Dear Shareholders:
- --------------------------------------------------------------------------------
The Lexington International Fund appreciated 2.90%* during the fourth
quarter of 1995. This compares favorably with the average international fund
return of 1.93% according to Lipper Analytical Services, Inc. The unmanaged EAFE
Index added 4% during the last quarter, due to its high Japanese exposure. For
the year the Lexington International Fund advanced 5.77%* while the average
international fund gained 9.41%. The unmanaged EAFE Index finished the year with
a return of 11.2%.
The Lexington International Fund underperformed the average international
fund in 1995 due to poor first half performance. An underweighting of strongly
performing European equities which included several technology stocks caused the
Fund to lag the first half. The fourth quarter returns bested the average
international fund due to the Fund's exposure to interest sensitive stocks in
Europe as well as overall good stock selection.
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
1
<PAGE>
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 remains positive. 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
International 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.
The risks in 1996 to be particularly aware of are accelerating inflation and
a strong economic recovery in the U.S. and/or Europe. Conversely, a lack of
economic pick-up in Japan would be extremely negative for Japanese equities as
would a further appreciation of the yen. The Lexington International Fund begins
1996 with an overweight position in Japan with over 80% of Japanese holdings
hedged back into dollars. We expect further weakness in the Japanese yen and an
acceleration of growth during 1996. Japanese equities offer strong earnings
prospects with earnings estimates likely to rise throughout 1996. The Japanese
market will also enjoy the monetary stimulus from the Bank of Japan. Finally,
most investors domestic and foreign are underweight in Japanese equities. The
Fund continues to hold approximately 30% in European equities. We believe
interest sensitive stocks will continue to perform well with falling interest
rates at least in the first half of 1996. Value is showing up in some European
cyclical stocks and these will be selectively purchased in anticipation of an
economic pick-up in the latter half of the year. Emerging markets will become a
bigger focus for Lexington International Fund in 1996 as prospects have greatly
improved in part due to two years of negative returns. U.S. investors are likely
to turn their attention back to the high growth emerging economies as U.S.
profit growth is likely to lag growth elsewhere.
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 Robert M. DeMichele
Portfolio Manager President
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 International Fund, Inc., and
the unmanaged Morgan Stanley Capital International (EAFE) Index
____________________________________________________________________________
*5.77% and 5.83% are the one year and since commencement (1/3/94) 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>
Lexington International Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995
Left Col.
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
COMMON STOCKS: 95.4%
Australia: 2.1%
45,200 QBE Insurance Group, Ltd. ....................... $ 208,749
58,400 TABcorp Holdings, Ltd. .......................... 164,776
----------
373,525
----------
Austria: 2.1%
2,300 Bank Austria AG ................................. 109,708
4,100 Creditanstalt-Bankverein ........................ 226,809
300 Wolford AG ...................................... 47,204
----------
383,721
----------
Canada: 0.5%
5,900 Jetform Corporation ............................. 85,181
----------
Chile: 1.2%
15,000 Banco Osorno y La Union (ADR) ................... 208,125
----------
Denmark: 1.7%
2,210 Novo-Nordisk A.S. ............................... 301,815
----------
France: 5.1%
1,327 Cetelem ......................................... 248,601
14,100 France Growth Fund, Inc. ........................ 139,238
70 Grand Optical Photoservice ...................... 6,821
4,100 SGS-Thomson Microelectronics N.V.2 .............. 156,712
540 Sidel S.A. ...................................... 167,983
1,530 Societe Generale de Surveillance
Holding S.A. "B" .............................. 188,696
----------
908,051
----------
Germany: 4.5%
18,200 Continental AG .................................. 253,217
1,800 Deutsche Bank AG ................................ 85,110
2,300 Fielmann AG (Preferred shares) .................. 118,400
1,520 G.M. Pfaff AG2 .................................. 106,268
920 SAP AG (Preferred shares) ....................... 138,880
216 Sto AG .......................................... 108,188
----------
810,063
----------
Hong Kong: 2.0%
169,000 National Mutual Asia, Ltd. ...................... 153,001
127,000 Semi-Tech (Global), Ltd. ........................ 204,494
----------
357,495
----------
Indonesia: 0.8%
92,500 PT Kawasan Industri Jababeka .................... 149,847
----------
Ireland: 2.2%
40,000 Allied Irish Banks Plc .......................... 215,662
74,700 Jefferson Smurfit Group ......................... 175,420
----------
391,082
----------
Right Col.
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
Israel: 1.9%
90 Africa-Israel Investments, Ltd.2 ................ $ 108,523
20,220 Clal Industries, Ltd. ........................... 108,507
1,300 Koor Industries, Ltd. ........................... 129,072
----------
346,102
----------
Italy: 2.3%
11,900 Alleanza Assicurazioni .......................... 113,131
5,100 Assicurazioni Generali .......................... 123,393
20,000 Bulgari SpA2 .................................... 170,645
----------
407,169
----------
Japan: 30.3%
11,000 Amada Company, Ltd. ............................. 108,563
6,600 Amway Japan, Ltd. ............................... 278,433
4,000 CSK Corporation ................................. 125,012
9,000 Hino Motors, Ltd. ............................... 75,675
14,000 Joshin Denki Company, Ltd. ...................... 182,874
78,000 Kawasaki Kisen Kaisha, Ltd.2 .................... 247,547
60,000 Kawasaki Steel Corporation ...................... 208,999
25,000 Komatsu Forklift Company, Ltd. .................. 165,699
8,000 Makino Milling Machine Company,
Ltd. .......................................... 68,428
16,000 Matsushita Electric Industrial
Company, Ltd. ................................. 260,087
15,000 Matsushita Refrigeration Company,
Ltd. .......................................... 108,853
17,000 Matsuzakaya Company, Ltd. ....................... 215,481
68,000 Mitsui Engineering & Shipbuilding ............... 188,834
8,000 Mori Seiki Company, Ltd. ........................ 180,358
10,000 National House Industrial Corporation ........... 182,874
33,000 Nippon Chemi-Con Corporation2 ................... 219,681
10,000 Nippon Electric Glass Company, Ltd. ............. 189,647
61,000 Nippon Steel Corporation ........................ 208,940
400 Nissen Company, Ltd. ............................ 9,366
11,000 Nitto Denko Corporation ......................... 170,295
9 NTT Data Communications Systems
Corporation ................................... 302,177
8,200 Paris Miki, Inc. ................................ 294,359
2,000 Ryohin Keikaku Company, Ltd. .................... 166,425
13,000 Sharp Corporation ............................... 207,547
33,000 Shinmaywa Industries, Ltd. ...................... 272,046
3,300 Sony Corporation ................................ 197,649
12,000 Sumitomo Forestry Company ....................... 185,776
25,000 Sumitomo Realty & Development
Company ....................................... 176,584
21,000 Yamato Kogyo Company, Ltd. ...................... 203,193
----------
5,401,402
----------
4
<PAGE>
Lexington International Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
Left Col.
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
Malaysia: 0.5%
44,000 Land & General Holdings Bhd ...................... $ 95,332
----------
Mexico: 1.4%
35,600 Tubos De Acero De Mexico S.A. (ADR) .............. 249,200
----------
Netherlands: 3.6%
8,400 ABN AMRO Holdings N.V. ........................... 382,103
2,000 Baan Company, N.V. ............................... 90,500
12,400 Elsevier N.V. .................................... 165,128
----------
637,731
----------
New Zealand: 4.7%
375,100 Brierley Investments, Ltd. ....................... 296,378
111,100 Fisher & Paykel Industries, Ltd. ................. 337,350
65,800 Independent Newspapers, Ltd. ..................... 199,798
----------
833,526
----------
Norway: 2.0%
35,500 Fokus Banken A.S.2 ............................... 191,263
12,300 Saga Petroleum A.S. .............................. 163,734
----------
354,997
----------
Philippines: 2.7%
286,000 C & P Homes, Inc.2 ............................... 210,053
357,500 Filinvest Land, Inc.2 ............................ 114,575
310,800 Universal Robina Corporation ..................... 154,155
----------
478,783
----------
Poland: 1.0%
5,200 Bank Rozwoju Eksportu S.A. ...................... 79,140
6,300 Debica S.A. ..................................... 95,114
----------
174,254
----------
Portugal: 1.0%
9,300 Portugal Telecom S.A. (ADR)2 ..................... 174,763
----------
Singapore: 1.7%
103,000 Comfort Group, Ltd. .............................. 87,424
23,000 United Overseas Bank, Ltd. ....................... 221,248
----------
308,672
----------
South Africa: 0.4%
4,216 Rustenburg Platinum Holdings, Ltd.
(ADR) .......................................... 69,391
Spain: 2.7%
9,400 Repsol S.A. ...................................... 307,227
13,100 Telefonica de Espana ............................. 180,957
----------
488,184
----------
Right Col.
Number of Value
Shares Security (Note 1)
- --------------------------------------------------------------------------------
Sweden: 2.4%
4,690 Astra AB .........................................$ 187,097
16,300 Atlas Copco AB ................................... 250,286
-----------
437,383
-----------
Switzerland: 4.5%
170 Nestle S.A. ...................................... 188,054
23 Roche Holding AG ................................. 181,946
210 Union Bank of Switzerland ........................ 227,568
280 Winterthur Schweizerische
Versicherungs-Gesellschaft ..................... 198,075
-----------
795,643
-----------
Thailand: 3.0%
28,800 Bangkok Bank, Ltd. ............................... 349,992
28,200 Total Access Communications Plc1,2 ............... 183,300
-----------
533,292
-----------
United Kingdom: 7.1%
163,600 Aegis Group Plc1 ................................. 95,726
30,450 Antofagasta Holdings Plc ......................... 138,053
21,400 B.A.T. Industries Plc ............................ 188,240
27,400 D.F.S. Furniture Company Plc ..................... 168,606
11,860 RTZ Corporation Plc .............................. 172,065
30,040 Takare Plc ....................................... 83,346
97,300 Tomkins Plc ...................................... 425,298
-----------
1,271,334
-----------
TOTAL COMMON STOCKS
(Cost $16,186,429) ............................... 17,026,063
-----------
LONG TERM DEBENTURES: 1.8%
Germany: 1.8%
$445,000 Bundesbank Deutschland
Republic Bond
6.5%, due 10/14/05
(Cost $316,015) .................................. 319,936
-----------
TOTAL INVESTMENTS: 97.2%
(cost $16,502,444\'86) (Note 1) .................. 17,345,999
Other assets in excess
of liabilities: 2.8% ........................... 508,640
TOTAL NET ASSETS: 100%
(equivalent to $10.60 per share on
1,685,127 shares outstanding) ..................$17,854,639
===========
5
<PAGE>
Lexington International Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
December 31, 1995 (continued)
- --------------------------------------------------------------------------------
Notes to Statement of Net Assets
1The 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>
December 31, 1995
-------------------------
Average
Acquisition Cost per Market Percentage of
Issuer Date Share Value Net Assets
- ---------------------------------------- ----------- -------- --------- -------------
<S> <C> <C> <C> <C>
Total Access Communications Plc ........ 09/28/95 $6.38 $183,300 1.03%
-------- -----
</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, at the time of purchase, but, pursuant to state regulations, the Fund's
investment in such securities is effectively limited to 10%.
2Non-income producing securities.
ADR-American Depository Receipt.
+Aggregate cost for Federal income tax purposes is identical.
----------------------
At December 31, 1995, the composition of the Fund's net assets by industry
concentration was as follows:
Banking ..................... 13.9%
Capital Equipment .......... 10.7
Construction & Housing ..... 2.2
Consumer Durable ............ 10.9
Consumer Nondurable ........ 3.5
Electric & Electronics ..... 6.0
Energy Sources .............. 2.6
Financial Services ........ 5.9%
Health Care ................ 4.2
Materials ................... 7.7
Merchandising ............... 6.5
Multi-Industry .............. 9.6
Real Estate ................ 2.5
Services .................... 4.8%
Telecommunications .......... 3.0
Transportation .............. 1.4
Other assets ................ 4.6
-----
Total Net Assets 100.0%
=====
The Notes to Financial Statements are an integral part of this statement.
6
<PAGE>
Lexington International Fund, Inc.
Statement of Assets and Liabilities
December 31, 1995
<TABLE>
<S> <C>
Assets
Investments in securities, at value (cost $16,502,444) (Note 1) .......................... $17,345,999
Cash ..................................................................................... 221,332
Receivable for investment securities sold ................................................ 378,680
Receivable for shares sold ............................................................... 1,160
Dividends and interest receivable ........................................................ 29,593
Foreign taxes recoverable ................................................................ 16,304
Deferred organization expenses, net (Note 1) ............................................ 31,462
Unrealized gain on open forward contracts (Note 7) ....................................... 318,123
-----------
Total Assets ..................................................................... 18,342,653
-----------
Liabilities
Due to Lexington Management Corporation (Note 2) ......................................... 13,990
Payable for investment securities purchased .............................................. 246,702
Accrued expenses ......................................................................... 39,411
Distributions payable .................................................................... 187,911
-----------
Total Liabilities ................................................................ 488,014
-----------
Net Assets (equivalent to $10.60 per share on 1,685,127 shares outstanding) (Note 4) ..... $17,854,639
===========
Net Assets consist of:
Capital stock-authorized 1,000,000,000 shares,
$.001 par value per share .............................................................. $ 1,685
Additional paid-in capital (Note 1) ...................................................... 16,804,291
Distributions in excess of net investment income (Note 1) ................................ (172,849)
Accumulated net realized gains on investments and foreign currency holdings (Note 1) ..... 59,544
Net unrealized appreciation of investments and foreign currency holdings ................. 1,161,968
-----------
$17,854,639
===========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
7
<PAGE>
Lexington International Fund, Inc.
Statement of Operations
Year ended December 31, 1995
<TABLE>
<S> <C> <C>
Investment Income
Dividends ......................................................... $ 375,996
Interest .......................................................... 74,579
---------
450,575
Less: foreign tax expense ......................................... 44,496
---------
Total investment income ..................................... 406,079
Expenses
Investment advisory fee (Note 2) ................................ 173,563
Accounting and shareholder services
expenses (Note 2) ............................................. 38,562
Custodian and transfer agent expenses ........................... 62,809
Printing and mailing ............................................ 31,734
Directors' fees and expenses .................................... 11,199
Audit and legal ................................................. 23,854
Registration fees ............................................... 23,860
Distribution expenses (Note 3) .................................. 36,785
Computer expense ................................................ 8,234
Other expenses .................................................. 5,895
Amortization of deferred organization
expenses (Note 1) ............................................. 9,613
---------
Total expenses ................................................ 426,108
---------
Net investment loss ....................................... (20,029)
Realized and Unrealized Gain on Investments (Note 5)
Net realized gain on:
Investments ................................................... 01,068
Foreign currency transactions ................................. 410,566
---------
Net realized gain ........................................... 511,634
Net change in unrealized appreciation on :
Investments ................................................... 254,843
Foreign currency translations of other assets and liabilities . 245,504
---------
Net change in unrealized appreciation ....................... 500,347
---------
Net realized and unrealized gain ............................ 1,011,981
---------
Increase in Net Assets Resulting from Operations .................. $ 991,952
=========
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
8
<PAGE>
Lexington International Fund, Inc.
Statements of Changes in Net Assets
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Net investment loss .................................................. $(20,029) $(142,947)
Net realized gain from investments and foreign currency
transactions ....................................................... 511,634 168,702
Increase in unrealized appreciation of investments and
foreign currency holdings .......................................... 500,347 661,621
----------- -----------
Net increase in net assets resulting from operations ............. 991,952 687,376
Distributions to shareholders from net investment income ............ (398,985) (168,702)
Distributions to shareholders in excess of net investment
income (Note 1) .................................................... (172,849) -
Distributions to shareholders from net realized gains from
security transactions (Note 1) ..................................... (33,076) (195,096)
Increase (decrease) in net assets from capital share transactions
(Note 4) ........................................................... (375,760) 17,519,779
----------- -----------
Net increase in net assets ....................................... 11,282 17,843,357
Net Assets:
Beginning of period ................................................ 17,843,357 -
----------- -----------
End of period (including distributions in excess of net investment
income of $172,849 for the year ended December 31, 1995)
(Note 1) ......................................................... $17,854,639 $17,843,357
=========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
9
<PAGE>
Lexington International Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994
1. Significant Accounting Policies
Lexington International 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 through investment in common stocks and equivalents of companies
demiciled in foreign countries. The Fund commenced operations on January 3,
1994. The following is a summary of significant accounting policies followed by
the Fund in the preparation of its financial statements:
Investments Security transactions are accounted for on a trade date basis.
Realized gains and losses from 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 Position 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 $338,043 have been
reclassified from accumulated net realized gain on investments to additional
paid-in capital. In addition, $419,014 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 $142,947 have been reclassified from
undistributed net investment income to distributions in excess of net realized
gains 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.
Deferred Organization Expenses Organization expenses aggregating $48,067
have been deferred and are being amortized on a straight-line basis over five
years.
10
<PAGE>
Lexington International Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
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.
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. Distribution Plan
The Fund has 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 Fund Distributors, 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 year ended December 31,
1995 were $36,785 and are set forth in the statement of operations.
4. 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 .......................... 179,998 $1,853,463 2,131,458 $21,962,295
Shares issued to shareholders on
reinvestment of dividends .......... 39,453 417,018 34,849 360,333
-------- ---------- --------- -----------
219,451 2,270,481 2,166,307 22,322,628
Shares redeemed ...................... (255,544) (2,646,241) (445,087) (4,802,849)
-------- ---------- --------- -----------
Net increase (decrease) .............. (36,093) $(375,760) 1,721,220 $17,519,779
======== ========== ========= ===========
</TABLE>
5. 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 $23,899,160 and
$21,660,731, 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
$1,682,160 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 $520,192.
11
<PAGE>
Lexington International Fund, Inc.
Notes to Financial Statements
December 31, 1995 and 1994 (continued)
6. 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 the result of the potential inability
of counterparties to meet the terms of their contracts.
7. Forward Foreign Exchange Contracts
At December 31, 1995, the Fund was committed to sell foreign currencies under
the following forward foreign exchange contracts:
Unrealized
Settlement Contract Contract Current Gain at
Currency Date Amount Rate Rate 12/31/95
-------- ---------- -------- -------- ------- ----------
Deutsche Mark ............. 05/06/96 $ 862,844 1.4064 1.4287 $ 13,468
Japanese Yen .............. 01/31/96 494,204 86.1500 102.8915 80,412
Japanese Yen .............. 02/14/96 906,297 90.4200 102.6844 108,246
Japanese Yen .............. 02/20/96 476,290 94.2900 102.5956 38,558
Japanese Yen .............. 02/20/96 447,220 95.3300 102.5956 31,671
Japanese Yen .............. 03/06/96 886,852 98.3200 102.3453 34,885
Japanese Yen .............. 06/28/96 1,070,933 99.8450 100.8701 10,883
--------
$318,123
========
12
<PAGE>
Lexington International Fund, Inc.
Financial Highlights
Selected per share data for a share outstanding throughout the period:
Year ended December 31,
1995 1994
----------- -------------
Net asset value, beginning of period .................. $10.37 $10.00
------ ------
Income (loss) from investment operations:
Net investment loss ................................. (.01) (.08)
Net realized and unrealized gain on investments ..... .61 .67
------ ------
Total income from investment operations ............. .60 .59
------ ------
Less distributions:
Dividends in excess of net investment income
(temporary book-tax difference) ................... (.35) -
Distributions from net realized capital gains ....... (.02) (.10)
Distributions in excess of net realized capital gains
(temporary book-tax difference) ................... - (.12)
------ ------
Total distributions ................................. (.37) (.22)
------ ------
Net asset value, end of period ........................ $10.60 $10.37
====== ======
Total return .......................................... 5.77% 5.87%
Ratio to average net assets:
Expenses ............................................ 2.46% 2.39%
Net investment loss ................................. (.12%) (.94%)
Portfolio turnover .................................... 137.72% 100.10%
Net assets at end of period (000's omitted) ........... $17,855 $17,843
13
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Lexington International Fund, Inc.:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington International
Fund, Inc. as of December 31, 1995, and the related statements of operations for
the year then ended, and the statement of changes in net assets and the
financial highlights for the year then ended and for the period from January 3,
1994 (commencement of operations) to December 31, 1994. 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 International Fund, Inc. as of December 31, 1995, and the results of
its operations for the year then ended, and changes in its net assets and the
financial highlights for the year then ended and for the period from January 3,
1994 to December 31, 1994, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
New York, New York
January 29, 1996
14
<PAGE>
(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.
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
(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.
<PAGE>
(Left Column)
Lexington
International 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 International 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
INTERNATIONAL
FUND, INC.
(filled box)
Seeks long-term growth of capital,
primarily through investment in
common stocks of companies
domiciled in foreign countries.
(filled box)
ANNUAL REPORT
DECEMBER 31, 1995
The Lexington Group
of No Load
Investment Companies
------------------------------------
