N-Q

OMB APPROVAL

OMB Number: 3235-0578

Expires: April 30, 2013

Estimated average burden

hours per response                    5.6

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANY

Investment Company Act file number       811-3070

Hilliard-Lyons Government Fund, Inc.

(Exact name of registrant as specified in charter)

P.O. Box 32760
Louisville, Kentucky 40232-2760

(Address of principal executive offices) (Zip code)

Joseph C. Curry, Jr.
Hilliard-Lyons Government Fund, Inc.
P.O. Box 32760
Louisville, Kentucky 40232-2760
(Name and address of agent for service)

Registrant's telephone number, including area code: 502-588-8400

Date of fiscal year end: August 31

Date of reporting period: May 31, 2010

Form N-Q is to be used by management investment companies, other than small business investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports with the Commission, not later than 60 days after the close of the first and third fiscal quarters, pursuant to rule 30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The Commission may use the information provided on Form N-Q in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-Q, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

Item 1. Schedule of Investments.

HILLIARD-LYONS GOVERNMENT FUND, INC.
SCHEDULE OF INVESTMENTS
(UNAUDITED)
May 31, 2010

			Cash Equivalent Yield
Principal Amount						Maturity Date
								Value
		U.S. GOVERNMENT SPONSORED ENTERPRISES* -- 63.5%***
$	44,000,000	Federal Home Loan Bank	0.061	%		06/01/2010		$	44,000,000
	15,300,000	Federal Home Loan Bank	0.091			06/01/2010			15,300,000
	50,000,000	Federal Home Loan Bank	0.112			06/01/2010			50,000,000
	40,000,000	Federal Home Loan Bank	0.122			06/02/2010			39,999,867
	25,000,000	Federal Home Loan Bank	0.157			06/02/2010			24,999,892
	55,000,000	Federal Farm Credit Bank	0.368		(a)	06/03/2010	(b)		55,000,000
	50,000,000	Federal Home Loan Bank	0.117			06/04/2010			49,999,521
	64,500,000	Federal Farm Credit Bank	0.528		(a)	06/04/2010	(b)		64,492,871
	30,000,000	Federal Home Loan Bank	0.112			06/07/2010			29,999,450
	30,000,000	Federal Home Loan Bank	0.147			06/09/2010			29,999,033
	35,000,000	Federal Home Loan Bank	0.157			06/11/2010			34,998,493
	20,000,000	Federal Home Loan Bank	0.122			06/14/2010			19,999,133
	25,000,000	Federal Farm Credit Bank	0.830		(a)	06/15/2010	(b)		25,000,000
	40,000,000	Federal Home Loan Bank	0.172			06/16/2010			39,997,167
	54,000,000	Federal Farm Credit Bank	0.430		(a)	06/20/2010	(b)		54,026,210
	50,000,000	Federal Home Loan Bank	0.162			06/23/2010			49,995,111
	40,000,000	Federal Home Loan Bank	0.122			06/30/2010			39,996,133
	90,000,000	Federal Home Loan Bank	0.198		(a)	07/13/2010	(b)		90,002,041
	78,000,000	Federal Home Loan Bank	0.253		(a)	07/15/2010	(b)		77,998,347
	90,000,000	Federal Home Loan Bank	0.251		(a)	07/27/2010	(b)		89,999,733
	55,000,000	Federal Home Loan Bank	0.274		(a)	07/28/2010	(b)		55,001,143
	25,000,000	Federal Farm Credit Bank	0.230		(a)	08/04/2010	(b)		24,999,277
	30,000,000	Federal Farm Credit Bank	0.750		(a)	08/12/2010	(b)		30,000,000
		TOTAL U.S. GOVERNMENT SPONSORED ENTERPRISES
		(at amortized cost -- $1,035,803,422)							1,035,803,422
		U.S. TREASURY SECURITIES -- 9.8%***
	40,000,000	United States Treasury Bill	0.130			06/04/2010			39,999,711
	35,000,000	United States Treasury Bill	0.145			06/10/2010			34,998,731
	45,000,000	United States Treasury Bill	0.140			06/17/2010			44,997,200
	40,000,000	United States Treasury Bill	0.145			06/24/2010			39,996,295
		TOTAL U.S. TREASURY SECURITIES
		(at amortized cost -- $159,991,937)							159,991,937
		REPURCHASE AGREEMENTS -- 6.1%***
	100,000,000	JP Morgan Securities, Inc. Repurchase Agreement, dated 5/28/10, collateralized by $102,118,000 market value U.S. Treasury Bills, 0.22%, due 11/26/10 with a repurchase price of $100,001,111	0.100			06/01/2010			100,000,000
		TOTAL REPURCHASE AGREEMENTS
		(at cost -- $100,000,000)							100,000,000

HILLIARD-LYONS GOVERNMENT FUND, INC.
SCHEDULE OF INVESTMENTS - continued
(UNAUDITED)
May 31, 2010

			Cash Equivalent Yield
Principal Amount						Maturity Date
								Value
		FDIC GUARANTEED CORPORATE FLOATING RATE NOTES** -- 20.6%***
$	22,000,000	Bank of America NA	0.378	%	(a)	07/29/2010	(b)	$	22,013,310
	42,000,000	Citigroup Funding Inc.	0.438		(a)	07/30/2010	(b)		42,007,508
	30,000,000	Bank of America NA	0.287		(a)	09/13/2010	(b)		30,009,916
	48,600,000	American Express Bank, FSB	1.147		(a)	12/10/2010	(b)		48,790,424
	17,500,000	KeyCorp	0.907		(a)	12/15/2010	(b)		17,514,943
	10,000,000	SunTrust Bank	0.907		(a)	12/16/2010	(b)		10,008,086
	64,400,000	General Electric Capital Corp.	0.336		(a)	03/11/2011	(b)		64,465,294
	20,000,000	Goldman Sachs Group Inc.	0.337		(a)	03/15/2011	(b)		20,037,005
	22,000,000	Goldman Sachs Group Inc.	0.624		(a)	11/09/2011	(b)		22,058,478
	58,000,000	General Electric Capital Corp.	1.184		(a)	12/09/2011	(b)		58,757,441
		TOTAL FDIC GUARANTEED CORPORATE FLOATING RATE NOTES
		(at amortized cost -- $335,662,405)							335,662,405
		TOTAL INVESTMENTS – 100.0%
		(at cost -- $1,631,457,764****)							1,631,457,764
		OTHER ASSETS LESS LIABILITIES – 0.0%							909,212
		NET ASSETS - 100.0%						$	1,632,366,976

*	Obligations of U.S. Government sponsored enterprises are not issued or guaranteed by the United States Treasury.
**	This debt is guaranteed under the Federal Deposit Insurance Corporation's ("FDIC") Temporary Liquidity Guarantee Program ("TLGP") and is backed by the full faith and credit of the United States. Details of the TLGP can be found on the FDIC's website, www.fdic.gov/tlgp.
***	The percentage shown for each investment category is the total value of that category as a percentage of the total net assets of the Fund.
****	Also represents cost for federal income tax purposes.

(a)	Floating or variable rate security. The interest rate shown is the rate in effect as of May 31, 2010.
(b)	The maturity date shown is either the readjustment date of the interest rate or the stated maturity date on the security.

Item 2. Controls and Procedures.

(a)

The registrant’s principal executive and principal financial officers have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) are effective, based on an evaluation of those controls and procedures made as of a date within 90 days of the filing date of this report as required by Rule 30a-3(b) under the 1940 Act and Rule 13a-15(b) under the Securities Exchange Act of 1934.

(b)

There have been no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

Item 3. Exhibits.

Exhibit 99. CERT     Certifications pursuant to Section 302 of the Sarbanes Oxley Act of 2002. Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)	Hilliard-Lyons Government Fund, Inc.
By (Signature and Title)	/s/ Joseph C. Curry, Jr.
	Joseph C. Curry, Jr., President
	(principal executive officer)

Date: July 8, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)	/s/ Dianna P. Wengler
	Dianna P. Wengler, Senior Vice President and Treasurer
	(principal financial officer)

Date: July 8, 2010

By (Signature and Title)	/s/ Joseph C. Curry, Jr.
	Joseph C. Curry, Jr., President
	(principal executive officer)

Date: July 8, 2010

EX-99.CERT

Exhibit 99.CERT

Certifications

I, Joseph C. Curry, Jr., certify that:

1.	I have reviewed this report on Form N-Q of Hilliard-Lyons Government Fund, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.      The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 8, 2010	/s/ Joseph C. Curry, Jr.
	Joseph C. Curry, Jr., President
	(principal executive officer)

Exhibit 99. CERT

Certifications

I, Dianna P. Wengler, certify that:

1.	I have reviewed this report on Form N-Q of Hilliard-Lyons Government Fund, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the schedules of investments included in this report fairly present in all material respects the investments of the registrant as of the end of the fiscal quarter for which the report is filed;
4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report, based on such evaluation; and
(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.      The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: July 8, 2010	/s/ Dianna P. Wengler
	Dianna P. Wengler, Senior Vice President
	and Treasurer
	(principal financial officer)