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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 811-3616
Madison Mosaic Income Trust
(Exact name of registrant as specified in charter)
550 Science Drive, Madison, WI 53711
(Address of principal executive offices)(Zip code)
Pamela M. Krill
Madison Funds Legal and Compliance Department
550 Science Drive
Madison, WI 53711
(Name and address of agent for service)
Registrant's telephone number, including area code: 608-274-0300
Date of fiscal year end: December 31
Date of reporting period: June 30, 2011
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, inspection, 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, 100 F Street, NE, 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)
June 30, 2011
Madison Mosaic
Income Trust
Government Fund
Core Bond Fund
Institutional Bond Fund
Investment Grade Corporate Bond Fund
Madison Mosaic¨ Funds
www.mosaicfunds.com
CONTENTS
Period of Review | |
Economic Overview | 1 |
Outlook | 1 |
Government Fund | 2 |
Core Bond Fund | 2 |
Institutional Bond Fund | 3 |
Investment Grade Corporate Bond Fund | 4 |
Portfolio of Investments | |
Government Fund | 6 |
Core Bond Fund | 7 |
Institutional Bond Fund | 9 |
Investment Grade Corporate Bond Fund | 10 |
Statements of Assets and Liabilities | 11 |
Statements of Operations | 12 |
Statements of Changes in Net Assets | 13 |
Financial Highlights | 14 |
Notes to Financial Statements | 16 |
Other Information | 22 |
Madison Mosaic Income Trust
Period of Review
ECONOMIC OVERVIEW
The six-month period ended June 30, 2011 was fraught with contradictions, as bond and stock returns continued to be positive in the midst of considerable global disruption. Stock markets around the world opened the year in a positive trend, but as we entered the second quarter of 2011 it was increasingly evident that the global economy had hit a soft patch. The main factors that appeared to be underlying this slowdown were: a rise in commodity prices, led by energy costs; the aftermath of the tragic earthquake and tsunami in Japan; the continuing sovereign debt crisis in Europe which is centered in, but not contained to Greece; and the shift of monetary policies, most notably the ending of the Federal Reserve’s Quantitative Easing II.
Looking at results from the start of the period to the end, returns appear broadly positive across the major domestic and global stock and bond indices. The S&P 500, the most widely used proxy for domestic stocks, was up 6.02% and the Morgan Stanley EAFE Index, representing overseas markets, was up 5.36%. Bond investors also saw positive returns for the period, with the Barclays U.S. Aggregate Index up 2.72%. These returns belie the underlying volatility for the period, as markets reacted to the events mentioned above, producing moments when the year-to-date returns were considerably lower than those achieved by period end.
While the news, including Washington’s impasse regarding the debt ceiling, often seemed gloomy, the markets continued to climb the proverbial "wall of worry." Supporting these results were corporate profits, which have continued to be robust. It appears that a wide swath of U.S. businesses have learned to do more with less, producing an environment where corporations show healthy fundamentals, while unemployment remains stubbornly high. While consumer spending is still not out of the doldrums, we continue to see controlled inflation and historically low interest rates, conditions which have traditionally been healthy for corporate balance sheets.
OUTLOOK
Looking forward, a number of second quarter developments bolstered our confidence that the economy can once again regain its footing as we move through the second half of 2011 and into 2012. For instance, the price of oil declined by more than 15% since peaking in late April. In addition, global supply chain disruptions from the Japanese earthquake appeared to be fading. Meanwhile, in Europe, another "fix" appeared to be in place which could at least improve the odds for a delayed and orderly (as opposed to disorderly) Greece default, welcome news to a number of very shaky European banks. On the fiscal front, serious political discussions focused on an extension of federal stimulus into 2012 appeared to be providing more time for the economy to heal before it sets out on its own. Finally, the ongoing credit cycle tightening in China may soon be coming to a close. Still, this is certainly no time for complacency. As a nation we are still going through a rather lengthy and painful de-leveraging process. We believe this ongoing de-leveraging could lead to more fragile economic growth with shorter and choppier economic cycles. The soft patches of 2010 and 2011 are quite consistent with this tempered view.
Semi-annual Report | June 30, 2011 | 1
Madison Mosaic Income Trust | Period of Review | continued
MADISON MOSAIC GOVERNMENT FUND
FUND-AT-A-GLANCE |
Objective: Madison Mosaic Government Fund provides investors with monthly dividends by investing in bonds and other securities issued or guaranteed by the U.S. Government. |
Net Assets: $5.3 million |
Date of Inception: July 21, 1983 |
Ticker: MADTX |
INVESTMENT STRATEGY HIGHLIGHTS
Madison Mosaic Government Fund invests primarily in short to intermediate term government and government agency bonds. The fund concentrates on the intermediate portion of the yield curve with a recognition that the ten-year Treasury bond has offered approximately 90% of the return of a 30-year Treasury with less risk. The fund is actively managed for duration, meaning that when we believe interest rates will fall, we lengthen duration to take advantage of the increased returns that should be available as rates drop. Likewise, when rates appear likely to rise, we shorten portfolio maturities with the goal of limiting potential declines.
PERFORMANCE DISCUSSION
Madison Mosaic Government Fund returned 1.40% for the semi-annual period ended June 30, 2011. This return exceeded the fund’s Morningstar Short Government peer group, which had a category return of 1.06% for the period. This relative return reflects the fund’s duration posture which tends towards a more intermediate stance in a period in which intermediate bonds outperformed short bonds, as indicated by the Morningstar Intermediate Government category, which rose 2.48% for the six months. The fund’s 30-day SEC yield at period-end was 0.70%, with an effective duration of 2.79 years.
The Government Fund began the period with 41.9% in Treasuries and 45.4% in government agency notes, with the remainder in mortgage-backed securities and short-term notes. Over the course of the six months, we maintained our Treasury position at 42.0% and reduced the agency position to a 41.2% weighting. We also maintained the fund’s holdings in high-quality mortgage-backed securities, increasing exposure from 10.9% of the fund to 12.1%. The fund’s largest positions during this six-month period were short to intermediate duration bonds issued by the U.S. Treasury, Fannie Mae and Freddie Mac.
TOP TEN STOCK HOLDINGS AS OF 6/30/11 | |
% of net assets | |
U.S. Treasury Note, 3.125%, 10/31/16 | 8.05% |
U.S. Treasury Note, 1.875%, 6/15/12 | 6.05% |
U.S. Treasury Note, 4.75%, 5/31/12 | 5.92% |
Freddie Mac, 5.5%, 9/15/11 | 5.74% |
U.S. Treasury Note, 2.625%, 4/30/16 | 5.44% |
U.S. Treasury Note, 4%, 11/15/12 | 4.97% |
U.S. Treasury Note, 3.75%, 11/15/18 | 4.62% |
Fannie Mae, 4.625%, 10/15/13 | 4.13% |
Fannie Mae, 2.375%, 7/28/15 | 3.90% |
Fannie Mae, 1.625%, 10/26/15 | 3.77% |
SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS AS OF 6/30/11 | |
Mortgage Backed Securities | 12.1% |
U.S. Agency Notes | 41.2% |
U.S. Treasury Notes | 42.0% |
Cash and Other | 4.7% |
MADISON MOSAIC CORE BOND FUND
FUND-AT-A-GLANCE |
Objective: Madison Mosaic Core Bond Fund provides regular, relatively higher income by investing in intermediate-term corporate, government and mortgage-backed bonds. |
Net Assets: $8.2 million |
Date of Inception: July 21, 1983 |
Ticker: MADBX |
INVESTMENT STRATEGY HIGHLIGHTS
Madison Mosaic Core Bond Fund invests primarily in intermediate term corporate, government and mortgage-backed bonds. The fund is actively managed in terms of duration, asset mix and yield curve positioning. When we believe interest rates are likely to fall, we lengthen duration to take advantage of the increased returns that should be
2 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Period of Review • Core Bond Fund | continued
available as rates drop. Likewise, when rates appear likely to rise, we shorten portfolio maturities with the goal of limiting potential declines.
PERFORMANCE DISCUSSION
Madison Mosaic Core Bond Fund rose 2.44% for the six months ended June 30, 2011. Over the same period, its Morningstar peer group in the Intermediate Term Bond category averaged 2.84%. The fund’s defensive short duration posture was a drag on relative performance, as indicated by the performance of the Morningstar Long-Term Bond category, which rose 3.70% for the period as interest rates moved lower. Core Bond had a relatively light 8.7% exposure to Baa/BBB bonds (the lowest investment-grade rating) at the beginning of the period and ended the period holding 7.0% in Baa/BBB bonds. A light exposure to low-rated bonds detracted from performance over the first six months of 2011, as indicated by the Morningstar High Yield Bond category, which rose 4.28% for the period. As of June 30, 2011, Core Bond had a 30-day SEC yield of 1.97% and a duration of 4.14 years.
TOP TEN STOCK HOLDINGS AS OF 6/30/11 | |
% of net assets | |
U.S. Treasury Note, 3.125%, 5/15/19 | 12.02% |
Ginnie Mae Pool #698089, 4%, 4/15/39 | 3.91% |
Freddie Mac, 5%, 2/16/17 | 3.50% |
U.S. Treasury Note, 2.625%, 11/15/20 | 2.95% |
Fannie Mae Pool #889260, 5%, 4/1/38 | 2.59% |
Fannie Mae Pool #745355, 5%, 3/1/36 | 2.18% |
Kimberly-Clark Corp., 6.125%, 8/1/17 | 2.17% |
U.S. Treasury Bond, 5.375%, 2/15/31 | 2.16% |
ConocoPhillips, 4.6%, 1/15/15 | 2.03% |
Freddie Mac Pool #J07302, 4.5%, 4/1/23 | 2.01% |
SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS AS OF 6/30/11 | |
Consumer Discretionary | 3.1% |
Consumer Staples | 7.8% |
Energy | 5.7% |
Financials | 18.2% |
Health Care | 6.1% |
Industrials | 1.4% |
Information Technology | 5.5% |
Materials | 1.3% |
Utilities | 1.0% |
Mortgage Backed Securities | 26.3% |
U.S. Government and Agency Obligations | 21.1% |
Cash and Other | 2.5% |
MADISON MOSAIC INSTITUTIONAL BOND FUND
FUND-AT-A-GLANCE |
Objective: The Madison Mosaic Institutional Bond Fund seeks total investment return through a combination of intermediate corporate and government bonds. |
Net Assets: $53.6 million |
Date of Inception: May 1, 2000 |
Ticker: MIIBX |
INVESTMENT STRATEGY HIGHLIGHTS
Madison Mosaic Institutional Bond Fund invests primarily in short to intermediate term government, government agency and investment-grade corporate bonds. The fund concentrates on the intermediate portion of the yield curve with a recognition that the ten-year Treasury bond has offered approximately 90% of the return of a 30-year Treasury with less risk. The fund is actively managed for duration, meaning that when we believe interest rates are likely to fall, we lengthen duration to take advantage of the increased returns that should be available as rates drop. Likewise, when rates appear likely to rise, we shorten portfolio maturities with the goal of limiting potential declines.
PERFORMANCE DISCUSSION
Madison Mosaic Institutional Bond Fund returned 1.52% for the semi-annual period ended June 30, 2011. This return trailed the fund’s Morningstar Short Government peer group, which had a category return of 2.84% for the period. This relative return reflects the fund’s duration posture which remained defensively short during the period, during which intermediate bonds outperformed short bonds, and long bonds outperformed intermediate bonds. Lower-grade bonds also had a stronger six-months, and Institutional Bond has no exposure to bonds in the
Semi-annual Report | June 30, 2011 | 3
Madison Mosaic Income Trust | Period of Review • Institutional Bond Fund | continued
lower-grade, "junk" categories. The fund’s 30-day SEC yield at period-end was 0.70%, with an effective duration of 2.73 years.
The Institutional Bond Fund began the period with 27.1% in Treasuries, 20.4% in government agency notes, and 51.5% in corporate bonds with the remainder in short-term notes. Over the course of the six months, we decreased our Treasury position to 25.7% while the agency position remained relatively constant at 19.8%. Corporate exposure remained about half the portfolio, with an ending 48.4% share. The fund’s largest positions during this six-month period were short to intermediate duration bonds issued by the U.S. Treasury, Fannie Mae and Freddie Mac.
TOP TEN HOLDINGS AS OF 6/30/11 | |
% of net assets | |
Freddie Mac, 4.5%, 7/15/13 | 4.54% |
Freddie Mac , 5.125%, 7/15/12 | 4.41% |
Fannie Mae, 3.625%, 8/15/11 | 4.21% |
U.S. Treasury Note, 4.25%, 8/15/14 | 4.13% |
U.S. Treasury Note, 2.625%, 11/15/20 | 4.05% |
Federal Home Loan Bank, 3.625%, 5/29/13 | 3.96% |
U.S. Treasury Note, 4%, 11/15/12 | 3.92% |
U.S. Treasury Note, 2%, 11/30/13 | 3.86% |
U.S. Treasury Note, 1.375%, 1/15/13 | 3.79% |
U.S. Treasury Note, 4.875%, 2/15/12 | 3.07% |
SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS AS OF 6/30/11 | |
Consumer Discretionary | 4.1% |
Consumer Staples | 12.4% |
Energy | 2.6% |
Financials | 16.9% |
Health Care | 3.1% |
Industrials | 1.5% |
Information Technology | 5.8% |
Materials | 2.0% |
U.S. Government & Agency Obligations | 45.4% |
Cash & Other | 6.2% |
INVESTMENT GRADE CORPORATE BOND FUND
FUND-AT-A-GLANCE |
Objective: The Madison Mosaic Investment Grade Corporate Bond Fund provides investors with high total investment returns in the form of income and share price appreciation through investments in a broad range of corporate debt securities. |
Net Assets: $1.0 million |
Date of Inception: July 1, 2007 |
Ticker: COINX |
INVESTMENT STRATEGY HIGHLIGHTS
Madison Mosaic Investment Grade Corporate Bond Fund provides investors with regular, monthly income through investments in bonds issued by corporations. The fund will generally invest in corporate securities with an average maturity of 10 years or less. The result is a fund designed for investors who seek regular income from an actively managed bond fund that seeks the best risk/return profiles from a portfolio that emphasizes higher quality intermediate-term corporate issuance.
PERFORMANCE DISCUSSION
Madison Mosaic Investment Grade Corporate Bond Fund returned 2.23% for the semi-annual period ended June 30, 2011, during a period in which corporate bonds outperformed U.S. Treasuries and agency bonds. This still was not enough to outperform its Morningstar category, Intermediate-Term Bond, which was up 2.84%. The fund focused on higher quality bonds and held a conservative duration posture, both which we believe were relative drags on performance. Barclays Capital corporate bond indices indicate the quality disparity as its top AAA category returned 2.3% for the year, while the lower categories of BA, B, CAA and CA-D were up 4.4% to 5.6% for the period. For the period, long-term bonds outperformed intermediate term bonds which in turn outperformed short-term bonds. We believe that over this six months, the fund’s high quality bias and defensive interest rate stance were detriments in matching peer group performance. At period end, the fund had a 30-day SEC yield of 1.65% and a duration of 4.29 years.
4 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Period of Review • Investment Grade Corporate Bond Fund | concluded
TOP TEN HOLDINGS AS OF 6/30/11 | |
% of net assets | |
Abbott Laboratories, 5.875%, 5/15/16 | 2.84% |
Coca-Cola Co./The, 5.35%, 11/15/17 | 2.82% |
Cisco Systems Inc., 5.5%, 2/22/16 | 2.77% |
Pfizer Inc., 5.35%, 3/15/15 | 2.75% |
General Electric Capital Corp., 6.75%, 3/15/32 | 2.71% |
Sysco Corp., 5.25%, 2/12/18 | 2.69% |
National Rural Utilities Cooperative Finance Corp., 4.75%, 3/1/14 | 2.65% |
Bank of New York Mellon Corp./The, 4.3%, 5/15/14 | 2.63% |
US Bancorp, 4.2%, 5/15/14 | 2.62% |
American Express Co., 4.875%, 7/15/13 | 2.59% |
SECTOR ALLOCATION AS A PERCENTAGE OF NET ASSETS AS OF 6/30/11 | |
Consumer Discretionary | 8.6% |
Consumer Staples | 23.1% |
Energy | 7.1% |
Financials | 25.1% |
Health Care | 7.1% |
Industrials | 4.7% |
Information Technology | 14.7% |
Materials | 2.6% |
Telecommunication Services | 1.5% |
Utilities | 1.0% |
Cash & Other | 4.5% |
Semi-annual Report | June 30, 2011 | 5
Madison Mosaic Income Trust | June 30, 2011
Government Fund • Portfolio of Investments (unaudited)
Par Value | Value (Note 1) | |
MORTGAGE BACKED SECURITIES - 12.1% | ||
Fannie Mae - 5.3% | ||
5.5%, 2/1/18 Pool # 555345 | $ 19,824 | $ 21,520 |
5%, 6/1/18 Pool # 555545 | 40,452 | 43,732 |
6.5%, 5/1/32 Pool # 636758 | 8,439 | 9,605 |
6.5%, 6/1/32 Pool # 254346 | 10,490 | 11,940 |
6%, 8/1/32 Pool # 254405 | 17,934 | 19,897 |
4.5%, 12/1/35 Pool # 745147 | 128,877 | 134,312 |
5.5%, 1/1/38 Pool # 953589 | 37,959 | 41,128 |
282,134 | ||
Freddie Mac - 4.2% | ||
5.5%, 8/1/17 Pool # E90778 | 16,369 | 17,736 |
4.5%, 11/1/23 Pool # G13342 | 40,076 | 42,546 |
6.5%, 6/1/32 Pool # C01364 | 10,414 | 11,803 |
4%, 10/1/40 Pool # A94362 | 151,666 | 151,807 |
223,892 | ||
Ginnie Mae - 2.6% | ||
7%, 9/20/27 Pool # 2483 | 6,681 | 7,773 |
6%, 2/15/38 Pool # 676516 | 33,189 | 37,007 |
4%, 4/15/39 Pool # 698089 | 83,283 | 85,031 |
129,811 | ||
Total Mortgage Backed Securities (Cost $611,148) | 635,837 | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 83.2% | ||
Fannie Mae - 24.8% | ||
6.125%, 3/15/12 | 100,000 | 104,095 |
4.875%, 5/18/12 | 100,000 | 103,756 |
3.625%, 2/12/13 | 150,000 | 157,594 |
4.75%, 2/21/13 | 150,000 | 160,526 |
4.375%, 7/17/13 | 150,000 | 161,657 |
4.625%, 10/15/13 | 200,000 | 218,221 |
2.375%, 7/28/15 | 200,000 | 206,106 |
1.625%, 10/26/15 | 200,000 | 199,344 |
1,311,299 | ||
Par Value | Value (Note 1) | |
Federal Home Loan Bank - 5.1% | ||
4%, 9/6/13 | $ 150,000 | $ 160,950 |
3.125%, 12/13/13 | 100,000 | 105,914 |
266,864 | ||
Freddie Mac - 11.3% | ||
5.5%, 9/15/11 | 300,000 | 303,344 |
4.5%, 7/15/13 | 150,000 | 162,264 |
2.875%, 2/9/15 | 125,000 | 131,740 |
597,348 | ||
U.S. Treasury Notes - 42.0% | ||
1%, 7/31/11 | 150,000 | 150,086 |
4.75%, 5/31/12 | 300,000 | 312,457 |
1.875%, 6/15/12 | 250,000 | 253,955 |
4%, 11/15/12 | 250,000 | 262,598 |
4.25%, 8/15/14 | 100,000 | 110,539 |
2.625%, 4/30/16 | 275,000 | 287,396 |
3.125%, 10/31/16 | 400,000 | 425,250 |
4.5%, 5/15/17 | 90,000 | 102,136 |
3.75%, 11/15/18 | 225,000 | 243,774 |
2.625%, 11/15/20 | 75,000 | 72,246 |
2,220,437 | ||
Total U.S. Government and Agency Obligations (Cost $4,271,030) | 4,395,948 | |
Repurchase Agreement - 3.5% | ||
With U.S. Bank National Association issued 6/30/11 at 0.01%, due 7/1/11, collateralized by $187,897 in Freddie Mac Pool #A87842 due 8/1/39. Proceeds at maturity are $184,212 (Cost $184,212) | 184,212 | |
TOTAL INVESTMENTS - 98.8% (Cost $5,066,390) | 5,215,997 | |
NET OTHER ASSETS AND LIABILITIES - 1.2% | 65,818 | |
TOTAL ASSETS - 100.0% | $ 5,281,815 |
See accompanying Notes to Financial Statements.
6 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Portfolio of Investments | June 30, 2011 | continued
Core Bond Fund • Portfolio of Investments (unaudited)
Par Value | Value (Note 1) | |
CORPORATE NOTES AND BONDS - 50.1% | ||
Consumer Discretionary - 3.1% | ||
Comcast Cable Communications Holdings Inc., 8.375%, 3/15/13 | $ 27,000 | $ 30,253 |
Comcast Corp., 5.3%, 1/15/14 | 100,000 | 109,734 |
McDonald’s Corp., 5.35%, 3/1/18 | 100,000 | 113,537 |
253,524 | ||
Consumer Staples - 7.8% | ||
Costco Wholesale Corp., 5.5%, 3/15/17 | 100,000 | 116,311 |
Kellogg Co., 4.45%, 5/30/16 | 100,000 | 109,219 |
Kimberly-Clark Corp., 6.125%, 8/1/17 | 150,000 | 177,272 |
Kraft Foods Inc., 5.625%, 11/1/11 | 13,000 | 13,209 |
Sysco Corp., 5.25%, 2/12/18 | 100,000 | 110,503 |
Walgreen Co., 4.875%, 8/1/13 | 100,000 | 108,299 |
634,813 | ||
Energy - 5.7% | ||
BP Capital Markets PLC, 3.875%, 3/10/15 | 52,000 | 54,811 |
ConocoPhillips, 4.6%, 1/15/15 | 150,000 | 165,818 |
Devon Energy Corp., 6.3%, 1/15/19 | 125,000 | 147,227 |
Valero Energy Corp., 6.875%, 4/15/12 | 100,000 | 104,593 |
472,449 | ||
Financials - 18.2% | ||
Allstate Corp./The, 6.2%, 5/16/14 | 100,000 | 113,248 |
American Express Credit Corp., 5.875%, 5/2/13 | 150,000 | 161,552 |
Bank of America Corp., 4.875%, 9/15/12 | 100,000 | 104,248 |
Bank of New York Mellon Corp./The, 4.3%, 5/15/14 | 150,000 | 162,254 |
Berkshire Hathaway Finance Corp., 4.85%, 1/15/15 | 100,000 | 110,493 |
General Electric Capital Corp., 4.8%, 5/1/13 | 100,000 | 106,234 |
Goldman Sachs Group Inc./The, 5.75%, 10/1/16 | 100,000 | 108,965 |
Markel Corp., 6.8%, 2/15/13 | 75,000 | 80,408 |
Morgan Stanley, 5.375%, 10/15/15 | 150,000 | 160,503 |
National Rural Utilities Cooperative Finance Corp., 4.75%, 3/1/14 | 100,000 | 108,788 |
US Bancorp, 4.2%, 5/15/14 | 100,000 | 107,776 |
Wells Fargo & Co., 4.375%, 1/31/13 | 150,000 | 157,489 |
1,481,958 | ||
Health Care - 6.1% | ||
Abbott Laboratories, 5.6%, 11/30/17 | 100,000 | 116,049 |
Eli Lilly & Co., 4.2%, 3/6/14 | 100,000 | 108,032 |
Merck & Co. Inc., 4%, 6/30/15 | 150,000 | 162,497 |
Pfizer Inc., 5.35%, 3/15/15 | 100,000 | 112,843 |
499,421 | ||
Par Value | Value (Note 1) | |
Industrials - 1.4% | ||
United Parcel Service Inc., 5.5%, 1/15/18 | $100,000 | $ 113,554 |
Information Technology - 5.5% | ||
Cisco Systems Inc., 5.5%, 2/22/16 | 100,000 | 113,818 |
Hewlett-Packard Co., 5.5%, 3/1/18 | 100,000 | 111,989 |
Oracle Corp., 4.95%, 4/15/13 | 100,000 | 107,331 |
Western Union Co./The, 5.93%, 10/1/16 | 100,000 | 113,203 |
446,341 | ||
Materials - 1.3% | ||
EI du Pont de Nemours & Co., 4.75%, 11/15/12 | 100,000 | 105,331 |
Utilities - 1.0% | ||
Dominion Resources Inc./VA, 5.7%, 9/17/12 | 75,000 | 79,304 |
Total Corporate Notes and Bonds (Cost $3,873,283) | 4,086,695 | |
MORTGAGE BACKED SECURITIES - 26.3% | ||
Fannie Mae - 15.6% | ||
5%, 2/1/19 Pool # 725341 | 31,488 | 34,042 |
6%, 3/1/21 Pool # 745406 | 46,719 | 51,147 |
5.5%, 3/1/21 Pool # 837199 | 56,431 | 61,260 |
6.5%, 5/1/32 Pool # 636758 | 11,251 | 12,806 |
4.5%, 12/1/35 Pool # 745147 | 128,877 | 134,312 |
5%, 2/1/36 Pool # 745275 | 125,731 | 134,258 |
5%, 3/1/36 Pool # 745355 | 166,533 | 177,827 |
5.5%, 5/1/36 Pool # 745516 | 54,349 | 59,107 |
6%, 12/1/36 Pool # 256514 | 66,127 | 72,889 |
6%, 12/1/36 Pool # 902070 | 61,495 | 67,783 |
6%, 12/1/36 Pool # 903002 | 54,680 | 60,271 |
5.5%, 1/1/37 Pool # 905805 | 106,764 | 115,793 |
5.5%, 1/1/38 Pool # 953589 | 37,959 | 41,128 |
6%, 1/1/38 Pool # 965649 | 40,459 | 44,520 |
5%, 4/1/38 Pool # 889260 | 198,402 | 211,237 |
1,278,380 | ||
Freddie Mac - 6.8% | ||
5%, 2/1/21 Pool # G11911 | 65,187 | 70,454 |
4.5%, 4/1/23 Pool # J07302 | 154,565 | 164,089 |
4.5%, 11/1/23 Pool # G13342 | 80,152 | 85,091 |
6%, 8/1/36 Pool # A51727 | 55,943 | 61,681 |
6.5%, 11/1/36 Pool # C02660 | 61,029 | 68,893 |
5%, 9/1/38 Pool # G04815 | 96,566 | 102,675 |
552,883 | ||
Ginnie Mae - 3.9% | ||
4%, 4/15/39 Pool # 698089 | 312,309 | 318,865 |
Total Mortgage Backed Securities (Cost $2,033,075) | 2,150,128 |
See accompanying Notes to Financial Statements.
Semi-annual Report | June 30, 2011 | 7
Madison Mosaic Income Trust | Core Bond Fund • Portfolio of Investments | June 30, 2011 | continued
Par Value | Value (Note 1) | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 21.1% | ||
Freddie Mac - 3.5% | ||
5%, 2/16/17 | $250,000 | $ 285,757 |
U.S. Treasury Bond - 2.2% | ||
5.375%, 2/15/31 | 150,000 | 175,828 |
U.S. Treasury Note - 15.4% | ||
3.125%, 10/31/16 | 35,000 | 37,209 |
3.125%, 5/15/19 | 950,000 | 981,023 |
2.625%, 11/15/20 | 250,000 | 240,821 |
1,259,053 | ||
Total U.S. Government and Agency Obligations (Cost $1,708,613) | 1,720,638 | |
Par Value | Value (Note 1) | |
Repurchase Agreement - 3.0% | ||
With U.S. Bank National Association issued 6/30/11 at 0.01%, due 7/1/11, collateralized by $248,041 in Freddie Mac Pool #A87842 due 8/1/39. Proceeds at maturity are $243,177 (Cost $243,177) | $ 243,177 | |
TOTAL INVESTMENTS - 100.5% (Cost $7,858,148) | 8,200,638 | |
NET OTHER ASSETS AND LIABILITIES - (0.5%) | (41,777) | |
TOTAL ASSETS - 100.0% | $ 8,158,861 |
PLC Public Limited Company
See accompanying Notes to Financial Statements.
8 | Semi-annual Report | June 30, 2011
| Semi-annual Report | June 30, 2011
Institutional Bond Fund • Portfolio of Investments (unaudited)
Par Value | Value (Note 1) | |
CORPORATE NOTES AND BONDS - 48.4% | ||
Consumer Discretionary - 4.1% | ||
McDonald’s Corp., 5.35%, 3/1/18 | $1,000,000 | $ 1,135,376 |
Target Corp., 5.875%, 3/1/12 | 1,000,000 | 1,036,833 |
2,172,209 | ||
Consumer Staples - 12.4% | ||
Coca-Cola Co./The, 4.875%, 3/15/19 | 1,000,000 | 1,108,828 |
Costco Wholesale Corp., 5.3%, 3/15/12 | 1,000,000 | 1,035,748 |
PepsiCo Inc./NC, 4.65%, 2/15/13 | 1,000,000 | 1,063,063 |
Procter & Gamble Co./The, 4.7%, 2/15/19 | 1,000,000 | 1,105,318 |
Sysco Corp., 5.25%, 2/12/18 | 1,000,000 | 1,105,032 |
Walgreen Co., 4.875%, 8/1/13 | 125,000 | 135,374 |
Walgreen Co., 5.25%, 1/15/19 | 875,000 | 976,820 |
Wal-Mart Stores Inc., 4.55%, 5/1/13 | 125,000 | 133,794 |
6,663,977 | ||
Energy - 2.6% | ||
BP Capital Markets PLC, 3.875%, 3/10/15 | 518,000 | 546,001 |
ConocoPhillips, 4.6%, 1/15/15 | 750,000 | 829,091 |
1,375,092 | ||
Financials - 16.9% | ||
Allstate Corp./The, 6.2%, 5/16/14 | 450,000 | 509,616 |
American Express Co., 4.875%, 7/15/13 | 1,000,000 | 1,063,757 |
Bank of America Corp., 4.875%, 9/15/12 | 1,000,000 | 1,042,484 |
Berkshire Hathaway Finance Corp., 4.85%, 1/15/15 | 450,000 | 497,218 |
General Electric Capital Corp., 4.25%, 6/15/12 | 170,000 | 176,027 |
General Electric Capital Corp., 4.8%, 5/1/13 | 830,000 | 881,743 |
Goldman Sachs Group Inc./The, 6.6%, 1/15/12 | 1,000,000 | 1,031,017 |
HSBC Finance Corp., 6.375%, 10/15/11 | 70,000 | 71,114 |
JPMorgan Chase & Co., 3.7%, 1/20/15 | 1,000,000 | 1,040,669 |
Merrill Lynch & Co. Inc., 5.77%, 7/25/11 | 125,000 | 124,871 |
Morgan Stanley, 5.375%, 10/15/15 | 1,000,000 | 1,070,020 |
National Rural Utilities Cooperative Finance Corp., 4.75%, 3/1/14 | 450,000 | 489,545 |
US Bancorp, 4.2%, 5/15/14 | 1,000,000 | 1,077,763 |
9,075,844 | ||
Health Care - 3.1% | ||
Abbott Laboratories, 5.6%, 11/30/17 | 1,000,000 | 1,160,488 |
Eli Lilly & Co., 4.2%, 3/6/14 | 450,000 | 486,143 |
1,646,631 | ||
Industrials - 1.5% | ||
United Parcel Service Inc., 5.5%, 1/15/18 | 705,000 | 800,555 |
Par Value | Value (Note 1) | |
Information Technology - 5.8% | ||
Hewlett-Packard Co., 5.25%, 3/1/12 | $1,000,000 | $ 1,032,695 |
International Business Machines Corp., 4.75%, 11/29/12 | 1,000,000 | 1,057,308 |
Oracle Corp., 4.95%, 4/15/13 | 1,000,000 | 1,073,312 |
3,163,315 | ||
Materials - 2.0% | ||
EI du Pont de Nemours & Co., 3.25%, 1/15/15 | 1,000,000 | 1,048,731 |
Total Corporate Notes and Bonds (Cost $25,049,890) | 25,946,354 | |
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 45.4% | ||
Fannie Mae - 6.8% | ||
3.625%, 8/15/11 | 2,250,000 | 2,257,520 |
4.625%, 10/15/14 | 1,250,000 | 1,392,024 |
3,649,544 | ||
Federal Home Loan Bank - 4.0% | ||
3.625%, 5/29/13 | 2,000,000 | 2,119,666 |
Freddie Mac - 9.0% | ||
5.125%, 7/15/12 | 2,250,000 | 2,364,676 |
4.5%, 7/15/13 | 2,250,000 | 2,433,955 |
4,798,631 | ||
U.S. Treasury Note - 25.6% | ||
4.875%, 2/15/12 | 1,600,000 | 1,647,314 |
4%, 11/15/12 | 2,000,000 | 2,100,782 |
1.375%, 1/15/13 | 2,000,000 | 2,031,250 |
2%, 11/30/13 | 2,000,000 | 2,066,876 |
4.25%, 8/15/14 | 2,000,000 | 2,210,782 |
3.125%, 5/15/19 | 1,500,000 | 1,548,984 |
2.625%, 11/15/20 | 2,250,000 | 2,167,382 |
13,773,370 | ||
Total U.S. Government and Agency Obligations (Cost $23,715,405) | 24,341,211 | |
Repurchase Agreement - 5.3% | ||
With U.S. Bank National Association issued 6/30/11 at 0.01%, due 7/1/11, collateralized by $2,885,976 in Freddie Mac Pool #A87842 due 8/1/39. Proceeds at maturity are $2,829,377 (Cost $2,829,376) | 2,829,376 | |
TOTAL INVESTMENTS - 99.1% (Cost $51,594,671) | 53,116,941 | |
NET OTHER ASSETS AND LIABILITIES - 0.9% | 457,383 | |
TOTAL ASSETS - 100.0% | $53,574,324 |
PLC Public Limited Company
See accompanying Notes to Financial Statements.
Semi-annual Report | June 30, 2011 | 9
Madison Mosaic Income Trust | Portfolio of Investments | June 30, 2011 | concluded
Investment Grade Corporate Bond Fund • Portfolio of Investments (unaudited)
Par Value | Value (Note 1) | |
CORPORATE NOTES AND BONDS - 95.5% | ||
Consumer Discretionary - 8.6% | ||
Comcast Corp., 6.45%, 3/15/37 | $ 20,000 | $ 21,460 |
McDonald’s Corp., 5.8%, 10/15/17 | 20,000 | 23,505 |
Target Corp., 5.875%, 7/15/16 | 20,000 | 23,407 |
Walt Disney Co./The, 5.7%, 7/15/11 | 20,000 | 20,003 |
88,375 | ||
Consumer Staples - 23.1% | ||
Coca-Cola Co./The, 5.35%, 11/15/17 | 25,000 | 29,017 |
Coca-Cola Refreshments USA Inc., 7.375%, 3/3/14 | 10,000 | 11,623 |
Costco Wholesale Corp., 5.3%, 3/15/12 | 20,000 | 20,715 |
General Mills Inc., 5.65%, 2/15/19 | 20,000 | 22,617 |
Kimberly-Clark Corp., 6.125%, 8/1/17 | 10,000 | 11,818 |
Kraft Foods Inc., 6.5%, 8/11/17 | 20,000 | 23,542 |
PepsiCo Inc./NC, 5.5%, 1/15/40 | 25,000 | 26,517 |
Procter & Gamble Co./The, 4.95%, 8/15/14 | 20,000 | 22,406 |
Sysco Corp., 5.25%, 2/12/18 | 25,000 | 27,626 |
Walgreen Co., 5.25%, 1/15/19 | 20,000 | 22,327 |
Wal-Mart Stores Inc., 3.25%, 10/25/20 | 20,000 | 19,064 |
237,272 | ||
Energy - 7.1% | ||
BP Capital Markets PLC, 3.875%, 3/10/15 | 13,000 | 13,703 |
ConocoPhillips, 4.6%, 1/15/15 | 20,000 | 22,109 |
Devon Energy Corp., 5.625%, 1/15/14 | 15,000 | 16,633 |
Valero Energy Corp., 6.625%, 6/15/37 | 10,000 | 10,459 |
Valero Energy Corp., 6.875%, 4/15/12 | 10,000 | 10,459 |
73,363 | ||
Financials - 25.1% | ||
American Express Co., 4.875%, 7/15/13 | 25,000 | 26,594 |
Bank of America Corp., 4.875%, 9/15/12 | 20,000 | 20,850 |
Bank of New York Mellon Corp./The, 4.3%, 5/15/14 | 25,000 | 27,042 |
Berkshire Hathaway Finance Corp., 4.85%, 1/15/15 | 20,000 | 22,099 |
General Electric Capital Corp., 6.75%, 3/15/32 | 25,000 | 27,857 |
Goldman Sachs Group Inc./The, 5.125%, 1/15/15 | 20,000 | 21,479 |
JPMorgan Chase & Co., 4.75%, 3/1/15 | 20,000 | 21,401 |
Morgan Stanley, 5.375%, 10/15/15 | 10,000 | 10,700 |
National Rural Utilities Cooperative Finance Corp., 4.75%, 3/1/14 | 25,000 | 27,197 |
Par Value | Value (Note 1) | |
US Bancorp, 4.2%, 5/15/14 | $ 25,000 | $ 26,944 |
Wells Fargo & Co., 4.6%, 4/1/21 | 15,000 | 15,113 |
Wells Fargo & Co., 5.625%, 12/11/17 | 10,000 | 11,061 |
258,337 | ||
Health Care - 7.1% | ||
Abbott Laboratories, 5.875%, 5/15/16 | 25,000 | 29,144 |
Eli Lilly & Co., 6%, 3/15/12 | 15,000 | 15,601 |
Pfizer Inc., 5.35%, 3/15/15 | 25,000 | 28,211 |
72,956 | ||
Industrials - 4.7% | ||
3M Co., 4.5%, 11/1/11 | 25,000 | 25,362 |
United Parcel Service Inc., 5.5%, 1/15/18 | 20,000 | 22,711 |
48,073 | ||
Information Technology - 14.7% | ||
Cisco Systems Inc., 5.5%, 2/22/16 | 25,000 | 28,455 |
Hewlett-Packard Co., 5.25%, 3/1/12 | 20,000 | 20,654 |
International Business Machines Corp., 4.75%, 11/29/12 | 20,000 | 21,146 |
Intuit Inc., 5.4%, 3/15/12 | 10,000 | 10,315 |
Microsoft Corp., 3%, 10/1/20 | 25,000 | 23,767 |
Oracle Corp., 5.75%, 4/15/18 | 20,000 | 22,922 |
Western Union Co./The, 5.93%, 10/1/16 | 20,000 | 22,640 |
149,899 | ||
Materials - 2.6% | ||
EI du Pont de Nemours & Co., 4.75%, 11/15/12 | 25,000 | 26,333 |
Telecommunication Services - 1.5% | ||
BellSouth Corp., 6%, 10/15/11 | 15,000 | 15,229 |
Utilities - 1.0% | ||
Dominion Resources Inc./VA, 5.7%, 9/17/12 | 10,000 | 10,574 |
Total Corporate Notes and Bonds (Cost $920,947) | 980,411 | |
Repurchase Agreement - 3.2% | ||
With U.S. Bank National Association issued 6/30/11 at 0.01%, due 7/1/11, collateralized by $33,772 in Freddie Mac Pool #A87842 due 8/1/39. Proceeds at maturity are $33,110 (Cost $33,109) | 33,109 | |
TOTAL INVESTMENTS - 98.7% (Cost $954,056) | 1,013,520 | |
NET OTHER ASSETS AND LIABILITIES - 1.3% | 13,801 | |
TOTAL ASSETS - 100.0% | $ 1,027,321 |
PLC Public Limited Company
See accompanying Notes to Financial Statements.
10 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | June 30, 2011
Statements of Assets and Liabilities (unaudited)
Government Fund | Core Bond Fund | Institutional Bond Fund | Investment Grade Corporate Bond Fund | |
ASSETS | ||||
Investments, at value (Notes 1 and 2) | ||||
Investment securities | $ 5,031,785 | $ 7,957,461 | $50,287,565 | $ 980,411 |
Repurchase agreements | 184,212 | 243,177 | 2,829,376 | 33,109 |
Total investments* | 5,215,997 | 8,200,638 | 53,116,941 | 1,013,520 |
Receivables | ||||
Interest | 38,542 | 76,298 | 627,952 | 14,301 |
Capital shares sold | 29,008 | 5,701 | 62,617 | – |
Total assets | 5,283,547 | 8,282,637 | 53,807,510 | 1,027,821 |
LIABILITIES | ||||
Payables | ||||
Investment securities purchased | – | 110,171 | – | – |
Dividends | 256 | 1,107 | 205,757 | – |
Capital shares redeemed | 226 | 10,248 | 21,179 | – |
Auditor fees | 1,000 | 2,000 | 6,000 | 500 |
Independent trustee fees | 250 | 250 | 250 | – |
Total liabilities | 1,732 | 123,776 | 233,186 | 500 |
NET ASSETS | $ 5,281,815 | $ 8,158,861 | $53,574,324 | $ 1,027,321 |
Net assets consists of: | ||||
Paid in capital | $ 5,122,027 | $ 7,859,724 | $51,981,050 | $ 954,240 |
Accumulated net realized gain | 10,181 | (43,353) | 71,004 | 13,617 |
Net unrealized appreciation on investments | 149,607 | 342,490 | 1,522,270 | 59,464 |
Net Assets | $ 5,281,815 | $ 8,158,861 | $53,574,324 | $ 1,027,321 |
CAPITAL SHARES OUTSTANDING | ||||
An unlimited number of capital shares, without par value, are authorized. (Note 7) | 490,968 | 1,174,640 | 4,870,938 | 94,687 |
NET ASSET VALUE PER SHARE | $10.76 | $6.95 | $11.00 | $10.85 |
*INVESTMENT SECURITIES, AT COST | $ 5,066,390 | $ 7,858,148 | $51,594,671 | $ 954,056 |
See accompanying Notes to Financial Statements.
Semi-annual Report | June 30, 2011 | 11
Madison Mosaic Income Trust | June 30, 2011
Statements of Operations (unaudited)
For the six-months ended June 30, 2011
Government Fund | Core Bond Fund | Institutional Bond Fund | Investment Grade Corporate Bond Fund | |
INVESTMENT INCOME (Note 1) | ||||
Interest income | $ 66,389 | $157,829 | $638,016 | $22,630 |
EXPENSES (Notes 3 and 5) | ||||
Investment advisory fees | 9,714 | 16,765 | 78,229 | 2,082 |
Other expenses: | ||||
Service agreement fees | 5,300 | 10,074 | 43,045 | 1,062 |
Auditor fees | 1,000 | 2,000 | 6,000 | 500 |
Independent trustee fees | 500 | 500 | 500 | – |
Total other expenses | 6,800 | 12,574 | 49,545 | 1,562 |
Total expenses | 16,514 | 29,339 | 127,774 | 3,644 |
NET INVESTMENT INCOME | 49,875 | 128,490 | 510,242 | 18,986 |
REALIZED AND UNREALIZED GAIN ON INVESTMENTS | ||||
Net realized gain (loss) on investments | 10,627 | (2,674) | 11,708 | 11,303 |
Change in net unrealized appreciation (depreciation) of investments | 10,742 | 63,827 | 277,243 | (7,663) |
NET GAIN ON INVESTMENTS | 21,369 | 61,153 | 288,951 | 3,640 |
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $ 71,244 | $189,643 | $799,193 | $22,626 |
See accompanying Notes to Financial Statements.
12 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | June 30, 2011
Statements of Changes in Net Assets
For the period indicated
Government Fund | Core Bond Fund | |||
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | (unaudited) Six-Months Ended June 30, | Year Ended December 31, | |
2011 | 2010 | 2011 | 2010 | |
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | ||||
Net investment income | $ 49,875 | $ 116,984 | $ 128,490 | $ 357,455 |
Net realized gain (loss) on investments | 10,627 | 5,634 | (2,674) | 255,707 |
Net unrealized appreciation on investments | 10,742 | 31,782 | 63,827 | 40,434 |
Net increase in net assets resulting from operations | 71,244 | 154,400 | 189,643 | 653,596 |
DISTRIBUTION TO SHAREHOLDERS | ||||
From net investment income | (49,875) | (116,984) | (128,490) | (357,455) |
From net capital gains | – | (5,897) | – | – |
Total distributions | (49,875) | (122,881) | (128,490) | (357,455) |
CAPITAL SHARE TRANSACTIONS (Note 7) | 212,897 | 716,384 | (997,950) | (3,701,608) |
NET INCREASE (DECREASE) IN NET ASSETS | 234,266 | 747,903 | (936,797) | (3,405,467) |
NET ASSETS | ||||
Beginning of period | $5,047,549 | $4,299,646 | $9,095,658 | $12,501,125 |
End of period | $5,281,815 | $5,047,549 | $8,158,861 | $ 9,095,658 |
Institutional Bond Fund | Investment Grade Corporate Bond Fund | |||
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | (unaudited) Six-Months Ended June 30, | Year Ended December 31, | |
2011 | 2010 | 2011 | 2010 | |
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | ||||
Net investment income | $ 510,242 | $ 994,219 | $ 18,986 | $ 46,400 |
Net realized gain on investments | 11,708 | 102,500 | 11,303 | 3,769 |
Net unrealized appreciation (depreciation) on investments | 277,243 | 1,208,983 | (7,663) | 8,240 |
Net increase in net assets resulting from operations | 799,193 | 2,305,702 | 22,626 | 58,409 |
DISTRIBUTIONS TO SHAREHOLDERS | ||||
From net investment income | (510,242) | (994,219) | (18,986) | (46,400) |
From net capital gains | – | (38,218) | – | – |
Total distributions | (510,242) | (1,032,437) | (18,986) | (46,400) |
CAPITAL SHARE TRANSACTIONS (Note 7) | 897,591 | 24,732,606 | (45,423) | 70,435 |
NET INCREASE (DECREASE) IN NET ASSETS | 1,186,542 | 26,005,871 | (41,783) | 82,444 |
NET ASSETS | ||||
Beginning of period | $52,387,782 | $26,381,911 | $1,069,104 | $ 986,660 |
End of period | $53,574,324 | $52,387,782 | $1,027,321 | $1,069,104 |
See accompanying Notes to Financial Statements.
Semi-annual Report | June 30, 2011 | 13
Madison Mosaic Income Trust | June 30, 2011
Financial Highlights
Selected data for a share outstanding for the periods indicated
GOVERNMENT FUND
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | |||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |
Net asset value, beginning of period | $10.72 | $10.63 | $10.81 | $10.30 | $9.94 | $9.95 |
Investment operations: | ||||||
Net investment income | 0.11 | 0.26 | 0.27 | 0.32 | 0.33 | 0.31 |
Net realized and unrealized gain (loss) on investments | 0.04 | 0.10 | (0.15) | 0.51 | 0.36 | (0.01) |
Total from investment operations | 0.15 | 0.36 | 0.12 | 0.83 | 0.69 | 0.30 |
Less distributions: | ||||||
From net investment income | (0.11) | (0.26) | (0.27) | (0.32) | (0.33) | (0.31) |
From net capital gains | – | (0.01) | (0.03) | – | – | – |
Total distribution | (0.11) | (0.27) | (0.30) | (0.32) | (0.33) | (0.31) |
Net asset value, end of period | $10.76 | $10.72 | $10.63 | $10.81 | $10.30 | $9.94 |
Total return (%) | 1.40 | 3.40 | 1.19 | 8.17 | 7.10 | 3.07 |
Ratios and supplemental data | ||||||
Net assets, end of period (in thousands) | $5,282 | $5,048 | $4,300 | $5,071 | $2,986 | $3,055 |
Ratio of expenses to average net assets (%) | 0.671 | 0.68 | 0.69 | 0.78 | 1.15 | 1.19 |
Ratio of net investment income to average net assets (%) | 2.041 | 2.39 | 2.55 | 3.00 | 3.30 | 3.11 |
Portfolio turnover (%) | 11 | 20 | 38 | 67 | 18 | 41 |
CORE BOND FUND
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | |||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |
Net asset value, beginning of period | $6.89 | $6.76 | $6.74 | $6.58 | $6.44 | $6.46 |
Investment operations: | ||||||
Net investment income | 0.11 | 0.21 | 0.21 | 0.27 | 0.26 | 0.24 |
Net realized and unrealized gain (loss) on investments | 0.06 | 0.13 | 0.02 | 0.16 | 0.14 | (0.02) |
Total from investment operations | 0.17 | 0.34 | 0.23 | 0.43 | 0.40 | 0.22 |
Less distributions from net investment income | (0.11) | (0.21) | (0.21) | (0.27) | (0.26) | (0.24) |
Net asset value, end of period | $6.95 | $6.89 | $6.76 | $6.74 | $6.58 | $6.44 |
Total return (%) | 2.44 | 5.11 | 3.43 | 6.80 | 6.41 | 3.48 |
Ratios and supplemental data | ||||||
Net assets, end of period (in thousands) | $8,159 | $9,096 | $12,501 | $5,188 | $4,523 | $4,610 |
Ratio of expenses to average net assets (%) | 0.701 | 0.70 | 0.70 | 0.80 | 1.12 | 1.10 |
Ratio of net investment income to average net assets (%) | 3.041 | 3.04 | 3.13 | 4.18 | 4.05 | 3.70 |
Portfolio turnover (%) | 4 | 32 | 16 | 36 | 41 | 60 |
1Annualized.
Net asset value figures are based on average daily shares outstanding during the year.
See accompanying Notes to Financial Statements.
14 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Financial Highlights | concluded
Selected data for a share outstanding throughout each period indicated
INSTITUTIONAL BOND FUND | ||||||
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | |||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |
Net asset value, beginning of period | $10.94 | $10.68 | $10.47 | $10.41 | $10.08 | $10.11 |
Investment operations: | ||||||
Net investment income | 0.11 | 0.19 | 0.20 | 0.48 | 0.44 | 0.41 |
Net realized and unrealized gain (loss) on investments | 0.06 | 0.27 | 0.21 | 0.16 | 0.33 | (0.03) |
Total from investment operations | 0.17 | 0.46 | 0.41 | 0.64 | 0.77 | 0.38 |
Less distributions: | ||||||
From net investment income | (0.11) | (0.19) | (0.20) | (0.48) | (0.44) | (0.41) |
From net capital gains | – | (0.01) | – | (0.10) | – | – |
Total distributions | (0.11) | (0.20) | (0.20) | (0.58) | (0.44) | (0.41) |
Net asset value, end of period | $11.00 | $10.94 | $10.68 | $10.47 | $10.41 | $10.08 |
Total return (%) | 1.52 | 4.35 | 3.99 | 6.30 | 7.77 | 3.93 |
Ratios and supplemental data | ||||||
Net assets, end of period (in thousands) | $53,574 | $52,388 | $26,382 | $2,155 | $6,413 | $6,511 |
Ratio of expenses to average net assets (%) | 0.491 | 0.49 | 0.49 | 0.56 | 0.47 | 0.46 |
Ratio of net investment income to average net assets (%) | 1.941 | 1.76 | 2.21 | 3.70 | 4.21 | 3.97 |
Portfolio turnover (%) | – | 21 | 11 | 73 | 42 | 34 |
INVESTMENT GRADE CORPORATE BOND FUND | |||||
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | ||||
2011 | 2010 | 2009 | 2008 | 2007* | |
Net asset value, beginning of period | $10.81 | $10.68 | $10.16 | $10.26 | $10.00 |
Investment operations: | |||||
Net investment income | 0.20 | 0.48 | 0.53 | 0.52 | 0.27 |
Net realized and unrealized gain (loss) on investments | 0.04 | 0.13 | 0.52 | (0.09) | 0.26 |
Total from investment operations | 0.24 | 0.61 | 1.05 | 0.43 | 0.53 |
Less distributions: | |||||
From net investment income | (0.20) | (0.48) | (0.53) | (0.52) | (0.27) |
From net capital gains | – | – | – | (0.01) | – |
Total distributions | (0.20) | (0.48) | (0.53) | (0.53) | (0.27) |
Net asset value, end of period | $10.85 | $10.81 | $10.68 | $10.16 | $10.26 |
Total return (%) | 2.23 | 5.81 | 10.58 | 4.29 | 5.37 |
Ratios and supplemental data | |||||
Net assets, end of period (in thousands) | $1,027 | $1,069 | $987 | $948 | $637 |
Ratio of expenses to average net assets (%) | 0.691 | 0.06 | – | – | – |
Ratio of net investment income to average net assets (%) | 3.621 | 4.44 | 5.05 | 5.21 | 5.29 |
Portfolio turnover (%) | 10 | 14 | 18 | 5 | 3 |
1Annualized.
* For the period July 1, 2007 (commencement of operations) through December 31, 2007
Net asset value figures are based on average daily shares outstanding during the year.
See accompanying Notes to Financial Statements.
Semi-annual Report | June 30, 2011 | 15
Madison Mosaic Income Trust | June 30, 2011
Notes to Financial Statements
1. Summary of Significant Accounting Policies. Madison Mosaic Income 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, Madison Mosaic Government Fund, Madison Mosaic Core Bond Fund, Madison Mosaic Institutional Bond Fund and the Madison Mosaic Investment Grade Corporate Bond Fund (collectively, the "Funds"). The Funds are each a diversified mutual fund with their objectives and strategies detailed in their prospectus.
Portfolio Valuation: Repurchase agreements and other securities having maturities of 60 days or less are valued at amortized cost, which approximates market value. Securities having longer maturities, for which quotations are readily available, are valued at the mean between their closing 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.
Each fund has adopted the Financial Accounting Standards Board ("FASB") applicable guidance on fair value measurements. Fair value is defined as the price that each fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. A three-tier hierarchy is used to maximize the use of observable market data "inputs" and minimize the use of unobservable "inputs" and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk (for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique). Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below:
Level 1 –quoted prices in active markets for identical investments |
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rate volatilities, prepayment speeds, credit risk, benchmark yields, transactions, bids, offers, new issues, spreads and other relationships observed in the markets among comparable securities, underlying equity of the issuer; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data, etc.) |
Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
The valuation techniques used by the Funds to measure fair value for the period ended June 30, 2011 maximized the use of observable inputs and minimized the use of unobservable inputs. As of June 30, 2011, none of the Funds held securities deemed as a Level 3.
16 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Notes to Financial Statements | continued
The following is a summary of the inputs used as of June 30, 2011 in valuing the Funds’ investments carried at fair value:
Fund | Level 1 | Level 2 | Level 3 | Value at 6/30/11 |
Government | ||||
Mortgage Backed Securities | $ – | $ 635,837 | $ – | $ 635,837 |
U.S. Government Agency Notes | – | 4,395,948 | – | 4,395,948 |
Repurchase Agreement | – | 184,212 | – | 184,212 |
Total | $ – | $5,215,997 | $ – | $5,215,997 |
Core Bond | ||||
Corporate Debt Securities | $ – | $ 4,086,695 | $ – | $ 4,086,695 |
Mortgage Backed Securities | – | 2,150,128 | – | 2,150,128 |
U.S. Government Agency Notes | – | 1,720,638 | – | 1,720,638 |
Repurchase Agreement | – | 243,177 | – | 243,177 |
Total | $ – | $ 8,200,638 | $ – | $ 8,200,638 |
Institutional Bond | ||||
Corporate Debt Securities | $ – | $25,946,354 | $ – | $25,946,354 |
U.S. Government Agency Notes | – | 24,341,211 | – | 24,341,211 |
Repurchase Agreement | – | 2,829,376 | – | 2,829,376 |
Total | $ – | $53,116,941 | $ – | $53,116,941 |
Investment Grade Corporate Bond Fund | ||||
Corporate Debt Securities | $ – | $ 980,411 | $ – | $ 980,411 |
Repurchase Agreement | – | 33,109 | – | 33,109 |
Total | $ – | $ 1,013,520 | $ – | $ 1,013,520 |
Please see the Portfolio of Investments for each Fund for a listing of all securities within each caption. |
The Funds have adopted the Accounting Standard Update, Fair Value Measurements and Disclosures; Improving Disclosures about Fair Value Measurements which provides guidance on how investment assets and liabilities are to be valued and disclosed. Specifically, the amendment requires reporting entities to disclose i) the input and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements, for Level 2 or Level 3 positions, ii) transfers between all levels (including Level 1 and Level 2) will be required to be disclosed on a gross basis (i.e. transfers out must be disclosed separately from transfers in) as well as the reason(s) for the transfer and iii) purchases, sales, issuances and settlements must be shown on a gross basis in the Level 3 rollforward rather than as one net number. The effective date of the amendment is for interim and annual periods beginning after December 15, 2009, however, the requirement to provide the Level 3 activity for purchases, sales, issuance and settlements on a gross basis was effective for interim and annual periods beginning after December 15, 2010. There were no transfers between classification levels during the period ended June 30, 2011.
The Funds adopted guidance regarding enhanced disclosures about Funds’ derivative and hedging activities. Management has determined that there is no impact on the financial statements of the Funds held in the Trust as they did not hold derivative financial instruments during the year.
In May 2011, FASB issued ASU 2011-04, modifying Topic 820, Fair Value Measurements and Disclosures. At the same time, the International Accounting Standards Board ("IASB") issued International Financial Reporting Standard ("IFRS") 13, Fair Value Measurement. The objective by the FASB and IASB is convergence of their guidance on fair value measurements and disclosures. The effective date of the ASU is for interim and annual periods beginning after December 15, 2011, and is therefore not effective for the current fiscal year. The Adviser is in the process of assessing the impact of the updated standards on the Fund’s financial statements.
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.
Semi-annual Report | June 30, 2011 | 17
Madison Mosaic Income Trust | Notes to Financial Statements | continued
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. Other income is accrued as earned.
Distribution of Income and Gains: Distributions are recorded on the ex-dividend date. 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 year-end.
The tax character of distributions paid during 2010 and 2009 was as follows:
2010 | 2009 | |
Government Fund: | ||
Distributions paid from: | ||
Ordinary income | $121,062 | $114,194 |
Long-term capital gains | 1,819 | 13,052 |
Core Bond Fund: | ||
Distributions paid from ordinary income | $357,455 | $323,880 |
Institutional Bond Fund: | ||
Distributions paid from: | ||
Ordinary income | $1,028,225 | $173,320 |
Long-term capital gains | 11,212 | – |
Investment Grade Corporate Bond Fund: | ||
Distributions paid from ordinary income | $46,400 | $47,935 |
As of June 30, 2011, the components of distributable earnings on a tax basis were as follows (unaudited):
Government Fund: | |
Accumulated net realized gains | $ 10,181 |
Net unrealized appreciation on investments | 149,607 |
$159,788 | |
Core Bond Fund: | |
Accumulated net realized losses | $ (41,596) |
Net unrealized appreciation on investments | 340,733 |
$299,137 | |
Institutional Bond Fund: | |
Accumulated net realized gains | $ 71,004 |
Net unrealized appreciation on investments | 1,522,270 |
$1,593,274 | |
Investment Grade Corporate Bond Fund: | |
Accumulated net realized gains | $13,617 |
Net unrealized appreciation on investments | 59,464 |
$73,081 |
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 Trust to comply with the provisions of Subchapter M of the Internal Revenue Code available to investment companies and to make the requisite distribution to shareholders of taxable income which will be sufficient to relieve it from all or substantially all federal income taxes.
As of and during the six-months ended June 30, 2011, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the Funds did not incur any interest or penalties.
The Regulated Investment Company ("RIC") Modernization Act of 2010 (the "Modernization Act") modernizes several of the federal income and excise tax provisions related to RICs. The Modernization Act contains simplification provisions effective for taxable years beginning after December 22, 2010, which are aimed at preventing disqualification of a RIC for "inadvertent" failures of the asset diversification and/or qualifying income tests. Additionally, the Modernization Act allows capital losses to be carried forward indefinitely, and retain the character of the original loss, exempts RICs from the preferential dividend rule, and repealed the 60-day designation requirement for certain types of pay-through income and gains.
As of December 31, 2010, the Core Bond Fund had available for federal income tax purposes the following unused capital loss carryovers:
Expiration Date | Core Bond Fund |
December 31, 2013 | $ 6,408 |
December 31, 2014 | 22,383 |
December 31, 2017 | 10,131 |
The capital loss carryforward cannot be utilized prior to the utilization of new capital loss carryovers, if any, created after December 31, 2010.
Tax years open to examination by tax authorities under the statute of limitations include 2007 through 2010.
18 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Notes to Financial Statements | continued
Cash Concentration: At times, the Funds maintain cash balances at financial institutions in excess of federally insured limits. The Funds monitor this credit risk and have not experienced any losses related to this risk.
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. Investments in Repurchase Agreements. When the Funds purchased securities under agreements to resell, the securities are held for safekeeping by the custodian bank as collateral. Should the market value of the securities purchased under such an agreement decrease below the principal amount to be received at the termination of the agreement plus accrued interest, the counterparty is required to place an equivalent amount of additional securities in safekeeping with the Funds’ custodian bank. The Funds, along with other registered investment companies having Advisory and Services Agreements with the same investment adviser, transfer uninvested cash balances into a joint trading account. The aggregate balance in this joint trading account is invested in one or more consolidated repurchase agreements whose underlying securities are U.S. Treasury or federal agency obligations. As of June 30, 2011, the Government Fund had a 0.8% interest, the Core Bond Fund had a 1.1% interest, the Institutional Bond Fund had a 12.3% interest and the Investment Grade Corporate Bond Fund had a 0.1% interest in the consolidated repurchase agreement of $23,040,315 collateralized by $23,501,225 in Freddie Mac Mortgaged Backed Security Notes. Proceeds at maturity were $23,040,321.
3. Investment Advisory Fees. For the period covered by this report, the investment adviser to the Funds, Madison Investment Advisors, LLC (the "Adviser"), earned an advisory fee equal to 0.40% per annum of the average net assets of the Government Fund and Core Bond Fund and 0.30% per annum for the Institutional Bond Fund. Effective November 30, 2010, the Investment Grade Corporate Bond Fund’s fee was 0.40% per annum. Prior to November 30, the Investment Grade Corporate Bond Fund was not charged an advisory fee. The fees are accrued daily and are paid monthly.
4. Investment Transactions. Purchases and sales of securities (excluding short-term securities) for the six-months ended June 30, 2011 were as follows (unaudited):
Purchases | Sales | |
Government Fund: | ||
U.S. Gov’t securities | $562,827 | $488,614 |
Core Bond Fund: | ||
U.S. Gov’t securities | $244,874 | $1,046,343 |
Other | 109,788 | 619,843 |
Institutional Fund: | ||
U.S. Gov’t securities | $ – | $ 486,258 |
Other | – | 1,000,000 |
Investment Grade Corporate Bond Fund: | ||
U.S. Gov’t securities | $ – | $ – |
Other | 99,642 | 142,095 |
5. Other Expenses. Under a separate Services Agreement, the Adviser 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. These fees are accrued daily and paid monthly. This fee was 0.28% for the Government Fund, 0.30% for the Core Bond Fund and 0.19% for the Institutional Bond Fund. Effective November 30, 2010, the Investment Grade Corporate Bond Fund’s fee was 0.30%. The direct expenses paid by the Funds and referenced below come out of this fee. Prior to November 30, 2010 the Investment Grade Corporate Bond Fund was not charged a services fee.
The Funds pay the expenses of the Funds’ Independent Trustees directly. For the six-months ended June 30, 2011, these fees were $500, $500, $500 and $0 for the Government, Core Bond, Institutional Bond and Investment Grade Corporate Bond Funds, respectively.
The Funds also pay the expenses of the Funds’ independent registered public accountants directly. For the six-months ended June 30, 2011, the amounts expensed for these fees were $1,000, $2,000, $6,000 and $500 for the Government, Core Bond, Institutional Bond and Investment Grade Corporate Bond Funds, respectively.
Semi-annual Report | June 30, 2011 | 19
Madison Mosaic Income Trust | Notes to Financial Statements | continued
6. Aggregate Cost and Unrealized Appreciation (Depreciation). The aggregate cost of securities for federal income tax purposes and the net unrealized appreciation (depreciation) are stated as follows as of June 30, 2011 (unaudited):
Government Fund | Core Bond Fund | |
Aggregate Cost | $5,066,390 | $7,859,905 |
Gross unrealized appreciation | 152,500 | 373,878 |
Gross unrealized depreciation | (2,893) | (33,145) |
Net unrealized appreciation | $ 149,607 | $ 340,733 |
Institutional Bond Fund | Investment Grade Corporate Bond Fund | |
Aggregate Cost | $51,594,671 | $954,056 |
Gross unrealized appreciation | 1,536,110 | 61,001 |
Gross unrealized depreciation | (13,840) | (1,537) |
Net unrealized appreciation | $ 1,522,270 | $ 59,464 |
7. Capital Share Transactions. An unlimited number of capital shares, without par value, are authorized. Transactions in capital shares for the following periods were:
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | |
Government Fund | 2011 | 2010 |
In Dollars | ||
Shares sold | $1,091,240 | $1,700,722 |
Shares issued in reinvestment of dividends | 48,274 | 118,897 |
Total shares issued | 1,139,514 | 1,819,619 |
Shares redeemed | (926,617) | (1,103,235) |
Net increase | $ 212,897 | $ 716,384 |
In Shares | ||
Shares sold | 102,006 | 157,293 |
Shares issued in reinvestment of dividends | 4,503 | 11,009 |
Total shares issued | 106,509 | 168,302 |
Shares redeemed | (86,536) | (101,855) |
Net increase | 19,973 | 66,447 |
(unaudited) Six-Months Ended June 30, | Year Ended December 31, | |
Core Bond Fund | 2011 | 2010 |
In Dollars | ||
Shares sold | $ 602,158 | $4,604,402 |
Shares issued in reinvestment of dividends | 121,704 | 335,564 |
Total shares issued | 723,862 | 4,939,966 |
Shares redeemed | (1,721,812) | (8,641,574) |
Net decrease | $ (997,950) | $(3,701,608) |
In Shares | ||
Shares sold | 86,615 | 658,207 |
Shares issued in reinvestment of dividends | 17,613 | 48,369 |
Total shares issued | 104,228 | 706,576 |
Shares redeemed | (249,696) | (1,236,378) |
Net decrease | (145,468) | (529,802) |
Institutional Bond Fund | 2011 | 2010 |
In Dollars | ||
Shares sold | $ 2,518,768 | $35,940,448 |
Shares issued in reinvestment of dividends | 87,527 | 395,053 |
Total shares issued | 2,606,295 | 36,335,501 |
Shares redeemed | (1,708,704) | (11,602,895) |
Net increase | $ 897,591 | $24,732,606 |
In Shares | ||
Shares sold | 229,209 | 3,345,384 |
Shares issued in reinvestment of dividends | 7,989 | 36,448 |
Total shares issued | 237,198 | 3,381,832 |
Shares redeemed | (155,965) | (1,061,304) |
Net increase | 81,233 | 2,320,528 |
Investment Grade Corporate Bond Fund | 2011 | 2010 |
In Dollars | ||
Shares sold | $456,935 | $24,035 |
Shares issued in reinvestment of dividends | 18,986 | 46,400 |
Total shares issued | 475,921 | 70,435 |
Shares redeemed | (521,344) | – |
Net increase (decrease) | $ (45,423) | $70,435 |
In Shares | ||
Shares sold | 42,294 | 2,229 |
Shares issued in reinvestment of dividends | 1,753 | 4,254 |
Total shares issued | 44,047 | 6,483 |
Shares redeemed | (48,236) | – |
Net increase (decrease) | (4,189) | 6,483 |
20 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Notes to Financial Statements | concluded
8. Line of Credit. The Government Fund, Core Bond Fund and Institutional Bond Fund have lines of credit with U.S. Bank N.A. of $500,000, $1 million and $5 million, respectively. Each line is a revolving credit facility with a bank for temporary emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The interest rate on the outstanding principal amount is equal to the prime rate less 1/2%. During the six-months ended June 30, 2011, none of the Funds borrowed on their respective lines of credit.
9. Subsequent Events. Management has evaluated the impact of all subsequent events on the Funds’ financial statements. No events have taken place that meet the definition of a subsequent event that requires adjustment to, or disclosure in the financial statements.
Semi-annual Report | June 30, 2011 | 21
Madison Mosaic Income Trust
Other Information
Fund Expenses
Example: As a shareholder of the Funds, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including Investment advisory fees and other fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. See Notes 3 and 5 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 January 1, 2011 and held for the six-months ended June 30, 2011.
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 | ||||
Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period2 | |
Government Fund | $1,000.00 | $1,014.02 | 0.67% | $3.36 |
Core Bond Fund | $1,000.00 | $1,024.36 | 0.70% | $3.48 |
Institutional Bond Fund | $1,000.00 | $1,015.24 | 0.49% | $2.43 |
Investment Grade Corporate Bond Fund | $1,000.00 | $1,022.26 | 0.69% | $3.48 |
1For the six-months ended June 30, 2011. 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. |
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 neither 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 either Fund and other funds. To do so, compare the 5.00% hypothetical example relating to the applicable Fund with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Based on Hypothetical Total Return1 | ||||
Beginning Account Value | Ending Account Value | Annualized Expense Ratio | Expenses Paid During the Period2 | |
Government Fund | $1,000.00 | $1,025.05 | 0.67% | $3.39 |
Core Bond Fund | $1,000.00 | $1,025.05 | 0.70% | $3.49 |
Institutional Bond Fund | $1,000.00 | $1,025.05 | 0.49% | $2.44 |
Investment Grade Corporate Bond Fund | $1,000.00 | $1,025.05 | 0.69% | $3.49 |
1For the six-months ended June 30, 2011. 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. |
22 | Semi-annual Report | June 30, 2011
Madison Mosaic Income Trust | Other Information | concluded
Forward-Looking Statement Disclosure. One of our most important responsibilities as investment company 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 Madison 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 ("SEC") 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 SEC for the first and third quarters of each fiscal year on Form N-Q. The Trust’s Forms N-Q are available on the SEC’s website. The Trust’s Forms N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. Information about the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Form N-Q and other information about the Trust are available on the EDGAR Database on the SEC’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 SEC’s Public Reference Section, Washington, DC 20549-0102. Finally, you may call Madison 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.
Semi-annual Report | June 30, 2011 | 23
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The Madison Mosaic Family of Mutual Funds
Equity Trust
Investors Fund
Mid-Cap Fund
Disciplined Equity Fund
Balanced Fund
NorthRoad International Fund
Madison Institutional Equity Option Fund
Income Trust
Government Fund
Core Bond Fund
Institutional Bond Fund
Investment Grade Corporate Bond Fund
Tax-Free Trust
Virginia Tax-Free Fund
Tax-Free National Fund
Government Money Market
For more complete information on any Madison 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.
TRANSFER AGENT
Madison 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
550 Science Drive
Madison, Wisconsin 53711
SEC File Number 811-03616
Madison Mosaic¨ Funds
www.mosaicfunds.com
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 (Item 1) above.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
No changes. The Trust does not normally hold shareholder meetings.
Item 11. Controls and Procedures.
(a) The Trust’s principal executive officer and principal financial officer determined that the Trust’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) are effective, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 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 were no changes in the Trust's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) 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 Trust's internal control over financial reporting.
Item 12. Exhibits.
(a)(1) Not applicable to semi-annual report (no change from the previously filed Code).
(a)(2) Certifications of principal executive and principal financial officers as required by Rule 30a-2(a) under the Act.
(b) Certification of principal executive and principal financial officers as required by Rule 30a-2(b) under the Act.
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.
Madison Mosaic Income Trust
By: (signature)
Holly Baggot, Secretary
Date: August 26, 2011
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: August 26, 2011
By: (signature)
Greg Hoppe, Chief Financial Officer
Date: August 26, 2011