DEAR SHAREHOLDERS:
- --------------------------------------------------------------------------------
During the first half of 1998, the Lexington Ramirez Global Income Fund
recorded a 3.03%* total return. Consistent, superior performance coupled with
relatively low price volatility and a high yield have been the hallmarks of this
Fund since it opened its doors as a global bond fund on January 1, 1995.
Global bonds can be risky investments. This is particularly true of fixed
income securities in emerging markets. Here, investors face both interest rate
and currency risk. Moreover, certain sectors of the market are interrelated. For
example, economic troubles in the developing Asian economies were reflected
quickly in the price of Latin American debt. Once speculators profited from
currency devaluations in Thailand and Indonesia, they focused on potential
exchange vulnerability in Russia and South Africa. Bonds in these distant
markets suffered. The combination of interest rate risk and currency risk
explain why returns vary so widely for global bond funds. But if these risks are
properly balanced, investors can enjoy high current income and excellent total
returns. For example, since December 31, 1994, the Lexington Ramirez Global
Income Fund has returned 11.67%* annually to its shareholders.
The secret of Lexington Ramirez's success is diversification. We maintain a
balance - usually an even split- between dollar-denominated and foreign currency
bonds. This helps control the currency risk. Then, we split those segments
between developed market debt and emerging market securities. Interest rate
risks within these two segments correlate closely. Then, we look for the best
values in each of the resulting market segments.
It's been tough to beat the U.S. bond market for performance this year. A
rising dollar and declining domestic interest rates have proven to be a winning
combination. For example, U.S. Treasury securities have returned about 4% so far
this year. European debt securities have done about as well but the bonds of any
developed market with even a hint of currency trouble have been under pressure.
Japan is down 3.7%, Australia, 5.0%, and New Zealand, 7.7% in U.S. dollar terms.
Most emerging debt markets were crushed. Going forward, we continue to see value
in Eastern European debt (excluding Russia), certain developed European bond
markets, and Latin American dollar-denominated debt.
Sincerely,
/s/Maria Fiorini Ramirez /s/Robert M. DeMichele /s/Denis P. Jamison
- ------------------------ ---------------------- -------------------
Maria Fiorini Ramirez Robert M. DeMichele Denis P. Jamison
Portfolio Manager President Portfolio Manager
August, 1998 August, 1998 August, 1998
* 5.90%, 7.29% and 7.99% are the one, five and ten year average annual standard
total returns, respectively, for the period ended June 30, 1998. Prior to
December 31, 1994 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.
1
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT OR SHARES SECURITY (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBENTURES: 92.2%
GOVERNMENT OBLIGATIONS: 52.3%
Argentina: 2.9%
$ 1,400,000 Republic of Argentina,
Floating Rate Note,
5.75%, due 03/31/23 .................. $1,042,125
----------
Brazil: 4.7%
2,320,420 Republic of Brazil, "C" Bond,
5.00%, due 04/15/14 .................. 1,682,909
----------
Costa Rica: 2.2%
900,000 Banco Central Costa Rica,
6.25%, due 05/21/10 .................. 792,000
----------
Dominican Republic: 2.6%
1,200,000 Central Bank of Dominican Republic,
Floating Rate Note,
6.625%, due 08/30/24 ............... 954,000
----------
Ecuador: 2.1%
1,100,000 Government of Ecuador,
Floating Rate Note,
6.625%, due 02/28/25 ............... 757,207
----------
Greece: 9.2%
500,000,000* Hellenic Republic,
9.80%, due 03/21/00 .................. 1,614,878
310,000,000* Hellenic Republic,
Floating Rate Note,
11.00%, due 10/23/03 ............... 1,030,413
200,000,000* Hellenic Republic,
8.80%, due 06/19/07 .................. 694,590
----------
3,339,881
----------
Hungary: 5.2%
200,000,000* Government of Hungary,
21.00%, due 10/24/99 ............... 962,154
200,000,000* Government of Hungary,
16.00%, due 11/24/00 ............... 916,536
----------
1,878,690
----------
Korea: 2.6%
1,000,000 Republic of Korea,
8.75%, due 04/15/03 .................. 939,907
----------
Mexico: 2.3%
1,000,000 United Mexican States,
6.25%, due 12/31/19 .................. 822,513
1,000,000 United Mexican States (Rights) ........ --
----------
822,513
----------
Norway: 3.8%
10,000,000* Government of Norway,
7.00%, due 05/31/01 .................. 1,356,740
----------
Philippines: 2.6%
40,000,000* Republic of the Philippines,
18.50%, due 05/07/00 ............... 956,602
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT SECURITY (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
Poland: 4.8%
2,680,000* Government of Poland,
16.00%, due 10/12/98 ................ $ 754,546
4,000,000* Government of Poland,
12.00%, due 02/12/03 ................ 979,723
----------
1,734,269
----------
South Africa: 2.7%
5,100,000* Electricity Supply Commission
(ESKOM), 11.00%, due 06/01/08 ....... 673,181
2,000,000* Republic of South Africa,
12.00%, due 02/28/05 ................ 295,965
----------
969,146
----------
United Kingdom: 4.6%
1,000,000* Government of United Kingdom
Treasury Bond, 6.00%, due
08/10/99 ............................ 1,646,601
----------
TOTAL GOVERNMENT OBLIGATIONS
(cost $20,064,948) ................... 18,872,590
----------
CORPORATE BONDS: 39.9%
Argentina: 2.6%
$ 1,000,000 Compagnie De Radiocomunicaciones
Moviles SA, 9.25%, due
05/08/081,2 ......................... 953,103
----------
Canada: 4.7%
1,237,000 CHC Helicopter Corporation,
11.50%, due 07/15/02 ................ 1,329,775
500,000* Rogers Communications, Inc.,
10.50%, due 02/14/06 ................ 376,392
----------
1,706,167
----------
Czech Republic: 3.4%
12,500,000* CEZ, A.S.,
11.30%, due 06/06/05 ................. 310,254
30,000,000* International Finance Corporation,
24.00%, due 10/12/99 ................ 914,675
----------
1,224,929
----------
Denmark: 9.9%
3,500,000* Danske Kredit,
6.00%, due 10/01/29. ................ 498,255
5,286,000* Nykredit A/S,
7.00%, due 10/01/26 ................ 786,326
5,293,000* Realkredit Danmark A/S,
7.00%, due 10/01/26. ................ 788,907
3,854,000* Unikredit Realkredit,
7.00%, due 10/01/26 ................ 573,868
6,500,000* Unikredit Realkredit,
6.00%, due 10/01/29. ................ 916,350
----------
3,563,706
----------
</TABLE>
2
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
June 30, 1998 (unaudited) (continued)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT SECURITY (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
Mexico: 3.2%
$ 1,000,000 Cemex SA,
12.75%, due 07/15/06 ................ $1,162,500
----------
United States: 16.1%
569,532 ABN-AMRO Mortgage Corporation,
Series 1998-1, Class B4,
6.79097%, due 04/25/281 ............. 409,886
700,000 Archibold Candy Corporation,
10.25%, due 07/01/04 ................ 745,500
563,812 BA Mortgage Securities, Inc.,
Series 1997-2, Class B4, 7.25%,
due 10/25/271 ...................... 409,645
1,000,000 Chiquita Brands International Inc.,
10.25%, due 11/01/06 ................ 1,085,000
950,000 Clark Materials Handling Company,
10.75%, due 11/15/06 ................ 1,021,250
190,975 DLJ Mortgage Acceptance Corporation,
Series 1996-I, Class B4,
7.25%, due 9/25/111,2 ................ 160,718
930,462 Norwest Asset Securities Corporation,
Series 1996-5, Class B4,
7.50%, due 5/25/271,2 ................ 683,890
696,451 PNC Mortgage Securities Corporation,
Series 1997-5, Class B5,
7.25%, due 10/25/271,2 ............. 504,927
698,994 PNC Mortgage Securities Corporation,
Series 1998-2, Class 5B5,
6.625%, due 03/25/281,2 ............. 493,665
305,343 Residential Asset Securitization Trust,
Series 1997-A6, Class B4,
7.25%, due 9/25/121,2 ................ 287,216
----------
5,801,697
----------
PRINCIPAL VALUE
AMOUNT SECURITY (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
TOTAL CORPORATE BONDS
(cost $14,430,862).................... $14,412,102
-----------
TOTAL LONG-TERM DEBENTURES
(cost $34,495,810) ................. 33,284,692
-----------
SHORT-TERM INVESTMENTS: 6.0%
Turkey: 4.1%
175,000,000,000* Government of Turkey Treasury Bills,
0.00%, due 09/02/98 ................ 580,721
300,000,000,000* Government of Turkey Treasury Bills,
0.00%, due 11/04/98 ................ 888,160
-----------
1,468,881
-----------
United States: 1.9%
$ 700,000 U.S. Treasury Bills,
5.17%, due 11/12/98. ................ 686,861
-----------
TOTAL SHORT-TERM INVESTMENTS
(cost $2,257,915). ................... 2,155,742
-----------
TOTAL INVESTMENTS: 98.2%
(cost $36,753,725\^) (Note 1) ....... 35,440,434
Other assets in excess of
liabilities: 1.8%. .................. 670,640
-----------
TOTAL NET ASSETS: 100.0%
(equivalent to $10.56 per share on
3,418,641 shares outstanding). ...... $36,111,074
===========
</TABLE>
* Principal amount represents local currency.
1 Restricted security (Note 8).
2 Illiquid security (Note 9).
+ Aggregate cost for Federal income tax purposes is $36,754,538.
The Notes to Financial Statements are an integral part of this statement.
3
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $36,753,725) (Note 1) ........................... $35,440,434
Cash ........................................................................ 75,518
Receivable for shares sold ................................................ 67,072
Interest receivable ......................................................... 869,896
-----------
Total Assets ............................................................ 36,452,920
-----------
LIABILITIES
Due to Lexington Management Corporation (Note 2) ........................... 19,273
Payable for shares redeemed ................................................ 193,244
Distributions payable ...................................................... 55,101
Accrued expenses ............................................................ 74,228
-----------
Total Liabilities ...................................................... 341,846
-----------
NET ASSETS (equivalent to $10.56 per share on
3,418,641 shares outstanding) (Note 4) .................................... $36,111,074
===========
NET ASSETS consist of:
Additional paid-in capital ................................................ $36,985,968
Undistributed net investment income ....................................... 362,468
Accumulated net realized gain on investments and foreign currency holdings 84,508
Unrealized depreciation on investments and foreign currency holdings ...... (1,321,870)
-----------
TOTAL NET ASSETS ...................................................... $36,111,074
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
4
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
STATEMENT OF OPERATIONS
Six months ended June 30, 1998 (unaudited)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest ............................................................ $1,766,407
Less: foreign tax expense .......................................... 93,240
----------
Total investment income .......................................... $1,673,167
EXPENSES
Investment advisory fee (Note 2) ................................. 136,696
Distribution expenses (Note 3) .................................... 34,174
Transfer agent and shareholder servicing expenses (Note 2) ......... 16,706
Registration fees ................................................ 15,198
Printing and mailing expenses .................................... 14,940
Custodian expenses ................................................ 13,833
Accounting expenses (Note 2) ....................................... 11,857
Professional fees ................................................ 10,884
Directors' fees and expenses ....................................... 8,599
Computer processing fees .......................................... 3,561
Other expenses ................................................... 5,750
----------
Total expenses. ................................................... 272,198
Less: expenses recovered under contract with
investment adviser (Note 2) .................................... 67,154 205,044
---------- ----------
Net investment income. .......................................... 1,468,123
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 5)
Net realized gain (loss) on:
Investments ...................................................... 344,718
Foreign currency transactions .................................... (357,322)
----------
Net realized loss ................................................ (12,604)
Net change in unrealized depreciation on:
Investments ...................................................... (862,053)
Foreign currency translation of other assets and liabilities ...... (23,442)
----------
Net change in unrealized depreciation ........................... (885,495)
----------
Net realized and unrealized loss ................................. (898,099)
----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .................. $ 570,024
==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Six months
ended Year ended
June 30, 1998 December 31,
(unaudited) 1997
------------- ------------
<S> <C> <C>
Net investment income .......................................... $ 1,468,123 $ 2,052,118
Net realized gain (loss) from investments and foreign currency
transactions ................................................... (12,604) 94,293
Net change in unrealized depreciation of investments
and foreign currency translation .............................. (885,495) (1,154,451)
----------- -----------
Increase in net assets resulting from operations ............ 570,024 991,960
Distributions to shareholders from net investment income ......... (957,513) (1,746,581)
Distributions to shareholders from net realized gains from
security transactions .......................................... -- (556,566)
Increase (decrease) in net assets from capital share
transactions (Note 4) .......................................... 12,830,830 (4,130,900)
----------- -----------
Net increase (decrease) in net assets ........................ 12,443,341 (5,442,087)
NET ASSETS
Beginning of period ............................................. 23,667,733 29,109,820
----------- -----------
End of period (including undistributed net investment
income of $362,468 and distributions in excess of net investment
income of $148,142, 1998 and 1997 respectively) ............... $36,111,074 $23,667,733
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Lexington Ramirez Global Income Fund (the "Fund") is an open-end non-diversified
management investment company registered under the Investment Company Act of
1940, as amended. The Fund's investment objective is to seek high current
income. Capital appreciation is a secondary objective. 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. Long-term debt obligations held by the Fund are
valued at the mean of representative quoted bid and asked prices for such
securities or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when LMC deems it appropriate,
prices obtained for the day of valuation from a bond pricing service will be
used. Short-term debt investments are amortized to maturity based on their cost,
adjusted for foreign exchange translation. Equity securities are valued at the
last sale price on the exchange as of the close of business on the day the
securities are being valued. In the absence of any sales, securities are valued
at the mean of the last available bid and asked prices. Securities traded on the
over-the-counter market are valued at the mean between the last current bid and
asked prices. Securities for which market quotations are not readily available
and other assets are valued by Fund management in good faith under the direction
of the Fund's Board of Directors. All investments quoted in foreign currencies
are valued in U.S. dollars on the basis of the foreign currency exchange rates
prevailing at the close of business. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income, adjusted for
amortization of premiums and accretion of discounts, is accrued as earned.
FOREIGN CURRENCY TRANSACTIONS Foreign currencies (and receivables and
payables denominated in foreign currencies) are translated into U.S. dollar
amounts at current exchange rates. Translation gains or losses resulting from
changes in exchange rates and realized gains and losses on the settlement of
foreign currency transactions are reported in the statement of operations. In
addition, the Fund may enter into forward foreign exchange contracts in order to
hedge against foreign currency risk in the purchase or sale of securities
denominated in foreign currency. The Fund may also enter into such contracts to
hedge against changes in foreign currency exchange rates on portfolio positions.
These contracts are marked to market daily, by recognizing the difference
between the contract exchange rate and the current market rate as unrealized
gains or losses. Realized gains or losses are recognized when contracts are
closed and are reported in the statement of operations. There are no forward
foreign currency exchange contracts outstanding at June 30, 1998.
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 are normally declared
and paid quarterly and dividends from net realized capital gains are normally
declared and paid annually. However, 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 that 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.
7
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997 (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 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. In connection with providing investment advisory services, LMC has
entered into a sub-advisory contract with MFR Advisors Inc. ("MFR") under which
MFR provides the Fund with investment management services. Pursuant to the terms
of the sub-advisory contract between LMC and MFR, LMC pays MFR a monthly
sub-advisory fee at the annual rate of 0.35% of the Fund's average daily net
assets in excess of $15 million. For 1998, LMC has voluntarily agreed to limit
the total expenses of the Fund (including management fee, but excluding
interest, taxes, brokerage commissions and extraordinary expenses) to an annual
rate of 1.50% of the Fund's average daily net assets. Total reimbursement was
$67,154 for the six months ended June 30, 1998, and is set forth in the
statement of operations. The Fund reimburses LMC for certain expenses, including
accounting and shareholder servicing costs of $19,994, which are incurred by the
Fund, but paid by LMC.
3. DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") which allows payments to
finance activities associated with the distribution of the Fund's shares. The
Plan provides that the Fund may pay distribution fees on a reimbursement basis,
including payments to Lexington Funds Distributor, Inc. ("LFD"), the Fund's
distributor, in amounts not exceeding 0.25% per annum of the Fund's average
daily net assets. Total distribution expenses for the six months ended June 30,
1998, were $34,174 and are set forth in the statement of operations.
4. 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 .................................... 1,552,878 $ 16,800,870 1,230,549 $ 13,579,416
Shares issued on reinvestment of dividends ...... 80,242 851,388 259,657 2,825,735
--------- ------------ --------- -------------
1,633,120 17,652,258 1,490,206 16,405,151
Shares redeemed ................................. (450,514) (4,821,428) (1,848,616) (20,536,051)
--------- ------------ ---------- -------------
Net increase (decrease) ........................ 1,182,606 $ 12,830,830 (358,410) $ (4,130,900)
========= ============ ========== =============
</TABLE>
8
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997 (continued)
5. 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 $19,955,367 and
$6,564,313, 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 $823,156 and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value amounted to $2,137,260.
6. 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.
7. OPTION CONTRACTS
When the Fund writes a call option, an amount equal to the premium received by
the Fund is recorded as a liability, the value of which is marked-to-market
daily. When a written option expires, the Fund realizes a gain equal to the
amount of the premium received. When the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or loss if the cost of the closing
purchase transaction exceeds the premium received when the option was sold)
without regard to any unrealized gain or loss on the underlying security, and
the liability related to such option is eliminated. When a written call option
is exercised, the cost of the security sold will be decreased by the premium
originally received. The risk in writing a covered call option is that the Fund
gives up the opportunity to participate in any increase in the price of the
underlying security beyond the exercise price.
The following written call option transactions occurred during the six months
ended June 30, 1998:
<TABLE>
<CAPTION>
Number of
Premiums Contracts
---------- ----------
<S> <C> <C>
Options written, outstanding at December 31, 1997 ............... $ 42,218 1
Options written during the six months ended June 30, 1998 ...... 94,645 3
Options exercised ............................................. (65,611) (2)
Options expired ................................................ (71,252) (2)
--------- --
Options written, outstanding at June 30, 1998 .................. $ -- --
========= ==
</TABLE>
9
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited) and December 31, 1997 (continued)
8. RESTRICTED SECURITIES
The following securities were purchased under Rule 144A of the Securities Act of
1933 and, unless registered under the Act or exempted from registration, may be
sold only to qualified institutional investors.
<TABLE>
<CAPTION>
Acquisition Principal Market Percent of
Security Date Amount Value Net Assets
- ------------------------------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
ABN-AMRO Mortgage
Corporation ..................... 03/05/98 $ 569,532 $ 409,886 1.14%
BA Mortgage Securities, Inc. ...... 12/17/97 563,812 409,645 1.13
Compagnie De
Radiocomunicaciones
Moviles, S.A. ..................... 06/26/98 1,000,000 953,103 2.64
DLJ Mortgage Acceptance
Corporation ..................... 10/25/96 190,975 160,718 0.45
Norwest Asset Securities
Corporation ..................... 03/21/97 930,462 683,890 1.89
PNC Mortgage Securities
Corporation ..................... 09/11/97 696,451 504,927 1.40
PNC Mortgage Securities
Corporation ..................... 03/30/98 698,994 493,665 1.37
Residential Asset
Securitization Trust ............ 07/31/97 305,343 287,216 0.79
---------- -----
$3,903,050 10.81%
========== =====
</TABLE>
9. ILLIQUID SECURITIES
Pursuant to guidelines adopted by the Fund's Board of Directors, the following
securities are deemed to be illiquid. The Fund currently limits investment in
illiquid securities to 15% of the Fund's net assets, at market value.
<TABLE>
<CAPTION>
Acquisition Principal Market Percent of
Security Date Amount Value Net Assets
- ------------------------------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Compagnie De
Radiocomunicaciones
Moviles, S.A. ............ 06/26/98 $1,000,000 $ 953,103 2.64%
DLJ Mortgage Acceptance
Corporation ............... 10/25/96 190,975 160,718 0.45
Norwest Asset Securities
Corporation ............... 03/21/97 930,462 683,890 1.89
PNC Mortgage Securities
Corporation ............... 09/11/97 696,451 504,927 1.40
PNC Mortgage Securities
Corporation ............... 03/30/98 698,994 493,665 1.37
Residential Asset
Securitization Trust ...... 07/31/97 305,343 287,216 0.79
---------- ----
$3,083,519 8.54%
========== ====
</TABLE>
10
<PAGE>
LEXINGTON RAMIREZ GLOBAL INCOME FUND
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 ............... $ 10.58 $ 11.22 $ 10.75 $ 9.80 $ 10.95
-------- -------- -------- ------- ---------
Income (loss) from investment operations:
Net investment income ........................... 0.51 1.04 1.01 0.96 0.46
Net realized and unrealized gain (loss) from
investments and foreign currency
transactions .................................... (0.19) (0.50) 0.36 0.95 (1.16)
-------- -------- -------- ------- ---------
Total income (loss) from investment operations ... 0.32 0.54 1.37 1.91 (0.70)
-------- -------- -------- ------- ---------
Less distributions:
Distributions from net investment income ......... (0.34) (0.91) (0.86) (0.96) (0.45)
Distributions from net realized gains ............ -- (0.27) (0.04) -- --
-------- -------- -------- ------- ---------
Total distributions .............................. (0.34) (1.18) (0.90) (0.96) (0.45)
-------- -------- -------- ------- ---------
Net asset value, end of period ..................... $ 10.56 $ 10.58 $ 11.22 $ 10.75 $ 9.80
======== ======== ======== ======= =========
Total return ....................................... 6.17%* 5.00% 13.33% 20.10% (6.52)%
Ratio to average net assets:
Expenses, before reimbursement or waivers ......... 1.99%* 2.17% 2.33% 3.07% 1.80%
Expenses, net of reimbursement or waivers ......... 1.50%* 1.50% 1.50% 2.75% 1.50%
Net investment income,
before reimbursement or waivers .................. 10.25%* 8.99% 9.49% 9.48% 4.18%
Net investment income ........................... 10.74%* 9.66% 10.32% 9.80% 4.48%
Portfolio turnover ................................. 51.31%* 117.94% 71.83% 164.72% 10.20%
Net assets, end of period (000's omitted) ......... $ 36,111 $ 23,668 $ 29,110 $12,255 $ 10,351
</TABLE>
* Annualized.
11
<PAGE>
L E X I N G T O N
[GRAPHIC OMITTED]
LEXINGTON
RAMIREZ GLOBAL INCOME FUND
Investment Adviser
- ---------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Sub-Adviser
- ---------------------------------------------------------
MFR ADVISORS, INC.
1 Liberty Plaza
46th Floor
165 Broadway
New York, New York 10006
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 Ramirez Global Income
Fund 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
RAMIREZ
GLOBAL
INCOME
FUND
--------------------------------
Seeks high current income.
The Fund invests in a
combination of foreign
and domestic high yield
lower rated debt securities.
--------------------------------
SEMI-ANNUAL REPORT
JUNE 30, 1998
The Lexington Group
of No Load
Investment Companies
