Dear Shareholders:
- --------------------------------------------------------------------------------
The Lexington Ramirez Global Income Fund enjoyed an excellent inaugural
year. The Fund boasted a 20.16%* total return for 1995. Included in that gain
were dividends of $0.96 cents a share. The new year is off to a fast start and
we are optimistic about the prospects for 1996.
Shareholders in the Fund have not seen a decline in their income despite a
drop in U.S. interest rates. Yields overseas, particularly in certain
transitional economies, are much higher than those at home. The Fund ended 1995
with a standardized yield of 9.9%* and we have every reason to expect this level
to be maintained in the quarters ahead.
Global bond investing often requires taking some less traveled roads. Over
the years, money managers have sold global and international bond funds as a way
of diversifying investment portfolios and reducing overall risk. They reasoned
that bond price movements in one country-the United States, for example-would
move independently of those in another country-such as Germany. Unfortunately,
the ongoing globalization of the world's economies, the ease with which capital
moves and, the flow of readily accessible financial information help to ensure
greater correlation of returns among the world's developed bond markets. So, we
think investors need to expand their investment parameters and seek out markets
that offer the possibility of noncorrelated returns. And, fortunately, most of
these markets offer high current income and profit potential as well.
The Lexington Ramirez Global Income Fund currently stresses bonds in certain
transitional markets-particularly those in Eastern Europe and South Africa. We
think the U.S. bond market, and by extension most of the world's developed
markets, are fully priced. Meanwhile, the economies of Eastern Europe and South
Africa need to attract capital and are offering yields and investor incentives
to assure that the capital keeps flowing.
We closed 1995 with major positions in Portugal, Poland, and South Africa.
Together, they totaled 26% of the Fund's assets. All three economies have strong
growth potential, relatively stable currencies, and governments committed to
fiscal restraint and pro-investor economic policies. Moreover, their bond
markets provide huge income advantages over those of the traditional developed
markets.
Aside from our concentration on transitional economies, the Fund strikes a
balance between developed market and LDC (less developed country) debt. This
diversification tends to mitigate volatility. Over the last twelve months, the
price volatility of the Fund has been comparable to that of ten-year U.S.
Treasury bonds.
1
<PAGE>
We appreciate your continued support and welcome the opportunity to discuss
any questions you may have about your investment.
Sincerely,
Maria Fiorini Ramirez Denis P. Jamison Robert M. DeMichele
Portfolio Manager Portfolio Manager Chairman of the Board
January, 1996 January, 1996 January, 1996
_____________________________________________________________________________
CHART
Paper version of this shareholder report contains a graph comparing the
changes in value of a $10,000 investment in
Lexington Ramirez Global Income Fund and
the unmanaged Lehman Brothers Global Bond Index
_____________________________________________________________________________
*20.16%, 7.85%, and 7.54% are the one and five year and since commencement
(7/10/86) average annual standard total returns, respectively, for the period
ended December 31, 1995. Prior to January 1995, the Fund operated under a
different name and investment objecitve. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than at their original cost. Total return represents past
performance.
2
<PAGE>
Lexington Ramirez Global Income Fund
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995
Left Col.
Principal Value
Amount* Security (Note 1)
- --------------------------------------------------------------------------------
LONG-TERM DEBENTURES: 79.0%
Government Obligations: 52.9%
Argentina: 4.7%
1,000,000 Republic of Argentina
5.00%, due 03/31/23 .......................... $ 571,875
---------
700,000 Treasury Corporation of Victoria
10.25%, due 11/15/06 ......................... 582,931
---------
Brazil: 5.0%
1,000,000 Republic of Brazil
7.25%, due 04/15/24 .......................... 615,000
---------
Canada: 4.5%
700,000 Stelco, Inc.
10.40%, due 11/30/09 ......................... 551,888
---------
Ecuador: 3.7%
1,250,000 Republic of Ecuador
3.00%, due 02/28/25 .......................... 454,688
---------
Germany: 4.1%
700,000 Bundesrepublic Deutschland
6.50%, due 10/14/05 .......................... 503,269
---------
Italy: 4.5%
900,000,000 Buoni Poliennali Del Tes
8.50%, due 01/01/99 .......................... 545,953
---------
Philippines: 3.0%
500,000 Central Bank of Philippines
5.75%, due 12/01/17 .......................... 372,500
---------
Spain: 2.5%
40,000,000 Bonos Y Oblig Del Estado
7.40%, due 07/30/99 .......................... 310,837
---------
Portugal: 8.5%
100,000,000 Obrig Do Tes Medio Prazo
8.875%, due 01/23/97 ......................... 667,423
50,000,000 Obrig Do Tes Medio Prazo
11.875%, due 02/23/05 ........................ 373,932
---------
1,041,355
---------
South Africa: 7.6%
2,000,000 Electricity Supply Commission
11.00%, due 06/01/08 ......................... 447,191
----------
2,000,000 Republic of South Africa
12.00%, due 02/28/05 ......................... 487,364
----------
934,555
----------
Total Government Obligations
(cost $6,005,328) ............................ 6,484,851
----------
Corporate Bonds: 26.1%
Brazil: 3.9%
500,000 Aracruz Celulose S.A.
10.375%, due 01/31/02 ........................ 478,750
---------
Czech Republic: 3.8%
12,500,000 CEZ, a.s.
11.30%, due 06/06/05 ......................... 468,850
---------
Right Col.
Principal Value
Amount* Security (Note 1)
=------------------------------------------------------------------------------
Costa Rica: 4.5%
900,000 Banco Costa Rica
6.25%, due 05/21/10 .......................... $ 551,250
----------
Denmark: 6.6%
2,992,000 Nykredit
8.00%, due 10/01/26 .......................... 521,785
----------
1,900,000 Realkredit Danmark
6.00%, due 10/01/26 .......................... 284,403
----------
806,188
----------
Mexico: 3.9%
500,000 Cemex S.A.
8.875%, due 06/10/98 ......................... 481,250
----------
United States: 3.4%
400,000 Chiquita Brands International, Inc.
11.50%, due 06/01/01 ......................... 418,000
----------
Total Corporate Bonds
(cost $3,114,868) ............................ 3,204,288
----------
TOTAL LONG-TERM DEBENTURES
(cost $9,120,196) ............................ 9,689,139
----------
SHORT-TERM INVESTMENTS: 20.2%
Greece: 4.8%
120,000,000 Hellenic Treasury Bills
0%, due 05/31/96 ............................. 476,476
----------
30,000,000 Hellenic Treasury Bills
0%, due 12/18/96 ............................. 111,428
----------
587,904
----------
Hungary: 3.7%
80,000,000 Government of Hungary Treasury
Bills 0%, due 12/20/96 ....................... 452,138
----------
Mexico: 2.2%
2,100,000 Cetes
0%, due 01/25/96 ............................. 267,780
----------
Poland: 7.1%
1,100,000 Government of Poland Treasury
Bills 0%, due 02/28/96 ....................... 430,909
1,300,000 Government of Poland Treasury
Bills 0%, due 11/15/96 ....................... 435,370
----------
866,279
----------
United States: 2.4%
300,000 U.S. Treasury Bill
4.91%, due 03/07/96 .......................... 297,300
----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,543,030) ............................ 2,471,401
----------
TOTAL INVESTMENTS: 99.2%
(cost $11,663,226\'86) (Note 1) .............. 12,160,540
Other assets in excess of
liabilities: 0.8% ............................ 94,192
----------
TOTAL NET ASSETS: 100%
(equivalent to $10.75 per share
on 1,139,533 shares outstanding) ............. $12,254,732
===========
*Principal amount represents local currency.
+Aggregate cost for Federal income tax purposes is identical.
The Notes to Financial Statements are an integral part of this statement.
3
<PAGE>
Lexington Ramirez Global Income Fund
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost $11,663,226) (Note 1) ....................... $12,160,540
Receivable for investment securities sold ............................................. 2,383,236
Receivable for shares sold ............................................................ 1,526,300
Interest receivable ................................................................... 270,239
-----------
Total Assets ................................................................... 16,340,315
-----------
Liabilities
Due to custodian bank ................................................................. 1,482,447
Due to Lexington Management Corporation (Note 2) ...................................... 2,849
Payable for investment securities purchased ........................................... 2,504,406
Payable for shares redeemed ........................................................... 13,120
Accrued expenses ...................................................................... 40,101
Distributions payable ................................................................. 42,660
-----------
Total Liabilities .............................................................. 4,085,583
-----------
Net Assets (equivalent to $10.75 per share on 1,139,533 shares outstanding) (Note 4) .. $12,254,732
===========
Net Assets consist of:
Additional paid-in capital (Note 1) ................................................... 12,031,391
Undistributed net investment income (Note 1) .......................................... 16,186
Accumulated net realized loss on investments and foreign currency holdings (Note 7) ... (288,636)
Net unrealized appreciation of investments and foreign currency holdings .............. 495,791
-----------
$12,254,732
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
4
<PAGE>
Lexington Ramirez Global Income Fund
Statement of Operations
Year ended December 31, 1995
<TABLE>
<S> <C> <C>
Investment Income
Interest income ................................................ $1,243,253
Less: foreign tax expense ...................................... 14,253
----------
Investment income $1,229,000
Expenses
Investment advisory fee (Note 2) ............................... 97,938
Accounting and shareholder services expense (Note 2) ........... 20,445
Custodian and transfer agent expenses .......................... 21,942
Directors' fees and expenses ................................... 13,447
Audit and legal ................................................ 25,038
Printing and mailing ........................................... 57,852
Registration fees .............................................. 21,322
Distribution expense (Note 3) .................................. 24,484
Computer processing fees ....................................... 6,502
Other expenses ................................................. 11,249
----------
Total expenses ......................................... 300,219
Less: expenses recovered under contract with
investment adviser (Note 2) .......................... 30,571 269,648
---------- ----------
Net investment income 959,352
Realized and Unrealized Gain (Loss) on Investments (Note 5)
Net realized gain (loss) on:
Investments ................................................ 427,257
Foreign currency ........................................... (95,887)
----------
Net realized gain 331,370
Net change in unrealized appreciation (depreciation) on:
Investments ................................................ 493,914
Foreign currency translation of other assets and liabilities (1,523)
----------
Net change in unrealized appreciation ................... 492,391
----------
Net realized and unrealized gain ................... 823,761
----------
Increase in Net Assets Resulting from Operations ................... $1,783,113
==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
Lexington Ramirez Global Income Fund
Statements of Changes in Net Assets
Year ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Net investment income ..................................................... $ 959,352 $ 579,593
Net realized gain (loss) from security transactions ....................... 331,370 (305,265)
Increase (decrease) in unrealized appreciation of investments ............. 492,391 (1,173,108)
----------- -----------
Net increase (decrease) in net assets resulting from operations ........... 1,783,113 (898,780)
Distributions to shareholders from net investment income .................. (901,633) (563,046)
Increase (decrease) in net assets from capital share transactions
(Note 4) ................................................................ 1,022,692 (2,763,453)
----------- -----------
Net increase (decrease) in net assets ..................................... 1,904,172 (4,225,279)
Net Assets
Beginning of period ....................................................... 10,350,560 14,575,839
----------- -----------
End of period ............................................................. $12,254,732 $10,350,560
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
Lexington Ramirez Global Income Fund
Notes to Financial Statements
December 31, 1995 and 1994
1. Significant Accounting Policies
Lexington Ramirez Global Income Fund, Inc. (the "Fund") is an open end
diversified management investment company registered under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek high
current income. Capital appreciation is a secondary objective. The following is
a summary of significant accounting policies followed by the Fund in the
preparation of its financial statements:
Investments Security transactions are accounted for on a trade date basis.
Realized gains and losses from security transactions are reported on the
identified cost basis. Long-term debt obligations held by the Fund are valued at
the mean of representative quoted bid and asked prices for such securities or,
if such prices are not available, at prices for securities of comparable
maturity, quality and type; however, when LMC deems it appropriate, prices
obtained for the day of valuation from a bond pricing service will be used.
Short-term debt investments are amortized to maturity based on their cost,
adjusted for foreign exchange translation and market fluctuations. Equity
securities are valued at the last sale price on the exchange or in the principal
OTC market in which such securities are traded, as of the close of business on
the day the securities are being valued, or, lacking any sales, at the last
available bid price. Securities for which market quotations are not readily
available and other assets are valued at fair value as determined by management
and approved in good faith by the Board of Trustees. All investments quoted in
foreign currencies are valued in U.S. dollars on the basis of the foreign
currency exchange rates prevailing at the close of business. Dividends and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is accrued as earned.
Foreign Currency Transactions Foreign currencies (and receivables and
payables denominated in foreign currencies) are translated into U.S. dollar
amounts at current exchange rates. Translation gains or losses resulting from
changes in exchange rates and realized gains and losses on the settlement of
foreign currency transactions are reported in the statement of operations. In
addition, the Fund may enter into forward foreign exchange contracts in order to
hedge against foreign currency risk in the purchase or sale of securities
denominated in foreign currency. The Fund may also enter into such contracts to
hedge against changes in foreign currency exchange rates on portfolio positions.
These contracts are marked to market daily, by recognizing the difference
between the contract exchange rate and the current market rate as unrealized
gains or losses. Realized gains or losses are recognized when contracts are
closed and are reported in the statement of operations.
Distributions In accordance with Statement of Position 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies, as of December 31,
1995, book and tax basis differences amounting to $14,434 have been reclassified
from additional paid-in-capital to undistributed net investment income. In
addition $43,646 was reclassified from undistributed net investment income to
accumulated net realized loss on investments and foreign currency holdings. As
of December 31, 1994, book and tax basis differences amounting to $14,483 have
been reclassified from undistributed net investment income to additional
paid-in-capital.
Federal Income Taxes It is the Fund's intention to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes has been made.
Other Matters The Board of Trustees approved a change in the Fund's name and
objective on November 30, 1994. Effective January 3, 1995 the Fund's name was
changed to Lexington Ramirez Global Income Fund and its objective was changed to
seek high current income and capital appreciation by investing in foreign and
domestic high-yield lower rated debt securities.
7
<PAGE>
Lexington Ramirez Global Income Fund
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
2. Investment Advisory Fee and Other Transactions with Affiliate
The Fund pays an investment advisory fee to Lexington Management Corporation
("LMC") at the rate of 1% of average daily net assets. In connection with
providing investment advisory services, LMC has entered into a sub-advisory
contract with MFR Advisors Inc. ("MFR") under which MFR provides the Fund with
investment management services. Pursuant to the terms of the sub-advisory
contract between LMC and MFR, LMC pays MFR a monthly sub-advisory fee at the
annual rate of .50% of the Fund's average daily net assets. The investment
advisory contract provides that the total annual expenses of the Fund (including
management fees, but excluding interest, taxes, brokerage commissions and
extraordinary expenses) will not exceed the level of expenses which the Fund is
permitted to bear under the most restrictive expense limitation imposed by any
state in which shares of the Fund are offered for sale. The investment advisory
fee and expense reimbursement are set forth in the statement of operations.
The Fund also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs, which are incurred by the Fund, but paid by LMC.
3. Distribution Plan
The Fund has adopted a Distribution Plan (the "Plan") which allows payments to
finance activities associated with the distribution of the Fund's shares. The
Plan provides that the Fund may pay distribution fees on a reimbursement basis,
including payments to Lexington Fund Distributors, Inc. ("LFD"), the Fund's
distributor, in amounts not exceeding 0.25% per annum of the Fund's average
daily net assets. Total distribution expenses for the year ended December 31,
1995 were $24,484 and are set forth in the statement of operations.
4. Shares of Beneficial Interest
The Fund is authorized to issue an unlimited number of no par value shares in
beneficial interest. Transactions of capital stock were as follows:
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1995 December 31, 1994
Shares Amount Shares Amount
-------- ---------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................... 356,354 $3,788,187 165,124 $ 1,718,766
Shares issued on reinvestment of dividends .... 72,344 755,680 44,829 458,077
-------- ---------- -------- -----------
428,698 4,543,867 209,953 2,176,843
Shares redeemed ............................... (345,326) (3,521,175) (484,897) (4,940,296)
-------- ---------- -------- -----------
Net increase (decrease) ....................... 83,372 $1,022,692 (274,944) $(2,763,453)
======== ========== ======== ===========
</TABLE>
5. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales of securities for the year ended
December 31, 1995, excluding short-term securities, were $18,414,156 and
$10,238,456, respectively.
8
<PAGE>
Lexington Ramirez Global Income Fund
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
5. Purchases and Sales of Investment Securities (continued)
At December 31, 1995, aggregate gross unrealized appreciation for all securities
and foreign currency holdings (including foreign currency receivables and
payables) in which there is an excess of value over tax cost amounted to
$599,537 and aggregate gross unrealized depreciation for all securities and
foreign currency holdings in which there is an excess of tax cost over value
amounted to $103,746.
6. Investment Risks
The Fund's investments in foreign securities may involve risks not present in
domestic investments. Since foreign securities may be denominated in a foreign
currency and involve settlement and pay interest or dividends in foreign
currencies, changes in the relationship of these foreign currencies to the U.S.
dollar can significantly affect the value of the investments and earnings of the
Fund. Foreign investments may also subject the Fund to foreign government
exchange restrictions, expropriation, taxation or other political, social or
economic developments, all of which could affect the market and/or credit risk
of the investments.
In addition to the risks described above, risks may arise from forward foreign
currency contracts as the result of the potential inability of counterparties to
meet the terms of their contracts.
7. Federal Income Taxes-Capital Loss Carryforwards
As of December 31, 1995, $137,019 of capital loss carryforwards have expired and
been reclassified to additional paid-in capital. Capital loss carryforwards
available for Federal income tax purposes as of December 31, 1995 are
approximately:
$ 99,152 expiring in 1996;
$ 48,158 expiring in 1998;
$ 6,712 expiring in 1999;
$ 37,269 expiring in 2001; and,
$ 97,345 expiring in 2002.
To the extent any future capital gains are offset by these losses, such gains
would not be distributed to shareholders.
Treasury regulations were issued in early 1990 which provide that capital losses
incurred after October 31 of a Fund's taxable year can be deemed to have
occurred on the first day of the following year (i.e., January 1). The
regulations indicate that a trust may elect to retroactively apply these rules
for purposes of computing taxable income. Accordingly, the capital loss
carryforwards for the Fund have been adjusted to reflect prior years'
post-October losses in the next fiscal year.
9
<PAGE>
Lexington Ramirez Global Income Fund
Financial Highlights
<TABLE>
<CAPTION>
Selected per share data for a share outstanding throughout the period:
Year ended December 31,
---------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $ 9.80 $10.95 $10.39 $10.35 $10.05
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income .......................... .96 .46 .53 .61 .67
Net realized and unrealized gain (loss) on
investments .................................. .95 (1.16) .58 .04 .30
------ ------ ------ ------ ------
Total income (loss) from investment operations ... 1.91 (.70) 1.11 .65 .97
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ........... (.96) (.45) (.55) (.61) (.67)
------ ------ ------ ------ ------
Net asset value, end of period ................... $10.75 $ 9.80 $10.95 $10.39 $10.35
====== ====== ====== ====== ======
Total return ..................................... 20.10% (6.52%) 10.90% 6.51% 10.03%
Ratio to average net assets:
Expenses, before reimbursement or waiver ..... 3.07% 1.80% 1.44% 1.54% 1.65%
Expenses, net of reimbursement or waiver ..... 2.75% 1.50% 1.44% 1.50% 1.12%
Net investment income, before reimbursement
or waiver .................................. 9.48% 4.18% 4.83% 5.88% 6.11%
Net investment income ........................ 9.80% 4.48% 4.83% 5.92% 6.64%
Portfolio turnover ........................... 164.72% 10.20% 31.06% 31.24% 29.45%
Net assets, end of period (000's omitted) ........ $12,255 $10,351 $14,576 $13,085 $12,252
</TABLE>
10
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Lexington Ramirez Global Income Fund:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Ramirez Global
Income Fund, as of December 31, 1995, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights 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 financial
highlights 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, 1995 by correspondence with the custodian and brokers. 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 financial highlights referred
to above present fairly, in all material respects, the financial position of
Lexington Ramirez Global Income Fund as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
January 29, 1996
11
<PAGE>
Left Col.
Lexington
Ramirez Global Income Fund, Inc.
Investment Adviser
- --------------------------------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Sub-Adviser
- --------------------------------------------------------------------------------
MFR ADVISORS, INC.
One World Financial Center
200 Liberty Street
New York, New York 10281
Distributor
- --------------------------------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
---------------------------------------------
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 * Account Balances * Exchanges *
Last Transactions * Total Return * Duplicate Statements
- --------------------------------------------------------------------------------
This report has been prepared for the information of the shareholders of
Lexington Ramirez Global Income 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.
Right Col.
LEXINGTON
LEXINGTON
RAMIREZ
GLOBAL
INCOME
FUND
-------------------------------------------
(filled box)Quarterly dividends
(filled box)Capital appreciation potential
(filled box)Free telephone exchange
privilege
(filled box)No sales charge
-------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1995
The Lexington Group
of No Load
Investment Companies
