<PAGE>
MAP - GOVERNMENT FUND, INC.
To Our Shareholders:
MAP-Government Fund continues to provide competitive returns to its
shareholders. As of June 30, 1997 the Fund's 7-day and 30-day yields were 4.98%
and 4.96%, respectively. The first half of the year saw MAP-Government yields
consistently out performing, on average, its government agency fund peers. The
investment adviser's efforts generally focused on maintaining the average
maturity in the 40 to 60 day range, in order to produce such competitive yields.
The Fund continues to offer to its shareholders a variety of convenient
programs, such as automatic investing, check writing, an exchange feature,
currently with the MAP-Equity Fund, as well as easy telephone access to your
account for inquiries, withdrawals, transfers etc. Please feel free to contact
First Priority Investment Corporation, the Fund's distributor, at 800-559-5535
to request more information about these features.
In the letter that follows, David James, the funds lead portfolio manager,
discusses some of the economic concerns that impacted the Fund's performance
during the first half of 1997.
In February, Eugene Ciarkowski, who was President and a Director of
MAP-Government Fund, retired. Gene, who was affiliated with the Fund since its
inception in 1983, will be missed greatly. We wish him well in all his future
endeavors. I have assumed Gene's responsibilities as President, and William
Clark, President of First Priority Investment Corporation, has been elected a
Director.
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.
Sincerely,
[SIGNATURE]
KATHLEEN M. KOERBER
PRESIDENT
August 15, 1997
<PAGE>
REPORT OF THE INVESTMENT ADVISER
Dear Shareholders:
In March of this year, the Federal Reserve Board raised the Federal Funds rates
by 25 basis points. The Federal Discount Rate remained unchanged at 5.00%.
Currently the 90-day Treasury Bill is yielding 5.20%.
As we began the second quarter it appeared that the economy was showing signs of
strength. Unemployment was down as low as 4.8% during the first half of the
year. Many investors believed that the Federal Reserve would continue to move
interest rates upward to slow the economy down, as well as keep inflation in
check. However, two Federal Open Market Committee meetings have come and gone
without interest rates being altered. During recent congressional testimony,
Federal Reserve Board Chairman, Alan Greenspan hailed the current state of the
economy as "exceptional". However, Mr. Greenspan did hint that interest rates
will need to be changed at some point to foster sustainable growth and low
inflation.
The Market has received a mixture of data. Factory orders fell .6% in May. The
producers price index fell .1% in June. The number of non-farm payroll jobs
added in June was 217,000 which was below 236,000, the average in the first five
months of the year. This data typically is associated with a slowing economy.
However, other indicators have shown the economy is still strong. In May new
home sales were up 7.1%, and existing home sales were up 4.4%. Finally the
Consumer Confidence Index in June rose to a 28 year high of 129.6.
In our opinion the overall economic outlook is very good, but the risk of higher
inflation is present and some caution should be exercised. Low unemployment and
higher product demand could eventually create inflationary pressure leading to
the possibility of an increase in interest rates by the Federal Reserve. Given
the current economic environment we feel the appropriate investment strategy for
the second half of 1997 is to maintain a weighted average maturity between 40-60
days.
Sincerely,
DAVID A. JAMES
FOR FIRST PRIORITY INVESTMENT
CORPORATION
August 15, 1997
2
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAP - GOVERNMENT FUND, INC.
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments (cost $90,653,493).................... $90,653,493
Interest receivable............................... 109,777
Cash.............................................. 15,790
Receivable for Fund shares sold................... 88,599
Prepaid expense and other......................... 8,168
------------
Total Assets.............................. 90,875,827
------------
LIABILITIES
Payable for Fund shares redeemed.................. 689,922
Investment advisory fee payable................... 90,413
Accounts payable and accrued expenses............. 14,997
------------
Total Liabilities......................... 795,332
------------
Net Assets................................ $90,080,495
------------
------------
NET ASSETS
Capital stock (90,080,495 shares of $.01 par value
capital stock outstanding, 2,000,000,000 shares
authorized)..................................... $ 900,805
Capital Paid-in................................... 89,179,690
------------
Net Assets................................ $90,080,495
------------
------------
Net asset value, offering price and redemption
price per share
($90,080,495 DIVIDED BY 90,080,495 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, 1997 (UNAUDITED)
<TABLE>
<S> <C>
Investment Income
Interest........................................ $2,589,773
----------
Expenses
Investment advisory fee......................... 190,267
Custodian....................................... 29,399
Transfer agent.................................. 28,179
Filing Fees..................................... 14,278
Audit........................................... 12,550
Insurance expense............................... 9,254
Directors' fees................................. 3,750
Miscellaneous................................... 3,723
Printing........................................ 3,569
Legal........................................... 3,022
----------
297,991
----------
Net Investment Income......................... $2,291,782
----------
----------
</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,
1997 1996
------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income.................................................... $ 2,291,782 $ 4,624,856
------------- ---------------
Net Increase in Net Assets Resulting from Operations................... 2,291,782 4,624,856
------------- ---------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income..................................... (2,291,782) (4,624,856)
------------- ---------------
FROM CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets from capital share transactions.... (19,674,243) 28,729,858
------------- ---------------
Net Increase (Decrease) in Net Assets.................................. (19,674,243) 28,729,858
NET ASSETS
Beginning of period...................................................... 109,754,738 81,024,880
------------- ---------------
End of period............................................................ $ 90,080,495 $ 109,754,738
------------- ---------------
------------- ---------------
</TABLE>
See notes to financial statements.
4
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAP - GOVERNMENT FUND, INC.
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- -----------
<C> <S> <C>
FEDERAL FARM CREDIT BANK (23.7%)
$1,310,000 5.44%, due July 2, 1997.................................................... $ 1,309,802
1,585,000 5.50%, due July 25, 1997................................................... 1,579,188
1,000,000 5.51%, due August 1, 1997.................................................. 995,255
900,000 5.52%, due August 1, 1997.................................................. 895,722
1,070,000 5.53%, due August 8, 1997.................................................. 1,063,754
2,060,000 5.45%, due August 18, 1997................................................. 2,045,031
1,070,000 5.48%, due August 19, 1997................................................. 1,062,019
2,015,000 5.45%, due August 21, 1997................................................. 1,999,443
855,000 5.48%, due August 21, 1997................................................. 848,362
500,000 5.45%, due September 2, 1997............................................... 495,231
730,000 5.46%, due September 4, 1997............................................... 722,803
1,220,000 5.42%, due September 5, 1997............................................... 1,207,877
400,000 5.44%, due September 8, 1997............................................... 395,829
1,670,000 5.42%, due September 12, 1997.............................................. 1,651,646
1,575,000 5.42%, due September 15, 1997.............................................. 1,556,979
745,000 5.42%, due September 16, 1997.............................................. 736,363
2,800,000 5.42%, due September 23, 1997.............................................. 2,764,589
-----------
21,329,893
-----------
FEDERAL HOME LOAN BANK BOARD (25.2%)
465,000 5.53%, due July 7, 1997.................................................... 464,571
2,250,000 5.41%, due July 17, 1997................................................... 2,244,590
1,000,000 5.43%, due July 24, 1997................................................... 996,531
1,250,000 5.44%, due July 30, 1997................................................... 1,244,522
1,020,000 5.41%, due July 31, 1997................................................... 1,015,402
1,905,000 5.43%, due August 14, 1997................................................. 1,892,357
200,000 5.46%, due August 14, 1997................................................. 198,665
2,275,000 5.53%, due August 14, 1997................................................. 2,259,624
1,000,000 5.54%, due August 14, 1997................................................. 993,229
1,945,000 5.41%, due August 22, 1997................................................. 1,929,801
2,120,000 5.43%, due September 12, 1997.............................................. 2,096,657
2,970,000 5.42%, due September 24, 1997.............................................. 2,931,992
955,000 5.43%, due October 3, 1997................................................. 941,460
1,500,000 5.70%, due November 18, 1997............................................... 1,500,000
1,000,000 5.75%, due January 9, 1998................................................. 1,000,000
1,000,000 5.91%, due March 24, 1998.................................................. 1,000,000
-----------
22,709,401
-----------
</TABLE>
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- CONTINUED
MAP - GOVERNMENT FUND, INC.
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- -----------
<C> <S> <C>
FEDERAL HOME LOAN MORTGAGE CORP. (27.6%)
$ 250,000 5.47%, due July 1, 1997.................................................... $ 250,000
1,500,000 5.51%, due July 1, 1997.................................................... 1,500,000
1,285,000 5.45%, due July 11, 1997................................................... 1,283,055
1,000,000 5.48%, due July 15, 1997................................................... 997,869
500,000 5.82%, due July 15, 1997................................................... 500,000
900,000 5.49%, due July 23, 1997................................................... 896,981
945,000 5.52%, due August 1, 1997.................................................. 940,508
740,000 5.53%, due August 1, 1997.................................................. 736,476
1,718,000 5.54%, due August 4, 1997.................................................. 1,709,011
2,000,000 5.54%, due August 7, 1997.................................................. 1,988,623
845,000 5.52%, due August 14, 1997................................................. 839,299
1,000,000 5.49%, due August 15, 1997................................................. 993,138
1,320,000 5.48%, due September 3, 1997............................................... 1,307,140
1,025,000 5.49%, due September 3, 1997............................................... 1,014,996
1,010,000 5.48%, due September 4, 1997............................................... 1,000,007
1,400,000 5.46%, due September 11, 1997.............................................. 1,384,712
1,700,000 5.47%, due September 11, 1997.............................................. 1,681,402
2,050,000 5.43%, due September 19, 1997.............................................. 2,025,263
1,525,000 5.42%, due September 22, 1997.............................................. 1,505,943
1,325,000 5.43%, due September 22, 1997.............................................. 1,308,412
1,000,000 5.43%, due September 25, 1997.............................................. 987,028
-----------
24,849,863
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (24.1%)
1,300,000 5.50%, due July 8, 1997.................................................... 1,298,610
1,835,000 5.49%, due July 10, 1997................................................... 1,832,482
1,500,000 5.51%, due July 10, 1997................................................... 1,497,934
2,650,000 5.54%, due July 18, 1997................................................... 2,643,067
3,000,000 5.50%, due August 4, 1997.................................................. 2,984,417
1,000,000 5.52%, due August 4, 1997.................................................. 994,787
1,310,000 5.53%, due August 11, 1997................................................. 1,301,757
1,425,000 5.53%, due August 12, 1997................................................. 1,415,806
1,000,000 5.45%, due August 27, 1997................................................. 991,371
800,000 5.50%, due August 27, 1997................................................. 793,033
1,410,000 5.42%, due August 28, 1997................................................. 1,397,699
840,000 5.45%, due August 28, 1997................................................. 832,624
1,050,000 5.49%, due September 4, 1997............................................... 1,039,592
1,000,000 5.30%, due September 11, 1997.............................................. 989,400
1,780,000 5.44%, due October 14, 1997................................................ 1,751,757
-----------
21,764,336
-----------
TOTAL INVESTMENTS (100.6%) (cost $90,653,493)(1)........................... 90,653,493
-----------
Liabilities, less cash, receivables, and other assets (-0.6%) (572,998)
-----------
NET ASSETS (100.0%) $90,080,495
-----------
-----------
</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 investment advisory, service and distribution agreements 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 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.
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 $3,750.
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 57,000,234 Fund shares at
June 30, 1997.
7
<PAGE>
NOTE C -- CAPITAL STOCK
A summary of capital share transactions, at $1.00 per share, follows:
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Shares sold.................................. 52,118,544 174,649,911
Shares issued in reinvestment of income
dividends and capital gain distributions... 2,271,708 4,942,746
----------------- -----------------
54,390,252 179,592,657
Shares repurchased........................... (74,064,495) (150,862,799)
----------------- -----------------
Net increase (decrease)...................... (19,674,243) 28,729,858
----------------- -----------------
----------------- -----------------
</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, ----------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <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 $ 1.00 $ 1.00
Net investment income.............. 0.024 0.048 0.052 0.035 0.025 0.034 0.054 0.073 0.084 0.068
Dividends from net investment
income........................... (0.024) (0.048) (0.052) (0.035) (0.025) (0.034) (0.054) (0.073) (0.084) (0.068)
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Period..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return....................... 2.42% 4.87% 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32% 6.84%
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net Assets, End of Period
(thousands)...................... $ 90,080 $ 109,755 $81,025 $89,518 $55,008 $42,850 $38,555 $35,434 $30,493 $30,816
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Expenses to Average Net
Assets........................... 0.31% 0.62% 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............... 2.39% 4.76% 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32% 6.84%
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
--------- --------- ------- ------- ------- ------- ------- ------- ------- -------
</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
William G. Clark
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, 1997
FS-631 (8-97)
---------------------------------------------
