September 1, 1998
LEXINGTON EMERGING MARKETS FUND, INC.
SUPPLEMENT TO
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1998
SUB-ADVISER
Lexington Mangement Corporation has entered into a Sub-Advisory
Agreement with Stratos Advisors, Inc. ("Stratos"). Stratos will provide
the Fund with investment advice and management of the Fund's investment
program. Stratos specializes in managing assets in emerging markets.
PORTFOLIO MANAGERS
The Fund will be managed by a portfolio management team
consisting of investment professionals from both Lexington and Stratos.
The lead managers will be Richard T. Saler, Alfredo M. Viegas and Mohammed
Zaidi.
Mr. Saler is Senior Vice President, Director of International
Investment Strategy at Lexington. Mr. Saler is responsible for
international investment analysis and portfolio management at
Lexington. He has twelve years of investment experience. Mr. Saler has
focused on international markets since first joining Lexington in
1986. In 1991 he was a strategist with Nomura Securities and rejoined
Lexington in 1992. Mr. Saler is a graduate of New York University with a
B.S. Degree in Marketing and an M.B.A. in Finance from New York
University's Graduate School of Business Administration.
Mr. Viegas is Chief Executive Officer and Senior Portfolio
Manager of Stratos. In 1995, Mr. Viegas established VZB Partners LLC
("VZB"), an emerging markets investment manager. Mr. Viegas is
responsible for corporate analysis and bottom-up research and has
concentrated on analyzing equity opportunities not only in emerging
markets but also in newly developing or frontier markets where quality of
publicly available information is scarce and direct research is
imperative. Prior to VZB, Mr. Viegas was Vice President and Latin America
Equity Strategist for emerging markets with Salomon Brothers from 1993
to 1995. From 1991 to 1993, Mr. Viegas was a research analyst with
Morgan Stanley. Mr. Viegas is a graduate of Wesleyan University with a
B.A. in Classics and Medieval History.
Mr. Zaidi is a Portfolio Manager at Stratos. Mr. Zaidi is
responsible for fundamental corporate analysis with a particular focus
on Asian and Middle Eastern Markets as well as the Risk Control
Officer. Mr. Zaidi has been a Portfolio Manager at VZB since 1997. Mr.
Zaidi was Chief Financial Officer and Partner at Paradigm Software, Inc.
from 1992 to 1995. Mr. Zaidi is a graduate of The University of
Pennsylvania with a B.S. in Economics from the Wharton School. Mr. Zaidi
also holds an M.B.A. in Finance from MIT Sloan School of Management.
DEBT SECURITIES
To the extent that the Fund's assets are not invested in emerging
country and emerging market equity securities, the remaining 35% of
the assets may be invested in (i) other equity securities without
regard to whether they qualify as emerging country or emerging market
equity securities, (ii) debt securities denominated in the currency
of an emerging market or issued or guaranteed by an emerging market
company or the government of an emerging country, and (iii) short-term
and medium-term debt securities of the type described below under
"Temporary Investments." The Fund's assets may be so invested in debt
securities when LMC believes that, based upon factors such as relative
interest rate levels and foreign exchange rates, such debt securities
offer opportunities for long-term growth of capital. It is likely that
many of the debt securities in which the Fund will invest will be
unrated. The Fund may invest in debt obligations rated below investment
grade or non-rated securities.
RISK CONSIDERATIONS
Lower-Quality Debt
The Fund may invest in high-yield, lower-rated debt securities. Lower-
rated debt securities are considered highly speculative and changes in
economic conditions or other circumstances are more likely to lead to a
weakened capacity to make principal and interest payments than with higher-
grade debt securities.
