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FUND FOR [LOGO]
GOVERNMENT INVESTORS
A MONEY MARKET FUND
SEMIANNUAL REPORT
June 30, 1999
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July 31, 1999
Dear Shareholders:
The Fund for Government Investors had net assets of $543.8 million as of
June 30, 1999, and the average maturity was 57 days. Annualized net income as a
percentage of net assets for the six months ended June 30, 1999, was 3.74%,
compared to 4.26% for the year ended December 31, 1998.
In response to rising inflation fears, the Federal Reserve chose to raise
the Fed Funds rate by 25 basis points at the June Federal Open Market Committee
(FOMC) meeting, raising the Fed Funds level to 5%. The threat of inflation was
fueled by the unanticipated level of strength in the economy as well as signs of
improving economies in previously troubled economies such as Japan.
As anticipation of a Fed rate hike grew, yields on fixed income securities
rose through the first six months of 1999. The rate on the three-month Treasury
bill increased between 15 and 20 basis points, and the 30-year Treasury bond
increased over 90 basis points during the first six months of 1999. The yield on
the 30-year Treasury closed at 5.99% on June 30, 1999, and three-month T-bills
were yielding roughly 4.81%.
The Federal Reserve returned to a neutral stance on interest rate policy
after the increase in June, but Fed Chairman Alan Greenspan has made it clear
that the Fed will not hesitate to increase rates further should inflationary
pressures warrant. The Fed remains focused on the low levels of unemployment,
the continued rise in equity prices, and the sustained strength in consumer
demand. With the attention of the fixed income markets on whether or not the
Federal Reserve will raise interest rates again, the release of economic reports
will have an increased impact on the market as participants use this data to
gauge the Fed's next move.
Fund for Government Investors maintains its conservative investment style,
with safety of your assets our primary concern. We thank you for your continued
support, and look forward to serving your investment needs in the future.
<TABLE>
<S> <C>
/s/ Daniel L. O'Connor /s/ Richard J. Garvey
Daniel L. O'Connor Richard J. Garvey
Chairman of the Board President
</TABLE>
4922 Fairmont Avenue Bethesda, Maryland 20814 800-621-7874 301-657-1517
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FUND FOR GOVERNMENT INVESTORS
STATEMENT OF NET ASSETS
June 30, 1999
(unaudited)
<TABLE>
<CAPTION>
ANNUALIZED
PAYABLE AT MATURITY YIELD ON DATE VALUE
MATURITY DATE OF PURCHASE (NOTE 1)
<S> <C> <C> <C> <C> <C> <C> <C>
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UNITED STATES TREASURY BILLS -- 102.2% OF NET ASSETS
$ 25,000,000 .............. July 1, 1999 .............. 4.48% .............. $ 25,000,000
75,000,000 .............. July 8, 1999 .............. 4.38 - 4.40 .............. 74,937,559
25,000,000 .............. July 22, 1999 .............. 4.33 .............. 24,938,459
25,000,000 .............. July 29, 1999 .............. 4.42 .............. 24,916,097
25,000,000 .............. August 5, 1999 .............. 4.58 .............. 24,891,354
50,000,000 .............. August 12, 1999 .............. 4.58 - 4.61 .............. 49,738,375
25,000,000 .............. August 19, 1999 .............. 4.66 .............. 24,845,514
50,000,000 .............. August 26, 1999 .............. 4.58 - 4.59 .............. 49,651,945
25,000,000 .............. September 2, 1999 .............. 4.71 .............. 24,799,188
50,000,000 .............. September 9, 1999 .............. 4.62 .............. 49,562,500
25,000,000 .............. September 16, 1999 .............. 4.74 .............. 24,752,958
35,000,000 .............. September 23, 1999 .............. 4.72 .............. 34,624,333
25,000,000 .............. September 30, 1999 .............. 4.81 .............. 24,703,618
100,000,000 .............. October 21, 1999 .............. 4.52 .............. 98,643,556
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Total Investments (Cost $556,005,456*) 556,005,456
Liabilities in excess of Other Assets -- (2.2)% (12,117,021)
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Net Assets -- 100.0% $543,888,435
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Net Asset Value Per Share
(Based on 543,888,435 Shares Outstanding)
$1.00
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</TABLE>
*Same cost is used for Federal income tax purposes.
Weighted Average Maturity of Portfolio: 57 Days
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999
(unaudited)
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<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS:
INVESTMENT INCOME (Note 1).................................................................... $12,454,011
EXPENSES
Investment Advisory Fee (Note 2)................................................ $1,367,123
Administrative Fee (Note 2)..................................................... 690,647 2,057,770
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NET INVESTMENT INCOME......................................................................... $10,396,241
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</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six
Months Ended For the Year
June 30, 1999 Ended
(unaudited) December 31, 1998
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<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS AND DECLARED AS DIVIDENDS TO
SHAREHOLDERS (Note 1)....................... $ 10,396,241 $ 23,763,437
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FROM SHARE TRANSACTIONS
(at constant net asset value of $1)
Shares Purchased........................ $ 2,004,838,365 $ 3,647,766,363
Dividends Reinvested.................... 10,128,814 23,392,188
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Total................................... 2,014,967,179 3,671,158,551
Shares Redeemed......................... (2,042,820,808) (3,671,729,762)
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Decrease in Net Assets.................. (27,853,629) (571,211)
NET ASSETS -- Beginning of Period........... 571,742,064 572,313,275
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NET ASSETS -- End of Period................. $ 543,888,435 $ 571,742,064
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</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six
Months Ended
June 30, For the Years Ended December 31,
1999 -------------------------------------------
(unaudited) 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net Asset Value -- Beginning of
Period.............................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
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Income from Investment Operations:
Net Investment Income............... 0.02 0.04 0.04 0.04 0.05 0.03
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Total from Investment
Operations...................... 0.02 0.04 0.04 0.04 0.05 0.03
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Distributions to Shareholders:
From Net Investment Income.......... (0.02) (0.04) (0.04) (0.04) (0.05) (0.03)
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Total Distributions to
Shareholders.................... (0.02) (0.04) (0.04) (0.04) (0.05) (0.03)
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Net Increase in Net Asset Value....... 0.00 0.00 0.00 0.00 0.00 0.00
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Net Asset Value -- End of Period...... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
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TOTAL INVESTMENT RETURN................. 3.77%(A) 4.34% 4.49% 4.50% 5.04% 3.38%
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................. 0.75%(A) 0.74% 0.74% 0.74% 0.74% 0.75%
Net Investment Income................. 3.74%(A) 4.26% 4.40% 4.41% 4.93% 3.31%
SUPPLEMENTARY DATA:
Number of Shares Outstanding at End of
Period with a Net Asset Value of $1
(in thousands)...................... 543,888 571,742 572,313 535,325 577,194 524,154
(A) Annualized
</TABLE>
See Notes to Financial Statements.
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FUND FOR GOVERNMENT INVESTORS
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Fund for Government Investors (the "Fund") is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 and invests only in
U.S. Government Securities. The Fund is authorized to issue an unlimited number
of shares. The financial statements have been prepared in conformity with
generally accepted accounting principles which permit management to make certain
estimates and assumptions at the date of the financial statements. The following
is a summary of significant accounting policies which the Fund consistently
follows:
(a) Investments are valued at amortized cost, which approximates market
value. Amortized cost is the purchase price of the security plus
accumulated discount or minus amortized premium from the date of
purchase.
(b) Investment income is recorded as earned.
(c) Net investment income is computed, and dividends are declared daily.
Dividends are paid monthly and reinvested in additional shares unless
shareholders request payment.
(d) The Fund complies with the provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes all net
investment income to its shareholders. Therefore, no Federal income
tax provision is required.
2. INVESTMENT ADVISER AND SHAREHOLDER SERVICING AGENT
Investment advisory and management services are provided by Money Management
Associates (the "Adviser") under an agreement whereby the Fund pays a fee at an
annual rate based on the Fund's net assets as follows: 0.50% of the first $500
million; 0.45% of the next $250 million; 0.40% of the next $250 million; and
0.35% of the net assets that exceed $1 billion. Certain Officers and Trustees of
the Fund are affiliated with the Adviser.
Rushmore Trust and Savings, FSB ("Rushmore Trust"), a majority-owned subsidiary
of the Adviser, provides custodial services, transfer agency, dividend
disbursing and other shareholder services to the Fund. Rushmore Trust is paid an
administrative fee at an annual rate of 0.25% of the average daily net assets to
cover the cost of these services as well as other expenses of the Fund except
for interest and extraordinary legal expenses. The Fund has an agreement with
Rushmore Trust to receive short-term borrowings to cover share redemptions. No
borrowings were outstanding at June 30, 1999.
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[GRAPHIC]
FUND FOR GOVERNMENT INVESTORS
SEMIANNUAL REPORT
JUNE 30, 1999
