As Filed With The Securities And Exchange Commission on April 30, 1997.
File Nos. 2-52552 and 811-2539
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (X)
Pre-Effective Amendment No. ( )
Post-Effective Amendment No. 32 (X)
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 (X)
Amendment No. 21 (X)
FUND FOR GOVERNMENT INVESTORS
(Exact Name of Registrant as Specified in Charter)
4922 Fairmont Avenue, Bethesda, Maryland 20814
(Address of Principal Executive Offices) (Zip Code)
(301) 657-1500
(Registrant's Telephone Number, Including Area Code)
Timothy N. Coakley
4922 Fairmont Avenue
Bethesda, Maryland 20814
(Name and Address of Agent for Service of Process)
Approximate Date of Commencement of the Proposed Public Offering of
the Securities:
It is proposed that this filing will become effective (check
appropriate box):
___ immediately upon filing pursuant to paragraph (b) of rule 485.
X on May 1, 1997 pursuant to paragraph (b)(1)(v) of rule 485.
___ 60 days after filing pursuant to paragraph (a)(1) of rule 485.
___ on (date) pursuant to paragraph (a)(1) of rule 485.
___ 75 days after filing pursuant to paragraph (a)(2) of rule 485.
___ on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously-filed post-effective amendment.
The Registrant has previously filed a declaration of indefinite registration
of its shares pursuant to Rule 24f-2 under the Investment Company Act of
1940. The Rule 24f-2 Notice for the Registrant's fiscal year ended December
31, 1996 was filed on February 27, 1997.
<PAGE>
FUND FOR GOVERNMENT INVESTORS
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
Form N-1A Location in
Item No. Registration Statement
Part A. Information Required in Prospectus
1. Cover Page Outside Front Cover Page of Prospectus
2. Synopsis Fee Table
3. Condensed Financial Financial Highlights
Information
4. General Description of Organization and Description of Shares
Registrant of Beneficial Interest; Investment
Objective and Policies; Management of
the Fund
5. Management of the Fund Management of the Fund
5A. Management's Discussion Management's Discussion
of Fund Performance of Fund Performance
6. Capital Stock and Other Organization and Description
Securities of Shares of Beneficial Interest;
Dividends and Distribution; Taxes
7. Purchase of Securities How to Invest in the Fund; Exchanges;
Being Offered Net Asset Value
8. Redemption or Repurchase How to Redeem an Investment
(Withdrawals)
9. Legal Proceedings Not Applicable
Part B: Information Required In
Statement of Additional Information
10. Cover Page Outside Front Cover Page
of Statement of Additional Information
11. Table of Contents Table of Contents
12. General Information and Not Applicable
History
13. Investment Objectives and Investment Policies;
Policies Investment Restrictions
14. Management of the Management of the Fund
Registrant
15. Control Persons and Principal Holders of Securities
Principal Holders of
Securities
16. Investment Advisory and Management of the Fund
Other Services
17. Brokerage Allocation Investment Policies
18. Capital Stock and Other Not Applicable
Securities
19. Purchase, Redemption and Not Applicable
Pricing of Securities
Being Offered
20. Tax Status Dividends, Distributions, and Taxes
21. Underwriters Management of the Fund
22. Calculations of Performance Information;
Performance Data Calculation of Return Quotations
23. Financial Statements Financial Statements
Part C: Other Information
24. Financial Statements and Financial Statements and Exhibits
Exhibits
25. Persons Controlled by or Persons Controlled by or
Under Common Control Under Common Control
26. Number of Holders of Numbers of Holders of
Securities Securities
27. Indemnification Indemnification
28. Business and Other Business and Other
Connections Connections of
of Investment Adviser Investment Adviser
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Location of Accounts and
Records Records
31. Management Services Management Services
32. Undertakings Undertakings
33. Signatures Signatures
<PAGE>
FUND FOR GOVERNMENT INVESTORS
A Money Market Fund
4922 Fairmont Avenue, Bethesda, Maryland 208l4
(800) 343-3355
(301) 657-1500
Fund for Government Investors (the "Fund") is an investment
company that invests in short-term marketable debt securities
issued by the United States Government, its agencies and
instrumentalities, and repurchase agreements secured by such
securities, with the sole objective of achieving current income
with safety of principal.
Investors should read this Prospectus and retain it for future
reference. It is designed to set forth concisely the information
an investor should know before investing in the Fund. A
Statement of Additional Information, dated May 1, 1997,
containing additional information about the Fund has been filed
with the Securities and Exchange Commission and is incorporated
herein by reference. A copy of the Statement of Additional
Information may be obtained, without charge, by writing or
telephoning the Fund.
The shares offered by this Prospectus are not deposits or
obligations of any bank, are not endorsed or guaranteed by any
bank, and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Federal Reserve Board, or any other
U.S. Government agency.
The securities of the Fund are neither insured nor guaranteed by
the U.S. Government and there can be no assurance that the Fund
will be able to maintain a stable net asset value of $1.00 per share.
The date of this Prospectus and of the Statement of Additional
Information is May 1, 1997.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
The following table illustrates all expenses and fees that a
shareholder of the Fund will incur:
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases,
Including Reinvested Dividends (as a
percentage of offering price).................... None
12b-1 Fees......................................... None
Other Expenses..................................... None
Total Fund Operating Expenses...................... None
Monthly Account Fee (for accounts under $500)*..... $5.00
Annual Fund Operating Expenses (as a percentage of average net assets)
Management Fees.................................... 0.50 %
12b-1 Fees......................................... None
Other Expenses..................................... 0.25 %
Total Fund Operating Expenses...................... 0.75 %
* A charge of $5 per month may be imposed on any account whose average
daily balance for the month falls below $500. See "Transaction Charges.
Example
Assuming a hypothetical investment of $1,000 in the Fund, a 5% annual
return, and redemption at the end of each time period, an investor in
the Fund would pay transaction and operating expenses at the end of
each year as follows:
1 Year 3 Years 5 Years 10 Years
$ 8 $ 25 $ 43 $ 95
The same level of expenses would be incurred if the investment were
held throughout the period indicated.
The preceding table of fees and expenses is provided to assist
investors in understanding the various costs and expenses that an
investor in the Fund will incur directly or indirectly. The
percentages shown above are based on actual expenses incurred by
the Fund. The 5% assumed annual return is for comparison purposes
only. The actual annual return for the Fund may be more or less
depending on market conditions, and the actual expenses an investor
incurs in future periods may be more or less than those shown above
and will depend on the amount invested and on the actual growth rate
of the Fund. The example should not be considered a representation
of past or future expenses. For more complete information about
the various costs and expenses of the Fund, see "Management of the
Fund" in the Prospectus and in the Statement of Additional Information.
<PAGE>
<TABLE>
FUND FOR GOVERNMENT INVESTORS
Financial Highlights
Audited
For The Year Ended December 31,
<CAPTION>
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value -
Beginning of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net Investment Income 0.044 0.049 0.033 0.023 0.030 0.053 0.071 0.082 0.064 0.057
Net Realized and Unrealized
Gains on Securities - - - - - - - - - -
Total from Investment Operations 0.044 0.049 0.033 0.023 0.030 0.053 0.071 0.082 0.064 0.057
Distributions to Shareholders:
From Net Investment Income (0.044) (0.049) (0.033) (0.023) (0.030) (0.053) (0.071) (0.082) (0.064) (0.057)
From Net Realized Capital Gains - - - - - - - - - -
Total Distributions to Shareholders (0.044) (0.049) (0.033) (0.023) (0.030) (0.053) (0.071) (0.082) (0.064) (0.057)
Net Increase in Net Asset Value - - - - - - - - - -
Net Asset Value - End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total Investment Return 4.50% 5.04% 3.38% 2.37% 3.02% 5.38% 7.38% 8.51% 6.66% 5.81%
Ratios to Average Net Assets:
Expenses 0.74% 0.74% 0.75% 0.75% 0.71% 0.69% 0.71% 0.72% 0.73% 0.72%
Net Investment Income 4.41% 4.93% 3.31% 2.32% 3.00% 5.29% 7.13% 8.19% 6.44% 5.66%
Supplementary Data:
Portfolio Turnover Rate - - - - - - - - - -
Number of Shares Outstanding at
End of Year (000s omitted) 535,325 577,194 524,154 600,766 751,925 796,655 857,418 704,479 634,723 695,554
The auditors' report is incorporated by reference in the registration statement. The auditors' report and further information
about the performance of the Fund are contained in the annual report to shareholders which may be obtained without charge by
calling or writing the Fund.
</TABLE>
<PAGE>
PERFORMANCE DATA
From time to time the Fund advertises its "yield" and "effective
yield". Both yield figures are based on historical earnings and
are not intended to indicate future performance. The yield of
the Fund refers to the income generated by an investment in the
Fund over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized". That is, the
amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The effective yield is
calculated similarly, but, when annualized, the income earned by
the investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield"
because of the compounding effect of this assumed reinvestment.
Comparative performance and relative ranking information may be
used from time to time in advertising or marketing the Fund's
shares, including data from Lipper Analytical Services, Inc.,
Donoghue's Money Fund Report and other industry publications.
For the seven day period ended December 31, 1996, the Fund's
annualized average yield was 4.29%. The effective annual yield
was 4.36%.
INVESTMENT OBJECTIVE AND POLICIES
General
The sole objective of the Fund is to achieve current income with
safety of principal. Although there is no assurance that this
objective will be achieved, the Fund will pursue this objective
by investing exclusively in marketable debt securities issued by
the United States Government or by agencies and instrumentalities
of the U.S. Government (collectively, "U.S. Government
Securities") and in repurchase agreements secured by U.S.
Government Securities. Repurchase agreements are fully
collateralized, but the value of the underlying collateral may be
affected by sharp fluctuations in short-term interest rates.
The Fund will invest in short-term United States Government
Securities, including U.S. Treasury bills, U.S. Treasury notes,
and U.S. Treasury bonds that mature within one year. All
securities purchased by the Fund are held by the Fund's custodian
bank, Rushmore Trust and Savings, FSB (the "Custodian"). U.S.
Treasury securities are backed by the full faith and credit of
the United States Government.
The Fund may not borrow money, except that as a temporary measure
the Fund may borrow money to facilitate redemptions. Such a
borrowing may be in an amount not to exceed 30% of the Fund's
total assets, taken at current value before such borrowing. The
Fund may borrow only to accommodate requests for redemption of
shares of the Fund while effecting an orderly liquidation of
portfolio securities.
The investment objective and the investment policies of the Fund
may not be changed without the approval of a majority of the
shareholders, as defined in the Investment Company Act of 1940.
U.S. Government Securities
U.S. Treasury securities are backed by the full faith and credit
of the U.S. Treasury. U.S. Treasury securities differ only in
their interest rates, maturities, and dates of issuance.
Treasury bills have maturities of one year or less. Treasury
notes have maturities of one to ten years, and Treasury bonds
generally have maturities of greater than ten years at the date
of issuance. Yields on short-, intermediate-, and long-term U.S.
Government Securities are dependent on a variety of factors,
including the general conditions of the money and bond markets,
the size of a particular offering, and the maturity of the
obligation. Debt securities with longer maturities tend to
produce higher yields and are generally subject to potentially
greater capital appreciation and depreciation than obligations
with shorter maturities and lower yields. The market value of
U.S. Government Securities generally varies inversely with
changes in market interest rates. An increase in interest rates,
therefore, would generally reduce the market value of the Fund's
portfolio investments in U.S. Government Securities, while a
decline in interest rates would generally increase the market
value of the Fund's portfolio investments in these securities.
Certain U.S. Government Securities are issued or guaranteed by
agencies or instrumentalities of the U.S. Government including,
but not limited to, obligations of U.S. Government agencies or
instrumentalities such as the Federal National Mortgage
Association, the Government National Mortgage Association, the
Small Business Administration, the Export-Import Bank, the
Federal Farm Credit Administration, the Federal Home Loan Banks,
Banks for Cooperatives (including the Central Bank for
Cooperatives), the Federal Land Banks, the Federal Intermediate
Credit Banks, the Tennessee Valley Authority, the Export-Import
Bank of the United States, the Commodity Credit Corporation, the
Federal Financing Bank, the Student Loan Marketing Association,
and the National Credit Union Administration.
Some obligations issued or guaranteed by agencies or
instrumentalities of the U.S. Government are backed by the full
faith and credit of the U.S. Treasury. Such agencies and
instrumentalities may borrow funds from the U.S. Treasury.
However, no assurances can be given that the U.S. Government will
provide such financial support to the obligations of the other
U.S. Government agencies or instrumentalities in which the Fund
invests, since the U.S. Government is not obligated to do so.
These other agencies and instrumentalities are supported by
either the issuer's right to borrow, under certain circumstances,
an amount limited to a specific line of credit from the U.S.
Treasury, the discretionary authority of the U.S. Government to
purchase certain obligations of an agency or instrumentality, or
the credit of the agency or instrumentality itself.
U.S. Government Securities may be purchased at a discount. Such
securities, when held to maturity or retired, may include an
element of capital gain. Capital losses may be realized when
such securities purchased at a premium are held to maturity or
are called or redeemed at a price lower than their purchase
price. Capital gains or losses also may be realized upon the
sale of securities.
Repurchase Agreements
The Fund may also invest in repurchase agreements secured by U.S.
Government Securities. Under a repurchase agreement, the Fund
purchases a debt security and simultaneously agrees to sell the
security back to the seller at a mutually agreed-upon future
price and date, normally one day or a few days later. The resale
price is greater than the purchase price, reflecting an agreed-
upon market interest rate during the purchaser's holding period.
While the maturities of the underlying securities in repurchase
transactions may be more than one year, the term of each
repurchase agreement will always be less than one year. The Fund
will enter into repurchase agreements only with member banks of
the Federal Reserve System or primary dealers of U.S. Government
Securities. The Fund's investment adviser will monitor the
creditworthiness of each of the firms which is a party to a
repurchase agreement with the Fund. In the event of a default or
bankruptcy by the seller, the Fund will liquidate those
securities (whose market value, including accrued interest, must
be at least equal to 100% of the dollar amount invested by the
Fund in each repurchase agreement) held under the applicable
repurchase agreement, which securities constitute collateral for
the seller's obligation to pay. However, liquidation could
involve costs or delays and, to the extent proceeds from the
sales of these securities were less than the agreed-upon
repurchase price, the Fund would suffer a loss. The Fund also
may experience difficulties and incur certain costs in exercising
its rights to the collateral and may lose the interest the Fund
expected to receive under the repurchase agreement. Repurchase
agreements usually are for short periods, such as one week or
less, but may be longer. It is the current policy of the Fund to
treat repurchase agreements that do not mature within seven days
as illiquid for the purposes of the Fund's investment policies.
DIVIDENDS
The Fund distributes all of its net income on a daily basis.
Dividends are declared on each day that the Fund is open for
business. Investors receive dividends in the form of additional
shares unless they elect to receive cash. Payment is made in
additional shares at the net asset value on the payable date or
in cash, on a monthly basis. To change the method of receiving
dividends, investors must notify the Fund in writing at least one
week before payment is to be made.
Net income of the Fund shall consist of all interest income
accrued and discount earned, plus or minus any realized gains or
losses, less estimated expenses of the Fund. The Fund does not
expect to realize any long-term capital gains.
NET ASSET VALUE
The Fund's net asset value per share will be determined as of
12:00 noon, Eastern time, on days when the Custodian bank is open
for business. The net asset value per share is determined by
adding the appraised value of all securities and all other
assets, deducting liabilities and dividing by the number of
shares outstanding. The value of the Fund's portfolio of
securities is determined on the basis of fair value as determined
in good faith by the Fund's Trustees. In determining fair value,
the Fund uses the amortized cost method of valuing the securities
in its portfolio, which method involves valuing a security at its
cost adjusted by a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. The
purpose of this method of calculation is to facilitate the
maintenance of a constant net asset value per share for the Fund
of $1.00. However, there is no assurance the $1.00 net asset
value will be maintained.
INVESTORS' ACCOUNTS
The Fund maintains an account for each investor in full and
fractional shares. Statements of account will be sent monthly
showing the beginning balance and the ending balance and
detailing transactions for the month. Confirmations of individual
transactions will not be sent.
The Fund reserves the right to reject any purchase order. All
accounts will be held in book entry form. No certificates for
shares will be issued.
TRANSACTION CHARGES
In addition to charges described elsewhere in this Prospectus,
the Fund may impose a charge of $5 per month for any account
whose average daily balance for the month falls below $500. The
fee will continue to be imposed during the months when the
account balance remains below $500. This fee will be paid to
Rushmore Trust and Savings, FSB. The fee will not be imposed on
tax-sheltered retirement plans or accounts established under the
Uniform Gifts or Transfers to Minors Act. Because of the
administrative expense of handling small accounts, the Fund
reserves the right to involuntarily redeem an investor's account
which falls below $500 due to redemptions or exchanges after
providing 60 days' written notice. The Fund may also assess a
charge of $10 for items returned for insufficient or
uncollectible funds.
TAXES
The Fund intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. Because of this
qualification, the Fund will not be liable for Federal income
taxes to the extent its earnings are distributed.
Dividends derived from interest and dividends received by the
Fund, together with distributions of any short-term capital
gains, are taxable as ordinary income whether or not reinvested.
Statements as to the Federal tax status of shareholders'
dividends and distributions will be mailed annually.
Shareholders should consult their tax advisers concerning the tax
status of the Fund's dividends in their own states and
localities.
Shareholders are required by law to certify that their tax
identification number is correct and that they are not subject to
back-up withholding. In the absence of this certification, the
Fund is required to withhold taxes at the rate of 31% on
dividends, capital gains distributions, and redemptions.
Shareholders who are non-resident aliens may be subject to a
withholding tax on dividends earned.
HOW TO INVEST IN THE FUND
Shares of the Fund are offered for sale continuously by the Fund.
There is no sales charge. The minimum initial investment is
$2,500. Retirement accounts may be opened with a $500 minimum
investment. There is no minimum amount for subsequent
investments.
By Mail. Complete an application and make a check payable to
"Fund for Government Investors" Mail the check, and the completed
application to:
Fund for Government Investors
4922 Fairmont Avenue
Bethesda, Maryland 208l4
By Bank Wire. Speak to the Branch Manager of your bank. Request
a transfer of Federal funds to Rushmore Trust and Savings, FSB,
instructing the bank to wire transfer the money before 12 noon,
Eastern time to:
Rushmore Trust and Savings, FSB
Bethesda, Maryland
Routing No. 0550-71084
For Account of
Fund for Government Investors
Account No. 029385770
AFTER INSTRUCTING YOUR BANK TO TRANSFER FEDERAL FUNDS, YOU MUST
TELEPHONE THE FUND AT (800) 622-1386 OR (301) 657-1510 BETWEEN
8:30 A.M. AND 12 NOON EASTERN TIME AND TELL US THE AMOUNT YOU
TRANSFERRED AND THE NAME OF THE BANK SENDING THE TRANSFER. YOUR
BANK MAY CHARGE A FEE FOR SUCH SERVICES. REMEMBER THAT IT IS
IMPORTANT TO COMPLETE THE WIRE TRANSFER BEFORE 12 NOON EASTERN
TIME.
Through Brokers. Investors may invest in the Fund by purchasing
shares through registered broker-dealers. Such broker-dealers
who process orders may charge a fee for such service. The
Government securities market, in which the Fund buys and sells
its securities, usually requires immediate settlement in Federal
funds for all security transactions. Payments received by bank
wire can be converted immediately into Federal funds and will
begin earning dividends the same day. Payment for the purchase of
Fund shares not received in the form of Federal funds will begin
earning dividends the following day. Foreign checks will not be
accepted. Orders received prior to 12 Noon, Eastern time, will
be invested in shares of the Fund at the next determined net
asset value. The Fund may impose a charge of $10 for items
returned for insufficient or uncollectible funds.
HOW TO REDEEM AN INVESTMENT (WITHDRAWALS)
An investor may withdraw all or any portion of his investment by
redeeming shares on any day that the Fund is open for business at
the next determined net asset value per share after receipt of
the order by writing the Fund or telephoning (800) 622-1386 or
(301) 657-1510.
The proceeds of redemptions will be sent directly to the
investor's address of record. If the investor requests payment
of redemptions to a third party or to a location other than his
address of record listed on the account application, the request
must be in writing and the investor's signature must be
guaranteed by an eligible institution. Eligible institutions
generally include banking institutions, securities exchanges,
associations, agencies or broker/dealers, and "STAMP" program
participants. There are no fees charged for redemptions.
Normally, the Fund will make payment for all shares redeemed
within one business day. However, withdrawal requests upon
investments that have been made by check may be delayed up to ten
calendar days following such investment or until the check
clears, whichever occurs first. This delay is necessary to assure
the Fund that investments made by check are good funds. The
proceeds of the redemption will be forwarded promptly upon
confirmation of receipt of good funds.
The right of redemption may be suspended, or the date of payment
postponed during the following periods: (a) periods during which
the New York Stock Exchange (the "NYSE") is closed (other than
customary weekend or holiday closings); (b) periods when trading
on the NYSE is restricted, or an emergency exists, as determined
by the Securities and Exchange Commission, so that disposal of
the Fund's investments for determination of net asset value is
not reasonably practicable; or (c) for such other periods as the
Commission, by order, may permit for protection of the Fund's
investors.
Telephone Redemption. The privilege to initiate redemption
transactions by telephone will be made available to Fund
shareholders automatically. Telephone orders for redemptions
must be received by 12 Noon Eastern time to be effective that
day. Telephone redemptions will only be sent to the address of
record or to bank accounts specified in the account applications.
When acting on instructions believed to be genuine, the Fund will
not be liable for any loss resulting from a fraudulent telephone
redemption request and the investor would bear the risk of any
such loss. The Fund will employ reasonable procedures to confirm
that redemption instructions communicated by telephone are
genuine; and if the Fund does not employ such procedures, then
the Fund may be liable for any losses due to unauthorized or
fraudulent instructions. The Fund follows specific procedures
for transactions initiated by telephone, including among others
requiring some form of personal identification prior to acting on
instructions received by telephone, providing written
confirmation not later than five business days after such
transactions, and/or tape recording of telephone transactions.
Telephone redemption privileges may be terminated or modified by
the Fund upon 60 days notice to all shareholders of the Fund.
Bank Wire Transfers. When the amount to be redeemed is at least
$5,000, the Fund, upon telephone instructions, will automatically
wire transfer the amount to the investor's commercial bank or
brokerage account specified in the account application. The Fund
will also accept written instructions for wire transfers of
funds.
Check Transfers. For amounts less than $5,000, investors
utilizing certain Washington, D.C. banks may have checks
deposited directly into their account. For redemptions by
investors utilizing banks in other states, including Virginia and
Maryland, checks will be delivered by mail.
Exchange Privileges. Shares of the Fund may be exchanged for
shares of Fund for Tax-Free Investors, Inc., The Rushmore Fund,
Inc., the American Gas Index Fund, Inc., or the Cappiello-
Rushmore Trust on the basis of the respective net asset values of
the shares involved, provided such exchange is permitted under
the applicable laws of the state of the investor's residence.
Shareholders contemplating such an exchange should obtain and
review the prospectuses of those funds. Exchanges may be made by
telephone or letter. Written requests should be sent to Fund for
Government Investors, 4922 Fairmont Avenue, Bethesda, Maryland
20814 and be signed by the record owner or owners. Telephone
exchange requests may be made by telephoning the Fund at (800)
622-1386 or (301) 657-1510. To implement an exchange,
shareholders should provide the following information: account
registration including address and number, taxpayer
identification number, number, percentage or dollar value of
shares to be redeemed, name and account number of the portfolio
to which the investment is to be transferred. Exchanges may be
made only if they are between identically registered accounts.
Telephone exchange privileges may be terminated or modified by
the Fund upon 60 days notice to all shareholders of the Fund.
TAX-SHELTERED RETIREMENT PLANS
Tax-Sheltered Retirement Plans of the following types are
available to investors:
Individual Retirement Accounts (IRAs)
Keogh Accounts - Defined Contribution
Plan (Profit Sharing Plan)
Keogh Accounts - Money Purchase Plan
(Pension Plan)
Internal Revenue Code
Section 401(k) Plans
Internal Revenue Code
Section 403(b) Plans
Additional information regarding these accounts may be obtained
by contacting the Fund.
MANAGEMENT OF THE FUND
Officers and Directors. The Fund has a Board of Trustees which
is responsible for the general supervision of the Fund's
business. The day-to-day operations of the Fund are the
responsibility of the Fund's officers. A complete list of the
Fund's Trustees and officers is provided in the Statement of
Additional Information.
Investment Adviser and Administrative Servicing Agent. The Fund
is provided investment advisory and management services by Money
Management Associates (the "Adviser"), 1001 Grand Isle Way, Palm
Beach Gardens, Florida 33418. The Agreement between the Adviser
and the Fund was approved by shareholders of the Fund on May 24,
1996, at a special meeting of Fund shareholders. The Adviser is
a limited partnership which was formed under the laws of the
District of Columbia on August 15, 1974. Its primary business
since inception has been to serve as the investment adviser of
the Fund.
Daniel L. O'Connor is the sole general partner of the
Adviser, and, as such, exercises control of the Adviser. Money
Management Associates provides investment advice and management
to other mutual funds including The Rushmore Fund, Inc., Fund for
Tax-Free Investors, Inc., and the American Gas Index Fund, Inc.
Net assets under management currently approximate $900 million.
Under an agreement with the Adviser, the Fund pays a fee at an
annual rate based on the size of the Fund's 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 over $1 billion.
For the year ended December 31, 1996, the Fund paid the Adviser
investment advisory fees of 0.49% (49/100 of 1%) of the average
daily net assets of the Fund.
Effective March 1, 1996, the Board of Trustees approved an
arrangement whereby Rushmore Trust and Savings, FSB, 4922
Fairmont Avenue, Bethesda, Maryland 20814, a majority-owned
subsidiary of the Adviser, provides the Fund with custodial,
transfer agency, dividend-disbursing, and other shareholder
services. The Fund pays an annual fee of 0.25% (25/100 of 1%) of
the average daily net assets of the Fund for these services.
ORGANIZATION AND DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
The Fund is a no-load, open-end, diversified management
investment company. The Fund is an unincorporated voluntary
association organized under the laws of the State of Delaware as
a business trust pursuant to a Declaration of Trust dated January
25, 1996. The Fund is authorized to issue an unlimited number of
shares of beneficial interest, which shares have no par value,
and which shares may be issued in separate classes. The Fund
currently has one series of shares outstanding and presently does
not intend to organize other separate series. Shares have equal
voting rights, and no preferences to conversion, exchange,
dividends, retirement or any other feature. These shares have
non-cumulative voting rights, which means that the holders of
more than 50% of the shares voting for the election of Trustees
can elect 100% of the Trustees, if they choose to do so. In such
event, the holders of the remaining shares voting (less than 50%)
will be unable to elect any Trustees.
Under Delaware law, a registered investment company is not
required to hold annual shareholders' meetings if the Investment
Company Act of 1940 does not require a meeting. It will,
however, hold special meetings as required or deemed desirable by
the Board of Trustees for such purposes as electing trustees,
changing fundamental policies, or approving an investment
advisory contract. Under the Investment Company Act of 1940,
shareholders of the Fund have the right to remove Trustees and,
if holders of 10% of the outstanding shares request in writing, a
shareholder's meeting must be called.
Shareholders of the Fund having inquiries about the Fund's
organization or operation should contact the Fund in writing at
4922 Fairmont Avenue, Bethesda, Maryland 20814 or by telephone
at (301) 657-1500 or (800) 343-3355.
<PAGE>
CONTENTS
Page [LOGO]
Fee Table 2
FUND FOR GOVERNMENT INVESTORS
Financial Highlights 3
Prospectus
Performance Data 4
May 1, 1997
Investment Objective and Policies 4
Dividends 6
Net Asset Value 6
Investor Accounts 6
Transaction Charges 7
Taxes 7
How to Invest in the Fund 7
How to Redeem an Investment
(Withdrawals) 8
Tax-Sheltered Retirement Plans 9
Management of the Fund 10
Organization and Description of
Shares of Beneficial Interest 10
<PAGE>
PART B
<PAGE>
FUND FOR GOVERNMENT INVESTORS
A Money Market Fund
4922 Fairmont Avenue, Bethesda, Maryland 20814
(301) 657-1500 (800) 343-3355
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus.
This Statement of Additional Information should be read in
conjunction with the Fund's Prospectus, dated May 1, 1997. A
copy of the Fund's Prospectus may be obtained without charge by
writing or telephoning the Fund.
The date of this Statement of Additional Information is May 1, 1997.
<PAGE>
FUND FOR GOVERNMENT INVESTORS
A Money Market Fund
STATEMENT OF ADDITIONAL INFORMATION
Table of Contents
Cross Reference to Related Item in Prospectus
Page in
Statement of
Additional Page in
Information Prospectus
Investment Objective and Policies 3 4
Investment Restrictions 3 4
Management of the Fund 4 9
Principal Holders of Securities 5 --
Investment Advisory and Other Services 5 10
Net Asset Value 6 6
Comparative Performance Data 6 4
Calculation of Yield Quotations 6 4
Auditors and Financial Statements 7 3
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
General
The Fund may invest only in marketable debt securities of the
United States Government, its agencies and instrumentalities
(collectively, "U.S. Government Securities"), and in repurchase
agreements secured by such securities. The investment objective,
the investment policies, and the investment restrictions of the
Fund may not be changed without the approval of a majority of the
shareholders, as defined in the Investment Company Act of 1940.
Portfolio turnover of the Fund will be high due to the short-term
nature of the Fund's investments. High turnover will not
adversely affect the Fund's yield because brokerage commissions
are not normally paid on investments the Fund makes.
U.S. Government Securities
The Fund invests primarily in U.S. Government Securities.
Securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities include U.S. Treasury securities,
which differ only in their interest rates, maturities, and times
of issuance. U.S. Treasury bills have initial maturities of one
year or less; U.S. Treasury notes have initial maturities of one
to ten years; and U.S. Treasury bonds generally have initial
maturities of greater than ten years. Some obligations issued or
guaranteed by U.S. Government agencies and instrumentalities,
including, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury. Other obligations issued by or
guaranteed by Federal agencies, such as those securities issued
by the Federal National Mortgage Association, are supported by
the discretionary authority of the U.S. Government to purchase
certain obligations of the Federal agency, while other
obligations issued by or guaranteed by Federal agencies, such as
those of the Federal Home Loan Banks, are supported by the right
of the issuer to borrow from the U.S. Treasury. While the U.S.
Government provides financial support to such U.S. Government-
sponsored Federal agencies, no assurance can be given that the
U.S. Government will always do so, since the U.S. Government is
not so obligated by law. U.S. Treasury notes and bonds typically
pay coupon interest semi-annually and repay the principal at
maturity. The Fund will invest in such U.S. Government
Securities only when the Fund's investment adviser (the
"Adviser") is satisfied that the credit risk with respect to the
issuer is minimal.
Repurchase Agreements
As discussed in the Fund's Prospectus, the Fund also may enter
into repurchase agreements with financial institutions. The Fund
follows certain procedures designed to minimize the risks
inherent in such agreements. These procedures include effecting
repurchase transactions only with large, well-capitalized and
well-established financial institutions whose condition will be
continually monitored by the Adviser. In addition, the value of
the collateral underlying the repurchase agreement will always be
at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a
default or bankruptcy by a selling financial institution, the
Fund will seek to liquidate such collateral. However, the
exercising of the Fund's right to liquidate such collateral could
involve certain costs or delays and, to the extent that proceeds
from any sale upon a default of the obligation to repurchase were
less than the repurchase price, the Fund could suffer a loss. It
is the current policy of the Fund not to invest in repurchase
agreements that do not mature within seven days if any such
investment, together with any other illiquid assets held by the
Fund, amounts to more than 10% of the Fund's total assets. The
investments of the Fund in repurchase agreements, at times, may
be substantial when, in the view of the Adviser, liquidity or
other considerations so warrant.
INVESTMENT RESTRICTIONS
As stated above, the Fund may invest only in U.S. Government
Securities and in repurchase agreements secured by such
securities, although the Fund did not invest in repurchase
agreements during 1995 and has no intentions to do so. The Fund
may not invest in any other securities.
The Fund may not borrow money, except that as a temporary measure
the Fund may borrow money to facilitate redemptions. Such a
borrowing may be in an amount not to exceed 30% of the Fund's
total assets, taken at current value before such borrowing. The
Fund may borrow only to accommodate requests for redemption of
shares of the Fund while effecting an orderly liquidation of
portfolio securities. Additionally, the Fund may not sell
securities short, write options, underwrite securities of other
issuers, purchase or sell real estate, commodities or commodity
contracts, or loan money to others (except securities under
repurchase agreements). The Fund may not purchase a portfolio
security if a borrowing by the Fund is outstanding. No other
senior securities may be issued by the Fund.
DRAFT CHECK REDEMPTION
Investors may elect to redeem shares by draft check (minimum
check - $250) made payable to the order of any person or
institution. Upon the Fund's receipt of a completed signature
card, investors will be supplied with draft checks which are
drawn on the Fund's account and are paid through Rushmore Trust
and Savings, FSB. The Fund reserves the right to change or
suspend the checking service and to charge for the reorder of
draft checks. These draft checks cannot be certified, nor can
these checks be negotiated for cash at Rushmore Trust and
Savings, FSB. There will be a $10 charge for each stop payment
request on the draft checks. Investors will be subject to the
same rules and regulations that Rushmore Trust and Savings, FSB
applies to checking accounts. Investors' accounts may not be
closed by draft check.
MANAGEMENT OF THE FUND
Trustees and Officers of the Fund and Officers of the Adviser,
together with information as to their principal business
occupations during the past five years, are set forth below.
Officers of the Fund do not receive salaries or other forms of
compensation from the Fund. Non-interested Trustees' fees and
expenses will be paid by the servicing agent. Non-interested
Trustees were paid an annual fee of $3,000. For the year ended
December 31, 1996, such fees amounted to $14,250.
*Daniel L. O'Connor, 55 - Chairman of the Board of Trustees,
President, and Treasurer of the Fund. General Partner of the
adviser since 1975. President of Rushmore Trust and Savings, FSB
since 1989. Address: 1001 Grand Isle Way, Palm Beach Gardens,
FL 33418.
*Richard J. Garvey, 64 - Trustee of the Fund. Employee of
Rushmore Services, Inc., a subsidiary of the Adviser, since 1995.
Limited Partner of the Adviser since 1975. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.
Jeffrey R. Ellis, 52 - Trustee of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since 1993.
Vice President Shoppers Express, Inc. 1988-1992. Address: 513
Kerry Lane, Virginia Beach, Virginia 23451.
Bruce C. Ellis, 52 - Trustee of the Fund. Vice President,
LottoFone, Inc., a telephone state lottery service, since 1991.
Vice President, Shoppers' Express, Inc. 1986-1992. Address: 7108
Heathwood Court Bethesda, Maryland 20817.
Patrick F. Noonan, 54 - Trustee of the Fund. Chairman and Chief
Executive Officer of the Conservation Fund since 1986. Vice
Chairman, American Farmland Trust and Trustee, American
Conservation Association since 1985. President, Conservation
Resources, Inc. since 1981. Address: 11901 Glen Mill Drive,
Potomac, Maryland 20854.
Michael D. Lange, 55 - Trustee of the Fund. Vice President,
Capital Hill Management Corporation since 1967. Owner of Michael
D. Lange, Ltd., a builder and developer since 1980. Partner of
Greatful Falls, a building developer since 1994. Address: 7521
Pepperell Drive, Bethesda, Maryland 20817.
Leo Seybold, 83 - Trustee of the Fund. Retired 1988. Address:
5804 Rockmere Drive, Bethesda, Maryland 20816.
*Rita A. Gardner, 53 - Trustee of the Fund. Retired 1996.
Limited Partner of the Adviser since 1979. Vice President and
Director of MMA Services, Inc. until 1993. Address: 311
Yorktown Village Pass, Annandale, Virginia 22003.
*Timothy N. Coakley, CPA, 30 - Vice President and Controller
since 1994. Chief Financial Officer, Rushmore Trust and Savings,
FSB since 1995. Formerly Audit Manager, Deloitte & Touche LLP
until 1994. Address: 4922 Fairmont Avenue, Bethesda, MD 20814.
*Martin M. O'Connor, 51 - Vice President since 1974. Employee of
Rushmore Services, Inc., a subsidiary of the Adviser, since 1995.
A limited partner of the Adviser since 1979. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.
*John R. Cralle, 56 - Vice President since 1978. Employee of
Rushmore Services, Inc., a subsidiary of the Adviser, since 1995.
A limited partner of the Adviser since 1979. Address: 4922
Fairmont Avenue, Bethesda, Maryland 20814.
*Stephenie E. Adams, 28 - Secretary. Manager, Fund
Administration and Marketing, Rushmore Services, Inc., from July
1994 to present. Regional Sales Coordinator, Media General
Cable, from June 1993 to June 1994. Graduate Student,
Northwestern University, M.S., from September 1991 to December
1992. Address: 4922 Fairmont Avenue, Bethesda, Maryland 20814.
Daniel L. O'Connor and Martin M. O'Connor are brothers.
* Indicates interested person as defined by the Investment
Company Act of 1940.
Certain Trustees and Officers of the Fund are also Directors and
Officers of Fund For Tax-Free Investors, Inc., The Rushmore Fund,
Inc., and American Gas Index Fund, Inc., other investment
companies managed by the Adviser.
PRINCIPAL HOLDERS OF SECURITIES
On April 3, 1997, there were 577,527,282.56 shares of beneficial
interest of the Fund outstanding. No shareholder owned more than
5% of the outstanding shares of beneficial interest. Officers
and Trustees of the Fund, as a group, own less than 1% of shares
outstanding.
INVESTMENT ADVISORY AND OTHER SERVICES
The Fund is provided investment advisory and management services
by Money Management Associates (the "Adviser"), 1001 Grand Isle
Way, Palm Beach Gardens, Florida 33418. The Adviser is a
limited partnership which was formed under the laws of the
District of Columbia on August 15, 1974. Certain Officers and
Trustees of the Fund are affiliated with the Adviser. Under an
Agreement (the "Agreement") with the Adviser, the Fund pays a fee
at an annual rate based on the size of the Fund's 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 over $1 billion.
Under the Agreement, the Adviser will reimburse the Fund for
expenses (including management fee) but excluding interest and
extraordinary legal expenses, which exceed one percent of the
average daily net assets per annum.
Normal expenses which are borne by the Fund include, but are not
limited to, taxes, trust fees, interest expenses (if any), office
expenses, the costs incident to preparing reports to governmental
agencies, auditing and accounting, the costs incident to
providing stock certificates for shareholders, and of registering
and redeeming such certificates, custodian charges, the expense
of shareholders' and Trustees' meetings, data processing,
preparation, printing and distribution of all reports and proxy
materials, legal services rendered to the Fund, compensation for
those Trustees, Officers and employees of the Fund who do not
also serve as Officers or employees of the Adviser, insurance
coverage for the Fund and its Trustees and Officers, and its
membership in trade associations. The Adviser may, from time to
time, make payments to broker-dealers and others for their
expenses in connection with the distribution of Fund shares.
Although such payments may be based upon the number of shares
distributed, it is the understanding of the Adviser that such
payments will be for reimbursement and will not exceed the
expenses of the recipients in arranging for and administering
distribution of Fund shares. Salaries of the Trustees of the
Fund, who are not affiliated with the Adviser, are expenses of
the Fund and are established annually by the Board of Trustees.
This includes a majority of those Trustees who are non-interested
persons of the Adviser. All fees and expenses are estimated and
accrued daily. For the years: 1996, 1995 and 1994, the Adviser
earned $2,823,002, $2,787,502, $2,754,339, respectively in
management fees.
Daniel L. O'Connor is the sole general partner of the Adviser
and, as such, exercises control of the Adviser.
The Agreement between the Adviser and the Fund was last approved
by the shareholders of the Fund on October 31, 1996. The
Agreement shall be renewed annually, if approved by either of two
methods: (1) by the Board of Trustees, including approval by a
majority of the non-interested Trustees by vote cast in person at
a meeting called for such purpose; or (2) by a majority of the
shareholders of the outstanding voting securities of the Fund.
The Agreement may be canceled by the Fund without penalty on
sixty days' notice by the Board of Trustees of the Fund or by
vote of the holders of a majority of the Fund's shares. The
Agreement may also be canceled by the Adviser without penalty on
sixty days' notice. The Agreement will terminate automatically
in the event of its assignment.
Effective March 1, 1996, the Board of Trustees approved an
arrangement whereby Rushmore Trust and Savings, FSB ("RTS"), 4922
Fairmont Avenue, Bethesda Maryland 20814, a majority-owned
subsidiary of the Adviser, acts as the Fund's custodian, transfer
agent, dividend disbursing agent and shareholder servicing agent.
The Fund pays RTS an annual fee of 0.25% of the average daily net
assets of the Fund for these services. The fee will be reviewed
and approved annually by the non-interested Trustees. The Fund
is subject to the self-custodian rules of the Securities and
Exchange Commission. These rules require that the custodian be
subject to three securities verification examinations each year
conducted by the Fund's independent accountants. Two of the
examinations must be performed on an unannounced surprise basis.
NET ASSET VALUE
The Fund's net asset value per share will be determined as of
12:00 noon, Eastern time, on days when the Custodian bank is open
for business. The net asset value per share is determined by
adding the appraised value of all securities and all other
assets, deducting liabilities and dividing by the number of
shares outstanding. The value of the Fund's portfolio of
securities is determined on the basis of fair value as determined
in good faith by the Fund's Trustees. In determining fair value,
the Fund uses the amortized cost method of valuing the securities
in its portfolio pursuant to Rule 2a-7 under the Investment
Company Act of 1940. The Fund's Trustees continuously review
this method of valuation and recommend changes which may be
necessary to assure that the portfolio instruments of the Fund
are valued at their fair value. In its review, the Trustees of
the Fund consider the relevant factors which may affect the value
of the portfolio investments, such as maturity, yield, stability,
special circumstances or trading markets, and any other factors
which they deem pertinent. Amortized cost is the purchase price
of the security plus accumulated discount or accrued interest
from the date of purchase. This method of valuation does not
take into account unrealized gains or losses due to short-term
market fluctuations and tends to stabilize the price of the
Fund's shares. Under Rule 2a-7, the Fund will not purchase any
securities with a remaining maturity of greater than 397 days, or
maintain a dollar weighted average portfolio maturity in excess
of 90 days. When interest rates decline, the market value of the
Fund's portfolio rises; when rates rise, the market value
declines. To the extent that the Fund's amortized cost valuation
of its short-term securities differs from the actual liquidation
value, the price at which an investor purchases or redeems will
correspondingly differ from the per share liquidation value of
the portfolio. Thus, when interest rates are declining and
purchases of Fund shares exceed redemptions, the interest of
existing investors may be diluted. When interest rates are
rising and redemptions exceed share purchases, the interest of
existing investors may be diluted. Declining interest rates and
net redemption of Fund shares or rising interest rates and new
purchases of Fund shares may enhance the interest of existing
investors. When interest rates are declining, the Fund's
valuation method tends to understate the percentage rate of net
investment income per share. When interest rates are rising, the
reverse is true. The Board of Trustees of the Fund believes that
the amortized cost basis offers the most consistent and
conservative method of valuing short-term investments.
COMPARATIVE PERFORMANCE DATA
The Fund's performance may be compared in advertising to the
performance of other money market and mutual funds in general or
to the performance of particular types of money market funds,
especially those with similar objectives. More up-to-date
performance data may be provided as it becomes available. From
time to time, the Fund may provide information concerning general
economic conditions, financial trends, analysis and supply
comparative performance and rankings, with respect to comparable
investments for the same period, for unmanaged market indexes
such as the Dow Jones Industrial Average, Standard & Poor's 500
IndexTM, Shearson Lehman Bond Indexes, Merrill Lynch Bond
Indexes, Bond Buyer Index, and from recognized independent
sources such as Donoghue's Money Fund Report, Donoghue Money
Letter, Bank Rate Monitor, Money Magazine, Forbes, Lipper,
Standard & Poor's Corporation, CDA/Wiesengerger Investment
Technologies, Inc. ("CDA"), Mutual Fund Values, Mutual Fund
Forecaster, Mutual Fund Sourcebook, Fortune, Business Week,
Kiplinger's Personal Finance, Wall Street Journal, Investor's
Business Daily and Schabacker Investment Management, Inc.
Comparisons may also be made to Consumer Price Index, rate of
inflation, bank money market rates, rates of certificates of
deposit, Treasury Bills and Treasury Bond rates and yields.
CALCULATION OF YIELD QUOTATIONS
The Fund's annualized current yield, as may be quoted from time
to time in advertisements and other communications to
shareholders and potential investors, is computed by determining,
for a stated seven-day period, the net change, exclusive of
capital changes and including the value of additional shares
purchased with dividends and any dividends declared therefrom
(which reflect deductions of all expenses of the Fund such as
management fees), in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the
period, and dividing the difference by the value of the account
at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/7).
The Fund's annualized effective yield, as may be quoted from time
to time in advertisements and other communications to
shareholders and potential investors, is computed by determining
(for the same stated seven-day period as the current yield), the
net change, exclusive of capital changes and including the value
of additional shares purchased with dividends and any dividends
declared therefrom (which reflect deductions of all expenses of
the Fund such as management fees), in the value of a hypothetical
pre-existing account having a balance of one share at the
beginning of the period, and dividing the difference by the value
of the account at the beginning of the base period to obtain the
base period return, and then compounding the base period return
by adding 1, raising the sum to a power equal to 365 divided by
7, and subtracting 1 from the result.
The yields quoted in any advertisement or other communication
should not be considered a representation of the yields of the
Fund in the future since the yield is not fixed. Actual yields
will depend not only on the type, quality, and maturities of the
investments held by the Fund and changes in interest rates on
such investments, but also on changes in the Fund's expenses
during the period.
Yield information may be useful in reviewing the performance of
the Fund and for providing a basis for comparison with other
investment alternatives. However, unlike bank deposits or other
investments which typically pay a fixed yield for a stated period
of time, the Fund's yield fluctuates.
AUDITORS AND FINANCIAL STATEMENTS
Deloitte & Touche LLP, independent certified public accountants,
are the auditors of the Fund. The Fund incorporates by reference
in this statement of additional information the financial
statements and notes contained in its annual report to the
shareholders for the year ended December 31, 1996.
<PAGE>
Fund for
Government Investors
A MONEY MARKET FUND
ANNUAL REPORT
December 31, 1996
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.
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
4922 Fairmont Avenue Bethesda, Maryland 20814 800-621-7874 301-657-1517
<PAGE>
<TABLE>
FUND FOR GOVERNMENT INVESTORS
STATEMENT OF NET ASSETS
December 31, 1996
<CAPTION>
PAYABLE AT MATURITY YIELD AT DATE VALUE
MATURITY DATE OF PURCHASE (%) (NOTE 1)
UNITED STATES TREASURY BILLS
<S> <C> <C> <C>
$ 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
$559,500,000 Total Investments - 103.93% (Cost $556,341,441*) 556,341,441
Liabilities Less Other Assets - (3.93)% (21,016,487)
Net Assets - 100.00% $535,324,954
Net Asset Value Per Share
(Based on 535,324,954 Shares Outstanding) $1.00
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 42 Days
See Notes to Financial Statements.
- 2 -
</TABLE>
<PAGE>
FUND FOR GOVERNMENT INVESTORS
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
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
NET INVESTMENT INCOME $25,210,604
See Notes to Financial Statements.
-3 -
<PAGE>
<TABLE>
FUND FOR GOVERNMENT INVESTORS
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
December 31,
1996 1995
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1) $ 25,210,604 $ 27,779,621
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
Total 2,850,897,459 2,638,589,100
Shares Redeemed (2,892,766,936) (2,585,548,223)
Increase (Decrease) in Net Assets (41,869,477) 53,040,877
NET ASSETS - Beginning of Year 577,194,431 524,153,554
NET ASSETS - End of Year $ 535,324,954 $ 577,194,431
See Notes to Financial Statements.
- 4 -
</TABLE>
<PAGE>
<TABLE>
FUND FOR GOVERNMENT INVESTORS
FINANCIAL HIGHLIGHTS
<CAPTION>
For the Year Ended December 31,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net Asset Value - Beginning of Year $1.00 $1.00 $1.00 $1.00 $1.00
Income from Investment Operations:
Net Investment Income 0.044 0.049 0.033 0.023 0.030
Net Realized and Unrealized Gains
on Securities - - - - -
Total from Investment Operations 0.044 0.049 0.033 0.023 0.030
Distributions to Shareholders:
From Net Investment Income (0.044) (0.049) (0.033) (0.023) (0.030)
From Net Realized Capital Gains - - - - -
Total Distributions to Shareholders (0.044) (0.049) (0.033) (0.023) (0.030)
Net Increase in Net Asset Value 0.00 0.00 0.00 0.00 0.00
Net Asset Value - End of Year $1.00 $1.00 $1.00 $1.00 $1.00
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
See Notes to Financial Statements.
- 5 -
</TABLE>
<PAGE>
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).
- 6 -
<PAGE>
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
- 7 -
<PAGE>
Deleted Rushmore Logo
FUND FOR
GOVERNMENT
INVESTORS
Annual Report
December 31, 1996
<PAGE>
PART C
OTHER INFORMATION
Fund for Government Investors
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
a. Financial statements:
The Financial Highlights in Part A and the following
financial statements in Part B of this registration
statement's amendment are incorporated by reference.
Statements of Net Assets as of December 31, 1996
Statements of Operations for the year ended December 31, 1996
Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995
Financial Highlights for each of the five years in the
period ended December 31, 1996
b. Exhibits:
11 Consent of Deloitte & Touche LLP independent
auditors for Registrant
16 Schedule for computation of performance quotations
27 Financial Data Schedule
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
Approximate Number of
Shareholders of Record
Title of Class at April 3, 1997
Common Stock, $.001 par value
Fund for Government Investors 11,947
ITEM 27. INDEMNIFICATION
The Articles of Incorporation of the Fund provide that
officers and directors shall be indemnified by the Fund
against liabilities and expenses of defense in
proceedings against them by reason of the fact that they
serve as officers or directors of the Fund or as an
officer or director of another entity at the request of
the entity. The indemnification is subject to the
following conditions:
(a) no director or officer is indemnified against all
liability to the Fund or its security holders which was
the result of any willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties;
(b) officers and directors are only indemnified for
actions taken in good faith which they believed were in
or not opposed to the best interests of the Fund;
(c) expenses of any suit or proceeding will be paid in
advance only if the persons who will benefit by such
advance undertake to repay the expenses unless it is
subsequently determined that they are entitled to
indemnification.
The Articles provide that if indemnification is not
ordered by a court, it may be authorized upon
determination by shareholders, by a majority vote of a
quorum of the directors who were not parties to the
proceedings or if a quorum is not obtainable, or if
directed by a quorum of disinterested directors, by
independent legal counsel in a written opinion that the
persons to be indemnified have met the applicable
standard.
In connection with the approval of indemnification to
officers and directors, the Fund hereby undertakes in
all cases where indemnification is not ordered by a
court not to submit any proposed indemnification to a
vote of its shareholders or directors unless it has
obtained a legal opinion from independent counsel that
the product of the persons seeking indemnification did
not involve willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
Insofar as indemnification for liability arising under
the Securities Act of 1933, as amended (the "1933 Act"),
may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against
public policy as expressed in the 1933 Act and,
therefore, is unenforceable. In the event that a claim
for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of
the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director,
officer, or controlling person in connection with the
securities being registered, the Registrant, unless in
the opinion of the Registrant's counsel the matter has
been settled by controlling precedent, will submit to a
court of appropriate jurisdiction the question whether
such indemnification by the Registrant is against public
policy as expressed in the 1933 Act and will be governed
by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Money Management Associates ("MMA"), 1001 Grand Isle
Way, Palm Beach Gardens, Florida 33418, a limited
partnership organized under the laws of the District of
Columbia on August 15, 1974, has one general partner and
four limited partners. Daniel L. O'Connor is the
general partner and sole employee of MMA. Limited
partners Richard J. Garvey, Martin M. O'Connor, and John
R. Cralle, are full-time employees of Rushmore Services,
Inc. ("RSI"), a subsidiary of MMA, at 4922 Fairmont
Avenue, Bethesda, Maryland 20814. Limited partner Rita
A. Gardner is a retired employee of Rushmore Trust and
Savings, FSB, the Fund's transfer agent and custodian.
MMA also serves as the investment adviser to Fund for
Government Investors, The Rushmore Fund, Inc., and
American Gas Index Fund, Inc., all regulated investment
companies since their inception.
ITEM 29. PRINCIPAL UNDERWRITERS
Not applicable
ITEM 30. LOCATIONS OF ACCOUNTS AND RECORDS
The physical location for all accounts, books and
records required to be maintained and preserved by
Section 31(a) of the Investment Company Act of 1940, as
amended, and Rules 31a-1 and 31a-2 thereunder, is 4922
Fairmont Avenue, Bethesda, Maryland 20814.
ITEM 31. MANAGEMENT SERVICES
None
ITEM 32. UNDERTAKINGS
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that
it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in this City of Bethesda and State of Maryland
on the 24th day of April, 1997.
Fund for Government Investors
By:
/s/ Daniel L. O'Connor*
Daniel L. O'Connor,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 32 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates
indicated.
Name Title Date
/s/ Daniel L. O'Connor* Chairman of the Board, April 24, 1997
Daniel L. O'Connor Treasurer, Trustee
/s/ Richard J. Garvey President,Trustee April 24, 1997
Richard J. Garvey
/s/ Timothy N. Coakley Vice President, Controller April 24, 1997
Timothy N. Coakley
/s/ Jeffrey R. Ellis* Trustee April 24, 1997
Jeffrey R. Ellis
/s/ Bruce C. Ellis* Trustee April 24, 1997
Bruce C. Ellis
/s/ Rita A. Gardner Trustee April 24, 1997
Rita A. Gardner
/s/ Michael D. Lange* Trustee April 24, 1997
Michael D. Lange
/s/ Patrick F. Noonan* Trustee April 24, 1997
Patrick F. Noonan
/s/ Leo Seybold* Trustee April 24, 1997
Leo Seybold
*Richard J. Garvey, Attorney-in-Fact
EXHIBIT 11
CONSENT OF DELOITTE & TOUCHE LLP
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
Fund for Government Investors
We consent to the incorporation by reference in this Post-
Effective Amendment No. 32 to Registration Statement No. 2-52552
of our report dated January 24, 1997 appearing in the Annual
Report of Fund for Government Investors for the year ended
December 31, 1996 and to the reference to us under the caption
"Financial Highlights" appearing in the Prospectus, which are
also a part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Washington, D.C.
April 25, 1997
EXHIBIT 16
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
<PAGE>
Fund for Government Investors
Exhibit 16
Computation of Yield Quotation
Item 22, Part B
Net Shares Daily Yield
Investment Outstanding (income divided by shares
Income multiplied by 365)
December 25, 1996 $ 62,138.28 530,805,116.32 4.28%
December 26, 1996 $ 62,296.92 530,798,716.10 4.30%
December 27, 1996 $ 61,680.48 526,981,402.27 4.28%
December 28, 1996 $ 61,680.48 526,981,402.27 4.28%
December 29, 1996 $ 61,680.48 526,981,402.27 4.28%
December 30, 1996 $ 62,772.35 532,336,194.29 4.32%
December 31, 1996 $ 62,022.46 529,938,542.42 4.28%
Average 7-Day Yield 4.29%
Annual Effective Yield 4.36%
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000039436
<NAME> FUND FOR GOVERNMENT INVESTORS
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 556,341,441
<INVESTMENTS-AT-VALUE> 556,341,441
<RECEIVABLES> 3,335,525
<ASSETS-OTHER> 1,244,766
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 560,921,732
<PAYABLE-FOR-SECURITIES> 24,680,868
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 915,910
<TOTAL-LIABILITIES> 25,596,778
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 535,324,954
<SHARES-COMMON-STOCK> 535,324,954
<SHARES-COMMON-PRIOR> 577,194,431
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 535,324,954
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 29,463,051
<OTHER-INCOME> 0
<EXPENSES-NET> (4,252,447)
<NET-INVESTMENT-INCOME> 25,210,604
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 25,210,604
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (25,210,604)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,826,372,757
<NUMBER-OF-SHARES-REDEEMED> (2,892,766,936)
<SHARES-REINVESTED> 24,524,702
<NET-CHANGE-IN-ASSETS> (41,869,477)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,823,002
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4,252,447
<AVERAGE-NET-ASSETS> 571,778,226
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.044
<PER-SHARE-GAIN-APPREC> 0.000
<PER-SHARE-DIVIDEND> (0.044)
<PER-SHARE-DISTRIBUTIONS> 0.000
<RETURNS-OF-CAPITAL> 0.000
<PER-SHARE-NAV-END> 1.000
<EXPENSE-RATIO> 0.740
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.000
</TABLE>
