DEAR SHAREHOLDERS:
- --------------------------------------------------------------------------------
MAJORITY OF THE REGION ENJOYED GAINS IN 1996
Most Asian stock markets enjoyed double-digit gains in 1996. This
performance is attributable to overseas liquidity, particularly in the latter
half of the year, but more importantly, it re-affirms the importance of Asia's
solid economic fundamentals. Lexington Crosby Small Cap Asia Growth Fund was up
25.50%* for the one year period ended December 31, 1996, as compared to a rise
of 9.97% for the unmanaged Morgan Stanley Capital International All Country Far
East ex-Japan Index. The stock markets in Greater China showed the strongest
gains. Following a few quarters of weak growth, the Hong Kong economy picked up
in the second quarter with a year-on-year GDP growth of 4.3%, compared with 3.3%
in the first quarter. The confidence level of the public improved significantly,
supported by stable unemployment data, a strong recovery in property prices and
conciliatory signs offered by the Chinese authorities. As we expected, these
resulted in a re-rating in the Hong Kong stock market, which rose 33.5%. The red
chips, such as China Resources, Guangnan and Guangzhou Investment, were
particularly strong, fueled by the improving Chinese economy, as the inflation
rate declined and economic growth fell to more sustainable levels. The `H'
shares recovered strongly in December and ended the year 29.5% higher. The
Shanghai `B' Share Index closed up 40.5% and the Shenzhen `B' Share Index up
145%. Across the straits, Taiwan rose 34%, buoyed by lower interest rates and
economy recovery.
Elsewhere, the stock markets in Malaysia, Indonesia and the Philippines
rose between 22 - 24% during the year. With a mild easing on the monetary front,
improvement in the trade balance and with inflationary pressures under control,
the Malaysian market regained investors' interest. Likewise, the ability of the
Indonesian government to engineer a soft landing in 1996, following two years of
economic upswing, has resulted in a 50% surge in the trade surplus in the first
eight months of 1996 and attracted a wave of foreign investment. In the first
quarter of 1996, realized foreign direct investment totaled US$2 billion,
compared with US$4.4 billion in 1995. In the Philippines, the accelerating
momentum of the economy and the Ramos administration's commitment to structural
economic reform, such as oil price liberalization, the introduction of VAT and
the Comprehensive Tax Reform package, continue to provide a boost to
international investor confidence.
However, both Thailand and Korea continued to suffer from their respective
structural economic problems, high interest rates and deteriorating current
account deficits. The Korean bourse fell 26% for the year and Thailand by 35%.
The Singapore stock market declined 2%, as growth projections were repeatedly
revised downward, mainly due to the slowing in the electronics industry.
STOCK SELECTION KEY TO 1997 STRATEGY
We continue to stress the importance of stock selection for effective
investment in the Asian stock markets. We believe that our disciplined,
"growth-with-value", research-based investment process which focuses on certain
key investment criteria, will result in superior long-term performance. The
continued divergence in both the performance of regional bourses and within
individual markets implies than an active and focused stock selection strategy,
when coupled with a top-down approach, will continue to prove successful.
Overweight positions will be maintained in the Greater China stock markets
of Hong Kong, Taiwan and China despite their out-performance in 1996, since the
positive factors outlined above continue to be valid. Our optimism toward the
increasing regionalization of Singapore companies and the bottoming in the
electronics cycle, coupled with attractive valuations, means that the Fund will
be overweight in this market. We are positive on the long-term economic outlook
for the Philippines, which will also be overweighted.
1
<PAGE>
While we are comfortable with Indonesia, we believe that a neutral
weighting is sufficient, given concerns about political risk. We have moved the
Fund's overall Malaysia exposure to an underweight stance since there is a
downside risk to earnings, resulting from high interest rates and overheating
pressures; however, attractive investment opportunities in key sectors of the
economy continue to be identified. With regard to Thailand, the major laggard of
1996, we expect that improving economic fundamentals in 1997 will mean that the
Fund's significant underweight position will be increased at the expense of
reduced exposure to the Greater China region. Korea offers the Fund similar
opportunities. Elsewhere, India is attractive on a valuation basis and the lack
of structural economic reform has largely been discounted in share prices. The
Fund will seek exposure in this market when attractive opportunities become
available.
Sincerely,
/s/ Nigel Webber /s/ Christina Lam /s/ Robert M. DeMichele
- ------------------ ------------------ -----------------------
Nigel Webber Christina Lam Robert M. DeMichele
Portfolio Manager Portfolio Manager President
February, 1997 February, 1997 February, 1997
CHART/BEGIN
Printed version of this shareholder report contains a
graphic chart indicating the comparison of change in
value of a $10,000 investment in Lexington Crosby
Small Cap Asia Growth Fund, the unmanaged Morgan
Stanley Capital International (EAFE) Index and the
unmanaged Morgan Stanley Capital Intgernational All
Country Far East ex-Japan Index from 6/30/95 through
12/31/96.
CHART/END
* 25.50% and 14.66% are the one year and since commencement (7/3/95) average
annual standard total return for the period ended December 31, 1996.
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 their
original cost. Total return represents past performance and is not predictive
of future results.
2
<PAGE>
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1996
NUMBER OF VALUE
SHARES SECURITY (NOTE 1)
- --------------------------------------------------------------------------------
COMMON STOCK: 98.8%
CHINA: 1.8%
430,000 Eastern Communications1 ................... $ 382,700
140,000 Shandong Xinhua
Pharmaceutical Company1 ................... 41,629
-----------
424,329
-----------
HONG KONG: 52.3%
2,088,000 Anhui Expressway Company, Ltd.1 ........... 587,124
74,000 Cheung Kong (Holdings), Ltd. .............. 657,725
298,000 Cheung Kong Infrastructure Holdings1 ...... 789,787
1,120,000 China Resources Beijing Land1 ............. 709,503
554,000 China Resources Enterprise, Ltd. .......... 1,246,232
1,388,000 China Travel International
Investment Hong Kong, Ltd. .............. 614,596
110,000 Citic Pacific, Ltd. ....................... 638,527
1,000,000 Guangdong Kelon Electrical
Holdings Company, Ltd. .................. 646,413
960,000 Guangnan Holdings ......................... 825,340
1,700,000 Guangzhou Investment Company, Ltd. ........ 813,187
56,800 Hang Seng Bank, Ltd. ...................... 690,265
65,000 Henderson Land Development
Company, Ltd. ........................... 655,463
614,000 Kwong Sang Hong International, Ltd. ....... 325,456
720,000 Midland Realty Holdings, Ltd. ............. 660,892
111,000 New World Development Company, Ltd......... 749,806
198,000 Shanghai Industrial Holdings, Ltd.1 ....... 721,862
1,150,000 Sinocan Holdings, Ltd. .................... 564,965
1,358,000 Theme International Holdings, Ltd. ........ 553,032
-----------
12,450,175
-----------
INDONESIA: 5.5%
265,000 PT Ramayana Lestari Sentosa1 .............. 572,063
564,866 PT Steady Safe ............................ 723,267
-----------
1,295,330
-----------
MALAYSIA: 19.0%
65,000 Cahya Mata Sarawak Bhd .................... 571,371
291,000 Cold Storage (Malaysia) Bhd ............... 430,939
22,000 Eastern Oxygen Bhd ........................ 111,502
142,000 Ekran Bhd ................................. 595,999
59,000 Gadek (Malaysia) Bhd ...................... 459,057
48,000 Gadek (Malaysia) Bhd (Warrants)1 .......... 182,458
235,000 Granite Industries Bhd1 ................... 400,118
56,000 Hock Seng Lee Bhd1 ........................ 853,690
99,000 Perusahaan Otomobil Nasional Bhd .......... 627,201
174,000 Wembley Industries Holdings Bhd1 .......... 290,746
-----------
4,523,081
-----------
PHILIPPINES: 1.1%
1,415,000 Asian Terminals,Inc ....................... 255,561
-----------
SINGAPORE: 14.7%
650,000 Advanced Systems Automation, Ltd.1 ........ 659,842
686,000 Delifrance Asia, Ltd.1 .................... 563,976
713,000 Lindeteves-Jacoberg, Ltd.1 ................ 667,728
46,000 Oversea-Chinese Banking Corporation, Ltd... 572,197
713,000 Roly International Holdings ............... 520,490
193,000 Want Want Holdings1 ....................... 507,590
-----------
3,491,823
-----------
SOUTH KOREA: 3.2%
41,750 Samsung Corporation1 ...................... 493,791
2,740 Shinhan Bank .............................. 37,268
12,320 Shinwon Corporation ....................... 240,426
-----------
771,485
-----------
THAILAND: 1.2%
383,300 National Petrochemical Plc ................ 295,248
-----------
TOTAL COMMON STOCK
(cost $19,310,751) ...................... 23,507,032
-----------
CALL OPTION: 0.8%
TAIWAN: 0.8%
43,000 BZW Taiwan Call Warrant 22.7 due 11/97
(cost $ 206,830)1 (Note 7) .............. 185,760
-----------
TOTAL INVESTMENTS: 99.6%
(cost $19,517,581+) (Note 1) ............ 23,692,792
-----------
Other assets in excess
of liabilities: 0.4% .................... 103,680
-----------
TOTAL NET ASSETS: 100.0%
(equivalent to $12.24 per share on
1,943,484 shares outstanding) ........... $23,796,472
===========
1 Non-income producing security.
+ Aggregate cost for Federal income tax purposes is identical.
3
<PAGE>
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
STATEMENT OF NET ASSETS
(INCLUDING THE PORTFOLIO OF INVESTMENTS)
December 31, 1996 (continued)
At December 31, 1996, the composition of the Fund's net assets by industry
concentration was as follows:
Banking ................... 5.5%
Capital Equipment ......... 6.8
Construction & Housing .... 6.9
Consumer Durable .......... 10.1
Consumer Nondurable ....... 9.3
Energy Sources ............ 0.5
Health & Personal Care .... 0.2
Holding Companies/
Diversified ............ 2.2
Materials ................. 7.3
Merchandising ............. 2.4
Multi-Industry ............ 8.9
Real Estate ............... 24.5
Services .................. 4.1
Telecommunications ........ 1.6
Trade ..................... 3.5
Transportation ............ 5.0
Other Assets .............. 1.2
-----
Total Net Assets ........ 100.0%
=====
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C> <C>
Investments, at value (cost $19,517,581) (Note1) ................................................ $ 23,692,792
Cash ............................................................................................ 2,767,950
Receivable for shares sold ...................................................................... 302,279
Dividends and interest receivable ............................................................... 21,816
Deferred organization expense, net (Note 1) ..................................................... 48,446
Other receivables ............................................................................... 12,985
------------
Total Assets ......................................................................... $ 26,846,268
------------
LIABILITIES
Due to Lexington Management Corporation (Note 2) ................................................ 24,564
Payable for investment securities purchased ..................................................... 1,270,072
Payable for shares redeemed ..................................................................... 1,724,553
Distributions payable ........................................................................... 1,463
Accrued expenses ................................................................................ 29,144
------------
Total Liabilities .................................................................... 3,049,796
------------
NET ASSETS (equivalent to $12.24 per share on 1,943,484 share outstanding) (Note 3) ............. $ 23,796,472
============
NET ASSETS consist of:
Capital stock--authorized 1,000,000,000 shares,
$.001 par value per share ..................................................................... $ 1,943
Additional paid in capital (Note 1) ............................................................. 20,159,332
Distributions in excess of net investment income (Note 1) ....................................... (22,305)
Accumulated net realized loss on investments and foreign currency transactions (Notes 1 and 6) .. (517,491)
Unrealized appreciation on investments and foreign currency transactions ........................ 4,174,993
------------
Total Net Assets ..................................................................... $ 23,796,472
============
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
4
<PAGE>
LEXINGTON CROSBY SMALL CAP
ASIA GROWTH FUND, INC.
STATEMENT OF OPERATIONS
Year ended December 31, 1996
INVESTMENT INCOME
Dividends ........................... $ 263,294
Interest ............................ 59,541
-----------
322,835
Less: foreign tax expense ........... 27,073
-----------
Total investment income ...... $ 295,762
EXPENSES
Investment advisory fee (Note 2) . 207,247
Printing and mailing expenses .... 51,816
Custodian expense ................ 50,183
Transfer agent and shareholder
servicing expense (Note 2) ..... 34,281
Registration fees ................ 22,924
Directors' fees and expenses ..... 16,845
Professional fees ................... 15,815
Accounting expenses (Note 2) ..... 13,791
Amortization of deferred
organization costs (Note 1) .... 13,522
Computer processing fees ......... 7,279
Other expenses ................... 4,952
-----------
Total expenses ................. 438,655
Less: expenses recovered under
contract with investment
adviser (Note 2) ........... 36,717 401,938
----------- -----------
Net investment loss .......... (106,176)
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (NOTE 4)
Net realized loss on:
Investments .................. (293,018)
Foreign currency
transactions ............... (41,686)
-----------
Net realized loss .......... (334,704)
Net change in unrealized
appreciation on:
Investments .................... 4,045,260
Foreign currency translations of
other assets and liabilities . 31
-----------
Net change in unrealized
appreciation ................ 4,045,291
-----------
Net realized and
unrealized gain ............. 3,710,587
-----------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ......... $ 3,604,411
===========
LEXINGTON CROSBY SMALL CAP
ASIA GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
JULY 3, 1995
(COMMENCEMENT
YEAR ENDED OF OPERATIONS)
DECEMBER 31, TO DECEMBER 31,
1996 1995
------------ -----------
Net investment income (loss) ............ $ (106,176) $ 14,754
Net realized loss from investments
and foreign currency transactions .... (334,704) (222,515)
Net change in unrealized
appreciation of investments and
foreign currency translations ........ 4,045,291 129,702
------------ -----------
Increase (decrease) in net
assets resulting from
operations ..................... 3,604,411 (78,059)
Distributions to shareholders from
net investment income ................ -- (18,581)
Distributions to shareholders in
excess of net investment income
(Note 1) ............................. 14,172 --
------------ -----------
Increase in net assets from capital
share transactions (Note 3) .......... 11,270,269 9,032,604
------------ -----------
Net increase in net assets ....... 14,860,508 8,935,964
NET ASSETS:
Beginning of period .................. 8,935,964 --
------------ -----------
End of period (including
distributions in excess of net
investment income of $57,727
and $1,869, respectively.) ......... $ 23,796,472 $ 8,935,964
============ ===========
5
<PAGE>
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
1. SIGNIFICANT ACCOUNTING POLICIES
Lexington Crosby Small Cap Asia Growth 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 capital appreciation through investment in common stocks and
equivalents of companies domiciled in the Asia region with a market
capitalization of less than $1 billion. The Fund commenced operations on July 3,
1995. 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 investment transactions are reported on the
identified cost basis. Securities traded on a recognized stock exchange are
valued at the last sales price reported by the exchange on which the securities
are traded. If no sales price is recorded, the mean between the last bid and
asked price is used. Securities traded on the over-the-counter market are valued
at the mean between the last current bid and asked price. Short-term securities
having a maturity of 60 days or less are stated at amortized cost, which
approximates market value. Securities for which market quotations are not
readily available and other assets are valued by Fund management in good faith
under the direction of the Fund's Board of Directors. All investments quoted in
foreign currencies are valued in U.S. dollars on the basis of the foreign
currency exchange rates prevailing at the close of business. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Interest
income, adjusted for amortization of premiums and accretion of discounts, is
accrued as earned.
FOREIGN CURRENCY TRANSACTIONS Foreign currencies (and receivables and
payables denominated in foreign currencies) are translated into U.S. dollar
amounts at current exchange rates. Translation gains or losses resulting from
changes in exchange rates and realized gains and losses on the settlement of
foreign currency transactions are reported in the statement of operations. In
addition, the Fund may enter into forward foreign exchange contracts in order to
hedge against foreign currency risk in the purchase or sale of securities
denominated in foreign currency. The Fund may also enter into such contracts to
hedge against changes in foreign currency exchange rates on portfolio positions.
These contracts are marked to market daily, by recognizing the difference
between the contract exchange rate and the current market rate as unrealized
gains or losses. Realized gains or losses are recognized when contracts are
closed and are reported in the statement of operations. There were no forward
foreign exchange contracts outstanding at December 31, 1996.
FEDERAL INCOME TAXES It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to "regulated investment
companies" and to distribute all of its taxable income to its shareholders.
Therefore, no provision for Federal income taxes is required.
DISTRIBUTIONS Dividends from net investment income and net realized
capital gains are normally declared and paid annually, but the Fund may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code. The character of income and gains to
be distributed is determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. At December 31, 1996,
reclassifications were made to the Fund's capital accounts to reflect permanent
book/tax differences and income and gains available for distributions under
income tax regulations. Net investment income, net realized gains and net assets
were not affected by this change.
DEFERRED ORGANIZATION EXPENSES Organization expenses aggregating $67,351
have been deferred and are being amortized on a straight-line basis over five
years.
6
<PAGE>
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (continued)
USE OF ESTIMATES The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATE
The Fund pays an investment advisory fee to Lexington Management Corporation
("LMC") at the rate of 1.25% of average daily net assets. In connection with
providing investment advisory services, LMC has entered into a sub-advisory
contract with Crosby Asset Management (U.S.), Ltd. ("Crosby") under which Crosby
provides the Fund with investment management services. Pursuant to the terms of
the sub-advisory contract between LMC and Crosby, LMC pays Crosby a monthly
sub-advisory fee at the annual rate of 0.625% of the Fund's average daily net
assets. LMC agreed to voluntarily limit the total expenses of the Fund
(excluding interest, taxes, brokerage commissions and extraordinary expenses but
including management fee and operating expenses) to an annual rate of 1.75% of
the Fund's average net assets through April 30, 1996. Thereafter, the investment
advisory contract provides that the total annual expenses of the Fund 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. Reimbursement for the year ended December 31, 1996
amounted to $36,717 and is set forth in the statement of operations.
The Fund also reimburses LMC for certain expenses, including accounting
and shareholder servicing costs of $23,449 which were incurred by the Fund, but
paid by LMC.
3. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
July 3, 1995
Year ended (commencement of operations)
December 31, 1996 to December 31, 1995
------------------------------ ----------------------------
Shares Amount Shares Amount
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Shares sold ................. 2,376,604 $ 26,361,583 1,003,607 $ 9,916,274
Shares issued on reinvestment
of dividends .............. 1,043 11,526 1,372 13,320
----------- ------------ ---------- -----------
2,377,647 26,373,109 1,004,979 9,929,594
Shares redeemed ............. (1,349,951) (15,102,840) (89,191) (896,990)
----------- ------------ ---------- -----------
Net increase ................ 1,027,696 $ 11,270,269 915,788 $ 9,032,604
========= ============ ========== ===========
</TABLE>
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from sales of securities for the year ended
December 31, 1996, excluding short-term securities, were $40,707,997 and
$28,513,862, respectively.
At December 31, 1996, the aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost amounted to
$4,828,790 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over value amounted to $653,797.
7
<PAGE>
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (continued)
5. INVESTMENT AND CONCENTRATION RISKS
The Fund's investments in foreign securities may involve risks not present in
domestic investments. Since foreign securities may be denominated in a foreign
currency and involve settlement and pay interest or dividends in foreign
currencies, changes in the relationship of these foreign currencies to the U.S.
dollar can significantly affect the value of the investments and earnings of the
Fund. Foreign investments may also subject the Fund to foreign government
exchange restrictions, expropriation, taxation or other political, social or
economic developments, all of which could affect the market and/or credit risk
of the investments.
In addition to the risks described above, risks may arise from forward
foreign currency contracts as the result of the potential inability of
counterparties to meet the terms of their contracts.
6. FEDERAL INCOME TAXES--CAPITAL LOSS CARRYFORWARDS
Capital loss carryforwards available for Federal income tax purposes as of
December 31, 1996 are approximately:
$224,473 expiring in 2003; and
$293,018 expiring in 2004.
To the extent any future capital gains are offset by these losses, such gains
may not be distributed to shareholders.
7. OPTION CONTRACTS
Premiums paid when call options are purchased by the Fund, represent
investments, which are marked-to-market daily. When a purchased option expires,
the Fund will realize a loss in the amount of the premium paid. When the Fund
enters into a closing sales transaction, the Fund will realize a gain or loss
depending on whether the proceeds from the closing sales transaction are greater
or less than the premiums paid for the option. When the Fund exercises a call
option, the cost of the security which the Fund purchases upon exercise will be
increased by the premium originally paid.
The following call option transactions occurred during the year ended December
31, 1996:
Call Options
----------------------------------
Number of
Cost Shares Optioned
---------- --------------
Outstanding at December 31, 1995 -- --
Options purchased $ 314,000 467,500
Options closed (107,170) (3,500)
--------- -------
Outstanding at December 31, 1996 $ 206,830 43,000
========= =======
8
<PAGE>
LEXINGTON CROSBY SMALL CAP ASIA GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
JULY 3, 1995
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31, DECEMBER 31,
1996 1995
------------- -----------------
<S> <C> <C>
Net asset value, beginning of period ............................ $ 9.76 $10.00
------- ------
Income (loss) from investment operations:
Net investment income (loss) .................................. (0.05) 0.02
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ..................... 2.54 (0.24)
------- ------
Total income (loss) from investment operations ................ 2.49 (0.22)
------- ------
Less distributions:
Distributions from net investment income ...................... (0.01) --
------- ------
Net asset value, end of period .................................. $12.24 $9.76
======= ======
Total return .................................................... 25.50% (4.39)%*
Ratio to average net assets:
Expenses, before reimbursement or waivers ....................... 2.64% 3.51%*
Expenses, net of reimbursement or waivers ....................... 2.42% 1.75%*
Net investment (loss), before reimbursement or waivers .......... (0.86%) (1.24)%*
Net investment income (loss) .................................... (0.64%) 0.52%*
Portfolio turnover rate ......................................... 178.82% 40.22%*
Average commission paid on equity security transactions** ....... $0.004 --
Net assets, end of period (000's omitted) ....................... $23,796 $8,936
======= ======
</TABLE>
* Annualized
** In accordance with recent SEC disclosure guidelines, the average commission
paid in equity security transactions is calculated for the current period,
but not for the prior period.
9
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Lexington Crosby Small Cap Asia Growth Fund, Inc.:
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Crosby Small
Cap Asia Growth Fund, Inc. as of December 31, 1996, the related statements of
operations for the year then ended, the statement of changes in net assets and
the financial highlights for the year then ended and for the period from July 3,
1995 (commencement of operations) to December 31, 1995. 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, 1996 by correspondence with the custodian. As to securities
purchased but not received, we performed other appropriate auditing procedures.
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 Crosby Small Cap Asia Growth Fund, Inc. as of December 31, 1996, 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
July 3, 1995 to December 31, 1995, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
New York, New York
February 14, 1997
10
<PAGE>
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.
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 TROIKA DIALOG RUSSIA FUND, INC.--Seeks long term capital appreciation
through investments primarily in equity securities of Russian companies.
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.
11
<PAGE>
LEXINGTON
CROSBY SMALL CAP ASIA GROWTH FUND, INC.
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
LEXINGTON MANAGEMENT CORPORATION
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
SUB-ADVISER
- --------------------------------------------------------------------------------
CROSBY ASSET MANAGEMENT (US), INC.
c/o Crosby Asset Management (Hong Kong) Limited
32/F Asia Pacific Tower
Citibank Plaza
3 Garden Road
Hong Kong
DISTRIBUTOR
- --------------------------------------------------------------------------------
LEXINGTON FUNDS DISTRIBUTOR, INC.
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
- --------------------------------------------------------------------------------
ALL SHAREHOLDER REQUESTS FOR SERVICES OF
ANY KIND SHOULD BE SENT TO:
TRANSFER AGENT
- --------------------------------------------------------------------------------
STATE STREET BANK AND
TRUST COMPANY
c/o National Financial Data Services
1004 Baltimore
Kansas City, Missouri 64105
OR CALL TOLL FREE:
SERVICE AND SALES: 1-800-526-0056
24 HOUR ACCOUNT INFORMATION:
1-800-526-0052
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(800) 526-0052
"LEXLINE"
24 hour toll-free telephone access to your
Lexington Fund account
Price/Yield o Account Balances o Exchanges o
Last Transactions o Total Return o Duplicate Statements
- --------------------------------------------------------------------------------
This report has been prepared for the information of the shareholders of
Lexington Crosby Small Cap Asia Growth Fund, Inc. and is authorized for
distribution to the public only if it is accompanied or preceded by a currently
effective prospectus which sets forth expenses and other material information.
- --------------------------------------------------------------------------------
LEXINGTON
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO]
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.
- --------------------------------------------------------------------------------
ANNUAL REPORT
DECEMBER 31, 1996
The Lexington Group
of NO LOAD
Investment Companies
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