================================================================================
DEAR PARTICIPATION HOLDERS:
We are pleased to report a distribution of $ 0.28 per participation from
net investment income for the year ended December 31, 1997. In addition, we are
able to report distributions per participation of $2.60 from realized security
gains and $1.84 from return of capital. For the year ended December 31, 1997,
the Trust had a total return of 23.09%*, as compared to a rise of 27.1% for the
average growth and income fund monitored by Lipper Analytical Services, Inc. and
the unmanaged Dow Jones Industrial Average (with dividends reinvested) which was
up 24.90%.
The realized security gains and return of capital component are primarily
attributable to the sale of shares received as a result of stock splits from the
following companies: Allied Signal, Inc., E.I. DuPont de Nemours and Co., Exxon
Corporation, General Electric Co., Mobil Corp., Proctor and Gamble Co., and
Travelers Group, Inc. In accordance with the Trust's investment policy, these
stock splits were sold and the proceeds of the sales were held pending
distribution to participation holders on June 30 and December 31. The Trustee
uses the money held in the Distributive Fund to purchase additional
participations unless the holder has elected to receive distributions in cash.
The year of 1997 was a record year for realized capital gains for the Trust as a
result of these splits. The Trust otherwise maintains a buy and hold policy with
regard to portfolio securities.
Other corporate actions that took place in 1997 or are scheduled for
early 1998 are name changes: Westinghouse Electric Corp. to CBS Corp., Columbia
Gas Systems, Inc. to Columbia Energy Group and Consolidated Edison Company of
New York, Inc. to Consolidated Edison, Inc. These name changes reflect changes
in the companies current and future business. Other corporate activity included
the merger of Union Electric Company with CIPSCO, Inc. creating Ameren
Corporation. Ameren will remain as a portfolio holding.
Stocks turned in a record performance in 1997. However, the market turned
decidedly more volatile in the second half and since the beginning of August
returned only 2.4%. The chief culprit for the change in sentiment was the
unfolding currency and economic crisis in several Asian and other emerging
markets. The Trust underperformed its benchmark indices due to several factors,
some of which we believe were one time events that will lead to improved
performance in 1998. These include: Woolworth Corporation closing its money
losing F.W. Woolworth five and dime store business. Analysts have long urged the
company to take this action. Woolworth continues to operate over 7,500 stores
worldwide that include Foot Locker, Champs and other sporting goods stores.
Kodak announced it would cut its payroll by 19,000 employees in 1997/1998 to
better compete. Union Pacific became the largest rail system in the nation with
its acquisition of Southern Pacific Railroad. However, the rail congestion
problems caused by this consolidation migrated throughout its entire 36,000 mile
track system. The UPS strike exacerbated this situation. We believe corrective
measures will be in place in the first half of 1998. Finally, weakness in the
oil sector, in which the Trust currently has a 16% weighting, also put a drag on
performance.
OUTLOOK FOR 1998
Economic conditions in the U.S. are quite good, maybe even too good to
keep the Federal Reserve
================================================================================
<PAGE>
================================================================================
from raising interest rates. The labor market is very tight with unemployment at
the lowest rate in 25 years and wage rates continuing to creep upward. Economic
growth remained above the Fed's stated target range. Thus, despite continued low
reported inflation rates, domestic conditions could very likely tempt the Fed to
raise rates, at least modestly.
The U.S. economy, however, does not exist in a vacuum. The events in Asia
this fall, will have significant effects on the world economies. The "Asian
Tiger" economies, together with China and Japan, had represented one of the
fastest growing regions of the world. As a result of the currency and market
upheavals, and the heavy dose of International Monetary Fund "medicine", many of
these economies will likely be in recession through 1998. The most severe
effects should be felt elsewhere in Asia, mainly in China and Japan which have
extensive trade relationships in the region. Less affected will be the major
economies of Europe. Given the relatively low trade and high services components
of our economy, the U.S. should be only moderately affected.
Although growth may be slowed somewhat in the U.S., the economy remains
quite strong and current low interest rates will help sustain that growth. The
larger issue for investors will be the outlook for corporate earnings. Analysts'
estimates for 1998 appeared too optimistic to us even before the Asian crisis.
Estimates have already begun to come down for the fourth quarter of 1997, but
have yet to drop materially for 1998. As estimates are reduced over the next few
months the market will likely remain volatile. On the other hand, lower interest
rates provide a floor under stock prices preventing a significant decline. The
key to performance in this environment will be avoiding significant earnings
disappointments.
By the second half of the year we believe the environment could flip
around. By then, economic conditions around the world should stabilize and
earnings expectations will have been reduced to more realistic levels. With the
U.S. economy still on a moderate growth track, interest rates will likely be
somewhat higher. Altogether, probably a healthier backdrop for stocks.
Sincerely,
/s/ LAWRENCE KANTOR /s/ ROBERT M. DEMICHELE
- ------------------- -----------------------
LAWRENCE KANTOR ROBERT M. DEMICHELE
Portfolio Manager Chairman of the Board
February, 1998 LEXINGTON MANAGEMENT CORPORATION
February, 1998
*23.09%, 19.61% and 17.09% are the one, five and ten year average annual
standard total returns, respectively, for the period ended December 31, 1997.
Investment return and principal value of an investment will fluctuate so that
an investor's participations, when redeemed, may be worth more or less at their
original cost. Total return represents past performance and is not predictive
of future results.
================================================================================
2
<PAGE>
[GRAPHIC OF CORPORATE LOGOS]
AT&T
MOBIL
GENERAL ELECTRIC
AMEREN
DU PONT
PRAXAIR
KODAK
UNION CARBIDE
CON EDISON
UNION PACIFIC
SEARS
LEXINGTON CORPORATE LEADERS TRUST FUND
================================================================================
[LOGO]
CORPORATE LEADERS TRUST FUND
IF YOU HAD INVESTED $10,000 57 YEARS AGO...
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $10,000
WITH INCOME DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS REINVESTED
The table on the following page covers the period from March 16, 1941 to
December 31, 1997. 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.
Long-term investments in industry, such as Lexington Corporate Leaders Trust
Fund, tend to move with the basic inflationary trend and offer your dollars an
opportunity to grow.
3
<PAGE>
LEXINGTON CORPORATE LEADERS TRUST FUND
================================================================================
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 "Initially 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 or other distributions reinvested
in additional participations.
The dollar amounts 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; 1997--$664,104; Total--$1,617,751.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE OF PARTICIPATIONS
--------------------------------------------------------
Cumulative
Cost of Cumu-
Amount of Participations lative Purchased Through Purchased
Dividends Purchased Cost Reinvestment Of Through Number
Year Reinvested Through Including Distributions From Reinvestment Net Of
Ended Semi- Reinvestment Reinvested Initially Realized Gains of Dividends Asset Partici-
Dec. 31 Annually Of 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
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
1997 71,379 973,511 983,511 1,794,519 1,785,369 3,579,888 1,212,302 $4,701,190 315,940
- ---------------------------------------------------------------------------------------------------------------------------
*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.
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
===================================================================================
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1997
===================================================================================
<S> <C>
ASSETS
Investments at market quotations, common stocks
(identified cost $355,379,763) ................................... $475,031,243
Cash and cash equivalents (substantially all of which was invested
in additional units of common stocks on January 2 and 5, 1998) ... 57,055,514
Receivable for investments sold .................................... 2,018,860
Subscriptions receivable ........................................... 1,197,060
Receivable for accrued dividends and interest ...................... 854,753
------------
Total assets ............................................ 536,157,430
------------
LIABILITIES
Distribution payable ............................................... 5,641,719
Payable for participations redeemed ................................ 4,659,150
Accrued expenses ................................................... 187,964
------------
Total liabilities ....................................... 10,488,833
------------
NET ASSETS
Balance applicable to 35,331,178 participations outstanding (Note 6) $525,668,597
============
Computation of public offering price:
Net asset value, offering and redemption price per participation
(net assets divided by participations outstanding) ............. $ 14.88
============
See Notes to Financial Statements.
===================================================================================
</TABLE>
5
<PAGE>
STATEMENT OF INVESTMENTS DECEMBER 31, 1997
<TABLE>
<CAPTION>
=====================================================================================================================
NUMBER OF MARKET
SECURITIES SHARES COST VALUE
- ------------------------------------------------------------------ ---------- ------------ -------------
<S> <C> <C> <C>
CONSUMER PRODUCTS: (15.4%)
Eastman Kodak Co. ................................................ 366,500 $ 22,209,187 $ 22,287,781
Fortune Brands, Inc. ............................................. 366,500 10,090,773 13,583,406
Gallaher Group PLC ............................................... 366,500 5,675,709 7,833.938
Proctor & Gamble Co. ............................................. 366,500 21,070,117 29,251,281
------------ -----------
59,045,786 72,956,406
------------ -----------
OIL INTERNATIONAL: (16.2%)
Chevron Corp. .................................................... 366,500 20,184,397 28,220,500
Exxon Corp. ...................................................... 366,500 16,872,549 22,425,219
Mobil Corp. ...................................................... 366,500 22,112,168 26,456,719
------------ -----------
59,169,114 77,102,438
------------ -----------
CHEMICAL & FERTILIZERS: (7.9%)
DuPont (E.I.) de Nemours & Co., Inc. ............................. 366,500 16,769,630 22,012,906
Union Carbide Corp. .............................................. 366,500 12,102,616 15,736,594
------------ -----------
28,872,246 37,749,500
------------ -----------
ELECTRICAL EQUIPMENT: (5.7%)
General Electric Co. ............................................. 366,500 16,848,060 26,891,938
------------ -----------
BROADCASTING: (2.3%)
CBS Corp. (formerly Westinghouse Electric Corp.) ................. 366,500 7,494,558 10,788,844
------------ -----------
RETAILING: (5.1%)
Sears, Roebuck & Co. ............................................. 366,500 13,451,048 16,584,125
Woolworth Corp.* ................................................. 366,500 7,949,652 7,467,438
------------ -----------
21,400,700 24,051,563
------------ -----------
UTILITIES: (8.8%)
Consolidated Edison, Inc. (formerly Consolidated
Edison Co., of NY, Inc.) ....................................... 366,500 10,721,375 15,026,500
Pacific Gas & Electric Co. ....................................... 366,500 9,437,207 11,155,344
Ameren Corp. (formerly Union Electric Co.) ....................... 366,500 13,338,775 15,851,125
------------ -----------
33,497,357 42,032,969
------------ -----------
RAILROADS: (9.8%)
Burlington Northern Santa Fe ..................................... 253,614 18,695,924 23,570,251
Union Pacific Corp. .............................................. 366,500 17,193,772 22,883,344
------------ -----------
35,889,696 46,453,595
------------ -----------
ENERGY: (10.3%)
Columbia Energy Group (formerly Columbia Gas Systems, Inc.) ...... 366,500 16,782,592 28,793,156
Union Pacific Resources Group, Inc. .............................. 325,267 7,610,809 7,887,725
USX Marathon Group ............................................... 366,500 8,513,405 12,369,375
------------ -----------
32,906,806 49,050,256
------------ -----------
MISC. INDUSTRIAL: (6.5%)
Allied Signal Corp. .............................................. 366,500 12,861,041 14,270,594
Praxair, Inc. .................................................... 366.500 11,893,658 16,492,500
------------ -----------
24,754,699 30,763,094
------------ -----------
COMMUNICATIONS: (7.9%)
AT&T Corp. ....................................................... 366,500 13,153,764 22,448,125
Lucent Technologies, Inc. ........................................ 187,760 11,279,012 14,997,330
------------ -----------
24,432,776 37,445.455
------------ -----------
FINANCIAL: (4.1%)
Travelers Group, Inc. ............................................ 366,500 11,067,964 19,745,188
------------ ------------
Total Investments (100%) $355,379,762 $ 475,031246
============ ============
*Non Income producing
See Notes to Financial Statements.
=====================================================================================================================
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997
=====================================================================================================================
<S> <C> <C>
Investment Income:
Income:
Dividends (Net of $45,320 foreign tax withheld) ............................. $10,626,455
Interest .................................................................... 999,180
-----------
Total income ................................................................................... $11,625,635
Expenses:
Sponsor's administrative fee (Note 4) ....................................... 1,948,212
Professional fees ........................................................... 65,633
Trustee's fee (Note 4) ...................................................... 9,166
Custody fees and other services (Note 4) .................................... 128,847
Transfer agent and shareholder servicing fees ............................... 652,538
Printing, mailing and sundry ................................................ 158,055
Registration and filing fees ................................................ 70,945
-----------
Total expenses ................................................................................. 3,033,396
-----------
Net investment income ........................................................................ 8,592,239
-----------
Realized and Unrealized Gain on Investments:
Net realized gain from securities transactions ..................................................... 92,590,754
Unrealized appreciation of investments
for the period ................................................................................... (4,605,627)
-----------
Net gain on investments ...................................................................... 87,985,127
-----------
Net increase in net assets from operations ....................................................... $96,577,366
===========
See Notes to Financial Statements.
=====================================================================================================================
7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================
STATEMENT OF CHANGES IN NET ASSETS
=========================================================================================
YEAR ENDED DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
Income and Distributable Fund:
Additions:
Net investment income ............................ $ 8,592,239 $ 6,767,457
Realized gains from sale of securities,
other than sale of stock units ................. 78,524,385 6,395,874
------------- -------------
87,116,624 13,163,331
------------- -------------
Deductions:
Paid on account of participations redeemed ....... 3,336,384 486,295
Semi-annual distributions (Note 3(a))
Paid in cash ................................ 8,469,406 1,849,390
Reinvested, below ........................... 75,189,280 10,714,827
------------- -------------
86,995,070 13,050,512
------------- -------------
Net change in income and distributable fund ........ 121,554 112,819
------------- -------------
Principal Account:
Additions:
Payments received on sale of participations ...... 180,924,862 167,449,209
Semi-annual distributions reinvested, above ...... 75,189,280 10,714,827
Realized gains on sale of stock units ............ 14,066,369 5,941,906
Unrealized depreciation of investments ........... (4,605,627) 47,385,034
------------- -------------
265,574,884 231,490,976
------------- -------------
Deductions:
Paid on account of participations redeemed ....... 126,965,570 95,197,345
Semi-annual distributions of principal (Note 3(b)) 5,357,404 578,409
------------- -------------
132,322,974 95,775,754
------------- -------------
Net change in principal account .................. 133,251,910 135,715,222
------------- -------------
Net assets at beginning of period
Income and distributable fund .......................... 545,233 432,414
Principal account ...................................... 391,749,900 256,034,678
------------- -------------
392,295,133 256,467,092
------------- -------------
Net assets at end of period
Income and distributable fund .......................... 666,787 545,233
Principal account ...................................... 525,001,810 391,749,900
------------- -------------
$ 525,668,597 $ 392,295,133
============= =============
See Notes to Financial Statements.
=========================================================================================
</TABLE>
8
<PAGE>
NOTES TO FINANCIAL STATEMENTS
================================================================================
NOTE 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.
NOTE 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.
(d) Accounting estimates--The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the amounts of income
and expense during the reporting period.
Actual results could differ from those estimates.
NOTE 3. DISTRIBUTIONS
(a) During the year ended December 31, 1997 the distributions from net
investment income were $0.27565 per participation and, from realized gains, were
$2.60033 per participation.
(b) The amount shown does not reflect the reinvestment, if any, of that
portion 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, 1997
the distributions from return of capital were $1.83887 per participation. NOTE
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 $138,013 for the year
ended December 31, 1997. The Trust pays an administrative fee to Lexington
Management Corporation (Sponsor) equal, on an annual basis, to 0.40% of the
average daily net assets of the Trust. NOTE 5. INVESTMENT TRANSACTIONS
During the year ended December 31, 1997, the cost of purchases and proceeds
of sales of investment securities, other than short-term obligations, were
$154,496,602 and $151,202,796, 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, 1997, net unrealized appreciation of portfolio
securities was $119,651,480, comprised of unrealized appreciation of
$120,133,695 and unrealized depreciation of $482,215.
NOTE 6. SOURCE OF NET ASSETS
As of December 31, 1997, 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 ....... $348,566,454
Cumulative amount of non-distributable realized
gains retained in Principal Account ...................... 56,783,876
Unrealized appreciation in value of securities ............. 119,651,480
------------
Principal account ..................................... 525,001,810
Income and distributable fund ......................... 666,787
------------
Total net assets ................................... $525,668,597
============
================================================================================
9
<PAGE>
<TABLE>
<CAPTION>
================================================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
================================================================================================================
NOTE 7. PARTICIPATIONS ISSUED AND REDEEMED
During the periods indicated, participations were issued and redeemed as
follows:
NUMBER OF PARTICIPATIONS
YEAR ENDED DECEMBER 31,
1997 1996
---------- ----------
<S> <C> <C>
Issued on payments from Holders ............................................ 10,808,038 11,313,596
Issued on reinvestment of dividends and distributions ...................... 7,968,673 919,816
Redeemed ................................................................... (7,892,774) (6,457,089)
---------- ----------
Net increase ........................................................... 10,883,937 5,776,323
========== ==========
</TABLE>
<TABLE>
<CAPTION>
NOTE 8. SELECTED FINANCIAL INFORMATION
YEARS ENDED DECEMBER 31,
SELECTED DATA PER PARTICIPATION ------------------------------------------------------
OUTSTANDING THROUGHOUT THE PERIOD: 1997 1996 1995 1994 1993
- --------------------------------- ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $ 16.05 $ 13.74 $ 10.51 $ 12.78 $ 11.62
------ ------ ------ ------ ------
Income from investment operations:
Net investment income ............................... 0.27 0.28 0.28 0.31 0.33
Net realized and unrealized gain
(loss) on investments ............................. 3.45 2.79 3.82 (0.45) 1.71
------ ------ ------ ------ ------
Total from investment operations ...................... 3.72 3.07 4.10 (0.14) 2.04
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ................ (0.28) (0.28) (0.28) (0.32) (0.33)
Distributions from net realized gains ............... (2.60) (0.28) (0.03) (0.90) (0.28)
Distributions from income and realized
gains included in terminations .................... (0.11) (0.02) (0.02) (0.01) --
Distributions from capital .......................... (1.90) (0.18) (0.54) (0.90) (0.27)
------ ------ ------ ------ ------
Total distributions ............................... (4.89) (0.76) (0.87) (2.13) (0.88)
------ ------ ------ ------ ------
Change in net asset value for the period .............. (1.17) 2.31 3.23 (2.27) 1.16
------ ------ ------ ------ ------
Net asset value at end of period ...................... $ 14.88 $ 16.05 $ 13.74 $ 10.51 $ 12.78
====== ====== ====== ====== ======
Total return .......................................... 23.09% 22.43% 39.21% (0.77%) 17.57%
Ratios/Supplemental Data
Net Assets, end of period (000) ....................... $525,669 $392,295 $256,467 $156,286 $147,181
Ratios to average net asset of:
Expenses ............................................ 0.62% 0.63% 0.58% 0.62% 0.57%
Net investment income ............................... 1.76% 2.05% 2.57% 2.84% 2.78%
================================================================================================================
10
</TABLE>
<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, 1997, 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, 1997, 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, 1997, 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.
/s/ McGladrey & Pullen, LLP
-------------------------------
McGladrey & Pullen, LLP
New York, New York
January 9, 1998
================================================================================
11
<PAGE>
TRUSTEE
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, Massachusetts 02110
AUDITORS
- --------------------------------------------------------------------------------
MCGLADREY &PULLEN, LLP
555 Fifth Avenue
New York, New York 10017
SPONSOR
- --------------------------------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
TRANSFER AGENT
- --------------------------------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
c/o National Financial Data Services
City Center Square
P.O. Box 419648
Kansas City, Missouri 64141-6648
ALL SHAREHOLDER REQUESTS FOR SERVICES OF
ANY KIND SHOULD BE SENT TO:
TRANSFER AGENT
------------------------------------------------------------------------------
STATE STREET BANK AND
TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
OR CALL TOLL FREE:
SERVICE AND SALES: 1-800-526-0056
24 HOUR ACCOUNT INFORMATION:
1-800-526-0052
------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(800) 526-0052
"LEXLINE"
24 hour toll-free telephone access to your
Lexington Fund account
Price/Yield o Account Balances o Exchanges o
Last Transactions o Total Return o
Duplicate Statements
- --------------------------------------------------------------------------------
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF THE PARTICIPATION
HOLDERS OF LEXINGTON CORPORATE LEADERS TRUST FUND AND IS AUTHORIZED FOR
DISTRIBUTION TO THE PUBLIC ONLY IF IT IS ACCOMPANIED OR PRECEDED BY A
CURRENTLY EFFECTIVE PROSPECTUS WHICH SETS FORTH EXPENSES AND OTHER MATERIAL
INFORMATION.
LEXINGTON
- --------------------------------------------------------------------------------
================================================================================
LEXINGTON
CORPORATE
LEADERS
TRUST
FUND
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1997
The Lexington Group
of
Investment Companies
================================================================================
