Dear Shareholders:
- --------------------------------------------------------------------------------
The Lexington Worldwide Emerging Markets Fund appreciated 7.38%* in 1996.
According to Lipper Analytical Services, Inc. the average return during 1996 for
emerging market funds was 11.2%. The unmanaged Morgan Stanley Emerging Markets
Free Index** advanced 6.0% in 1996.
Moderate global economic activity provided a positive background for most
equity markets in 1996. Unfortunately, the strong performance of the U.S. and
many large developed markets discouraged foreign investors from venturing into
the emerging markets. As a result, returns for emerging market funds badly
trailed average returns for U.S. and European equity funds. U.S. long bonds
rallied strongly from August till year end as the economy showed signs of
slowing. Anticipating rising interest rates, the Fund had been widely
diversified with an emphasis on markets with low correlations to U.S. stocks and
bonds. Portfolio positions in Chile, Greece, South Korea, India, South Africa,
and Thailand hindered performance as Latin America and most of Asia enjoyed
strong second half returns. Latin America and Asian markets tend to perform well
as U.S. interest rates decline and this occurred during the latter half of the
year. The unmanaged Morgan Stanley Capital International Chilean Index** fell
13.5% as a strong economy forced interest rates higher and stocks lower. Greek
equities gained only a little over 6% on the unmanaged Morgan Stanley Captial
International Greek Index**, although valuations are very attractive and
economic restructuring is improving the long term outlook. The Fund was not
overweight in too many poor performing markets, but its diversification did
expose the portfolio to several of the poorer performing markets.
The outlook for 1997 is more favorable. Due to several years of
underperformance versus the developed markets, emerging markets offer
outstanding relative value. Latin America continues to enjoy an economic
recovery which will fuel strong profit growth. Progress continues to be made on
the economic and political front as well. Brazil experienced the lowest
inflation in over 30 years and privatization continues to move forward.
Argentina has seen a clear pick-up in economic activity and discussions are
underway to reform the labor market. Mexico has seen interest rates and
inflation decline. GDP growth is now driven by a healthy export sector. Asian
markets currently favored are Hong Kong/China, Philippines, and Malaysia. The
Chinese economy has slowed down to the 10% level while inflation has fallen to
single digits. Chinese interest rates are falling and property prices are
rising. This year Hong Kong reverts to Chinese rule and with falling interest
rates and accelerating profit growth, the outlook is favorable. The Philippines
has been well managed under President Ramos. Growth is now approaching 7% per
annum. Unlike the rest of Asia, export growth is remaining strong as the
Philippines has become very competitive. Malaysia has been a success story for
many years and this should continue. Economic activity will likely slow in 1997
due to weaker exports; however, interest rates are likely to decline which
historically has benefitted stocks.
The Lexington Worldwide Emerging Markets Fund currently has 30% invested in
Latin America, with heavy representation in Brazil, Chile and Mexico. Asia
comprises 40% with heavy emphasis on Malaysia, Philippines, Hong Kong/ China,
and Singapore. Russian equities are among the cheapest in the world and offer
tremendous upside potential as the Russian economy
1
<PAGE>
transforms to capitalism. The Fund presently has 5.1% in Russian equities which
trade at steep discounts to replacement value. Eastern Europe continues to
perform well but with stock prices experiencing strong gains over the past year
the risk/reward opportunities are less attractive. Weightings in Eastern Europe
have been reduced to 7% from over 10% in 1996. Greece remains a favored market
due to prospects for falling interest rates, economic restructuring, and low
valuations. Greece represents 5.5% of the Fund's holdings. Finally, positions
have been reduced in South Africa, South Korea and Thailand as better
opportunities have been found elsewhere.
Sincerely,
Richard T. Saler Robert M. DeMichele
Portfolio Manager President
February, 1997 February, 1997
CHART/BEGIN
Printed version of this shareholder report contains a
graphic chart indicating the comparison of change in
value of a $10,000 investment in Lexington Worldwide
Emerging Markets Fund, Inc., the unmanaged Morgan Stanley
Capital International (EAFE) Index and the unmanaged
Morgan Stanley Emerging Markets Free Index from 6/17/91
through 12/31/96
CHART/END
*7.38%, 8.10% and 8.33% are the one, five and ten year average annual standard
total returns, respectively, for the period ended December 31, 1996.
Investment return and principal value of an investment will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than at their
original cost. Total return represents past performance and is not predictive
of future results.
**All country and regional returns are from the corresponding Morgan Stanley
Capital International Indices. Returns are dollar based with net dividends
reinvested.
2
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS: 99.9%
ARGENTINA: 2.0%
97,000 Banco Frances del Rio de la Plata S.A. .............$ 2,667,500
98,400 Telefonica de Argentina S.A. (ADR) ................. 2,546,100
------------
5,213,600
------------
BRAZIL: 12.0%
379,400 Aracruz Celulose S.A. (ADR) ........................ 3,130,050
8,290,000 Cia Tecidos Norte De Mina (Preferred shares) ....... 2,645,622
12,118,000 Companhia Cimento Portland Itau .................... 4,256,314
216,800 Compania Vale Do Rio Doce (ADR) (Preferred shares)1. 4,172,858
24,943,000 Petroleo Brasileiro S.A.(Preferred shares) ......... 3,972,759
54,336,000 Telecomunicacoes Brasileiras S.A. .................. 4,183,341
20,100,000 Telecomunicacoes de Sao Paulo S.A. ................. 4,352,353
3,682,057,000 Usinas Siderurgicas de Minas Gerais S.A. ........... 3,756,140
------------
30,469,437
------------
CHILE: 5.4%
773,800 Antofagasta Holdings Plc ........................... 4,502,293
159,100 Banco O'Higgins (ADR) .............................. 3,689,131
199,300 Banco Santander (ADR) .............................. 2,989,500
186,100 Maderas y Sinteticos Sociedad Anonima S.A. (ADR) ... 2,605,400
------------
13,786,324
------------
COLUMBIA: 0.7%
85,000 Banco Ganadero S.A. (ADR) .......................... 1,827,500
------------
CZECH REPUBLIC: 1.3%
26,580 SPT Telekon AS1 .................................... 3,305,415
------------
GREECE: 5.5%
160,100 Delta Dairy S.A. (Preferred shares) ................ 1,330,327
61,800 Ergo Bank S.A. ..................................... 3,132,458
71,600 Hellenic Bottling Company S.A. ..................... 2,294,183
128,700 Hellenic Tellecommunication Organization S.A. ...... 2,198,818
303,900 Michaniki S.A. ..................................... 2,352,757
49,300 Titan Cement Company ............................... 2,680,715
------------
13,989,258
------------
HONG KONG: 6.3%
736,000 Citic Pacific, Ltd. ................................ 4,272,323
3,744,000 Founder Hong Kong, Ltd.1............................ 1,440,001
3,986,000 Guangdong Investments .............................. 3,839,136
7,350,000 Qingling Motors Company1............................ 4,062,219
510,000 Wharf (Holdings), Ltd. ............................. 2,545,056
------------
16,158,735
------------
3
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
HUNGARY: 1.7%
72,820 Pick Szeged Rt. ....................................$ 4,311,087
------------
INDIA: 1.1%
200 Bajaj Auto, Ltd. ................................... 4,769
151,000 Hindalco Industries, Ltd. .......................... 2,767,101
------------
2,771,870
------------
INDONESIA: 4.1%
1,780,000 PT Ramayana Lestari Sentosa1 ....................... 3,842,539
1,166,000 PT Semen Cibinong .................................. 3,282,073
1,876,000 PT Tambang Timah ................................... 3,414,518
------------
10,539,130
------------
ISRAEL: 1.5%
74,300 Teva Pharmaceutical Industries, Ltd. (ADR) ......... 3,719,644
------------
MALAYSIA: 10.2%
43,000 Berjaya Sports Toto Bhd ............................ 214,531
371,000 Hong Leong Credit Bhd .............................. 2,335,730
1,765,000 Magnum Corporation Bhd ............................. 3,424,462
265,000 Malayan Banking Bhd ................................ 2,938,025
1,457,000 MBF Capital Bhd .................................... 2,365,348
260,000 O.Y.L. Industries Bhd .............................. 2,753,904
1,228,000 Public Finance Bhd ................................. 2,139,452
759,000 Sime Darby Bhd ..................................... 2,990,312
1,310,000 Sungei Way Holdings Bhd ............................ 3,890,310
703,000 Tanjong Plc ........................................ 2,811,437
------------
25,863,511
------------
MEXICO: 6.9%
1,641,000 Cemex S.A. de C.V. "B" ............................. 6,399,711
127,400 Grupo Casa Autrey, S.A. de C.V. (ADR) .............. 2,484,300
2,721,500 Grupo Industrial Maseco S.A. de C.V. ............... 3,450,264
71,500 Grupo Televisa S.A. (ADR)1 ......................... 1,832,188
219,700 Tubos De Acero De Mexico S.A. (ADR)1 ............... 3,487,738
------------
17,654,201
------------
4
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
PAKISTAN: 0.6%
313,700 Pakistan Investment Fund, Inc.1 ....................$ 1,607,713
------------
PHILIPPINES: 5.8%
7,079,250 Filinvest Land, Inc.1 .............................. 2,207,218
4,210,000 Fortune Cement Corporation1 ........................ 2,121,007
8,503,275 International Container Terminal Service, Inc.1 .... 4,445,628
341,900 Manila Electric Company "B" ........................ 2,794,999
5,919,000 Universal Robina Corporation ....................... 3,319,591
------------
14,888,443
------------
POLAND: 7.0%
116,100 Debica S.A. ........................................ 2,597,574
603,280 Elektrim Towarzystwo Handlowe S.A. ................. 5,483,376
29,803 Gorazdze S.A. ...................................... 744,941
980,100 Mostostal-Export S.A. .............................. 2,329,888
447,900 Polifarb Cieszyn Wroclaw S.A. ...................... 2,489,625
209,500 Stomil Olsztyn S.A.1 ............................... 2,709,827
33,361 Zaklady Piwowarski w Zywcu S.A. .................... 1,551,124
------------
17,906,355
------------
PORTUGAL: 1.0%
86,200 Portugal Telecom S.A. .............................. 2,454,131
------------
RUSSIA: 5.1%
27,780 Lexington Troika Dialog Russia Fund, Inc. .......... 312,248
486,300 LUKoil Holdings of Russia1 ......................... 5,495,190
1,354,000 Rostelekom1 ........................................ 3,276,680
42,869,000 Unified Energy System1 ............................. 3,901,079
------------
12,985,197
------------
SINGAPORE: 5.5%
304,000 City Developments, Ltd. ............................ 2,738,310
760,000 DBS Land, Ltd. ..................................... 2,798,075
654,000 Far East Levingston Shipbuilding, Ltd. ............. 3,413,022
821,000 Jardine Strategic Holdings, Ltd. ................... 2,972,020
781,000 Want Want Holdings1 ................................ 2,054,030
------------
13,975,457
------------
SOUTH AFRICA: 3.2%
33,000 Anglo American Corporation of South Africa,
Ltd. (ADR) ........................................ 1,798,500
194,600 Driefontein Consolidated, Ltd. ..................... 2,048,970
85,300 Liberty Life Association of Africa, Ltd. ........... 2,142,897
122,986 Rustenburg Platinum Holdings, Ltd. (ADR)1 .......... 1,682,759
7,600 Vaal Reefs Exploration & Mining Company, Ltd. ...... 487,440
------------
8,160,566
------------
5
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
SOUTH KOREA: 2.9%
43,500 Hyundai Motor Company, Ltd. ........................$ 1,028,977
76,600 Korea Electric Power Corporation ................... 2,228,693
49,950 Pohang Iron & Steel Company, Ltd. .................. 2,156,327
20,200 Pohang Iron & Steel Company, Ltd. (ADR) ............ 409,050
27,100 Samsung Electronics Company ........................ 1,458,368
------------
7,281,415
------------
TAIWAN: 2.2%
256,125 Taiwan Fund, Inc. .................................. 5,698,781
------------
THAILAND: 3.2%
246,000 Advanced Info Service Plc. ......................... 2,110,761
197,000 BEC World Public Company Ltd.1 ..................... 1,782,525
523,000 Krung Thai Bank Public Company, Ltd. ............... 1,009,690
310,000 Matichon Public Company, Ltd. ...................... 876,559
191,600 Shinawatra Computer Company, Plc ................... 2,316,533
------------
8,096,068
------------
TURKEY: 1.2%
11,656,000 Akbank T.A.S. ...................................... 1,585,216
13,834,000 Arcelik A.S. ....................................... 1,411,068
------------
2,996,284
------------
VENEZUELA: 3.5%
95,700 Compania Anonima Nacional Telefonos
de Venezuela (ADR)1 ............................... 2,691,563
621,870 Mantex S.A. (ADR) .................................. 2,709,425
512,749 Mavesa S.A. (ADR) .................................. 3,433,316
------------
8,834,304
------------
TOTAL COMMON STOCKS (cost $244,923,408) ............ 254,494,426
------------
6
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1996 (continued)
Number of
Shares or
Principal Value
Amount Security (Note 1)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS: 0.1%
$300,000 U.S. Treasury Bills, 5.02%, due 02/13/97
(cost $298,201) ...................................$ 298,158
------------
TOTAL INVESTMENTS: 100.0% (cost $245,221,609+)
(Note 1) .......................................... 254,792,584
Liabilities in excess of other assets: ............. (119,778)
------------
TOTAL NET ASSETS: 100.0% (equivalent to $11.49 per
share on 22,161,235 shares outstanding) ...........$254,672,806
============
1Non-income producing securities.
ADR-American Depository Receipt.
+Aggregate cost for Federal income tax purposes is $245,222,883.
---------------------------
At December 31, 1996, the composition of the Fund's net assets by industry
concentration was as follows:
Left Column
Banking ............................... 7.8%
Capital Equipment ..................... 5.3
Construction and Housing .............. 0.9
Consumer (Durables) ................... 4.6
Consumer (Non-Durables) ............... 8.5
Electrical and Electronics ............ 1.5
Energy Sources ........................ 3.7
Financial Services .................... 5.2
Gold .................................. 1.0
Health & Personal Care ................ 2.4
Right Column
Materials ............................. 21.7%
Merchandising ......................... 1.5
Multi-Industry ........................ 10.7
Real Estate ........................... 4.0
Services .............................. 5.5
Telecommunications .................... 9.8
Trade ................................. 2.2
U.S. Government Obligations ........... 0.1
Utilities ............................. 3.6
-----
Total Net Assets .............. 100.0%
=====
The Notes to Financial Statement are an integral part of this statement.
7
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Assets and Liabilities
December 31, 1996
Assets
Investments, at value (cost $245,221,609) (Note 1) ............... $254,792,584
Cash ............................................................. 224,869
Foreign currencies, at value (cost $2,097,058) ................... 2,097,348
Receivable for investment securities sold ........................ 3,172,247
Receivable for shares sold ....................................... 445,011
Dividends and interest receivable ................................ 184,512
Foreign taxes recoverable ........................................ 7,191
------------
Total Assets ..................................................... 260,923,762
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ................. 213,891
Payable for investment securities purchased ...................... 3,116,159
Payable for shares redeemed ...................................... 2,454,555
Accrued expenses ................................................. 466,351
------------
Total Liabilities ................................................ 6,250,956
------------
Net Assets (equivalent to $11.49 per share
on 22,161,235 shares outstanding) (Note 3) ...................... $254,672,806
============
Net Assets consist of:
Capital stock-authorized 100,000,000 shares, $1.00 par value
per share ....................................................... $ 22,161,235
Additional paid-in capital (Note 1) .............................. 250,326,948
Distributions in excess of net investment income (Note 1) ........ (56,742)
Accumulated net realized loss on investments and
foreign currency transactions (Notes 1 and 6) ................... (27,325,466)
Net unrealized appreciation of investments and
foreign currency transactions ................................... 9,566,831
------------
$254,672,806
============
The Notes to Financial Statements are an integral part of this statement.
8
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statement of Operations
Year ended December 31, 1996
Investment Income
Income
Dividends ..........................................$ 5,190,190
Interest ........................................... 973,380
-----------
6,163,570
Less: Foreign tax expense .......................... 600,569
-----------
Total investment income ......................... $ 5,563,001
Expenses
Investment advisory fee (Note 2) ................... 3,176,490
Transfer agent and shareholder servicing expense
(Note 2) .......................................... 998,436
Custodian expense .................................. 766,489
Accounting expenses (Note 2) ....................... 242,862
Printing and mailing expenses ...................... 159,965
Registration fees .................................. 51,372
Professional fees .................................. 46,344
Computer processing fees ........................... 18,114
Directors' fees and expenses ....................... 16,232
Other expenses ..................................... 105,092
-----------
Total expenses .................................. 5,581,396
-----------
Net investment loss ............................ (18,395)
Realized and Unrealized Gain (Loss) on Investments (Note 4)
Net realized gain (loss) on:
Investments ....................................... 7,637,557
Foreign currency transactions ..................... (300,025)
-----------
Net realized gain .............................. 7,337,532
Net change in unrealized appreciation on:
Investments ....................................... 12,559,897
Foreign currency translation of other assets
and liabilities .................................. (2,519)
-----------
Net change in unrealized appreciation .......... 12,557,378
-----------
Net realized and unrealized gain ............... 19,894,910
-----------
Increase in Net Assets Resulting from Operations .... $19,876,515
===========
The Notes to Financial Statements are an integral part of this statement.
9
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Statements of Changes in Net Assets
Years ended December 31, 1996 and 1995
1996 1995
------------ ------------
Net investment income (loss) .....................$ (18,395) $ 1,973,177
Net realized gain (loss) on investments and
foreign currency transactions ................... 7,337,532 (33,750,839)
Net change in unrealized appreciation on
investments and foreign currency translations ... 12,557,378 16,901,196
------------ ------------
Increase (decrease) in net assets
resulting from operations ..................... 19,876,515 (14,876,466)
Distributions to shareholders from net
investment income (Note 1) - (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)
Decrease in net assets from capital share
transactions (Note 3) ........................... (30,748,162) (5,982,120)
------------ ------------
Net decrease in net assets ............... (10,871,647) (23,036,736)
Net Assets
Beginning of period .............................. 265,544,453 288,581,189
------------ ------------
End of period (including distributions in excess
of net investment income of $56,742 and
$420,121, respectively) .........................$254,672,806 $265,544,453
============ ============
The Notes to Financial Statements are an integral part of these statements.
10
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Notes to Financial Statements
December 31, 1996 and 1995
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
domiciled in, or doing business in, emerging countries and emerging markets. 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 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. 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 is 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
realized assets were not affected by this change.
11
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Notes to Financial Statements
December 31, 1996 and 1995 (continued)
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. 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, 1996.
The Fund also reimbursed LMC for certain expenses, including accounting and
shareholder servicing costs of $517,910 which were incurred by the Fund, but
paid by LMC.
3. Capital Stock
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Year ended Year ended
December 31, 1996 December 31, 1995
------------------------ ----------------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ...................................... 22,719,087 $266,562,359 22,479,065 $242,654,550
Shares issued to shareholders on reinvestment
of dividends .................................... - - 183,411 1,963,204
---------- ----------- ---------- ------------
22,719,087 266,562,359 22,662,476 244,617,754
Shares redeemed ..................................(25,383,903) (297,310,521) (23,001,849) (250,599,874)
---------- ----------- ---------- ------------
Net decrease .................................... (2,664,816) $(30,748,162) (339,373) $ (5,982,120)
========== ============ ========== ============
</TABLE>
4. 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 $ 255,441,337 and
$ 274,438,387, 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
$35,995,940 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $26,430,383.
12
<PAGE>
Lexington Worldwide Emerging Markets Fund, Inc.
Notes to Financial Statements
December 31, 1996 and 1995 (continued)
5. Investment and Concentration 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 as a result of 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, 1996 are approximately $22,320,887 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 Worldwide Emerging Markets Fund, 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 .................... $10.70 $11.47 $13.96 $ 8.66 $ 9.03
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) ........................... - .08 (.01) .05 .07
Net realized and unrealized gain
(loss) on investments and foreign currency
transactions .......................................... .79 (.76) (1.92) 5.43 .27
------ ------ ------ ------ ------
Total income (loss) from investment operations .......... .79 (.68) (1.93) 5.48 .34
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ................... - (.08) - (.01) (.11)
Distributions in excess of net investment income
(temporary book-tax difference) ....................... - (.01) - - -
Distributions from net realized gains .................. - - (.47) (.17) (.60)
Distributions in excess of net realized gains (temporary
book-tax difference) ................................. - - (.09) - -
------ ------ ------ ------ ------
Total distributions ..................................... - (.09) (.56) (.18) (.71)
------ ------ ------ ------ ------
Net asset value, end of period .......................... $11.49 $10.70 $11.47 $13.96 $ 8.66
====== ====== ====== ====== ======
Total return ............................................ 7.38% (5.93%) (13.81%) 63.37% 3.77%
Ratio to average net assets:
Expenses ............................................... 1.76% 1.88% 1.65% 1.64% 1.89%
Net investment income (loss) ........................... (.01%) .70% (.06%) .21% .75%
Portfolio turnover rate ................................. 86.26% 92.85% 79.56% 38.35% 91.27%
Average commission paid on equity security transactions* - - - - -
Net assets at end of period (000's omitted) ............$254,673 $265,544 $288,581 $230,473 $30,021
</TABLE>
- ---------------
*The average commission paid on equity security transactions for the year ended
December 31, 1996 is less than $0.005 per share of securities purchased and
sold. In accordance with recent SEC disclosure guidelines, average commissions
are calculated for the current period and not for prior periods.
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, 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
purchased or sold but not yet received or 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 Worldwide Emerging Markets Fund, 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
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.
Right Column
---------------------------------
LEXINGTON
---------------------------------
---------------------------------
LEXINGTON
WORLDWIDE
EMERGING
MARKETS
FUND, INC.
(filled box)
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.
(filled box)
ANNUAL REPORT
DECEMBER 31, 1996
The Lexington Group
of No Load
Investment Companies
---------------------------------
