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<PAGE> PAGE 2
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 16
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SIGNATURE RICHARD MASON
TITLE GENERAL COUNSEL
Deloitte & Touche LLP
University Square
117 Campus Drive Telephone: (609) 520-2300
Princeton, New Jersey 08540 Facsimile: (609) 520-2413
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of
Mosaic Income Trust:
In planning and performing our audit of the financial statements of the High
Yield, Government and Bond Funds of the Mosaic Income Trust (the "Trust") for
year ended December 31, 1998, (on which we have issued our report dated
February 10, 1999), we considered its internal control, including control
activities for safeguarding securities, in order to determine our auditing
procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-SAR, and not to
provide assurance on the Trust's internal control.
The management of the Trust is responsible for establishing and maintaining
internal control. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs
of controls. Generally, controls that are relevant to an audit pertain to the
entity's objective of preparing financial statements for external purposes
that are fairly presented in conformity with generally accepted accounting
principles. Those controls include the safeguarding of assets against
unauthorized acquisition, use, or disposition.
Because of inherent limitations in any internal control, misstatements due
to error or fraud may occur and not be detected. Also, projections of any
evaluation of internal control to future periods are subject to the risk that
the internal control may become inadequate because of changes in conditions,
or that the degree of compliance with policies or procedures may deteriorate.
Our consideration of the Trust's internal control would not necessarily
disclose all matters in internal control that might be material weaknesses
under standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control components does not reduce
to a relatively low level the risk misstatements caused by error or fraud in
amounts that would be material in relation to the financial statements being
audited may occur and not be detected within a timely period by employees in
the normal course of performing their assigned functions. However, we noted
no matters involving the Trust's internal control and its operation, inclu-
ding controls for safeguarding securities, that we consider to be material
weaknesses as defined above as of December 31, 1998.
This report is intended solely for the information and use of management,
the Board of Trustees, and the Securities and Exchange Commission and is not
intended to be and should not be used by anyone other than these specified
parties.
(signature)
Deloitte & Touche LLP
February 10, 1999
Deloitte Touche
Tohmatsu
International
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule constains summary financial data extracted from the Registrant's
current Form NSAR, Annual Report and prospectus and is qualified in its entirety
by reference to such source documents.
</LEGEND>
<CIK> 0000710978
<NAME> MOSAIC INCOME TRUST
<SERIES>
<NUMBER> 1
<NAME> HIGH YIELD FUND
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<S> <C>
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<REALIZED-GAINS-CURRENT> (239)
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<NET-CHANGE-IN-ASSETS> (362)
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial data extracted from the Registrant's
current Form NSAR, Annual Report and prospectus and is qualified in its entirety
by reference to such source documents.
</LEGEND>
<CIK> 0000710978
<NAME> MOSAIC INCOME TRUST
<SERIES>
<NUMBER> 2
<NAME> GOVERNMENT FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
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<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (377)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 265
<NET-ASSETS> 5,763
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 342
<OTHER-INCOME> 0
<EXPENSES-NET> 64
<NET-INVESTMENT-INCOME> 278
<REALIZED-GAINS-CURRENT> 45
<APPREC-INCREASE-CURRENT> 139
<NET-CHANGE-FROM-OPS> 461
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 278
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 712
<NUMBER-OF-SHARES-REDEEMED> 884
<SHARES-REINVESTED> 252
<NET-CHANGE-IN-ASSETS> 264
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (422)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 35
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 64
<AVERAGE-NET-ASSETS> 5,629
<PER-SHARE-NAV-BEGIN> 9.89
<PER-SHARE-NII> 0.49
<PER-SHARE-GAIN-APPREC> 0.33
<PER-SHARE-DIVIDEND> 0.49
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.22
<EXPENSE-RATIO> 1.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
Registrant's current Form NSAR, Annual Report and prospectus and is qualified
in its entirety by reference to such source documents.
</LEGEND>
<CIK> 0000710978
<NAME> MOSAIC INCOME TRUST
<SERIES>
<NUMBER> 3
<NAME> BOND FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 790
<INVESTMENTS-AT-VALUE> 811
<RECEIVABLES> 12
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 824
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,086
<SHARES-COMMON-STOCK> 39
<SHARES-COMMON-PRIOR> 54
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (284)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 21
<NET-ASSETS> 824
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 59
<OTHER-INCOME> 0
<EXPENSES-NET> 11
<NET-INVESTMENT-INCOME> 48
<REALIZED-GAINS-CURRENT> 10
<APPREC-INCREASE-CURRENT> 13
<NET-CHANGE-FROM-OPS> 71
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 48
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22
<NUMBER-OF-SHARES-REDEEMED> 391
<SHARES-REINVESTED> 44
<NET-CHANGE-IN-ASSETS> (303)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (294)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 5
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11
<AVERAGE-NET-ASSETS> 979
<PER-SHARE-NAV-BEGIN> 20.75
<PER-SHARE-NII> 1.03
<PER-SHARE-GAIN-APPREC> 0.46
<PER-SHARE-DIVIDEND> 1.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.21
<EXPENSE-RATIO> 1.11
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
