Mosaic Equity Trust
<I>Mosaic Investors Fund
Mosaic Balanced Fund
Mosaic Mid-Cap Growth Fund</I>
Semiannual Report
June 30, 1998
(Unaudited)
Mosaic Funds
<PAGE>
Mosaic Equity Trust
Letter to Shareholders
June 30, 1998
Period in Review and Fund Overview
We are pleased to report positive results for all of our Equity Trust funds for
the six-month period ended June 30, 1998. The six-month total returns for our
funds were: Investors 6.62%; Balanced 5.33%; and Mid-Cap Growth 4.42%. One-
year total returns through June 30, 1998 were 25.58% for Investors; 19.49% for
Balanced; and 14.43% for Mid-Cap Growth.
While the six-month returns were indicative of another positive period for
domestic stock markets, the funds' returns fall short of the most-watched large-
stock indices. The S&P 500 Index advanced 17.67% for the same period, while
the Dow Jones 30 Industrials Index rose 17.85%. On the other hand, small-stock
indices advanced less. The Russell 2000 was up 5.27% and the Value Line Index
4.91%
The performance disparity between the most-watched indices and the majority of
publicly traded stocks was one of the big stories for the first half of 1998.
For instance, if you looked at the performance of the S&P 500 minus the 20
largest companies, the 480 remaining stocks returned just 10.3%. Because the
S&P 500 is weighted to reflect the market value of the companies, the largest
stocks have a heavy influence on the Index as a whole. Whereas Mosaic's mutual
fund portfolios are much more evenly weighted among their holdings.
For many years Mosaic has followed a discipline of stock picking that places an
important weight on a stock's valuation. Our "Growth at a Reasonable Price"
philosophy steers us away from the highest priced segment of the market--just
the area that led the market forward the past six months. We believe that any
long-term success an investment manager achieves is through conviction to a
discipline, even though this will mean periods when their chosen style is out
of favor. Only by changing our investment approach could we have matched the
recent market indices. Looking forward, we will continue to work hard to find
good quality stocks that are priced reasonably. We believe that future market
conditions will demonstrate the wisdom of this approach.
MOSAIC INVESTORS FUND
Fund-at-a-Glance
Objective: Mosaic Investors seeks long-term capital appreciation through
investments in large growth companies.
Net Assets: $27.6 million
Date of Inception: November 1, 1978
Ticker: MINVX
TOP TEN HOLDINGS
% of net assets
Safeway, Inc. 5.4%
Merck 4.6%
CVS Corporation 4.5%
Norwest 4.5%
PepsiCo, Inc. 4.5%
Abbott Laboratories 4.4%
Johnson & Johnson 4.2%
Federated Department Stores, Inc. 3.9%
Kimberly-Clark Corporation 3.9%
First Data Corporation 3.9%
MOSAIC BALANCED FUND
TOP HOLDINGS
% of net assets
Top Five Stock Holdings
(Total stock holdings: 65.62%)
Safeway, Inc. 3.7%
Merck 3.2%
Norwest Corporation 3.2%
Abbott Laboratories 3.1%
PepsiCo, Inc. 3.0%
Top Five Fixed-Income Holdings
(Total fixed-income holdings: 34.38%)
U.S. Treasury Notes 6.25%, 4/01/01 4.3%
U.S. Treasury Notes 6.25%, 5/01/00 3.6%
U.S. Treasury Notes 6.25%, 8/01/02 2.9%
U.S. Treasury Notes 5.25%, 1/01/01 2.8%
U.S. Treasury Notes 6.25%, 5/01/99 2.6%
Fund-at-a-Glance
Objective: Mosaic Balanced seeks to provide substantial current dividend
income while providing opportunity for capital appreciation by investing in
a combination of mid-to-large companies and bonds.
Net Assets: $17.6 million
Date of Inception: December 18,1986
Ticker: BHBFX
Mosaic Mid-Cap Growth
Top TEN Holdings
% of net assets
Cognizant Corporation 5.4%
Lexmark International 4.5%
Federated Department Stores, Inc. 4.5%
Tommy Hilfiger Corporation 4.5%
American Power Conversion Corporation 4.0%
Hillenbrand Industries 4.0%
Dentsply International, Inc 3.9%
Alberto Culver Company 3.8%
Petco Animal Supplies 3.7%
Fiserv, Inc. 3.7%
Fund-at-a-Glance
Objective: Mosaic Mid-Cap Growth seeks long-term capital appreciation through
the investment in mid-sized growth companies.
Net Assets: $11.2 million
Date of Inception: July 21, 1983
Ticker: GTSGX
Interview with lead equity manager Jay Sekelsky
Q. How has Madison's equity discipline, growth at a reasonable price,
matched up against the market so far in 1998?
A. This has been much more of a "growth at any price" market than one
concerned with valuations. While we expect to see a variety of markets, it is
always something of a shock for price-sensitive stock shoppers like us to
witness the rush for stocks such as Yahoo, trading on June 30 at an extremely
expensive forward-looking P/E of 310, or Internet provider America Online at a
P/E of 150. With the largest, most expensive stocks leading the indices, it's
extremely difficult to match or exceed the indices. This narrow market
leadership gives the perception of a more robust market than really exists.
Q. Has this high-priced market with some tremendously high flying stocks
made you think twice about your stock picking?
A. Anyone who keeps an eye on the market must have the occasional wistful
glance at the chart of one of the hot companies du jour. But we are grounded \
enough to know that our success will depend upon sticking with our discipline.
Even so, we are constantly looking for refinements and evolutionary changes.
For instance, while our view on valuations has always been more relative than
absolute, it has become harder and harder to follow our old guideline of
investing in companies whose growth rates exceed their P/Es.
Q. The Asian economic crisis is still in the news. How has this affected
Mosaic's stock portfolios?
A. Early in the crisis (last fall) we evaluated the Asian exposure in all of
our holdings, and positioned our portfolios accordingly. In particular, we
decided that for the time being we would avoid companies that derive a
meaningful percentage of their earnings from the Far East. The economic
situation in Asia, particularly Japan, continues to be a major factor in the
U.S. markets this year. By the second quarter of this year the manufacturing
sector of the U.S. economy began to slow, largely due to the effect of the
strong dollar, which makes our exports relatively expensive. Still, the
healthy U.S. economy picked up the slack, allowing for overall growth. The
bottom line is a preference for companies whose earnings are domestically
based. Given the economic situation in Asia, companies that have a
dependence on sales to that region face uncertain, and possibly volatile
revenue and earnings results.
Q. What stocks or sectors contributed most to the funds' performance?
A. For Investors and Balanced we had considerable good news on the consumer
side. McDonalds was up strongly, and shareholders received a boost when ATT
proposed to acquire Telecommunications, Inc. At the time of the acquisition
announcement, the Wall Street Journal noted that "Mosaic Investors came out
tops in terms of the percentage of its net assets in TCI." In Mid-Cap both the
healthcare and technology sectors had a positive influence on performance. For
example, pharmaceutical R.P. Scherer was up 45% through June 30, while Lexmark,
a printer manufacturer, advanced some 60% through the first six months of the
year.
Q. What stocks or sectors hurt performance?
A. Technology stocks continued to be among the market leaders in the first
half of 1998. Over the past six months we've strategically reduced our
technology exposure. This reduction is based on our continued concern over the
economic situation in Asia and the high valuations in the sector. As such, our
exposure to this sector was a bit lower than the technology percentage in the
S&P 500. In addition, our technology holdings in Investors and Balanced did not
keep up with their sector. For instance, computer maker Compaq, which we have
held since late 1995, and which was up over 90% in 1997, reported sub-par
earnings growth this year and the stock remained in a holding pattern. In Mid-
Cap, our results were hurt by the consumer sector, specifically by the inability
to get the expected turnaround in Sunbeam.
Q. What changes have you made in the portfolios since the last report on
December 31, 1997?
A. While the majority of the names in the portfolios remain unchanged, we've
generally increased our exposure to the financial sector. This decision
reflects our difficulty in finding good companies at reasonable prices and our
willingness to move to a more defensive posture. In other words, we feel that
the financial stocks we own can withstand market and economic difficulties
better than other choices. This is also a sector that tends to have less
dependence on events in the Far East. Our exposure to the consumer sector
increased slightly. For instance, we added CVS, an operator of drug stores
under its corporate name, to our Investors and Balanced funds, a company we
believe can continue to grow through all kinds of market environments. In our
large company funds we stepped back a bit from technology, again reflecting our
basic defensiveness in this environment of historically high-priced stocks.
Q. What do you anticipate for the rest of 1998?
A. In general, the solid underpinnings that have led to this incredible
stock rally over the past three years are still in place. Namely, low
inflation, low interest rates and good earnings growth. However, we do believe
we are entering a period where earnings growth may be more difficult to come by.
As such, we believe a strategy of owning more domestically based companies in
defensive sectors is the best approach. We have a great deal of confidence in
the companies we hold, and demonstrate the strength of our convictions by
placing a significant percentage of assets in each name. I'm looking forward
to our next couple of reports to keep you informed on their progress.
Investors Fund
Portfolio of Investments - June 30, 1998
(unaudited)
Number
of
Shares Value
COMMON STOCKS: 96.2% of net assets
CONSUMER PRODUCTS - CYCLICAL: 13.7%
First Data Corporation 32,000 $1,066,000
McDonalds Corporation 13,750 948,750
Nike, Inc. 15,000 730,312
Telecommunications, Inc.* 27,125 1,043,578
CONSUMER STAPLES - FOOD & BEVERAGE: 7.1%
Nabisco Holdings Corp, CLA 20,450 737,478
PepsiCo, Inc. 29,950 1,233,566
CONSUMER PRODUCTS - HOUSEHOLD PRODUCTS: 4.3%
Kimberly-Clark Corporation 23,250 1,066,594
Sunbeam-Oster Company 12,050 125,019
CONSUMER RETAIL: 13.8%
CVS Corporation 32,000 1,246,000
Federated Department Stores 20,000 1,076,250
Safeway, Inc. 36,800 1,497,300
FINANCIAL - BANKS: 11.1%
Chase Manhattan Corporation 13,850 1,045,675
First Union Corp. 13,500 786,375
Norwest Corporation 33,300 1,244,588
FINANCIAL - INSURANCE: 3.8%
MGIC Investment Corporation 18,450 1,052,802
FINANCIAL - SERVICES: 7.2%
American Express Company 9,350 1,065,900
Federal Home Loan
Mortgage Corporation 19,450 915,365
HEALTHCARE - PHARMACEUTICALS: 9.0%
Abbot Laboratories 30,100 1,230,338
Merck & Co., Inc. 9,450 1,263,938
HEALTHCARE - MEDICAL PRODUCTS/OTHER: 9.6%
Dentsply International, Inc. 27,900 697,500
Johnson & Johnson 15,675 1,156,031
United Healthcare Corporation 12,750 809,625
INDUSTRIAL: 2.6%
U.S. Industries Inc. 29,150 721,462
TECHNOLOGY - HARDWARE: 9.3%
Compaq Computer Corporation* 36,800 1,044,200
Hewlett-Packard Company 8,850 529,893
Sun Microsystems, Inc. 23,200 1,007,750
TECHNOLOGY - SOFTWARE: 4.7%
Cadence Design Systems 20,750 648,438
Paramentric Technology Company 23,500 637,438
TOTAL COMMON STOCKS
(Cost $20,857,540) $26,628,165
SHORT TERM INVESTMENTS: 5.9% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 6/30/98 at 5.50%, due
7/1/98, collateralized by $1,675,052 in
United States Treasury Notes due 7/31/98.
Proceeds at maturity are $1,632,249.
(Cost $1,632,000) $1,632,000
TOTAL INVESTMENTS
(Cost $22,489,540) $28,260,165
CASH AND RECEIVABLES
LESS LIABILITIES: (2.1%) of net assets $(583,299)
NET ASSETS: 100% $27,676,866
*Non-income producing
Balanced Fund
Portfolio of Investments - June 30, 1998
(unaudited)
Number
of
Shares Value
COMMON STOCKS: 65.6% of net assets
CONSUMER PRODUCTS - CYCLICAL: 9.4%
First Data Corporation 14,000 $466,375
McDonalds Corporation 6,000 414,000
Pitney Bowes, Inc. 6,800 331,075
Telecommunications, Inc.* 11,800 453,562
CONSUMER STAPLES - FOOD & BEVERAGE: 4.9%
Nabisco Holdings Corp, CLA 9,000 324,562
PepsiCo, Inc. 13,000 535,438
CONSUMER STAPLES- HOUSEHOLD PRODUCTS: 3.1%
Kimberly-Clark Corporation 10,550 483,980
Sunbeam-Oster Company 5,450 56,544
CONSUMER RETAIL: 8.9%
CVS Corporation 12,000 467,250
Federated Department Stores 8,350 449,334
Safeway, Inc. 16,000 651,000
FINANCIAL - BANKS: 7.5%
Chase Manhattan Corporation 5,500 415,250
First Union Corporation 6,000 349,500
Norwest Corporation 15,200 568,100
FINANCIAL - INSURANCE: 2.6%
MGIC Investment Corporation 8,100 462,205
FINANCIAL - SERVICES: 5.1%
American Express Company 4,050 461,700
Federal Home Loan
Mortgage Corporation 9,400 442,388
HEALTHCARE - PHARMACEUTICALS: 6.3%
Abbot Laboratories 13,600 555,900
Merck & Co., Inc. 4,200 561,750
HEALTH CARE - MEDICAL PRODUCTS/OTHER: 6.5%
Dentsply International, Inc. 13,000 325,000
Johnson & Johnson 6,650 490,438
United Healthcare Corp. 5,300 336,550
INDUSTRIAL: 1.8%
U.S. Industries, Inc. 12,850 318,038
TECHNOLOGY - HARDWARE: 6.2%
Compaq Computer Corporation* 16,250 461,094
Hewlett-Packard Company 4,200 251,475
Sun Microsystems, Inc. 9,000 390,938
TECHNOLOGY - SOFTWARE: 3.3%
Cadence Design Systems 9,000 281,250
Paramentric Technology Co. 11,100 301,088
TOTAL COMMON STOCKS (Cost $9,040,704) $11,605,784
DEBT INSTRUMENTS: 31.0% of net assets
Corporate Obligations: 14.9%
Assoc Corporation NA, 7.875%, 9/1/01 55,000 $58,025
Coca-Cola Enterprises,7.875%,2/1/02 265,000 281,230
Fed Nat'l Home Mortgage Assoc,
5.75%, 6/1/05 275,000 275,142
Ford Motor Credit Corporation,
7.75%, 3/1/05 205,000 222,169
Gap, Inc, 6.9%, 9/1/07 195,000 204,750
International Leasing Finance, 8.375%,
12/1/04 105,000 116,813
Kohls Corporation, 6.7%, 2/1/06 230,000 234,025
Lucent Technologies, Inc., 6.9%,
7/1/01 270,000 277,763
Merrill Lynch, 7%, 1/10/07 50,000 52,375
Morgan Stanley Dean Witter, 6.375%,
8/1/02 225,000 227,531
Seagate Technology Inc., 7.37%,
3/1/07 275,000 272,938
Tommy Hilfiger, 6.5%, 6/1/03 140,000 139,650
Walt Disney Co, 6.375%, 3/1/01 275,000 279,125
Treasury Obligations: 16.1%
US Treasury Note, 6.25%, 5/1/00 625,000 633,256
US Treasury Note, 5.25%, 1/1/01 500,000 496,995
US Treasury Note, 6.25%, 4/1/01 740,000 753,905
US Treasury Note, 6.25%, 5/1/99 450,000 452,948
US Treasury Note, 6.25%, 8/1/02 500,000 512,995
TOTAL DEBT INSTRUMENTS
(Cost $5,453,537) $5,491,635
SHORT TERM INVESTMENTS: 2.8% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 6/30/98 at 5.50%, due
7/1/98, collateralized by $501,900 in
United States Treasury Notes due 7/31/98.
Proceeds at maturity are $489,075.
(Cost $489,000) $489,000
TOTAL INVESTMENTS
(Cost $14,983,241) $17,586,419
CASH AND RECEIVABLES LESS LIABILITIES:
0.6% of net assets $98,351
NET ASSETS: 100% $17,684,770
*Non-income producing
Mid-Cap Growth Fund
Portfolio of Investments - June 30, 1998
(unaudited)
Number
of
Shares Value
COMMON STOCKS: 86.9% of net assets
CONSUMER PRODUCTS - CYCLICAL: 6.7%
Callaway Golf Company 12,750 251,015
Tommy Hilfiger Corporation 8,000 500,000
CONSUMER STAPLES - FOOD & BEVERAGE: 3.1%
Richfood Holdings, Inc. 16,800 347,550
CONSUMER STAPLES - HOUSEHOLD PRODUCTS: 4.4%
Alberto Culver Company 17,000 431,375
Sunbeam-Oster Company 5,650 58,619
CONSUMER RETAIL: 14.5%
Consolidated Stores Co 10,150 367,938
Federated Department Stores, Inc. 9,450 508,528
Officemax, Inc.* 20,550 339,075
Petco Animal Supplies 21,100 420,680
FINANCIAL - BANKS:6.5%
Firstar Corporation 6,000 228,000
Regions Financial 5,700 234,056
Southtrust Corporation 6,225 270,788
FINANCIAL - INSURANCE: 6.3%
MBIA INC 5,575 417,428
MGIC Investment Corporation 5,000 285,313
FINANCIAL - SERVICES: 3.2%
Finova Group Inc. 6,400 362,400
HEALTHCARE - PHARMACEUTICALS: 3.7%
R.P. Scherer 4,700 416,538
HEALTHCARE - MEDICAL PRODUCTS/OTHER: 7.9%
Dentsply International, Inc. 17,500 435,313
Hillenbrand Industries 7,475 448,500
INDUSTRIAL: 3.7%
U.S. Industries Inc. 16,650 412,088
INFORMATION SERVICES: 5.4%
Cognizant Corporation 9,700 611,100
TECHNOLOGY - HARDWARE: 8.5%
American Power Conversion Corp. 15,100 451,112
Lexmark International Group Inc. 8,350 509,350
TECHNOLOGY - SOFTWARE: 9.4%
Cadence Design Systems 9,150 285,938
Fiserv, Inc.* 9,900 420,440
Network Associates, Inc. 7,275 348,290
TRANSPORTATION: 3.6%
Expeditors Internat'l Wash, Inc. 9,200 404,800
TOTAL COMMON STOCKS
(Cost $8,758,339) $ 9,766,234
SHORT TERM INVESTMENTS: 11.7% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 6/30/98 at 5.50%, due
7/1/98, collateralized by $1,345,584 in
United States Treasury Notes due 7/31/98.
Proceeds at maturity are $1,311,200.
(Cost $1,311,000) $1,311,000
TOTAL INVESTMENTS
(Cost $10,069,339) $11,077,234
CASH AND RECEIVABLES LESS LIABILITIES:
1.4% of net assets $157,031
NET ASSETS: 100% $11,234,265
*Non-income producing
Statement of Assets and Liabilities
June 30, 1998 (unaudited)
Mid-Cap
Investors Balanced Growth
Fund Fund Fund
ASSETS
Investments, at value (Notes 1 and 2)
Investment securities $26,628,165 $17,097,419 $ 9,766,234
Repurchase agreement 1,632,000 489,000 1,311,000
Total investments $28,260,165 $17,586,419 $11,077,234
Cash 745 723 28
Receivables
Dividends and interest 23,293 100,484 6,406
Investment securities sold -- -- 444,493
Capital shares sold 2,400 2,196 10,313
Total assets $28,286,603 $17,689,822 $11,538,474
LIABILITIES
Payables
Dividends $22 $4,554 $146
Capital shares redeemed 609,715 498 304,063
Total liabilities $609,737 $5,052 $304,209
NET ASSETS (Note 6) $27,676,866 $17,684,770 $11,234,265
CAPITAL SHARES OUTSTANDING 1,160,427 868,388 1,163,539
NET ASSET VALUE PER SHARE $23.85 $20.37 $9.66
Statement of Operations
For the six months ended June 30, 1998 (unaudited)
Mid-Cap
Investors Balanced Growth
Fund Fund Fund
INVESTMENT INCOME (Note 1)
Interest income $34,061 $171,910 $25,095
Dividend income 114,227 52,485 32,476
Other income 12,766 12,679 --
Total investment income $161,054 $237,074 $57,571
EXPENSES (Notes 3 and 5)
Investment advisory fees $100,991 $65,620 $43,517
Transfer agent, administrative,
registration and professional fees 53,862 39,372 29,012
Total expense $154,853 $104,992 $72,529
NET INVESTMENT INCOME (LOSS) $6,201 $132,082 $(14,958)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $1,823,607 $1,073,164 $657,692
Change in net unrealized
appreciation of investments (117,218) (292,921) (125,584)
NET GAIN ON INVESTMENTS 1,706,389 780,243 532,108
TOTAL INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,712,590 $912,325 $517,150
Statements of Changes in Net Assets
For the period indicated
<TABLE>
<CAPTION>
Investors Fund Balanced Fund Mid-Cap Growth Fund
Six Months Year Six Months Year Six Months Nine Months Year
Ended Ended Ended Ended Ended Ended Ended
June December June December June December March
30, 1998 31, 1997 30, 1998 31, 1997 30, 1998 31, 1997 31, 1997
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS RESULTING
FROM OPERATIONS
Net investment income (loss) $6,201 $95,730 $132,082 $258,291 $(14,958) $(31,388) $(17,803)
Net realized gain on investments 1,823,607 3,209,113 1,073,164 2,051,649 657,692 1,579,590 4,734,760
Net unrealized appreciation
(depreciation) of investments (117,218) 2,336,334 (292,921) 889,817 (125,584) 1,250,952 (5,199,869)
Total increase (decrease) in net
assets resulting from operations $1,712,590 $5,641,177 $ 912,325 $3,199,757 $ (517,150) $(2,799,154) $ (482,912)
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income -- (104,054) (132,082) (287,828) -- -- (15,133)
From net capital gains -- (2,972,340) -- (1,921,318) -- (3,057,678) (9,039,372)
Total distributions -- (3,076,394) (132,082)(2,209,146) -- (3,057,678) (9,054,505)
CAPITAL SHARE
TRANSACTIONS (Note 8) 762,347 9,525,594 (498,092) 5,394,249 (750,476) 761,629 3,410,899
TOTAL INCREASE (DECREASE)
IN NET ASSETS 2,474,937 12,090,377 282,151 6,384,860 (233,326) 503,105 (6,126,518)
NET ASSETS
Beginning of period $25,201,929$13,111,552 $17,402,619$11,017,759$11,467,591 $10,964,486 $17,091,004
End of period $27,676,866$25,201,929 $17,684,770$17,402,619$11,234,265 $11,467,591 $10,964,486
</TABLE>
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
Ratio of
Net Ratio of net
Net realized & Distri- Net Net expenses investment
asset Net unrealized butions asset assets to income
value invest. gain Total from from netDist. value end of average (loss) Port.
begin income (loss) on invest. invest. fm. cap.Total end of Total period net to average turnover
period (loss) invest's operat's income gains dist'ions period return (1000s) assets net assets rate
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investors Fund - Fiscal Years Ended December 31:
19988 $22.37 $0.010 $1.470 $1.480 0-- 0-- 0-- $23.85 6.62% $27,677 1.15%9 0.05% 39%
19971 19.16 0.135 6.388 6.523$(0.136)5$(3.180)5$(3.316)522.37 34.84 25,202 1.15 0.49 78
1996 18.03 0.240 3.910 4.150 (0.250) (4.010) (4.260) 17.92 22.75 13,112 1.17 1.20 81
1995 15.84 0.420 3.450 3.870 (0.420) (1.260) (1.680) 18.03 24.63 11,860 1.17 2.44 58
1994 16.73 0.390 0.260 0.650 (0.390) (1.150) (1.540) 15.84 4.09 10,009 1.20 2.28 54
1993 18.15 0.190 0.340 0.530 (0.190) (1.760) (1.950) 16.73 3.16 10,207 1.20 1.00 80
Balanced Fund - Fiscal Years Ended December 31:
19988 $19.48 $0.151 $0.890 $1.041$(0.151) 0-- $(0.151)$20.37 5.33% $17,684 1.20%9 1.50% 48%
19971 18.09 0.404 4.042 4.446 (0.409)5$(2.640)5 (3.049)519.48 25.49 17,403 1.35 1.80 78
1996 22.44 0.500 3.200 3.700 (0.500) (3.610) (4.110) 22.03 17.00 11,018 1.42 2.06 86
1995 20.16 0.750 3.530 4.280 (0.740) (1.260) (2.000) 22.44 21.51 10,857 1.36 3.36 66
1994 22.36 0.720 (0.460) 0.260 (0.720) (1.740) (2.460) 20.16 1.31 10,588 1.34 3.03 76
1993 23.65 0.620 0.370 0.990 (0.620) (1.660) (2.280) 22.36 4.35 15,107 1.24 2.53 76
Mid-Cap Growth Fund
19988 $9.25$(0.010) $0.420 $0.410 0-- 0-- 0-- $9.66 4.42% $11,234 1.25%9(0.26)% 53%
19977 9.88 (0.025) 1.911 1.885 0-- $(2.514) $(2.514) 9.25 26.06 11,468 1.27 (0.35) 80
Mid-Cap Growth Fund - Fiscal Years Ended March 31
19974 $20.49$(0.016) $(0.469)$ (0.485)$(0.018)$(10.103)$(10.121)$9.88 (5.59)%$10,964 1.62% (0.12)% 127%
1996 18.09 0.133 3.621 3.754 (0.115) (1.243) (1.358) 20.49 21.22 17,091 1.41 0.56 21
1995 21.11 0.152 0.190 0.342 (0.152) (3.208) (3.360) 18.09 2.27 31,590 1.30 0.76 4
1994 19.97 0.171 2.125 2.296 (0.170) (0.986) (1.156) 21.11 11.57 34,931 1.45 0.75 7
1993 19.10 0.092 1.031 1.123 (0.121) (0.131) (0.252) 19.97 5.90 38,911 1.35 0.44 13
</TABLE>
1 All data reflect share price adjustment due to fund merger on June 13,
1997. (See Notes 1 and 9.)
2 Data prior to June 13, 1997 represents Bascom Hill Investors, Inc. (See
Note 1.)
3 Data prior to June 13, 1997 represents Bascom Hill BALANCED Fund, Inc.
(See Note 1.)
3 Effective 7/31/96, the investment advisory services transferred to Madison
Investment Advisors, Inc./Madison Mosaic, LLC from Bankers Finance Investment
Management Corp.
4 Includes distribution attributable to net investment income and net
realized gain from Mosaic Equity Income Fund and Mosaic Equity Investors. (See
Note 1)
5 For purposes of determining portfolio turnover, the transfer of
securities pursuant to the merger on June 13, 1997 are not considered for the
Investors Fund and the Balanced Fund. (See Note 1.)
7 Nine month period ended December 31.
8 For the six months ended June 30, 1998.
9 Annualized.
Mosaic Equity Trust
Notes to Financial Statements
For the period ended June 30, 1998
1. Summary of Significant Accounting Policies. Mosaic Equity Trust (the
"Trust") is registered with the Securities and Exchange Commission under the
Investment Company act of 1940 as an open-end, diversified investment manage-
ment company. The Trust offers shares in four separate portfolios which invest
in differing securities. The Investors Fund, the surviving economic entity of
the merger between Mosaic Equity Trust Investors Fund and Bascom Hill
Investors, Inc., which occurred on June 13, 1997, is invested in established
companies that may be undervalued or may offer good management and significant
growth potential. The Balanced Fund, the surviving economic entity of the
merger between Mosaic Equity Trust Equity Income Fund and Bascom Hill BALANCED
Fund, Inc., which occurred on June 13, 1997, is invested in a combination of
investment grade fixed-income securities and equity securities of established
companies. All financial information presented prior to the effective date of
the merger represents activity of Bascom Hill Investors, Inc. and Bascom Hill
BALANCED Fund, Inc. The Mid-Cap Growth Fund is invested primarily in smaller
"mid-cap" companies that may offer rapid growth potential. The Foresight Fund
moves in and out of the stock and bond markets when these markets appear
unusually over-or-under valued. The Foresight Fund issues separate semi-annual
and annual financial reports to shareholders.
Share Price Adjustment Due to Merger: On June 13, 1997, the Balanced Fund
shares were adjusted pursuant to the merger as discussed above by approximately
the following factors: adjustment to shares, 1.218; adjustment to net asset
value per share, 0.821. Similarly, the Investors Fund shares were adjusted as
follows: adjustment to shares, 0.935; adjustment to net asset value per share,
1.0699.
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 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 statements 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 fiscal year
end. The Trust intends to declare and pay regular dividends quarterly on the
Balanced Fund. Capital gain distributions, if any, are declared and paid
annually at calendar 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.
Use of Estimates: The preparation of 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
custodian bank as collateral. Should the market value of the securities
purchased under such an agreement decrease below the principal amount to be
received at the termination of the agreement plus accrued interest, the
counterparty is required to place an equivalent amount of additional securities
in safekeeping with the Trust's custodian bank. Repurchase agreements may be
terminated within seven days. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Trust, along with other registered
investment companies having Advisory and Services Agreements with the same
advisor, transfers uninvested cash balances into a joint trading account. The
aggregate balance in this joint trading account is invested in one or more
consolidated repurchase agreements whose underlying securities are U.S.
Treasury or federal agency obligations.
3. Investment Advisory Fees and Other Transactions with Affiliates. The
Investment Advisor to the Trust, Madison Mosaic, LLC ("the Advisor"), earns an
advisory fee equal to 0.75% per annum of the average net assets of each of the
Investors, Balanced and Mid-Cap Growth 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.
4. Aggregate Cost and Unrealized Appreciation (Depreciation). The aggregate
cost for federal income tax purposes and the net unrealized appreciation are
stated as follows as of June 30, 1998:
Mid-Cap
Investors Fund Balanced Fund Growth Fund
Aggregate cost $22,489,540 $14,983,241 $10,069,339
Gross unrealized
appreciation $ 6,391,462 $ 2,893,923 $ 1,617,117
Gross unrealized
depreciation (620,837) (290,745) (609,222)
Net unrealized
appreciation $ 5,770,625 $ 2,603,178 $ 1,007,895
5. Other Expenses. Effective November 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. This percentage is 0.40% for the
Investors Fund, 0.45% for the Balanced Fund and 0.50% for the Mid-Cap Growth
Fund. For the six months ended June 30, 1998, such expenses paid by the
Investors Fund were $53,862, by the Balanced Fund were $39,372 and by the Mid-
Cap Growth Fund were $29,012.
6. Net Assets. At June 30, 1998, net assets included the following:
Investors Balanced Mid-Cap Growth
Fund Fund Fund
Net paid in capital on shares
of beneficial interest $19,774,995 $13,554,516 $ 9,058,766
Undistributed net investment
income (loss) 5,984 -- (14,959)
Accumulated net realized gains 2,125,262 1,527,076 1,182,563
Net unrealized appreciation
of investments 5,770,625 2,603,178 1,007,895
Total net assets $27,676,866 $17,684,770 $11,234,265
6. Investment Transactions. Purchases and sales of securities other than
short-term securities were as follows:
Investors Fund Balanced Fund Mid-Cap Growth Fund
Six Months Ended Six Months Ended Six Months Ended
June 30, 1998 June 30, 1998 June 30, 1998
Purchases $10,755,387 $8,051,629 $5,675,533
Sales $10,284,909 $8,574,254 $6,512,213
7. Capital Share Transactions. An unlimited number of capital shares, without
par value, are authorized. Transactions in capital shares for the following
periods were:
<TABLE>
<CAPTION>
Investors Fund Balanced Fund Mid-Cap Growth Fund
Six Months Year Six Months Year Six Months Nine Months
Ended Ended Ended Ended Ended Ended
June December June December June December
30, 1998 31, 1997 30, 1998 31, 1997 30, 1998 31, 1997
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C>
In Dollars
Shares sold $8,457,395 $6,367,150 $ 642,647 $ 506,400 $3,401,726 $23,964,062
Additional shares in connection
with merged funds -- 8,167,826 -- 5,629,050 -- --
Shares issued in reinvestment
of dividends -- 2,936,288 123,420 2,111,666 -- 2,971,370
Total shares issued 8,457,395 17,471,264 766,067 8,247,116 3,401,726 26,935,432
Shares redeemed (7,695,048)(7,945,670)(1,264,159) (2,852,867) (4,152,202) (26,173,803)
Net increase (decrease) $ 762,347 $9,525,594 $ (498,092) $5,394,249 $ (750,476) $ 761,629
In Shares
Shares sold 362,135 271,938 31,682 24,140 351,152 2,599,323
Additional shares in connection
with merged funds, net -- 332,755 -- 400,072 -- --
Shares issued in reinvestment
of dividends -- 134,417 6,035 103,505 -- 353,118
Total shares issued 362,135 739,110 37,717 527,717 351,152 2,952,441
Shares redeemed (328,362) (344,210) (62,606) (134,580) (427,269) (2,822,303)
Net increase (decrease) 33,773 394,900 (24,889) 393,137 (76,117) 130,138
</TABLE>
Mosaic Equity Trust
Foresight Fund
Semiannual Report
June 30, 1998
(Unaudited)
<PAGE>
Mosaic Equity Trust
Foresight Fund
Letter to Shareholders
June 30, 1998
Dear Shareholders:
1998 has been a year of new directions for Mosaic Foresight. As an asset
allocation fund, it has followed a most conservative path, holding substantial
cash reserves. Indeed, as of June 30, only 43.4% of the fund was invested in
stocks. For the six-month period ended June 30, 1998 Mosaic Foresight showed a
total return of 3.57%.
During this period your fund was positioned quite defensively in light of
overall market valuations, which remained at record highs. Our stock allocation
remained at or below 50%, an indication of our overall concern regarding the
market's near-term future. In fact, our concerns seemed justified. Prior to
June 30, a broad market correction was already underway, although the most-
watched indices were masking this reality. Through the first-half of 1998 a
small number of large, popular companies drove the indices, which are weighted
to give the largest companies the most influence. Underneath these names, the
market was showing considerably less strength, as indicated by the relatively
weaker performance of broader market indices such as the Russell 2000. Since
our stock-picking discipline keeps us at distance from the most pricey issues in
the market, the stocks in your portfolio only partially participated in the
rally of the S&P 500.
Looking forward, we continue to expect your fund to remain defensive, with stock
allocation in the 25%-50% range. This allows us some real safety as the market
sorts out an array of bad news, especially the overall impact of the deep
economic problems in Asia and Russia. The stocks we hold are not the high-
flying, highly valued issues that we feel are most vulnerable in any future
corrections. Our goal is to weather the storm, however large it is, with rather
minimal impact to your fund. With our current stance, we would be quite happy
to see additional market corrections, which could then create a new round of
bargains, and make for a vastly improved outlook over the next few years. We
intend to remain patient and cautious.
Sincerely,
(signature)
Frank E. Burgess
President
<PAGE>
Foresight Fund
Portfolio of Investments - June 30, 1998 (unaudited)
Number
of
Shares Value
COMMON STOCKS: 43.4% of net assets
CONSUMER PRODUCTS - CYCLICAL: 4.5%
First Data Corporation 2,800 $93,275
CONSUMER STAPLES - FOOD & BEVERAGE: 5.2%
PepsiCo, Inc. 2,600 107,088
CONSUMER PRODUCTS - HOUSEHOLD PRODUCTS: 4.2%
Kimberly-Clark Corporation 1,900 87,162
CONSUMER RETAIL: 5.0%
Federated Department Stores, Inc. 1,900 102,244
FINANCIAL - BANKS: 4.8%
First Union Corporation 1,700 99,025
INDUSTRIAL: 4.1%
U.S. Industries Inc. 3,400 84,150
TECHNOLOGY - HARDWARE: 15.6%
Compaq Computer Corporation* 4,300 122,012
Hewlett-Packard Company 1,500 89,813
Sun Microsystems, Inc. 2,500 108,594
TOTAL COMMON STOCKS
(Cost $856,247) $ 893,363
Principal
Amount Value
U.S. GOVERNMENT AGENCY OBLIGATIONS: 48.4% of net assets
Federal Home Loan Mortgage Corp.
Discount Note, 5.41%, 7/7/98 $250,000 $249,775
Federal Home Loan Mortgage Corp.
Discount Note, 5.44%, 7/10/98 $250,000 249,660
Federal Home Loan Mortgage Corp.
Discount Note, 5.49%, 7/24/98 $250,000 249,123
Federal Home Loan Mortgage Corp.
Discount Note, 5.45%, 7/27/98 $250,000 249,016
TOTAL GOVERNMENT
AGENCY OBLIGATIONS
Proceeds at maturity are $2,000,000.
(Cost $997,574) $997,574
SHORT TERM INVESTMENTS: 8.1% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 6/30/98 at 5.50%, due
7/1/98, collateralized by $171,405 in
United States Treasury Notes due 7/31/98.
Proceeds at maturity are $167,026.
(Cost $167,000) $167,000
TOTAL INVESTMENTS
(Cost $2,020,821)+ $2,057,937
CASH AND RECEIVABLES LESS
LIABILITIES: 0.1% of net assets $1,651
NET ASSETS: 100% $2,059,588
+ Equals aggregate cost for federal income tax purposes.
* Non-income producing.
<PAGE>
Statement of Assets and Liabilities
June 30, 1998 (unaudited)
ASSETS
Investments, at value (Notes 1 and 2)
Investment securities $1,890,937
Repurchase agreement 167,000
Total investments $2,057,937
Cash 723
Receivables
Dividends and interest 1,031
Total Assets $2,059,691
LIABILITIES
Payables
Capital shares redeemed 103
Total Liabilities $103
NET ASSETS (Note 5) $2,059,588
CAPITAL SHARES OUTSTANDING 190,054
NET ASSET VALUE PER SHARE $10.84
<PAGE>
Statement of Operations
For six months ended June 30, 1998 (unaudited)
INVESTMENT INCOME (Note 1)
Interest income $37,812
Dividend income 3,751
Total investment income $41,563
EXPENSES (Notes 3 and 4)*
Investment advisory fee $7,255
Transfer agent, administrative,
registration and professional fees 5,986
Total expense $13,241
NET INVESTMENT INCOME $28,322
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $4,201
Change in net unrealized appreciation of
investments 37,116
NET GAIN ON INVESTMENTS 41,317
TOTAL INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $69,639
*Certain reclassifications have been made to prior year end information to
conform to current year presentation.
Statements of Changes in Net Assets
For the period indicated
Six Months Ended Nine Months Ended
June 30, 1998 December 31, 1997
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income (loss) $28,322 $(983)
Net realized gain on investments 4,201 127,653
Net unrealized gain (loss) on foreign
currency transactions -- (21,582)
Net unrealized appreciation
(depreciation) of investments 37,116 (175,233)
Total increase (decrease) in net assets
resulting from operations $69,639 $(70,145)
CAPITAL SHARE TRANSACTIONS (Note 7) 75,821 (597,912)
TOTAL INCREASE (DECREASE) IN NET
ASSETS 145,460 (668,057)
NET ASSETS
Beginning of period $1,914,128 $2,582,185
End of period $2,059,588 $1,914,128
<PAGE>
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Ratio of
Net Ratio of net
Net realized & Distri- Net Net expenses investment
asset Net unrealized butions asset assets to income
value invest. gain Total from from netDist. value end of average (loss) Port.
begin income (loss) on invest. invest. fm. cap.Total end of Total period net to average turnover
period (loss) invest's operat's income gains dist'ions period return (1000s) assets net assets rate
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mosaic Foresight Fund
19984 $10.462 $0.150 $0.230 $0.380 -- -- -- $10.840 3.60% $2,060 1.32%2 2.83%2 20%
Worldwide Growth Fund
19975 10.968 (0.005) (0.501) (0.506) -- -- -- 10.462 (4.60) 1,914 2.412 0.052 2
19976 9.862 0.012 1.094 1.106 -- -- -- 10.968 11.21 2,582 2.50 0.10 47
19966 8.501 0.044 1.387 1.431 $(0.070)-- $(0.070) 9.862 16.88 3,116 2.38 0.43 78
19956 12.511 0.022 (2.491) (2.469) (0.025)$(1.516) (1.541) 8.501 (22.20) 3,319 2.05 0.21 65
19941 10.000 (0.035) 2.546 2.511 -- -- -- 12.511 26.192 3,526 1.812 (0.48)2 83
</TABLE>
1 For the period from April 16, 1993 (inception) to March 31, 1994.
2 Annualized.
3 Had the Advisor not waived advisory fees, the Fund's annualized ratios of
expenses and net investment loss to average net assets would have been 2.92% and
(0.56)%, respectively, for the nine-month period ended December 31, 1997; 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.
4 For the six month period ended June 30, 1998.
5 For the nine month period ended December 31, 1997.
6 For the year ended March 31.
Notes:
Effective July 31, 1996, the investment advisory services transferred to Madison
Mosaic, LLC from Bankers Finance Investment Management Corp. (See Note 3.)
<PAGE>
Mosaic Foresight Fund
Notes to Financial Statements
June 30, 1998
1. Summary of Significant Accounting Policies. Mosaic Equity Trust (the
"Trust") is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as an open-end, diversified invest-ment
management company. The Trust offers shares in four separate funds which invest
in differing securities. The Foresight Fund is being managed as a strategic
asset allocation domestic equity fund. Prior to 1998, the Fund was known as
the Worldwide Growth Fund and invested primarily in foreign equity securities.
The Mid-Cap Growth, Investors and Balanced Funds are managed independently from
the Foresight Fund and issue separate semi-annual and annual financial reports
to shareholders.
Fiscal year: Beginning April 1, 1997, the Trust's fiscal year ends on December
31.
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. Investment transactions are recorded
on the trade date. The cost of investments sold is determined on the identi-
fied cost basis for financial statement and federal income tax purposes.
Short-term and 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 net investment income, determined
as gross investment income less expenses, if any, is declared as a regular
dividend and distributed to shareholders at calendar year end. Capital gain
distributions, if any, are declared and paid at calendar year end. Addition-
al 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 June 30, 1998 the Fund
had available for federal income tax purposes unused capital loss carryovers
of $411,508 expiring December 31, 2003.
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 securi-
ties 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, Madison Mosaic, LLC ("the Advisor"), earns an
advisory fee equal to .75% per annum of the average net assets of the Fund;
the fee is accrued daily and 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 six months ended June 30, 1998, the
Advisor waived $5,046 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.
3. Other Expenses. Effective November 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. This percentage was at an annualized
rate of .50% for the Fund through June 30, 1998. For the six months ended
June 30, 1998, operating expenses of $5,986 have been paid to the Advisor,
under the Services Agreement.
5. Net Assets. At June 30, 1998, net assets include the following:
Net paid in capital on shares of beneficial interest $2,424,023
Undistributed net investment income 27,339
Accumulated net realized gain (loss) (428,890)
Net unrealized appreciation of investment 37,116
Total net assets $2,059,588
6. Investment Transactions. Purchases and sales of securities other than
short-term securities for the six months ended June 30, 1998 were $1,031,865
and $179,819, respectively.
7. Capital Share Transactions. An unlimited number of capital shares,
without par value, are authorized. Transactions in capital shares for the
periods presented were as follows:
Six Months Ended Nine Months Ended
June 30, 1998 December 31, 1997
In Dollars
Shares sold $408,729 $560,174
Shares issued in reinvestment of dividends -- --
Total shares issued 408,729 560,174
Shares redeemed (332,908) (1,158,086)
Net increase (decrease) $75,821 $(597,912)
In Shares
Shares sold 37,991 47,038
Shares issued in reinvestment of dividends -- --
Total shares issued 37,991 47,038
Shares redeemed (30,903) (99,499)
Net increase (decrease) 7,088 (52,461)
<PAGE>
Telephone Numbers
Shareholder Service
Washington, DC area: 703 528-6500
Toll-free nationwide: 1 888 670-3600
Mosaic Tiles (24 hour automated information)
Toll-free nationwide: 1 800 336-3063
The Mosaic Family of Mutual Funds
Mosaic Equity Trust
Mosaic Investors Fund
Mosaic Balanced Fund
Mosaic Mid-Cap Growth Fund
Mosaic Foresight Fund
Mosaic Income Trust
Mosaic High Yield Fund
Mosaic Government Fund
Mosaic Bond 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
