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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 5
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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 15
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<PAGE> PAGE 16
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SIGNATURE RICHARD MASON
TITLE GENERAL COUNSEL
<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
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<NAME> INTERMEDIATE INCOME FUND
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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>
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<NAME> GOVERNMENT FUND
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Deloitte & Touche LLP
Two Prudential Plaza
180 North Stetson Avenue
Chicago, Illinois 60601-6779
Telephone: (312) 946-3000
Facsimile: (312) 946-2600
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
MOSAIC INCOME TRUST:
In planning and performing our audits of the financial statements of Mosaic
Income Trust, including Government Fund and Intermediate Income Fund
(collectively the "Funds") for the year ended December 31, 1999, (on which
we have issued our report dated February 15, 2000), 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 Funds' internal control.
The management of the Funds 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
deteriorates.
Our consideration of the Funds' 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 that misstatements due to 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 Funds' internal control and its
operation, including controls for safeguarding securities, that we consider
to be material weaknesses as defined above as of December 31, 1999.
This report is intended solely for the information and use of management,
the Board of Trustees of Mosaic Income Trust, and the Securities and
Exchange Commission and is not intended to be and should not be used by
anyone other than these specified parties.
DELOITTE & TOUCHE LLP
(signature)
Chicago, Illinois
February 15, 2000
Exhibit To Form NSAR
Mosaic Income Trust
December 31, 1999
Discussion of Merger Activity.
Effective July 1, 1999, the
Mosaic Bond Fund series of the Trust merged with the High Yield Fund
series of the Trust. Contemporaneously with the merger, the combined
fund became known as the Intermediate Income Fund. The reorganization
was designed to be accomplished as a tax-free reorganization pursuant
to Internal Revenue Code Section 368(a)(1)(C). As of the date of the
merger, shareholders of Mosaic Bond Fund received approximately 3.12
shares of beneficial interest of Mosaic Intermediate Income Fund for
each share they held of Mosaic Bond Fund. A total of 31,343 shares of
Mosaic Bond Fund were outstanding as of the date of the
reorganization, resulting in the issuance of 97,859 shares of
beneficial interest. The Mosaic Bond Fund's net assets on June 30,
1999 ($640,045), including $7,781 of net unrealized depreciation, were
combined with those of Mosaic High Yield Fund. Mosaic Bond Fund
distributed all income to its shareholders prior to the reorganization
and had no gains to distribute. The separate and combined aggregate
net assets as of the date of the reorganization are as follows:
Financial Position for Merged Funds as of June 30, 1999
Mosaic
Unaudited Bond Fund
Investment in securities at cost $ 638,158
Investment in long-term
securities at value 607,379
Short-term investments 23,000
Other assets 10,023
640,402
Liabilities 357
Net assets $ 640,045
Shares outstanding 31,342
Net asset value per share $20.42
Mosaic
High
Unaudited Yield Fund
Investment in securities at cost $5,086,812
Investment in long-term securities
at value 4,980,180
Short-term investments 59,000
Other assets 219,921
5,259,101
Liabilities 969
Net assets $5,258,132
Shares outstanding 803,697
Net asset value per share $6.54
Combined
Mosaic
Intermediate
Income
Unaudited Fund
Investment in securities at cost $5,724,970
Investment in long-term
securities at value 5,587,559
Short-term investments 82,000
Other assets 229,944
5,899,503
Liabilities 1,326
Net assets $5,898,177
Shares outstanding 901,556
Net asset value per share $6.54
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