Dear Shareholders:
- --------------------------------------------------------------------------------
The Lexington Global Fund enjoyed a strong fourth quarter but still fell
short of the averages due to a weak first half performance. The unmanaged Morgan
Stanley Capital International World Index advanced 4.8% during the fourth
quarter and a strong 20.7% for all of 1995. The average global fund appreciated
1.3% during the fourth quarter and 16.1% for 1995, according to Lipper
Analytical Services, Inc. The Lexington Global Fund gained 3.5%* during the
fourth quarter and 10.69%* for the year.
Due to the spectacular performance of the unmanaged Morgan Stanley Capital
International Index, which advanced 37.1% in 1995, most global funds
underperformed the World Index. U.S. equities comprise over 40% of a global fund
weighting, and since most global funds seek greater diversification they tend to
underperform the World Index when U.S. equities strongly outperform
international equities as they did in 1995. The Lexington Global Fund
underperformed its peers in the first half of the year due to weak performance
caused by a relatively light weighting in U.S. equities and, in particular U.S.
technology stocks. European equities also performed well and the Fund had an
underweight exposure, particularly in the U.K. Lexington Global Fund enjoyed a
competitively strong fourth quarter due to an overweighting of Japanese stocks,
and an underweighting of poorly performing Scandinavian equities and certain
U.S. technology stocks. The Fund also benefited from declining interest rates,
particularly in Europe, where a large concentration of interest sensitive stocks
performed well.
U.S. investors had no need to look beyond the American border due to the
strong performance of U.S. stocks and bonds in 1995. U.S. stocks soared 37.1%
due to several factors. American companies are once again the most competitive
in the world. U.S. corporations continue to cut costs and raise productivity at
a faster rate than most of their global competitors. As a result, corporate
profitability stands at record levels and 1995 was another year of strong double
digit profit growth. The earnings growth has been even more impressive when
factoring in low inflation rates. Due to the great flexibility of the U.S.
economy, capital is efficiently deployed to those areas offering the best
returns. As a result, the U.S. today dominates in many emerging and rapidly
growing industries such as biotechnology. Adding fuel to the fire, U.S.
corporate competitiveness benefitted from a weak dollar which has enhanced the
cost advantage of U.S. companies over their foreign competitors. Equities also
moved higher as low inflation and slowing yet sustainable growth led to a bond
market rally in 1995. Ten year government bonds began 1995 yielding 7.84% and
ended the year with a yield of only 5.68%. This was a tremendous boost for U.S.
equities.
1
<PAGE>
European equities performed very well in 1995 although returns could not
match those of the U.S. The unmanaged Morgan Stanley Capital International
European Index appreciated 21.6% in 1995. European equities were primarily
stimulated by falling interest rates. Ten year German bonds began the year
yielding 7.36% and by the end of 1995 the yield fell to 5.99%. Growth in Europe
was revised downward throughout the year. Consumer spending remains weak on the
European continent due to structurally high unemployment. German unemployment
stands at 10%, France at 12% and Spain at a whopping 23%. Unemployment levels
are high due to high labor costs which have flourished under restrictive labor
laws. European companies are now focusing on cutting costs by closing or moving
production to lower cost countries. Governments are trying to ease restrictive
labor practices although this is proving politically difficult.
Japanese equities barely moved in 1995 ending the year up less than 1%.
However, equities experienced two distinct periods with sharp losses in the
first half of the year offset by strong gains in the second half. The first half
of 1995 was marked by a terrible earthquake in Kobe, an important industrial
city in Japan, and the strong yen which reached 80 yen to the dollar. Sensing
the urgency of a Japanese economy facing accelerating deflation and possibly
depression, Japanese authorities finally addressed their economic problems. The
Bank of Japan began to aggressively add liquidity to the system and intervene in
currency markets to weaken an overvalued yen. The Ministry of Finance announced
measures to encourage more investment of capital abroad, hoping to weaken the
yen. The Japanese government passed an aggressive fiscally stimulative package
of approximately $130 billion and is now beginning to tackle the bad debt burden
in the financial system. Japanese equities recovered during the second half of
1995 as the yen weakened back to 100 yen to the dollar and short-term interest
rates, through aggressive monetary stimulation by the Bank of Japan, fell below
0.5%.
The outlook for 1996 is still constructive. Japanese equities seem poised
for strong gains as we expect economic activity to increase from aggressive
monetary easing, fiscal stimulus and further weakening in the yen. The Lexington
Global Fund has hedged positions on most of its Japanese holdings to protect
returns in the event of a weak yen. Corporate profits are set to surge from
depressed levels if Japanese GDP can achieve even a modest recovery. Japanese
equities after six difficult years are also under-owned by both foreign and
domestic investors. European equities should also continue to perform well in
1996 as economic activity will remain subdued due to corporate restructuring and
high unemployment. However, as a result of continued high unemployment and weak
consumption, interest rates are likely to continue downward which will help
support equities. U.S. equities are likely to underperform international stocks
in 1996. The earnings outlook is dull at best as it is difficult to envision
margins expanding further from current lofty levels. Signs of increasing
economic activity might be damaging to U.S. stocks some time in 1996 as bond
yields would rise. The outlook for emerging markets looks greatly improved.
After two years of negative returns, valuation levels are reasonable and, in
places like Eastern Europe, outstanding. Investors will once again need to
search abroad for double digit returns as U.S. profit growth will trail.
2
<PAGE>
We appreciate your continued support and would welcome the opportunity to
discuss any questions you may have about your investment.
Sincerely,
Richard T. Saler Alan H. Wapnick Robert M. DeMichele
Portfolio Manager Portfolio Manager President
January, 1996 January, 1996 January, 1996
_____________________________________________________________________________
GRAPH
Paper version of this shareholder report contains a graph comparing the
changes in value of a $10,000 investment in
Lexington Global Fund, Inc., and
the unmanaged Morgan Stanley Capital International World Index
_____________________________________________________________________________
*10.69%, 10.63% and 8.75% are the one and five year and since commencement
(3/27/87) average annual standard total returns, respectively, for the period
ended December 31, 1995. 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.
3
<PAGE>
(left column)
Lexington Global Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------
COMMON STOCKS: 97.0%
Australia: 2.0%
110,600 QBE Insurance Group, Ltd. .......................... $ 510,790
20,400 TABcorp Holdings, Ltd. (ADR)1 ...................... 576,300
-----------
1,087,090
-----------
Austria: 1.7%
5,100 Bank Austria AG .................................... 243,266
9,900 Creditanstalt-Bankverein ........................... 547,660
700 Wolford AG ......................................... 110,143
-----------
901,069
-----------
Canada: 0.5%
20,400 Jetform Corporation2 ............................... 294,525
-----------
Chile: 1.0%
38,200 Banco Osorno y La Union (ADR) ...................... 530,025
-----------
Denmark: 1.2%
4,840 Novo-Nordisk A.S. .................................. 660,988
-----------
France: 3.7%
3,244 Cetelem ............................................ 607,733
15,400 France Growth Fund, Inc. ........................... 152,075
200 Grand Optical Photoservice ......................... 19,488
10,000 SGS-Thomson Microelectronics N.V.2 ................. 382,224
1,260 Sidel S.A. ......................................... 391,960
3,500 Societe Generale de Surveillance
Holding S.A. "B" ................................. 431,658
-----------
1,985,138
-----------
Germany: 3.9%
29,700 Continental AG ..................................... 413,217
6,500 Deutsche Bank AG ................................... 307,343
5,900 Fielmann AG (Preferred shares) ..................... 303,722
5,060 G.M. Pfaff AG2 ..................................... 353,760
2,840 SAP AG (Preferred shares) .......................... 428,717
624 Sto AG ............................................. 312,543
-----------
2,119,302
-----------
Hong Kong: 1.5%
411,000 National Mutual Asia, Ltd. ......................... 372,090
280,500 Semi-Tech (Global), Ltd. ........................... 451,659
-----------
823,749
-----------
Indonesia: 0.7%
242,000 PT Kawasan Industri Jababeka ....................... 392,032
-----------
(right column)
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------
Ireland: 1.5%
72,300 Allied Irish Banks Plc ............................. $ 389,810
187,000 Jefferson Smurfit Group ............................ 439,137
-----------
828,947
-----------
Israel: 1.5%
190 Africa-Israel Investments, Ltd.2 ................... 229,104
50,400 Clal Industries, Ltd. .............................. 270,462
2,820 Koor Industries, Ltd. .............................. 279,988
-----------
779,554
-----------
Italy: 1.8%
29,500 Alleanza Assicurazioni ............................. 280,450
12,700 Assicurazioni Generali ............................. 307,272
46,000 Bulgari SpA2 ....................................... 392,485
-----------
980,207
-----------
Japan: 23.0%
26,000 Amada Company, Ltd. ................................ 256,603
16,000 Amway Japan, Ltd. .................................. 674,988
10,000 CSK Corporation .................................... 312,530
16,000 Hino Motors, Ltd. .................................. 134,533
30,000 Joshin Denki Company, Ltd. ......................... 391,872
197,000 Kawasaki Kisen Kaisha, Ltd.2 ....................... 625,215
137,000 Kawasaki Steel Corporation ......................... 477,213
51,000 Matsushita Electric Industrial
Company, Ltd. .................................... 829,028
37,000 Matsushita Refrigeration
Company, Ltd. .................................... 268,505
39,000 Matsuzakaya Company, Ltd. .......................... 494,340
158,000 Mitsui Engineering & Shipbuilding2 ................. 438,761
19,000 Mori Seiki Company, Ltd. ........................... 428,350
23,000 National House Industrial Corporation .............. 420,610
64,000 Nippon Chemi-Con Corporation2 ...................... 426,047
23,000 Nippon Electric Glass Company, Ltd. ................ 436,188
141,000 Nippon Steel Corporation ........................... 482,961
1,000 Nissen Company, Ltd. ............................... 23,416
25,000 Nitto Denko Corporation ............................ 387,034
20 NTT Data Communications Systems
Corporation ...................................... 671,505
20,100 Paris Miki, Inc. ................................... 721,538
5,000 Ryohin Keikaku Company, Ltd. ....................... 416,062
29,000 Sharp Corporation .................................. 462,990
85,000 Shinmaywa Industries, Ltd. ......................... 700,726
8,200 Sony Corporation ................................... 491,127
27,000 Sumitomo Forestry Company .......................... 417,997
84,000 Sumitomo Realty & Development
Company .......................................... 593,324
34,000 Yamato Kogyo Company, Ltd. ......................... 328,979
-----------
12,312,442
-----------
4
<PAGE>
(left column)
Lexington Global Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------
Malaysia: 0.5%
113,000 Land & General Holdings Bhd ........................ $ 244,830
-----------
Mexico: 1.3%
96,900 Tubos De Acero De Mexico
S.A. (ADR)2 ...................................... 678,300
-----------
Netherlands: 2.8%
20,500 ABN AMRO Holdings N.V. ............................. 932,514
4,500 Baan Company N.V.2 ................................. 203,625
28,600 Elsevier N.V.2 ..................................... 380,859
-----------
1,516,998
-----------
New Zealand: 2.3%
532,200 Brierley Investments, Ltd. ......................... 420,507
170,100 Fisher & Paykel Industries, Ltd. ................... 516,500
94,400 Independent Newspapers, Ltd. ....................... 286,641
-----------
1,223,648
-----------
Norway: 1.6%
80,900 Fokus Banken A.S.2 ................................. 435,864
29,500 Saga Petroleum A.S. ................................ 392,695
-----------
828,559
-----------
Philippines: 2.3%
654,000 C & P Homes, Inc.2 ................................. 480,332
993,000 Filinvest Land, Inc.2 .............................. 318,245
841,320 Universal Robina Corporation ....................... 417,289
-----------
1,215,866
-----------
Poland: 1.1%
16,000 Bank Rozwoju Eksportu S.A. ......................... 243,506
21,100 Debica S.A. ........................................ 318,555
-----------
562,061
-----------
Portugal: 0.8%
23,200 Portugal Telecom S.A. (ADR)2 ....................... 435,968
-----------
Singapore: 1.1%
299,000 Comfort Group, Ltd. ................................ 253,784
37,000 United Overseas Bank, Ltd. ......................... 355,920
-----------
609,704
-----------
South Africa: 0.3%
10,509 Rustenburg Platinum Holdings, Ltd.
(ADR) ............................................ 172,967
-----------
(right column)
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------
Spain: 1.6%
13,800 Repsol S.A. ........................................ $ 451,036
30,100 Telefonica de Espana ............................... 415,787
-----------
866,823
-----------
Sweden: 2.0%
10,670 Astra AB ........................................... 425,656
42,800 Atlas Copco AB ..................................... 657,193
-----------
1,082,849
-----------
Switzerland: 3.1%
360 Nestle S.A. ........................................ 398,231
54 Roche Holding AG ................................... 427,178
335 Union Bank of Switzerland .......................... 363,026
640 Winterthur Schweizerische
Versicherungs-Gesellschaft ....................... 452,744
-----------
1,641,179
-----------
Thailand: 2.0%
53,800 Bangkok Bank, Ltd. ................................. 653,805
64,200 Total Access Communication Plc1,2 .................. 417,300
-----------
1,071,105
-----------
United Kingdom: 5.4%
433,500 Aegis Group Plc2 ................................... 253,652
81,400 Antofagasta Holdings Plc ........................... 369,047
56,200 B.A.T. Industries Plc .............................. 494,349
74,000 D.F.S. Furniture Company Plc ....................... 455,359
36,200 RTZ Corporation Plc ................................ 525,190
65,900 Takare Plc ......................................... 182,840
144,200 Tomkins Plc ........................................ 630,298
-----------
2,910,735
-----------
United States: 24.8%
6,800 Aluminum Company of America ........................ 359,550
4,400 American Home Products Corporation ................. 426,800
4,400 American International Group ....................... 407,000
8,200 Bank of New York Company, Inc. ..................... 399,750
7,200 Beneficial Corporation ............................. 335,700
21,600 Borders Group, Inc.2 ............................... 399,600
8,100 Ceridian Corporation2 .............................. 334,125
4,000 Chubb Corporation .................................. 387,000
15,900 Diamond Offshore Drilling, Inc. .................... 536,625
9,500 Dover Corporation .................................. 350,313
14,100 Ecolab, Inc. ....................................... 423,000
8,200 Eli Lilly & Company ................................ 461,250
2,600 General Re Corporation ............................. 403,000
8,800 Halliburton Company ................................ 445,500
7,100 Hercules, Inc. ..................................... 400,262
5,900 Hershey Foods Corporation .......................... 383,500
4,300 Hewlett-Packard Company ............................ 360,125
5
<PAGE>
Lexington Global Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
(left column)
Number of Value
Shares Security (Note 1)
- -------------------------------------------------------------------------------
United States (continued)
3,700 Johnson & Johnson .................................. $ 316,813
5,600 Lockheed Martin Corporation ........................ 442,400
13,300 Loral Corporation .................................. 470,487
10,000 Meredith Corporation ............................... 418,750
10,100 Millipore Corporation .............................. 415,363
3,900 Mobil Corporation .................................. 436,800
5,400 NationsBank Corporation ............................ 375,975
5,500 PepsiCo, Inc. ...................................... 307,313
7,800 Pioneer Hi-Bred International, Inc. ................ 433,875
4,800 Procter & Gamble Company ........................... 398,400
9,700 Service Corporation International .................. 426,800
5,300 Union Pacific Corporation .......................... 349,800
11,300 US Bancorp ......................................... 379,255
9,700 Williams Companies, Inc. ........................... 425,588
12,600 Winn-Dixie Stores, Inc. ............................ 464,625
2,900 Xerox Corporation .................................. 397,300
-----------
13,272,644
-----------
TOTAL COMMON STOCKS
(cost $48,846,583) ............................... 52,029,304
-----------
(right column)
Number of
Shares
or Principal Value
Amount3 Security (Note 1)
- -------------------------------------------------------------------------------
LONG TERM DEBENTURES: 2.1%
Germany: 2.1%
1,555,000 Bundesbank Deutschland Republic
Bond 6.50%, due 10/14/05
(cost $1,104,271) ................................ $ 1,117,977
-----------
TOTAL INVESTMENTS: 99.1%
(cost $49,950,854+) (Note 1) ..................... 53,147,281
Other assets in excess of liabilities:
0.9% ............................................. 466,925
-----------
TOTAL NET ASSETS: 100.0%
(equivalent to $11.32 per share on
4,734,403 shares outstanding) .................... $53,614,206
===========
6
<PAGE>
Lexington Global Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
- --------------------------------------------------------------------------------
NOTES TO STATEMENT OF NET ASSETS
1The 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>
Average Percentage
Acquisition Cost Per Share/ Market of Net
Issuer Date Principal Unit Value Assets
------ ----------- --------------- ------ ----------
<S> <C> <C> <C> <C>
TABCorp Holdings Ltd. (ADR) ......... 8/15/94 $16.73 $576,300 1.07%
Total Access Communications Plc ..... 9/28/95 6.31 417,300 0.78%
-------- ----
$993,600 1.85%
======== ====
</TABLE>
Pursuant to guidelines adopted by the Fund's Board of Directors, these
unregistered securities have been deemed to be illiquid. The Fund currently
limits investment in illiquid securities to 15% of the Fund's net assets, at
market value, at the time of purchase, but, pursuant to state regulations, the
Fund's investment in such securities is effectively limited to 10%.
2 Non-lncome producing securities.
3 Principal amount represents local currency.
ADR-American Depository Receipt.
+ Aggregate cost for Federal income tax purposes is identical.
-------------------
At December 31, 1995, the compostion of the Fund's net assets by industry
concentration was as follows:
(left column)
Banking ....................... 11.6%
Capital Equipment ............. 11.4
Consumer Durable .............. 8.4
Consumer Non-durable .......... 5.6
Construction & Housing ........ 1.7
Electrical and Electronics .... 5.1
(middle column)
Energy ........................ 5.0
Environmental Technology ...... 0.8
Financial Services ............ 8.3
Healthcare .................... 5.4
Materials ..................... 7.5
Merchandising ................. 6.9
(right column)
Multi-Industry ................ 6.2%
Real Estate ................... 2.4
Services ...................... 6.5
Telecommunications ............ 2.4
Transportation ................ 1.8
Other net assets .............. 3.0
-----
Total Net Assets ............ 100.0%
=====
The Notes to Financial Statements are an integral part of this statement.
7
<PAGE>
Lexington Global Fund, Inc.
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost $49,950,854) (Note 1) ................................... $53,147,281
Cash .............................................................................................. 713,315
Receivable for investment securities sold ......................................................... 573,156
Receivable for shares sold ........................................................................ 22,083
Dividends and interest receivable ................................................................. 64,018
Foreign taxes recoverable ......................................................................... 40,580
Unrealized gain on open forward contracts (Note 6) ................................................ 712,789
-----------
Total Assets ................................................................................. 55,273,222
-----------
Liabilities
Due to Lexington Management Corporation (Note 2) .................................................. 42,409
Payable for investment securities purchased ....................................................... 592,922
Payable for shares redeemed ....................................................................... 26,474
Distributions payable ............................................................................. 919,766
Accrued expenses .................................................................................. 77,445
-----------
Total Liabilities ............................................................................ 1,659,016
-----------
Net Assets (equivalent to $11.32 per share on 4,734,403 shares outstanding) (Note 3) .............. $53,614,206
===========
Net Assets consist of:
Capital stock-authorized 1,000,000,000 shares,
$.001 par value per share ....................................................................... $ 4,734
Additional paid-in capital (Note 1) ............................................................... 50,204,682
Distributions in excess of net investment income (Note 1) ......................................... (534,709)
Accumulated net realized gain on investments and foreign currency
holdings (Note 1) ............................................................................... 30,656
Net unrealized appreciation of investments and foreign currency holdings .......................... 3,908,843
-----------
$53,614,206
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
8
<PAGE>
Lexington Global Fund, Inc.
Statement of Operations
Year ended December 31, 1995
<TABLE>
<S> <C> <C>
Investment Income
Dividends .................................................................. $1,243,781
Interest ................................................................... 136,862
----------
1,380,643
Less: foreign tax expense .................................................. 112,712
----------
Investment income .................................................... 1,267,931
----------
Expenses
Investment advisory fee (Note 2) ......................................... 590,198
Accounting and shareholder services expenses (Note 2) .................... 102,974
Custodian and transfer agent expenses .................................... 113,837
Printing and mailing ..................................................... 68,799
Directors' fees and expenses ............................................. 13,357
Audit and legal .......................................................... 39,472
Registration fees ........................................................ 16,610
Computer expense ......................................................... 12,658
Other expenses ........................................................... 29,449
----------
Total expenses ......................................................... 987,354
----------
Net investment income .............................................. 280,577
Realized and Unrealized Gain on Investments (Note 4)
Net realized gain on:
Investments .......................................................... 2,800,030
Foreign currency transactions ........................................ 975,924
----------
Net realized gain .................................................. 3,775,954
Net change in unrealized appreciation on:
Investments .......................................................... 1,196,032
Foreign currency translations of other assets and liabilities ........ 418,155
----------
Net change in unrealized appreciation ................................ 1,614,187
----------
Net realized and unrealized gain ................................... 5,390,141
----------
Increase in Net Assets Resulting from Operations ........................... $5,670,718
==========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
9
<PAGE>
Lexington Global Fund, Inc.
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Net investment income ......................................................... $ 280,577 $ 109,218
Net realized gain from investments and foreign currency transactions .......... 3,775,954 12,203,208
Increase (decrease) in unrealized appreciation of investments and
foreign currency holdings ................................................... 1,614,187 (11,085,660)
----------- -----------
Net increase in net assets resulting from operations .................. 5,670,718 1,226,766
Distributions to shareholders from net investment income ...................... (1,284,116) -
Distributions to shareholders in excess of net investment income (Note 1) ..... (576,895) -
Distributions to shareholders from net realized gains ......................... (2,751,490) (12,203,208)
Distributions to shareholders in excess of net realized gains (Note 1) ........ - (645,274)
Decrease in net assets from capital share transactions (Note 3) ............... (14,836,260) (8,299,468)
----------- -----------
Net decrease in net assets ............................................ (13,778,043) (19,921,184)
Net Assets:
Beginning of period ......................................................... 67,392,249 87,313,433
----------- -----------
End of period ............................................................... $53,614,206 $67,392,249
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
10
<PAGE>
Lexington Global Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994
1. Significant Accounting Policies
Lexington Global 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 objective is to seek long term growth of capital primarily
through investment in common stock of companies domiciled in foreign countries
and the United States. The following is a summary of significant accounting
policies followed by the Fund in the preparation of its financial statements:
Securities Security transactions are accounted for on a trade date basis.
Realized gains and losses from security transactions are reported on the
identified cost basis. Investments are stated at market value based on closing
prices reported by the exchange on which the securities are traded on the last
business day of the period or, for over-the-counter securities, at the average
between bid and asked prices, except for short-term securities which are stated
at amortized cost, which approximates market value. Securities for which market
quotations are not readily available and other assets are valued at fair value
as determined by management and approved in good faith by the 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. Dividends and distributions to shareholders are recorded on
the ex-dividend date. Interest income 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.
Distributions In accordance with Statement of Positon 93-2: Determination,
Disclosure and Financial Statement Presentation of Income, Capital Gain and
Return of Capital Distributions by Investment Companies, as of December 31,
1995, book and tax basis differences amounting to $389,838 have been
reclassified from additional paid-in capital to accumulated net realized gains
on investments. In addition, $1,045,725 was reclassified from accumulated net
realized gain on investments and foreign currency holdings to distributions in
excess of net investment income. Distributions in excess of net investment
income reflect temporary book-tax differences arising from tax treatment of
unrealized gains on forward foreign exchange contracts. As of December 31, 1994,
book and tax basis differences amounting to $14,279 have been reclassified from
additional paid-in capital to accumulated realized gains on investments. In
addition, $158,473 was reclassified from undistributed net investment income to
accumulated net realized gain on investments.
Federal Income Taxes It is the Fund's intention 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 has been made.
2. Investment Advisory Fee and Other Transactions with Affiliate
The Fund pays an investment advisory fee to Lexington Management Corporation
("LMC") at the rate of 1% of average daily net assets. The investment advisory
contract provides that the total annual expenses of the Fund (including
management fees, but excluding interest, taxes, brokerage commissions and
extraordinary expenses) will not exceed the level of expenses which the Fund is
permitted to bear under the most restrictive expense limitation imposed by any
state in which shares of the Fund are offered for sale. No reimbursement was
required for the year ended December 31, 1995.
11
<PAGE>
Lexington Global Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
2. Investment Advisory Fee and Other Transactions with Affiliate (continued)
The Fund also reimburses LMC for certain expenses, including accounting and
shareholder servicing costs, 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, 1995 December 31, 1994
----------------- -----------------
Shares Amount Shares Amount
---------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold .................................... 357,460 $ 4,001,451 2,384,324 $ 33,526,089
Shares issued to shareholders on reinvest-
ment of dividends and distributions .......... 326,079 3,690,927 1,105,090 12,355,393
---------- ------------ --------- ------------
683,539 7,692,378 3,489,414 45,881,482
Shares redeemed ................................ (1,984,366) (22,528,638) (3,916,491) (54,180,950)
---------- ------------ --------- ------------
Net decrease ................................... (1,300,827) $(14,836,260) (427,077) $ (8,299,468)
========== ============ ========= ============
</TABLE>
4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales of securities for the year ended
December 31, 1995, excluding short-term securities, were $92,032,179 and
$104,121,296, respectively.
At December 31, 1995, aggregate gross unrealized appreciation for all securities
and foreign currency holdings (including foreign currency receivables and
payables) in which there is an excess of value over tax cost amounted to
$5,339,738 and aggregate gross unrealized depreciation for all securities and
foreign currency holdings in which there is an excess of tax cost over value
amounted to $1,430,895.
5. Investment 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. Forward Foreign Exchange Contracts
At December 31, 1995, the Fund was committed to sell foreign currencies under
the following forward foreign exchange contracts:
<TABLE>
<CAPTION>
Unrealized
Settlement Contract Contract Current Gain at
Currency Date Amount Rate Rate 12/31/95
-------- ---------- -------- -------- ------- -----------
<S> <C> <C> <C> <C> <C>
Deutsche Mark ......... 05/06/96 $2,638,864 1.4064 1.4287 $ 41,189
Japanese Yen .......... 01/31/96 743,853 86.1500 102.8915 121,033
Japanese Yen .......... 02/14/96 2,068,187 90.4200 102.6844 247,020
Japanese Yen .......... 02/20/96 1,147,519 94.2900 102.5956 92,897
Japanese Yen .......... 02/20/96 1,416,159 95.3300 102.5956 100,289
Japanese Yen .......... 02/20/96 292,367 95.3600 102.5956 20,619
Japanese Yen .......... 03/06/96 1,654,513 98.3200 102.3453 65,073
Japanese Yen .......... 06/28/96 2,427,488 99.8450 100.8701 24,669
--------
$712,789
========
</TABLE>
12
<PAGE>
Lexington Global Fund, Inc.
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------
1995 1994 1993 1992 1991
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ....................... $11.17 $13.51 $11.09 $11.57 $10.26
------ ------ ------ ------ ------
Income (loss) from investment
operations:
Net investment income ..................... .09 .02 .06 .06 .09
Net realized and unrealized gain
(loss) on investments ................... 1.10 .23 3.47 (.47) 1.50
------ ------ ------ ------ ------
Total income (loss) from
investment operations ................... 1.19 .25 3.53 (.41) 1.59
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income .................................. (.29) - (.06) (.07) (.08)
Distributions in excess of
net investment income
(temporary book-tax
difference) ............................. (.13) - - - -
Distributions from net realized
capital gains ........................... (.62) (2.46) (1.05) - (.20)
Distributions in excess of
net realized capital gains
(temporary book-tax
difference) ............................. - (.13) - - -
------ ------ ------ ------ ------
Total distributions ................. (1.04) (2.59) (1.11) (.07) (.28)
------ ------ ------ ------ ------
Net asset value, end of period .............. $11.32 $11.17 $13.51 $11.09 $11.57
====== ====== ====== ====== ======
Total return ................................ 10.69% 1.84% 31.88% (3.55%) 15.55%
Ratio to average net assets:
Expenses .................................. 1.67% 1.61% 1.49% 1.52% 1.57%
Net investment income ..................... .48% .14% .52% .55% .79%
Portfolio turnover ..........................166.35% 83.40% 84.61% 81.38% 75.71%
Net assets at end of period
(000's omitted) ...........................$53,614 $67,392 $87,313 $50,298 $53,886
</TABLE>
13
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Lexington Global Fund, Inc.:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Global Fund,
Inc. as of December 31, 1995, 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, 1995 by correspondence with the custodian and brokers. 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 Global Fund, Inc. as of December 31, 1995, 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
January 29, 1996
14
<PAGE>
(left column)
LEXINGTON
INVESTOR SERVICES
- --------------------------------------------------------------------------------
As a Lexington shareholder, you should be aware of the many services available
to you.
No Load-The Lexington Funds are no load funds. That is, investments and
redemptions are made without any sales charges, commissions or redemption fees.
-----------
Free Telephone Exchange-Investments in the Lexington Funds may be exchanged for
shares of a different Lexington Fund at any time.
-----------
Check Writing Privileges-Lexington Money Market Trust and Lexington Tax Free
Money Fund permit investors immediate access to their funds with check writing
for withdrawals from their account.
-----------
Tax Sheltered Plans-IRA, Keogh, Pension, and Profit Sharing Prototype Plans are
available to qualified individuals. These plans offer investment flexibility
through the Share Exchange Service, simplified record keeping, convenience and
investment supervision.
-----------
Custodial Accounts for Minors-Investments may be made on behalf of minors under
the Uniform Gifts to Minors Act currently in effect in all states.
-----------
Systematic Withdrawal Plan-An investor may elect to receive a fixed amount from
his or her account each month or quarter, subject to certain minimums.
-----------
Complete Record Keeping-A statement is provided for every transaction in
addition to a year-end statement with tax information.
For more complete information about any of the Lexington Funds and a prospectus
which includes management fee and expenses call the distributor toll-free at
1-800-526-0056. Read the prospectus carefully before you invest or send money.
15
(right column)
The Lexington Group of
No Load Investment Companies
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.
Lexington Global Fund, Inc.-Seeks long-term growth of capital primarily through
investment in common stocks of companies domiciled in foreign countries and the
United States.
Lexington International Fund, Inc.-Seeks long-term growth of capital through
investment in companies domiciled in foreign countries.
Lexington Crosby Small Cap Asia Growth Fund, Inc.-Seeks long-term capital
appreciation through investment in companies domiciled in the Asia Region with a
market capitalization of less than $1 billion.
Lexington Ramirez Global Income Fund-Seeks high current income. Capital
appreciation is a secondary objective. The Fund invests in a combination of
foreign and domestic high-yield, lower rated debt securities.
Lexington Goldfund, Inc.-Seeks capital appreciation through investment in gold
bullion and shares of gold mining companies.
Lexington Growth and Income Fund, Inc.-Seeks capital appreciation over the
long-term through investments in the stocks of large, ably managed and well
financed companies.
Lexington Corporate Leaders Trust Fund-Seeks capital growth and reasonable
income through investment in an equal number of shares of an established list of
American blue chip corporations.
Lexington SmallCap Value Fund, Inc.-Seeks long-term capital appreciation through
investment in common stocks of companies domiciled in the United States with a
market capitalization of less than $1 billion.
Lexington Convertible Securities Fund-Seeks total return by providing capital
appreciation, current income and conservation of capital through investments in
a diversified portfolio of securities convertible into shares of common stock.
Lexington GNMA Income Fund, Inc.-Seeks to achieve a high level of current
income, consistent with liquidity and safety of principal, through investment
primarily in mortgage-backed GNMA ("Ginnie Mae") certificates that are
guaranteed as to the timely payment of principal and interest by the United
States Government.
Lexington Money Market Trust-Seeks a high level of current income consistent
with preservation of capital and liquidity through investments in interest
bearing short-term money market instruments. Lexington Tax Free Money Fund,
Inc.-Seeks current income exempt from Federal income taxes while maintaining
stability of principal, liquidity and preservation of capital.
<PAGE>
Lexington
Global Fund, Inc.
Investment Adviser
- --------------------------------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Distributor
- --------------------------------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
--------------------------------------------
All shareholder requests for services of
any kind should be sent to:
Transfer Agent
--------------------------------------------
STATE STREET BANK AND
TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
Or call toll free:
Service and Sales: 1-800-526-0056
24 Hour Account Information:
1-800-526-0052
--------------------------------------------
- --------------------------------------------------------------------------------
(800) 526-0052
"LEXLINE"
24 hour toll-free telephone access to your
Lexington Fund account
Price/Yield * Account Balances * Exchanges *
Last Transactions * Total Return * Duplicate Statements
- --------------------------------------------------------------------------------
This report has been prepared for the information of the shareholders of
Lexington Global Fund, Inc. and is authorized for distribution to the public
only if it is accompanied or preceded by a currently effective prospectus which
sets forth expenses and other material information.
(right column)
- -------------------------------------------
LEXINGTON
LEXINGTON
GLOBAL
FUND, INC.
(filled box)
Seeks long-term growth of capital,
primarily through investment in
common stocks of companies
domiciled in foreign countries and
the United States.
(filled box)
ANNUAL REPORT
DECEMBER 31, 1995
The Lexington Group
of No Load
Investment Companies
- -------------------------------------------
