LEXINGTON NATURAL RESOURCES TRUST, 485BPOS, 1998-04-24

LEXINGTON NATURAL RESOURCES TRUST
485BPOS, 1998-04-24

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As filed with the Securities and Exchange Commission on April 24, 1998
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. 10 X
and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 11 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
------------------------------------------------
(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
------------------------------------------------
(Name and address of agent for service)

With a copy to:
Carl Frischling, Esq.
Kramer, Levin, Naftalis & Frankel
919 Third Avenue, New York, New York 10022
------------------------------------------------
It is proposed that this filing will become effective April 30, 1998
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, 1997 was filed on March 18, 1998.

<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 2

4. General Description of Registrant 3

5. Management of the Fund 5

6. Capital Stock and Other Securities 8

7. Purchase of Securities Being Offered 6

8. Redemption or Repurchase 6

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 8 (Part A)

13. Investment Objectives and Policies 2

14. Management of the Registrant 7

15. Control Persons and Principal Holders 3
of Securities

16. Investment Advisory and Other Services 3

17. Brokerage Allocation and Other Practices 4

18. Capital Stock and Other Securities 8 (Part A)

19. Purchase, Redemption and Pricing of 6 (Part A)
securities being offered

20. Tax Status 6

21. Underwriters 5 (Part A)

22. Calculation of Yield Quotations on Money *
Market Funds

23. Financial Statements 10

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

April 30, 1998

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 and variable life
insurance policies.

This Prospectus concisely sets forth information about the Fund
that you should know before investing. It should be read and retained
for future reference.

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.

A STATEMENT OF ADDITIONAL INFORMATION DATED APRIL 30, 1998, HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND IS
INCORPORATED HEREIN BY REFERENCE. THE STATEMENT OF ADDITIONAL
INFORMATION 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.

- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------

INVESTORS SHOULD READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE

<PAGE>

FINANCIAL HIGHLIGHTS
The following Financial Highlights for each of the years in the five year
period ended December 31, 1997 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. The Fund's annual report, which contains additional
performance information, is available upon request and without charge.

Selected per share data for a share outstanding throughout the period:

PERIOD FROM
AUGUST 1, 1989
(COMMENCEMENT
OF OPERATIONS)
TO DECEMBER 31,
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989
------ ------- ------- ------- ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ...................... $14.29 $ 11.30 $ 9.71 $ 10.30 $ 9.30 $ 9.01 $ 9.50 $11.49 $10.00
------ ------- ------- ------- ------ ------ ------- ------ ------
Income (loss) from investment
operations:
Net investment income (loss) 0.06 0.05 0.06 0.04 -- -- 0.02 (0.01) 0.01
Net realized and unrealized
gain (loss) on investments and
foreign currency transactions 1.00 2.99 1.58 (0.59) 1.01 0.29 (0.49) (1.70) 1.48
------ ------- ------- ------- ------ ------ ------- ------ ------
Total income (loss) from
investment operations ....... 1.06 3.04 1.64 (0.55) 1.01 0.29 (0.47) (1.71) 1.49
------ ------- ------- ------- ------ ------ ------- ------ ------
Less distributions:
Distributions from net
investment income ......... -- (0.05) (0.05) (0.04) (0.01) -- (0.02) -- --
Distributions from net
realized gains .............. (0.44) -- -- -- -- -- -- (0.28) --
------ ------- ------- ------- ------ ------ ------- ------ ------
Total distributions ........... (0.44) (0.05) (0.05) (0.04) (0.01) -- (0.02) (0.28) --
------ ------- ------- ------- ------ ------ ------- ------ ------
Net asset value, end of period $14.91 $ 14.29 $ 11.30 $ 9.71 $10.30 $ 9.30 $ 9.01 $ 9.50 $11.49
====== ======= ======= ======= ====== ====== ======= ====== ======
Total return .................. 7.15% 26.89% 16.87% (5.38%) 10.90% 3.22% (4.95%) (14.85%) 40.98%*
Ratio to average net assets:
Expenses, before
reimbursement ............... 1.25% 1.42% 1.47% 1.55% 2.26% 2.31% 2.97% 4.55% 19.76%*
Expenses, net of reimbursement 1.25% 1.42% 1.47% 1.55% 2.26% 2.31% 1.60% 1.54% 0.39%*
Net investment income (loss),
before reimbursement ........ 0.39% 0.40% 0.56% 0.49% 0.08% 0.02% (1.10%) (3.06%) (19.16%)*
Net investment income (loss) .. 0.39% 0.40% 0.56% 0.49% 0.08% 0.02% 0.27% (0.05%) 0.22%*
Portfolio turnover ............114.16% 102.76 149.18% 87.40% 114.44% 65.50% 100.94% 50.43% 0.00%*
Average commissions paid on
equity security
transactions** .............. $0.07 $0.07 -- -- -- -- -- -- --
Net assets, end of period
(000's omitted) .............. $65,263 $37,934 $16,955 $13,627 $5,325 $1,926 $1,393 $916 $280
</TABLE>

- ------------
*Annualized

**In accordance with recent SECdisclosure guidelines, the average commissions
are calculated for the period beginning with December 1996, but not for prior
periods.

<PAGE>

DESCRIPTION OF THE FUND

Lexington Natural Resources Trust is a no-load open-end non-diversified
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 and variable life insurance policies 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 and variable life insurance policies
arising from the fact that the interests of the holders of such contracts and
policies 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 and
variable life insurance policies 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 and variable life insurance
policy 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 or variable life insurance policy. 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 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

<PAGE>

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, 1997, the portfolio turnover rate was 114.16%.

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 CONSIDERATIONS 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 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.

<PAGE>

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:

o Invest more than 5% of its total assets in the securities of any one
issuer with respect to 50% of its total assets (except securities issued
or guaranteed by the U.S. Government, or its agencies and
instrumentalities);

o 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;

o 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;

o 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 twelve Trustees (of whom seven are
non-affiliated persons) who meet five 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.

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, 1997, the Investment Adviser received $635,819
in investment advisory fees from the Fund and paid the Sub-Adviser $317,919.

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, transfer agent and provides
facilities for such services. The Fund shall reimburse the Administrator for its
actual cost in providing such services, facilities and expenses.

The Investment Adviser and the Distributor are wholly-owned subsidiaries of
Lexington Global Asset Managers, Inc., a Delaware corporation with offices at
Park 80 West Plaza Two, Saddle Brook, New Jersey 07663. Lexington Global Asset
Managers, 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 Lexington Global Asset
Managers, Inc., common stock. See "Investment Adviser and Distributor" in the
Statement of Additional Information.

<PAGE>

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 35 years
investment experience. Mr. Peluso is President and Chief Executive Officer of
Market Systems Research Advisors, Inc., 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 Lexington Global Asset Managers, Inc.,
LMC's parent company. He holds similar offices in other companies owned by
Lexington Global Asset Managers, Inc., 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, Paribus, 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.

ROBERT W. RADSCH, CFA, is a Portfolio Manager of the Fund and is a Vice
President of Lexington Management Corporation. Prior to joining 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 15 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 and variable life insurance policies. 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 three business 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.

SHAREHOLDER SERVICING AGENTS

The Fund may enter into Shareholder Servicing Agreements with insurance
companies or other financial institutions that provide administrative services
for the Fund or that provide to contractholders and policyholders other services
relating to the Fund. These services may include, among other things,
sub-accounting services, answering inquiries of contractholders and policymakers
regarding the Fund, transmitting, on behalf of the Fund, proxy statements,
annual reports, updated prospectuses and other communications to contractholders
and policyholders regarding the Fund, and such other related services as the
Fund or a contractholder or policyholder may request. For these services, each
Shareholder Servicing Agent may receive fees, which may be paid periodically,
provided that such fees will not exceed 0.25% of the average daily net assets of
the Fund represented by shares owned during the period for which payment is
made. LMC, at no additional cost to the Fund, may pay to Shareholder Servicing
Agents additional amounts from its past profits. Each Shareholder Servicing
Agent may, from time to time, voluntarily waive all or a portion of the fees
payable to it.

DETERMINATION OF NET ASSET VALUE

The net asset value of the shares of the Fund is determined 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,

<PAGE>

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. However, when LMCdeems it appropriate, prices
obtained for the day of valuation from a third party pricing service will be
used. For over-the-counter securities the mean between the bid and asked prices
is 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 a 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 shall be
valued by Fund Management in good faith under the direction of the Fund's 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 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"), including the diversification of assets,
distribution of income, and sources of income. As a regulated investment
company, the Fund will not be subject to federal income tax on its income
distributed in accordance with the timing requirements of the Code. 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 (the "Accounts")), and such
distributions may be taxable to the recipients to the extent that the Fund has
current and accumulated earnings and profits.

FUND DISTRIBUTIONS. Under current tax law, an insurance company is not
subject to tax on income of a qualifying separate account that is properly
allocable to the value of eligible variable annuity contracts or variable life
insurance policies. Therefore, generally fund distributions will not be
currently taxable to either the Accounts or to the contract holders or
policyholders.

<PAGE>

SHARE REDEMPTIONS. Redemptions of the shares held by the Accounts generally
will not result in gain or loss for the Accounts and will not result in gain or
loss for the variable annuity contract holders or variable life insurance policy
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 foregoing
discussion also assumes that the Accounts are the owners of the shares and that
the policies or contracts qualify as life insurance policies or annuities,
respectively, under the Code. If the foregoing requirements are not met then the
variable annuity contract holders or variable life insurance policy holders 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. Variable
annuity contract holders or variable life insurance policy holders must consult
the prospectuses of their respective contracts or policies for information
concerning the federal income tax consequences of owning such contracts or
policies.

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 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 policies or annuity contracts. Participating insurance
companies provide variable annuity contract holders and variable life insurance
policyholders 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 Annuity Contract or Variable Life Insurance Policy section 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, & 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, 1998.

<PAGE>

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.

OTHER INFORMATION

This prospectus omits certain information contained in the registration
statement filed with the SEC. Copies of the registration statement, including
items omitted herein, may be obtained from the SEC by paying the charges
prescribed under its rules and regulations. The Statement of Additional
Information included in such registration statement may be obtained without
charge from the Fund.

NO PERSON HAS BEEN AUTHORIZED TO GAIN ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND INFORMATION OR
REPRESENTATIONS NOT HEREIN CONTAINED, IF GIVEN OR MADE, MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OR SOLICITATION IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.

<PAGE>

[THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

INVESTMENT ADVISER
- ----------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663

SUB-ADVISER
- ----------------------------------------------------------
MARKET SYSTEMS RESEARCH ADVISORS, INC.
80 Maiden Lane
New York, N.Y. 10038

DISTRIBUTOR
- ----------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515/Park 80 West Plaza Two
Saddle Brook, N.J. 07663

TRANSFER AGENT
- ----------------------------------------------------------
STATE STREET BANK AND TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105

TABLE OF CONTENTS PAGE
- ----------------------------------------------------------

Financial Highlights ................................ 2

Description of the Fund ............................. 3

Investment Objective 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 Managers .................................. 6

How to Purchase and Redeem Shares ................... 6

Shareholder Servicing Agents ........................ 6

Determination of Net Asset Value .................... 6

Performance Calculation ............................. 7

Dividend, Distribution and Reinvestment Policy ...... 7

Tax Matters ......................................... 7

General Information ................................. 8

Other Information ................................... 9

LEXINGTON
========================

[LOGO]

LEXINGTON

NATURAL
RESOURCES
TRUST

------------

========================

P R O S P E C T U S

APRIL 30, 1998

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST

STATEMENT OF ADDITIONAL INFORMATION

APRIL 30, 1998

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 April 30, 1998, 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 ........................................... 2

Investment Objectives and Policies ........................................ 2

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 .................................................... 7

Other Information ......................................................... 9

Financial Statements ...................................................... 10

<PAGE>

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 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 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.)

2. 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

<PAGE>

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.

3. 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.

4. 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 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.

5. Invest in any commodities or commodities futures contracts, including
futures contracts relating to gold.

6. Invest in real estate.

7. 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.

8. 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.

9. 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.

10. 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.

11. Underwrite securities issued by others.

12. Purchase securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets.

13. Invest for the purpose of exercising control or management of another
company.

14. 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

<PAGE>

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 has agreed to reduce its management fee if necessary to keep total
operating expenses at or below 2.50% of the Fund's average daily net assets.
Total annual operating expenses may also be subject to state blue sky
regulations. LMC may terminate this voluntarily reduction at any time.

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 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, 1997 LMC received
$635,819 in investment advisory fees from the Fund and paid MSR $317,919.

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 Lexington Global Asset
Managers, Inc., a publicly traded corporation. Lexington Global Asset Managers,
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 Lexington Global Asset Managers, Inc.,

Of the Trustees, officers or employees ("affiliated persons") of the Fund,
Messrs. Corniotes, DeMichele, Faust, Hisey, Kantor and Lavery and Mmes.
Carnicelli, Carr-Waldron, Curcio, DiFalco, Gilfillan, Lederer and Mosca (see
"Management of the Fund"), may also be deemed affiliates of LMC by virtue of
being officers, trustees or employees thereof. As of March 31, 1998, all
officers and Trustees of the Fund as a group owned of record and beneficially
less than 1% of the outstanding shares of the Fund.

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 their 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."

<PAGE>

Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services ("soft dollars") 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.

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,
1995, the portfolio turnover rate for the Fund was 149.18%, and the Fund paid
$100,622 in brokerage commissions. For the fiscal year ended December 31, 1996,
the portfolio turnover rate for the Fund was 102.76% and the Fund paid $118,713
in brokerage commissions and of that amount, $40,567 was paid for with soft
dollars. For the fiscal year ended December 31, 1997, the portfolio turnover
rate for the Fund was 114.16% and the Fund paid $258,001 in brokerage
commissions and of that amount, $106,488 was paid for with soft dollars.

Advisory fees paid to LMC and expense reimbursements paid to the Fund are
as follows:

PERIOD ADVISORY FEE SUB ADVISORY FEE EXPENSE REIMBURSEMENT
------ ------------ ---------------- --------------------
1/1/95 to 12/31/95 $148,634 $ 74,304 $0
1/1/96 to 12/31/96 260,014 130,009 0
1/1/97 to 12/31/97 635,819 317,919 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

<PAGE>

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 one and five year and since commencement (8/1/89) period ended December
31, 1997 was 7.15%, 10.77% and 5.81%.

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 Internal Revenue Code of 1986, as amended ("the 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 as
a RIC, that are not described in the Prospectus and generally affect each 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.

QUALIFICATION 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, as amended (the
"Code"). The Fund will not itself be subject to federal income tax on its
investment company taxable income and net capital gains to the extent that such
investment company taxable income and net capital gains are distributed in each
taxable year to the separate accounts of the Participating Insurance Companies.
In addition, if the Fund distributes annually to the separate accounts its
ordinary income and capital gain net income, in the manner prescribed in 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
existing tax law, capital gains or dividends from the Fund are not currently
taxable when left to accumulate within a variable annuity or variable life
insurance contract.

SEGREGATED ASSET ACCOUNTS. Shares in the Fund are offered only to
segregated asset accounts, which are insurance company separate accounts that
fund variable annuity or variable life insurance accounts.

Section 817(h) of the Code requires that investments of a segregated asset
account of an insurance company be "adequately diversified," in accordance with
Treasury Regulations promulgated thereunder, in order for the holders of the
variable annuity contracts or variable life insurance policies investing in the
account to receive the tax-deferred or tax-free treatment generally afforded
holders of annuities or life insurance policies 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 the Regulations, if a RIC satisfies certain conditions, such
RIC will not be treated as a single investment for these purposes, but rather
the 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 each segregated asset account of a Participating Insurance
Company investing in the Fund will be treated as adequately diversified under
the Code and Regulations.

For information concerning the federal income tax consequences to the
holders of variable annuity contracts and variable rate insurance policies, such
holders should consult the prospectuses used in connection with the issuance of
their particular contracts or policies.

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

<PAGE>

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:

+ S.M.S. CHADHA (60), TRUSTEE. 3/16 Shanti Niketan, New Delhi 21, India.
Secretary, Ministry of External Affairs, New Delhi, India; Head of Foreign
Service Institute, New Delhi, India; Special Envoy of the Government of
India; Director, Special Unit for Technical Cooperation among Developing
Countries, United Nations Development Program, New York.

*+ ROBERT M. DEMICHELE (53), PRESIDENT AND CHAIRMAN. P.O. Box 1515, Saddle
Brook, N.J. 07663. Chairman and Chief Executive Officer, Lexington Management
Corporation; President and Director, Lexington Global Asset Managers, Inc.;
Chairman and Chief Executive Officer, Lexington Funds Distributor, Inc.;
Chairman of the Board, Market Systems Research, Inc. and Market Systems
Research Advisors, Inc.; Director, Chartwell Re Corporation, Claredon
National Insurance Company, The Navigator's Group, Inc., Unione Italiana
Reinsurance, Vanguard Cellular Systems, Inc. and Weeden &Co.; Vice Chairman
of the Board of Trustees, Union College and Trustee, Smith Richardson
Foundation.

*+ BEVERLEY C. DUER, P.E. (68), TRUSTEE. 340 East 72nd Street, New York, N.Y.
10021. Private Investor. Formerly Manager, Operations Research Department,
CPC International Inc.

*+ BARBARA R. EVANS (37), TRUSTEE. 5 Fernwood Road, Summit, N.J. 07901. Private
Investor, formerly, Assistant Vice President and Securities Analyst,
Lexington Management Corporation.

*+ RICHARD M. HISEY (39), TRUSTEE, 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.; Executive Vice President and
Chief Financial Officer, Lexington Global Asset Managers, Inc.

*+ LAWRENCE KANTOR (51), 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.; Executive Vice President and General
Manager -- Mutual Funds, Lexington Global Asset Managers, Inc.,

+ JERARD F. MAHER (51), TRUSTEE. 300 Raritan Center Parkway, Edison, N.J.
08818. General Counsel, Federal Business Center; Counsel, Ribis, Graham
&Curtin.

+ ANDREW M. MCCOSH (57), TRUSTEE. 12 Wyvern Park, Edinburgh EH92 JY, Scotland,
U.K. Professor of the Organisation of Industry and Commerce, Department of
Business Studies, The University of Edinburgh, Scotland..

*+ DONALD B. MILLER (71), TRUSTEE. 10725 Quail Covey Drive, Boynton Beach,
Florida 33436. Chairman, Horizon Media, Inc.; Trustee, Galaxy Funds;
Director, Maguire Group of Connecticut; prior to January 1989, President,
Director and C.E.O., Media General Broadcast Services.

*+ JOHN G. PRESTON (65), TRUSTEE. 3 Woodfield Road, Wellesley, Massachusetts
02181. Associate Professor of Finance, Boston College, Boston, Massachusetts.

+ MARGARET W. RUSSELL (77), TRUSTEE. 55 North Mountain Avenue, Montclair, N.J.
07042. Private Investor, formerly Community Affairs Director, Union Camp
Corporation.

*+ ALLEN H. STOWE (60), TRUSTEE. 3674 Fifth and Ocean Avenues, Normandy Beach,
New Jersey 08739. President, Dartmouth Co-operative Society Co., Inc.

*+ LISA CURCIO (38), VICE PRESIDENT AND 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.;
Secretary, Lexington Global Asset Managers, Inc.

*+ RICHARD J. LAVERY, CLU, CHFC (43), VICE PRESIDENT. P. O. Box 1515, Saddle
Brook, N.J. 07663. Senior Vice President, Lexington Management Corporation;
Vice President, Lexington Funds Distributor, Inc.

<PAGE>

*+ JANICE A. CARNICELLI (38), VICE PRESIDENT. P. O. Box 1515, Saddle Brook, N.J.
07663.

*+ CHRISTIE CARR-WALDRON (30), ASSISTANT TREASURER, P.O. Box 1515, Saddle Brook,
N.J. 07663. Prior to October 1992, Senior Accountant, KPMG Peat Marwick LLP.

*+ CATHERINE DIFALCO (29), ASSISTANT TREASURER. P.O. Box 1515, Saddle Brook, New
Jersey 07663. Prior to October 1997, Manager, Fund Accounting.

*+ SIOBHAN GILFILLAN (34), ASSISTANT TREASURER. P.O. Box 1515, Saddle Brook,
N.J. 07663.

*+ JOAN K. LEDERER (31), ASSISTANT TREASURER. P.O. Box 1515, Saddle Brook, N.J.
07663. Prior to April 1997, Director of Investment Accounting, Diversified
Investment Advisors, Inc. Prior to April 1996, Assistant Vice President,
PIMCO.

*+ SHERI MOSCA (34), ASSISTANT TREASURER. P. O. Box 1515, Saddle Brook, N.J.
07663.

*+ PETER CORNIOTES (36), ASSISTANT SECRETARY. P. O. Box 1515, Saddle Brook, N.J.
07663. Vice President and Assistant Secretary, Lexington Management
Corporation. Assistant Secretary, Lexington Funds Distributor, Inc.

*+ ENRIQUE FAUST (37), ASSISTANT SECRETARY, P.O. Box 1515, Saddle Brook, N.J.
07663. Assistant Vice President, Lexington Management Corporation. 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. Chadha, Corniotes, DeMichele, Duer, Hisey, Faust, Kantor, Lavery,
Maher, McCosh, Miller, Preston and Stowe and Mmes. Carnicelli, Carr-Waldron,
Curcio, DiFalco, Evans, Gilfillan, Lederer, Mosca and Russell 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.

The Board of Trustees met 5 times during the twelve months ended December
31, 1997, and each of the Trustees attended at least 75% of those meetings.

REMUNERATION OF TRUSTEES AND CERTAIN EXECUTIVE OFFICERS

Each Trustee is reimbursed for expenses incurred in attending each meeting
of the Board of Trustees or any committee thereof up to a maximum of $9,000 per
year for Trustees living outside the U.S. and $6,000 per year for Trustees
living within the U.S. Each Trustee who is not an affiliate of the advisor is
compensated for his or her services according to a fee schedule which recognizes
the fact that each Trustee also serves as a Trustee of other investment
companies advised by LMC. Each Trustee receives a fee, allocated among
all investment companies for which the Trustee serves. Effective September 12,
1995, each Trustee receives annual compensation of $24,000. Prior to September
12, 1995, the trustees who were not employed by the Fund or its affiliates
received annual compensation of $16,000.

Set forth below is information regarding compensation paid or accrued
during the period January 1, 1997 to December 31, 1997 for each Trustee:

- -------------------------------------------------------------------------------
AGGREGATE TOTAL COMPENSATION NUMBER OF
NAME OF DIRECTOR COMPENSATION FROM FROM FUND AND DIRECTORSHIPS IN
FUND FUND COMPLEX FUND COMPLEX
- --------------------------------------------------------------------------------
S.M.S. Chadha $1,712 $26,821 15
- --------------------------------------------------------------------------------
Robert M. DeMichele 0 0 16
- --------------------------------------------------------------------------------
Beverley C. Duer $1,712 $29,521 16
- --------------------------------------------------------------------------------
Barbara R. Evans 0 0 15
- --------------------------------------------------------------------------------
Lawrence Kantor 0 0 15
- --------------------------------------------------------------------------------
Jerard F. Maher $1,712 $29,521 16
- --------------------------------------------------------------------------------
Andrew M. McCosh $1,600 $25,029 15
- --------------------------------------------------------------------------------
Donald B. Miller $1,712 $26,821 15
- --------------------------------------------------------------------------------
John G. Preston $1,712 $26,821 15
- --------------------------------------------------------------------------------
Margaret W. Russell $1,936 $27,045 15
- --------------------------------------------------------------------------------
Philip C. Smith* $1,220 $19,200 N/A
- --------------------------------------------------------------------------------

*Retired

8
<PAGE>

RETIREMENT PLAN FOR ELIGIBLE DIRECTORS/TRUSTEES

Effective September 12, 1995, the Trustees instituted a Retirement Plan for
Eligible Directors/Trustees (the "Plan") pursuant to which each Director/Trustee
(who is not an employee of any of the Funds, the Advisor, Administrator or
Distributor or any of their affiliates) may be entitled to certain benefits upon
retirement from the Board. Pursuant to the Plan, the normal retirement date is
the date on which the eligible Director/Trustee has attained age 65 and has
completed at least ten years of continuous and non-forfeited service with one or
more of the investment companies advised by LMC (or its affiliates)
(collectively, the "Covered Funds"). Each eligible Director/Trustee is entitled
to receive from the Covered Fund an annual benefit commencing on the first day
of the calendar quarter coincident with or next following his date of retirement
equal to 5% of his compensation multiplied by the number of such
Director/Trustee's years of service (not in excess of 15 years) completed with
respect to any of the Covered Portfolios. Such benefit is payable to each
eligible Trustee in quarterly installments for ten years following the date of
retirement or the life of the Director/Trustee. The Plan establishes age 72 as a
mandatory retirement age for Directors/Trustees; however, Director/Trustees
serving the Funds as of September 12, 1995 are not subject to such mandatory
retirement. Directors/Trustees serving the Funds as of September 12, 1995 who
elect retirement under the Plan prior to September 12, 1996 will receive an
annual retirement benefit at any increased compensation level if compensation is
increased prior to September 12, 1997 and receive spousal benefits (i.e., in the
event the Director/Trustee dies prior to receiving full benefits under the Plan,
the Director/Trustee's spouse (if any) will be entitled to receive the
retirement benefit within the 10 year period.)

Retiring Trustees will be eligible to serve as Honorary Trustees for one
year after retirement and will be entitled to be reimbursed for travel expenses
to attend a maximum of two meetings.

Set forth in the table below are the estimated annual benefits payable to
an eligible Trustee upon retirement assuming various compensation and years of
service classifications. As of December 31, 1997, the estimated credited years
of service for Trustees Chadha, Duer, Maher, McCosh, Miller, Preston and Russell
are 2, 19, 2, 2, 23, 19 and 16, respectively.

HIGHEST ANNUAL COMPENSATION PAID BY ALL FUNDS
---------------------------------------------

$20,000 $25,000 $30,000 $35,000

YEARS OF
SERVICE ESTIMATED ANNUAL BENEFIT UPON RETIREMENT
------ ----------------------------------------
15 $15,000 $18,750 $22,500 $26,250
14 14,000 17,500 21,000 24,500
13 13,000 16,250 19,500 22,750
12 12,000 15,000 18,000 21,000
11 11,000 13,750 16,500 19,250
10 10,000 12,500 15,000 17,500

OTHER INFORMATION

As of February 19, 1998, Lexington Management Corporation, P. O. Box
1515/Park 80 West Plaza Two, Saddle Brook, New Jersey 07663 owned beneficially
10,454 shares of the Fund (0.2% of the Fund's outstanding shares). The balance
of the outstanding shares of the Fund (99.8%) are owned by Aetna Life Insurance
and Annuity Company, Kemper Investors Life Insurance Company and Safeco Life and
Annuity Company and allocated to a separate account used for funding variable
annuity contracts and variable life insurance policies.

<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Shareholders
Lexington NaturalResources Trust:

We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Natural
Resources Trust as of December 31, 1997, the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian. As to securities
purchased or sold, but not yet received delivered, we performed other
appropriate auditing procedures. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Lexington Natural Resources Trust as of December 31, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.

KPMG Peat Marwick LLP

New York, New York
February 4, 1998

10
<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1997

NUMBER OF VALUE
SHARES SECURITY (NOTE 1)
- --------------------------------------------------------------------------------

COMMON STOCK: 95.3%
AGRICULTURE: 2.9%
48,000 Dekalb Genetics Corporation ............... $1,884,000
----------

CHEMICAL PRODUCTS: 8.1%
14,000 Dow Chemical Company ...................... 1,421,000
25,000 Imperial Chemical Industries
Plc (ADR) ............................... 1,623,437
21,000 Pioneer Hi-Bred International,
Inc. .................................... 2,252,250
----------
5,296,687
----------
ENERGY SOURCES: 74.0%
26,000 Anadarko Petrol Corporation ............... 1,577,875
21,600 Atlantic Richfield Company ................ 1,730,700
32,400 Atwood Oceanics, Inc. ..................... 1,534,950
19,200 British Petroleum Company Plc ............. 1,530,000
55,000 Canadian Natural Resources,
Ltd.1 ................................... 1,176,085
17,500 Chevron Corporation ....................... 1,347,500
35,000 Coflexip S.A. (ADR) ....................... 1,958,906
30,600 Cooper CameronCorporation ................. 1,866,600
34,000 Diamond Offshore Drilling, Inc. ........... 1,636,250
28,200 Elf Aquitaine S.A. (ADR) ................. 1,653,225
50,000 ENSCO International, Inc. ................. 1,675,000
26,600 Exxon Corporation ......................... 1,627,587
49,000 Forcenergy, Inc.1 ......................... 1,283,187
90,000 Global Industries, Ltd.1 .................. 1,532,813
49,000 Global Marine, Inc.1 ...................... 1,200,500
40,000 Halliburton Company ....................... 2,077,500
26,000 Imperial Oil, Ltd. ........................ 1,662,375
35,800 Rogers Corporation ........................ 1,463,325
30,000 Rowan Companies, Inc. ..................... 915,000
29,200 Royal Dutch Petroleum
Company (ADR) ........................... 1,582,275
22,500 Schlumberger, Ltd. ........................ 1,811,250
25,500 Smith International, Inc. ................. 1,565,063
39,000 Stolt Comex Seaway, S.A. (ADR)1 ........... 1,920,750
33,400 Talisman Energy, Inc. ..................... 1,021,126
37,200 Texaco, Inc. .............................. 2,022,750
54,000 The Williams Companies. Inc. .............. 1,532,250
59,900 Tosco Corporation ......................... 2,264,969
64,300 Trizec Hahn Corporation ................... 1,490,956
50,000 USX-Marathon Group ........................ 1,687,500
56,000 YPF Sociedad Anonima (ADR) ................ 1,914,500
-----------
48,262,767
-----------
ENVIRONMENTAL TECHNOLOGY: 2.4%
43,300 Browning-Ferris Industries, Inc. .......... 1,602,100
-----------
FERROUS METALS: 1.4%
52,000 Minorco S.A. (ADR) ........................ 877,500
-----------
PAPER AND FOREST PRODUCTS: 2.9%
50,000 Fort James Corporation .................... 1,912,500
-----------
PRECIOUS METALS: 3.6%
99,000 Cambior, Inc. ............................. 581,625
35,000 Newmont Gold Company ...................... 1,043,438
220,000 TVX Gold, Inc.1 ........................... 742,500
-----------
2,367,563
-----------
TOTAL COMMON STOCK
(cost $55,702,007) ...................... 62,203,117
-----------

SHORT-TERM INVESTMENT:

U.S. GOVERNMENT AGENCY OBLIGATION: 4.6%
$3,000,000 Federal Home Loan Mortgage
Corporation, 4.75%, due 01/02/1998
(cost $2,999,604) ....................... 2,999,604
-----------

TOTAL INVESTMENTS: 99.9%
(cost $58,701,611+) ..................... 65,202,721

Other assets in excess of liabilities:
0.1% .................................... 60,141
-----------
TOTAL NET ASSETS: 100.0%
(equivalent to $14.91 per share on
4,375,853 shares outstanding) ........... $65,262,862
===========

ADR--American Depository Receipt.
1Non-income producing security.
+Aggregate cost for Federal income tax purposes is $58,845,176.

The Notes to Financial Statements are an integral part of this statement.

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997

ASSETS
Investments, at value (cost $58,701,611) (Note1) ................ $65,202,721
Cash ............................................................ 234,005
Receivable for investment securities sold ....................... 35,133
Dividends and interest receivable ............................... 75,010
-----------
Total Assets .......................................... 65,546,869
-----------
LIABILITIES
Due to Lexington Management Corporation (Note 2) ................ 54,457
Payable for investment securities purchased ..................... 185,187
Accrued expenses ................................................ 44,363
-----------
Total Liabilities ..................................... 284,007
-----------
Net Assets (equivalent to $14.91 per share on
4,375,853 shares outstanding) (Note 3) ........................ $65,262,862
===========
NET ASSETS CONSIST OF:
Paid-in capital--unlimited shares of beneficial interest
at no par value ................................................ $55,816,532
Undistributed net investment income ............................. 245,932
Accumulated net realized gains on investments ................... 2,699,288
Unrealized appreciation on investments .......................... 6,501,110
-----------
Total Net Assets ...................................... $65,262,862
===========

The Notes to Financial Statements are an integral part of this statement.

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF OPERATIONS
December 31, 1997

INVESTMENT INCOME
Dividends ........................................... $ 949,200
Interest ............................................ 123,697
----------
1,072,897
Less: foreign tax expense ........................... 29,231
----------
Total investment income ................... $1,043,666

EXPENSES
Investment advisory fee (Note 2) ................. 635,819
Printing and mailing expenses. ................... 47,572
Accounting expenses (Note 2) ..................... 43,278
Directors' fees and expenses ..................... 17,832
Professional fees ................................ 14,200
Computer processing fees ......................... 12,927
Custodian expenses ............................... 12,910
Registration fees ................................ 2,590
Other expenses ................................... 10,606
----------
Total expenses ............................ 797,734
----------
Net investment income. .................... 245,932

REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 4)

Net realized gain on investments ................. 2,699,440

Net change in unrealized appreciation on
investments .................................. 768,667
----------
Net realized and unrealized gain .......... 3,468,107
----------

INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .... $3,714,039
==========

The Notes to Financial Statements are an integral part of this statement.

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF CHANGES IN NET ASSETS
Years Ended December 31, 1997 and 1996

1997 1996
----------- -----------
<S> <C> <C>
Net investment income ................................................................. $ 245,932 $ 102,985
Net realized gain from investments and foreign currency
transactions ....................................................................... 2,699,440 2,033,892
Net change in unrealized appreciation ................................................. 768,667 4,072,007
----------- -----------
Increase in net assets resulting from operations .............................. 3,714,039 6,208,884

Distribution to shareholders from net investment income ............................... -- (125,875)
Distribution to shareholders from net realized gains from security
transactions ................................................................... (1,902,822) --
Increase in net assets from capital share transactions (Note 3) ....................... 25,517,709 14,895,680
----------- -----------
Net increase in net assets .................................................... 27,328,926 20,978,689

NET ASSETS:
Beginning of period .............................................................. 37,933,936 16,955,247
----------- -----------
End of period (including undistributed net investment income of
$245,932 and $0, 1997 and 1996, respectively) ................................. $65,262,862 $37,933,936
=========== ===========

</TABLE>

The Notes to Financial Statements are an integral part of this statement.

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996

NOTE 1. SIGNIFICANT ACCOUNTING POLICIES

Lexington Natural Resources Trust (the "Trust") is an open-end diversified
management investment company registered under the Investment Company Act of
1940, as amended. The Trust's investment objective is to seek long-term growth
of capital through investment primarily in common stock of companies which own,
or develop natural resources and other basic commodities, or supply goods and
services to such companies. 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 life insurance policies issued by the participating
insurance companies. 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. Securities traded on a recognized stock exchange are
valued at the last sales price reported by the exchange on which the securities
are traded. If no sales price is recorded, the mean between the last bid and
asked price is used. Securities traded on the over-the-counter market are valued
at the mean between the last current bid and asked price. Short-term securities
having a maturity of 60 days or less are stated at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available and other assets are valued by management in good faith under
the direction of the Trust's Board of Trustees. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income, adjusted for amortization of premiums and accretion of discounts, is
accrued as earned.

FEDERAL INCOME TAXES It is the Trust's policy 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 is required.

DISTRIBUTIONS Dividends from net investment income and net realized
capital gains are normally declared and paid annually, but the Trust may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. The character of income and gains to
be distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. At December 31, 1997,
reclassifications were made to the Trust's capital accounts to reflect permanent
book/tax differences and income and gains available for distribution under
income tax regulations. Net investment income, net realized gains and net assets
were not affected by this change.

USE OF ESTIMATES The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.

NOTE 2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE

The Trust pays an investment advisory fee to Lexington Management
Corporation ("LMC") at an annual rate of 1.00% of the Trust's average daily net
assets. LMC has entered into a sub-advisory management contract with Market
Systems Research Advisors, Inc. ("MSR"), a registered investment advisor, under
which MSR will provide the Trust with certain investment management and
administrative services. Pursuant to the terms of the sub-advisory contract
between LMC and MSR, LMC pays MSR a monthly sub-advisory fee of 0.50% of

15
<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996 (continued)

NOTE 2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE
(CONTINUED)

the Trust's average daily net assets. The investment advisory contract provides
that the total annual expenses of the Trust (including management fees, but
excluding interest, taxes, brokerage commissions and extraordinary expenses)
will not exceed the level of expenses which the Trust is permitted to bear under
the most restrictive expense limitation imposed by any state in which shares of
the Trust are offered for sale. No reimbursement was required for the year ended
December 31, 1997.

The Trust reimbursed LMC for certain expenses, including accounting costs
of $43,278, which are incurred by the Trust, but paid by LMC.

NOTE 3. CAPITAL STOCK

Transactions in capital stock were as follows:
<TABLE>
<CAPTION>

Year ended Year ended
December 31, 1997 December 31, 1996
--------------------------- ---------------------------
Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold ................................ 3,601,366 $53,536,615 1,945,915 $25,001,397
Shares issued on
reinvestment of dividends ............. 116,969 1,902,821 8,844 125,875
--------- ----------- --------- -----------
3,718,335 55,439,436 1,954,759 25,127,272
Shares redeemed ............................ (1,996,391) (29,921,727) (801,456) (10,231,592)
--------- ----------- --------- -----------
Net increase ............................... 1,721,944 $25,517,709 1,153,303 $14,895,680
========= =========== ========= ===========
</TABLE>

NOTE 4. PURCHASES AND SALES OF INVESTMENT SECURITIES

The cost of purchases and proceeds from sales of investments for the year
ended December 31, 1997, excluding short-term securities, were $92,192,948 and
$68,120,104, respectively.

At December 31, 1997, the aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost amounted to
$9,978,914 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $3,621,369.

NOTE 5. INVESTMENT AND CONCENTRATION RISKS

The Trust makes 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
or 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, all of which could affect the market and/or
credit risk of the investments.

NOTE 6. TAX INFORMATION (UNAUDITED)

The percentage of investment company taxable income eligible for the
dividends received deduction available to certain corporate shareholders with
respect to the year ended December 31, 1997 is 100%.

Capital gain distributions paid to shareholders by the Trust during the
year ended December 31, 1997, whether taken in shares or cash:

$1,122,934 are designated as 28 percent long-term capital gains.

16
<PAGE>

LEXINGTON NATURAL RESOURCES TRUST
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:

Year ended December 31,
-------------------------------------------------------------------

1997 1996 1995 1994 1993
------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 14.29 $ 11.30 $ 9.71 $10.30 $ 9.30
------- ------- ------- ------ ------
Income (loss) from investment operations:
Net investment income .................... 0.06 0.05 0.06 0.04 --
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ..................... 1.00 2.99 1.58 (0.59) 1.01
------- ------- ------- ------ ------
Total income (loss) from investment
operations .............................. 1.06 3.04 1.64 (0.55) 1.01
------- ------- ------- ------ ------
Less distributions:
Distributions from net investment income .... -- (0.05) (0.05) (0.04) (0.01)
Distribution from net realized gains ........ (0.44) -- -- -- --
------- ------- ------- ------ ------
Total distributions ......................... (0.44) (0.05) (0.05) (0.04) (0.01)
------- ------- ------- ------ ------
Net asset value, end of period .............. $ 14.91 $ 14.29 $ 11.30 $ 9.71 $10.30
======= ======= ======= ====== ======
Total return ................................ 7.15% 26.89% 16.87% (5.38%) 10.90%
RATIO TO AVERAGE NET ASSETS:
Expenses ................................. 1.25% 1.42% 1.47% 1.55% 2.26%
Net investment income .................... 0.39% 0.40% 0.56% 0.49% 0.08%
Portfolio turnover rate. .................... 114.16% 102.76% 149.18% 87.40% 114.44%
Average commission paid on equity security
transactions** ........................... $0.07 $0.07 -- -- --
Net assets, end of period (000's omitted) ... $65,263 $37,934 $16,955 $13,627 $5,325

</TABLE>

** In accordance with recent SEC disclosure guidelines, the average commissions
are calculated for the period beginning with December 1996, but not for prior
periods.

17
<PAGE>

PART C. OTHER INFORMATION
- ------- -----------------
Item 24. Financial Statements and Exhibits - List
----------------------------------------
The Annual Report for the year ending December 31, 1997 was filed
electronically on February 27, 1998 (as form type N-30D). Financial
statements from this 1997 Annual Report have been included in the Statement
of Additional Information.

Page in the Statement
(a) Financial statements: of Additional Information
--------------------- -------------------------

Report of Independent Auditors 10
dated February 4, 1998

Statement of Net Assets (Including 11
the Portfolio of Investments) at
December 31, 1997 (1)

Statement of Assets and Liabilities 12
at December 31, 1997

Statement of Operations for the year 13
ended December 31, 1997 (2)

Statements of Changes in Net Assets for 14
the years ended December 31, 1996
and 1997

Notes to Financial Statements 15

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 electronically on 4/10/97 -
Incorporated by reference

2. By-Laws - Filed electronically on 4/10/97 -
Incorporated by reference

3. Not Applicable

4. Rights of Holders - Filed electronically

5. Investment Advisory Agreement between Registrant
and Lexington Management Corporation - Filed Electronically
on April 29, 1996 - Incorporated by reference

5a. Sub-Advisory Investment Management Agreement between
Registrant & Market Systems Research Advisors, Inc.- Filed
electronically on April 29, 1996 - Incorporated by reference

6. Distribution Agreement between Registrant
and Lexington Funds Distributor, Inc. - Filed electronically
on 4/10/97 - Incorporated by reference

7. Retirement Plan for Eligible Trustees - Filed electronically

8a. Form of Custodian Agreement between
Registrant and Chase Manhattan Bank, N.A. -
Filed electronically on 4/28/95 -
Incorporated by reference

8b. Transfer Agency Agreements between Registrant
and State Street Bank and Trust Company - Filed Electronically
on April 29, 1996 - Incorporated by reference

9. Form of Administrative Services Agreement between
Registrant and Lexington Management Corporation -
Filed electronically on 4/28/95 -
Incorporated by reference

10. Opinion of Counsel as to Legality of Securities being
registered - Filed electronically

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 electronically

<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 February 13, 1998:

Title of Class Number of Record Holders
-------------- ------------------------
Shares of beneficial interest 16
(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.

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 Growth and Income 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.
Lexington Crosby Small Cap Asia Growth Fund, Inc.
Lexington SmallCap Fund, Inc.
Lexington Troika Dialog Russia 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 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
and Director President

Richard Lavery* Vice President Vice President

Janice McInerney* Assistant Treasurer None

*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 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.

The Registrant will hold a meeting of its public shareholders, if
requested to do so by the holders of at least 10 percent of the
Registrant's outstanding shares, to call a meeting of shareholders
for the purpose of voting upon the question of removal of a
director or directors and to assist in communications with other
shareholders.

<PAGE>

Registration No. 33-26116

Securities and Exchange Commission

Washington, D.C. 20549

Exhibits

Filed With

Form N-1A

LEXINGTON NATURAL RESOURCES TRUST

<PAGE>

EXHIBIT INDEX

The following documents are being filed electronically as exhibits to this
filing:

Rights of Holders

Retirement Plan for Eligible Trustees

Opinion of Counsel as to Legality of Securities being registered

Consent of Kramer, Levin, Naftalis & Frankel

Consent of independent auditors for the inclusion of their report herein

Performance Calculation

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 24th day of April, 1998.

LEXINGTON NATURAL RESOURCES TRUST

/s/ 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

/s/ Robert M. DeMichele
__________________________ Chairman of the Board April 24, 1998
Robert M. DeMichele Principal Executive
Officer

/s/ Richard M. Hisey
__________________________ Principal Financial April 24, 1998
Richard M. Hisey and Accounting Officer
and Trustee

/s/ Lisa Curcio
__________________________ Principal Compliance April 24, 1998
Lisa Curcio Officer

*SMS Chadha Trustee April 24, 1998
__________________________
SMS Chadha

*Beverley C. Duer, P.E. Trustee April 24, 1998
__________________________
Beverley C. Duer, P.E.

*Barbara M. Evans Trustee April 24, 1998
__________________________
Barbara M. Evans

<PAGE>

Signature Title Date

*Lawrence Kantor Trustee April 24, 1998
__________________________
Lawrence Kantor

*Jerard F. Maher Trustee April 24, 1998
__________________________
Jerard F. Maher

*Andrew M. McCosh Trustee April 24, 1998
__________________________
Andrew M. McCosh

*Donald B. Miller Trustee April 24, 1998
__________________________
Donald B. Miller

*John G. Preston Trustee April 24, 1998
__________________________
John G. Preston

*Margaret W. Russell Trustee April 24, 1998
__________________________
Margaret W. Russell

*Allen H. Stowe Trustee April 24, 1998
__________________________
Allen H. Stowe

/s/ Lisa Curcio
*By: ______________________
Lisa Curcio
Attorney-in-Fact

<PAGE>

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Lawrence Kantor, Lisa Curcio or Jay Baris, and each of them, his
or her true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him and in his or her name, place and
stead, in any and all his or her capacities as a trustee of LEXINGTON
NATURAL RESOURCES TRUST, a Massachusetts business trust, to sign on his or
her or its behalf any and all Registration Statements (including any post-
effective amendments to Registration Statements) under the Securities Act
of 1933, the Investment Company Act of 1940 and any amendments and
supplements thereto, and other documents in connection thereunder, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority
to do and perform each and every act and this requisite and necessary to
be done in and about the premises, as fully as to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, and each of them, may lawfully do or
cause to be done by virtue hereof.

DATED this 27th day of February, 1998.

/s/ Allen H. Stowe
_____________________________
Allen H. Stowe

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.

Retirement Plan for Eligible Directors/Trustees

Each Director/Trustee (who is not an employee of any of the Funds, the
Advisor, Administrator or Distributor or any of their affiliates) may be
entitled to certain benefits upon retirement from the Board. Pursuant to the
Plan, the normal retirement date is the date on which the eligible
Director/Trustee has attained age 65 and has completed at least ten years of
continuous and non-forfeited service with one or more of the investment
companies advised by LMC (or its affiliates) (collectively, the "Covered
Funds"). Each eligible Director/Trustee is entitled to receive from the
Covered Fund an annual benefit commencing on the first day of the calendar
quarter coincident with or next following his date of retirement equal to 5%
of his compensation multiplied by the number of such Director/Trustee's years
of service (not in excess of 15 years) completed with respect to any of the
Covered Portfolios. Such benefit is payable to each eligible Director in
quarterly installments for ten years following the date of retirement or the
life of the Director/Trustee. The Plan establishes age 72 as a mandatory
retirement age for Directors/Trustees; however, Director/Trustees serving the
Funds as of September 12, 1995 are not subject to such mandatory retirement.
Directors/Trustees serving the Funds as of September 12, 1995 who elect
retirement under the Plan prior to September 12, 1996 will receive an annual
retirement benefit at any increased compensation level if compensation is
increased prior to September 12, 1997 and receive spousal benefits (i.e., in
the event the Director/Trustee dies prior to receiving full benefits under the
Plan, the Director/Trustee's spouse (if any) will be entitled to receive the
retirement benefit within the 10 year period.)

Retiring Directors/Trustees will be eligible to serve as Honorary
Directors/Trustees for one year after retirement and will be entitled to be
reimbursed for travel expenses to attend a maximum of two meetings.

For more information regarding these benefits, refer to the Statement of
Additional Information to the section titled "Management of the Fund".

SPENGLER CARLSON GUBAR BRODSKY & FRISCHLING
ATTORNEYS AT LAW
280 PARK AVENUE, NEW YORK, N.Y. 10017

TELEPHONE
(212) 286-4000

December 12, 1988

Lexington Gold Trust
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07662

Gentlemen:

We have acted as counsel for Lexington Gold Trust, a
Massachusetts business trust, in connection with the public offering of
shares of beneficial interest of the Fund, without par value (the
"Shares"), pursuant to a registration statement on Form N-1A, (the
"Registration Statement"), filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended.

We have reviewed the Declaration of Trust of the Fund, its by-laws
and Registration Statement (including exhibits thereto). We have also
made such inquiries and have examined originals, certified copies or
copies otherwise identified to our satisfaction of such documents,
records and other instruments as we have deemed necessary or appropriate
for the purposes of this opinion.

The opinions expressed herein are limited to matters of law which
govern the due organization of the Fund and the authorization and
issuance of the Shares. We are members of the Bar of the State of New
York and do not hold ourselves out as experts as to law of any other
state or jurisdiction. Based upon and subject to the foregoing, we are
of the opinion, and so advise you, as follows:

1. The Fund has been duly organized as a Massachusetts business
trust.

2. The issuance of the Shares has been duly and validly
authorized and, upon the issuance of the Shares and payment therefor in
the manner contemplated by the Registration Statement, the Shares will
be validly issued, fully paid and non-assessable by the Fund.

We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference therein to the Firm as
Counsel to the Fund.

Very truly yours,

/s/ Spengler Carlson Gubar
Brodsky & Frischling

Kramer, Levin, Naftalis & 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 8, 1998

Lexington Natural Resources Trust
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663

Gentlemen:

We hereby consent to the reference of this Firm as counsel in the
Registration Statement on Form N-1A of the Lexington Natural Resources Trust.

Very truly yours,

/s/ Kramer, Levin, Naftalis & Frankel

Independent Auditors' Consent

To the Board of Directors and Shareholders
Lexington Natural Resources Trust:

We consent to the use of our report dated February 4, 1998 included in
this Registration Statement on form N-1a of the Lexington Natural
Resources Trust dated April 9, 1998 and to the reference to our firm
under the heading "Financial Highlights" in the Prospectus.

KPMG Peat Marwick LLP

New York, New York
April 9, 1998

LEXINGTON NATURAL RESOURCES TRUST

SCHEDULE OF PERFORMANCE QUOTATIONS
ENDING REDEEMABLE VALUE PURSUANT TO SEC RULES

N
P (1+T) = ERV

Where P = Initital payment of $1,000
T = Average annual total return
N = Number of years

FROM COMMENCEMENT THROUGH 12/31/97

8.42 Years:

REINV. TOTAL
DATE INVESTMENT DIV. SHARES SHARES NAV VALUE
- -------------------------------------------------------------------------
08/01/89 $1,000.00 - 100.503 100.503 9.95 1,000.00
12/28/90 28.14 3.006 103.509 9.36
12/30/91 2.07 0.232 103.741 8.91
12/29/93 1.43 0.139 103.880 10.31
12/29/94 3.75 0.387 104.267 9.69
12/28/95 4.96 0.440 104.707 11.26
09/11/96 0.53 0.041 104.749 12.81
12/27/96 4.56 0.317 105.066 14.39
09/10/97 45.99 2.827 107.892 16.27
12/29/97 0.05 0.003 107.896 14.51
12/31/97 107.896 14.91 1,608.73

1/n 0.1188
(erv) 1608.73
T = ------- - 1 = -------- - 1 = 5.81%
(P) 1,000.00

8
ERV = 1,000 (1 + 0.0581 ) = $1,608.73

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST

SCHEDULE OF PERFORMANCE QUOTATIONS
ENDING REDEEMABLE VALUE PURSUANT TO SEC RULES

N
P (1+T) = ERV

Where P = Initital payment of $1,000
T = Average annual total return
N = Number of years

FROM COMMENCEMENT THROUGH 12/31/97

5 Year:

REINV. TOTAL
DATE INVESTMENT DIV. SHARES SHARES NAV VALUE
- -------------------------------------------------------------------------
12/31/92 $1,000.00 - 107.527 107.527 9.30 1,000.00
12/29/93 1.48 0.144 107.670 10.31
12/29/94 3.89 0.401 108.072 9.69
12/28/95 5.14 0.456 108.528 11.26
09/11/96 0.55 0.043 108.571 12.81
12/27/96 4.72 0.328 108.899 14.39
09/10/97 47.67 2.930 111.829 16.27
12/29/97 0.06 0.004 111.833 14.51
12/31/97 111.833 14.91 1,667.44

1/n 0.2000
(erv) 1667.44
T = ------- - 1 = -------- - 1 = 10.77%
(P) 1,000.00

5
ERV = 1,000 (1 + 0.1077 ) = $1,667.44

<PAGE>

LEXINGTON NATURAL RESOURCES TRUST

SCHEDULE OF PERFORMANCE QUOTATIONS
ENDING REDEEMABLE VALUE PURSUANT TO SEC RULES

N
P (1+T) = ERV

Where P = Initital payment of $1,000
T = Average annual total return
N = Number of years

1 Year:

REINV. TOTAL
DATE INVESTMENT DIV. SHARES SHARES NAV VALUE
- -------------------------------------------------------------------------
12/31/96 $1,000.00 - 69.979 69.979 14.29 1,000.00
09/10/97 30.63 1.883 71.862 16.27
12/29/97 0.04 0.003 71.864 14.51
12/31/97 71.864 14.91 1,071.50

1/n 1.0000
(erv) 1071.50
T = ------- - 1 = -------- - 1 = 7.15%
(P) 1,000.00

1
ERV = 1,000 (1 + 0.0715 ) = $1,071.50

<ARTICLE> 6
<LEGEND>
The Schedule contains summary financial information extracted from annual
audited financial statements dated December 31, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 58,701,611
<INVESTMENTS-AT-VALUE> 65,202,721
<RECEIVABLES> 110,143
<ASSETS-OTHER> 234,005
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,546,869
<PAYABLE-FOR-SECURITIES> 185,187
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 98,820
<TOTAL-LIABILITIES> 284,007
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 55,816,532
<SHARES-COMMON-STOCK> 4,375,853
<SHARES-COMMON-PRIOR> 2,653,910
<ACCUMULATED-NII-CURRENT> 245,932
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,699,288
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,501,110
<NET-ASSETS> 65,262,862
<DIVIDEND-INCOME> 949,200
<INTEREST-INCOME> 123,697
<OTHER-INCOME> (29,231)
<EXPENSES-NET> (797,734)
<NET-INVESTMENT-INCOME> 245,932
<REALIZED-GAINS-CURRENT> 2,699,440
<APPREC-INCREASE-CURRENT> 768,667
<NET-CHANGE-FROM-OPS> 3,714,039
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,902,822)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,601,366
<NUMBER-OF-SHARES-REDEEMED> (1,996,391)
<SHARES-REINVESTED> 116,969
<NET-CHANGE-IN-ASSETS> 25,517,709
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,902,670
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 635,819
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 797,734
<AVERAGE-NET-ASSETS> 61,225,935
<PER-SHARE-NAV-BEGIN> 14.29
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 1.00
<PER-SHARE-DIVIDEND> (0.18)
<PER-SHARE-DISTRIBUTIONS> (0.26)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.91
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>