DEAR SHAREHOLDERS:
- --------------------------------------------------------------------------------
Lexington Money Market Trust, like other money market mutual funds, generated an
excellent real rate of return for its shareholders during the first half of
1998. The Trust's 4.7%* annualized yield far exceeded the 1.7% increase in
consumer prices, as measured by the Consumer Price Index (twelve months ending
May 1998).
While interest rates in the longer end of the market declined during the first
half of the year, the short-end remained stable. In fact, there has been a
slight back up in rates from the beginning of the year. Initially, the Asian
crisis was expected to have an immediate impact on the domestic economy. Slower
growth would cause the Federal Reserve to loosen monetary policy by lowering
short-term interest rates. However, the economy continued to roll along quite
strongly. Also, during much of the first half, the labor market remained tight.
The unemployment rate slipped from 4.7% at the end of 1997 to 4.3% by April. GDP
growth for the first quarter came in at a whopping 5.6%. More impressive during
this period is that inflation remained benign.
Recent economic numbers indicate some caution. In June, both employment growth
and hours worked in the economy both slowed. Additionally, the manufacturing
sector of the economy shows signs of moderating. The Asian crisis clearly has
helped U.S. economic growth slip to a more sustainable pace. Economists are
anticipating gains as low as 1% for second quarter GDP.
We do not anticipate a Federal Reserve rate cut. While it has become clear that
the economy is slowing, it is by no means collapsing. The American consumer, who
accounts for roughly two-thirds of GDP growth, is still very confident. The
consumer has experienced an increase in wealth as a result of mortgage
refinancing and appreciation in equity prices. These factors have increased the
wealth of the consumer and will continue to spur additional spending. Therefore,
although the trade deficit has expanded higher, consumer spending should offset
this partially.
The average maturity of the Trust is 18 days compared with 57 days for the
typical money market fund. We continue to invest daily cash flow in commercial
paper that offers the best rate compared to the targeted Federal Funds rate. The
Trust consists of 92% high-grade commercial paper supplemented by 8% floating
rate demand notes. We are positioned to perform well in a stable or rising
interest rate environment.
We wish to thank our shareholders for their continued support.
Sincerely,
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
Denis P. Jamison Roseann G. McCarthy Robert M. DeMichele
Portfolio Manager Portfolio Manager President
August, 1998 August, 1998 August, 1998
* The average annual yield for the seven day period ended June 30, 1998 was
4.60%. 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, 1998 (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: 94.9%
$ 3,000,000 Alfa Corporation .............................. 07/14/98 5.66% $2,993,987
1,000,000 Alfa Corporation .............................. 07/23/98 5.65 996,614
1,750,000 American Honda Finance Corporation ............ 07/20/98 5.65 1,744,901
1,400,000 American Honda Finance Corporation ............ 07/24/98 5.64 1,395,063
1,500,000 Associates First Capital Corporation ............ 07/16/98 5.65 1,496,544
1,900,000 Associates First Capital Corporation ............ 07/21/98 5.64 1,894,173
1,800,000 Avnet, Inc. .................................... 07/17/98 5.66 1,795,552
1,500,000 Bemis Company, Inc. ........................... 07/08/98 5.70 1,498,367
928,000 Bemis Company, Inc. ........................... 07/17/98 5.66 925,711
3,900,000 Block Financial Corporation ..................... 07/28/98 5.67 3,883,796
4,500,000 Countrywide Home Loans, Inc. .................. 07/14/98 5.67 4,490,949
2,200,000 CSC Enterprises ................................. 07/07/98 5.67 2,197,965
1,600,000 CSC Enterprises ................................. 07/07/98 5.73 1,598,507
300,000 CSC Enterprises ................................. 07/13/98 5.78 299,435
3,800,000 Duke Capital Corporation ........................ 07/06/98 5.66 3,797,081
3,000,000 Eastern Corporate Federal Credit Union ......... 07/20/98 5.62 2,991,165
1,700,000 Ford Motor Credit Company ..................... 07/01/98 6.07 1,700,000
2,600,000 Ford Motor Credit Company ..................... 07/10/98 5.65 2,596,393
2,300,000 General Electric Capital Corporation ............ 07/07/98 5.64 2,297,884
800,000 GTE Funding, Inc. .............................. 07/02/98 5.63 799,877
611,000 GTE Funding, Inc. .............................. 07/06/98 5.71 610,523
1,200,000 GTE Funding, Inc. .............................. 07/10/98 5.67 1,198,329
4,500,000 J.P. Morgan & Company, Inc. ..................... 07/15/98 5.47 4,490,812
3,900,000 Merrill Lynch & Company, Inc. .................. 07/02/98 6.09 3,899,350
4,500,000 Mid-States Corporate Federal Credit Union ...... 07/24/98 5.70 4,483,900
4,000,000 MidAmerican Energy Company ..................... 07/13/98 5.64 3,992,627
4,000,000 Progress Capital Corporation .................. 07/08/98 5.63 3,995,699
4,000,000 Prudential Funding Corporation .................. 07/08/98 5.63 3,995,707
3,530,000 Reliastar Mortgage Corporation .................. 07/13/98 5.65 3,523,481
2,780,000 Sears Roebuck Acceptance Corporation ............ 07/29/98 5.64 2,768,064
1,300,000 Transamerica Finance Corporation ............... 07/14/98 5.65 1,297,404
2,800,000 Volkswagen of America, Inc. ..................... 07/10/98 5.62 2,796,136
4,500,000 Winn Dixie Stores, Inc. ........................ 08/11/98 5.67 4,471,556
1,300,000 Wisconsin Corporate Central Credit Union ...... 07/02/98 6.07 1,299,797
----------
TOTAL COMMERCIAL PAPER (cost $84,217,349) ...... 84,217,349
----------
</TABLE>
2
<PAGE>
LEXINGTON MONEY MARKET TRUST
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited) (continued)
<TABLE>
<CAPTION>
Yield to
Maturity
Principal Maturity on Date of Value
Amount Security Date Purchase (Note 1)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ADJUSTABLE RATE NOTES: 8.2%
$ 3,300,000 Community Health System, Inc. Series A
First Union National Bank* ........................ 10/01/03 5.85% $ 3,300,000
Virginia State Housing Development Authority
4,000,000 Series C* .......................................... 01/01/47 5.55 4,000,000
------------
TOTAL ADJUSTABLE RATE NOTES (cost $7,300,000). 7,300,000
------------
TOTAL INVESTMENTS: 103.1% (cost $91,517,349+) ...... 91,517,349
Liabilities in excess of other assets: (3.1%) ...... (2,738,725)
------------
TOTAL NET ASSETS: 100.0% (equivalent to $1.00
per share on 88,778,624 shares outstanding) ...... $ 88,778,624
============
</TABLE>
* Seven day demand Floating Rate Note.
+ Aggregate cost for Federal income tax purposes is identical.
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, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $91,517,349) (Note 1) ................................. $91,517,349
Cash .............................................................................. 310,238
Receivable for shares sold ......................................................... 599,169
Dividends and interest receivable ................................................... 32,789
-----------
Total Assets ............................................................... 92,459,545
-----------
LIABILITIES
Due to Lexington Management Corporation (Note 2) .................................... 30,356
Payable for shares redeemed ......................................................... 3,564,257
Accrued expenses .................................................................. 86,308
-----------
Total Liabilities ............................................................ 3,680,921
-----------
NET ASSETS (equivalent to $1.00 per share on 88,778,624 shares outstanding)
(Note 3) ........................................................................ $88,778,624
===========
NET ASSETS consist of:
Shares of beneficial interest - $.10 par value per share ........................... $ 8,877,862
Paid-in capital - unlimited authorized shares of beneficial interest at no par value 79,900,762
-----------
Total Net Assets ............................................................ $88,778,624
===========
</TABLE>
LEXINGTON MONEY MARKET TRUST
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest income ................................................... $2,614,949
EXPENSES
Investment advisory fee (Note 2) ................................. $232,272
Transfer agent and shareholder servicing expenses (Note 2) ...... 106,891
Accounting expenses (Note 2) .................................... 41,470
Printing and mailing expenses .................................... 30,420
Registration fees ................................................ 14,661
Professional fees ................................................ 14,788
Directors' fees and expenses .................................... 8,910
Computer processing fees ....................................... 8,688
Custodian expenses ............................................. 7,964
Other expenses ................................................... 20,817
--------
Total expenses ................................................ 486,881
Less: expenses recovered under contract with
investment adviser (Note 2) .................................... 22,421 464,460
-------- ----------
Net investment income .......................................... 2,150,489
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $2,150,489
==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
LEXINGTON MONEY MARKET TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1998 December 31,
(unaudited) 1997
----------------- ---------------
<S> <C> <C>
Net investment income ................................................ $ 2,150,489 $ 4,174,353
Distributions to shareholders from net investment income ............ (2,150,489) (4,174,353)
Decrease in net assets from capital share transactions (Note 3) ...... (6,370,561) (2,377,208)
------------ ------------
Net decrease in net assets .......................................... (6,370,561) (2,377,208)
NET ASSETS
Beginning of period ................................................ 95,149,185 97,526,393
------------ ------------
End of period ...................................................... $ 88,778,624 $ 95,149,185
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
LEXINGTON MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997
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:
INVESTMENTS Securities 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 is required.
DIVIDENDS Dividends are declared daily from the total of net investment
income and net realized gain (loss) on investments.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE
The Trust pays an investment advisory fee to Lexington Management Corporation
("LMC") at an annual rate of 0.50% 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
5
<PAGE>
LEXINGTON MONEY MARKET TRUST
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997 (continued)
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE (CONTINUED)
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, 1998
amounted to $22,421 and is set forth in the statement of operations. The Trust
also reimburses LMC for certain expenses, including accounting and shareholder
servicing costs of $88,812 which are incurred by the Trust, but paid by LMC.
3. SHARES OF BENEFICIAL INTEREST
Transactions (at $1.00 per share) in shares were
as follows:
<TABLE>
<CAPTION>
Six months ended Year ended
June 30, 1998 December 31,
(unaudited) 1997
------------------ -------------
<S> <C> <C>
Shares sold .................................... 50,343,175 116,527,395
Shares issued to shareholders on reinvestment of
dividends .................................... 1,975,249 3,869,183
---------- -----------
52,318,424 120,396,578
Shares redeemed .............................. (58,688,985) (122,773,786)
----------- ------------
Net decrease ................................. (6,370,561) (2,377,208)
=========== ============
</TABLE>
4. CASH
In order to facilitate the clearing process for redemptions by check, the Trust
maintains a compensating balance with its transfer agent. At June 30, 1998,
this compensating balance amounted to $193,000 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,
Six months ended ----------------------------------------------
June 30, 1998
(unaudited) 1997 1996 1995 1994
---------------- ------- ------- ------- -------
<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 ........................... 0.0229 0.0458 0.0441 0.0495 0.0330
Less distributions:
Distributions from net investment income ...... (0.0229) (0.0458) (0.0441) (0.0495) (0.0330)
------- -------- -------- --------- ---------
Net asset value, end of period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======== ======== ========= =========
Total return ................................... 4.67%* 4.68% 4.50% 5.06% 3.35%
Ratio to average net assets:
Expenses, before reimbursement or waivers ...... 1.05%* 1.04% 1.04% 1.08% 1.02%
Expenses, net of reimbursement or waivers ...... 1.00%* 1.00% 1.00% 1.00% 1.00%
Net investment income, before reimbursement
or waivers .................................... 4.58%* 4.55% 4.37% 4.87% 3.30%
Net investment income ........................... 4.63%* 4.58% 4.41% 4.95% 3.32%
Net assets, end of period (000's omitted) ...... $88,779 $ 95,149 $ 97,526 $ 88,786 $ 111,805
</TABLE>
* Annualized
6
<PAGE>
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 permits 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.
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 GLOBAL CORPORATE LEADERS 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 TROIKA DIALOG RUSSIA FUND, INC.--Seeks long-term capital appreciation
through investments primarily in the equity securities of Russian companies.
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 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.
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.
*Redemptions on shares of Lexington Troika Dialog Russia Fund, Inc. held less
than 365 days are subject to a redemption fee of 2% of the redemption proceeds.
<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 o Account Balances o Exchanges o
Last Transactions o Total Return o 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
-----------------
[GRAPHIC]
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.
----------------
SEMI-ANNUAL REPORT
JUNE 30, 1998
The Lexington Group
of NO LOAD
Investment Companies
