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FUND FOR [LOGO]
GOVERNMENT INVESTORS
A MONEY MARKET FUND
SEMIANNUAL REPORT
June 30, 1998
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July 31, 1998
Dear Shareholders:
The Fund for Government Investors' net assets were $561 million as of June
30, 1998 and the average maturity was 41 days. Annualized net income as a
percentage of average net assets for the six months ended June 30, 1998 was
4.42%, compared to 4.40% for the year ended December 31, 1997.
The U.S. economy continued to grow during the first half of 1998, while
maintaining an environment of low inflation. The Federal Reserve went from a
neutral stance on interest rates to a bias toward tightening in their March
Federal Open Market Committee meeting, but there has not been an adjustment to
the Fed Funds rate since March of 1997. While the Fed remains concerned about
the strength in the economy, as well as the tightness in the U.S. labor market,
it is expected that the effects of Asia on our economy will moderate economic
growth in the coming months. Asia's economic woes as well as increased
productivity in the manufacturing sector have had a counterbalancing effect on
domestic price levels, thus, keeping levels of inflation low. The rates on T-
Bills have been relatively stable over the past six months, while the yield on
the benchmark thirty-year Treasury has dropped to the lowest levels since the
Treasury Department began regular auctions of that issue in the 1970's,
resulting in a flattening of the yield curve.
Inflation appears to be in check for the near-term, but the total effect
that Asia will have on the U.S. economy is still unclear and should it begin to
abate as the year progresses, we could see added pressure on the Federal Reserve
to tighten monetary policy (i.e. raise the Fed Funds rate). We do not feel,
however, that sufficient economic data will exist in the coming months to
justify a Fed intervention on interest rates until late 1998 at the earliest.
The Fund for Government Investors maintains its conservative investment
style, with safety of your assets as our primary concern. We thank you for your
continued support, and look forward to serving your investment needs in the
future.
<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
June 30, 1998
(unaudited)
<TABLE>
<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 -- 99.3% OF NET ASSETS
$ 75,000,000 .............. July 9, 1998 .............. 5.08% .............. $ 74,917,500
75,000,000 .............. July 16, 1998 .............. 5.15 - 5.16 .............. 74,843,281
50,000,000 .............. July 23, 1998 .............. 5.11 .............. 49,847,833
50,000,000 .............. July 30, 1998 .............. 5.10 .............. 49,799,820
25,000,000 .............. August 6, 1998 .............. 5.09 .............. 24,876,000
75,000,000 .............. August 13, 1998 .............. 5.15 - 5.16 .............. 74,550,441
75,000,000 .............. August 27, 1998 .............. 5.13 - 5.15 .............. 74,405,458
25,000,000 .............. September 3, 1998 .............. 5.06 .............. 24,780,889
75,000,000 .............. September 10, 1998 .............. 5.10 - 5.11 .............. 74,264,361
34,950,000 .............. September 24, 1998 .............. 4.99 .............. 34,548,949
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Total Investments (Cost $556,834,532*) 556,834,532
Other Assets Less Liabilities -- 0.7% 3,746,779
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Net Assets -- 100.0% $560,581,311
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Net Asset Value Per Share
(Based on 560,581,311 Shares Outstanding)
$1.00
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</TABLE>
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 41 Days
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1998
(unaudited)
<TABLE>
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
INVESTMENT INCOME (Note 1).................................................................... $14,160,663
EXPENSES
Investment Advisory Fee (Note 2)................................................ $1,358,809
Administrative Fee (Note 2)..................................................... 686,020 2,044,829
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NET INVESTMENT INCOME......................................................................... $12,115,834
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</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
June 30, 1998 Ended
(unaudited) December 31, 1997
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<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1)....................... $ 12,115,834 $ 25,173,185
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FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased........................ $ 1,794,845,569 $ 2,978,762,541
Dividends Reinvested.................... 11,918,507 24,697,986
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Total................................... 1,806,764,076 3,003,460,527
Shares Redeemed......................... (1,818,496,040) (2,966,472,206)
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Increase (Decrease) in Net Assets....... (11,731,964) 36,988,321
NET ASSETS -- Beginning of Period........... 572,313,275 535,324,954
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NET ASSETS -- End of Period................. $ 560,581,311 $ 572,313,275
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</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six
Months Ended
June 30, For the Years Ended December 31,
1998 -------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
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Income from Investment Operations:
Net Investment Income............... 0.02 0.04 0.04 0.05 0.03 0.02
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Total from Investment
Operations...................... 0.02 0.04 0.04 0.05 0.03 0.02
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Distributions to Shareholders:
From Net Investment Income.......... (0.02) (0.04) (0.04) (0.05) (0.03) (0.02)
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Total Distributions to
Shareholders.................... (0.02) (0.04) (0.04) (0.05) (0.03) (0.02)
------------ ------- ------- ------- ------- -------
Net Increase in Net Asset Value....... 0.00 0.00 0.00 0.00 0.00 0.00
------------ ------- ------- ------- ------- -------
Net Asset Value -- End of Period...... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------ ------- ------- ------- ------- -------
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TOTAL INVESTMENT RETURN................. 4.46%(A) 4.49% 4.50% 5.04% 3.38% 2.37%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 0.75%(A) 0.74% 0.74% 0.74% 0.75% 0.75%
Net Investment Income................. 4.42%(A) 4.40% 4.41% 4.93% 3.31% 2.32%
SUPPLEMENTARY DATA:
Number of Shares Outstanding at End of
Period with a Net Asset Value of $1
(000's omitted)..................... 560,581 572,313 535,325 577,194 524,154 600,766
(A) Annualized
</TABLE>
See Notes to Financial Statements.
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<PAGE>
FUND FOR GOVERNMENT INVESTORS
NOTES TO FINANCIAL STATEMENTS
June 30, 1998
(unaudited)
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 Directors
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 on an annual basis 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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