MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
Annual Report
September 30, 1998
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MILLENNIUM INCOME TRUST
Dear Shareholder,
We are pleased to provide you with the annual report of the
Millennium Income Trust for the year ended September 30, 1998.
During the period the Treasurers' Government Money Market Fund (the
"Fund") portfolio registered solid performance and achieved its
objective of providing maximum current income from high quality
money market securities while maintaining stability of principal.
Although past performance is no guarantee of future results, the
table below presents the Fund's 7 day average yields at the end of
the year.
Treasurers' Government Money Market Fund
7 Day Average Yields (9/30/98)
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Current Compound
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5.26% 5.40%
Thank you for choosing the Treasurers' Government Money Market
Fund. We look forward to the continued opportunity to meet your
investment needs.
James A. Casselberry, Jr.
President
November 27, 1998
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STATEMENT OF ASSETS AND LIABILITIES
September 30, 1998
ASSETS:
Investment securities, at cost and value (Note 2) $ 33,770,291
Receivables
Accrued income 1,749
Receivable from related party 49,188
Prepaid organizational expenses, net (Note 3) 5,984
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Total assets 33,827,212
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LIABILITES:
Income distribution payable 74,156
Payable to related party (Note 3) 13,845
Accrued Expenses 31,405
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Total liabilities 119,406
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Net assets $ 33,707,806
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Net assets consisting of capital shares $ 33,707,806
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Shares of beneficial interest outstanding
(Unlimited number of shares authorized, no par value) 33,707,806
Net asset value, redemption price and offering $ 1.00
price per share (Note 2) ====
See accompanying Notes to Financial Statements.
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STATEMENT OF OPERATIONS
September 30, 1998
INVESTMENT INCOME:
Interest income
U.S. government securities $ 455,634
Repurchase agreements 245,381
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Total Income 701,015
EXPENSES: (Note 3)
Management fees 25,202
Administration fees 6,300
Service fees 29,081
Professional fees 12,769
Insurance expense 2,200
Trustees fees & expenses 11,232
Registration fees 10,145
Amortization of organization expenses 4,700
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Total Expenses 101,629
Less fees waived and expenses reimbursed
by the Manager and Administrator (Note 3) 74,040
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Net Expenses 27,589
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NET INVESTMENT INCOME AND INCREASE
IN NET ASSETS FROM OPERATIONS $ 673,426
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See accompanying Notes to Financial Statements.
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STATEMENTS OF CHANGES IN NET ASSETS
Year Ended September 30
1998 1997
From operations:
Net investment income $ 673,426 $ 6,315
From dividends:
Dividends to shareholders from investment income (673,426) (6,315)
From capital share transactions:
Proceeds from shares sold 33,475,179 0
Shares issued in reinvestment of dividends 321,417 6,315
Less payments for shares redeemed (200,000) (26,606)
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Net increase (decrease) in net assets 33,596,596 (20,291)
Net assets:
Beginning of period (Note 1) 111,210 131,501
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End of period $ 33,707,806 $ 111,210
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See accompanying Notes to Financial Statements.
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FINANCIAL HIGHLIGHTS
<CAPTION>
Year Ended September 30
1998 1997 1996
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<S> <C> <C> <C>
Per share data for a share outstanding:
Net asset value at beginning of period $ 1.000 $1.000 $1.000
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Net investment income 0.053 0.051 0.052
Distributions from net investment income (0.053) (0.051) (0.052)
Net asset value at end of period $ 1.000 $1.000 $1.000
==== ==== ====
Total Return* 5.33% 5.06% 5.27%
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Net assets at end of period (000's) $ 33,708 $ 111 $ 132
Ratios net of expenses waived or absorbed by adviser (Note 3)
Ratio of net expenses to average net assets 0.22% 0.00% 0.00%
Ratio of net investment income to average net assets 5.33% 5.06% 5.25%
Ratios assuming no fee waiver or expense absorption (Note 3)
Ratio of expenses to average net assets 0.80% 30.19% 14.42%
Ratio of net investment income to average net assets 4.74% (25.13%) (9.17%)
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* Past performance cannot be used to predict future returns. An investment in
a money market fund is neither insured nor guaranteed by the U.S. government
and there is no assurance that the Fund will be able to maintain a stable
net asset value of $1 per share.
See accompanying Notes to Financial Statements.
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SCHEDULE OF INVESTMENTS
September 30, 1998
AGENCY DISCOUNT NOTES - 65.5 %
Par Value
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Federal Home Loan Mortgage Corp
5.41% discount rate, due 10/7/98 $ 3,000,000 $ 2,997,295
5.44% discount rate, due 10/9/98 3,000,000 2,996,373
5.32% discount rate, due 11/5/98 2,500,000 2,487,070
5.36% discount rate, due 11/16/98 3,024,000 3,003,289
Federal National Mortgage Association
5.45% discount rate, due 10/13/98 1,973,000 1,969,422
5.42% discount rate, due 10/16/98 8,675,000 8,655,409
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TOTAL AGENCY DISCOUNT NOTES
(Amortized Cost $ 22,108,858) $ 22,108,858
REPURCHASE AGREEMENT (1) - 35.4 %
Proceeds Value
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Lehman Brothers
5.40% Issue date 9/30/98 due 10/1/98 $ 11,663,182 $ 11,661,433
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TOTAL REPURCHASE AGREEMENT 11,663,182 11,661,433
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TOTAL INVESTMENTS $ 33,770,291
(Amortized Cost $ 33,770,291) ------------
(1) Repurchase agreements are fully collateralized by U.S. Government
agency securities.
See accompanying Notes to Financial Statements.
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<PAGE> NOTES TO FINANCIAL STATEMENTS
September 30 1998
(1) Organization
The Millennium Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company. The Trust was established as a
Massachusetts business trust under a Declaration of Trust dated August 19,
1994. The Trust has established one fund series, the Treasurers'
Government Money Market Fund (the "Fund"). The Trust was capitalized on
January 17, 1995, when 100,000 shares of the Fund were issued at $1.00 per
share to Janis S. England, chairman and controlling member of Millennium
Financial LLC, ("MFL") the Fund's administrator, and Millennium Capital
LLC, ("MCL") the Fund's principal underwriter. The Fund had no operations
prior to the public offering (which occurred on October 2, 1995) of shares
except for the initial issuance of shares; accordingly, no financial
statement information is presented for the period prior to fiscal 1996.
The Fund's investment objective is to seek high current income, consistent
with protection of capital.
(2) Significant Accounting Policies
The following is a summary of the Fund's significant accounting policies:
Security valuation - Securities are valued on an amortized cost basis,
which approximates market value. This involves initially valuing a
security at its original cost and thereafter assuming a constant
amortization to maturity of any discount or premium. This method of
valuation is designed to enable the Fund to maintain a stable net asset
value per share.
Repurchase agreements - Repurchase agreements are collateralized by U.S.
Government securities and are valued at cost which, together with accrued
interest, approximates market. Collateral for repurchase agreements is
held in safekeeping in the Fund's custodian customer-only account at the
Federal Reserve Bank of Cleveland. At the time the Fund enters into a
repurchase agreement, the seller agrees that the value of the underlying
securities, including accrued interest, will be equal to or exceed the face
amount of the repurchase agreement. In the event of a bankruptcy or other
default of the seller of a repurchase agreement, the Fund could experience
both delays in liquidating the underlying security and losses. These
losses would equal the face amount of the repurchase agreement(s) and
accrued interest, net of any proceeds received in liquidation of the
underlying securities. To minimize the possibility of loss, the Fund
enters into repurchase agreements only with institutions deemed to be
creditworthy by the invesment manager.
Security transactions - Investment transactions are accounted for on the
trade date. Securities sold are valued on a specific identification
basis.
Fund share valuation, investment income and distributions to shareholders -
The net asset value per share of the Fund is calculated twice a day by
dividing the total value of the Fund's assets, less liabilities, by the
number of shares outstanding. Interest income is accrued as earned.
Distributions from net investment income are declared daily and paid on or
about the first business day of each month.
Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported amount
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
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Federal income tax - It is the Fund's policy to comply with the special
provisions of the Internal Revenue Code applicable to regulated investment
companies. As provided therein, in any fiscal year in which a Fund so
qualifies and distributes at least 90% of its taxable net income, the Fund
(but not the shareholders) will be relieved of Federal income tax on the
income distributed. Accordingly, no provision for income taxes has been
made. In order to avoid imposition of the excise tax applicable to
regulated investment companies, it is also the Fund's intention to declare
as dividends in each calendar year at least 98% of its net investment
income (earned during the calendar year) and 98% of its net realized
capital gains (earned during the twelve months ended October 31) plus
undistributed amounts from prior years.
(3) Transactions with Affiliates
The President of the Trust is the chairman and controlling shareholder of
Trias Capital Management, Inc. ("Trias"), the Trust's investment manager.
The Secretary/Treasurer of the Trust is the chairman and controlling member
of MFL, the Trust's administrator, and MCL, the Trust's principal
underwriter.
Investment Management Agreement - The Fund's investments are managed by
Trias pursuant to the terms of a management agreement. Under the terms of
the management agreement, the Fund pays Trias a fee, which is computed and
accrued daily and paid monthly at the annual rate of 0.20% of its average
daily net assets. Trias voluntarily waived its advisory fees and absorbed
all Fund expenses through March 31, 1998. Since April 1, 1998 Trias has
voluntarily agreed to maintain the Funds expenses at 0.25% of its average
daily net assets.
Administration Agreement - The Fund's business affairs are managed by MFL
pursuant to the terms of an administration agreement. Under the terms of
the administration agreement, the Fund pays MFL a fee, which is computed
and accrued daily and paid monthly at the annual rate of 0.05% of its
average daily net assets. In order to reduce the operating expenses of the
Fund, MFL voluntarily waived its administration fee through March 31, 1998.
Transfer Agent and Shareholder Service Agreement - Under the terms of a
Transfer, Dividend Disbursing, Shareholder Service and Plan Agency
Agreement between the Trust and Countrywide Fund Services, Inc. ("CFS"),
maintains the records of each shareholder's account, answers shareholders'
inquiries concerning their accounts, processes purchases and redemptions of
the Fund's shares, acts as dividend distribution and disbursing agent and
performs other shareholder service functions. For these services CFS
receives a monthly fee at an annual rate of $20 per shareholder account,
subject to a minimum monthly fee not to exceed $1,500. In addition the
Fund pays CFS' out-of-pocket expenses including, but not limited to,
postage and supplies.
Accounting Services Agreement - Under the terms of the Accounting Services
Agreement between the Trust and CFS, CFS calculates the daily net asset
value per share and maintains the books and records of the Fund. For these
services CFS receives a monthly fee, based on current assets levels, of
$2,000 per month.
Prepaid Organizational Expenses - Expenses incurred in connection with the
organization of the Trust and the initial offering of shares were paid by
MFL. Such organizational expenses were capitalized and amortized on a
straight-line basis over five years. As of January 17, 1995, all
outstanding shares of the Fund were held by the chairman and controlling
member of MFL, who purchased these initial shares in order to provide the
Trust with its required capital. In the event any of the initial shares of
the Fund are redeemed by the chairman and controlling member of MFL or by
any subsequent owner at any time prior to the complete amortization of
organizational expenses, the redemption proceeds payable with respect to
such shares will be reduced by the pro rata share of the unamortized
deferred organizational expenses as of the date of such redemption.
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Report of Independent Public Accountants
To the Shareholders and Board of Trustees of the
Treasurers' Government Money Market Fund of Millennium Income Trust:
We have audited the accompanying statement of assets and liabilities of the
Treasurers' Government Money Market Fund of Millennium Income Trust (a
Massachusetts business trust), including the portfolio of investments as of
September 30, 1998, and the related statement of operations, the statements
of changes in net assets, and the financial highlights for the periods
indicated thereon. These financial statements and financial highlights are
the responsibility of the Trust's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of September 30, 1998, by correspondence with the
custodian and broker. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of the Treasurers' Government Money Market Fund of the Millennium Income
Trust as of September 30, 1998, the results of its operations, the changes
in its net assets, and the financial highlights for the periods indicated
thereon, in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Cincinnati, Ohio,
November 6, 1998
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