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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-3486
Mosaic Tax-Free Trust
(Exact name of registrant as specified in charter)
550 Science Drive, Madison, WI 53711
(Address of principal executive offices)(Zip code)
W. Richard Mason
Madison/Mosaic Legal and Compliance Department
8777 N. Gainey Center Drive, Suite 220
Scottsdale, AZ 85258
(Name and address of agent for service)
Registrant's telephone number, including area code: 608-274-0300
Date of fiscal year end: September 30
Date of reporting period: March 31, 2005
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspoection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. s 3507.
Item 1. Report to Shareholders.
Semi-Annual Report (unaudited)
March 31, 2005
Mosaic Income Trust
Mosaic Arizona Tax-Free Fund
Mosaic Missouri Tax-Free Fund
Mosaic Virginia Tax-Free Fund
Mosaic Tax-Free National Fund
Mosaic Funds
www.mosaicfunds.com
Contents
The semi-annual period ended March 31, 2005 was not a strong one for the funds in Mosaic Tax-Free Trust. Six-month total returns were: -0.75% for Tax-Free National; -0.47% for Tax-Free Arizona; -0.13% for Tax-Free Missouri; and -0.01% for Tax-Free Virginia. Over the same period, the Lipper General Municipal Debt Index was up 1.32%. A large part of the relative performance story was the variance in returns by maturity. The intermediate range of municipal bonds had the unusual result of underperforming both short-term and long-term municipal bonds. This can be seen in the results of the Lipper Intermediate Municipal Fund Index, which was down -0.03% for the period, while the Lipper Short-Intermediate Municipal Debt Index was up 0.11%. Although historically the portfolios in Tax-Free Trust approach or meet the definition of long-term bonds, current holdings place the funds squarely in the intermediate category. This positioning is designed to help the funds' relative performance should rates rise--a scenario we believe is still likely. Another factor was the outperformance of lower-grade municipals while we have always emphasized high-quality bonds.
On the positive side, high-quality municipal bonds continue to show their benefits for investors who seek relative safety and regular income. At the end of this six-month period, the funds in Tax-Free Trust had five-year annualized returns ranging from 5.05% to 5.58%, a period in which the stock market, as measured by the S&P 500, lost an annualized -3.16%. Yields have also generally moved up over the six months, as indicated below in the fund-by-fund summaries.
Economic Overview
As we entered this semi-annual period, in the fall of 2004, the economy was well past the recession of 2001 and 2002, and deep enough into recovery to produce doubts about its continued sustainability. This was reflected in stock market returns, which were robust in 2003 and solid in 2004, but shaky in early 2005. And it's true that the expansion was running into headwinds, particularly the steady ramp-up in Fed rates, mixed economic news, and growing indications of inflation--most prominently displayed in soaring energy prices.
On the other hand, consumer spending seemed to be a reliable strength, and the housing market was a bright spot throughout the period. Housing activity was fueled by low mortgage rates, which seemed, uncharacteristically, unfazed by the Federal Reserve's unrelenting rate increases. In fact, longer-term bonds were amazingly resilient, as foreign buyers stepped up and poured record amounts of capital into both government and corporate issuances.
Outlook
The tension in the bond market between inflationary pressures and Fed rate increases and the lack of movement in longer-term rates is a factor in the municipal bond market, where total returns can be hurt should rates spike upward. While the path of longer-term rates is subject to speculation, the direction of short-term rates seems more predictable, with the Fed likely to persist in its path to neutral monetary policy, with an endpoint in the 3% to 4% range. More aggressive rate increases could unfold if the labor markets heat up, or if inflation pressures flare in the first half of 2005. Intermediate and long-term bonds have not yet seen the kind of rate increases that we've seen in shorter-term bonds. Holders of municipal bonds will likely see higher yields over the upcoming year, as municipal issuance seeks to remain competitive with other bond classes.
ARIZONA FUND
Arizona continues to enjoy a strong, well-diversified service and tourism based economy. The State does not have a credit rating because it does not issue general obligation bonds. The Fund had a total return of -0.47% for the semi-annual period and the 30-day SEC yield was 2.34% as of March 31, 2005. The duration of the portfolio was 5.09 years while the average credit quality remained at AA. Arizona ranked 15th in the country in terms of issuance on a year-to-date basis.
MISSOURI FUND
Missouri has a broad-based and diversified economy that is service-sector oriented. The State's general obligation bonds are rated AAA. The Fund had a total return of -0.13% for the semi-annual period and the 30-day SEC yield was 2.39% as of March 31, 2005. The duration of the portfolio was 5.80 years while the average credit quality was maintained at AA. Missouri ranked 25th in the country in terms of issuance on a year-to-date basis.
VIRGINIA FUND
The Commonwealth of Virginia maintains an AAA general obligation bond rating based on a well-diversified economy that emphasizes services and government. The Fund had a total return of -0.01% for the semi-annual period and the 30-day SEC yield was 2.58% as of March 31, 2005. The duration of the portfolio was 6.24 years while the average credit quality was maintained at AA. Virginia ranked 17th in the country in terms of issuance on a year-to-date basis.
NATIONAL FUND
The National Fund had a total return of -0.75% for the semi-annual period and the 30-day SEC yield was 2.42% as of March 31, 2005. The duration of the portfolio was 6.33 years while 78.2% of the portfolio held Moody's top Aaa rating. The United States and its territories have issued $96.6 billion in muni bonds year-to-date through the end of March which represents a 10.9% increase in volume over the same period last year.
We appreciate your confidence in Mosaic Funds and reaffirm our commitment to provide you with competitive returns to meet your investment objectives.
Sincerely,
(signature)
Michael J. Peters, CFA
Vice President
Arizona Fund - Portfolio of Investments (unaudited)
March 31, 2005
Credit Rating* | Principal AMOUNT | Market VALUE | ||
Moody's | S&P | |||
LONG TERM MUNICIPAL BONDS: 98.7% of net assets | ||||
EDUCATION: 28.2% | ||||
Aa3 | AA | Maricopa County Unified School District #210 (Phoenix), 5.375%, 7/1/13 | $250,000 | $260,815 |
Aaa | AAA | Maricopa County Unified School District #41 (Gilbert), 5.8%, 7/1/14 | 250,000 | 288,003 |
Baa2 | nr | Maricopa County, Unified School District #090 Saddle Mountain, 5%, 7/1/14 | 75,000 | 76,547 |
Aaa | AAA | Mohave County Elementary School District #16 (Mohave Valley) (MBIA Insured), 5.375%, 7/1/13 | 100,000 | 105,479 |
Aaa# | AAA | Mohave County Elementary School District #1 (Lake Havasu) (FGIC Insured), 5.9%, 7/1/15 | 150,000 | 157,442 |
Aaa | AAA | Pima County Unified School District #10 (Amphitheater), (FGIC Insured), 5.1%, 7/1/11 | 190,000 | 204,273 |
Aaa | AAA | Pima County, Arizona School District, (MBIA Insured), 5%, 7/1/09 | 125,000 | 129,840 |
Aaa | AAA | University of Arizona, (AMBAC Insured) 5%, 6/1/17 | 125,000 | 131,830 |
Aaa | AAA | University of Arizona Board of Regents, (FGIC Insured) 5.8%, 6/1/24 | 275,000 | 305,058 |
GENERAL OBLIGATION: 11.1% | ||||
Baa1 | A- | Puerto Rico Commonwealth, 6.5%, 7/1/14 | 320,000 | 380,445 |
Aa3 | AA | Tucson Recreational Facility Improvements, 5.25%, 7/1/19 | 250,000 | 269,740 |
HOSPITAL: 7.3% | ||||
Aaa# | AAA | Arizona Health Facilities Authority, Hospital Revenue (Phoenix Baptist Hospital) (MBIA Insured), 6.25%, 9/1/11 | 155,000 | 162,962 |
Aaa | AAA | Pima County Industrial Development Authority Revenue (Refunding Bonds), 5.625%, 4/1/14 | 250,000 | 266,285 |
HOUSING: 0.9% | ||||
Aaa | nr | Maricopa County Industrial Development Authority, Single Family Mortgage Revenue, 4.3%, 12/1/06 | 50,000 | 50,220 |
INDUSTRIAL DEVELOPMENT: 1.8% | ||||
Aaa | AAA | Phoenix Civic Improvement Corp. Excise Tax, 4.5%, 7/1/08 | 100,000 | 104,404 |
LEASING AND OTHER FACILITIES: 25% | ||||
Aaa | AAA | Arizona Board of Regents Certificate Participation, (AMBAC Insured), 5.5%, 6/1/13 | 320,000 | 352,173 |
Baa1 | nr | Arizona Tourism & Sports Authority Tax Revenue Bond, 5%, 7/1/16 | 100,000 | 100,731 |
A1 | A+ | Greater Arizona Development Authority Infrastructure Revenue Bond, 4.85%, 8/1/20 | 300,000 | 305,949 |
Aaa | nr | Maricopa County Public Corp. Lease Revenue Bond, (AMBAC Insured), 5.5%, 7/1/10 | 280,000 | 307,560 |
Aaa | nr | Maricopa County Stadium Revenue Bond, (AMBAC Insured), 5.25%, 6/1/12 | 250,000 | 274,647 |
Aaa | AAA | Rio Nuevo Multipurpose Facilities, Certificate Participation, (FGIC Insured), 4.5%, 7/1/08 | 125,000 | 130,309 |
TRANSPORTATION: 15.2% | ||||
Aa3 | AA- | Arizona Transportation Board, Grant Antic, 5%, 7/1/13 | 135,000 | 146,260 |
Aaa | AAA | Flagstaff Street and Highway User Revenue, Junior Lien (FGIC Insured), 5.9%, 7/1/10 | 500,000 | 560,005 |
Aaa | AAA | Mesa Street and Highway Revenue Bond, (FSA Insured), 4%, 7/1/14 | 130,000 | 131,379 |
Aaa | AAA | Phoenix Street and Highway User Revenue Bond (FGIC Insured), 5.25%, 7/1/10 | 50,000 | 54,452 |
WATER AND SEWER: 9.2% | ||||
nr | AA | Buckeye Water and Sewer Improvements, 5.45%, 1/1/10 | 235,000 | 253,029 |
Aaa | AAA | Mesa Recreational, Water and Sewer Improvements (FGIC Insured), 6.5%, 7/1/10 | 250,000 | 287,147 |
TOTAL INVESTMENTS (Cost $5,492,803) | $5,796,984 | |||
CASH AND RECEIVABLES LESS LIABILITIES: 1.3% of net assets | 78,474 | |||
NET ASSETS: 100% | $5,875,458 |
Missouri Fund - Portfolio of Investments (unaudited)
March 31, 2005
Credit Rating* | PRINCIPAL AMOUNT | MARKET VALUE | ||
Moody's | S&P | |||
LONG TERM MUNICIPAL BONDS: 94.4% of net assets | ||||
EDUCATION: 29.7% | ||||
Aaa | AAA | Jackson County School District #7, Lees Summit, (FSA Insured), 5.25%, 3/1/14 | $300,000 | $327,525 |
Aa2 | nr | Jefferson County School District, 6.7%, 3/1/11 | 200,000 | 224,414 |
Aaa | AAA | Mehlville School District R-9, Certificate Participation, (FSA Insured), 5%, 9/1/19 | 300,000 | 315,519 |
nr | AA+ | Normandy School District General Obligation, 5.4%, 3/1/18 | 325,000 | 345,234 |
Aa1 | AA+ | North Kansas City School District, 4.25%, 3/1/16 | 300,000 | 305,031 |
Aa1 | AA+ | Platte County School District Park Hill, 5.5%, 3/1/14 | 300,000 | 314,064 |
nr | AA+ | Polk County School District R-1 Bolivar, 5%, 3/1/21 | 110,000 | 117,151 |
Aaa | AAA | St. Louis Board of Education, 5.5%, 4/1/10 | 275,000 | 301,823 |
Aaa | AAA | St. Louis County Pattonville R-3 School District (FGIC Insured), 5.75%, 3/1/16 | 200,000 | 223,432 |
GENERAL OBLIGATION: 13.4% | ||||
Aa2 | nr | Lees Summit, 4.7%, 4/1/21 | 325,000 | 332,384 |
Aaa | AAA | Missouri State (Fourth State Building), 5.75%, 8/1/19 | 200,000 | 208,128 |
Baa1 | A- | Puerto Rico Commonwealth Public Improvement, 6.5%, 7/1/14 | 480,000 | 570,667 |
HOSPITAL: 3.7% | ||||
Aa2 | AA+ | Missouri State Certificate Participation, Rehabilitation Center, 6%, 11/1/15 | 115,000 | 117,369 |
Aaa | AAA | Missouri State Health & Educational Facilities Revenue, (MBIA Insured) 6.4%, 6/1/10 | 165,000 | 187,300 |
HOUSING: 8.7% | ||||
Aa3 | AA | Puerto Rico Housing Finance Authority, 4.5%, 12/1/09 | 150,000 | 157,306 |
nr | AAA# | St. Louis County Mortgage Revenue (AMT), 5.65%, 2/1/20 | 500,000 | 565,155 |
LEASING AND OTHER FACILITIES: 29.2% | ||||
A1 | nr | Greene County Certificate Participation, 5.25%, 7/1/11 | 300,000 | 323,424 |
Aa3 | nr | Jackson County Missouri, Public Building Corp. Leasehold Revenue, 5.1%, 11/1/12 | 200,000 | 214,232 |
Aaa | AAA | Missouri Development Financial Board Cultural Facilities Revenue Bond, (MBIA Insured), 5.25%, 1/1/17 | 350,000 | 377,871 |
Baa1 | BBB+ | Missouri Development Financial Board Infrastructure Facilities Revenue Bond, 4.3%, 12/1/12 | 225,000 | 221,528 |
Aa1 | AA+ | Missouri State Board Public Buildings, 4.0%, 12/1/10 | 75,000 | 77,295 |
Aaa | AAA | Springfield Public Building Corp. Leasehold Revenue Bond, 5.8%, 6/1/13 | 275,000 | 304,585 |
Aa3 | nr | Springfield Public Building Corp. Leasehold Revenue Bond, 4.7%, 5/1/12 | 175,000 | 183,078 |
Aaa | nr | St Louis Municipal Finance Corporation, Leasehold Revenue Bond (AMBAC Insured), 5.75%, 2/15/17 | 300,000 | 331,602 |
Aaa | AAA | St Louis Parking Facilities Revenue (MBIA Insured), 5.375%, 12/15/21 | 375,000 | 397,365 |
POLLUTION CONTROL REVENUE: 3% | ||||
A1 | A+ | St Louis Industrial Development Authority Pollution Control Revenue, 6.65%, 5/1/16 | 200,000 | 246,222 |
TRANSPORTATION: 5.0% | ||||
Aa2 | AA | Missouri State Highway & Transportation, Street & Road Revenue, 5.25%, 2/1/20 | 250,000 | 267,953 |
nr | AA- | Platte County Industrial Development Authority, Zona Rosa Retail Project, 3.75%, 12/1/13 | 150,000 | 144,999 |
WATER AND SEWER: 1.7% | ||||
Aaa | nr | Jefferson County Public Water Supply District Number C-1 (AMBAC Insured), 5.25%, 12/1/16 | 130,000 | 142,323 |
TOTAL INVESTMENTS (Cost $7,365,499) | $7,844,979 | |||
CASH AND RECEIVABLES LESS LIABILITIES: 5.6% of net assets | 468,198 | |||
NET ASSETS: 100% | $8,313,177 |
Virginia Fund - Portfolio of Investments (unaudited)
March 31, 2005
Credit Rating* | PRINCIPAL AMOUNT | MARKET VALUE | ||
Moody's | S&P | |||
LONG TERM MUNICIPAL BONDS: 96.9% of net assets | ||||
EDUCATION: 10.9% | ||||
A2 | nr | Loudoun County Industrial Development Authority, University Facilities Revenue (George Washington University), 6.25%, 5/15/22 | $500,000 | $502,555 |
nr | A | Roanoke County Industrial Development Authority, (Hollins College), 5.25%, 3/15/23 | 900,000 | 943,353 |
Aa2 | AA | Virginia College Building Authority, Educational Facilities Revenue (Washington And Lee University), 5.75%, 1/1/14 | 20,000 | 20,276 |
Aa1 | AA+ | Virginia College Building Authority, Educational Facilities Revenue (Washington And Lee University), 5.75%, 8/1/16 | 200,000 | 210,702 |
Aaa | AAA | Virginia Polytechnic Institute & State University Revenue, 5%, 6/1/14 | 775,000 | 847,563 |
A1 | AA- | Virginia State Universities, University Revenue (Virginia Commonwealth University), 5.75%, 5/1/15 | 500,000 | 511,280 |
GENERAL OBLIGATION: 26.8% | ||||
Aaa | AAA | Alexandria, 5%, 1/1/16 | 200,000 | 219,140 |
Aaa | AAA | Arlington County, 5%, 2/1/19 | 250,000 | 263,388 |
Aaa | AAA | Culpepper County, 6%, 1/15/21 | 500,000 | 563,940 |
Aaa | AAA | Leesburg, (AMBAC Insured), 5.6%, 6/1/15 | 500,000 | 512,650 |
Aaa# | AA+ | Loudoun County, (Prerefunded 5/1/12 @ 100), 5.25%, 5/1/13 | 620,000 | 683,761 |
Aaa | AA+ | Loudoun County, 5.25%, 5/1/13 | 130,000 | 142,858 |
Aaa | AA+ | Loudoun County, 5%, 10/1/13 | 500,000 | 547,365 |
Aa3 | AA | Lynchburg, 5.7%, 6/1/25 | 1,170,000 | 1,313,138 |
Aa2 | AA | Newport News, 5%, 5/1/18 | 820,000 | 879,671 |
A1 | nr | Prince George County, 4.5%, 8/1/12 | 400,000 | 417,992 |
Baa1 | A- | Puerto Rico Commonwealth, 6.5%, 7/1/14 | 1,115,000 | 1,325,612 |
Aa1 | AA+ | Virginia Beach, 5%, 3/1/12 | 540,000 | 586,532 |
HOSPITAL: 10.7% | ||||
A2 | nr | Arlington County Industrial Development Authority, Hospital Facilities Revenue Bond, 5.5%, 7/1/15 | 200,000 | 213,738 |
Aaa | AAA | Danville Industrial Development Authority, Hospital Revenue (Danville Regional Medical Center) (AMBAC Insured), 5%, 10/1/10 | 250,000 | 267,162 |
Aa2 | AA+ | Fairfax County Industrial Development Authority Revenue Bond, 6%, 8/15/26 | 500,000 | 533,625 |
HOSPITAL: (continued) | ||||
Aaa | AAA | Hanover County Industrial Development Authority, Revenue Bon Secours Health System (MBIA Insured), 6%, 8/15/10 | 640,000 | 717,229 |
Aaa# | nr | Prince William County Industrial Development Authority, Hospital Revenue, (Prerefunded 10/1/05 @ 102), 6.85%, 10/1/25 | 85,000 | 88,528 |
Aaa | AAA | Roanoke Industrial Development Authority, Hospital Revenue (Carilion Health Systems) (MBIA Insured), 5.5%, 7/1/16 | 500,000 | 556,330 |
Aaa | AAA | Roanoke Industrial Development Authority, Hospital Revenue (Roanoke Memorial Hospitals) (MBIA Insured), 6.125%, 7/1/17 | 500,000 | 592,390 |
HOUSING: 6.8% | ||||
nr | AAA | Fairfax County Redevelopment & Housing Authority, Multi-Family Housing Revenue (Castel Lani Project) (FHA Insured), 5.5%, 4/1/28 | 425,000 | 435,787 |
Aa3 | AA | Puerto Rico Housing Finance Authority, 4.5%, 12/1/09 | 150,000 | 157,307 |
nr | AAA | Suffolk Redevelopment & Housing Authority, Multi-Family Housing Revenue, 5.6%, 2/01/33 | 1,250,000 | 1,308,675 |
INDUSTRIAL DEVELOPMENT: 3.9% | ||||
Aaa | nr | Fairfax County Economic Development Authority (National Wildlife Assoc.), 5.25%, 9/1/19 | 1,000,000 | 1,073,060 |
LEASING AND OTHER FACILITIES: 9.7% | ||||
Aa1 | AA+ | Arlington County Industrial Development Authority Lease Revenue, 5%, 8/1/14 | 500,000 | 544,245 |
Aaa | AAA | Portsmouth Industrial Development Authority Revenue, Hotel Conference Center & Parking, 5.125%, 4/1/17 | 1,000,000 | 1,056,070 |
Aaa | nr | Richmond Industrial Development Authority Government Facilities, 5%, 7/15/13 | 1,000,000 | 1,089,680 |
MUNICIPAL OTHER: 13.4% | ||||
Aaa | AAA | Riverside Regional Jail Authority Revenue, 5%, 7/1/16 | 500,000 | 538,380 |
Aaa | AAA | Southeastern Public Service Authority Revenue, 5%, 7/1/15 | 1,000,000 | 1,093,840 |
Aaa | AAA | Southwest Regional Jail Authority Revenue, (MBIA Insured), 4.5% 9/1/10 | 1,000,000 | 1,050,840 |
Aa1 | AA+ | Virginia State Public Building Authority, Public Facilities Revenue, 5%, 8/01/18 | 1,000,000 | 1,047,890 |
TRANSPORTATION: 4.4% | ||||
Aaa | AAA | Richmond Metropolitan Authority Expressway Revenue, (FGIC Insured), 5.25%, 7/15/12 | 350,000 | 386,432 |
Aa2 | AA | Virginia State Resources Authority Infrastructure Revenue, 4.75%, 5/1/17 | 800,000 | 831,624 |
WATER & WASTE: 10.3% | ||||
Aaa | AAA | Frederick Regional Sewer System Revenue, (AMBAC), 5%, 10/1/15 | 570,000 | 624,577 |
Aaa | AAA | Henry County Water & Sewer Revenue, (FSA Insured), 5.25% 11/15/16 | 700,000 | 777,721 |
Aaa | AAA | Stafford County Water & Sewer Revenue, (FSA Insured), 4.5%, 6/1/11 | 335,000 | 354,343 |
Aaa | AAA | Upper Occoquan Sewer, Regional Sewer Revenue, (MBIA Insured), 5.15%, 7/1/20 | 1,000,000 | 1,108,450 |
TOTAL INVESTMENTS (Cost $25,879,375) | $26,939,699 | |||
CASH AND RECEIVABLES LESS LIABILITIES: 3.1% of net assets | 862,564 | |||
NET ASSETS: 100% | $27,802,263 |
National Fund - Portfolio of Investments (unaudited)
March 31, 2005
Credit Rating* | PRINCIPAL AMOUNT | MARKET VALUE | ||
Moody's | S&P | |||
LONG TERM MUNICIPAL BONDS: 96.8% of net assets | ||||
ARIZONA: 8.8% | ||||
Aa3 | AA- | Arizona Transportation Board, Grant Antic, 5%, 7/1/13 | $100,000 | $108,341 |
Aaa | AAA | Maricopa County Unified School District #48 Scottsdale, (FSA), 5%, 7/1/15 | 500,000 | 544,710 |
Aaa | AAA | Rio Nuevo Multipurpose Facilities, Certificate Participation, (FGIC Insured), 4.5%, 7/1/08 | 1,100,000 | 1,146,717 |
Aa3# | AA | Tucson Recreational, (Prerefunded 7/1/09 @ 100), 5.25%. 7/1/18 | 100,000 | 107,896 |
COLORADO: 5% | ||||
Aaa | nr | El Paso County School District #020, 5%, 12/15/16 | 1,005,000 | 1,081,702 |
FLORIDA: 10.9% | ||||
Aaa | nr | First Florida Government Community Revenue Bond, (AMBAC Insured), 5.5%, 7/1/16 | 1,000,000 | 1,131,750 |
Aaa | AAA | Palm Beach County Solid Waste Authority Revenue Bond, (AMBAC Insured), 6%, 10/1/10 | 1,100,000 | 1,234,497 |
ILLINOIS: 10.6% | ||||
Aaa | nr | Grundy County School District #054, General Obligation, (AMBAC Insured), 8.35%, 12/1/07 | 720,000 | 815,206 |
Aaa | AAA | Regional Illinois Transportation Authority, Transit Revenue (AMBAC Insured), 7.2%, 11/1/20 | 300,000 | 381,624 |
Aaa | AAA | University of Illinois Certificates, Utility Infrastructure Projects (MBIA Insured), 5.75%, 8/15/09 | 1,000,000 | 1,100,850 |
KANSAS: 2.6% | ||||
Aa2 | AA+ | Kansas State Department of Transportation, Hwy Revenue, 6.125%, 9/1/09 | 500,000 | 559,850 |
MARYLAND: 1.6% | ||||
Aa1 | AA+ | Anne Arundel County, Solid Waste Projects (AMT), 5.5%, 9/1/16 | 100,000 | 104,019 |
Aa2 | AA | Frederick County, 5.1%, 12/1/17 | 75,000 | 80,167 |
Aaa | AAA | Maryland State, 5%, 7/15/11 | 50,000 | 54,026 |
Aaa# | AAA | Maryland State Transportation Authority Transportation Facilities Project Revenue, 6.8%, 7/1/16 | 95,000 | 111,410 |
MASSACHUSETTS: 5.6% | ||||
Aa2 | AA | Massachusetts Bay Transportation Authority, Transit Revenue, 7%, 3/1/14 | 1,000,000 | 1,208,670 |
MICHIGAN: 2.1% | ||||
Aaa | AAA | Redford United School District, (AMBAC Insured), 5%, 5/1/22 | 410,000 | 446,527 |
MINNESOTA: 0.4% | ||||
Aa1 | AA+ | Minnesota State Housing Finance Agency, Housing Revenue (Single-Family Mortgage) (AMT), 6.25%, 7/1/26 | 95,000 | 96,875 |
MISSISSIPPI: 5.9% | ||||
Aaa | AAA | Harrison County Wastewater Management District, Sewer Revenue, (Wastewater Treatment Facilities) (FGIC Insured), 7.75%, 2/1/14 | 500,000 | 639,045 |
Aaa | AAA | Harrison County Wastewater Management District, Sewer Revenue, (Wastewater Treatment Facilities) (FGIC Insured), 8.5%, 2/1/13 | 500,000 | 654,525 |
MISSOURI: 4.9% | ||||
Aa1 | AA+ | Missouri State Health & Educational Facilities Authority Revenue Bond, 5%, 11/1/09 | 1,000,000 | 1,075,090 |
NEW JERSEY: 9.8% | ||||
Aaa | AAA | New Jersey State Transportation Transit Fund Authority, 5.5%, 12/15/17 | 1,000,000 | 1,126,840 |
Aaa# | AAA | New Jersey State Turnpike Authority Revenue, 6.5%, 1/1/16 | 850,000 | 1,008,559 |
NORTH CAROLINA: 5.3% | ||||
Aaa | AAA | Macon County, 5%, 6/1/13 | 500,000 | 546,115 |
Aa2 | AA+ | Raleigh, Certificate Participation, Leasing Revenue, 4.75%, 6/1/25 | 590,000 | 597,841 |
NORTH DAKOTA: 2.5% | ||||
Baa2 | nr | Grand Forks Health Care Systems Revenue Bond, 7.125%, 8/15/24 | 500,000 | 543,885 |
PENNSYLVANIA: 5.7% | ||||
Aaa | AAA | Lehigh County General Obligation (Lehigh Valley Hospital) (MBIA Insured), 7%, 7/1/16 | 1,000,000 | 1,247,700 |
PUERTO RICO: 1.4% | ||||
Baa1 | A- | Puerto Rico Commonwealth, 6.5%, 7/1/14 | 85,000 | 101,056 |
Aa3 | AA | Puerto Rico Housing Finance Authority, 4.5%, 12/1/09 | 200,000 | 209,742 |
TEXAS: 7.1% | ||||
Aaa | AAA | Lower Colorado River Authority, Utility Revenue, (AMBAC Insured), 6.0%, 1/1/17 | 305,000 | 360,422 |
Aaa | AAA | North Forest Independent School District, 6%, 8/15/11 | 1,050,000 | 1,191,445 |
VIRGINIA: 5% | ||||
Aaa | AAA | Hanover County Industrial Development Authority Hospital (Bon Secours Health Systems) (MBIA Insured), 6%, 8/15/10 | 500,000 | 560,335 |
Aaa | AAA | Riverside Regional Jail Authority Revenue, 5%, 7/1/16 | 500,000 | 538,380 |
WASHINGTON: 1.6% | ||||
Aaa | AAA | King County School District #415 Kent, (FSA Insured) 5.5%, 6/1/16 | 300,000 | 338,430 |
TOTAL INVESTMENTS (Cost $ 19,988,812) | $21,054,247 | |||
CASH AND RECEIVABLES LESS LIABILITIES: 3.2% of net assets | 707,939 | |||
NET ASSETS: 100% | $21,762,186 |
Notes to Portfolios of Investments:
# Refunded or escrowed to maturity
AMBAC American Municipal Bond Assurance Corporation
AMT Subject to Alternative Minimum Tax
FGIC Financial Guaranty Insurance Company
FHA Federal Housing Administration
FSA Federal Security Assistance
MBIA Municipal Bond Investors Assurance Corporation
Moody's Moody's Investors Service, Inc.
nr Not rated
S&P Standard & Poor's Corporation
* Credit ratings are unaudited
Statements of Assets and Liabilities (unaudited)
March 31, 2005
Arizona | Missouri Fund | Virginia | National | |
ASSETS | ||||
Investments, at value (Note 1) | ||||
Investment securities*......................................... | $5,796,984 | $7,844,979 | $26,939,699 | $21,054,247 |
Cash...................................................................... | 8,995 | 383,627 | 520,463 | 442,315 |
Receivables | ||||
Interest............................................................... | 78,480 | 94,566 | 354,751 | 278,105 |
Capital shares sold.............................................. | -- | -- | -- | 300 |
Total assets........................................................... | 5,884,459 | 8,323,172 | 27,814,913 | 21,774,967 |
LIABILITIES | ||||
Payables | ||||
Dividends........................................................... | 5,167 | 7,371 | 5,896 | 5,043 |
Capital shares redeemed...................................... | 1,210 | -- | 3,000 | 3,984 |
Independent trustee and auditor fees................... | 2,624 | 2,624 | 3,754 | 3,754 |
Total liabilities...................................................... | 9,001 | 9,995 | 12,650 | 12,781 |
NET ASSETS........................................................ | $5,875,458 | $8,313,177 | $27,802,263 | $21,762,186 |
Net assets consists of: | ||||
Paid in capital................................................... | $5,558,832 | $7,896,475 | $26,763,982 | $20,641,666 |
Accumulated net realized gains (losses)............ | 12,445 | (62,778) | (22,043) | 55,085 |
Net unrealized appreciation on investments...... | 304,181 | 479,480 | 1,060,324 | 1,065,435 |
Net assets............................................................ | $5,875,458 | $8,313,177 | $27,802,263 | $21,762,186 |
CAPITAL SHARES OUTSTANDING An unlimited number of capital shares, without par value, are authorized. (Note 7)............................... | 554,382 | 765,908 | 2,386,237 | 1,963,975 |
NET ASSET VALUE PER SHARE....................... | $10.60 | $10.85 | $11.65 | $11.08 |
* INVESTMENT SECURITIES, AT COST........... | $5,492,803 | $7,365,499 | $25,879,375 | $19,988,812 |
Statements of Operations (unaudited)
For the period ended March 31, 2005
Arizona Fund | Missouri Fund | Virginia Fund | National Fund | |
INVESTMENT INCOME (Note 1) | ||||
Interest income............................................................ | $138,918 | $186,574 | $602,980 | $487,356 |
EXPENSES (Notes 2 and 3) | ||||
Investment advisory fees.......................................... | 19,076 | 25,996 | 87,741 | 69,713 |
Other expenses: | ||||
Service agreement fees.......................................... | 11,751 | 16,014 | 50,539 | 44,616 |
Independent trustee and auditor fees..................... | 2,991 | 2,991 | 4,487 | 4,487 |
Total other expenses........................................... | 14,742 | 19,005 | 55,026 | 49,103 |
Total expenses............................................................ | 33,818 | 45,001 | 142,767 | 118,816 |
NET INVESTMENT INCOME................................... | 105,100 | 141,573 | 460,213 | 368,540 |
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS | ||||
Net realized gain (loss) on investments..................... | 12,445 | -- | (11,886) | 95,533 |
Change in net unrealized appreciation (depreciation) of investments...................................... | (144,951) | (149,912) | (449,213) | (617,431) |
NET GAIN (LOSS) ON INVESTMENTS................... | (132,506) | (149,912) | (461,099) | (521,898) |
TOTAL DECREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................... | $ (27,406) | $ (8,339) | $ (886) | $(153,358) |
Statements of Changes in Net Assets
For the periods indicated
Arizona Fund | Missouri Fund | |||
Six-Months Ended March 31, 2005* | Year Ended Sept. 30, 2004 | Six-Months Ended March 31, 2005* | Year Ended Sept. 30, 2004 | |
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | ||||
Net investment income................................. | $ 105,100 | $ 224,135 | $ 141,573 | $ 274,300 |
Net realized gain on investments.................. | 12,445 | 26,223 | -- | 8,275 |
Net unrealized depreciation on investments | (144,951) | (97,901) | (149,912) | (29,885) |
Total increase (decrease) in net assets resulting from operations.............................. | (27,406) | 152,457 | (8,339) | 252,690 |
DISTRIBUTION TO SHAREHOLDERS | ||||
From net investment income........................ | (105,100) | (224,135) | (141,573) | (274,300) |
From net capital gains.................................. | (2,081) | -- | -- | -- |
Total distributions.......................................... | (107,181) | (224,135) | (141,573) | (274,300) |
CAPITAL SHARE TRANSACTIONS (Note 7).......................................................... | (303,109) | (220,245) | 228,368 | 415,569 |
TOTAL INCREASE (DECREASE) IN NET ASSETS | (437,696) | (291,923) | 78,456 | 393,959 |
NET ASSETS | ||||
Beginning of Period..................................... | $6,313,154 | $6,605,077 | $8,234,721 | $7,840,762 |
End of Period............................................... | $5,875,458 | $6,313,154 | $8,313,177 | $8,234,721 |
Virginia Fund | National Fund | |||
Six-Months Ended March 31, 2005* | Year Ended Sept. 30, 2004 | Six-Months Ended March 31, 2005* | Year Ended Sept. 30, 2004 | |
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | ||||
Net investment income................................. | $ 460,213 | $ 974,849 | $ 368,540 | $ 763,094 |
Net realized gain (loss) on investments | (11,886) | 179,191 | 95,533 | 120,103 |
Net unrealized depreciation on investments..................................................... | (449,213) | (203,250) | (617,431) | (327,787) |
Total increase (decrease) in net assets resulting from operations.............................. | (886) | 950,790 | (153,358) | 555,410 |
DISTRIBUTION TO SHAREHOLDERS | ||||
From net investment income........................ | (460,213) | (974,849) | (368,540) | (763,094) |
From net capital gains.................................. | (179,348) | (332,133) | -- | -- |
Total distributions......................................... | (639,561) | (1,306,982) | (368,540) | (763,094) |
CAPITAL SHARE TRANSACTIONS (Note 7) ........................................................ | 286,036 | (1,168,003) | (241,509) | (755,845) |
TOTAL DECREASE IN NET ASSETS.......... | (354,411) | (1,524,195) | (763,407) | (963,529) |
NET ASSETS | ||||
Beginning of Period..................................... | $28,156,674 | $29,680,869 | $22,525,593 | $23,489,122 |
End of Period............................................... | $27,802,263 | $28,156,674 | $21,762,186 | $22,525,593 |
*Unaudited
Selected data for a share outstanding for the periods indicated.
ARIZONA FUND
Six-Months Ended March 31, | Year Ended September 30, | ||||
2005* | 2004 | 2003 | 2002 | 2001 | |
Net asset value, beginning of year | $10.84 | $10.96 | $11.00 | $10.63 | $10.06 |
Investment operations: | |||||
Net investment income | 0.19 | 0.37 | 0.38 | 0.39 | 0.42 |
Net realized and unrealized gain (loss) on investments | (0.24) | (0.12) | (0.04) | 0.37 | 0.57 |
Total from investment operations | (0.05) | 0.25 | 0.34 | 0.76 | 0.99 |
Less distributions from net investment income | (0.19) | (0.37) | (0.38) | (0.39) | (0.42) |
Net asset value, end of year | $10.60 | $10.84 | $10.96 | $11.00 | $10.63 |
Total return (%) | (0.47) | 2.38 | 3.17 | 7.37 | 10.01 |
Ratios and supplemental data | |||||
Net assets, end of year (in thousands) | $5,875 | $6,313 | $6,605 | $6,801 | $6,883 |
Ratio of expenses to average net assets (%)1 | 1.11 | 1.11 | 1.11 | 1.11 | 1.10 |
Ratio of net investment income to average net assets (%)1 | 3.44 | 3.45 | 3.47 | 3.69 | 4.01 |
Portfolio turnover (%) | 0 | 3 | 5 | 15 | 20 |
MISSOURI FUND
Six-Months Ended March 31, | Year Ended September 30, | ||||
2005* | 2004 | 2003 | 2002 | 2001 | |
Net asset value, beginning of year | $11.05 | $11.08 | $11.24 | $10.72 | $10.17 |
Investment operations: | |||||
Net investment income | 0.19 | 0.38 | 0.40 | 0.41 | 0.43 |
Net realized and unrealized gain (loss) on investments | (0.20) | (0.03) | (0.16) | 0.52 | 0.55 |
Total from investment operations | (0.01) | 0.35 | 0.24 | 0.93 | 0.98 |
Less distributions from net investment income | (0.19) | (0.38) | (0.40) | (0.41) | (0.43) |
Net asset value, end of year | $10.85 | $11.05 | $11.08 | $11.24 | $10.72 |
Total return (%) | (0.13) | 3.23 | 2.24 | 8.96 | 9.79 |
Ratios and supplemental data | |||||
Net assets, end of year (in thousands) | $8,313 | $8,235 | $7,841 | $8,569 | $7,943 |
Ratio of expenses to average net assets (%)1 | 1.08 | 1.08 | 1.09 | 1.08 | 1.08 |
Ratio of net investment income to average net assets (%)1 | 3.39 | 3.45 | 3.63 | 3.85 | 4.06 |
Portfolio turnover (%) | 0 | 2 | 17 | 21 | 16 |
VIRGINIA FUND
Six-Months Ended March 31, | Year Ended September 30, | ||||
2005* | 2004 | 2003 | 2002 | 2001 | |
Net asset value, beginning of year | $11.92 | $12.06 | $12.16 | $11.70 | $11.14 |
Investment operations: | |||||
Net investment income | 0.19 | 0.41 | 0.45 | 0.48 | 0.49 |
Net realized and unrealized gain (loss) on investments | (0.19) | -- | (0.05) | 0.46 | 0.56 |
Total from investment operations | -- | 0.41 | 0.40 | 0.94 | 1.05 |
Less distribution from: | |||||
net investment income | (0.19) | (0.41) | (0.45) | (0.48) | (0.49) |
net capital gains | (0.08) | (0.14) | (0.05) | -- | -- |
Total distributions | (0.27) | (0.55) | (0.50) | (0.48) | (0.49) |
Net asset value, end of year | $11.65 | $11.92 | $12.06 | $12.16 | $11.70 |
Total return (%) | (0.01) | 3.46 | 3.35 | 8.22 | 9.62 |
Ratios and supplemental data | |||||
Net assets, end of year (in thousands) | $27,802 | $28,157 | $29,681 | $30,080 | $29,747 |
Ratio of expenses to average net assets (%)1 | 1.01 | 1.02 | 1.01 | 1.01 | 1.01 |
Ratio of net investment income to average net assets (%)1 | 3..27 | 3.41 | 3.72 | 4.05 | 4.26 |
Portfolio turnover (%) | 5 | 16 | 31 | 27 | 38 |
NATIONAL FUND
Six-Months Ended March 31, | Year Ended September 30, | ||||
2005* | 2004 | 2003 | 2002 | 2001 | |
Net asset value, beginning of year | $11.35 | $11.45 | $11.53 | $10.97 | $10.43 |
Investment operations: | |||||
Net investment income | 0.19 | 0.38 | 0.38 | 0.41 | 0.49 |
Net realized and unrealized gain (loss) on investments | (0.27) | (0.27) | (0.10) | (0.08) | 0.56 |
Total from investment operations | (0.08) | 0.28 | 0.30 | 0.97 | 1.03 |
Less distribution from net investment income | (0.19) | (0.38) | (0.38) | (0.41) | (0.49) |
Net asset value, end of year | $11.08 | $11.35 | $11.45 | $11.53 | $10.97 |
Total return (%) | (0.75) | 2.47 | 2.72 | 9.08 | 10.03 |
Ratios and supplemental data | |||||
Net assets, end of year (in thousands) | $21,762 | $22,526 | $23,489 | $24,274 | $24,417 |
Ratio of expenses to average net assets (%)1 | 1.06 | 1.07 | 1.07 | 1.07 | 1.06 |
Ratio of net investment income to average net assets (%)1 | 3.30 | 3.31 | 3.37 | 3.70 | 4.48 |
Portfolio turnover (%) | 6 | 28 | 21 | 56 | 53 |
*Unaudited
1Annualized
Notes to Financial Statements (unaudited)
1. Summary of Significant Accounting Policies. Mosaic Tax-Free 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 maintains four separate funds (described in the following sentences and defined as the "Funds") which invest principally in securities exempt from federal income taxes, commonly known as "municipal" securities. The Arizona, Missouri and Virginia Funds (the "State Funds") invest solely in securities exempt from both federal and state income taxes in their respective states. The National Fund invests in securities exempt from federal taxes. The National Fund and the State Funds invest in intermediate and long-term securities. Because the Trust is 100% no-load, the shares of each fund are offered and redeemed at the net asset value per share.
Securities Valuation: The State and National Funds value securities having maturities of 60 days or less at amortized cost, which approximates market value. Securities having longer maturities, for which market quotations are readily available are valued at the mean between their bid and ask prices. Securities for which market quotations are not readily available are valued at their fair value as determined in good faith under procedures approved by the Board of Trustees.
Investment Transactions: Investment transactions are recorded on a trade date basis. The cost of investments sold is determined on the identified cost basis for financial statement and federal income tax purposes.
Investment Income: Interest income is recorded on an accrual basis. Bond premium is amortized and original issue discount and market discount are accreted over the expected life of each applicable security using the effective interest method.
Distribution of Income and Gains: Net invest-ment income, determined as gross investment income less total expenses, is declared as a regular dividend and distributed to shareholders monthly. Capital gain distributions, if any, are declared and paid annually at calendar year-end. Additional distributions may be made if necessary. Distributions paid during the years ended September 30, 2004 and 2003 were identical for book purposes and tax purposes.
The tax character of distributions paid for the years ended September 30, 2004 and 2003 for the Virginia Fund was $0 short-term and $332,133 long-term and $2,174 short-term and $115,058 long-term, respectively. The Arizona, Missouri and National Funds distributed no taxable short-term or long-term capital gains as of the years ended September 30, 2004 and 2003.
As of March 31, 2005 the components of distributable earnings on a tax basis were as follows:
Arizona Fund:
Accumulated net realized gains | $ 12,445 |
Net unrealized appreciation on investments | 304,181 |
$ 316,626 |
Missouri Fund:
Accumulated net realized losses | $ (62,778) |
Net unrealized appreciation on investments | 479,480 |
$ 416,702 |
Virginia Fund:
Accumulated net realized losses | $ (22,043) |
Net unrealized appreciation on investments | 1,060,324 |
$1,038,281 |
National Fund:
Accumulated net realized gains | $ 55,085 |
Net unrealized appreciation on investments | 1,065,435 |
$1,120,520 |
Net realized gains or losses may differ for financial and tax reporting purposes as a result of loss deferrals related to wash sales and post-October transactions.
Income Tax: No provision is made for Federal income taxes since it is the intention of the Funds to comply with the provisions of the Internal Revenue Code available to investment companies and to make the requisite distribu-tion to shareholders of taxable income which will be sufficient to relieve it from all or substantially all Federal Income Taxes. As of September 30, 2004, capital loss carryovers available to offset future capital gains for federal income tax purposes and the years they expire are as follows:
Expiration Date | Missouri Fund |
September 30, 2008 | $62,778 |
Expiration Date | National Fund |
September 30, 2008 | $40,448 |
Use of Estimates: The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. Such estimates 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. Investment Advisory Fees and Other Transactions with Affiliates. The investment advisor to the Trust, Madison Mosaic, LLC, a wholly owned subsidiary of Madison Investment Advisors, Inc. (the "Advisor"), earns an advisory fee equal to 0.625% per annum of the average net assets of the Funds. The fees are accrued daily and are paid monthly.
3. Other Expenses. Under a separate Services Agreement, the Advisor will provide or arrange for each Fund to have all other necessary operational and support services for a fee based on a percentage of average net assets, other than the expenses of the Trust's Independent Trustees and auditor ("Independent Service Providers") which are paid directly based on cost. Through six-months ended March 31, 2005, the services fee was as follows: 0.39% for the Arizona Fund; 0.39% for the Missouri Fund; 0.36% for the Virginia Fund and 0.40% for the National Fund. The amounts paid by each fund directly for Independent Service Providers fees for the six months was $2,991, $2,991, $4,487 and $4,487 for the Arizona, Missouri, Virginia and National Funds, respectively.
4. Fund Expenses.
Example: This Example is intended to help you understand your costs (in dollars) of investing in a Mosaic Tax-Free Trust fund and to compare these costs with the costs of investing in other mutual funds. See footnotes 2 and 3 above for an explanation of the types of costs charged by the funds. This Example is based on an investment of $1,000 invested on October 1, 2004 and held for the six months ended March 31, 2005.
Actual Expenses
The table below titled "Based on Actual Total Return" provides information about actual account values and actual expenses. You may use the information provided in this table, together with the amount you invested, to estimate the expenses that you paid over the period. To estimate the expenses you paid on your account, divide your ending account value by $1,000 (for example, an $8,500 ending account valued divided by $1,000 = 8.5), then multiply the result by the number under the heading entitled "Expenses Paid During the Period."
Based on Actual Total Return1 | |||||
Actual Total Return2 | Beginning Account Value | Ending Account Value | Annualized Expense Ratio3 | Expenses Paid During the Period3 | |
Arizona Fund | -0.47% | $1,000.00 | $995.26 | 1.11% | $5.53 |
Missouri Fund | -0.13% | $1,000.00 | $998.74 | 1.08% | $5.40 |
Virginia Fund | -0.01% | $1,000.00 | $999.89 | 1.01% | $5.08 |
National Fund | -0.75% | $1,000.00 | $992.50 | 1.06% | $5.30 |
1For the six months ended March 31, 2005. 2Assumes reinvestment of all dividends and capital gains distributions, if any, at net asset value. 3Expenses are equal to the respective Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365 |
Hypothetical Example for Comparison Purposes
The table below titled "Based on Hypothetical Total Return" provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio and an assumed rate of return of 5.00% per year before expenses, which is not any fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use the information provided in this table to compare the ongoing costs of investing in a Mosaic Tax-Free Trust Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the Mosaic Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Based on Hypothetical Total Return1 | |||||
Hypothetical Annualized Total Return | Beginning Account Value | Ending Account Value | Annualized Expense Ratio2 | Expenses Paid During the Period2 | |
Arizona Fund | 5.00% | $1,000.00 | $1,025.16 | 1.11% | $5.58 |
Missouri Fund | 5.00% | $1,000.00 | $1,025.16 | 1.08% | $5.45 |
Virginia Fund | 5.00% | $1,000.00 | $1,025.16 | 1.01% | $5.12 |
National Fund | 5.00% | $1,000.00 | $1,025.16 | 1.06% | $5.36 |
1For the six months ended March 31, 2005. 2Expenses are equal to the respective Fund's annualized expense ratio multiplied by the average account value over the period, multiplied by the number of days in the most recent fiscal half-year, then divided by 365 |
5. Aggregate Cost and Unrealized Appreciation. The aggregate cost for federal income tax purposes and the net unrealized appreciation (depreciation) are stated as follows as of March 31, 2005:
Arizona Fund | Missouri Fund | |
Aggregate Cost | $5,492,803 | $7,365,499 |
Gross unrealized appreciation | 315,989 | 487,607 |
Gross unrealized depreciation | (11,808) | (8,127) |
Net unrealized appreciation | $ 304,181 | $ 479,480 |
Virginia Fund | National Fund | |
Aggregate Cost | $25,879,375 | $19,988,812 |
Gross unrealized appreciation | 1,137,785 | 1,133,318 |
Gross unrealized depreciation | (77,461) | (67,883) |
Net unrealized appreciation | $ 1,060,324 | $ 1,065,435 |
6. Investment Transactions. Purchases and sales of securities (excluding short-term securities) for the six-months ended March 31, 2005, were as follows:
Purchases | Sales | |
Arizona Fund | $ -- | $ 249,801 |
Missouri Fund | -- | -- |
Virginia Fund | 1,286,759 | 1,610,600 |
National Fund | 1,243,350 | 1,784,450 |
7. Capital Share Transactions. An unlimited number of capital shares, without par value, are authorized. Transactions in capital shares were as follows:
(unaudited) Period Ended March 31, | Year Ended Sept. 30, | |
Arizona Fund | 2005 | 2004 |
In Dollars | ||
Shares sold | $ 98,047 | $ 198,107 |
Shares issued in reinvestment of dividends | 74,943 | 158,003 |
Total shares issued | 172,990 | 356,110 |
Shares redeemed | (476,099) | (576,355) |
Net decrease | $(303,109) | $(220,245) |
In Shares | ||
Shares sold | 9,121 | 18,175 |
Shares issued in reinvestment of dividends | 6,966 | 14,578 |
Total shares issued | 16,087 | 32,753 |
Shares redeemed | (44,053) | (53,050) |
Net decrease | (27,966) | (20,297) |
(unaudited) Period Ended March 31, | Year Ended Sept. 30, | |
Missouri Fund | 2005 | 2004 |
In Dollars | ||
Shares sold | $ 436,392 | $ 448,565 |
Shares issued in reinvestment of dividends | 117,742 | 222,786 |
Total shares issued | 554,134 | 671,351 |
Shares redeemed | (325,766) | (255,782) |
Net increase | $ 228,368 | $ 415,569 |
In Shares | ||
Shares sold | 39,736 | 40,768 |
Shares issued in reinvestment of dividends | 10,713 | 20,271 |
Total shares issued | 50,449 | 61,039 |
Shares redeemed | (29,485) | (23,516) |
Net increase | 20,964 | 37,523 |
(unaudited) Period Ended March 31, | Year Ended Sept. 30, | |
Virginia Fund | 2005 | 2004 |
In Dollars | ||
Shares sold | $ 617,600 | $1,323,802 |
Shares issued in reinvestment of dividends | 588,716 | 1,195,785 |
Total shares issued | 1,206,316 | 2,519,587 |
Shares redeemed | 920,280 | 3,687,590 |
Net increase (decrease) | $ 286,036 | $(1,168,003) |
In Shares | ||
Shares sold | 52,002 | 111,281 |
Shares issued in reinvestment of dividends | 49,849 | 100,651 |
Total shares issued | 101,851 | 211,932 |
Shares redeemed | 77,550 | 310,466 |
Net increase (decrease) | 24,301 | (98,534) |
(unaudited) Period Ended March 31, | Year Ended Sept. 30, | |
National Fund | 2005 | 2004 |
In Dollars | ||
Shares sold | $ 791,523 | $2,724,523 |
Shares issued in reinvestment of dividends | 336,387 | 689,890 |
Total shares issued | 1,127,910 | 3,414,413 |
Shares redeemed | (1,369,419) | (4,170,258) |
Net decrease | $ (241,509) | $ (755,845) |
In Shares | ||
Shares sold | 70,064 | 239,790 |
Shares issued in reinvestment of dividends | 29,887 | 61,082 |
Total shares issued | 99,951 | 300,872 |
Shares redeemed | (121,000) | (367,015) |
Net decrease | (21,049) | (66,143) |
Forward-Looking Statement Disclosure. One of our most important responsibilities as mutual fund managers is to communicate with shareholders in an open and direct manner. Some of our comments in our letters to shareholders are based on current management expectations and are considered "forward-looking statements." Actual future results, however, may prove to be different from our expectations. You can identify forward-looking statements by words such as "estimate," "may," "will," "expect," "believe," "plan" and other similar terms. We cannot promise future returns. Our opinions are a reflection of our best judgment at the time this report is compiled, and we disclaim any obligation to update or alter forward-looking statements as a result of new information, future events, or otherwise.
Proxy Voting Information. The Trust only invests in non-voting securities. Nevertheless, the Trust adopted policies that provide guidance and set forth parameters for the voting of proxies relating to securities held in the Trust's portfolios. These policies are available to you upon request and free of charge by writing to Mosaic Funds, 550 Science Drive, Madison, WI 53711 or by calling toll-free at 1-800-368-3195. The Trust's proxy voting policies may also be obtained by visiting the Securities and Exchange Commission web site at www.sec.gov. The Trust will respond to shareholder requests for copies of our policies within two business days of request by first-class mail or other means designed to ensure prompt delivery.
N-Q Disclosure. The Trust files its complete schedule of portfolio holdings with the U.S. Securities and Exchange Commission (the "Commission") for the first and third quarters of each fiscal year on Form N-Q. The Trust's Forms N-Q are available on the Commission's website. The Trust's Forms N-Q may be reviewed and copied at the Commission's Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the Commission at 1-202-942-8090. Form N-Q and other information about the Trust are available on the EDGAR Database on the Commission's Internet site at http://www.sec.gov. Copies of this information may also be obtained, upon payment of a duplicating fee, by electronic request at the following email address: publicinfo@sec.gov, or by writing the Commission's Public Reference Section, Washington, DC 20549-0102. Finally, you may call Mosaic at 800-368-3195 if you would like a copy of Form N-Q and we will mail one to you at no charge.
The Mosaic Family of Mutual Funds
Mosaic Equity Trust
Mosaic Investors Fund
Mosaic Balanced Fund
Mosaic Mid-Cap Fund
Mosaic Foresight Fund
Mosaic Income Trust
Mosaic Government Fund
Mosaic Intermediate Income Fund
Mosaic Institutional Bond Fund
Mosaic Tax-Free Trust
Mosaic Arizona Tax-Free Fund
Mosaic Missouri Tax-Free Fund
Mosaic Virginia Tax-Free Fund
Mosaic Tax-Free National Fund
Mosaic Government Money Market
For more complete information on any Mosaic fund, including charges and expenses, request a prospectus by calling 1-800-368-3195. Read it carefully before you invest or send money. This document does not constitute an offering by the distributor in any jurisdiction in which such offering may not be lawfully made. Mosaic Funds Distributor, LLC.
TRANSER AGENT
Mosaic Funds
c/o US Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
TELEPHONE NUMBERS
Shareholder Service
Toll-free nationwide: 888-670-3600
Mosaic Tiles (24 hour automated information)
Toll-free nationwide: 800-336-3600
550 Science Drive
Madison, Wisconsin 53711
Mosaic Funds
www.mosaicfunds.com
SEC File Number 811-3486
Item 2. Code of Ethics.
Not applicable in semi-annual report.
Item 3. Audit Committee Financial Expert.
Not applicable in semi-annual report.
Item 4. Principal Accountant Fees and Services.
Not applicable in semi-annual report.
Item 5. Audit Committee of Listed Registrants.
Not applicable.
Item 6. Schedule of Investments
Included in report to shareholders above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 9. Submission of Matters to a Vote of Security Holders.
No changes.
Item 10. Controls and Procedures.
(a) The Trust’s principal executive officer and principal financial officer determined that the Trust’s disclosure controls and procedures are effective, based on their evaluation of these controls and procedures within 90 days of the date of this report. There were no significant changes in the Trust’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. The officers identified no significant deficiencies or material weaknesses.
(b) There have been no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
Item 11. Exhibits.
(a)(1) Code of ethics referred to in Item 2.
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Investment Company Act of 1940.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Mosaic Tax-Free Trust
By: (signature)
W. Richard Mason, Secretary
Date: May 19, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: (signature)
Katherine L. Frank, Chief Executive Officer
Date: May 19, 2005
By: (signature)
Greg Hoppe, Chief Financial Officer
Date: May 19, 2005