Mosaic Equity Trust
Investors Fund
Balanced Fund
Mid-Cap Growth Fund*
SEMIANNUAL REPORT
June 30, 1997 (Unaudited)
*Interim Report
Mosaic Funds
<PAGE>
Mosaic Equity Trust
Letter to Shareholders
June 30, 1997
Dear Shareholder:
We are pleased with the results we have to report for the period ending
June 30, 1997 for our three domestic equity funds: Mosaic Investors
Fund, Mosaic Balanced Fund, and Mosaic Mid-Cap Growth Fund. It has been
an exciting period for the market, with the major domestic indices
hitting new highs. It has also been an exciting period for us, as we
launched our new name and realigned our funds under the Mosaic banner.
You'll see that this report includes expanded information on your funds.
Please give us a call if you have any questions or suggestions. Our
customer service account executives are available at 1-888-670-3600.
Period in Review
While U.S. equities continued to produce stellar returns for the first
half of 1997, results were generally better for big companies compared
to medium and smaller companies. For this period, the S&P 500 (a larger
company stock index) produced a 20.6% total return while the Russell
2000 (a smaller company stock index) had a return of 10.2%.
During the early weeks of 1997 the stock market continued to move higher
in a very orderly fashion. However, after reaching then record levels in
mid-February, the markets began to retreat as investors feared weaker
corporate earnings and higher interest rates. From mid-February until
early April the stock market moved lower by nearly 10%, erasing prior
gains. The correction proved short-lived. Companies began reporting
earnings at levels better than expected and interest rates actually
declined due to low inflation. Higher earnings and lower interest rates
are positive news for stocks, and the markets have been on a tear since
mid-April, routinely achieving new highs.
Portfolio Review
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.
Mosaic Investors
For the six-month period ended June 30, 1997, Mosaic Investors continued
to produce solid results. Mosaic Investors Fund achieved a total return
of 14.5% for the six-month period. That return positioned the fund in
the top 4% of funds in its Morningstar category for this period. Results
were positively influenced by the defensive holdings within the
portfolio, such as the financial and consumer stocks. Some examples of
stocks that were added during this period include Abbott Laboratories,
American Express, Compaq Computer, MGIC Investment, and McDonald's.
Top Ten Holdings
% of assets
Norwest 4.1%
Pitney Bowes 4.1%
Schering-Plough 4.1%
Wal-Mart 3.8%
Nabisco Holdings 3.6%
Kimberly-Clark 3.6%
MGIC Investment 3.6%
Intel 3.6%
Pep Boys 3.6%
Morton International 3.5%
Fund-at-a-Glance
Objective: Mosaic Investors seeks long-term growth through investments
in large, growing companies.
Assets: $22.5 million
Date of Inception: November 1, 1978
Ticker: MINVX
Mosaic Balanced
Mosaic Balanced Fund returned 10.6% for the six-month period, which
placed it in the top 40% of funds it its Morningstar category for that
period. 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.
The stock side of Mosaic Balanced parallels the holdings of Mosaic
Investors, with the same positive results from the defensive holdings,
including financial and consumer stocks.
Top Holdings
% of assets
Top Five Stock Holdings (61.6%)
Norwest 2.8%
Schering-Plough 2.6%
Pep Boys 2.6%
Pitney Bowes 2.6%
McDonald's 2.5%
Top Five Fixed-Income Holdings (30.9%)
U.S. Treasury Notes 5.625%, Due 01-31-98 4.4%
U.S. Treasury Notes 6.250%, Due 05-31-00 3.8%
U.S. Treasury Notes 5.625%. Due 02-28-01 3.6%
U.S. Treasury Notes 5.875%, Due 10-31-98 2.6%
U.S. Treasury Notes 5.875%, Due 02-15-04 2.5%
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.
Assets: $16.5 million
Date of Inception: December 18,1986
Ticker: BHBFX
Mosaic Mid-Cap Growth
As discussed above, those portfolios that invest in small and medium
sized companies encountered a relatively more difficult market
environment during the past six months. Mosaic Mid-Cap Growth fund was
no exception, showing a return of 6.8% for the first half of 1997,
although the fund returned 15.03% for the three months following its
Annual Report dated March 31, 1997. For the past several months we have
worked to gradually restructure the portfolio to invest primarily in
medium-sized companies 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
companies in the portfolio, along with a limited number of select
smaller companies. Recent purchases for the portfolio include Denstply
International, Express Scripts, Fiserv, and United Asset Management.
Top Holdings
% of assets
Equifax 5.2%
LaQuinta Inns 4.6%
Pep Boys 4.4%
HealthCare Compare 4.3%
Green Tree Financial 4.3%
Officemax 4.0%
Franklin Resources 3.9%
Intimate Brands 3.8%
Morton International 3.8%
Dentsply International 3.8%
Fund-at-a-Glance
Objective: Mosaic Mid-Cap Growth seeks long-term capital appreciation
through the investment in small-to-mid sized companies.
Assets: $11.3 million
Date of Inception: July 21, 1983
Ticker: GTSGX
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 the Mosaic Funds.
Sincerely,
(signature)
Jay Sekelsky, CFA
Vice President and Portfolio Manager
<PAGE>
Investors Fund
Portfolio of Investments - June 30, 1997
(Unaudited)
Number of Shares Value
COMMON STOCKS: 89.6% of net assets
BASIC INDUSTRY: 3.5%
Morton International, Inc. 26,350 $ 795,440
CONSUMER PRODUCTS - CYCLICAL: 12.6%
Eastman Kodak Company 9,400 721,450
McDonald's Corporation 16,000 773,000
Pitney Bowes, Inc. 13,250 920,875
Telecommunications, Inc.* 29,700 441,787
CONSUMER PRODUCTS - FOOD & BEVERAGE: 9.6%
Conagra, Inc. 9,900 634,838
Dole Food Company 16,700 713,925
Nabisco Holdings Corporation 20,450 815,444
CONSUMER PRODUCTS - HOUSEHOLD PRODUCTS/OTHER: 3.6%
Kimberly-Clark Corporation 16,350 813,413
CONSUMER PRODUCTS - RETAIL: 7.4%
Pep Boys - Manny, Moe & Jack 23,800 810,688
Wal-Mart Stores, Inc. 25,500 862,219
FINANCIAL - BANKS: 4.1%
Norwest Corporation 16,650 936,562
FINANCIAL - INSURANCE: 3.6%
MGIC Investment Corporation 16,950 812,541
FINANCIAL - SERVICES: 9.1%
American Express Company 9,350 696,575
Federal Home Loan
Mortgage Corporation 19,450 668,593
Green Tree Financial Corporation 19,450 692,906
HEALTHCARE - DRUGS: 7.4%
Abbot Laboratories 11,150 744,262
Schering-Plough Corporation 19,200 919,200
HEALTHCARE - HOSPITALS/OTHER: 5.9%
Columbia/HCA Healthcare Corp 16,275 639,811
Dentsply International, Inc. 13,950 683,550
INDUSTRIAL: 1.2%
General Electric Company 4,000 261,500
TECHNOLOGY - HARDWARE: 12.4%
Cabletron Systems, Inc.* 16,750 474,234
Cisco Systems, Inc.* 3,000 201,375
Compaq Computer Corporation* 6,200 615,350
Hewlett-Packard Company 13,800 772,800
Seagate Technology, Inc.* 20,950 737,178
TECHNOLOGY - SEMICONDUCTOR/ELECTRONICS: 3.6%
Intel Corporation 5,725 811,877
TECHNOLOGY - SOFTWARE: 3.1%
Computer Associates Intl, Inc. 12,600 701,663
UTILITIES: 2.5%
Bell Atlantic Corporation 7,450 565,269
TOTAL COMMON STOCKS
(Cost $16,206,048) $20,238,325
SHORT TERM INVESTMENTS: 9.0% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities
Corporation issued 6/30/97 at 5.75%, due 7/1/97,
collateralized by $2,109,763 in United States
Treasury Notes due 8/31/00. Total proceeds at
maturity are $2,027,323.76. (Cost $2,027,000) $2,027,000
TOTAL INVESTMENTS
(Cost $18,233,048) $22,265,325
CASH, RECEIVABLES AND OTHER ASSETS, NET OF
LIABILITIES: 1.4% $308,469
NET ASSETS: 100% $22,573,794
*Non-income producing
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Balanced Fund
Portfolio of Investments - June 30, 1997 (Unaudited)
Number of Shares Value
COMMON STOCKS: 61.6% of net assets
BASIC INDUSTRY: 2.3%
Morton International, Inc. 12,750 $384,891
CONSUMER PRODUCTS - CYCLICAL: 8.3%
Eastman Kodak Company 4,275 328,106
McDonald's Corporation 8,450 408,241
Pitney Bowes, Inc. 6,150 427,425
Telecommunications, Inc.* 15,650 232,793
CONSUMER PRODUCTS - FOOD & BEVERAGE: 6.1%
Conagra, Inc. 4,425 283,753
Dole Food Company 7,700 329,175
Nabisco Holdings Corporation 9,850 392,768
CONSUMER PRODUCTS - HOUSEHOLD PRODUCTS/OTHER: 2.4%
Kimberly-Clark Corporation 7,900 393,025
CONSUMER PRODUCTS - RETAIL: 4.9%
Pep Boys-Manny, Moe & Jack 12,550 427,484
Wal-Mart Stores, Inc. 11,350 383,772
ENERGY: 2.3%
Amoco Corporation 2,000 173,875
Williams Companies, Inc. 4,569 199,894
FINANCIAL - BANKS: 2.8%
Norwest Corporation 8,100 455,625
FINANCIAL - INSURANCE: 2.2%
MGIC Investment Corporation 7,450 357,134
FINANCIAL - SERVICES: 6.0%
American Express Company 4,500 335,250
Federal Home Loan
Mortgage Corporation 9,400 323,125
Green Tree Financial Corporation 9,400 334,875
HEALTHCARE - DRUGS: 5.6%
Abbot Laboratories 5,000 333,750
Pfizer, Inc. 1,400 167,300
Schering-Plough Corporation 9,000 430,875
HEALTH CARE - HOSPITALS/OTHER: 3.7%
Columbia/HCA Healthcare Corporation 7,300 286,981
Dentsply International, Inc. 6,500 318,500
TECHNOLOGY - HARDWARE: 7.2%
Cabletron System, Inc.* 7,800 220,838
Compaq Computer Corporation* 2,950 292,788
Hewlett-Packard Company 6,050 338,800
Seagate Technology, Inc.* 9,800 344,839
TECHNOLOGY - SEMICONDUCTOR/ELECTRONICS: 2.4%
Intel Corporation 2,775 393,530
TECHNOLOGY - SOFTWARE: 2.2%
Computer Associates International, Inc. 6,700 $373,106
UTILITIES: 3.1%
Bell Atlantic Corporation 3,500 265,563
SBC Communications, Inc. 3,962 245,148
TOTAL COMMON STOCKS (Cost $7,952,594) $10,183,229
DEBT INSTRUMENTS: 29.7% of net assets
Columbia/HCA, 6.91%, 6/15/05 195,000 $193,050
Disney Global Bond, 6.75%, 3/30/06 275,000 271,906
Ford Motor Credit Corporation, 7.75%, 3/15/05 205,000 212,944
International Leasing Finance Corporation,
8.375%, 12/15/04 75,000 80,719
Kohl's Corporation, 6.7%, 2/1/06 230,000 223,100
Marshall & Ilsley, 6.375%, 7/15/03 100,000 97,250
Merrill Lynch, 7.375%, 5/15/06 50,000 51,000
Morgan Stanley Group, Inc., 6.875%, 3/1/07 225,000 222,187
Norwest Corporation, 6.625%, 3/15/03 90,000 89,438
Seagate Technology, Inc., 7.37%, 3/1/07 275,000 273,968
US Treasury Note, 5.625%, 1/31/98 725,000 725,015
US Treasury Note, 5.875%, 10/31/98 425,000 424,605
US Treasury Note, 6.25%, 5/31/00 625,000 625,444
US Treasury Note, 5.25%, 1/31/01 250,000 242,000
US Treasury Note, 5.625%, 2/28/01 600,000 586,902
US Treasury Note, 5.875%, 2/15/04 425,000 412,178
US Treasury Note, 6.5%, 8/15/05 175,000 174,546
TOTAL DEBT INSTRUMENTS (Cost $4,901,214) $4,906,252
COLLATERALIZED MORTGAGE OBLIGATIONS: 1.2%
Federal National Mortgage Association,
6.75%, 5/25/19, (Cost $198,312) 200,000 $197,138
SHORT TERM INVESTMENTS: 6.8% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities Corporation issued
6/30/97 at 5.75%, due 7/1/97, collateralized by $1,164,689 in United
States Treasury Notes due 8/31/00. Proceeds at maturity are
$1,119,178.73. (Cost $1,119,000) $1,119,000
TOTAL INVESTMENTS (Cost $14,171,120) $16,405,619
CASH, RECEIVABLES AND OTHER ASSETS, NET OF
LIABILITIES: 0.7% $126,669
NET ASSETS: 100% $16,532,288
*Non-income producing
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Mid-Cap Growth Fund
Portfolio of Investments - June 30, 1997 (Unaudited)
Number of Shares Value
COMMON STOCKS: 101.4% of net assets
BASIC INDUSTRY: 3.8%
Morton International, Inc. 14,400 $434,700
CONSUMER PRODUCTS - CYCLICAL: 16.7%
Callaway Golf Company 10,350 367,425
Clayton Homes, Inc. 20,050 285,712
LaQuinta Inns, Inc. 23,775 520,078
Tommy Hilfiger Corporation 9,200 369,725
Unitog Company 13,100 352,063
CONSUMER STAPLES - FOOD & BEVERAGE: 7.7%
Dole Food Company, Inc. 12,000 513,000
Richfood Holdings, Inc. 14,100 366,600
CONSUMER STAPLES - RETAIL: 12.2%
Intimate Brand, Inc. 20,750 435,750
Officemax, Inc.* 31,150 449,728
Pep Boys - Manny, Moe & Jack 14,750 502,422
FINANCIAL - INSURANCE: 7.1%
Allied Group, Inc. 8,550 324,900
MGIC Investment Corporation 10,000 479,375
FINANCIAL - SERVICES: 16.3%
Equifax, Inc. 15,800 587,562
Franklin Resources, Inc. 6,050 439,003
Green Tree Financial Corporation 13,600 484,500
United Asset Management Corporation 12,100 342,581
HEALTHCARE - DRUGS: 3.6%
Watson Pharmaceutical, Inc.* 9,700 409,219
HEALTHCARE - HOSPITALS/OTHER: 15.0%
Dentsply International, Inc. 8,750 428,203
Express Scripts, Inc.* 9,100 378,219
HealthCare Compare Coporation* 9,400 492,913
Sybron International Corporation 10,300 410,712
TECHNOLOGY - HARDWARE: 4.3%
Cabletron Systems, Inc.* 7,250 $205,266
EMC Corporation* 7,325 285,675
TECHNOLOGY - SEMICONDUCTOR/ELECTRONICS: 3.1%
Arrow Electronics, Inc.* 6,625 351,953
TECHNOLOGY - SOFTWARE: 11.6%
CFI Proservices, Inc.* 18,050 331,669
Fiserv, Inc.* 7,750 346,813
IKOS Systems, Inc.* 16,250 349,375
IFR Systems, Inc.* 15,550 287,675
TOTAL COMMON STOCKS
(Cost $10,034,337) $11,532,816
SHORT TERM INVESTMENTS: 12.5% of net assets
REPURCHASE AGREEMENT
With Donaldson, Lufkin & Jenrette Securities Corporation issued
6/30/97 at 5.75%, due 7/1/97, collateralized by $1,475,898 in United
States Treasury Notes, due 8/31/00. Total proceeds at maturity are
$1,418,226.49. (Cost $1,418,000) $1,418,000
TOTAL INVESTMENTS (Cost $11,452,337) $12,950,816
CASH, RECEIVABLES AND OTHER ASSETS, NET OF
LIABILITIES: (13.9%) $(1,577,296)
NET ASSETS: 100% $11,373,520
*Non-income producing
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
Mid-Cap Growth Fund Investors Fund Balanced Fund
ASSETS
Investments, at cost $11,452,337 $18,233,048 $14,171,120
Investments, at value (Notes 1 and 2)
Investment securities $11,532,816 $20,238,325 $15,286,619
Repurchase agreement 1,418,000 2,027,000 1,119,000
Total investments $12,950,816 $22,265,325 $16,405,619
Cash 676 27,949 22,521
Receivables
Investment securities sold 0 857,044 293,975
Dividends and interest 4,220 21,999 108,960
Capital shares sold 0 476 500
Other assets 144 260 2,374
Total assets $12,955,856 $23,173,053 $16,833,949
LIABILITIES
Payables
Dividends $129 0 $5,377
Investment securities purchased 366,436 554,729 266,225
Accrued professional fees 0 24,557 18,498
Accrued audit fees 0 3,513 2,651
Capital shares redeemed 1,215,747 11,914 0
Other liabilities 24 4,546 8,910
Total liabilities $1,582,336 $599,259 $301,661
NET ASSETS (Note 6) $11,373,520 $22,573,794 $16,532,288
CAPITAL SHARES OUTSTANDING 1,224,806 1,072,675 878,691
NET ASSET VALUE PER SHARE $9.28 $21.04 $18.81
The Notes to Financial Statements are an integral part of these statements.
Statement of Operations
For the periods ended June 30, 1997 (Unaudited)
Mid-Cap Growth Fund Investors Fund Balanced Fund
Three Months Ended Six Months Ended Six Months Ended
June 30, 1997 June 30, 1997 June 30, 1997
INVESTMENT INCOME (Note 1)
Interest income $17,278 $60,405 $151,913
Dividend income 15,493 76,998 41,326
Other income 0 13,254 13,206
Total investment income 32,771 150,657 206,445
EXPENSES (Notes 3 and 5)
Investment advisory fees $21,939 $58,709 $46,747
Transfer agent and admin fees 8,659 11,726 17,429
Securities reg and blue sky fees 3,299 807 2,932
Auditing fees 953 3,985 4,135
Trustee fees 750 1,613 1,613
Custodian fees 383 2,084 2,315
Printing costs 826 3,216 3,696
Fidelity bond 70 457 445
Legal fees 375 891 1,062
Other fees 0 1,289 3,265
Total expenses 37,254 84,777 83,639
NET INVESTMENT INCOME(LOSS) $(4,483) $65,880 $122,806
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain on investments $68,970 $1,153,060 $691,511
Change in net unrealized
appreciation of investments 1,615,952 480,768 228,218
NET GAIN ON INVESTMENTS 1,684,922 1,633,828 919,729
TOTAL INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,680,439 $1,699,708 $1,042,535
The Notes to Financial Statements are an integral part of these statements.
<PAGE>
Statement of Changes in Net Assets
<TABLE>
Mid-Cap Growth Fund Investors Fund Balanced Fund
<S> <C> <C> <C> <C> <C> <C>
Three Year Six Year Six Year
Months Ended Ended Months Ended Ended Months Ended Ended
June 30, 1997 March June 30, 1997 December June 30, 1997 December
(unaudited) 31, 1997 (unaudited) 31, 1996 (unaudited) 31, 1996
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income (loss) $(4,483) $(17,803) $65,880 $149,156 $122,806 $221,615
Net realized gain on investments 68,970 4,734,760 1,153,060 2,420,310 691,511 1,558,337
Net unrealized appreciation
(depreciation) of investments 1,615,952 (5,199,869) 480,768 5,172 228,218 (146,758)
Total increase (decrease) in net
assets resulting from operations$1,680,439 $(482,912) $1,699,708 $2,574,638 $1,042,535 $1,633,194
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income 0 (15,133) (65,255) (153,894) (154,220) (221,362)
From net capital gains (2,002,959) (9,039,372) (531,036) (2,421,537) (524,108) (1,554,066)
Total distributions (2,002,959) (9,054,505) (596,291) (2,575,431) (678,328) (1,775,428)
CAPITAL SHARE TRANSACTIONS (Note 8) 731,554 3,410,899 8,358,825 1,251,895 5,150,322 303,122
TOTAL INCREASE (DECREASE) IN NET
ASSETS 409,034 (6,126,518) 9,462,242 1,251,102 5,514,529 160,888
NET ASSETS
Beginning of period $10,964,486 $17,091,004 $13,111,552 $11,860,450 $11,017,759 $10,856,871
End of period $11,373,520 $10,964,486 $22,573,794 $13,111,552 $16,532,288 $11,017,759
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
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. Average
begin income (loss) on invest. invest. fm. cap.Total end of Total period net to average turnover commn
period (loss) invest's operat's income gains dist'ions period return (1000s) assets net assets rate rate paid
Mid-Cap Growth Fund -- Fiscal Years Ended March 31
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
19971 $9.88 $(0.004) $1.210 $1.206 0 $(1.805) $(1.805) $9.28 15.03% $11,370 0.31% (0.04)% 24% $0.0797
19973 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 0.0729
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 --
Investors Fund -- Fiscal Years Ended December 31
19972$19.16 $0.102 $2.676 $2.778$(0.098)$(0.798) $(0.896)$21.04 14.48% $22,574 0.56% 0.53% 27%5 $0.0800
1996 18.03 0.240 3.910 4.150 (0.250) (4.010) (4.260) 17.92 23.36 13,112 1.17 1.20 81 0.0800
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 0.0819
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 --
1992 16.66 0.220 1.590 1.810 (0.220) (0.100) (0.320) 18.15 10.98 8,878 1.22 1.33 69 --
Balanced Fund -- Fiscal Years Ended December 31
19972$18.09 $0.155 $1.761 $1.916$(0.246)4(0.940) $(1.186)$18.81 10.62% $16,532 0.73% 1.07% 34%5 $0.0800
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 0.0800
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 0.0818
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 --
1992 23.00 0.590 1.300 1.890 (0.600) (0.640) (1.240) 23.65 8.43 14,706 1.90 2.53 72 --
</TABLE>
1 For the three months ended June 30, 1997.
2 For the six months ended June 30, 1997. (All data reflect share price
adjustment due to fund merger on June 13, 1997. See Note 1.)
3 For year ended March 31. Effective 7/31/96, the investment advisory
services transferred to Madison Investment Advisors, Inc./Bankers
Finance Advisors, LLC from Bankers Finance Investment Management Corp.
4 Includes distribution attributable to net investment income from
Mosaic Equity Income Fund. See Note 1.)
5 See Note 7.
<PAGE>
Mosaic Equity Trust
Notes to Financial Statements
For the periods ended June 30, 1997 (unaudited)
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 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, 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.
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.
Share Price Adjustment Due to Merger: On June 13, 1997, the Balanced
Fund shares were adjusted pursuant to the merger as discussed above by
the following factors: adjustment to shares, 1.21815703952; adjustment
to net asset value per share, 0.8209122203. Similarly, the Investors
Fund shares were adjusted as follows: adjustment to shares,
0.93467102193; adjustment to net asset value per share, 1.06989515726.
Fiscal Year: Beginning April 1, 1997, the Trust's fiscal year will end
on December 31. The predecessors of the Investors and Balanced Funds had
previously maintained December 31 fiscal years and this report
represents a full six-month Semi-Annual Report for such funds. With
regard to the Mid-Cap Growth Fund, this Interim Report is the first of
two financial statements the Trust will provide for its short fiscal
year beginning April 1, 1997 and ending December 31, 1997 and serves to
adjust the Trust's financial reporting schedule.
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 Investment Advisors,
Inc./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 Balanced 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 is responsible for the fees and expenses of trustees who are
affiliated with the Advisor and certain promotional expenses. For the
six-months ended June 30, 1997, outside trustee fees were $1,613 each
for the Investors and Balanced Funds and for the three-months ended June
30, 1997, were $750 for the Mid-Cap Growth Fund.
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, 1997:
Mid-Cap Growth Fund Investors Fund Balanced Fund
Aggregate cost $11,452,337 $18,233,048 $14,171,120
Gross unrealized
appreciation $1,618,671 $4,369,233 $2,405,562
Gross unrealized
depreciation (120,192) (336,956) (171,063)
Net unrealized
appreciation $1,498,479 $4,032,277 $2,234,499
5. Other Expenses. The Trust reimburses the Advisor under a Services
Agreement for all the Trust's direct expenses, namely fees for blue sky,
SEC registration, custody, legal and accounting, printing, insurance and
the independent trustees. All remaining support services are provided by
the Advisor for a fee equal to 0.25% of average net assets of each
particular Trust portfolio up to $10,000,000, which amount generally
declines when a portfolio's assets rise above $10,000,000 as follows:
$10,000,001 through $20,000,000, 0.22%; $20,000,001 through $50,000,000,
0.15%; and $50,000,001 through $100,000,000, 0.12%. In addition,
pursuant to the Services Agreement, each Fund covered by this Report
pays an "activity fee" of 0.05% of average net assets to the Advisor.
For the period from June 13, 1997 through December 31, 1997, such direct
and other expenses (not including advisory fees) are capped at .40% for
the Investors Fund and .55% for the Balanced Fund. For the six-months
ended June 30, 1997, such expenses paid by the Investors Fund were
$26,068 and by the Balanced Fund were $36,892. For the three months
ended June 30, 1997, such expenses paid by the Mid-Cap Growth Fund were
$15,315.
6. Net Assets. At June 30, 1997, net assets included the following:
Mid-Cap Investors Balanced
Growth Fund Fund Fund
Net paid in capital on shares of
beneficial interest $9,810,554 $17,845,662 $13,808,404
Undistributed net investment income (4,483) 8,949 0
Accumulated net realized gains 68,970 686,906 489,385
Net unrealized appreciation
(depreciation) of investments 1,498,479 4,032,277 2,234,499
Total net assets $11,373,520 $22,573,794 $16,532,288
7. Investment Transactions. Purchases and sales of securities other than
short-term securities were as follows:
Mid-Cap Growth Fund Investors Fund Balanced Fund
Three Months Ended Six Months Ended Six Months Ended
June 30, 1997 June 30, 1997 June 30, 1997
Purchases $2,486,888 $4,655,473 $4,031,079
Sales 2,768,610 3,687,011 3,692,096
For purposes of determining portfolio turnover, purchases and sales by
the funds into which the Investors Fund and Balanced Fund merged on June
13, 1997, and the transfer of securities pursuant to such mergers are
not considered.
8. Capital Share Transactions. An unlimited number of capital shares,
without par value, are authorized. Transactions in capital shares for
the following periods were:
<TABLE>
Mid-Cap Growth Fund Investors Fund Balanced Fund
Three Year Six Year Six Year
Months Ended Ended Months Ended Ended Months Ended Ended
June 30, 1997 March June 30, 1997 December June 30, 1997 December
(unaudited) 31, 1997 (unaudited) 31, 1996 (unaudited) 31, 1996
<S> <C> <C> <C> <C> <C> <C>
In Dollars
Shares sold $10,618,800 $31,470,896 $419,422 $717,580 $183,359 $190,147
Additional shares in
connection with
merged funds -- -- 8,167,826 -- 5,629,050 --
Shares issued in
reinvestment of
dividends 1,960,688 8,494,283 560,427 2,404,639 645,179 1,699,086
Total shares issued 12,579,488 39,965,179 9,147,675 3,122,219 6,457,588 1,889,233
Shares redeemed (11,847,934) (36,554,280) (788,850)(1,870,324) (1,307,266)(1,586,111)
Net increase $731,554 $3,410,899 $8,358,825 $1,251,895 $5,150,32 $303,122
In Shares
Shares sold 484,895 2,675,134 22,749 63,002 8,103 7,944
Additional shares in
connection with
merged funds -- -- 381,143 -- 295,059 --
Shares issued in
reinvestment of dividends243,867 693,789 28,205 132,406 28,402 75,908
Total shares issued 728,762 3,368,923 432,097 195,408 331,564 83,852
Shares redeemed (415,100) (3,093,601) (41,972) (95,706) (57,367) (67,635)
Net increase 313,662 275,322 390,125 99,702 274,197 16,217
</TABLE>
Mosaic Equity Trust
Special Vote Information
June 30, 1997 (Unaudited)
On May 28, 1997, Annual Meetings of Shareholders of Bascom Hill
Investors, Inc. and Bascom Hill BALANCED Fund, Inc. were held at 4:00
p.m. in Madison, Wisconsin. The shareholders of each respective fund
were requested to vote on the merger of their fund with Mosaic Equity
Trust Investors Fund and Equity Income Fund, respectively, in accordance
with the applicable Prospectus/Proxy Statement dated May 1, 1997. Of the
741,199.383 outstanding shares of Bascom Hill Investors, Inc.,
430,831.055 voted in favor of the merger (58.13%), 8.13% in excess of
the amount required to approve the merger. Of the 464,095.648
outstanding shares of Bascom Hill BALANCED Fund, Inc., 274,747.791 voted
in favor of the merger (59.2%), 9.2% in excess of the amount required to
approve the merger.
<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
Investors Fund
Balanced Fund
Mid-Cap Growth Fund
Worldwide Growth Fund
Mosaic Income Trust
High Yield Fund
Government Fund
Mosaic Bond Fund
Mosaic Tax-Free Trust
Arizona Fund
Maryland Fund
Missouri Fund
Virginia Fund
National Fund
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 Fort Myer Drive
Arlington Virginia 22209-3108
http://www.mosaicfunds.com
<PAGE>
MOSAIC EQUITY TRUST
WORLDWIDE GROWTH FUND
Interim Report
June 30, 1997
Discussion of Second Quarter
For the three months ended June 30, 1997, the Mosaic Worldwide Growth
Fund achieved a total return of 13.37%. This return placed the fund in
the top 31% of all diversified emerging markets funds for the quarter,
as measured by Morningstar, Inc. In addition, the fund's one-year
return as of June 30 ranks in the top 30%. As the world's emerging
markets continue their long-term recovery from the 1994-1995 bear market
conditions, our value-based investment strategy continues to outperform.
This quarter's performance was driven by the strong performance of Latin
American markets. The two countries in which the fund is most heavily
weighted, Brazil and Mexico, saw their markets return 40.90% and 19.97%
in the June quarter, respectively. The Brazilian market continues to
reflect investor optimism with regard to the privatization of state-
owned enterprises such as Telebras and Electrobras, while Mexican
companies such as Grupo Alfa are experiencing rapid earnings growth from
depressed levels in 1995 and 1996.
After a broad-based rally in the first half of the year, Latin American
markets have recently experienced some volatility. Events such as a
political crisis in Peru and concern about the overvaluation of the
Brazilian currency have led recent market declines. While these events
may cause some short-term setbacks, valuations throughout the region
continue to look reasonable.
In contrast, the fund has had minimal exposure to the broad-based
weakness in the Asian stock markets, which have vastly underperformed
most of the world's stock markets over the last year. In June, markets
throughout the region suffered as the Thai Baht was devalued by 20%.
There is also a general sense of uncertainty over the future of Hong
Kong, as the British returned the colony to the Chinese on July 1.
We are closely following events in Asia. For the first time in over
four years, many of the region's blue chip stocks are trading at a
discount to the S&P 500. In 1993's bull market, investors accorded
stocks in countries such as Malaysia and Singapore premium valuations
due to the region's secular growth prospects. Now that premiums have
contracted significantly, the region may be poised for stronger relative
performance. Currently, our biggest investments in the region are in
the semiconductor industry; Samsung Electronics in South Korea and
Sunright in Singapore continue to be two of our core holdings.
In other markets, we continue to see strong returns in Greece, where the
market has soared due to declining interest rates and inflation, and
strong economic growth. With the exception of the Russian stock market,
the Greek market has been the best performing in Europe in 1997.
In closing, we thank you for your continued confidence in the Mosaic
Worldwide Growth Fund. We will continue to strive to identify promising
investment opportunities outside the U.S., to provide our investors with
balanced exposure to some of the world's fastest growing economies.
1655 Ft. Myer Drive, Arlington, Virginia 22209 888-670-3600
<PAGE>
Worldwide Growth Fund
Portfolio of Investments - June 30, 1997
(Unaudited)
Number of
Country Shares Value
COMMON STOCKS: 74.7% of Net Assets
BANKING AND FINANCIAL SERVICES: 15.8%
Alpha Credit Bank Greece 1,333 $ 90,670
Banco Frances del Rio de la Plata
S.A., ADR Argentina 1,725 56,062
Banco Industrial Colombiano, ADR Columbia 2,200 39,600
Banco Latinoamerciano de
Exportaciones, S.A. Panama 1,500 64,688
*Bangkok Bank Company Ltd. Thailand 5,800 30,353
Commerce Asset Holdings Berhad Malaysia 14,000 36,886
*Grupo Financiero Banamex Accival
S.A. de C.V., Series L Mexico 11,247 27,086
Housing & Commercial Bank South Korea 2,250 37,636
Komercni Banka A.S., GDR (144A) Czech Republic 2,500 51,875
Shinhan Bank South Korea 1,150 14,297
BUILDING MATERIALS: 1.7%
Cemex, S.A. de C.V., Series B Mexico 10,000 48,418
CONTAINERS: 1.4%
Sinocan Holdings Limited Hong Kong/
China 80,000 39,499
ELECTRIC UTILITIES: 2.0%
Empresa Nacional Electricidad
S.A., ADR Chile 2,500 56,406
ELECTRONICS: 9.7%
Samsung Electronics Company South Korea 828 65,974
Sunright Limited Singapore 80,000 145,455
Venture Manufacturing Ltd. Singapore 20,000 65,175
ENGINEERING AND CONSTRUCTION: 0.9%
Inversiones y Representacion S.A.,
Class B Argentina 5,576 24,423
FOOD PROCESSING: 5.0%
Tablex S.A. de C.V., Series 2 Mexico 20,059 63,229
Zaklady Przemyslu Cukierniczego
Jutrzenka S.A. Poland 4,000 80,414
HOME APPLIANCES: 3.2%
Arcelik A.S. Turkey 628,500 84,664
Singer Thailand Public Company
Limited Thailand 1,800 7,302
HOSPITAL MANAGEMENT AND SERVICES: 2.5%
Athens Medical Center S.A. Greece 9,000 72,250
INVESTMENT COMPANY: 6.7%
Taiwan Fund, Inc. Taiwan 3,500 88,375
*The India Fund Inc. India 3,000 28,688
*The Morgan Stanley India
Investment Fund, Inc. India 1,500 19,406
Turkish Investment Fund Turkey 8,000 53,500
MANUFACTURING: 2.1%
Alfa, S.A. de C.V. Mexico 8,914 60,918
MULTI-INDUSTRY: 4.7%
*Desc, S.A. de C.V., ADR Mexico 2,577 75,055
First Pacific Company Ltd. Hong Kong/
China 45,593 58,264
OIL AND GAS: 4.2%
Petronas Gas Berhad Malaysia 14,000 51,030
YPF Sociedad Anonmia, ADR Argentina 2,200 67,650
REAL ESTATE: 2.0%
O.Y.L. Industries Berhad Malaysia 8,800 55,784
RUBBER PRODUCTS: 2.0%
Compania Goodyear del Peru Peru 10,000 60,376
TELECOMMUNICATIONS: 9.1%
CPT Telefonica del Peru S.A.,
B shares Peru 36,112 96,344
ECI Telecommunications Limited
Designs Israel 2,500 74,375
Jasmine International Public
Company Limted Thailand 10,000 9,736
*SPT Telekom A.S. Czech Republic 500 51,813
Telecom Argentina Stet-France
Telecom S.A., ADR Argentina 500 26,250
TEXTILES: 1.7%
P.T. Indorama Synthetics Indonesia 54,000 48,863
TOTAL COMMON STOCKS (Cost $1,844,728) $2,128,789
PREFERRED STOCKS: 16.6% of Net Assets
BANKING AND FINANCIAL SERVICES: 2.6%
Uniao de Bancos Brasileiros S.A. Brazil 2,000,000 73,352
ELECTRONICS: 0.3%
Samsung Electronics Company South Korea 240 9,087
MULTI-INDUSTRY: 1.4%
Randon Participacoes S.A. Brazil 50,000,000 39,926
OIL AND GAS: 5.2%
Petroleo Brasileiro S.A. Brazil 530,000 148,617
STEEL: 0.5%
Compania Siderurgica Paulista,
Series B Brazil 25,000 13,928
TELECOMMUNICATION: 6.6%
Telecomunicacoes Brasileiras,
S.A., ADR Brazil 1,250 189,687
TOTAL PREFERRED STOCKS (Cost $256,736) $ 474,597
RIGHTS AND WARRANTS: 0.4% of Net Assets
BANKING AND FIANCIAL SERVICES: 0.4%
Alpha Credit Rights Greece 266 7,461
Commerce Asset Holdings Rights Malaysia 2,800 166
Commerce Asset Holdings Warrants Malaysia 1,750 3,501
ELECTRONICS: 0.0%
Samsung Common Rights South Korea 18 482
TOTAL RIGHTS AND WARRANTS (Cost $0) $ 11,610
REPURCHASE AGREEMENT: 7.9% of Net Assets
With Donaldson, Lufkin & Jenrette Securities Corporation issued 6/30/97
at 5.75%, due 7/1/97, collateralized by $234,187 in United States
Treasury Notes due 8/31/00. Proceeds at maturity are $225,035.94. (Cost
$225,000) 225,000
TOTAL INVESTMENT (Cost $2,326,465)+ $2,839,996
Notes to the Portfolio of Investments:
* Non-income producing
+ Aggregate cost for federal income tax purposes is $2,326,465 at June
30, 1997, and the net unrealized appreciation is $513,531 comprised of
gross unrealized appreciation of $785,665 and gross unrealized
depreciation of $272,134.
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 June 30, 1997 these securities amounted to $51,875 or less than 1%
of net assets.
<PAGE>
Worldwide Growth Fund
Statement of Assets and Liabilities
June 30, 1997 (Unaudited)
ASSETS
Investments, at cost $ 2,326,465
Investments, at value (Notes 1 and 2)
Investment securities 2,614,996
Repurchase agreement 225,000
Total investments 2,839,996
Cash 585
Receivables
Dividends and interest 10,974
Other Assets 34
Total assets 2,851,589
LIABILITIES
Other liabilities 2
Total liabilities 2
NET ASSETS (Note 5) $ 2,851,587
CAPITAL SHARES OUTSTANDING 229,341
NET ASSET VALUE PER SHARE $12.434
Worldwide Growth Fund
Statement of Operations
For the Three Months Ended June 30, 1997 (Unaudited)
INVESTMENT INCOME (Note 1)
Interest income $ 3,508
Dividend income(net of foreign taxes of $762)13,012
Total income 16,520
EXPENSES (Notes 3 and 4)
Investment advisory fee 6,674
Transfer agent and administrative fees 2,664
Securities registration and blue sky fees 5,115
Auditing fees 357
Trustees' fees 750
Custodian fees 2,952
Printing costs 546
Fidelity bond 32
Legal fees 225
Investment advisory fees waived (3,337)
Total expenses 15,978
NET INVESTMENT INCOME 542
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investments (1)
Net realized loss on foreign currency
transactions (99)
Net unrealized appreciation of investments 338,298
Net unrealized depreciation on foreign
currency transactions (83)
NET GAIN ON INVESTMENTS 338,115
TOTAL INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS $ 338,657
Worldwide Growth Fund
Statement of Changes in Net Assets
For the Three Months For the Year
Ended June 30, 1997 Ended
(Unaudited) March 31, 1997
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
Net investment income $542 $2,895
Net realized gain (loss) on investments (1) 60,864
Net realized loss on foreign currency transactions(99) (6,455)
Net unrealized appreciation of investments 338,298 225,620
Net unrealized appreciation (depreciation) on
foreign currency transactions (83) 3,044
Total increase in net assets resulting
from operations 338,657 285,968
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income 0 0
CAPITAL SHARE TRANSACTIONS (Note 7) (69,255) (819,492)
TOTAL INCREASE(DECREASE) IN NET ASSETS 269,402 (533,524)
NET ASSETS
Beginning of Period 2,582,185 3,115,709
End of Period $2,851,587 $2,582,185
Worldwide Growth Fund
Financial Highlights
Selected data for a share outstanding throughout each period:
<TABLE>
<CAPTION>
Year ended March 31,
<C> <C> <C> <C> <C>
1997** 1997(4) 1996 1995 1994*
Net asset value beginning
of period $10.968 $9.862 $ 8.501 $12.511 $10.000
Net investment income (loss) 0.002 0.012 0.044 0.022 (0.035)
Net realized and unrealized
gains (losses) on securities 1.464 1.094 1.387 (2.491) 2.546
Total from investment
operations 1.466 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 $12.434 $10.968 9.862 $8.501 12.511
Total return 65.46%2 11.21% 16.88% (22.20)% 26.19%2
Net assets at end of
period (thousands) 2,852 2,582 3,116 3,319 3,526
Expenses to average net assets3 2.38%2 2.50% 2.38% 2.05% 1.81%2
Net income to average net
assets 0.08%2 0.10% 0.43% 0.21% (0.48)%2
Portfolio turnover -- 47% 78% 65% 83%
Average commission paid rate5 -- $0.0035
* 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 ratios of
expenses and net investment loss to average net assets would have been
2.88% and (0.42)%, annualized, respectively, for the three months ended
June 30, 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 Effective July 31, 1996, the investment advisory services transferred
to Bankers Finance Advisors, LLC from Bankers Finance Investment
Management Corp. (See Note 3).
5 Required disclosure for fiscal years beginning after September 1, 1995
pursuant to SEC regulations.
** For the three months ended June 30, 1997 (unaudited).
<PAGE>
Worldwide Growth Fund
Notes to Financial Statements
June 30, 1997 (Unaudited)
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.
Fiscal year: Beginning April 1, 1997, the Trust's fiscal year will end
on December 31. This Interim Report is the first of two financial
statements the Trust will provide for the short fiscal year beginning
April 1, 1997 and ending December 31, 1997 and serves to adjust the
Trust's financial reporting schedule. The Trust will not provide a six-
month financial statement for the period ending September 30, 1997, but
will provide an audited financial statement for the short fiscal year.
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
period, caused by 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 Fund 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 calendar and fiscal year end. Capital gain distributions, if any,
are declared and paid 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 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 three months ended June 30, 1997, the Advisor waived
$3,337 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
three months ended June 30, 1997, independent Trustees fees of $750 were
paid by the Fund.
4. Other Expenses. The Trust reimburses the Advisor under a Services
Agreement for all the Trust's direct expenses, namely fees for bluesky,
SEC registration, custody, legal and accounting, printing, insurance and
the independent trustees. All remaining support services are provided
by the Advisor for a fee equal to 0.25% of average net assets of each
particular Trust portfolio up to $10,000,000, which amount gradually
declines when a portfolio's assets rise above $10,000,000 as follows:
$10,000,001 through $20,000,000, 0.22%; $20,000,001 through $50,000,000,
0.15%; and $50,000,001 through $100,000,000, 0.12%. In addition,
pursuant to the Services Agreement, the Fund pays an "activity fee" of
0.15% of average net assets to the Advisor. For the three months ended
June 30, 1997, a fee of $2,664 has been paid to the Advisor under the
Services Agreement and direct expenses of $9,977 have been reimbursed to
the Advisor under the Services Agreement.
5. Net Assets. At June 30, 1997, net assets include the following:
Net paid in capital on shares of beneficial interest $2,876,866
Undistributed net investment gain 542
Net undistributed realized loss (539,262)
Net unrealized appreciation of investments and foreign
currency 513,441
Total net assets $2,851,587
6. Investment Transactions. Purchases and sales of securities other than
short-term securities for the three months ended June 30, 1997 were $14
and $0, 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:
Three months
ended Year ended
June 30, 1997 March 31, 1997
In Dollars
Shares sold $ 147,321 $ 561,455
Shares issued in reinvestment of
dividends -- --
Total shares issued 147,321 561,455
Shares redeemed (216,576) (1,380,947)
Net decrease $ (69,255) $ (819,492)
In Shares
Shares sold 12,683 52,876
Shares issued in reinvestment of
dividends -- --
Total shares issued 12,683 52,876
Shares redeemed (18,770) (133,392)
Net decrease (6,087) (80,516)
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