PROSPECTUS DATED APRIL 30, 1997
LEXINGTON CORPORATE LEADERS
TRUST FUND
PARK 80 WEST, PLAZA TWO
SADDLE BROOK, NEW JERSEY 07663
Shareholder Services: 1-800-526-0056
Institutional/Financial Adviser Services: 1-800-367-9160
24 Hour Account Information: 1-800-526-0052
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Lexington Corporate Leaders Trust Fund (the "Trust") was created in 1935
with the objective of seeking long term capital growth and income through
investment in an equal number of shares of the common stocks of a fixed list of
American blue chip corporations. See "Description of the Trust" on page 2.
Currently, the Trust is invested in twenty-five such corporations including
Eastman Kodak, General Electric, Mobil, Sears Roebuck and Travelers Group.
Investments in these corporations, while having potential for long term capital
growth and income, may be considered conservative investments. The value of
participations of the Trust will fluctuate with the market value of the
underlying portfolio securities.
The minimum initial purchase requirement is $1,000 and additional
investments must be at least $50. Participations are sold without a sales or
redemption charge.
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Sponsor: Trustee:
Lexington Management Corporation State Street Bank and Trust Company
Park 80 West, Plaza Two Mutual Fund Services Area
Saddle Brook, New Jersey 07663 Lexington Corporate Leaders Trust Fund
225 Franklin Street
Distributor: Boston, Massachusetts 02110
Lexington Funds Distributor, Inc.
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
Participations are not deposits or obligations of (or endorsed or guaranteed
by) any bank, nor are they federally insured or otherwise protected by the
Federal Deposit Insurance Corporation ("FDIC"), the Federal Reserve Board or any
other agency. Investing in the Trust involves investment risks, including the
possible loss of principal, and their value and return will fluctuate.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
<PAGE>
HIGHLIGHTS
THE TRUST AND ITS OBJECTIVE
THE TRUST WAS CREATED IN 1935 WITH THE OBJECTIVE OF SEEKING LONG
TERM CAPITAL GROWTH AND INCOME THROUGH INVESTMENT IN AN EQUAL
NUMBER OF SHARES OF COMMON STOCK OF A FIXED LIST OF AMERICAN BLUE
CHIP CORPORATIONS. CURRENTLY THE TRUST IS INVESTED IN TWENTY-FIVE SUCH
CORPORATIONS. THERE CAN BE NO ASSURANCE THAT THE TRUST'S OBJECTIVE
WILL BE ACHIEVED. SEE "DESCRIPTION OF THE TRUST" HEREIN.
PUBLIC OFFERING PRICE
The initial purchase requirement for an investment in the Trust is $1,000
and additional investments must be at least $50. Investors receive a fractional
undivided interest in and ownership of the Trust Fund and Distributive Fund
described below which is called a participation. Participations are offered at a
price equal to the net asset value next determined after an order is received.
SPECIAL CONSIDERATIONS The value of a participation fluctuates with the
market value of the underlying portfolio securities of the Trust. The dividend
income, if any, from the portfolio securities is subject to fluctuation which in
turn will affect the amounts of distributions made to participants. An investor
in the Trust has no assurance against loss in a declining market and redemption
at a time when the market value of the participations is less than their cost
will result in a loss to the investor.
SEMI-ANNUAL DISTRIBUTIONS
Semi-annual distributions on June 30 and December 31 of each year
(Distribution Date) will be reinvested at net asset value in additional
participations of the Trust unless the participant notifies the Trustee to pay
such distributions in cash.
TAXATION
For Federal income tax purposes, (1) the Trust will be treated as a fixed
investment trust and will not be subject to Federal income tax, (2) each
participant will be treated as the owner of his pro rata portion of the common
stock of the corporations held by the Trust, (3) each participant will be
required to include in his gross income his pro rata portion of the dividends
and interest received by the Trust (including the amounts of such dividends and
interest that are not distributed to participants but are used to pay the fees
and expenses of the Trust), at the time such dividends and interest are received
by the Trust, not at the later time such dividends and interests are distributed
to participants or reinvested in additional participations, and (4) each
individual participant who itemizes deductions may deduct his pro rata portion
of the fees and expenses of the Trust only to the extent such amount, together
with his other miscellaneous itemized deductions, exceeds 2% of his adjusted
gross income. See "Taxation" herein.
THE INDENTURE
The Amended and Restated Indenture is effective as of November 14, 1989, as
amended on April 23, 1993 (the "Indenture"). Both the Indenture and the Trust
will terminate on November 30, 2100.
DESCRIPTION OF THE TRUST
Corporate Leaders Trust Fund was created under New York Law by an Indenture
dated November 18, 1935, as amended and supplemented, between Empire Trust
Company (now The Bank of New York by merger) as Trustee, and Corporate Leaders
of America, Inc., as Sponsor. On October 29, 1971, Corporate Leaders of America,
Inc. was merged into Piedmont Capital Corporation, which designated Manlex
Corporation as Sponsor of the Trust on March 25, 1981. On October 31, 1988
holders of Corporate Leaders Trust Fund Certificates Series B voted to approve
an Amended and Restated Indenture which, among other things, designated
Lexington Management Corporation, the parent company of Manlex Corporation, as
Sponsor, and changed the name to Lexington Corporate Leaders Trust Fund (Federal
I.D. #13-6061925). Holders of Corporate Leaders Trust Fund Certificates Series A
continue to be governed by the initial Indenture. This Prospectus pertains
solely to Lexington Corporate Leaders Trust Fund Certificates Series B (herein
referred to as the "Trust"). All discussions herein of articles and sections of
the Indenture refer to the Amended and Restated Indenture (the "Indenture").
The Trust is comprised of a Trust Fund and a Distributive Fund. The Trust
Fund is composed of stock units, each unit consisting of one share of common
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stock of each of the twenty-five American corporations (except with respect to
shares received from spin-offs of existing portfolio securities--see discussion
below) and such cash as may be available for the purchase of stock units. Cash
received on sales of participations, (excluding the portion thereof, if any,
attributable to the value of, and therefore deposited in, the Distributive Fund)
including distributions by the Trust which are reinvested in additional
participations under the Distribution Reinvestment Program described herein, is
held in the Trust Fund without interest until receipt of sufficient cash to
purchase at least one hundred stock units. To the extent monies remain
uninvested in the Trust, the Trustee will derive a benefit therefrom.
All dividends and any other cash distributions received by the Trust with
respect to the common stock held in the Trust Fund are deposited in the
Distributive Fund. Any non-cash distributions received by the Trust with respect
to the common stock held in the Trust Fund are sold by the Trustee and the
proceeds of sale are deposited in the Distributive Fund. The Trustee may invest
the funds deposited in the Distributive Fund in debt obligations issued or
guaranteed by the United States Government, its agencies or instrumentalities,
or in repurchase agreements collateralized by such United States Government
obligations, which mature prior, and as close as practicable, to the next
Distribution Date. The interest earned on such investments is also deposited in
the Distributive Fund. Fees and expenses of the Trust are paid from the
Distributive Fund. The Trustee may from time to time set aside out of the
Distributive Fund a reserve for payments of taxes or other governmental charges.
On each Distribution Date, the Trustee uses the money in the Distributive
Fund to purchase additional participations for participants under the
Distribution Reinvestment Program described herein, unless the participant has
elected to receive his distribution in cash.
In the event of the merger, consolidation, re-capitalization or
readjustment of the issuer of any portfolio security with any other corporation,
the Sponsor may instruct the Trustee, in writing, to accept or reject such offer
or take such other action as the Sponsor may deem proper. Any securities
received in exchange shall be held by the Portfolio and shall be subject to the
terms and conditions of the Amended and Restated Indenture to the same extent as
the securities originally held in the Portfolio. Securities received pursuant to
an exchange may result in the Trust holding fewer shares than originally held in
the Portfolio security. Each stock unit issued after the effective date of such
an exchange will include one share of the corporation received on exchange.
The Trust will enter into repurchase agreements only with commercial banks
and dealers in U.S. government securities. Repurchase agreements when entered
into with dealers, will be fully collateralized including the interest earned
thereon during the entire term of the agreement. If the institution defaults on
the repurchase agreement, the Trust will retain possession of the underlying
securities. In addition, if bankruptcy proceedings are commenced with respect to
the seller, realization on the collateral by the Trust may be delayed or limited
and the Trust may incur additional costs. In such case the Trust will be subject
to risks associated with changes in the market value of the collateral
securities.
The Trust is invested generally in an equal number of shares of the common
stock of a fixed list of twenty-five American corporations. The Trust's
portfolio investments are not managed and are expected to remain fixed. Of the
securities held on December 31, 1996, 17.3% were in consumer products, 20.7%
were in international oil companies and 9.8% were in chemical and fertilizer
companies. A complete list of the securities is contained in the financial
statements included herein. The value of a participation in the Trust fluctuates
with the market value of the underlying common stock held by the Trust. The
dividend income, if any, from the common stocks is subject to fluctuation,
which, in turn will affect the amounts of distributions made to participants.
The Sponsor may direct the Trustee to sell the shares of common stock of
any of the twenty-five corporations if (i) the corporation has failed to declare
or pay dividends on the common stock; (ii) a materially adverse legal proceeding
has been instituted which affects the declaration or payment of dividends; (iii)
a breach of covenant or warranty exists which may materially affect the payment
of dividends; (iv) a default in payment of principal or income on any other
outstanding securities of the corporation occurs which may affect the payment of
dividends; or (v) the common stock ceased to be listed on the New York Stock
Exchange and after fifteen days has not been reinstated. The proceeds of any
such sale shall be deposited in the Distributive Fund.
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<PAGE>
SELECTED FINANCIAL INFORMATION
The following table of selected financial information has been audited by
McGladrey & Pullen, LLP independent certified public accountants, whose report
thereon appears elsewhere in this prospectus.
<TABLE>
<CAPTION>
Per participation operating
performance (for a Thirteen
participation outstanding Months Years
throughout the period) Ended Ended
Years Ended December 31, December November
-------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 31, 1988 30, 1987
---- ---- ---- ---- ---- ---- ---- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning year ............. $13.74 $10.51 $12.78 $11.62 $11.52 $10.53 $13.68 $12.00 $10.93 $14.26
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income ...... .28 .28 .31 .33 .36 .39 .43 .46 .77 .55
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net realized and
unrealized gain
(loss) on investments ..... 2.79 3.82 (.45) 1.71 .70 1.64 (.89) 3.18 2.27 (1.31)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations ................. 3.07 4.10 (.14) 2.04 1.06 2.03 (.46) 3.64 3.04 (.76)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income ........ (.28) (.03) (.90) (.28) (.35) (.28) (1.29) (1.00) (.58) (.96)
Distributions from
income and realized
gains included in
terminations ............. (.02) (.02) (.01) -- (.01) -- (.01) (.02) (.02) (.02)
Distributions from capital . (.18) (.54) (.90) (.27) (.25) (.36) (.96) (.48) (.55) (1.04)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions ... (.76) (.87) (2.13) (.88) (.96) (1.04) (2.69) (1.96) (1.97) (2.57)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Change in net asset
value for the year ......... 2.31 3.23 (2.27) 1.16 .10 .99 (3.15) 1.68 1.07 (3.33)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value
at end of year ............. $16.05 $13.74 $10.51 $12.78 $11.62 $11.52 $10.53 $13.68 $12.00 $10.93
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return.................. 22.43% 39.21% (0.77%) 17.57% 9.63% 19.41% (4.20%) 30.34% 28.21% (7.81%)
Ratio/Supplemental Data
Net Assets,
end of year (000)........... $392,295 $256,427 $156,286 $147,181 $105,712 $98,104 $85,961 $94,379 $77,868 $65,967
Ratios to average
net asset of:
Expenses ................... .63% .58% .62% .57% .60% .67% .67% .72% .26%* .08%
Net investment income ...... 2.05% 2.57% 2.84% 2.78% 3.16% 3.46% 3.57% 3.34% 5.88%* 4.01%
*Annualized
</TABLE>
HOW TO PURCHASE PARTICIPATIONS
INITIAL INVESTMENT--MINIMUM $1,000. BY MAIL: Send a check payable to Lexington
Corporate Leaders Trust Fund, along with a completed New Account Application to
State Street Bank and Trust Company (the "Agent"). To transmit funds by wire,
contact the Trust at 1-800-526-0056.
SUBSEQUENT INVESTMENTS--MINIMUM $50. BY MAIL: Send a check payable to Lexington
Corporate Leaders Trust Fund, to the Agent, accompanied by either the detachable
form which is part of the confirmation of a prior transaction or a letter
indicating the dollar amount of the investment and identifying the Trust,
account number and registration. The Fund does not accept third party checks or
cash investments. Third party checks are defined as checks made payable to
someone other than the Fund. Checks must be in U.S. dollars, and to avoid fees
and delays, drawn only on banks located in the U.S.
BROKER-DEALERS: You may invest in participations of the Trust through
broker-dealers who are members of the National Association of Securities
Dealers, Inc., and other financial institutions and who have selling agreements
with Lexington Funds Distributor, Inc. Broker-dealers and financial institutions
who process such purchase and sale transactions for their customers may charge a
transaction fee for these services. The fee may be avoided by purchasing
participations directly from the Trust.
THE OPEN ACCOUNT: By investing in the Trust, a shareholder appoints the Agent,
as his agent, to establish an open account to which all participations
purchased, including additional participations purchased under the Distribution
Reinvestment Program, will be credited. Participation certificates will be
issued for full participations only when requested in writing. Unless payment
for participations is made by certified or cashier's check or federal funds
wire, certificates will not be issued for 30 days. In order to facilitate
redemptions and transfers, most participation holders elect not to receive
certificates.
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<PAGE>
After an Open Account is established, payments can be provided for by
"Lex-O-Matic" or other authorized automatic bank check program accounts (checks
drawn on the investor's bank periodically for investment in the Trust).
Automatic Investing Plan with "Lex-O-Matic". A shareholder may arrange to
make additional purchases of shares automatically on a monthly or quarterly
basis. The investments of $50 or more are automatically deducted from a checking
account on or about the 15th day of each month. The institution must be an
Automated Clearing House (ACH) member. Should an order to purchase shares of a
fund be cancelled because your automated transfer does not clear, you will be
responsible for any resulting loss incurred by that fund. The shareholder
reserves the right to discontinue the Lex-O-Matic program provided written
notice is given ten days prior to the scheduled investment date. Further
information regarding this service can be obtained from Lexington by calling
1-800-526-0056.
On payroll deduction accounts administered by an employer and on payments
into qualified pension or profit sharing plans and other continuing purchase
programs, there are no minimum purchase requirements.
TERMS OF OFFERING: If an order to purchase participations is cancelled because
the investor's check does not clear, the purchaser will be responsible for any
loss incurred by the Trust. To recover any such loss the Trust reserves the
right to redeem participations owned by the purchaser, and may prohibit or
restrict the purchaser in placing future orders in any of the Lexington Funds.
The Trust reserves the right to reject any order, and to waive or lower the
investment minimums with respect to any person or class of persons, including
participation holders of the Trust's special investment programs. An order to
purchase participations is not binding on the Trust until it has been confirmed
by the Agent.
SHAREHOLDER SERVICING AGENTS: The Trust may enter into Shareholder Servicing
Agreements with one or more Shareholder Servicing Agents. The Shareholder
Servicing Agent may, as agent for its customers, among other things: answer
customer inquiries regarding account status, account history and purchase and
redemption procedures; assist shareholders in designating and changing dividend
options, account designations and addresses; provide necessary personnel and
facilities to establish and maintain shareholder accounts and records; assist in
processing purchase and redemption transactions; arrange for the wiring of
funds; transmit and receive funds in connection with customer orders to purchase
or redeem shares; verify and guarantee shareholder signatures in connection with
redemption orders and transfers and changes in shareholder-designated accounts;
furnish monthly and year-end statements and confirmations of purchases and
redemptions; transmit, on behalf of the Trust, proxy statements, annual reports,
updated prospectuses and other communications to shareholders of the Trust;
receive, tabulate and transmit to the Trust proxies executed by shareholders
with respect to meetings of shareholders of the Trust; and provide such other
related services as the Trust or a shareholder may request. For these services,
each Shareholder Servicing Agent receives fees, which may be paid periodically,
provided that such fees will not exceed, on an annual basis, 0.25% of the
average daily net assets of the Trust represented by participations owned during
the period for which payment is made. LMC, at no cost to the Trust, may pay to
Shareholder Servicing Agents additional amounts from its past profits. Each
Shareholder Servicing Agent may, from time to time, voluntarily waive all or a
portion of the fees payable to it.
ACCOUNT STATEMENTS: The Agent will send participation holders either purchasing
or redeeming participations of the Trust, a confirmation of the transaction
indicating the date the purchase or redemption was accepted, the number of
participations purchased or redeemed, the purchase or redemption price per
participation, and the amount purchased or redemption proceeds. A statement is
also sent to participation holders whenever a distribution is paid, or when a
change in the registration, address, or dividend option occurs. PARTICIPATION
HOLDERS ARE URGED TO RETAIN THEIR ACCOUNT STATEMENTS FOR TAX PURPOSES.
HOW TO REDEEM PARTICIPATIONS
BY MAIL: Send to the Agent (see the back cover of this prospectus for the
Agent's address): (1) a written request for redemption, signed by each
registered owner exactly as the participations are registered including the name
of the Trust, account number and exact registration; (2) participation
certificates for any participations to be redeemed which are held by the
participation holder; (3) signature guarantees, when required, and (4) the
additional documents required for redemptions by corporations, executors,
administrators, trustees, and guardians. REDEMPTIONS BY MAIL WILL NOT BECOME
EFFECTIVE UNTIL ALL DOCUMENTS IN PROPER FORM HAVE BEEN RECEIVED BY THE AGENT. IF
A PARTICIPATION HOLDER HAS ANY QUESTIONS REGARDING THE REQUIREMENTS FOR
REDEEMING PARTICIPATIONS, HE SHOULD CALL THE TRUST AT THE TOLL FREE NUMBER ON
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<PAGE>
THE BACK COVER PRIOR TO SUBMITTING A REDEMPTION REQUEST. If a redemption request
is sent to the Trust in New Jersey, it will be forwarded to the Agent and the
effective date of redemption will be the date received by the Agent.
Checks for redemption proceeds will normally be mailed within three
business days, but will not be mailed until all checks in payment for the
participations to be redeemed have been cleared. The Transfer Agent will
restrict the mailing of redemption proceeds to a participation holder's address
of record within 30 days of such address being changed unless the participation
holder provides a signature guaranteed letter of instruction.
BY TELEPHONE: TO ESTABLISH THIS PRIVILEGE ON YOUR ACCOUNT, PLEASE CALL OUR
SHAREHOLDER SERVICES DEPARTMENT AT 1-800-526-0056 BETWEEN 9:00 A.M. AND 5:00
P.M. EASTERN TIME AND REQUEST A TELEPHONE AUTHORIZATION FORM.
Shareholders redeeming at least $1,000 worth of shares (for which
certificates have not been issued) may effect a telephone redemption by calling
our Shareholder Services Department at 1-800-526-0056 Monday--Friday between
9:00 a.m. and 4:00 p.m. Eastern Time. A telephone redemption in good order will
be processed at the net asset value of the Trust next determined. There is a
maximum telephone redemption limit of $100,000.
The redemption proceeds will be made payable to the registered
shareholder(s) and forwarded to the address of record. The Transfer Agent will
restrict the mailing of telephone redemption proceeds to a participation
holder's address of record within 30 days of such address being changed, unless
the participation holder provides a signature guaranteed letter of instruction
(See "Telephone Exchange/Redemption Provisions").
SIGNATURE GUARANTEE: Signature guarantees are required in connection with (a)
redemptions by mail involving $25,000 or more; (b) all redemptions by mail,
regardless of the amount involved, when the proceeds are to be paid to someone
other than the registered owners; (c) changes in instructions as to where the
proceeds of redemptions are to be sent, and (d) participation transfer requests.
The Agent requires that the guarantor be either a commercial bank which is
a member of the Federal Deposit Insurance Corporation, a trust company, a
savings and loan association, a savings bank, a credit union, a member firm of a
domestic stock exchange, or a foreign branch of any of the foregoing. A NOTARY
PUBLIC IS NOT AN ACCEPTABLE GUARANTOR.
With respect to redemption requests submitted by mail, the signature
guarantees must appear either: (a) on the written request for redemption, (b) on
a separate instrument of assignment ("stock power") specifying the total number
of participations to be redeemed, or (c) on all participation certificates
tendered for redemption and, if participations held by the Agent are also being
redeemed, on the letter or stock power.
REDEMPTION PRICE: The redemption price will be the net asset value per
participation of the Trust next determined after receipt by the Agent of a
redemption request in proper form.
The redemption price per participation is computed on (i) any Trust
business day, which is each day on which the New York Stock Exchange, the
Federal Reserve Bank of New York and the Trustee are open for business and on
such other days as there is sufficient trading in the Trust's securities to
materially affect net asset value per participation except for certain national
holidays. The calculation is made by (a) adding: (i) the aggregate value of the
portfolio securities; (ii) available cash; (iii) amounts in the Distributive
Fund, including dividends on the portfolio securities and interest on the
investment of monies in the Distributive Fund; and (iv) any other assets of the
Trust and (b) deducting: (i) taxes and other governmental charges; (ii) fees and
expenses of the Trust; (iii) cash allocated for distribution to participants of
record as of a date prior to the evaluation; and (iv) any other liabilities of
the Trust.
Participations will be redeemed in cash from the Trust Fund and the
Distributive Fund at a price equal to the next determined participation value
following receipt of an appropriate request multiplied by the number of
participations being redeemed and subject to payment by the participant of any
tax or other governmental charge. If there is insufficient cash in the Trust
Fund to pay the portion of the redemption price attributable thereto, the
Trustee shall sell stock units. Sales of such securities will be at the best
price obtainable subject to any minimum value limitations on sales specified by
the Sponsor.
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<PAGE>
A security listed or traded on a recognized stock exchange is valued at its
last sale price prior to the time when assets are valued on the principal
exchange on which the security is traded. If no sale is reported at that time,
the mean between the current bid and asked price will be used. All other
securities for which over-the-counter market quotations are readily available
are valued at the mean between the last current bid and asked price. Short-term
securities having maturity of 60 days or less are valued at cost, when it is
determined by the Trustee that amortized cost reflects the fair value of such
securities. Securities for which market quotations are not readily available and
other assets are valued at fair value as determined in good faith by the
Trustee.
The right of redemption may be suspended (a) for any period during which
the New York Stock Exchange is closed or the Securities and Exchange Commission
("SEC") determines that trading on the Exchange is restricted, (b) when there is
an emergency as determined by the SEC as a result of which it is not reasonably
practicable for the Trust to dispose of securities owned by it or to determine
fairly the value of its net assets, or (c) for such other periods as the SEC may
by order permit for the protection of participants. Due to the proportionately
high cost of maintaining smaller accounts, the Trust reserves the right to
redeem all participations in an account with a value of less than $500 other
than as a result of a change in net asset value and mail the proceeds to the
participant. Participants will be notified before these redemptions are to be
made and will have thirty (30) days to make an additional investment to bring
their accounts up to the required minimum.
SHAREHOLDER SERVICES
TRANSFER
Participations may be transferred to another owner. A signature guarantee
of the registered participant is required on the letter of instruction or other
instrument of assignment.
SYSTEMATIC WITHDRAWAL PLAN
Participants may elect to withdraw cash in fixed amounts from their
accounts at regular intervals. The minimum investment to establish a Systematic
Withdrawal Plan is $10,000. If the proceeds are to be mailed to someone other
than the registered owner, a signature guarantee is required.
GROUP SUB-ACCOUNTING: To minimize recordkeeping by fiduciaries, corporations and
certain other investors, the minimum initial investment may be waived.
EXCHANGE PRIVILEGE
Participations may be exchanged for shares of the following funds managed
by the Sponsor, Lexington Management Corporation, (the "Lexington Funds") on the
basis of relative net asset value per share at the time of the exchange. In the
event shares of one or more of these funds being exchanged by a single investor
have a value in excess of $500,000, participations may not be purchased until
the third business day following the redemption of the shares being exchanged in
order to enable the redeeming fund to utilize normal securities settlement
procedures in transferring the proceeds of the redemption to the Trust.
EXCHANGES MAY NOT BE MADE UNTIL ALL CHECKS IN PAYMENT FOR PARTICIPATIONS TO BE
EXCHANGED HAVE BEEN CLEARED.
The Lexington Funds currently available for exchange are:
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC. (NASDAQ Symbol: LEXGX)/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 INTERNATIONAL FUND, INC.* (NASDAQ Symbol: LEXIX)/Seeks long term
growth of capital through investment in common stocks of companies
domiciled in foreign countries.
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.* (NASDAQ Symbol: LXCAX)/Seeks
long-term capital appreciation through investment in companies domiciled in
the Asia Region with a market capitalization of less than $1 billion.
LEXINGTON TROIKA DIALOG RUSSIA FUND, INC.* (NASDAQ Symbol: LETRX)/Seeks
long-term capital appreciation through investment primarily in the equity
securities of Russian companies. The Fund has a $5,000 minimum investment.
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LEXINGTON RAMIREZ GLOBAL INCOME FUND* (NASDAQ Symbol: LEBDX)/Seeks high current
income by investing in a combination of foreign and domestic high-yield,
lower rated debt securities. Capital appreciation is a secondary objective.
LEXINGTON GOLDFUND, INC.* (NASDAQ Symbol: LEXMX)/Seeks capital appreciation and
such hedge against loss of buying power as may be obtained through
investment in gold bullion and equity securities of companies engaged in
mining or processing gold throughout the world.
LEXINGTON SMALLCAP VALUE FUND, INC.* (NASDAQ Symbol: LESVX)/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 CORPORATE LEADERS TRUST FUND (NASDAQ Symbol: LEXCX)/Seeks long-term
capital growth and income through investment in an equal number of shares
of the common stocks of a fixed list of American blue chip corporations.
LEXINGTON GROWTH AND INCOME FUND, INC. (NASDAQ Symbol: LEXRX)/Seeks long-term
capital appreciation through investments in stocks of large, ably managed
and well financed companies. Income is a secondary objective.
LEXINGTON CONVERTIBLE SECURITIES FUND* (NASDAQ Symbol: CNCVX)/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. (NASDAQ Symbol: LEXNX)/Seeks a high level of
current income, consistent with liquidity and safety of principal, through
investment primarily in mortgage-backed GNMA Certificates.
LEXINGTON MONEY MARKET TRUST (NASDAQ Symbol: LMMXX)/Seeks a high level of
current income consistent with preservation of capital and liquidity
through investments in interest bearing short term money market
instruments.
*These Funds are not available for exchange until exemptive relief is
received from the SEC.
The Exchange Privilege enables a participant to acquire another Lexington
Fund with a different investment objective when the participant believes that a
shift between funds is an appropriate investment decision. Participants
contemplating an exchange should obtain and review the prospectus of the Fund to
be acquired. If an exchange involves investing in a Lexington Fund not already
owned and a new account has to be established, the dollar amount exchanged must
meet the minimum initial investment of the Fund being purchased. If, however, an
account already exists in the Fund being bought, there is a $500 minimum
exchange required. Participants must provide the account number of the existing
account. Any exchange between Funds is, in effect, a redemption in one Fund and
a purchase in the other Fund. Participants should consider the possible tax
effects of an exchange.
TELEPHONE EXCHANGE/REDEMPTION PROVISIONS
Exchange or redemption instructions may be given in writing or by
telephone. TELEPHONE EXCHANGES/REDEMPTIONS MAY ONLY BE MADE IF A TELEPHONE
AUTHORIZATION FORM HAS BEEN PREVIOUSLY EXECUTED AND FILED WITH THE SPONSOR.
Telephone exchanges/redemptions are permitted only after a minimum of seven (7)
days have elapsed from the date of a previous exchange/redemption.
EXCHANGES/REDEMPTIONS MAY NOT BE MADE UNTIL ALL CHECKS IN PAYMENT FOR
PARTICIPATIONS TO BE EXCHANGED HAVE BEEN CLEARED.
Telephonic exchanges/redemptions can only involve participants registered
on the books of the Trustee; participations held in certificate form cannot be
included. However, outstanding certificates can be returned to the Trustee and
qualify for these services. Any new account established with the same
registration will also have the privileges of exchange/redemption by telephone
in the Lexington Funds. All accounts involved in a telephonic exchange must have
the same registration and dividend option as the account from which the
participations were transferred and will also have the privilege of exchange by
telephone in the Lexington Funds in which these services are available.
By checking the box on the Purchase Application authorizing telephone
exchange and/or telephone redemption services, a participant constitutes and
appoints Lexington Funds Distributor, Inc. ("LFD"), distributor of the Lexington
Funds, as the true and lawful attorney to surrender for redemption or exchange
8
<PAGE>
any and all non-certificate shares held by the Trustee in account(s) designated,
or in any other account with the Lexington Funds, present or future which has
the identical registration with full power of substitution in the premises and
authorizes and directs LFD to act upon any instruction from any person by
telephone for exchange of shares held in any of these accounts, to purchase
shares of any other Lexington Fund that is available, provided the registration
and mailing address of the shares to be purchased are identical to the shares
being redeemed, and agrees that neither LFD, the Trustee, the Trust or the
Lexington Fund(s) will be liable for any loss, expense or cost arising out of
any requests effected in accordance with this authorization which would include
requests effected by imposters or persons otherwise unauthorized to act on
behalf of the account. LFD, the Agent and the Fund, will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine
and if they do not employ reasonable procedures they may be liable for any
losses due to unauthorized or fraudulent instructions. The following
identification procedures may include, but are not limited to, the following:
account number, registration and address, taxpayer identification number and
other information particular to the account. In addition, all exchange
transactions will take place on recorded telephone lines and each transaction
will be confirmed in writing by the Fund. LFD reserves the right to cease to act
as agent subject to the above appointment upon thirty (30) days' written notice
to the address of record. If the participant is an entity other than an
individual, such entity may be required to certify that certain persons have
been duly elected and are now legally holding the titles given and that the said
corporation, trust, unincorporated association, etc., is duly organized and
existing and has the power to take action called for by this continuing
authorization.
Exchange Authorization Forms, telephone authorization forms and
prospectuses of the other Lexington Funds may be obtained from LFD.
LFD has made arrangements with certain dealers to accept instructions by
telephone to exchange participations for shares of one of the other Lexington
Funds at net asset value as described above. Under this procedure, the dealer
must agree to indemnify LFD and the Lexington Funds from any loss or liability
that any of them might incur as a result of the acceptance of such telephone
exchange orders. A properly signed exchange application must be received by the
Distributor within five (5) days of the exchange request. In each such exchange,
the registration of the shares of the Fund being acquired must be identical to
the registration of the participations of the Fund being exchanged.
Participations in certificate form are not eligible for this type of exchange.
LFD reserves the right to reject any telephone exchange request. Any telephone
exchange orders so rejected may be processed by mail.
TAX SHELTERED RETIREMENT PLANS
The Trust offers a Prototype Pension and Profit Sharing Plan, including a
Keogh Plan, IRA's, SEP-IRA Rollover Accounts, 401(k) Salary Reduction Plans,
Section 457 Deferred Compensation Plans and 403(b)(7) Plans. Plan support
services are available through the Shareholder Services Department of the
Sponsor. For further information, call 1-800-526-0056.
DISTRIBUTION REINVESTMENT PROGRAM
On June 30 and December 31 of each year, the Distribution Dates, the
Trustee will compute to at least two decimal places the amount of the
semi-annual distribution per participation for participants of record, and shall
use such distributions to purchase additional participations unless the Trustee
has been instructed by the participant, in writing, prior to the Distribution
Date to pay such distributions in cash.
TAX MATTERS
The Trust is treated as a fixed investment trust under the Internal Revenue
Code of 1986, as amended (the "Code"), and not an association taxable as a
corporation. The Trust is also treated as a grantor trust under the Code. As a
result, the Trust will not be subject to Federal income taxes. In addition, for
Federal income tax purposes, each participant is treated as the owner of his pro
rata portion (i.e., the ratio of the number of participations owned by the
participant to the total number of participations outstanding) of (i) the common
stock of each corporation and any cash held in the Trust Fund and (ii) the
securities and cash held in the Distributive Fund.
Each participant is treated as receiving his pro rata portion of dividends
and any other distributions received by the Trust on the common stock of the
corporations held in the Trust Fund and interest received by the Trust from the
investment of such dividends (and any other amounts) deposited in the
Distributive Fund. Each participant shall include in gross income his pro rata
portion of such dividends and interest when such dividends and interest are
received by the Trust (or, in the case of an accrual basis participant, as such
interest accrues), regardless of when such dividends and interest are
distributed by the Trust to participants (or reinvested in additional
participations) and regardless of the fact that a portion of such dividends and
interest are not distributed to participants (or reinvested in additional
participations) but rather are used to pay the fees and expenses of the Trust.
A corporate participant will generally be entitled to the 70%
dividends-received deduction with respect to the dividends so included in its
gross income, subject to various limitations and restrictions imposed by the
Code. A corporate participant will also be entitled to a deduction for his pro
rata portion of fees and expenses paid by the Trust. An individual participant
who itemizes deductions will be entitled to a deduction for his pro rata portion
9
<PAGE>
of fees and expenses paid by the Trust only to the extent that such amount,
together with the participant's other miscellaneous itemized deductions, exceeds
2% of the participant's adjusted gross income. Further, certain itemized
deductions of an individual participant (including any portion of the
miscellaneous itemized deductions which exceeds the 2% floor, state and local
income and property taxes, home mortgage interest, and charitable contributions)
will be reduced (but not by more than 80% thereof) by 3% of the participant's
adjusted gross income in excess of $111,800 (for 1994, adjusted for inflation
thereafter).
The purchase price paid by a participant for his participations (excluding
any portion thereof attributable to, and to be deposited in, the Distributive
Fund) shall be allocated (based upon relative fair market values) among the
participant's pro rata portion of the common stock of each corporation and any
cash held in the Trust Fund, in order to determine his tax basis in his pro rata
portion of the common stock of each corporation. If the common stock of any of
the corporations held in the Trust Fund is sold by the Trust, each participant
will be considered to have sold his pro rata portion of the common stock of that
corporation and will be considered to have received his pro rata portion of the
sale proceeds received by the Trust. If a participant redeems his
participations, he will be considered to have sold his pro rata portion of the
common stock of each corporation. The redemption price received by the
participant (excluding any portion thereof attributable to, and paid out of, the
Distributive Fund) shall be allocated (based upon relative fair market values)
among his pro rata portion of the common stock of each corporation and any cash
held in the Trust Fund. If a participant is considered to have sold his pro rata
portion of the common stock of any corporation, he will recognize a capital gain
or loss equal to the difference between the amount he is considered to have
received with respect thereto and his tax basis therein. Any such capital gain
or loss generally will be long-term capital gain or loss if the participant held
his participations for more than one year.
Under the back-up withholding rules of the Code, certain shareholders may
be subject to 31% withholding of federal income tax on distributions and
redemption payments made by the Trust. In order to avoid this back-up
withholding, a shareholder must provide the Trust with a correct taxpayer
identification number (which for most individuals is their Social Security
number) or certify that it is a corporation or otherwise exempt from or not
subject to back-up withholding. The new account application included with this
Prospectus provides for shareholder compliance with these certification
requirements.
Information concerning the Federal income tax status of distributions will
be mailed to participants annually. Prospective participants are urged to
consult their own tax advisers as to the tax consequences of an investment in
the Trust.
INVESTMENT RETURN
The Trust may, from time to time, include total return information in
advertisements and reports to shareholders. The average annual total return of
the Trust for the 1, 5 and 10 years ended December 31, 1996 is set forth in the
following table:
Average Annual
Period Total Return
------ --------------
1 year ended December 31, 1996 +22.43%
5 years ended December 31, 1996 +16.87%
10 years ended December 31, 1996 +14.80%
This performance is calculated pursuant to the formula P(1+T)n = ERV (where
P = a hypothetical investment of $1,000; T = the average annual total return; n
= the number of years and ERV = the ending redeemable value of the hypothetical
$1,000 investment). The computation reflects the reinvestment of all dividends
and distributions reinvested on participations acquired with the original
hypothetical $1,000 investment. Past results are not necessarily representative
of future results.
10
<PAGE>
Comparative performance information may be used from time to time in
advertising or marketing of the Trust's participations, including data from
Lipper Analytical Services, Inc., the Dow Jones Industrial Average Index and
Standard & Poor's 500 Composite Stock Index. Such comparative performance
information will be stated in the same terms in which the comparative data and
indices are stated.
AMENDMENT AND TERMINATION
The Sponsor and Trustee may amend the Indenture without the consent of
participants (i) to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent; (ii) to change any
provision as may be required by the SEC or any successor governmental agency; or
(iii) to make any other provisions which do not adversely affect the interest of
participants. The Indenture may be amended by the Sponsor and the Trustee with
the consent of a majority of the participations entitled to vote.
The Trust and Indenture will terminate on November 30, 2100 upon the sale
or disposition of the last portfolio security of the Trust unless terminated
sooner by written instrument executed by the Sponsor and consented to by
participants owning 51% of the then outstanding participations. The Trustee will
deliver written notice of any termination to each participant specifying the
times at which the participants may surrender their certificates for
cancellation. Within a reasonable period of time after the termination, the
Trustee will distribute to each participant registered on the Trustee's books in
uncertificated form, and to each other participant upon surrender for
cancellation of his certificate, after deducting all unpaid expenses, fees,
taxes and other governmental charges, the participant's interest in the
Distributive Fund (into which had been deposited the proceeds from the sale of
the portfolio securities) and furnish to each participant a final account
statement.
RESIGNATION, REMOVAL AND LIMITATIONS ON LIABILITY OF SPONSOR
Sponsor The Sponsor may resign upon written notice to the Trustee. The
resignation will not become effective unless the Trustee shall have appointed a
successor sponsor to assume, with such compensation as the Trustee may deem
desirable, the duties of the resigning Sponsor. If the Sponsor fails to perform
its duties for 30 days after notice from the Trustee, or becomes incapable of
acting or becomes bankrupt or its affairs are taken over by a public official,
then the Sponsor will be automatically discharged. The Sponsor shall be under no
liability to the Trust or to the participants for taking any action or for
refraining from taking any action in good faith or for errors in judgment or for
depreciation or loss incurred by reason of the purchase or sale of any portfolio
security. This provision, however, shall not protect the Sponsor in cases of
willful misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.
TRUSTEE
The Trustee may resign upon written notice to the Sponsor and by mailing a
copy of such notice to all participants of record not less than sixty days prior
to the effective date of their resignation. The Sponsor shall then use its best
efforts to promptly appoint a successor trustee, and if upon resignation of the
Trustee no successor has been appointed within thirty days after notification,
the Trustee may apply to a court of competent jurisdiction for the appointment
of a successor. If, after such an application by the Trustee is made to a court
of competent jurisdiction (after November 30, 2015) and the court is unable to
appoint a successor trustee, then no earlier than six months after the date of
such application, the Trustee may notify each participant and the Sponsor that
the Trust shall terminate on a day no earlier than six months from the date of
such notice unless a successor trustee is appointed. If the Trustee fails to
perform its duties or becomes incapable of acting or becomes bankrupt or a
public official takes over its affairs, the Sponsor may remove the Trustee and
appoint a successor trustee by written notice to the Trustee. The Trustee shall
be under no liability for any action taken in good faith in reliance upon prima
facie properly executed documents or for the disposition of monies or portfolio
securities. This provision shall not protect the Trustee in cases of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties. The Trustee will not be responsible for the misconduct
of any of its agents, attorneys or accountants if they were selected with
reasonable care.
MISCELLANEOUS
Trustee The Trustee is State Street Bank and Trust Company (Federal I.D.
#04-1867445), a trust company incorporated under the laws of Massachusetts and
subject to regulation by the Federal Deposit Insurance Corporation and the
Commissioner of Banks of
11
<PAGE>
Massachusetts. Its principal office is at 225 Franklin Street, Boston,
Massachusetts 02110. The Trustee receives a fee of $10,000 per year for its
services as set forth in the Indenture and is reimbursed for all of its
disbursements relating to the Trust. In addition, the Trustee receives fees for
acting as Custodian and Transfer Agent and for providing portfolio, tax
accounting and recordkeeping services. During the year ended December 31, 1996,
aggregate fees received by the Trustee were $138,352.
SPONSOR
The Sponsor, Lexington Management Corporation (Federal l.D. #22- 1891864),
a Delaware corporation, serves as investment adviser and sponsor to 18
registered investment companies and to private and institutional investment
accounts. The Sponsor is responsible for performing certain administrative
services for the Trust including shareholder servicing, answering inquiries,
blue sky compliance and accounting. For performing such administrative services
the Sponsor receives an annual fee of .40% of the Trust's average daily net
assets. For the year ended December 31, 1996, the Sponsor received fees of
$1,268,269.
The Sponsor is a wholly-owned subsidiary of Lexington Global Asset
Managers, Inc., a Delaware corporation with offices at Park 80 West Plaza Two,
Saddle Brook, New Jersey 07663. Descendants of Lunsford Richardson, Sr., their
spouses, trusts and other related entities have a majority voting control of
outstanding shares of Lexington Global Asset Managers, Inc.
The principal officers and the directors of the Sponsor and their principal
occupations during the past five years are as follows:
*Robert M. DeMichele Chairman and Chief Executive Officer, Lexington
Management Corporation; President and Director,
Lexington Global Asset Managers, Inc.; Chairman
and Chief Executive Officer, Lexington Funds
Distributor, Inc.; Chairman of the Board, Market
Systems Research, Inc. and Market Systems Research
Advisors, Inc.; Director, Chartwell Re
Corporation, Claredon National Insurance Company,
The Navigator's Group, Inc., Unione Italiana
Reinsurance, Vanguard Cellular Systems, Inc. and
Weeden & Co.; Vice Chairman of the Board of
Trustees, Union College and Trustee, Smith
Richardson Foundation.
*Richard M. Hisey Chief Financial Officer, Managing Director and
Director, Lexington Management Corporation; Chief
Financial Officer, Vice President and Director,
Lexington Funds Distributor, Inc.; Chief Financial
Officer, Market Systems Research Advisors, Inc.;
Executive Vice President and Chief Financial
Officer, Lexington Global Asset Managers, Inc.
*Lawrence Kantor Executive Vice President, Managing Director and
Director of Lexington Management Corporation;
Executive Vice President and Director, Lexington
Funds Distributor, Inc.; Executive Vice President
and General Manager--Mutual Funds, Lexington
Global Asset Managers, Inc.
Stuart S. Richardson Director, Lexington Management Corporation;
Chairman, Lexington Global Asset Managers, Inc.;
Vice Chairman, Vanguard Cellular Systems, Inc.
Prior to January 1986, Chairman, Richardson-Vicks,
Inc.
*Lisa Curcio Senior Vice President and Secretary, Lexington
Management Corporation; Vice President and
Secretary, Lexington Funds Distributor, Inc.;
Secretary, Lexington Global Asset Managers, Inc.
- ----------
*Messrs. DeMichele, Hisey and Kantor and Ms. Curcio hold officer, director
and/or trustee positions with some or all of the registered investment companies
advised and/or distributed by Lexington Management Corporation and Lexington
Funds Distributor, Inc.
During its last fiscal year ended December 31, 1996, the Sponsor paid all
its salaried officers a total of $ .
12
<PAGE>
DISTRIBUTOR
State Street Bank and Trust Company has appointed Lexington Funds
Distributor, Inc., a registered broker-dealer to act as distributor to the
Trust. Lexington Funds Distributor, Inc. is a wholly-owned subsidiary of
Lexington Global Asset Managers, Inc., and receives no compensation for its
services.
LEGAL OPINION
The legality of the participations has been passed upon by Kramer, Levin,
Naftalis, & Frankel, 919 Third Avenue, New York, New York 10022, as counsel for
the Trust.
AUDITORS
Financial Statements have been examined by McGladrey & Pullen, LLP
independent certified public accountants, as stated in their opinion appearing
herein and has been so included in reliance upon that opinion given on the
authority of that firm as experts in accounting and auditing.
This Prospectus does not contain all of the information with respect to the
investment company set forth in its registration statements and exhibits
relating thereto which have been filed with the Securities and Exchange
Commission, Washington, D.C. under the Securities Act of 1933 and the Investment
Company Act of 1940, and to which reference is hereby made.
* * * * *
No person is authorized to give any information or to make any
representations not contained in this Prospectus; and any information or
representation not contained herein must not be relied upon as having been
authorized by the Trust, the Trustee or the Sponsor. The Trust is registered as
a unit investment trust under the Investment Company Act of 1940. Such
registration does not imply that the Trust has been guaranteed, sponsored,
recommended or approved by the United States or any state or any agency or
officer thereof.
* * * * *
This Prospectus does not constitute an offer to sell, or a solicitation of
an offer to buy securities in any state to any person to whom it is not lawful
to make such offer in such state.
13
<PAGE>
NONSTANDARD INVESTMENT RETURN IF YOU HAD INVESTED $10,000 55 YEARS AGO
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
WITH DIVIDENDS AND OTHER DISTRIBUTIONS REINVESTED
The table below covers the period from March 16, 1941 to December 31, 1996.
This period was one of generally rising common stock prices. The results shown
should not be considered as a representation of the dividends and other
distributions which may be realized from an investment made in the Trust today.
A program of the type illustrated does not assure a profit or protect against
depreciation in declining markets.
The cumulative cost figure represents the initial investment of $10,000 plus the
cumulative amount of dividends reinvested. Dividends and other distributions
were assumed to have been reinvested in additional participations at the
reinvestment price. The value of participations Initiailly Acquired" includes
the value of additional participations created as a result of the reinvestment
of that portion of the semi-annual distributions representing "A Return of
Capital" (the proceeds from securities sold representing the cost of securities
sold, and other principal transactions). No adjustment has been made for any
income taxes payable by holders on dividends and other distributions reinvested
in additional participations.
The dollar amount of distributions from realized gains (determined at the Trust
level) reinvested in additional participations were: 1941_None; 1942--None;
1943--None; 1944--$3; 1945--$450; 1946-- None; 1947--$44; 1948--$338;
1949--None; 1950--$283; 1951--$796; 1952--$185; 1953--$10; 1954--$812;
1955--$474; 1956--$4,347; 1957--$48; 1958--$17; 1959--$3,032; 1960--$2,371;
1961--$2,118; 1962--$2,749; 1963--$735; 1964--$3.138; 1965--$9,035; 1966--
$1,077; 1967--$48; 1968--$4.121; 1969--$102; 1970--$644; 1971-- $1,862;
1972--$2,300; 1973--None; 1974--None; 1975--None; 1976-- $5,071; 1977--$4,161;
1978--None; 1979--None; 1980--$5,182; 1981-- $31,473; 1982--None; 1983--$18,602;
1984--$8,258; 1985--$39,496; 1986--$64,138; 1987--$69,182; 1988--$49,350;
1989--$99,410; 1990--$148,727; 1991--$39,773; 1992--$52,819; 1993--$46,262;
1994--$160,296; 1995--$7,696; 1996--$62,612; Total $953,647.
<TABLE>
<CAPTION>
CUMULATIVE
COST OF VALUE OF PARTICIPATIONS
PARTICI- PURCHASED
PATIONS THROUGH REIN- PURCHASED
AMOUNT OF PURCHASED CUMULATIVE INVESTMENT OF THROUGH
DIVIDENDS THROUGH COST DISTRIBUTIONS REINVESTMENT NUMBER
YEAR REINVESTED REINVEST- INCLUDING FROM REALIZED OF NET OF
ENDED SEMI- MENT OF REINVESTED INITIALLY GAINS DIVIDENDS ASSET PARTICI-
DEC. 31 ANNUALLY DIVIDENDS DIVIDENDS ACQUIRED (CUMULATIVE) SUB-TOTAL (CUMULATIVE) VALUE PATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1941* -- -- $ 10,000 $ 8,799 -- $ 8,799 -- $ 8,799 566
1942 -- -- 10,000 9,613 -- 9,613 -- 9,613 584
1943 $ 190 $ 190 10,190 10,809 -- 10,809 $ 188 10,997 601
1944 192 382 10,382 11,983 $ 3 11,986 402 12,388 620
1945 215 597 10,597 14,709 464 15,173 682 15,855 693
1946 187 784 10,784 13,961 430 14,391 816 15,207 716
1947 370 1,154 11,154 14,639 447 15,086 1,141 16,227 824
1948 513 1,668 11,668 14,840 718 15,558 1,480 17,038 989
1949 509 2,177 12,177 17,113 701 17,814 1,968 19,782 1,176
1950 804 2,980 12,980 19,871 994 20,865 2,779 23,644 1,392
1951 1,012 3,992 13,992 21,659 1,756 23,415 3,674 27,089 1,652
1952 1,054 5,046 15,046 24,356 2,016 26,372 4,901 31,273 1,845
1953 1,217 6,263 16,263 24,849 2,030 26,879 6,149 33,028 1,945
1954 1,378 7,641 17,641 33,779 3,476 37,255 9,475 46,730 2,117
1955 1,599 9,240 19,240 39,164 4,398 43,562 12,349 55,911 2,243
1956 1,790 11,030 21,030 38,511 7,051 45,562 10,475 56,037 3,123
1957 1,910 12,940 22,940 36,268 6,574 42,842 11,496 54,338 3,269
1958 2,134 15,075 25,075 48,925 8,778 57,703 17,710 75,413 3,406
1959 2,184 17,258 27,258 55,426 11,821 67,247 19,992 87,239 3,906
1960 2,416 19,674 29,674 55,782 12,653 68,435 19,772 88,207 4,562
1961 2,697 22,371 32,371 67,126 16,993 84,119 25,757 109,876 4,881
1962 2,926 25,296 35,296 62,396 17,033 79,429 24,446 103,875 5,541
1963 3,243 28,540 38,540 71,467 19,863 91,330 30,711 122,041 5,803
1964 3,553 32,093 42,093 83,001 24,049 107,050 35,865 142,915 6,452
1965 3,855 35,948 45,948 92,523 30,246 122,769 35,623 158,392 8,066
1966 4,571 40,519 50,519 74,713 24,491 99,204 31,774 130,978 8,606
1967 5,060 45,579 55,579 83,121 27,090 110,211 40,165 150,376 8,948
1968 5,573 51,153 61,153 89,160 32,157 121,317 46,879 168,196 9,710
1969 5,915 57,068 67,068 75,017 26,979 101,996 44,536 146,532 10,115
1970 6,009 63,077 73,077 82,621 28,564 111,185 52,500 163,685 10,957
1971 6,190 69,267 79,267 93,454 32,126 125,580 61,694 187,274 11,856
1972 6,585 75,852 85,852 108,913 38,484 147,397 75,949 223,346 12,605
1973 7,371 83,223 93,223 93,151 32,729 125,880 71,868 197,748 13,123
1974 8,196 91,419 101,419 68,448 22,864 91,312 57,376 148,688 14,124
1975 9,139 100,557 110,557 91,498 30,474 121,972 85,413 207,385 14,781
1976 9,666 110,223 120,223 115,461 37,963 153,424 101,306 254,730 16,914
1977 11,237 121,460 131,460 108,466 35,919 144,385 96,397 240,782 18,898
1978 13,283 134,743 144,743 110,210 34,687 144,897 105,738 250,635 20,370
1979 15,804 150,547 160,547 139,110 34,774 173,884 121,307 295,191 23,931
1980 19,369 169,916 179,916 173,026 47,488 220,514 165,362 385,876 26,181
1981 21,822 191,738 201,738 163,070 62,645 225,715 140,698 366,413 33,836
1982 24,452 216,190 226,190 191,554 69,992 261,546 183,359 444,905 36,772
1983 25,923 242,114 252,114 235,913 91,870 327,783 218,649 546,432 42,757
1984 28,926 271,040 281,040 250,855 91,476 342,331 226,566 568,897 49,375
1985 31,808 302,848 312,848 333,623 145,913 479,536 293,217 772,753 58,251
1986 39,216 342,064 352,064 408,170 212,840 621,010 342,608 963,618 69,711
1987 40,394 382,458 392,458 412,599 241,185 653,784 326,728 980,512 83,847
1988 71,268 453,726 463,726 470,438 297,425 767,863 407,155 1,175,018 97,918
1989 45,103 498,829 508,829 583,494 438,476 1,021,970 509,512 1,531,482 111,950
1990 51,303 550,132 560,132 552,346 473,992 1,026,338 440,810 1,467,148 139,330
1991 55,828 605,960 615,960 654,372 558,392 1,212,764 539,190 1,751,954 152,079
1992 55,460 661,420 671,420 700,391 619,341 1,319,732 600,946 1,920,678 165,291
1993 54,505 715,925 725,925 814,945 727,611 1,542,556 715,658 2,258,214 176,699
1994 60,332 776,257 786,257 832,095 759,684 1,591,779 649,069 2,240,848 213,211
1995 61,329 837,586 847,586 1,207,794 998,228 2,206,022 913,513 3,119,535 227,040
1996 64,546 902,132 912,132 1,452,214 1,232,426 2,684,640 1,134,598 3,819,238 237,959
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*FROM MARCH 16, 1941.
NOTE--DURING 1990 ALL SALES CHARGES WERE ELIMINATED. THE ABOVE TABLE
REFLECTS THE CHANGE TO A "NO LOAD" STATUS AS IF IT WERE IN EFFECT FOR THE
ENTIRE PERIOD SHOWN.
THE AMOUNTS SHOWN AS DIVIDENDS FOR PERIODS AFTER OCTOBER 31, 1988 INCLUDE
INTEREST INCOME FROM THE INVESTMENT OF AMOUNTS DEPOSITED IN THE DISTRIBUTIVE
FUND.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Participation Holders of Lexington Corporate Leaders Trust Fund
We have audited the accompanying statement of assets and liabilities,
including the statement of investments, of Lexington Corporate Leaders Trust
Fund as of December 31, 1996 and the related statements of operations, changes
in net assets and the selected financial information for the periods indicated
in the accompanying financial statements. These financial statements and
selected financial information are the responsibility of the management of the
Trust. Our responsibility is to express an opinion on these financial statements
and selected financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996, by correspondence with State Street Bank and
Trust Company, Trustee. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of Lexington Corporate Leaders Trust Fund as of December 31, 1996 and
the results of its operations, the changes in its net assets and the selected
financial information for the periods indicated, in conformity with generally
accepted accounting principles.
New York, New York /s/McGladrey & Pullen, LLP
January 10, 1997
15
<PAGE>
LEXINGTON CORPORATE LEADERS
TRUST FUND STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
Investments at market quotations,
common stocks (identified
cost $259,495,211) ........................................... $383,752,319
Cash ........................................................... 8,560,554
Receivable for accrued dividends ............................... 988,327
Subscriptions receivable ....................................... 678,279
------------
Total assets .......................................... 393,979,479
------------
LIABILITIES
Distribution payable ........................................... 1,131,657
Payable for participations redeemed ............................ 419,675
Accrued expenses ............................................... 133,014
------------
Total liabilities ..................................... 1,684,346
------------
NET ASSETS
Balance applicable to 24,447,241
participations outstanding (Note 6) ........................... $392,295,133
============
Computation of public offering price:
Net asset value, offering and
redemption price per participation
(net assets divided by
participations outstanding) ................................ $ 16.05
============
See Notes to Financial Statements.
16
<PAGE>
LEXINGTON CORPORATE LEADERS TRUST FUND
STATEMENT OF OPERATIONS
Years Ended December 31,
-----------------------------------------
1996 1995 1994
----------- --------- ----------
Investment Income:
Income:
Dividends ....................... $ 8,730,682 $ 5,974,941 $ 5,177,999
Interest ........................ 103,006 234,501 160,518
------------ ------------ ------------
Total income .............. 8,833,688 6,209,442 5,338,517
------------ ------------ ------------
Expenses:
Sponsor's administrative
fee (Note 4) .................. 1,268,269 689,822 541,100
Professional fees ............... 64,797 52,907 52,543
Trustee's fee (Note 4) .......... 10,833 10,000 10,000
Custodian fees and
other services (Note 4) ....... 127,519 103,513 109,431
Transfer agent fees ............. 390,712 138,644 125,301
Printing, mailing and sundry .... 141,076 112,527 87,283
Registration and filing fees .... 63,025 31,079 29,480
------------ ------------ ------------
Total expenses ............... 2,066,231 1,138,492 955,138
------------ ------------ ------------
Net investment income ........ 6,767,457 5,070,950 4,383,379
------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS:
Net realized gain from
securities transactions ......... 12,337,780 2,521,317 12,380,590
Unrealized appreciation
(depreciation) of
investments for the year .... 47,385,034 56,613,954 (18,331,342)
------------ ------------ ------------
Net gain (loss) on investments 59,722,814 59,135,271 (5,950,752)
------------ ------------ ------------
Net increase (decrease)
in net assets from
operations ....................... $ 66,490,271 $ 64,206,221 $(1,567,373)
------------ ------------ ------------
17
See Notes to Financial Statements.
<PAGE>
LEXINGTON CORPORATE LEADERS TRUST FUND
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31,
-----------------------------------------
1996 1995 1994
----------- --------- ----------
Income and
Distributable Fund:
Additions:
Net investment income ...... $ 6,767,457 $ 5,070,950 $ 4,383,379
Realized gains from
sale of securities,
other than sale
of stock units ............ 6,395,874 820,396 11,402,269
------------ ------------ ------------
13,163,331 5,891,346 15,785,648
------------ ------------ ------------
Deductions:
Paid on account of
participations redeemed ... 486,295 212,668 219,442
Semi-annual
distributions
(Note 3(a))
Paid in cash ............. 1,849,390 939,656 2,810,148
Reinvested, below ........ 10,714,827 4,685,472 12,699,124
------------ ------------ ------------
13,050,512 5,837,796 15,728,714
------------ ------------ ------------
Net change in income
and distributable fund ...... 112,819 53,550 56,934
------------ ------------ ------------
Principal Account:
Additions:
Payments received on
sale of participations ..... 167,449,209 74,367,391 40,209,522
Semi-annual
distributions
reinvested, above ........ 10,714,827 4,685,472 12,699,124
Realized gains on
sale of stock units ........ 5,941,906 1,700,921 978,321
Unrealized appreciation
(depreciation) of
investments .............. 47,385,034 56,613,954 (18,331,342)
------------ ------------ ------------
231,490,976 137,367,738 35,555,625
------------ ------------ ------------
Deductions:
Paid on account
of participations
redeemed ................... 95,197,345 35,780,396 24,442,332
Semi-annual
distributions of
principal (Note 3(b)) ..... 578,409 1,459,632 2,065,563
------------ ------------ ------------
95,775,754 37,240,028 26,507,895
------------ ------------ ------------
Net change
in principal account ...... 135,715,222 100,127,710 9,047,730
------------ ------------ ------------
Net assets at
beginning of year:
Income and
distributable fund ....... 432,414 378,864 321,930
Principal account .......... 256,034,678 155,906,968 146,859,238
------------ ------------ ------------
256,467,092 156,285,832 147,181,168
------------ ------------ ------------
Net assets at
end of year:
Income and
distributable fund ....... 545,233 432,414 378,864
Principal account .......... 391,749,900 256,034,678 155,906,968
------------ ------------ ------------
$392,295,133 $256,467,092 $156,285,832
============ ============ ============
See Notes to Financial Statements.
18
<PAGE>
LEXINGTON CORPORATE LEADERS TRUST FUND
STATEMENT OF INVESTMENTS December 31, 1996
Number Market
Securities of Shares Cost Value
- ------------------- --------- --------- ---------
CONSUMER PRODUCTS: (17.3%)
American Brands, Inc. .......... 278,900 $ 10,450,174 $ 13,840,413
Eastman Kodak Co. .............. 278,900 14,471,365 22,381,725
Procter & Gamble Co. ........... 278,900 17,161,874 29,981,750
------------ ------------
42,083,413 66,203,888
------------ ------------
OIL INTERNATIONAL: (20.7%)
Chevron Corp. .................. 278,900 13,110,451 18,128,500
Exxon Corp. .................... 278,900 17,511,249 27,332,200
Mobil Corp. .................... 278,900 22,755,150 34,095,525
------------ ------------
53,376,850 79,556,225
------------ ------------
CHEMICAL & FERTILIZERS: (9.8%)
duPont (E.I.)
de Nemours & Co., Inc. ....... 278,900 15,990,733 26,321,187
Union Carbide Corp. ............ 278,900 7,151,820 11,400,038
------------ ------------
23,142,553 37,721,225
------------ ------------
ELECTRICAL EQUIPMENT: (8.6%)
General Electric Co. ........... 278,900 16,143,502 27,576,237
Westinghouse Electric Corp. .... 278,900 5,614,603 5,543,138
------------ ------------
21,758,105 33,119,375
------------ ------------
RETAILING: (4.9%)
Sears, Roebuck & Co. ........... 278,900 8,114,543 12,864,262
Woolworth Corp. ................ 278,900 5,859,608 6,100,938
------------ ------------
13,974,151 18,965,200
------------ ------------
UTILITIES: (6.5%)
Consolidated Edison
Co. of N.Y., Inc. ............ 278,900 7,931,764 8,157,825
Pacific Gas & Electric Co. ..... 278,900 7,179,327 5,856,900
Union Electric Company ......... 278,900 9,606,266 10,737,650
------------ ------------
24,717,357 24,752,375
------------ ------------
RAILROADS: (8.1%)
Burlington Northern Santa Fe ... 166,014 9,395,456 14,339,459
Union Pacific Corp. ............ 278,900 10,407,538 16,768,863
------------ ------------
19,802,994 31,108,322
------------ ------------
ENERGY: (8.2%)
Columbia Gas Systems, Inc. ..... 278,900 10,361,691 17,745,012
Union Pacific
Resources Group Inc. . ....... 237,667 5,070,486 6,951,760
USX Marathon Group ............. 278,900 5,840,610 6,658,738
------------ ------------
21,272,787 31,355,510
------------ ------------
MISC. INDUSTRIAL: (8.2%)
AlliedSignal Corp. ............. 278,900 11,240,594 18,686,300
Praxair, Inc. .................. 278,900 6,362,448 12,864,262
------------ ------------
17,603,042 31,550,562
------------ ------------
COMMUNICATIONS: (4.4%)
A T & T Corp. .................. 278,900 9,931,761 12,132,150
Lucent Technologies Inc. ....... 100,160 4,343,760 4,632,400
------------ ------------
14,275,521 16,764,550
------------ ------------
FINANCIAL: (3.3%)
Travelers Group Inc. ........... 278,900 7,488,438 12,655,087
------------ ------------
TOTAL INVESTMENTS (100%) . $259,495,211 $383,752,319
============ ============
* Non Income producing.
See Notes to Financial Statements.
19
<PAGE>
LEXINGTON CORPORATE LEADERS TRUST FUND
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Lexington Corporate Leaders Trust Fund (the "Trust") is an unincorporated
Unit Investment Trust registered as such with the Securities and Exchange
Commission. The Trust commenced operations in 1941 as a series of Corporate
Leaders Trust Fund which was created under a Trust Indenture dated November 18,
1935.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements:
(a) Valuation of securities--Investments are stated at value based on
the last sale price on the principal exchange on which the security is
traded prior to the time the Trust's assets are valued. Investments for
which no sale is reported, or which are traded over-the-counter, are valued
at the mean between bid and asked prices. Short term securities with 60
days or less to maturity are valued at amortized cost.
(b) Income taxes--No provision for Federal income taxes is made since
the Trust, under applicable provisions of the Internal Revenue Code, is a
Grantor Trust and all its income is taxable to the Holders of
participations.
(c) Other--Investment transactions are recorded on the trade date
basis. Dividend income is recorded on the ex-dividend date. Interest income
is accrued as earned.
3. DISTRIBUTIONS
(a) During the year ended December 31, 1996, the distributions from
net investment income were $.28047 per participation and, from realized
gains, were $.27318 per participation.
(b) The amount shown does not reflect the reinvestment of that portion
of the proceeds from the sale of securities (other than stock units)
representing the cost of the securities sold which is distributed and then
reinvested in additional participations. In addition, any gain on the sale
of stock units to provide funds for the redemption of participations is
non-distributable and remains a part of the principal account. During the
year ended December 31, 1996, the distributions from return of capital were
$.17214 per participation.
4. TRUSTEE AND SPONSOR FEES
State Street Bank and Trust Company (the "Trustee") receives an annual
Trustee fee as well as fees for acting as custodian and for providing portfolio
accounting and record keeping services which aggregated $138,352 for the year
ended December 31, 1996. The Trust pays an administrative fee to Lexington
Management Corporation (Sponsor) equal, on an annual basis, to 0.40% (.35% prior
to May 1, 1996) of the average daily net assets of the Trust.
5. INVESTMENT TRANSACTIONS
During the year ended December 31, 1996, the cost of purchases and proceeds
of sales of investment securities, other than short-term obligations, were
$99,232,310 and $19,044,457, respectively.
The cost of investment securities as well as realized security gains and
losses are based on the identified cost basis. The cost of investments for
Federal income taxes is the same as that reported in the Trust's financial
statements.
As of December 31, 1996, net unrealized appreciation of portfolio
securities was $124,257,108, comprised of unrealized appreciation of
$125,651,000 and unrealized depreciation of $1,393,892.
20
<PAGE>
6. SOURCE OF NET ASSETS
As of December 31, 1996, the Trust's net assets were
comprised of the following amounts:
Net amounts paid in and reinvested by Holders
net of terminations and return of capital payments ............ $224,775,285
Cumulative amount of non-distributable realized
gains retained in Principal Account ............................. 42,717,507
Unrealized appreciation in value of securities .................. 124,257,108
-----------
Principal account ............................................. 391,749,900
Income and distributable fund ................................. 545,233
-----------
Total net assets ............................................ $392,295,133
============
7. PARTICIPATIONS ISSUED AND REDEEMED
During the periods indicated, participations were issued and redeemed as
follows:
Number of Participations
Year ended December 31,
---------------------------------------------
1996 1995 1994
------- ------- -------
Issued on payments from Holders .... 11,313,596 5,797,609 3,324,643
Issued on reinvestment
of distributions ................. 919,816 914,327 2,100,371
Redeemed ........................... (6,457,089) (2,910,131) (2,072,895)
---------- ---------- ----------
Net increase ................... 5,776,323 3,801,805 3,352,119
========= ========= =========
8. SELECTED FINANCIAL INFORMATION
Refer to page 4 of the Prospectus for selected financial information.
21
SPONSOR
- --------------------------------------------------------------------------------
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
TRUSTEE
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
MUTUAL FUND SERVICES AREA
Lexington Corporate Leaders Trust Fund
225 Franklin Street
Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
ALL SHAREHOLDER REQUESTS FOR SERVICES OF ANY KIND SHOULD BE SENT TO:
- --------------------------------------------------------------------------------
TRANSFER AGENT
STATE STREET BANK AND TRUST COMPANY
C/O NATIONAL FINANCIAL DATA SERVICES
LEXINGTON FUNDS
1004 BALTIMORE
KANSAS CITY, MISSOURI 64105
OR CALL TOLL FREE:
SERVICE: 1-800-526-0056
INSTITUTIONAL/FINANCIAL ADVISER SERVICES:
1-800-367-9160
24 HOUR ACCOUNT INFORMATION: 1-800-526-0052
- --------------------------------------------------------------------------------
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
Highlights ............................................................. 2
Description of the Trust ............................................... 2
Selected Financial Information ......................................... 4
How to Purchase Participations ......................................... 4
How to Redeem Participations ........................................... 5
Shareholder Services ................................................... 7
Exchange Privilege ..................................................... 7
Tax Matters ............................................................ 9
Investment Return ...................................................... 10
Amendment and Termination .............................................. 11
Resignation, Removal and Limitations on Liability
of Sponsor ........................................................... 11
Miscellaneous .......................................................... 12
Nonstandard Investment Return .......................................... 14
Financial Statements ................................................... 15
- --------------------------------------------------------------------------------
LEXINGTON
CORPORATE
LEADERS
TRUST
FUND
--------------------------------o----------------------------------
o No sales charge
o No redemption fees
o Created in 1935
o Blue chip stocks
o Free telephone
exchange privilege
--------------------------------o----------------------------------
The Lexington Group
of
NO-LOAD
Investment Companies
- --------------------------------------------------------------------------------
PROSPECTUS
APRIL 30, 1997