Dear Shareholders:
- --------------------------------------------------------------------------------
Gold bullion, after a brief rally in late February, succumbed to the
pervading fears of central bank selling. The important $340 an ounce support
level was broken in late June resulting in an 11.5% price decline for the first
half of 1997. In July, the announcement that the Australian Central Bank had
sold 167 tons of the metal sent prices down to levels not seen since 1985.
However, the low prices that existed in the first quarter stimulated fabrication
demand, mostly for jewelry in the Far East, so that physical demand was up 17%
with every sign that this stimulation in demand has remained in force so that
the gap between production and fabrication demand should widen even more.
Furthermore, despite the Australian Central Bank sale it is unlikely that total
Central Bank sales will exceed sales in 1993, a year when the price of gold rose
significantly. A lower gold price came about because the Australian sales were
accompanied by producer forward sales and then by massive short selling by trend
following commodity and hedge funds. As gold retreated the dealers sold short as
well in order to hedge put positions created earlier by the producers. The
result of all of this is an extremely high short position in the gold market,
which, if covered, should produce a significant rally.
Given the decline in the gold price it is not surprising that the
unmanaged Financial Times All Gold Index was down by 23.6%. Even this decline
masks the carnage experienced by the more speculative exploration stocks, the
darlings of yesteryear, after the Bre-X debacle. These stocks are largely absent
from the unmanaged Financial Times Index. Strangely enough, the North American
sector of the Index was down a more modest 18.9%. The highly leveraged African
sector was down a full 33.2% because productivity enhancement efforts have been
too slow to counter the effects of the lower local gold price. Ironically, the
well hedged members of the Australian sector were down on average by 27.2%. This
appears to be due largely to the perception of high costs resulting in part from
a strong Australia currency in 1996 as well as to heavy rainfall in the Spring.
Major tax loss selling towards the end of the period exacerbated the sell off.
During the first six months of 1997 Lexington Goldfund showed a decline of
19.60%* very close to the average 19.20% decline recorded by the average of the
gold oriented funds monitored by Lipper Analytical Services, Inc. Hurting the
Fund was a higher than average weighting in the Australian and South African
gold shares. It is our feeling that a heavier than average weighting in these
markets not only adds diversification to the Fund but also that better values
are to be found here. On the other hand, the significant gold bullion holding,
another source of diversification, added stability by declining substantially
less than the average share price.
As we look forward it is important not to exaggerate the impact of Central
Bank sales. The hue and cry raised within Germany when their Treasury suggested
revaluing the country's gold bullion reserves clearly demonstrated the popular
attachment to gold as a secure backing for a traditionally strong currency. The
Central Bank mirrored that view and the government promptly backed off.
Certainly other Central Banks took notice of this, and even the new French
government has retreated from some of its policies which would be inimical to a
strong European currency. There has even
1
<PAGE>
been talk that the European Monetary Union may be delayed. The largely
unanticipated sale of gold by Australia raised fears that Central Banks outside
of Europe might join the bandwagon but closer inspection of these potential
suspects allays these fears. Meanwhile, it is important to remember that last
year 17 countries actually added to their gold reserves. In fact, some evidence
exists that the Chinese central bank has been buying gold bullion in order to
diversify its preponderantly dollar denominated reserves. With an increasingly
large gap between production and fabrication demand together with the
possibility of mine closures at current prices any improvement in sentiment
regarding Central Bank sales could well produce a squeeze on the huge short
positions held by the Funds and the producers with the dealers then obligated to
reduce their own hedges. The stage would then by set for a sharp rally in the
gold price.
Sincerely,
/s/ Robert W. Radsch /s/ Robert M. DeMichele
----------------------------- --------------------------
Robert W. Radsch Robert M. DeMichele
Portfolio Manager President
August, 1997 August, 1997
* -25.27%, 3.77% and -0.82% are the one, five and ten year average annual
standard total returns, respectively, for the period ended June 30, 1997.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than at their
original cost. Total return represents past performance and is not predictive
of future results.
2
<PAGE>
LEXINGTON GOLDFUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30,1997 (unaudited)
Number
of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
GOLD BULLION: 15.7%
39,592 fine ounces (cost $15,262,309) ...... $13,221,718
----------
GOLD MINING COMMON STOCKS: 73.7%
AUSTRALIA: 15.7%
505,000 Acacia Resources, Ltd.2 .................... 658,273
750,000 Centaur Mining and Exploration, Ltd.2 ...... 955,159
910,000 Climax Mining, Ltd.2 ....................... 722,624
400,000 Delta Gold NL .............................. 662,243
407,600 Eagle Mining Corporation NL2 ............... 772,538
457,900 Emperor Mines, Ltd.2 ....................... 634,611
260,000 Gold Fields, Ltd.2 ......................... 383,712
490,000 Great Central Mines, Ltd. .................. 925,777
400,000 Gwalia Resources, Ltd.2 .................... 485,445
15,000 Lihir Gold, Ltd. (ADR)2 .................... 495,938
1,470,000 Menzies Gold NL2 ........................... 440,497
171,200 Newcrest Mining, Ltd.2 ..................... 469,279
293,750 Niugini Mining, Ltd.2 ...................... 605,168
1,752,539 Normandy Mining, Ltd. ...................... 1,956,227
350,000 Otter Gold Mines, Ltd.2 .................... 298,908
70,000 Otter Gold Mines, Ltd. (Options)2 .......... 9,439
250,000 Plutonic Resources, Ltd. ................... 775,364
191,000 Ranger Minerals NL2 ........................ 579,500
492,857 Resolute, Ltd. ............................. 871,361
146,107 Sons of Gwalia, Ltd. ....................... 539,614
----------
13,241,677
----------
GHANA: 3.2%
228,771 Ashanti Goldfields Company, Ltd.2 .......... 2,674,768
80,000 Ashanti Goldfields Company, Ltd.
(Preferred shares)2 ..................... 8,000
----------
2,682,768
----------
NEW ZEALAND: 0.3%
200,000 Macraes Mining Company, Ltd. ............... 277,183
----------
3
<PAGE>
LEXINGTON GOLDFUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30,1997 (unaudited) (continued)
Number
of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
NORTH AMERICA: 40.9%
50,000 Agnico-Eagle Mines, Ltd. ................... $ 481,250
75,000 Arizona Star Resource Corporation2 ......... 481,132
54,407 Barrick Gold Corporation ................... 1,196,954
100,344 Battle Mountain Gold Company2 .............. 574,617
245,400 Cambior, Inc. .............................. 2,776,088
165,000 Campbell Resources, Inc.2 .................. 101,663
226,586 Canyon Resources Corporation2 .............. 552,303
50,000 Colony Pacific Explorations, Ltd.
(Warrants)1,2 ........................... 36
100,000 Dayton Mining Corporation1,2 ............... 347,938
160,000 Dayton Mining Corporation2 ................. 556,700
50,000 Dayton Mining Corporation (Warrants)1,2 .... 36
30,000 Francisco Gold Corporation2 ................ 470,803
30,000 Franco Nevada Mining Corporation, Ltd. ..... 1,505,917
93,600 Freeport McMoran Copper & Gold "A" ......... 2,737,800
450,000 Geomaque Explorations, Ltd.2 ............... 1,043,813
62,169 Getchell Gold Corporation2 ................. 2,191,457
100,000 Gold Reserve Corporation2 .................. 797,357
50,000 Goldcorp, Inc. "A"2 ........................ 360,623
626,500 Golden Bear Minerals, Inc.1,2 .............. 149,863
700,000 Golden Bear Minerals, Inc. (Warrants)1,2 ... 507
175,000 Golden Knight Resources, Inc.2 ............. 357,723
400,000 Golden Queen Mining Company, Ltd.1,2 ....... 724,870
200,000 Golden Queen Mining Company, Ltd.
(Warrants)1,2 ........................... 145
200,000 Gran Colombia Resources, Inc.1,2 ........... 65,238
100,000 Gran Colombia Resources, Inc.
(Warrants)1,2 ........................... 72
150,000 Granges, Inc. (Warrants)1,2 ................ 109
25,000 Greenstone Resources, Ltd.2 ................ 219,273
155,000 Homestake Mining Company ................... 2,024,688
112,000 International Pursuit Corporation1,2 ....... 185,103
125,000 International Pursuit Corporation
(Warrants)1,2 ........................... 91
200,000 Laminco Resources, Inc.2 ................... 50,741
200,000 Meridian Gold, Inc.1,2 ..................... 543,652
50,000 Nevsun Resources, Ltd.2 .................... 150,410
50,000 Nevsun Resources, Ltd1,2 ................... 150,410
25,000 Nevsun Resources, Ltd. (Warrants)1,2 ....... 18
20,000 Newmont Gold Company ....................... 798,750
4
<PAGE>
LEXINGTON GOLDFUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30,1997 (unaudited) (continued)
Number
of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
NORTH AMERICA (continued):
40,420 Newmont Mining Corporation ................. $ 1,576,380
62,000 North American Palladium, Ltd. ............. 240,250
177,400 Pangea Goldfields, Inc.2 ................... 514,368
50,000 Pangea Goldfields, Inc.1,2 ................. 144,974
50,000 Pioneer Group, Inc. ........................ 1,153,125
97,000 Placer Dome, Inc. .......................... 1,588,375
150,000 Prime Resource Group, Inc. ................. 1,087,305
107,000 Rea Gold Corporation2 ...................... 61,273
120,000 Samax Gold, Inc.1,2 ........................ 500,160
500,000 Steppe Gold Resources, Ltd.1,2 ............. 141,350
250,000 Steppe Gold Resources, Ltd. (Warrants)1,2 .. 181
125,000 Stillwater Mining Company2 ................. 2,679,688
625,000 Tombstone Explorations Company, Ltd.1,2 .... 747,526
100,000 Triton Mining Corporation2 ................. 155,847
200,000 TVX Gold, Inc.2 ............................ 1,062,500
182,000 Venoro Gold Corporation2 ................... 9,894
223,650 Viceroy Resource Corporation2 .............. 729,527
500,000 Vista Gold Corporation2 .................... 449,419
-----------
34,440,292
-----------
SOUTH AFRICA: 13.6%
63,675 Anglo American Platinum Corporation,
Ltd. (ADR) .............................. 526,465
15,000 Anglovaal, Ltd. "N" .................... 400,173
235,000 Beatrix Mines, Ltd. ........................ 1,064,757
304,000 Driefontein Consolidated, Ltd. ............. 2,044,299
19,680 Durban Roodepoort Deep, Ltd. (Options)2 .... 21,695
19,680 Durban Roodepoort Deep, Ltd.
(Preferred shares) ...................... 86,347
1,099,000 East Rand Gold & Uranium Company, Ltd. ..... 1,538,659
370,000 Elandsrand Gold Mining Company, Ltd. ....... 1,333,799
41,443 Evander Gold Mines, Ltd. ................... 178,179
150,000 Free State Development &Investment, Ltd.2 .. 117,406
59,499 JCI, Ltd. (ADR) ............................ 457,829
73,646 Rustenburg Platinum Holdings Ltd.2 ......... 1,347,864
177,000 St. Helena Gold Mines, Ltd. ................ 878,065
125,849 Western Areas Gold Mining Company, Ltd.2 ... 846,293
25,000 WesternDeepLevels, Ltd. .................... 602,188
-----------
11,444,018
-----------
TOTAL GOLD MINING COMMON STOCKS
(Cost $75,623,965) ...................... $62,085,938
-----------
5
<PAGE>
LEXINGTON GOLDFUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30,1997 (unaudited) (continued)
Number
of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
CONVERTIBLE NOTES: 0.5%
$ 500,000 Trizec Hahn Corporation 3.0%, due 1/29/21
(cost $500,000) ......................... 401,250
SHORT-TERM INVESTMENTS: 4.7%
4,000,000 Federal Home Loan Mortgage Corporation 5.42%,
due 7/14/97 (Cost $3,992,171) ............ 3,992,171
-----------
TOTAL INVESTMENTS: 94.6%
(Cost $95,378,445+)(Note 1) .............. $79,701,077
Other assets in excess of liabilities: 5.4% 4,581,469
-----------
TOTAL NET ASSETS: 100.0%
(Equivalent to $4.80 per share on
17,555,767 shares outstanding) ........... $84,282,546
===========
1 Restricted Securities (Note 7)
2 Non-income producing securities.
ADR--American Depository Receipt
+ Aggregate cost for Federal income tax purposes is $97,193,369.
The Notes to Financial Statements are an integral part of this statement.
6
<PAGE>
LEXINGTON GOLDFUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30,1997 (unaudited)
ASSETS
Investments, at value (cost $95,378,445)
(Note1) ................................................. $ 79,701,077
Cash ...................................................... 4,233,610
Receivable for investment securities sold ................. 574,654
Receivable for shares sold ................................ 53,461
Dividends and interest receivable ......................... 81,348
-------------
Total Assets ...................................... 84,644,150
-------------
LIABILITIES
Due to Lexington Management
Corporation (Note 2) .................................... 65,550
Payable for shares redeemed ............................... 116,301
Accrued expenses .......................................... 179,753
-------------
Total Liabilities ................................ 361,604
-------------
NET ASSETS (equivalent to $4.80 per
share on17,555,767 shares
outstanding) (Note 4) ................................... $ 84,282,546
=============
NET ASSETS consist of:
Capital stock - authorized 500,000,000 shares,
$.001 par value per share ................................. $ 17,556
Additional paid-in capital (Note 1) ....................... 107,659,601
Undistributed net investment income (Note 1) .............. 1,995,328
Accumulated net realized loss on
investments and foreign currency
transactions (Note 1) ................................... (9,711,610)
Net unrealized depreciation of
investments and foreign currency
transactions ............................................ (15,678,329)
-------------
TOTAL NET ASSETS .......................................... $ 84,282,546
=============
LEXINGTON GOLDFUND, INC.
STATEMENT OF OPERATIONS
Six months ended June 30, 1997 (unaudited)
INVESTMENT INCOME
Income
Dividends ................................ $ 753,470
Interest ................................. 178,448
---------
........................................... 931,918
Less: foreign tax expense ................ 28,455
---------
Total investment income ................ $903,463
Expenses
Investment advisory fee
(Note 2) ............................... 430,736
Transfer agent and shareholder
servicing expense (Note 2) ............ 89,295
Printing and mailing expenses ............ 55,859
Distribution expense (Note 3) ............ 46,770
Accounting expenses (Note 2) ............. 36,005
Custodian expense ........................ 28,633
Registration fees ........................ 23,462
Professional fees ........................ 19,321
Computer processing fees ................. 8,651
Directors' fees and expenses ............. 7,580
Other expenses ........................... 32,373
---------
Total expenses ......................... 778,685
-------------
Net investment income .............. 124,778
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 5)
Net realized loss on:
Investments ......................... (6,458,213)
Foreign currency
transactions ....................... (394)
---------
Net realized loss .................. (6,458,607)
Net change in unrealized
depreciation on:
Investments ........................ (14,914,947)
Foreign currency
translations of other
assets and liabilities ............. (36)
---------
Net change in unrealized
depreciation ....................... (14,914,983)
-------------
Net realized and
unrealized loss ................... (21,373,590)
-------------
DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ................ $ (21,248,812)
=============
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
LEXINGTON GOLDFUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR
ENDED ENDED
JUNE 30,1997 DECEMBER 31,
(UNAUDITED) 1996
------------ ------------
<S> <C> <C>
Net investment income (loss) ............................................... $ 124,778 $ (451,907)
Net realized gain (loss) on investments and foreign
currency transactions .................................................... (6,458,607) 23,503,613
Net change in unrealized appreciation (depreciation) of investments
and foreign currency translations ........................................ (14,914,983) (8,561,690)
------------ -------------
Increase (decrease) in net assets resulting from operations .......... (21,248,812) 14,490,016
Distributions to shareholders from net investment income ................... -- (13,568,657)
Decrease in net assets from capital share transactions (Note 4) ............ (3,755,735) (27,412,928)
------------ -------------
Net decrease in net assets ........................................... (25,004,547) (26,491,569)
NET ASSETS:
Beginning of period ...................................................... 109,287,093 135,778,662
------------ -------------
End of period (including undistributed net investment income
of $1,995,328 and $1,870,550, respectively) .......................... $ 84,282,546 $ 109,287,093
============ =============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
LEXINGTON GOLDFUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (unaudited) and December 31, 1996
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 price 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 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.
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. For 1997, the investment
advisor has voluntarily agreed to reimburse the Fund if total annual expenses
(including management fees, but excluding interest, taxes, brokerage commission,
and extraordinary expenses) exceed 2.50% of the Fund's average daily net assets.
No reimbursement was required for the six months ended June 30, 1997.
The Fund reimbursed LMC for certain expenses, including accounting and
shareholder servicing costs of $80,507, which are incurred by the Fund, but paid
by LMC.
9
<PAGE>
LEXINGTON GOLDFUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 (unaudited) and December 31, 1996 (continued)
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 six months June 30, 1997
were $46,770 and are set forth in the statement of operations.
4. CAPITAL STOCK
Transactions in capital stock were as follows:
Six months ended
June 30, 1997 Year ended
(unaudited) December 31, 1996
-------------------------- --------------------------
Shares Amount Shares Amount
-------------------------- --------------------------
Shares sold ......... 7,048,348 $39,389,786 16,342,313 $118,484,798
Shares issued on
reinvestment
of dividends ...... -- -- 1,854,776 11,861,015
--------- ---------- --------- ------------
7,048,348 39,389,786 18,197,089 130,345,813
Shares redeemed ..... (7,796,835) (43,145,521) (21,643,173) (157,758,741)
--------- ---------- --------- ------------
Net decrease ...... (748,487) $(3,755,735) (3,446,084) $(27,412,928)
========= ========== ========= ============
5. PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from sales of securities for the six months
ended June 30, 1997, excluding short-term securities, were $12,140,271 and
$19,168,955, respectively.
At June 30, 1997, the aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost amounted to $5,227,589 and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value amounted to $20,905,918.
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.
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.
Average
Acquisition Cost Market % of Net
Security Date Shares Per Share Value Assets
------ ---- ------ -------- ----- ------
Colony Pacific
Explorations, Ltd.
(Warrants) 4/28/97 50,000 $ 0.00 36 0.00%
Dayton Mining Corporation 1/15/96 100,000 4.77 347,938 0.41%
Dayton Mining Corporation
(Warrants) 1/15/96 50,000 0.00 36 0.00%
Golden Bear Minerals, Inc. 9/10/96 626,500 1.17 149,863 0.18%
Golden Bear Minerals, Inc.
(Warrants) 9/10/96 700,000 0.00 507 0.00%
Golden Queen Mining
Company, Ltd. 5/02/96 400,000 1.84 724,870 0.86%
Golden Queen Mining
Company,Ltd. (Warrants) 5/02/96 200,000 0.00 145 0.00%
Gran Columbia
Resources, Inc. 5/29/96 200,000 2.62 65,238 0.08%
Gran Columbia Resources,
Inc. (Warrants) 5/29/96 100,000 0.00 72 0.00%
Granges, Inc. (Warrants) 4/11/96 150,000 0.00 109 0.00%
International Pursuit
Corporation 4/24/96 112,000 3.30 185,103 0.22%
International Pursuit
Corporation (Warrants) 4/24/96 125,000 0.00 91 0.00%
Meridian Gold, Inc. 7/25/96 200,000 1.82 543,652 0.64%
Nevsun Resources, Ltd. 9/5/96 50,000 7.29 150,410 0.18%
Nevsun Resources, Ltd.
(Warrants) 9/5/96 25,000 0.00 18 0.00%
Pangea Goldfields, Inc. 5/14/96 50 000 4.09 144,974 0.17%
Samax Gold, Inc. 12/06/96 120,000 3.31 500,160 0.59%
Steppe Gold Resources, Ltd. 5/21/96 500,000 1.65 141,350 0.17%
Steppe Gold Resources,
Ltd. (Warrants) 5/21/96 250,000 0.00 181 0.00%
Tombstone Explorations
Company, Ltd. 5/02/96 625,000 1.27 747,526 0.89%
---------- -----
$3,702,279 4.39%
========== =====
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.
10
<PAGE>
LEXINGTON GOLDFUND, INC.
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, 1997 -------------------------------------------------------
(unaudited) 1996 1995 1994 1993
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ................. $5.97 $6.24 $6.37 $6.90 $3.70
----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income .............................. 0.01 0.02 -- 0.03 0.01
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ..................................... (1.18) 0.50 (0.12) (0.53) 3.21
----- ----- ----- ----- -----
Total income (loss) from investment
operations ......................................... (1.17) 0.52 (0.12) (0.50) 3.22
----- ----- ----- ----- -----
Less distributions:
Distributions from net investment income ........... -- (0.79) (0.01) (0.03) (0.02)
----- ----- ----- ----- -----
Net asset value, end of period ....................... $4.80 $5.97 $6.24 $6.37 $6.90
===== ===== ===== ===== =====
Total return ......................................... (35.59%)* 7.84% (1.89%) (7.28%) 86.96%
Ratio to average net assets:
Expenses ........................................... 1.58%* 1.60% 1.70% 1.54% 1.63%
Net investment income (loss) ....................... 0.25%* (0.32%) 0.07% 0.50% 0.25%
Portfolio turnover rate .............................. 26.63%* 31.04% 40.41% 23.77% 28.41%
Average commissions paid on equity
security transactions** ............................ $0.01 $0.02 -- -- --
Net assets, end of period (000's omitted) ............ $84,283 $109,287 $135,779 $159,435 $159,479
</TABLE>
* Annualized
** In accordance with SEC disclosure guidelines, average commissions are
calculated beginning with the year ended December 31, 1996, but not for
prior periods.
11
<PAGE>
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 o Account Balances o Exchanges o
Last Transactions o Total Return o 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.
LEXINGTON
- --------------------------------------------------------------------------------
LEXINGTON
GOLDFUND,
INC.
- --------------------------------------[ ]---------------------------------------
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
- --------------------------------------[ ]---------------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1997
The Lexington Group
of No Load
Investment Companies
- --------------------------------------------------------------------------------
