Dear Shareholders:
- --------------------------------------------------------------------------------
It was another difficult year for emerging market funds. The Lexington
Worldwide Emerging Markets Fund declined 5.9%* during 1995. The unmanaged Morgan
Stanley Capital International Emerging Markets Index fell an even greater 10.8%.
The average emerging markets fund fell 4.5% during 1995 according to Lipper
Analytical Services Inc. Returns remained in negative territory for the fourth
quarter as the unmanaged Morgan Stanley Capital International Emerging Markets
Index fell 2.4%. The Lexington Worldwide Emerging Markets Fund declined 3.0%*
while the average emerging market fund suffered declines of 3.3% during the
fourth quarter.
There were only a few bright spots in the emerging market arena in 1995.
Israeli stocks rose an average 21.8% as falling interest rates and further signs
of peace propelled equities. South African equities also saw strong returns,
appreciating 17.3%, while Greek equities posted gains of 10.2%. The best
strategy for 1995 would have been to hold large cash positions with heavy
investments in the few smaller yet strong performing markets. The major regions
in which most emerging market funds invest declined sharply. The unmanaged
Morgan Stanley Far East Index fell 10.5% during 1995, while the unmanaged Morgan
Stanley Latin America Index declined 15.8% for the year. The Lexington Worldwide
Emerging Markets Fund did relatively well due to a large holding of Israeli
stocks and high cash levels at the beginning of the year.
Emerging markets performed poorly for several reasons in 1995. Latin
American markets were more severely damaged due to the collapse of the Mexican
peso at the end of 1994. Mexico fell into a severe recession as GDP fell by
almost 10%. Capital fled the Latin American region, resulting in a sharp
economic contraction in Mexico as well as in Argentina and Brazil. The economic
contraction not only damaged corporate profits but also led to a crisis in the
Mexican and Argentine banking systems. Far Eastern markets suffered from the
typical cyclical effects of economic overheating. Central banks responded to
rising current account deficits, which became more difficult to fund as foreign
capital inflows diminished, by raising interest rates. As usual, rising interest
rates had a negative impact on equity prices. Finally, with returns so strong in
the U.S. market, investors stayed at home in 1995 instead of searching abroad
for higher returns.
The outlook for 1996 is exciting. Given two years of consolidation after a
spectacular 1993, valuation levels are far more attractive today than they have
been for some time. Signs of economic slowing in Asia should begin to appear,
improving the interest rate outlook and propelling stocks higher. Mexico and
Latin America face a difficult recovery but there are also many opportunities.
Mexico is rebuilding its economy on a sounder
1
<PAGE>
footing. Exports are now 30% of Mexican GDP and growing rapidly and the Mexican
current account deficit has moved into surplus.
We see tremendous opportunities in Eastern Europe, especially Poland.
Western European countries, due to high labor costs, are increasingly moving
production capacity to low wage countries with Poland becoming a favorite
target. This is in many ways similar to Japanese investment earmarked for Asia
in the '80s and '90s. Israel also continues to offer attractive investments due
to its highly skilled and cheap labor force, and better macroeconomic management
from the government and the Bank of Israel.
The Lexington Worldwide Emerging Markets Fund has redeployed most of its
high cash position back into equities due to our positive stance on emerging
markets. The largest weighting remains in Asia as these dynamic, fast growing
economies offer the prospect of strong long-term earnings growth. Latin America
now constitutes about one quarter of the Fund's assets as we expect confidence
to return to the region. If capital flows increase into Latin America those
economies will reap the benefits of falling interest rates and healthier
currencies. Also, due to the sharp contraction in the Latin American markets,
several outstanding companies have become very cheap and should provide
excellent returns over the long-term from these depressed levels. We believe the
Fund's 10% weighting in Eastern Europe and Russia will differentiate the
Lexington Worldwide Emerging Markets Fund from other emerging markets funds in
1996. It is in this region where we believe the best value exists. This is still
a relatively undiscovered area in the emerging markets community. The Polish
economy is growing at a rate of 6%, inflation although high at 24%, continues to
decline, and there are several rapidly growing companies with world class
strategic partners trading at low single digit price to earnings ratios.
Investing in emerging markets is certainly not without risks. Besides those
risks usually associated with emerging markets investments, we will be watching
out for signs of rising inflation and economic pick-up in the developed world.
Such a scenario would put pressure on interest rates and thus have a negative
effect on the emerging markets. We believe that U.S. investors will begin to
look abroad again in 1996. U.S. returns are likely to be much more pedestrian in
1996 than they were in 1995. Barings Securities estimates $50 billion will flow
into emerging markets in 1996 which would be triple the 1995 level.
2
<PAGE>
We would like to take this opportunity to thank our shareholders for their
support and we look forward to rewarding them in the long-term with the
investment opportunities provided by emerging markets.
Sincerely,
Richard T. Saler Robert M.DeMichele
Portfolio Manager President
January, 1996 January, 1996
_____________________________________________________________________________
GRAPH
Paper version of this shareholder report contains a graph comparing the
changes in value of a $10,000 investment in
Lexington Worldwide Emerging Markets Fund, Inc., and
the unmanaged Morgan Stanley Capital International (EAFE) Index
_____________________________________________________________________________
*-5.93%, 11.29% and 9.59% are the one, five and ten year average annual standard
total returns, respectively, for the period ended December 31, 1995. Prior to
June 1991, the Fund operated under a different name and investment objective.
Investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than at their
original cost. Total return represents past performance.
3
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS: 95.4%
BRAZIL: 7.4%
10,690,000 Cia Tecidos Norte De Mina (Preferred shares) ......$ 3,575,435
475,606,000 Cia Acos Especiais Itabir (Preferred shares) ...... 2,765,436
108,400 Compania Vale Do Rio Doce (ADR) ................... 4,444,400
63,134,000 Telecomunicacoes Brasileiras S.A. ................. 3,040,724
17,030,000 Telecomunicacoes de Sao Paulo S.A. ................ 2,506,216
4,033,017,000 Usinas Siderurgicas de Minas Gerais S.A. .......... 3,278,875
------------
19,611,086
------------
CHILE: 4.9%
159,100 Banco O'Higgins (ADR) ............................. 3,659,300
199,300 Banco Osorno y La Union (ADR) ..................... 2,765,288
112,400 Chile Fund, Inc. .................................. 2,922,400
136,800 Madeco, S.A. (ADR) ................................ 3,693,600
------------
13,040,588
------------
GREECE: 4.0%
147,400 AEGEK ............................................. 1,266,995
161,910 Delta Dairy S.A. (Preferred shares) ............... 2,387,751
205,900 Michaniki S.A. .................................... 2,646,084
100,200 Titan Cement Company .............................. 4,200,860
------------
10,501,690
------------
HONG KONG: 2.6%
827,000 Dao Heng Bank Group, Ltd. ......................... 2,973,435
262,000 HSBC Holdings Plc ................................. 3,964,563
------------
6,937,998
------------
HUNGARY: 1.2%
82,520 Pick Szeged ....................................... 3,141,771
------------
INDIA: 3.3%
82,100 Bajaj Auto, Ltd.2 ................................. 2,144,452
68,500 Hindalco Industries, Ltd.2 ........................ 2,329,000
497,400 The India Fund, Inc. .............................. 4,414,425
------------
8,887,877
------------
INDONESIA: 6.3%
371,500 PT Hanjaya Mandala Sampoerna ...................... 3,871,147
1,645,000 PT Hero Supermarket ............................... 3,529,116
380,000 PT Modern Photo Film Company ...................... 2,204,466
1,166,000 PT Semen Cibinong ................................. 2,909,895
928,000 PT Semen Gresik ................................... 2,600 ,350
2,888,000 PT Sinar Mas Agro Resources Agricultural
Production and Technology Corporation .......... 1,612,172
------------
16,727,146
------------
4
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
ISRAEL: 6.5%
790 Africa-Israel Investments, Ltd.2 ..................$ 952,591
1,524,267 Bank Hapoalim, Ltd. ............................... 2,516,078
11,870 First International Bank of Israel ................ 1,388,246
335,000 First Israel Fund, Inc. ........................... 3,894,375
29,010 Koor Industries, Ltd. ............................. 2,880,302
366,336 Osem Investments, Ltd. ............................ 2,190,708
51,000 Teva Pharmaceutical Industries, Ltd. (ADR) ........ 2,361,938
394,000 The Israel Land Development Company ............... 1,139,776
------------
17,324,014
------------
MALAYSIA: 7.8%
234,000 Arab Malaysian Merchant Bank Holdings Bhd ......... 2,673,232
980,000 Berjaya Singer Bhd ................................ 1,219,933
949,000 Cement Industries of Malaysia Bhd ................. 3,074,857
211,000 Genting Bhd ....................................... 1,762,143
735,000 IOI Properties Bhd ................................ 1,838,586
336,000 Malayan Banking Bhd ............................... 2,832,539
1,100,000 New Straits Times Press Bhd ....................... 3,683,278
1,005,000 Sungei Way Holdings Bhd ........................... 3,622,513
------------
20,707,081
------------
MEXICO: 8.2%
739,398 Corporacion Industrial San Luis S.A. .............. 3,802,893
209,500 Grupo Casa Autrey S.A. de C.V. (ADR) .............. 2,802,063
6,135,000 Grupo Industrial Maseca S.A. de C.V. .............. 3,754,492
202,900 Grupo Televisa S.A. (ADR) ......................... 4,565,250
341,500 Transportation Maritima Mexicana
S.A. de C.V. "L" (ADR) ......................... 2,860,063
587,100 Tubos De Acero De Mexico S.A. (ADR)2 .............. 4,109,700
------------
21,894,461
------------
PAKISTAN: 0.6%
313,700 Pakistan Investment Fund, Inc. .................... 1,646,925
------------
PHILIPPINES: 6.3%
3,595,700 Ayala Land, Inc. "B" .............................. 4,390,019
15,107,500 Filinvest Land Inc.2 .............................. 4,841,778
4,574,650 International Container Terminal Service, Inc. .... 2,399,902
214,000 Philippine Commercial International Bank1 ......... 1,975,887
6,315,000 Universal Robina Corporation ...................... 3,132,201
------------
16,739,787
------------
5
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
POLAND: 6.7%
239,600 Bank Rozwoju Eksportu S.A. ........................$ 3,646,510
26,242 Bank Slaski S.A. .................................. 1,528,298
116,100 Debica S.A. ....................................... 1,752,808
1,029,380 Elektrim Towarzystwo Handlowe S.A. ................ 3,488,362
447,900 Polifarb Cieszyn Wroclaw S.A. ..................... 1,699,621
209,400 Stomil Olsztyn S.A.2 .............................. 1,954,627
148,400 Universal S.A. .................................... 421,591
25,000 Wedel S.A. ........................................ 826,907
34,100 Zaklady Piwowarski w Zywcu S.A. ................... 2,352,679
------------
17,671,403
------------
PORTUGAL: 1.8%
255,300 Portugal Telecom S.A. (ADR)2 ...................... 4,797,527
------------
RUSSIA: 1.5%
829,700 Lukoil Holdings2 .................................. 3,974,263
------------
SINGAPORE: 6.7%
299,000 Development Bank of Singapore, Ltd. ............... 3,722,167
259,000 Fraser & Neave, Ltd. .............................. 3,297,496
233,000 Jurong Engineering, Ltd. .......................... 1,359,634
324,000 Keppel Corporation, Ltd. .......................... 2,887,537
224,000 Oversea-Chinese Banking Corporation, Ltd. ......... 2,804,357
534,000 Overseas Union Bank, Ltd. ......................... 3,682,628
------------
17,753,819
------------
SOUTH AFRICA: 6.8%
16,000 Anglo American Corporation of
South Africa, Ltd. (ADR) ..................... 969,000
239,599 Anglo American Platinum (ADR)2 ................... 1,363,798
261,800 Barlow, Ltd. (ADR) ............................... 3,714,288
154,200 Liberty Life Association of Africa, Ltd. (ADR) ... 4,750,324
244,700 Malbak, Ltd.1 .................................... 1,695,342
259,400 Malbak, Ltd. ..................................... 1,797,188
223,462 Rustenburg Platinum Holdings, Ltd. (ADR) ......... 3,677,939
------------
17,967,879
------------
SOUTH KOREA: 2.3%
100,000 Cho Hung Bank .................................... 1,164,110
13,441 Kia Motors Corporation (ADR)1,2 .................. 312,503
22,409 Korea Long Term Credit Bank ...................... 632,664
30,800 Pohang Iron & Steel Company, Ltd. ................ 2,013,098
20,200 Pohang Iron & Steel Company, Ltd. (ADR) .......... 441,875
26,062 Sung Shin Cement Industrial Company, Ltd. ........ 940,745
7,000 Tae Young Corporation ............................ 422,328
11,201 Taihan Electric Wire Company ..................... 303,237
------------
6,230,560
------------
6
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
Number of
Shares or
principal Value
amount Security (Note 1)
- --------------------------------------------------------------------------------
TAIWAN: 2.0%
256,125 Taiwan Fund, Inc. ................................. $ 5,250,563
------------
THAILAND: 6.3%
203,300 Bangkok Bank, Ltd. ................................ 2,470,604
2,700 Charoen Pokphand Feedmill Company, Ltd. ........... 13,189
310,000 Matichon Public Company, Ltd. ..................... 1,859,015
269,000 Phatra Thanakit Company, Ltd. ..................... 2,307,546
88,000 Saha Pathanapibul Company, Ltd. ................... 164,257
180,000 Siam City Cement Company, Ltd. .................... 2,816,521
263,000 Thai Farmers Bank Public Company, Ltd ............. 2,652,979
54,000 The Siam Cement Company, Ltd. ..................... 2,993,805
213,000 Total Access Communication Plc1,2 ................. 1,384,500
------------
16,662,416
------------
UNITED KINGDOM: 1.5%
864,000 Antofagasta Holdings Plc ......................... 3,917,160
------------
VENEZUELA: 0.7%
410,400 Ceramanic Carobobo (ADR) .......................... 439,128
146,280 Mantex S.A.C.A. (ADR) ............................. 694,830
92,933 Mavesa S.A. (ADR) 1 ............................... 348,499
114,800 Mavesa S.A. (ADR) ................................. 430,500
------------
1,912,957
------------
TOTAL COMMON STOCKS (cost $256,287,316) ........... 253,298,971
------------
SHORT-TERM INVESTMENTS: 4.1%
$8,000,000 Federal Home Loan Mortgage Corporation,
5.50%, due 1/12/96 ............................ 7,998,778
3,000,000 Federal Home Loan Mortgage Corporation,
6.25%, due 2/26/96 ............................ 2,973,570
------------
TOTAL SHORT-TERM INVESTMENTS (cost $10,972,925) ... 10,972,348
------------
TOTAL INVESTMENTS: 99.5%
(cost $267,260,241+) (Note 1) ................ 264,271,319
Other assets in excess of liabilities: 0.5% ....... 1,273,134
------------
TOTAL NET ASSETS: 100.0%
(equivalent to $10.70 per share
on 24,826,051 shares outstanding) ............$265,544,453
============
7
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
Notes to Statement of Net Assets
1The following securities were purchased under Rule 144A of the Securities Act
of 1933 and, unless registered under the Act or exempted from registration, may
be sold only to qualified institutional investors.
<TABLE>
Acquisition Average Cost Per Percent of
Issuer Date Share/Principal Unit Market Value Net Assets
- ---------------------------------- -------------------- ------------------- ------------ ----------
<S> <C> <C> <C> <C>
Kia Motors Corporation (ADR) .... 11-15-91 to 12-7-93 $30.06 $ 312,503 .12%
Mavesa S.A. (ADR) ................ 2-15-94 to 6-6-94 10.82 348,499 .13%
Malbak, Ltd. ..................... 7-25-95 1.66 1,695,342 .64%
Philippine Commercial
International Bank ........... 8-4-95 8.30 1,975,887 .74%
Total Access Communications Plc .. 9-28-95 6.31 1,384,500 .52%
---------- -----
$5,716,731 2.15%
========== =====
</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, but, pursuant to state regulations, the
Fund's investment in such securities is effectively limited to 10%.
2Non-income producing securities.
ADR-American Depository Receipt.
+Aggregate cost for Federal income tax purposes is identical.
___________________________
At December 31, 1995, the composition of the Fund's net assets by industry
concentration was as follows:
(left column)
Banking/Financial Services .................. 16.8%
Capital Equipment ........................... 4.1%
Consumer (Durables) ......................... 3.6%
Consumer (Non-Durables) ..................... 11.0%
Construction and Housing .................... 2.1%
Energy Sources/Utility ...................... 1.5%
Financial Services .......................... 3.7%
Health Care ................................. 1.9%
Materials ................................... 19.2%
(right column)
Merchandising ............................... 1.3%
Multi-Industry .............................. 13.2%
Real Estate ................................. 4.6%
Services .................................... 5.4%
Telecommunications .......................... 4.4%
Trade ....................................... 1.5%
Transportation .............................. 1.1%
U.S. Government Obligations ................. 4.1%
Other assets ................................ 0.5%
------
Net Assets ..........................100.0%
======
The Notes to Financial Statements are an integral part of this statement.
8
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Assets and Liabilities
December 31, 1995
Assets
Investments in securities, at value
(cost $267,260,241) (Note 1) .................................. $264,271,319
Cash ............................................................ 2,678,772
Foreign currencies, at value (cost $487,347) .................... 487,511
Receivable for shares sold ...................................... 7,674,853
Dividends receivable ............................................ 265,613
Foreign taxes recoverable ....................................... 2,462
------------
Total Assets .......................................... 275,380,530
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ................ 486,373
Payable for shares redeemed ..................................... 4,422,177
Payable for investment securities purchased ..................... 3,966,921
Accrued expenses ................................................ 737,877
Distributions payable ........................................... 222,729
------------
Total Liabilities ..................................... 9,836,077
------------
Net Assets (equivalent to $10.70 per share
on 24,826,051 shares outstanding) (Note 3) ................... $265,544,453
============
Net Assets consist of:
Capital stock-authorized 100,000,000 shares,
$1.00 par value per share ..................................... $ 24,826,051
Additional paid-in capital (Note 1) ............................. 279,989,335
Distributions in excess of net investment income (Note 1) ....... (420,121)
Accumulated net realized loss on investments and foreign
currency holdings (Notes 1 and 6) ............................. (35,860,265)
Net unrealized depreciation of investments and foreign
currency holdings ............................................. (2,990,547)
------------
$265,544,453
============
The Notes to Financial Statements are an integral part of this statement.
9
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Operations
Year ended December 31, 1995
Investment Income
Income
Dividends ...................................... $ 6,002,960
Interest ....................................... 2,129,820
-----------
8,132,780
Less: Foreign tax expense ...................... 818,698
-----------
Total investment income ..................... 7,314,082
Expenses
Investment advisory fee (Note 2) ............... 2,837,412
Accounting and shareholder
services expense (Note 2) ................... 435,809
Custodian and transfer agent expenses .......... 1,284,175
Printing and mailing ........................... 400,754
Directors' fees and expenses ................... 12,241
Audit and Legal ................................ 62,428
Registration fees .............................. 113,318
Computer processing fees ....................... 22,604
Other expenses ................................. 172,164
-----------
Total expenses ............................. 5,340,905
------------
Net investment income ................. 1,973,177
Realized and Unrealized Gain (Loss) on
Investments (Note 4)
Realized loss on:
Investments ................................. (33,525,989)
Foreign currency transactions ............... (224,850)
-----------
Net realized loss ..................... (33,750,839)
Net change in unrealized appreciation
(depreciation) on:
Investments ................................. 16,903,699
Foreign currency translation of other
assets and liabilities ..................... (2,503)
-----------
Net change in unrealized appreciation .. 16,901,196
------------
Net realized and unrealized loss ....... (16,849,643)
------------
Decrease in Net Assets Resulting from Operations . $(14,876,466)
============
The Notes to Financial Statements are an integral part of this statement.
10
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
1995 1994
------------ ------------
Net investment income (loss) ....................... $ 1,973,177 $ (174,837)
Net realized gain (loss) from security transactions. (33,750,839) 11,472,267
Increase (decrease) in unrealized appreciation
(depreciation) of investments and foreign
currency holdings ................................. 16,901,196 (62,458,378)
------------ ------------
Net decrease in net assets resulting
from operations ............................... (14,876,466) (51,160,948)
Distributions to shareholders from net
investment income ................................. (1,973,177) -
Distributions to shareholders in excess of net
investment income (Note 1) ........................ (195,271) -
Distributions to shareholders from net realized
gains from security transactions (Note 1) ......... (9,702) (11,472,267)
Distributions to shareholders in excess of net
realized gains from security
transactions (Note 1) ............................. - (2,117,189)
Increase (decrease) in net assets from
capital share transactions (Note 3) ............... (5,982,120) 122,858,778
------------ ------------
Net increase (decrease) in net assets .... (23,036,736) 58,108,374
Net Assets
Beginning of period ................................ 288,581,189 230,472,815
------------ ------------
End of period ...................................... $265,544,453 $288,581,189
============ ============
The Notes to Financial Statements are an integral part of these statements.
Lexington Worldwide Emerging Markets Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994
1. Significant Accounting Policies
Lexington Worldwide Emerging Markets Fund, Inc. (the "Fund") is an open end
diversified management investment company registered under the Investment
Company Act of 1940, as amended. The Fund's investment objective is to seek
long-term growth of capital primarily through investment in equity securities of
companies domiciled in, or doing business in emerging countries and emerging
markets. The following is a summary of the significant accounting policies
followed in the preparation of its financial statements:
Securities Security transactions are accounted for on a trade date basis.
Realized gains and losses from security transactions are reported on the
identified cost basis. Investments are stated at market value based on closing
prices reported by the exchange on which the securities are traded, on the last
business day of the period or, for over-the-counter securities, at the average
between bid and asked prices. Short-term securities are stated at amortized
cost, which approximates market value. Securities for which market quotations
are not readily available and other assets are valued at fair value as
determined by management and approved in good faith by the Board of Directors.
All investments quoted in foreign currency are valued in U.S. dollars on the
basis of the foreign currency exchange rate prevailing at the close of business.
Dividends are recorded on the ex-dividend date. Interest income is accrued as
earned.
11
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
1. Significant Accounting Policies (continued)
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
settled and are reported in the statement of operations.
Distributions In accordance with Statement of Position 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies, as of December 31,
1995, $224,850 was reclassified from accumulated net realized loss on
investments and foreign currencies to distributions in excess of net investment
income. In addition, book and tax differences of $32,548 have been reclassified
from accumulated net realized loss on investments to additional paid-in capital.
Distributions in excess of net investment income reflect temporary book-tax
differences. As of December 31, 1994, book and tax basis differences amounting
to $132,316 have been reclassified from distributions in excess of net realized
gains to additional paid-in capital. In addition $174,837 was reclassified from
net investment loss to distributions in excess of net realized gains on
investments. Accumulated net realized loss on investments reflect temporary
book-tax differences arising from Internal Revenue Code Excise Tax distribution
requirements and associated post-October loss deferral provisions, which
effectively allow the deferral of net realized capital losses to the next tax
year.
Federal Income Taxes It is the Fund's intention 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 has been made.
2. Investment Advisory Fee and Other Transactions with Affiliate
The Fund pays an investment advisory fee to Lexington Management Corporation
("LMC") at the rate of 1% of average daily net assets. 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 which shares of the Fund are offered for sale. No reimbursement was
required for the year ended December 31, 1995.
The Fund also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs, which are incurred by the Fund, but paid by LMC.
3. Capital Stock
Transactions in capital stock were as follows:
Year ended Year ended
December 31, 1995 December 31, 1994
------------------------- ------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
Shares sold ............... 22,479,065 $242,654,550 39,085,412 $521,337,885
Shares issued on
reinvestment of
dividends ............... 183,411 1,963,204 1,084,862 12,465,043
----------- ------------ ---------- ------------
.......................... 22,662,476 244,617,754 40,170,274 533,802,928
Shares redeemed ........... (23,001,849) (250,599,874)(31,509,363) (410,944,150)
----------- ------------ ---------- ------------
Net increase (decrease) . (339,373) $(5,982,120) 8,660,911 $122,858,778
=========== ============ ========== ============
12
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales of securities for the year ended
December 31, 1995, excluding short-term securities, were $289,286,823 and
$227,931,120, respectively.
At December 31, 1995 aggregate gross unrealized appreciation for all securities
and foreign currency holdings (including foreign currency receivables and
payables) in which there is an excess of value over tax cost amounted to
$25,824,307 and aggregate gross unrealized depreciation for which there is an
excess of tax cost over value amounted to $28,814,854.
5. Investment Risks
The Fund's investments in foreign securities may involve risks not present in
domestic investments. Since foreign securities may be denominated in a foreign
currency and involve settlement and pay interest or dividends in foreign
currencies, changes in the relationship of these foreign currencies to the U.S.
dollar can significantly affect the value of the investments and earnings of the
Fund. Foreign investments may also subject the Fund to foreign government
exchange restrictions, expropriation, taxation or other political, social or
economic developments, 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 from the potential inability of counterparties to meet the
terms of their contracts.
6. Federal Income Taxes-Capital Loss Carryforwards
Capital loss carryforwards available for federal income tax purposes as of
December 31, 1995 are approximately $34,104,140 expiring in 2003.
To the extent any future capital gains are offset by these losses, such gains
would not be distributed to shareholders.
Treasury regulations were issued in early 1990 which provide that capital losses
incurred after October 31 of a fund's taxable year can be deemed to have
occurred on the first day of the following year (i.e.: January 1). The
regulations indicate that a fund may elect to retroactively apply these rules
for purposes of computing taxable income. Accordingly, the 1995 post-October
losses of $1,756,125 have been deemed to have occured in 1996 for federal income
tax purposes.
13
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Financial Highlights
Selected per share data for a share outstanding throughout the period: 1
Year ended December 31,
-------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Net asset value, beginning
of period ....................... $11.47 $13.96 $ 8.66 $ 9.03 $ 8.56
------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income (loss) ... .08 (.01) .05 .07 .09
Net realized and unrealized gain
(loss) on investments ........... (.76) (1.92) 5.43 .27 1.97
------ ------ ------ ------ ------
Total income (loss) from
investment operations ........... (.68) (1.93) 5.48 .34 2.06
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income ....................... (.08) - (.01) (.11) (.11)
Distributions in excess of net
investment income (temporary
book-tax difference) ......... (.01) - - - -
Distributions from capital gains - (.47) (.17) (.60) (1.48)
Distributions in excess of
capital gains (temporary
book-tax difference) ......... - (.09) - - -
------ ------ ------ ------ ------
Total distributions .............. (.09) (.56) (.18) (.71) (1.59)
------ ------ ------ ------ ------
Net asset value, end of period ... $10.70 $11.47 $13.96 $ 8.66 $ 9.03
====== ====== ====== ====== ======
Total return ..................... (5.93%) 13.81%) 63.37% 3.77% 24.19%
Ratio to average net assets:
Expenses ....................... 1.88% 1.65% 1.64% 1.89% 1.97%
Net investment income (loss) ..... .70% (.06%) .21% .75% .79%
Portfolio turnover ............... 92.85% 79.56% 38.35% 91.27% 112.03%
Net assets at end of period
(000's omitted) ................ $265,544 $288,581 $230,473 $30,021 $25,060
________
1Effective June 17, 1991 the Fund changed its name and investment objective from
Lexington Growth Fund, Inc. to Lexington Worldwide Emerging Markets Fund, Inc.
14
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Lexington Worldwide Emerging Markets Fund Inc.:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Worldwide
Emerging Markets Fund Inc. as of December 31, 1995, 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, 1995 by correspondence with the custodian and brokers. 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 Worldwide Emerging Markets Fund Inc. as of December 31, 1995, 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
January 29, 1996
15
<PAGE>
Lexington
Worldwide Emerging Markets Fund, 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 Worldwide Emerging Markets Fund,
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
WORLDWIDE
EMERGING
MARKETS
FUND, INC.
---------------------------------
Seeks long-term growth of capital
primarily through investment in
equity securities of
companies domiciled in, or doing
business in, emerging countries
and emerging markets.
---------------------------------
ANNUAL REPORT
DECEMBER 31, 1995
The Lexington Group
of No Load
Investment Companies
---------------------------------
