<PAGE>
MAP - GOVERNMENT FUND, INC.
To Our Shareholders:
For the twelve months of 1995, the MAP-Government Fund returned 5.17% relative
to the average return of 5.31% for money market mutual funds investing in
government and government agency securities as reported by IBC/Donaghue, Inc.
The Fund's desire to maintain favorable liquidity resulted in the portfolio
having a slightly shorter maturity than the average fund, giving rise to the
yield difference. The Fund continues to explore methods of expanding its
acceptance by the investing public. A review by our Investment Adviser of the
1995 financial markets for short-term investments is described in the letter
that follows.
The Board of Directors continues to invite you to mail your comments and
suggestions to them and thanks you for your continued support and confidence in
the Fund.
Sincerely,
EUGENE J. CIARKOWSKI
PRESIDENT
February 15, 1996
<PAGE>
REPORT OF THE INVESTMENT ADVISER
Dear Shareholders:
Prompted by a weak economy, the Federal Reserve Board reduced the interest rate
on federal funds by 25 basis points in mid-December 1995 and again in late
January, 1996. This was the second time short-term rates were moved downward
during the year in an attempt to revive faltering economic activity. The federal
funds rate ended the year at 5.50% down from 6.00% in January. Ninety day
Treasury bills ended the year at 5.00%, down from 5.52% at the start of the
year. The prime lending rate at commercial banks ended the year at 8.50%, the
same level at which it started the year after rising to 9.00% from February
through July.
Recent employment statistics reflect the soft condition of the economy. The
unemployment rate has hovered in the 5.6% area as the labor force shrank. In
1994, the US economy generated approximately 300,000 new jobs per month. For all
of 1995 the pace fell to 133,000 per month and in the fourth quarter was only
128,000. These numbers are signs of a weak economy that is not threatened by
wage inflation.
The three major areas of growth that kept the economy expanding during the last
several years were business spending, foreign trade and business inventory
accumulation. Spending on durable equipment is expected to fall as profits
contract during 1996. The foreign trade sector will be weak as a result of slow
growth in Europe and Japan. Recent reports indicate inventories are high in the
non-auto retail and wholesale sectors and are growing at a 3.8% rate, far in
excess of the rate of growth of the economy. Thus, we can expect factory orders
and production to slow in the next few quarters.
Economic growth, which stood at 4.1% in 1994, slowed to about 2.6% last year and
should continue to decline during 1996. The pace of economic activity is
expected to accelerate by only 2.0% in 1996 with the last quarter seeing only
1.0% growth. As the members of the Federal Reserve Board receive reports of a
slowing economy, they can be expected to continue lowering interest rates as we
progress through 1996. Since we expect short-term interest rates to continue to
decrease, we will be extending the average maturity of the portfolio.
Sincerely,
WALTER A. APPEL
FOR FIRST PRIORITY INVESTMENT
CORPORATION
February 15, 1996
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Directors of
MAP - Government Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of portfolio investments, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of MAP - Government Fund, Inc. (the
"Fund") at December 31, 1995, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the three years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1995 by correspondence with the custodian, provide a reasonable
basis for the opinion expressed above. The financial highlights for each of the
seven years in the period ended December 31, 1992 were audited by other
independent accountants whose report dated February 12, 1993 expressed an
unqualified opinion on those statements.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 13, 1996
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAP - GOVERNMENT FUND, INC.
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS
Investments............................. $78,669,791
Cash.................................... 71,756
Receivable for Fund shares sold......... 4,071,581
Prepaid expense and other............... 12,677
------------
Total Assets.................... $82,825,805
------------
------------
LIABILITIES
Payable for Fund shares redeemed........ $1,431,923
Investment advisory fee payable -- Note
B..................................... 26,166
Accounts payable and accrued expenses... 17,455
Dividends payable....................... 325,381
------------
Total Liabilities............... 1,800,925
NET ASSETS
Capital stock -- 81,024,880 shares of
$.01 par value capital stock
outstanding (2,000,000,000 shares
authorized)........................... 810,249
Capital Paid-in......................... 80,214,631
------------
Total Net Assets................ 81,024,880
------------
Total Liabilities and Net
Assets........................ $82,825,805
------------
------------
Net asset value, offering price and
redemption price per share
($81,024,880 DIVIDED BY 81,024,880
shares of
capital stock outstanding)............ $1.00
</TABLE>
See notes to financial statements.
STATEMENT OF OPERATIONS
MAP - GOVERNMENT FUND, INC.
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
Investment Income
Interest..................... $4,787,100
Expenses
Investment advisory fee --
Note B..................... $ 326,612
Transfer agent............... 69,113
Custodian.................... 52,710
Filing fees.................. 34,806
Audit........................ 28,202
Insurance expense............ 22,210
Printing..................... 13,062
Directors' fees.............. 7,100
Legal........................ 6,978
Miscellaneous................ 6,613
State tax.................... 250
---------
567,656
Less expenses reimbursed by
investment adviser -- Note
B............................ (1,844) 565,812
--------- ----------
Net Investment Income...... 4,221,288
Net realized gain from security
transactions................. 1,585
----------
Net Increase in Net Assets
Resulting from
Operations............... $4,222,873
----------
----------
</TABLE>
4
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
MAP - GOVERNMENT FUND, INC.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income...................................................... $ 4,221,288 $ 2,477,613
Net realized gain from security transactions............................... 1,585 29
-------------- --------------
Net Increase in Net Assets Resulting from Operations..................... 4,222,873 2,477,642
-------------- --------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income....................................... (4,221,288) (2,477,613)
Distributions from net realized gain from security transactions............ (1,585) (29)
-------------- --------------
Total Distributions to Shareholders...................................... (4,222,873) (2,477,642)
-------------- --------------
FROM CAPITAL SHARE TRANSACTIONS -- NOTE C
Net increase (decrease) in net assets from capital share transactions...... (8,493,059) 34,510,318
-------------- --------------
Net Increase (Decrease) in Net Assets.................................... (8,493,059) 34,510,318
NET ASSETS
Beginning of year.......................................................... 89,517,939 55,007,621
-------------- --------------
End of year................................................................ $ 81,024,880 $ 89,517,939
-------------- --------------
-------------- --------------
</TABLE>
See notes to financial statements.
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAP - GOVERNMENT FUND, INC.
DECEMBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- -----------
<C> <S> <C>
FEDERAL FARM CREDIT BANK (7.7%)
$2,800,000 5.62%, due January 10, 1996................................................................ $ 2,796,066
3,500,000 5.53%, due February 29, 1996............................................................... 3,468,279
-----------
6,264,345
-----------
FEDERAL HOME LOAN BANK BOARD (28.8%)
1,500,000 5.46%, due January 2, 1996................................................................. 1,499,773
1,500,000 5.51%, due January 10, 1996................................................................ 1,497,934
2,350,000 5.57%, due January 12, 1996................................................................ 2,346,000
3,000,000 5.62%, due January 22, 1996................................................................ 2,990,165
4,490,000 5.60%, due January 29, 1996................................................................ 4,470,444
1,440,000 5.58%, due February 1, 1996................................................................ 1,433,081
2,000,000 5.55%, due February 6, 1996................................................................ 1,988,900
1,000,000 5.56%, due February 16, 1996............................................................... 992,896
3,325,000 5.41%, due February 21, 1996............................................................... 3,299,517
2,800,000 5.40%, due February 27, 1996............................................................... 2,776,060
-----------
23,294,770
-----------
FEDERAL HOME LOAN MORTGAGE CORP. (33.6%)
3,000,000 5.59%, due January 5, 1996................................................................. 2,998,137
3,000,000 5.59%, due January 8, 1996................................................................. 2,996,739
1,700,000 5.58%, due January 9, 1996................................................................. 1,697,892
2,000,000 5.64%, due January 16, 1996................................................................ 1,995,300
2,000,000 5.50%, due January 19, 1996................................................................ 1,994,500
800,000 5.57%, due January 24, 1996................................................................ 797,153
1,700,000 5.57%, due February 5, 1996................................................................ 1,690,794
850,000 5.51%, due February 5, 1996................................................................ 845,447
3,000,000 5.55%, due February 8, 1996................................................................ 2,982,425
600,000 5.57%, due February 13, 1996............................................................... 596,008
1,785,000 5.46%, due March 15, 1996.................................................................. 1,764,966
2,950,000 5.34%, due March 18, 1996.................................................................. 2,916,306
1,000,000 5.47%, due March 18, 1996.................................................................. 988,300
3,000,000 5.34%, due March 26, 1996.................................................................. 2,962,175
-----------
27,226,142
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (27.0%)
1,000,000 5.55%, due January 3, 1996................................................................. 999,692
2,500,000 5.58%, due January 4, 1996................................................................. 2,498,838
900,000 5.55%, due January 10, 1996................................................................ 898,751
3,200,000 5.55%, due February 2, 1996................................................................ 3,184,213
2,600,000 5.55%, due February 9, 1996................................................................ 2,584,368
3,100,000 5.55%, due February 12, 1996............................................................... 3,079,928
2,375,000 5.50%, due February 20, 1996............................................................... 2,356,858
1,950,000 5.46%, due March 6, 1996................................................................... 1,930,776
1,400,000 5.44%, due March 7, 1996................................................................... 1,386,037
2,000,000 5.30%, due March 19, 1996.................................................................. 1,977,033
1,000,000 5.45%, due March 20, 1996.................................................................. 988,040
-----------
21,884,534
-----------
Total Investments (97.1%) (cost $78,669,791)(1)............................................ $78,669,791
-----------
-----------
</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.
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 year ended
December 31, 1995, such reimbursed expenses amounted to $1,844.
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 year to the Fund's disinterested directors amounted to $7,100.
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 65,459,630 Fund shares at
December 31, 1995.
NOTE C -- CAPITAL STOCK
A summary of capital share transactions follows:
<TABLE>
<CAPTION>
Year Ended December 31, 1995 Year Ended December 31, 1994
--------------------------------- ---------------------------------
Shares Amount Shares Amount
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold............................ 163,802,627 $ 163,802,627 142,135,206 $ 142,135,206
Shares issued in reinvestment of income
dividends and capital gain
distributions........................ 3,892,429 3,892,429 2,469,263 2,469,263
--------------- ---------------- --------------- ----------------
167,695,056 167,695,056 144,604,469 144,604,469
Shares repurchased..................... (176,188,115) (176,188,115) (110,094,151) (110,094,151)
--------------- ---------------- --------------- ----------------
Net increase (decrease)................ (8,493,059) $ (8,493,059) 34,510,318 $ 34,510,318
--------------- ---------------- --------------- ----------------
--------------- ---------------- --------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
FINANCIAL HIGHLIGHTS
MAP - GOVERNMENT FUND, INC.
Selected data for each share of capital stock outstanding throughout the years
indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income.................... 0.052 0.035 0.025 0.034 0.054 0.073 0.084 0.068
Dividends from net investment income..... (0.052) (0.035) (0.025) (0.034) (0.054) (0.073) (0.084) (0.068)
--------- --------- --------- --------- --------- --------- --------- ---------
Net Asset Value, End of Year............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Total Return............................. 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32% 6.84%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Ratios/Supplemental Data:
Net Assets, End of Year (thousands)...... $ 81,025 $ 89,518 $ 55,008 $ 42,850 $ 38,555 $ 35,434 $ 30,493 $ 30,816
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Ratio of Expenses to Average Net
Assets................................. 0.69% 0.73% 0.74% 0.75% 0.75% 0.75% 0.75% 0.75%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Ratio of Net Investment Income to Average
Net Assets............................. 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32% 6.84%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
1987 1986
--------- ---------
<S> <C> <C> <C>
Net Asset Value, Beginning of Year....... $ 1.00 $ 1.00
Net investment income.................... 0.058 0.060
Dividends from net investment income..... (0.058) (0.060)
--------- ---------
Net Asset Value, End of Year............. $ 1.00 $ 1.00
--------- ---------
--------- ---------
Total Return............................. 5.78% 6.23%
--------- ---------
--------- ---------
Ratios/Supplemental Data:
Net Assets, End of Year (thousands)...... $ 24,094 $ 20,929
--------- ---------
--------- ---------
Ratio of Expenses to Average Net
Assets................................. 0.81% 0.76%
--------- ---------
--------- ---------
Ratio of Net Investment Income to Average
Net Assets............................. 5.78% 6.23%
--------- ---------
--------- ---------
</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]
ANNUAL REPORT
DECEMBER 31, 1995
FS-631 (2-96)
-------------------------------
<PAGE>
[LOGO]
