MILLENNIUM INCOME TRUST
TREASURERS' GOVERNMENT MONEY MARKET FUND
Semi-Annual Report
March 31, 1999
Unaudited
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MILLENNIUM INCOME TRUST
May 20, 1999
Dear Shareholder,
We are pleased to provide you with the semi-annual report of the
Millennium Income Trust for the six month period ended March 31,
1999. During the period the Treasurers' Government Money Market
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 six month period.
Treasurers' Government Money Market Fund
7 Day Average Yields 3/31/99
Current Compound
4.79% 4.90%
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
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STATEMENT OF ASSETS AND LIABILITIES
March 31, 1999 (Unaudited)
Assets
Investments at cost and value (Note 2) $ 28,400,737
Repurchase agreement Note 2) 6,927,322
Receivables
Accrued income 288,560
Receivable from related party 54,172
Prepaid organizational expenses, net (Note 3) 3,634
Other assets 5,833
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Total assets 35,680,258
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Liabilities
Income distribution payable 50,516
Payable to related party (Note 3) 801
Accrued expenses 9,483
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Total liabilities 60,800
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Net assets applicable to outstanding shares $ 35,619,458
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Net assets consist of:
Paid-in capital $ 35,621,218
Accumulated net realized losses
from security transactions (1,760)
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$ 35,619,458
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Outstanding shares
(Unlimited number of shares authorized, no par value) 35,621,218
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Net asset value, offering and redemption
price per share (Note 2) $ 1.00
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See accompanying Notes to Financial Statements.
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STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1999 (Unaudited)
Interest income $ 872,572
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Expenses: (Note 3)
Management fees 33,766
Administration fees 8,442
Service fees 22,380
Professional fees 13,073
Insurance expense 4,167
Trustees fees & expenses 8,485
S & P rating 25,666
Amortization of organization expenses 2,350
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118,329
Less expenses reimbursed by the Manager (Note 3 (76,122)
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Net expenses 42,207
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Net investment income 830,365
Net realized losses from security transactions (1,760)
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Increase in net assets resulting from operations $ 828,605
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See accompanying Notes to Financial Statements.
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<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
<S> <C> <C>
6 Mos Ended Year
3/31/1999 Ended
(Unaudited) 9/30/1998
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From operations:
Net investment income $ 830,365 $ 673,426
Net realized losses from security transactions (1,760) 0
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Increase in net assets resulting from operations 828,605 0
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From dividends:
Dividends from net investment income (830,365) (673,426)
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From capital share transactions:
Proceeds from shares sold 70,509,630 33,475,179
Shares issued in reinvestment of dividends 398,206 321,417
Less payments for shares redeemed (68,994,424) (200,000)
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Increase in net assets from capital share transactions 1,913,412 33,596,596
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Total increase in net assets $ 1,911,652 $ 33,596,596
Net assets:
Beginning of period 33,707,806 111,210
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End of period $ 35,619,458 $ 33,707,806
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See accompanying Notes to Financial Statements.
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SCHEDULE OF INVESTMENTS
March 31, 1999 (Unaudited)
U. S. GOVERNMENT AGENCY ISSUES - 80.4 % Par Value Market Value
- -------------------------------------------- ---------- ------------
Federal Home Loan Mortgage Corp
Discount Note due 4/1/99 $ 13,000,000 $ 13,000,000
Discount Note due 4/6/99 500,000 499,670
Discount Note due 4/9/99 1,017,000 1,015,928
Federal National Mortgage Association
Note, 4.75% due 4/7/99 600,000 599,525
Note, 4.75% due 4/8/99 1,500,000 1,498,614
Note, 5.97% due 4/5/99 3,000,000 3,000,324
Note, 6.25%, due 4/16/99 1,750,000 1,750,716
Note, 7.12% due 4/19/99 2,240,000 2,250,649
Note, 5.80% due 5/3/99 1,000,000 1,000,475
Federal Home Loan Bank
Note, 8.91% due 4/7/99 330,000 329,737
Note, 6.15% due 5/4/99 300,000 300,970
Note, 7.00% due 9/14/99 650,000 653,497
Note, 5.39% due 4/30/99 500,000 500,632
Federal Farm Credit Bank
Note, 5.39% due 10/1/99 2,000,000 2,000,000
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TOTAL U.S. GOVERNMENT AGENCY ISSUES 28,400,737
(Amortized Cost $ 28,400,737)
REPURCHASE AGREEMENT(1) - 19.6 % Proceeds Value
- -------------------------------------------- ---------- ------------
Lehman Brothers
4.90% Issue date 3/31/99 due 4/1/99 $ 6,928,265 6,927,322
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TOTAL REPURCHASE AGREEMENT 6,928,265 6,927,322
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TOTAL INVESTMENTS - 100.0 % $ 35,328,059
(Amortized Cost $ 35,328,059) ===========
(1) Repurchase agreements are fully collateralized by
U.S. Government agency securities.
See accompanying Notes to Financial Statements.
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FINANCIAL HIGHLIGHTS
<CAPTION>
<S> <C> <C> <C> <C>
6 Mos Ended Year Ended September 30,
3/31/1999 -------------------------
(Unaudited) 1998 1997 1996
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Per share data for a share outstanding:
Net asset value at beginning of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
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Net investment income 0.025 0.053 0.051 0.052
Distributions from net investment income (0.025) (0.053) (0.051 ) (0.052)
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Net asset value at end of period $ 1.000 $ 1.000 $ 1.000 $ 1.000
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Total return (1) 4.93% * 5.33% 5.06% 5.27%
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Net assets at end of period (000's) $ 35,619 $ 33,708 $ 111 $ 132
Ratio of net expenses to average net assets (1) 0.25% * 0.22% 0.00% 0.00%
Ratio of net investment income 4.92% * 5.33% 5.06% 5.25%
to average net assets (1)
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(1) The information contained in the above table is based on
actual expenses for the periods, after giving effect to the
portion of expenses reduced by the Adviser. Had these expenses
not been reduced, the Fund's expense and investment income ratios
would have been:
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<CAPTION>
<S> <C> <C> <C> <C>
6 Mos Ended Year Ended September 30,
3/31/1999 -------------------------
(Unaudited) 1998 1997 1996
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Ratio of gross expenses to average net assets 0.70% * 0.80% 30.19% 14.42%
Ratio of net investment 4.47% * 4.74% (25.13%) ( 9.17%)
income (loss) to average net assets
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* Annualized
(1) 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 assetvalue of $1 per share.
See accompanying Notes to Financial Statements.
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NOTES TO FINANCIAL STATEMENTS
March 31, 1999 (Unaudited)
(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 distributor.
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 the 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 expected to enable the
Fund to maintain a constant net asset value per share.
Repurchase agreements - Repurchase agreements are collateralized by U.S.
Government securities valued at cost which, together with accrued interest,
approximates market. Collateral for repurchase agreements is held in
safekeeping in the 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.
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.
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
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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 .20% of its average daily net
assets. Since Apriil 1, 1999 Trias has agreed to reimburse the Fund the
amount by which its total operating expenses exceeded .25% of average daily
net assets. For the six months ended March 31, 1999, the total of such
reimbursements were $ 76,122.
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 .05% of its average daily
net assets.
Transfer Agent and Shareholder Service Agreement - The Fund has a Transfer,
Dividend Disbursing, Shareholder Service and Plan Agency Agreement with
Countrywide Fund Services, Inc. ("CFS"). For the services provided under this
agreement, 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 - The Fund has an Accounting Services Agreement
with CFS. For the services provided under this agreement CFS receives a
monthly fee. Based on current asset levels this fee is $1,000 per month.
Prepaid Organizational Expenses - Expenses paid by MFL amounting to $23,500,
were incurred in connection with the organization of the Trust and the initial
offering of shares. Such organizational expenses are 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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