Dear Shareholders:
- -------------------------------------------------------------------------------
After an initial burst of enthusiasm early in 1996 gold prices gradually
succumbed to the relentless bombardment of short sales by commodity funds
prompted by widespread talk of European Central Bank sales resulting from a
purblind desire to join into a common monetary union. The talk of central bank
selling was confirmed on Monday, January 13, 1997 when the Netherlands Bank
announced that it had sold 300 tonnes of gold for delivery in February and
March. This large sale of gold was executed in a fashion similar to the even
larger sale of gold for delivery in February of 1993, also by the Dutch Central
Bank, which coincided with the beginning of a major upward move in the gold
price.
Gold bullion, which ended 1993 at a price of $387.10 an ounce, quickly
recorded a yearly high of $413.50 an ounce on February 2, 1996, and ended 1996
at $367.70. Despite the heavy short selling by the commodity funds together with
the central bank sales, gold bullion was down only 5.01% for the year as lower
prices attracted higher jewelry demand especially from the Far East.
CHART/BEGIN
Printed version of this shareholder report contains a
graphic chart indicating the price of gold in U.S. Dollars
per ounce from December 1995 through December 1996.
CHART/END
1
<PAGE>
The unmanaged Financial Times All Gold Mines Index traced a similar path to
gold bullion showing a small net loss for the year of 4.70%. This small decline,
as usual, masked differences in performance among the different geographical
sectors. The best performer was the unmanaged Financial Times North American
Gold Index which showed a microscopic gain of 0.23% with exploration success
just outweighing the effect of a lower gold price. Meanwhile, the unmanaged
Financial Times Australasian Gold Index finished the year down 6.41% hurt by a
weaker local gold price due to a strong currency. Conversely, a weak South
African currency meant that gold prices actually went up in local terms so that
the unmanaged Johannesburg All Gold Index was up 12.07% when measured in the
South African currency. Unfortunately, when translated into U.S. dollars the
same index was down 12.67%.
During this difficult year for the gold market Lexington Goldfund, Inc.
showed a positive return of 7.84%* which compared favorably with the negative
return of 4.70% shown by the unmanaged Financial Times All Gold Mine Index. The
average gold fund monitored by Lipper Analytical Services showed a gain of
7.56%. Despite the negative effect of higher than average weightings in South
Africa, Australia and gold bullion compared with the other gold funds, the
Fund's performance was more than compensated for by a healthy involvement in
exploration companies, especially in the superbly performing Bre-X Minerals
Limited.
As we look ahead it is easy to succumb to the negative sentiment pervading
the gold market, but history teaches us that times of severe malaise are often
excellent times to add to holdings. One need only look back to the final months
of 1992 when the Dutch Central Bank also disposed of a large holding of gold
bullion. The German and the French have recently reiterated with ardor their
opposition to wanton sales of gold reserves in order to show cosmetic adherence
to the guidelines for membership in the European Monetary Union. Should
questions arise concerning the timetable of monetary alliance, gold would be a
major beneficiary. Meanwhile, jewelry demand has once again strengthened and
worldwide inflationary forces may well have bottomed.
Sincerely,
Robert W. Radsch Robert M. DeMichele
Portfolio Manager President
February, 1997 February, 1997
2
<PAGE>
CHART/BEGIN
Printed version of this shareholder report contains a
graphic chart indicating the comparison of change in
value of a $10,000 investment in Lexington Goldfund, Inc.,
the unmanaged Standard & Poor's 500 Stock Price Index
and Gold Bullion (London P.M. Fix. (US Dollars))
CHART/END
*7.84%, 7.83% and 5.25% are the one, five and ten year average annual standard
total returns, respectively, for the period ended December 31, 1996. Investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than at their
original cost. Total return represents past performance and is not predictive
of future results.
3
<PAGE>
Lexington Goldfund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
GOLD BULLION: 13.3%
39,592 fine ounces (cost $15,262,309) ................$ 14,552,005
------------
GOLD MINING COMMON STOCKS: 81.5%
AUSTRALIA: 18.7%
505,000 Acacia Resources, Ltd.2 .............................. 982,691
750,000 Centaur Mining and Exploration, Ltd.2 ................ 1,161,596
910,000 Climax Mining, Ltd.2 ................................. 838,415
750,000 Croesus Mining NL .................................... 488,466
400,000 Delta Gold NL2 ....................................... 749,776
407,600 Eagle Mining Corporation NL2 ......................... 887,042
557,900 Emperor Mines, Ltd.2 ................................. 1,085,630
260,000 Gold Fields, Ltd.2 ................................... 505,940
340,000 Great Central Mines, Ltd. ............................ 966,766
800,000 Gwalia Resources, Ltd. ............................... 1,874,439
15,000 Lihir Gold, Ltd. (ADR)2 .............................. 571,875
1,470,000 Menzies Gold NL2 ..................................... 665,505
624,750 Mount Edon Gold Mines, Ltd.2 ......................... 853,482
191,200 Newcrest Mining, Ltd. ................................ 759,307
293,750 Niugini Mining, Ltd.2 ................................ 723,268
1,452,539 Normandy Mining, Ltd. ................................ 2,007,412
350,000 Otter Gold Mines, Ltd.2 .............................. 472,581
70,000 Otter Gold Mines, Ltd. (Options)2 .................... 16,679
400,000 Plutonic Resources, Ltd. ............................. 1,858,554
191,000 Ranger Minerals NL2 .................................. 584,055
492,857 Resolute, Ltd. ....................................... 1,025,609
146,107 Sons Of Gwalia, Ltd. ................................. 862,222
727,100 St. Barbara Mines, Ltd.2 ............................. 404,251
------------
20,345,561
------------
GHANA: 2.6%
228,772 Ashanti Goldfields Company, Ltd. ..................... 2,831,449
80,000 Ashanti Goldfields Company, Ltd. (Preferred shares)2 . 8,000
------------
2,839,449
------------
NEW ZEALAND: 0.4%
200,000 Macraes Mining Company, Ltd. ......................... 460,667
------------
4
<PAGE>
Lexington Goldfund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
NORTH AMERICA: 40.3%
50,000 Agnico-Eagle Mines, Ltd. .............................$ 700,000
15,000 Amax Gold Inc. (Preferred shares) .................... 789,375
75,000 Arizona Star Resource Corporation2 ................... 560,864
207,407 Barrick Gold Corporation ............................. 5,962,951
100,344 Battle Mountain Gold Company ......................... 695,485
245,400 Cambior, Inc. ........................................ 3,588,975
165,000 Campbell Resources, Inc. ............................. 2 152,883
226,586 Canyon Resources Corporation2 ........................ 594,788
350,000 Dayton Mining Corporation2 ........................... 2,323,710
100,000 Dayton Mining Corporation1,2 ......................... 663,917
50,000 Dayton Mining Corporation (Warrants)1,2 .............. 76,606
30,000 Franco Nevada Mining Corporation, Ltd. ............... 1,373,433
18,600 Freeport McMoran Copper & Gold "A" ................... 523,125
450,000 Geomaque Explorations, Ltd.2 ......................... 1,083,425
32,169 Getchell Gold Corporation2 ........................... 1,234,485
100,000 Gold Reserve Corporation2 ............................ 919,270
50,000 Goldcorp, Inc. "A"2 .................................. 428,628
700,000 Golden Bear Minerals, Inc. (Warrants)1,2 ............. 628,168
100,000 Golden Knight Resources, Inc.2 ....................... 481,522
400,000 Golden Queen Mining Company, Ltd.1,2 ................. 817,129
200,000 Golden Queen Mining Company, Ltd. (Warrants)1,2 ...... 146
200,000 Gran Columbia Resources, Inc. (Warrants)1,2 .......... 189,691
150,000 Granges, Inc. (Warrants)1,2 .......................... 109
25,000 Greenstone Resources, Ltd.2 .......................... 290,920
55,000 Homestake Mining Company ............................. 783,750
225,000 International Pursuit Corporation1,2 ................. 845,400
125,000 International Pursuit Corporation (Warrants)1,2 ...... 91
200,000 Laminco Resources, Inc.2 ............................. 96,304
700,000 Lone Star Exploration NL2 ............................ 418,778
200,000 Meridian Gold, Inc.1,2 ............................... 474,227
50,000 Nevsun Resources, Ltd.2 .............................. 284,536
50,000 Nevsun Resources, Ltd.1,2 ............................ 284,536
21,691 Newmont Mining Corporation ........................... 970,672
62,000 North American Palladium, Ltd.2 ...................... 232,500
177,400 Pangea Goldfields, Inc.2 ............................. 828,335
50,000 Pangea Goldfields, Inc.1,2 ........................... 233,465
50,000 Pioneer Group, Inc. .................................. 1,178,125
147,000 Placer Dome, Inc. .................................... 3,197,250
150,000 Prime Resource Group, Inc. ........................... 1,061,538
107,000 Rea Gold Corporation2 ................................ 133,491
5
<PAGE>
Lexington Goldfund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
NORTH AMERICA (continued)
157,800 Royal Oak Mines, Inc.2 ...............................$ 504,259
120,000 Samax Gold, Inc.1,2 .................................. 459,634
94,002 Santa Fe Pacific Gold Corporation .................... 1,445,281
98,000 South Pacific Resources Corporation2 ................. 225,221
500,000 Steppe Gold Resources, Ltd.1,2 ....................... 353,848
250,000 Steppe Gold Resources, Ltd. (Warrants)1,2 ............ 182
75,000 Stillwater Mining Company2 ........................... 1,350,000
625,000 Tombstone Explorations Company, Ltd.1,2 .............. 980,372
312,500 Tombstone Explorations Company, Ltd. (Warrants)1,2 ... 34,199
100,000 Triton Mining Corporation2 ........................... 319,191
200,000 TVX Gold, Inc.2 ...................................... 1,550,000
182,000 Venoro Gold Corporation2 ............................. 27,885
223,650 Viceroy Resource Corporation2 ........................ 995,339
500,000 Vista Gold Corporation2 .............................. 674,861
------------
44,022,875
------------
SOUTH AFRICA: 19.5%
62,790 Anglo American Platinum Corporation, Ltd. (ADR)2 ..... 372,508
15,000 Anglovaal Ltd. "N" ................................... 442,544
235,000 Beatrix Mines, Ltd. .................................. 1,469,536
304,000 Driefontein Consolidated, Ltd. ....................... 3,200,858
49,200 Durban Roodepoort Deep, Ltd.2 ........................ 368,146
19,680 Durban Roodepoort Deep, Ltd. (Options)2 .............. 69,422
19,680 Durban Roodepoort Deep, Ltd. (Preferred shares)2 ..... 168,295
1,099,000 East Rand Gold & Uranium Company, Ltd. ............... 1,903,134
370,000 Elandsrand Gold Mining Company, Ltd. ................. 1,819,350
177,343 Evander Gold Mines, Ltd. ............................. 1,478,649
70,000 Free State Consolidated Gold Mines, Ltd. ............. 512,561
150,000 Free State Development & Investment, Ltd.2 ........... 118,653
101,158 JCI, Ltd. ............................................ 994,820
59,120 JCI, Ltd. (ADR) ...................................... 581,404
125,000 Kloof Gold Mining Company, Ltd. ...................... 1,018,173
30,500 Kloof Gold Mining Company, Ltd. (ADR) ................ 241,141
360,000 Randex, Ltd.2 ........................................ 166,243
73,631 Rustenburg Platinum Holdings, Ltd. ................... 1,007,337
177,000 St. Helena Gold Mines, Ltd.2 ......................... 1,173,064
6,600 Vaal Reefs Exploration & Mining Company, Ltd. ........ 423,303
221,849 Western Areas Gold Mining Company, Ltd. .............. 3,059,171
25,000 Western Deep Levels, Ltd. ............................ 765,634
------------
21,353,946
------------
TOTAL GOLD MINING COMMON STOCKS:
(Cost $89,110,863) ................................. 89,022,498
------------
6
<PAGE>
Lexington Goldfund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of
Shares or
Principal Value
Amount Security (Note 1)
- --------------------------------------------------------------------------------
CONVERTIBLE NOTES: 0.5%
$ 500,000 Trizec Hahn Corporation 3.0%, due 1/29/21
(cost $500,000) .................................... $ 536,250
------------
SHORT-TERM INVESTMENTS: 5.5%
6,000,000 Federal Home Loan Mortgage Corporation, 5.4%, due 01/02/97
(cost $5,999,100) .................................. 5,999,100
------------
TOTAL INVESTMENTS: 100.8%
(cost $110,872,272+) (Note 1) ...................... 110,109,853
Liabilities in excess of other assets: (0.8%) ........ (822,760)
------------
TOTAL NET ASSETS: 100.0%
(equivalent to $5.97 per share on
18,304,254 shares outstanding) .....................$109,287,093
============
1Restricted Securities. (Note 7).
2Non-income producing securities.
ADR-American Depository Receipt
+Aggregate cost for Federal income tax purposes is $112,687,196.
The Notes to Financial Statements are an integral part of this statement.
7
<PAGE>
Lexington Goldfund, Inc.
Statement of Assets and Liabilities
December 31, 1996
<TABLE>
Assets
<S> <C>
Investments, at value (cost $110,872,272) (Note 1) ................................................ $110,109,853
Cash .............................................................................................. 43,572
Receivable for investment securities sold ......................................................... 22,594
Receivable for shares sold ........................................................................ 435,786
Dividends and interest receivable ................................................................. 98,453
------------
Total Assets ................................................................................. 110,710,258
------------
Liabilities
Due to Lexington Management Corporation (Note 2) .................................................. 78,645
Payable for shares redeemed ....................................................................... 242,793
Distributions payable ............................................................................. 875,496
Accrued expenses .................................................................................. 226,231
------------
Total Liabilities ............................................................................ 1,423,165
------------
Net Assets (equivalent to $5.97 per share on 18,304,254 shares outstanding) (Note 4) .............. 109,287,093
============
Net Assets consist of:
Capital stock-authorized 500,000,000 shares, $.001 par value per share ............................ 18,304
Additional paid-in capital (Note 1) ............................................................... 111,414,588
Undistributed net investment income (Note 1) ...................................................... 1,870,550
Accumulated net realized loss on investments and foreign currency transactions (Notes 1 and 8) .... (3,253,003)
Net unrealized depreciation of investments and foreign currency transactions ...................... (763,346)
------------
Total Net Assets .................................................................................. $109,287,093
============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
8
<PAGE>
Lexington Goldfund, Inc.
Statement of Operations
Year ended December 31, 1996
<TABLE>
Investment Income
<S> <C> <C>
Dividends ...........................................................$ 1,509,861
Interest ............................................................ 324,224
-----------
1,834,085
Less: foreign tax expense ......................................... 55,810
-----------
Total investment income ......................................... $ 1,778,275
Expenses
Investment advisory fee (Note 2) .................................. 1,171,393
Distribution expense (Note 3) ..................................... 348,816
Transfer agent and shareholder servicing expense (Note 2) ......... 226,713
Accounting expenses (Note 2) ...................................... 114,550
Printing and mailing expenses ..................................... 112,554
Custodian expense ................................................. 77,434
Professional fees ................................................. 36,910
Registration fees ................................................. 36,396
Computer processing fees .......................................... 20,911
Directors' fees and expenses ...................................... 16,141
Other expenses .................................................... 68,364
-----------
Total expenses .................................................. 2,230,182
-----------
Net investment loss ......................................... (451,907)
Realized and Unrealized Gain (Loss)
on Investments (Note 5)
Net realized gain (loss) on:
Investments ................................................... 23,523,528
Foreign currency transactions ................................. (19,915)
-----------
Net realized gain ........................................... 23,503,613
Net change in unrealized appreciation/depreciation on:
Investments ................................................... (8,560,669)
Foreign currency translations of other assets and liabilities . (1,021)
-----------
Net change in unrealized appreciation ....................... (8,561,690)
-----------
Net realized and unrealized gain .......................... 14,941,923
-----------
Increase in Net Assets Resulting from Operations .................... $14,490,016
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
9
<PAGE>
Lexington Goldfund, Inc.
Statements of Changes in Net Assets
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Net investment income (loss) .................................................................... $ (451,907) $ 103,930
Net realized gain on investments and foreign currency transactions .............................. 23,503,613 9,671,211
Net change in unrealized appreciation (depreciation) of investments and
foreign currencies translations ............................................................... (8,561,690) (11,866,587)
------------ ------------
Increase (decrease) in net assets resulting from operations .............................. 14,490,016 (2,091,446)
Distributions to shareholders from net investment income ........................................ (13,568,657) (244,385)
Decrease in net assets from capital share transactions (Note 4) ................................. (27,412,928) (21,320,113)
------------ ------------
Net decrease in net assets ............................................................... (26,491,569) (23,655,944)
Net Assets
Beginning of period ........................................................................... 135,778,662 159,434,606
------------ ------------
End of period (including undistributed net investment income of
$1,870,550 and $0, respectively) ............................................................ $109,287,093 $135,778,662
============ ============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
10
<PAGE>
(left column)
Lexington Goldfund, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
1. Significant Accounting Policies
Lexington Goldfund, Inc. (the "Fund") is an open-end non-diversified management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to attain capital appreciation and
such hedge against loss of buying power as may be obtained through investment in
gold and equity securities of companies engaged in mining or processing gold
throughout the world. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements:
Investments Security transactions are accounted for on a trade date basis.
Realized gains and losses from investment transactions are reported on the
identified cost basis. Securities traded on a recognized stock exchange are
valued at the last sales price reported by the exchange on which the securities
are traded. If no sales price is recorded, the mean between the last bid and
asked prices is used. Securities traded on the over-the-counter market and gold
bullion are valued at the mean between the last current bid and asked price.
Short-term securities having a maturity of 60 days or less are stated at
amortized cost, which approximates market value. Securities for which market
quotations are not readily available and other assets are valued by Fund
management in good faith under the direction of the Fund's Board of Directors.
All investments quoted in foreign currencies are valued in U.S. dollars on the
basis of the foreign currency exchange rates prevailing at the close of
business. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income, adjusted for amortization of premiums and
accretion of discounts, is accrued as earned.
Foreign Currency Transactions Foreign currencies (and receivables and payables
denominated in foreign currencies) are translated into U.S. dollar amounts at
current exchange rates. Translation gains or losses resulting from changes in
exchange rates and realized gains and losses on the settlement of foreign
currency transactions are reported in the statement of operations. In addition,
the Fund may enter into forward foreign exchange contracts in order to hedge
against foreign currency risk in the purchase or sale of securities denominated
in foreign currency. The Fund may also enter into such contracts to hedge
against changes in foreign currency exchange rates on portfolio
(right column)
positions. These contracts are marked to market daily, by recognizing the
difference between the contract exchange rate and the current market rate as
unrealized gains or losses. Realized gains or losses are recognized when
contracts are closed and are reported in the statement of operations. There were
no foreign exchange contracts outstanding at December 31, 1996.
Federal Income Taxes It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to "regulated investment companies" and
to distribute all of its taxable income to its shareholders. Therefore, no
provision for Federal income taxes is required.
Distributions Dividends from net investment income and net realized capital
gains are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. The character of income and gains to
be distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. At December 31, 1996,
reclassifications were made to the Fund's capital accounts to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Net investment income, net realized gains and net assets
were not affected by this change.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
2. Investment Advisory Fee and Other Transactions
with Affiliate
The Fund pays an investment advisory fee to Lexington Management Corporation
("LMC") at an annual rate of 1.00% of the Fund's average daily net assets up to
$50 million and at an annual rate of 0.75% thereafter. The investment advisory
contract provides that the total annual expenses of the Fund (including
management fees, but excluding interest, taxes, brokerage commissions and
extraordinary expenses) will not exceed the level of expenses which the Fund is
permitted to bear under the most restrictive expense limitation imposed by any
state in
11
<PAGE>
Lexington Goldfund, Inc.
Notes to Financial Statements
December 31, 1996 and 1995 (continued)
(left column)
which shares of the Fund are offered for sale. No reimbursement was required for
the year ended December 31, 1996.
The Fund also reimbursed LMC for certain expenses, including accounting and
shareholder servicing costs of $239,171, which are incurred by the Fund, but
paid by LMC.
3. Distribution Plan
The Fund has a Distribution Plan (the "Plan") which allows payments to finance
activities associated with the distribution of the Fund's shares. The Plan
provides that the Fund may pay distribution fees on a reimbursement basis,
including payments to Lexington Funds Distributor, Inc. ("LFD"), the Fund's
distributor, in amounts not exceeding 0.25% per annum of the Fund's average
daily net assets. Total distribution expenses for the year ended December 31,
1996 were $348,816 and are set forth in the statement of operations.
4. Capital Stock
Transactions in capital stock were as follows:
Year ended Year ended
December 31, 1996 December 31, 1995
--------------------------- ---------------------------
Shares Amount Shares Amount
----------- ------------ ----------- ------------
Shares sold ........ 16,342,313 $118,484,798 22,030,928 $132,527,053
Shares issued on
reinvestment
of dividends ...... 1,854,776 11,861,015 32,429 212,081
----------- ------------ ----------- ------------
18,197,089 130,345,813 22,063,357 132,739,134
Shares redeemed .... (21,643,173) (157,758,741) (25,332,729) (154,059,247)
----------- ------------ ----------- ------------
Net decrease ...... (3,446,084) $(27,412,928) (3,269,372) $(21,320,113)
=========== ============ ========== ============
(right column)
5. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales of securities for the year ended
December 31, 1996, excluding short-term securities, were $41,091,652 and
$82,902,983, respectively. At December 31, 1996, the aggregate gross unrealized
appreciation for all securities in which there is an excess of value over tax
cost amounted to $10,388,756 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over value amounted to
$12,967,026.
6. Investment and Concentration Risks
The Fund makes significant investments in foreign securities and has a policy of
investing in gold and in the securities of companies engaged in mining or
processing of gold. There are certain risks involved in investing in foreign
securities or concentrating in specific industries that are in addition to the
usual risks inherent in domestic investments. These risks include those
resulting from potentially adverse political and economic developments as well
as the possible imposition of foreign exchange or other foreign governmental
restrictions or laws, all of which could affect the market and/or credit risk of
the investments.
In addition to the risks described above, risks may arise from forward foreign
currency contracts as a result of the potential inability of counterparties to
meet the terms of their contracts.
12
<PAGE>
Lexington Goldfund, Inc.
Notes to Financial Statements
December 31, 1996 and 1995 (continued)
7. Restricted Securities
The following securities were purchased under Rule 144A of the Securities Act of
1933 or issued in private placements and, unless registered under the Act or
exempted from registration, may be sold only to qualified institutional
investors.
<TABLE>
<CAPTION>
Shares or
Acquisition Principal Average Cost Market % of Net
Security Date Amount Per Share Value Assets
-------- ---- ------ --------- ----- ------
<S> <C> <C> <C> <C> <C>
Dayton Mining Corporation ........................... 1/15/96 100,000 $ 4.77 $ 663,917 0.61%
Dayton Mining Corporation (Warrants) ................ 1/15/96 50,000 0.00 76,606 0.07%
Golden Bear Minerals, Inc. (Warrants) ............... 9/10/96 700,000 1.17 628,168 0.57%
Golden Queen Mining Company, Ltd. ................... 5/02/96 400,000 1.84 817,129 0.75%
Golden Queen Mining Company, Ltd. (Warrants) ........ 5/02/96 200,000 0.00 146 0.00%
Gran Columbia Resources, Inc. (Warrants) ............ 5/29/96 200,000 2.62 189,691 0.17%
Granges, Inc. (Warrants) ............................ 4/11/96 150,000 0.00 109 0.00%
International Pursuit Corporation ................... 4/24/96 225,000 3.30 845,400 0.78%
International Pursuit Corporation (Warrants) ........ 4/24/96 125,000 0.00 91 0.00%
Meridian Gold, Inc. ................................. 7/25/96 200,000 1.82 474,227 0.43%
Nevson Resources, Ltd. .............................. 9/5/96 50,000 7.29 284,536 0.26%
Pangea Goldfields, Inc. ............................. 5/14/96 50,000 4.09 233,465 0.21%
Samax Gold, Inc. .................................... 12/6/96 120,000 3.31 459,634 0.42%
Steppe Gold Resources, Ltd. ......................... 5/21/96 500,000 1.65 353,848 0.32%
Steppe Gold Resources, Ltd. (Warrants) .............. 5/21/96 250,000 0.00 182 0.00%
Tombstone Explorations Company, Ltd. ................ 5/02/96 625,000 1.10 980,372 0.90%
Tombstone Explorations Company, Ltd. (Warrants) ..... 5/02/96 312,500 0.00 34,199 0.03%
---------- ----
$6,041,720 5.52%
========== ====
</TABLE>
Pursuant to guidelines adopted by the Fund's Board of Directors, these
unregistered securities have been deemed to be illiquid. The Fund currently
limits investment in illiquid securities to 15% of the Fund's net assets, at
market value, at the time of purchase.
8. Federal Income Taxes-Capital Loss Carryforwards
Capital loss carryforwards available for federal income tax purposes as of
December 31, 1996 are approximately:
$2,280,435 expiring in 2001, and $972,568 expiring in 2003.
To the extent any future capital gains are offset by these losses, such gains
would not be distributed to shareholders.
13
<PAGE>
Lexington Goldfund, Inc.
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $6.24 $6.37 $6.90 $3.70 $4.68
----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income ..................... 0.02 - 0.03 0.01 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ............................ 0.50 (0.12) (0.53) 3.21 (0.98)
----- ----- ----- ----- -----
Total income (loss) from investment
operations ................................ 0.52 (0.12) (0.50) 3.22 (0.96)
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income ...... (0.79) (0.01) (0.03) (0.02) (0.02)
----- ----- ----- ----- -----
Net asset value, end of period .............. $5.97 $6.24 $6.37 $6.90 $3.70
===== ===== ===== ===== =====
Total return ................................ 7.84% (1.89%) (7.28%) 86.96% (20.51%)
Ratio to average net assets:
Expenses .................................. 1.60% 1.70% 1.54% 1.63% 1.69%
Net investment income (loss) .............. (0.32%) 0.07% 0.50% 0.25% 0.58%
Portfolio turnover rate ..................... 31.04% 40.41% 23.77% 28.41% 13.18%
Average commissions paid on equity
security transactions* .................... $0.02 - - - -
Net assets, end of period (000's omitted) ... $109,287 $135,779 $159,435 $159,479 $71,856
</TABLE>
*In accordance with recent SEC disclosure guidelines, the average commission
paid on equity security transactions is calculated for the current period,
but not for prior periods.
14
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Lexington Goldfund, Inc.:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Goldfund, Inc.
as of December 31, 1996, the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian. As to securities sold
but not delivered, we performed other appropriate auditing procedures. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Lexington Goldfund, Inc. as of December 31, 1996, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New York, New York
February 10, 1997
15
<PAGE>
(left column)
Lexington
Goldfund, Inc.
Investment Adviser
- -----------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Distributor
- -----------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
------------------------------------------
All shareholder requests for services of
any kind should be sent to:
Transfer Agent
STATE STREET BANK AND
TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
Or call toll free:
Service and Sales: 1-800-526-0056
24 Hour Account Information:
1-800-526-0052
------------------------------------------
- -----------------------------------------------------------
(800) 526-0052
"LEXLINE"
24 hour toll-free telephone access to your
Lexington Fund account
Price/Yield * Account Balances * Exchanges *
Last Transactions * Total Return * Duplicate Statements
- -----------------------------------------------------------
This report has been prepared for the information of the
shareholders of Lexington Goldfund, Inc. and is authorized
for distribution to the public only if it is accompanied or
preceded by a currently effective prospectus which sets
forth expenses and other material information.
(right column)
------------------------------------
LEXINGTON
------------------------------------
------------------------------------
LEXINGTON
GOLDFUND,
INC.
(filled box)
Seeks capital appreciation and such
hedge against loss of buying power
as may be obtained through
investment in gold and equity
securities of companies engaged in
mining or processing gold
throughout the world.
(filled box)
ANNUAL REPORT
December 31, 1996
The Lexington Group
of No Load
Investment Companies
------------------------------------
