Mosaic Equity Trust
Management's Discussion of Fund Performance
May 15, 1997
Dear Shareholder:
The U.S. stock market continued to set new highs over the
past 12 months, although a "two-tiered" market developed as
the year progressed. The largest companies produced
exceptional results, while medium and small companies had
mediocre results at best. The S&P 500 (a larger company
stock index) showed a total return of 19.8% for the year
ended 3/31/97, while the Russell 2000 (a smaller company
stock index) had a more modest return of just 5.2%.
Further, for the calendar year 1996, the S&P 500 produced a
total return of 20.3%, but if you exclude the 100 largest
companies in that index, the return was just 5.4%.
A robust economy, which led to record corporate
profitability, coupled with low inflation and stable
interest rates, were the positive ingredients the market
needed to continue to rally. Still, investors fretted that
the exceptional earnings trend would soon come to an end and
gravitated towards the stocks of companies that were
perceived to be able to deliver consistently growing
earnings. The companies that investors had the most
confidence in tended to be the largest and most liquid
companies in the market. As such, the two-tiered market
noted above developed.
The Investors Fund (known as Select Growth Portfolio prior
to May 12, 1997) continued to produce solid returns,
achieving a total return of 9.5% for the year ended 3/31/97.
Those investment results placed the fund in the top 35% of
all equity mutual funds as compiled by Morningstar, Inc.
Results were dragged down somewhat by the mix of smaller and
medium sized companies in the portfolio. Although well
diversified across economic sectors, an emphasis on
financial and consumer companies contributed the most to
investment results. We have emphasized these sectors, as
well as health care and technology, because they include
companies with strong fundamental characteristics. These
characteristics include, high operating margins and return
on equity, strong earnings growth and high quality balance
sheets, with relatively low stock market valuations. The
combination of these attributes is a recipe for continued,
long-term success.
The Equity Income Fund returned 13.9% for the twelve-month
period. These results placed the fund in the top 21% of all
equity mutual funds as compiled by Morningstar, Inc.
Investment returns were positively influenced by an emphasis
on larger, income producing stocks and the defensive
holdings within the portfolio, such as energy and consumer
stocks. In early 1997, we strategically took profits in
selected stocks and reinvested the proceeds in bonds to
enhance the income component of the portfolio as well as to
reduce the overall risk of the portfolio. Some examples of
stocks that were added during this period include, Abbott
Laboratories, American Express, Compaq Computer, MGIC
Investment, and McDonalds.
As discussed above, those portfolios that invest in smaller
companies have had a relatively difficult twelve month
period. The Mid-Cap Growth Fund (known as the Special
Growth Portfolio prior to May 12, 1997) was no exception,
showing a loss of 5.6%. Fund results were negatively
influenced from investing in stocks of a number of
exceptionally small companies. However, for the past
several months we have worked to gradually restructure the
portfolio to invest in those smaller companies generally
considered to be in the "mid-cap" range to provide more
stability. In the past, we emphasized extremely small
companies which added to the volatility of the investment
results. While we are still looking for companies
exhibiting rapid earnings growth, we now emphasize medium-
sized smaller companies in the portfolio, along with a
limited number of select small companies. Recent purchases
for the portfolio include Denstply International Inc.,
Express Scripts Inc., Fiserv Inc., and United Asset
Management.
We are pleased with the progress that has been made to
implement strategies that will continue to serve you well.
We thank you for your continued confidence in Mosaic Funds.
Sincerely,
(signature)
Jay R. Sekelsky, CFA
Vice President
Comparison of Changes in the Value of a $10,000 Investment
Depicted herein are graphic representations of the performance of
the Trust's portfolos, the S&P 500 and the Value Line Geometric
Index. The results, in tabular format are as follows:
<TABLE>
<CAPTION>
<C> <C> <C> <C> <C> <C>
S&P Value Line Mid-Cap Investors Equity
500 Geometric Index Growth Fund Fund Income Fund
3/31/87 $10,000 10,000 10,000 10,000 10,000
3/31/88 9,157 8,500 10,247 9,319 9,463
3/31/89 10,817 9,044 11,584 10,558 10,534
3/31/90 12,903 8,974 12,936 11,875 12,366
3/31/91 14,727 8,741 13,552 13,615 13,180
3/31/92 16,353 9,467 14,625 14,334 13,805
3/31/93 18,844 10,304 15,488 15,545 16,028
3/31/94 19,117 10,482 17,280 15,226 15,855
3/31/95 22,093 10,746 17,672 15,919 16,813
3/31/96 29,185 12,694 21,422 20,954 21,447
3/31/97 34,973 13,645 20,225 22,955 24,423
</TABLE>
Average Annual Total Returns:
Mid-Cap Growth Fund: 1 year - (5.59%), 5 years - 6.70%, 10 years - 7.30%
Investors Fund: 1 year - 9.55%, 5 years - 9.88%, 10 years - 8.66%
Equity Income Fund: 1 year - 13.88%, 5 years - 12.09%, 10 years - 9.34%
Past performance is not predictive of future performance.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders, Mid-Cap Growth
Fund (formerly known as Special Growth Portfolio), Investors
Fund (formerly known as Select Growth Portfolio) and Equity
Income Fund, Mosaic Equity Trust (formerly known as GIT
Equity Trust):
We have audited the accompanying statements of assets and
liabilities, including the portfolios of investments, of
Mosaic Equity Trust (comprised of the Mid-Cap Growth,
Investors and Equity Income Funds) as of March 31, 1997, and
the related statements of operations for the year then
ended, the statements of changes in net assets for each of
the two years in the period then ended, and the financial
highlights for each of the five years in the period then
ended. These financial statements and financial highlights
are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation
of securities owned as of March 31, 1997, by correspondence
with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of each of the respective
portfolios constituting Mosaic Equity Trust at March 31,
1997, the results of their operations for the year then
ended, the changes in their net assets for each of the two
years in the period then ended, and the financial highlights
for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
Ernst & Young LLP
(signature)
Washington, DC
May 2, 1997
<PAGE>
Mid-Cap Growth Fund
Portfolio of Investments - March 31, 1997
Number of
Company Description Shares Value
COMMON STOCKS AND EQUIVALENTS: 92.4% of Net Assets
COMPUTERS - SOFTWARE AND SERVICES: 17.5%
*CFI Proservices, Inc. Supplies compliance software 18,050 $300,081
*Cabletron Systems, Inc. Develops and manufactures
LAN products 16,700 488,475
*EMC Corporation Develops and markets information
storage and retrieval products 8,625 306,187
*Fiserv, Inc. Provides data processing and
management systems 12,350 456,950
Jack Henry & Associates Develop and install integrated
computer systems 5,000 110,625
*IKOS Systems, Inc. Supplies high-performance, mixed-
level hardware and software 15,000 255,000
COSMETICS: 3.1%
Alberto Culver Company,
A Shares Manufactures personal care
products 15,500 344,875
ELECTRONICS - GENERAL: 2.2%
*IFR Systems, Inc. Manufactures communications
test equipment 15,550 237,138
ELECTRONICS - SEMICONDUCTORS: 2.0%
*Atmel Corporation Designs, manufactures, markets
memory and logic circuits 9,000 215,437
FINANCIAL SERVICES: 13.9%
Advanta Corporation Originates credit card and
mortgages 10,000 269,375
Equifax, Inc. Helps businesses grant credit,
control health cost, etc. 15,800 430,550
Green Tree Financial
Corporation Provides diversified financial
services 10,700 361,125
*Leasing Solutions, Inc. Leases information equipment 8,200 153,750
United Asset Management
Corporation Owns institutional investment
management firms 12,100 310,063
HOMEBUILDING: 2.3%
Clayton Homes, Inc. Builds, retails, finances and
manages manufactured housing 20,050 255,638
HOTELS/MOTELS: 3.7%
La Quinta Inns, Inc. Owns, operates and manages
200 motels 20,000 410,000
INSURANCE: 11.1%
Allied Group, Inc. Underwrites property and
casualty insurance 8,550 294,975
CapMAC Holdings Inc. Provides financial guaranty
insurance 9,200 244,950
Frontier Insurance Group,
Inc. Underwrites property and
casualty insurance 7,600 330,600
MGIC Investment
Corporation Provides private mortgage
insurance coverage 5,000 353,750
MANUFACTURING: 2.5%
Unitog Company Manufactures, sells and rents
uniforms 13,100 273,462
MEDICAL SUPPLIES AND SERVICES: 15.7%
Dentsply International,
Inc. Designs, manufactures and markets
x-ray systems 8,750 439,141
*Express Scripts, Inc. Provides pharmacy benefit
management 11,100 389,194
*HealthCare Compare
Corporation Provides cost management
services 9,400 383,050
*Sybron International
Corporation Manufactures laboratory and
dental suplies 10,300 285,825
*Watson Pharmaceutical,
Inc. Produces and sells medications 6,400 228,000
RETAIL-SPECIALTY: 15.8%
Intimate Brand, Inc. Retails intimate apparel and
personal care products 24,350 459,606
Callaway Golf Company Designs, develops, manufactures
and markets golf clubs 12,750 364,969
*Officemax, Inc. Retails office products 36,150 469,950
Pep Boys-Manny,Moe&Jack Retails auto parts and
accessories 14,750 442,500
WHOLESALE FOOD DISTRUBUTOR: 2.4%
Richfood Holdings, Inc. Provides a variety of food and
nonfood items 14,100 264,375
TOTAL COMMON STOCKS (Cost $10,247,089) 10,129,616
REPURCHASE AGREEMENT: 4.0% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation issued
3/31/97 at 6.25%, due 4/1/97, collateralized by $448,060 in United
States Treasury Notes due 7/31/97. Total proceeds at maturity
are $435,076. (Cost $435,000) 435,000
TOTAL INVESTMENTS (Cost $10,682,089)+ $10,564,616
See the Notes to Portfolios of Investments.
Investors Fund
Portfolio of Investments - March 31, 1997
Number
of
Shares Value
COMMON STOCKS: 87.6% of Net Assets
BANKING AND FINANCIAL SERVICES: 18.0%
American Express Company 4,600 $275,425
Federal Home Loan Mortgage
Corporation 10,000 272,500
Green Tree Financial Corporation 8,400 283,500
MGIC Investment Corporation 2,975 210,481
Norwest Corporation 6,000 277,500
CAPITAL GOODS: 6.5%
General Electric Company 2,000 198,500
Pitney Bowes, Inc. 4,800 282,000
CHEMICALS: 3.4%
Morton International, Inc. 6,000 253,500
COMPUTERS - HARDWARE AND PERIPHERALS: 15.1%
*Cabletron Systems, Inc. 9,300 272,025
*Cisco Systems, Inc. 3,000 144,563
*Compaq Computer Corporation 3,000 229,875
Hewlett-Packard Company 5,000 266,250
*Seagate Technology, Inc. 4,400 197,450
COMPUTERS - SOFTWARE AND SERVICES: 2.4%
Computer Associates
International, Inc. 4,550 176,881
CONSUMER PRODUCTS: 3.1%
Kimberly-Clark Corporation 2,350 233,531
ELECTRONICS - GENERAL: 3.6%
Eastman Kodak Company 3,450 261,769
ELECTRONICS - SEMICONDUCTORS: 2.5%
Intel Corporation 1,300 180,781
FOOD PROCESSING: 5.8%
Conagra, Inc. 3,525 191,231
Dole Food Company 6,150 232,163
HOUSING AND CONSTRUCTION: 0.00008%
Clayton Homes, Inc. 1 $ 6
MEDICAL SUPPLIES AND SERVICES: 8.0%
Abbot Laboratories 5,900 331,138
Columbia/HCA Healthcare
Corporation 7,650 257,231
PHARMACEUTICALS: 3.4%
Schering-Plough Corporation 3,450 250,988
RESTAURANTS: 3.8%
McDonald's Corporation 5,850 276,412
RETAIL-DEPARTMENT STORES: 3.5%
Wal-Mart Stores, Inc. 9,100 253,663
RETAIL-SPECIAL LINES: 3.6%
Pep Boys - Manny, Moe & Jack 8,700 261,000
TELECOMMUNICATIONS: 4.9%
Bell Atlantic Corporation 3,800 231,325
*Telecommunications, Inc. 10,650 127,800
TOTAL COMMON STOCKS (Cost $5,688,493) 6,429,488
REPURCHASE AGREEMENT: 12.5% of Net Assets
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 3/31/97 at 6.25%, due 4/1/97,
collateralized by $945,562 in United States Treasury
Notes due 7/31/97. Total proceeds at maturity are
$918,159. (Cost $918,000) 918,000
TOTAL INVESTMENTS
(Cost $6,606,493)+ $ 7,347,488
See the Notes to Portfolios of Investments.
<PAGE>
Equity Income Fund
Portfolio of Investments - March 31, 1997
Number
of
Shares Value
COMMON STOCKS AND EQUIVALENTS: 79.7% of Net Assets
BANKING AND FINANCIAL SERVICES: 9.0%
American Express Company 1,850 $ 110,769
Federal Home Loan Mortgage
Corporation 3,950 107,638
Green Tree Financial Corporation 800 27,000
MGIC Investment Corporation 1,175 83,131
Norwest Corporation 2,600 120,250
CAPITAL GOODS: 2.3%
Pitney-Bowes, Inc. 1,950 114,562
CHEMICALS: 2.6%
Morton International, Inc. 3,000 126,750
COMPUTERS-HARDWARE AND PERIPHERALS: 9.8%
*Cabletron System, Inc. 4,150 121,388
*Compaq Computer Corporation 1,300 99,612
Hewlett-Packard Company 1,900 101,175
Intel Corporation 600 83,438
*Seagate Technology, Inc. 1,750 78,531
COMPUTERS-SOFTWARE AND SERVICES: 1.5%
Computer Associates
International, Inc. 1,950 75,806
ELECTRONICS-GENERAL: 2.1%
Eastman Kodak Company 1,350 102,431
FOOD PROCESSING: 3.5%
Conagra, Inc. 1,400 75,950
Dole Food Company 2,650 100,038
FOREST AND PAPER: 2.0%
Kimberly-Clark Corporation 975 96,891
MEDICAL SERVICES: 2.2%
Columbia/HCA Healthcare
Corporation 3,250 109,281
NATURAL GAS: 8.5%
Northwest Natural Gas Company 5,250 128,297
Washington Gas Light Company 4,000 90,000
Williams Companies, Inc. 4,569 203,320
PETROLEUM: 9.8%
Amoco Corporation 2,000 173,250
Chevron Corporation 2,000 139,250
Royal Dutch Petroleum Company 1,000 175,000
PHARMACEUTICALS: 7.5%
Abbot Laboratories 2,550 143,119
Pfizer, Inc. 1,400 117,775
Schering-Plough Corporation 1,500 109,125
REAL ESTATE: 3.1%
Post Properties, Inc. 1,500 57,188
Sun Communities, Inc. 3,000 96,000
RESTAURANT: 2.4%
McDonald's Corporation 2,550 120,488
RETAIL-DEPARTMENT STORES: 2.0%
Wal-Mart Stores, Inc. 3,600 100,350
RETAIL-SPECIAL LINES: 2.3%
Pep Boys-Manny, Moe & Jack 3,800 114,000
TELECOMMUNICATION: 9.1%
Bell Atlantic Corporation 1,650 100,444
Pacific Telesis Group 2,000 75,500
SBC Communications, Inc. 2,500 131,562
Sprint Corporation 2,000 91,000
Tele-Communications, Inc. 4,500 54,000
TOTAL COMMON STOCKS AND EQUIVALENTS
(Cost $3,134,990) 3,954,309
DEBT INSTRUMENTS: 12.4%
Disney Global Bond, 6.75%, 3/30/06 75,000 71,821
Ford Motor Credit Corporation,
7.75%, 3/15/05 75,000 76,061
International Leasing Finance
Corporation 8.375%, 12/15/04 75,000 78,034
Kohl's Corporation, 6.7%, 2/1/06 55,000 51,712
Merrill Lynch, 7.375%, 5/15/06 50,000 49,647
Morgan Stanley Group, Inc.,
6.875%, 3/1/07 75,000 71,596
Seagate Technology, Inc.,
7.37%, 3/1/07 75,000 73,241
U.S. Treasury Note, 5.625%,
2/28/01 150,000 144,445
TOTAL DEBT INSTRUMENTS (Cost $633,178) 616,557
REPURCHASE AGREEMENT: 7.5% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation issued 3/31/97
at 6.25%, due 4/1/97, collateralized by $383,169 in United States
Treasury Notes due 7/31/97. Proceeds at maturity are $372,064.
(Cost $372,000) 372,000
TOTAL INVESTMENTS
(Cost $4,140,168)+ $4,942,866
See the Notes to Portfolios of Investments.
Notes to Portfolios of Investments:
* Non-income producing
+ Aggregate cost for federal income tax purposes and net
unrealized appreciation of investments as follows:
Mid-Cap Equity
Growth Investors Income
Fund Fund Fund
Aggregate cost $10,682,089 $6,606,493 $4,140,168
Gross unrealized appreciation 713,893 921,104 912,298
Gross unrealized depreciation (831,366) (180,109) (109,600)
Net unrealized appreciation
(depreciation) $ (117,473)$ 740,995 $ 802,698
<PAGE>
Statements of Assets and Liabilities
March 31, 1997
Mid-Cap Equity
Growth Investors Income
Fund Fund Fund
ASSETS
Investments, at cost $10,682,089 $6,606,493 $4,140,168
Investments, at value (Notes 1 and 2)
Investment securities $10,129,616 $6,429,488 $4,570,866
Repurchase agreement 435,000 918,000 372,000
Total investments 10,564,616 7,347,488 4,942,866
Cash 428 922 1,042
Receivables
Investment securities sold 416,360 -- --
Capital shares sold -- -- 4,103
Dividends and interest 4,512 5,218 11,767
Other assets 70 11 27
Total assets 10,985,986 7,353,639 4,959,805
LIABILITIES
Payables
Dividends 3 -- 1
Capital shares redeemed 21,369 14,325 --
Other liabilities 128 12 22
Total liabilities 21,500 14,337 23
NET ASSETS (Note 5) $10,964,486 $7,339,302 $4,959,782
CAPITAL SHARES OUTSTANDING 1,109,518 353,973 258,674
NET ASSET VALUE PER SHARE $9.882 $20.734 $19.174
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Statements of Operations
For the Year Ended March 31, 1997
Mid-Cap Equity
Growth Investors Income
Fund Fund Fund
INVESTMENT INCOME (Note 1)
Interest Income $ 103,594 $ 28,765 $ 24,604
Dividend Income (Net of foreign tax
of $0, $0, $1,845, respectively)123,284 73,514 139,283
Total investment income 226,878 102,279 163,887
EXPENSES (Notes 3 and 4)
Investment advisory fee 113,760 56,837 35,591
Transfer agent and administrative
expenses 96,652 42,074 24,462
Auditing fees 9,753 2,817 1,768
Trustees' fees 3,000 3,000 3,000
Custodian fees 4,915 2,292 1,393
Securities registration and
blue sky expenses 9,808 8,683 8,674
Printing costs 3,788 2,110 1,155
Fidelity bond 1,920 826 490
Legal fees 1,618 770 471
Custodian fees paid indirectly (533) (278) (178)
Total expenses 244,681 119,131 76,826
NET INVESTMENT INCOME (LOSS) (17,803) (16,852) 87,061
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments4,734,760 1,559,639 1,097,111
Net unrealized depreciation of
investments (5,199,869) (854,587) (572,613)
NET GAIN (LOSS) ON INVESTMENTS (465,109) 705,052 524,498
TOTAL INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ (482,912) $ 688,200 $ 611,559
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Statements of Changes in Net Assets
For the Year Ended March 31, 1997
<TABLE>
<CAPTION>
Mid-Cap Growth Fund Investors Fund Equity Income Fund
1997 1996 1997 1996 1997 1996
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) $(17,803) 163,647 $ (16,852) $(15,167) $ 87,061 $85,280
Net realized gain on investments4,734,760 7,936,809 1,559,639 370,742 1,097,111 26,354
Net unrealized appreciation
(depreciation) of investments (5,199,869)(2,310,916) (854,587)1,182,208 (572,613)851,075
Total increase (decrease) in net assets
resulting from operations (482,912) 5,789,540 688,200 1,537,783 611,559 962,709
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income (15,133) (148,514) -- -- (88,595)(66,947)
From net capital gains (9,039,372)(1,629,234)(1,091,662) -- (552,832) --
Total distributions (9,054,505)(1,777,748)(1,091,662) -- (641,427)(66,947)
CAPITAL SHARE
TRANSACTIONS (Note 7) 3,410,899(18,510,504) 354,098 1,102,287 550,134 131,245
TOTAL INCREASE (DECREASE)
IN NET ASSETS (6,126,518)(14,498,712) (49,364)2,640,070 520,266 1,027,007
NET ASSETS
Beginning of year 17,091,004 31,589,716 7,388,666 4,748,596 4,439,516 3,412,509
End of year $10,964,486 17,091,004 7,339,302 7,388,666 4,959,782 4,439,516
UNDISTRIBUTED NET
INVESTMENT INCOME
INCLUDED IN NET
ASSETS AT THE END OF
YEAR (Note 5) -- 15,132 -- -- 16,932 18,466
The Notes to Financial Statements are an integral part of these statements.
</TABLE>
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Special Growth Portfolio
Year ended March 31,
<C> <C> <C> <C> <C>
1997* 1996 1995 1994 1993
Net asset
value
beginning
of period $20.488 18.092 21.110 19.970 19.099
Net
investment
income $(0.016) 0.133 0.152 0.171 0.092
Net
realized &
unrealized
gains
(losses) on
securities $(0.469) 3.621 0.190 2.125 1.031
Total from
investment
operations $(0.485) 3.754 0.342 2.296 1.123
Distributions
from net
investment
income $(0.018)(0.115)(0.152)(0.170)(0.121)
Distributions
from capital
gains $(10.103)(1.243)(3.208)(0.986)(0.131)
Total
Distributions(10.121)(1.358)(3.360)(1.156)(0.252)
Net asset
value end
of period $ 9.882 20.488 18.092 21.110 19.970
Total
Return (5.59)% 21.22% 2.27% 11.57% 2.47%
Net assets
at end of
period
(thousands) $10,964 17,091 31,590 34,931 38,911
Ratio of
expenses to
average net
assets1 1.61% 1.41% 1.30% 1.45% 1.35%
Net
investment
income to
average
net assets (0.12)% 0.56% 0.76% 0.75% 0.44%
Portfolio
turnover 127% 21% 4% 7% 13%
Average
commission
rate paid3 $0.0729
</TABLE>
<TABLE>
Investors Fund
Year ended March 31,
<C> <C> <C> <C> <C>
1997* 1996 1995 1994 1993
Net asset
value
beginning
of period $21.990 16.706 17.706 18.486 19.670
Net
investment
income $(0.048)(0.045)(0.032)(0.053) 0.137
Net
realized &
unrealized
gains
(losses) on
securities $2.032 5.329 0.741 (0.318) 1.410
Total from
investment
operations $1.984 5.284 0.709 (0.371) 1.547
Distributions
from net
investment
income $ -- -- -- (0.007)(0.175)
Distributions
from capital
gains $(3.240) -- (1.709)(0.402)(2.556)
Total
Distributions$(3.240) -- (1.709)(0.409)(2.731)
Net asset
value end
of period $20.734 21.990 16.706 17.706 18.486
Total
Return 9.55% 31.63% 4.55% (2.05)% 8.45%
Net assets
at end of
period
(thousands) $7,339 7,389 4,749 4,760 5,742
Ratio of
expenses to
average net
assets1 1.57% 1.79% 1.90% 2.02% 2.00%
Net
investment
income to
average
net assets (0.22)%(0.26)%(0.19)%(0.27)% 0.70%
Portfolio
turnover 124% 56% 82% 48% 125%
Average
commission
rate paid3 $0.0785
</TABLE>
<TABLE>
Equity Income Fund
Year ended March 31,
<C> <C> <C> <C> <C>
1997* 1996 1995 1994 1993
Net asset
value
beginning
of period $19.330 15.411 15.809 16.814 15.117
Net
investment
income $0.366 0.373 0.504 0.382 0.416
Net
realized &
unrealized
gains
(losses) on
securities $2.222 3.839 0.364 (0.543) 1.961
Total from
investment
operations $2.588 4.212 0.868 (0.161) 2.377
Distributions
from net
investment
income $(0.381)(0.293)(0.504)(0.352)(0.449)
Distributions
from capital
gains $(2.363) -- (0.762)(0.492)(0.231)
Total
Distributions$(2.744)(0.293)(1.266)(0.844)(0.680)
Net asset
value end
of period $19.174 19.330 15.411 15.809 16.814
Total
Return 13.88% 27.56% 6.04% (1.08)%16.11%
Net assets
at end of
period
(thousands) $4,960 4,440 3,413 3,625 3,315
Ratio of
expenses to
average net
assets 1.62% 1.92% 2.07% 2.17% 2.19%
Net
investment
income to
average
net assets1 1.83% 2.13% 2.53% 2.27% 2.58%
Portfolio
turnover 90% 7% 29% 34% 55%
Average
commission
rate paid3 $0.0808
</TABLE>
1 For the year ended March 31, 1996 and thereafter, ratio reflects fees
paid indirectly (Note 3).
* Effective July 31, 1996, the investment advisory services transferred
to Bankers Finance Advisors, LLC from Bankers Finance Investment
Management Corp. (See Note 3).
3 Required disclosure for fiscal years beginning after September 1,
1995, pursuant to SEC regulations.
The Notes to Financial Statements are an integral part of these
statements.
<PAGE>
Mosaic Equity Trust
Notes to Financial Statements
March 31, 1997
1. Summary of Significant Accounting Policies. Mosaic Equity Trust
(the "Trust"), formerly known as GIT Equity Trust, is registered with
the Securities and Exchange Commission under the Investment Company Act
of 1940 as an open-end, diversified investment management company. The
Trust offers shares in four separate portfolios which invest in
differing securities. The Mid-Cap Growth Fund, formerly known as the
Special Growth Portfolio, is invested primarily in smaller "mid-cap"
companies that may offer rapid growth potential. The Investors Fund,
formerly known as the Select Growth Portfolio, is invested primarily in
established companies that may be undervalued or may offer good
management and significant growth potential. The Equity Income Fund is
invested primarily in relatively stable, high-yielding securities. The
Worldwide Growth Fund invests primarily in foreign equity securities
emphasizing companies that are likely to benefit from the growth of the
world's smaller and emerging capital markets. The Worldwide Growth Fund
issues separate semi-annual and annual financial reports to
shareholders.
Effective April 1, 1997, the Board of Trustees of the Trust approved and
entered into plans for the mergers of Bascom Hill Investors, Inc. and
Bascom Hill BALANCED Fund, Inc., with the Investors Fund and Equity
Income Fund, respectively. Under the terms of the plans, the Investors
Fund and Equity Income Fund would acquire all the assets and liabilities
of Bascom Hill Investors, Inc. and Bascom Hill BALANCED Fund, Inc.,
respectively. The Trustees determined the plans would be in the best
interests of the shareholders of the Investors and Equity Income Funds
and that such shareholders' interest in the respective funds will not be
diluted. Subject to the approval of the plans by the shareholders of
Bascom Hill Investors, Inc. and Bascom Hill BALANCED Fund, Inc., the
mergers are expected to occur prior to the end of June 1997.
Securities Valuation: Securities traded on a national securities
exchange are valued at their closing sale price, if available, and if
not available such securities are valued at the mean between their bid
and asked prices. Other securities, for which current market quotations
are readily available, are valued at the mean between their bid and
asked prices. Securities for which current market quotations are not
readily available are valued at their fair value as determined in good
faith by the Trustees. 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.
Repurchase agreements are valued at amortized cost, which approximates
market value.
Investment Income: Interest and other income (if any) is accrued as
earned. Dividend income is recorded on the ex-dividend date.
Dividends: Substantially all of the Trust's accumulated net investment
income, if any, determined as gross investment income less accrued
expenses, is declared as a regular dividend and distributed to
shareholders at least twice annually at calendar and fiscal year ends.
The Trust intends to declare and pay regular Equity Income Fund
dividends quarterly. Capital gains distributions, if any, are declared
and paid twice annually at calendar and fiscal year end. Additional
distributions may be made if necessary.
Income Tax: In accordance with the provisions of Subchapter M of the
Internal Revenue Code applicable to regulated investment companies, all
of the taxable income of each portfolio is distributed to its
shareholders, and therefore no federal income tax provision is required.
Share Subscriptions: Shares purchased by check or otherwise not paid
for in immediately available funds are accounted for as share
subscriptions receivable and shares reserved for subscriptions.
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.
2. Investments in Repurchase Agreements. When the Trust purchases
securities under agreements to resell, the securities are held for
safekeeping by the Trust's custodian bank as collateral. Should the
market value of the securities purchased under such an agreement
decrease below the principal amount to be received at the termination of
the agreement plus accrued interest, the counterparty is required to
place an equivalent amount of additional securities in safekeeping with
the Trust's custodian bank. Repurchase agreements may be terminated
within seven days. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Trust, along with other
registered investment companies having Advisory and Services Agreements
with the same advisor, transfers uninvested cash balances into a joint
trading account. The aggregate balance in this joint trading account is
invested in one or more consolidated repurchase agreements whose
underlying securities are U.S. Treasury or federal agency obligations.
3. Investment Advisory Fees and Other Transactions with Affiliates.
The Investment Advisor to the Trust, Bankers Finance Advisors, LLC ("the
Advisor"), earns an advisory fee equal to 0.75% per annum of the average
net assets of each of the Mid-Cap Growth, Investors and Equity Income
Funds; the fees are accrued daily and are paid monthly. The Advisory
Agreement between the Trust and the Advisor was approved at the special
meeting of the Trust's shareholders on July 29, 1996. The Advisor
purchased the investment management assets of Bankers Finance Investment
Management Corp. ("BFIMC"), the Trust's previous investment advisor,
effective July 31, 1996.
The Advisor is responsible for the fees and expenses of trustees who are
affiliated with the Advisor, the rent expense of the Trust's principal
executive office premises and certain promotional expenses. For the
year ended March 31, 1997, outside trustee fees were $3,000 for each
fund.
4. Other Expenses. With the exception of certain expenses of the Trust
payable by it directly, all operational support services are provided to
the Trust under a services agreement between the Trust and the Advisor,
pursuant to which such services are provided for amounts not exceeding
the cost to the Advisor. Common expenses incurred by the Trust, Mosaic
Tax-Free Trust, Mosaic Government Money Market Trust and Mosaic Income
Trust ("the Trusts") are allocated among the funds based on the ratio of
net assets of each fund to the combined net assets of the Trusts. For
the year ended March 31, 1997, operating expenses of $130,921 for the
Mid-Cap Growth Fund, $62,294 for the Investors Fund and $41,235 for the
Equity Income Fund have been reimbursed to the Advisor under the
Services Agreement. Included in these amounts are expenses incurred by
the Trust prior to March 31, 1996 then reimbursed to BFIMC, the previous
advisor, between March 31, 1996 and July 31, 1996. As of July 31, 1996,
the Advisor has discontinued the practice of billing expenses incurred
in prior years. To the extent the Trust had incurred expenses for which
BFIMC was not reimbursed as of July 31, 1996, such expenses from prior
years will not be billed to the Trust by the Advisor.
Fees are reduced under an expense offset arrangement with the Trust's
Custodian. The amount of the expense offset for the year ended March 31,
1997 was $533 for the Mid-Cap Growth Fund, $278 for the Investors Fund
and $178 for the Equity Income Fund.
5. Net Assets. At March 31, 1997, net assets included the following:
Mid-Cap Growth Investors Equity Income
Fund Fund Fund
Net paid in capital on
shares of beneficial
interest $9,079,000 $5,770,566 $3,622,170
Undistributed net
investment income -- -- 16,932
Accumulated net realized
gains 2,002,959 827,741 517,982
Net unrealized appreciation
(depreciation) of
investments (117,473) 740,995 802,698
Total net assets $10,964,486 $7,339,302 $4,959,782
The Mid-Cap Growth Fund and Investors Fund reclassified $17,803 and
$16,852, respectively, from "accumulated net investment losses" to "paid
in capital" as a result of permanent book and tax basis differences.
This reclassification had no impact on net asset value.
6. Investment Transactions. Purchases and sales of securities other
than short-term securities for the year ended March 31, 1997, were as
follows:
Mid-Cap Growth Investors Equity Income
Fund Fund Fund
Purchases $16,970,322 $8,733,379 $3,925,949
Sales 22,981,922 9,903,412 4,050,429
7. Capital Share Transactions. An unlimited number of capital shares,
without par value, are authorized. Transactions in capital shares for
the years ended March 31 were as follows:
<TABLE>
<CAPTION>
Mid-Cap Growth Investors Equity Income
Fund Fund Fund
1997 1996 1997 1996 1997 1996
<C> <C> <C> <C> <C> <C>
In Dollars
Shares sold $31,470,896 63,271,505 1,355,954 2,853,388 786,550 904,364
Shares issued in
reinvestment
of dividends 8,494,283 1,559,202 972,741 -- 563,662 59,319
Total shares
issued 39,965,179 64,830,707 2,328,695 2,853,388 1,350,212 963,683
Shares redeemed (36,554,280)(83,341,211)(1,974,597)(1,751,101) (800,078)(832,438)
Net increase
(decrease) $ 3,410,899 (18,510,504) 354,098 1,102,287 550,134 131,245
In Shares
Shares sold 2,675,134 3,260,611 62,220 141,259 39,658 52,804
Shares issued in
reinvestment
of dividends 693,789 80,463 46,982 -- 29,882 3,417
Total shares issued 3,368,923 3,341,074 109,202 141,259 69,540 56,221
Shares redeemed 3,093,601 (4,252,958) 91,237 (89,489) (40,540) (47,985)
Net increase
(decrease) 275,322 (911,884) 17,965 51,770 29,000 8,236
</TABLE>
Mosaic Equity Trust
Special Tax Information
March 31, 1997
(Unaudited)
Corporate shareholders should note that the percentages of ordinary
dividend income resulting from the fiscal year ended March 31, 1997,
that qualify for the corporate dividends-received deduction are as
follows:
Mid-Cap Growth Fund 17%
Investors Fund 20%
Equity Income Fund 77%
Pursuant to Section 852 of the Internal Revenue Code, the Mid-Cap
Growth, Investors, and Equity Income Funds designate $4,134,763 and
$1,197,322, and $1,008,215, respectively, as capital gain dividends for
the fiscal year ended March 31, 1997.
<PAGE>
MOSAIC EQUITY TRUST
WORLDWIDE GROWTH FUND
Annual Report
March 31, 1997
Management's Discussion of Fund Performance
May 19, 1997
For the twelve months ended March 31, 1997 covered by this
Report, the Mosaic Worldwide Growth Fund (known as GIT
Worldwide Growth Portfolio prior to May 12, 1997) achieved a
total return of 11.26%. This return was achieved in a
varied investment climate, which favored markets in regions
such as Eastern Europe and Latin America over those in Asia.
Of the major emerging markets, a stellar performer over the
past year has been Brazil, with its stock market climbing
101.75% in the twelve months ended March 31, 1997. The
rally in Brazil was driven by the privatization potential of
the giant state-owned enterprises, such as Telebras, the
national telecommunications company, and Petrobras, the
state-owned oil concern. The Worldwide Growth Fund
benefited from core positions in these stocks, as well as
from its holdings in the Brazilian banking sector.
Eastern European markets have also performed well in the
last year. While the fund has not invested in Russia
because we believe the risks of that market's underdeveloped
transfer agency and accounting regimes are prohibitive, the
fund has benefited from its investments in Greece and
Poland. The Athens Stock Exchange performed exceptionally
well, returning 41% over the year. Limiting gains somewhat,
the fund did not have any exposure to the explosive bull
market in Russian securities, highlighted by the 299% rally
in dollar terms of the Moscow Straits Times Index. However,
in addition to our assessment of the infrastructure problems
with the Russian market, over the last several years Russia
has proved to be one of the riskiest, most volatile markets
in the emerging markets universe. In general, our
investment strategy has focused on countries further along
in their development of market institutions.
Some of the under-performing markets over the twelve months
covered by this report have been in Asia. With the
exception of the Hong Kong Stock Exchange, the region has
seen a broad-based consolidation in share prices. In
Malaysia and Singapore, equity markets at the end of March
were down significantly from their highs. The Korea
composite index declined 21.85% over the course of the year
and the Thai stock market plunged a dramatic 44%.
The Worldwide Growth Fund has over the past year had a
relatively low weighting in the Asian Markets. The markets
have traditionally had much higher valuations than other
markets, due to the region's strong growth prospects and
business culture. We note, however, that the recent decline
in share prices in the region has brought valuations to a
fairly reasonable level. After trailing other regions in
the emerging markets universe over the past year, the Asian
markets offer reasonable appreciation prospects going
forward.
We are encouraged by the performance of the Worldwide Growth
Fund. The fund's total return for the year placed it in the
52nd percentile for all emerging markets funds, as measured
by Morningstar, Inc. By placing at the median for its peer
group, the fund is continuing to effectively deliver to its
shareholders broad-based and balanced exposure to the
emerging markets universe. We thank you for your continued
confidence in the Worldwide Growth Fund.
MOSAIC EQUITY TRUST
WORLDWIDE GROWTH FUND
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE
MOSAIC EQUITY TRUST WORLDWIDE GROWTH FUND AND THE
MORGAN STANLEY EUROPEAN AUSTRALIAN FAR EAST INDEX
Depicted herein is a graphic illustration of the performance of the Worldwide
Growth Portfolio and the EAFE Index. In tabular format:
EAFE Worldwide Growth Fund
4/30/93 10,000 10,000
6/30/93 10,026 9,867
9/30/93 10,652 11,001
12/31/93 10,705 14,892
3/31/94 11,040 12,531
6/30/94 11,564 12,197
9/30/94 11,533 13,955
12/31/94 11,373 11,315
3/31/95 11,537 9,741
6/30/95 11,573 10,764
9/30/95 12,008 11,188
12/31/95 12,444 10,783
3/31/96 12,754 11,385
6/30/96 12,907 11,768
9/30/96 12,839 11,859
12/31/96 12,991 11,782
3/31/97 12,737 12,662
Total return - 11.21 one year
Since inception (April 16, 1993 - March 31, 1997) - 6.12%
Past performance is not predictive of future performance.
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders, Worldwide Growth
Fund, Mosaic Equity Trust (formerly known as GIT Equity
Trust):
We have audited the accompanying statement of assets and
liabilities, including the portfolio of investments, of
Worldwide Growth Fund (a separate series of Mosaic Equity
Trust) as of March 31, 1997, and the related statement of
operations for the year then ended, the statements of
changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of
the periods indicated therein. These financial statements
and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an
opinion on these financial statements and financial
highlights based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements and financial
highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation
of securities owned as of March 31, 1997, by correspondence
with the custodian and brokers. An audit also includes
assessing the accounting principles used and significant
estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of Worldwide Growth
Portfolio at March 31, 1997, the results of its operations
for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the
financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
(signature)
Washington, DC
May 2, 1997
<PAGE>
Worldwide Growth Fund
Portfolio of Investments - March 31, 1997
Number of
Country Shares Value
COMMON STOCKS: 72.1% of Net Assets
BANKING AND FINANCIAL SERVICES: 16.6%
Alpha Credit Bank Greece 1,066 $ 78,220
Banco Frances del Rio de la
Plata S.A., ADR Argentina 1,725 51,750
Banco Industrial Colombiano, ADR Columbia 2,200 36,300
Banco Latinoamerciano de
Exportaciones, S.A. Panama 500 23,625
*Bangkok Bank Company Ltd. Thailand 5,800 39,746
Commerce Asset Holdings Berhad Malaysia 7,000 49,127
*Grupo Financiero Banamex Accival
S.A. de C.V., Series L Mexico 11,247 22,860
Housing & Commercial Bank South Korea 2,250 34,171
Komercni Banka A.S., GDR (144A) Czech Republic 2,500 78,875
Shinhan Bank South Korea 1,150 13,741
BUILDING MATERIALS: 1.6%
Cemex, S.A. de C.V., Series B Mexico 10,000 40,348
CONTAINERS: 1.2%
Sinocan Holdings Limited Hong Kong\China80,000 30,197
ELECTRIC UTILITIES: 1.8%
Empresa Nacional Electricidad
S.A., ADR Chile 2,500 47,500
ELECTRONICS: 7.3%
Samsung Electronics Company South Korea 828 55,385
Sunright Limited Singapore 80,000 83,027
Venture Manufacturing Ltd. Singapore 20,000 48,986
ENGINEERING AND CONSTRUCTION: 0.8%
Inversiones y Representacion
S.A., Class B Argentina 5,576 20,634
FOOD PROCESSING: 5.9%
Zaklady Przemyslu Cukierniczego
Jutrzenka S.A. Poland 4,000 81,963
Tablex S.A. de C.V., Series 2 Mexico 20,000 69,852
HOME APPLIANCES: 2.5%
Arcelik A.S. Turkey 419,000 55,731
Singer Thailand Public Company
Limited Thailand 1,800 7,692
HOSPITAL MANAGEMENT AND SERVICES: 1.9%
Athens Medical Center S.A. Greece 6,000 49,798
INVESTMENT COMPANY: 6.7%
Taiwan Fund, Inc. Taiwan 3,500 86,188
*The India Fund Inc. India 3,000 22,125
*The Morgan Stanley India
Investment Fund, Inc. India 1,500 14,625
Turkish Investment Fund Turkey 8,000 49,000
MANUFACTURING: 1.9%
Alfa, S.A. de C.V. Mexico 8,914 49,903
MULTI-INDUSTRY: 4.8%
*Desc, S.A. de C.V., ADR Mexico 2,552 $ 66,990
First Pacific Company Ltd. Hong Kong\China45,593 57,955
OIL AND GAS: 4.3%
Petronas Gas Berhad Malaysia 14,000 51,668
YPF Sociedad Anonmia, ADR Argentina 2,200 58,300
REAL ESTATE: 3.4%
O.Y.L. Industries Berhad Malaysia 8,800 86,960
RUBBER PRODUCTS: 1.3%
Compania Goodyear del Peru Peru 10,000 33,674
TELECOMMUNICATIONS: 8.7%
CPT Telefonica del Peru S.A.,
B shares Peru 36,112 80,613
ECI Telecommunications Limited
Designs Israel 2,500 46,250
Jasmine International Public
Company Limited Thailand 10,000 14,052
*SPT Telekom A.S. Czech Republic 500 59,446
Telecom Argentina Stet-France
Telecom S.A., ADR Argentina 500 23,000
TEXTILES: 1.7%
P.T. Indorama Synthetics Indonesia 54,000 42,732
TOTAL COMMON STOCKS (Cost $1,795,016) 1,863,009
PREFERRED STOCKS: 14.1% of Net Assets
BANKING AND FINANCIAL SERVICES: 2.9%
Uniao de Bancos Brasileiros S.A. Brazil 2,000,000 75,165
ELECTRONICS: 0.3%
Samsung Electronics Company South Korea 240 8,264
MULTI-INDUSTRY: 1.2%
Randon Participacoes S.A. Brazil 50,000,000 29,745
OIL AND GAS: 4.1%
Petroleo Brasileiro S.A. Brazil 530,000 105,600
STEEL: 0.7%
Compania Siderurgica Paulista,
Series B Brazil 25,000 17,233
TELECOMMUNICATION: 5.0%
Telecomunicacoes Brasileiras,
S.A., ADR Brazil 1,250 127,969
TOTAL PREFERRED STOCKS (Cost $256,736) 363,976
REPURCHASE AGREEMENT: 13.5% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation
issued 3/31/97 at 6.25%, due 4/1/97, collateralized by
$358,448 in United States Treasury Notes due 7/31/97.
Proceeds at maturity are $348,060.
(Cost $348,000) $ 348,000
TOTAL INVESTMENTS (Cost $2,399,752)+ $ 2,574,985
Notes to the Portfolio of Investments:
* Non-income producing
+ Aggregate cost for federal income tax purposes is
$2,399,752 at March 31, 1997, and the net unrealized
appreciation is $175,233 comprised of gross unrealized
appreciation of $481,072 and gross unrealized depreciation
of $305,839.
ADR American Depository Receipt
GDR Global Depository Receipt
144A Securities exempt from registration under Rule 144A of
the Securities Act of 1933. These securities may be resold
in transactions exempt from registration, normally to
qualified institutional buyers. At March 31, 1997 these
securities amounted to $78,875 or 3.1% of net assets.
The Notes to Financial Statements are an integral part of
these statements.
<PAGE>
Worldwide Growth Fund
Statement of Assets and Liabilities
March 31, 1997
ASSETS
Investments, at cost $2,399,752
Investments, at value (Notes 1 and 2)
Investment securities 2,226,985
Repurchase agreement 348,000
Total investments 2,574,985
Cash 629
Receivables
Dividends and interest 6,537
Other assets 34
Total assets 2,582,185
LIABILITIES
Total liabilities --
NET ASSETS (Note 5) $2,582,185
CAPITAL SHARES OUTSTANDING 235,428
NET ASSET VALUE PER SHARE $10.968
Worldwide Growth Fund
Statement of Operations
For the Year Ended March 31, 1997
INVESTMENT INCOME (Note 1)
Interest income $ 15,623
Dividend income (net of foreign taxes
of $4,816) 58,150
Total income 73,773
EXPENSES (Notes 3 and 4)
Investment advisory fee 28,352
Transfer agent and administrative expenses 22,676
Securities registration and blue sky expenses 9,873
Auditing fees 1,230
Trustees' fees 3,000
Custodian fees 18,587
Printing costs 848
Fidelity bond 313
Legal fees 274
Custodian fees paid indirectly (99)
Investment advisory fees waived (14,176)
Total expenses 70,878
NET INVESTMENT INCOME 2,895
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments 60,864
Net realized loss on foreign currency
transactions (6,455)
Net unrealized appreciation of investments 225,620
Net unrealized appreciation on foreign
currency transactions 3,044
NET GAIN ON INVESTMENTS 283,073
TOTAL INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $285,968
The Notes to Financial Statements are an integral part of
these statements.
<PAGE>
Worldwide Growth Fund
Statements of Changes in Net Assets
For the years ended March 31
1997 1996
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $ 2,895 $ 14,830
Net realized gain (loss) on investments 60,864 (577,927)
Net realized loss on foreign currency
transactions (6,455) (3,488)
Net unrealized appreciation of
investments 225,620 1,103,450
Net unrealized appreciation (depreciation)
on foreign currency transactions 3,044 (3,053)
Total increase in net assets resulting
from operations 285,968 533,812
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income -- (22,834)
CAPITAL SHARE TRANSACTIONS (Note 7) (819,492) (714,253)
TOTAL DECREASE IN NET ASSETS (533,524) (203,275)
NET ASSETS
Beginning of year 3,115,709 3,318,984
End of year $2,582,185 $3,115,709
Worldwide Growth Fund
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Year ended Year ended Year ended Year ended1
March 31, 1997* March 31, 1996 March 31, 1995 March 31, 1994
<C> <C> <C> <C>
Net asset value beginning
of period $ 9.862 $8.501 $12.511 $10.000
Net investment income (loss) 0.012 0.044 0.022 (0.035)
Net realized and unrealized
gains (losses) on securities 1.094 1.387 (2.491) 2.546
Total from investment
operations 1.106 1.431 (2.469) 2.511
Distributions from net
investment income -- (0.070) (0.025) --
Distributions from capital
gains -- -- (1.516) --
Total distributions -- (0.070) (1.541) --
Net asset value end of
period $10.968 $ 9.862 $8.501 12.511
Total return 11.21% 16.88% (22.20)% 26.19%**
Net assets at end of
period (thousands) 2,582 3,116 3,319 3,526
Ratio of expenses
to average net assets 2.50% 2.38% 2.05% 1.81%**
Ratio of net income
to average net assets3 0.10% 0.43% 0.21% (0.48)%**
Portfolio turnover rate 47% 78% 65% 83%
Average commission
rate paid $0.003# -- -- --
1 For the period from April 16, 1993 (inception) to March 31, 1994
**Annualized
3 Had the Advisor not waived advisory fees, the Fund's
ratios of expenses and net investment loss to average net
assets would have been 3.00% and (0.40)%, respectively, for
the year ended March 31, 1997; 2.97% and (0.17)%,
respectively, for the year ended March 31, 1996; and 3.05%
and (0.79)%, respectively, for the year ended March 31,
1995. Had the Advisor not waived the advisory fee and
deferred a portion of the operating expenses, the Fund's
annualized ratios of expenses and net investment loss to
average net assets would have been 4.24% and (2.92)%,
respectively, for the period from inception to March 31,
1994. Ratio of expenses to average net assets includes fees
paid indirectly for the year ended March 31, 1996 and
thereafter.
* Effective July 31, 1996, the investment advisory services
transferred to Bankers Finance Advisors, LLC from Bankers
Finance Investment Management Corp. (See Note 3).
# Required disclosure for fiscal years beginning after
September 1, 1995 pursuant to SEC regulations.
The Notes to Financial Statements are an integral part of
these statements.
Worldwide Growth Fund
Notes to Financial Statements
March 31, 1997
1. Summary of Significant Accounting Policies. Mosaic
Equity Trust (the "Trust"), formerly known as GIT Equity
Trust, is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as an
open-end, diversified investment management company. The
Trust offers shares in four separate funds which invest in
differing securities. The Worldwide Growth Fund (the "Fund")
invests primarily in foreign equity securities, emphasizing
companies that are likely to benefit from the growth of the
world's smaller and emerging capital markets. The Mid-Cap
Growth, Investors and Equity Income Funds are managed
independently from the Worldwide Growth Fund and issue
separate semi-annual and annual financial reports to
shareholders.
Securities Valuation: Securities traded on a securities
exchange are valued at their closing sale price, if
available, and if not available, such securities are valued
at the mean between their bid and asked prices. Other
securities, for which current market quotations are readily
available, are valued at the mean between their bid and
asked prices. Securities for which current market
quotations are not readily available are valued at their
fair value as determined in good faith by the Trustees.
Securities whose prices are quoted in foreign currency are
normally translated into U.S. dollars based on exchange
rates at 4 p.m., London, England time. 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.
Repurchase agreements are valued at amortized cost, which
approximates market value.
Foreign Currency Translations: The books and records of the
Fund are maintained in U.S. dollars. Foreign currency
amounts are translated into U.S. dollars on the following
basis:
(i) market value of investment securities, assets and
liabilities at the daily rates of exchange, and
(ii) purchase and sales of investment securities, dividend
and interest income and certain expenses at the rates of
exchange prevailing on the respective dates of such
transactions.
The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates
on investments from the fluctuations arising from changes in
market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss
from investments.
Reported net realized gains or losses from foreign currency
transactions arise from sales and maturities of short-term
securities, sales of foreign currencies, currency gains or
losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts
of dividends, interest, and foreign withholding taxes
recorded on the Fund's books, and the U.S. dollar equivalent
of the amounts actually received or paid. Net unrealized
gains and losses from foreign currency transactions arise
from changes in the value of assets and liabilities other
than investments in securities at the end of the fiscal
period, resulting from changes in exchange rates.
Forward Foreign Currency Contracts: The Fund may enter into
forward foreign currency contracts in order to hedge against
foreign currency risk. Such contracts have been used solely
to establish a rate of exchange for settlement of
transactions. Forward foreign currency contracts are valued
at the forward rate and are marked-to-market daily. The
change in market value is recorded by the Portfolio as an
unrealized gain or loss. Realized gains or losses are
recognized when contracts settle. Although forward foreign
currency contracts limit the risk of loss due to a decline
in the value of the hedged currency, they also limit any
potential gain that might result should the value of the
currency increase. In addition, the Fund could be exposed to risks if the counter parties to the contracts are unable
to meet the terms of their contracts.
Investment Income: Interest and other income (if any) is
accrued as earned. Dividend income is recorded on the ex-
dividend date, except that if the ex-dividend date has
passed, certain dividends from foreign securities are
recorded as soon as the Fund is informed of the ex-dividend
date.
Dividends: Substantially all of the Trust's accumulated net
investment income, determined as gross investment income
less accrued expenses, if any, is declared as a regular
dividend and distributed to shareholders at least twice
annually at calendar and fiscal year end. Capital gains
distributions, if any, are declared and paid twice annually
at calendar and fiscal year end. Additional distributions
may be made if necessary.
Income Tax: In accordance with the provisions of Subchapter
M of the Internal Revenue Code applicable to regulated
investment companies, all of the taxable income of each
portfolio is distributed to its shareholders, and therefore
no federal income tax provision is required. As of March
31, 1997 the Fund had available for federal income tax
purposes unused capital loss carryovers of $539,162
expiring March 31, 2004.
Share Subscriptions: Shares purchased by check or otherwise
not paid for in immediately available funds are accounted
for as share subscriptions receivable and shares reserved
for subscriptions.
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.
2. Investments in Repurchase Agreements. When the Trust
purchases securities under agreements to resell, the
securities are held for safekeeping by the Trust's custodian
bank as collateral. Should the market value of the
securities purchased under such an agreement decrease below
the principal amount to be received at the termination of
the agreement plus accrued interest, the counterparty is
required to place an equivalent amount of additional
securities in safekeeping with the Trust's custodian bank.
Repurchase agreements may be terminated within seven days.
Pursuant to an Exemptive Order issued by the Securities and
Exchange Commission, the Trust, along with other registered
investment companies having Advisory and Services Agreements
with the same advisor, transfers uninvested cash balances
into a joint trading account. The aggregate balance in this
joint trading account is invested in one or more
consolidated repurchase agreements whose underlying
securities are U.S. Treasury or federal agency obligations.
3. Investment Advisory Fees and Other Transactions with
Affiliates. The Investment Advisor to the Trust, Bankers
Finance Advisors, LLC ("the Advisor"), earns an advisory fee
equal to 1.00% per annum of the average net assets of the
Fund; the fees are accrued daily and are paid monthly. The
Advisory Agreement between the Trust and the Advisor was
approved at the special meeting of the Trust's shareholders
on July 29, 1996. The Advisor purchased the investment
assets of Bankers Finance Investment Management Corp.
("BFIMC"), the Trust's previous advisor, effective July 31,
1996. For the year ended March 31, 1997, the Advisor and
BFIMC waived $14,176 of such fee from the Fund.
The Advisor is responsible for the fees and expenses of
trustees who are affiliated with the Advisor and certain
promotional expenses. For the year ended March 31, 1997,
outside trustees fees of $3,000 were paid by the Fund.
Fees are reduced under an expense offset arrangement with
the Trust's custodian. The amount of the offset for the
year ended March 31, 1997 was $99.
4. Other Expenses. With the exception of certain expenses of
the Trust payable by it directly, all support services are
provided to the Trust under a services agreement between the
Trust and the Advisor, pursuant to which such services are
provided for amounts not exceeding the cost to the Advisor.
Common expenses incurred by the Trust, Mosaic Tax-Free
Trust, Mosaic Income Trust and Mosaic Government Money
Market Trust ("the Trusts") are allocated among the funds
based on the ratio of net assets of each fund to the
combined net assets of the Trust. For the year ended March
31, 1997, expenses of $56,702 have been reimbursed to the
Advisor and BFIMC under the services agreement.
5. Net Assets. At March 31, 1997, net assets include the
following:
Net paid in capital on shares of beneficial
interest $2,946,121
Accumulated net realized loss on investments (539,162)
Net unrealized appreciation of investments and
foreign currency 175,226
Total net assets $2,582,185
The Fund reclassified $2,895 from "accumulated net
investment income" and $6,455 from "accumulated losses on
foreign currency transactions" to "paid in capital" as a
result of permanent book and tax basis differences. These
reclassifications had no impact on net asset value.
6. Investment Transactions. Purchases and sales of
securities other than short-term securities for the year
ended March 31, 1997 were $1,184,053 and $2,001,690,
respectively.
7. Capital Share Transactions. An unlimited number of
capital shares, without par value, are authorized.
Transactions in capital shares for the years ended March 31
were as follows:
1997 1996
In Dollars
Shares sold $561,455 $960,967
Shares issued in
reinvestment of dividends -- 18,767
Total shares issued 561,455 979,734
Shares redeemed (1,380,947)(1,693,987)
Net decrease $ (819,492) $(714,253)
In Shares
Shares sold 52,876 100,911
Shares issued in reinvestment
of dividends -- 2,009
Total shares issued 52,876 102,920
Shares redeemed (133,392) (177,403)
Net decrease (80,516) (74,483)
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Telephone Numbers
Shareholder Service
Washington, DC area: 703 528-6500
Toll-free nationwide: 1 888 670-3600
Mosaic Tiles (24 hours automated information)
Toll-free nationwide: 1 800 336-3063
The Mosaic Family of Mutual Funds
Mosaic Equity Trust
Mosaic Investors Fund
Mosaic Equity Income/Balanced Fund
Mosaic Mid-Cap Growth Fund
Mosaic Worldwide Growth Fund
Mosaic Income Trust
Mosaic High Yield Fund
Mosaic Government Fund
Mosaic Tax-Free Trust
Mosaic Tax-Free Arizona Fund
Mosaic Tax-Free Maryland Fund
Mosaic Tax-Free Missouri Fund
Mosaic Tax-Free Virginia Fund
Mosaic Tax-Free National Fund
Mosaic Tax-Free Money Market
Mosaic Government Money Market
For more complete information on any Mosaic Fund, including charges and
expenses, request a prospectus by calling the numbers above. Read it
carefully before you invest or send money.
1655 Ft. Myer Drive, 10th floor
Arlington, Virginia 22209-3108
http://www.mosaicfunds.com
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