Dear Shareholders:
- --------------------------------------------------------------------------------
Money market yields likely have bottomed. The Federal Reserve trimmed short
term interest rates by one-quarter of a percentage point in early February. This
reduced the Federal Funds rate-the interest rate banks charge each other for
overnight loans-to 5.25%. Since then, the return of the Lexington Money Market
Trust has averaged about 4.25%*. But the outlook is for higher interest rates in
the months ahead.
The economy is on the move. During the second quarter, the business
expansion was strong enough to create nearly 800,000 new jobs and Gross Domestic
Product likely increased more than 4%. The Federal Reserve has indicated that
they think the long-term non-inflationary growth trajectory for the economy is
about 2.0% to 2.5%. Barring a sudden business slowdown, we expect the Federal
Reserve to gradually increase short-term interest rates in order to apply the
brakes to economic growth. A minimum one-half percentage point increase in the
Federal Funds rate by year-end and a further rise in 1997 seems probable. Such
an increase would likely lift the yield of the Lexington Money Market Trust-now
4.40%-by a similar amount.
We're keeping the Trust's portfolio maturity short-24 days as of June 30th.
This compares with a 51 day average maturity for the typical taxable money
market fund. While the shorter average maturity probably takes 10 to 15 basis
points off our daily yield, it enables the Trust to respond more quickly to any
increases in money market interest rates. We anticipate the first increase in
the Federal Funds rate will occur in late August.
Cash keeps pouring into money market funds. Through mid-June, taxable money
fund assets were about 22% higher than a year earlier. Despite the attraction
provided by the high rates of return from stocks, investors still recognize the
high, inflation-adjusted, real rates of return and price stability offered by
money market funds.
We continue to stress high-grade commercial paper in our investment plan.
Such securities-which are the short-term I.O.U.'s of top tier U.S.
corporations-accounted for 94% of our holdings on June 30th. Government
securities and variable rate notes which can be redeemed upon seven days notice
account for the remainder of the Trust. The portfolio is extremely liquid with
little credit risk and this is in keeping with the primary goals of the Trust.
We appreciate your continued support and welcome the opportunity to discuss
any questions you may have about your investment.
Sincerely,
Denis P. Jamison Robert M. DeMichele
Portfolio Manager President
July, 1996 July, 1996
*The average annual yield for the seven day period ended June 30, 1996 was
4.40%. Shares of the Fund are not insured or guaranteed by the U.S. Government
and there can be no assurance that the Fund will be able to maintain a stable
net asset value of $1.00 per share.
1
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 1996 (unaudited)
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER: 93.9%
$4,000,000 Air Products and Chemicals, Inc. ............... 08/21/96 5.40% $ 3,970,193
2,200,000 Baltimore Gas and Electric Company ............. 08/16/96 5.48 2,184,961
4,500,000 Bayerische Vereinsbank Finance ................. 07/10/96 5.47 4,493,948
4,500,000 Cargill,Inc. ................................... 08/05/96 5.40 4,476,900
4,500,000 Centric Funding Company ........................ 07/26/96 5.44 4,483,375
2,000,000 Coca Cola Company .............................. 07/08/96 5.36 1,997,958
4,200,000 Dresser Industries, Inc. ....................... 07/31/96 5.46 4,181,275
4,800,000 Echlin, Inc. ................................... 07/15/96 5.43 4,790,051
2,700,000 Ford Motor Credit Corporation .................. 07/03/96 5.50 2,699,186
2,300,000 Ford Motor Credit Corporation .................. 07/23/96 5.46 2,292,466
5,000,000 H.J. Heinz Company ............................. 07/31/96 5.46 4,977,667
4,115,000 Indianapolis Power and Light Company ........... 07/22/96 5.42 4,102,230
3,800,000 Interstate Power Company ....................... 07/08/96 5.41 3,796,077
1,700,000 J.C. Penney Funding, Inc. ...................... 07/10/96 5.42 1,697,739
4,500,000 John Deere Capital Corporation ................. 07/10/96 5.44 4,493,981
4,500,000 Kimberly-Clark Corporation ..................... 07/09/96 5.41 4,494,680
5,000,000 Lucent Technologies, Inc. ...................... 07/26/96 5.47 4,982,100
4,300,000 MetLife Funding, Inc. .......................... 07/16/96 5.39 4,290,558
3,500,000 Nordstrom Credit, Inc. ......................... 07/18/96 5.44 3,491,158
4,700,000 PHH Corporation ................................ 07/11/96 5.43 4,693,041
3,500,000 Philip Morris Companies, Inc. .................. 07/12/96 5.36 3,494,385
4,500,000 Prudential Funding Corporation ................. 07/01/96 5.39 4,500,000
4,500,000 South Carolina Electric and Gas Company ........ 07/24/96 5.45 4,484,619
3,600,000 Tampa Electric Company ......................... 07/31/96 5.44 3,584,010
4,500,000 USAA Capital Corporation ....................... 07/19/96 5.38 4,488,143
1,800,000 Xerox Credit Corporation ....................... 07/18/96 5.39 1,795,512
-----------
TOTAL COMMERCIAL PAPER (cost $98,936,213) ...... 98,936,213
-----------
ADJUSTABLE RATE NOTE: 3.6%
3,800,000 Community Health System, Inc. Series A
First Union National Bank* (cost $3,800,000) ... 10/01/03 5.75 3,800,000
-----------
</TABLE>
2
<PAGE>
Lexington Money Market Trust
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 1996 (unaudited) (continued)
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATION: 1.6%
$ 700,000 Treasury Bills .................................. 07/05/96 5.06% $ 699,617
300,000 Treasury Bills .................................. 04/03/97 5.54 288,074
700,000 Treasury Bills .................................. 04/03/97 5.46 671,825
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(cost $1,659,516) ............................. 1,659,516
------------
OTHER U.S. GOVERNMENT OBLIGATIONS: 0.5%
500,000 Federal Farm Credit Bank (cost $499,206) ........ 07/12/96 5.33 499,206
------------
TOTAL INVESTMENTS: 99.6% (cost $104,894,935+) 104,894,935
Other assets in excess of liabilities: 0.4% ..... 456,021
------------
TOTAL NET ASSETS: 100.0% (equivalent to
$1.00 per share on 105,350,956 shares
outstanding) .................................. $105,350,956
============
<FN>
*Seven day demand Floating Rate Note.
+Aggregate cost for Federal income tax purposes is identical.
</FN>
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
3
<PAGE>
Lexington Money Market Trust
Statement of Assets and Liabilities
June 30, 1996 (unaudited)
<TABLE>
Assets
<S> <C>
Investments, at value (cost $104,894,935) (Note 1) ............................. $104,894,935
Cash (Note 4) .................................................................. 412,513
Receivable for shares sold ..................................................... 484,285
Interest receivable ............................................................ 22,171
------------
Total Assets ........................................................... 105,813,904
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ............................... 35,430
Payable for shares redeemed .................................................... 323,778
Accrued expenses ............................................................... 103,740
------------
Total Liabilities ...................................................... 462,948
------------
Net Assets (equivalent to $1.00 per share on 105,350,956 shares outstanding)
(Note 3) ..................................................................... $105,350,956
============
Net Assets consist of:
Shares of beneficial interest-$.10 par value ................................... $ 10,535,097
Additional paid-in capital ..................................................... 94,815,859
------------
Net Assets ............................................................. $105,350,956
============
</TABLE>
<TABLE>
Lexington Money Market Trust
Statement of Operations
Six months ended June 30, 1996 (unaudited)
<S> <C> <C>
Investment Income
Interest income $ 2,576,635
Expenses
Investment advisory fee (Note 2) .............................. $238,016
Transfer agent and shareholder servicing fees (Note 2) ........ 105,713
Printing and mailing expenses ................................. 39,650
Accounting (Note 2) ........................................... 37,430
Computer processing fees ...................................... 17,140
Registration fees ............................................. 16,540
Professional fees ............................................. 16,289
Custodian fees ................................................ 8,295
Directors' fees ............................................... 7,050
Other expenses ................................................ 28,552
--------
Total expenses ............................................ 514,675
Less: expenses recovered under contract with
investment adviser (Note 2) .............................. 37,250 477,425
------- ------------
Net investment income ..................................... 2,099,210
------------
Increase in Net Assets Resulting from Operations .................. $ 2,099,210
============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
<TABLE>
<CAPTION>
Lexington Money Market Trust
Statements of Changes in Net Assets
Six months
ended Year ended
June 30, 1996 December 31,
(Unaudited) 1995
---------- ------------
<S> <C> <C>
Net investment income ................................................ $ 2,099,210 $ 4,692,894
Dividends to shareholders from net investment income ................. (2,099,210) (4,692,894)
Increase (decrease) in net assets from share transactions (Note 3) ... 16,564,998 (23,018,771)
------------ ------------
Net increase (decrease) in net assets ................................ 16,564,998 (23,018,771)
Net Assets
Beginning of period .............................................. 88,785,958 111,804,729
------------ ------------
End of period .................................................... $105,350,956 $ 88,785,958
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
Lexington Money Market Trust
Notes to Financial Statements
June 30, 1996 (unaudited) and December 31, 1995
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 to be 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 0.45% 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 1.0% of the Trust's average daily net
assets. Reimbursement for the six months ended June 30, 1996 amounted to $37,250
and is set forth in the statement of operations.
The Trust also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs of $74,565, which are incurred by the Trust but paid
by LMC.
5
<PAGE>
Lexington Money Market Trust
Notes to Financial Statements
June 30, 1996 (unaudited) and December 31, 1995 (continued)
3. Shares of Beneficial Interest
Transactions (at $1.00 per share) in shares were as follows:
Six months
ended Year ended
June 30, 1996 December 31,
(unaudited) 1995
------------- ----------
Shares sold ...................... 92,971,901 171,612,305
Shares issued to shareholders
on reinvestment of dividends ... 1,902,176 4,309,282
----------- ------------
94,874,077 175,921,587
Shares redeemed .................. (78,309,079) (198,940,358)
----------- ------------
Net increase (decrease) .......... 16,564,998 (23,018,771)
=========== ============
4. Cash
In order to facilitate the clearing process by check, the Trust maintains a
compensating balance with its transfer agent. At June 30, 1996, this
compensating balance amounted to $190,700 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>
Six months
ended
June 30, Year ended December 31,
1996 -------------------------------------
(unaudited) 1995 1994 1993 1992
----------- ---- ---- ---- ----
<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 .................. 0.0220 0.0495 0.0330 0.0230 0.0299
Less distributions:
Dividends from net investment income ... (0.0220) (0.0495) (0.0330) (0.0230) (0.0299)
Net asset value, end of period ........... $1.00 $1.00 $1.00 $1.00 $1.00
Total return ............................. 4.46%* 5.06% 3.35% 2.32% 3.03%
Ratio to average net assets:
Expenses, before reimbursement ......... 1.08%* 1.08% 1.02% 1.00% 1.03%
Expenses, net of reimbursement ......... 1.00%* 1.00% 1.00% 1.00% 1.00%
Net investment income,
before reimbursement ................. 4.33%* 4.87% 3.30% 2.30% 2.99%
Net investment income,
including reimbursement .............. 4.41%* 4.95% 3.32% 2.30% 3.02%
Net assets, end of period (000's omitted) . $105,351 $88,786 $111,805 $94,718 $111,453
</TABLE>
*Annualized
6
<PAGE>
(LEFT COLUMN)
The Lexington Group of
No Load Investment Companies
Lexington Worldwide Emerging Markets Fund, Inc.-Seeks long-term growth of
capital primarily through investment in equity securities of companies domiciled
in, or doing business in, emerging countries and emerging markets.
Lexington Troika Dialog Russia Fund, Inc.-Seeks long term capital appreciation
through investments primarily in equity securities of Russian companies.
Lexington Global Fund, Inc.-Seeks long-term growth of capital primarily through
investment in common stocks of companies domiciled in foreign countries and the
United States.
Lexington International Fund, Inc.-Seeks long-term growth of capital through
investment in companies domiciled in foreign countries.
Lexington Crosby Small Cap Asia Growth Fund, Inc.-Seeks long-term capital
appreciation through investment in companies domiciled in the Asia Region with a
market capitalization of less than $1 billion.
Lexington Ramirez Global Income Fund-Seeks high current income. Capital
appreciation is a secondary objective. The Fund invests in a combination of
foreign and domestic high-yield, lower rated debt securities.
Lexington Goldfund, Inc.-Seeks capital appreciation through investment in gold
bullion and shares of gold mining companies.
Lexington Growth and Income Fund, Inc.-Seeks capital appreciation over the
long-term through investments in the stocks of large, ably managed and well
financed companies.
Lexington Corporate Leaders Trust Fund-Seeks capital growth and reasonable
income through investment in an equal number of shares of an established list of
American blue chip corporations.
Lexington SmallCap Value Fund, Inc.-Seeks long-term capital appreciation through
investment in common stocks of companies domiciled in the United States with a
market capitalization of less than $1 billion.
Lexington Convertible Securities Fund-Seeks total return by providing capital
appreciation, current income and conservation of capital through investments in
a diversified portfolio of securities convertible into shares of common stock.
Lexington GNMA Income Fund, Inc.-Seeks to achieve a high level of current
income, consistent with liquidity and safety of principal, through investment
primarily in mortgage-backed GNMA ("Ginnie Mae") certificates that are
guaranteed as to the timely payment of principal and interest by the United
States Government.
Lexington Money Market Trust-Seeks a high level of current income consistent
with preservation of capital and liquidity through investments in interest
bearing short-term money market instruments.
Lexington Tax Free Money Fund, Inc.-Seeks current income exempt from Federal
income taxes while maintaining stability of principal, liquidity and
preservation of capital.
For more complete information about any of the Lexington Funds and a prospectus
which includes management fee and expenses call the distributor toll-free at
1-800-526-0056. Read the prospectus carefully before you invest or send money.
(RIGHT COLUMN)
LEXINGTON
INVESTOR SERVICES
- -------------------------------------------------------------------------------
As a Lexington shareholder, you should be aware of the many services available
to you.
No Load-The Lexington Funds are no load funds. That is, investments and
redemptions are made without any sales charges, commissions or redemption fees.
------------------
Free Telephone Exchange-Investments in the Lexington Funds may be exchanged for
shares of a different Lexington Fund at any time.
------------------
Check Writing Privileges-Lexington Money Market Trust and Lexington Tax Free
Money Fund permit investors immediate access to their funds with check writing
for withdrawals from their account.
------------------
Tax Sheltered Plans-IRA, Keogh, Pension, and Profit Sharing Prototype Plans are
available to qualified individuals. These plans offer investment flexibility
through the Share Exchange Service, simplified record keeping, convenience and
investment supervision.
------------------
Custodial Accounts for Minors-Investments may be made on behalf of minors under
the Uniform Gifts to Minors Act currently in effect in all states.
------------------
Systematic Withdrawal Plan-An investor may elect to receive a fixed amount from
his or her account each month or quarter, subject to certain minimums.
------------------
Complete Record Keeping-A statement is provided for every transaction in
addition to a year-end statement with tax information.
7
<PAGE>
Lexington
Money Market Trust
Investment Adviser
- ---------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Distributor
- ---------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
-----------------------------------------
All shareholder requests for services of
any kind should be sent to:
Transfer Agent
-----------------------------------------
STATE STREET BANK AND
TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
Or call toll free:
Service and Sales: 1-800-526-0056
24 Hour Account Information:
1-800-526-0052
-----------------------------------------
- ---------------------------------------------------------
(800) 526-0052
"LEXLINE"
24 hour toll-free telephone access to your
Lexington Fund account
Price/Yield * Account Balances * Exchanges *
Last Transactions * Total Return * Duplicate Statements
- ---------------------------------------------------------
This report has been prepared for the information of the shareholders of
Lexington Money Market Trust and is authorized for distribution to the public
only if it is accompanied or preceded by a currently effective prospectus which
sets forth expenses and other material information.
LEXINGTON
LEXINGTON
MONEY
MARKET
TRUST
------------------ X ------------------
Seeks a high level of current
income consistent with preservation
of capital and liquidity through
investments in interest bearing
short term money market
instruments.
------------------ X ------------------
SEMI-ANNUAL REPORT
JUNE 30, 1996
The Lexington Group
of No Load
Investment Companies
