DEAR SHAREHOLDERS:
- --------------------------------------------------------------------------------
Emerging markets continued to experience sharp losses for the second
quarter. The average emerging market fund declined 19.7% for the latest quarter
and is down 15.6% through the first half, according to Lipper Analytical
Services, Inc. The Lexington Worldwide Emerging Markets Fund, Inc., has fared
better although returns are still negative. Through the first six months the
Fund has returned -15.5%* while falling 15.9%* during the second quarter. The
unmanaged Morgan Stanley Emerging Markets Free Index has suffered most with a
second quarter return of -23.6%** and a first half decline of 18.9%**.
The Fund's outperformance can be attributed to large weightings in Greece
and Israel, while maintaining relatively small weightings in Asia, Russia, South
Africa and Brazil. Greek equities gained 17.8% during the latest quarter
outperforming all emerging market indices. Stocks in Greece have benefited from
the government's drive to prepare Greece for European Monetary Union by 2001.
Asia continued to be represented by some of the worst performing markets, during
the second quarter Indonesia fell 53%, Thailand 51%, and Malaysia 46%. Concerns
over potential devaluation pushed Russian equities to a decline of 53%.
The economic environment for most emerging markets remains negative.
Several Asian economies will experience double digit declines in GDP. Inflation
is surging due to dramatic declines in local currencies. Unemployment is rising
sharply while consumer demand has collapsed. The risk of social unrest as we
have seen in Indonesia, remains high. As a consequence of Asian troubles
commodity prices have fallen sharply, which in turn has damaged
commodity-producing economies of Latin America, Russia, and South Africa.
Investors are demanding high interest rates to compensate for the heightened
risk levels.
Unfortunately, there is no one magic cure for these difficult problems.
However, share prices have already reflected quite a bit of bad news. Positive
movement toward solving Asia's problems could result in strong share gains. The
focus has recently shifted to Japan. Japan is mired in deep recession while
still not aggressively addressing its structural problems. Asia needs a strong
Japan to help revive the region. The Japanese government has announced plans to
clean up the financial system. Fixing the banking problem will prove difficult
and time consuming. Investors have been disappointed before by Japanese policy
so the focus will be on action not words. China must also avoid devaluation,
which would unsettle the region. For now it appears a devaluation can be avoided
in the near future, however, pressure is building as Chinese exports continue to
suffer. Governments must also become more investor friendly to attract the
capital which is desperately needed. The problems are too complex to fully
address here, but it is clear that growth in emerging market economies will
decline. A sharp economic recovery is not expected as the problems are too deep.
Economic activity is likely to remain depressed for several years.
The Fund will continue to follow a defensive posture. Greek equities
continue to offer excellent long-term opportunity as inflation and interest
rates fall. Since joining the European exchange rate mechanism in March, Greek
equities have gained greater correlation with developed markets and as such have
performed well. Opportunities do exist even in regions suffering sharp economic
downturns. Many stocks can be bought at very depressed price levels and with a
long-term investment horizon the potential for superior returns is there. The
focus continues to be on stock selection of financially healthy companies that
can ride through these trying times.
Sincerely,
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Richard T. Saler Robert M. DeMichele
Portfolio Manager President
August, 1998 August, 1998
* -34.45%, -0.64% and 3.91% are the one, five and ten year average annual
standard total returns, respectively, for the period ended June 30, 1998.
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.
1
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 85.8%
ARGENTINA: 2.3%
460,506 Perez Companc S.A. ................................................... $2,312,018
----------
BRAZIL: 10.0%
4,530,000 Cia Tecidos Norte De Mina (Preferred shares) ........................ 636,452
58,600 Companhia Brasileira de Distribuicao Grupo Pao de Acucar (ADR) ...... 1,325,825
6,790,000 Empresa Nacional de Comercio Redito ................................. 17,025
4,710,000 Light - Servicos de Electricidade S.A. .............................. 1,445,651
6,024,000 Petroleo Brasileiro S.A. (Preferred shares) ........................ 1,119,793
164,000 Souza Cruz S.A. ...................................................... 1,219,429
7,940,000 Telecomunicacoes de Sao Paulo S.A. ................................. 1,867,255
373,162 Telecomunicacoes de Sao Paulo S.A. Rights (Preferred shares)2 ...... 5,969
12,280,000 Telecomunicacoes do Rio de Janeiro S.A. (Preferred shares) ......... 923,702
12,280,000 Telerj Celular S.A. "B" (Preferred shares)2 ........................ 730,361
7,940,000 Telesp Celular S.A. "B" (Preferred shares)2 ........................ 659,031
----------
9,950,493
----------
CHILE: 3.4%
90,200 Banco Santander (ADR) ................................................ 1,161,325
77,700 Vina Concha y Toro S.A. (ADR) ....................................... 2,214,450
----------
3,375,775
----------
COLOMBIA: 1.0%
56,600 Banco Ganadero S.A. (ADR) .......................................... 997,575
----------
CZECH REPUBLIC: 1.2%
84,100 SPT Telekom AS2 ...................................................... 1,162,239
----------
GREECE: 15.2%
35,000 Alpha Credit Bank ................................................... 2,837,107
192,120 Delta Dairy S.A. (Preferred shares) ................................. 2,216,186
36,200 Ergo Bank S.A. ...................................................... 3,093,798
204,677 Hellenic Tellecommunication Organization S.A. ........................ 5,246,755
332,640 Michaniki S.A. ...................................................... 1,749,125
----------
15,142,971
----------
HONG KONG: 3.0%
620,000 China Telecom (Hong Kong), Ltd.2 .................................... 1,076,198
3,396,000 JCG Holdings, Ltd. ................................................... 942,289
10,100,000 Moulin International Holding, Ltd. ................................. 1,003,668
1,201,666 Moulin International Holding, Ltd. Warrants2 ........................ 8,995
----------
3,031,150
----------
</TABLE>
2
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited) (continued)
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------------------
<S> <C> <C>
HUNGARY: 2.0%
55,600 Zalakeramia Rt. ............................................. $1,974,641
----------
INDIA: 4.7%
93,400 Hindalco Industries, Ltd. .................................... 1,471,256
253,200 Hindustan Petroleum Corporation, Ltd.2 ........................ 2,333,324
81,900 Videsh Sanchar Nigam, Ltd. (GDR)1,2 ........................... 876,330
----------
4,680,910
----------
INDONESIA: 0.7%
1,500,000 PT Timah Tbk ................................................ 671,451
----------
ISRAEL: 5.0%
907,000 Bank Hapoalim, Ltd. .......................................... 2,742,613
63,700 Teva Pharmaceutical Industries, Ltd. (ADR) .................. 2,241,444
----------
4,984,057
----------
MALAYSIA: 4.5%
470,000 Austral Enterprises Bhd ....................................... 396,625
428,000 Berjaya Sports Toto Bhd ....................................... 634,648
1,648,000 Hap Seng Consolidated Bhd .................................... 874,166
631,000 Highlands and Lowlands Bhd .................................... 445,770
813,000 Kuala Lumpur Kepong Bhd ....................................... 1,313,346
2,236,000 Magnum Corporation Bhd ....................................... 830,245
----------
4,494,800
----------
MEXICO: 7.5%
220,000 Cemex S.A. de C.V. "B" ....................................... 969,504
6,600 Cemex S.A. de C.V. CPO ....................................... 24,752
193,000 Corporacion GEO, S.A. de C.V. "B"2 ........................... 1,073,889
476,740 Corporacion Interamericana de Entretenimiento S.A. "B"2 ...... 1,326,336
63,565 Corporacion Interamericana de Entretenimiento S.A. "L"2 ...... 148,549
61,300 Grupo Casa Autrey, S.A. de C.V. (ADR) ........................ 398,450
453,000 Grupo Financiero Banamex Accival, S.A. de C.V.2 ............... 882,202
1,894,000 Grupo Financiero Bancomer, S.A. de C.V. ..................... 706,084
1,765,900 Grupo Industrial Maseco S.A. de C.V. ........................ 1,285,215
189,000 Grupo Industrial Saltillo, S.A. de C.V. "B" .................. 630,979
----------
7,445,960
----------
PANAMA: 0.9%
29,200 Banco Latinoamericano de Exportaciones, S.A. (ADR) ............ 897,900
----------
</TABLE>
3
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited) (continued)
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------------
<S> <C> <C>
PHILIPPINES: 4.9%
3,148,300 Ayala Corporation .................................... $ 811,610
16,347,000 C & P Homes, Inc. .................................... 823,228
16,210,000 Filinvest Land, Inc. ................................. 684,162
7,778,750 Fortune Cement Corporation ........................... 410,389
4,321,637 International Container Terminal Service, Inc.2 ...... 492,272
3,180,000 Ionics Circuit, Inc. ................................. 1,010,429
6,193,000 Universal Robina Corporation ........................ 631,180
----------
4,863,270
----------
POLAND: 1.6%
127,880 Elektrim Towarzystwo Handlowe S.A. .................. 1,558,607
----------
PORTUGAL: 3.7%
49,300 Espirito Santo Financial Group (ADR) .................. 1,201,687
47,300 Portugal Telecom S.A. ................................. 2,506,858
----------
3,708,545
----------
RUSSIA: 2.6%
131,100 Lukoil Holdings of Russia ........................... 1,097,307
409,300 Rostelecom2 .......................................... 931,158
4,235,000 Unified Energy Systems .............................. 554,785
----------
2,583,250
----------
SINGAPORE: 2.7%
595,000 Cerebos Pacific, Ltd. ................................. 774,794
311,000 Keppel Fels, Ltd. .................................... 929,605
1,085,600 Want Want Holdings .................................... 803,344
217,120 Want Want Holdings "A" .............................. 143,299
----------
2,651,042
----------
SOUTH AFRICA: 2.4%
38,000 Liberty Life Association of Africa, Ltd. ............ 745,804
85,300 Liberty Life Association of Africa, Ltd. ............ 1,663,756
----------
2,409,560
----------
SOUTH KOREA: 0.3%
25,090 Suheung Capsule ....................................... 305,173
----------
THAILAND: 1.2%
1,378,800 Advance Agro Public Company, Ltd.2 .................. 1,189,744
----------
</TABLE>
4
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited) (continued)
<TABLE>
<CAPTION>
Number of
Shares or
Principal Value
Amount Security (Note 1)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
TURKEY: 5.0%
40,527,793 Akbank T.A.S. ................................................ $ 1,296,889
22,778,000 Arcelik A.S. ................................................... 1,070,566
5,533,000 Eregli Demir Ve Celik Fabrikalari T.A.S. ..................... 863,148
6,519,261 Petrol Ofisi A.S. ............................................. 1,688,489
-----------
4,919,092
-----------
TOTAL COMMON STOCKS (cost $113,785,717) ........................ 85,310,223
-----------
SHORT-TERM INVESTMENTS: 4.0%
U.S. GOVERNMENT AGENCY OBLIGATION
$ 4,000,000 Federal Home Loan Mortgage, 5.40%, due 07/01/98
(cost $4,000,000) ........................................... 4,000,000
-----------
U.S. GOVERNMENT OBLIGATION: 7.5%
37,000,000 U.S. Strip Bond, 0.00%, due 02/15/2027 (cost $6,922,640) ...... 7,488,430
-----------
TOTAL INVESTMENTS: 97.3% (cost $124,708,357\^) ............... 96,798,653
Other assets in excess of liabilities: 2.7% .................. 2,627,785
-----------
TOTAL NET ASSETS: 100.0% (equivalent to $8.60 per share on
11,559,910 shares outstanding) ............................... $99,426,438
===========
</TABLE>
1 Restricted Security (Note 6).
2 Non-income producing securities.
ADR-American Depository Receipt.
+ Aggregate cost for Federal income tax purposes is $124,731,903.
At June 30, 1998, the composition of the Fund's net assets by industry
concentration was as follows:
<TABLE>
<S> <C>
Banking ........................... 15.9%
Capital Equipment .................. 1.6
Construction and Housing ......... 2.5
Consumer (Durables) ............... 1.1
Consumer (Non-Durables) ............ 9.3
Electrical and Electronics ......... 1.0
Energy Sources ..................... 5.2
Financial Services ............... 3.4
Health and Personal Care ......... 4.0
Materials ........................ 11.3
Merchandising ..................... 1.3
Multi-Industry ..................... 3.1
Oil and Gas Holding Companies ...... 1.1
Real Estate ........................ 1.8
Services ........................... 3.0
Telecommunications ............... 16.1
Trade .............................. 1.6
Transportation ..................... 0.5
U.S. Government Obligations ...... 11.5
Utilities ........................ 2.0
Other Assets ..................... 2.7
-----
Total Net Assets .................. 100.0%
=====
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $124,708,357) (Note 1) .............................. $96,798,653
Cash ........................................................................... 612,565
Receivable for investment securities sold ....................................... 37,632
Receivable for shares sold ...................................................... 2,250,559
Dividends and interest receivable ............................................. 254,986
Foreign taxes recoverable ...................................................... 7,444
Unrealized gain on open forward contracts (Note 7) .............................. 314,066
-----------
Total Assets ............................................................ 100,275,905
-----------
LIABILITIES
Due to Lexington Management Corporation (Note 2) .............................. 84,290
Payable for investment securities purchased .................................... 104,669
Payable for shares redeemed ................................................... 291,884
Accrued expenses ............................................................... 368,624
-----------
Total Liabilities ......................................................... 849,467
-----------
NET ASSETS (equivalent to $8.60 per share on
11,559,910 shares outstanding) (Note 3) ....................................... $99,426,438
===========
NET ASSETS consist of:
Capital stock-authorized 100,000,000 shares,
$1.00 par value per share ...................................................... $11,559,910
Additional paid-in capital ...................................................... 134,739,084
Undistributed net investment income ............................................. 1,043,089
Accumulated net realized loss on investments and foreign currency transactions (20,303,834)
Net unrealized depreciation of investments and foreign currency transactions ... (27,611,811)
-----------
Total Net Assets ......................................................... $99,426,438
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
6
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income
Dividends ............................................................ $ 1,777,975
Interest ............................................................... 437,043
-------------
2,215,018
Less: foreign tax expense ............................................. 92,542
-------------
Total investment income ............................................. $ 2,122,476
EXPENSES
Investment advisory fee (Note 2) .................................... 603,770
Transfer agent and shareholder servicing expenses (Note 2) ......... 213,429
Custodian expenses ................................................ 159,010
Accounting expenses (Note 2) ....................................... 70,130
Printing and mailing expenses ....................................... 26,704
Professional fees ................................................... 28,146
Registration fees ................................................... 18,279
Directors' fees and expenses ....................................... 8,783
Computer processing fees .......................................... 9,955
Other expenses ...................................................... 43,052
-------------
Total expenses ................................................... 1,181,258
------------
Net investment income .......................................... 941,218
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 4)
Net realized loss on:
Investments ...................................................... (11,827,245)
Foreign currency transactions .................................... (239,391)
-------------
Net realized loss ............................................. (12,066,636)
Net change in unrealized appreciation (depreciation) on:
Investments ...................................................... (8,197,445)
Foreign currency translations of other assets and liabilities ..... 314,066
-------------
Net change in unrealized appreciation ........................... (7,883,379)
------------
Net realized and unrealized loss .............................. (19,950,015)
------------
DECREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... $(19,008,797)
============
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
7
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six months
ended
June 30, Year ended
1998 December 31,
(unaudited) 1997
------------ -------------
<S> <C> <C>
Net investment income .......................................... $ 941,218 $ 222,797
Net realized gain (loss) on investment and foreign currency
transactions ................................................ (12,066,636) 19,032,982
Net change in unrealized depreciation on investments
and foreign currency translations ........................... (7,883,379) (29,295,263)
----------- -------------
Decrease in net assets resulting from operations ............ (19,008,797) (10,039,484)
Decrease from capital share transactions (Note 3) ............ (19,250,501) (106,947,586)
----------- -------------
Net decrease in net assets ................................. (38,259,298) (116,987,070)
NET ASSETS:
Beginning of period .......................................... 137,685,736 254,672,806
----------- -------------
End of period (including undistributed net investment income of
$1,043,089 and $101,871, 1998 and 1997, respectively) ...... $99,426,438 $ 137,685,736
=========== =============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
8
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) December 31, 1997
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 Securities 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 prices is used. Securities traded on the over-the-counter market are
valued at the mean between the last current bid and asked prices. 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.
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 and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE
The Fund pays an investment advisory fee to Lexington Management Corporation
("LMC") at an annual rate of 1.00% of the Fund's average daily net assets. For
1998, 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 six months ended June
30, 1998.
9
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997 (continued)
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE (CONTINUED)
The Fund reimburses LMC for certain expenses, including accounting and
shareholder servicing costs of $149,749 which are incurred by the Fund, but paid
by LMC.
3. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Six months ended
June 30, 1998 Year ended
(unaudited) December 31, 1997
------------------------------ --------------------------------
Shares Amount Shares Amount
---------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Shares sold ......... 2,627,018 $ 25,534,988 11,625,469 $ 143,114,566
Shares redeemed ...... (4,594,517) (44,785,489) (20,259,295) (250,062,152)
---------- ------------- ----------- --------------
Net decrease ......... (1,967,499) $ (19,250,501) (8,633,826) $ (106,947,586)
---------- ------------- ----------- --------------
</TABLE>
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from sales of securities for the six months
ended June 30, 1998, excluding short-term securities, were $50,646,952 and
$66,294,014, respectively.
At June 30, 1998, the aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost amounted to $7,276,106 and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value amounted to $35,209,356.
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 SECURITY
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 Percent of
Security Date Shares Per Share Value Net Assets
- -------- ------------- -------- -------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Videsh Sanchar Nigam, Ltd. ...... 4/11/97 81,900 $18.98 $876,330 0.88%
</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. FORWARD FOREIGN EXCHANGE CONTRACT
At June 30, 1998, the Fund was committed to sell foreign currencies under the
following forward foreign exchange contract:
<TABLE>
<CAPTION>
Contract Contract Unrealized
Settlement Amount Amount gain at
Contract Date (local currency) (U.S. Dollar) Value June 30, 1998
- -------- ------------ ------------------ --------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Malaysian Ringgit ...... 8/19/98 22,827,350.12 $5,742,170 $5,428,104 $314,066
</TABLE>
10
<PAGE>
LEXINGTON WORLDWIDE EMERGING MARKETS FUND, INC.
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Six months
ended Year ended December 31,
June 30, ----------------------------------------------------
1998
(unaudited) 1997 1996 1995 1994
----------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 10.18 $ 11.49 $ 10.70 $ 11.47 $ 13.96
------- --------- ---------- --------- ---------
Income (loss) from investment operations:
Net investment income (loss) ............... 0.09 0.01 -- 0.08 (0.01)
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .............................. (1.67) (1.32) 0.79 (0.76) (1.92)
------- --------- ---------- --------- ---------
Total income (loss) from investment
operations ................................. (1.58) (1.31) 0.79 (0.68) (1.93)
------- --------- ---------- --------- ---------
Less distributions:
Distributions from net investment income ... -- -- -- (0.08) --
Distributions in excess of net investment
income (temporary book-tax difference) ...... -- -- -- (0.01) --
Distributions from net realized gains. ...... -- -- -- -- (0.47)
Distributions in excess of net realized
gains (temporary book-tax difference) ...... -- -- -- -- (0.09)
------- --------- ---------- --------- ---------
Total distributions ........................ -- -- -- (0.09) (0.56)
------- --------- ---------- --------- ---------
Net asset value, end of period. ............... $ 8.60 $ 10.18 $ 11.49 $ 10.70 $ 11.47
======= ========= ========== ========= =========
Total return. ................................. (28.83)%* ( 11.40)% 7.38% ( 5.93)% (13.81)%
Ratio to average net assets:
Expenses .................................... 1.96%* 1.82% 1.76% 1.88% 1.65%
Net investment income (loss). ............... 1.56%* 0.09% ( 0.01)% 0.70% (0.06)%
Portfolio turnover rate. ..................... 89.83%* 112.05% 86.26% 92.85% 79.56%
Average commission paid on equity security
transactions** .............................. -- - - - -
Net assets at end of period (000's omitted). $99,426 $ 137,686 $ 254,673 $ 265,544 $ 288,581
</TABLE>
- -------------
* Annualized.
** The average commission paid on equity security transactions for the six
months ended June 30, 1998 and the years ended December 1997 and 1996 are
less than $.005 per share of securities purchased and sold. In accordance
with recent SEC disclosure guidelines, average commissions are calculated
beginning with the year ended December 31, 1996, but not for prior periods.
11
<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
---------------
[GRAPHIC]
LEXINGTON
WORLDWIDE
EMERGING
MARKET
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.
---------------
SEMI-ANNUAL REPORT
JUNE 30, 1998
The Lexington Group
of NO LOAD
Investment Companies
