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FUND FOR
GOVERNMENT INVESTORS
A MONEY MARKET FUND
ANNUAL REPORT
December 31, 1996
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Dear Shareholder:
Fund for Government Investors ended the year with net assets of $535 million
on December 31, 1996. Net income averaged 4.41% of net assets for the year, down
from 4.93% for the year ended December 31, 1995.
As we mentioned in our six month report, the economy was a pleasant
surprise. The moderation of economic activity during the second half of 1996 has
been gratifying for the Federal Reserve. The economy has been a picture of
stability for 1996.
The outlook for 1997 is more of the same. We look for inflation to show a
slight increase. The economy is moving to full employment with a more stable
pace of growth during the current expansion. The one possible trouble spot in
the U.S. economy is the labor market indicators. A tighter labor market has
already begun to exert upward pressure on wages, so the future course of
monetary policy will be based in this area.
Going forward, Fund for Government Investors will continue its conservative
investment philosophy, and as always, safety of assets will be our primary
concern. Thank you for your continued support.
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[SIGNATURE] [SIGNATURE]
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
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4922 Fairmont Avenue Bethesda, Maryland 20814 800-621-7874 301-657-1517
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FUND FOR GOVERNMENT INVESTORS
STATEMENT OF NET ASSETS
December 31, 1996
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<CAPTION>
PAYABLE AT MATURITY YIELD AT DATE VALUE
MATURITY DATE OF PURCHASE (%) (NOTE 1)
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UNITED STATES TREASURY BILLS
$ 25,000,000 .............. January 2, 1997 .............. 5.16 .............. $ 24,996,521
84,500,000 .............. January 9, 1997 .............. 5.05 .............. 84,407,433
50,000,000 .............. January 16, 1997 .............. 5.14 .............. 49,896,042
25,000,000 .............. January 23, 1997 .............. 5.14 .............. 24,923,688
50,000,000 .............. January 30, 1997 .............. 4.70 .............. 49,814,722
25,000,000 .............. February 6, 1997 .............. 5.18 .............. 24,874,125
75,000,000 .............. February 13, 1997 .............. 5.16 .............. 74,550,889
25,000,000 .............. February 20, 1997 .............. 4.97 .............. 24,831,597
25,000,000 .............. February 27, 1997 .............. 5.16 .............. 24,801,688
50,000,000 .............. March 6, 1997 .............. 5.14 .............. 49,556,222
50,000,000 .............. March 13, 1997 .............. 4.99 .............. 49,522,229
50,000,000 .............. March 20, 1997 .............. 4.89 .............. 49,485,417
25,000,000 .............. April 3, 1997 .............. 5.20 .............. 24,680,868
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$ 559,500,000 Total Investments -- 103.93% (Cost $556,341,441*) 556,341,441
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Liabilities Less Other Assets -- (3.93)% (21,016,487)
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Net Assets -- 100.00% $535,324,954
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Net Asset Value Per Share
(Based on 535,324,954 Shares Outstanding) $1.00
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*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 42 Days
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
INVESTMENT INCOME (Note 1).................................................................... $29,463,051
EXPENSES
Investment Advisory Fee (Note 2)................................................ $2,823,002
Administrative Fee (Note 2)..................................................... 1,429,445 4,252,447
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NET INVESTMENT INCOME......................................................................... $25,210,604
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See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENTS OF CHANGES IN NET ASSETS
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<CAPTION>
For the Year Ended December 31,
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1996 1995
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NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1)..................................................... $ 25,210,604 $ 27,779,621
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FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased...................................................... $ 2,826,372,757 $ 2,611,795,994
Dividends Reinvested.................................................. 24,524,702 26,793,106
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Total................................................................. 2,850,897,459 2,638,589,100
Shares Redeemed....................................................... (2,892,766,936) (2,585,548,223)
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Increase (Decrease) in Net Assets..................................... (41,869,477) 53,040,877
NET ASSETS - Beginning of Year............................................ 577,194,431 524,153,554
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NET ASSETS - End of Year.................................................. $ 535,324,954 $ 577,194,431
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See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
FINANCIAL HIGHLIGHTS
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<CAPTION>
For the Year Ended December 31,
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1996 1995 1994 1993 1992
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PER SHARE OPERATING PERFORMANCE:
Net Asset Value - Beginning of Year...................... $1.00 $1.00 $1.00 $1.00 $1.00
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Income from Investment Operations:
Net Investment Income.................................. 0.044 0.049 0.033 0.023 0.030
Net Realized and Unrealized Gains
on Securities........................................ -- -- -- -- --
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Total from Investment Operations..................... 0.044 0.049 0.033 0.023 0.030
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Distributions to Shareholders:
From Net Investment Income............................. (0.044) (0.049) (0.033) (0.023) (0.030)
From Net Realized Capital Gains........................ -- -- -- -- --
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Total Distributions to Shareholders.................. (0.044) (0.049) (0.033) (0.023) (0.030)
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Net Increase in Net Asset Value.......................... 0.00 0.00 0.00 0.00 0.00
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Net Asset Value - End of Year............................ $1.00 $1.00 $1.00 $1.00 $1.00
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TOTAL INVESTMENT RETURN.................................... 4.50% 5.04% 3.38% 2.37% 3.02%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................................. 0.74% 0.74% 0.75% 0.75% 0.71%
Net Investment Income.................................... 4.41% 4.93% 3.31% 2.32% 3.00%
SUPPLEMENTARY DATA:
Portfolio Turnover Rate.................................. -- -- -- -- --
Number of Shares Outstanding at End of Year with a Net
Asset Value of $1 (000's omitted)...................... 535,325 577,194 524,154 600,766 751,925
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See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Government Investors (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 and invests only in
U.S. Government Securities. The Fund is authorized to issue an unlimited number
of shares. At a special meeting of the shareholders of the Fund held on May 24,
1996, shareholders approved an agreement to change the domicile and business
form of the Fund from a Maryland corporation to a Delaware business trust
effective May 31, 1996. The investment objectives and policies of the Fund
remain the same. The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The following
is a summary of significant accounting policies which the Fund consistently
follows:
(a) Investments are valued at amortized cost, which approximates market
value. Amortized cost is the purchase price of the security plus
accumulated discount or minus amortized premium from the date of
purchase.
(b) Investment income is recorded as earned.
(c) Net investment income is computed, and dividends are declared daily.
Dividends are paid monthly and reinvested in additional shares
unless shareholders request payment.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income
tax provision is required.
2. INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT
Investment advisory and management services are provided by Money Management
Associates under an agreement whereby the Fund pays a fee at an annual rate
based on the Fund's average daily net assets as follows: 0.50% of the first $500
million; 0.45% of the next $250 million; 0.40% of the next $250 million; and
0.35% of the net assets that exceed $1 billion. Certain Officers and Trustees of
the Fund are affiliated with Money Management Associates.
Rushmore Trust and Savings, FSB, a majority-owned subsidiary of Money Management
Associates, provides custodial services, transfer agency, dividend disbursing
and other shareholder services to the Fund. Rushmore Trust is paid an
administrative fee of 0.25% of average daily net assets to cover the cost of
these services as well as other expenses of the Fund except for interest and
extraordinary legal expenses.
3. ACQUISITION
On May 31, 1996, the Fund acquired all the net assets of the Rushmore Money
Market Portfolio ("Portfolio"), a series of The Rushmore Fund, Inc., pursuant to
a plan of reorganization approved by the Portfolio's shareholders on May 24,
1996. The transferred Portfolio's net assets at that date were $21,852,849
(valued at $1 per share).
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INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Trustees
of Fund for Government Investors:
We have audited the statement of net assets of Fund for Government Investors
(the Fund) as of December 31, 1996, the related statements of operations for the
year then ended and of changes in net assets for the years ended December 31,
1996 and 1995, and the financial highlights for each of the five years in the
period ended December 31, 1996. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned at December
31, 1996 by correspondence with the custodian and broker. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the net assets of Fund for Government
Investors at December 31, 1996, the results of its operations, the changes in
its net assets, and the financial highlights for the respective stated periods
in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 24, 1997
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[Logo]
FUND FOR
GOVERNMENT
INVESTORS
-------------------
Annual Report
December 31, 1996
