FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended December 31, 1996
                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from ________ to ___________

Commission file number: 0-26868

                      Lexington Global Asset Managers, Inc.
             (Exact name of Registrant as specified in its charter)

Delaware                                                     22-3395036
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)


PARK 80 WEST PLAZA TWO
SADDLE BROOK, NJ 07663
(Address of principal executive offices)  (Zip code)

                                 (201) 845-7300
               (Registrant's telephone number including area code)

                 Securities registered pursuant to Section 12(b)
                                  of the Act:
                                      None

           Securities registered pursuant to section 12(g) of the Act:
                     Common Stock, $.01 par value per share

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. |_|

   The number of shares outstanding of the registrant's  voting Common Stock and
the  aggregate  market  value of such  Common  Stock held by  non-affiliates  on
February 28, 1997 was as follows:

                      Common Stock-$.01 Par Value Per Share
                          Authorized 15,000,000 Shares
                     5,487,887 Shares Issued and Outstanding
                       Aggregate Market Value $33,613,308

Document Incorporated by Reference.

     Registrant's  Proxy Statement for Annual Meeting of Stockholders to he held
May 15, 1997 is incorporated by reference into Part III of this Filing.

                                     PART I
     The  statements  contained  in the  Annual  Report  on Form  10-K  ("Annual
Report")  which  are  not  historical  facts,  including,  but not  limited  to,
statements  found in Item 7,  Management's  Discussion and Analysis of Financial
Condition and Results of Operations, are forward-looking statements that involve
a number of risks and  uncertainties.  The actual  results of the future  events
described in such forward-looking  statements in this Annual Report could differ
materially  from  those  stated in such  forward-looking  statements.  Among the
factors  that could  cause  actual  results to differ  materially  are risks and
uncertainties set forth below under the heading Risk Factors and other risks and
uncertainties discussed in this Annual Report and set forth from time to time in
the registrant's other public reports and filings and public statements.

Item 1. Business
          HISTORY AND BUSINESS OF LEXINGTON GLOBAL ASSET MANAGERS, INC.
     Lexington  Global Asset Managers,  Inc. (the "Company") was incorporated in
Delaware  in  September  1995 as a holding  company  that  offers,  through  its
subsidiaries,  a variety of asset  management  and  related  services  to retail
investors, institutions and high net worth individuals.
    Prior to the spin-off of the Company on December 13, 1995 (the  "Spin-off"),
the Company was a wholly-owned subsidiary of Piedmont Management Company Inc., a
Delaware   corporation   ("Piedmont").   Pursuant  to  the  Spin-off,   Piedmont
contributed  to the  Company  all  of  its  subsidiaries  engaged  in the  asset
management  business and  distributed to each Piedmont  stockholder one share of
Common Stock of the Company for each share of Piedmont common stock held by such
stockholder.  The  Spin-off  resulted in 100% of the Common Stock of the Company
being distributed to Piedmont stockholders.
     The  Company  manages  portfolios  of  equity,   balanced,   fixed  income,
mortgage-backed and money market  investments,  which portfolios are designed to
meet a broad range of investment objectives.
     At  December  31,  1996 total  assets  under  management  amounted  to $3.2
billion,  with $1.8  billion in mutual  funds,  $1.0  billion  in  institutional
accounts and $0.4 billion in private client accounts.  The Company's client base
consists   of   approximately   160,000   mutual  fund   shareholder   accounts,
approximately 20 institutional  accounts,  and  approximately 550 private client
accounts. The tables below set forth the Company's total assets under management
in each of its three  major  markets at the dates  indicated  and the  Company's
total assets under management by type of investment.
<TABLE>

                                                               Asset Composition By Market (1)
                                                                    (Dollars in Thousands) 
                                                                           December 31,
<S>                                           <C>            <C>           <C>            <C>            <C>
                                           ------------------------------------------------------------------------
                                                1996          1995          1994           1993             1992
                                                ----          ----          ----           ----             ----
Mutual                                         $1,795,927    $1,517,260    $1,501,668     $1,309,267      $754,720
Funds...........................
Institutional..............................     1,047,244     1,134,080     1,472,122      1,549,777     1,460,009
Private                                           360,226       428,434       421,204        460,756       456,841
Clients........................
                                           ------------------------------------------------------------------------
                                               $3,203,397    $3,079,774    $3,394,994     $3,319,800    $2,671,570
Total..................................
                                           ========================================================================
</TABLE>

<TABLE>
                                                    Asset Composition By Type of Investment
                                                               (Dollars in Thousands)
                                                                      December 31, 
<S>                                            <C>           <C>           <C>            <C>           <C>   
                                           ------------------------------------------------------------------------
                                                1996          1995          1994           1993            1992
                                                ----          ----          ----           ----            ----
Domestic Equity......................          $1,329,087    $1,172,710    $1,096,988     $1,274,390    $1,178,722
Foreign                                           807,962       699,842       696,882        578,008       165,243
Equity.........................
                                           ------------------------------------------------------------------------
     Subtotal                                   2,137,049     1,872,552     1,793,870      1,852,398     1,343,965
(2)........................
Precious Metals (3)..................             201,295       273,411       347,023        277,573        88,805
Fixed                                             668,841       712,830       976,104        977,396       965,422
Income..........................
Money Market Funds...............                 196,212       220,981       277,997        212,433       273,378
                                           ------------------------------------------------------------------------
                                               $3,203,397    $3,079,774    $3,394,994     $3,319,800    $2,671,570
Total..................................
                                           ========================================================================
-------------
(1)  Included in the  institutional  assets under management are invested assets
     of  members  of  the   Richardson   Family   (defined   below,   see  "Risk
     Factors---Substantial   Stockholders"),   principal   stockholders  of  the
     Company,  and certain other related  persons,  which assets at December 31,
     1996 were valued at  approximately  $696 million.  The fees charged for the
     management  of such assets are based upon  standard fee  schedules  and are
     comparable with the fees charged to unaffiliated accounts.
(2) Excludes precious metal equities.
(3) Precious Metals includes precious metals and precious metal equities.

</TABLE>




The following illustrates the structure of the Company as of December 31,
1996.
Lexington Global Asset Managers,Inc.

     Lexington Management Corporation                  (100%)
     Lexington Funds Distributor,Inc.                  (100%)
     Market Systems Research Advisors, Inc.            ( 65%)
       Market Systems Research, Inc. (100% owned 
       by Market Systems Reseach Advisors, Inc.) 
     Piedmont Asset Advisors, Inc.                     ( 51%)             



     The  subsidiaries  of the  Company  can be divided  into its core  business
(Lexington Management Corporation ("LMC") and Lexington Funds Distributor,  Inc.
("LFD"),  the "Core Business"),  which business  generates most of the Company's
revenues and profits,  and its other subsidiaries,  which generate the remainder
of the Company's  revenues and profits.  On September 30, 1996, the Company sold
four  of  these  other  subsidiaries,  LCM  Financial  Services  Inc.  ("LFSI"),
Lexington  Capital  Management   Associates,   Inc.  ("LCMA"),   Lexington  Plan
Administrators  ("LPA"), and LCMI Insurance Services ("LCMII") to Berkeley (USA)
Holdings Limited, a company formed by the CEO of these subsidiaries and the U.S.
unit of London  Pacific Group Limited.  The Company  recorded a one-time gain of
$0.5 million on the sale. On December 31, 1996,  another  subsidiary,  Lexington
Capital Management Inc. ("LCM") was merged into LMC.

     The revenues of the Company  consist  primarily of management fees based on
the value of assets under management and commissions  associated with the direct
sales of mutual fund products.

     The tables below set forth the  Company's  assets under  management  in and
revenues from each of these two segments:
<TABLE>

                                                                          Assets Under Management
                                                                           (Dollars in Thousands)
                                                                                December 31,
                                           ------------------------------------------------------------------------
                                                1996            1995          1994           1993          1992
                                                ----            ----          ----           ----          ----
<S>                                            <C>            <C>           <C>            <C>           <C>       
LMC and LFD(1).....................            $2,720,094    $2,556,750    $2,874,412     $2,751,602    $2,131,705
Other Subsidiaries(2)..............               483,303       523,024       520,582        568,198       539,865
                                           ------------------------------------------------------------------------
                                               $3,203,397    $3,079,774    $3,394,994     $3,319,800    $2,671,570
Total.................................
                                           ========================================================================
</TABLE>

<TABLE>
                                                                     Revenues
                                                              (Dollars in Thousands)
                                                                    December 31,
                                           ------------------------------------------------------------------------
                                                                                          
                                                                                           
                                                    1996           1995          1994        1993           1992
                                                   ----           ----          ----         ----           ----
<S>                                               <C>           <C>           <C>            <C>            <C>   
LMC and LFD(1)......................              $14,384       $14,178       $14,796        $10,549        $8,702
Other Subsidiaries(2)...............                6,427         7,108         7,883          7,521         7,431
                                           ------------------------------------------------------------------------
                                                  $20,811       $21,286       $22,679        $18,070       $16,133
Total..................................
                                           ========================================================================

(1)  Lexington Management Corporation and Lexington Funds Distributor, Inc.
(2) These  subsidiaries  include  Lexington Capital  Management,  Inc., LCM
Financial  Services,  Inc.,  Lexington  Capital  Management  Associates,   Inc.,
Lexington Plan  Administrators,  Inc., Market Systems Research  Advisors,  Inc.,
Market Systems Research, Inc. and Piedmont Asset Advisors L.L.C.. LCM was merged
into LMC on December 31, 1996.  LFSI,  LCMA,  and LPA were divested on September
30, 1996.

</TABLE>



Primary Markets and Strategy for Growth Markets

The Company's business strategy is targeted at three large market segments:

          Mutual  Funds--The   Company,   through  its  subsidiaries,   markets,
     promotes,  and  distributes  the  Lexington  family of 18 mutual funds (the
     "Lexington Funds") providing a variety of investment choices for the retail
     investor,  financial planner and intermediary,  and the defined benefit and
     defined  contribution  marketplace,  including the rapidly  growing  401(k)
     market.  In addition,  the  Company,  through its  subsidiaries,  acts as a
     subadvisor and /or administrator to four mutual funds

          Institutional   Market--The   institutional   market  for   investment
     management services includes corporate, government and multi-employee (Taft
     Hartley) pension plans,  charitable  endowments and foundations,  insurance
     company  general  accounts  and  defined  contribution  and  401(k)  plans.
     Lexington  has  secured  both  domestic  and   international   assignments,
     utilizing  investments in domestic and foreign equity securities,  precious
     metal equities, fixed income and its family of mutual funds.

          Private  Clients--The Company offers equity, fixed income and balanced
     fund alternatives,  tailored to the individual investment objectives of its
     private clients.

     In each of  these  areas,  management's  overall  objective  is to  execute
specific business strategies (see following  discussions) to profitably maximize
assets under  management and provide  clients with investment  performance  that
meets their objectives.

     The Company  derives its revenues  primarily  from fees for its  investment
advisory  services  provided  to  retail  investors,  institutions  and  private
clients.

Mutual Funds

     Background. The mutual fund industry has expanded rapidly in the last seven
years. According to the Investment Company Institute,  the trade association for
investment companies, total assets of U.S. mutual funds have increased from $982
billion at December 31, 1989 to $3.5  trillion at December 31, 1996,  an average
growth rate of approximately 20% per year.

     In the mutual fund  industry,  mutual funds may be sold to investors with a
sales  charge or a  commission  (a "load"  fund) or without a sales  charge or a
commission (a "no-load"  fund).  Of the eighteen  Lexington  Funds,  sixteen are
no-load  funds and two are load  funds.  In  addition,  all four of the funds to
which the Company  acts as a  subadvisor  and/or  administrator  are load funds.
Mutual funds may also be either  closed-end or open-end.  Generally,  closed-end
funds raise money from  stockholders  only once,  unlike an open-end  fund which
issues and redeems shares of the fund on a continuous basis. In addition, unlike
open-end  mutual  funds,  closed-end  funds do not stand  ready to redeem  their
shares at net asset value.  Instead,  stockholders  wishing to sell their shares
must  do  so by  trading  them  on a  national  securities  exchange  or in  the
over-the-counter  market,  at a price  determined  by the  market,  which may be
higher or lower than the fund's net asset value.
All of the Company's mutual funds are open-end funds.

     The  mutual  fund   industry  is  highly   competitive   and  is  currently
characterized  by a  high  degree  of  fragmentation  and a  large  and  rapidly
increasing  number of product  offerings.  The Company  believes that the mutual
fund  industry is becoming  similar to the  consumer  products  business,  where
marketing strategies, product development, business development, sales expertise
and servicing are increasingly important.

     Investment  Products and Services.  The Company has developed the Lexington
family of 18 mutual funds which are managed,  marketed and distributed under the
Lexington name through  Lexington  Management  Corporation  and Lexington  Funds
Distributor,  Inc.  The  Lexington  Funds are  designed  to provide a variety of
investment options for retail investors,  financial planners and intermediaries,
and for the defined benefit and defined contribution marketplace,  including the
401(k)  market.  These funds have been  selected for inclusion in various no fee
transaction broker programs, such as the Charles Schwab Mutual Fund OneSource(R)
program.

     Each of the  Company's  global/international  equity funds may invest their
assets in any country  approved by the fund's Board of Directors  provided  such
assets  are  custodied  with an  eligible  custodian  under  Rule  17f-5  of the
Investment Company Act of 1940, as amended.  Currently,  Chase Manhattan Bank is
acting as master custodian of assets for each of the Lexington Funds.

     Except for the Lexington  Strategic  Investments  Fund,  Inc.,  which has a
significant portion of its assets under management invested in South Africa, the
Lexington  Goldfund,  Inc., which has a significant  portion of its assets under
management invested in Australia,  Canada and South Africa, the Lexington Crosby
Small Cap Asia Growth Fund, which has a significant  portion of its assets under
management  invested in Asia, and the Lexington Troika Dialog Russia Fund, which
has a significant portion of its assets under management invested in Russia, the
Company  believes  that,  in  general,   the  assets  under  management  in  its
global/international  and  precious  metal  equities  funds  are  invested  in a
geographically diversified manner.

     The  Company,   through  its  subsidiaries,   offers   subadvisory   and/or
administration  services  to  other  mutual  funds.  Such  services,  which  are
currently  used by four  unaffiliated  mutual  funds  with  total  assets  under
management of $292.1 million at December 31, 1996, include investment management
and mutual fund administration  services.  Mutual fund  administration  services
provided by the Company are  principally  in the areas of  accounting,  pricing,
compliance and marketing support.

     Strategy.  The Company's  current  strategies in the mutual fund market are
to: (i) identify  emerging  trends in order to develop new investment  products;
(ii)  strengthen the "brand name"  awareness of the Lexington  Funds both at the
broker-dealer  level and the retail investor level; (iii) broaden its efforts to
offer subadvisory and administration services to other mutual funds; (iv) expand
into other  distribution  channels;  and, (v)  evaluate  and pursue  acquisition
opportunities.

     The Company  believes  that with  focused  market  research  efforts it can
identify  demographic  and industry  trends relevant to the growth of the mutual
fund  business  and  thereby  develop   products  to  meet  emerging  needs  and
opportunities. For example, the Company launched the Lexington Global Fund, Inc.
in  March  1987  after  the  Company's  research  indicated  that  international
investing  was an emerging  investment  trend which  offered the  potential  for
reduced  risk  and  higher  expected  returns  through  global  diversification.
Furthermore,  the company  believes that its smaller relative size in the mutual
fund industry  provides it with a competitive  advantage by enabling the Company
to capitalize upon trends more quickly than its competitors. As another example,
in 1991, the Company  launched the Lexington  Worldwide  Emerging  Markets Fund,
Inc. in four months which enabled it to capitalize upon the  approximately  400%
growth in that market in 1993. The Lexington  Worldwide  Emerging  Markets Fund,
Inc. is currently Lexington's second largest mutual fund.

     To achieve  greater  "brand  name"  awareness,  the  Company has used media
relations  consultants to assist in building  relationships  with the media. The
Company's portfolio managers,  analysts and management have appeared in national
print  publications as well as on television and radio.  This program,  combined
with the Company's  internal  promotion  staff that  communicates  directly with
financial  planners,  is  designed  to enhance  the "brand  name"  awareness  of
Lexington and its investment products.

     The  Company  continuously   markets  to  insurance  companies,   financial
planners, consultants, bank trust departments and other financial intermediaries
to sell  its  subadvisory  and  fund  administration  services  and  secure  new
distribution channels for its investment products.

     The  Company  utilizes a  formalized  screening  and  valuation  process to
identify  potential  acquisition  candidates  or strategic  partners in order to
expand its  business.  In addition to the Company's  management  contacts in the
mutual fund and investment  management industry,  an outside consultant has been
used in the past to complement management's efforts in this area.

     Management  believes  that  the  integration  of  financial  products  with
targeted  services will also allow it to better pursue  opportunities in various
markets.  For example,  the Company has developed funds for the specific purpose
of funding  variable  annuity and variable  life  insurance  policies  issued by
insurance companies.  Currently,  two such funds are being sold by six insurance
companies  and the Company  provides  subadvisory  services  for two  additional
insurance company funds.

Institutional Market

      Background.  The  market for  institutional  clients  includes  corporate,
government  and   multi-employee   (Taft  Hartley)  pension  plans,   charitable
endowments and  foundations,  insurance  company general  accounts,  and defined
contribution  and 401(k) plans.  According to the 1996 Money Market Directory of
Pension Funds (including 401(k)), the institutional market represented over $3.5
trillion in total  assets  under  management,  including  defined  benefit  plan
assets, endowments and foundations.

     The  institutional  market is  extremely  competitive  with long lead times
between initial contact and acquisition of an account.  Institutional  investors
increasingly  rely upon a competitive  review process when selecting  investment
advisory  firms.  The process  often  includes  the  assistance  of  independent
investment  consultants,  who analyze,  rank and  recommend  advisors as well as
conduct  searches  for  advisors  on behalf of  clients.  Consultants  typically
classify firms according to their investment style and place heavy emphasis upon
a demonstrated record of investment performance within a particular style. These
consultants often control access to prospective clients.

     Investment  Products and Services.  The products the Company  offers to the
institutional   market  include  investments  in  domestic  and  foreign  equity
securities,  precious metal  equities,  fixed income  securities and a family of
mutual  funds to be  utilized in a client's  pension,  defined  contribution  or
401(k) plan.

     The Company,  through its  subsidiaries,  acts as subadvisor  under several
variable  annuity  contracts and variable  life  insurance  policies,  including
contracts and policies with Security  Benefit Life Insurance  Company and London
Pacific Life & Annuity  Company.  The Company  also makes  certain of its mutual
funds available to selected insurance companies as funding vehicles for variable
annuity  contracts  and  variable  life  insurance  policies,   including  Aetna
Insurance Company of America,  SafeCo Life Insurance  Company,  Kemper Investors
Life  Insurance  Company,   Transamerica   Occidental  Life  Insurance  Company,
Great-West  Life & Annuity  Insurance  Company,  and Fortis  Benefits  Insurance
Company.

     Strategy.  The Company's strategy in the institutional  market is to target
specialized  segments such as: (i) Taft Hartley and charitable  foundations  and
endowments,  (ii) public  retirement  accounts,  (iii) insurance company general
accounts and,  (iv) broker wrap  accounts.  In addition,  the Company has formed
joint management  arrangements  with other investment  advisory  companies which
offer specialized products or services.

     By targeting specialized  segments,  management believes that it can market
directly to these segments and leverage upon the integrated  financial  products
and services that it offers. The Company believes the strategy will allow better
penetration of the institutional market.

     The Company  believes that the 401(k) market is of key interest.  According
to Pensions  and  Investments,  assets in the 401(k)  market,  where  investment
decisions  are made by the  individual,  will  surpass the assets in the private
pension system. The 401(k) market,  according to Bernstein Research, is expected
to grow at an average  annual rate of 15% over the next four years.  The Company
is  targeting  the 401(k)  market as a key  growth  market by  participating  in
administrative  alliances and various  discount broker programs which target the
defined contribution and 401(k) market.

     The  Company  has formed  joint  management  arrangements  with  investment
advisory firms to expand  investment  product  offerings.  The Company  develops
investment  products  in  consultation  with these firms  which  usually  have a
specialization  in evaluating and investing in specific  market segments such as
convertible  securities,  specific  geographic  regions and global fixed income.
These products are subsequently  distributed utilizing Lexington's  distribution
channels  and are jointly  managed by the Company  and the  investment  advisory
firm.  These joint  management  arrangements  are subject to the approval of the
shareholders of the fund utilizing these services and the annual approval of the
Board of Directors of the fund. Firms with which the Company has developed joint
management   arrangements   include  Ariston  Capital   Management   Corporation
(convertible  securities),  Crosby  Asset  Management  (US),  Inc.  (Asia),  MFR
Advisors,   Inc.  (Maria  Fiorini  Ramirez)   (global  fixed  income),   Capital
Technology, Inc. (small cap), and, Troika Dialog Asset Management, ZAO (Russia).
Each of these firms is a registered investment advisor.

     The  Lexington  Crosby  Small Cap Asia Growth  Fund has a joint  management
arrangement with Crosby Asset  Management (US), Inc., a wholly-owned  subsidiary
of the Crosby group.  The Crosby group is an  independent  merchant bank in Asia
founded  in 1984  which  provides  a variety  of  financial  services  including
investment  management,  stock brokerage,  research,  and corporate finance. The
Crosby group,  headquartered  in Hong Kong,  employs over 500 people in Asia and
has 18 offices in 11 countries throughout the region, as well as in New York and
London.

     The Lexington Ramirez Global Income Fund has a joint management arrangement
with MFR  Advisors,  Inc.,  a  subsidiary  of Maria  Fiorini  Ramirez  Inc.  MFR
Advisors, Inc. was established in 1992 by the economist Maria Fiorini Ramirez to
provide  global  economic  consulting,  investment  advisory  and  broker-dealer
services.

     The  Lexington   Convertible   Securities  Fund  has  a  joint   management
arrangement  with  Ariston  Capital   Management   Corporation,   a  corporation
established in 1977. Ariston Capital Management Corporation's president, Richard
B. Russell, has over 20 years of experience in conducting research in the use of
convertible securities and market forecasting in portfolio management.

     The Lexington SmallCap Value Fund, Inc. has a joint management  arrangement
with  Capital  Technology,  Inc.,  which  has  been  managing  small  cap  stock
portfolios  since  1977.  Management  utilizes   computer-based   technology  in
combination with analytical research to identify companies for the portfolio.

     The  Lexington  Troika  Dialog  Russia Fund,  Inc.  has a joint  management
arrangement  with Troika Dialog Asset  Management,  ZAO, a Russian  Closed Joint
Stock Company, established in 1991. Troika Dialog Asset Management, a pioneer in
the development of Russia's securities markets, is the largest brokerage firm in
Russia.

Private Clients

     Background.  With the changing demographics of the United States, the aging
of the "baby boomer"  generation  and the  accumulation  of assets in retirement
accounts,  the  private  client  sector is a growing  segment of the  investment
advisory  industry.  The Company  believes that the principal  needs for private
clients  are  investment  advice and asset  management  services  because  these
clients, as they near retirement,  have a large amount of accumulated assets and
require  sophisticated  estate  planning  advice.  According to a September 1996
Bernstein Research report, there are approximately 2.0 million households in the
United  States  that  have  discretionary  assets  exceeding  $1  million.  This
represents  approximately 2.0% of all U.S.  households and total assets for this
market segment exceed $4.4 trillion.

     Investment Products and Services.  The Company offers equity,  fixed income
and  balanced  fund  investment  options to its high net worth  clients  through
portfolios which are tailored to the client's individual investment objectives.

     The average account size of the Company's private clients is $655,000. With
approximately 550 private clients,  the Company's clients are generally heads of
households  in their  mid-40s to 60s with a high  proportion  of their wealth in
liquid assts.

     Strategy. The Company's strategies in the private client sector are to: (i)
integrate  the products and services  offered to these  clients by the Company's
various  subsidiaries,  (ii) design an integrated set of financial  products and
services to meet the  financial  service  needs of these  individuals  and (iii)
excel  in  customer  service  through   utilization  of  the  most  current  and
sophisticated investment planning, management and reporting techniques.

     The Company  offers  products and services to its private  clients  through
LMC's private  client  group.  Currently,  marketing of investment  products and
services  to high net worth  prospects  is  primarily  conducted  by LMC through
direct  sales  and  referral  sales by  retail  stockbrokers,  CPAs  and  lawyer
networks.




LMC and LFD

     LMC and LFD,  both  located  in Saddle  Brook,  New  Jersey,  form the core
business of the Company  generating  approximately  69% of revenues in 1996. LMC
and its  predecessors  have been active in the  investment  management  business
since 1938.  LMC  provides  products  and  services  for  institutional  clients
including  corporate,  government  and Taft Hartley  pension  plans,  charitable
endowments and foundations,  insurance company general and separate accounts and
defined  contribution and 401(k) plans. The Company's private client business is
also conducted  primarily  through LMC. LMC targets accounts in this market with
up to $5 million to invest, which accounts typically include wealthy individuals
and  smaller  institutional  accounts,  including  foundations,   not-for-profit
corporations, pension plans and employee benefit plans.

     LMC  and  LFD  are  responsible  for  managing,  servicing,  marketing  and
distributing  the  Lexington  Funds to financial  intermediaries  and the retail
market.  The  Lexington  Funds are  designed to provide a variety of  investment
options for retail investors, financial planners and intermediaries, and for the
defined  benefit  and defined  contribution  marketplace,  including  the 401(k)
market. The Lexington Funds include money market, equity and fixed income funds.
The  geographical  orientation  of the  Lexington  Funds range from  domestic to
international to global.

      Certain  funds  specialize  in specific  industries  or  sectors,  such as
precious  metals  and  natural  resources,  but  most are  broadly  diversified.
Currently,  the Lexington Funds have approximately 160,000 shareholders.  Of the
eighteen  Lexington  Funds,  two are load funds and sixteen  are no-load  funds.
Investment  advisory  services,  as well as management  research and statistical
services,  are  provided to each fund by LMC and LFD. As  compensation  for such
services,  the  mutual  funds pay a fee which is based upon  average  net assets
under  management.  These fees are limited by certain  statutory  limitations on
fund expenses.

     LMC also acts as a sub-advisor and/or administrator to four open-end mutual
funds, all of which are load funds.

     The following  table sets forth the assets for each of the five years ended
December 31, 1996 of each of the Lexington  Funds and for each fund to which LMC
and LFD provides subadvisory and/or administration services.


<TABLE>





                                 Fund Assets (1)
                             (Dollars in Thousands)
                                                                                       December 31,
                                                          -----------------------------------------------------------------------
                                                              1996           1995          1994          1993          1992
                                                              ----           ----          ----          ----          ----
<S>                                                            <C>            <C>           <C>           <C>           <C>   
Domestic Equity*
Lexington Growth & Income Fund                                 $200,231       $138,840      $124,292      $134,494      $125,934
Lexington Corporate Leaders Trust Fund                          384,990        247,560       152,990       142,798       104,428
Lexington Natural Resources Trust                                37,896         16,962        13,620         5,272         1,921
Lexington Technical Strategy Fund, Inc. (2)                           0              0             0             0         6,511
Lexington SmallCap Value Fund, Inc.                               8,056              0             0             0             0
                                                          -----------------------------------------------------------------------
             Total Domestic Equity                             $631,173       $403,362      $290,902      $282,564      $238,794
                                                          -----------------------------------------------------------------------
Fixed Income*
Lexington Money Market Trust                                    $97,680        $88,961      $110,811       $94,790      $111,394
Lexington Short-Intermediate Government Securities
    Fund, Inc. (3)                                                    0              0         5,799         7,718        12,021
Lexington GNMA Income Fund, Inc.                                133,660        130,735       132,362       149,951       132,031
Lexington Ramirez Global Income Fund (4)                         28,992         10,754        10,578        14,573        13,127
Lexington Tax Free Money Fund, Inc.                              26,528         28,203        37,531        41,187        45,799
Lexington Convertible Securities Fund                            11,208         11,634         8,021         8,317         7,180
SBL Fund Series K (5) (6) (7)                                    11,755          5,684             0             0             0
Security Income Fund-Global Aggressive Bond
    Series (5) (6) (7)                                            4,915          4,409             0             0             0
                                                          -----------------------------------------------------------------------
            Total Fixed Income                                 $314,738       $280,380      $305,102      $316,536      $321,552
                                                          -----------------------------------------------------------------------
Global/International Equity*
Lexington Worldwide Emerging Markets Fund, Inc. (8)            $256,532       $260,423      $288,511      $227,464       $30,031
Lexington Global Fund, Inc.                                      37,216         53,635        67,353        87,044        50,410
Lexington Emerging Markets Fund, Inc.                            21,581          7,840         4,598             0             0
Lexington International Fund, Inc.                               18,891         17,855        17,811             0             0
Lexington Crosby Small Cap Asia Growth Fund                      25,246          8,900             0             0             0
SBL Fund Series D (5) (6) (7)                                   246,908        177,935       147,028        97,863        25,128
Parkstone Advantage International Discovery
    Fund (7) (10)                                                     0         11,649         9,501         6,325             0
Security Equity Fund-Global Series (5) (6) (7)                   28,543         21,870        23,839        13,898             0
Lexington Troika Dialog Russia Fund (9)                          13,804              0             0             0             0
                                                          -----------------------------------------------------------------------
            Total Global/International Equity                  $648,721       $560,107      $558,641      $432,594      $105,569
                                                          -----------------------------------------------------------------------
Precious Metal Equity*
Lexington Goldfund, Inc.                                       $109,215       $136,361      $158,846      $159,483       $71,828
Lexington Strategic Investments Fund, Inc. (7)                   43,702         76,280       138,164        84,465         8,615
Lexington Strategic Silver Fund, Inc. (7)                        48,378         60,770        50,013        33,625         8,362
                                                          -----------------------------------------------------------------------
            Total Precious Metal Equity                        $201,295       $273,411      $347,023      $277,573       $88,805
                                                          -----------------------------------------------------------------------
            Total Funds                                      $1,795,927     $1,517,260    $1,501,668    $1,309,267      $754,720
                                                          =======================================================================

----------------------------------------------------------
  (1)  Each  of  the  funds  listed  are  open-end  funds.  Unless  otherwise
       indicated, each of the funds is a no-load fund.
  (2)  Fund liquidated in May 1993.
  (3)  Fund liquidated in December 1995.
  (4)  Fund changed  objective from tax-exempt bond fund to global income fund
       on January 3, 1995.
  (5)  Fund sponsored by Security Benefit Life Insurance Company.
  (6)  Fund  to  which  the  Company,  through  its  subsidiaries,   provides
       subadvisory and administration services.
  (7)  Load fund.
  (8)  Fund changed objective from growth fund to emerging markets growth fund
       in June 1991.
  (9)  Fund commenced operations in June 1996.
 (10)  Fund  to  which  the  Company,   through  its  subsidiaries,   provides
       administration services. Administration services to Parkstone Advantage
       International Discovery Fund were terminated June 1996.
  *    Of each of the Company's four market  segments,  Domestic  Equity,  Fixed
       Income,  Global/International  Equity and Precious Metal Equity, invested
       assets held by the Richardson Family constituted 32.0%,  20.3%, 13.8% and
       0%,  respectively,  of the total assets under  management with respect to
       such segment.

</TABLE>




Other Subsidiaries

     During the year, the Company had 7 subsidiaries in addition to LMC and LFD,
which were principally located in Gold River, California and New York, New York.
On September  30, 1996,  the Company sold four of the  California  subsidiaries:
Lexington Capital Management  Associates,  Inc. ("LCMA"), LCM Financial Services
Inc.  ("LFSI"),  Lexington  Plan  Administrators  ("LPA"),  and  LCMI  Insurance
Services  ("LCMII"),  to a company formed by the CEO of the subsidiaries and the
U.S. unit of London Pacific Group Limited,  Berkeley (USA) Holdings Limited.  On
December 31, 1996,  Lexington Capital Management ("LCM") was merged into LMC. At
December 31, 1996,  the Company had 2  subsidiaries  in addition to LMC and LFD:
Market  Systems  Research  Advisors,  Inc.  ("MSR") and Piedmont  Asset Advisors
L.L.C. ("PAA").

MSR, MSRI--New York, New York.
     MSR  provides  professional  portfolio  management  services  to  investors
through the use of proprietary  quantitative  price  momentum stock  selectivity
models. MSR offers investment advisory services to accounts within the Lexington
organization  and to other  clients.  MSR  publishes a monthly  research  report
through a subsidiary company, Market Systems Research,  Inc. ("MSRI"),  which is
marketed to other investment advisory companies. MSR is owned 65% by the Company
and 35% by Frank A.
Peluso, a principal  employee who also serves as President and a Director of the
Company.

PAA--New York, New York.
     The  Company  owns 51% of PAA, an entity  formed in 1994 which  served as a
general  partner  of a  limited  investment  partnership  engaged  in the  asset
management   business.   (PAA's  activities  in  the  limited  partnership  were
terminated  in the third  quarter  of 1996.)  The  remainder  of PAA is owned by
R.V.Consultants,  Inc. a company which is owned by Messrs. Stuart S. Richardson,
Robert M. DeMichele and Richard M. Hisey, all of whom are principal employees of
the Company.

Marketing and Distribution

     Traditionally,  load  mutual  funds  were  principally  sold by  registered
representatives   of   broker-dealers,   who  received   sales   commissions  as
compensation  for fund sales.  No-load  mutual  funds were sold  directly to the
investing  public  without the  assistance  of a registered  representative  and
therefore no sales commission was imposed on the purchase.

     The Company's products and services are marketed and distributed  through a
variety of captive and non-captive distribution channels which are listed below.
The approximate  percentage of assets under management  distributed through each
of  the  Company's  distribution  channels  listed  below  is  provided  in  the
parenthetical immediately prior to the description of such distribution channel.

          (48%) The  Lexington  Family of No Load Mutual  Funds are sold through
direct  sales and  marketing  efforts  utilizing  print,  radio  and  television
advertising.

          (29%) The Company also has  shareholder  servicing  arrangements  with
discount  brokers,  including Charles Schwab Mutual Fund OneSource(R) , Fidelity
Funds  Network(R),  Jack White & Company No Transaction Fee Mutual Fund Service,
Waterhouse Mutual Fund Connection and First Trust Corporation.  The Company also
has a number of its funds included in strategic  alliances and "wrap"  programs,
which will offer greater  distribution  opportunities in the future. At December
31, 1996,  approximately $533 million, or 29%, of LMC's total mutual fund assets
have been  generated  through these named  shareholder  servicing  arrangements.
Under these  shareholder  servicing  arrangements,  the discount  broker,  which
sells,  markets and distributes many mutual funds other than the Lexington Funds
is paid a fee for recordkeeping,  shareholder  communications and other services
provided by the discount broker to investors  purchasing shares of the Lexington
Funds through the discount broker's programs. This fee is typically based on the
average  daily  value of the  investments  in each  Lexington  Fund  made by the
discount broker on behalf of investors  participating  in the discount  broker's
program.  While  the  Company  has no reason to  believe  that such  shareholder
servicing arrangements will be terminated, no assurances can be given that these
arrangements  will continue or that they will continue to generate a substantial
portion of the Company's  total mutual fund assets.  The loss of any one or more
of these shareholder servicing  arrangements may materially adversely affect the
Company's  results of  operations.  The  Company's  ability to gain and maintain
access to these  distribution  channels is largely  dependent on the  investment
performance  of the  Company's  products,  the  development  of  new  investment
products, marketing and pricing strategies that serve the needs of investors and
discount brokers and the level of service provided by the Company.  Although the
Company historically has been successful in these aspects of its business, there
can be no assurance  that the Company can  continue to maintain  such access for
its products.

         (5%) The  Lexington  Strategic  Funds,  which are precious  metal stock
funds, as well as funds sponsored by Security Benefit Life Insurance Company are
sold with a sales charge through broker-dealers and directly by LFD.

         (18%) The  Lexington  Funds are also sold through  banks and  insurance
companies.

     Although the Company does not control all of its distribution channels, the
Company  believes  that the use of  multiple  distribution  channels,  including
competing  non-captive  distribution  channels,  stabilizes  and  increases  the
distribution of its products.

Regulation

     LMC and MSR are  registered as  investment  advisors  under the  Investment
Advisers Act of 1940, as amended (the "Advisory  Act"), and all applicable state
securities  laws.  LFD is registered  as a  broker/dealer  under the  Securities
Exchange  Act of 1934,  as amended (the "1934 Act"),  and all  applicable  state
securities  laws.  Accordingly,  this  company is subject to  regulation  by the
Securities and Exchange Commission (the "SEC") and state securities  commissions
and is  required to furnish  periodic  reports  and to observe  restrictions  on
certain  activities.  Each Lexington  Fund is registered  with the SEC under the
Investment  Company Act of 1940,  as amended (the "1940 Act"),  and is qualified
for sale  throughout the United  States.  The 1940 Act imposes  restrictions  on
certain transactions between the Lexington Funds and LMC.

     All  aspects  of  the  Company's  business  are  subject  to the  laws  and
regulations of the countries and states in which Lexington, its subsidiaries and
affiliates  conduct business.  These laws and regulations are primarily intended
to benefit  clients and  shareholders  and, in some instances may impose minimum
capital  requirements.  These laws and regulations  generally grant  supervisory
agencies broad administrative  powers,  including the power to limit or restrict
Lexington's business and impose sanctions,  to suspend individual employees,  to
limit the Company  from  engaging in business for  specific  periods,  to revoke
LMC's  registration  as  an  investment  advisor  and  LFD's  registration  as a
broker-dealer  and to censure and levy fines.  Applicable  United States Federal
laws also  include the  Employee  Retirement  Income  Security  Act of 1974,  as
amended  ("ERISA"),  and the Securities Act of 1933, as amended (the "Securities
Act").

Competition

     The asset management business is highly  competitive.  The Company competes
with a large  number of other  domestic  and  foreign  asset  management  firms,
commercial banks, insurance companies,  broker-dealers and others, although as a
practical  matter the  Company  typically  competes  with other  firms  offering
comparable  investment  services and  objectives.  In December 1996,  there were
approximately  9,800 asset  management  firms nationwide that compete in some or
all of the  Company's  markets.  According  to The Money  Market,  Directory  of
Pension Funds and their  Investment  Managers,  the Company ranked among the top
400 largest of  investment  counsel  firms,  as measured by total  assets  under
management  at  December  1996.  As a  result,  some of the  financial  services
companies with which the Company competes have  substantially  greater resources
and  assets  under  management  than the  Company  and offer a wider  variety of
products and services.

     The Company  believes  factors  which  affect its  competition  for clients
include  investment  performance  records,  the range of products  offered,  the
abilities and  reputations of its portfolio  managers,  management  fees and the
development of new investment strategies and marketing,  although the importance
of these  factors can vary  depending  on the type of asset  management  service
involved.  Client service is also an important competitive factor. The Company's
ability to increase  or retain  client  assets  could be  adversely  affected if
client  accounts  underperform  the market or if  portfolio  managers  leave the
Company. The ability of the Company to compete with other asset management firms
is also  dependent,  in part, on the relative  attractiveness  of its investment
philosophies  and  strategies  under  prevailing  market  conditions.  There are
relatively  few  barriers  to entry by new asset  management  firms  which could
increase competitive pressure in the industry.

     Selection of advisors by investors often is subject to a competitive review
process relying heavily upon historical performance.

     A large number of mutual  funds are sold to the public by asset  management
firms,  broker-dealers,  insurance  companies and banks in competition  with the
Company's  mutual  funds.  Many  competitors  apply  substantial   resources  to
advertising  and  marketing  their mutual funds which may  adversely  affect the
ability of the  Company's  mutual  funds to attract  new  clients  and to retain
assets under management.

Personnel

     At  December  31,  1996,  the  Company  employed  approximately  96 people.
Approximately  91, 1, 1, and 3 were located in Saddle  Brook,  New Jersey;  Gold
River, California; Dallas, Texas; and New York, New York, respectively.  None of
the  Company's  employees  are  represented  by a labor  union  and the  Company
believes that its relations with its employees are good.

                           RISK FACTORS

Dependence upon Performance Record

     The  market  for  providing   investment   management  services  is  highly
competitive  with  investors  generally  favoring  investment  advisors  with  a
sustained  successful  investment  performance record. The performance record of
the Company  may be affected by factors  over which the Company has little or no
control,  including general economic  conditions,  other factors influencing the
capital  markets,  the net sales of mutual fund shares  generally,  and interest
rate fluctuations.

Concentration of Distribution Channels and Reliance on Certain Distributors

     While the Company  over time has used a variety of  distribution  channels,
currently a substantial percentage of the Company's investment product sales are
through  non-captive   distribution  channels,   including  no  transaction  fee
programs.  Such  non-captive  distribution  channels  generally  offer competing
internally and externally sponsored or managed investment products and access to
these  distribution  channels  is  limited.  The  Company's  ability to gain and
maintain  access to these  distribution  channels  is largely  dependent  on the
investment  performance  of  the  Company's  products,  the  development  of new
investment  products,  marketing and pricing  strategies that serve the needs of
investors  and the  non-captive  distribution  channels and the level of service
provided by the Company.  Although the Company  historically has been successful
in these aspects of its business, there can be no assurance that the Company can
continue to maintain such access for its products.

     As of  December  31,  1996,  approximately  $533  million,  or 29% , of the
Company's  total  mutual  fund assets have been  generated  through  shareholder
servicing  arrangements with five discount  brokers;  Charles Schwab Mutual Fund
OneSource(R)  , Fidelity Funds  Network(R),  Jack White & Company No Transaction
Fee Mutual Fund  Service,  Waterhouse  Mutual Fund  Connection,  and First Trust
Corporation.  While the Company has no reason to believe  that such  shareholder
servicing arrangements will be terminated, no assurances can be given that these
arrangements  will continue or that they will continue to generate a substantial
portion of the Company's total mutual fund assets under management.  The loss of
any one or more of these  arrangements  could  materially  adversely  affect the
Company's results of operations.

Changes in Market Conditions; Retention of Assets Under Management

     The Company derives the major portion of its revenues from asset management
contracts with clients. Under these contracts,  the asset management fee paid to
the Company is  typically  based on the market value from time to time of assets
under   management.   Accordingly,   fluctuations  in  securities  prices  could
materially adversely affect the Company's results of operations.

     In  addition,   institutional  asset  management  contracts  are  generally
terminable  upon 30 days'  notice.  Mutual  fund and unit  trust  investors  may
generally  withdraw their funds at any time without prior notice.  Institutional
clients may elect to terminate their  relationship  with the Company,  or reduce
the aggregate  amount of assets under  management,  and  individual  clients may
elect to close their  accounts or redeem  their shares in the  Company's  mutual
funds or unit  trusts,  or shift their  funds to other  types of  accounts  with
different rate structures,  for any of a number of reasons, including investment
conditions  or  changes  in  prevailing   interest  rates  or  financial  market
conditions.  Fees vary with the aggregate  amount of assets under  management by
the Company and with the type of asset being managed, with higher fees earned on
actively  managed  equity and  balanced  accounts and lower fees earned on fixed
income and stable return accounts.

Global/International and Precious Metal Equity Mutual Fund Holdings

     At  December  31,  1996,  approximately  $1.0  billion,  or  31.5%,  of the
Company's total assets under  management  were invested in  global/international
and precious metal equities.  Many foreign markets,  especially emerging markets
and markets where precious metals are mined,  may be  characterized  by volatile
economic,  political and social  conditions.  Many of these  countries have also
experienced  significant exchange rate fluctuations between the local currencies
and the U.S.  dollar which may subject the U.S.  dollar  value of the  Company's
assets under management in  global/international  and precious metal equities to
currency translation risk, which could materially adversely affect the Company's
results of operations. The markets in such countries may also be less liquid and
less efficient than domestic markets.  While the Company believes  international
investing  offers the  potential  for reduced risk and higher  expected  returns
through  global  diversification,  fluctuations  in foreign  markets  may have a
material  adverse  effect on the value of the  assets  under  management  in the
Company's global/international and precious metal equities.

     Except for the Lexington  Strategic  Investments  Fund,  Inc.,  which has a
significant portion of its assets under management invested in South Africa, the
Lexington  Goldfund,  Inc., which has a significant  portion of its assets under
management invested in Australia,  Canada and South Africa, the Lexington Crosby
Small Cap Asia Growth Fund, which has a significant  portion of its assets under
management  invested in Asia, and the Lexington Troika Dialog Russia Fund, Inc.,
which has a  significant  portion of its assets  under  management  invested  in
Russia, the Company believes that in general, the assets under management in its
global/international  and  precious  metal  equities  funds  are  invested  in a
geographically diversified manner.

Competition

     The asset management business is highly  competitive.  The Company competes
with a large  number of other  domestic  and  foreign  asset  management  firms,
commercial banks, insurance companies,  broker-dealers and others, although as a
practical  matter the  Company  typically  competes  with other  firms  offering
comparable  investment  services and objectives.  Many of the financial services
companies with which the Company competes have  substantially  greater resources
and  assets  under  management  than the  Company  and offer a wider  variety of
products and services.

     The Company  believes  factors  which  affect its  competition  for clients
include  investment  performance  records,  the range of products  offered,  the
abilities and  reputations of its portfolio  managers,  management  fees and the
development of new investment strategies and marketing,  although the importance
of these  factors can vary  depending  on the type of asset  management  service
involved.  Client service is also an important competitive factor. The Company's
ability to increase  or retain  client  assets  could be  adversely  affected if
client  accounts  underperform  the market or if  portfolio  managers  leave the
Company. The ability of the Company to compete with other asset management firms
is also  dependent,  in part, on the relative  attractiveness  of its investment
philosophies  and  strategies  under  prevailing  market  conditions.  There are
relatively  few  barriers  to entry by new asset  management  firms  which could
increase competitive pressure in the industry.

Reliance on Key Personnel

     The Company's  business is managed by key executive  officers,  the loss of
whom could have a material  adverse effect on the Company.  The Company believes
that its  continued  success will depend in large part on its ability to attract
and  retain  highly  skilled  and  qualified  personnel.  In the event  that any
officers or directors of the Company  cease to be  associated  with the Company,
the  Company  will seek to find a  qualified  person or  persons  to fill  their
positions  with the  Company.  There can,  however,  be no  assurance  that such
individuals could be engaged by the Company.

Dividends and Dividend Policy

     The decision  whether to apply  legally  available  funds to the payment of
dividends on the Common  Stock will be made by the Board of Directors  from time
to time in the exercise of its business  judgment,  taking into  account,  among
other things,  the Company's  results of operations and financial  condition and
any  then  existing  or  proposed  commitments  for  the use by the  Company  of
available funds.

     On March 7, 1997, the Company announced a share repurchase program of up to
750,000 shares. Repurchases will be made from time to time in the open market or
through privately negotiated transactions at market prices. The stock repurchase
plan approved on March 6, 1997 has a term of three years.


     In  addition,  the  Company  may in the  future  issue debt  securities  or
preferred stock or enter into loan or other agreements that restrict the payment
of dividends on and repurchases of the Company's capital stock.

Substantial Stockholders

     Descendants  of  Lunsford  Richardson,   Sr.,  their  spouses,   trusts,  a
corporation  in  which  they  have   interests  and   charitable   organizations
established  by such  descendants  (the  "Richardson  Family")  some of whom are
directors of the Company,  beneficially own shares of Common Stock  representing
over 50% of the voting power of all the Company's outstanding voting securities.
Accordingly,  the  Richardson  Family has the ability to elect a majority of the
Board of Directors and, in general, exert significant influence over the outcome
of any other  matters  submitted to the  Company's  stockholders  for  approval,
including mergers, consolidations or the sale of all or substantially all of the
Company's assets, and to prevent or cause a change in control of the Company.

     At December 31, 1996 the Company also managed approximately $696 million in
invested assets of the Richardson Family and certain other related persons which
represent  approximately 21.7% of the Company's total assets under management at
such date.  The fees  charged for the  management  of such assets are based upon
standard fee schedules and are comparable  with the fees charged to unaffiliated
accounts.  While the Company  believes  that it will  continue  to manage  these
assets,  no assurance can be given with respect to the  continued  management of
these  assets.  The loss of such assets would  materially  adversely  affect the
Company's results of operations.

Item 2.  Properties

     Neither the Company nor its  subsidiaries  and majority owned companies own
real  estate.  The  principal  offices of the Company and its  subsidiaries  are
leased from unaffiliated third parties,  which leases expire at various dates up
until the year 2003. The Company and its subsidiaries LMC and LFD are located in
Saddle Brook, New Jersey,  occupying  approximately 28,000 square feet of office
space at an annual rental of  approximately  $578,000  under a lease expiring in
2003.

     MSR leases approximately 2,100 square feet of office space in New York, New
York, at an annual rental rate of  approximately  $42,000 under a lease expiring
in 1999.

     Substantially  all of the leases  referred to above provide for the payment
of tax, escalation,  maintenance, insurance and certain other operating expenses
applicable to the leased premises.

     In  addition  to the  above  leases,  the  Company  leases  equipment  on a
long-term or month-to-month basis, which rental expense was $152,630 in 1996.

     Additional information concerning leases is provided in Note 6 of the Notes
to Consolidated  Financial  Statements,  and such information is incorporated in
this item by reference.

Item 3.  Legal Proceedings

     As part of the normal course of its operations,  the Company and certain of
its subsidiaries and majority owned companies are named as defendants in various
legal actions seeking monetary damages.  Management does not expect any material
adverse  judgments to be rendered  against the Company or its  subsidiaries as a
result of pending legal actions.

Item 4.  Submission of Matters to a Vote of Security Holders

(a)  Date of Meeting:  May 17, 1996 Annual Meeting of Stockholders

(b)  Matters voted on and number of affirmative/negative votes:

           1.  Election of Directors:
     Peter L.  Richardson,  Stuart S. Richardson,  Carl H. Tiedemann,  Marion A.
     Woodbury
     For All Directors: 5,037,624                Withheld Authority: 5,039

           2. Ratification of the selection of Coopers & Lybrand L.L.P. as the
independent auditors for the current calendar year.

         Votes:            For              Against           Abstain
                        5,041,393             720                550







                                            PART II

Item 5.  Market for Registrant's Common Stock and Related Stockholder Matters

     The Company's  Common Stock is traded in the NASDAQ  National Market System
under the symbol LGAM.  The quarterly  range of prices of the  Company's  Common
Stock as reported by the NASDAQ  National  Market System,  from the inception of
trading on December 13, 1995 to December 31, 1996 was:

 
                                            1996                 1995
                                            ----                 ----
                                    High         Low      High          Low
                                  
First . . . . . . . . . . .         $4.906     $3.625      N/A           N/A
Second . . . . . . . . . .           6.50       4.375      N/A           N/A
Third  . . . . . . . . . .           5.50       4.25       N/A           N/A
Fourth . . . . . . . . . .           7.313      5.00      $5.00        $4.625


      On March 7, 1997, the Company  announced a share repurchase  program of up
to 750,000 shares. Repurchases will be made from time to time in the open market
or  through  privately  negotiated  transactions  at  market  prices.  The stock
repurchase plan approved on March 6, 1997 has a term of three years. The payment
of any dividends will depend,  among other things,  upon the Company's earnings,
assets and general financial condition, and upon other relevant factors.

     As of December 31, 1996, there were 671 holders of record of Common Stock.

Item 6.  Selected Financial Data
<TABLE>

                                                                   Year Ended December 31,
                                                1996           1995         1994           1993        1992
                                                ----           ----         ----           ----        ----
                                                               (000'0 omitted except per share data)

                                                                                      (Unaudited)
<S>                                            <C>           <C>           <C>            <C>         <C>   
Results of Operations:
     Total revenue                             $20,811       $21,286       $22,680        $18,070     $16,133
     Total expenses                             17,684        18,965        17,576         15,963      14,524
     Provision for taxes                         1,270           700         2,059            977         862
     Net income                                  2,475         1,579         2,990          1,145         731

Per Share Data:
     Earnings per share                          $0.45         $0.29         $0.55           0.21       $0.13

Financial Position:
     Total assets                              $16,078       $14,774       $13,646        $10,867     $10,750
     Total liabi                                 5,911         6,994        16,201         15,012      14,526
     Total stockholders' equity (deficit)        9,822         7,347        (2,908)        (4,346)     (3,990)


</TABLE>














     Item 7.  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations

     The  consolidated  net  income in 1996 was $2.5  million,  $0.45 per share,
compared to net income of $1.6 million, $0.29 per share in 1995. Included in the
1996 results is a one-time  pre-tax gain of $0.5 million  ($0.09 per share) from
the sale of four of the  Company's  West Coast  subsidiaries.  On September  30,
1996, the Company sold four of the California subsidiaries: LCMA, LFSI, LPA, and
LCMII, to a company formed by the CEO of the  subsidiaries  and the U.S. unit of
London Pacific Group Limited,  Berkeley (USA) Holdings Limited.  On December 31,
1996, LCM was merged into LMC. Included in the 1995 results were  reorganization
costs of $2.2 million  associated  with the  Company's  Spin-off  from  Piedmont
Management  Company. On a per share basis, these costs amounted to $0.40 for the
year.

     A further discussion and analysis of results of operations follows.

1996 Compared with 1995

     Total  revenues  of $20.8  million  are 2.4% less  than the  $21.3  million
recorded in 1995.

The revenue decrease primarily  reflected the sale of four of the Company's West
Coast  subsidiaries  on  September  30,  1996.  These  subsidiaries  would  have
contributed  approximately  $1.5  million in  additional  revenue for the fourth
quarter.  Partially  offsetting  the  effect of the sale is a 9.5%  increase  in
mutual fund  management  fees. This reflects the strong mutual fund asset growth
at the Company's Core Business (LMC/LFD).  This business delivered $14.4 million
in revenues in 1996 versus $14.2 million in 1995,  reflecting  the $300 million,
18.4%  increase  in mutual  fund  assets  under  management.  Asset  growth  was
strongest in domestic  equity  (+$0.2  billion) and  international  equity ($0.1
billion),  partially offset by precious metals which were down $0.1 billion. The
largest  increase  in mutual  fund  assets  under  management  was in  Lexington
Corporate  Leaders Trust which  increased by 56% or $137 million in assets under
management.  In general, stronger investor demand and performance in a number of
the Lexington funds drove the increase in assets under  management.  Mutual fund
management fees increased from $9.8 million in 1995 to $10.7 million in 1996. In
particular,  management  fees associated  with the Lexington  Corporate  Leaders
Trust Fund,  SBL Fund Series D, and  Lexington  Growth & Income Fund,  Inc. grew
significantly due to the asset increases noted above.

     Other  management fees experienced a $1.7 million decline from $9.1 million
in  1995  to  $7.4  million.  This  income  primarily  reflects  private  client
management fees at the West Coast  operations,  which, as mentioned above,  were
sold at the end of the third  quarter  and  contributed  $1.2  million  in other
management  fees in the fourth quarter of 1995.  This revenue line also includes
LMC's  institutional  asset  management fees which declined by $0.8 million from
1995 due to client terminations.

     Commissions income of $1.7 million were even with 1995.

     Other  income  of  $0.7  million  is  $0.2  million  above  1995,   and  is
attributable to higher investment income.

     Expenses of $17.7  million  decreased  $1.3 million  from $19.0  million in
1995. The Company's Core Business incurred total expenses of $10.9 million which
are $1.1 million  below the $12.0  million for 1995,  when the Company  incurred
one-time  reorganization  expenses  of $2.2  million  due to the  Spin-off.  The
Company's other  subsidiaries  incurred expenses of $6.8 million for 1996 versus
$7.0 million for 1995.

     Total  salaries  and other  compensation  increased  $0.7  million to $11.2
million from $10.5  million as a result of : 1) the addition of  investment  and
other personnel; 2) higher commissions associated with increased revenues in the
Company's West Coast  operations;  and, 3) the fact that the prior year expenses
benefited from an employee  benefit  refund  associated  with a good  experience
rating.  Selling and promotional expenses of $1.2 million are down $0.7 million.
This is primarily  due to the Company  re-targeting  its  marketing  efforts and
making greater use of public relations.  Administrative  and general expenses of
$5.2  million are $1.4  million  lower than $6.6  million in 1995.  The decrease
reflects $2.2 million in various  professional  fees incurred in 1995 associated
with  the  Spin-off  and  internal  reorganization  of  the  Company.  Partially
offsetting the $2.2 million decline are the additional costs associated with the
Company's public reporting responsibilities.

     The Company  recorded a $0.5 million gain on the sale of LFSI,  LPA,  LCMA,
and LCMII which occurred on September 30, 1996.

     Pre-tax  income grew to $3.7 million in 1996 from $2.3 million in 1995,  an
increase  of 60.9% or $1.4  million.  Provision  for  state  and  federal  taxes
increased 88.7% from $0.7 million in 1995 to $1.3 million in 1996, due to higher
profits.

     Overall,  net  income  increased  56.3%  from $1.6  million in 1995 to $2.5
million in 1996.  Earnings  per share were  $0.45 in 1996  compared  to $0.29 in
1995.

1995 Compared with 1994

     Total  revenues  of $21.3  million  for 1995 are 6.2%  less  than the $22.7
million recorded in 1994.

     The Company's core business  (consisting  of LMC and LFD)  delivered  total
revenues of $14.2 million in 1995, which is $0.6 million below the $14.8 million
recorded in 1994. The Company's other  subsidiaries  generated total revenues of
$7.1 million in 1995,  which is $0.8  million less than the $7.9 million  figure
for 1994.

     Net mutual fund management fees of $9.8 million are $0.3 million lower than
1994's  $10.1   million   reflecting   lower   average  net  assets  in  several
international  and fixed income funds,  which reflects higher returns and higher
investor  interest in U.S. equity markets,  which had a strong year. Mutual fund
commissions  fell $0.4 million from $0.6 million in 1994 to $0.2 million in 1995
as a result of a lower level of load fund sales.  Lexington's two load funds are
both precious metals  products;  precious metal products did not attract as much
investor interest in 1995 as they did in 1994.

     Other  management  fees of $9.1 million are $0.6 million  below 1994's $9.7
million. This income is primarily derived from the Company's other subsidiaries,
led by the California  operations,  which handles most of the Company's high net
worth  business.  The decline in revenues is due to a decline in billable assets
under  management  for the  year  which  is  primarily  a  function  of  account
terminations.

     Commissions  income of $1.7 million are $0.3 million  below the  comparable
1994  figure  of $2.0  million.  This  revenue  is  generated  primarily  by the
Company's California brokerage and insurance operations and decreased with lower
levels of new business.

     Other  income  of $0.5  million  is $0.2  million  above  the $0.3  million
recorded in 1994. The increase is attributable to higher  investment  income and
mutual fund administration fees at the Company's Core Business.

     Total  expenses of $19.0  million are $1.4  million or 8.0% higher than the
$17.6 million in total expenses in 1994.  The Company's  Core Business  incurred
total  expenses of $12.0 million which are $2.0 million or 20.0% above the $10.0
million  in  expense  for  1994   primarily   as  a  result  of  the   Company's
reorganization  and Spin-off.  The Company's  other  subsidiaries  incurred $7.0
million in expenses for 1995,  $0.6 million less than the year earlier  expenses
of $7.6 million.

     Total salaries and other  compensation  expenses are down $0.5 million from
$11.0  million  in 1994 to $10.5  million  in 1995,  reflecting  lower  employee
benefits  expenses and lower bonus accruals which are a result of lower revenues
and profits.  Total  selling and  promotional  expenses of $1.9 million are $0.1
million  below the year  earlier  expense  of $2.0  million.  Lower  advertising
expenditures  account  for most of the  variance  and reflect the lower sales of
precious metals,  foreign equities,  and fixed income  securities  compared with
U.S.  equities.  Administrative  and general  expenses of $6.6  million are $2.0
million  higher than the  comparable  1994 figure of $4.6 million.  The increase
reflects $2.2 million in various  professional fees associated with the Spin-off
and internal reorganization of the Company.

     Pre-tax  income of $2.3  million  is down 54.9% or $2.8  million  from $5.1
million  recorded  in  1994  due to the  lower  revenues  and  higher  expenses.
Provision for state and federal taxes declined from $2.0 million in 1994 to $0.7
million in 1995 due to lower profits.

     Overall, net income for 1995 decreased to $1.6 million from $3.0 million in
1994.

Effects of Inflation

     The Company does not believe that inflation has had a significant impact on
the operations of the Company to date. The Company's assets consist primarily of
cash and  investments  which are  monetary  in  nature.  However,  to the extent
inflation results in rising interest rates with the attendant adverse effects on
the securities  markets and on the values of  investments  held in the Company's
accounts,  inflation may adversely affect the Company's  financial  position and
results of operations. Inflation also may result in increased operating expenses
(primarily  personnel-related  costs) that may not be readily recoverable in the
fees charged by the Company.

Liquidity and Financial Condition

     The  Company's  business  typically  does not require  substantial  capital
expenditures.  The most  significant  investments  are in technology,  including
computer equipment and telephones.
     Historically,  the Company has been cash  self-sufficient.  Cash flows from
operations have ranged between $1.7 million and $4.5 million over the past three
years primarily as a result of the Company's net income.

     Net cash from  investing  activities  have ranged  between  inflows of $0.4
million and  outflows of $0.8  million  over the past three  years.  The primary
source  of cash in 1996  was  the  September  30 sale of four of the  California
subsidiaries.  The  primary  use of cash  over  the  recent  past  has  been for
purchases of computer equipment. It is expected that future investing activities
will consist of more routine  furniture  and equipment  purchases,  purchases of
marketable securities and, potentially, further acquisitions. With the exception
of  acquisitions,  the routine  investment  activities are expected to result in
smaller cash outflows from the investing activities in the near future.

     Cash flows from financing  activities  consistently have been negative over
the past three years. The most significant  outflow was the payment of a regular
quarterly dividend to Piedmont, the Company's former parent which ended in 1995.
On March 7, 1997, the Company announced a 750,000 share repurchase program under
which the Company may  repurchase its stock from time to time in the open market
or  through  privately  negotiated  transactions  at  market  prices.  The stock
repurchase plan approved on March 6, 1997 has a term of three years. The Company
may in the future issue debt securities or preferred stock or enter into loan or
other agreements that restrict the payment of dividends on and repurchase of the
Company's capital stock.

     Historically,  the Company has maintained a substantial amount of liquidity
for purposes of meeting regulatory  requirements and potential business demands.
At December 31, 1996 the Company has $7.5 million of cash and cash  equivalents.
Management  believes  the  Company's  cash  resources,  plus  cash  provided  by
operations,  are  sufficient  to meet  the  Company's  foreseeable  capital  and
liquidity  requirements.  As a result  of the  holding  company  structure,  the
Company's  cash flows will depend  primarily on  dividends or other  permissible
payments from its subsidiaries.  The Company has no standby  lines-of-credit  or
other similar arrangements.

     LFD,  as a  registered  broker-dealer,  has  federal  and state net capital
requirements  at December 31, 1996 of $5,000.  The  aggregate net capital of LFD
was $0.3  million at December  31,  1996.  LMC,  MSR,  and MSRI,  as  registered
investment  advisors,  must meet net capital requirements imposed at the Federal
and state levels.

     Stockholders'  equity on December  31, 1996  increased to $9.8 million from
$7.3 million a year earlier primarily as a result of the Company's net income.

     Management  believes  that the  Company's  liquid  assets  and its net cash
provided by operations will enable it to meet any foreseeable cash requirements.
The Company's overall financial condition remains strong.



















Item 8.  Financial Statements

     The following are included and filed under this item:                

     Report of Independent  Accountants . . . . . . . . . . . . . . . . . .   18

LEXINGTON GLOBAL ASSET MANAGERS, INC.

Consolidated Statements of Financial Condition--December 31, 1996 and 1995.. 19
Consolidated  Statements of  Operations--Years Ended December 31, 1996, 
      1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . .  20 
Consolidated  Statements of Stockholders' Equity  (Deficit)--Years Ended
 December 31, 1996, 1995 and 1994. . . . . .  .  .  .  .  .  .  . . . . . .  21
Consolidated  Statements  of  Cash Flows--Years  Ended  December 31, 1996, 
 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . .  22 
Notes to Consolidated  Financial Statements . . . . . . . . . . . . . . . .  23






































                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of
Lexington Global Asset Managers, Inc. :

    We have  audited the  consolidated  statements  of  financial  condition  of
Lexington  Global Asset Managers,  Inc. and Subsidiaries as of December 31, 1996
and 1995,  and the related  consolidated  statements of  operations,  changes in
stockholders'  equity  (deficit),  and cash flows for each of the three years in
the  period  ended  December  31,  1996.  These  financial  statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

     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 are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  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 consolidated  financial  statements  referred to above
present fairly, in all material respects, the consolidated financial position of
Lexington  Global Asset Managers,  Inc. and Subsidiaries as of December 31, 1996
and 1995, and the consolidated  results of their operations and their cash flows
for each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.



                                                 /s/ Coopers & Lybrand L.L.P.
                                                     Coopers & Lybrand L.L.P.



New York, New York
February 19, 1997





<TABLE>


                                        LEXINGTON GLOBAL ASSET MANAGERS, INC.
                                                            AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31,

                                                                           1996                    1995
                                                                           ----                    ----
<S>                                                                        <C>                     <C>   
Assets:
Cash and cash equivalents:
   Cash                                                                    $1,631,249              $  575,694
   Money market accounts                                                    5,898,575               5,039,323
                                                                     -----------------        ----------------

                                                                            7,529,824               5,615,017
                                                                     -----------------        ----------------

Receivables:
   Investment advisory and management fees                                  1,161,473               1,577,875
   Due from funds and other                                                   868,649               1,206,619
                                                                     -----------------        ----------------

                                                                            2,030,122               2,784,494
                                                                     -----------------        ----------------
Marketable securities                                                       1,205,350                 932,282
Prepaid expenses                                                              367,159                 349,768
Prepaid taxes                                                                  11,900                  42,365
Furniture, equipment and leasehold improvements (net of
   accumulated depreciation and amortization)                               1,347,324               1,434,802
Intangible assets (net of accumulated amortization)                           210,875                 252,387
Deferred income taxes                                                       3,131,842               3,048,283
Other assets                                                                  243,120                 314,203
                                                                     -----------------        ----------------
         Total assets                                                  $   16,077,516            $ 14,773,601          
                                                                      =================          =============
                      
                                                                           

Liabilities:
Accounts payable and other accrued expenses                               $ 1,027,123             $ 1,256,982
Accrued compensation                                                        1,480,337               1,870,820
Accrued employee benefits                                                   1,183,866               1,130,393
Capitalized lease obligations                                                       -                 157,019
Deferred income                                                             1,197,576               1,592,531
Federal income taxes payable                                                1,015,351                 979,184
Other liabilities                                                               6,681                   7,515
                                                                     -----------------        ----------------
         Total liabilities                                                  5,910,934               6,994,444
                                                                     -----------------        ----------------
Minority interest                                                             344,909                 432,136

Stockholders' Equity:
Common stock, $.01 par value; 15,000,000 authorized shares;
   5,487,887 issued and outstanding                                            54,879                  54,879
Additional paid-in capital                                                 21,501,517              21,501,517
Accumulated deficit                                                       (11,734,723)            (14,209,375)
                                                                     -----------------        ----------------
         Total stockholders' equity                                         9,821,673               7,347,021
                                                                     -----------------        ----------------

         Total liabilities and stockholders' equity                    $   16,077,516           $  14,773,601           
                                                                       =================        ================             
                                                                             





                                         The accompanying  notes are an integral part of the consolidated financial statements.
</TABLE>


<TABLE>


                                         LEXINGTON GLOBAL ASSET MANAGERS, INC.
                                                              AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31,

                                                                      1996              1995               1994
                                                                      ----              ----               ----
<S>                                                                <C>                 <C>               <C>   

Revenues:
   Investment advisory:
      Mutual fund management fees (including approximately)
          $430,252 ,  $452,000 and
          $496,000 from related parties)                           $  10,723,805       $9,789,003        $  10,092,248
         Mutual fund commissions                                         215,656          175,434              592,507
      Other management fees (including approximately
         $2,102,000,  $2,443,000 and
         $2,619,000 from related parties)                              7,395,337        9,107,863            9,674,799
   Commissions income                                                  1,734,411        1,692,261            1,989,766
   Other income                                                          742,092          521,556              330,273
                                                                -----------------  ---------------   ------------------
       Total revenues                                                 20,811,301       21,286,117           22,679,593
                                                                                      
                                                                -----------------  ---------------   ------------------

Expenses:
   Salaries and other compensation                                    11,241,242      10,492,925            11,032,675
   Selling and promotional                                             1,231,927        1,893,083            1,989,949
   Administrative and general                                          5,210,413        6,578,621            4,553,640
                                                                -----------------  ---------------   ------------------
       Total expenses                                                 17,683,582       18,964,629           17,576,264
                                                                                       
                                                                -----------------  ---------------   ------------------
                                                                       3,127,719        2,321,488            5,103,329
                                                                               

Gain on sale of subsidiaries                                             529,881                -                    -

Provision for income  taxes
   Current                                                             1,353,734        1,285,843           2,228,543 
   Deferred                                                              (83,559)        (586,027)           (169,113)
                                                                -----------------  ---------------   ------------------
       Total provision                                                 1,270,175          699,816           2,059,430   
                                                                -----------------  ---------------   ------------------
       Income before minority interest                                 2,387,425        1,621,672           3,043,899
Minority interest                                                        (87,227)           43,015               53,629
                                                                -----------------  ---------------   ------------------
       Net income                                                 $    2,474,652    $ 1,578,657         $    2,990,270
                                                                                      
                                                                =================  ===============   ==================

Earnings per share (Note 7):
   Net income per share                                                    $0.45            $0.29                $0.55
                                                                =================  ===============   ==================

   Average shares outstanding during the period                        5,487,887        5,487,887            5,487,887
                                                                =================  ===============   ==================












                                         The accompanying  notes are an integral part of the consolidated financial statements.
</TABLE>



<TABLE>

                                        LEXINGTON GLOBAL ASSET MANAGERS, INC.
                                                             AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
Years Ended December 31,



                                                Common Stock                                                       Total
                                          --------------------------
                                             Shares                      Additional          Accumulated       Stockholders'
                                             Issued         Amounts     Paid-In Capital       Deficit         Equity (Deficit)

<S>                                       <C>              <C>            <C>              <C>                <C>    

Balance at December 31, 1993                5,487,887      $54,879        $11,125,665      ($15,526,302)      ($4,345,758)
Net income                                                                                    2,990,270         2,990,270
Dividends                                                                                    (1,752,000)       (1,752,000)
Capital contribution                                                          200,000                              200,000
                                           -----------   ----------   ----------------   ----------------   ---------------
Balance at December 31, 1994                5,487,887       54,879         11,325,665       (14,288,032)       (2,907,488)
Net income                                                                                     1,578,657         1,578,657
Dividends                                                                                    (1,500,000)       (1,500,000)
Capital contributions                                                          76,000                               76,000
Conversion of debt to equity                                               10,099,852                           10,099,852
                                           -----------   ----------   ----------------   ----------------   ---------------
Balance at December 31, 1995                5,487,887       54,879         21,501,517       (14,209,375)         7,347,021
Net income                                                                                     2,474,652         2,474,652
                                           -----------   ----------   ----------------   ----------------   ---------------
Balance at December 31, 1996                5,487,887      $54,879        $21,501,517      ($11,734,723)        $9,821,673
                                           ===========   ==========   ================   ================   ===============





























                    The   accompanying   notes  are  an  integral  part  of  the consolidated financial statements.
</TABLE>

<TABLE>

                                         LEXINGTON GLOBAL ASSET MANAGERS, INC.
                                                              AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31,

                                                                                     1996                 1995               1994
                                                                                     ----                 ----               ----
<S>                                                                             <C>                    <C>             <C>    

Cash flows from operating activities:
Net income                                                                      $ 2,474,652            $1,578,657      $ 2,990,270 
                                                                                                     
Adjustments  to  reconcile   net  income  to  net  cash  provided  by  operating
   activities:
      Depreciation and amortization                                                 425,974              429,807           378,719 
      Gain on sale of subsidiaries                                                 (529,881)                   -                 - 
      Loss on sale of marketable securities                                               -               67,308             7,711 
      Unrealized (appreciation) depreciation on marketable
         securities                                                                (104,567)             (30,682)           51,747 
      Deferred income taxes                                                         (83,559)            (586,027)         (169,113)
      Minority interest                                                             (87,227)              43,015            53,629
Change in assets and liabilities
      Receivables                                                                   754,372             (779,783)          101,082 
      Prepaid expenses                                                              (17,391)            (190,697)           40,979
      Prepaid taxes                                                                  30,465               (4,969)           40,514
      Accounts payable and accrued expenses                                        (566,869)           1,092,218           721,606
      Federal income taxes payable                                                   36,167              445,799           533,385
      Deferred income                                                              (394,955)            (224,309)         (143,493)
      Other, net                                                                     48,823             (114,493)         (124,618)
      Net assets of subsidiaries sold                                              (286,425)                   -                 - 
                                                                               ------------------   ------------------  ------------
Net cash provided by operating activities                                         1,699,579            1,725,844         4,482,418

Cash flows from investing activities:
      Purchases of furniture, equipment and leasehold
         improvements
                                                                                   (425,803)            (504,648)         (728,291)
      Purchases of intangibles                                                       (7,225)                   -                 - 
      Purchases of marketable securities                                           (168,501)            (349,792)         (113,177)
      Sales of marketable securities                                                      -              155,767                 - 
      Sales of furniture and equipment                                              157,470                    -                 -
      Net proceeds from sale of subsidiaries                                        816,306                    -                 -
                                                                                ------------------   ------------------  -----------
Net cash used in investing activities                                                372,247            (698,673)         (841,468)

Cash flows from financing activities:
      Proceeds from issuance of debt                                                       -                    -          125,000
      Principal payments under capital lease obligations                            (157,019)           (135,764)         (135,034)
      Dividends                                                                            -          (1,500,000)       (1,752,000)
      Capital contribution                                                                 -              76,000           200,000
                                                                                ------------------   ------------------  -----------
Net cash used in financing activities                                               (157,019)          (1,559,764)      (1,562,034)
Net increase  (decrease) in cash and cash equivalents                              1,914,807            (532,593)        2,078,916
Cash and cash equivalents, beginning of year                                       5,615,017            6,147,610        4,068,694
                                                                                ------------------   ------------------  -----------
Cash and cash equivalents, end of year                                           $ 7,529,824          $ 5,615,017       $6,147,610
                                                                                ==================   ==================  ===========

Supplemental cash flow disclosure
     Income taxes paid                                                           $1,665,849           $   917,679       $1,486,374  
     Interest paid                                                                                       $108,530       $  337,398 
                                                                                                                  

Supplemental schedule of non-cash investing activities
     Conversion of debt to equity                                                                    $ 10,099,852


                    The   accompanying   notes  are  an  integral  part  of  the consolidated financial statements.

</TABLE>
                                                                               
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Organization and Business

     Lexington Global Asset Managers,  Inc. (the "Company")  serves as a holding
company for the following asset management  subsidiaries  (collectively referred
to as  the  "Subsidiaries"):  Lexington  Management  Corporation  (100%  owned),
Lexington Funds Distributor Inc. (100% owned), MSR Advisors Inc. (65% owned) and
Piedmont  Asset  Advisors  (51%  owned).  The  Subsidiaries  are  engaged in the
management,  distribution,  and administrative services for the Lexington Family
of Funds  ("Funds") and for its  institutional  and private  clients.  Lexington
Management  Corporation  ("LMC") and MSR Advisors  Inc.,  ("MSR") are registered
investment  advisors  under the Investment  Advisers Act of 1940 as amended.  In
addition Lexington Funds Distributor ("LFD") is a registered broker/dealer under
the Securities Exchange Act of 1934, is a member of the National  Association of
Securities  Dealers,  Inc.  ("NASD"),  and is therefore  subject to various NASD
regulations, including net capital requirements.

     On  September   30,  1996,   the  Company  sold  four  of  its   California
subsidiaries:  Lexington  Capital  Management  Associates,  Inc.  ("LCMA"),  LCM
Financial Services Inc. ("LFSI"),  Lexington Plan  Administrators  ("LPA"),  and
LCMI  Insurance  Services  ("LCMII"),  to a  company  formed  by the  CEO of the
subsidiaries  and the U.S. unit of London Pacific Group Limited,  Berkeley (USA)
Holdings Limited. On December 31, 1996, Lexington Capital Management ("LCM") was
merged into LMC.


2.  Basis of Presentation and Summary of Significant Accounting Policies

     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  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported amount of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

  Principles of Consolidation
     The accompanying  consolidated financial statements include the accounts of
the Company and the  Subsidiaries.  All material  intercompany  transactions and
accounts have been eliminated.

  Revenue Recognition
     Investment  management  and  advisory  fees are  recorded as income for the
period in which the  services  are  performed.  Commissions  related to security
transactions are accrued on the trade date.

  Receivables
     Included in 1995 other receivables is a note receivable from an employee of
one of the divested subsidiaries of approximately $195,000 which was forgiven in
1996.

  Furniture, Equipment, and Leasehold Improvements
     Furniture,  equipment,  and  leasehold  improvements  are  stated  at cost.
Equipment and  furniture are  depreciated  on a  straight-line  basis over their
estimated useful lives ranging from five to twelve years. Leasehold improvements
are amortized on a straight-line basis over the remaining lease term.

  Stock-Based Compensation
     In October 1995, the Financial  Accounting Standards Board issued Statement
of  Financial  Accounting  Standards  (SFAS) 123,  "Accounting  for  Stock-Based
Compensation,"  effective for financial  statements  for fiscal years  beginning
after  December  15,  1995.  SFAS 123  required  the  Company  to adopt,  at its
election,  either 1) the provisions in SFAS 123 which require the recognition of
compensation  expense  employee   stock-based   compensation  plans  or  2)  the
provisions in SFAS 123 which require the pro forma  disclosure of net income and
earnings  per  share  as if the  recognition  provisions  of SFAS  123 had  been
adopted. SFAS 123 explicitly provides that employers may continue to account for
their employee stock-based compensation plans using the accounting prescribed by
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees" (APB 25). The company adopted the disclosure requirements of SFAS 123
effective January 1, 1996 and continues to account for its employee  stock-based
compensation  plans under APB 25.  Accordingly,  the adoption of SFAS 123 had no
impact on the  Company's  financial  position  or  results  of  operations.  Had
compensation  cost for the Company's  stock option program been  recognized
based on the fair  value  at the  grant  date  consistent  with the  recognition
provisions  of SFAS 123, the impact on the Company's net income and earnings per
share would not have been  material.  However,  since the options vest over four
years and  additional  awards  could be made in future  years,  the  effects  of
applying SFAS 123 in 1996 are not likely to be  representative of the effects on
reported net income and earnings per share for future years. 

Employee and Retiree Benefit Plans
     Certain  subsidiaries  sponsor  various  benefit  plans  including a 401(k)
savings plan and a defined  benefit  pension  plan  covering  substantially  all
employees.

     The  Subsidiaries  also provide retired  employees the option of continuing
health and life insurance  benefits  through  various  welfare  benefit plans in
which the retiree shares in the cost.

     See Note 9 for further  information on these  employee and retiree  benefit
plans.

 Income Taxes
     The  Company  and  its  wholly  owned  subsidiaries  are  included  in  the
consolidated  federal  income tax return  filed by the  Company.  For  financial
statement  purposes,  federal  income  taxes are  computed on a  separate-return
basis.  Deferred  income  tax  assets  and  liabilities  are  computed  for  the
differences  between  the  financial  statement  and tax  bases  of  assets  and
liabilities  based on enacted  tax laws and rates  applicable  to the periods in
which the differences are expected to reverse.

     See Note 10 for further information.

3.  Investments

  Cash Equivalents
     Cash equivalents consist of highly liquid investments. At December 31, 1996
and 1995 cash  equivalents  consist  primarily of investments in Lexington Money
Market Trust, recorded at market value (which approximates cost).

  Marketable securities
     Marketable securities are carried at market value and, at December 31, 1996
consist of investments in eight of the Funds:  Lexington Global Fund,  Lexington
Natural  Resources  Trust,  Lexington  Ramirez  Global  Income  Fund,  Lexington
International Fund,  Lexington Emerging Markets Fund, Lexington Crosby Small Cap
Asia Growth Fund,  Lexington  SmallCap Value Fund,  and Lexington  Troika Dialog
Russia Fund. The cost of these securities was $1,060,788.  At December 31, 1995,
marketable securities consisted of investments in seven of the Funds:  Lexington
Global Fund, Lexington Natural Resources Trust,  Lexington Ramirez Global Income
Fund,  Lexington  International Fund, Lexington Emerging Markets Fund, Lexington
Crosby Small Cap Asia Growth Fund,  and Lexington  SmallCap Value Fund. The cost
of these  securities  was  $892,288.  The market  value of these  securities  is
determined  by  multiplying  the  number  of  shares  held in  each  Fund by its
respective net asset value as published daily in major newspapers.

     Unrealized  appreciation  (depreciation) arises from the difference between
the cost and  market  value  of  investments  and is  recognized  in  operations
currently.

4.  Regulatory Requirements

     The  broker/dealer  subsidiary is subject to rules and  regulations  of the
Securities  and Exchange  Commission  which require  maintenance  of minimum net
capital and reserve  accounts.  At December 31, 1996,  the amount of net capital
required for the subsidiary  pursuant to such rules and  regulations was $5,000.
The net  capital  of the  broker/dealer  subsidiary  which met all  requirements
aggregated $300,565 at December 31, 1996.

5.  Intangible Assets

     Intangible  assets  include  goodwill,  which  represents the excess of the
purchase price over the fair value of net assets  acquired and is amortized on a
straight-line  basis over forty years.  The  goodwill  arising from the original
acquisition of the LMC business by Piedmont  Management Company  ("Piedmont") in
1969 has been recorded on the books of the Company.
                                                                              

     Accumulated amortization of goodwill amounted to approximately $452,000 and
$436,000 at December 31, 1996 and 1995, respectively.


6.  Commitments and Contingencies

     The  Subsidiaries  lease   administrative   offices  under   noncancellable
operating leases.


     The future minimum lease payments are follows:
                                                              
 
         1997.................................................$   571,000
         1998..................................................   586,000
         1999..................................................   611,000
         2000..................................................   578,000
         2001..................................................   578,000
         Later Years...........................................   964,000
                                                                  -------
                                                               $3,888,000
                                                               ==========


     Rent expense was  approximately  $941,000 in 1996;  $1,140,000 in 1995; and
$944,000 in 1994.

7.  Common and Preferred Stock

     On December 13, 1995, the Company was recapitalized by adoption of restated
articles  of  incorporation  authorizing  15,000,000  shares  of  common  stock.
Piedmont distributed all of the Company's outstanding common stock as a dividend
to the  holders  of  Piedmont  common  stock,  on a one for one  basis  for each
outstanding  share of  Piedmont  common  stock.  The  accompanying  consolidated
financial statements of the Company have been retroactively reclassified to give
effect to the recapitalization.

     The  Company  has  5,000,000  shares  of  preferred  stock,  $.01 par value
authorized; no shares are issued and outstanding.

8.  Incentive Plan

     The Company has reserved 750,000 shares of common stock for issuance to key
employees  under the Long Term  Incentive  Plan  established  in 1995.  The plan
provides for the granting of stock options,  stock appreciation rights and other
stock based performance awards to employees.  During 1995, 180,000 stock options
were granted,  all at an exercise price of $4.75,  the fair market value at date
of grant. No options were exercised or expired in 1996 and 1995; and 45,000 were
exercisable at December 31, 1996. No grants were made in 1996.

9.  Employee and Retiree Benefit Plans

    Effective with the December 13, 1995 Spin-off of 100% of the Common Stock of
the Company  being  distributed  to Piedmont  Management  stockholders,  LMC has
assumed the  sponsorship  of certain of  Piedmont's  employee  benefit plans and
their related trusts and insurance contracts,  and is solely responsible for all
liabilities  and  obligations  under such plans.  In  addition,  in exchange for
payment  from  Piedmont  of  approximately  $740,000,  LMC  assumed  certain  of
Piedmont's  obligations  to provide  continuing  medical and dental  coverage to
certain of Piedmont's and The  Reinsurance  Corporation  of New York's  ("RECO")
employees,  and  retirement  and  postretirement  medical and life  insurance to
former RECO employees.

  Savings Plan
     LMC's and MSR's employees  participate in the 401(k) savings plan sponsored
by LMC. The savings plan provides for voluntary participant  contributions which
may not exceed 10% of each participant's annual salary.  Additionally,  for each
participant's  voluntary  contribution  not  exceeding  6% of the  participant's
annual  salary,  LMC and MSR contribute an amount equal to 50% of the individual
participant's contribution.

     LMC's and MSR's  contributions  fully vest to  employees at the end of five
years.  The annual amounts  contributed by LMC and MSR to the Plan were $114,409
in 1996; $88,395 in 1995; and $84,274 in 1994.

                                                                              
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.  Employee and Retiree Benefit Plans (Continued)

Retirement Plan

     LMC sponsors a defined  benefit plan which is part of a master  trust.  The
funding  policy for the plan is to annually  contribute  the statutory  required
minimum  amount  as  actuarially  determined.  The  net  periodic  pension  cost
determined under Statement of Financial Accounting Standards No. 87 was $127,464
in 1996;  $141,770  in 1995;  and  $171,700 in 1994.  The funded  status and net
pension liability for the Master Trust is provided in the table below.

                                                       Years ended December 31,
                                                       1996              1995
Actuarial present value of benefit obligations:
Vested...........................................  $4,851,900       $4,224,900
Non-vested..................................          127,600          194,000
                                                      -------          -------
     Accumulated benefit obligation........        $4,979,500       $4,418,900
                                                    ==========      ==========
Projected benefit obligation.................       5,603,100        5,504,400
Plan assets at fair value...................        4,848,000        4,475,200
                                                    ---------        ---------
Plan assets less than projected benefit obligation.. (755,100)      (1,029,200)
Unrecognized prior service cost...............         60,600           66,400
Unrecognized net loss..........................       191,300          422,700
Unrecognized net asset........................       (216,100)        (252,600)
                                                     --------         --------
     Net pension liability...................     $  (719,300)      $ (792,700)
                                                   ===========        ======== 


     The development of the foregoing  projected  benefit  obligations was based
upon a discount  rate of 7.5% in 1996 and 7.25% in 1995;  a 6%  average  rate of
increase in employee compensation was used for each year. The expected long-term
rate of return on assets was 10%.  Plan assets are invested  primarily in bonds,
stocks, short-term securities and cash equivalents.

     LMC also  maintains  non-qualified  supplemental  benefit plans for certain
employees.  These  plans  replace  the  portion  of  benefits  that  exceed  the
limitations  established by the Internal Revenue Code for tax qualified  benefit
plans. The amount charged to expense  relating to these plans was  approximately
$116,600 in 1996; $51,600 in 1995; and $37,200 in 1994.

  Postretirement Employee Benefits
     Certain of the  Subsidiaries  provide retired  employees the option of life
and medical insurance benefits.

     As of January 1, 1992, the provisions of Statement of Financial  Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions," were adopted. The Company elected the prospective transition approach
and is amortizing the transaction obligation over a 20-year period.

     Net periodic  postretirement  benefit  costs for 1996 and 1995 included the
following components:

                                                         1996             1995
                                                         -----            ----
  Service Cost........................               $  76,000        $  47,000
  Interest Cost........................                 96,000           53,000
  Amortization of transition obligation over 20 years   29,000           27,000
                                                     ---------        ---------
    Net periodic postretirement benefit cost....      $201,000         $127,000
                                                      ========         ========







                                                                             
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9.  Employee and Retiree Benefit Plans (Continued)

     The accumulated unfunded  postretirement benefit obligation for the Company
is provided in the table below. The Company has accrued its estimated portion of
the unfunded  postretirement benefit obligation  (approximately $427,700 in 1996
and $282,000 in 1995).

                                                      Years ended December 31,
                                                       1996            1995
                                                       ----            ----
          Retirees.............................   $  735,000      $  804,000
          Eligible active participants.........       89,000           7,000
          Other active participants............      592,000         374,000
                                                   ---------       ---------
          Total................................   $1,416,000      $1,185,000
                                                  ==========      ==========

     The  discount  rate  used in  determining  the  accumulated  postretirement
benefit  obligation  was 7.5% in 1996 and 7.25% in 1995. The assumed health care
cost trend rate was 7.5% in each year. If the assumptions used in developing the
health care cost trend rate in each of the last two years were  increased by 1%,
the effect on the accumulated  postretirement  benefit  obligation  would not be
material.

10. Income Taxes

     A reconciliation of income tax expense computed at the U.S.  statutory rate
to the  effective  rate  reflected  in  the  consolidated  financial  statements
follows:

                                                    Years Ended December 31,
                                                1996        1995         1994
                                                ----        ----         ----
Expected tax rate..........................    34.00%      34.00%       34.00%
State and local taxes......................     6.50       (3.50)       10.50
Other......................................    (5.78)        .01        (4.10)
                                               -----         ---        ----- 
Effective tax rate.........................    34.72%      30.51%       40.40%
                                               ======      ======       ======

     The tax effects of temporary differences that give rise to the net deferred
tax assets at December 31, 1996 and 1995 are as follows:
                                                     1996             1995
                                                     ----             ----
     Deferred tax asset:
          Net operating loss carryforwards...    $2,203,641        $2,172,003
          Deferred compensation..............       565,587           452,217
          Retirement and postretirement......       500,880           365,763
          Other..............................                         169,397
                                                    -------           -------
               Total deferred tax asset......     3,270,108         3,159,380
                                                  ---------         ---------
     Deferred tax liability:
          Deferred state taxes...............       (93,302)          (90,154)
          Other..............................       (44,964)          (20,943)
                                                    -------           ------- 
               Total deferred tax liability..      (138,266)         (111,097)
                                                   --------          -------- 
               Net deferred tax asset........    $3,131,842        $3,048,283
                                                 ==========        ==========

      The Company  believes  it is more  likely  than not that the Company  will
generate  future  taxable income to realize the benefits of the net deferred tax
asset.  Accordingly,  the Company has not  provided a valuation  allowance.  The
amount  ultimately  realized,  however,  could be reduced  if actual  amounts of
future taxable income are reduced.
     The  Company  has  net  operating  loss   carryforwards   of  approximately
$6,303,026 which are available to offset future taxable income which expire over
the period 1998 through 2008.



                                                                              
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Debt

     Prior to the Spin-off of the Company  from  Piedmont,  $10,099,852  owed to
Piedmont  and  its  subsidiary  by  certain  subsidiaries  of the  Company  were
converted from debt to equity of those subsidiaries.

      As of December 31, 1996 there were no capitalized lease obligations. As of
December  31,  1995  amounts  due  on   capitalized   lease   obligations   were
approximately $157,000 due September 1999.

12. Subsequent Event (Unaudited)

     On March 7, 1997, the Company announced a share repurchase program of up to
750,000 shares. Repurchases will be made from time to time in the open market or
through privately negotiated transactions at market prices. The stock repurchase
plan approved on March 6, 1997 has a term of three years.

13. Quarterly Financial Data (Unaudited)
<TABLE>

     The unaudited quarterly financial data for 1996 and 1995 follows:

                                              First            Second             Third           Fourth
                                            Quarter           Quarter           Quarter          Quarter
<S>                                        <C>              <C>               <C>              <C>    
                                            -------           -------           -------          -------
1996
----
Results of Operations:
     Total revenues......................  $5,717,300       $5,606,059        $5,565,017       $ 3,922,925
     Total expenses......................   4,955,313        4,855,620         4,832,825         3,039,824
     Provision for taxes.................     206,807          335,985           580,875           146,508
     Net income .........................     543,940          396,835           789,326           744,551
     Net income per share................       $0.10            $0.07             $0.14             $0.14

Common stock price range:
     High................................      $4.906            $6.50             $5.50            $7.313
     Low.................................      $3.625            $4.375            $4.25             $5.00

1995
----
Results of Operations:
     Total revenues......................  $5,218,727        $5,347,927        $5,440,059       $5,279,403
     Total expenses......................   4,261,104         4,513,279         4,890,031        5,300,215
     Provision for taxes.................     447,094           311,691           122,234         (181,203)
     Net income..........................     510,528           519,104           404,651          144,374
     Net income per share................       $0.09             $0.10             $0.07            $0.03

Common stock price range:
     High................................         N/A               N/A               N/A           $5.00
     Low.................................         N/A               N/A               N/A           $4.625

</TABLE>





     Item 6. Exhibits and Reports on Form 8-K
1. (a)  Exhibits.  (27)  Financial  Data  Schedule  for the twelve months ended
December 31, 1996.


     Item 9. Changes in and  Disagreements  with  Accountants  on Accounting and
Financial Disclosure

     The Company  terminated its audit  relationship  with its former  principal
accountant,  Coopers & Lybrand  L.L.P.  ("C&L"),  on March 6, 1997. On that same
day,  KPMG Peat  Marwick  L.L.P.  was engaged as  principal  accountant  for the
Company.

     C & L's report on the financial  statements  for the past two years did not
contain an adverse  opinion or disclaimer  of opinion,  and was not qualified or
modified as to uncertainty, audit scope, or accounting principles.

     The decision to change  principal  accountants was recommended by the Audit
Committee and approved by the Board of Directors of the Company.

     During  the  Company's  two most  recent  fiscal  years and any  subsequent
interim period preceding such termination,  there were no disagreements with the
former accountant on any matter of accounting principles or practices, financial
statements disclosure, or auditing scope or procedure, which disagreement(s), if
not resolved to the satisfaction of the former accountant,  would have caused it
to make  reference to the subject  matter of the  disagreement(s)  in connection
with its report.

     There were no reportable  events of the type  described in Item 304 (a) (1)
(v) (A) through (D) of Regulation S-K.


                                    PART III

Item 10.  Directors and Executive Officers of the Registrant


                      EXECUTIVE OFFICERS OF THE REGISTRANT

     The  following  table sets forth  certain  information  as of December 31,
 1996 with respect to the  company's  executive officers.

                                    Principal Occupation or Employment Office(s)
Name                         Age    Year Elected Executive Officer

Stuart S. Richardson         50    Chairman (1995)

Robert M. DeMichele          52    President and Chief Executive Officer (1995)

Richard M. Hisey             38    Executive Vice President and Chief Financial 
                                   Officer (1995)

Lawrence Kantor              49    Executive Vice President and General 
                                   Manager - Mutual Funds (1995)

     Other information required under this item in contained in the Registrant's
1997 definitive  proxy statement which will be filed with the Commission  within
120 days  after  the close of the  fiscal  year and is  herein  incorporated  by
reference.


Item 11.  Executive Compensation

     Information  required under this item is contained in the Registrant's 1997
definitive  proxy statement  which will be filed with the Commission  within 120
Days after the close of the fiscal year and is herein incorporated by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     Information  required under this item is contained in the Registrant's 1997
definitive  proxy statement  which will be filed with the Commission  within 120
Days after the close of the fiscal year and is herein incorporated by reference.



Item 13.  Certain Relationships and Related Transactions

     Information  required under this item is contained in the Registrant's 1997
definitive  proxy statement  which will be filed with the Commission  within 120
Days after the close of the fiscal year and is herein incorporated by reference.




                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

     The following information is filed under this item:

(a) (1) Financial Statements

     The  following  consolidated  financial  statements  of the Company and its
subsidiaries  are  included  in Item 8:  Consolidated  Statements  of  Financial
Condition-December   31,   1996   and   1995;    Consolidated    Statements   of
Operations-Years Ended December 31, 1996, 1995, 1994; Consolidated Statements of
Stockholders'  Equity  (Deficit)-Years  Ended  December  31, 1996,  1995,  1994;
Consolidated Statements of Cash Flows-Years Ended December 31, 1996, 1995, 1994;
Notes to Consolidated Financial Statements;

(a) (2) Schedules

     All  schedules  for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related  instructions,  are  inapplicable  or are  adequately  explained  in the
financial statements and, therefore, have been omitted.

     Financial  statements of interests of 50% or less,  which are accounted for
by the equity method,  have been omitted because they do not,  considered in the
aggregate as a single subsidiary, constitute a significant subsidiary.

(a)(3) Exhibits

     13.1 Registrant's Annual Report to Stockholders for the year ended December
31, 1996.

Exhibits specified by Item 601 of Regulation S-K, other than those listed above,
have been omitted since they are either not required or are not applicable.

(b)  Report on Form 8-K

The  Registrant  filed a Form 8-K on March  12,  1997  reporting  under  Item 4,
changing Registrants certifying accountant, which is incorporated by reference.

(c) Schedules described in item 14A (2) are excluded from the Registrants Annual
Report to Stockholders.



(d)    Items Incorporated by Reference

              The  Registrant's  Definitive  Proxy Statement for its 1997 Annual
Stockholders'  meeting and its Annual Report to stockholders for the fiscal year
ended  December  31,  1996 are  incorporated  by  reference  herein.  The  Proxy
Statement will be filed with the  Commission  within 120 days after the close of
the fiscal year, along with a copy of the Registrant's Annual Report.


















                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized:

                                     LEXINGTON GLOBAL ASSET MANAGERS, INC.

                                     By  /s/ Richard M. Hisey

                                     Richard M. Hisey, Executive Vice President
                                     (Chief Financial Officer)

Date March 27, 1997

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated:

          /s/Stuart Smith Richardson
        Stuart Smith Richardson, Chairman              Date March 27, 1997
          of the Board of Directors

          /s/Robert M. DeMichele
Robert M. DeMichele, President & Director              Date March 27, 1997
           (Chief Executive Officer)

          /s/Richard M. Hisey
Richard M. Hisey, Executive Vice President             Date March 27, 1997
(Principal Financial and Accounting Officer)

          /s/ Sion A. Boney
      Sion A. Boney, III, Director                     Date March 27, 1997

          /s/Haynes G. Griffin
       Haynes G. Griffin, Director                     Date March 27, 1997

          /s/William R. Miller
       William R. Miller, Director                     Date March 27, 1997

          /s/L. Richardson Preyer
     L. Richardson Preyer, Director                    Date March 27, 1997

          /s/Lunsford Richardson, Jr.
      Lunsford Richardson, Jr., Director               Date March 27, 1997

          /s/Peter L. Richardson
      Peter L. Richardson, Director                    Date March 27, 1997

          /s/Carl H. Tiedemann
      Carl H. Tiedemann, Director                      Date March 27, 1997

          /s/ Marion A. Woodbury
      Marion A. Woodbury, Director                     Date March 27, 1997