<PAGE>
FUND FOR [LOGO]
GOVERNMENT INVESTORS
A MONEY MARKET FUND
ANNUAL REPORT
December 31, 1998
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January 21, 1999
Dear Shareholders:
Fund for Government Investors ended the year with net assets of $571.7
million on December 31, 1998. Net investment income averaged 4.26% of net assets
for the year, down from 4.40% for the year ended December 31, 1997. The average
maturity for the Fund at year-end was 37 days.
The economy continued to move ahead in 1998, with little inflation, and
interest rates proceeded to move lower throughout the year. Troubles in various
foreign economies, such as Asia, Brazil and Russia served as a catalyst for the
volatility of financial markets as investors began to turn their backs on
riskier, more volatile investments, and head for the safety and liquidity of
U.S. Treasuries. The yield on the benchmark 30-year Treasury dropped to as low
as 4.71% in October, and finished the year yielding 5.08%, a decline of over 80
basis points for the year. The yield on three-month Treasury Bills also dropped
significantly, spurred on by a 75 basis point cut in the overnight Federal Funds
rate initiated by the Federal Reserve during a seven-week period from September
to November. The Fed Funds rate is currently at 4.75% and three-month T-Bills
ended the year yielding roughly 4.52%. The intervention of the Federal Reserve
on monetary policy served to stabilize the financial markets, and provide
confidence to investors to take on more risks.
The U.S. economy should move ahead with little inflation as global financial
troubles continue to act as a drag on our domestic economy. Low inflation will
maintain an environment of low interest rates, especially in Treasuries as they
provide the safety and liquidity that investors look for in times of turmoil in
the financial markets that we have seen in the past year. Treasuries will also
be aided by a continued budget surplus as the Treasury will have less need to
borrow, lowering the supply of debt issued. We expect that the Federal Reserve
is through easing monetary policy for the near future, as not to put unnecessary
stimulus into an economy that appears to have alleviated the deflationary
pressures that surfaced in the fourth quarter of 1998. The Federal Reserve
maintained their neutral stance on monetary policy at their last meeting in
December, and we expect them to continue a wait and see approach for at least
the first quarter of 1999 as reports on the status of economy take shape.
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 1999.
<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
<PAGE>
FUND FOR GOVERNMENT INVESTORS
STATEMENT OF NET ASSETS
December 31, 1998
<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 -- 98.8% OF NET ASSETS
$ 75,000,000 .............. January 7, 1999 .............. 4.22 - 4.27% .............. $ 74,948,229
50,000,000 .............. January 14, 1999 .............. 3.97 .............. 49,929,944
142,390,000 .............. January 21, 1999 .............. 3.89 - 4.67 .............. 142,053,780
25,000,000 .............. January 28, 1999 .............. 4.16 .............. 24,923,875
25,000,000 .............. February 4, 1999 .............. 4.49 .............. 24,896,583
75,000,000 .............. February 11, 1999 .............. 4.58 .............. 74,618,614
50,000,000 .............. February 25, 1999 .............. 4.49 .............. 49,665,417
25,000,000 .............. March 4, 1999 .............. 4.54 .............. 24,809,264
50,000,000 .............. March 11, 1999 .............. 4.42 - 4.43 .............. 49,586,240
25,000,000 .............. March 18, 1999 .............. 4.46 .............. 24,770,153
25,000,000 .............. April 1, 1999 .............. 4.64 .............. 24,717,500
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Total Investments (Cost $564,919,599*) 564,919,599
Other Assets less Liabilities -- 1.2% 6,822,465
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Net Assets -- 100.0% $571,742,064
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Net Asset Value Per Share
(Based on 571,742,064 Shares Outstanding)
$1.00
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</TABLE>
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 37 Days
See Notes to Financial Statements.
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<PAGE>
FUND FOR GOVERNMENT INVESTORS
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1998
<TABLE>
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
INVESTMENT INCOME (Note 1).................................................................... $27,919,574
EXPENSES
Investment Advisory Fee (Note 2)................................................ $2,761,086
Administrative Fee (Note 2)..................................................... 1,395,051 4,156,137
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NET INVESTMENT INCOME......................................................................... $23,763,437
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-----------
</TABLE>
See Notes to Financial Statements.
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<PAGE>
FUND FOR GOVERNMENT INVESTORS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------
1998 1997
----------------- -----------------
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1)....................... $ 23,763,437 $ 25,173,185
----------------- -----------------
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FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased........................ $ 3,647,766,363 $ 2,978,762,541
Dividends Reinvested.................... 23,392,188 24,697,986
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Total................................... 3,671,158,551 3,003,460,527
Shares Redeemed......................... (3,671,729,762) (2,966,472,206)
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Increase (Decrease) in Net Assets....... (571,211) 36,988,321
NET ASSETS -- Beginning of Year............. 572,313,275 535,324,954
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NET ASSETS -- End of Year................... $ 571,742,064 $ 572,313,275
----------------- -----------------
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</TABLE>
See Notes to Financial Statements.
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<PAGE>
FUND FOR GOVERNMENT INVESTORS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<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............... 0.04 0.04 0.04 0.05 0.03
-------- -------- -------- -------- --------
Total from Investment
Operations...................... 0.04 0.04 0.04 0.05 0.03
-------- -------- -------- -------- --------
Distributions to Shareholders:
From Net Investment Income.......... (0.04) (0.04) (0.04) (0.05) (0.03)
-------- -------- -------- -------- --------
Total Distributions to
Shareholders.................... (0.04) (0.04) (0.04) (0.05) (0.03)
-------- -------- -------- -------- --------
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................. 4.34% 4.49% 4.50% 5.04% 3.38%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 0.74% 0.74% 0.74% 0.74% 0.75%
Net Investment Income................. 4.26% 4.40% 4.41% 4.93% 3.31%
SUPPLEMENTARY DATA:
Number of Shares Outstanding at End of
Year with a Net Asset Value of $1
(000s omitted)...................... 571,742 572,313 535,325 577,194 524,154
</TABLE>
See Notes to Financial Statements.
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<PAGE>
FUND FOR GOVERNMENT INVESTORS
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
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 (the "Adviser") under an agreement whereby the Fund pays a fee at an
annual rate based on 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 that exceed $1 billion. Certain Officers and Trustees of
the Fund are affiliated with the Adviser.
Rushmore Trust and Savings, FSB ("Rushmore Trust"), a majority-owned subsidiary
of the Adviser, provides custodial services, transfer agency, dividend
disbursing and other shareholder services to the Fund. Rushmore Trust is paid an
administrative fee at an annual rate of 0.25% of the 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. The Fund has an agreement with
Rushmore Trust to receive short-term borrowings to cover share redemptions. No
borrowings were outstanding at December 31, 1998.
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<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, 1998, the related statements of operations for
the year then ended and of changes in net assets for the years ended December
31, 1998 and 1997, and the financial highlights for each of the five years in
the period ended December 31, 1998. 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, 1998, 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, 1998, 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 27, 1999
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<PAGE>
FUND FOR GOVERNMENT INVESTORS
ANNUAL REPORT
DECEMBER 31, 1998
