LEXINGTON WORLDWIDE EMERGING MARKETS FUND INC, N-30D, 1998-02-27

LEXINGTON WORLDWIDE EMERGING MARKETS FUND INC
N-30D, 1998-02-27

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DEAR SHAREHOLDERS:

- --------------------------------------------------------------------------------

The Lexington Worldwide Emerging Markets Fund declined 20.3%* during the
fourth quarter and fell 11.4%* for the full year of 1997. According to Lipper
Analytical Services, Inc., the average emerging market fund dropped 16.9% during
the quarter and declined 2.35% for the year. The unmanaged Morgan Stanley
Emerging Markets Free Index posted a loss of 17.5%** for the quarter and 11.6%**
for the year.

The Fund remains significantly underweight in the Asian portion of the
emerging market index; however, other emerging market funds benefited from even
lower weightings in Asia. Some of our competitors also have heavier weightings
in Latin America, which in comparison to Asia, performed much better. Latin
American markets fell 10.7% during the quarter, while Asian markets declined
33.0%. Despite the Fund's low weighting, a 57.7% drop in Indonesian stocks
negatively impacted performance. In Latin America, a 7% weighting in Chilean
stocks was negatively impacted by a 17.6% drop in the country's stock market. On
the positive side, Korean equities were mostly avoided, as that market sank
64.4%. Turkish equities, which comprise 5% of the Fund, performed strongly with
a gain of 24.4% during the fourth quarter. Finally, cash positions were
increased to 15-20% to cushion against expected volatility in emerging market
equities, while providing an opportunity to invest selectively in depressed
stocks at lower prices.

The turmoil in emerging markets has affected different groups of countries
in very different ways. Asian economies have suffered sharp declines in economic
activity due to excess industrial capacity, high debt loads, bankrupt financial
institutions and property companies, and rising unemployment. This economic
reality has also led to high real interest rates as investors demanded greater
compensation due to higher risks. High interest rates are now impacting many
other emerging economies as well, from Russia to Greece and most of Latin
America.

The Asian crisis has resulted in lower prices for key commodities such as
oil and copper which also will result in weak economies in the resource-based
economies of Chile, Venezuela, and Brazil, to name just a few. Governments have
responded to lower expected revenues by cutting fiscal spending which will
further impede growth. In conclusion, GDP growth in the emerging economies will
be under pressure from several fronts that make country weighting and stock
selectivity key factors in our 1998 strategy.

The Fund will seek financially sound companies in industries that are not
economically sensitive. Industries such as pharmaceuticals and foods are
favored. Though news in Asia still remains negative, opportunities are beginning
to surface. There are many cheap stocks in Asia and these stocks should provide
excellent returns while adopting a multi-year view. Export companies in the
region should actually benefit with revenues in U.S. dollars while costs are in
depreciated local currencies. Stocks of companies focused on Asian domestic
economies are down as much as 80-90%. Although the short-term economic outlook
looks dire, much of the news has already been discounted in share prices. The
Asian region will improve as its trade surplus and foreign investment increase.
Therefore, Asian weightings will be increased, and cash positions reduced, to
take advantage of Asian opportunities. Stock selection will focus on companies
with strong balance sheets and franchise value, as these will offer tremendous
opportunities. Emerging markets must be

1
<PAGE>

viewed with a longer-term horizon. Expanding populations, a growing middle class
and an educated work force are strong contributing factors to a successful
economic recovery. Above average economic growth will resume once stability
occurs in the credit and currency markets for these regions.

Sincerely,

/s/ Richard T. Saler /s/ Robert M. DeMichele
- -------------------- -----------------------
Richard T. Saler Robert M. DeMichele
Portfolio Manager President
February, 1998 February, 1998

[The following table represents a line chart in the printed report]

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

LEXINGTON
YEAR WWEM EAFE MSCI EMF
==============================================
6/17/91 $10,000 $10,000 $10,000
12/31/91 $10,173 $11,039 $11,780
12/31/92 $10,557 $9,695 $13,123
12/31/93 $17,246 $12,852 $22,944
12/31/94 $14,864 $13,852 $21,266
12/31/95 $13,983 $15,405 $20,158
12/31/96 $15,015 $16,336 $21,374
12/31/97 $13,303 $16,626 $18,898

AVERAGE ANNUAL STANDARD TOTAL RETURNS
FOR THE PERIOD ENDED 12/31/97
-------------------------------------------------------------
FUND/INDEX 1 YR. 5 YR. 10 YR.
-------------------------------------------------------------
LEXINGTON WORLDWIDE
EMERGING MARKETS FUND (11.40%) 4.73% 7.00%
-------------------------------------------------------------
MORGAN STANLEY CAPITAL
INTERNATIONAL (EAFE) INDEX 1.78% 11.39% 6.25%
-------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS FREE INDEX (11.59%) 7.57% 18.18%
-------------------------------------------------------------

This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund with a similar investment in the Morgan Stanley Capital
International (EAFE) Index and the Morgan Stanley Emerging Markets Free Index.
Results for the Fund, the Morgan Stanley Capital International (EAFE) Index and
the Morgan Stanley Emerging Markets Free Index include the reinvestment of all
dividend and capital gain distributions. *Prior to June 17, 1991 the Fund
operated under a different investment objective. Investment return and principal
value of an investment will fluctuate so that an investor's shares when redeemed
may be worth more or less than at their original cost. Total return represents
past performance and it is not predictive of future results.

* -11.40%, 4.73% and 7.00% are the one, five and ten year average annual
standard total returns, respectively, for the period ended December 31, 1997.
Prior to June, 1991, the Fund operated under a different name and investment
objective. Investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than at their original cost. Total return represents past performance
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 all dividends
reinvested.

2
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1997

BRAZIL: 6.8%
6,790,000 Cia Tecidos Norte De Mina (Preferred shares) ..................................... 2,433,648
6,790,000 Empresa Nacional de Comercio Redito .............................................. 5,050
4,710,000 Light - Servicos de Electricidade S.A. ........................................... 1,962,380
9,693,000 Petroleo Brasileiro S.A. (Preferred shares) ...................................... 2,266,871
67,000 Souza Cruz S.A. .................................................................. 540,313
7,940,000 Telecomunicacoes de Sao Paulo S.A. ............................................... 2,112,956
-----------
9,321,218
-----------

CHILE: 7.0%
268,400 Banco Santander (ADR) ............................................................ 3,791,150
151,700 Empresa Nacional Electricidad S.A. (ADR) ......................................... 2,683,194
59,100 Enersis S.A. (ADR) ............................................................... 1,713,900
58,200 Vina Concha y Toro S.A. (ADR) .................................................... 1,469,550
-----------
9,657,794
-----------

COLOMBIA: 1.7%
95,600 Banco Ganadero S.A. (ADR) ........................................................ 2,294,400
-----------

CZECH REPUBLIC: 1.9%
24,780 SPT Telekom AS2 .................................................................. 2,644,345
-----------

GREECE: 3.4%
192,120 Delta Dairy S.A. (Preferred Shares) .............................................. 1,726,837
58,450 Hellenic Tellecommunication Organization S.A. .................................... 1,199,074
332,640 Michaniki S.A. ................................................................... 1,705,988
-----------
4,631,899
-----------

HONG KONG: 3.4%
225,000 Cheung Kong (Holdings), Ltd. ..................................................... 1,473,717
3,396,000 JCG Holdings, Ltd. ............................................................... 1,457,319
10,100,000 Moulin International Holding, Ltd. ............................................... 1,212,271
1,201,666 Moulin International Holding, Ltd. Warrants ...................................... 17,990
3,925,000 Tingyi (Cayman Islands) Holding Company .......................................... 511,631
-----------
4,672,928
-----------
</TABLE>

3
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1997

INDIA: 6.2%
93,400 Hindalco Industries, Ltd. ........................................................ 1,769,913
452,200 Hindustan Petroleum Corporation, Ltd.2 .......................................... 5,587,796
81,900 Videsh Sanchar Nigam, Ltd. (GDR)1,2 ............................................. 1,148,648
-----------
8,506,357
-----------

INDONESIA: 3.6%
2,268,500 PT Fiskar Agung Perkasa .......................................................... 309,631
1,206,000 PT Hanjaya Mandala Sampoerna ..................................................... 910,836
4,902,000 PT Indah Kiat Pulp and Paper Corporation Tbk ..................................... 869,807
2,670,000 PT Tambang Timah ................................................................. 2,866,872
-----------
4,957,146
-----------

ISRAEL: 2.2%
63,700 Teva Pharmaceutical Industries, Ltd. (ADR) ....................................... 3,013,806
-----------

MALAYSIA: 4.8%
1,318,000 Austral Enterprises Bhd .......................................................... 1,381,535
573,000 Berjaya Sports Toto Bhd .......................................................... 1,464,752
772,000 Hap Seng Consolidated Bhd ........................................................ 952,017
631,000 Highlands and Lowlands Bhd ....................................................... 645,207
27,400 Hong Leong Credit Bhd Warrants2 .................................................. 0
813,000 Kuala Lumpur Kepong Bhd .......................................................... 1,744,068
621,000 Magnum Corporation Bhd ........................................................... 373,331
-----------
6,560,910
-----------

MEXICO: 8.3%
902,000 Cintra S.A. ...................................................................... 836,904
197,000 Corporacion Interamericana de Entretenimiento S.A. ............................... 1,529,706
142,600 Grupo Casa Autrey, S.A. de C.V. (ADR) ........................................... 2,914,387
686,400 Grupo Financiero Banamex Accival, S.A. de C.V.2 ................................. 2,056,184
15,200 Grupo Imsa S.A. de C.V. (ADR) .................................................... 358,150
2,908,900 Grupo Industrial Maseco S.A. de C.V. ............................................ 3,009,279
189,000 Grupo Industrial Saltillo, S.A. de C.V. "B" ...................................... 773,648
-----------
11,478,258
-----------

PAKISTAN: 1.1%
313,700 Pakistan Investment Fund, Inc.2 .................................................. 1,529,287
-----------
</TABLE>

4
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1997

PHILIPPINES: 2.9%
16,347,000 C & P Homes, Inc. ................................................................ 966,919
6,223,000 Fortune Cement Corporation ....................................................... 623,878
4,321,637 International Container Terminal Service, Inc.2 .................................. 541,575
3,180,000 Ionics Circuit, Inc. ............................................................. 1,315,077
4,238,000 Universal Robina Corporation ..................................................... 525,783
-----------
3,973,232
-----------

POLAND: 4.1%
237,480 Elektrim Towarzystwo Handlowe S.A. ............................................... 2,297,378
359,100 Polifarb Cieszyn Wroclaw S.A.2 ................................................... 1,701,308
119,700 Polifarb Cieszyn Wroclaw S.A. Rights2 ........................................... 373,541
170,200 Stomil Olsztyn S.A.2 ............................................................. 1,303,690
-----------
5,675,917
-----------

PORTUGAL: 2.4%
72,100 Portugal Telecom S.A. ............................................................ 3,349,212
-----------

RUSSIA: 3.3%
59,700 Lukoil Holdings of Russia2 ....................................................... 1,374,294
538,300 Rostelecom2 ...................................................................... 1,910,965
4,316,000 Unified Energy Systems2 .......................................................... 1,305,158
-----------
4,590,417
-----------

SINGAPORE: 4.5%
103,500 Asia Pulp & Paper Company, Ltd. .................................................. 1,041,469
1,834,000 DBS Land, Ltd. ................................................................... 2,808,244
311,000 Keppel Fels, Ltd. ................................................................ 867,509
853,000 Want Want Holdings ............................................................... 1,177,140
270,600 Want Want Holdings "A" ........................................................... 357,192
-----------
6,251,554
-----------

SOUTH AFRICA: 2.3%
38,000 Liberty Life Association of Africa, Ltd. ......................................... 976,090
85,300 Liberty Life Association of Africa, Ltd. ......................................... 2,217,571
-----------
3,193,661
-----------
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1997

Number of Value
Shares Security (Note 1)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SOUTH KOREA: 0.2%
4,920 Suheung Capsule .................................................................. $ 206,966
-------------
TAIWAN: 1.2%
96,825 Taiwan Fund, Inc. ................................................................ 1,597,612
-------------
THAILAND: 0.8%
1,378,800 Advance Agro Public Company, Ltd. ................................................ 1,152,613
-------------
TURKEY: 4.9%
25,329,871 Akbank T.A.S. .................................................................... 2,229,029
22,726,000 Arcelik A.S. ..................................................................... 2,136,244
5,533,000 Eregli Demir Ve Celik Fabrikalari T.A.S. ......................................... 857,615
6,519,261 Petrol Ofisi A.S. ................................................................ 1,558,103
-------------
6,780,991
-------------
VENEZUELA: 0.9%
30,200 Compania Anonima Nacional Telefonos de Venezuela (ADR) ........................... 1,257,075
-------------

TOTAL COMMON STOCKS (cost $135,022,391) .......................................... 115,079,756
-------------

SHORT-TERM INVESTMENTS: 16.1%
U.S. GOVERNMENT AGENCY OBLIGATIONS: 10.5%
$12,500,000 Federal Home Loan Mortgage Corporation, 4.75%, due 01/01/98 ...................... $ 12,498,351
500,000 Federal Home Loan Mortgage Corporation, 5.70%, due 02/13/98 ...................... 496,596
1,500,000 Federal Home Loan Mortgage Corporation, 6.00%, due 01/14/98 ...................... 1,496,750
-------------
14,491,697
-------------
U.S. GOVERNMENT OBLIGATION: 5.6%
7,550,000 U.S. Treasury Bond, 6.125%, due 11/15/2027 ....................................... 7,764,949
-------------
TOTAL SHORT-TERM INVESTMENTS (cost $22,029,918) .................................. 22,256,646
-------------
TOTAL INVESTMENTS: 99.7% (cost 157,052,309 ) ..................................... 137,336,402
Other assets in excess of liabilities: 0.3% ...................................... 349,334
-------------
TOTAL NET ASSETS: 100.0% (equivalent to $10.18 per share on
13,527,409 shares outstanding) ................................................. $ 137,685,736
=============
</TABLE>

1Restricted Securities (Note 6).
2Non-income producing securities.
ADR--American Depository Receipt.
+Aggregate cost for Federal income tax purposes is $157,075,855.

<PAGE>

LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1997 (continued)

At December 31, 1997, the composition of the Fund's net assets by industry
concentration was as follows:

Banking .......................................................... 8.7%
Capital Equipment ................................................ 0.6
Construction and Housing ......................................... 1.9
Consumer (Durables) .............................................. 4.2
Consumer (Non-Durables) .......................................... 7.6
Electrical and Electronics ....................................... 1.0
Energy Sources ................................................... 8.1
Financial Services ............................................... 3.4
Health and Personal Care ......................................... 4.5
Materials ........................................................ 17.0
Multi-Industry ................................................... 3.5
Real Estate ...................................................... 3.1
Services ......................................................... 3.7
Telecommunications ............................................... 9.9
Trade ............................................................ 1.7
Transportation ................................................... 0.6
U.S. Government Obligations ...................................... 16.1
Utilities ........................................................ 4.1
Other Assets ..................................................... 0.3
-----
Total Net Assets ................................................. 100.0%
=====

The Notes to Financial Statements are an integral part of this statement.

7
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1997

ASSETS
Investments, at value (cost $157,052,309) (Note1) $ 137,336,402
Cash ............................................. 24,707
Receivable for investment securities sold ........ 1,113,496
Receivable for shares sold ....................... 1,251,190
Dividends and interest receivable ................ 624,600
Foreign taxes recoverable ........................ 8,607
-------------
Total Assets ................................. 140,359,002
-------------

LIABILITIES

Due to Lexington Management Corporation (Note 2) 120,308
Payable for investment securities purchased ...... 389,951
Payable for shares redeemed ...................... 1,809,516
Accrued expenses ................................. 353,491
-------------
Total Liabilities ................................ 2,673,266
-------------
NET ASSETS (equivalent to $10.18 per share on

13,527,409 shares outstanding) (Note 3) ....... $ 137,685,736
=============

NET ASSETS consist of:

Capital stock -- authorized 100,000,000 shares

$1.00 par value per share ...................... $ 13,527,409
Additional paid in capital (Note 1) .............. 152,022,086
Undistributed net investment income .............. 101,871
Accumulated net realized loss on investments and
foreign currency holdings ....................... (8,237,198
Unrealized depreciation on investments and
foreign currency holdings ....................... (19,728,432
-------------
Total Net Assets ................................. $ 137,685,736
=============

The Notes to Financial Statements are an integral part of this statement.

8
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF OPERATIONS
Year ended December 31, 1997

INVESTMENT INCOME
<S> <C> <C>
Dividends ....................................................................... $ 4,245,417
Interest ........................................................................ 959,988
-----------
5,205,405

Less: Foreign tax expense ....................................................... 668,024
-----------
Total investment income ................................................... $ 4,537,381

Expenses
Investment advisory fee (Note 2) .......................................... 2,373,753
Transfer agent and shareholder services expense (Note 2) .................. 726,251
Custodian fees ............................................................ 655,756
Accounting expenses (Note 2) .............................................. 202,868
Printing and mailing expenses ............................................. 110,860
Professional fees ......................................................... 60,624
Registration fees ......................................................... 54,860
Directors' fees and expenses .............................................. 20,889
Computer processing fees .................................................. 18,806
Other expenses ............................................................ 89,917
-----------
Total expenses ....................................................... 4,314,584
------------
Net investment income ........................................... 222,797

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4)
Net realized gain (loss) on:
Investments .......................................................... 19,298,608
Foreign currency transactions ........................................ (265,626)
-----------
Net realized gain .............................................. 19,032,982
Net change in unrealized appreciation on:
Investments .......................................................... (29,282,738)
Foreign currency translation of other assets and liabilities ......... (12,525)
-----------
Net change in unrealized appreciation ........................... (29,295,263)
------------
Net realized and unrealized loss ................................ (10,262,281)
------------

DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ $(10,039,484)
============
</TABLE>

The Notes to Financial Statements are an integral part of this statement.

9
<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Years ended December 31, 1997 and 1996

1997 1996
------------- -------------
<S> <C> <C>
Net investment income (loss) .................................... $ 222,797 $ (18,395)
Net realized gain from investment and
foreign currency transactions ................................. 19,032,982 7,337,532

Net change in unrealized appreciation of investments
and foreign currency translation .............................. (29,295,263) 12,557,378
------------- -------------

Increase (decrease) in net assets resulting from operations ... (10,039,484) 19,876,515
Decrease in net assets from capital share transactions (Note 3) . (106,947,586) (30,748,162)
------------- -------------

Net decrease net assets ....................................... (116,987,070) (10,871,647)
NET ASSETS:
Beginning of period ........................................... 254,672,806 265,544,453
------------- -------------
End of period (including undistributed net investment income of
$101,871 and distributions in excess of net investment income
of $56,742, 1997 and 1996, respectively) .................... $ 137,685,736 $ 254,672,806
============= =============

The Notes to Financial Statements are an integral part of this statement.

10
</TABLE>
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996

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.

FEDERAL INCOME TAXES It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes is required.

DISTRIBUTIONS Dividends from net investment income and net realized capital
gains are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. The character of income and gains to
be distributed are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. At December 31, 1997,
reclassifications were made to the Fund's capital accounts to reflect permanent
book/tax differences and income and gains available for distribution under
income tax regulations. Net investment income, net realized gains and net assets
were not affected by this change.

11
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996 (continued)

1. SIGNIFICANT ACCOUNTING POLICIES (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 operatons 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. For
1997, LMC has agreed to voluntarily limit the total expenses of the Fund,
(including management fees, but excluding interest, taxes, brokerage
commissions, and extraordinary expenses) to an annual rate of 2.50% of the
Fund's average daily net assets. No reimbursement was required for the year
ended December 31, 1997.

The Fund reimbursed LMC for certain expenses, including accounting and
shareholder servicing costs of $439,637 which are 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, 1997 December 31, 1996
------------------------------------ ------------------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Shares sold ........................ 11,625,469 $ 143,114,566 22,719,087 $ 266,562,359
Shares redeemed .................... (20,259,295) (250,062,152) (25,383,903) (297,310,521)
----------- ------------- ----------- -------------
Net decrease ..................... (8,633,826) $(106,947,586) (2,664,816) $ (30,748,162)
=========== ============= =========== =============
</TABLE>

4. PURCHASES AND SALES OF INVESTMENT SECURITIES

The cost of purchases and proceeds from sales of securities for the year ended
December 31, 1997, excluding short-term securities, were $240,250,116 and
$361,460,824, respectively.

At December 31, 1997, the aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost amounted to
$11,466,344 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $31,205,797.

<PAGE>

LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997 and 1996 (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. RESTRICTED SECURITIES

The following security was purchased under Rule 144A of the Securities Act of
1933 and, unless registered under the Act or exempted from registration, may be
sold only to qualified institutional investors.
<TABLE>
<CAPTION>

Acquisition Average Cost Market % of Net
Security Date Shares Per Share Value Assets
- ------- ----------- -------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Videsh Sanchar Nigam, Ltd. ............. 4/11/97 81,900 $18.98 $1,148,648 0.83%
========= =====
</TABLE>

Pursuant to guidelines adopted by the Fund's Board of Directors, this
unregistered security has been deemed to be illiquid. The Fund currently limits
investment in illiquid securities to 15% of the Fund's net assets, at market
value.

7. FEDERAL INCOME TAXES--CAPITAL LOSS CARRYFORWARDS

Capital loss carryforwards available for Federal income tax purposes as of
December 31, 1997 are $1,243,031 expiring in 2003.

To the extent any future capital gains are offset by these losses, such gains
would not be distributed to shareholders.

<PAGE>
<TABLE>
<CAPTION>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
FINANCIAL HIGHLIGHTS

Selected per share data for a share outstanding throughout the period:

Year ended December 31,
-------------------------------------------------------
1997 1996 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period .................. $11.49 $10.70 $11.47 $13.96 $ 8.66
------ ------ ------ ------ ------
Income (loss) from investment operations:
Net investment income (loss) ........................ 0.01 -- 0.08 (0.01) 0.05
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ..... (1.32) 0.79 (0.76) (1.92) 5.43
------ ------ ------ ------ ------
Total income (loss) from investment operations ........ (1.31) 0.79 (0.68) (1.93) 5.48
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ................ -- -- (0.08) -- (0.01)
Distributions in excess of net investment income
(temporary book-tax difference) ................... -- -- (0.01) -- --
Distributions from net realized gains ............... -- -- -- (0.47) (0.17)
Distributions in excess of net realized gains
(temporary book-tax difference) ................... -- -- -- (0.09) --
------ ------ ------ ------ ------
Total distributions ................................... -- -- (0.09) (0.56) (0.18)
------ ------ ------ ------ ------
Net asset value, end of period ........................ $10.18 $11.49 $10.70 $11.47 $13.96
====== ====== ====== ====== ======
Total return .......................................... (11.40%) 7.38% (5.93%) (13.81%) 63.37%

Ratio to average net assets:
Expenses ............................................ 1.82% 1.76% 1.88% 1.65% 1.64%
Net investment income (loss) ........................ 0.09% (0.01%) .70% (0.06%) 0.21%
Portfolio turnover rate ............................... 112.05% 86.26% 92.85% 79.56% 38.35%
Average commission paid on equity
security transactions** ............................. $0.00 $0.00 -- -- --
Net assets at end of period (000's omitted) ........... $137,686 $254,673 $265,544 $288,581 $230,473
</TABLE>

- ----------
** The average commission paid on equity security transactions for the years
ended December 31, 1997 and 1996 is less than $0.005 per share of
securities purchased and sold. In accordance with SEC disclosure
guidelines, average commissions are calculated beginning with the year
ended December 31, 1996, but 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, 1997, 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, 1997 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, 1997, 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 4, 1998

15
<PAGE>
LEXINGTON
WORLDWIDE EMERGING MARKETS FUND,INC.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663

DISTRIBUTOR
- --------------------------------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663

------------------------------------------------------------------------------
ALL SHAREHOLDER REQUESTS FOR SERVICES OF
ANY KIND SHOULD BE SENT TO:

TRANSFER AGENT
------------------------------------------------------------------------------
STATE STREET BANK AND
TRUST COMPANY

c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105

OR CALL TOLL FREE:
SERVICE AND SALES: 1-800-526-0056
24 HOUR ACCOUNT INFORMATION:
1-800-526-0052
------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(800) 526-0052

"LEXLINE"
24 hour toll-free telephone access to your
Lexington Fund account
Price/Yield o Account Balances o Exchanges o
Last Transactions o Total Return o Duplicate Statements
- --------------------------------------------------------------------------------

This report has been prepared for the information of the shareholders of
Lexington Worldwide Emerging Markets Fund, Inc. and is authorized for
distribution to the public only if it is accompanied or preceded by a currently
effective prospectus which sets forth expenses and other material information.

LEXINGTON
- --------------------------------------------------------------------------------

================================================================================
LEXINGTON

WORLDWIDE

EMERGING

MARKETS

FUND, INC.

- --------------------------------------------------------------------------------

Seeks long-term growth of capital
primarily through investment in
equity securities of
companies domiciled in, or doing
business in, emerging countries
and emerging markets.
- --------------------------------------------------------------------------------

ANNUAL REPORT
DECEMBER 31, 1997

The Lexington Group
of No Load
Investment Companies
================================================================================