DEAR CONTRACTHOLDER:
- --------------------------------------------------------------------------------
Lexington Natural Resources Trust had an above average 1997, compared to
other natural resource funds as monitored by Lipper Analytical Services, Inc.
The Fund's total return for 1997 was +7.15%.* The Fund's fourth quarter return
of -13.3%* had a substantial impact on the calendar year return. The oil sector,
which comprised over 50% of the Fund, was hit hard by the "momentum stock"
players trying to lock in their 1997 profits in what was one of the strongest
performing sectors.
Assuming that one views natural resource commodity based investments as a
contrarian play, to hedge against inflation or accelerating price increases in
basic commodities such as copper, oil, timber, or precious metals, the return
earned on the Fund outperformed the downward price spiral in these commodities.
The obvious downside to this, the contrarian hedge play, is that the Fund
underperformed the broader unmanaged Standard and Poor's 500 Stock Price Index
("S&P 500") return of 33.4%.
It is safe to say that few investors expected to be rewarded with another
double digit return year from the U.S. stock market, or if they did, we are sure
they didn't expect it to exceed 30%. The U.S. "Goldilocks economy" continued to
deliver in 1997. Nothing went wrong! For the most part, profits came through
within a reasonable range of expectation, inflation was not an issue, interest
rates fell below consensus expectation and once again investors disregarded the
stretched valuation levels of the U.S. stock market.
Your Fund did well in this environment. The strongest performing area was
in the oil service and oil rig business where many of these stocks substantially
outperformed the S&P 500. Day rates on rig rentals continue to go up and
exploration activity in the Gulf of Mexico continues to accelerate. We expect
many of these stocks, which were hit by profit taking in the fourth quarter of
1997, to be strong performers in 1998. Despite a slowdown in world economic
growth in 1998 as a result of the Asian economies in turmoil, the oil supply, as
measured in excess barrel capacity, has actually been coming down over the last
ten years. We believe our heavy commitment to the oil related sector will pay
off again in 1998, regardless of the absence of inflation or supply glitches in
basic raw materials.
We are not as optimistic about the mining companies or the forest products
sector, as currency devaluation in the Asian countries has provided these
countries with significant cost advantages to export their raw materials to the
Western economies. The fall in commodity prices is starting to affect the
marginal mining companies that are the high cost producers. These areas may
become more interesting in the latter half of 1998, after a period of pricing
stability is established.
As to the deflation issue, which would not be good for stocks in general,
let alone natural resource stocks, we fall in the optimistic camp. We expect a
slowdown in the world economy's growth rate and we believe the Asia problem
could be a prolonged situation to resolve. We are not downplaying the risk, but
mild deflationary periods have not necessarily been ruinous for stock market
returns. However, until one starts to see stability occurring in the Asian
economies, it is difficult to define mild deflation.
1
<PAGE>
The likelihood of the Federal Reserve increasing interest rates anytime
soon, appears remote to us. If the Asian crisis has the expected effect of
slowing down the U.S. GDP growth rate, probabilities favor a cut in rates to
stimulate growth. This should bode well for stocks on a selective basis, as both
recessionary and deflationary fears ebb in the second half of the year.
Entering 1998, we plan to stay heavily committed to the oil sectors,
investing in both U.S. and non-U.S. companies throughout the world. Of all the
resource sectors, we believe it has the best opportunity to outperform in the
current economic environment.
We appreciate your support, and look forward to continuing to meet your
investment expectations in the future.
Sincerely,
/s/ Robert M. DeMichele
-------------------------------
Robert M. DeMichele
Portfolio Manager and President
February, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
LEXINGTON NATURAL RESOURCES TRUST AND
THE UNMANAGED STANDARD & POOR'S 500 STOCK PRICE INDEX
[THE FOLLOWING TABLE REPRESENTS A CHART IN THE PRINTED REPORT]
Lexington
Year Natural S&P 500
Resources
=================================================
10/14/91 $10,000.00 $10,000.00
12/31/91 $10,238.35 $10,867.85
12/31/92 $10,567.89 $11,694.89
12/31/93 $11,719.89 $12,871.40
12/31/94 $11,089.71 $13,040.01
12/31/95 $12,960.20 $17,940.45
12/31/96 $16,445.58 $22,061.37
12/31/97 $17,621.33 $29,423.26
AVERAGE ANNUAL STANDARD TOTAL RETURNS
FOR THE PERIOD ENDED 12/31/97
FUND/INDEX 1 YEAR 5 YEAR SINCE INCEPTION
10/14/91
- ---------- ------ ------ ---------------
Lexington Natural
Resources Trust 7.15% 10.77% 6.63%
S & P 500 33.37% 20.27% 6.65%
*Prior to October 14, 1991, the Fund opeerated under a different investment
objective.
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund with a similar investment in the Standard & Poor's 500
Stock Index ("S&P 500"). Results for the Fund and the S&P 500 include the
reinvestment of all dividend and capital gain distributions. Investment return
and principal value of an investment will fluctuate so that an investor's shares
when redeemed may be worth more or less than at their original cost. Total
return represents past performance and it is not predictive of future results.
- --------------------------------------------------------------------------------
*7.15%, 10.77% and 5.81% are the one year, five year and since commencement
(8/1/89) average annual standard total returns, respectively, for the year ended
December 31, 1997. Prior to October 1991, the Fund operated under a different
name and investment objective.Investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than at their original cost. Total return represents past
performance and is not predictive of future results.
2
<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 Cameron Corporation .... 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.
3
<PAGE>
LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
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
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
4
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON NATURAL RESOURCES TRUST
STATEMENT OF OPERATIONS
December 31, 1997
INVESTMENT INCOME
<S> <C> <C>
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
==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON NATURAL RESOURCES TRUST
STATEMENTS 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 these statements.
6
<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
7
<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
<TABLE>
<CAPTION>
Transactions in capital stock were as follows:
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.
8
<PAGE>
LEXINGTON NATURAL RESOURCES TRUST
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
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.
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders
Lexington Natural Resources 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
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
SUB-ADVISOR
- --------------------------------------------------------------------------------
MARKET SYSTEMS RESEARCH ADVISORS, INC.
80 Maiden Lane
New York, New York 10038
DISTRIBUTOR
- --------------------------------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
This report has been prepared for the information of the shareholders of
Lexington Natural Resources Trust and is authorized for distribution to the
public only if it is accompanied or preceded by a currently effective
prospectus which sets forth expenses and other material information.
- --------------------------------------------------------------------------------
LEXINGTON
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
LEXINGTON
NATURAL
RESOURCES
TRUST
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1997
The Lexington Group
of No Load
Investment Companies
================================================================================
- --------------------------------------------------------------------------------
