<PAGE>
MAP - GOVERNMENT FUND, INC.
To Our Shareholders:
We are pleased to report that MAP-Government Fund continues to provide
competitive returns to its shareholders. As of June 25, 1996, the last reporting
date prior to the completion of the first half of 1996, the Fund's 30-day and
7-day yields were 4.71% and 4.74%, respectively, versus 4.61% and 4.64%,
respectively, for comparable U.S. Government and agency money market funds. For
the 30-day and 7-day periods ended July 30, 1996 the yield was 4.77% and 4.80%,
respectively, versus 4.66% and 4.67%, respectively, for comparable funds. The
information is based upon returns compiled by IBC Financial Data, Inc., a
recognized source of money fund performance data. Our investment manager
continues to focus investment selection on securities with varying maturities in
an effort to minimize the Fund's interest rate risk while producing competitive
yields. Our ability to diversify the Fund's assets has been aided by a continued
growth in assets. We are pleased to report that a significant milestone was
reached in May when the Fund reached the $100 million asset mark. As of July 30,
1996 assets were in excess of $108 million.
The Fund continues to offer a variety of convenient programs, such as automatic
investing, check writing, an exchange feature, as well as, easy access to your
account by telephone. Please feel free to contact First Priority, the Fund's
distributor, at 800-559-5535 to request more information about these features.
The Board of Directors invites you to mail your comments and suggestions to them
and thanks you for your continued support and confidence in the Fund.
Yours sincerely,
EUGENE J. CIARKOWSKI
PRESIDENT
August 15, 1996
<PAGE>
REPORT OF THE INVESTMENT ADVISER
Dear Shareholders:
Economic growth for the first six months of 1996 was 3.5% as measured by Gross
Domestic Product, much higher than most economists were forecasting. This
exhibition of strength could lead to the Federal Reserve Board taking action to
slow growth in the second half by increasing interest rates in the form of a
Federal funds rate move up from its current level of 5.50%. The mid-July meeting
of the Fed's Open Market Committee passed without any action to increase rates
due to other economic indicators giving conflicting readings.
The June 1996 employment report continued the strength exhibited in the first
five months of the year. In June, the unemployment rate fell to 5.3% with
payroll gains averaging 200,000 jobs per month for the first six months of the
year. Unemployment levels in the 5.0% to 5.5% range are considered near full
employment and carry the potential for wage inflation. Hourly wages were up 3.4%
from June of last year, indicating the possibility that inflation pressures may
surface in the second half of 1996.
An indicator giving a conflicting reading is plant capacity utilization. In the
industrial sector of the economy, plant utilization is approximately 83% of
capacity, a level which is not associated with inflationary pressures. Commodity
prices also remained stable.
During the second quarter of 1996, 90-day Treasury Bill rates moved in a narrow
band between 4.90% and 5.10% as a result of the Federal Reserve maintaining a
stable Fed funds rate. Given the conflicting readings of the economic indicators
and the presidential election, we do not anticipate a change in interest rates
during the third quarter of 1996 and will maintain the average maturity of the
MAP-Government Fund in the 40 to 50 day range.
Sincerely,
WALTER A. APPEL
FOR FIRST PRIORITY INVESTMENT
CORPORATION
August 15, 1996
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAP - GOVERNMENT FUND, INC.
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments....................................... $110,029,231
Interest receivable............................... 21,535
Cash.............................................. 53,530
Receivable for Fund shares sold................... 148,835
Prepaid expense and other......................... 9,805
------------
Total Assets.............................. $110,262,936
------------
------------
LIABILITIES
Payable for Fund shares redeemed.................. $ 664,959
Investment advisory fee payable -- Note B......... 96,254
Accounts payable and accrued expenses............. 21,497
Dividends payable................................. 391,239
------------
Total Liabilities......................... 1,173,949
NET ASSETS
Capital stock -- 109,088,987 shares of $.01 par
value capital stock outstanding (2,000,000,000
shares authorized).............................. 1,090,890
Capital Paid-in................................... 107,998,097
------------
Total Net Assets.......................... 109,088,987
------------
Total Liabilities and Net Assets.......... $110,262,936
------------
------------
Net asset value, offering price and redemption
price per share
($109,088,987 DIVIDED BY 109,088,987 shares of
capital stock outstanding)...................... $1.00
------------
------------
</TABLE>
See notes to financial statements.
STATEMENT OF OPERATIONS
MAP - GOVERNMENT FUND, INC.
SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income
Interest........................................ $2,347,464
----------
Expenses
Investment advisory fee -- Note B............... 174,828
Transfer agent.................................. 33,378
Custodian....................................... 29,051
Filing fees..................................... 17,403
Audit........................................... 13,462
Insurance expense............................... 10,341
Miscellaneous................................... 5,103
Directors' fees................................. 3,750
Printing........................................ 2,899
Legal........................................... 2,756
State tax....................................... 125
----------
293,096
----------
Net Investment Income......................... 2,054,368
Net realized loss from security transactions...... (87)
----------
Net Increase in Net Assets Resulting from
Operations.................................. $2,054,281
----------
----------
</TABLE>
3
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
MAP - GOVERNMENT FUND, INC.
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income.................................................... $ 2,054,368 $ 4,221,288
Net realized gain (loss) from security transactions...................... (87) 1,585
------------ ------------
Net Increase in Net Assets Resulting from Operations................... 2,054,281 4,222,873
------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income..................................... (2,054,281) (4,221,288 )
Distributions from net realized gain from security transactions.......... 0 (1,585 )
------------ ------------
Total Distributions to Shareholders.................................... (2,054,281) (4,222,873 )
------------ ------------
FROM CAPITAL SHARE TRANSACTIONS -- NOTE C
Net increase (decrease) in net assets from capital share transactions.... 28,064,107 (8,493,059 )
------------ ------------
Net Increase (Decrease) in Net Assets.................................. 28,064,107 (8,493,059 )
NET ASSETS
Beginning of period...................................................... 81,024,880 89,517,939
------------ ------------
End of period............................................................ $109,088,987 $81,024,880
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements.
4
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAP - GOVERNMENT FUND, INC.
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- ------------
<C> <S> <C>
FEDERAL FARM CREDIT BANK (5.0%)
$2,425,000 5.18%, due July 11, 1996................................................... $ 2,421,511
1,000,000 5.18%, due July 23, 1996................................................... 996,834
2,000,000 5.31%, due September 4, 1996............................................... 1,980,825
------------
5,399,170
------------
FEDERAL HOME LOAN BANK BOARD (17.2%)
2,000,000 5.20%, due July 29, 1996................................................... 1,991,911
1,500,000 5.24%, due August 5, 1996.................................................. 1,492,358
1,375,000 5.21%, due August 13, 1996................................................. 1,366,443
1,500,000 5.21%, due August 14, 1996................................................. 1,490,448
1,500,000 5.21%, due August 15, 1996................................................. 1,490,231
2,325,000 5.20%, due August 28, 1996................................................. 2,305,522
2,000,000 5.34%, due September 16, 1996.............................................. 1,977,178
1,500,000 5.32%, due September 18, 1996.............................................. 1,482,488
1,205,000 5.33%, due September 25, 1996.............................................. 1,189,657
1,360,000 5.34%, due October 3, 1996................................................. 1,341,037
1,000,000 5.23%, due October 11, 1996................................................ 985,182
1,000,000 5.16%, due October 16, 1996................................................ 984,663
720,000 5.22%, due October 16, 1996................................................ 708,829
------------
18,805,947
------------
FEDERAL HOME LOAN MORTGAGE CORP. (50.8%)
1,400,000 5.23%, due July 1, 1996.................................................... 1,400,000
1,780,000 5.20%, due July 2, 1996.................................................... 1,779,743
1,025,000 5.18%, due July 3, 1996.................................................... 1,024,705
1,500,000 5.19%, due July 5, 1996.................................................... 1,499,135
2,465,000 5.22%, due July 9, 1996.................................................... 2,462,141
2,015,000 5.23%, due July 10, 1996................................................... 2,012,365
485,000 5.18%, due July 12, 1996................................................... 484,232
2,000,000 5.19%, due July 12, 1996................................................... 1,996,828
3,000,000 5.19%, due July 15, 1996................................................... 2,993,946
710,000 5.27%, due July 15, 1996................................................... 708,545
3,120,000 5.20%, due July 16, 1996................................................... 3,113,240
1,095,000 5.19%, due July 17, 1996................................................... 1,092,474
1,738,000 5.20%, due July 17, 1996................................................... 1,733,983
2,000,000 5.18%, due July 22, 1996................................................... 1,993,957
2,380,000 5.27%, due July 22, 1996................................................... 2,372,683
1,340,000 5.20%, due July 31, 1996................................................... 1,334,193
1,000,000 5.23%, due August 1, 1996.................................................. 995,496
1,000,000 5.25%, due August 6, 1996.................................................. 994,750
1,284,000 5.26%, due August 8, 1996.................................................. 1,276,871
2,500,000 5.25%, due August 12, 1996................................................. 2,484,688
1,500,000 5.23%, due August 15, 1996................................................. 1,490,194
1,500,000 5.21%, due August 19, 1996................................................. 1,489,363
1,000,000 5.21%, due August 19, 1996................................................. 992,909
1,149,000 5.21%, due August 20, 1996................................................. 1,140,686
1,500,000 5.21%, due August 21, 1996................................................. 1,488,929
1,500,000 5.21%, due August 22, 1996................................................. 1,488,712
1,000,000 5.20%, due August 26, 1996................................................. 991,911
2,115,000 5.20%, due August 30, 1996................................................. 2,096,670
1,000,000 5.21%, due September 3, 1996............................................... 990,738
1,115,000 5.25%, due September 4, 1996............................................... 1,104,431
2,000,000 5.26%, due September 4, 1996............................................... 1,981,006
1,000,000 5.31%, due September 19, 1996.............................................. 988,200
1,500,000 5.32%, due September 20, 1996.............................................. 1,482,045
</TABLE>
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- CONTINUED
MAP - GOVERNMENT FUND, INC.
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- ------------
<C> <S> <C>
$1,615,000 5.33%, due September 23, 1996.............................................. $ 1,594,915
2,385,000 5.34%, due September 26, 1996.............................................. 2,354,250
------------
55,428,934
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (27.9%)
1,625,000 5.25%, due July 8, 1996.................................................... 1,623,341
1,000,000 5.21%, due July 18, 1996................................................... 997,540
1,575,000 5.27%, due July 18, 1996................................................... 1,571,084
2,000,000 5.00%, due July 24, 1996................................................... 1,993,611
1,015,000 5.23%, due July 30, 1996................................................... 1,010,724
2,000,000 5.20%, due August 9, 1996.................................................. 1,988,733
1,500,000 5.22%, due August 16, 1996................................................. 1,489,995
1,000,000 5.21%, due August 20, 1996................................................. 992,764
1,000,000 5.21%, due August 23, 1996................................................. 992,330
2,115,000 5.20%, due August 29, 1996................................................. 2,096,976
1,500,000 5.22%, due August 29, 1996................................................. 1,487,180
485,000 5.23%, due September 3, 1996............................................... 480,495
2,000,000 5.26%, due September 5, 1996............................................... 1,980,713
1,000,000 5.25%, due September 6, 1996............................................... 990,229
2,000,000 5.31%, due September 10, 1996.............................................. 1,979,055
2,000,000 5.26%, due September 12, 1996.............................................. 1,978,668
2,310,000 5.25%, due September 13, 1996.............................................. 2,285,071
1,000,000 5.34%, due September 19, 1996.............................................. 988,144
1,490,000 5.32%, due September 27, 1996.............................................. 1,470,623
2,000,000 5.31%, due October 18, 1996................................................ 1,997,904
------------
30,395,180
------------
Total Investments (100.9%) (cost $110,029,231)(1).......................... 110,029,231
------------
Liabilities, less cash, receivables and other assets (-0.9%)............... (940,244)
------------
Net assets (100.0%)........................................................ $109,088,987
------------
------------
</TABLE>
- ---------
(1) Also represents cost for federal income tax purposes.
The percentage shown for each investment category is the total value of that
category expressed as a percentage of the net assets of the Fund.
See notes to financial statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MAP - GOVERNMENT FUND, INC. (UNAUDITED)
NOTE A -- ACCOUNTING POLICIES
MAP - Government Fund, Inc. (the "Fund") is an open-end management investment
company registered under the Investment Company Act of 1940, as amended.
Significant accounting policies of the Fund are as follows:
INVESTMENTS: Investments are valued at amortized cost which approximates market
value. Under this method, securities are initially valued at cost on their
acquisition date and their subsequent value is calculated based on such initial
value and assuming a constant accretion of purchase discount or amortization of
any purchase premium to maturity. It is the intention of the Fund to maintain a
per share net asset value of $1.00. Security transactions are recorded on the
date of purchase or sale. Interest is accrued daily. Realized gains and losses
on investment transactions are determined on the basis of identified cost.
FEDERAL INCOME TAXES: The Fund does not provide for federal income taxes since
it intends to continue to qualify as a "regulated investment company" under the
Internal Revenue Code and to maintain this qualification by distributing each
year substantially all of its net investment income and net realized capital
gains, if any, to its shareholders.
DIVIDENDS: The Fund declares dividends daily from net investment income and net
realized capital gains, if any, and distributes such dividends monthly.
ESTIMATES: The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS
The Fund has an investment advisory, a service and a distribution agreement with
First Priority Investment Corporation ("FPIC"). FPIC is a wholly-owned
subsidiary of MBLLAC Holding Corporation, a wholly-owned subsidiary of MBL Life
Assurance Corporation ("MBL Life"). Under the investment advisory agreement, the
Fund pays FPIC a periodic fee at the annual rate of .40% of the first
$300,000,000 of the Fund's total net assets, .35% of the next $400,000,000 of
such value and .30% of such value in excess of $700,000,000. The fee is computed
and accrued daily and paid quarterly. Under the terms of the service agreement,
FPIC reimburses MBL Life for services provided in connection with FPIC's
obligations under the investment advisory agreement.
FPIC has agreed to bear total annual expenses of the Fund (including the
investment advisory fee but excluding taxes, interest, brokerage commissions and
extraordinary expenses) that exceed .75% of the first $20,000,000 of the Fund's
average daily net asset value. However, when the Fund's average daily net asset
value exceeds $20,000,000, FPIC has agreed to bear such expenses of the Fund to
the extent that they exceed the lesser of 1.5% of the first $30,000,000 of the
Fund's average daily net asset value and 1% of the Fund's average daily net
asset value in excess of $30,000,000 or 25% of the total investment income of
the Fund. FPIC has agreed to limit the Fund's expenses to the annual rate of
.75% of the Fund's daily net asset value. However, FPIC has reserved the right
to withdraw this undertaking and assume its contractual expense limitation
responsibility upon 30 days written notice to the Fund. For the period ended
June 30, 1996, no reimbursement was required.
7
<PAGE>
NOTE B -- INVESTMENT ADVISORY AND SERVICE AGREEMENTS -- CONTINUED
The compensation of each disinterested director is paid by the Fund at the rate
of $400 per meeting attended, plus an annual retainer of $900. Aggregate fees
paid during the period to the Fund's disinterested directors amounted to $2,550.
Two of the directors of the Fund and all officers of the Fund are either
officers or employees of MBL Life. The compensation of the directors and
officers and any employees of the Fund affiliated with FPIC is paid by the
affiliated entities.
MBL Life and certain subsidiaries and affiliates owned 76,609,569 Fund shares at
June 30, 1996.
NOTE C -- CAPITAL STOCK
A summary of capital share transactions follows:
<TABLE>
<CAPTION>
Six Months Ended June 30, Year Ended December 31,
1996 1995
------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Shares sold.................................. 107,414,012 $107,414,012 163,802,627 $ 163,802,627
Shares issued in reinvestment of income
dividends and capital gain distributions... 1,988,531 1,988,531 3,892,429 3,892,429
----------- ------------ ------------ -------------
109,402,543 109,402,543 167,695,056 167,695,056
Shares repurchased........................... (81,338,436) (81,338,436) (176,188,115) (176,188,115)
----------- ------------ ------------ -------------
Net increase (decrease)...................... 28,064,107 28,064,107 (8,493,059) $ (8,493,059)
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
FINANCIAL HIGHLIGHTS
MAP - GOVERNMENT FUND, INC.
(UNAUDITED)
Selected data for each share of capital stock outstanding throughout the periods
indicated:
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, -------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989
-------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income............................. 0.023 0.052 0.035 0.025 0.034 0.054 0.073 0.084
Dividends from net investment income.............. (0.023) (0.052) (0.035) (0.025) (0.034) (0.054) (0.073) (0.084)
-------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- -------
Total Return...................................... 2.33% 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32%
-------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net Assets, End of Period (thousands)............. $109,089 $81,025 $89,518 $55,008 $42,850 $38,555 $35,434 $30,493
-------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- -------
Ratio of Expenses to Average Net Assets........... 0.33% 0.69% 0.73% 0.74% 0.75% 0.75% 0.75% 0.75%
-------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- -------
Ratio of Net Investment Income to Average Net
Assets.......................................... 2.33% 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32%
-------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- -------
<CAPTION>
1988 1987
------- -------
<S> <C> <C>
Net Asset Value, Beginning of Period.............. $ 1.00 $ 1.00
Net investment income............................. 0.068 0.058
Dividends from net investment income.............. (0.068) (0.058)
------- -------
Net Asset Value, End of Period.................... $ 1.00 $ 1.00
------- -------
------- -------
Total Return...................................... 6.84% 5.78%
------- -------
------- -------
Ratios/Supplemental Data:
Net Assets, End of Period (thousands)............. $30,816 $24,094
------- -------
------- -------
Ratio of Expenses to Average Net Assets........... 0.75% 0.81%
------- -------
------- -------
Ratio of Net Investment Income to Average Net
Assets.......................................... 6.84% 5.78%
------- -------
------- -------
</TABLE>
See notes to financial statements.
9
<PAGE>
MAP-GOVERNMENT FUND, INC.
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
FUND DIRECTORS
Eugene J. Ciarkowski
Horace J. DePodwin
Herbert M. Groce Jr.
Kathleen M. Koerber
Jerome M. Scheckman
INVESTMENT ADVISER
and
DISTRIBUTOR
First Priority Investment Corporation
520 Broad Street
Newark, New Jersey 07102-3111
1-800-559-5535
CUSTODIAN and TRANSFER AGENT
State Street Bank & Trust Co.
P.O. Box 8500
Boston, Massachusetts 02266-8500
1-800-343-0529
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
THIS REPORT HAS BEEN PREPARED FOR THE SHAREHOLDERS OF THE FUND. IT IS NOT
AUTHORIZED FOR OTHER DISTRIBUTION UNLESS PRECEDED OR ACCOMPANIED BY A CURRENT
PROSPECTUS, WHICH INCLUDES ADDITIONAL INFORMATION ABOUT THE FUND.
[LOGO]
SEMI-ANNUAL REPORT
JUNE 30, 1996
FS-631 (8-96)
---------------------------------------------
