4.29 4.52
<p>1 Annualized.<br>
2 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.<br>
</p>
<hr>
<p><strong>NOTES TO FINANCIAL STATEMENTS</strong></p>
<p><em>1. Summary of Significant Accounting Policies</em>. Mosaic Government
Money Market (the "Fund") 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 <br>
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.</p>
<p><u>Fiscal Year</u>: Effective April 1, 1997, the Fund changed its fiscal year end to
September 30.</p>
<p><u>Securities Value</u>: 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 <br>
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.</p>
<p><u>Investment Income</u>: Interest income, net of amortization of premium or discount,
and other income (if any) are recorded as earned.</p>
<p><u>Dividends:</u> 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.</p>
<p><u>Income Tax</u>: 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. </p>
<p><u>Use of Estimates</u>: 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 <br>
from those estimates.</p>
<p><em>2. Investment in Repurchase Agreements.</em> 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 <br>
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 <br>
underlying securities are U.S. Treasury or federal agency obligations.</p>
<p><em>3. Investment Advisory Fee and Other Transactions with Affiliates. </em>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. </p>
<p>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,
2000. </p>
<p><em>4. Other Expenses</em>. 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. Pursuant to the Services Agreement, the Advisor retained
Firstar Mutual Fund Services, LLC to serve as the Trust's transfer agent effective
September 27, 1999.</p>
<p>The Advisor is responsible for the fees and expenses of trustees who are affiliated
with the Advisor and certain promotional expenses. </p>
<p><em>5. Capital Share Transactions. </em>An unlimited number of capital
shares, without par value, are authorized. Transactions in capital shares (in
dollars and shares) were as follows:</p>
Six Months Year
Ended Ended
March 31, Sept. 30,
2000 1999
In Dollars
Shares sold $22,411,582 $52,120,827
Shares issued in reinvestment of dividends 1,009,035 1,805,672
Total shares issued 23,420,617 53,926,499
Shares redeemed 21,584,931 57,093,854
Net increase (decrease) $1,835,686 $(3,167,355)
In Shares
Shares sold 22,411,582 52,120,827
Shares issued in reinvestment of dividends 1,009,035 1,805,672
Total shares issued 23,420,617 53,926,499
Shares redeemed 21,584,931 57,093,854
Net increase (decrease) 1,835,686 (3,167,355)
<hr>
<p><big><big>The Mosaic Family of Mutual Funds</big></big><br>
<big>Mosaic Equity Trust</big><br>
<strong> Mosaic Investors Fund<br>
Mosaic Balanced Fund<br>
Mosaic Mid-Cap Growth Fund<br>
Mosaic Foresight Fund</strong> </p>
<p><big>Mosaic Focus Fund</big></p>
<p><big>Mosaic Income Trust</big><br>
<strong>Mosaic Government Fund<br>
Mosaic Intermediate Income Fund</strong></p>
<p><big>Mosaic Tax-Free Trust</big><br>
<strong>Mosaic Tax-Free Arizona Fund<br>
Mosaic Tax-Free Maryland Fund<br>
Mosaic Tax-Free Missouri Fund<br>
Mosaic Tax-Free Virginia Fund<br>
Mosaic Tax-Free National Fund<br>
Mosaic Tax-Free Money Market</strong></p>
<p><big>Mosaic Government Money Market</big></p>
<p>For more complete information on any Mosaic Fund, including charges and expenses,
request a prospectus by calling 1-800-368-3195. Read it carefully before you invest
or send money. This document does not constitute an offering by the distributor in
any jurisdiction in which such offering may not be lawfully made. Mosaic Funds
Distributor, LLC.</p>
<p><strong>Transfer Agent<br>
</strong> Mosaic Funds<br>
c/o Firstar Mutual Fund Services, LLC<br>
P.O. Box 701<br>
Milwaukee, WI 53201-0701<br>
888-670-3600</p>
<p><strong>Telephone Numbers</strong></p>
<p> Shareholder Service<br>
Toll-free nationwide:
888 670 3600<br>
Mosaic Tiles <em>(24 hour automated information)</em><br>
Toll-free nationwide:
800 336 3063</p>
<p>6411 Mineral Point Road<br>
Madison, Wisconsin 53705<br>
<strong>www.mosaicfunds.com</strong></p>
<p><small>SEC File Number 811-2910</small></p>
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