As filed with the Securities and Exchange Commission on April 28, 1995
Registration No. 33-26116
811-5710
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 7 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 8 X
(Check appropriate box or boxes.)
LEXINGTON NATURAL RESOURCES TRUST
----------------------------------------------------
(Exact name of Registrant as specified in Charter)
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
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(Address of principal executive offices)
Registrant's Telephone Number: (201) 845-7300
Lisa Curcio, Secretary
Lexington Natural Resources Trust
Park 80 West Plaza Two, Saddle Brook, New Jersey 07663
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(Name and address of agent for service)
With a copy to:
Carl Frischling, Esq.
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
919 Third Avenue, New York, New York 10022
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It is proposed that this filing will become effective May 1, 1995
pursuant to Paragraph (b) of Rule 485.
--------------------------------------------
The Registrant has registered an indefinite number of shares
under the Securities Act of 1933, pursuant to Section 24(f) of
the Investment Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended December 31, 1994 was filed on
February 24, 1995.
<PAGE>
LEXINGTON NATURAL RESOURCES TRUST
REGISTRATION STATEMENT ON FORM N-1A
CROSS REFERENCE SHEET
PART A
Items in Part A Prospectus
of Form N-1A Prospectus Caption Page Number
- ------------ ------------------ -----------
1. Cover Page Cover Page
2. Synopsis *
3. Condensed Financial Information 3
4. General Description of Registrant 4
5. Management of the Fund 7
6. Capital Stock and Other Securities 10
7. Purchase of Securities Being Offered 8
8. Redemption or Repurchase 8
9. Legal Proceedings *
Note * Omitted since answer is negative or inapplicable
<PAGE>
LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF ADDITIONAL STATEMENT OF ADDITIONAL
PART B INFORMATION CAPTION INFORMATION PAGE NUMBER
- ------ ----------------------- -----------------------
10. Cover Page Cover Page
11. Table of Contents Cover Page
12. General Information and History 10 (Part A)
13. Investment Objectives and Policies 2
14. Management of the Registrant 16
15. Control Persons and Principal Holders 5
of Securities
16. Investment Advisory and Other Services 5
17. Brokerage Allocation and Other Practices 6
18. Capital Stock and Other Securities 10 (Part A)
19. Purchase, Redemption and Pricing of 8 (Part A)
securities being offered
20. Tax Status 8
21. Underwriters 7 (Part A)
22. Calculation of Yield Quotations on Money *
Market Funds
23. Financial Statements Exhibit
PART C
- ------
Information required to be included in Part C is set
forth under the appropriate Item, so numbered, in
Part C to this Registration Statement.
* Not Applicable
<PAGE>
PROSPECTUS
May 1, 1995
Lexington Natural Resources Trust
P.O. Box 1515 / Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
201-845-7300
- --------------------------------------------------------------------------------
Lexington Natural Resources Trust (the "Fund"), is a no load
open-end non-diversified management investment company. The Fund's
investment objective is to seek long-term growth of capital through
investment primarily in common stocks of companies which own, or develop
natural resources and other basic commodities, or supply goods and
services to such companies. Current income will not be a factor. Total
return will consist primarily of capital appreciation. For a description
of the types of securities in which the Fund will invest, see
"Investment Objectives and Policies" on page 3.
Shares of the Fund may be purchased only by insurance companies for
the purpose of funding variable annuity contracts.
This Prospectus concisely sets forth information about the Fund that
you should know before investing. It should be read and retained for
future reference.
A Statement of Additional Information ("SAI") dated May 1, 1995, has
been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The SAI further discusses certain
areas in this Prospectus and other matters which may be of interest to
some investors. For a free copy, call the telephone number above or
write to the address listed above.
Lexington Management Corporation (the "Investment Adviser") is the
Investment Adviser of the Fund. Lexington Funds Distributor, Inc. (the
"Distributor") is the Distributor of shares of the Fund. Market Systems
Research Advisors, Inc. (the "Sub-Adviser") is the Sub-Adviser to the
Fund.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
FINANCIAL HIGHLIGHTS
The following Per Share and Capital Changes Information for each of the
years in the five year period ended December 31, 1994 has been audited by KPMG
Peat Marwick LLP, Independent Auditors, whose report thereon appears in the
Statement of Additional Information. This information should be read in
conjunction with the financial statements and related notes thereto included in
the Statement of Additional Information.
Financial Highlights
(for a share outstanding throughout the period)
<TABLE>
<CAPTION>
Period from Year
Ended December 31,
August 1, 1989
(Commencement of
Operations) to
December 31,
1994 1993 1992 1991 1990 1989
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .... $10.30 $ 9.30 $9.01 $9.50 $11.49 $10.00
------ ------ ----- ----- ------ ------
Income (loss) from investment operations:
Net investment income (loss)........... 0.04 - - 0.02 (0.01) 0.01 -
Net realized and unrealized gain (loss)
on investments ........................ (0.59) 1.01 0.29 (0.49) (1.70) 1.48
------ ------ ----- ----- ------ ------
Total income (loss) from investment
operations ............................ (0.55) 1.01 0.29 (0.47) (1.71) 1.49
------ ------ ----- ----- ------ ------
Less distributions:
Dividends from net investment income .. (0.04) (0.01) - (0.02) - -
Dividends from capital gains............. - - - - (0.28) -
------ ------ ----- ----- ------ ------
Net asset value, end of period .......... $ 9.71 $10.30 $9.30 $9.01 $ 9.50 $11.49
====== ====== ===== ===== ====== ======
Total return ............................ (5.38%) 10.90% 3.22% (4.95%) (14.85%) 40.98%*
Ratio to average net assets:
Expenses, before reimbursement .......... 1.55% 2.26% 2.31% 2.97% 4.55% 19.76%*
Expenses, net of reimbursement .......... 1.55% 2.26% 2.31% 1.60% 1.54% 0.39%*
Net investment income (loss), before
reimbursement ......................... 0.49% 0.08% 0.02% (1.10%) (3.06%) (19.16%)*
Net investment income (loss) ............ 0.49% 0.08% 0.02% 0.27% (0.05%) 0.22%*
Portfolio turnover ...................... 87.40% 114.44% 65.50% 100.94% 50.43% 0.00%*
Net assets, end of period (000's omitted) $13,627 $5,325 $1,926 $1,393 $ 916 $ 280
</TABLE>
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*Annualized
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DESCRIPTION OF THE FUND
Lexington Natural Resources Trust is an open-end management investment
company organized as a business trust under the laws of Massachusetts. The Fund
is intended to be the funding vehicle for variable annuity contracts to be
offered by the separate accounts of certain life insurance companies
("participating insurance companies"). The Fund currently does not foresee any
disadvantages to the holders of variable annuity contracts arising from the fact
that the interests of the holders of such contracts may differ. Nevertheless,
the Fund's Trustees intend to monitor events in order to identify any material
irreconcilable conflicts which may possibly arise and to determine what action,
if any, should be taken in response thereto. If a conflict were to occur, an
insurance company separate account might be required to withdraw its investments
in the Fund and the Fund might be forced to sell securities at disadvantageous
prices. The variable annuity contracts are described in the separate
prospectuses issued by the Participating Insurance Companies. The Fund assumes
no responsibility for such prospectuses.
Individual variable annuity contract holders are not "shareholders" of the
Fund. The Participating Insurance Companies and their separate accounts are the
shareholders or investors, although such companies may pass through voting
rights to their variable annuity contract. Shares of the Fund are not offered
directly to the general public.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is to seek long-term growth of capital
through investment primarily in common stocks of companies that own or develop
natural resources and other basic commodities, or supply goods and services to
such companies. Current income will not be a factor. Total return will consist
primarily of capital appreciation.
Management attempts to achieve the investment objective of the Fund by
seeking to identify securities of companies that, in its opinion, are
undervalued relative to the value of natural resource holdings of such companies
in light of current and anticipated economic or financial conditions. Natural
resource assets are materials derived from natural sources which have economic
value. The Fund will consider a company to have substantial natural resource
assets when, in management's opinion, the company's holdings of the assets are
of such magnitude, when compared to the capitalization, revenues or operating
profits of the company, that changes in the economic value of the assets will
affect the market price of the equity securities of such company. Generally, a
company has substantial natural resource assets when at least 50% of the
non-current assets, capitalization, gross revenues or operating profits of the
company in the most recent or current fiscal year are involved in or result
from, directly or indirectly through subsidiaries, exploring, mining, refining,
processing, fabricating, dealing in or owning natural resource assets. Examples
of natural resource assets include: companies that specialize in energy sources
(e.g., coal, geothermal power, natural gas and oil), environmental technology
(e.g., pollution control and waste recycling), forest products, agricultural
products, chemical products, ferrous and non-ferrous metals (e.g., iron,
aluminum and copper), strategic metals (e.g., uranium and titanium), precious
metals (e.g., gold, silver and platinum), and other basic commodities. The Fund
presently does not intend to invest directly in natural resource assets or
related contracts. The Fund may invest up to 25% of its total assets in
securities principally traded in markets outside the United States.
Management of the Fund believes that, based upon past performance, the
securities of specific companies that hold different types of substantial
natural resource assets may move relatively independently of one another during
different stages of inflationary cycles due to different degrees of demand for,
or market values of, their respective natural resource holdings during
particular portions of such inflationary cycles. The Fund's fully-managed
investment approach enables it to switch its emphasis among various industry
groups depending upon management's outlook with respect to prevailing trends and
developments. The investment objective and policies of the Fund described in the
first two paragraphs of this section are fundamental policies of the Fund and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment Company Act
of 1940, as amended.
Except for defensive or liquidity purposes, at least 65% of the total assets
of the Fund will be invested in companies with substantial natural resource
assets. The remaining assets to the extent not invested in the common stocks of
natural resource
3
<PAGE>
companies may be invested in companies other than the natural resource companies
and in debt securities of natural resource companies as well as other companies.
At any time management deems it advisable for temporary defensive or liquidity
purposes, the Fund may hold all its assets in cash or cash equivalents and
invest in, or hold unlimited amounts of, debt obligations of the United States
government or its political subdivisions, and money market instruments including
repurchase agreements with maturities of seven days or less and Certificates of
Deposit.
The Fund's investment portfolio may include repurchase agreements with banks
and dealers in U.S. Government securities. A repurchase agreement involves the
purchase by the Fund of an investment contract from a bank or a dealer in U.S.
Government securities which contract is secured by debt securities whose value
is equal to or greater than the value of the repurchase agreement including the
agreed upon interest. The agreement provides that the institution will
repurchase the underlying securities at an agreed upon time and price. The total
amount received on repurchase would exceed the price paid by the Fund,
reflecting an agreed upon rate of interest for the period from the date of the
repurchase agreement to the settlement date, and would not be related to the
interest rate on the underlying securities. The difference between the total
amount to be received upon the repurchase of the securities and the price paid
by the Fund upon their acquisition is accrued daily as interest. If the
institution defaults on the repurchase agreement, the Fund will retain
possession of the underlying securities. In addition, if bankruptcy proceedings
are commenced with respect to the seller, realization on the collateral by the
Fund may be delayed or limited and the Fund may incur additional costs. In such
case the Fund will be subject to risks associated with changes in the market
value of collateral securities. The Fund intends to limit repurchase agreements
to transactions with institutions believed by the Investment Adviser and
Sub-Adviser to present minimal credit risk.
Although the Fund's Board of Trustees present policy prohibits investments
in speculative securities trading at extremely low prices and in relatively
illiquid markets, investments in such securities can be made when and if the
Board determines such investments to be in the best interests of the Fund and
its shareholders. The policies set forth in this paragraph are subject to change
by the Board of Trustees of the Fund, in its sole discretion (see "Special
Considerations and Risks" and "Dividend, Distribution and Reinvestment Policy").
The Fund anticipates that its annual portfolio turnover rate will generally
not exceed 150%. A 100% turnover rate would occur if all of the Fund's portfolio
investments were sold and either repurchased or replaced within one year. High
turnover may result in increased transaction costs to the Fund; however, the
rate of turnover will not be a limiting factor when the Fund deems it desirable
to purchase or sell portfolio investments. For the fiscal year ended December
31, 1994, the portfolio turnover rate was 87.40%.
Generally, the primary consideration in placing portfolio securities
transactions with broker-dealers for execution is to obtain, and maintain the
availability of, execution at the best net price available and in the most
effective manner possible. The Fund's brokerage allocation policy may permit the
Fund to pay a broker-dealer which furnishes research services a higher
commission than that which might be charged by another broker-dealer which does
not furnish research services, provided that such commission is deemed
reasonable in relation to the value of the services provided by such
broker-dealer. For a complete discussion of portfolio transactions and brokerage
allocation, see "Portfolio Transactions and Brokerage Commissions" in the
Statement of Additional Information.
SPECIAL CONSIDERATION AND RISKS
Because the Fund will invest a substantial portion of its portfolio in the
securities of companies with natural resources assets, the Fund should be
considered as a vehicle for diversification and not as a balanced investment
program. In addition, investments in foreign securities may involve risks and
considerations not present in domestic investments.
Investments in Foreign Securities
A portion of the Fund's security investments will be in the securities of
foreign issuers. Investments in foreign securities may involve risks greater
than those attendant to investments in securities of U.S. issuers. Publicly
available information concerning issuers located outside the U.S. may not be
comparable in scope or depth of analysis to that generally available for
publicly held U.S. corporations. Accounting and auditing practices and financial
reporting requirements vary significantly from country to country and generally
are not comparable to those applicable to publicly held U.S. corporations.
Government supervision and regulation of
4
<PAGE>
foreign securities exchanges and markets, securities listed on such exchanges or
traded in such markets and brokers, dealers, banks and other financial
institutions who trade the securities in which the Fund may invest is generally
less extensive than in the U.S., and trading customs and practices may differ
substantially from those prevailing in the U.S. The Fund may trade in certain
foreign securities markets which are less developed than comparable U.S.
markets, which may result in reduced liquidity of securities traded in such
markets. Investments in foreign securities are also subject to currency
fluctuations. For example, when the Fund's assets are invested primarily in
securities denominated in foreign currencies, an investor can expect that the
Fund's net asset value per share will tend to increase when the value of U.S.
dollars is decreasing as against such currencies. Conversely, a tendency toward
decline in net asset value can be expected when the value of U.S. dollars is
increasing as against such currencies. Changes in net asset value per share as a
result of foreign exchange rate fluctuations will be determined by the
composition of the Fund's portfolio at any given time. Further, it is not
possible to avoid altogether the risks of expropriation, burdensome or
confiscatory taxation, moratoriums, exchange and investment controls or
political or diplomatic events which might adversely affect the Fund's
investments in foreign securities or restrict the Fund's ability to dispose of
such investments.
INVESTMENT RESTRICTIONS
The Fund has adopted a number of investment restrictions which may not be
changed without shareholder approval. These are set forth under "Investment
Restrictions" in the Statement of Additional Information. Some of these
restrictions provide that the Fund shall not:
*Invest more than 5% of its total assets in the securities of any one issuer
(except securities issued or guaranteed by the U.S. Government, or its
agencies and instrumentalities);
*Purchase any securities if such purchase would cause the Fund to own at the
time of purchase more than 10% of the outstanding voting securities of one
issuer;
*Borrow money; except that the Fund may borrow from a bank as a temporary
measure for extraordinary purposes or to meet redemptions in amounts not
exceeding 10% (taken at market value) of its total assets and pledge its
assets to secure such borrowings. The Fund may not purchase additional
securities when money borrowed exceeds 5% of the Fund's total assets;
*Purchase any security restricted as to disposition under Federal securities
laws or securities that are not readily marketable or purchase any
securities if such a purchase would cause the Fund to own at the time of
such purchase, illiquid-securities, including repurchase agreements with an
agreed upon repurchase date in excess of seven days from the date of
acquisition by the Fund, having aggregate market value in excess of 10% of
the value of the Fund's total assets.
MANAGEMENT OF THE FUND
The business affairs of the Fund are managed under the direction of its
Board of Trustees. There are currently seven Trustees (of whom four are
non-affiliated persons) who meet four times each year. The Statement of
Additional Information contains additional information regarding the Trustees
and officers of the Fund.
INVESTMENT ADVISER, SUB-ADVISER, DISTRIBUTOR AND ADMINISTRATOR
Lexington Management Corporation, P.O. Box 1515/Park 80 West Plaza Two,
Saddle Brook, New Jersey 07663, is the investment adviser to the Fund, and, as
such, advises and makes recommendations to the Fund with respect to its
investments and investment policies. Lexington Funds Distributor, Inc. is a
registered broker-dealer and is the distributor of shares of the Fund.
The Investment Adviser has entered into a sub-advisory management contract
with Market Systems Research Advisors, Inc., 80 Maiden Lane, New York, New York
10038, a registered investment adviser, under which the Sub-Adviser will provide
the Fund with certain investment management and administrative services. The
Sub-Adviser serves as investment adviser to private and institutional accounts.
5
<PAGE>
The Investment Adviser is paid an investment advisory fee at the annual rate
of 1.00% of the net assets of the Fund which is higher than that paid by most
other investment companies. This fee is computed on the basis of the Fund's
average daily net assets and is payable on the last business day of each month.
For the year ended December 31, 1994, the Investment Adviser received $107,760
in investment advisory fees from the Fund and paid the Sub-Adviser $53,880.
From time to time, the Investment Adviser may pay amounts from its past
profits to participating insurance companies or insurance companies or other
financial institutions that provide administrative services for the Fund or that
provide to contract holders other services relating to the Fund. These services
may include, among other things, sub-accounting services, answering inquiries of
contract holders regarding the Fund, transmitting, on behalf of the Fund, proxy
statements, annual reports, updated prospectus and other communications to
contract holders regarding the Fund, and such other related services as the Fund
or a contract holder may request. The Investment Adviser will not pay more than
0.25% of the average daily net assets of the Fund represented by shares of the
Fund held in the separate account of any participating insurance company.
Payment of such amounts by the Investment Adviser will not increase the fees
paid by the Fund or its shareholders.
The Investment Adviser serves as investment adviser to other investment
companies and private institutional investment accounts. Included among these
clients are persons and organizations which own significant amounts of capital
stock of the Investment Adviser's parent. The clients pay fees which the
Investment Adviser considers comparable to the fee levels for similarly served
clients.
The Investment Adviser also acts as administrator to the Fund and performs
certain administrative and internal accounting services, including but not
limited to, maintaining general ledger accounts, regulatory compliance,
preparation of financial information for semiannual and annual reports,
preparing registration statements, calculating net asset values, shareholder
communications and supervision of the custodian of, transfer agent and provides
facilities for such services. The Fund pays the Investment Adviser a fee,
payable monthly, equal to the pro-rata portion of the Investment Adviser's
actual cost in providing such services and facilities.
The Investment Adviser and the Distributor are wholly-owned subsidiaries of
Piedmont Management Company Inc., a Delaware corporation with offices at 80
Maiden Lane, New York, New York 10038. Piedmont Management Company Inc. holds a
controlling interest in the Sub-Adviser. Descendants of Lunsford Richardson,
Sr., their spouses, trusts and other related entities have a majority voting
control of outstanding shares of Piedmont Management Company Inc. common stock.
See "Investment Adviser and Distributor" in the Statement of Additional
Information.
PORTFOLIO MANAGERS
The Fund is managed by an investment management team. Frank A. Peluso,
Robert M. DeMichele and Robert W. Radsch are the lead managers.
Frank A. Peluso is a Portfolio Manager of the Fund. He has 32 years
investment experience. Mr. Peluso is President and Chief Executive Officer of
Market Systems Research Advisors, Inc. (MSR), the sub-adviser to the Fund. Mr.
Peluso utilizes a proprietary analytical system to identify securities with
performance potential which he believes to be exceptional. In addition, Mr.
Peluso's proprietary data is used by professional money managers, insurance
companies, brokerage firms, banks, mutual fund companies and pension funds.
Mr. Peluso is a graduate of Princeton University and has completed a year
of post-graduate study at Columbia University.
Robert M. DeMichele is Chairman and Chief Executive Officer of Lexington
Management Corporation. He is also the Chairman of the Investment Strategy
Group. In addition, he is President of Piedmont Management Company Inc., LMC's
parent company. He holds similar offices in other companies owned by Piedmont,
as well as, the Lexington Funds.
Prior to joining LMC in 1981, Mr. DeMichele was a Vice President at A.G.
Becker, Inc. the securities division of Warburg, Paribas, Becker, an
international investment banking firm. From 1973 to 1981, Mr. DeMichele held
several positions, the most recent managing A.G. Becker's Funds Evaluation and
Consulting Group for both the East and West coasts.
Mr. DeMichele is a graduate of Union College with a B.A. Degree in
Economics and an M.B.A. in Finance from Cornell University.
6
<PAGE>
Robert W. Radsch, CFA, is a Portfolio Manager of the Fund and is a Vice
President of Lexington Management Corporation. Prior to joing Lexington in July,
1994, he was Senior Vice President, Portfolio Manager and Chief Economist for
the Bull & Bear Group. He has extensive experience managing gold, silver and
platinum on an international basis, having managed precious metals and
international funds for more than 12 years.
Mr. Radsch is a graduate of Yale University with a B.A. Degree and holds an
M.B.A. in Finance from Columbia University.
HOW TO PURCHASE AND REDEEM SHARES
With the exception of shares held in connection with initial capital of the
Fund, shares of the Fund are currently available for purchase solely by
participating insurance companies for the purpose of funding variable annuity
contracts. Shares of the Fund are purchased and redeemed at net asset value next
calculated after a purchase or redemption order is received by the Fund in good
order. There are no minimum investment requirements. Payment for shares redeemed
will be made as soon as possible, but in any event within seven days after the
order for redemption is received by the Fund. However, payment may be postponed
under unusual circumstances, such as when normal trading is not taking place on
the New York Stock Exchange.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of the Fund is computed as of the close of
trading on each day the New York Stock Exchange is open, by dividing the value
of the Fund's securities plus any cash and other assets (including accrued
dividends and interest) less all liabilities (including accrued expenses) by the
number of shares outstanding, the result being adjusted to the nearest whole
cent. A security listed or traded on a recognized stock exchange is valued at
its last sale price prior to the time when assets are valued on the principal
exchange on which the security is traded. If no sale is reported at that time,
the mean between the current bid and asked price will be used. All other
securities for which the over-the-counter market quotations are readily
available are valued at the mean between the last current bid and asked price.
Short-term securities having maturity of 60 days or less are valued at cost when
it is determined by the Fund's Board of Trustees that amortized cost reflects
the fair value of such securities. Securities for which market quotations are
not readily available and other assets are valued at fair value as determined by
the management and approved in good faith by the Board of Trustees.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of the New York Stock Exchange. The
values of foreign securities used in computing the net asset value of the shares
of the Fund are determined as of the earlier of such market close or the closing
time of the New York Stock Exchange (the "Exchange"). Foreign currency exchange
rates are also generally determined prior to the close of the Exchange.
Occasionally, events affecting the value of such securities and such exchange
rates may occur between the times at which they are determined and the close of
the Exchange, which will not be reflected in the computation of net asset value.
If during such periods, events occur which materially affect the value of such
securities, the securities will be valued at their fair market value as
determined by the investment adviser and approved in good faith by the Trustees.
In order to determine net asset value per share, the aggregate value of
portfolio securities is added to the value of the Fund's other assets, such as
cash and receivables; the total of the assets thus obtained, less liabilities,
is then divided by the number of shares outstanding.
PERFORMANCE CALCULATION
Advertisements and communications with shareholders and others may cite the
Fund's performance calculated on a total return basis. All such advertisements
and communications will portray the value of an assumed initial investment of
$1,000 at the end of one, five and ten year periods. These values will be
calculated by multiplying the compounded average annual total return for each
time period by the amount of the assumed initial investment and will reflect all
recurring charges against Fund income.
Advertisements and communications may compare the Fund's performance to
major market indices. Quotations of historical total returns are not indicative
of future dividend income or total return, but are an indication of the return
to shareholders only for the
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<PAGE>
limited historical period used. The Fund's total return will depend on the
particular investments in its portfolio, its total operating expenses and other
conditions. For further information, including the formula and an example of the
total return calculation, see the Statement of Additional Information.
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
The Fund intends to declare or distribute a dividend from its net investment
income and/or net capital gain income to shareholders annually or more
frequently if necessary in order to comply with distribution requirements of the
Code to avoid the imposition of regular Federal income tax, and if applicable, a
4% excise tax.
Any dividends and distribution payments will be reinvested at net asset
value, without sales charge, in additional full and fractional shares of the
Fund. Dividend and capital gain distributions are generally not currently
taxable to owners of variable contracts.
TAX MATTERS
The Fund. The Fund intends to qualify as a regulated investment company by
satisfying the requirements under subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") concerning diversification of assets, distribution
of income and sources of income. When the Fund qualifies as a regulated
investment company and all of its taxable income is distributed in accordance
with the timing requirements imposed by the Code, it will not be subject to
federal income tax. If, however, for any taxable year the Fund does not qualify
as a regulated investment company, then all of its taxable income will be
subject to tax at regular corporate rates (without any deduction for
distributions to the separate accounts of the Participating Insurance
Companies), and the accounts will be subject to tax on such distributions to the
extent that the distributing Fund has current and accumulated earnings and
profits.
Fund Distributions. Capital gain and ordinary income dividends from the Fund
are not currently taxable when left to accumulate within a variable annuity
contract.
Share Redemptions. Gain or loss realized on redemptions of shares held by
the separate accounts of Participating Insurance Companies generally will not be
taxable to the separate accounts or to the contract holders.
Summary. The foregoing discussion of federal income tax consequences is
based on tax laws and regulations in effect on the date of this Prospectus, and
is subject to change by legislative or administrative action. The discussion
assumes that the separate accounts of the Participating Insurance Companies are
the owners of the shares and that the underlying variable annuity contracts
qualify as annuities under the Code. If these requirements are not met then the
contract owners will be treated as recognizing income (from distributions or
otherwise) related to the ownership of Fund shares. The foregoing discussion is
for general information only; a more detailed discussion of federal income tax
considerations is contained in the Statement of Additional Information. Holders
of variable annuity contracts must consult the prospectuses of their respective
contracts or policies for information concerning the federal income tax
consequences of owning such contracts.
GENERAL INFORMATION
The Fund was organized as a Massachusetts business trust on October 7, 1988
under the name Lexington Gold Trust. At a meeting held on September 30, 1991,
the shareholders of the Fund approved a change in the Fund's fundamental
investment objective and policies. In connection with the change of investment
objective and policies, the Fund also changed its name to "Lexington Natural
Resources Trust." The capitalization of the Fund consists solely of an unlimited
number of shares of beneficial interest, no par value. When issued, shares of
the Fund are fully paid, non-assessable and freely transferable.
Unlike the stockholder of a corporation, shareholders could under certain
circumstances be held personally liable for the obligations of the Fund.
However, the Declaration of Trust disclaims liability of the shareholders,
Trustees, or officers of the Fund for acts or obligations of the Fund, which are
binding only on the assets and property of the Fund. The Declaration of Trust
provides for
8
<PAGE>
indemnification out of Fund property for all loss and expense of any shareholder
held personally liable for the obligations of the Fund. The risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund itself would be unable to meet its
obligations and thus should be considered remote.
Voting Rights
Shareholders of the Fund are given certain voting rights. Each share of the
Fund will be given one vote, unless a different allocation of voting rights is
required under applicable law for a mutual fund that is an investment medium for
variable life insurance or annuity contracts. Participating insurance companies
provide variable annuity Contract Holders and Participants the right to direct
the voting of Fund shares at shareholder meetings to the extent required by law.
See the Separate Account Prospectus for the Variable Contract for more
information regarding the pass-through of these voting rights.
Massachusetts business trust law does not require the Fund to hold annual
shareholder meetings, although special meetings may be called for the Fund, for
purposes such as electing or removing Trustees, changing fundamental policies or
approving an investment management contract. A shareholders' meeting will be
held after the Fund begins operations for the purpose of electing the initial
Board of Trustees. In addition, the Fund will be required to hold a meeting to
elect Trustees to fill any existing vacancies on the Board if, at any time,
fewer than a majority of the Trustees have been elected by the shareholders of
the Fund. In addition, the holders of not less than two-thirds of the
outstanding shares or other voting interests of the Fund may remove a person
serving as Trustee either by declaration in writing or at a meeting called for
such purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of a person serving as trustee, if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of other
voting interests of the Fund. The Fund is required to assist in shareholders'
communications. In accordance with current laws, an insurance company issuing a
variable life insurance or annuity contract that participates in the Fund will
request voting instructions from Contract Holders and will vote shares or other
voting interests in the Separate Account in proportion to the voting
instructions received.
Counsel and Independent Auditors
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel will pass upon legal
matters for the Fund in connection with the shares offered by this Prospectus.
KPMG Peat Marwick LLP, New York, New York has been selected as independent
auditors for the Fund for the fiscal year ending December 31, 1995.
Custodians, Transfer Agent and Dividend Disbursing Agent
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York
10036 has been retained to act as the Custodian for the Fund's investments and
assets. In addition, Chase Manhattan Bank, N.A. may appoint foreign banks and
securities depositories to act as sub-custodians for the Fund's portfolio
securities subject to their qualification as eligible foreign custodians under
the rules adopted by the SEC. State Street Bank & Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110 has been retained to act as the Transfer
Agent and Dividend Disbursing Agent for the Fund. Neither Chase Manhattan Bank,
N.A. nor State Street Bank and Trust Company have any part in determining the
investment policies of the Fund or in determining which portfolio securities are
to be purchased or sold by the Fund or in the declaration of dividends and
distributions.
9
<PAGE>
L E X I N G T O N
LEXINGTON
NATURAL
RESOURCES
TRUST
-----------------
International
diversification
Free telephone
exchange privilege
No sales charge
No redemption fee
-----------------
The Lexington Group
of
No-Load
Investment Companies
P R O S P E C T U S
MAY 1, 1995
--------------
Investment Adviser
- -----------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663
Distributor
- -----------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 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: 1-800-526-0056
24 Hour Account Information: 1-800-526-0052
Table of Contents Page
- -----------------------------------------------------------
Financial Highlights ................................... 2
Description of the Fund ................................ 3
Investment Objectives and Policies ..................... 3
Special Considerations and Risks ....................... 4
Investment Restrictions ................................ 5
Management of the Fund ................................. 5
Investment Adviser, Sub-Adviser, Distributor and
Administrator ........................................ 5
Portfolio Manager ...................................... 6
How to Purchase and Redeem Shares ...................... 6
Determination of Net Asset Value ....................... 6
Performance Calculation ................................ 7
Dividend, Distribution and Reinvestment Policy ......... 8
Tax Matters ............................................ 8
General Information .................................... 8
<PAGE>
LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1995
This Statement of Additional Information, which is not a prospectus, should
be read in conjunction with the current prospectus of Lexington Natural
Resources Trust (the "Fund"), dated May 1, 1995, as it may be revised from time
to time. To obtain a copy of the Fund's prospectus at no charge, please write to
the Fund at P.O. Box 1515/Park 80 West - Plaza Two, Saddle Brook, New Jersey
07663 or call the following number:
201-845-7300
TABLE OF CONTENTS
Page
General Information and History ............................................. 1
Investment Objectives and Policies .......................................... 1
Investment Restrictions ..................................................... 2
Investment Adviser, Sub-Adviser, Distributor and Administrator .............. 3
Portfolio Transactions and Brokerage Commissions ............................ 4
Performance Calculation ..................................................... 5
Dividend, Distribution and Reinvestment Policy .............................. 6
Tax Matters ................................................................. 6
Custodians, Transfer Agent and Dividend Disbursing Agent .................... 6
Management of the Fund ...................................................... 6
Other Information ........................................................... 8
Financial Statements ........................................................
GENERAL INFORMATION AND HISTORY
The Fund was formerly named "Lexington Gold Trust". At a meeting held on
September 30, 1991, the shareholders of the Fund approved a change in the Fund's
fundamental investment objective and policies. In connection with the change of
investment objective and policies, the Fund also changed its name to "Lexington
Natural Resources Trust."
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is to seek long-term growth of capital
through investment primarily in common stocks of companies which own, or develop
natural resources and other basic commodities, or supply goods and services to
such companies. Current income will not be a factor. Total return will consist
primarily of capital appreciation.
Management attempts to achieve the investment objective of the Fund by
seeking to identify securities of companies that, in its opinion, are
undervalued relative to the value of natural resource holdings of such companies
in light of current and anticipated economic or financial conditions. Natural
resource assets are materials derived from natural sources which have economic
value. The Fund will consider a company to have substantial natural resource
assets when, in management's opinion, the company's holdings of the assets are
of such magnitude, when compared to the capitalization, revenues or operating
profits of the company, that changes in the economic value of the assets will
affect the market price of the equity securities of such company. Generally, a
company has substantial natural resource
1
<PAGE>
assets when at least 50% of the non-current assets, capitalization, gross
revenues or operating profits of the company in the most recent or current
fiscal year are involved in or result from, directly or indirectly through
subsidiaries, exploring, mining, refining, processing, fabricating, dealing in
or owning natural resource assets. Examples of natural resource assets include:
companies that specialize in energy sources (e.g. coal, geothermal power,
natural gas and oil), environmental technology (e.g. pollution control and waste
recycling), forest products, agricultural products, chemical products, ferrous
and non- ferrous metals (e.g. iron, aluminum and copper), strategic metals (e.g.
uranium and titanium), precious metals (e.g. gold, silver and platinum), and
other basic commodities. The Fund presently does not intend to invest directly
in natural resource assets or related contracts. The Fund may invest up to 25%
of its total assets in securities principally traded in markets outside the
United States.
Management of the Fund believes that, based upon past performance, the
securities of specific companies that hold different types of substantial
natural resource assets may move relatively independently of one another during
different stages of inflationary cycles due to different degrees of demand for,
or market values of, their respective natural resource holdings during
particular portions of such inflationary cycles. The Fund's fully managed
investment approach enables it to switch its emphasis among various industry
groups depending upon management's outlook with respect to prevailing trends and
developments. The investment objective and policies of the Fund described in the
first two paragraphs of this section are fundamental policies of the Fund and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment Company Act
of 1940, as amended.
INVESTMENT RESTRICTIONS
The Fund's investment objective, as described under "Investment Policy," and
the following investment restrictions are matters of fundamental policy which
may not be changed without the affirmative vote of the lesser of (a) 67% or more
of the shares of the Fund present at a shareholder's meeting at which more than
50% of the outstanding shares are present or represented by proxy or (b) more
than 50% of the outstanding shares. The Fund is a non-diversified management
investment company and
1. with respect to 50% of its assets, the Fund will not at the time of
purchase invest more than 5% of its total assets, at market value, in
the securities of one issuer (except the securities of the United
States Government);
2. with respect to the other 50% of its assets, the Fund will not invest
at the time of purchase more than 25% of the market value of its total
assets in any single issuer.
These two restrictions, hypothetically, could give rise to a portfolio with
as few as fourteen issues.
In addition, the Fund will not:
1. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the United States government, its agencies or
instrumentalities) if, as a result, more than 5% of the value of the
Fund's assets would be invested in securities of that issuer.
2. Purchase more than 10% of the voting securities or more than 10% of any
class of securities of any issuer. (For this purpose all outstanding
debt securities of an issuer are considered as one class, and all
preferred stocks of an issuer are considered as one class.)
3. Purchase any security restricted as to disposition under Federal
Securities laws or securities that are not readily marketable or
purchase any securities if such a purchase would cause the Fund to own
at the time of such purchase, illiquid securities, including repurchase
agreements with an agreed upon repurchase date in excess of seven days
from the date of acquisition by the Fund, having aggregate market value
in excess of 10% of the value of the Fund's total assets.
4. Make short sales of securities or purchase any securities on margin,
except for such short term credits as are necessary for the clearance
of transactions.
5. Write, purchase or sell puts, calls or combinations thereof. However,
the Fund may invest up to 15% of the value of its assets in warrants.
The holder of a warrant has the right to purchase a given number of
shares of a particular company at a specified price until expiration.
Such investments generally can provide a greater potential for profit -
or loss - than investment of an equivalent amount in the underlying
common stock. The prices of warrants do not necessarily move parallel
to the prices of the underlying securities. If the holder does not sell
the warrant, he risks the loss of his entire investment if the market
price of the underlying stock does not, before the expiration date,
exceed the exercise price of the warrant plus the cost thereof. It
should
2
<PAGE>
be understood that investment in warrants is a speculative activity.
Warrants pay no dividends and confer no rights (other than the right to
purchase the underlying stock) with respect to the assets of the
corporation issuing them. In addition, the sale of warrants held more
than one year generally results in a long term capital gain or loss to
the holder, and the sale of warrants held for less than such period
generally results in a short term capital gain or loss. The holding
period for securities acquired upon exercise of warrants, however,
begins on the day after the date of exercise, regardless of how long
the warrant was held. This restriction on the purchase of warrants does
not apply to warrants attached to, or otherwise included in, a unit
with other securities.
6. Invest in any commodities or commodities futures contracts, including
futures contracts relating to gold.
7. Invest in real estate.
8. Invest more than 5% of the value of its total assets in securities of
issuers which, with their predecessors, have a record of less than
three years continuous operation.
9. Purchase or retain the securities of any issuer if the officers or
Trustees of the Fund, or its Investment Adviser, or Sub-Adviser who own
individually more than 1/2 of 1% of the securities of such issuer
together own more than 5% of the securities of such issuer.
10. Lend money or securities, provided that the making of time or demand
deposits with domestic banks and the purchase of debt securities such
as bonds, debentures, commercial paper, repurchase agreements and short
term obligations in accordance with the Fund's objective and policies,
are not prohibited.
11. Borrow money, except for temporary emergency purposes, and in no event
more than 5% of its net assets at value or cost, whichever is less; or
pledge its gold or portfolio securities or receivables or transfer or
assign or otherwise encumber them in an amount exceeding 10% of the
value of its total assets.
12. Underwrite securities issued by others.
13. Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.
14. Invest for the purpose of exercising control or management of another
company.
15. Participate on a joint or a joint and several basis in any trading
account in securities.
The percentage restrictions referred to above are to be adhered to at the
time of investment, and are not applicable to a later increase or decrease in
percentage beyond the specified limit resulting from a change in values or net
assets.
INVESTMENT ADVISER, SUB-ADVISER, DISTRIBUTOR AND ADMINISTRATOR
Lexington Management Corporation ("LMC"), P.O. Box 1515/Park 80 West Plaza
Two, Saddle Brook, New Jersey 07663, is the investment adviser to the Fund, and,
as such, advises and makes recommendations to the Fund with respect to its
investments and investment policies.
LMC has entered into a sub-advisory management contract with Market Systems
Research Advisors, Inc. ("MSR"), 80 Maiden Lane, New York, New York 10038, a
registered investment advisor, under which the MSR will provide the Fund with
certain investment management and administrative services.
Under the terms of the investment management agreement, LMC also pays the
Fund's expenses for office rent, utilities, telephone, furniture and supplies
utilized for the Fund's principal office and the salaries and payroll expense of
officers and Trustees of the Fund who are employees of LMC or its affiliates in
carrying out its duties under the investment management agreement. The Fund pays
all its other expenses, including custodian and transfer agent fees, legal and
registration fees, audit fees, printing of prospectuses, shareholder reports and
communications required for regulatory purposes or for distribution to existing
shareholders, computation of net asset value, mailing of shareholder reports and
communications, portfolio brokerage, taxes and independent Trustees' fees.
LMC shall reimburse the Fund in any fiscal year for the amount by which the
Fund's aggregate expenses exceed the most restrictive expense limits imposed by
any statute or regulatory authority of any jurisdiction in which shares of the
Fund are offered for sale during such year. Brokerage fees and commissions,
taxes, interest and extraordinary expenses are not deemed to be expenses of the
Fund for such reimbursement.
LMC's services are provided and its investment advisory fee is paid
pursuant to an investment management agreement, dated August 20, 1991 which will
automatically terminate if assigned and which may be terminated by either party
upon 60 days' notice. The terms of the agreement and any renewal thereof must be
approved annually by a majority
3
<PAGE>
of the Fund's Board of Trustees, including a majority of Trustees who are not
parties to the agreement or "interested persons" of such parties, as such term
is defined under the Investment Company Act of 1940, as amended. For the year
ended December 31, 1994 LMC received $107,760 in investment advisory fees from
the Fund and paid MSR $53,880.
LMC serves as investment adviser to other investment companies and private
and institutional investment accounts. Included among these clients are persons
and organizations which own significant amounts of capital stock of LMC's
parent. These clients pay fees which LMC considers comparable to the fee levels
for similarly served clients. LMC's accounts are managed independently with
reference to the applicable investment objectives and current security holdings
but on occasion more than one fund or counsel account may seek to engage in
transactions in the same security at the same time. To the extent practicable,
such transactions will be effected on a pro-rata basis in proportion to the
respective amounts of securities to be bought and sold for a fund, and the
allocated transactions will be averaged as to price. While this procedure may
adversely affect the price or volume of a given Fund transaction, LMC believes
that the ability of the Fund to participate in combined transactions may
generally produce better execution overall.
MSR, the Sub-Adviser serves as investment adviser to private and
institutional accounts.
LMC also acts as administrator to the Fund pursuant to an Administration
Services Agreement dated February 28, 1995 and performs certain administrative
and internal accounting services, including but not limited to, maintaining
general ledger accounts, regulatory compliance, preparation of financial
information for semiannual and annual reports, preparing registration
statements, calculating net asset values, shareholder communications and
supervision of the custodian, transfer agent and provides facilities for such
services. The Fund shall reimburse LMC for its actual cost in providing such
services, facilities and expenses.
Lexington Funds Distributor, Inc. ("LFD") serves as distributor for Fund
shares under a distribution agreement which is subject to annual approval by a
majority of the Fund's Board of Trustees, including a majority of Trustees who
are not "interested persons."
LMC and LFD are wholly owned subsidiaries of Piedmont Management Company
Inc., a publicly traded corporation. Piedmont Management Company Inc. holds a
controlling interest in MSR. Descendants of Lunsford Richardson, Sr., their
spouses, trusts and other related entities have a majority voting control of
outstanding shares of Piedmont Management Company Inc.
Of the Trustees, officers or employees ("affiliated persons") of the Fund,
Messrs. Corniotes, DeMichele, Faust, Hisey, Kantor, Lavery, Petruski and Mmes.
Carnicelli, Carr, Curcio, Gilfillan and Mosca (see "Management of the Fund"),
may also be deemed affiliates of LMC by virtue of being officers, trustees or
employees thereof.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
As a general matter, purchases and sales of portfolio securities by the Fund
are placed by LMC or MSR with brokers and dealers who in its opinion will
provide the Fund with the best combination of price (inclusive of brokerage
commissions) and execution for its orders. However, pursuant to the Fund's
investment management agreement, management consideration may be given in the
selection of broker-dealers to research provided and payment may be made at a
fee higher than that charged by another broker-dealer which does not furnish
research services or which furnishes research services deemed to be of lesser
value, so long as the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended are met. Section 28(e) was adopted in 1975 and specifies
that a person with investment discretion shall not be "deemed to have acted
unlawfully or to have breached a fiduciary duty" solely because such person has
caused the account to pay a higher commission than the lowest available under
certain circumstances, provided that the person so exercising investment
discretion makes a good faith determination that the commissions paid are
"reasonable in relation to the value of the brokerage and research services
provided . . . viewed in terms of either that particular transaction or his
overall responsibilities with respect to the accounts as to which he exercises
investment discretion."
Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services might exceed commissions
that would be payable for execution services alone. Nor generally can the value
of research services to the Fund be measured. Research services furnished might
be useful and of value to LMC or MSR and its affiliates, in serving other
clients as well as the Fund. On the other hand, any research services obtained
by LMC or MSR or its affiliates from the placement of portfolio brokerage of
other clients might be useful and of value to LMC or MSR in carrying out its
obligations to the Fund.
As a general matter, it is the Fund's policy to execute in the U.S. all
transactions with respect to securities traded in the U.S. except when better
price and execution can, in the judgment of management of the Fund, be obtained
elsewhere. Over-the-counter purchases and sales are normally made with principal
market makers, except where, in the opinion of management, the best executions
are available elsewhere.
4
<PAGE>
In addition, the Fund may from time to time allocate brokerage commissions
to firms which furnish research and statistical information to LMC or MSR or
which render to the Fund services which LMC or MSR is not required to provide.
The supplementary research supplied by such firms is useful in varying degrees
and is of indeterminable value. No formula has been established for the
allocation of business to such brokers. For the fiscal year ended December 31,
1992, the portfolio turnover rate for the Fund was 65.50%, and the Fund paid
$6,696 in brokerage commissions. For the fiscal year ended December 31, 1993,
the portfolio turnover rate for the Fund was 114.44% and the Fund paid $25,556
in brokerage commissions. For the fiscal year ended December 31, 1994, the
portfolio turnover rate for the Fund was 87.40%, and the Fund paid $66,168 in
brokerage commissions.
Advisory fees paid to LMC and expense reimbursements paid to the Fund are as
follows:
Period Advisory Fee Sub Advisory Fee Expense Reimbursement
------ ------------ ---------------- ---------------------
1/1/92 to 12/31/92 $ 16,606 $ 8,303 $0
1/1/93 to 12/31/93 30,699 15,350 0
1/1/94 to 12/31/94 107,760 53,880 0
PERFORMANCE CALCULATION
For purposes of quoting and comparing the performance of the Fund to that of
other mutual funds and to other relevant market indices in advertisements or in
reports to shareholders, rules promulgated by the Securities and Exchange
Commission ("SEC"), a fund's advertising performance must include total return
quotations calculated according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment,
made at the beginning of the 1, 5 or 10 year period, at the
end of such period (or fractional portion thereof).
Under the foregoing formula, the time periods used in advertising will be
based on rolling calendar quarters, updated to the last day of the most recent
quarter prior to submission of the advertising for publication, and will cover
1, 5 and 10 year periods of the Fund's existence or such shorter period dating
from the effectiveness of the Fund's Registration Statement. In calculating the
ending redeemable value, the maximum sales load is deducted from the initial
$1,000 payment and all dividends and distributions by the Fund are assumed to
have been reinvested at net asset value as described in the Prospectus on the
reinvestment dates during the period. Total return, or "T" in the formula above,
is computed by finding the average annual compounded rates of return over the 1,
5 and 10 year periods (or fractional portion thereof) that would equate the
initial amount invested to the ending redeemable value. Any recurring account
charges that might in the future be imposed by the Fund would be included at
that time.
The Fund may also from time to time include in such advertising a total
return figure that is not calculated according to the formula set forth above in
order to compare more accurately the performance of the Fund with other measures
of investment return. For example, in comparing the Fund's total return, the
Fund calculates its aggregate total return for the specified periods of time by
assuming the investment of $10,000 in Fund shares and assuming the reinvestment
of each dividend or other distribution at net asset value on the reinvestment of
each dividend or other distribution at net asset value on the reinvestment date.
Percentage increases are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder by the beginning
value. Such alternative total return information will be given no greater
prominence in advertising than the information prescribed under Item 21 of Form
N-1A.
The Fund's performance may be compared in advertising to the performance of
other mutual funds in general, or of particular types of mutual funds,
especially those with similar objectives. Such performance data may be prepared
by Lipper Analytical Services, Inc. and other independent services which monitor
the performance of mutual funds. The Fund may also advertise mutual fund
performance rankings which have been assigned to it by such monitoring services.
Pursuant to the SEC calculation, the Fund's average total rate of return for
the period August 1, 1989 (commencement of operations) to December 31, 1994 was
- -2.60% and for the fiscal year ended December 31, 1994, the total rate of return
was -5.38%.
5
<PAGE>
DIVIDEND, DISTRIBUTION AND REINVESTMENT POLICY
The Fund intends to declare or distribute a dividend from its net capital
gain income to shareholders annually or more frequently if necessary in order to
comply with distribution requirements of the Internal Revenue Code of 1986, as
amended ("Code"), and to avoid the imposition of regular Federal income tax, and
if applicable, a 4% excise tax.
Any dividends and distribution payments will be reinvested at net asset
value, in additional full and fractional shares of the Fund.
TAX MATTERS
The following is only a summary of certain additional tax considerations
that are not described in the Prospectus and generally affect the Fund and its
shareholders. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussions here and in the
Prospectus are not intended as substitutes for careful tax planning.
Qualifications as a Regulated Investment Company
The Fund intends to qualify to be treated as a "regulated investment
company" ("RIC") under the Internal Revenue Code of 1986 (the "Code"). If so
qualified, the Fund will not be subject to federal income tax on its investment
company taxable income and net capital gains to the extent that such income and
gains are distributed in each taxable year to the separate accounts of the
Participating Insurance Companies. In addition, if the Fund distributes annually
to these separate accounts its ordinary income and capital gain net income, in
the manner prescribed by the Code, it will not be subject to the 4% federal
excise tax otherwise applicable to the undistributed income or gain of a RIC.
Distributions of net investment income and net short-term capital gains will be
treated as ordinary income and distributions of net long-term capital gains will
be treated as long-term capital gain in the hands of the Participating Insurance
Companies. Under current tax law, capital gain and ordinary income dividends
from the Fund are not currently taxable when left to accumulate within a
variable annuity contract.
Section 817(h) of the Code requires that investments of a segregated asset
account of an insurance company be "adequately diversified" in accordance with
applicable Treasury Regulations in order for tbe holders of annuity contracts
investing in the account to receive the tax-deferred or tax-free treatment
generally afforded holders of such contracts under the Code. The Department of
the Treasury has issued Regulations under section 817(h) which, among other
things, provide the manner in which a segregated asset account will treat
investments in a RIC for purposes of the applicable diversification
requirements. Under those Regulations, if a RIC satisfies certain conditions it
will not be treated as a single investment for these purposes; instead, each
segregated asset account will be treated as owning its proportionate share of
each of the assets of the RIC. The Fund plans to satisfy these conditions at all
times so that segregated asset accounts investing in the Fund will be treated as
adequately diversified.
For information concerning the federal income tax consequences to the
holders of variable annuity contracts, such holders should consult the
prospectuses of their particular contracts.
CUSTODIANS, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York
10036 has been retained to act as the Custodian for the Fund. In addition, the
Fund and Chase Manhattan Bank, N.A., may appoint foreign banks and foreign
securities depositories which qualify as eligible foreign sub-custodians under
rules adopted by the Securities and Exchange Commission. State Street Bank and
Trust Company, N.A., 225 Franklin Street, Boston, Massachusetts 02110 has been
retained to act as the Transfer Agent and Dividend Disbursing Agent for the
Fund.
The custodians and transfer agent have no part in determining the investment
policies of the Fund or in determining which portfolio securities are to be
purchased or sold by the Fund or in the declaration of dividends and
distributions.
MANAGEMENT OF THE FUND
The Fund's Trustees and executive officers and their principal occupations
and former affiliations are:
*+ROBERT M. DeMICHELE, Chairman and President. P.O. Box 1515, Saddle Brook,
N.J. 07663. Chief Executive Officer and Chairman, Lexington Management
Corporation; Chairman and Chief Executive Officer, Lexington Funds
Distributor, Inc.; President and Director, Piedmont Management Company Inc.;
Director, Reinsurance Corporation of New York; Director, Unione Italiana
Reinsurance; Vice Chairman of the Board of Trustees, Union College;
Director, Continental National Corporation; Director, Navigator's Group,
Inc.; Chairman, Lexington Capital Management;
6
<PAGE>
Chairman, LCM Financial Services, Inc.; Director, Vanguard Cellular Systems,
Inc.; Chairman, Market Systems Research, Inc. and Market Systems Research
Advisors, Inc. (registered investment advisers).
+BEVERLEY C. DUER, P.E., Trustee. 340 East 72nd Street, New York, N.Y.
Investments/Engineering Economics Consultant; formerly Manager, Operations
Research Department, CPC International Inc.
*+BARBARA R. EVANS, Trustee. 5 Fernwood Drive, Summit, N.J. 07901. Private
Investor. Prior to May 1989, Assistant Vice President and Securities
Analyst, Lexington Management Corporation; prior to March 1987, Vice
President-Institutional Sales, L.F. Rothschild, Unterberg, Towbin.
*+LAWRENCE KANTOR, Vice President and Trustee. P.O. Box 1515, Saddle Brook,
N.J. 07663. Managing Director, Executive Vice President and Director,
Lexington Management Corporation; Executive Vice President and Director,
Lexington Funds Distributor, Inc.
+DONALD B. MILLER, Trustee. 10725 Quail Covey Drive, Boynton Beach, Florida
33436. Chairman, Horizon Media, Inc.; Trustee, Galaxy Funds; Director,
Maguire Group of Connectucut; prior to January 1989, President, Director and
C.E.O., Media General Broadcast Services.
+JOHN G. PRESTON, Trustee. 3 Woodfield Road, Wellesley, Massachusetts.
Associate Professor of Finance, Boston College, Boston, Massachusetts.
+PHILIP C. SMITH, Trustee. 87 Lord's Highway, Weston, Connecticut 06883.
Private Investor. Director, Southwest Investors Income Fund, Inc.,
Government Income Fund, Inc., U.S. Trend Fund, Inc., Investors Cash Reserve
and Plimony Fund, Inc. (registered investment companies).
*+LISA CURCIO, Secretary. P.O. Box 1515, Saddle Brook, N.J. 07663. Senior Vice
President and Secretary, Lexington Management Corporation; Vice President
and Secretary, Lexington Funds Distributor, Inc.
*+RICHARD M. HISEY, Vice President and Treasurer. P.O. Box 1515, Saddle Brook,
N.J. 07663. Managing Director, Chief Financial Officer and Director,
Lexington Management Corporation; Chief Financial Officer, Vice President
and Director, Lexington Funds Distributor, Inc; Chief Financial Officer,
Market Systems Research Advisers, Inc.
*+RICHARD J. LAVERY, CLU, ChFC, Vice President. P. O. Box 1515, Saddle Brook,
N.J. 07663. Senior Vice President, Lexington Management Corporation; Vice
President, Lexington Funds Distributor, Inc.
*+JANICE A. CARNICELLI, Vice President. P. O. Box 1515, Saddle Brook, N.J.
07663.
*+CHRISTIE CARR, Assistant Treasurer, P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to October 1992, Senior Accountant, KPMG Peat Marwick LLP.
*+SIOBHAN GILFILLAN, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663.
*+THOMAS LUEHS, Assistant Treasurer, P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to November 1993, Supervisor Investment Accounting, Alliance Capital
Management, Inc.
*+SHERI MOSCA, Assistant Treasurer. P. O. Box 1515, Saddle Brook, N.J. 07663.
Prior to September 1990, Fund Accounting Manager, Lexington Group of
Investment Companies.
*+ANDREW PETRUSKI, Assistant Treasurer. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to May 1994, Supervising Senior Accountant, NY Life Securities.
Prior to December 1990, Senior Accountant, Dreyfus Corporation.
*+PETER CORNIOTES, Assistant Secretary. P. O. Box 1515, Saddle Brook, N.J.
07663. Assistant Secretary, Lexington Management Corporation. Assistant
Secretary, Lexington Funds Distributor, Inc.
*+ENRIQUE FAUST, Assistant Secretary, P.O. Box 1515, Saddle Brook, N.J. 07663.
Prior to March 1994, Blue Sky Compliance Coordinator, Lexington Group of
Investment Companies.
*"Interested person" and/or "affiliated person" as defined in the Investment
Company Act of 1940, as amended.
+Messrs. Corniotes, DeMichele, Duer, Hisey, Faust, Kantor, Lavery, Luehs,
Miller, Petruski, Preston, and Smith and Mmes. Carnicelli, Carr, Curcio,
Evans, Gilfillan and Mosca hold similar offices with some or all of the
other registered investment companies advised and/or distributed by
Lexington Management Corporation or Lexington Funds Distributor, Inc. or
Market Systems Research Advisers, Inc.
7
<PAGE>
Trustees of the Fund not employed by the Fund or its affiliates will receive
a fee of $100 for each meeting attended and will be reimbursed for the expenses
of attendance at such meetings. For the fiscal year ended December 31, 1994, an
aggregate of $3,420 in fees and expenses was paid to four Trustees not employed
by the Fund's affiliates.
- --------------------------------------------------------------------------------
Aggregate Total Compensation Number of
Name of Director Compensation from From Fund and Directorships in
Fund Fund Complex Fund Complex
- --------------------------------------------------------------------------------
Robert M. DeMichele 0 0 15
- --------------------------------------------------------------------------------
Beverely C. Duer $1350 $20,250 15
- --------------------------------------------------------------------------------
Barbara R. Evans 0 0 14
- --------------------------------------------------------------------------------
Lawrence Kantor 0 0 15
- --------------------------------------------------------------------------------
Donald B. Miller $1350 $20,250 15
- --------------------------------------------------------------------------------
John G. Preston $1350 $20,250 15
- --------------------------------------------------------------------------------
Philip C. Smith $1350 $20,250 15
- --------------------------------------------------------------------------------
OTHER INFORMATION
As of April 3, 1995, Lexington Management Corporation, P. O. Box 1515/Park
80 West Plaza Two, Saddle Brook, New Jersey 07663 owned beneficially 10,374
shares of the Fund (1.0% of the Fund's outstanding shares). The balance of the
outstanding shares of the Fund (99.3%) are owned by Aetna Life Insurance and
Annuity Company and allocated to a separate account used for funding variable
annuity contracts.
8
<PAGE>
PART C. OTHER INFORMATION
- -----------------------------
Item 24. Financial Statements and Exhibits - List
----------------------------------------
Page in the Financial
(a) Financial statements: Statements Exhibit
---------------------
Report of Independent Auditors 1
dated January 30, 1995
Statement of Net Assets (Including 2
the Portfolio of Investments) at
December 31, 1994 (1)
Statement of Assets and Liabilities 5
at December 31, 1994
Statement of Operations for the year 6
ended December 31, 1994 (2)
Statements of Changes in Net Assets for 7
the years ended December 31, 1994
and 1995
Notes to Financial Statements 7
Schedules II-VII and other Financial Statements, for
which provisions are made in the applicable
accounting regulations of the Securities and Exchange
Commission, are omitted because they are not required
under the related instructions, they are inapplicable,
or the required information is presented in the financial
statements or notes thereto.
(1) Includes the information required by Schedule I.
(2) Includes the information required by the Statement of
Realized Gain or Loss on Investments
<PAGE>
ITEM 24. Financial Statements and Exhibits - List
(b) Exhibits:
1. Declaration of Trust - Filed 12/14/88 -
Incorporated by reference
2. By-Laws - Filed 12/14/88 - Incorporated by reference
3. Not Applicable
4. Stock Certificate Specimen - Filed 8/28/91 -
Incorporated by reference
5. Investment Advisory Agreement between Registrant
and Lexington Management Corporation -
Filed 8/28/91 - Incorporated by reference
5a. Sub-Advisory Investment Management Agreement between
Registrant and Market Systems Research Advisors,
Inc. - Filed 8/28/91 - Incorporated by reference.
6. Distribution Agreement between Registrant
and Lexington Funds Distributor, Inc. -
Filed 8/28/91 - Incorporated by reference
7. Not Applicable
8a. Form of Custodian Agreement between Filed electronically
Registrant and Chase Manhattan Bank, N.A.
8b. Transfer Agency Agreements between Registrant
and State Street Bank and Trust Company -
Filed 4/30/90 - Incorporated by reference
9. Form of Administrtive Services Agreement between Filed electronically
Registrant and Lexington Management Corporation
10. Opinion of Counsel as to Legality of Securities being
registered - Filed 12/14/88 - Incorporated by reference
11. Consents
(a) Consent of Counsel Filed electronically
(b) Consent of Independent Auditors Filed electronically
12. Not Applicable
13. Not Applicable
14. Not Applicable
15. Not Applicable
16. Performance Calculation - Filed 3/1/90 -
Incorporated by reference
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant
-------------------------------------------------------------
Furnish a list or diagram of all persons directly or
indirectly controlled by or under common control with the
Registrant and as to each such person indicate (1) if a company,
the state or other sovereign power under the laws of which it is
organized, (2) the percentage of voting securities owned or other
basis of control by the person, if any, immediately controlling
it.
None.
Item 26. Number of Holders of Securities
-------------------------------
State in substantially the tabular form indicated, as of a
specified date within 90 days prior to the date of filing, the
number of record holders of each class of securities of the
Registrant.
The following information is given as of April 3, 1995:
Title of Class Number of Record Holders
-------------- ------------------------
Shares of beneficial interest 10
(no par value)
Item 27. Indemnification
---------------
State the general effect of any contract, arrangements or
statute under which any director, officer, underwriter or
affiliated person of the Registrant is insured or indemnified in
any manner against any liability which may be incurred in such
capacity, other than insurance provided by any director, officer,
affiliated person or underwriter for their own protection.
Under the terms of the General Laws of the State of
Massachusetts and the Trust's Restated Declaration of Trust, the
Trust shall indemnify each of its Trustees to receive such
indemnification (including those who serve at its request as
directors, officers or trustees of another organization in which
it has any interest as a shareholder, creditor or otherwise),
against all liabilities and expenses, including amounts paid in
satisfaction of judgements, in compromise of fines and penalties,
and counsel fees, reasonably incurred by him in connection with
the defense or disposition of any action, suit or other
proceeding by the Trust or any other person, whether civil or
criminal, in which he may be involved or with which he may be
threatened, while in office or thereafter, by reason of this
being or having been such a Trustee, officer, employee or agent,
except with respect to any matter as to which he shall have been
adjudicated to have acted in bad faith or with willful
misfeasance or reckless disregard of duties or gross negligence;
provided, however, that as to any matter disposed of by a
compromise payment by such Trustee, officer, employee or agent,
pursuant to a consent, decree or otherwise, no indemnification
either for said payment or for any other expenses shall be
provided unless the Trust shall have received a written opinion
from independent counsel approved by the Trustee to the effect
that if the foregoing matter had been adjudicated they would
likely have been adjudicated in favor of such Trustee, officer,
employee or agent. The rights accruing to any Trustee, officer,
employee or agent under these provisions shall not exclude any
other right to which he may lawfully be titled; provided, however,
that no Trustee, officer, employee or agent may satisfy any right of
indemnity or reimbursement granted herein or to which he may otherwise be
entitled except out of Trust Property, and no Shareholder shall
be personally liable to any Person with respect to any claim for
indemnity or reimbursement or otherwise. The Trustees may make
advance payments in connection with indemnification under the
Declaration of Trust, provided that the indemnified Trustee,
officer, employee or agent shall have given a written undertaking
to reimburse the Trust in the event it is subsequently determined
that he is entitled to such indemnification.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
Describe any other business, profession, vocation or
employment of a substantial nature in which the investment
adviser of the Registrant, and each director, officer or partner
of any such investment adviser, is or has been, at any time
during the past two fiscal years, engaged for his own account or
in the capacity of director, officer, employee, partner or
trustee.
See Prospectus Part A and Statement of Additional
Information Part B ("Management of the Fund").
Item 29. Principal Underwriters
----------------------
(a) Lexington Money Market Trust
Lexington Tax Free Money Fund, Inc.
Lexington Growth and Income Fund, Inc.
Lexington Short-Intermerdiate Government Securities Fund, Inc.
Lexington GNMA Income Fund, Inc.
Lexington Ramirez Global Income Fund
Lexington Worldwide Emerging Markets Fund, Inc.
Lexington Goldfund, Inc.
Lexington Global Fund, Inc.
Lexington Corporate Leaders Trust Fund
Lexington Natural Resources Trust
Lexington Strategic Investments Fund, Inc.
Lexington Strategic Silver Fund, Inc.
Lexington Convertible Securities Fund
Lexington International Fund, Inc.
Lexington Emerging Markets Fund, Inc.
<PAGE>
29 (b)
Position and Offices Position and
Name and Principal with Principal Offices with
Business Address Underwriter Registrant
- ----------------- -------------------- -------------
Peter Corniotes* Assistant Secretary Asst. Secretary
Lisa A. Curcio* Vice President and Secretary
Secretary
Robert M. DeMichele* Chief Executive Officer Chairman of the
and Chairman Board and President
Richard M. Hisey* Chief Financial Officer, Vice President &
Vice President & Director Treasurer
Lawrence Kantor* Executive Vice President, Trustee & Vice
General Manager & Director President
Richard Lavery* Vice President Vice President
Janice Violette* Assistant Treasurer None
(c)
Not Applicable.
- ---------------
*P.O. Box 1515
Saddle Brook, New Jersey 07663
<PAGE>
Item 30. Location of Accounts and Records
--------------------------------
With respect to each account, book or other document
required to be maintained by Section 31(a) of the 1940 Act and
the Rules (17 CFR 270, 31a-1 to 31a-3) promulgated thereunder,
furnish the name and address of each person maintaining physical
possession of each such account, book or other document.
The Registrant, Lexington Natural Resources Trust, Park
80 West -Plaza Two, Saddle Brook, New Jersey 07663 will maintain
physical possession of such of each such account, book or other
document of the Company, except for those maintained by the
Registrant's Custodian, Chase Manhattan Bank, N.A., 1211 Avenue
of the Americas, New York, New York 10036, or Transfer Agent,
State Street Bank and Trust Company, c/o National Financial Data
Services, City Center Square, 1100 Main, Kansas City, Missouri
64105.
Item 31. Management Services
-------------------
Furnish a summary of the substantive provisions of any
management-related service contract not discussed in Part A or B
of this Form (because the contract was not believed to be
material to a purchaser of securities of the Registrant) under
which services are provided to the Registrant, indicating the
parties to the contract, the total dollars paid and by whom for
the last three fiscal years.
None.
Item 32. Undertakings -
------------
The Registrant, Lexington Natural Resources Trust
undertakes to furnish a copy of the Fund's latest
annual report, upon request and without charge, to
every person to whom a prospectus is delivered.
<PAGE>
Registration No. 33-26116
Securities and Exchange Commission
Washington, D.C. 20549
Exhibits
Filed With
Form N-1A
LEXINGTON NATURAL RESOURCES TRUST
EXHIBIT INDEX
The following documents are being filed electronically as exhibits to this
filing:
Financial Statements for the period ending December 31, 1994
Form of Custodian Agreement
Form of Administrative Services Agreement
Consent of Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
Consent of independent auditors for the inclusion of their report herein
Article 6 Financial Data Schedule
Cover
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933 and the Investment Company Act of 1940 the Registrant
certifies that it meets all of the requirements for effectiveness
of this amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this
amendment to be signed on its behalf by the Undersigned,
thereunto duly authorized, in the City of Saddle Brook and State
of New Jersey, on the 25th day of April, 1994.
LEXINGTON NATURAL RESOURCES TRUST
Robert M. DeMichele
________________________________________
By Robert M. DeMichele
Chairman of the Board
Pursuant to the requirements of the Securities Act of
1933, this amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the dates indicated.
Signature Title Date
Robert M. DeMichele
__________________________ Chairman of the Board April 25, 1995
Robert M. DeMichele Principal Executive
Officer
Richard M. Hisey
__________________________ Principal Financial April 25, 1995
Richard M. Hisey and Accounting Officer
Lisa Curcio
__________________________ Principal Compliance April 25, 1995
Lisa Curcio Officer
*Beverley C. Duer, P.E. Director April 25, 1995
- --------------------------
Beverley C. Duer, P.E.
*Barbara M. Evans Director April 25, 1995
- --------------------------
Barbara M. Evans
<PAGE>
Signature Title Date
*Lawrence Kantor Director April 25, 1995
- --------------------------
Lawrence Kantor
*Donald B. Miller Director April 25, 1995
- ---------------------------
Donald B. Miller
*Francis Olmsted Director April 25, 1995
- ---------------------------
Francis Olmsted
*John G. Preston Director April 25, 1995
- ---------------------------
John G. Preston
*Margaret W. Russell Director April 25, 1995
- ---------------------------
Margaret W. Russell
*Philip C. Smith Director April 25, 1995
- ---------------------------
Philip C. Smith
*Francis A. Sunderland Director April 25, 1995
- ---------------------------
Francis A. Sunderland
Lisa Curcio
*By: ______________________
Lisa Curcio
Attorney-in-Fact
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Lexington Natural Resources Trust:
We have audited the accompanying statements of net assets (including the port-
folio of investments) and assets and liabilities of Lexington Natural Resources
Trust as of December 31, 1994, 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 finan-
cial highlights are the responsibility of the Trust's management. Our responsi-
bility 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 stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial high-
lights 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 De-
cember 31, 1994 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 pre-
sentation. We believe that our audits provide a reasonable basis for our opin-
ion.
In our opinion, the financial statements and financial highlights referred to
above present fairly in all material respects, the financial position of Lex-
ington Natural Resources Trust as of December 31, 1994 and 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 gener-
ally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
January 30, 1995
1
<PAGE>
Lexington Natural Resources Trust
STATEMENT OF NET ASSETS (INCLUDING THE PORTFOLIO OF INVESTMENTS) -- December
31, 1994
<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
PRINCIPAL VALUE
SECURITY AMOUNT (NOTE 1)
-------- --------- ----------
<S> <C> <C>
COMMON STOCKS: 92.8%
CHEMICAL PRODUCTS: 4.6%
Hercules, Inc. ........................................... 2,600 $ 299,975
Union Carbide Corporation ................................ 11,000 323,125
----------
623,100
----------
ENERGY SOURCES: 37.7%
Amoco Corporation ........................................ 4,800 283,800
Anadarko Petroleum Corporation ........................... 5,200 200,200
British Petroleum Company Plc ............................ 3,500 279,562
Broken Hill Proprietary (ADR) ............................ 6,000 369,750
Horsham Corporation ...................................... 29,500 376,125
Mobil Corporation ........................................ 3,000 252,750
Noble Affiliates, Inc. ................................... 17,400 430,650
Norsk Hydro (ADR) ........................................ 8,000 313,000
Phillips Petroleum Company ............................... 6,700 219,425
Praxair, Inc. ............................................ 13,000 266,500
Rogers Corporation* ...................................... 11,000 547,250
Royal Dutch Petroleum Company ............................ 3,200 344,000
Smith International, Inc.* ............................... 19,000 237,500
Societe Nationale Elf Aquitaine (ADR) .................... 7,600 267,900
Texaco, Inc. ............................................. 4,000 239,500
Tosco Corporation ........................................ 8,200 238,825
Ultramar Corporation ..................................... 10,600 270,300
----------
5,137,037
----------
ENVIRONMENTAL TECHNOLOGY: 6.2%
Browning Ferris Industries, Inc. ......................... 10,000 283,750
Millipore Corporation .................................... 5,400 261,225
Sevenson Environmental Services .......................... 18,500 300,625
----------
845,600
----------
FERROUS METALS: 17.6%
Aluminum Company of America .............................. 3,200 277,200
Castle, (A.M.) & Company ................................. 19,500 270,563
Cleveland Cliffs ......................................... 4,000 148,000
Cyprus Amax Minerals Company ............................. 9,000 235,125
Inco Ltd. ................................................ 12,000 343,500
Newmont Mining Corporation ............................... 8,000 288,000
Phelps Dodge Corporation ................................. 4,300 266,063
Rio Algom Ltd. ........................................... 16,000 296,000
Western Mining Holdings (ADR) ............................ 11,500 268,812
----------
2,393,263
----------
FOREST PRODUCTS: 9.3%
Chesapeake Corporation ................................... 10,000 330,000
International Paper Company .............................. 4,000 301,500
</TABLE>
2
<PAGE>
Lexington Natural Resources Trust
STATEMENT OF NET ASSETS (INCLUDING THE PORTFOLIO OF INVESTMENTS) -- December
31, 1994 (continued)
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
PRINCIPAL VALUE
SECURITY AMOUNT (NOTE 1)
-------- --------- -----------
<S> <C> <C>
Lydall, Inc. * .......................................... 10,000 $ 325,000
Scott Paper Company ..................................... 4,500 311,062
-----------
1,267,562
-----------
PRECIOUS METALS: 17.4%
American Barrick Resources Corporation .................. 14,900 331,525
ASARCO, Inc. ............................................ 8,200 232,675
Battle Mountain Gold Company ............................ 23,600 259,600
Coeur D'Alene Mines Corporation ......................... 18,000 294,750
Echo Bay Mines Ltd. ..................................... 30,800 327,250
Homestake Mining Company ................................ 13,700 234,613
Placer Dome, Inc. ....................................... 18,500 402,375
Santa Fe Pacific Gold Corporation ....................... 23,000 296,125
-----------
2,378,913
-----------
TOTAL COMMON STOCKS (COST $12,720,975) .................. 12,645,475
===========
SHORT-TERM INVESTMENTS: 14.5%
U.S. Government Obligations
U.S. Treasury Bills
4.96%, due 01/26/95 .................................... 300,000 298,966
U.S. Treasury Bills
5.22%, due 02/09/95 .................................... 300,000 298,304
U.S. Treasury Bills
5.61%, due 03/02/95 .................................... 200,000 198,130
U.S. Treasury Bills
5.525%, due 03/16/95 ................................... 300,000 296,593
U.S. Treasury Bills
5.37%, due 03/23/95 .................................... 300,000 296,375
U.S. Treasury Bills
5.405%, due 03/23/95 ................................... 300,000 296,352
U.S. Treasury Bills
5.50%, due 03/30/95 .................................... 300,000 295,966
-----------
TOTAL SHORT-TERM INVESTMENTS (COST $1,980,686) .......... 1,980,686
-----------
TOTAL INVESTMENTS: 107.3% (COST $14,701,661+) ........... 14,626,161
LIABILITIES IN EXCESS OF OTHER ASSETS: (7.3%) ........... (999,251)
-----------
TOTAL NET ASSETS: 100.0%
(equivalent to $9.71 per share
on 1,403,250 shares outstanding) ....................... $13,626,910
===========
</TABLE>
* Non-income producing investments.
ADR--American Depository Receipt
+ Aggregate cost for Federal income tax purposes is identical.
The Notes to Financial Statements are an integral part of this statement.
3
<PAGE>
Lexington Natural Resources Trust
PORTFOLIO CHANGES
Six months ended December 31, 1994
(unaudited)
ADDITIONS
- ---------
Browning Ferris Industries, Inc.
Chesapeake Corporation
Cleveland Cliffs
Newmont Mining Corporation
Norsk Hydro (ADR)
Phillips Petroleum Company
Santa Fe Pacific Gold Corporation
Scott Paper Company
Smith International, Inc.
INCREASES IN HOLDINGS
- ---------------------
Aluminum Company of America
American Barrick Resources Corporation
Battle Mountain Gold Company
British Petroleum Company Plc
Broken Hill Proprietary (ADR)
Castle (A.M.) & Company
Echo Bay Mines Ltd.
Hercules, Inc.
Horsham Corporation
Inco Ltd.
International Paper Company
Mobil Corporation
Noble Affiliates, Inc.
Phelps Dodge Corporation
Placer Dome, Inc.
Rogers Corporation
Royal Dutch Petroleum Company
Sevenson Environmental Services
Societe Nationale Elf Aquitaine (ADR)
Texaco, Inc.
Tosco Corporation
Ultramar Corporation
Union Carbide Corporation
Western Mining Holdings (ADR)
DELETIONS
- ---------
Addington Resources, Inc.
Alumax, Inc.
Ashland Oil, Inc.
Atmos Energy Corporation
Bemis Company, Inc.
Chemed Corporation
Donaldson Company, Inc.
du Pont (EI) de Nemours
Hanna (M.A.) Company
Hecla Mining Company
Kennametal, Inc.
Louisiana Pacific Corporation
Material Sciences Corporation
Monsanto Company
Plum Creek Timber Company
Sanifill, Inc.
Sonat, Inc.
Total Petroleum North America
PURCHASED & SOLD DURING PERIOD
- ------------------------------
Mosinee Paper Corporation
Pegasus Gold Company
4
<PAGE>
Lexington Natural Resources Trust
STATEMENT OF ASSETS AND LIABILITIES -- DECEMBER 31, 1994
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $14,701,661) (Note 1) ............... $14,626,161
Cash ............................................................ 8,311
Receivable for shares sold ...................................... 22,094
Interest and dividends receivable ............................... 14,551
-----------
TOTAL ASSETS ................................................. 14,671,117
-----------
LIABILITIES
Due to Lexington Management Corporation (Note 2) ................ 10,857
Payable for shares redeemed ..................................... 7,447
Payable for securities purchased ................................ 1,008,872
Accrued expenses ................................................ 17,031
-----------
TOTAL LIABILITIES ............................................ 1,044,207
-----------
NET ASSETS (EQUIVALENT TO $9.71 PER SHARE ON 1,403,250 SHARES
OUTSTANDING) (NOTE 3)............................................ $13,626,910
===========
NET ASSETS CONSIST OF:
Paid-in capital--unlimited authorized shares of beneficial inter-
est at no par value ............................................ $14,348,045
Distributions in excess of net investment income ................ (2,513)
Accumulated net realized loss on investments (Note 6) ........... (643,122)
Net unrealized depreciation of investments (Note 4) ............. (75,500)
-----------
NET ASSETS........................................................ $13,626,910
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
Lexington Natural Resources Trust
STATEMENT OF OPERATIONS -- YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest income .................................................. $ 27,574
Dividend income .................................................. 198,642
----------
226,216
Less: Foreign tax expense ........................................ 6,671
----------
Total investment income ....................................... 219,545
----------
EXPENSES
Investment advisory fee (Note 2) ................................. 107,760
Accounting expense (Note 2) ...................................... 2,293
Custodian fees ................................................... 13,085
Printing and mailing ............................................. 1,580
Directors' fees .................................................. 3,420
Audit and legal .................................................. 23,170
Registration fees ................................................ 2,947
Computer processing fees ......................................... 8,359
Other expenses ................................................... 4,580
----------
Total expenses ................................................ 167,194
----------
Net investment income ............................................. 52,351
----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (Note 4)
Realized loss on investments (excluding short-term securities):
Proceeds from sales ............................................. 8,776,636
Cost of securities sold ......................................... 9,267,107
----------
Net realized loss .............................................. (490,471)
----------
Unrealized appreciation (depreciation) of investments:
End of period ................................................... (75,500)
Beginning of period ............................................. 263,543
----------
Change during period ........................................... (339,043)
----------
Net realized and unrealized loss on investments ................ (829,514)
----------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $ (777,163)
==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
6
<PAGE>
Lexington Natural Resources Trust
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1994 AND 1993
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Net investment income ................................ $ 52,351 $ 2,466
Net realized gain (loss) from investment transac-
tions ............................................... (490,471) 144,415
Increase (decrease) in unrealized appreciation of in-
vestments ........................................... (339,043) 48,326
----------- ----------
Net increase (decrease) in net assets resulting from
operations ......................................... (777,163) 195,207
Distributions to shareholders from net investment in-
come ................................................ (50,415) (6,984)
Increase in net assets from capital share transactions
(Note 3) ............................................ 9,129,763 3,210,360
----------- ----------
Net increase in net assets ........................... 8,302,185 3,398,583
NET ASSETS:
Beginning of period .................................. 5,324,725 1,926,142
----------- ----------
End of period (including distributions in excess of
net investment income of $2,513 and $4,449,
respectively) ........................................ $13,626,910 $5,324,725
=========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
NOTE 1--Significant Accounting Policies:
Lexington Natural Resources Trust (the "Trust") is an open-end diversified in-
vestment company registered under the Investment Company Act of 1940, as
amended. With the exception of shares held in connection with initial capital
of the Trust, shares of the Trust are currently being offered only to Aetna
Life Insurance and Annuity Company ("Aetna") for allocation to certain of its
separate accounts established for the purpose of funding variable annuity con-
tracts issued by Aetna. The following is a summary of significant accounting
policies followed by the Trust in the preparation of its financial statements:
INVESTMENTS: Security transactions are accounted for on a trade date basis.
Realized gains and losses from investment transactions are reported on the
identified cost basis. Investments in securities traded on a national secu-
rities exchange are valued at the last sale price on such exchange as of
the close of business. Securities traded on the over-the-counter market are
valued at the mean between the last reported bid and asked price. Securi-
ties 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. Short-term securities are stated at amor-
tized
cost, which approximates market value. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is ac-
crued as earned.
FEDERAL INCOME TAXES: It is the Trust's intention to comply with the re-
quirements 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.
NOTE 2--Investment Advisory Fee and Other Transactions with Affiliate:
The Trust pays an investment advisory fee to Lexington Management Corporation
("LMC") at the annual rate of 1% of the Trust's average daily net assets. LMC
shall reimburse the Trust in any fiscal year for the amount by which the
Trust's aggregate expenses (excluding interest, taxes, brokerage commissions
and extraordinary expenses) exceed the most restrictive expense limits imposed
by any state or regulatory authority of any jurisdiction in which shares of
the Trust are offered for sale during any such year. No reimbursement was re-
quired for the year ended December 31, 1994.
The Trust also reimburses LMC for certain expenses, including accounting
costs, which are incurred by the Trust, but paid by LMC.
7
<PAGE>
Lexington Natural Resources Trust
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993 (CONTINUED)
NOTE 3--Capital Stock:
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1994 DECEMBER 31, 1993
---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold .................... 1,309,826 $13,428,318 419,356 $ 4,353,233
Shares issued on reinvestment of
distributions from net
investment income ............. 5,203 50,415 679 7,004
--------- ----------- -------- -----------
1,315,029 13,478,733 420,035 4,360,237
Shares redeemed ................ (428,676) (4,348,970) (110,292) (1,149,877)
--------- ----------- -------- -----------
Net increase ................. 886,353 $ 9,129,763 309,743 $ 3,210,360
========= =========== ======== ===========
</TABLE>
NOTE 4--Purchases and Sales of Investments:
The cost of purchases and proceeds from sales of investments for the year
ended December 31, 1994, excluding short-term securities, were $17,434,482 and
$8,776,636, respectively.
At December 31, 1994, aggregate gross unrealized appreciation for all invest-
ments in which there is an excess of value over tax cost amounted to $563,112
and aggregate gross unrealized depreciation for all investments in which there
is an excess of tax cost over value amounted to $638,612.
NOTE 5--Investment and Concentration Risks:
The Fund can make significant investments in foreign securities and has a pol-
icy of investing in the securities of companies that own or develop natural
resources and other basic commodities, or supply goods and services to such
companies. There are certain risks involved in investing in foreign securities
or concentrating in specific industries such as natural resources that are in
addition to the usual risks inherent in domestic investments. These risks in-
clude those resulting from future adverse political and economic developments,
as well as the possible imposition of foreign exchange or other foreign gov-
ernmental restrictions or laws.
NOTE 6--Federal Income Taxes--Capital Loss Carryforwards:
Capital loss carryforwards available for Federal income tax purposes as of De-
cember 31, 1994 are as follows:
$44,907 expiring in 1999;
$106,168 expiring in 2000;
$1,577 expiring in 2001;
$297,900 expiring in 2002; and
$192,570 expiring in 2003.
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 trust's taxable year should be deemed to
have occurred on the first day of the following taxable year (i.e., January
1). The regulations indicate that a fund may elect to retroactively apply
these rules for purposes of computing taxable income. Accordingly, the capital
loss carryforwards for the Trust have been adjusted to reflect prior years'
post-October losses in the next fiscal year.
8
<PAGE>
Lexington Natural Resources Trust
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1994 1993 1992 1991 1990
------- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of peri-
od ................................ $ 10.30 $ 9.30 $ 9.01 $ 9.50 $ 11.49
------- ------- ------ ------- -------
INCOME (LOSS) FROM INVESTMENT OPER-
ATIONS:
Net investment income (loss) ...... 0.04 -- -- 0.02 (0.01)
Net realized and unrealized gain
(loss) on investments ............ (0.59) 1.01 0.29 (0.49) (1.70)
------- ------- ------ ------- -------
Total income (loss) from invest-
ment operations ................. (0.55) 1.01 0.29 (0.47) (1.71)
------- ------- ------ ------- -------
LESS DISTRIBUTIONS:
Dividend from net investment in-
come ............................. (0.04) (0.01) -- (0.02) --
Distributions from capital gains .. -- -- -- -- (0.28)
------- ------- ------ ------- -------
Total distributions .............. (0.04) (0.01) -- (0.02) (0.28)
------- ------- ------ ------- -------
Net asset value, end of period ..... $ 9.71 $ 10.30 $ 9.30 $ 9.01 $ 9.50
======= ======= ====== ======= =======
Total return ....................... (5.38%) 10.90% 3.22% (4.95%) (14.85%)
Ratios to average net assets:
Expenses, before reimbursement .... 1.55% 2.26% 2.31% 2.97% 4.55%
Expenses, net of reimbursement .... 1.55% 2.26% 2.31% 1.60% 1.54%
Net investment income (loss),
before reimbursement ............. 0.49% 0.08% 0.02% (1.10%) (3.06%)
Net investment income (loss) ...... 0.49% 0.08% 0.02% 0.27% (0.05%)
Portfolio turnover ................ 87.40% 114.44% 65.50% 100.94% 50.43%
Net assets at end of period (000's
omitted) ......................... $13,627 $ 5,325 $1,926 $ 1,393 $ 916
</TABLE>
9
GLOBAL CUSTODY AGREEMENT
This AGREEMENT is effective __________, 19__, and is between THE CHASE
MANHATTAN BANK, N.A. (the "Bank") and LEXINGTON NATURAL RESOURCES TRUST (the
"Customer").
1. Customer Accounts.
The Bank agrees to establish and maintain the following accounts
("Accounts"):
(a) A custody account in the name of the Customer ("Custody Account")
for any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money, bullion, coin and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same or evidencing or representing any other
rights or interests therein and other similar property whether certificated
or uncertificated as may be received by the Bank or its Subcustodian (as
defined in Section 3) for the account of the Customer ("Securities"); and
(b) A deposit account in the name of the Customer ("Deposit Account")
for any and all cash in any currency received by the Bank or its Subcustodian
for the account of the Customer, which cash shall not be subject to
withdrawal by draft or check.
The Customer warrants its authority to: 1) deposit the cash and
Securities ("Assets") received in the Accounts and 2) give Instructions (as
defined in Section 11) concerning the Accounts. The Bank may deliver
securities of the same class in place of those deposited in the Custody
Account.
Upon written agreement between the Bank and the Customer, additional
Accounts may be established and separately accounted for as additional
Accounts under the terms of this Agreement.
2. Maintenance of Securities and Cash at Bank and Subcustodian Locations.
Unless Instructions specifically require another location acceptable to
the Bank:
(a) Securities will be held in the country or other jurisdiction in
which the principal trading market for such Securities is located, where such
Securities are to be presented for payment or where such Securities are
acquired; and
(b) Cash will be credited to an account in a country or other
jurisdiction in which such cash may be legally deposited or is the legal
currency for the payment of public or private debts.
Cash may be held pursuant to Instructions in either interest or
non-interest bearing accounts as may be available for the particular
currency. To the extent Instructions are issued and the Bank can comply with
such Instructions, the Bank is authorized to maintain cash balances on
deposit for the Customer with itself or one of its affiliates at such
reasonable rates of interest as may from time to time be paid on such
accounts, or in non-interest bearing accounts as the Customer may direct, if
acceptable to the Bank.
If the Customer wishes to have any of its Assets held in the custody of
an institution other than the established Subcustodians as defined in Section
3 (or their securities depositories), such arrangement must be authorized by
a written agreement, signed by the Bank and the Customer.
3. Subcustodians and Securities Depositories.
The Bank may act under this Agreement through the subcustodians listed
in Schedule A of this Agreement with which the Bank has entered into
subcustodial agreements ("Subcustodians"). The Customer authorizes the Bank
to hold Assets in the Accounts in accounts which the Bank has established
with one or more of its branches or Subcustodians. The Bank and Subcustodians
are authorized to hold any of the Securities in their account with any
securities depository in which they participate.
The Bank reserves the right to add new, replace or remove
Subcustodians. The Customer will be given reasonable notice by the Bank of
any amendment to Schedule A. Upon request by the Customer, the Bank will
identify the name, address and principal place of business of any
Subcustodian of the Customer's Assets and the name and address of the
governmental agency or other regulatory authority that supervises or
regulates such Subcustodian.
4. Use of Subcustodian.
(a) The Bank will identify such Assets on its books as belonging to
the Customer.
(b) A Subcustodian will hold such Assets together with assets
belonging to other customers of the Bank in accounts identified on such
Subcustodian's books as special custody accounts for the exclusive benefit of
customers of the Bank.
(c) Any Assets in the Accounts held by a Subcustodian will be subject
only to the instructions of the Bank or its agent. Any Securities held in a
securities depository for the account of a Subcustodian will be subject only
to the instructions of such Subcustodian.
(d) Any agreement the Bank enters into with a Subcustodian for
holding its customer's assets shall provide that such assets will not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of such Subcustodian except for safe custody or administration, and
that the beneficial ownership of such assets will be freely transferable
without the payment of money or value other than for safe custody or
administration. The foregoing shall not apply to the extent of any special
agreement or arrangement made by the Customer with any particular
Subcustodian.
5. Deposit Account Transactions.
(a) The Bank or its Subcustodians will make payments from the Deposit
Account upon receipt of Instructions which include all information required
by the Bank.
(b) In the event that any payment to be made under this Section 5
exceeds the funds available in the Deposit Account, the Bank, in its
discretion, may advance the Customer such excess amount which shall be deemed
a loan payable on demand, bearing interest at the rate customarily charged by
the Bank on similar loans.
(c) If the Bank credits the Deposit Account on a payable date, or at
any time prior to actual collection and reconciliation to the Deposit
Account, with interest, dividends, redemptions or any other amount due, the
Customer will promptly return any such amount upon oral or written
notification: (i) that such amount has not been received in the ordinary
course of business or (ii) that such amount was incorrectly credited. If the
Customer does not promptly return any amount upon such notification, the Bank
shall be entitled, upon oral or written notification to the Customer, to
reverse such credit by debiting the Deposit Account for the amount previously
credited. The Bank or its Subcustodian shall have no duty or obligation to
institute legal proceedings, file a claim or a proof of claim in any
insolvency proceeding or take any other action with respect to the collection
of such amount, but may act for the Customer upon Instructions after
consultation with the Customer.
6. Custody Account Transactions.
(a) Securities will be transferred, exchanged or delivered by the
Bank or its Subcustodian upon receipt by the Bank of Instructions which
include all information required by the Bank. Settlement and payment for
Securities received for, and delivery of Securities out of, the Custody
Account may be made in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivery of Securities to a purchaser, dealer or their agents
against a receipt with the expectation of receiving later payment and free
delivery. Delivery of Securities out of the Custody Account may also be made
in any manner specifically required by Instructions acceptable to the Bank.
(b) The Bank, in its discretion, may credit or debit the Accounts on
a contractual settlement date with cash or Securities with respect to any
sale, exchange or purchase of Securities. Otherwise, such transactions will
be credited or debited to the Accounts on the date cash or Securities are
actually received by the Bank and reconciled to the Account.
(i) The Bank may reverse credits or debits made to the Accounts
in its discretion if the related transaction fails to settle
within a reasonable period, determined by the Bank in its
discretion, after the contractual settlement date for the related
transaction.
(ii) If any Securities delivered pursuant to this Section 6 are
returned by the recipient thereof, the Bank may reverse the
credits and debits of the particular transaction at any time.
7. Actions of the Bank.
The Bank shall follow Instructions received regarding assets held in
the Accounts. However, until it receives Instructions to the contrary, the
Bank will:
(a) Present for payment any Securities which are called, redeemed or
retired or otherwise become payable and all coupons and other income items
which call for payment upon presentation, to the extent that the Bank or
Subcustodian is actually aware of such opportunities.
(b) Execute in the name of the Customer such ownership and other
certificates as may be required to obtain payments in respect of Securities.
(c) Exchange interim receipts or temporary Securities for definitive
Securities.
(d) Appoint brokers and agents for any transaction involving the
Securities, including, without limitation, affiliates of the Bank or any
Subcustodian.
(e) Issue statements to the Customer, at times mutually agreed upon,
identifying the Assets in the Accounts.
The Bank will send the Customer an advice or notification of any
transfers of Assets to or from the Accounts. Such statements, advices or
notifications shall indicate the identity of the entity having custody of the
Assets. Unless the Customer sends the Bank a written exception or objection
to any Bank statement within sixty (60) days of receipt, the Customer shall
be deemed to have approved such statement. In such event, or where the
Customer has otherwise approved any such statement, the Bank shall, to the
extent permitted by law, be released, relieved and discharged with respect to
all matters set forth in such statement or reasonably implied therefrom as
though it had been settled by the decree of a court of competent jurisdiction
in an action where the Customer and all persons having or claiming an
interest in the Customer or the Customer's Accounts were parties.
All collections of funds or other property paid or distributed in
respect of Securities in the Custody Account shall be made at the risk of the
Customer. The Bank shall have no liability for any loss occasioned by delay
in the actual receipt of notice by the Bank or by its Subcustodians of any
payment, redemption or other transaction regarding Securities in the Custody
Account in respect of which the Bank has agreed to take any action under this
Agreement.
8. Corporate Actions; Proxies.
Whenever the Bank receives information concerning the Securities which
requires discretionary action by the beneficial owner of the Securities
(other than a proxy), such as subscription rights, bonus issues, stock
repurchase plans
<PAGE>
and rights offerings, or legal notices or other material intended to be
transmitted to securities holders ("Corporate Actions"), the Bank will give
the Customer notice of such Corporate Actions to the extent that the Bank's
central corporate actions department has actual knowledge of a Corporate
Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action is
received which bears an expiration date, the Bank will endeavor to obtain
Instructions from the Customer or its Authorized Person, but if Instructions
are not received in time for the Bank to take timely action, or actual notice
of such Corporate Action was received too late to seek Instructions, the Bank
is authorized to sell such rights entitlement or fractional interest and to
credit the Deposit Account with the proceeds or take any other action it
deems, in good faith, to be appropriate in which case it shall be held
harmless for any such action.
The Bank will deliver proxies to the Customer or its designated agent
pursuant to special arrangements which may have been agreed to in writing.
Such proxies shall be executed in the appropriate nominee name relating to
Securities in the Custody Account registered in the name of such nominee but
without indicating the manner in which such proxies are to be voted; and
where bearer Securities are involved, proxies will be delivered in accordance
with Instructions.
9. Nominees.
Securities which are ordinarily held in registered form may be
registered in a nominee name of the Bank, Subcustodian or securities
depository, as the case may be. The Bank may without notice to the Customer
cause any such Securities to cease to be registered in the name of any such
nominee and to be registered in the name of the Customer. In the event that
any Securities registered in a nominee name are called for partial redemption
by the issuer, the Bank may allot the called portion to the respective
beneficial holders of such class of security in any manner the Bank deems to
be fair and equitable. The Customer agrees to hold the Bank, Subcustodians,
and their respective nominees harmless from any liability arising directly or
indirectly from their status as a mere record holder of Securities in the
Custody Account.
10. Authorized Persons.
As used in this Agreement, the term "Authorized Person" means employees
or agents including investment managers as have been designated by written
notice from the Customer or its designated agent to act on behalf of the
Customer under this Agreement. Such persons shall continue to be Authorized
Persons until such time as the Bank receives Instructions from the Customer
or its designated agent that any such employee or agent is no longer an
Authorized Person.
11. Instructions.
The term "Instructions" means instructions of any Authorized Person
received by the Bank, via telephone, telex, TWX, facsimile transmission, bank
wire or other teleprocess or electronic instruction or trade information
system acceptable to the Bank which the Bank believes in good faith to have
been given by Authorized Persons or which are transmitted with proper testing
or authentication pursuant to terms and conditions which the Bank may
specify. Unless otherwise expressly provided, all Instructions shall
continue in full force and effect until canceled or superseded.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which
confirmation may bear the facsimile signature of such Person), but the
Customer will hold the Bank harmless for the failure of an Authorized Person
to send such confirmation in writing, the failure of such confirmation to
conform to the telephone instructions received or the Bank's failure to
produce such confirmation at any subsequent time. The Bank may
electronically record any Instructions given by telephone, and any other
telephone discussions with respect to the Custody Account. The Customer
shall be responsible for safeguarding any testkeys, identification codes or
other security devices which the Bank shall make available to the Customer or
its Authorized Persons.
12. Standard of Care; Liabilities.
(a) The Bank shall be responsible for the performance of only such
duties as are set forth in this Agreement or expressly contained in
Instructions which are consistent with the provisions of this Agreement as
follows:
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Assets.
The Bank shall be liable to the Customer for any loss which shall
occur as the result of the failure of a Subcustodian to exercise
reasonable care with respect to the safekeeping of such Assets to
the same extent that the Bank would be liable to the Customer if
the Bank were holding such Assets in New York. In the event of
any loss to the Customer by reason of the failure of the Bank or
its Subcustodian to utilize reasonable care, the Bank shall be
liable to the Customer only to the extent of the Customer's
direct damages, to be determined based on the market value of the
property which is the subject of the loss at the date of
discovery of such loss and without reference to any special
conditions or circumstances.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent which it or a
Subcustodian appoints unless such appointment was made
negligently or in bad faith.
(iii) The Bank shall be indemnified by, and without liability to
the Customer for any action taken or omitted by the Bank whether
pursuant to Instructions or otherwise within the scope of this
Agreement if such act or omission was in good faith, without
negligence. In performing its obligations under this Agreement,
the Bank may rely on the genuineness of any document which it
believes in good faith to have been validly executed.
(iv) The Customer agrees to pay for and hold the Bank harmless
from any liability or loss resulting from the imposition or
assessment of any taxes or other governmental charges, and any
related expenses with respect to income from or Assets in the
Accounts.
(v) The Bank shall be entitled to rely, and may act, upon the
advice of counsel (who may be counsel for the Customer) on all
matters and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
(vi) The Bank need not maintain any insurance for the benefit of
the Customer.
(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from: 1) the general risk of
investing, or 2) investing or holding Assets in a particular
country including, but not limited to, losses resulting from
nationalization, expropriation or other governmental actions;
regulation of the banking or securities industry; currency
restrictions, devaluations or fluctuations; and market conditions
which prevent the orderly execution of securities transactions or
affect the value of Assets.
(viii) Neither party shall be liable to the other for any
loss due to forces beyond their control including, but not
limited to strikes or work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear fusion, fission or radiation,
or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty
or responsibility to:
(i) question Instructions or make any suggestions to the
Customer or an Authorized Person regarding such Instructions;
(ii) supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) advise the Customer or an Authorized Person regarding any
default in the payment of principal or income of any security other
than as provided in Section 5(c) of this Agreement;
(iv) evaluate or report to the Customer or an Authorized Person
regarding the financial condition of any broker, agent or other
party to which Securities are delivered or payments are made
pursuant to this Agreement;
(v) review or reconcile trade confirmations received from
brokers. The Customer or its Authorized Persons (as defined in
Section 10) issuing Instructions shall bear any responsibility to
review such confirmations against Instructions issued to and
statements issued by the Bank.
(c) The Customer authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have
a material interest in a transaction, or circumstances are such that the Bank
may have a potential conflict of duty or interest including the fact that the
Bank or any of its affiliates may provide brokerage services to other
customers, act as financial advisor to the issuer of Securities, act as a
lender to the issuer of Securities, act in the same transaction as agent for
more than one customer, have a material interest in the issue of Securities,
or earn profits from any of the activities listed herein.
13. Fees and Expenses.
The Customer agrees to pay the Bank for its services under this
Agreement such amount as may be agreed upon in writing, together with the
Bank's reasonable out-of-pocket or incidental expenses, including, but not
limited to, legal fees. The Bank shall have a lien on and is authorized to
charge any Accounts of the Customer for any amount owing to the Bank under
any provision of this Agreement.
14. Miscellaneous.
(a) Foreign Exchange Transactions. To facilitate the administration
of the Customer's trading and investment activity, the Bank is authorized to
enter into spot or forward foreign exchange contracts with the Customer or an
Authorized Person for the Customer and may also provide foreign exchange
through its subsidiaries, affiliates or Subcustodians. Instructions,
including standing instructions, may be issued with respect to such contracts
but the Bank may establish rules or limitations concerning any foreign
exchange facility made available. In all cases where the Bank, its
subsidiaries, affiliates or Subcustodians enter into a foreign exchange
contract related to Accounts, the terms and conditions of the then current
foreign exchange contract of the Bank, its subsidiary, affiliate or
Subcustodian and, to the extent not inconsistent, this Agreement shall apply
to such transaction.
(b) Certification of Residency, etc. The Customer certifies that it
is a resident of the United States and agrees to notify the Bank of any
changes in residency. The Bank may rely upon this certification or the
certification of such other facts as may be required to administer the Bank's
obligations under this Agreement. The Customer will indemnify the Bank
against all losses, liability, claims or demands arising directly or
indirectly from any such certifications.
(c) Access to Records. The Bank shall allow the Customer's
independent public accountant reasonable access to the records of the Bank
relating to the Assets as is required in connection with their examination of
books and records pertaining to the Customer's affairs. Subject to
restrictions under applicable law, the Bank shall also obtain an undertaking
to permit the Customer's independent public accountants reasonable access to
the records of any Subcustodian which has physical possession of any Assets
as may be required in connection with the examination of the Customer's books
and records.
(d) Governing Law; Successors and Assigns. This Agreement shall be
governed by the laws of the State of New York and shall not be assignable by
either party, but shall bind the successors in interest of the Customer and
the Bank.
(e) Entire Agreement; Applicable Riders. Customer represents that
the Assets deposited in the Accounts are (Check one):
Employee Benefit Plan or other assets subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
X Mutual Fund assets subject to certain Securities and Exchange
Commission ("SEC") rules and regulations;
Neither of the above.
This Agreement consists exclusively of this document together with
Schedule A, Exhibits I - _______ and the following Rider(s) [Check
applicable rider(s)]:
ERISA
X MUTUAL FUND
X SPECIAL TERMS AND CONDITIONS
There are no other provisions of this Agreement and this Agreement
supersedes any other agreements, whether written or oral, between the
parties. Any amendment to this Agreement must be in writing, executed by
both parties.
(f) Severability. In the event that one or more provisions of this
Agreement are held invalid, illegal or enforceable in any respect on the
basis of any particular circumstances or in any jurisdiction, the validity,
legality and enforceability of such provision or provisions under other
circumstances or in other jurisdictions and of the remaining provisions will
not in any way be affected or impaired.
(g) Waiver. Except as otherwise provided in this Agreement, no
failure or delay on the part of either party in exercising any power or right
under this Agreement operates as a waiver, nor does any single or partial
exercise of any power or right preclude any other or further exercise, or the
exercise of any other power or right. No waiver by a party of any provision
of this Agreement, or waiver of any breach or default, is effective unless in
writing and signed by the party against whom the waiver is to be enforced.
(h) Notices. All notices under this Agreement shall be effective
when actually received. Any notices or other communications which may be
required under this Agreement are to be sent to the parties at the following
addresses or such other addresses as may subsequently be given to the other
party in writing:
Bank: The Chase Manhattan Bank, N.A.
Chase MetroTech Center
Brooklyn, NY 11245
Attention: Global Custody Division
or telex:
Customer: Richard Hisey
Lexington Management Corp.
Park 80 West, Plaza Two
Saddlebrook, NJ 07663
or telex:
(i) Termination. This Agreement may be terminated by the Customer or
the Bank by giving sixty (60) days written notice to the other, provided that
such notice to the Bank shall specify the names of the persons to whom the
Bank shall deliver the Assets in the Accounts. If notice of termination is
given by the Bank, the Customer shall, within sixty (60) days following
receipt of the notice, deliver to the Bank Instructions specifying the names
of the persons to whom the Bank shall deliver the Assets. In either case the
Bank will deliver the Assets to the persons so specified, after deducting any
amounts which the Bank determines in good faith to be owed to it under
Section 13. If within sixty (60) days following receipt of a notice of
termination by the Bank, the Bank does not receive Instructions from the
Customer specifying the names of the persons to whom the Bank shall deliver
the Assets, the Bank, at its election, may deliver the Assets to a bank or
trust company doing business in the State of New York to be held and disposed
of pursuant to the provisions of this Agreement, or to Authorized Persons, or
may continue to hold the Assets until Instructions are provided to the Bank.
LEXINGTON NATURAL RESOURCES TRUST
By:____________________________________________
Title
THE CHASE MANHATTAN BANK, N.A.
By:____________________________________________
Title
STATE OF )
: ss.
COUNTY OF )
On this day of , 19 , before me personally came
, to me known, who being by me duly sworn, did
depose and say that he/she resides in at
;
that he/she is of
, the entity described in and which executed the
foregoing instrument; that he/she knows the seal of said entity, that the
seal affixed to said instrument is such seal, that it was so affixed by order
of said entity, and that he/she signed his/her name thereto by like order.
Sworn to before me this
day of , 19 .
Notary
<PAGE>
STATE OF NEW YORK )
: ss.
COUNTY OF NEW YORK )
On this day of ,19 ,
before me personally came , to me known, who being by
me duly sworn, did depose and say that he/she resides in
at
; that he/she is a Vice
President of THE CHASE MANHATTAN BANK, (National Association), the
corporation described in and which executed the foregoing instrument; that
he/she knows the seal of said corporation, that the seal affixed to said
instrument is such corporate seal, that it was so affixed by order of the
Board of Directors of said corporation, and that he/she signed his/her name
thereto by like order.
Sworn to before me this
day of , 19 .
Notary
Mutual Fund Rider to Global Custody Agreement
Between The Chase Manhattan Bank, N.A. and
Lexington Natural Resources Trust
effective __________, 19__
Customer represents that the Assets being placed in the Bank's custody
are subject to the Investment Company Act of 1940 (the Act), as the same may
be amended from time to time.
Except to the extent that the Bank has specifically agreed to comply
with a condition of a rule, regulation, interpretation promulgated by or
under the authority of the SEC or the Exemptive Order applicable to accounts
of this nature issued to the Bank (Investment Company Act of 1940, Release
No. 12053, November 20, 1981), as amended, or unless the Bank has otherwise
specifically agreed, the Customer shall be solely responsible to assure that
the maintenance of Assets under this Agreement complies with such rules,
regulations, interpretations or exemptive order promulgated by or under the
authority of the Securities Exchange Commission.
The following modifications are made to the Agreement:
Section 3. Subcustodians and Securities Depositories.
Add the following language to the end of Section 3:
The terms Subcustodian and securities depositories as used in this
Agreement shall mean a branch of a qualified U.S. bank, an eligible
foreign custodian or an eligible foreign securities depository, which
are further defined as follows:
(a) "qualified U.S. Bank" shall mean a qualified U.S. bank as defined
in Rule 17f-5 under the Investment Company Act of 1940;
(b) "eligible foreign custodian" shall mean (i) a banking institution
or trust company incorporated or organized under the laws of a country
other than the United States that is regulated as such by that
country's government or an agency thereof and that has shareholders'
equity in excess of $200 million in U.S. currency (or a foreign
currency equivalent thereof), (ii) a majority owned direct or indirect
subsidiary of a qualified U.S. bank or bank holding company that is
incorporated or organized under the laws of a country other than the
United States and that has shareholders' equity in excess of $100
million in U.S. currency (or a foreign currency equivalent thereof)
(iii) a banking institution or trust company incorporated or organized
under the laws of a country other than the United States or a majority
owned direct or indirect subsidiary of a qualified U.S. bank or bank
holding company that is incorporated or organized under the laws of a
country other than the United States which has such other
qualifications as shall be specified in Instructions and approved by
the Bank; or (iv) any other entity that shall have been so qualified by
exemptive order, rule or other appropriate action of the SEC; and
(c) "eligible foreign securities depository" shall mean a securities
depository or clearing agency, incorporated or organized under the laws
of a country other than the United States, which operates (i) the
central system for handling securities or equivalent book-entries in
that country, or (ii) a transnational system for the central handling
of securities or equivalent book-entries.
The Customer represents that its Board of Directors has approved each
of the Subcustodians listed in Schedule A to this Agreement and the terms of
the subcustody agreements between the Bank and each Subcustodian, which are
attached as Exhibits I through of Schedule A, and further represents
that its Board has determined that the use of each Subcustodian and the terms
of each subcustody agreement are consistent with the best interests of the
Fund(s) and its (their) shareholders. The Bank will supply the Customer with
any amendment to Schedule A for approval. The Customer has supplied or will
supply the Bank with certified copies of its Board of Directors resolution(s)
with respect to the foregoing prior to placing Assets with any Subcustodian
so approved.
Section 11. Instructions.
Add the following language to the end of Section 11:
Deposit Account Payments and Custody Account Transactions made pursuant
to Section 5 and 6 of this Agreement may be made only for the purposes
listed below. Instructions must specify the purpose for which any
transaction is to be made and Customer shall be solely responsible to
assure that Instructions are in accord with any limitations or
restrictions applicable to the Customer by law or as may be set forth
in its prospectus.
(a) In connection with the purchase or sale of Securities at prices as
confirmed by Instructions;
(b) When Securities are called, redeemed or retired, or otherwise
become payable;
(c) In exchange for or upon conversion into other securities alone or
other securities and cash pursuant to any plan or merger,
consolidation, reorganization, recapitalization or readjustment;
(d) Upon conversion of Securities pursuant to their terms into other
securities;
(e) Upon exercise of subscription, purchase or other similar rights
represented by Securities;
(f) For the payment of interest, taxes, management or supervisory
fees, distributions or operating expenses;
(g) In connection with any borrowings by the Customer requiring a
pledge of Securities, but only against receipt of amounts borrowed;
(h) In connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any
restrictions applicable to the Customer;
(i) For the purpose of redeeming shares of the capital stock of the
Customer and the delivery to, or the crediting to the account of, the
Bank, its Subcustodian or the Customer's transfer agent, such shares to
be purchased or redeemed;
(j) For the purpose of redeeming in kind shares of the Customer
against delivery to the Bank, its Subcustodian or the Customer's
transfer agent of such shares to be so redeemed;
(k) For delivery in accordance with the provisions of any agreement
among the Customer, the Bank and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"), relating
to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Customer;
(l) For release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only
upon payment to the Bank of monies for the premium due and a receipt
for the Securities which are to be held in escrow. Upon exercise of
the option, or at expiration, the Bank will receive from brokers the
Securities previously deposited. The Bank will act strictly in
accordance with Instructions in the delivery of Securities to be held
in escrow and will have no responsibility or liability for any such
Securities which are not returned promptly when due other than to make
proper request for such return;
(m) For spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related
transactions;
(n) For other proper purposes as may be specified in Instructions
issued by an officer of the Customer which shall include a statement of
the purpose for which the delivery or payment is to be made, the amount
of the payment or specific Securities to be delivered, the name of the
person or persons to whom delivery or payment is to be made, and a
certification that the purpose is a proper purpose under the
instruments governing the Customer; and
(o) Upon the termination of this Agreement as set forth in Section
14(i).
Section 12. Standard of Care; Liabilities.
Add the following subsection (c) to Section 12:
(c) The Bank hereby warrants to the Customer that in its opinion,
after due inquiry, the established procedures to be followed by each of
its branches, each branch of a qualified U.S. bank, each eligible
foreign custodian and each eligible foreign securities depository
holding the Customer's Securities pursuant to this Agreement afford
protection for such Securities at least equal to that afforded by the
Bank's established procedures with respect to similar securities held
by the Bank and its securities depositories in New York.
Section 14. Access to Records.
Add the following language to the end of Section 14(c):
Upon reasonable request from the Customer, the Bank shall furnish the
Customer such reports (or portions thereof) of the Bank's system of
internal accounting controls applicable to the Bank's duties under this
Agreement. The Bank shall endeavor to obtain and furnish the Customer
with such similar reports as it may reasonably request with respect to
each Subcustodian and securities depository holding the Customer's
assets.
GLOBAL CUSTODY AGREEMENT
WITH: LEXINGTON NATURAL RESOURCES TRUST
DATE: __________, 19__
SPECIAL TERMS AND CONDITIONS RIDER
The parties have agreed to the following modifications to the
Agreement:
Section 7
The last paragraph of Section 7 shall be reworded as follows:
"The collectibility of funds or other property paid or
distributed in respect of Securities, in the Custody Account
shall be made at the risk of the customer. Subject to the Bank's
of exercise of reasonable care the Bank shall have no liability
for any loss occasioned by delay in the acutal receipt of notice
by the Bank or by its Subcustodians of any payment, redemption or
other transaction regarding Securities in in the Custody Account
in respect of which the Bank has agreed to take any action under
this Agreement."
Section 12(b)(iii)
Following the words: "as provided in Section 5(c)" insert the words: "and
7(e)".
Section 13
Reword the last sentence as follows:
"Following invoice by the Bank, if any such amount is not paid by
the Customer (and rights with respect to such amount remains
disputed following good faith efforts to resolve such dispute),
the Bank shall have a lien on, and is authorized to charge any
accounts of the Customer for any amount owing to the Bank under
any provision of this Agreement.
FORM OF
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made by and between LEXINGTON NATURAL RESOURCES
TRUST, a Massachusetts Business Trust (the Fund ), and LEXINGTON
MANAGEMENT CORPORATION, A Delaware corporation (the Administrator ), with
respect to the following recital of facts:
RECITAL
WHEREAS, the Fund is registered as an open-end non-diversified
management investment company under the Investment Company Act of 1940, as
amended (the 1940 Act ), and the rules and regulations promulgated
thereunder;
WHEREAS, the Administrator is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended (the Advisers Act ),
and engages in the business of acting as an investment adviser and an
administrator of investment companies;
WHEREAS, the Fund, and the Administrator desire to enter into an
agreement to provide for administrative services for the Fund on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable considerations, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADMINISTRATOR
The Administrator is hereby appointed to serve as the Administrator
to the Fund, to provide the administrative services described herein and
assume the obligations set forth in Section II, subject to the terms of this
Agreement and the control of the Fund s Board of [Directors/Trustees] (the
Board ). The administrator shall, for all purposes herein, be deemed an
independent contractor and shall have, unless otherwise expressly provided
or authorized, no authority to act for or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
II. DUTIES OF THE ADMINISTRATOR
In carrying out the terms of this Agreement, the Administrator shall:
A. provide office space, equipment and facilities (which may be
the Administrator s or its affiliates ) for maintaining the
Fund s organization, for meetings of the Board and the
shareholders, and for performing administrative services
hereunder;
B. supervise and manage all aspects of the Fund s operations
(other than investment advisory activities), and supervise
relations with, and monitor the performance of, custodians,
depositories, transfer and pricing agents, accountants,
attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary and
desirable by the Board;
C. determine and arrange for the publication of the net asset
value of the Fund;
D. provide non-investment related statistical and research data
and such other reports, evaluations and information as the Fund
may request from time to time;
E. provide internal clerical, accounting and legal services, and
stationery and office supplies;
F. prepare, to the extent requested by the Fund, the Fund s
prospectus, statement of additional information, proxy
statements and annual and semi-annual reports to shareholders;
G. arrange for the printing and mailing (at the Fund s expense) of
proxy statements and other reports or other materials provided
to the Fund s shareholders;
H. prepare for execution and file all the Fund s federal and state
tax returns and required tax filings other than those required
to be made by the Fund s custodian and transfer agent;
I. prepare periodic reports to and filings with the Securities and
Exchange Commission (the SEC ) and state Blue Sky authorities
with the advice of the Fund s counsel;
J. maintain the Fund s existence, and during such times as the
shares of the Fund are publicly offered, maintain the
registration and qualification of the Fund s shares under the
federal and state law;
K. keep and maintain the financial accounts and records of the
Fund;
L. develop and implement, if appropriate, management and
shareholder services designed to enhance the value or
convenience of the Fund as an investment vehicle;
M. provide the Board on a regular basis with reports and analyses
of the Fund s operations and the operations of comparable
investment companies;
N. respond to inquiries from shareholders or participants of
employee benefit plans (for which the administrator or any
affiliate provides recordkeeping) relating to the Fund,
concerning, among other things, exchanges among Funds, or refer
any such inquiries to the Fund s officers or the Fund s
transfer agent;
O. provide participant recordkeeping services for participants in
employee benefit plans for which the Administrator or any
affiliate provides recordkeeping services; and
P. provide such information as may be reasonably requested by a
shareholder representative of or a participant in an employee
benefit plan to comply with applicable federal or state laws.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator hereby represents and warrants to the Fund as
follows:
1. Due Incorporation and Organization. The Administrator is
duly organized and is in good standing under the laws of the
State of Delaware and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Best Efforts. The Administrator at all times shall provide
its best judgment and effort to the Fund in carrying out its
obligations hereunder.
B. REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE FUND
The Fund hereby represents and warrants to the Administrator as
follows:
1. Organization. The Fund has been duly organized as a
business trust under the laws of the State of Massachusetts and
it is authorized to enter into this Agreement and carry out its
terms.
2. Registration. The Fund is registered as an investment
company with the SEC under the 1940 Act and shares of the Fund
are registered or qualified for offer and sale to the public
under the Securities Act of 1933, as amended (the 1933 Act ),
and all applicable state securities laws. Such registrations
or qualifications will be kept in effect during the term of
this Agreement.
IV. CONTROL BY THE BOARD
Any activities undertaken by the administrator pursuant to this
Agreement on behalf of the Fund shall at all times be subject to any
directives of the Board.
V. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the
Administrator shall at all times conform to:
A. all applicable provisions of the 1940 Act;
B. the provisions of the registration statement of the Fund under
the 1933 Act and the 1940 Act;
C. the provisions of the Fund s chartering documents, as amended;
D. the provisions of the By-Laws of the Fund, as amended; and
E. any other applicable provisions of state and federal law.
VI. DELEGATION OF RESPONSIBILITIES
All services to be provided by the Administrator under this Agreement
may be furnished by any directors, officers or employees of the
Administrator or by any affiliates of the Administrator under the
Administrator s supervision.
VII. COMPENSATION
For the services to be rendered, the facilities furnished and the
expenses assumed by the administrator, the Fund shall pay to the
Administrator an annual fee, payable monthly, equal to the pro-rata portion
of the Administrator s actual cost in providing such services, facilities
and expenses.
VIII. NON-EXCLUSIVITY
The services of the Administrator to the Fund are not to be deemed to
be exclusive, and the Administrator shall be free to render administrative
or other services to others (including other investment companies) and to
engage in other activities, so long as its services under this agreement are
not impaired thereby. It is understood and agreed that officers and
directors of the Administrator may serve as officers or [directors/trustees]
of the Fund, and that officers of [directors/trustees] of the Fund may serve
as officers or directors of the Administrator to the extent permitted by
law; and that the officers and directors of the Administrator are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers,
directors or trustees of any other firm or trust, including other investment
companies.
IX. TERM
This Agreement shall become effective at the close of business on the
date hereof and shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by the
Fund s [directors/trustees] who are not parties to this Agreement or
interested persons (as defined in the 1940 Act) of any such party, or by
the vote of the holders of a majority (as so defined) of the outstanding
voting securities of the Fund and by such vote of the [directors/trustees].
X. TERMINATION
This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Fund s [directors/trustees] or by vote of a
majority of the Fund s outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), or by the Administrator, on sixty (60) days
written notice to the other party.
XI. LIABILITY OF ADMINISTRATOR AND INDEMNIFICATION
A. LIABILITY
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Administrator or its officers, directors
or employees, or reckless disregard by the Administrator of its duties
under this Agreement, the Administrator shall not be liable to the
Fund or to any shareholder of the Fund for any act or omission in the
course of, or connected with, rendering services hereunder or for any
looses that may be sustained in the purchase, holding or sale of any
security.
B. INDEMNIFICATION
In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder
on the part of the Administrator or any officer, director or employee
of the Administrator, to the extent permitted by applicable law, the
Fund hereby agrees to indemnify and hold the Administrator harmless
from and against all claims, actions, suits and proceedings at law or
in equity, whether brought or asserted by a private party or a
governmental agency, instrumentality or entity of any kind, relating
to the sale, purchase, pledge of, advertisement of, or solicitation
of sales or purchases of any security (whether of the Fund or
otherwise) by the Fund, its officers, directors, employees or agents
in alleged violation of applicable federal, state or foreign laws,
rules or regulations.
XII. MATERIALS FOR DISTRIBUTION TO SHAREHOLDERS
During the term of this Agreement, the Fund shall furnish to the
Administrator at its principal office copies of all prospectuses, proxy
statements, reports to shareholders, sales literature and other material
referring to the Administrator that were prepared for distribution to
shareholders of the Fund and to participants in employee benefit plans
owning interests in the Fund (prior to the public distribution of such
materials). The Fund shall not use any such materials that refer to the
Administrator if the Administrator reasonably objects in writing within five
business days (or such other time as the parties may agree) after receipt
thereof, unless prior to such use the material is modified in a manner that
is satisfactory to the Administrator. Subsequent to the termination of this
Agreement, the Fund will continue to furnish to the Administrator copies of
such materials. The Fund shall also furnish or otherwise make available to
the Administrator other information relating to the business affairs of the
Fund as the Administrator reasonably requests from time to time.
XIII. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further
notice to the other party, it is agreed that the address of the
Administrator and that of the Fund for this purpose shall be Park 80 West,
Plaza Two, Saddle Brook, New Jersey, 07663.
XIV. QUESTIONS OF INTERPRETATIONS
This Agreement shall be governed by the laws of the State of New
Jersey. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the SEC issued pursuant to
said Act. In addition, where the effect of a requirement of the 1940 Act
reflected in the provisions of this Agreement is revised by rule, regulation
or order of the SEC, such provisions shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate by their respective officers on the ____ day of
_________________, 199__.
LEXINGTON NATURAL RESOURCES TRUST
Attest: By: _______________________________
Name Title
________________________
LEXINGTON MANAGEMENT CORPORATION
Attest: By: ______________________________
Name Title
________________________
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel
9 1 9 T H I R D A V E N U E
NEW YORK, N.Y. 10022 3852
(212) 715 9100
FAX
(212) 715-8000
______
WRITER'S DIRECT
NUMBER
(212) 715-9100
April 21, 1995
Lexington Natural Resources Trust
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Re: Lexington Natural Resources Trust
Registration No. 33-26116
Post-Effective Amendment to Registration
Statement on Form N-1A
Gentlemen:
We hereby consent to the reference of our firm as Counsel in the
Post-Effective Amendment No. 7 to the Registration Statement on Form N-1A of
Lexington Natural Resources Trust.
Very truly yours,
Independent Auditors' Consent
The Board of Directors
Lexington Natural Resources Trust:
We consent to the use of our report dated January 30, 1995, included in the
Registration Statement on form N-1A and to the reference to our firm under the
heading "Financial Highlights" in the Prospectus.
KPMG PEAT MARWICK LLP
New York, New York
April 26, 1995
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from year-
end audited financial statements dated December 31, 1994 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 14,701,661
<INVESTMENTS-AT-VALUE> 14,626,161
<RECEIVABLES> 36,645
<ASSETS-OTHER> 8,311
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 14,671,117
<PAYABLE-FOR-SECURITIES> 1,008,872
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,335
<TOTAL-LIABILITIES> 1,044,207
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,348,045
<SHARES-COMMON-STOCK> 1,403,250
<SHARES-COMMON-PRIOR> 516,897
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 2,513
<ACCUMULATED-NET-GAINS> (643,122)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (75,500)
<NET-ASSETS> 13,626,910
<DIVIDEND-INCOME> 198,642
<INTEREST-INCOME> 27,574
<OTHER-INCOME> (6,671)
<EXPENSES-NET> 167,194
<NET-INVESTMENT-INCOME> 52,351
<REALIZED-GAINS-CURRENT> (490,471)
<APPREC-INCREASE-CURRENT> (339,043)
<NET-CHANGE-FROM-OPS> (777,163)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (50,415)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,309,826
<NUMBER-OF-SHARES-REDEEMED> 428,676
<SHARES-REINVESTED> 5,203
<NET-CHANGE-IN-ASSETS> 8,302,185
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 4,449
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 107,760
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 167,194
<AVERAGE-NET-ASSETS> 10,776,046
<PER-SHARE-NAV-BEGIN> 10.30
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> (0.59)
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.71
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
