<PAGE> 1
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SEMI-ANNUAL REPORT TO SHAREHOLDERS NOVEMBER 30, 1995
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[NAVIGATOR MONEY MARKET FUND LOGO]
A member of the NAVIGATOR GROUP of FUNDS
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<PAGE> 2
CHAIRMAN'S LETTER
January 17, 1996
Dear Shareholder:
-- Since our last report to you in July '95, there was another easing
of monetary policy by 25 basis points on December 19th. This action on
the part of the Federal Reserve put the end of the year federal funds
rate right where it began, 5.50%. With inflationary pressures
remaining low, it is possible that the Federal Reserve will continue
to lower interest rates as we move further into 1996.
In this period of relatively low interest rates, some investment
managers find it tempting to reduce investment standards, or extend the
average maturity of a portfolio in order to stretch for a few more
basis points of yield. I can assure you that is not the practice with
the Navigator Money Market Fund, as quality is something we take very
seriously at our organization.
As you know, we have built our company on being a quality investor, and
our basic philosophy remains unchanged. We will always strive to
provide our shareholders with a high quality portfolio with competitive
returns.
I want to thank you for your continued support of the Navigator Money
Market Fund. We continue to be optimistic about the coming year, and
want to assure you of our decade-long commitment of providing a
competitive product with a minimal degree of risk.
Sincerely,
/s/ R. J. WALKER
Robert J. Walker, Jr.
Chairman
1
<PAGE> 3
INVESTMENT REPORT
-- During the second half of the Fund's fiscal year, interest rates
across the maturity spectrum moved to lower levels. The Federal Reserve
began to loosen their restrictive monetary policy in early July by
lowering the Federal Funds target rate 25 basis points to 5.75%. As
important economic indicators began to point to the beginning of a
period of moderate to sluggish growth, the Fed eased again in December
by another 25 basis points to the current Federal Funds rate of 5.50%.
The investment strategy of the Navigator Money Market Fund has
consistently been safe and simple as well as placing emphasis on
portfolio quality. With the financial markets already pricing in
additional easings in 1996, yields on short-term money market
instruments remained inverted. To enhance the Fund's yield, the
Navigator Money Market Fund concentrated on investments in high quality
commercial paper on the shorter end of the yield curve which offered
more attractive returns. Consequently, the Fund maintained a shorter
weighted average maturity as compared to many of its peers.
Looking ahead, it is expected that the Fed will have some latitude to
lower short-term interest rates again. Uncertainties about the strength
of the economy and the unresolved budget debate could delay another
policy adjustment. Given this outlook, the Navigator Money Market Fund
will continue to take advantage of investment opportunities with
shorter maturities in order to maximize its returns.
2
<PAGE> 4
PORTFOLIO STATISTICS
<TABLE>
<CAPTION>
Average Average
Monthly Compound Maturity
Month Yield Yield* (Month-end)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------
1995 June 5.79% 5.95% 33 days
July 5.64 5.79 34
August 5.52 5.66 27
September 5.48 5.62 27
October 5.50 5.64 30
November 5.54 5.68 22
--------------------- ------- ------- --------
Average Annualized
Yields and Maturity 5.58% 5.72% 29 days
======= ======= ========
</TABLE>
*Compound yields assume reinvestment of dividends.
MATURITY DIVERSIFICATION SCHEDULE
AS OF NOVEMBER 30, 1995
<TABLE>
<CAPTION>
Amount
(Face Value) % of Portfolio % Cumulative
<S> <C> <C> <C>
-------------------------------------------------------------------
One Day $44,994,239 25.3% 25.3%
2-7 days 27,740,832 15.6 40.9
8-30 days 34,936,919 19.7 60.6
31-60 days 70,016,795 39.4 100.0
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Total $177,688,785
============
</TABLE>
3
<PAGE> 5
FINANCIAL STATEMENTS
Statement of Net Assets
November 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
AUTOMOBILE, MANUFACTURING -- 4.48%
$ 5,000,000 Ford Motor Credit........................ 01/19/96 5.69% $ 4,961,276
3,000,000 Ford Motor Credit........................ 01/24/96 5.68% 2,974,440
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TOTAL AUTOMOBILE, MANUFACTURING.................................. 7,935,716
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AUTOMOTIVE, FINANCE -- 2.24%
4,000,000 USL Capital Corporation.................. 01/12/96 5.69% 3,973,447
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TOTAL AUTOMOTIVE, FINANCE........................................ 3,973,447
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CONGLOMERATE -- 2.82%
5,000,000 General Electric Capital................. 12/15/95 5.70% 4,988,917
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TOTAL CONGLOMERATE............................................... 4,988,917
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CONSUMER ELECTRONICS -- 4.50%
3,000,000 Sharp Electronics........................ 12/08/95 5.73% 2,996,658
5,000,000 Sharp Electronics........................ 01/05/96 5.62% 4,972,681
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TOTAL CONSUMER ELECTRONICS....................................... 7,969,339
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CONSUMER NON-DURABLES -- 4.50%
8,000,000 Hasbro, Inc.............................. 12/21/95 5.69% 7,974,728
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TOTAL CONSUMER NON-DURABLES...................................... 7,974,728
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FINANCE, CORPORATE RECEIVABLES -- 9.53%
1,000,000 Asset Securitization Coop................ 01/12/96 5.80% 993,233
5,000,000 Asset Securitization Coop................ 01/16/96 5.70% 4,963,583
3,000,000 Asset Securitization Coop................ 01/19/96 5.75% 2,976,521
3,000,000 Corporate Asset Funding.................. 01/19/96 5.70% 2,976,725
5,000,000 Preferred Receivables Funding............ 01/22/96 5.75% 4,958,472
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TOTAL FINANCE, CORPORATE RECEIVABLES............................. 16,868,534
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FINANCIAL SERVICES, DIVERSIFIED -- 7.30%
5,000,000 Associates Corp. of North America........ 12/20/95 5.73% 4,984,879
8,000,000 John Deere Capital....................... 01/10/96 5.73% 7,949,067
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TOTAL FINANCIAL SERVICES, DIVERSIFIED............................ 12,933,946
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INDUSTRIAL DIVERSIFIED -- 4.49%
8,000,000 Hanson Finance (U.K.) PLC................ 01/05/96 5.70% 7,955,696
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TOTAL INDUSTRIAL DIVERSIFIED..................................... 7,955,696
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SECURITIES DEALERS -- 11.80%
4,000,000 Bear Stearns Companies................... 12/01/95 5.72% 4,000,000
4,000,000 Bear Stearns Companies................... 12/14/95 5.72% 3,991,738
5,000,000 Merrill Lynch............................ 01/16/96 5.57% 4,964,414
3,000,000 Morgan Stanley Group..................... 01/12/96 5.72% 2,979,980
5,000,000 Morgan Stanley Group..................... 01/25/96 5.75% 4,956,076
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TOTAL SECURITIES DEALERS......................................... 20,892,208
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TOBACCO -- 2.54%
4,500,000 Philip Morris Companies.................. 12/01/95 5.70% 4,500,000
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TOTAL TOBACCO.................................................... 4,500,000
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TOTAL COMMERCIAL PAPER........................................... 95,992,531
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</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
MATURITY INTEREST
PAR SECURITY DATE RATE VALUE
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
U.S. AGENCIES -- 18.85%
2,000,000 Federal Home Loan Bank.................. 12/01/95* 4.63% $ 1,995,943
10,000,000 Federal Home Loan Mortgage
Corporation........................... 12/26/95* 4.13% 10,000,000
2,715,000 Student Loan Marketing Association...... 12/05/95* 5.93% 2,718,832
1,200,000 Student Loan Marketing Association...... 12/01/95* 4.63% 1,198,296
10,000,000 Student Loan Marketing Association...... 12/05/95* 5.70% 10,000,000
7,500,000 Federal National Mortgage Association... 01/04/96 5.48% 7,461,183
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TOTAL U.S. AGENCIES............................................. 33,374,254
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REPURCHASE AGREEMENTS -- 27.29%
15,011,000 First Boston Variable
dated 11/30/95, due 12/04/95
(collateralized by
U.S. Treasury Notes; market value $15,611,155)... 5.65% 15,011,000
1,000 Goldman Sachs Variable
dated 11/30/95, due 12/04/95
(collateralized by
U.S. Treasury Bonds; market value................ 5.63% 1,000
10,000 Merrill Lynch
dated 11/30/94, due 12/04/95
(collateralized by
U.S. Treasury Notes; market value $10,269)....... 5.65% 10,000
33,300,000 Paine Webber Tri-Party
dated 11/30/95, due 12/01/95
(collateralized by
U.S. Government Agency-issued, Mortgage-backed
Securities; market value $34,298,023)............ 5.99% 33,300,000
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TOTAL REPURCHASE AGREEMENTS..................................... 48,322,000
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TOTAL VALUE OF SECURITIES OWNED -- 100.35%
(which approximates cost for federal income tax purposes)....... $177,688,785
LESS LIABILITIES REDUCED BY OTHER ASSETS -- (0.35%)............. (617,267)
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NET ASSETS APPLICABLE TO 171,943,980 SHARES OUTSTANDING;
EQUIVALENT TO $1.00 PER SHARE -- 100.00%...................... $177,071,518
============
</TABLE>
--------------------------------
* =The interest rate shown for each of
these obligations is the rate as of
November 30, 1995 and the maturity
shown is the next interest
re-adjustment date.
See accompanying notes.
5
<PAGE> 7
Statement of Operations
For the Six-Month Period Ended November 30, 1995
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest....................................................... $6,140,677
----------
EXPENSES:
Investment Advisory Fees....................................... 209,099
Administrative Fees............................................ 104,549
Less Investment Advisory & Administration Fees
Waived by Management........................................ (176,634)
Custodian and Transfer Agent Fees.............................. 57,440
Insurance...................................................... 5,122
Professional Fees.............................................. 26,371
Registration and Filing Fees................................... 11,617
Taxes -- other than Income..................................... 28,732
Miscellaneous.................................................. 17,118
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Total Expenses.............................................. 283,414
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NET INVESTMENT INCOME............................................ 5,857,263
Net Realized Loss on Securities Sold........................ --
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $5,857,263
==========
</TABLE>
See accompanying notes.
6
<PAGE> 8
Statements of Changes in Net Assets
For the Six-Month Period Ended November 30, 1995
and For the Year Ended May 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
6/01/95 6/01/94
TO 11/30/95 TO 5/31/95
------------ ------------
<S> <C> <C>
OPERATIONS:
Net Investment Income........................... $ 5,857,263 $ 13,947,997
Net Realized Gain (Loss) Securities Sold........ -- (2,706)
------------ ------------
Net Increase in Net Assets
Resulting from Operations.................... 5,857,263 13,945,291
------------ ------------
DIVIDENDS DISTRIBUTED FROM:
Net Investment Income........................... (5,857,263) (13,947,997)
Net Realized Gain............................... -- (3,406)
------------ ------------
Total Dividends Distributed..................... (5,857,263) (13,951,403)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold....................... 353,399,905 876,669,817
Net Asset Value of Shares Issued
upon Reinvestment of Dividends............... 14,650 179,501
Cost of Shares Repurchased...................... (414,451,903) (979,870,062)
------------ ------------
Net Decrease in Net Assets
Derived from Capital Share Transactions...... (61,037,348) (103,020,744)
------------ ------------
NET DECREASE IN NET ASSETS................... (61,037,348) (103,026,856)
NET ASSETS:
Beginning of Period............................. 238,108,866 341,135,722
------------ ------------
End of Period................................... $177,071,518 $238,108,866
============ ============
</TABLE>
See accompanying notes.
7
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
November 30, 1995
(Unaudited)
NOTE 1 -- ORGANIZATION
Navigator Money Market Fund -- Prime Obligations Portfolio (the "Fund")
is a portfolio offered by Navigator Money Market Fund, Inc. (the
"Company"), a no-load, diversified, open-end investment company
registered under the Investment Company Act of 1940, as amended.
Shares of the Fund are sold by Fairfield Group, Inc. ("Fairfield"), the
Manager, only to banks and other institutional investors for the
investment of their own funds, or funds for which they act in a
fiduciary, agency, or custodial capacity.
As Manager of the Company, Fairfield serves as the Fund's Investment
Adviser, Administrator, and Distributor. Fairfield is a wholly-owned
subsidiary of Legg Mason, Inc.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
Interest income and expenses are recorded on an accrual basis. Interest
income includes, when applicable, the pro rata amortization of premiums
and discounts.
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Investment securities are valued at
amortized cost, which approximates market value. Realized gains and
losses are determined by using the specific identification method.
The fair value of securities for which prices cannot be determined
using established procedures will be valued in good faith by the Board
of Directors. No investments were so valued at November 30, 1995.
Net investment income, determined as gross income less expenses, is
declared as a dividend each day. Declared dividends are distributable
to shareholders monthly on the first business day of the next month.
Dividends payable at November 30, 1995 amounted to $892,940.
No provision for federal income taxes is made since it is the intention
of the Fund to qualify as a regulated investment company under the
provisions of the Internal Revenue Code and to make requisite
distributions to shareholders which will relieve it from Federal income
and excise taxes.
For federal income tax purposes, net realized capital losses generated
in the Fund may be carried forward and applied against future capital
gains.
NOTE 3 -- INVESTMENT ADVISORY AND ADMINISTRATIVE FEES
As Manager, Fairfield provides investment advisory and administrative
services to the Fund pursuant to a Management Agreement dated April 17,
1993. Under the terms of such Agreement, the Manager is entitled to
receive an annual fee for investment advisory services of .20% on the
first $500 million of the average net assets of the Fund; .15% on the
next $1 billion; and .10% on average net assets in excess of $1.5
billion. Such fee is computed daily and paid monthly.
The Manager is also entitled to receive an administrative fee at the
annual rate of .10% on the first $1.5 billion of the average net assets
of the Fund and .05% thereafter. Such fee is computed daily and paid
monthly.
During the six-month period ended November 30, 1995, the management
fees (investment advisory and administrative) earned by Fairfield
totalled $313,648. Of the investment advisory and administrative fees
earned, $176,634 was voluntarily waived by the Manager in order to
assist the Fund in maintaining a competitive expense ratio. At November
30, 1995, Fairfield was owed $11,282 in administrative fees.
8
<PAGE> 10
NOTE 4 -- CUSTODIAN AND TRANSFER AGENT FEES
Custodial services are provided to the Fund by CoreStates Bank, N.A.
Fund/Plan Services, Inc. is the Fund's Transfer Agent and, as such,
provides transfer agency, dividend disbursing, and bookkeeping
services.
NOTE 5 -- OTHER TRANSACTIONS WITH AFFILIATES
Fairfield also serves as the Company's exclusive Distributor; however,
it receives no fees for providing distribution services.
Certain officers and directors of the Company are also officers and
directors of Fairfield. Such officers and directors are paid no fees by
the Fund for serving as officers and directors.
The Fund has paid legal fees to a law firm with which the Secretary of
the Company is associated.
NOTE 6 -- REPURCHASE AGREEMENTS
The investment policies of the Fund permit participation in repurchase
agreements. Collateral for such agreements is held by the Fund's
Custodian in the Federal Reserve's book-entry system. The Fund monitors
its repurchase agreements on a daily basis to ensure that the market
value of the collateral underlying the agreements is maintained at not
less than 100% of the repurchase price.
The Fund may participate in repurchase agreements arranged by Fairfield
for a fee not to exceed 1% of the purchase or sale price of the
transaction. During the six-month period ended November 30, 1995,
Fairfield received $5,140 in fees with respect to such transactions.
NOTE 7 -- CAPITAL SHARES
At November 30, 1995, there were 2 billion shares of $.001 par value
common stock authorized with respect to the Fund. Transactions in
capital shares of the Fund during the periods indicated were as
follows:
<TABLE>
<CAPTION>
6/01/95 6/01/94
TO 11/30/95 TO 5/31/95
------------ ------------
<S> <C> <C>
Shares sold....................................... 353,399,905 876,669,817
Shares issued upon reinvestment of dividends...... 14,650 179,501
Shares repurchased................................ (414,451,903) (979,870,062)
------------ ------------
Net decrease...................................... (61,037,348) (103,020,744)
Outstanding at beginning of period................ 238,111,095 341,131,839
------------ ------------
Outstanding at end of period...................... 177,073,747 238,111,095
============ ============
</TABLE>
9
<PAGE> 11
NOTE 8 -- FINANCIAL HIGHLIGHTS
Financial highlights for a share of the Fund outstanding
throughout the periods indicated
were as follows:
<TABLE>
<CAPTION>
6/01/95 6/01/94 6/01/93 6/01/92 6/01/91 6/01/90 6/01/89
TO TO TO TO TO TO TO
11/30/95 5/31/95 5/31/94 5/31/93 5/31/92 5/31/91 5/31/90
------- ------- ------- ------- ------- ------- -------
<S> <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
------ ------ ------ ------ ------ ------ ------
Income from
Investment Operations:
Net Investment Income........ .0294 .0501 .0314 .0323 .0499 .0728 .0853
Net Gain on Securities (both
realized and unrealized)....... -- -- -- -- .0001 -- --
------ ------ ------ ------ ------ ------ ------
Total Income
from Investment
Operations.............. .0294 .0501 .0314 .0323 .0500 .0728 .0853
------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from
Net Investment Income...... (.0294) (.0501) (.0314) (.0323) (.0499) (.0728) (.0853)
Dividends from
Capital Gains.............. -- -- -- -- (.0001) -- --
------ ------ ------ ------ ------ ------ ------
Total Distributions...... (.0294) (.0501) (.0314) (.0323) (.0500) (.0728) (.0853)
------ ------ ------ ------ ------ ------ ------
Net Asset Value,
end of period.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ====== ======
Total Return.................... 5.60% 5.19% 3.18% 3.28% 5.12% 7.53% 8.87%
Net Assets,
end of period (000)............$177,074 $238,109 $341,136 $417,114 $443,368 $563,265 $508,859
Ratios and Supplemental Data:
Ratio of Expenses
to Average Net Assets........ .27%(A) .28% .27% .26% .22% .21% .22%
Ratio of Expenses
to Average Net Assets,
excluding Fee Waivers........ .44%(A) .43% .42% .41% .37% .35% .37%
Ratio of Net Investment Income
to Average Net Assets........ 5.60%(A) 5.01% 3.14% 3.23% 4.99% 7.28% 8.53%
Ratio of Net Investment Income
to Average Net Assets,
excluding Fee Waivers........ 5.43%(A) 4.86% 2.99% 3.08% 4.84% 7.14% 8.38%
-----------------------------
*Commencement of Operations
(A) Annualized
<CAPTION>
6/01/88 6/01/87 06/01/86 7/22/85*
TO TO TO TO
5/31/89 5/31/88 5/31/87 5/31/86
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Asset Value,
beginning of period............ $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------
Income from
Investment Operations:
Net Investment Income........ .0859 .0686 .0614 .0645
Net Gain on Securities (both
realized and unrealized)....... -- -- -- --
------ ------ ------ ------
Total Income
from Investment
Operations.............. .0859 .0686 .0614 .0645
------ ------ ------ ------
Less Distributions:
Dividends from
Net Investment Income...... (.0859) (.0686) (.0614) (.0645)
Dividends from
Capital Gains.............. -- -- -- --
------ ------ ------ ------
Total Distributions...... (.0859) (.0686) (.0614) (.0645)
------ ------ ------ ------
Net Asset Value,
end of period.................. $1.00 $1.00 $1.00 $1.00
====== ====== ====== ======
Total Return.................... 8.95% 7.08% 6.32% 7.50%(A)
Net Assets,
end of period (000)............ $464,483 $326,406 $234,560 $177,519
Ratios and Supplemental Data:
Ratio of Expenses
to Average Net Assets........ .22% .23% .17% .19%(A)
Ratio of Expenses
to Average Net Assets,
excluding Fee Waivers........ .38% .39% .43% .49%(A)
Ratio of Net Investment Income
to Average Net Assets........ 8.59% 6.86% 6.14% 7.50%(A)
Ratio of Net Investment Income
to Average Net Assets,
excluding Fee Waivers........ 8.43% 6.69% 5.88% 7.20%(A)
-----------------------------
*Commencement of Operations
(A) Annualized
</TABLE>
10
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<PAGE> 13
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<PAGE> 14
INVESTMENT ADVISER,
ADMINISTRATOR,
AND DISTRIBUTOR
Fairfield Group, Inc.
Horsham, PA 19044
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
Philadelphia, PA 19103
AUDITORS
Ernst & Young LLP
Philadelphia, PA 19103
DIRECTORS
Robert J. Walker, Jr.
Philip D. Croll
Richard G. Gilmore
Jan J. Wieckowski
Robert E. Keith
[NAVIGATOR MONEY MARKET FUND LOGO]
200 Gibraltar Road
Horsham, PA 19044
1-800-441-3885
