SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No.__)
FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
LEXINGTON WORLWIDE EMERGING MARKETS FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
__________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
5) Total fee paid:
__________________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
__________________________
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
__________________________
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
P.O. BOX 1515
PARK 80 WEST, PLAZA TWO
SADDLE BROOK, NEW JERSEY 07663
(800) 526-0056
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
AUGUST 12, 1998
A special meeting of the shareholders (the "Meeting") of Lexington
Worldwide Emerging Markets Fund, Inc. (the "Fund"), a Maryland corporation, will
be held on August 12, 1998 at 10:30 a.m. Eastern time. The Meeting will be held
at the offices of the Fund, Park 80 West, Plaza Two, Saddle Brook, New Jersey.
At the Meeting, we will ask shareholders to vote on:
1. Electing eleven (11) Directors to hold office until the election and
qualification of their successors.
2. Approving or disapproving a sub-advisory agreement between Lexington
Management Corporation and Stratos Advisors, Inc. with respect to the Fund.
3. Approving or disapproving a Plan of Distribution for the Fund.
4. Ratifying or rejecting the selection of KPMG Peat Marwick LLP as
independent auditors of the Fund.
5. Any other business properly brought before the Meeting.
Any shareholder who owned shares of the Fund on the "record date," which
was June 15, 1998, gets notice of the Meeting and gets to vote. Please read the
full text of the proxy statement for a complete understanding of our proposals.
By Order of the Board of Directors,
Lisa A. Curcio
Secretary
Dated: July 7, 1998
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YOU CAN HELP AVOID THE NECESSITY AND EXPENSE OF SENDING FOLLOW-UP LETTERS TO
ENSURE A QUORUM BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO
ATTEND THE MEETING, PLEASE MARK, SIGN, DATE, AND RETURN THE ENCLOSED PROXY SO
THAT THE NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED
ENVELOPE REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
P.O. BOX 1515
PARK 80 WEST, PLAZA TWO
SADDLE BROOK, NEW JERSEY 07663
(800) 526-0056
----------------------------
PROXY STATEMENT
----------------------------
DATED JULY 7, 1998
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD
AUGUST 12, 1998
GENERAL INFORMATION
The Board of Directors of Lexington Worldwide Emerging Markets Fund, Inc.,
a Maryland corporation (the "Fund"), has sent you this proxy statement to ask
you to vote on several proposals affecting your Fund. A special meeting of
shareholders (the "Meeting") will be held on August 12, 1998 at 10:30 a.m.
Eastern time at the offices of the Fund, Park 80 West, Plaza Two, Saddle Brook,
New Jersey. At the Meeting, we will ask shareholders to vote on:
1. Electing eleven (11) Directors to hold office until the election and
qualification of their successors.
2. Approving or disapproving an investment sub-advisory agreement (the
"Sub-Advisory Agreement") between Lexington Management Corporation (the
"Adviser") and Stratos Advisors, Inc. ("Stratos") with respect to the Fund.
3. Approving or disapproving a Plan of Distribution for the Fund.
4. Ratifying or rejecting the selection of KPMG Peat Marwick LLP as
independent auditors of the Fund.
5. Any other business properly brought before the Meeting.
REVOCATION OF YOUR PROXY. You may revoke your proxy at any time up until
voting results are announced at the Meeting. You may revoke your proxy by giving
written notice to the Secretary of the Fund prior to the Meeting or by giving a
subsequently dated proxy or by attending and voting at the Meeting in person. If
you sign and return the proxy card, but do not vote on a proposal, the proxy
attorneys will vote your shares of common stock "FOR" the proposal.
PROXY SOLICITATION. Your Fund will pay all costs of preparing and mailing
the notice of meeting, the proxy card, this proxy statement, and any additional
proxy solicitation material. All shareholders who are entitled to vote will
receive these proxy materials. Your Fund will solicit shareholder proxies in a
variety of ways. Employees or officers of the Fund, the Fund's investment
adviser, Lexington Management Corporation, and the Fund's distributor, Lexington
Funds Distributor, Inc., and their affiliates, none of whom will receive
additional compensation, will solicit shareholder proxies primarily by mail, but
also by telephone, telegraph, facsimile, or personal interview. We may also use
an outside firm to solicit shareholder votes on behalf of the Fund by mail,
telephone, telegraph, facsimile, or personal interview. The proxy solicitation
services are expected to cost the Fund approximately $50,000.
<PAGE>
RECORD DATE. The Board of Directors has fixed the close of business on June
15, 1998 as the record date to determine the shareholders who are entitled to
notice of, and to vote at, the Meeting (the "Record Date"). As of the Record
Date, there were approximately 11,450,454 outstanding shares of the Fund.
Shareholders are entitled to cast one vote for each full share and a fractional
vote for each fractional share.
OWNERSHIP OF 5% OR MORE. Securities and Exchange Commission rules require
the Fund to tell you the name and address of any person known to be the
beneficial owner of 5% or more of the Fund's outstanding shares. The Fund must
also tell you how many shares such persons own and what percentage of the Fund
these shares represent. As of June 15, 1998, the Fund was not aware of any
shareholder who beneficially owned 5% or more of the Fund's outstanding shares.
REQUIRED VOTE. The election of Directors (Proposal 1) and the ratification
of the selection of KPMG Peat Marwick LLP as independent auditors (Proposal 4)
will require the affirmative vote of a majority of the votes cast at the
Meeting, provided that a quorum is present in person or by proxy at the Meeting.
Approval of the Sub-Advisory Agreement (Proposal 2) and approval of the Plan of
Distribution (Proposal 3) for the Fund will require the affirmative vote of a
"majority of the outstanding voting securities" of the Portfolio, which means
the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund, or (2) 67% or more of the shares of the Fund present at the
Meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented by proxy at the Meeting.
QUORUM. In order for the Meeting to proceed, your Fund must achieve a
quorum. This means that one-third of the Fund's shares must be represented at
the Meeting -- either in person or by proxy. All returned proxies count towards
a quorum, regardless of how they are voted ("FOR," "AGAINST" or "ABSTAIN"). Your
Fund will count broker non-votes towards the quorum, but not towards the
approval of any proposals. (Broker non-votes are shares for which (1) the
underlying owner has not voted and (2) the broker holding the shares does not
have discretionary authority to vote on the particular matter.) Under the
Investment Company Act of 1940 (the "1940 Act"), the affirmative vote needed to
approve a proposal may be determined with reference to a percentage of votes
present at the Meeting, which would have the effect of counting abstentions and
non-votes as if they were votes against the proposal.
If the proposals are approved, it is anticipated that they will become
effective as soon as practicable after shareholder approval.
PROPOSAL 1: ELECTION OF DIRECTORS
Eleven directors are to be elected at the Meeting as the entire Board of
Directors, to hold office until the next meeting and until the election and
qualification of their successors. If authority is granted on the accompanying
proxy to vote in the election of Directors, the persons named in the proxy
intend to vote at the Meeting for the election of the nominees named below, each
of whom has consented to serve if elected. If any of the nominees is unavailable
to serve for any reason, the persons named as proxies will vote for such other
nominee or nominees selected by the Board of Directors or the Board of Directors
may reduce the number of Directors as provided in the Fund's By-Laws. The Fund
currently knows of no reason why any of the nominees listed below will be unable
to serve if elected.
2
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST SHARES OWNED
NOMINEE'S NAME BECAME A BENEFICIALLY
AND AGE PRINCIPAL OCCUPATION FOR PAST 5 YEARS DIRECTOR JUNE 15, 1998**
- ---------- ------------------------------------- -------- --------------
<S> <C> <C> <C>
S.M.S. Chadha Director. Formerly, Secretary, Ministry of External 1996 0
(61) Affairs, New Delhi, India; Head of Foreign Service
Institute, New Delhi, India; Formerly, Special Envoy
of the Government of India; Director, Special Unit
for Technical Cooperation among Developing Countries,
United Nations Development Program, New York.
*Robert M. DeMichele President and Chairman of the Board. Chairman of the 1981 0
(53) Board and Chief Executive Officer, Lexington
Management Corporation; President and Director,
Lexington Global Asset Managers, Inc.; Chairman and
Chief Executive Officer, Lexington Funds Distributor,
Inc.; Chairman of the Board, Market Systems Research,
Inc. and Market Systems Research Advisors, Inc.
(registered investment advisors); Director, Chartwell
Re Corporation; Director, Claredon National Insurance
Company; Director, Unione Italiana Reinsurance;
Director, The Navigator's Group, Inc.; Director,
Vanguard Cellular Systems, Inc.; Director, Weeden &
Co.
Beverley C. Duer Director. Private Investor; Formerly, Manager of 1987 735
(69) Operations Research Department, CPC International
Inc.
*Barbara R. Evans Director. Private Investor; Formerly, Assistant Vice 1991 0
(37) President and Securities Analyst, Lexington
Management Corporation.
*Richard M. Hisey Vice President, Treasurer and Director. Managing -- 1,658
(39) Director, Director and Chief Financial Officer,
Lexington Management Corporation; Chief Financial
Officer, Vice President and Director, Lexington Funds
Distributor, Inc.; Chief Financial Officer, Market
Systems Research Advisers, Inc.; Executive Vice
President and Chief Financial Officer, Lexington
Global Asset Managers, Inc.
*Lawrence Kantor Vice President and Director. Managing Director, 1986 0
(51) Executive Vice President and Director, Lexington
Management Corporation; Executive Vice President and
Director, Lexington Funds Distributor, Inc.;
Executive Vice President and General Manager--Mutual
Funds, Lexington Global Asset Managers, Inc.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST SHARES OWNED
NOMINEE'S NAME BECAME A BENEFICIALLY
AND AGE PRINCIPAL OCCUPATION FOR PAST 5 YEARS DIRECTOR JUNE 15, 1998**
- -------------- ------------------------------------- -------- --------------
<S> <C> <C> <C>
Jerard F. Maher Director. General Counsel, Federal Business Centers; 1996 0
(52) Counsel, Ribis, Graham & Curtis.
Andrew M. McCosh Director. Professor of the Organisation of Industry 1996 0
(57) and Commerce, Department of Business Studies, The
University of Edinburgh, Scotland.
Donald B. Miller Director. Chairman, Horizon Media, Inc.; Trustee, 1969 1,853
(72) Galaxy Funds (registered investment companies);
Director, Maguire Group of Connecticut.
John G. Preston Director. Associate Professor of Finance, Boston 1987 0
(65) College.
Allen H. Stowe Director, President, Dartmouth Co-Operative Society -- 1,998
(60) Co., Inc.
</TABLE>
*An "interested person" as defined in Section 2(a)(19) of the 1940 Act.
** Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission and means generally the power to vote or
dispose of shares, regardless of any economic interest therein.
All of the Directors hold similar offices with some or all of the other
registered investment companies advised and/or whose shares are distributed by
the Adviser and Lexington Funds Distributor, Inc.
There are no standing audit, nominating or compensation committees of the
Board of Directors, or any committees performing similar functions. The Board of
Directors met four times during the twelve months ended December 31, 1997, and
each of the Directors attended at least 75% of those meetings.
SENIOR OFFICERS OF THE FUND
<TABLE>
<CAPTION>
YEAR FIRST SHARES OWNED
PRINCIPAL OCCUPATION; BECAME AN BENEFICIALLY
NAME AND AGE OTHER ASSOCIATIONS OFFICER JUNE 15, 1998**
- ------------- -------------------- -------- --------------
<S> <C> <C> <C>
Robert M. DeMichele* President and Chairman of the Board (see page 3). 1981 0
(53)
Richard M. Hisey* Vice President, Treasurer and Director (see page 3). 1987 1,658
(39)
Lawrence Kantor* Vice President and Director (see page 3). 1984 0
(51)
Lisa Curcio* Vice President and Secretary. Senior Vice President 1985 0
(38) and Secretary, Lexington Management Corporation; Vice
President and Secretary, Lexington Funds Distributor,
Inc.; Secretary, Lexington Global Asset Managers,
Inc.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST SHARES OWNED
PRINCIPAL OCCUPATION; BECAME AN BENEFICIALLY
NAME AND AGE OTHER ASSOCIATIONS OFFICER JUNE 15, 1998**
- ------------- ----------------- ------- --------------
<S> <C> <C> <C>
Richard Lavery* 1990 0
(44) Vice President. Senior Vice President, Lexington
Management Corporation; Vice President, Lexington
Funds Distributor, Inc. Janice Carnicelli* 1991 0
(38) Vice President.
Richard T. Saler* 1994 3,532
(36) Vice President and Portfolio Manager. Senior Vice
President, Director of International Investment
Strategy of Lexington Management Corporation.
</TABLE>
* Messrs. DeMichele, Hisey, Kantor, Lavery, Saler and Mmes. Curcio and
Carnicelli hold similar offices with some or all of the other registered
investment companies advised and/or whose shares are distributed by the
Adviser and Lexington Funds Distributor, Inc.
** Beneficial ownership is defined in accordance with the rules of the
Securities and Exchange Commission and means generally the power to vote or
dispose of shares, regardless of any economic interest therein.
REMUNERATION OF DIRECTORS AND CERTAIN EXECUTIVE OFFICERS
Each Director who is not an interested person is reimbursed for expenses
incurred in attending each meeting of the Board of Directors or any committee
thereof up to a maximum of $9,000 per year for Directors living outside the
U.S., and $6,000 per year for Directors living within the U.S. Each Director who
is not an affiliate of the Adviser is compensated for his or her services
according to a fee schedule which recognizes the fact that each Director also
serves as a Director (or trustee) of other investment companies advised by the
Adviser. Each Director receives a fee, allocated among all investment companies
for which the Director serves. Each Director who served as a director or trustee
for all the funds in the Lexington Fund Complex and attended regular meetings
received an annualized compensation of $24,000.
The following chart outlines information regarding compensation paid or
accrued for the fiscal year ended December 31, 1997 for each Director:
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION FROM NUMBER OF
NAME OF DIRECTOR COMPENSATION FROM FUND FUND AND FUND COMPLEX DIRECTORSHIPS IN FUND COMPLEX
- --------------- ---------------------- ---------------------- ---------------------------
<S> <C> <C> <C>
S.M.S. Chadha $1,712 $26,821 15
Robert M. DeMichele 0 0 16
Beverley C. Duer $1,712 $29,521 16
Barbara R. Evans 0 0 15
Richard M. Hisey 0 0 5
Lawrence Kantor 0 0 15
Jerard F. Maher $1,712 $29,521 16
Andrew M. McCosh $1,600 $25,029 15
Donald B. Miller $1,712 $26,821 15
Francis Olmsted* $1,085 $16,800 N/A
John G. Preston $1,712 $26,821 15
Margaret W. Russell* $1,712 $27,045 15
Philip C. Smith* $1,200 $19,200 N/A
Allen H. Stowe 0 $2,574 5
Francis A. Sunderland* $1,085 $16,200 N/A
*Retired
</TABLE>
5
<PAGE>
RETIREMENT PLAN FOR ELIGIBLE DIRECTORS
Under the Retirement Plan for Eligible Directors (the "Retirement Plan"),
each Director who is not an employee of the Adviser, any of the funds managed by
the Adviser, the Fund's administrator, Lexington Funds Distributor, Inc., or any
of their affiliates may be entitled to certain benefits upon retirement from the
Board. Under the Retirement Plan, the normal retirement date is the date on
which the eligible Director has attained age 65 and has completed at least ten
years of continuous and non-forfeited service with one or more of the investment
companies advised by the Adviser (or its affiliates) (collectively, the "Covered
Funds"). Each eligible Director is entitled to receive from the Covered Fund an
annual benefit commencing on the first day of the calendar quarter coincident
with or next following his date of retirement equal to 5% of his compensation
multiplied by the number of such Director's years of service (not in excess of
15 years) completed with respect to any of the Covered Funds. Such benefit is
payable to each eligible Director in quarterly installments for ten years
following the date of retirement or the life of the Director. The Retirement
Plan establishes age 72 as a mandatory retirement age for Directors; however,
Directors who were serving the Covered Funds as of September 12, 1995 are not
subject to such mandatory retirement. Directors who were serving the Covered
Funds as of September 12, 1995 who elected retirement under the Retirement Plan
prior to September 12, 1996 receive an annual retirement benefit at an increased
compensation level if compensation is increased prior to September 12, 1997 and
receive spousal benefits (i.e., in the event the Director dies prior to
receiving full benefits under the Retirement Plan, the Director's spouse (if
any) will be entitled to receive the retirement benefit within the 10 year
period.)
Retiring Directors will be eligible to serve as Honorary Directors for one
year after retirement and will be entitled to be reimbursed for travel expenses
to attend a maximum of two meetings.
The following table shows the estimated annual benefits payable to an
eligible Director upon retirement assuming various compensation and years of
service classifications. As of December 31, 1997, the estimated credited years
of service for Directors Chadha, Duer, Maher, McCosh, Miller and Preston are 2,
19, 2, 2, 23 and 19 respectively. This table below refers to retirement
compensation for the trustees and directors of the entire Lexington Fund Complex
(the investment companies managed by the Adviser):
HIGHEST ANNUAL COMPENSATION PAID BY ALL FUNDS
----------------------------------------------
$20,000 $25,000 $30,000 $35,000
YEARS OF
SERVICE ESTIMATED ANNUAL BENEFIT UPON RETIREMENT
- ------- ----------------------------------------
15 $15,000 $18,750 $22,500 $26,250
14 14,000 17,500 21,000 24,500
13 13,000 16,250 19,500 22,750
12 12,000 15,000 18,000 21,000
11 11,000 13,750 16,500 19,250
10 10,000 12,500 15,000 17,500
The Fund pays annual retirement benefits to Francis Olmsted, Margaret W.
Russell, Philip C. Smith and Francis A. Sunderland.
6
<PAGE>
PROPOSAL 2: APPROVAL OR DISAPPROVAL OF SUB-ADVISORY AGREEMENT
The Fund has entered into an investment advisory agreement with the
Adviser, under which the Adviser provides investment advice and in general
conducts the management and investment program of the Fund under the supervision
and control of the Board of Directors of the Fund.
The Adviser has proposed to enter into a Sub-Advisory Agreement with
Stratos Advisors, Inc. ("Stratos"). A copy of the proposed Sub-Advisory
Agreement is attached as Exhibit A. Under the proposed Sub-Advisory Agreement,
Stratos will provide the Fund with investment advice and management of the
Fund's investment program. Stratos, an affiliate of VZB Partners LLC ("VZB"), an
offshore investment manager, is registered with the Securities and Exchange
Commission as an investment adviser. As a newly formed investment adviser,
Stratos currently does not have any assets under management. Stratos intends to
provide investment management services to institutional investors or
sophisticated individual investors with a net worth in excess of $1 million.
Stratos specializes in managing assets in emerging markets.
The Adviser believes that the addition of Stratos as subadviser to the Fund
will expand the investment expertise available to the Adviser in managing the
Fund's investments in emerging markets due to Stratos' ability to investigate
investment opportunities in emerging markets. The Adviser believes that Stratos'
expertise in managing assets in emerging markets will help the Fund to better
achieve its investment objective of seeking long-term capital growth through
investments in emerging markets.
THE PROPOSED SUB-ADVISORY AGREEMENT DOES NOT PROVIDE FOR ANY INCREASE IN
THE INVESTMENT ADVISORY FEES PAID BY THE FUND. Rather, the Adviser will pay the
subadviser fees from its own resources. If the proposed Sub-Advisory Agreement
is approved, the Adviser will continue to serve as investment adviser to the
Fund and Stratos will serve as the investment subadviser to the Fund.
If shareholders approve the proposed Sub-Advisory Agreement, it will go
into effect on August 12, 1998 and, unless earlier terminated in accordance with
their terms, will continue in effect from year to year only so long as such
continuance is specifically approved by the Board of Directors. Either party may
terminate the Sub-Advisory Agreement at any time without penalty on 60 days'
written notice.
Based upon the recommendations of the Adviser, the Board of Directors
determined that the proposed Sub-Advisory Agreement was in the best interests of
shareholders. At a meeting held on June 15, 1998, the Fund's Board of Directors,
including a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund (the "Disinterested Directors"), approved
the proposed Sub-Advisory Agreement between the Adviser and Stratos. The Board
also directed that the proposed Sub-Advisory Agreement be submitted to
shareholders for approval at this meeting. Shareholders are being asked to
approve this transaction.
ADVISORY FEES
As compensation for its services as investment adviser, the Fund pays the
Adviser a monthly advisory fee at the annual rate of 1.00% of the average daily
net assets of the Fund. Under the proposed Sub-Advisory Agreement, the Adviser,
from its own resources, will pay Stratos an annual sub-advisory fee of 0.35% of
the Fund's average daily net assets (net of reimbursements and no transaction
fee program fees not borne by the Fund). For the fiscal year ended December 31,
1997, the Fund paid the Adviser $2,373,753.
7
<PAGE>
PORTFOLIO MANAGEMENT TEAM
The Fund will be managed by a portfolio management team consisting of
investment professionals from both the Adviser and Stratos. The lead managers
will be Richard T. Saler, Alfredo M. Viegas and Mohammed Zaidi.
Mr. Saler is Senior Vice President, Director of International Investment
Strategy of the Adviser. Mr. Saler is responsible for international investment
analysis and portfolio management at the Adviser. He has twelve years of
investment experience. Mr. Saler has focused on international markets since
first joining the Adviser in 1986. In 1991 he was a strategist with Nomura
Securities and rejoined the Adviser in 1992. Mr. Saler is a graduate of New York
University with a B.S. Degree in Marketing and an M.B.A. in Finance from New
York University's Graduate School of Business Administration.
Mr. Viegas is Chief Executive Officer and Senior Portfolio Manager of
Stratos. In 1995, Mr. Viegas established VZB. He has been Senior Portfolio
Manager and Partner of VZB since its inception. Mr. Viegas is responsible for
corporate analysis and bottom-up research and has concentrated on analyzing
equity opportunities not only in emerging markets but also in newly developing
or frontier markets where quality of publicly available information is scarce
and direct research is imperative. Prior to VZB, Mr. Viegas was Vice President
and Latin America Equity Strategist for emerging markets with Salomon Brothers
from 1993 to 1995. From 1991 to 1993, Mr. Viegas was a research analyst with
Morgan Stanley. Mr. Viegas is a graduate of Weslyan University with a B.A. in
Classics and Medieval History.
Mr. Zaidi is a Portfolio Manager at Stratos. Mr. Zaidi is responsible for
fundamental corporate analysis with a particular focus on Asian and Middle
Eastern Markets as well as the Risk Control Officer. Mr. Zaidi has been a
Portfolio Manager at VZB since 1997. Mr. Zaidi was Chief Financial Officer and
Partner at Paradigm Software, Inc. from 1992 to 1995. Mr. Zaidi is a graduate of
The University of Pennsylvania with a B.S. in Economics from the Wharton School.
Mr. Zaidi also holds an M.B.A. in Finance from MIT Sloan School of Management.
The following persons are directors and/or senior officers of Stratos:
Alfredo M. Viegas, Chief Executive Officer and Senior Portfolio Manager;
Mohammed Zaidi, Portfolio Manager; and Michael Perry, Chief Financial Officer.
The business address of each of the directors and officers listed above is 20
Exchange Place, 52nd Floor, New York, New York 10005.
BOARD CONSIDERATIONS
In considering whether to recommend that the proposed Sub-Advisory
Agreement be approved by shareholders, the Board of Directors considered, among
other things, the investment philosophy, integrity, experience in emerging
markets and past performance of the investment personnel of the subadviser. The
Board of Directors also considered information related to VZB's performance in
emerging markets. In addition, the Board requested and evaluated other
information from Stratos which the Board deemed to be relevant. The Board also
considered the fact that the proposed Sub-Advisory Agreement would not result in
additional fees to the Fund, and the Board weighed the potential benefits
offered by Stratos' expertise in emerging markets. Finally, the Board also
considered various alternatives, including internalization of management, having
the Adviser more fully assume the sub-advisory function or retaining another
subadviser.
Based on these considerations and the recommendation of the Adviser, the
Board, including a majority of the Disinterested Directors, unanimously approved
the proposed Sub-Advisory Agreement at the meeting held on June 15, 1998.
8
<PAGE>
REQUIRED VOTE
Approval of the proposed Sub-Advisory Agreement will require the
affirmative vote of a "majority of the outstanding voting securities" of the
Fund. If the shareholders of the Fund do not approve the proposed Sub-Advisory
Agreement, the Board of Directors will take such further action as it may deem
to be in the best interests of the Fund's shareholders.
DIRECTORS' RECOMMENDATION
The Board of Directors recommends that you vote FOR approval of the
proposed Sub-Advisory Agreement between the Adviser and Stratos.
PROPOSAL 3: APPROVAL OR DISAPPROVAL OF DISTRIBUTION PLAN
At a meeting held on June 15, 1998, the Board of Directors, including a
majority of the Disinterested Directors, approved the proposed Plan of
Distribution (the "Plan") in accordance with requirements of Rule 12b-1 of the
Investment Company Act of 1940 Act. The Board of Directors determined that it
was reasonably likely that the Plan would contribute to an increase in sales of
the shares of the Fund, with resulting benefits the Fund and its shareholders
for the reasons described below. Shareholders are being asked to consider and
approve the proposed Plan for the Fund.
The Board of Directors determined that an enhanced marketing effort by
Lexington Funds Distributor, Inc. (the "Distributor") on behalf of the Fund
would benefit the Fund in maintaining and improving its market share, and that
such an effort would be enhanced by the adoption of the Plan, under which the
Fund's assets will be available to compensate the Distributor for the costs of
marketing and distributing the Fund's shares. The proposed Distribution Plan
will also cover expenses currently being paid through the Shareholder Servicing
Plan. However, under the proposed Distribution Plan, payment of fees to
shareholder servicing agents will reduce expenses currently being paid through
the Shareholder Servicing Plan.
The Adviser believes, and the Board of Directors concurs, that the adoption
of the Plan is reasonably likely to improve the sales of Fund shares by
providing third party intermediaries with an incentive to provide ongoing
services to the Fund shareholders and sell shares of the Fund and assist the
Fund to remain competitive in the marketplace, and by providing Funds with
advertising or other promotional efforts.
BENEFITS TO SHAREHOLDERS
The Adviser believes, and the Board of Directors concurs, that the proposed
Plan is reasonably likely to benefit both the Fund and existing shareholders.
For example, enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and afford greater
resources with which to pursue the investment objective of the Fund. In
addition, the sale of additional shares reduces the likelihood that redemptions
of shares will require the liquidation of the Fund's securities in amounts and
at times that are disadvantageous for investment purposes and, therefore,
disadvantageous to the remaining shareholders. Finally, increased Fund assets
may result in reducing each investor's share of certain expenses such as
printing, audit, legal, insurance, etc., through economies of scale (e.g.,
allocating fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.
9
<PAGE>
The Board of Directors recognize that there is no assurance that the
expenditures of assets of the Fund to finance distribution of shares of the Fund
will result in additional sales of shares or in an increase in the net assets of
the Fund. The Board of Directors determined, however, that there is a reasonable
likelihood that one or more of such benefits will result and that the Board of
Directors will be in a position to monitor the distribution expenses of the Fund
and to evaluate the benefit of such expenditures in deciding whether to continue
the Plan.
DESCRIPTION OF THE PROPOSED PLAN OF DISTRIBUTION
Under the proposed Plan, the Fund will pay for distribution and service
expenses. A copy of the proposed Plan is attached as Exhibit B. The Fund is
authorized under the proposed Plan to use its assets to finance certain
activities relating to the distribution of its shares including, among other
things, advertising, the preparation, printing and distribution of sales
literature, printing and distributing prospectuses, statement of additional
information, annual reports and other periodic reports to prospective investors.
The proposed Plan provides that distribution payments are limited to an
amount not to exceed an annual rate of 0.25% of the Fund's average daily net
assets. The proposed Plan of Distribution does not permit carrying over
distribution expenses in excess of the annual rate of 0.25% to subsequent
periods. The Board of Directors will receive quarterly reports concerning the
marketing expenses that have been compensated under the Plan. The Board of
Directors will be able to terminate the Plan of Distribution at any time, which
would terminate subsequent payments. In addition, the Board of Directors,
including a majority of the of the Disinterested Directors, must approve the
continuation of the Plan annually, or the Plan will terminate automatically
along with the payments made under it by the Fund.
BOARD CONSIDERATIONS
In considering whether to recommend that the proposed Plan be approved by
shareholders, the Board of Directors identified and considered, among other
things, the potential benefits from the proposed Plan to the Fund and its
shareholders. In addition, the Disinterested Directors requested, evaluated and
discussed other information and materials furnished by Fund management which the
Disinterested Directors deemed to be relevant. In connection with their
consideration of the proposed Plan, the Directors were furnished with a draft of
the Plan of Distribution and related materials which outlined the uses and
benefits of distribution plans under Rule 12b-1 of the 1940 Act currently being
used in the mutual fund industry, and certain data concerning such plans.
The Directors considered various factors relevant to the Fund's situation,
including the investment and sales history of the Fund, the Fund's marketing
experience using Lexington Funds Distributor, Inc. as distributor, possible ways
in which sales of shares could be increased, and the effect of the proposed Plan
on the Fund and its shareholders. The Board also took into account the following
factors: the nature and causes of the problems or circumstances which made
implementation of the Plan advisable and appropriate; the way in which the Plan
would address these problems or circumstances, including the nature and
potential amount of the expenditures; the relationship of such expenditures to
the overall cost structure of the Fund; the nature of the anticipated benefits;
the time it might take for those benefits to be achieved; the merits of possible
alternative plans; and the effect of the Plan on existing shareholders.
In approving the Plan, the Directors determined, in the exercise of their
business judgment and in light of their fiduciary duties, based upon the
materials requested and evaluated by them, that there was a reasonable
likelihood that the Fund and its shareholders would benefit from the adoption of
the proposed Plan.
10
<PAGE>
Based on these considerations, the Board, including all of the
Disinterested Directors, unanimously approved the proposed Plan at the meeting
held on June 15, 1998.
REQUIRED VOTE
Approval of the proposed Plan will require the affirmative vote of a
"majority of the outstanding voting securities" of the Fund. If the shareholders
of the Fund do not approve the proposed Plan, the Board of Directors will take
such further action as it may deem to be in the best interests of the Fund's
shareholders.
DIRECTORS' RECOMMENDATION
The Board of Directors recommends that you vote FOR approval of the
proposed Plan of Distribution for the Fund.
PROPOSAL 4: RATIFICATION OR REJECTION OF INDEPENDENT AUDITORS
The Board of Directors, including a majority of the Disinterested
Directors, unanimously appointed KPMG Peat Marwick LLP, as independent auditors
to examine and to report on the financial statements of the Fund for the fiscal
year ending December 31, 1998. Such appointment was expressly conditioned upon
the right of the Fund by a vote of the majority of the outstanding voting
securities at any meeting called for the purpose to terminate such employment.
The Board's selection of KPMG Peat Marwick LLP is hereby submitted to
shareholders for ratification.
KPMG Peat Marwick LLP has served as the independent auditors for the Fund
during its most recent fiscal period ended December 31, 1997. As the independent
auditors, KPMG Peat Marwick LLP audits and certifies the Fund's financial
statements. KPMG Peat Marwick LLP also reviews the Fund's Annual Reports to
shareholders and its filings with the U.S. Securities and Exchange Commission.
Neither KPMG Peat Marwick LLP nor any of its partners has any direct or material
indirect financial interest in the Fund. Representatives of KPMG Peat Marwick
LLP are not expected to attend the Meeting but have been given the opportunity
to make a statement if they so desire, and will be available should any matter
arise requiring their participation.
DIRECTORS' RECOMMENDATION
The Board of Directors recommends that you vote FOR the ratification of the
selection of KPMG Peat Marwick LLP as independent certified public accountants
to examine and to report on the financial statements of the Fund for the fiscal
year ending December 31, 1998.
PROPOSAL 5: OTHER MATTERS
The Directors do not know of any matters to be presented at the Meeting
other than those set forth in this proxy statement. If any other business should
come before the meeting, the persons named in the accompanying proxy will vote
thereon in accordance with their best judgment.
11
<PAGE>
OTHER INFORMATION
VOTING INFORMATION AND DISCRETION OF THE PERSONS NAMED AS PROXIES. At the
date of the proxy, we know of no other business to be brought before the
Meeting. However, if any other matters do come up, we will use our best judgment
to vote on your behalf.
If at the time any session of the Meeting is called to order a quorum is
not present, in person or by proxy, the persons named as proxies may vote those
proxies which have been received to adjourn the Meeting to a later date. In the
event that a quorum is present but sufficient votes in favor of one or more of
the proposals have not been received, the persons named as proxies may propose
one or more adjournments of the Meeting to permit further solicitation of
proxies with respect to any such proposal. All adjournments will require the
affirmative vote of a majority of the shares present in person or by proxy at
the session of the Meeting to be adjourned. The persons named as proxies will
vote those proxies which they are entitled to vote in favor of the proposal, in
favor of such an adjournment, and will vote those proxies required to be voted
against the proposal, against any adjournment. We may take a vote on one or more
of the proposals in this proxy statement prior to any adjournment if we receive
sufficient votes for its approval and the approval is otherwise appropriate. Any
adjourned session or sessions may be held within 90 days after the date set for
the original Meeting without the necessity of further notice.
ANNUAL/SEMIANNUAL REPORTS. The Fund's most recent annual and semiannual
reports to shareholders are available at no cost. To request a report, please
call us toll-free at 1-800-526-0056 or write us at Park 80 West, Plaza Two,
Saddle Brook, New Jersey 07663.
LITIGATION. The Fund is not involved in any litigation.
SUBMISSION OF PROPOSALS FOR THE NEXT ANNUAL MEETING OF THE FUND. Under the
Fund's Articles of Incorporation and By-Laws, annual meetings of shareholders
are not required to be held unless necessary under the 1940 Act (for example,
when fewer than a majority of the Directors have been elected by shareholders).
Therefore, the Fund does not hold shareholder meetings on an annual basis. Any
shareholder proposals to be included in the proxy statement for the next meeting
must be received by the Fund, at Park 80 West, Plaza Two, Saddle Brook, New
Jersey 07663, within a reasonable time period prior to that meeting. The
submission of a shareholder proposal does not guarantee that it will be included
in the proxy statement. Shareholder proposals are subject to certain regulations
under federal securities law.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE SIGN YOUR PROXY CARD PROMPTLY
AND RETURN IT IN THE ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY.
NO POSTAGE IS NECESSARY.
By Order of the Board of Directors,
Lisa A. Curcio
Secretary
12
<PAGE>
EXHIBIT A
SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made this day of __________, 1998 by and between
LEXINGTON MANAGEMENT CORPORATION, a Delaware corporation (the "Adviser"), and
Stratos Advisors, Inc., a New York corporation (the "Sub-Adviser"), with respect
to the following recital of fact:
RECITAL
WHEREAS, Lexington Worldwide Emerging Markets Fund, Inc. (the "Fund") is
registered as an open-end, diversified management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules and
regulations promulgated thereunder; and
WHEREAS, the Adviser is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Fund is authorized to issue shares of common stock $1.00 par
value; and
WHEREAS, the Fund and the Adviser have entered into an agreement dated
December 5, 1994 to provide for management services for the Fund on the terms
and conditions set forth therein (the "Investment Advisory Agreement"); and
WHEREAS, the Sub-Adviser proposes to render investment management services
to the Adviser in connection with the Adviser's responsibilities to the Fund on
the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Duties. The Sub-Adviser shall furnish the Fund with investment
research and advice consistent with the investment policies set forth
in the Prospectus and Statement of Additional Information of the Fund,
subject at all times to the policies and control of the Fund's Board
of Directors and the supervision of the Adviser. The Sub-Adviser shall
give the Fund the benefit of its best judgment, efforts and facilities
in rendering its services as Sub-Adviser. In carrying out this
obligation, the Sub-Adviser shall:
(a) determine which issuers and securities shall be represented in the
Fund's portfolio and regularly report thereon to the Fund's Board of
Directors and the Adviser;
(b) formulate and implement continuing programs for the purchase and
sale of the securities of such issuers and regularly report thereon to
the Fund's Board of Directors and the Adviser;
(c) continuously review the Fund's security holdings and the
investment program and the investment policies of the Fund; and
(d) take, on behalf of the Fund, all actions which appear necessary to
carry into effect such purchase and sale programs, including the
placement of orders for the purchase and sale of securities for the
Fund.
A-1
<PAGE>
2. Broker-Dealer Relationships.
a. PORTFOLIO TRADES. The Adviser and Sub-Adviser at their own expense,
shall place all orders for the purchase and sale of portfolio
securities for the Fund with brokers or dealers selected by the
Adviser, and Sub-Adviser which may include brokers or dealers
affiliated with the Adviser or Sub-Adviser. The Adviser and
Sub-Adviser shall use their best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits
received.
b. SELECTION OF BROKER-DEALERS. In selecting broker-dealers qualified
to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage and research services (as those
terms are defined in Section 28(e) of the Securities Exchange Act of
1934, as amended) to the Fund and/or the other accounts which the
Adviser, Sub-Adviser or its affiliates exercise investment discretion.
The Adviser and Sub-Adviser are authorized to pay a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund that is in excess of
the amount of commission another broker or dealer would have charged
for effecting that transaction if the Adviser determines in good faith
that such amount of commission is reasonable in relation to the value
of the brokerage and research services provided by such broker or
dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities that the
Adviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Board shall periodically
review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits received.
3. CONTROL BY BOARD OF DIRECTORS. Any investment program undertaken by
the Sub-Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser on behalf of the Fund
pursuant thereto, shall at all times be subject to any directives of
the Board of Directors of the Fund.
4. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Sub-Adviser shall at all times
conform to:
(a) all applicable provisions of the 1940 Act; and
(b) the provisions of the Registration Statement of the Fund under the
Securities Act of 1933 and the 1940 Act; and
(c) the provisions of the Fund's Agreement and Articles of
Incorporation and
(d) the provisions of the By-Laws of the Fund; and
(e) any other applicable provisions of state and federal law.
5. EXPENSES. The expenses connected with the Fund shall be borne by the
Sub-Adviser as follows:
(a) The Sub-Adviser shall pay the salaries and payroll expenses of
persons serving as officers or Directors of the Fund who are also
employees of the Sub-Adviser or any of its affiliates.
6. DELEGATION OF RESPONSIBILITIES. Upon request of the Adviser and with
the approval of the Fund's Board of Directors the Sub-Adviser may
perform services on behalf of the Fund which are not required by this
Agreement. Such services will be performed on behalf of the Fund and
the Sub-Adviser's cost in
A-2
<PAGE>
rendering such services may be billed monthly to the Adviser, subject
to examination by the Adviser's independent accountants. Payment or
assumption by the Sub-Adviser of any Fund expense that the Sub-Adviser
is not required to pay or assume under this Agreement shall not
relieve the Adviser or the Sub-Adviser of any of their obligations to
the Fund or obligate the Sub-Adviser to pay or assume any similar Fund
expense on any subsequent occasions.
7. COMPENSATION. For the services to be rendered and the facilities
furnished hereunder, the Adviser shall pay the Sub-Adviser monthly
compensation of the sum of the amount determined by applying the
following annual rate to the Fund's average daily net assets, net of
reimbursement and net of shareholder servicing agent fees not borne by
the Fund: 0.35% of the Fund's annual average daily net assets.
Compensation under this Agreement shall be paid monthly. If this
Agreement becomes effective subsequent to the first day of the month
or shall terminate before the last day of the month, compensation for
that part of the month this Agreement is in effect shall be prorated
in a manner consistent with the calculation for the preceding month
and shall be made as promptly as possible after the end of each month.
8. EXPENSE LIMITATION. If, for any fiscal year, the total of all
ordinary business expenses of the Fund, including all investment
advisory fees but excluding brokerage commissions and fees, taxes,
interest and extraordinary expenses such as litigation, would exceed
the most restrictive expense limits imposed by any statute or
regulatory authority of any jurisdiction in which the Fund's
securities are offered as determined in the manner described above as
of the close of business on each business day during such fiscal year,
the aggregate of all such investment management fees shall be reduced
by the amount of such excess. The amount of any such reduction to be
borne by the Sub-Adviser shall be deducted from the monthly investment
advisory fee otherwise payable to the Sub-Adviser during such fiscal
year; and if such amount should exceed such monthly fee, the
Sub-Adviser agrees to repay to the Adviser such amount of its
investment advisory fee previously received with respect to such
fiscal year as may be required to make up the deficiency no later than
the last day of the first month of the next succeeding fiscal year.
The Sub-Adviser will not be required to reimburse the Fund for any
ordinary business expenses which exceed the amount of its Sub-Advisory
fee for said fiscal year. For purposes of this paragraph, the term
"fiscal year" shall exclude the portion of the current fiscal year
which shall have elapsed prior to the date hereof and shall include
the portion of the then current fiscal year which shall have elapsed
at the date of termination of this Agreement.
9. TERM. This Agreement shall become effective at the close of business
on the date hereof and shall remain in force and effect, subject to
Section 11 hereof for two years from the date hereof.
10. RENEWAL. Following the expiration of its initial two year term, this
Agreement shall continue in force and effect from year to year,
provided that such continuance is specifically approved at least
annually.
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the Fund's outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the Directors who are not
parties of this Agreement or interested persons of a party to the
Agreement (other than as a Director of the Fund), by votes cast in
person at a meeting specifically called for such purposes.
11. TERMINATION. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors or by
vote of a majority of the Fund's outstanding voting securities or by
the Sub-Adviser on sixty (60) days' written notice to the other party.
This Agreement shall automat-
A-3
<PAGE>
ically terminate in the event of its assignment, the term "assignment"
for the purposes having the meaning defined in Section 2(a)(42) of the
Investment Company Act of 1940.
12. LIABILITY OF THE SUB-ADVISER. In the absence of willful misfeasance,
bad faith, gross negligence on the part of the Sub-Adviser or its
officers, directors or employees, or reckless disregard by the
Sub-Adviser of its duties under this Agreement, the Sub-Adviser shall
not be liable to the Adviser, the Fund or to any shareholder of the
Fund for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained
in the purchase, holding or sale of any security, provided the
Sub-Adviser has acted in good faith.
13. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at
such address as such other party may designate for the receipt of such
notice. Until further notice to the other party, it is agreed that the
address of the Adviser shall be Park 80 West, Plaza Two, Saddle Brook,
New Jersey 07663, and that of the Sub-Adviser for this purpose shall
be 20 Exchange Place, 52nd Floor, New York, NY 10005.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
LEXINGTON MANAGEMENT CORPORATION
Attest: By _____________________________________
Executive Vice President
_______________________________
STRATOS ADVISORS, INC.
Attest: By ______________________________________
President
________________________________
A-4
<PAGE>
EXHIBIT B
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
DISTRIBUTION PLAN
Distribution Plan (the "Plan") of Lexington Worldwide Emerging Markets
Fund, Inc. a Maryland Corporation (the "Fund), an open-end, management
investment company registered under the Investment Company Act of 1940, as
amended (the "Act"), adopted pursuant to Section 12(b) of the act and Rule 12b-1
promulgated thereunder ("Rule 12b-1").
1. PRINCIPAL UNDERWRITER AND INVESTMENT ADVISER. Lexington Funds
Distributor, Inc., a Delaware corporation ("the Distributor"), acts as
the principal underwriter of the Fund's shares pursuant to a
Distribution Agreement. Lexington Management Corporation, a Delaware
corporation (the "Adviser"), acts as the Fund's investment adviser
pursuant to an Investment Advisory Agreement.
2. DISTRIBUTION PAYMENTS. (a) The Fund either directly or through the
Adviser, may make payments periodically (i) to the Distributor or to
any broker-dealer (a "Broker") who is registered under the Securities
Exchange Act of 1934 and a member in good standing of the National
Association of Securities Dealers, Inc. and who has entered into a
selected dealer agreement with the Distributor, (ii) to other persons
or organizations ("Servicing Agents") who have entered into
shareholder processing and service agreements with the Adviser or with
the Distributor, with respect to Fund shares owned by shareholders for
which such Broker is the dealer or holder of record or such servicing
agent has a servicing relationship, or (iii) for expenses associated
with distribution of Fund shares, including the compensation of the
sales personnel of the Distributor; payments of no more than an
effective annual rate of 0.25%, or such lesser amounts as the
Distributor determines appropriate.
(b) The schedule of such fees and the basis upon which such fees will
be paid shall be determined from time to time by the Distributor and
the Adviser, subject to approval by the Directors of the Fund.
(c) Payments may also be made for any advertising and promotional
expenses relating to selling efforts, including but not limited to the
incremental costs of printing, prospectuses, statements of additional
information, annual reports and other periodic reports for
distribution to persons who are not shareholders of the Fund; the
costs of preparing and distributing any other supplemental sales
literature; costs of radio, television, newspaper and other
advertising: telecommunications expenses, including the cost of
telephones, telephone lines and other communications equipment,
incurred by or for the Distributor in carrying out its obligations
under the Distribution Agreement.
3. REPORTS. Quarterly, in each year that this Plan remains in effect, the
Fund's Treasurer shall prepare and furnish to the Directors of the
Fund a written report, complying with the requirements of Rule 12b-1,
setting forth the amounts expended by the Fund under the Plan and
purposes for which such expenditures were made.
4. APPROVAL OF PLAN. This Plan shall become effective upon approval of
the Plan, the form of Selected Dealer Agreement and the form of
Shareholder Service Agreement, by the majority votes of both (a) the
Fund's Directors and the Qualified Directors (as defined in Section
6), cast in person at a meeting called
B-1
<PAGE>
for the purpose of voting on the Plan and (b) the outstanding voting
securities of the Fund, as defined in Section 2(a)(42) of the Act.
5. TERM. This Plan shall remain in effect for one year from its adoption
date and may be continued thereafter if this Plan and all related
agreements are approved at least annually by a majority vote of the
Directors of the Fund, including a majority of the Qualified Directors
cast in person at a meeting called for the purpose of voting on such
Plan and Agreements. This Plan may not be amended in order to increase
materially the amount to be spent for distribution assistance without
shareholder approval in accordance with Section 4 hereof. All material
amendments to this Plan must be approved by a vote of the Directors of
the Fund, and of the Qualified Directors (as hereinafter defined),
cast in person at a meeting called for the purpose of voting thereon.
6. TERMINATION. This Plan may be terminated at any time by a majority
vote of the Directors who are not interested persons (as defined in
Section 2(a)(19) of the Act) of the Fund and have no direct or
indirect financial interest in the operation of the Plan or in any
Agreements related to the Plan (the "Qualified Directors") or by vote
of a majority of the outstanding voting securities of the Fund, as
defined in Section 2(a)(42) of the Act.
7. NOMINATION OF "NON-INTERESTED" DIRECTORS. While this Plan shall be in
effect, the selection and nomination of the "non-interested" Directors
of the Fund shall be committed to the discretion of the non-interested
Directors then in office.
8. MISCELLANEOUS. (a) Any termination or non-continuance of (i) a
Selected Dealer Agreement between the Distributor and a particular
broker or (ii) a Shareholder Service Agreement between the adviser or
the Fund and a particular person or organization, shall have no effect
on any similar agreements between brokers or other persons and the
Fund, the Adviser or the Distributor pursuant to this Plan.
(b) The Distributor, the Adviser, or the Fund shall not be under any
obligation because of this Plan to execute any Selected Dealer
Agreement with any broker or any Shareholder Service Agreement with
any person or organization.
(c) All Agreements with any person or organization relating to the
implementation of this Plan shall be in writing and any agreement
related to this Plan shall be subject to termination, without penalty,
pursuant to the provisions of Section 6 hereof.
Dated: ___________________________ Lexington Funds Distributor, Inc.
By: ___________________________________
Executive Vice President
Lexington Worldwide Emerging Markets Fund, Inc.
By: __________________________________
President
B-2
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS of Lexington
Worldwide Emerging Markets Fund, Inc. (the "Fund") for use at a Special
Meeting of Shareholders to be held at the offices of the Fund, Park 80
West, Plaza Two, Saddle Brook, New Jersey, on August 12, 1998 at 10:30 a.m.
Eastern time.
The undersigned hereby appoints Peter Corniotes and Richard Lavery,
and each of them, with full power of substitution, as proxies of the
undersigned to vote at the above-stated Special Meeting, and at all
adjournments thereof, all shares of common stock of the Fund that are
held of record by the undersigned on the record date for the Special
Meeting, upon the following matters:
Please mark box in blue or black ink.
ITEM I. Votes on Proposal to elect directors to serve as members of the
Board of Directors of the Fund, the nominees are: S.M.S.
Chadha, Robert M. DeMichele, Beverley C. Duer, Barbara R.
Evans, Richard M. Hisey, Lawrence Kantor, Jerard F. Maher,
Andrew M. McCosh, Donald B. Miller, John G. Preston, and Allen
H. Stowe.
FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ] TO WITHHOLD
AUTHORITY TO VOTE
FOR ANY INDIVIDUAL
NOMINEE, MARK THE
"FOR ALL EXCEPT"
BOX, AND STRIKE A
LINE THROUGH THE
NOMINEE'S NAME IN
THE LIST ABOVE.
ITEM 2. Vote on Proposal to approve an investment sub-advisory
agreement between Lexington Management Corporation and Stratos
Advisors, Inc. with respect to the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 3. Vote on Proposal to approve a Plan of Distribution for the
Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 4. Vote on Proposal to ratify the selection of KPMG Peat Marwick
LLP as independent auditors of the Fund.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
ITEM 5. Vote on the transaction of any other business properly brought
before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Every properly signed proxy will be voted in the manner specified
thereon and, in the absence of specification, will be treated as
GRANTING authority to vote FOR all of the above items.
Receipt of Notice of Special Meeting is hereby acknowledged.
PLEASE SIGN, DATE AND RETURN PROMPTLY.
______________________________________
Sign here exactly as name(s)
appears on this Proxy card
______________________________________
Dated:____________________________,1998
IMPORTANT: Joint owners must EACH
sign. When signing as attorney,
executor, administrator, trustee,
guardian or corporate officer,
please give your full title as
such.
