================================================================================
DEAR PARTICIPATION HOLDERS:
We are pleased to report a distribution of $0.23 per participation holder
from net investment income for the year ended December 31, 1998. In addition we
are able to report distributions per participation of $0.26 from realized
security gains and $0.18 from return of capital. As we reported in our June 30,
1998 report, an amendment was made to the Trust Indenture to enable the Trust to
become more tax efficient. As a result, the realized security gains reported
above relate to the first six months of the year. There were no realized gains
for the second half of the year. The new policy has been effective in reducing
such distributable gains to investors. For the year ended December 31, 1998, the
Trust had total return of 9.94%*, as compared to a rise of 15.61%* for the
average growth and income fund monitored by Lipper, Inc., and the unmanaged Dow
Jones Industrial Average (with dividends reinvested) which was up 18.1%.
The Trust was negatively impacted throughout the year by the
underperformance of oil and energy holdings as a result of decade low oil
prices, weakness in the retail sector and restructuring problems at Union
Pacific Corporation. We believe that the worst is over. Worldwide economic
recovery beginning to take hold will lead to stronger demand for energy and
retail products. We also expect to see operations and profit improvements at
Union Pacific Corporation. The Trust will greatly benefit from a turnaround in
energy. The Trust is continuing to benefit from its heavy weighting in
telecommunications which include AT&T and Lucent Technologies.
The U.S. economy continues to defy gravity. Despite widespread predictions
that the economic problems in many emerging economies would drive the U.S. into
a sharp slowdown, if not a full-blown recession, growth has remained strong.
Third quarter Gross Domestic Product rose 3.7%, and it appears that fourth
quarter growth could approach 4%. While manufacturing activity has slowed
significantly in response to global conditions, consumers have continued
spending, reflecting continued strong income growth, high confidence levels, and
the support of a strong stock market. Thus, the U.S. continues to enjoy the best
of all worlds- strong overall growth, low interest rates and little inflation.
The economic problems that began in Asia are now being felt in Latin America, a
region that ranks as a more important trading partner of the U.S. than the
emerging economies of Asia, and should therefore have a greater impact on our
economy. A domestic slowdown would appear to be inevitable, although we believe
the economy remains fundamentally sound. Should the economy sustain its current
strength, it could result in a change in policy by the Federal Reserve, which in
recent months has already reduced interest rates three times.
OUTLOOK FOR 1999
The larger issue for investors will be the corporate earnings environment.
Reduced demand overseas, a lack of pricing power, and pressure from rising wage
costs has resulted in virtually no earnings growth in 1998. The outlook is for
more of the same, at least through the first half of this year with the prospect
of a return to moderate growth in the second half.
Sincerely,
/s/ LAWRENCE KANTOR /s/ ROBERT M. DEMICHELE
- ---------------------- ------------------------
LAWRENCE KANTOR ROBERT M. DEMICHELE
Portfolio Manager Chairman of the Board
February, 1999 LEXINGTON MANAGEMENT CORPORATION
February, 1999
*9.94%, 18.01% and 15.97% are the one, five and ten year average annual
standard total returns, respectively, for the period ended December 31, 1998.
Investment return and principal value of an investment will fluctuate so that
an investor's participations, when redeemed, may be worth more or less than at
their original cost. Total return represents past performance and is not
predictive of future results.
================================================================================
<PAGE>
IF YOU HAD INVESTED $10,000 58 YEARS AGO. . .
[GRAPHIC OMITTED] 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, 1998. 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.
2
<PAGE>
LEXINGTON CORPORATE LEADERS TRUST FUND
- --------------------------------------------------------------------------------
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; 1998-$83,389; Total-$1,701,140.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CUMULATIVE COST
AMOUNT OF OF PARTICIPATIONS CUMULATIVE
DIVIDENDS PURCHASED COST
YEAR REINVESTED THROUGH INCLUDING
ENDED SEMI- REINVESTMENT REINVESTED
DEC. 31 ANNUALLY OF DIVIDENDS DIVIDENDS
- --------- ------------ ------------------- -------------
<S> <C> <C> <C>
1941* - - $ 10,000
1942 - - 10,000
1943 $ 190 $ 190 10,190
1944 192 382 10,382
1945 215 597 10,597
1946 187 784 10,784
1947 370 1,154 11,154
1948 513 1,668 11,668
1949 509 2,177 12,177
1950 804 2,980 12,980
1951 1,012 3,992 13,992
1952 1,054 5,046 15,046
1953 1,217 6,263 16,263
1954 1,378 7,641 17,641
1955 1,599 9,240 19,240
1956 1,790 11,030 21,030
1957 1,910 12,940 22,940
1958 2,134 15,075 25,075
1959 2,184 17,258 27,258
1960 2,416 19,674 29,674
1961 2,697 22,371 32,371
1962 2,926 25,296 35,296
1963 3,243 28,540 38,540
1964 3,553 32,093 42,093
1965 3,855 35,948 45,948
1966 4,571 40,519 50,519
1967 5,060 45,579 55,579
1968 5,573 51,153 61,153
1969 5,915 57,068 67,068
1970 6,009 63,077 73,077
1971 6,190 69,267 79,267
1972 6,585 75,852 85,852
1973 7,371 83,223 93,223
1974 8,196 91,419 101,419
1975 9,139 100,557 110,557
1976 9,666 110,223 120,223
1977 11,237 121,460 131,460
1978 13,283 134,743 144,743
1979 15,804 150,547 160,547
1980 19,369 169,916 179,916
1981 21,822 191,738 201,738
1982 24,452 216,190 226,190
1983 25,923 242,114 252,114
1984 28,926 271,040 281,040
1985 31,808 302,848 312,848
1986 39,216 342,064 352,064
1987 40,394 382,458 392,458
1988 71,268 453,726 463,726
1989 45,103 498,829 508,829
1990 51,303 550,132 560,132
1991 55,828 605,960 615,960
1992 55,460 661,420 671,420
1993 54,505 715,925 725,925
1994 60,332 776,257 786,257
1995 61,329 837,586 847,586
1996 64,546 902,132 912,132
1997 71,379 973,511 983,511
1998 72,385 1,045,896 1,035,896
<CAPTION>
VALUE OF PARTICIPATIONS
----------------------------------------------------------------------------
PURCHASED THROUGH PURCHASED
REINVESTMENT OF THROUGH NUMBER
YEAR DISTRIBUTIONS FROM REINVESTMENT NET OF
ENDED INITIALLY REALIZED GAINS OF DIVIDENDS ASSET PARTICI-
DEC. 31 ACQUIRED (CUMULATIVE) SUB-TOTAL (CUMULATIVE) VALUE PATIONS
- --------- ------------- -------------------- ------------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1941* $ 8,799 - $ 8,799 - $ 8,799 566
1942 9,613 - 9,613 - 9,613 584
1943 10,809 - 10,809 $ 188 10,997 601
1944 11,983 $ 3 11,986 402 12,388 620
1945 14,709 464 15,173 682 15,855 693
1946 13,961 430 14,391 816 15,207 716
1947 14,639 447 15,086 1,141 16,227 824
1948 14,840 718 15,558 1,480 17,038 989
1949 17,113 701 17,814 1,968 19,782 1,176
1950 19,871 994 20,865 2,779 23,644 1,392
1951 21,659 1,756 23,415 3,674 27,089 1,652
1952 24,356 2,016 26,372 4,901 31,273 1,845
1953 24,849 2,030 26,879 6,149 33,028 1,945
1954 33,779 3,476 37,255 9,475 46,730 2,117
1955 39,164 4,398 43,562 12,349 55,911 2,243
1956 38,511 7,051 45,562 10,475 56,037 3,123
1957 36,268 6,574 42,842 11,496 54,338 3,269
1958 48,925 8,778 57,703 17,710 75,413 3,406
1959 55,426 11,821 67,247 19,992 87,239 3,906
1960 55,782 12,653 68,435 19,772 88,207 4,562
1961 67,126 16,993 84,119 25,757 109,876 4,881
1962 62,396 17,033 79,429 24,446 103,875 5,541
1963 71,467 19,863 91,330 30,711 122,041 5,803
1964 83,001 24,049 107,050 35,865 142,915 6,452
1965 92,523 30,246 122,769 35,623 158,392 8,066
1966 74,713 24,491 99,204 31,774 130,978 8,606
1967 83,121 27,090 110,211 40,165 150,376 8,948
1968 89,160 32,157 121,317 46,879 168,196 9,710
1969 75,017 26,979 101,996 44,536 146,532 10,115
1970 82,621 28,564 111,185 52,500 163,685 10,957
1971 93,454 32,126 125,580 61,694 187,274 11,856
1972 108,913 38,484 147,397 75,949 223,346 12,605
1973 93,151 32,729 125,880 71,868 197,748 13,123
1974 68,448 22,864 91,312 57,376 148,688 14,124
1975 91,498 30,474 121,972 85,413 207,385 14,781
1976 115,461 37,963 153,424 101,306 254,730 16,914
1977 108,466 35,919 144,385 96,397 240,782 18,898
1978 110,210 34,687 144,897 105,738 250,635 20,370
1979 139,110 34,774 173,884 121,307 295,191 23,931
1980 173,026 47,488 220,514 165,362 385,876 26,181
1981 163,070 62,645 225,715 140,698 366,413 33,836
1982 191,554 69,992 261,546 183,359 444,905 36,772
1983 235,913 91,870 327,783 218,649 546,432 42,757
1984 250,855 91,476 342,331 226,566 568,897 49,375
1985 333,623 145,913 479,536 293,217 772,753 58,251
1986 408,170 212,840 621,010 342,608 963,618 69,711
1987 412,599 241,185 653,784 326,728 980,512 83,847
1988 470,438 297,425 767,863 407,155 1,175,018 97,918
1989 583,494 438,476 1,021,970 509,512 1,531,482 111,950
1990 552,346 473,992 1,026,338 440,810 1,467,148 139,330
1991 654,372 558,392 1,212,764 539,190 1,751,954 152,079
1992 700,391 619,341 1,319,732 600,946 1,920,678 165,291
1993 814,945 727,611 1,542,556 715,658 2,258,214 176,699
1994 832,095 759,684 1,591,779 649,069 2,240,848 213,211
1995 1,207,794 998,228 2,206,022 913,513 3,119,535 227,040
1996 1,452,214 1,232,426 2,684,640 1,134,598 3,819,238 237,959
1997 1,794,519 1,785,369 3,579,888 1,121,302 4,701,190 315,940
1998 1,948,610 1,965,327 3,913,937 1,254,684 5,168,621 329,211
- ------------------------------------------------------------------------------------------------
</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.
3
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments at market quotations, common stocks
(identified cost $376,032,600)........................................... $ 482,305,431
Cash ..................................................................... 2,948,592
Subscriptions receivable ................................................. 650,046
Receivable for accrued dividends ......................................... 760,994
-------------
Total assets ....................................................... 486,665,063
-------------
LIABILITIES
Distribution payable ..................................................... 415,318
Payable for participations redeemed ...................................... 891,252
Accrued expenses ......................................................... 163,976
-------------
Total liabilities .................................................. 1,470,546
-------------
NET ASSETS
Balance applicable to 30,904,526 participations outstanding (Note 6) ..... $ 485,194,517
=============
Computation of public offering price:
Net asset value, offering and redemption price per participation
(net assets divided by participations outstanding) ..................... $ 15.70
=============
</TABLE>
See Notes to Financial Statements
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF INVESTMENTS DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
SECURITIES SHARES COST VALUE
- ---------------------------------------------------------- ----------- -------------- ---------------
<S> <C> <C> <C>
CONSUMER PRODUCTS: (16.2%)
Eastman Kodak Co. ........................................ 351,300 $ 23,409,259 $ 25,293,600
Fortune Brands, Inc. ..................................... 351,300 10,630,772 11,109,863
Gallaher Group PLC ....................................... 351,300 6,017,939 9,550,968
Procter & Gamble Co. ..................................... 351,300 22,628,475 32,078,081
------------ ------------
62,686,445 78,032,512
------------ ------------
OIL INTERNATIONAL: (17.7%)
Chevron Corp. ............................................ 351,300 21,656,629 29,135,943
Exxon Corp. .............................................. 351,300 17,929,914 25,688,813
Mobil Corp. .............................................. 351,300 22,567,293 30,607,012
------------ ------------
62,153,836 85,431,768
------------ ------------
CHEMICAL & FERTILIZERS: (7.0%)
DuPont (E.I.) de Nemours & Co., Inc. ..................... 351,300 17,928,254 18,640,856
Union Carbide Corp. ...................................... 351,300 13,931,829 14,930,250
------------ ------------
31,860,083 33,571,106
------------ ------------
ELECTRICAL EQUIPMENT: (7.4%)
General Electric Co. ..................................... 351,300 18,986,334 35,854,556
------------ ------------
BROADCASTING: (2.4%)
CBS Corp. (formerly Westinghouse Electric Corp.) ......... 351,300 7,054,878 11,505,075
------------ ------------
RETAILING: (3.5%)
Sears, Roebuck & Co. ..................................... 351,300 15,042,195 14,930,250
Venator Group, Inc.* (formerly Woolworth, Corp.) ......... 351,300 7,085,121 2,261,494
------------ ------------
22,127,316 17,191,744
------------ ------------
UTILITIES: (9.3%)
Ameren Corp. (formerly Union Electric Co.) ............... 351,300 11,386,262 18,574,988
Consolidated Edison, Inc. (formerly Consolidated
Edison Co., of NY, Inc.) ................................ 351,300 9,548,809 11,065,950
Pacific Gas & Electric Co. ............................... 351,300 13,752,765 14,996,119
------------ ------------
34,687,836 44,637,057
------------ ------------
RAILROADS: (8.5%)
Burlington Northern Santa Fe ............................. 739,042 21,632,317 24,942,668
Union Pacific Corp. ...................................... 351,300 18,523,041 15,830,456
------------ ------------
40,155,358 40,773,124
------------ ------------
ENERGY: (9.2%)
Columbia Energy Group .................................... 539,550 18,332,653 31,159,013
Union Pacific Resources Group, Inc. ...................... 310,067 7,674,843 2,809,982
USX Marathon Group ....................................... 351,300 8,587,659 10,582,913
------------ ------------
34,595,155 44,551,908
------------ ------------
MISC. INDUSTRIAL: (5.8%)
Allied Signal Corp. ...................................... 351,300 13,331,504 15,566,981
Praxair, Inc. ............................................ 351,300 13,485,811 12,383,325
------------ ------------
26,817,315 27,950,306
------------ ------------
COMMUNICATIONS: (9.4%)
AT&T Corp. ............................................... 351,300 14,732,083 26,435,325
Lucent Technologies, Inc. ................................ 172,560 7,583,993 18,981,600
------------ ------------
22,316,076 45,416,925
------------ ------------
FINANCIAL: (3.6%)
Citigroup Inc. (formerly Travelers Group, Inc.) .......... 351,300 12,591,968 17,389,350
------------ ------------
Total Investments (100%) ............................. $376,032,600 $482,305,431
============ ============
</TABLE>
* Non Income producing
See Notes to Financial Statements
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Investment Income:
Income:
Dividends (Net of $75,395 tax expense)................. $ 10,649,739
Interest .............................................. 118,931
-------------
Total income ......................................... 10,768,670
-------------
Expenses:
Sponsor's administrative fee (Note 4) ................. 2,045,892
Professional fees ..................................... 70,736
Trustee's fee (Note 4) ................................ 10,833
Custody fees and other services (Note 4) .............. 173,265
Transfer agent fees ................................... 723,132
Printing, mailing and sundry .......................... 208,536
Registration and filing fees .......................... 72,615
-------------
Total expenses ....................................... 3,305,009
-------------
Net investment income ............................... 7,463,661
-------------
Realized and Unrealized Gain on Investments:
Net realized gain from securities transactions ......... 54,816,314
Unrealized appreciation of investments
for the period ........................................ (13,378,650)
-------------
Net gain on investments ............................. 41,437,664
-------------
Net increase in net assets from operations ............ $ 48,901,325
=============
</TABLE>
See Notes to Financial Statements
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1998 1997
---------------- ----------------
<S> <C> <C>
Income and Distributable Fund:
Additions:
Net investment income ......................................... $ 7,463,661 $ 8,592,239
Realized gains from sale of securities,
other than sale of stock units .............................. 8,884,899 78,524,385
------------- ------------
16,348,560 87,116,624
------------- ------------
Deductions:
Paid on account of participations redeemed .................... 648,862 3,336,384
Semi-annual distributions (Note 3(a))
Paid in cash ............................................... 1,783,831 8,469,406
Reinvested, below .......................................... 13,985,638 75,189,280
------------- ------------
16,418,331 86,995,070
------------- ------------
Net change in income and distributable fund .................... (69,771) 121,554
------------- ------------
Principal Account:
Additions:
Payments received on sale of participations ................... 73,930,270 180,924,862
Semi-annual distributions reinvested, above ................... 13,985,638 75,189,280
Realized gains on sale of stock units ......................... 45,931,415 14,066,369
Unrealized (appreciation) depreciation of investments ......... (13,378,650) (4,605,627)
------------- ------------
120,468,673 265,574,884
------------- ------------
Deductions:
Paid on account of participations redeemed .................... 160,221,771 126,965,570
Semi-annual distributions of principal (Note 3(b)) ............ 651,211 5,357,404
------------- ------------
160,872,982 132,322,974
------------- ------------
Net change in principal account ............................... (40,404,309) 133,251,910
------------- ------------
Net assets at beginning of period:
Income and distributable fund ..................................... 666,787 545,233
Principal account ................................................. 525,001,810 391,749,900
------------- ------------
525,668,597 392,295,133
------------- ------------
Net assets at end of period:
Income and distributable fund ..................................... 597,016 666,787
Principal account ................................................. 484,597,501 525,001,810
------------- ------------
$ 485,194,517 $525,668,597
============= ============
</TABLE>
See Notes to Financial Statements
- --------------------------------------------------------------------------------
7
<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, 1998 the distributions from net
investment income were $0.22532 per participation and, from realized gains,
were $0.26394 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,
1998, the distributions from return of capital were $0.17835 per participation.
Effective June 1, 1998, the Trust amended its Trust indenture requiring
that additional shares of common stock received as a result of a stock split
shall remain assets of the Trust.
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 $184,098 for
the year ended December 31, 1998. 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, 1998, the cost of purchases and
proceeds of sales of investment securities, other than short-term obligations,
were $73,893,400 and $108,056,877, 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, 1998, net unrealized appreciation of portfolio
securities was $106,272,831, comprised of unrealized appreciation of
$119,868,334 and unrealized depreciation of $13,595,503.
NOTE 6. SOURCE OF NET ASSETS
As of December 31, 1998, the Trust's net assets were comprised of the
following amounts:
<TABLE>
<S> <C>
Net amounts paid in and reinvested by Holders net of terminations and return of capital $275,609,379
payments
Cumulative amount of non-distributable realized gains retained in Principal Account ...... 102,715,291
Unrealized appreciation in value of securities ........................................... 106,272,831
------------
Principal account ...................................................................... 484,597,501
Income and distributable fund .......................................................... 597,016
------------
Total net assets ...................................................................... $485,194,517
============
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE 7. PARTICIPATIONS ISSUED AND REDEEMED
During the periods indicated, participations were issued and redeemed as
follows:
<TABLE>
<CAPTION>
NUMBER OF PARTICIPATIONS
----------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
---------------- ---------------
<S> <C> <C>
Issued on payments from Holders ............................... 4,778,866 10,808,038
Issued on reinvestment of dividends and distributions ......... 1,198,055 7,968,673
Redeemed ...................................................... (10,403,573) (7,892,774)
----------- ----------
Net increase (decrease) ..................................... (4,426,652) 10,883,937
=========== ==========
</TABLE>
NOTE 8. SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------
SELECTED DATA PER PARTICIPATION
OUTSTANDING THROUGHOUT THE PERIOD: 1998 1997 1996 1995 1994
- -------------------------------------------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $ 14.88 $ 16.05 $ 13.74 $ 10.51 $ 12.78
--------- ------- -------- -------- --------
Income from investment operations:
Net investment income ........................... 0.23 0.27 0.28 0.28 0.31
Net realized and unrealized gain
(loss) on investments .......................... 1.28 3.45 2.79 3.82 (0.45)
--------- ------- -------- -------- --------
Total from investment operations ................. 1.51 3.72 3.07 4.10 (0.14)
--------- ------- -------- -------- --------
Less distributions:
Dividends from net investment income ............ (0.23) (0.28) (0.28) (0.28) (0.32)
Distributions from net realized gains ........... (0.26) (2.60) (0.28) (0.03) (0.90)
Distributions from income and realized gains
included in terminations ....................... (0.02) (0.11) (0.02) (0.02) (0.01)
Distributions from capital ....................... (0.18) (1.90) (0.18) (0.54) (0.90)
---------- -------- -------- -------- --------
Total distributions ............................ (0.69) (4.89) (0.76) (0.87) (2.13)
---------- -------- -------- -------- --------
Change in net asset value for the period ......... 0.82 (1.17) 2.31 3.23 (2.27)
---------- -------- -------- -------- --------
Net asset value at end of period ................. $ 15.70 $ 14.88 $ 16.05 $ 13.74 $ 10.51
========== ======== ======== ======== ========
Total return ..................................... 9.94% 23.09% 22.43% 39.21% (0.77%)
Ratios/Supplemental Data:
Net Assets, end of period (000) .................. $ 485,195 $525,669 $392,295 $256,467 $156,286
Ratios to average net asset of:
Expenses ........................................ 0.65% 0.62% 0.63% 0.58% 0.62%
Net investment income ........................... 1.46% 1.76% 2.05% 2.57% 2.84%
</TABLE>
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9
<PAGE>
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INDEPENDENT AUDITOR'S REPORT
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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, 1998, 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, 1998, 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, 1998, and
the results of its operations, the changes in its net assets and the selected
financial information for the periods indicated, in conformity with general
accepted accounting principles.
/s/ McGlady & Pullen, LLP
New York, New York
January 7, 1999
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10
<PAGE>
LEXINGTON
INVESTOR SERVICES
- --------------------------------------
AS A LEXINGTON SHAREHOLDER, YOU SHOULD BE AWARE OF THE MANY SERVICES AVAILABLE
TO YOU.
NO LOAD - The Lexington Funds are no load funds. That is, investments and
redemptions are made without any sales charges, commissions or redemption fees.*
--------
FREE TELEPHONE EXCHANGE - Investments in the Lexington Funds may be exchanged
for shares of a different Lexington Fund at any time.
--------
CHECK WRITING PRIVILEGES - Lexington Money Market Trust permits investors
immediate access to their funds with check writing for withdrawals from their
account.
--------
TAX SHELTERED PLANS - IRA, Keogh, Pension, and Profit Sharing Prototype Plans
are available to qualified individuals. These plans offer investment flexibility
through the Share Exchange Service, simplified record keeping, convenience and
investment supervision.
--------
CUSTODIAL ACCOUNTS FOR MINORS - Investments may be made on behalf of minors
under the Uniform Gifts to Minors Act currently in effect in all states.
--------
SYSTEMATIC WITHDRAWAL PLAN - An investor may elect to receive a fixed amount
from his or her account each month or quarter, subject to certain minimums.
--------
COMPLETE RECORD KEEPING - A statement is provided for every transaction in
addition to a year-end statement with tax information.
THE LEXINGTON GROUP OF
NO LOAD INVESTMENT COMPANIES
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.-Seeks long-term growth of
capital primarily through investment in equity securities of companies domiciled
in, or doing business in, emerging countries and emerging markets.
LEXINGTON GLOBAL CORPORATE LEADERS FUND, INC.-Seeks long-term growth of capital
primarily through investment in common stocks of companies domiciled in foreign
countries and the United States.
LEXINGTON INTERNATIONAL FUND, INC.-Seeks long-term growth of capital through
investment in companies domiciled in foreign countries.
LEXINGTON TROIKA DIALOG RUSSIA FUND, INC.-Seeks long-term capital appreciation
through investments primarily in the equity securities of Russian companies.
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.-Seeks long-term capital
appreciation through investment in companies domiciled in the Asia Region with a
market capitalization of less than $1 billion.
LEXINGTON RAMIREZ GLOBAL INCOME FUND-Seeks high current income. Capital
appreciation is a secondary objective. The Fund invests in a combination of
foreign and domestic high-yield, lower rated debt securities.
LEXINGTON GOLDFUND, INC.-Seeks capital appreciation through investment in gold
bullion and shares of gold mining companies.
LEXINGTON GROWTH AND INCOME FUND, INC.-Seeks capital appreciation over the
long-term through investments in the stocks of large, ably managed and well
financed companies.
LEXINGTON CORPORATE LEADERS TRUST FUND-Seeks capital growth and reasonable
income through investment in an equal number of shares of an established list of
American blue chip corporations.
LEXINGTON SMALLCAP FUND, INC.-Seeks long-term capital appreciation through
investment in common stocks of companies domiciled in the United States with a
market capitalization of less than $1 billion.
LEXINGTON CONVERTIBLE SECURITIES FUND-Seeks total return by providing capital
appreciation, current income and conservation of capital through investments in
a diversified portfolio of securities convertible into shares of common stock.
LEXINGTON GNMA INCOME FUND, INC.-Seeks to achieve a high level of current
income, consistent with liquidity and safety of principal, through investment
primarily in mortgage-backed GNMA ("Ginnie Mae") certificates that are
guaranteed as to the timely payment of principal and interest by the United
States Government.
LEXINGTON MONEY MARKET TRUST-Seeks a high level of current income consistent
with preservation of capital and liquidity through investments in interest
bearing short-term money market instruments.
For more complete information about any of the Lexington Funds and a prospectus
which includes management fee and expenses call the distributor toll-free at
1-800-526-0056. Read the prospectus carefully before you invest or send money.
*Redemptions on shares of Lexington Troika Dialog Russia Fund, Inc. held less
than 365 days are subject to a redemption fee of 2% of the redemption proceeds.
<PAGE>
----------------------------------------------
L E X I N G T O N
[GRAPHIC OMITTED]
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"
[GRAPHIC OMITTED]
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
CORPORATE
LEADERS
TRUST
FUND
--------------------------------
-
-
ANNUAL REPORT
DECEMBER 31, 1998
The Lexington Group
of
Investment Companies
