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[LOGO]
FUND FOR
GOVERNMENT
INVESTORS
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Annual Report
December 31, 1997
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FUND FOR [LOGO]
GOVERNMENT INVESTORS
A MONEY MARKET FUND
ANNUAL REPORT
December 31, 1997
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January 29, 1998
Dear Shareholders:
Fund for Government Investors ended the year with net assets of $572 million
on December 31, 1997. Net income averaged 4.40% of net assets for the year, down
from 4.41% for the year ended December 31, 1996. The average maturity for the
Fund on December 31, 1997 was 38 days.
In 1997 we witnessed an economy that continued to move along with little
sign of inflation. The rates on T-Bills were relatively stable during the year,
with the exception of a temporary spike near the end of the year due to foreign
central bank selling of shorter term U.S. Government securities as a result of
economic difficulties in Asia. After the Federal Funds rate hike earlier this
year in March, the Federal Reserve chose not to make any further adjustments, as
the rapid growth of the first quarter slowed considerably for the remainder of
the year. Though the labor market remains tight, a possible inflationary concern
to the Fed, increases by companies in productivity have been able to keep wage
pressure from resulting in increased consumer prices.
We expect 1998 to continue to exhibit an environment of low inflation, as
economic growth should slow from the pace of 1997, due in no small part to the
effects on our economy from Asian currency and market difficulties. We look for
the Fed not to intervene in the near future as there is not enough inflationary
growth to warrant a hike, and employment data remains enough of a concern to
keep the Fed from easing.
Fund for Government Investors continues its philosophy of conservative
investing with safety of assets our primary concern. And as always, we thank you
for your continued support and look forward to serving you in 1998.
<TABLE>
<S> <C>
/s/ DANIEL L. O'CONNOR /s/ RICHARD J. GARVEY
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
</TABLE>
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, 1997
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<CAPTION>
ANNUALIZED
PAYABLE AT MATURITY YIELD ON DATE VALUE
MATURITY DATE OF PURCHASE (NOTE 1)
<S> <C> <C> <C> <C> <C> <C> <C>
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UNITED STATES TREASURY BILLS -- 99.6% OF NET ASSETS
$ 75,000,000 .............. January 8, 1998 .............. 5.05% .............. $ 74,928,250
75,000,000 .............. January 15, 1998 .............. 5.11 .............. 74,854,750
72,845,000 .............. January 22, 1998 .............. 5.07 - 5.08 .............. 72,633,410
50,000,000 .............. January 29, 1998 .............. 5.06 .............. 49,808,278
25,000,000 .............. February 5, 1998 .............. 5.25 .............. 24,875,799
75,000,000 .............. February 12, 1998 .............. 5.28 - 5.29 .............. 74,550,104
75,000,000 .............. February 26, 1998 .............. 5.26 .............. 74,402,666
50,000,000 .............. March 5, 1998 .............. 5.22 .............. 49,555,500
50,000,000 .............. March 12, 1998 .............. 5.29 .............. 49,499,306
25,000,000 .............. March 19, 1998 .............. 5.18 .............. 24,730,500
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Total Investments (Cost $569,838,563*) 569,838,563
Other Assets Less Liabilities -- 0.4% 2,474,712
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Net Assets -- 100.0% $572,313,275
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Net Asset Value Per Share
(Based on 572,313,275 Shares Outstanding)
$1.00
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</TABLE>
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 38 Days
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
INVESTMENT INCOME (Note 1).................................................................... $29,428,044
EXPENSES
Investment Advisory Fee (Note 2)................................................ $2,824,552
Administrative Fee (Note 2)..................................................... 1,430,307 4,254,859
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NET INVESTMENT INCOME......................................................................... $25,173,185
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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 Years Ended
December 31,
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1997 1996
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NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1)....................... $ 25,173,185 $ 25,210,604
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FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased........................ $ 2,978,762,541 $ 2,826,372,757
Dividends Reinvested.................... 24,697,986 24,524,702
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Total................................... 3,003,460,527 2,850,897,459
Shares Redeemed......................... (2,966,472,206) (2,892,766,936)
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Increase (Decrease) in Net Assets....... 36,988,321 (41,869,477)
NET ASSETS - Beginning of Year.............. 535,324,954 577,194,431
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NET ASSETS - End of Year.................... $ 572,313,275 $ 535,324,954
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</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
FINANCIAL HIGHLIGHTS
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<CAPTION>
For the Years Ended December 31,
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1997 1996 1995 1994 1993
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<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
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Income from Investment Operations:
Net Investment Income............... 0.044 0.044 0.049 0.033 0.023
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Total from Investment
Operations...................... 0.044 0.044 0.049 0.033 0.023
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Distributions to Shareholders:
From Net Investment Income.......... (0.044) (0.044) (0.049) (0.033) (0.023)
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Total Distributions to
Shareholders.................... (0.044) (0.044) (0.049) (0.033) (0.023)
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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................. 4.49% 4.50% 5.04% 3.38% 2.37%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 0.74% 0.74% 0.74% 0.75% 0.75%
Net Investment Income................. 4.40% 4.41% 4.93% 3.31% 2.32%
SUPPLEMENTARY DATA:
Number of Shares Outstanding at End of
Year with a Net Asset Value of $1
(000's omitted)..................... 572,313 535,325 577,194 524,154 600,766
</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
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. 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.
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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, 1997, the related statements of operations for the
year then ended and of changes in net assets for the years ended December 31,
1997 and 1996, and the financial highlights for each of the five years in the
period ended December 31, 1997. 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 from 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, 1997, by correspondence with the custodian. 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, 1997, 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.
/s/ DELOITTE & TOUCHE LLP
Princeton, New Jersey
January 23, 1998
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