PROSPECTUS
April 29, 1996
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 April 29, 1996, 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%
----
Total Fund Operating Expenses ....................................... 1.00%
====
Example: 1 year 3 years 5 years 10 years
------ ------- ------- --------
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, 1995 to December 31, 1995. Absent expense reimbursements, total
Fund operating expenses would have been 1.08% 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, 1995 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.
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Selected Per Share Data for a share outstanding throughout the period
<TABLE>
<CAPTION>
Year Ended December 31,
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1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<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 0.0495 0.0330 0.0230 0.0299 0.0532 0.0732 0.0828 0.0678 0.0610 0.0616
Less distributions:
Dividends from net
investment income (0.0495) (0.0330) (0.0230) (0.0299) (0.0532) (0.0732) (0.0828) (0.0678) (0.0610) (0.0616)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
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 5.06% 3.35% 2.32% 3.03% 5.45% 7.56% 8.60% 7.00% 6.29% 6.35%
Ratio to average net assets:
Expenses, before
reimbursement 1.08% 1.02% 1.00% 1.03% 1.02% 0.97% 0.99% 0.97% 0.80% 0.91%
Expenses, net of
reimbursement 1.00% 1.00% 1.00% 1.00% 1.00% 0.97% 0.99% 0.97% 0.80% 0.91%
Net investment income,
before reimbursement 4.87% 3.30% 2.30% 2.99% 5.35% 7.32% 8.29% 6.74% 6.13% 6.17%
Net investment income,
net of reimbursement 4.95% 3.32% 2.30% 3.02% 5.37% 7.32% 8.29% 6.74% 6.13% 6.17%
Net assets, end of period
(000's omitted) $88,786 $111,805 $94,718 $111,453 $143,137 $176,127 $182,703 $192,079 $212,487 $196,838
</TABLE>
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2
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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, 1995, the Trust's annualized
current yield was 4.79% and the compounded effective yield was 4.91%. 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, 1995 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 nine trustees (of whom six are
non-affiliated persons) who meet five 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 24 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 $3.0 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 Lexington Global Asset
Managers, Inc., a Delaware corporation with offices at Park 80 West, Plaza Two,
Saddle Brook, NJ 07663. Descendants of Lunsford Richardson, Sr., their spouses,
trusts and other related entities have a majority voting control of outstanding
shares of Lexington Global Asset Managers, Inc.
For the fiscal year ended December 31, 1995, 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, 1995 the Trust paid net advisory fees to LMC of
$473,889. 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 shall be valued by management in good faith
under the direction of 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.
5
<PAGE>
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 15th 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
quarterly, 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: 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 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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<PAGE>
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 three business 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 $25,000 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 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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<PAGE>
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 third 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 for the shares to be exchanged have been cleared.
Lexington Funds currently available for exchange are:
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC. (NASDAQ Symbol: LEXGX)
LEXINGTON GLOBAL FUND, INC. (NASDAQ Symbol: LXGLX)
LEXINGTON INTERNATIONAL FUND, INC. (NASDAQ Symbol: LEXIX) (Shares not available
in Missouri and Vermont)
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
LEXINGTON TROIKA DIALOG RUSSIA FUND, INC. (Expected to be available in
June, 1996)
LEXINGTON RAMIREZ GLOBAL INCOME FUND (NASDAQ Symbol: LEBDX)
LEXINGTON GOLDFUND, INC. (NASDAQ Symbol: LEXMX)
LEXINGTON CORPORATE LEADERS TRUST FUND (NASDAQ Symbol: LEXCX)
LEXINGTON GROWTH AND INCOME FUND, INC. (NASDAQ Symbol: LEXRX)
LEXINGTON SMALL CAP VALUE FUND, INC.
LEXINGTON CONVERTIBLE SECURITIES FUND (NASDAQ Symbol: CNCVX) (Shares not
available in Vermont)
LEXINGTON GNMA INCOME FUND, INC. (NASDAQ Symbol: LEXNX)
LEXINGTON MONEY MARKET TRUST (NASDAQ Symbol: LMMXX)
LEXINGTON TAX FREE MONEY FUND, INC. (NASDAQ Symbol: LTFXX)
LEXINGTON STRATEGIC INVESTMENTS FUND, INC. (NASDAQ Symbol: STIVX)
LEXINGTON STRATEGIC SILVER FUND, INC. (NASDAQ Symbol: STSLX)
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
8
<PAGE>
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 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
9
<PAGE>
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.
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 31,1996.
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
10
<PAGE>
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.
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.
The Code of Ethics adopted by each of the Adviser and the Fund prohibits all
affiliated personnel from engaging in personal investment activities which
compete with or attempt to take advantage of the Fund's planned portfolio
transactions. The objective of each Code of Ethics is that the operations of the
Adviser and Fund be carried out for the exclusive benefit of the Fund's
shareholders. All organizations maintain careful monitoring of compliance with
the Code of Ethics.
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.
11
<PAGE>
(Left Column)
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
Lexington Funds
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 Page
- -----------------------------------------------------------
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. Banks ........................ 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 ........................ 9
Dividend, Distribution and Reinvestment Policy ........ 9
Tax Matters ........................................... 9
Custodian, Transfer Agent and
Dividend Disbursing Agent ........................... 10
Counsel and Independent Auditors ...................... 10
Other Information ..................................... 10
(Right Column)
------------------------------------------
L E X I N G T O N
------------------------------------------
------------------------------------------
LEXINGTON
MONEY
MARKET
TRUST
(filled box)
(filled box)No sales charge
(filled box)No redemption fee
(filled box)Free check writing service
(filled box)Free telephone exchange
privilege
(filled box)
The Lexington Group
of
No-Load
Investment Companies
------------------------------------------
P R O S P E C T U S
APRIL 29, 1996
==============
12
<PAGE>
LEXINGTON MONEY MARKET TRUST
STATEMENT OF ADDITIONAL INFORMATION
APRIL 29, 1996
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 April 29, 1996, 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 ......................................................... 2
Investment Restrictions ................................................... 2
Yield Calculation ......................................................... 3
Determination of Net Asset Value .......................................... 3
Tax-Sheltered Retirement Plans ............................................ 4
Investment Adviser, Distributor and Administrator ......................... 5
Portfolio Transactions .................................................... 6
Dividend, Distribution and Reinvestment Policy ............................ 6
Tax Matters ............................................................... 7
Custodian, Transfer Agent and Dividend Disbursing Agent ................... 9
Management of the Trust ................................................... 9
Financial Statements ...................................................... 12
1
<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.
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,
2
<PAGE>
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.
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, 1995 was at an annual rate
of 4.79% and the effective yield was at an annual rate of 4.91%. 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
3
<PAGE>
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.
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 I" 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 I" 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.
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").
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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").
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.
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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
(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".
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(acute accent)Is 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 March 1, 1996, 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 Lexington Global Asset
Managers, Inc., a Delaware corporation with offices at Park 80 West, Plaza Two,
Saddle Brook, New Jersey 07663. Descendants of Lunsford Richardson, Sr., their
spouses, trusts and other related entities have a majority voting control of the
outstanding shares of Lexington Global Asset Managers, Inc.
LMC received from the Trust under the advisory agreement the following net
fees as of the fiscal year ended December 31, 1993, $509,533; December 31, 1994,
$503,124 and December 31, 1995, $473,889.
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 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
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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.
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
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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).
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 losses.
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.
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, Lexington Global Asset Managers,
Inc.; Director, Unione Italiana Reinsurance; Vice Chairman of Board of
Trustees, Union College; 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) and Trustee, Smith Richardson Foundation.
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+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).
+JOHN G. PRESTON, Trustee. 3 Woodfield Road, Wellesley, Massachusetts 02181.
Associate Professor of Finance, Boston College, Boston, Massachusetts.
+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 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, 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.
*+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 Vice President and 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.
*"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, 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.
The Board of Trustees met 5 times during the twelve months ended December
31, 1995, and each of the Trustees attended at least 75% of those meetings.
10
<PAGE>
Remuneration of Trustees and Certain Executive Officers:
Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof. Each Trustee who is not an
affiliate of the advisor is compensated for his or her services according to a
fee schedule which recognizes the fact that each Trustee also serves as a
Trustee of other investment companies advised by LMC. Each Trustee receives a
fee, allocated among all investment companies for which the Trustee serves.
Effective September 12, 1995 each Trustee receives annual compensation of
$24,000. Prior to September 12, 1995, the trustees who were not employed by the
Fund or its affiliates received annual compensation of $16,000.
Set forth below is information regarding compensation paid or accrued during
the period January 1, 1995 to December 31, 1995 for each Trustee:
- --------------------------------------------------------------------------------
Aggregate Total Compensation From Number of
Name of Trustee Compensation from Fund and Fund Complex Directorships in Fund
Fund Complex
- --------------------------------------------------------------------------------
Robert M. DeMichele 0 0 15
- --------------------------------------------------------------------------------
Beverley C. Duer $ 1,456 $22,616 15
- --------------------------------------------------------------------------------
Barbara R. Evans 0 0 14
- --------------------------------------------------------------------------------
Lawrence Kantor 0 0 14
- --------------------------------------------------------------------------------
Donald B. Miller $ 1,456 $22,616 14
- --------------------------------------------------------------------------------
John G. Preston $ 1,456 $22,616 14
- --------------------------------------------------------------------------------
Margaret Russell $ 1,456 $22,616 13
- --------------------------------------------------------------------------------
Philip C. Smith $ 1,456 $22,616 14
- --------------------------------------------------------------------------------
Francis A. Sunderland $ 1,456 $22,616 13
- --------------------------------------------------------------------------------
Retirement Plan for Eligible Directors/Trustees
Effective September 12, 1995, the Trustees instituted a Retirement Plan for
Eligible Directors/Trustees (the "Plan") pursuant to which each Director/Trustee
(who is not an employee of any of the Funds, the Advisor, Administrator or
Distributor or any of their affiliates) may be entitled to certain benefits upon
retirement from the Board. Pursuant to the Plan, the normal retirement date is
the date on which the eligible Director/Trustee has attained age 65 and has
completed at least ten years of continuous and non-forfeited service with one or
more of the investment companies advised by LMC (or its affiliates)
(collectively, the "Covered Funds"). Each eligible Director/Trustee is entitled
to receive from the Covered Fund an annual benefit commencing on the first day
of the calendar quarter coincident with or next following his date of retirement
equal to 5% of his compensation multiplied by the number of such
Director/Trustee's years of service (not in excess of 15 years) completed with
respect to any of the Covered Portfolios. Such benefit is payable to each
eligible Trustee in quarterly installments for ten years following the date of
retirement or the life of the Director/Trustee. The Plan establishes age 72 as a
mandatory retirement age for Directors/Trustees; however, Director/Trustees
serving the Funds as of September 12, 1995 are not subject to such mandatory
retirement. Directors/Trustees serving the Funds as of September 12, 1995 who
elect retirement under the Plan prior to September 12, 1996 will receive an
annual retirement benefit at any increased compensation level if compensation is
increased prior to September 12, 1997 and receive spousal benefits (i.e., in the
event the Director/Trustee dies prior to receiving full benefits under the Plan,
the Director/Trustee's spouse (if any) will be entitled to receive the
retirement benefit within the 10 year period.)
Retiring Trustees will be eligible to serve as Honorary Trustees for one
year after retirement and will be entitled to be reimbursed for travel expenses
to attend a maximum of two meetings.
Set forth in the table below are the estimated annual benefits payable to an
eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of December 31, 1995, the estimated credited years
of service for Trustees Duer, Miller, Preston, Russell, Smith and Sunderland
are 18, 22, 18, 15, 26 and 36, respectively.
Highest Annual Compensation Paid by All Funds
---------------------------------------------
$20,000 $25,000 $30,000 $35,000
Years of
Service Estimated Annual Benefit Upon Retirement
-------- ----------------------------------------
15 $15,000 $18,750 $22,500 $26,250
14 14,000 17,500 21,000 24,500
13 13,000 16,250 19,500 22,750
12 12,000 15,000 18,000 21,000
11 11,000 13,750 16,500 19,250
10 10,000 12,500 15,000 17,500
11
<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, 1995, 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, 1995 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, 1995, 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 5, 1996
12
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER: 90.0%
$4,000,000 Atlantic Richfield Company ................................ 01/24/96 5.70% $ 3,985,740
4,000,000 Avnet, Inc. ............................................... 01/23/96 5.75 3,986,189
4,000,000 Bellsouth Telecommunications, Inc. ........................ 02/08/96 5.77 3,976,144
4,000,000 Cargill, Inc. ............................................. 02/06/96 5.79 3,977,480
4,000,000 Columbia University ....................................... 01/12/96 5.83 3,993,033
4,100,000 Deutsche Bank Financial, Inc. ............................. 01/22/96 5.85 4,086,368
4,000,000 Echlin, Inc. .............................................. 01/29/96 5.86 3,982,235
4,000,000 Ford Motor Credit Corporation ............................. 01/18/96 5.91 3,989,044
4,100,000 General Electric Capital Corporation ...................... 01/02/96 5.99 4,099,328
2,000,000 Hercules, Inc. ............................................ 02/16/96 5.83 1,985,535
4,500,000 Indianapolis Power & Light Company ........................ 01/30/96 5.84 4,479,338
4,000,000 Interstate Power Company .................................. 01/26/96 5.88 3,984,028
4,000,000 J.C. Penney Funding, Inc. ................................. 01/31/96 5.82 3,981,067
4,000,000 Metlife Funding, Inc. ..................................... 01/19/96 5.80 3,988,680
3,900,000 Midamerican Energy Company ................................ 03/22/96 5.62 3,852,000
3,000,000 National Rural Utility Cooperative Finance Corporation .... 03/15/96 5.72 2,965,775
3,000,000 Prudential Funding Corporation ............................ 01/05/96 6.01 2,998,027
3,700,000 South Carolina Electric and Gas Company ................... 02/05/96 5.70 3,679,928
4,000,000 USAA Capital Corporation .................................. 02/14/96 5.74 3,972,622
4,000,000 Vereinsbank Financial, Inc. ............................... 01/23/96 5.84 3,986,067
4,000,000 Winn-Dixie Stores, Inc. ................................... 02/08/96 5.82 3,976,018
-----------
TOTAL COMMERCIAL PAPER (cost $79,924,646) ................. 79,924,646
-----------
ADJUSTABLE RATE NOTE: 4.5%
4,000,000 Community Health System, Inc. Series A
First Union National Bank* (cost $4,000,000) ............ 10/01/03 6.15 4,000,000
-----------
U.S. GOVERNMENT OBLIGATION: 0.7%
600,000 Treasury Bills (cost $589,223) ............................ 05/02/96 5.54 589,223
-----------
</TABLE>
13
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER U.S. GOVERNMENT OBLIGATIONS: 4.9%
$1,800,000 Federal Home Loan Bank .................................... 02/13/96 5.72% $ 1,788,068
2,600,000 Federal Home Loan Mortgage Corporation .................... 02/05/96 5.73 2,585,895
-----------
TOTAL OTHER U.S. GOVERNMENT OBLIGATIONS
(cost $4,373,963) ....................................... 4,373,963
-----------
TOTAL INVESTMENTS: 100.1% (cost $88,887,832+) 88,887,832
Liabilities in excess of other assets: (0.1%) ............. (101,874)
-----------
TOTAL NET ASSETS: 100.0% (equivalent to
$1.00 per share on 88,785,958 shares outstanding) ....... $88,785,958
===========
*Seven day demand Floating Rate Note.
+Aggregate cost for Federal income tax purposes is identical.
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
14
<PAGE>
Lexington Money Market Trust
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<S> <C>
Assets
Investments, at value (cost $88,887,832) (Note 1) ............................ $ 88,887,832
Cash (Note 4) ................................................................ 204,111
Receivable for shares sold ................................................... 392,113
Interest receivable .......................................................... 47,791
------------
Total Assets ......................................................... 89,531,847
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ............................. 52,483
Payable for shares redeemed .................................................. 599,920
Accrued expenses ............................................................. 93,486
------------
Total Liabilities .................................................... 745,889
------------
Net Assets (equivalent to $1.00 per share on 88,785,958 shares outstanding)
(Note 3) ................................................................... $ 88,785,958
============
Net Assets consist of:
Shares of beneficial interest-$.10 par value ................................. $ 8,878,596
Additional paid-in capital ................................................... 79,907,362
------------
Net Assets ........................................................... $ 88,785,958
============
</TABLE>
Lexington Money Market Trust
Statement of Operations
Year ended December 31, 1995
<TABLE>
<S> <C> <C>
Investment Income
Interest income .................................................... $ 5,641,637
Expenses
Investment advisory fee (Note 2) ............................... $473,889
Accounting and shareholder services expense (Note 2) ........... 162,060
Custodian and transfer agent expenses .......................... 160,235
Printing and mailing ........................................... 84,420
Directors' fees and expenses ................................... 11,270
Audit and Legal ................................................ 27,117
Registration fees .............................................. 32,330
Computer processing fees ....................................... 18,930
Other expenses ................................................. 51,760
---------
Total expenses ............................................. 1,022,011
Less: expenses recovered under contract with
investment adviser (Note 2) .............................. 73,268 948,743
--------- ------------
Net investment income ...................................... 4,692,894
------------
Increase in Net Assets Resulting from Operations ................... $ 4,692,894
============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
15
<PAGE>
Lexington Money Market Trust
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net investment income ................................................ $ 4,692,894 $ 3,344,928
Dividends to shareholders from net investment income ................. (4,692,894) (3,344,928)
Increase (decrease) in net assets from share transactions (Note 3) ... (23,018,771) 17,086,315
------------ ------------
Net increase (decrease) in net assets ................................ (23,018,771) 17,086,315
Net Assets
Beginning of period .............................................. 111,804,729 94,718,414
------------ ------------
End of period .................................................... $ 88,785,958 $111,804,729
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
Lexington Money Market Trust
Notes to Financial Statements
December 31, 1995 and 1994
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 Trust's investment objective is to seek a high level of current
income from short-term investments as is consistent with the preservation of
capital and liquidity. 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, 1995 amounted to $73,268 and is set forth in the statement of
operations.
The Trust also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs, which are incurred by the Trust but paid by LMC.
16
<PAGE>
Lexington Money Market Trust
Notes to Financial Statements
December 31, 1995 and 1994 (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,
1995 1994
----------- -----------
Shares sold ........................... 171,612,305 205,550,508
Shares issued to shareholders
on reinvestment of dividends ........ 4,309,282 3,096,009
----------- -----------
175,921,587 208,646,517
Shares redeemed ....................... (198,940,358) (191,560,202)
----------- -----------
Net increase (decrease) ............... (23,018,771) 17,086,315
=========== ===========
4. Cash
In order to facilitate the clearing process for redemptions by check, the Trust
maintains a compensating balance with its transfer agent. At December 31, 1995,
this compensating balance amounted to $112,000 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,
------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<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 ..................... 0.0495 0.0330 0.0230 0.0299 0.0532
Less distributions:
Dividends from net investment income ...... (0.0495) (0.0330) (0.0230) (0.0299) (0.0532)
------- ------- ------- ------- -------
Net asset value, end of period .............. $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return ................................ 5.06% 3.35% 2.32% 3.03% 5.45%
Ratio to average net assets:
Expenses, before reimbursement .......... 1.08% 1.02% 1.00% 1.03% 1.02%
Expenses, net of reimbursement .......... 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income,
before reimbursement .................. 4.87% 3.30% 2.30% 2.99% 5.35%
Net investment income,
including reimbursement ............... 4.95% 3.32% 2.30% 3.02% 5.37%
Net assets, end of period (000's omitted) ... $88,786 $111,805 $94,718 $111,453 $143,137
</TABLE>
17