<PAGE>
MAP - GOVERNMENT FUND, INC.
To Our Shareholders:
We are pleased to report that MAP-Government Fund continued to provide
competitive returns to its shareholders. As of December 31, 1996 the Fund's
30-day and 7-day yields were 4.85%. The second half of the year saw
MAP-Government yields consistently out performing, on average, its government
agency fund peers. In fact relative to its peer group, 1996 was the most
successful year in the history of the Fund. The investment adviser's efforts
generally focused on maintaining the average maturity in the 40 to 50 day range,
in order to produce competitive yields.
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 Investment
Corporation, 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
February 10, 1997
<PAGE>
REPORT OF THE INVESTMENT ADVISER
Dear Shareholders:
Economic growth for 1996 was 3.4% as measured by Gross Domestic Product (GDP).
This indicates moderate growth and will be one of the determining factors in the
decision of the Federal Open Market Committee (FOMC) in determining monetary
policy. The February meeting of the Federal Open Market Committee passed without
any rate action. The next meeting of the Committee will be held in March. We
believe the committee will abstain from increasing interest rates due to the
lack of material change in the economic outlook.
Employment continued its strength in the final quarter of 1996. The monthly
employment report averaged 215,000 jobs per month. Unemployment levels remained
at 5.3% in December exhibiting near full employment. Hourly wages also increased
3.8% for 1996 creating caution on inflation issues. Employment data will be the
focal point of future FOMC meetings. The Committee has paid close attention to
this data in its most recent meetings.
During the fourth quarter of 1996, the 90-day Treasury Bill rates moved within a
broad band between 4.92% and 5.36% as a result of strong employment data which
led many investors to believe the FOMC would increase interest rates. We believe
that the Fed Funds rate will remain unchanged for the first six months of 1997.
Therefore, we will maintain the average maturity of the MAP-Government Fund in
the 40 to 50 day range.
Sincerely,
DAVID A. JAMES
FOR FIRST PRIORITY INVESTMENT
CORPORATION
February 10, 1997
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, 1996, 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 four 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, 1996 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above. The financial highlights for
each of the six 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 10, 1997
3
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
MAP - GOVERNMENT FUND, INC.
DECEMBER 31, 1996
<TABLE>
<S> <C>
ASSETS
Investments (cost $107,097,677)................... $107,097,677
Interest receivable............................... 14,275
Cash.............................................. 36,205
Receivable for Fund shares sold................... 3,804,107
Prepaid expense and other......................... 16,896
------------
Total Assets.............................. 110,969,160
------------
LIABILITIES
Payable for investment securities purchased....... 1,000,000
Payable for Fund shares redeemed.................. 81,687
Investment advisory fee payable................... 104,013
Accounts payable and accrued expenses............. 28,722
------------
Total Liabilities......................... 1,214,422
------------
Net Assets................................ $109,754,738
------------
------------
NET ASSETS
Capital stock (109,754,738 shares of $.01 par
value capital stock outstanding, 2,000,000,000
shares authorized).............................. $ 1,097,547
Capital Paid-in................................... 108,657,191
------------
Net Assets................................ $109,754,738
------------
------------
Net asset value, offering price and redemption
price per share
($109,754,738 DIVIDED BY 109,754,738 shares of
capital stock outstanding)...................... $1.00
------------
------------
</TABLE>
See notes to financial statements.
STATEMENT OF OPERATIONS
MAP - GOVERNMENT FUND, INC.
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<S> <C>
Investment Income
Interest........................................ $5,231,405
----------
Expenses
Investment advisory fee......................... 388,276
Transfer agent.................................. 64,394
Custodian....................................... 59,285
Audit........................................... 26,924
Filing Fees..................................... 21,301
Insurance expense............................... 20,730
Miscellaneous................................... 6,996
Printing........................................ 6,831
Directors' fees................................. 6,300
Legal........................................... 5,512
----------
606,549
----------
Net Investment Income......................... $4,624,856
----------
----------
</TABLE>
4
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
MAP - GOVERNMENT FUND, INC.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS
Net investment income.................................................... $ 4,624,856 $ 4,221,288
Net realized gain from security transactions............................. 0 1,585
------------- -------------
Net Increase in Net Assets Resulting from Operations................... 4,624,856 4,222,873
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income..................................... (4,624,856) (4,221,288)
Distributions from net realized gain from security transactions.......... 0 (1,585)
------------- -------------
Total Distributions to Shareholders.................................... (4,624,856) (4,222,873)
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets from capital share transactions.... 28,729,858 (8,493,059)
------------- -------------
Net Increase (Decrease) in Net Assets.................................. 28,729,858 (8,493,059)
NET ASSETS
Beginning of year........................................................ 81,024,880 89,517,939
------------- -------------
End of year.............................................................. $109,754,738 $81,024,880
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
5
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
MAP - GOVERNMENT FUND, INC.
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- ------------
<C> <S> <C>
FEDERAL FARM CREDIT BANK (9.5%)
$ 300,000 5.26%, due January 17, 1997................................................ $ 299,298
500,000 5.53%, due January 17, 1997................................................ 498,771
2,000,000 5.21%, due February 7, 1997................................................ 1,989,291
1,245,000 5.21%, due February 10, 1997............................................... 1,237,793
1,325,000 5.21%, due February 24, 1997............................................... 1,314,645
1,745,000 5.28%, due March 18, 1997.................................................. 1,725,549
2,190,000 5.30%, due March 20, 1997.................................................. 2,164,852
1,235,000 5.33%, due March 24, 1997.................................................. 1,220,006
------------
10,450,205
------------
FEDERAL HOME LOAN BANK BOARD (25.6%)
785,000 5.24%, due January 2, 1997................................................. 784,885
1,090,000 5.22%, due January 3, 1997................................................. 1,089,684
850,000 5.23%, due January 9, 1997................................................. 849,012
1,500,000 5.45%, due January 10, 1997................................................ 1,497,956
1,575,000 5.39%, due January 15, 1997................................................ 1,571,699
1,620,000 5.22%, due January 21, 1997................................................ 1,615,302
2,000,000 5.22%, due January 23, 1997................................................ 1,993,620
1,395,000 5.21%, due January 30, 1997................................................ 1,389,145
555,000 5.26%, due January 30, 1997................................................ 552,648
1,050,000 5.22%, due February 3, 1997................................................ 1,044,976
2,125,000 5.20%, due February 20, 1997............................................... 2,109,653
3,730,000 5.22%, due February 27, 1997............................................... 3,699,172
2,000,000 5.36%, due March 3, 1997................................................... 1,981,836
2,570,000 5.34%, due March 25, 1997.................................................. 2,538,359
915,000 5.23%, due March 26, 1997.................................................. 903,834
2,000,000 5.35%, due March 31, 1997.................................................. 1,973,547
1,500,000 5.70%, due November 18, 1997............................................... 1,500,000
1,000,000 5.75%, due January 9, 1998................................................. 1,000,000
------------
28,095,328
------------
FEDERAL HOME LOAN MORTGAGE CORP. (30.7%)
1,870,000 5.26%, due January 2, 1997................................................. 1,869,726
1,480,000 5.44%, due January 6, 1997................................................. 1,478,882
1,000,000 5.27%, due January 14, 1997................................................ 998,097
1,000,000 5.23%, due January 17, 1997................................................ 997,676
1,200,000 5.45%, due January 17, 1997................................................ 1,197,093
2,315,000 5.22%, due January 31, 1997................................................ 2,304,930
1,540,000 5.22%, due February 6, 1997................................................ 1,531,961
770,000 5.24%, due February 10, 1997............................................... 765,517
1,025,000 5.22%, due February 14, 1997............................................... 1,018,461
2,410,000 5.21%, due February 20, 1997............................................... 2,392,561
1,000,000 5.24%, due February 21, 1997............................................... 992,584
1,365,000 5.20%, due February 25, 1997............................................... 1,354,156
1,500,000 5.22%, due February 26, 1997............................................... 1,487,820
4,044,000 5.23%, due February 27, 1997............................................... 4,010,512
1,545,000 5.35%, due February 28, 1997............................................... 1,531,683
1,005,000 5.30%, due March 12, 1997.................................................. 994,643
4,000,000 5.34%, due March 12, 1997.................................................. 3,958,467
2,500,000 5.34%, due March 21, 1997.................................................. 2,470,704
2,330,000 5.36%, due March 27, 1997.................................................. 2,300,513
------------
33,655,986
------------
</TABLE>
6
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS -- CONTINUED
MAP - GOVERNMENT FUND, INC.
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL VALUE
- ---------- ------------
<C> <S> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION (30.9%)
$1,500,000 5.50%, due January 8, 1997................................................. $ 1,498,395
2,000,000 5.43%, due January 9, 1997................................................. 1,997,587
1,755,000 5.22%, due January 16, 1997................................................ 1,751,183
2,125,000 5.23%, due January 17, 1997................................................ 2,120,061
2,000,000 5.21%, due January 22, 1997................................................ 1,993,922
2,780,000 5.23%, due January 22, 1997................................................ 2,771,527
1,500,000 5.43%, due January 24, 1997................................................ 1,494,796
1,015,000 5.23%, due January 29, 1997................................................ 1,010,875
2,500,000 5.22%, due February 5, 1997................................................ 2,487,313
2,650,000 5.21%, due February 10, 1997............................................... 2,634,659
2,395,000 5.21%, due February 12, 1997............................................... 2,380,442
2,235,000 5.22%, due February 13, 1997............................................... 2,221,065
2,050,000 5.21%, due February 18, 1997............................................... 2,035,759
1,985,000 5.21%, due February 19, 1997............................................... 1,970,924
2,000,000 5.29%, due March 14, 1997.................................................. 1,978,840
1,500,000 5.33%, due March 21, 1997.................................................. 1,482,455
1,035,000 5.20%, due March 24, 1997.................................................. 1,022,741
1,060,000 5.25%, due April 17, 1997.................................................. 1,043,614
------------
33,896,158
------------
STUDENT LOAN MARKETING ASSOCIATION (0.9%)
1,000,000 5.63% due December 5, 1997................................................. 1,000,000
------------
TOTAL INVESTMENTS (97.6%) (cost $107,097,677)(1)........................... $107,097,677
------------
------------
</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.
7
<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 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.
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, 1996, no reimbursement was required.
8
<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 $6,300.
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 76,490,098 Fund shares at
December 31, 1996.
NOTE C -- CAPITAL STOCK
A summary of capital share transactions, at $1.00 per share, follows:
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Shares sold.................................. 174,649,911 163,802,627
Shares issued in reinvestment of income
dividends and capital gain distributions... 4,942,746 3,892,429
----------------- -----------------
179,592,657 167,695,056
Shares repurchased........................... (150,862,799) (176,188,115)
----------------- -----------------
Net increase (decrease)...................... 28,729,858 (8,493,059)
----------------- -----------------
----------------- -----------------
</TABLE>
- --------------------------------------------------------------------------------
9
<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,
-----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <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 $ 1.00 $ 1.00
Net investment income.............. 0.048 0.052 0.035 0.025 0.034 0.054 0.073 0.084 0.068 0.058
Dividends from net investment
income........................... (0.048 ) (0.052) (0.035) (0.025) (0.034) (0.054) (0.073) (0.084) (0.068) (0.058)
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of Year....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Return....................... 4.87% 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32% 6.84% 5.78%
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratios/Supplemental Data:
Net Assets, End of Year
(thousands)...................... $109,755 $81,025 $89,518 $55,008 $42,850 $38,555 $35,434 $30,493 $30,816 $24,094
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Expenses to Average Net
Assets........................... 0.62% 0.69% 0.73% 0.74% 0.75% 0.75% 0.75% 0.75% 0.75% 0.81%
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Ratio of Net Investment Income to
Average Net Assets............... 4.76% 5.17% 3.53% 2.49% 3.36% 5.38% 7.32% 8.32% 6.84% 5.78%
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- ------- ------- ------- -------
</TABLE>
See notes to financial statements.
10
<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, 1996
FS-631 (2-97)
---------------------------------------------
