PROSPECTUS
May 1, 1995
Lexington Money Market Trust
P.O. Box 1515 / Park 80 West Plaza Two, Saddle Brook, New Jersey 07663
Toll Free: Service-1-800-526-0056
24 Hour Account Information-1-800-526-0052
A NO-LOAD MONEY MARKET MUTUAL FUND WITH A PRINCIPAL OBJECTIVE OF HIGH CURRENT
INCOME, CONSISTENT WITH PRESERVATION OF CAPITAL AND LIQUIDITY.
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Lexington Money Market Trust (the "Trust") is a diversified
open-end management investment company, known as a money market mutual
fund.
Shareholders may invest, reinvest or redeem shares at any time
without charge or penalty.
The Trust's investment objective is to seek a high level of
current income as is consistent with the preservation of capital and
liquidity by investing in short-term money market instruments as
described more fully on page 3.
Shares of the Trust are not insured or guaranteed by the U.S.
Government and there can be no assurance that the Trust will be able
to maintain a stable net asset value of $1.00 per share.
Shareholders may use free redemption checks provided by the Trust
for amounts of $100.00 or more.
Lexington Management Corporation ("LMC") is the Investment
Adviser of the Trust. Lexington Funds Distributor, Inc. ("LFD") is the
Distributor of shares of the Trust.
This Prospectus concisely sets forth information about the Trust
that you should know before investing. It should be read and retained
for future reference.
A Statement of Additional Information dated May 1, 1995, that
provides a further discussion of certain areas in this Prospectus and
other matters that may be of interest to some investors, has been
filed with the Securities and Exchange Commission and is incorporated
herein by reference. For a free copy, call the appropriate telephone
number above or write to the address listed above.
Mutual fund shares are not deposits or obligations of (or
endorsed or guaranteed by) any bank, nor are they federally insured or
otherwise protected by the Federal Deposit Insurance Corporation
("FDIC"), the Federal Reserve Board or any other agency. Investing in
mutual funds involves investment risks, including the possible loss of
principal, and their value and return will fluctuate.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Investors Should Read and Retain this Prospectus for Future Reference
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FEE TABLE
Annual Fund Operating Expenses:
(as a percentage of average net assets) (net of reimbursement):
Management fees ..................................................... 0.50%
Other fees .......................................................... 0.50%
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Total Fund Operating Expenses ....................................... 1.00%
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Example: 1 year 3 years 5 years 10 years
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You would pay the following expenses on
a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the
end of each period $10.20 $31.84 $55.25 $122.46
The purpose of the foregoing table is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
indirectly. (For more complete descriptions of the various costs and expenses,
see "Investment Adviser and Distributor" below.) The Expenses and Example
appearing in the table above are based on the Fund's expenses for the period
from January 1, 1994 to December 31, 1994. Absent expense reimbursements, total
Fund operating expenses would have been 1.02% of the Fund's average net assets.
The Example shown in the table above should not be considered a representation
of past or future expenses and actual expenses may be greater or less than those
shown.
FINANCIAL HIGHLIGHTS
The following Financial Highlights Table for each of the years in the five
year period ended December 31, 1994 has been audited by KPMG Peat Marwick LLP,
Independent Auditors, whose report thereon appears in the Statement of
Additional Information. This information should be read in conjunction with the
financial statements and related notes thereto included in the Statement of
Additional Information. The Fund's annual report, which contains additional
performance information, is available upon request and without charge.
<TABLE>
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Selected Per Share Data for a share outstanding throughout the period
<CAPTION>
Year Ended December 31,
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1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<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
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from investment
operations:
Net investment income..... 0.0330 0.0230 0.0299 0.0532 0.0732 0.0828 0.0678 0.0610 0.0616 0.0782
Less distributions:
Dividends from net
investment income ........ (0.0330) (0.0230) (0.0299) (0.0532) (0.0732) (0.0828) (0.0678) (0.0610) (0.0616) (0.0782)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
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 ................. 3.35% 2.32% 3.03% 5.45% 7.56% 8.60% 7.00% 6.29% 6.35% 8.13%
Ratio to average net assets:
Expenses,
before reimbursement...... 1.02% 1.00% 1.03% 1.02% 0.97% 0.99% 0.97% 0.80% 0.91% 0.88%
Expenses,
net of reimbursement...... 1.00% 1.00% 1.00% 1.00% 0.97% 0.99% 0.97% 0.80% 0.91% 0.88%
Net investment income,
before reimbursement...... 3.30% 2.30% 2.99% 5.35% 7.32% 8.29% 6.74% 6.13% 6.17% 7.83%
Net investment income,
net of reimbursement...... 3.32% 2.30% 3.02% 5.37% 7.32% 8.29% 6.74% 6.13% 6.17% 7.83%
Net assets, end of period
(000's omitted)............. $111,805 $94,718 $111,453 $143,137 $176,127 $182,703 $192,079 $212,487 $196,838 $242,058
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</TABLE>
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YIELD INFORMATION
The yield is computed in accordance with a standardized formula described in
the Statement of Additional Information.
For the seven-day period ended December 31, 1994, the Trust's annualized
current yield was 4.81% and the compounded effective yield was 4.93%. This yield
is subject to market conditions and will fluctuate daily as income earned
fluctuates. The above yield quotations are not an indication or representation
by the Trust of future yields or rates of return. This Prospectus may be in use
for a full year and it can be expected that these yields will fluctuate
substantially over that time. To obtain a current yield quotation for the Trust,
call the appropriate toll free telephone number listed on the cover of this
Prospectus.
The weighted average portfolio maturity on December 31, 1994 was 33 days.
COMPARATIVE PERFORMANCE INFORMATION
Advertisements and communications may compare the Trust's performance with
that of other mutual funds, as reported by Lipper Analytical Services, Inc. or
similar independent services or financial publications. Such performance may be
categorized according to the Trust's asset size as determined by the independent
service. From time to time, the performance of the Trust may be compared to
various investment indicies, including the Dow Jones Industrial Average and
Standard & Poor's 500 Composite Stock Index. Quotations of historical yields are
not indicative of future dividend income, but are an indication of the return to
shareholders only for the limited historical period used. The Trust's yield will
depend on the particular investments in its portfolio, its total operating
expenses and other conditions. For further information, including an example of
the yield calculation, see the Statement of Additional Information.
DESCRIPTION OF THE TRUST
The Trust is a diversified open-end management investment company known as a
money market mutual fund. It is called a no-load fund because its shares are
sold without a sales charge.
INVESTMENT OBJECTIVE
The Trust's investment objective is to seek as high a level of current
income from short-term investments as is consistent with the preservation of
capital and liquidity.
INVESTMENT POLICIES
In order to achieve its objective of as high a level of current income as is
available from short term investments and consistent with the preservation of
capital and liquidity, the Trust will invest its assets in the following money
market instruments: (1) Obligations issued, or guaranteed as to interest and
principal, by the government of the United States or any agency or
instrumentality thereof (2) U.S. dollar denominated time deposits, certificates
of deposit and bankers' acceptances of U.S. banks and their London and Nassau
branches and of U.S. branches of foreign banks, provided that the bank has total
assets of one billion dollars; (3) Commercial paper of U.S. corporations, rated
A1, A2 by Standard & Poor's Corporation or P1, P2 by Moody's Investors Service,
Inc. or, if not rated, of comparable quality to those securities in which the
Trust may invest; (4) Other money market instruments; or (5) Repurchase
agreements under which the Trust may acquire an underlying debt instrument for a
relatively short period subject to the obligation of the seller to repurchase,
and of the Trust to resell, at a fixed price. The underlying security must be of
the same quality as those described herein, although the usual practice is to
use U.S. Government or government agency securities. The Trust will enter into
repurchase agreements only with commercial banks and dealers in U.S. government
securities. Repurchase agreements when entered into with dealers, will be fully
collateralized including the interest earned thereon during the entire term of
the agreement. If the institution defaults on the repurchase agreement, the
Trust will retain possession of the underlying securities. In addition, if
bankruptcy proceedings are commenced with respect to the seller, realization on
the collateral by the Trust may be delayed or limited and the Trust may incur
additional costs. In such case the Trust will be subject to risks associated
with changes in the market value of the collateral securities. The Trust intends
to limit repurchase agreements to institutions believed by LMC to present
minimal credit risk. The Trust will not enter into repurchase agreements
maturing in more than seven days if the aggregate of such repurchase agreements
would exceed 10% of the total assets of the Trust. Securities in the Trust will
consist of
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money market instruments that have been rated (or whose issuer's short-term debt
obligations are rated) in one of the two highest categories (i.e. "A1/P1") by
both Standard & Poor's Corporation ("S&P") and Moody's Investors Services, Inc.
("Moody's"), two nationally recognized statistical rating organizations
("NRSRO").
The Trust may invest up to 5% of its assets in any single "Tier 1" security
(other than U.S. Government securities), measured at the time of acquisition;
however, it may invest more than 5% of its assets in a single Tier 1 security
for no more than three business days. A "Tier 1" security is one that has been
rated (or the issuer of such security has been rated) by both S&P and Moody's in
the highest rating category or, if unrated, is of comparable quality. A security
rated in the highest category by only one of these NRSROs is also considered a
Tier 1 security.
In addition, the Trust may invest not more than 5% of its assets in "Tier 2"
securities. A Tier 2 security is a security that is (a) rated in the second
highest category by either S&P or Moody's or (b) an unrated security that is
deemed to be of comparable quality by LMC. The Trust may invest up to 1% of its
assets in any single Tier 2 security.
The Trust may invest only in a money market instrument that has a remaining
maturity of 13 months (397 days) or less, provided that the Trust's average
weighted maturity is 90 days or less.
The Trust is expected to have a high portfolio turnover rate due to the
short maturities of the securities held, but this should not affect net asset
value as brokerage commissions are usually not paid on the purchase or sale of
money market instruments.
FOREIGN BRANCHES OF U.S. BANKS
The obligations of London and Nassau branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by governmental regulation.
Payment of interest and principal upon these obligations may also be affected by
governmental action in the country of domicile of the branch (generally referred
to as "sovereign risk"). In addition, evidences of ownership of portfolio
securities may be held outside of the U.S., and the Trust may be subject to the
risks associated with the holding of such property overseas. Examples of
governmental actions would be the imposition of currency controls, interest
limitations, seizure of assets, or the declaration of a moratorium. Obligations
of U.S. branches of foreign banks may be general obligations of the parent bank
in addition to the issuing branch, or may be limited by the terms of a specific
obligation and by Federal and state regulation as well as by governmental action
in the country in which the foreign bank has its head office. While the Trust
will carefully consider these factors on making such investments, there are no
limitations on the percentage of the Trust's portfolio which may be invested in
any one type of instrument.
The Investment Policies stated above are fundamental and may not be changed
without shareholder approval. The Trust may not invest in securities other than
the types of securities listed above and is subject to other specific
restrictions as detailed under "Investment Restrictions", below.
MANAGEMENT OF THE TRUST
The business affairs of the Trust are managed under the direction of its
Board of Trustees. There are currently ten trustees (of whom seven are
non-affiliated persons) who meet four times each year. The Statement of
Additional Information contains additional information regarding the trustees
and officers of the Trust.
PORTFOLIO MANAGER
Denis P. Jamison, C.F.A. Senior Vice President, Director of Fixed Income
Strategy is responsible for fixed-income portfolio management at LMC. He is a
member of the New York Society of Security Analysts. Mr. Jamison has 23 years
investment experience.
Prior to joining LMC in 1981, Mr. Jamison had spent nine years at Arnold
Bernhard & Company, an investment counseling and financial services
organization. At Bernhard, he was a Vice President supervising the security
analyst staff and managing investment portfolios. He is a specialist in
government, corporate and municipal bonds. Mr. Jamison is a graduate of the City
College of New York with a B.A. in Economics. Mr. Jamison has been the portfolio
manager of the Trust since July of 1981.
INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
LMC, P.O. Box 1515/Park 80 West Plaza Two, Saddle Brook, New Jersey 07663,
is the investment adviser of the Trust. LFD is the distributor of shares of the
Trust. LMC was established in 1938 and currently manages over $3.8 billion in
assets.
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LMC serves as investment adviser to other investment companies and private
and institutional investment accounts. Included among these clients are persons
and organizations which own significant amounts of capital stock of LMC's
parent. The clients pay fees which LMC considers comparable to the fee levels
for similarly served clients.
LMC also acts as administrator to the Fund and performs certain
administrative and internal accounting services, including but not limited to,
maintaining general ledger accounts, regulatory compliance, preparation of
financial information for semiannual and annual reports, preparing registration
statements, calculating net asset values, shareholder communications and
supervision of the custodian, transfer agent and provides facilities for such
services. The Fund shall reimburse LMC for its actual cost in providing such
services, facilities and expenses.
LMC and LFD are wholly-owned subsidiaries of Piedmont Management Company
Inc., a Delaware corporation with offices at 80 Maiden Lane, New York, New York
10038. Descendants of Lunsford Richardson, Sr., their spouses, trusts and other
related entities have a majority voting control of outstanding shares of
Piedmont Management Company Inc.
For the fiscal year ended December 31, 1994, the Trust paid LMC a monthly
management fee at the annual rate of 1/2 of 1% of the average daily net assets.
For the year ended December 31, 1994 the Trust paid net advisory fees to LMC of
$503,124. See "Investment Adviser and Distributor" in the Statement of
Additional Information.
HOW TO PURCHASE SHARES
Initial Investments: Minimum $1,000. By Wire: (1) Telephone the Trust toll
free 1-800-526-0056 and provide the account registration, address, and social
security or tax identification number, the amount being wired, the name of the
wiring bank, and the name and telephone number of the person to be contacted in
connection with the order. You will then be provided with an account number. (2)
Instruct your bank to wire the specified amount, along with the account number
and registration to State Street Bank and Trust Company, (the "Agent") Attn:
Mutual Funds Dept., re: Lexington Money Market Trust, Account No. 99043713. (3)
A completed New Account Application must then be forwarded to the Trust at the
address on the Application.
By Mail: Send a check payable to Lexington Money Market Trust, along with a
completed New Account Application, to the Agent at the address on the
Application.
Subsequent Investments-By Wire: Instruct your bank to wire the specified
amount and appropriate information to State Street Bank and Trust Company (see
"Initial Investments - By Wire" - (2), above).
By Mail-Minimum $50: Send a check payable to Lexington Money Market Trust to
the Agent (see back cover of this prospectus for address), accompanied by either
(a) the detachable form which accompanies the Agent's confirmation of a prior
transaction, or (b) a letter indicating the dollar amount of the shares to be
purchased and identifying the Trust, the account number and registration.
Broker-Dealers: You may invest in shares of the Trust through broker-dealers
who are members of the National Association of Securities Dealers, Inc., and
other financial institutions and who have selling agreements with LFD. Banks and
other financial institutions may be required to register as dealers pursuant to
state law. Broker-dealers and financial institutions who process such purchase
and sale transactions for their customers may charge a transaction fee for these
services. The fee may be avoided by purchasing shares directly from the Trust.
Purchase Price and Effective Date: Shares of the Trust are offered
continuously at net asset value which will normally be constant at $1.00 per
share. Net asset value is determined as of the close of the New York Stock
Exchange and on such other times or days as there is a sufficient degree of
trading in the portfolio securities of the Trust to materially affect its net
asset value per share. The price at which a purchase is effected is based on the
next calculation of net asset value per share after the order is placed.
Investments for which market quotations are not readily available are valued at
their fair market value, as determined by management and approved in good faith
by the Board of Trustees. Trust assets are valued based upon the amortized cost
method. No sales charge is imposed on purchases of shares. There is no assurance
that the Trust will maintain a net asset value per share of $1.00. Orders will
become effective when an investor's wire order or check is converted into
federal funds (monies credited to a bank's account with its registered Federal
Reserve Bank). If payment is transmitted by federal funds wire, the order will
become effective upon receipt. Payments transmitted by bank wire may take longer
to be converted into federal funds. Money transmitted by check will normally be
considered to have been converted into federal funds on the first business day
following receipt by the Agent.
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An Open Account: By investing in the Trust, a shareholder appoints the
Agent, as his agent, to establish an Open Account to which all shares purchased
will be credited, together with any dividends and capital gain distributions
which are paid in additional shares (see "Dividend, Distribution and
Reinvestment Policy"). Share certificates will be issued, for full shares only,
when requested in writing. Unless payment for shares is made by certified or
cashier's check or federal funds wire, certificates will not be issued for 30
days. In order to facilitate redemptions and transfers, most shareholders elect
not to receive certificates.
After an Open Account is established, payments can be provided for by
"Lex-O-Matic" or other authorized automatic bank check program accounts (checks
drawn on the investor's bank periodically for investment in the Fund).
Automatic Investing Plan with "Lex-O-Matic". A shareholder may arrange to
make additional purchases of shares automatically on a monthly or quarterly
basis. The investments of $50 or more are automatically deducted from a checking
account on or about the 1 5th day of each month. The institution must be an
Automated Clearing House (ACH) member. Should an order to purchase shares of a
fund be cancelled because your automated transfer does not clear, you will be
responsible for any resulting loss incurred by that fund. The shareholder
reserves the right to discontinue the Lex-O-Matic program provided written
notice is given ten days prior to the scheduled investment date. Further
information regarding this service can be obtained from Lexington by calling
1-800-526-0056.
On payroll deduction accounts administered by an employer and on payments
into qualified pension or profit sharing plans and other continuing purchases
programs, there are no minimum purchase requirements.
Terms of Offering: If an order to purchase shares is cancelled because the
investor's check does not clear, the purchaser will be responsible for any loss
incurred by the Trust. To recover any such loss, the Trust reserves the right to
redeem shares owned by the purchaser, seek reimbursement directly from the
purchaser and may prohibit or restrict the purchaser in placing future orders in
any of the Lexington Funds. The Trust reserves the right to reject any order. An
order to purchase shares is not binding on the Trust until it has been confirmed
by the Agent.
Account Statements: The Agent will send shareholders a confirmation of each
transaction, indicating the date the purchase or redemption was accepted, the
number of shares purchased or redeemed, the price per share and the total amount
invested or redemption proceeds. A statement is also sent to shareholders
whenever a distribution is paid, or when a change in the registration, address,
or dividend option occurs. A statement will be sent to shareholders quarterly
advising them of the income dividends paid in additional shares in the preceding
quarter. Shareholders are urged to retain their account statements for tax
purposes.
HOW TO REDEEM SHARES
By Telephone or Telegram: Shares may be redeemed by telephone. Call the Trust
toll free 1-800-526-0056. A redemption authorization, which is contained in the
New Account Application, or a separate authorization form, must be on file with
LFD before a shareholder may redeem in this manner. Shareholders may elect on
the redemption authorization form to have checks in any amount of $200 or more
mailed either to the registered address, to the shareholder's bank account, or
to any other designated person and a new form must be completed whenever these
instructions are revised.
Shareholders may request that redemption proceeds of $1,000 or more be wired
directly to a commercial bank account. The signatures on such a request must be
guaranteed, unless an authorization for redemption by telephone or telegram form
has been previously filed with LFD. The Agent presently imposes a $5.00 wire
charge.
By Check: Shareholders may effect redemptions by writing checks drawn on the
Trust, payable to the order of any person in any amount of $100 or more up to
$500,000 at no charge. Checks in amounts over $500,000 will not be honored.
Special forms and instructions may be obtained from the Trust or the Agent.
Redemption checks should not be used to close your account. Redemption
checks are free, but the Agent will impose a fee (currently $15.00) for stopping
payment of a redemption check upon your request or if the Agent cannot honor the
redemption check due to insufficient funds, uncollected funds or other valid
reason.
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Procedures for redemptions by telephone at no charge, or check may only be
used for shares for which share certificates have not been issued, and may not
be used to redeem shares purchased by check which have been on the books of the
Trust for less than 15 days.
By Mail: Send to the Agent (see back cover of this prospectus for address): (1)
a written request for redemption, signed by each registered owner exactly as the
shares are registered including the name of the Fund, account number and exact
registration; (2) share certificates for any shares to be redeemed which are
held by the shareholder; (3) signature guarantees, when required; and (4) the
additional documents required for redemptions by corporations, executors,
administrators, trustees and guardians. Redemptions by mail will not become
effective until all documents in proper form have been received by the Agent. If
a shareholder has any questions regarding the requirements for redeeming shares,
he should call the Trust prior to submitting a redemption request. If a
redemption request is sent to the Trust in New Jersey, it will be forwarded to
the Agent and the effective date of redemption will be the date received by the
Agent.
Checks for redemption proceeds will be mailed within seven days, but will
not be mailed until all checks in payment for the shares to be redeemed have
been cleared. Shareholders who redeem all of their shares will receive a check
representing the value of the shares redeemed plus the accrued dividends through
the date of the redemption. Where shareholders redeem only a portion of their
shares, all dividends declared but unpaid will be distributed on the next
dividend payment date.
Signature Guarantee: Signature guarantees are required in connection with (a)
redemptions by mail involving $10,000 or more; (b) all redemptions by mail,
regardless of the amount involved, when the proceeds are to be paid to someone
other than the registered owner(s); (c) authorizations to effect redemptions by
telephone, telegram or check; (d) changes in instructions as to where the
proceeds of redemptions are to be sent; and, (e) share transfer requests.
The Agent requires that the guarantor be either a commercial bank which is a
member of the Federal Deposit Insurance Corporation, a trust company, a savings
and loan association, a savings bank, a credit union, a member firm of a
domestic stock exchange, or a foreign branch of any of the foregoing. A notary
public is not an acceptable guarantor.
With respect to redemption requests submitted by mail, the signature
guarantees must appear either: (a) on the written request for redemption; (b) on
a separate instrument of assignment ("stock power") which should specify the
total number of shares to be redeemed; or (c) on all share certificates tendered
for redemption and, if shares held by the Agent are also being redeemed, on the
letter or stock power.
Redemption Price: The redemption price will be the net asset value per share of
the Trust next determined after receipt by the Agent of a redemption request in
proper form (see "Determination of Net Asset Value" in the Statement of
Additional Information). The right of redemption may be suspended (a) for any
period during which the New York Stock Exchange is closed or the Securities and
Exchange Commission ("SEC") determines that trading on the Exchange is
restricted, (b) when there is an emergency as determined by the SEC as a result
of which it is not reasonably practicable for the Trust to dispose of securities
owned by it or to determine fairly the value of its net assets, or (c) for such
other periods as the SEC may by order permit for the protection of shareholders
of the Trust. Due to the proportionately high cost of maintaining smaller
accounts, the Trust reserves the right to redeem all shares in an account with a
value of less than $500 (except retirement plan accounts) and mail the proceeds
to the shareholder. Shareholders will be notified before these redemptions are
to be made and will have 30 days to make an additional investment to bring their
accounts up to the required minimum.
SHAREHOLDER SERVICES
Transfer: Shares of the Trust may be transferred to another
owner. A signature guarantee of the registered owner is required on the letter
of instruction or accompanying stock power.
Systematic Withdrawal Plan: Shareholders may elect to withdraw cash in fixed
amounts from their accounts at regular intervals. The minimum investment to
establish a Systematic Withdrawal Plan is $10,000. If the proceeds are to be
mailed to someone other than the registered owner, a signature guarantee is
required.
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Group Sub-Accounting: To minimize recordkeeping by fiduciaries, corporations,
and certain other investors, the minimum initial investment may be waived.
EXCHANGE PRIVILEGE
Shares of the Trust may be exchanged for shares of the following Lexington
Funds on the basis of relative net asset value per share, next determined at the
time of the exchange. In the event shares of one or more of these Funds being
exchanged by a single investor have a value in excess of $500,000, the shares of
the Fund will not be purchased until the fifth business day following the
redemption of the shares being exchanged in order to enable the redeeming Fund
to utilize normal securities settlement procedures in transferring the proceeds
of the redemption to the Fund. Exchanges may not be made until all checks in
payment tor the shares to be exchanged have been cleared.
Lexington Funds currently available for exchange are:
LEXINGTON GLOBAL FUND, INC. (NASDAQ Symbol: LXGLX)/Seeks long-term growth of
capital primarily through investment in common stocks of companies
domiciled in foreign countries and the United States.
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC. (NASDAQ Symbol: LEXGX)/Seeks
long-term growth of capital primarily through investment in equity
securities of companies domiciled in, or doing business in, emerging
countries.
LEXINGTON INTERNATIONAL FUND, INC. (NASDAQ Symbol: LEXIX)/Seeks long term growth
of capital through investment in common stocks of companies domiciled
in foreign countries. Shares of the Fund are not presently available
for sale in Vermont.
LEXINGTON CORPORATE LEADERS TRUST FUND (NASDAQ Symbol: LEXCX)/Seeks long-term
capital growth and income through investment in an equal number of
shares of the common stocks of a fixed list of American blue chip
corporations.
LEXINGTON GROWTH AND INCOME FUND, INC. (NASDAQ Symbol: LEXRX)/Seeks long-term
capital appreciation through investments in stocks of large, ably
managed and well financed companies. Income is a secondary objective.
LEXINGTON GOLDFUND, INC. (NASDAQ Symbol: LEXMX)/Seeks capital appreciation and
such hedge against loss of buying power as may be obtained through
investment in gold bullion and equity securities of companies engaged
in mining or processing gold throughout the world. Shares are not
presently available for sale in Wisconsin.
LEXINGTON CONVERTIBLE SECURITIES FUND (NASDAQ Symbol: CNCVX)/Seeks total return
by providing capital appreciation, current income and conservation of
capital through investments in a diversified portfolio of securities
convertible into shares of common stock. Shares of the Fund are not
presently available for sale in Vermont.
LEXINGTON GNMA INCOME FUND, INC. (NASDAQ Symbol: LEXNX)/Seeks a high level of
current income, consistent with liquidity and safety of principal,
through investment primarily in mortgage-backed GNMA Certificates.
LEXINGTON RAMIREZ GLOBAL INCOME FUND (NASDAQ Symbol: LEBDX)/Seeks high current
income by investing in a combination of foreign and domestic
high-yield, lower rated debt securities. Capital appreciation is a
secondary objective.
LEXINGTON MONEY MARKET TRUST (NASDAQ Symbol: LMMXX)/Seeks a high level of
current income consistent with preservation of capital and liquidity
through investments in interest bearing short term money market
instruments.
LEXINGTON TAX FREE MONEY FUND, INC. (NASDAQ Symbol: LTFXX)/Seeks current income
exempt from Federal income taxes while maintaining liquidity and
stability of principal through investment in short term municipal
securities.
LEXINGTON SHORT-INTERMEDIATE GOVERNMENT SECURITIES FUND, INC. (NASDAQ Symbol:
LSGXX)/Seeks current income as is consistent with preservation of
capital by investing in a portfolio of U.S. Government securities.
LEXINGTON STRATEGIC INVESTMENTS FUND, INC. (NASDAQ Symbol: STIVX)/Seeks capital
appreciation through investments in securities of companies engaged in
exploration, mining, processing, fabrication and distribution of
natural resources
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(hydrocarbons, minerals, metals of silver, gold, uranium, platinum and
copper). Purchases are subject to sales charges ranging from 0-5.75%
of the offering price.
LEXINGTON STRATEGIC SILVER FUND, INC. (NASDAQ Symbol: STSLX)/Seeks to maximize
total return through long-term growth of capital and income
principally by investing in a portfolio at least 80% of which will be
invested in the securities of established silver-related companies
throughout the world. Purchases are subject to sales charges ranging
from 0-5.75% of the offering price.
Shareholders in any of these funds may exchange all or part of their shares
for shares of one or more of the other funds, subject to the conditions
described herein. The Exchange Privilege enables a shareholder in any of these
funds to acquire shares in a fund with a different investment objective when the
shareholder believes that a shift between funds is an appropriate investment
decision. Shareholders contemplating an exchange should obtain and review the
prospectus of the fund to be acquired. If an exchange involves investing in a
Lexington Fund not already owned and a new account has to be established, the
dollar amount exchanged must meet the minimum initial investment of the Fund
being purchased. If, however, an account already exists in the Fund being
bought, there is a $500 minimum exchange required. Shareholders must provide the
account number of the existing account. Any exchange between mutual funds is, in
effect, a redemption of shares in one Fund and a purchase in the other Fund.
Shareholders should consider the possible tax effects of an exchange.
Telephone Exchange Provisions-Exchange instructions may be given in writing or
by telephone. Telephone exchanges may only be made if a Telephone Authorization
form has been previously executed and filed with LFD. Telephone exchanges are
permitted only after a minimum of 7 days have elapsed from the date of a
previous exchange. Exchanges may not be made until all checks in payment for the
shares to be exchanged have been cleared. Telephonic exchanges can only involve
shares held on deposit at the Agent; shares held in certificate form by the
shareholder cannot be included. However, outstanding certificates can be
returned to the Agent and qualify for these services. Any new account
established with the same registration will also have the privilege of exchange
by telephone in the Lexington Funds. All accounts involved in a telephonic
exchange must have the same registration and dividend option as the account from
which the shares were transferred and will also have the privilege of exchange
by telephone in the Lexington Funds in which these services are available.
By checking the box on the New Account Application authorizing telephone
exchange services, a shareholder constitutes and appoints LFD as the true and
lawful attorney to surrender for redemption or exchange any and all
non-certificated shares held by the Agent in account(s) designated, or in any
other account with the Lexington Funds, present or future, which has the
identical registration with full power of substitution in the premises,
authorizes and directs LFD to act upon any instruction from any person by
telephone for exchange of shares held in any of these accounts, to purchase
shares of any other Lexington Fund that is available, provided the registration
and mailing address of the shares to be purchased are identical to the
registration of the shares being redeemed, and agrees that neither LFD, the
Agent, nor the Fund(s) will be liable for any loss, expense or cost arising out
of any requests effected in accordance with this authorization which would
include requests effected by imposters or persons otherwise unauthorized to act
on behalf of the account. LFD, the Agent and the Fund, will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine
and if they do not employ reasonable procedures they may be liable for any
losses due to unauthorized or fraudulent instructions. The following
identification procedures may include, but are not limited to, the following:
account number, registration and address, taxpayer identification number and
other information particular to the account. In addition, all exchange
transactions will take place on recorded telephone lines and each transaction
will be confirmed in writing by the Fund. LFD reserves the right to cease to act
as Agent subject to the above appointment upon thirty (30) days' written notice
to the address of record. If the shareholder is an entity other than an
individual, such entity may be required to certify that certain persons have
been duly elected and are now legally holding the titles given and that the said
corporation, trust, unincorporated association, etc. is duly organized and
existing and has power to take action called for by this continuing
Authorization.
Exchange authorization forms, telephone authorization forms and prospectuses
of the other funds may be obtained from LMC.
The Distributor has made arrangements with certain dealers to accept
instructions by telephone to exchange shares of the Trust for shares of one of
the other Lexington funds at net asset value as described above. Under this
procedure, the dealer must agree to indemnify LFD and the Lexington funds from
any loss or liability that any of them might incur as a result of the acceptance
of such
9
<PAGE>
telephone exchange orders. A properly signed Exchange Authorization must be
received by the Distributor within five days of the exchange request. In each
such exchange, the registration of the shares of the Fund being acquired must be
identical to the registration of the shares of the Fund exchanged. Shares in
certificate form are not eligible for this type of exchange. LFD reserves the
right to reject any telephone exchange request. Any telephone exchange orders so
rejected may be processed by mail.
A capital gain or loss for Federal income tax purposes may be realized upon
the exchange, depending upon the cost or other basis of the shares exchanged.
This exchange offer is available only in states where shares of the Fund being
acquired may legally be sold and may be modified or terminated at any time by
the Trust. Broker dealers who process exchange orders on behalf of their
customers may charge a fee for their services. Such fee may be avoided by making
requests for exchange directly to the Trust or Agent.
TAX-SHELTERED RETIREMENT PLANS
The Trust offers a Prototype Pension and Profit Sharing Plan, including a
Keogh Plan, IRA's, SEP-lRA's and IRA Rollover Accounts, 401(k) Salary Reduction
Plans, Section 457 Deferred Compensation Plan and 403 (b) (7) Plans. Plan
support services are available through the Shareholder Services Department of
LMC at 1-800-526-0056. (See "Tax-Sheltered Retirement Plans" in the Statement of
Additional Information.)
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
The Trust's policy is to declare dividends from net investment income daily,
reinvest them daily and distribute them monthly. Dividends are distributed in
the form of additional full and fractional shares at net asset value unless
specific instructions otherwise are received by the Dividend Disbursing Agent.
The net income of the Trust (from the time of the immediately preceding
determination thereof) consists of (i) all interest income accrued on the
portfolio assets of the Trust, (ii) plus or minus all realized and unrealized
gains and losses on portfolio assets of the Trust and (iii) less all expenses of
the Trust. Interest income includes discounts earned (including original issue
and market discount) on discount paper accrued ratably to the date of maturity.
TAX MATTERS
The Trust intends to qualify as a regulated investment company by satisfying
the requirements under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"), including requirements with respect to diversification of
assets, distribution of income and sources of income. It is the Trust's policy
to distribute to shareholders all of its investment income (net of expenses) and
any capital gains (net of capital losses) so that, in addition to satisfying the
distribution requirement of Subchapter M, the Trust will not be subject to
federal income tax or the 4% excise tax.
Distributions by the Trust of its net investment income and any net
short-term capital gain are taxable to shareholders as ordinary income. These
distributions are treated as dividends for federal income tax purposes but do
not qualify for the 70% dividends-received deduction for corporate shareholders.
The Trust is managed so that it will not have any long-term capital gains or
losses.
Distributions to shareholders will be treated in the same manner for federal
income tax purposes whether received in cash or reinvested in additional shares
of the Trust. In general, distributions by the Trust are taken into account by
the shareholders in the year in which they are made. However, certain
distributions made during January will be treated as having been paid by the
Trust and received by the shareholders on December 31 of the preceding year. A
statement setting forth the federal income tax status of all distributions made
or deemed made during the year will be sent to shareholders promptly after the
end of each year. Shareholders purchasing shares of the Trust just prior to the
ex-dividend date will be taxed on the entire amount of the dividend received,
even though the net asset value per share on the date of such purchase reflected
the amount of such dividend.
All or a portion of any loss realized upon a taxable disposition of shares
of the Fund may be disallowed if other shares of the Trust are purchased within
30 days before or after such disposition.
10
<PAGE>
Under the back-up withholding rules of the Code, certain shareholders may be
subject to 31% withholding of federal income tax on ordinary income dividends
paid by the Trust. In order to avoid this back-up withholding, a shareholder
must provide the Trust with a correct taxpayer identification number (which for
most individuals is their Social Security number) or certify that it is a
corporation or otherwise exempt from or not subject to back-up withholding. The
new account application included with this Prospectus provides for shareholder
compliance with these certification requirements.
The foregoing discussion of federal income tax consequences is based on tax
laws and regulations in effect on the date of this Prospectus, and is subject to
change by legislative or administrative action. As the foregoing discussion is
for general information only, a prospective shareholder should also review the
more detailed discussion of federal income tax considerations relevant to the
Trust that is contained in the Statement of Additional Information. In addition,
each prospective shareholder should consult with his own tax adviser as to the
tax consequences of investments in the Trust, including the application of state
and local taxes which may differ from the federal income tax consequences
described above.
CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank N.A., 1211 Avenue of the Americas, New York, New York
10022, has been retained to act as the Custodian for the Trust's investments and
assets. State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is the transfer agent and dividend disbursing agent for the
Trust. Neither Chase Manhattan Bank, N.A. nor State Street Bank and Trust
Company have any part in determining the investment policies of the Trust or in
determining which portfolio securities are to be purchased or sold by the Trust
or in the declaration of dividends and distributions.
COUNSEL AND INDEPENDENT AUDITORS
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, New York 10022, will pass upon legal matters for the Trust in connection
with the shares offered by this Prospectus.
KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154, has been
selected as independent auditors for the Trust for the fiscal year ending
December 31,1995.
OTHER INFORMATION
The Trust is a trust fund of the type commonly known as a "Massachusetts
business trust". It is a diversified open-end management investment company
registered under the Investment Company Act of 1940, established under
Massachusetts law by Declaration of Trust dated October 28, 1976. The
Declaration of Trust permits the Trustees to issue an unlimited number of full
and fractional shares of a single class. Each share represents an equal
proportionate interest with each other share. In the event of liquidation of the
Trust, shareholders are entitled to share pro rata in the net assets available
for distribution to shareholders. Shares have no preemptive or conversion
rights. Shares are fully paid and non assessable. Shareholders are entitled to
one vote for each share held in the election of Trustees and on other matters
submitted to the vote of shareholders. Voting rights are not cumulative, so that
the holders of more than 50% of the shares voting in the election of Trustees
can, if they choose to do so, elect all the Trustees. No material amendment may
be made to the Declaration of Trust without the affirmative vote of a majority
of the outstanding shares.
Shareholder and Trustee liability: Under Massachusetts law, shareholders of
a Massachusetts business trust may, under certain circumstances, be held
personally liable as partners for the obligations of the Trust. The Declaration
of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
the Trust property for any shareholders held personally liable for the
obligations of the Trust, and also provides that the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Trust and satisfy any judgment thereon. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust itself would be unable to meet its
obligations. The Declaration of Trust further provides that the Trustees will
not be liable for errors of judgment or mistakes of fact or law; but nothing in
the Declaration of Trust protects a Trustee against any liability to which he
would otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
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<PAGE>
The Trust was originally organized under the name "Banner Redi-Resources
Trust" and assumed its present name in January 1979.
As a general matter, the Trust will not hold annual or other meetings of
shareholders. Instead meetings of shareholders will be held only: (i) for the
election of trustees; (2) for the approval of any new or amended advisory
agreement; (3) ratification of the selection of the independent auditors; or (4)
approval of the distribution agreement. The Trustees are required to call a
meeting for the purpose of considering the removal of a person serving as
trustee, if requested in writing to do so by the holders of not less than 10% of
the outstanding shares of other voting interests of the Trust. The Trust is
required to assist in shareholder communications.
A Registration Statement (herein called the "Registration Statement"), of
which this Prospectus is a part, has been filed with the SEC, Washington, D.C.
under the Securities Act of 1933, as amended.
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Trust's
official sales literature in connection with the offer of the Trust's shares,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Trust. This Prospectus does not
constitute an offer in any State in which, or to any person to whom, such
offering may not lawfully be made. A "Statement of Additional Information", to
which reference is made in this Prospectus, provides a further discussion of
certain areas in the Prospectus and other matters which may be of interest to
some investors and is available by request without cost as indicated herein. The
Prospectus and the Statement of Additional Information omit certain information
contained in the Registration Statement, to which reference is made, filed with
the Commission. Items which are thus omitted, including contracts and other
documents referred to or summarized herein and therein, may be obtained from the
Commission upon payment of the prescribed fees.
12
<PAGE>
L E X I N G T O N
LEXINGTON
MONEY
MARKET
TRUST
No sales charge
No redemption fee
Free check writing service
Free telephone exchange
privilege
The Lexington Group
of
No-Load
Investment Companies
P R O S P E C T U S
MAY 1, 1995
Investment Adviser
- ------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
Distributor
- ------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
All shareholder requests for services of any kind should be
sent to:
Transfer Agent
- ------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
Or call Toll Free:
Service: 1-800-526-0056
24 Hour Account Information: 1-800-526-0052
Table of Contents
- ------------------------------------------------------
Fee Table.......................................... 2
Financial Highlights............................... 2
Yield Information.................................. 3
Comparative Performance Information................ 3
Description of the Trust........................... 3
Investment Objective............................... 3
Investment Policies................................ 3
Foreign Branches of U.S. Bank...................... 4
Management of the Trust............................ 4
Portfolio Manager.................................. 4
Investment Adviser, Distributor and Administrator.. 4
How to Purchase Shares............................. 5
How to Redeem Shares............................... 6
Shareholder Services............................... 7
Exchange Privilege................................. 8
Tax-Sheltered Retirement Plans..................... 10
Dividend, Distribution and Reinvestment Policy..... 10
Tax Matters........................................ 10
Custodian, Transfer Agent and
Dividend Disbursing Agent........................ 11
Counsel and Independent Auditors................... 11
Other Information.................................. 11
<PAGE>
LEXINGTON MONEY MARKET TRUST
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
This statement of additional information which is not a prospectus,
should be read in conjunction with the current prospectus of Lexington Money
Market Trust (the "Trust"), dated May 1, 1995, as it may be revised from
time to time. To obtain a copy of the Trust's prospectus at no charge,
please write to the Trust at P.O. Box 1515/Park 80 West - Plaza Two, Saddle
Brook, New Jersey 07663 or call the following toll-free numbers:
Shareholder Services: 1-800-526-0056
24 Hour Account Information: 1-800-526-0052
Lexington Management Corporation ("LMC") serves as the Trust's
investment adviser. Lexington Funds Distributor, Inc. ("LFD") serves as
distributor of shares of the Trust.
TABLE OF CONTENTS
PAGE
Investment Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 2
Yield Calculation. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . 3
Tax-Sheltered Retirement Plans . . . . . . . . . . . . . . . . . . . . 5
Investment Adviser, Distributor and Administrator. . . . . . . . . . . 6
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . 7
Dividend, Distribution and Reinvestment Policy . . . . . . . . . . . . 7
Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Custodian, Transfer Agent and Dividend Disbursing Agent. . . . . . . .12
Management of the Trust. . . . . . . . . . . . . . . . . . . . . . . .12
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .15
<PAGE>
INVESTMENT POLICY
In order to achieve its objective of seeking as high a level of
current income as is available from short term investments and consistent
with the preservation of capital and liquidity, the Trust will invest its
assets in the following money market instruments: (l) Obligations issued,
or guaranteed as to interest and principal, by the Government of the United
States or any agency or instrumentality thereof; (2) U.S. dollar denominated
time deposits, certificates of deposit and bankers' acceptances of U.S.
banks and their London and Nassau branches and of U.S. branches of foreign
banks, provided that the bank has total assets of one billion dollars; (3)
Commercial paper of U.S. corporations, rated Al, A2 by Standard & Poor's
Corporation or Pl, P2 by Moody's Investors Service, Inc. or, if not rated,
of such issuers having outstanding debt rated A or better by either of such
services, or debt obligations of such issuers maturing in two years or less
and rated A or better; (4) Repurchase agreements under which the Trust may
acquire an underlying debt instrument for a relatively short period subject
to the obligation of the seller to repurchase, and of the Trust to resell,
at a fixed price. The underlying security must be of the same quality as
those described herein, although the usual practice is to use U.S.
Government or government agency securities. The Trust will enter into
repurchase agreements only with commercial banks and dealers in U.S.
Government securities. Repurchase agreements when entered into with
dealers, will be fully collateralized including the interest earned thereon
during the entire term of the agreement. If the institution defaults on the
repurchase agreement, the Trust will retain possession of the underlying
securities. In addition, if bankruptcy proceedings are commenced with
respect to the seller, realization on the collateral by the Trust may be
delayed or limited and the Trust may incur additional costs. In such case
the Trust will be subject to risks associated with changes in the market
value of the collateral securities. The Trust intends to limit repurchase
agreements to institutions believed by LMC to present minimal credit risk.
The Trust will not enter into repurchase agreements maturing in more than
seven days if the aggregate of such repurchase agreements would exceed 10%
of the total assets of the Trust; or (5) Other money market instruments.
Foreign Branches of U.S. Banks
The obligations of London and Nassau branches of U.S. banks may be
general obligations of the parent bank in addition to the issuing branch,
or may be limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal upon these obligations may
also be affected by governmental action in the country of domicile of the
branch (generally referred to as "sovereign risk"). In addition, evidences
of ownership of portfolio securities may be held outside of the U.S., and
the Trust may be subject to the risks associated with the holding of such
property overseas. Examples of governmental actions would be the imposition
of currency controls, interest limitations, seizure of assets, or the
declaration of a moratorium. Obligations of U.S. branches of foreign banks
may be general obligations of the parent bank in addition to the issuing
branch, or may be limited by the terms of a specific obligation and by
Federal and state regulation as well as by governmental action in the
country in which the foreign bank has its head office. While the Trust will
carefully consider these factors on making such investments, there are no
limitations on the percentage of the Trust's portfolio which may be invested
in any one type of instrument.
The Investment Policies stated above are fundamental and may not be
changed without shareholder approval. The Trust may not invest in securities
other than the types of securities listed above and is subject to other
specific restrictions as detailed under "Investment Restrictions", below.
1
<PAGE>
INVESTMENT RESTRICTIONS
The following investment restrictions adopted by the Trust may not be
changed without the affirmative vote of a majority (defined as the lesser
of: 67% of the shares represented at a meeting at which 50% of outstanding
shares are present, or 50% of outstanding shares) of its outstanding shares.
The Trust may not: (l) purchase any securities other than money market
instruments or other debt securities maturing within two years of the date
of purchase; (2) borrow an amount which is in excess of one-third of its
total assets taken at market value (including the amount borrowed); and then
only from banks as a temporary measure for extraordinary or emergency
purposes. The Trust will not borrow to increase income but only to meet
redemption requests which might otherwise require undue disposition of
portfolio securities. The Trust will not invest while it has borrowings
outstanding; (3) pledge its assets except in an amount up to 15% of the
value of its total assets taken at market value in order to secure
borrowings made in accordance with number (2) above; (4) sell securities
short unless at all times while a short position is open the Trust maintains
a long position in the same security in an amount at least equal thereto;
(5) write or purchase put or call options; (6) purchase securities on margin
except the Trust may obtain such short term credit as may be necessary for
the clearance of purchases and sales of portfolio securities; (7) make
investments for the purpose of exercising control or management; (8)
purchase securities of other investment companies, except in connection with
a merger, consolidation, acquisition or reorganization; (9) make loans to
other persons, provided that the Trust may purchase money market securities
or enter into repurchase agreements and lend securities owned or held by it
as provided herein; (10) lend its portfolio securities, except in conformity
with the guidelines set forth below; (11) concentrate more than 25% of its
total assets, taken at market value at the time of such investment, in any
one industry, except U.S. Government and U.S. Government agency securities
and U.S. bank obligations; (12) purchase any securities other than U.S.
Government or U.S. Government agency securities, if immediately after such
purchase more than 5% of its total assets would be invested in securities
of any one issuer for more than three business days; (taken at market value)
(13) purchase or hold real estate, commodities or commodity contracts; ( 14
) invest more than 5% of its total assets (taken at market value) in issues
for which no readily available market exists or with legal or contractual
restrictions on resale except for repurchase agreements; (15) act as an
underwriter (except as it may be deemed such as to the sale of restricted
securities); or (16) enter into reverse repurchase agreements.
Although the Trust has the right to pledge or hypothecate in excess
of 10% of its assets at market value, it will not do so in order to comply
with certain state statutes. Also, the Trust has undertaken not in invest
in real estate limited partnership interests, oil, gas or mineral leases,
as well as exploration or development programs. The Trust will not purchase
warrants except in units with other securities in original issuance thereof
or attached to other securities, if at the time of purchase, the Trust's
investment in warrants valued at the lower of cost or market, would exceed
5% of the Trust's total assets. Warrants which are not listed on the New
York or American Stock Exchanges shall not exceed 2% of the Trust's net
assets. Shares of the Trust will not be issued for consideration other than
cash.
Lending of portfolio securities: As stated in number (10) above,
subject to guidelines established by the Trustees and by the Securities and
Exchange Commission, the Trust, from time-to-time, may lend portfolio
securities to brokers, dealers, corporations or financial institutions and
receive collateral which will be maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities. Such
collateral will be either cash or fully negotiable U. S. Treasury or agency
issues. If cash, such collateral will be invested in short term securities,
the income from which will increase the return to the Trust. However, a
portion of such incremental return may be shared with the borrower. If
securities, the usual procedure will be for the borrower to pay a fixed fee
to the Trust for such time as the loan is outstanding. The Trust will retain
substantially all rights of beneficial ownership as to the loaned portfolio
securities including rights to interest or other distributions and will have
the right to regain record ownership of loaned securities in order to
exercise such beneficial rights. Such loans will be terminable at any time.
The Trust may pay reasonable fees to persons unaffiliated with it in
connection with the arranging of such loans.
2
<PAGE>
YIELD CALCULATION
The Trust provides current yield and effective yield quotations, which
are calculated in accordance with the regulations of the Securities and
Exchange Commission, based upon changes in account value during a recent
seven-day base period.
Current yield quotations are computed by annualizing (on a 365-day
basis) the "base period return". The "base period return" is computed by
determining the net change exclusive of capital changes in the value of the
account, divided by the value of the account at the beginning of the base
period. Effective yield is computed by compounding the "base period return".
Based upon dividends actually credited to the shareholders' accounts (i.e.:
based upon net investment income), the current yield to an investor in the
Trust during the last seven calendar days of its fiscal year ended December
31, 1994 was at an annual rate of 4.81% and the effective yield was at an
annual rate of 4.93%. The average weighted maturity of investments was 33
days. The current and effective yield are affected by market conditions,
portfolio quality, portfolio maturity, type of instruments held and
operating expenses. The Trust attempts to keep its net asset value per share
at $1.00, but attainment of this objective is not guaranteed. This Statement
of Additional Information may be in use for a full year and it can be
expected that these yields will fluctuate substantially from the example
shown above.
The current and effective yield figures are not a representation of
future yield as the Trust's net income and expenses will vary based on many
factors, including changes in short term money market yields generally and
the types of instruments in the Trust's portfolio. The stated yield of the
Trust may be useful in reviewing the Trust's performance and in providing
a basis for comparison with other investment alternatives. However, unlike
bank deposits and other investments which pay fixed yields for stated
periods of time, the yield of the Trust fluctuates. In addition, other
investment companies may calculate yield on a different basis and may
purchase securities for their portfolios which have different qualities and
maturities than those of the Trust's portfolio securities.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Trust is determined as of the close of
trading on the New York Stock Exchange each day the Exchange is open for
business and at such other times and/or such other days as there is
sufficient trading in money market instruments to affect materially the
Trust's net asset value per share. Substantially all of the Trust's net
income calculated from the immediately preceding determination of net
income, is declared daily as dividends (see "Dividend, Distribution and
Reinvestment Policy").
For the purpose of determining the price at which shares are issued
and redeemed, the net asset value per share is calculated immediately after
the daily dividend declaration by: (a) valuing all securities and
instruments as set forth below; (b) deducting the Trust's liabilities; and
(c) dividing the resulting amount by the number of shares outstanding. As
discussed below, it is the intention of the Trust to maintain a net asset
value per share of $1.00. The Trust's portfolio instruments are valued on
the basis of amortized cost. This involves valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the
market value of the security. While this method provides certainty in
valuation, it may result in periods during which the value, as determined
by amortized cost, is higher or lower than the price the Trust would receive
if it sold its portfolio. During periods of declining interest rates, the
daily yield on shares of the Trust computed as described above may be higher
than a like computation made by a fund with identical investments utilizing
a method of valuation based upon market prices and estimates of market
prices for all its portfolio instruments. Thus, if the use of amortized cost
by the Trust results in a lower aggregate portfolio value on a particular
day, a prospective investor in the Trust would be able to obtain a somewhat
higher yield than would result from an investment in a fund utilizing solely
market values, and existing investors in the Trust would receive less
investment income. The converse would apply in a period of rising interest
rates.
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The Trust's use of amortized cost and the maintenance of the Trust's
per share net value at $1.00 is based on its election to operate under the
provisions of Rule 2a-7 under the Investment Company Act of 1940. As a
condition of operating under that rule, the Trust must maintain a dollar-
weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of thirteen months or less, and
invest only in securities which are determined by the Board of Trustees to
present minimal credit risks and which are of high quality as required by
the Rule, or in the case of any instrument not so rated, considered by the
Board of Trustees to be of comparable quality. Securities in the Trust will
consist of money market instruments that have been rated (or whose issuer's
short-term debt obligations are rated) in one of the two highest categories
(i.e. "Al/Pl") by both Standard & Poor's Corporation ("S&P") and Moody's
Investors Services, Inc. ("Moody's"), two nationally recognized statistical
rating organizations ("NRSRO").
The Trust may invest up to 5% of its assets in any single "Tier l"
security (other than U.S. Government securities), measured at the time of
acquisition; however, it may invest more than 5% of its assets in a single
Tier 1 security for no more than three business days. A "Tier l" security
is one that has been rated (or the issuer of such security has been rated)
by both S&P and Moody's in the highest rating category or, if unrated, is
of comparable quality. A security rated in the highest category by only one
of these NRSROs is also considered a Tier 1 security.
In addition, the Trust may invest not more than 5% of its assets in
"Tier 2" securities. A Tier 2 security is a security that is (a) rated in
the second highest category by either S&P or Moody's or (b) an unrated
security that is deemed to be of comparable quality by the Trust's
investment advisor. The Trust may invest up to 1% of its assets in any
single Tier 2 security.
The Trust may invest only in a money market instrument that has a
remaining maturity of 13 months (397 days) or less, provided that the
Trust's average weighted maturity is 90 days or less.
The Board of Trustees has also agreed, as a particular responsibility
within the overall duty of care owed to its shareholders, to establish
procedures reasonably designed, taking into account current market
conditions and the Trust's investment objective, to stabilize the net asset
value per share as computed for the purposes of sales and redemptions at
$1.00. These procedures include periodic review, as the Board deems
appropriate and at such intervals as are reasonable in light of current
market conditions, of the relationship between the amortized cost value per
share and a net asset value per share based upon available indications of
market value. In such review, investments for which market quotations are
readily available are valued at the most recent bid price or quoted yield
equivalent for such securities or for securities of comparable maturity,
quality and type as obtained from one or more of the major market makers for
the securities to be valued. Other investments and assets are valued at fair
value, as determined in good faith by the Board of Trustees.
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TAX-SHELTERED RETIREMENT PLANS
The Trust makes available a variety of Prototype Pension and Profit
Sharing Plans including a 401(k) Salary Reduction Plan and a 403(b)(7) Plan.
Plan services are available by contacting the Shareholder Services
Department of LMC at 1-800-526-0056.
INDIVIDUAL RETIREMENT ACCOUNT (IRA): Individuals may make tax deductible
contributions to their own Individual Retirement Accounts established under
Section 408 of the Internal Revenue Code (the "Code").
Married investors filing a joint return neither of whom is an active
participant in an employer sponsored retirement plan, or who have adjusted
gross income of $40,000 or less ($25,000 or less for single taxpayers) may
continue to make a $2,000 ($2,250 for spousal IRAs) annual deductible IRA
contribution. For adjusted gross income above $40,000 ($25,000 for single
taxpayers), the IRA deduction limit is generally phased out ratably over the
next $10,000 of adjusted gross income, subject to a minimum $200 deductible
contribution. Investors who are not able to deduct a full $2,000 ($2,250
spousal) IRA contribution because of the limitations may make a
nondeductible contribution to their IRA to the extent a deductible
contribution is not allowed. Federal income tax on accumulations earned on
nondeductible contributions is deferred until such time as these amounts are
deemed distributed to an investor. Rollovers are also permitted under the
Plan. The disclosure statement required by the Internal Revenue Service
("IRS") is provided by the Trust.
The minimum initial investment to establish a tax-sheltered plan
through the Trust is $250 for retirement plan accounts. Subsequent
investments are subject to a minimum of $50 for each account.
SELF-EMPLOYED RETIREMENT PLAN (HR-10): Self-employed individuals may
make tax deductible contributions to a prototype defined contribution
pension plan or profit sharing plan. There are, however, a number of special
rules which apply when self-employed individuals participate in such plans.
Currently purchase payments under a self-employed plan are deductible only
to the extent of the lesser of (i) $30,000 or (ii) 25% of the individuals
earned annual income (as defined in the Code) and in applying these
limitations not more than $200,000 of "earned income" may be taken into
account.
CORPORATE PENSION AND PROFIT SHARING PLANS: The Trust makes available
a Prototype Defined Contribution Pension Plan and a Prototype Profit Sharing
Plan.
All purchases and redemptions of Trust shares pursuant to any one of
the Trust's tax sheltered plans must be carried out in accordance with the
provisions of the plan. Accordingly, all plan documents should be reviewed
carefully before adopting or enrolling in the plan. Investors should
especially note that a penalty tax of 10% may be imposed by the IRS on early
withdrawals under corporate, Keogh or IRA plans. It is recommended by the
IRS that an investor consult a tax adviser before investing in the Trust
through any of these plans. An investor participating in any of the Trust's
special plans has no obligation to continue to invest in the Trust and may
terminate the plan with the Trust at any time. Except for expenses of sales
and promotion, executive and administrative personnel, and certain services
which are furnished by LMC, the cost of the plans generally is borne by the
Trust; however, each IRA plan account is subject to an annual maintenance
fee of $12.00 charged by State Street Bank and Trust Company (the "Agent").
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INVESTMENT ADVISER, DISTRIBUTOR AND ADMINISTRATOR
LMC, P.O. Box 1515/Park 80 West Plaza Two, Saddle Brook, New Jersey
07663, is the investment adviser to the Trust and, as such, advises and
makes recommendations to the Trust with respect to its investments and
investment policies.
Under the terms of the investment advisory agreement with LMC, as
compensation for its services to the Trust, LMC receives monthly from the
Trust a fee at the annual rates of 0.5% of that portion of the average daily
net assets of the Trust not exceeding $500 million and 0.45% of the average
daily net assets of the Trust in excess of $500 million, computed monthly.
All fees and expenses are accrued daily and deducted before payment of
dividends to investors. Such agreement provides that if in any fiscal year
the aggregate expenses of the Trust, exclusive of taxes, brokerage, interest
and extraordinary expenses, but including the fees payable to the adviser,
exceed 1% of the average daily net assets, LMC will refund monthly to the
Trust or bear any such excess.
Under the terms of the advisory agreement LMC also pays the Trust's
expenses for office rent, utilities, telephone, furniture and supplies
utilized for the Trust's principal office and the salaries and payroll
expense of officers and trustees of the Trust who are also employees of LMC
or its affiliates in carrying out its duties under the investment advisory
agreement. The Trust pays all its other expenses, including custodian and
transfer fees, legal and registration fees, audit fees, printing of
prospectuses, shareholder reports and communications required for regulatory
purposes or for distribution to existing shareholders, computation of net
asset value, mailing of shareholder reports and communications, portfolio
brokerage, taxes and independent trustees' fees, and furnishes LFD, at
printer's overrun cost paid by LFD, such copies of its prospectus and
annual, semi-annual and other reports and shareholder communications as may
reasonably be required for sales purposes. In addition, the Trust will bear
any costs associated with the securities loan program (any such loans will
increase the return to the shareholders).
The investment advisory agreement will automatically terminate if
assigned and may be terminated by either party upon 60 days' notice. The
terms of the agreement and any renewal thereof must be approved at least
annually by a majority of its trustees, including a majority of trustees who
are not parties to the agreement or "interested persons" of such parties,
as such term is defined under the Investment Company Act of 1940, as
amended.
LMC serves as investment adviser to other investment companies and
private and institutional investment accounts. Included among these clients
are persons and organizations which own significant amounts of capital stock
of LMC's parent (see below). These clients pay fees which LMC considers
comparable to the fee levels for similarly served clients. LMC's accounts
are managed independently with reference to the applicable investment
objectives and current security holdings but on occasion more than one fund
or counsel account may seek to engage in transactions in the same security
at the same time. To the extent practicable, such transactions will be
effected on a pro-rata basis in proportion to the respective amounts of
securities to be bought and sold for each portfolio, and the allocated
transactions will be averaged as to price. While this procedure may
adversely affect the price or volume of a given Trust transaction, LMC
believes that the ability of the Trust to participate in combined
transactions may generally produce better executions overall.
LFD also serves as distributor for Trust shares under a Distribution
Agreement which is subject to annual approval by a majority of the Trustees,
including a majority of those who are not "interested persons".
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LMC also acts as administrator to the Fund and performs certain
administrative and internal accounting services, including but not limited
to, maintaining general ledger accounts, regulatory compliance, preparation
of financial information for semiannual and annual reports, preparing
registration statements, calculating net asset values, shareholder
communications and supervision of the custodian of, transfer agent and
provides facilities for such services. The Fund pays LMC a fee, payable
monthly, equal to the pro-rata portion of LMC s actual cost in providing
such services and facilities.
Of the trustees, officers or employees ("affiliated persons") of the
Trust, Messrs. Corniotes, DeMichele, Faust, Hisey, Kantor, Jamison, Lavery,
Luehs and Petruski and Mmes. Carnicelli, Carr, Curcio, Gilfillan and Mosca
(see "Management of the Trust") may also be deemed affiliates of LMC by
virtue of being officers, directors or employees thereof. As of April 3,
1995, all officers and trustees of the Trust as a group were beneficial
owners of less than 1% of the shares of the Trust.
LMC and LFD are wholly-owned subsidiaries of Piedmont Management
Company Inc., a Delaware corporation with offices at 80 Maiden Lane, New
York, N.Y. 10038. Descendants of Lunsford Richardson, Sr., their spouses,
trusts and other related entities have a majority voting control of the
outstanding shares of Piedmont Management Company Inc.
LMC received from the Trust under the advisory agreement the following
net fees as of the fiscal year ended December 31, 1992, $614,646; December
31, 1993, $509,533 and December 31, 1994, $503,124.
PORTFOLIO TRANSACTIONS
Portfolio securities are normally purchased directly from the issuer
or from an underwriter or market maker for money market instruments.
Therefore, usually no brokerage commissions were paid by the Trust.
Transactions are allocated to various dealers by LMC in its best judgment.
Dealers are selected primarily on the basis of prompt execution of orders
at the most favorable prices. The Trust has no obligation to deal with any
dealer or group of dealers. Particular dealers may be selected for research
or statistical and other services to enable LMC to supplement its own
research and analysis with that of such firms. Information so received will
be in addition to and not in lieu of the services required to be performed
by LMC under the investment advisory agreement and the expenses of LMC will
not necessarily be reduced as a result of the receipt of such supplemental
information.
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
Substantially all of the Trust's net income will be declared as a
dividend daily. The net income of the Trust (from the immediately preceding
determination thereof) consists of: (i) all interest income accrued on the
portfolio assets of the Trust; (ii) plus or minus all realized and
unrealized gains and losses on portfolio assets of the Trust; and (iii) less
all expenses of the Trust. Interest income includes discounts earned
(including original issue and market discount) on discount paper accrued
ratably to the date of maturity. All distributions will be reinvested
automatically in additional shares unless specific instructions otherwise
are received by the Agent. Dividends are declared, reinvested daily and
distributed monthly in the form of additional full and fractional shares at
net asset value. Since the net income will be declared as a dividend each
time the net income of the Trust is determined, the net asset value per
share will normally remain at one dollar per share immediately after each
such dividend declaration and determination. If the net income on any one
day is a negative amount (for example, if a sharp rise in interest rates
causes realized and unrealized losses on portfolio assets in excess of
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interest income), the Trust will first offset the negative amount against
the accrued dividends of each account. If the negative amount should exceed
such accrued dividends, the Trust will reduce the number of outstanding
shares by treating each shareholder as having contributed to the capital of
the Trust that number of full and fractional shares in the account of such
shareholder which represents the amount of such excess at the time of the
determination. Each shareholder will be deemed to have agreed to such
contribution in these circumstances by his investment in the Trust. This
procedure will permit the net asset value per share of the Trust to be
maintained at a constant value of $1.00 per share. If in the view of the
Trustees it is inadvisable to continue the practice of maintaining the net
asset value of one dollar per share, the Trustees reserve the right to alter
the procedure. Shareholders will be notified promptly of any such
alteration. Shareholders will be notified annually of the tax status of all
distributions.
TAX MATTERS
The following is only a summary of certain additional tax
considerations generally affecting the Trust and its shareholders that are
not described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Trust or its shareholders, and the
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
Qualification as a Regulated Investment Company
The Trust has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). As a regulated investment company, the Trust is not subject to
federal income tax on the portion of its net investment income (i.e.,
taxable interest, dividends and other taxable ordinary income, net of
expenses) and capital gain net income (i.e., the excess of capital gains
over capital losses) that it distributes to shareholders, provided that it
distributes at least 90% of its investment company taxable income (i.e., net
investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year (the "Distribution
Requirement"), and satisfies certain other requirements of the Code that are
described below. Distributions by the Trust made during the taxable year
or, under specified circumstances, within twelve months after the close of
the taxable year, will be considered distributions of income and gains of
the taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies (to the extent such currency gains are directly related to the
regulated investment company's principal business of investing in stock or
securities) and other income (including but not limited to gains from
options, futures or forward contracts) derived with respect to its business
of investing in such stock, securities or currencies (the "Income
Requirement"); and (2) derive less than 30% of its gross income (exclusive
of certain gains on designated hedging transactions that are offset by
realized or unrealized losses on offsetting positions) from the sale or
other disposition of stock, securities or foreign currencies (or options,
futures or forward contracts thereon) held for less than three months (the
"Short-Short Gain Test"). However, foreign currency gains, including those
derived from options, futures and forwards, will not in any event be
characterized as Short-Short Gain if they are directly related to the
regulated investment company's investments in stock or securities (or
options or futures thereon). Because of the Short-Short Gain Test, the
Trust may have to limit the sale of appreciated securities that it has held
for less than three months. However, the Short-Short Gain Test will not
prevent the Trust from disposing of investments at a loss, since the
recognition of a loss before the expiration of the three-month holding
period is disregarded for this purpose. Interest (including original issue
discount) received by the Trust at maturity or upon the disposition of a
security held for less than three months will not be treated as gross income
derived from the sale or other disposition of such security within the
meaning of the Short-Short Gain Test. However, income that is attributable
to realized market appreciation will be treated as gross income from the
sale or other disposition of securities for this purpose.
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In general, gain or loss recognized by the Trust on the disposition
of an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Trust at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Trust held the debt obligation.
Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain
(i.e., the excess of net long-term capital gain over net short-term capital
loss) for any taxable year, to elect (unless it has made a taxable year
election for excise tax purposes as discussed below) to treat all or any
part of any net capital loss, any net long-term capital loss or any net
foreign currency loss incurred after October 31 as if it had been incurred
in the succeeding year.
In addition to satisfying the requirements described above, the Trust
must satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, at the close of each quarter
of the Trust's taxable year, at least 50% of the value of the Trust's assets
must consist of cash and cash items, U.S. Government securities, securities
of other regulated investment companies, and securities of other issuers (as
to which the Trust has not invested more than 5% of the value of the Trust's
total assets in securities of such issuer and as to which the Trust does not
hold more than 10% of the outstanding voting securities of such issuer), and
no more than 25% of the value of its total assets may be invested in the
securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more
issuers which the Trust controls and which are engaged in the same or
similar trades or businesses.
If for any taxable year the Trust does not qualify as a regulated
investment company, all of its taxable income (including its net capital
gain) will be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such distributions will be
taxable to the shareholders as ordinary dividends to the extent of the
Trust's current and accumulated earnings and profits. Such distributions
generally will be eligible for the dividends-received deduction in the case
of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to
98% of ordinary taxable income for the calendar year and 98% of capital gain
net income for the one-year period ended on October 31 of such calendar year
(or, at the election of a regulated investment company having a taxable year
ending November 30 or December 31, for its taxable year (a "taxable year
election")). The balance of such income must be distributed during the next
calendar year. For the foregoing purposes, a regulated investment company
is treated as having distributed any amount on which it is subject to income
tax for any taxable year ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain)
by the amount of any net ordinary loss for the calendar year; and (2)
exclude foreign currency gains and losses incurred after October 31 of any
year (or after the end of its taxable year if it has made a taxable year
election) in determining the amount of ordinary taxable income for the
current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year).
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The Trust intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income
prior to the end of each calendar year to avoid liability for the excise
tax. However, investors should note that the Trust may in certain
circumstances be required to liquidate portfolio investments to make
sufficient distributions to avoid excise tax liability.
Trust Distributions
The Trust anticipates distributing substantially all of its investment
company taxable income for each taxable year. Such distributions will be
taxable to shareholders as ordinary income and treated as dividends for
federal income tax purposes, but they will not qualify for the 70%
dividends-received deduction for corporate shareholders.
The Trust does not expect to realize any long-term capital
gains or loss.
Distributions by the Trust that do not constitute ordinary income
dividends or capital gain dividends will be treated as a return of capital
to the extent of (and in reduction of) the shareholder's tax basis in his
shares; any excess will be treated as gain from the sale of his shares, as
discussed below.
Distributions by the Trust will be treated in the manner described
above regardless of whether such distributions are paid in cash or
reinvested in additional shares of the Trust (or of another fund).
Shareholders receiving a distribution in the form of additional shares will
be treated as receiving a distribution in an amount equal to the fair market
value of the shares received, determined as of the reinvestment date. In
addition, if the net asset value at the time a shareholder purchases shares
of the Trust reflects undistributed net investment income or recognized
capital gain net income, or unrealized appreciation in the value of the
assets of the Trust, distributions of such amounts will be taxable to the
shareholder in the manner described above, although such distributions
economically constitute a return of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by the
Trust into account in the year in which the distributions are made.
However, dividends declared in October, November or December of any year and
payable to shareholders of record on a specified date in such a month will
be deemed to have been received by the shareholders (and made by the Trust)
on December 31 of such calendar year if such dividends are actually paid in
January of the following year. Shareholders will be advised annually as to
the U.S. federal income tax consequences of distributions made (or deemed
made) during the year.
The Trust will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of ordinary income dividends and capital gain
dividends, and the proceeds of redemption of shares, paid to any shareholder
(1) who has provided either an incorrect tax identification number or no
number at all, (2) who is subject to backup withholding by the IRS for
failure to report the receipt of interest or dividend income properly, or
(3) who has failed to certify to the Trust that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient."
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Sale or Redemption of Shares
The Trust seeks to maintain a stable net asset value of $1.00 per
share; however, there can be no assurance that the Trust will do this. In
such a case, a shareholder will recognize gain or loss on the sale or
redemption of shares of the Trust in an amount equal to the difference
between the proceeds of the sale or redemption and the shareholder's
adjusted tax basis in the shares. All or a portion of any loss so
recognized may be disallowed if the shareholder purchases other shares of
the Trust within 30 days before or after the sale or redemption. In
general, any gain or loss arising from (or treated as arising from) the sale
or redemption of shares of the Trust will be considered capital gain or loss
and will be long-term capital gain or loss if the shares were held for
longer than one year.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation,
or foreign partnership ("foreign shareholder"), depends on whether the
income from the Trust is "effectively connected" with a U.S. trade or
business carried on by such shareholder.
If the income from the Trust is not effectively connected with a U.S.
trade or business carried on by a foreign shareholder, ordinary income
dividends paid to a foreign shareholder will be subject to U.S. withholding
tax at the rate of 30% (or lower treaty rate) upon the gross amount of the
dividend. Such a foreign shareholder would generally be exempt from U.S.
federal income tax on gains realized on the sale of shares of the Trust.
If the income from the Trust is effectively connected with a U.S.
trade or business carried on by a foreign shareholder, then ordinary income
dividends and any gains realized upon the sale of shares of the Trust will
be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, the Trust may be
required to withhold U.S. federal income tax at a rate of 31% on
distributions that are otherwise exempt from withholding tax (or taxable at
a reduced treaty rate) unless such shareholders furnish the Trust with
proper notification of its foreign status.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in
the Trust, including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued
thereunder as in effect on the date of this Statement of Additional
Information. Future legislative or administrative changes or court
decisions may significantly change the conclusions expressed herein, and any
such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.
Rules of state and local taxation of dividends from regulated
investment companies often differ from the rules for U.S. federal income
taxation described above. Shareholders are urged to consult their tax
advisers as to the consequences of these and other state and local tax rules
affecting investment in the Trust.
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CUSTODIAN, TRANSFER AGENT, AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New
York 10036, has been retained to act as Custodian for the Trust's
investments and assets. State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110 is the transfer agent and dividend
disbursing agent for the Trust. Neither Chase Manhattan Bank, N.A. nor State
Street Bank and Trust Company have any part in determining the investment
policies of the Trust or in determining which portfolio securities are to
be purchased or sold by the Trust or in the declaration of dividends and
distributions.
MANAGEMENT OF THE TRUST
The Trustees and executive officers of the Trust and their principal
occupations are set forth below:
*+ROBERT M. DeMICHELE, President and Chairman. P.O. Box 1515, Saddle Brook,
N.J. 07663. Chairman and Chief Executive Officer, Lexington Management
Corporation; Chairman and Chief Executive Officer, Lexington Funds
Distributor, Inc.; President and Director, Piedmont Management Company
Inc. Director, Reinsurance Corporation of New York; Director, Unione
Italiana Reinsurance; Vice Chairman of Board of Trustees, Union
College; Director, Continental National Corporation; Director, The
Navigator's Group, Inc.; Chairman, Lexington Capital Management, Inc.;
Chairman, LCM Financial Services, Inc.; Director, Vanguard Cellular
Systems, Inc.; Chairman of the Board, Market Systems Research, Inc.
and Market Systems Research Advisors, Inc. (registered investment
advisors). Trustee, Smith Richardson Foundation.
+BEVERLEY C. DUER, P.E., Trustee. 340 East 72nd Street, New York, N.Y.
10021. Private Investor. Formerly Manager of Operations Research
Department, CPC International, Inc.
*+BARBARA R. EVANS, Trustee. 5 Fernwood Road, Summit, N.J. 07901. Private
Investor. Prior to May 1989, Assistant Vice President and Securities
Analyst, Lexington Management Corporation; prior to March 1987, Vice
President - Institutional Equity Sales, L.F. Rothschild, Unterberg,
Towbin.
*+LAWRENCE KANTOR, Vice President and Trustee. P.O. Box 1515, Saddle Brook,
N.J. 07663. Executive Vice President, Managing Director and Director,
Lexington Management Corporation; Executive Vice President and
Director, Lexington Funds Distributor, Inc.
+DONALD B. MILLER, Trustee. 10725 Quail Covey Road, Boynton Beach, Florida
33436. Chairman, Horizon Media, Inc.; Trustee, Galaxy Funds; Director,
Maguire Group of Connecticut; prior to January 1989, President, C.E.O.
and Director, Media General Broadcast Services (advertising firm).
+FRANCIS OLMSTED, Trustee. 50 Van Hooten Court, San Anselmo, California
94960. Private Investor; formerly Manager Commercial Development (West
Coast) Essex Chemical Corporation, Clifton New Jersey (chemical
manufacturers).
+JOHN G. PRESTON, Trustee. 3 Woodfield Road, Wellesley, Massachusetts
02181. Associate Professor of Finance, Boston College, Boston,
Massachusetts.
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+MARGARET W. RUSSELL, Trustee. 55 North Mountain Avenue, Montclair, N.J.
07042. Private Investor; formerly Community Affairs Director, Union
Camp Corporation.
+PHILIP C. SMITH, Trustee. 87 Lord's Highway, Weston, Connecticut 06883.
Private Investor; Director, Southwest Investors Income Fund, Inc.,
Government Income Fund, Inc., U.S. Trend Fund, Inc., Investors Cash
Reserve, Plimony Fund, Inc. (registered investment companies).
+FRANCIS A. SUNDERLAND, Trustee. 309 Quito Place, Castle Pines, Castle
Rock, Colorado 80104. Private Investor.
*+DENIS P. JAMISON, Vice President and Portfolio Manager. P.O. Box 1515,
Saddle Brook, N.J. 07663. Senior Vice President, Director of Fixed
Income Strategy, Lexington Management Corporation. Mr. Jamison is a
Chartered Financial Analyst and a member of the New York Society of
Security Analysts.
*+LISA A. CURCIO, Vice President and Secretary. P.O. Box 1515, Saddle Brook,
N.J. 07663. Senior Vice President and Secretary, Lexington Management
Corporation; Vice President and Secretary, Lexington Funds
Distributor, Inc.
*+RICHARD M. HISEY, Vice President and Treasurer. P.O. Box 1515, Saddle
Brook, N.J. 07663. Chief Financial Officer, Managing Director and
Director, Lexington Management Corporation; Chief Financial Officer,
Vice President and Director, Lexington Funds Distributor, Inc.; Chief
Financial Officer, Market Systems Research Advisors, Inc.
*+RICHARD LAVERY, CLU ChFC, Senior Vice President. P.O. Box 1515, Saddle
Brook, N.J. 07663. Senior Vice President, Lexington Management
Corporation; Vice President, Lexington Funds Distributor, Inc.
*+JANICE A. CARNICELLI, Vice President. P.O. Box 1515, Saddle Brook, N.J.
07663.
*+CHRISTIE CARR, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to October 1992, Senior Accountant, KPMG Peat Marwick
LLP.
*+SIOBHAN GILFILLAN, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663.
*+THOMAS LUEHS, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to November, 1993, Supervisor Investment Accounting,
Alliance Capital Management, Inc.
*+SHERI MOSCA, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to September 1990, Fund Accounting Manager, Lexington Group of
Investment Companies.
*+ANDREW PETRUSKI, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to May 1994, Supervising Senior Accountant, NY Life
Securities. Prior to December 1990, Senior Accountant, Dreyfus
Corporation.
*+PETER CORNIOTES, Assistant Secretary. P.O. Box 1515, Saddle Brook, N.J.
07663. Assistant Secretary, Lexington Management Corporation;
Assistant Secretary, Lexington Funds Distributor, Inc.
*+ENRIQUE J. FAUST, Assistant Secretary. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to March 1994, Blue Sky Compliance Coordinator,
Lexington Group of Investment Companies.
13
<PAGE>
*"Interested person" and/or "affiliated person" of LMC as defined in
the Investment Company Act of 1940, as amended.
+Messrs. Corniotes, DeMichele, Duer, Faust, Hisey, Jamison, Kantor,
Lavery, Luehs, Miller, Olmsted, Petruski, Preston, Smith and Sunderland, and
Mmes. Carnicelli, Carr, Curcio, Evans, Gilfillan, Mosca and Russell hold
similar offices with some or all of the other registered investment
companies advised and/or distributed by Lexington Management Corporation and
Lexington Funds Distributor, Inc.
Trustees not employed by the Trust or its affiliates receive an annual
fee of $600 and a fee of $150 for each meeting attended plus reimbursement
of expenses for attendance at regular meetings. For the fiscal year ended
December 31, 1994, an aggregate of $4,650 fees and expenses was paid to
eight Trustees not employed by the Trust's affiliates. The Board of Trustees
held four meetings in the past fiscal year. The Board does not have any
audit, nominating or compensation committees.
Aggregate Total Compensation Number of
Compensation From Fund and Directorships in
Name of Director From Fund Fund Complex Fund Complex
- ---------------- ------------ ------------------ ----------------
Robert M. DeMichele 0 0 15
Beverley C. Duer $1350 $20,250 15
Barbara R. Evans 0 0 14
Lawrence Kantor 0 0 15
Donald B. Miller $1350 $20,250 14
Francis Olmsted $1350 $18,900 13
John G. Preston $1350 $20,250 14
Margaret Russell $1350 $18,900 13
Philip C. Smith $1350 $20,250 14
Francis A. Sunderland $1200 $16,800 13
<PAGE>
Independent Auditors' Report
The Board of Trustees and Shareholders
Lexington Money Market Trust:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Money Market
Trust as of December 31, 1994, the related statement of operations for the year
then ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Lexington Money Market Trust as of December 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
February 6, 1995
15
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1994
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER: 79.3%
$1,500,000 American General Finance Corporation .......... 01/25/95 5.63% $ 1,494,520
1,350,000 American General Finance Corporation .......... 01/17/95 5.52 1,346,803
3,000,000 American Telephone and Telegraph Company ...... 02/14/95 6.20 2,977,842
5,000,000 A.I. Credit Corporation ....................... 02/13/95 6.25 4,963,570
4,000,000 Bankers Trust Company ......................... 01/26/95 5.58 3,984,945
3,500,000 Bellsouth Telecommunications, Inc. ............ 02/10/95 5.76 3,478,222
4,200,000 Commercial Credit Corporation ................. 01/10/95 5.64 4,194,225
5,000,000 Consolidated Natural Gas Company .............. 02/15/95 6.23 4,962,030
5,000,000 Daimler-Benz North America Corporation ........ 02/09/95 6.20 4,967,175
2,200,000 Echlin Inc. ................................... 01/06/95 5.73 2,198,289
1,000,000 Ford Motor Credit Corporation ................. 01/27/95 6.09 995,727
3,900,000 Ford Motor Credit Corporation ................. 02/28/95 6.05 3,863,054
800,000 General Electric Credit Corporation ........... 02/24/95 6.16 792,800
1,700,000 General Electric Credit Corporation ........... 01/13/95 5.55 1,696,940
1,200,000 General Electric Credit Corporation ........... 01/18/95 5.53 1,196,975
1,400,000 General Electric Credit Corporation ........... 02/24/95 5.97 1,387,820
5,000,000 Georgia Power Company ......................... 02/08/95 6.24 4,967,806
2,000,000 Hewlett-Packard Company ....................... 02/27/95 5.19 1,984,191
5,200,000 Hubbell Inc. .................................. 02/23/95 5.94 5,155,750
4,500,000 John Deere Capital Corporation ................ 02/01/95 5.65 4,478,713
4,500,000 J.C. Penney Funding Corporation ............... 01/20/95 5.64 4,486,938
5,000,000 McGraw Hill Inc. .............................. 02/10/95 6.08 4,967,081
4,000,000 Metlife Funding Corporation ................... 01/30/95 5.58 3,982,561
1,000,000 Pepsico Inc. .................................. 02/06/95 5.64 994,520
4,400,000 Prudential Funding Inc. ....................... 02/21/95 5.99 4,363,747
3,600,000 Republic New York Corporation ................. 02/03/95 6.17 3,580,134
2,300,000 Smithkline Beecham Corporation ................ 01/09/95 5.08 2,297,495
2,950,000 Walt Disney Company ........................... 01/11/95 5.50 2,945,616
------------
TOTAL COMMERCIAL PAPER (cost $88,705,489) ..... 88,705,489
------------
ADJUSTABLE RATE NOTES: 7.9%
4,600,000 Baylis Group Partnership Series '92
Societe Generale* ........................... 01/01/10 4.35 4,600,000
4,200,000 Community Health Systems, Inc. Series A
First Union National Bank* .................. 10/01/03 4.40 4,200,000
------------
TOTAL ADJUSTABLE RATE NOTES (cost $8,800,000) . 8,800,000
------------
</TABLE>
16
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1994 (continued)
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS: 2.1%
$1,350,000 U.S. Treasury Bills ........................... 01/12/95 4.23% $ 1,348,338
1,000,000 U.S. Treasury Bills ........................... 01/12/95 4.12 998,800
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $2,347,138) ........................... 2,347,138
------------
OTHER U.S. GOVERNMENT OBLIGATIONS: 5.1%
5,000,000 Federal Farm Credit Bank ...................... 02/27/95 6.01 4,953,529
800,000 Federal Home Loan Bank ........................ 01/03/95 5.83 799,744
------------
TOTAL OTHER U.S. GOVERNMENT OBLIGATIONS
(cost $5,753,273) ........................... 5,753,273
------------
ADJUSTABLE RATE MUNICIPAL BONDS: 4.5%
5,000,000 City of New York (General Obligation Series B)
(cost $5,000,000) ........................... 01/10/95 6.20 5,000,000
------------
TOTAL INVESTMENTS: 98.9% (cost $110,605,900(D)) 110,605,900
Other assets in excess of liabilities: 1.1% ... 1,198,829
------------
TOTAL NET ASSETS: 100.0% (equivalent to $1.00
per share on 111,804,729 shares outstanding) $111,804,729
============
*Seven day demand Floating Rate Note.
(D)Aggregate cost for Federal income tax purposes is identical.
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
17
<PAGE>
Lexington Money Market Trust
Statement of Assets and Liabilities
December 31, 1994
Assets
Investments, at value (cost $110,605,900) (Note 1) ............... $110,605,900
Cash (Note 4) .................................................... 289,976
Receivable for shares sold ....................................... 1,446,225
Interest receivable .............................................. 68,262
------------
Total Assets ................................................. 112,410,363
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ................. 45,959
Payable for shares redeemed ...................................... 482,172
Accrued expenses ................................................. 77,503
------------
Total Liabilities ............................................ 605,634
------------
Net Assets (equivalent to $1.00 per share on 111,804,729
shares outstanding) (Note 3) .................................... $111,804,729
============
Net Assets consist of:
Shares of beneficial interest-$.10 par value ..................... $ 11,180,473
Additional paid-in capital ....................................... 100,624,256
------------
$111,804,729
============
Lexington Money Market Trust
Statement of Operations
Year ended December 31, 1994
Investment Income
Interest income ...................................... $ 4,352,177
Expenses
Investment advisory fee (Note 2) .................... $ 503,124
Accounting and shareholder services expense (Note 2) 140,705
Custodian and transfer agent expenses ............... 193,715
Printing and mailing ................................ 71,155
Directors' fees and expenses ........................ 4,650
Audit and legal ..................................... 22,550
Registration fees ................................... 37,175
Computer processing fees ............................ 7,560
Other expenses ...................................... 50,397
---------
Total expenses ................................... 1,031,031
Less: expenses recovered under contract with
investment adviser (Note 2) ..................... 23,782 1,007,249
--------- ------------
Net investment income ............................ 3,344,928
------------
Increase in Net Assets Resulting from Operations ..... $ 3,344,928
============
The Notes to Financial Statements are an integral part of these statements.
18
<PAGE>
Lexington Money Market Trust
Statements of Changes in Net Assets
Years ended December 31, 1994 and 1993
1994 1993
------------ -----------
Net investment income ............................ $ 3,344,928 $ 2,343,055
Dividends to shareholders from
net investment income ........................... (3,344,928) (2,343,055)
Increase (decrease) in net assets from share
transactions (Note 3) ........................... 17,086,315 (16,734,572)
------------ -----------
Net increase (decrease) in net assets ............ 17,086,315 (16,734,572)
Net Assets
Beginning of period ............................ 94,718,414 111,452,986
------------ -----------
End of period .................................. $111,804,729 $94,718,414
============ ===========
The Notes to Financial Statements are an integral part of these statements.
Lexington Money Market Trust
Notes to Financial Statements
December 31, 1994 and 1993
1. Significant Accounting Policies
Lexington Money Market Trust (the "Trust") is an open end diversified management
investment company registered under the Investment Company Act of 1940, as
amended. The following is a summary of significant accounting policies followed
by the Trust in the preparation of its financial statements:
Securities Security transactions are accounted for on a trade date basis.
Investments are valued at amortized cost, which approximates market value. Under
this valuation method, a portfolio instrument is valued at cost and any discount
or premium is amortized on a constant basis to the maturity of the instrument.
Interest income is accrued as earned.
Federal Income Taxes It is the Trust's intention to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes has been made.
Dividends Dividends are declared daily from net investment income and net
realized gain (loss) on investments.
2. Investment Advisory Fees and Other Transactions with Affiliate
The Trust pays an investment advisory fee to Lexington Management Corporation
(LMC) at the annual rate of 0.50% of that portion of the Trust's average daily
net assets up to $500 million and .45% of its average daily net assets in excess
of $500 million. LMC is required to reimburse the Trust for any expenses,
including the investment adviser's fee but excluding interest and taxes, in
excess of 1% of the Trust's average daily net assets. Reimbursement for the year
ended December 31, 1994 amounted to $23,782 and is set forth in the statement of
operations.
The Fund also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs, which are incurred by the Fund but paid by LMC.
19
<PAGE>
Lexington Money Market Trust
Notes to Financial Statements
December 31, 1994 and 1993 (continued)
3. Shares of Beneficial Interest
Transactions (at $1.00 per share) in shares were as follows:
Year ended Year ended
December 31, December 31,
1994 1993
----------- -----------
Shares sold ....................... 205,550,508 147,596,684
Shares issued to shareholders
on reinvestment of dividends ..... 3,096,009 2,144,722
----------- -----------
208,646,517 149,741,406
Shares redeemed ................... (191,560,202) (166,475,978)
----------- -----------
Net increase (decrease) ........... 17,086,315 (16,734,572)
=========== ===========
4. Cash
In order to facilitate the clearing process for redemptions by check, the Fund
maintains a compensating balance with its transfer agent. At December 31, 1994,
this compensating balance amounted to $204,900 and is included in cash in the
statement of assets and liabilities.
Lexington Money Market Trust
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1994 1993 1992 1991 1990
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income ........................... 0.0330 0.0230 0.0299 0.0532 0.0732
Less distributions:
Dividends from net investment income ............ (0.0330) (0.0230) (0.0299) (0.0532) (0.0732)
------- ------- ------- ------- -------
Net asset value, end of period ................... $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return ..................................... 3.35% 2.32% 3.03% 5.45% 7.56%
Ratio to average net assets:
Expenses, before reimbursement ................. 1.02% 1.00% 1.03% 1.02% 0.97%
Expenses, net of reimbursement ................. 1.00% 1.00% 1.00% 1.00% 0.97%
Net investment income, before reimbursement .... 3.30% 2.30% 2.99% 5.35% 7.32%
Net investment income .......................... 3.32% 2.30% 3.02% 5.37% 7.32%
Net assets, end of period (000's omitted) ........ $111,805 $94,718 $111,453 $143,137 $176,127
</TABLE>
20
