<PAGE> 1
---------------------------------------------------------------------------
SEMI-ANNUAL REPORT TO SHAREHOLDERS AUGUST 31, 1995
---------------------------------------------------------------------------
[NAVIGATOR TAX-FREE MONEY MARKET FUND LOGO]
A MEMBER OF THE NAVIGATOR GROUP OF FUNDS
---------------------------------------------------------------------------
<PAGE> 2
CHAIRMAN'S LETTER
October 17, 1995
Dear Shareholder:
- Recent economic reports have caused the Federal Reserve to not take
further action on monetary policy. The Fed's position of tight monetary
policy has been relaxed as the indicators show a slowing economy.
The recent IBC/Donoghue ranking of Tax-Free Institutional Funds ranked
by 12-month total return -- as of the Fund's year end -- show the
Navigator Tax-Free Fund in the top quartile of the funds reporting.
This is a strong testament to our investment strategy, as the majority
of the few funds ranked above us have significant portfolio holdings of
A.M.T. paper.
Quality is one of the founding principles of our organization. Others
may be tempted to reduce investment standards or extend the average
maturity of a portfolio in order to produce a few more basis points of
yield. I can assure you that this is not the practice of the Navigator
Funds. Quality is something we take seriously in our organization, and
is reviewed and monitored daily.
Everyone has strategy for keeping their yields competitive. The
Navigator strategy has consistently been safe and simple -- serviced by
investment professionals who understand the trust and investment
industry.
We are proud of the performance we have been able to deliver without
jeopardizing the quality of the portfolio. Our commitment to you is to
continue to deliver above-industry average returns, without
compromising quality.
Thank you for your continued confidence in the Navigator Tax-Free Fund.
Sincerely,
/s/ ROBERT J. WALKER, JR.
-------------------------
Robert J. Walker, Jr.
Chairman
1
<PAGE> 3
INVESTMENT REPORT
- The Federal Reserve's position of maintaining tight monetary policy
came to an end during the latest semi-annual period as the economy
showed signs of slowing down. Inflationary indicators continued to
hover in the 3.0% area, and preliminary GDP growth figures were
pointing to something less than 2.5%; a far cry from its peak of 5.1%
in the fourth quarter 1994. In early July the targeted Fed Funds rate
was cut 25 basis points to 5.75%, marking the first downward move since
mid-1992. The tax-exempt markets meanwhile, acted independent of their
taxable brethren, preferring to be dominated by technical pressures.
Early in the period, there was a one-two punch as the March 15
corporate tax payment date was followed by the annual April 15 personal
tax date. These occurrences resulted in upward pressure on yields, as
demonstrated by 90-day tax-exempt commercial paper yields increasing 20
basis points to an approximate 4.10%. Then, tax-exempt market
participants found themselves in the threshold of a thin new supply
calendar. Afterwards, yields declined as a result of thin new supply; a
trend that continued through the next corporate tax date in mid-June,
beyond the popular June 30 fiscal year-end date, and into mid-July. It
wasn't until the annual re-emergence of many short-term issuers that
helped move tax-exempt money market yields higher. This gradual upward
trend continued through the end of the Fund's semi-annual period.
90-day tax-exempt commercial paper ended the period offering investors
an approximate 3.75%, just slightly below yields six months earlier.
In an attempt to enhance the Fund's yield, the Fund's weighted average
maturity was active. After beginning the period at 40 days, the
portfolio was permitted to shorten to the 18 day area in early May as
investors were adequately compensated to maintain shorter maturities.
At that time, lower short-term yields were anticipated and an extension
program was undertaken, increasing the Fund's maturity to the 30-day
area. A larger than anticipated increase in assets in early July had
the effect of shortening the portfolio to the low 20-day area. These
assets were then invested throughout the yield curve, and by the end of
August, the Fund's maturity stood at 50 days.
Looking ahead, short-term yields are expected to remain volatile,
relatively speaking. The month of September typically offers investors
several new issues, and also marks quarter-end for the Wall Street
community. The month of October, however, is anticipated to have few
new issue offerings, suggesting that any upward pressure for rates in
September will be offset by downward pressure in October. The approach
of calendar year-end should push rates higher once again, leaving
investors with little to focus on between those dates. With respect to
the Fed, further easings are possible, but not probable.
In order to maintain Navigator's quality and selection standards, the
Fund continues to use only the highest quality securities,
acknowledging and respecting the demanding standards of our
shareholders.
2
<PAGE> 4
PORTFOLIO STATISTICS
<TABLE>
<CAPTION>
Average Average
Monthly Compound Maturity
Month Yield Yield* (Month-end)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------
1995 March 3.64% 3.70% 28 days
April 3.82 3.89 22
May 3.96 4.03 31
June 3.58 3.64 25
July 3.26 3.31 34
August 3.41 3.46 50
--------------------- ------ ------ --------
Average Annualized
Yields and Maturity 3.61% 3.67% 32 days
------ ------ --------
------ ------ --------
</TABLE>
*Compound yields assume reinvestment of dividends.
PORTFOLIO COMPOSITION
AS OF AUGUST 31, 1995
<TABLE>
<CAPTION>
Amount
(Face Value) % of Portfolio
<S> <C> <C>
------------------------------------------------------------------
Floating Rate Securities:
Daily Liquidity $36,300,000 31.6%
7-Day Liquidity 42,150,000 36.7
Notes and Bonds 15,071,187 13.2
Tax-Exempt Commercial Paper 20,100,000 17.5
Put Bonds 1,170,000 1.0
----------- --------
$114,791,187 100.0%
----------- --------
----------- --------
</TABLE>
PORTFOLIO QUALITY
AS OF AUGUST 31, 1995
<TABLE>
<CAPTION>
Moody's Ratings % of Portfolio
<S> <C> <C>
--------------------------------------------------------------------------------------
"MIG-1/VMIG-1" Highest Quality Short-term Instruments 49.8%
"Prime-1" Highest Quality
Tax-Exempt Commercial Paper 50.2
"Aaa" Best Quality Bonds 0.0
"Aa" High Quality Bonds 0.0
--------
100.0%
--------
--------
</TABLE>
3
<PAGE> 5
FINANCIAL STATEMENTS
Statement of Net Assets
August 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
PAR SECURITIES VALUE
---------- ------------------------------- ------------
<S> <C>
ALABAMA -- 5.60%
$ 3,100,000 Birmingham, Medical Clinic
Board Rev. Bonds (University
of Alabama -- UAHSF Medical
Center),
3.50% VRDO due 09/01/95...... $ 3,100,000
3,000,000 Columbia, PCR Bonds (Alabama
Power Co Project) Series A,
3.30% VRDO due 09/01/95...... 3,000,000
-----------
TOTAL ALABAMA.................. 6,100,000
---------------------------------------------------------
ALASKA -- 3.21%
3,500,000 Valdez, Marine Terminal
Rev. Bonds
(Exxon Pipeline Company),
3.50% VRDO due 09/01/95...... 3,500,000
-----------
TOTAL ALASKA................... 3,500,000
---------------------------------------------------------
COLORADO -- 2.11%
2,300,000 Moffat County, PCR Rfdg. Bonds
(Colorado UTE Electric Assn.
Inc Project),
3.60% VRDO due 09/06/95...... 2,300,000
-----------
TOTAL COLORADO................. 2,300,000
---------------------------------------------------------
FLORIDA -- 2.75%
3,000,000 Broward County, HFA,
MFHR Bonds
(Landings of Inverrary),
3.65% VRDO due 09/07/95...... 3,000,000
-----------
TOTAL FLORIDA.................. 3,000,000
---------------------------------------------------------
ILLINOIS -- 4.87%
1,300,000 Illinois HFA, IDR Bonds
(Midwest Cambridge),
3.95% VRDO due 09/01/95...... 1,300,000
4,000,000 Illinois HFDC Rev. Bonds
(Hospital Sisters Service)
Series E,
3.50% VRDO due 09/06/95...... 4,000,000
-----------
TOTAL ILLINOIS................. 5,300,000
---------------------------------------------------------
INDIANA -- 7.99%
4,100,000 Gary, Environmental Improvement
Rev.
Rfdg. Bonds (USX),
3.95% VRDO due 09/15/95...... 4,100,000
4,600,000 Mt. Vernon, Pollution Control
and Solid Waste Disposal Rev.
Rfdg. Bonds Series A,
3.80% CP due 11/10/95........ 4,600,000
-----------
TOTAL INDIANA.................. 8,700,000
---------------------------------------------------------
<CAPTION>
PAR SECURITIES VALUE
---------- ------------------------------- ------------
<S> <C>
IOWA -- 0.92%
$ 1,000,000 Waterloo, IA IDR Bonds
(Waterloo Civic Center Hotel),
3.80% VRDO due 09/01/95........ $ 1,000,000
-----------
TOTAL IOWA..................... 1,000,000
---------------------------------------------------------
LOUISIANA -- 1.65%
1,800,000 Parish of St. Charles PCR Bonds
(Shell Oil Co) Series B,
3.50% VRDO due 09/01/95...... 1,800,000
-----------
TOTAL LOUISIANA................ 1,800,000
---------------------------------------------------------
MASSACHUSETTS -- 5.97%
2,500,000 Massachusetts Dedicated Income
Tax Bonds Fiscal Recovery
Loan Series B,
3.20% VRDO due 09/01/95...... 2,500,000
2,000,000 Massachusetts Health &
Educational Fac. Auth. Rev.
Bonds (Harvard University)
Series L,
3.30% CP due 10/17/95........ 2,000,000
2,000,000 Massachusetts Industrial Fin
Agency PCR Rfdg. Bonds (New
England Power) Series B,
3.80% CP due 10/16/95........ 2,000,000
-----------
TOTAL MASSACHUSETTS............ 6,500,000
---------------------------------------------------------
MINNESOTA -- 2.75%
3,000,000 Regents of the University of
Minnesota Commercial Paper
Certificates Series B,
3.30% CP due 09/20/95........ 3,000,000
-----------
TOTAL MINNESOTA................ 3,000,000
---------------------------------------------------------
MISSOURI -- 4.38%
1,500,000 Missouri Environmental
Improvement & Energy
Resources Auth.
PCR Bonds
(Monsanto Company Project),
3.60% VRDO due 09/06/95...... 1,500,000
1,170,000 Missouri Environmental
Improvement & Energy
Resources Auth. PCR Bonds
(Union Electric) Series A,
4.00% Put due 06/01/96....... 1,170,000
2,100,000 Missouri Health & Education
Fac. Authority Rev Bonds (St.
Louis University)
3.40% VRDO due 09/01/95...... 2,100,000
-----------
TOTAL MISSOURI................. 4,770,000
---------------------------------------------------------
</TABLE>
4
<PAGE> 6
<TABLE>
<CAPTION>
PAR SECURITIES VALUE
---------- ------------------------------- ------------
<S> <C>
NEW YORK -- 4.60%
$ 5,000,000 New York City, New York TAN
Series A,
4.50% due 02/15/96........... $ 5,014,976
-----------
TOTAL NEW YORK................. 5,014,976
---------------------------------------------------------
OREGON -- 4.13%
4,500,000 Port of Morrow, Rev. Rfdg.
Bonds (Portland General
Electric Boardman Project),
3.55% VRDO due 09/01/95...... 4,500,000
-----------
TOTAL OREGON................... 4,500,000
---------------------------------------------------------
PENNSYLVANIA -- 13.52%
2,000,000 Beaver County, IDA PCR Rfdg.
Bonds (Duquesne Light) Series
B,
3.55% VRDO due 09/06/95...... 2,000,000
3,000,000 City of Philadelphia, TRAN
Series A
4.50% due 06/27/96........... 3,013,034
1,800,000 Delaware County, IDA Solid
Waste Rev. Bonds
(Scott Paper) Series D,
3.60% VRDO due 09/06/95...... 1,800,000
1,900,000 Lackawanna County,
IDA IDR Bonds
(National Book Co Inc.),
4.38% VRDO due 09/06/95...... 1,900,000
4,000,000 Montgomery County, IDA PCR
Rfdg. Bonds (PECO) Series A,
3.70% CP due 10/05/95........ 4,000,000
2,000,000 Temple University of the
Commonwealth System Of Higher
Educational University
Funding Obligation Series
1995,
5.00% due 05/22/96........... 2,009,677
-----------
TOTAL PENNSYLVANIA............. 14,722,711
---------------------------------------------------------
SOUTH DAKOTA -- 3.95%
4,300,000 Lawrence County, PCR Bonds
(Homestake Mining)
3.60% VRDO due 09/06/95...... 4,300,000
-----------
TOTAL SOUTH DAKOTA............. 4,300,000
---------------------------------------------------------
<CAPTION>
PAR SECURITIES VALUE
---------- ------------------------------- ------------
<S> <C>
TEXAS -- 22.80%
$ 1,500,000 Board of Regents of Texas A & M
University Permanent Univ
Fund Sub Lien Notes, Series
B,
3.75% CP due 10/10/95........ $ 1,500,000
3,000,000 Board of Regents of Texas A & M
University Permanent Univ
Fund Sub Lien Notes, Series
B,
3.30% CP due 10/12/95........ 3,000,000
2,200,000 Brazos River Auth, Variable
Rate Demand PCR Rfdg. Bonds
(Monsanto)
3.60% VRDO due 09/06/95...... 2,200,000
3,500,000 Harris County, HFDC
Rev. Bonds
(St. Lukes Episcopal
Hospital),
Series C,
3.40% VRDO due 09/01/95...... 3,500,000
3,500,000 Harris County, HFDC Hospital
Rev. Bonds
(Methodist Hospital)
3.40% VRDO due 09/01/95...... 3,500,000
2,000,000 North Central, HFDC
Hospital Rev. Bonds
(Methodist Hospital, Dallas),
Series B,
3.40% VRDO due 09/01/95...... 2,000,000
2,600,000 Port Arthur Navigation
District, PCR Bonds (Texaco)
3.55% VRDO due 09/01/95...... 2,600,000
1,500,000 Port of Corpus Christi
Authority of Nueces County,
Marine Term Rev. Bonds
3.60% VRDO due 09/06/95...... 1,500,000
5,000,000 Texas State TRAN Series A,
4.75% 08/30/96............... 5,033,500
-----------
TOTAL TEXAS.................... 24,833,500
---------------------------------------------------------
VIRGINIA -- 3.67%
4,000,000 Roanoke, IDA Hospital Rev.
Bonds (Carilion Health
System/Roanoke Hospital), Ser
C,
3.50% VRDO due 09/07/95...... 4,000,000
-----------
TOTAL VIRGINIA................. 4,000,000
---------------------------------------------------------
</TABLE>
5
<PAGE> 7
Statement of Net Assets (Cont.)
<TABLE>
<CAPTION>
PAR SECURITIES VALUE
---------- ------------------------------- ------------
<S> <C>
WASHINGTON -- 6.66%
$ 5,000,000 Port of Seattle, IDC Rev. Bonds
(Sysco Food Service Project)
3.65% VRDO due 09/06/95...... $ 5,000,000
2,250,000 Washington HFC MFMR
Rfdg. Bonds, Series B,
3.70% VRDO due 09/06/95...... 2,250,000
-----------
TOTAL WASHINGTON............... 7,250,000
---------------------------------------------------------
WYOMING -- 3.86%
4,200,000 Lincoln County, PCR Bonds
(PacifiCorp Project) Series
1994,
3.40% VRDO due 09/01/95...... 4,200,000
-----------
TOTAL WYOMING.................. 4,200,000
---------------------------------------------------------
TOTAL MUNICIPAL SECURITIES -- 105.39%....... $114,791,187
---------------------------------------------------------
---------------------------------------------------------
<CAPTION>
VALUE
------------
<S> <C>
TOTAL VALUE OF
SECURITIES OWNED -- 105.39%
(which approximates cost
for income tax purposes).................. $114,791,187
LIABILITIES REDUCED
BY OTHER ASSETS -- (5.39%)................ 5,867,214
------------
NET ASSETS APPLICABLE TO
108,952,906
SHARES OUTSTANDING;
EQUIVALENT TO
$1.00 PER SHARE -- 100.00%................ $108,923,973
------------
------------
------------------------
BAN = Bond Anticipation Notes
CP = Commercial Paper
HFA = Housing Finance Agency/Authority
HFC = Housing Finance Commission/Corporation
HFDC = Health Facility Development Corporation
IDA = Industrial Development Authority
IDB = Industrial Development Board
IDC = Industrial Development Corporation
IDR = Industrial Development Revenue
IFA = Industrial Finance Agency
MFHR = Multi-Family Housing Revenue
MFMR = Multi-Family Mortgage Revenue
PCR = Pollution Control Revenue
TAN = Tax Anticipation Notes
TRAN = Tax and Revenue Anticipation Notes
VRDO = Variable Rate Demand Obligations -- The rate shown for
each of these obligations is the rate as of August 31,
1995 and the maturity shown is the date of the next
interest rate adjustment.
</TABLE>
See accompanying notes.
6
<PAGE> 8
Statement of Operations
For the Six-Month Period Ended August 31, 1995
(Unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest....................................................... $1,938,651
----------
EXPENSES:
Investment Advisory Fees....................................... 122,672
Less Investment Advisory Fees Waived by Management............. (97,479)
Administrative Fees............................................ 49,068
Custodian and Transfer Agent Fees.............................. 43,841
Insurance...................................................... 1,915
Professional Fees.............................................. 12,262
Registration and Filing Fees................................... 9,715
Taxes -- other than Income..................................... 2,830
Miscellaneous.................................................. 11,501
----------
Total Expenses.............................................. 156,325
----------
NET INVESTMENT INCOME............................................ 1,782,326
Net Realized Gain on Securities Sold........................... 649
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............. $1,782,975
----------
----------
</TABLE>
See accompanying notes.
7
<PAGE> 9
Statements of Changes in Net Assets
For the Six-Month Period Ended August 31, 1995 and
For the Year Ended February 28, 1995
(Unaudited)
<TABLE>
<CAPTION>
3/01/95 3/01/94
TO 8/31/95 TO 2/28/95
------------ ------------
<S> <C> <C>
OPERATIONS:
Net Investment Income........................... $ 1,782,326 $ 3,612,046
Net Realized Gain (Loss) on Securities Sold..... 649 (32,421)
------------ ------------
Net Increase in Net Assets
Resulting from Operations.................... 1,782,975 3,579,625
------------ ------------
DIVIDENDS DISTRIBUTED FROM:
Net Investment Income........................... (1,782,326) (3,612,046)
Net Realized Gain............................... -- --
------------ ------------
Total Dividends Distributed..................... (1,782,326) (3,612,046)
------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from Shares Sold....................... 150,007,913 292,394,559
Net Asset Value of Shares Issued
upon Reinvestment of Dividends............... 2,292 7,912
Cost of Shares Repurchased...................... (148,444,283) (337,285,543)
------------ ------------
Net Increase (Decrease) in Net Assets
Derived from Capital Share Transactions...... 1,565,922 (44,883,072)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS........ 1,566,571 (44,915,493)
NET ASSETS:
Beginning of Period............................. 107,357,402 152,272,895
------------ ------------
End of Period................................... $108,923,973 $107,357,402
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS
August 31, 1995
(Unaudited)
NOTE 1 -- ORGANIZATION
Navigator Tax-Free Money Market Fund (the "Fund") is a portfolio
offered by Navigator Tax-Free 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 the pro rata amortization of premiums and discounts.
Security transactions are accounted for on the date the securities are
purchased or sold (trade date). On August 31, 1995 the Fund had a
payable for investment securities purchased totalling $5,033,500.
Investment securities are valued at amortized cost, which approximates
market value. Realized gains and losses are determined by using the
specific identification method. The net realized capital gain of $649
for the six-month period ended August 31, 1995 resulted from sales of
securities with proceeds and costs of $147,158,960 and $147,158,311,
respectively.
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 August 31, 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 August 31, 1995 amounted to $305,426.
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 .25% on the
first $1 billion of the average net assets of the Fund; .20% on the
next $1 billion; and .15% on average net assets in excess of $2
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 Fund's average net assets. Such fee is
computed daily and paid monthly.
During the six-month period ended August 31, 1995, the management fees
(investment advisory and administrative) earned by Fairfield totalled
$171,740. Of the investment advisory fees earned, $97,479 was
voluntarily waived by the Manager in order to assist the Fund in
maintaining a competitive expense ratio. At August 31, 1995, Fairfield
was owed $4,469 (after partial fee waiver) for investment advisory
services and $8,937 in administrative fees.
9
<PAGE> 11
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 -- CAPITAL SHARES
At August 31, 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>
3/01/95 3/01/94
TO 8/31/95 TO 2/28/95
------------ ------------
<S> <C> <C>
Shares sold......................................... 150,007,913 292,394,559
Shares issued upon reinvestment of dividends........ 2,292 7,912
Shares repurchased.................................. (148,444,283) (337,285,543)
------------ ------------
Net increase (decrease)............................. 1,565,922 (44,883,072)
Outstanding at beginning of period.................. 107,386,984 152,270,056
------------ ------------
Outstanding at end of period........................ 108,952,906 107,386,984
------------ ------------
------------ ------------
</TABLE>
NOTE 7 -- INVESTMENT COMPOSITION
The Fund invests in securities which may include revenue, general, and
escrowed obligations. At August 31, 1995, the revenue sources by
purpose were as follows:
<TABLE>
<CAPTION>
% OF PORTFOLIO
INVESTMENTS
--------------
<S> <C>
Revenue Bonds:
Industrial Development........................................... 23%
Pollution Control................................................ 19
Health Care Facilities........................................... 14
Educational Facilities........................................... 12
State and Local Government....................................... 7
Housing Facilities............................................... 5
Basic Materials.................................................. 4
Other Revenue.................................................... 10
General Obligations................................................ 4
Moral Obligations.................................................. 2
-----------
100%
-----------
-----------
</TABLE>
In addition, certain investments (10.7%) are covered by insurance
issued by several private insurers who guarantee the payment of
interest and principal at final maturity in the event of default. Such
insurance, however, does not guarantee the market value of the
securities or the value of the Fund's shares. None of these insurers
individually insure more than 5.2% of the insured investments in the
portfolio.
10
<PAGE> 12
NOTE 8 -- FINANCIAL HIGHLIGHTS
Financial highlights for a share of the Fund outstanding
throughout the periods indicated were as follows:
<TABLE>
<CAPTION>
3/01/95 3/01/94 3/01/93 3/01/92 3/01/91 3/01/90 3/01/89
TO TO TO TO TO TO TO
8/31/95 2/28/95 2/28/94 2/28/93 2/29/92 2/28/91 2/28/90
------- ------- ------- ------- ------- ------- -------
<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........ .0198 .0286 .0227 .0273 .0407 .0558 .0613
Net Gain/Loss on Securities
(both realized
and unrealized)............ -- (.0003) -- -- .0001 -- --
------ ------ ------ ------ ------ ------ ------
Total Income
from Investment
Operations.............. .0198 .0283 .0227 .0273 .0408 .0558 .0613
------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from
Net Investment Income...... (.0198) (.0286) (.0227) (.0273) (.0407) (.0558) (.0613)
------ ------ ------ ------ ------ ------ ------
Total Distributions...... (.0198) (.0286) (.0227) (.0273) (.0407) (.0558) (.0613)
------ ------ ------ ------ ------ ------ ------
Net Asset Value,
end of period.................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------
Total Return.................... 3.63% (A) 2.94% 2.29% 2.76% 4.15% 5.73% 6.31%
Net Assets,
end of period (000)............ $108,924 $107,357 $152,273 $202,245 $227,249 $255,298 $300,001
Ratios and Supplemental Data:
Ratio of Expenses
to Average Net Assets........ .32% (A) .29% .28% .23% .23% .22% .20%
Ratio of Expenses
to Average Net Assets,
excluding Fee Waivers........ .52% (A) .49% .48% .43% .45% .44% .43%
Ratio of Net Investment Income
to Average
Net Assets................... 3.63% (A) 2.86% 2.27% 2.73% 4.07% 5.58% 6.13%
Ratio of Net Investment Income
to Average
Net Assets, excluding
Fee Waivers.................. 3.43% (A) 2.66% 2.07% 2.53% 3.85% 5.36% 5.90%
------------------------------
* Commencement of Operations
(A)Annualized
<CAPTION>
3/01/88 3/01/87 3/27/86*
TO TO TO
2/28/89 2/29/88 2/28/87
------- ------- -------
<S> <<C> <C> <C>
Net Asset Value,
beginning of period............ $1.00 $1.00 $1.00
------ ------ ------
Income from
Investment Operations:
Net Investment Income........ .0532 .0458 .0418
Net Gain/Loss on Securities
(both realized
and unrealized)............ -- -- --
------ ------ ------
Total Income
from Investment
Operations.............. .0532 .0458 .0418
------ ------ ------
Less Distributions:
Dividends from
Net Investment Income...... (.0532) (.0458) (.0418)
------ ------ ------
Total Distributions...... (.0532) (.0458) (.0418)
------ ------ ------
Net Asset Value,
end of period.................. $1.00 $1.00 $1.00
------ ------ ------
------ ------ ------
Total Return.................... 5.45% 4.68% 4.71% (A)
Net Assets,
end of period (000)............ $200,396 $194,508 $143,806
Ratios and Supplemental Data:
Ratio of Expenses
to Average Net Assets........ .18% .15% .10% (A)
Ratio of Expenses
to Average Net Assets,
excluding Fee Waivers........ .45% .45% .15% (A)
Ratio of Net Investment Income
to Average
Net Assets................... 5.32% 4.58% 4.50% (A)
Ratio of Net Investment Income
to Average
Net Assets, excluding
Fee Waivers.................. 5.05% 4.28% 4.02% (A)
------------------------------
* Commencement of Operations
(A)Annualized
</TABLE>
11
<PAGE> 13
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 TAX-FREE MONEY MARKET FUND LOGO]
200 Gibraltar Road
Horsham, PA 19044
1-800-441-3885
