Dear Shareholders:
For the first six months of 1995, the Lexington Natural Resources Trust
appreciated by 7.42%* in comparison with other natural resources funds as
monitored by Lipper Analytical Services, Inc. which returned 9.79%. However,
this sector lagged in comparison to the broad-based unmanaged Standard & Poor's
500 Stock Price Index, which returned a surprisingly strong 20.2% for the first
six months of 1995.
The obvious question is, why aren't the natural resources funds doing
better? Our belief is that they will. In our opinion, the performance of the
Trust is tied to four key factors-
* Strength of the Economy-Rapid expansive GDP growth means greater demand
for suppliers of raw materials, i.e., higher prices, higher margins and higher
stock prices;
* Inflation-Higher inflation rates have always been a positive factor as
suppliers "bid up" prices of commodity resource companies;
* Supply and Demand-Especially relevant to the gold mining companies where
gold is commercially being utilized faster than it is currently being mined;
* World Crisis-Oil is bought and sold in dollars which in comparison with
other currencies has been weak. The OPEC countries are a potential threat to
drive up oil prices as the currency with which they are being paid (dollars)
buys less goods and services on the world market.
The fact remains that these key factors have been relatively benign. The
economy is growing, but at a rate that is not causing the supply glitches that
one would normally be expecting at this stage of the economic cycle. Inflation
remains well under control as wages continue to grow at less than 3%, while
companies have difficulty passing along price increases. Although the dollar has
been under heavy pressure, it has not triggered a financial debacle, nor has oil
been in short supply.
Our economic outlook is for a sustained pickup in the second half of 1995,
along with higher inflation prospects. This should benefit the natural resources
funds and in particular, Lexington Natural Resources Trust.
The biggest detriment to our performance in the first six months of 1995 was
our 15% weighting in gold stocks, which has simply underperformed other resource
categories. We are extremely pleased with the performance of the oil and oil
service sectors, where oil companies are now going through a major restructuring
process that involves employee layoffs, downsizing, cutting costs and improving
operating margins while oil prices remain in a trading range between $15 to $20
a barrel. We are invested in the oil companies that will benefit from this major
downsizing. Mobil, Chevron, and Schlumberger are three excellent examples of
companies that are well into their re-engineering/restructuring process.
On a longer term basis, we are very optimistic about the environmental
sector whereby many of the companies that we are investing in participate
directly in cleaning up the by-products of many of the mining and forest
products companies whose operations in the past were harmful to the environment.
There is a bright future for companies such as Millipore, Imco Recycling, and
Severnson Environmental.
1
<PAGE>
The last segment that we would like to comment upon is the gold stocks. They
represent approximately 15% of the portfolio. We still believe that the
combination of inflation, and increased demand from the Far East should provide
a substantial lift to the quality gold stocks that we have in the Trust's
Portfolio.
The Trust is well positioned to participate in a continued economic
expansion and will be a net beneficiary if some of the factors cited above tend
to become more prominent in the economy and in the minds of individual
investors.
Sincerely,
Robert M. DeMichele
President
July, 1995
*6.28%, 1.73% and 1.43% are the one year, five year and since commencement
(8/1/89) average annual standard total returns, respectively, for the period
ended June 30, 1995. Prior to September, 1991, the Fund operated under a
different name and investment objective. Investment return and principal value
of an investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than at their original cost. Total return represents past
performance.
2
<PAGE>
Lexington Natural Resources Trust
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 1995 (unaudited)
(Left Column)
Number of
Shares or
Principal Value
Amount Security (Note 1)
---------------------------------------------------------------------
COMMON STOCKS: 96.9%
AGRICULTURE: 1.9%
7,100 Pioneer Hi Bred International, Inc. $ 297,313
----------
CHEMICAL PRODUCTS: 9.0%
8,100 Avery-Dennison Corporation ............. 324,000
8,700 Chemed Corporation ..................... 302,325
7,800 Hercules, Inc. ......................... 380,250
11,000 Union Carbide Corporation .............. 367,125
----------
1,373,700
----------
ENERGY SOURCES: 46.4%
5,800 Amoco Corporation ...................... 386,425
11,500 Apache Corporation ..................... 314,813
4,000 Atlantic Richfield Company ............. 439,000
4,500 British Petroleum Company Plc .......... 385,313
7,150 Broken Hill Proprietary Company,
Ltd. (ADR) ........................... 353,030
11,000 Canadian Occidental Petroleum Ltd. ..... 342,375
8,000 Chevron Corporation .................... 373,000
5,000 Elf Aquitaine (ADR) .................... 186,250
12,800 Enron Oil & Gas Company ................ 278,400
29,500 Horsham Corporation .................... 398,250
4,800 Mobil Corporation ...................... 460,800
14,400 Noble Affiliates, Inc. ................. 367,200
8,000 Norsk Hydro (ADR) ...................... 334,000
2,900 Royal Dutch Petroleum Company
(ADR) ................................ 353,437
7,000 Schlumberger, Ltd. ..................... 434,875
14,000 Tidewater Inc. ......................... 351,750
9,000 Triton Energy Corporation .............. 417,375
15,800 USX-Marathon Group, Inc. ............... 312,050
13,500 Union Texas Petroleum Holdings, Inc. ... 285,187
15,000 Valero Energy Corporation 303,750
----------
7,077,280
----------
ENVIRONMENTAL TECHNOLOGY: 8.9%
17,000 IMCO Recycling, Inc. ................... 318,750
5,400 Millipore Corporation .................. 364,500
18,500 Sevenson Environmental Services,
Inc. ................................. 344,563
11,600 WMX Technologies, Inc. ................. 329,150
----------
1,356,963
----------
(Right Column)
Number of
Shares or
Principal Value
Amount Security (Note 1)
---------------------------------------------------------------------
FERROUS METALS: 6.8%
7,400 Aluminum Company of America ............ $ 370,925
8,500 Cleveland-Cliffs, Inc. ................. 327,250
8,000 Newmont Mining Corporation ............. 335,000
----------
1,033,175
----------
FOREST PRODUCTS: 11.4%
9,000 Federal Paper Board Inc. ............... 318,375
7,000 Kimberly-Clark Corporation ............. 419,125
7,100 Pentair Inc. ........................... 309,738
6,000 Union Camp Corporation ................. 347,250
7,700 Westvaco Corporation ................... 340,725
----------
1,735,213
----------
PRECIOUS METALS: 12.5%
14,900 Barrick Gold Corporation ............... 376,225
23,600 Battle Mountain Gold Company ........... 227,150
18,000 Coeur D'Alene Mines Corporation ........ 312,750
13,700 Homestake Mining Company ............... 226,050
18,500 Placer Dome, Inc. ...................... 483,313
23,000 Santa Fe Pacific Gold Corporation ...... 278,875
----------
1,904,363
----------
TOTAL COMMON STOCKS
(cost $13,973,527) 14,778,007
----------
SHORT-TERM INVESTMENTS: 1.9%
$300,000 U.S. Treasury Bill
5.445% due 09/14/95
(cost $296,597) ...................... 296,597
----------
TOTAL INVESTMENTS: 98.8%
(cost $14,270,124(D)) ................ 15,074,604
Other assets in excess of liabilities:
1.2% ................................. 176,014
----------
TOTAL NET ASSETS: 100.0%
(equivalent to $10.43 per share
on 1,461,610 shares outstanding) .....$15,250,618
===========
ADR-American Depository Receipt.
(D)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
Statement of Assets and Liabilities
June 30, 1995 (unaudited)
Assets
<TABLE>
<S> <C>
Investments, at value (cost $14,270,124) (Note 1) ......................................... $15,074,604
Cash ...................................................................................... 443,814
Receivable for securities sold ............................................................ 670,822
Receivable for shares sold ................................................................ 24,668
Interest and dividends receivable ......................................................... 34,777
-----------
Total Assets ...................................................................... 16,248,685
-----------
Liabilities
Due to Lexington Management Corporation (Note 2) .......................................... 13,413
Payable for securities purchased .......................................................... 957,258
Payable for shares redeemed ............................................................... 9,541
Accrued expenses .......................................................................... 17,855
-----------
Total Liabilities ................................................................. 998,067
-----------
Net Assets (equivalent to $10.43 per share on 1,461,610 shares outstanding) (Note 3) ...... $15,250,618
===========
Net Assets consist of:
Paid-in capital-unlimited authorized shares of beneficial interest
at no par value ......................................................................... $14,949,572
Undistributed net investment income ....................................................... 60,233
Accumulated net realized loss on investments .............................................. (563,667)
Net unrealized appreciation of investments (Note 4) ....................................... 804,480
-----------
Net Assets ........................................................................ $15,250,618
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
4
<PAGE>
(Left Column)
Lexington Natural Resources Trust
Statement of Operations
Six months ended June 30, 1995 (unaudited)
Investment Income
Interest Income ........................ $ 143,164
Dividend income ........................ 15,914
---------
Total investment income ........ $ 159,078
---------
Expenses
Investment advisory fee (Note 2) ..... 71,133
Accounting expense (Note 2) .......... 1,125
Custodian fees ....................... 6,465
Printing and mailing ................. 1,332
Directors' fees ...................... 1,512
Audit and legal ...................... 9,186
Registration fees .................... 374
Computer processing fees ............. 3,015
Other expenses ....................... 2,190
---------
Total expenses ..................... 96,332
---------
Net investment income ............ 62,746
Realized and Unrealized Gain on Investments (Note 4)
Realized gain on investments
(excluding short-term securities):
Proceeds from sales .............. 9,511,720
Cost of securities sold .......... 9,432,265
---------
Net realized gain .............. 79,455
Unrealized appreciation of investments:
End of period ...................... 804,480
Beginning of period ................ (75,500)
---------
Change during period ............. 879,980
---------
Net realized and unrealized gain
on investments ............... 959,435
---------
Increase in Net Assets Resulting
from Operations ................... $1,022,181
==========
(Right Column)
Lexington Natural Resources Trust
Statements of Changes in Net Assets
Six months Year
ended ended
June 30, 1995 December 31,
(unaudited) 1994
------------- ------------
Net investment income ....................... $ 62,746 $ 52,351
Net realized gain (loss) from
investment transactions ................... 79,455 (490,471)
Increase (decrease) in unrealized
appreciation of investments ............... 879,980 (339,043)
---------- ----------
Net increase (decrease) in
net assets resulting
from operations ..................... 1,022,181 (777,163)
Distributions to shareholders from
net investment income ..................... - (50,415)
Increase in net assets from
capital share transactions
(Note 3) .................................. 601,527 9,129,763
---------- ----------
Net increase in net assets ............ 1,623,708 8,302,185
Net Assets:
Beginning of period ....................... 13,626,910 5,324,725
---------- ----------
End of period (including undistributed
net investment income of $60,233
and distributions in excess of net
investment income of $2,513,
respectively) ........................... $15,250,618 $13,626,910
=========== ===========
The Notes to Financial Statements are an integral part of these statements.
5
<PAGE>
Lexington Natural Resources Trust
Notes to Financial Statements
June 30, 1995 (unaudited) and December 31, 1994
Note 1.-Significant Accounting Policies
Lexington Natural Resources Trust (the "Trust") is an open-end diversified
investment 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 participating
insurance companies for allocation to certain of their separate accounts
established for the purpose of funding variable annuity contracts and variable
insurance life policies. 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 securities
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. Short-term securities are
stated at amortized cost, which appoximates market value. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income is accrued as earned.
Federal Income Taxes: It is the Trusts intention to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes has been made.
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 Trusts 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 required
for the six months ended June 30, 1995.
The Trust also reimburses LMC for certain expenses, including accounting
costs, which are incurred by the Trust, but paid by LMC.
Note 3-Capital Stock
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six months ended
June 30, 1995 Year ended
(unaudited) December 31, 1994
---------------------- ------------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ................................ 318,308 $3,190,528 1,309,827 $13,428,318
Shares issued on reinvestment of
distributions from net investment
income ................................... - - 5,203 50,415
-------- ---------- --------- -----------
318,308 3,190,528 1,315,030 13,478,733
Shares redeemed ............................(259,948) (2,589,001) (428,676) (4,348,970)
-------- ---------- --------- -----------
Net increase ............................... 58,360 $ 601,527 886,354 $ 9,129,763
======== ========= ========= ===========
</TABLE>
6
<PAGE>
Lexington Natural Resources Trust
Notes to Financial Statements
June 30, 1995 (unaudited) and December 31, 1994 (continued)
Note 4-Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments for the six
months ended June 30,1995, excluding short-term securities, were $10,684,819 and
$9,511,720, respectively.
At June 30, 1995, aggregate gross unrealized appreciation for all
investments in which there is an excess of value over tax cost amounted to
$1,153,550 and aggregate gross unrealized depreciation for all investments in
which there is an excess of tax cost over value amounted to $349,070.
Note 5-Investment and Concentration Risks
The Trust can make significant investments in foreign securities and has a
policy 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
of concentrating in specific industries such as natural resources that are in
addition to the usual risks inherent in domestic investments. These risks
include those resulting from future adverse political and economic developments,
as well as the possible imposition of foreign exchange or other foreign
governmental restrictions or laws.
---------------------------------
Lexington Natural Resources Trust
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1995 -------------------------------------
(unaudited) 1994 1993 1992 1991
--------- ------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $ 9.71 $10.30 $ 9.30 $9.01 $9.50
------ ------ ------ ----- -----
Income (loss) from investment operations:
Net investment income .......................... 0.04 0.04 - - 0.02
Net realized and unrealized gain (loss)
on investments ............................... 0.68 (0.59) 1.01 0.29 (0.49)
------ ------ ------ ----- -----
Total income (loss) from investment
operations ..................................... 0.72 (0.55) 1.01 0.29 (0.47)
------ ------ ------ ----- -----
Less distributions:
Dividends from net investment income ........... - (0.04) (0.01) - (0.02)
------ ------ ------ ----- -----
Net asset value, end of period ................... $10.43 $ 9.71 $10.30 $9.30 $9.01
====== ====== ====== ===== =====
Total return ..................................... 15.45%* (5.38%) 10.90% 3.22% (4.95%)
Ratios to average net assets:
Expenses, before reimbursement ................. 1.35%* 1.55% 2.26% 2.31% 2.97%
Expenses, net of reimbursement ................. 1.35%* 1.55% 2.26% 2.31% 1.60%
Net investment income (loss), before
reimbursement ................................ 0.88%* 0.49% 0.08% 0.02% (1.10%)
Net investment income (loss) ................... 0.88%* 0.49% 0.08% 0.02% 0.27%
Portfolio turnover ............................... 138.29%* 87.40% 114.44% 65.50% 100.94%
Net assets at end of period (000's omitted) ...... $15,251 $13,627 $5,325 $1,926 $1,393
<FN>
*Annualized
</FN>
</TABLE>
7
<PAGE>
(Left Column)
----------------------------------------------------------------
Lexington
Natural Resources Trust
Investment Adviser
--------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Distributor
--------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
This report has been prepared for the information of
the shareholders of Lexington Natural Resources Trust
and is authorized for distribution to the public only if
it is accompanied or preceded by a currently effective
prospectus which sets forth expenses and other
material information.
----------------------------------------------------------------
(Right Column)
--------------------------
LEXINGTON
--------------------------
LEXINGTON
NATURAL
RESOURCES
TRUST
(filled box)
SEMI-ANNUAL REPORT
JUNE 30, 1995
The Lexington Group
of No Load
Investment Companies
--------------------------
