Left Col.
Dear Shareholder:
- --------------------------------------------------------------------------------
During the first six months of 1995 the price of gold bullion traded within
a narrow range and finished the period with a negligible advance of 0.42%. A
brief decline at the beginning of the period to $371.50 an ounce, down from the
opening price of $383.00, brought forth strong physical demand, especially from
the Far East, and a moderate uptrend began seeing gold bullion finish the period
at $384.60.
The gold shares reflected this lackluster performance of gold bullion and
the unmanaged Financial Times World Gold Mines Index was down 2.45% for the
period. However, the South African gold shares significantly underperformed
their North American and Australian counterparts with the unmanaged Johannesburg
All Gold Index down 27.5%. Although the South African gold mines were noticeably
inexpensive in terms of gold reserves in the ground, the costs of extracting
those reserves ballooned after several years of good cost control, the local
price of gold was impeded by a strong commercial rand, and fears of a
devastating strike emerged. Costs were impacted by a fall in production during
the first quarter of 11% compared with the year before. This fall in production
resulted from a sharp increase in public holidays, scattered work disruptions at
individual mines and lower grades. Profitability was devastated, down 32% from
the December quarter. Lexington Strategic Investments Fund had a -18.45%* total
return for the period compared with a 2.85% total return for the 39 gold funds
monitored by Lipper Analytical Services, Inc., due to its heavy concentration in
South African gold shares. It is worth noting that the Fund's performance was
considerably better for the period than the unmanaged Johannesburg All Gold
Index and also that the total return for the twelve month period through June
30, 1995, was 2.87%* compared with an average total return for the Lipper gold
fund universe of 0.98%.
During the period, Lexington Strategic Investments Fund significantly pared
its holdings in the South African gold shares most directly affected by the
severe cost pressures. The proceeds have been placed into gold and platinum
bullion which should benefit from any production disruptions should a strike
materialize and which can be redeployed into the South African gold shares as
conditions improve. Within South Africa, more defensive companies have been
emphasized.
There have been some recent indications that things may improve. Both
management and labor recognize that the industry is in difficulty and that a
fundamental reorganization is needed. Without change, unprofitable mines will
have to be closed down, an unpalatable prospect for union leadership as well as
for the government which faces high unemployment throughout the country and
which is eager
Right Col.
to generate the foreign reserves that come with strong gold production.
Fortunately, there exist areas for substantial productivity improvements. South
Africa is unique in not allowing the mines to operate on Sundays other than for
basic maintenance with the result that the industry is losing 18% of the
calendar year in terms of production. In addition, significantly greater
productivity within the mines is possible with more flexible work practices
permitting the mining teams to share the work more effectively and with less
time wasted going to and from the stopes and waiting around while various manual
tasks are performed. Finally, allowing noncontiguous mines to merge would permit
the development of reserves on a tax sheltered basis.
Management has become more clearly focused on what is needed to improve
productivity and costs while the National Union of Mine Workers has stated its
intention of settling this year knowing full well the hardships a strike would
bring to its membership. Given the low valuations of the shares, a successful
conclusion to the negotiations would have a dramatic impact on share prices of
the South African gold mines. We are, therefore, hopeful that Lexington
Strategic Investments Fund will resume the strong outperformance it has shown
since the beginning of 1993 after a period of deep pessimism regarding the South
African gold mining industry.
Also included in this annual report to shareholders is a summary of the
results of the shareholder meeting held on April 19, 1995. All of the proposals
were approved by a majority of shareholders.
We appreciate your continued support and welcome the opportunity to discuss
any questions you may have about your investment.
Sincerely,
Robert W. Radsch Robert M. DeMichele
Portfolio Manager President
July, 1995 July, 1995
*-3.38% and 6.88% are the one year and since commencement (1/2/92) average
annual standard total returns, respectively, for the period ended June 30, 1955.
Prior to January, 1992 the Fund was managed by a different investment adviser.
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. These calculations include the maximum 5.75% initial sales charge
and assume reinvestment of dividends and capital gains at net asset value. Total
return represents past performance.
1
<PAGE>
Comparison of change in value of a $10,000 investment in
Lexington Strategic Investments Fund, Inc.,
the S&P 500 and Gold Bullion (London Spot - US Dollar)
$16,000
$14,422
$14,000
$12,622
$12,000
$11,028
$10,000
$9,412
Average Annual Total Returns for the
$8,000 Period Ended 6/30/95
________________________________________________________________
Fund Index Legend One Year Since Inception (1/2/92)*
________________________________________________________________
$6,000 Lexington Strategic (3.38%) 6.88%
Investment Fund
________________________________________________________________
$4,000 S&P 500 26.03% 11.03%
________________________________________________________________
Gold Bullion ----- (0.32%) 2.84%
$2,000 ________________________________________________________________
1/2/92 6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/30/94 6/30/95
This graph, prepared in accordance with SEC regulations, compares a $10,000
investment in the Fund, including the maximum sales charge (5.75%) made at its
inception, with a similar investment in the Standard & Poor's 500 Stock Index
("S&P 500") and a direct investment in gold bullion. Results for the Fund and
the S&P 500 include the reinvestment of all dividend and capital gain
distributions. The price of gold is subject to substantial price fluctuations
over short periods of time and may be affected by unpredictable international
monetary and political policies. The performance illustration for the more
narrowly defined comparison (gold bullion) utilized a Comex futures contract
which expired in August, 1994. We are therefore including for this and future
reports a comparison based on the spot price of gold bullion that is readily
available to investors on a daily basis. A review of the performance for the
previous index and the current spot prices based index shows little difference
in the price of gold bullion quoted.
*The original inception date for the Fund was May 13, 1974. Prior to December,
1991 the Fund was managed by a different investment advisor. Investment results
for periods prior to that date are not shown in the graph. The Per Share Income
and Capital Changes Table in the Fund's prospectus contains performance data
that relates to prior periods. 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 performance.
2
<PAGE>
Results of Annual Meeting of Shareholders held April 19, 1995 (unaudited)
Total Outstanding Shares as of February 1, 1995: 36,324,374
1. Directors Elected: Robert M. DeMichele, Beverley C. Duer, Barbara R. Evans,
Lawrence Kantor, Donald B. Miller, Francis Olmsted, John G. Preston, Margaret
W. Russell, Philip C. Smith and Francis A. Sunderland
<TABLE>
<CAPTION>
Votes Votes
Votes For Against Abstained
--------- ------- ---------
<S> <C> <C> <C>
2.Selection of KPMG Peat Marwick LLP as Independent Auditors .......... 16,292,338 691,767 2,030,594
3.Amendment to fundamental restriction concerning senior securities ... 15,365,124 1,495,229 2,154,345
4.Amendment to fundamental restriction concerning diversification ..... 15,498,048 1,433,718 2,082,932
5.Elimination of fundamental restriction concerning securities of
other investment companies ......................................... 15,342,801 1,542,057 2,129,840
6.Elimination of fundamental restriction concerning securities of
issuers in operation less than three (3) years ..................... 15,277,720 1,597,469 2,139,509
7.Amendment to fundamental restriction concerning borrowing ........... 14,886,729 2,000,907 2,127,062
8.Amendment to fundamental restriction concerning underwriting ........ 15,579,730 1,293,959 2,141,00
9.Elimination of fundamental restriction concerning restricted and
illiquid securities ................................................ 14,944,388 1,911,441 2,158,870
10.Amendment to fundamental restriction concerning real estate ......... 15,186,189 1,722,706 2,105,803
11.Elimination of fundamental restriction concerning securities of
affiliates ......................................................... 15,251,468 1,601,599 2,161,630
12.Amendment to fundamental restriction concerning lending ............. 14,934,511 1,901,386 2,178,800
13.Elimination of fundamental restriction concerning margin and
short sales ........................................................ 14,873,722 2,033,752 2,107,224
14.Elimination of fundamental restriction concerning puts and calls .... 14,899,501 1,978,306 2,136,890
15.Elimination of fundamental restriction concerning investment for
control ............................................................ 15,545,764 1,346,521 2,122,412
16.Amendment to fundamental restriction concerning investment in
oil, gas and minerals .............................................. 15,453,631 1,493,594 2,067,472
17.Amendment to fundamental restriction concerning commodity
contracts .......................................................... 15,046,636 1,843,303 2,124,759
</TABLE>
3
<PAGE>
Lexington Strategic Investments Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 1995
<TABLE>
<CAPTION>
Number of
Shares or
Principal Value
Amount Security (Note 1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
BULLION: 15.6%
GOLD BULLION: 10.5%
25,588 fine ounces*.......................................................$ 9,837,399
PLATINUM BULLION: 5.1%
10,996 fine ounces*....................................................... 4,796,456
-----------
TOTAL BULLION (cost $14,869,194) ......................................... 14,633,855
-----------
GOLD MINING COMMON STOCKS: 79.9%
Ghana Gold Mining Shares: 2.3%
93,000 Ashanti Goldfields (ADR) ................................................. 2,162,250
-----------
South African Gold Mining Shares: 73.0%
868,800 Beatrix Mines, Ltd. (ADR) ................................................ 6,152,233
165,000 Beatrix Mines, Ltd. ...................................................... 1,168,845
2,138,600 Deelkraal Gold Mining Company, Ltd. (ADR) ................................ 1,793,644
1,910,800 Doornfontein Gold Mining Company, Ltd. (ADR)*............................. 1,313,675
65,000 Driefontein Consolidated, Ltd. (ADR) ..................................... 905,938
164,700 Driefontein Consolidated, Ltd. ........................................... 2,424,057
168,500 Durban Roodeport Deep, Ltd. (ADR)*........................................ 1,575,492
771,100 East Rand Gold & Uranium Company, Ltd. (ADR) ............................. 1,929,677
3,311,000 Eastern Transvaal Consolidated, Ltd. (ADR) ............................... 3,368,943
63,600 Elandsrand Gold Mining Company, Ltd. (ADR) ............................... 306,075
150,000 Elandsrand Gold Mining Company, Ltd.*..................................... 722,146
223,400 Freestate Consolidated Gold Mines, Ltd. (ADR) ............................ 2,764,575
87,125 Freestate Consolidated Gold Mines, Ltd. .................................. 1,114,529
925,000 Gencor Ltd. .............................................................. 3,180,880
664,300 Grootvlei Proprietary Mines, Ltd. (ADR) .................................. 1,379,219
200,000 Grootvlei Proprietary Mines, Ltd. ........................................ 415,406
433,300 Harmony Gold Mining, Ltd. (ADR)*.......................................... 3,425,800
50,000 Hartebeestfontein Gold Mining Company, Ltd. .............................. 180,193
400,000 H. J. Joel Mining Company, Ltd.*.......................................... 324,622
159,700 Kinross Mines, Ltd. (ADR) ................................................ 1,273,623
233,000 Kloof Gold Mining Company, Ltd. .......................................... 2,660,110
1,000,000 Lebowa Platinum Mines, Ltd.*.............................................. 1,100,412
244,500 Leslie Gold Mines, Ltd. (ADR) ............................................ 1,630,547
60,400 Leslie Gold Mines, Ltd. .................................................. 80,589
671,700 Loraine Gold Mines, Ltd.*................................................. 2,679,408
313,200 Northam Platinum Holdings, Ltd.* .......................................... 495,433
45,400 Randfontein Estates, Gold Mining Company Witwatersrand, Ltd. (ADR) ....... 302,763
187,400 Randfontein Estates, Gold Mining Company Witwatersrand, Ltd. ............. 1,250,193
</TABLE>
4
<PAGE>
Lexington Strategic Investments Fund, Inc.
Statement of Net Assets
(Including the Portfolio of Investments)
June 30, 1995 (continued)
<TABLE>
<CAPTION>
Number of
Shares or
Principal Value
Amount Security (Note 1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
South African Gold Mining Shares (continued):
998,200 Randgold and Exploration Company, Ltd.*................................... $ 2,883,384
30,000 Rustenburg Platinum Holdings, Ltd. (ADR) ................................. 618,759
341,700 St. Helena Gold Mines Ltd. (ADR) ......................................... 2,989,875
10,000 St. Helena Gold Mines Ltd.*............................................... 90,784
1,429,622 Target Exploration Company, Ltd.*......................................... 1,966,468
359,700 Unisel Gold Mines, Ltd. (ADR) ............................................ 939,717
126,000 Unisel Gold Mines, Ltd. .................................................. 320,633
35,700 Vaal Reefs Exploration & Mining Company, Ltd. ............................ 2,288,336
770,000 Western Areas Gold Mining Company, Ltd. (ADR) ............................ 8,787,702
18,400 Western Areas Gold Mining Company, Ltd.*.................................. 210,068
193,200 Winkelhaak Mines, Ltd. (ADR) ............................................. 1,434,529
26,000 Winkelhaak Mines, Ltd. ................................................... 193,122
-----------
68,642,404
-----------
United Kingdom Gold Mining Shares: 4.6%
1,851,000 Lonrho Plc (ADR) ......................................................... 4,358,180
-----------
TOTAL COMMON STOCKS:
(cost $81,203,900) ...................................................... 75,162,834
-----------
CONVERTIBLE DEBENTURES: 1.0%
$352,822 Target Exploration Company, Ltd., 11.25% due 1/1/1997 (cost $497,083) ... 970,624
-----------
SHORT-TERM INVESTMENTS: 4.2%
4,000,000 U.S. Treasury Bills 5.375% due 09/21/95 (cost $3,951,028) ................ 3,951,028
-----------
TOTAL INVESTMENTS: 100.7% (cost $100,521,205\'86) (Note 1) ............... 94,718,341
Liabilities in excess of other assets: (0.7%) ............................ (659,627)
-----------
TOTAL NET ASSETS: 100.0% (equivalent to $2.51 per share
on 37,400,881 shares outstanding) ....................................... $94,058,714
===========
<FN>
* Non-income producing securities.
ADR - American Depository Receipt.
(D)Aggregate cost for Federal income tax purposes is identical.
</FN>
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
Lexington Strategic Investments Fund, Inc.
Statement of Assets and Liabilities
June 30, 1995
<TABLE>
<S> <C>
Assets
Investments, at value (cost $100,521,205) (Note 1) .................................... $ 94,718,341
Cash .................................................................................. 924,698
Receivable for investment securities sold ............................................. 40,135
Receivable for shares sold ............................................................ 107,011
Dividends and interest receivable ..................................................... 282,273
Deferred reorganization expenses, net (Note 1) ........................................ 42,106
------------
Total Assets ...................................................................... 96,114,564
------------
Liabilities
Due to Lexington Management Corporation (Note 2) ...................................... 68,171
Payable for investment securities purchased ........................................... 690,262
Payable for shares redeemed ........................................................... 1,107,814
Accrued expenses ...................................................................... 189,603
------------
Total Liabilities ................................................................. 2,055,850
------------
Net Assets (equivalent to $2.51 per share on 37,400,881 shares outstanding) (Note 3) .. $ 94,058,714
============
Net Assets consist of:
Capital stock-authorized 1,000,000,000 shares, $.001 par value per share .............. $ 37,401
Additional paid-in capital (Note 1) ................................................... 166,629,601
Undistributed net investment income (Note 1) .......................................... 772,732
Accumulated net realized loss on investments (Notes 1 and 6) .......................... (67,578,568)
Net unrealized depreciation of investments ............................................ (5,802,452)
...................................................................................... $ 94,058,714
============
Net Asset Value, redemption price per share ........................................... $2.51
=====
Offering price per share (100/94.25 of $2.51 adjusted to nearest cent) ................ $2.66
=====
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
6
<PAGE>
(Left column)
Lexington
Strategic Investments Fund, Inc.
Statement of Operations
Year ended June 30, 1995
Investment Income
Income
Dividends............................ $ 4,086,252
Interest............................. 309,061
-----------
4,395,313
Less: foreign tax expense............ 817,031
-----------
Total investment income............ $ 3,578,282
Expenses
Investment advisory fees
(Note 2)........................... 902,569
Accounting and shareholder
services expenses (Note 2)......... 165,279
Custodian and transfer agent
expenses........................... 419,732
Printing and mailing................. 151,405
Directors' fees and expenses......... 11,821
Audit and legal...................... 28,473
Registration fees.................... 96,393
Amortization of deferred
reorganization expenses
(Note 1)........................... 28,088
Computer processing fees............. 22,612
Other expenses....................... 52,773
-----------
Total expenses..................... 1,879,145
-----------
Net investment income............ 1,699,137
Realized and Unrealized Loss
on Investments (Note 4)
Realized loss on investments
(excluding short-term securities):
Proceeds from sales................. 119,338,296
Cost of securities sold............. 124,277,343
-----------
Net realized loss................. (4,939,047)
Unrealized depreciation
of investments:
End of period....................... (5,802,452)
Beginning of period................. (4,154,965)
-----------
Change during period.............. (1,647,487)
-----------
Net realized and unrealized
loss on investments............. (6,586,534)
-----------
Decrease in Net Assets Resulting
from Operations....................... $(4,887,397)
===========
(Right column)
Lexington
Strategic Investments Fund, Inc.
Statements of Changes in Net Assets
Years ended June 30, 1995 and 1994
1995 1994
----------- -----------
Net investment income......................... $ 1,699,137 $ 1,306,963
Net realized loss from
security transactions....................... (4,939,047) (6,775,796)
Increase (decrease) in unrealized
appreciation (depreciation)
of investments.............................. (1,647,487) 8,850,021
----------- -----------
Net increase (decrease) in
net assets resulting
from operations......................... (4,887,397) 3,381,188
Distributions to shareholders
from net investment income.................. (1,662,361) (1,063,935)
Increase in net assets from
capital share transactions
(Note 3).................................... 27,108,968 27,366,122
----------- -----------
Net increase in net assets.............. 20,559,210 29,683,375
Net Assets
Beginning of period......................... 73,499,504 43,816,129
----------- -----------
End of period (including
undistributed net investment
income of $772,732 and
$702,433, respectively)................... $94,058,714 $73,499,504
=========== ===========
The Notes to Financial Statements are an integral part of these statements.
7
<PAGE>
Lexington Strategic Investments Fund, Inc.
Notes to Financial Statements
June 30, 1995 and 1994
1. Significant Accounting Policies
Lexington Strategic Investments Fund, Inc. (the "Fund") is an open end
diversified management investment company registered under the Investment
Company Act of 1940, as amended. 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 national securities exchange are
valued at the closing price or, in the absence of a recorded sale, at the mean
between the last reported bid and asked price. Securities traded on the
over-the-counter market and silver bullion are valued at the mean between the
last reported bid and asked price. Short-term securities 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.
Dividend income 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
settled and are reported in the statement of operations. There were no foreign
currency exchange contracts outstanding at June 30, 1995.
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 Reorganization Expenses Reorganization expenses aggregating
$140,435 have been deferred and are being amortized on a straight line basis
over five years.
Distributions Effective January 1, 1993, the Fund adopted 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 June 30, 1995, book and tax basis differences amounting to
$11,002 have been reclassified from undistributed net investment income to
additional paid-in capital. In addition, $22,521 was reclassified from
accumulated net realized loss to undistributed net investment income.
8
<PAGE>
Lexington Strategic Investments Fund, Inc.
Notes to Financial Statements
June 30, 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 an annual rate of 1% of the Fund's average daily net assets up to $30
million and at an annual rate of .75% thereafter. 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. The investment advisory
fee is set forth in the accompanying statement of operations. No reimbursement
was required for the year ended June 30, 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. Capital Stock
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Year ended Year ended
June 30, 1995 June 30, 1994
-------------------------- -------------------------
Shares Amount Shares Amount
----------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................. 106,249,102 $313,690,114 83,027,947 $199,877,283
Shares issued on reinvestment of dividends... 461,700 1,417,415 333,055 905,910
----------- ------------ ---------- ------------
106,710,802 315,107,529 83,361,002 200,783,193
Shares redeemed.............................. (98,974,867) (287,998,561) (72,746,955) (173,417,071)
----------- ------------ ---------- ------------
Net increase................................. 7,735,935 $ 27,108,968 10,614,047 $ 27,366,122
----------- ------------ ---------- ------------
</TABLE>
4. Purchases and Sales of Investment Securities
The cost of purchases and proceeds from sales of securities for the year ended
June 30, 1995, excluding short term securities, were $146,914,291 and
$119,338,296, respectively.
At June 30, 1995, the aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost amounted to $10,219,816, and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value amounted to $16,022,268.
5. Investment and Concentration Risks
The Fund makes significant investments in foreign securities and has a policy of
investing in precious metals and in the securities of companies engaged in the
exploration, mining, processing, fabrication and distribution of natural
resources. There are certain risks involved in investing in foreign securities
or concentrating in specific industries that are in addition to the usual risks
inherent in domestic investments. These risks include those resulting from
potentially adverse political and economic developments as well as the possible
imposition of foreign exchange or other foreign governmental restrictions or
laws.
9
<PAGE>
Lexington Strategic Investments Fund, Inc.
Notes to Financial Statements
June 30, 1995 and 1994 (continued)
6. Federal Income Taxes-Capital Loss Carryforwards
As of June 30, 1995, $28,080,557 of capital loss carryforwards have expired and
have been reclassified to additional paid-in capital. Capital loss
carryforwards1 available for federal income tax purposes as of June 30, 1995 are
approximately:
$13,839,966 expiring in 1996;
11,422,434 expiring in 1997;
13,348,932 expiring in 1998;
1,703,574 expiring in 1999;
14,932,782 expiring in 2000;
591,575 expiring in 2001;
753,540 expiring in 2002; and,
9,015,366 expiring in 2003.
To the extent any future capital gains are offset by these losses, such gains
would not be distributed to shareholders.
1Temporary book-tax differences of $1,970,399 are the result of losses generated
from wash sales.
Lexington Strategic Investments Fund, Inc.
Financial Highlights
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year ended June 30,
-------------------------------------------------
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $2.48 $2.30 $1.26 $2.54 $2.63
Income (loss) from investment operations:
Net investment income............................ .04 .04 .03 - .04
Net realized and unrealized gain (loss)
on investments................................. .03 .18 1.01 (1.27) (.04)
----- ----- ----- ----- -----
Total income (loss) from investment operations..... .07 .22 1.04 (1.27) .00
----- ----- ----- ----- -----
Less distributions:
Dividends from net investment income............. (.04) (.04) - (.01) (.09)
----- ----- ----- ----- -----
Net asset value, end of period..................... $2.51 $2.48 $2.30 $1.26 $2.54
===== ===== ===== ===== =====
Total return*...................................... 2.47% 9.26% 82.54% (50.14%) (0.17%)
Ratios to average net assets:
Expenses, before reimbursement................... 1.70% 1.76% 3.76% 2.82% 1.98%
Expenses, net of reimbursement................... 1.70% 1.76% 2.78% 2.50% 1.85%
Net investment income (loss), before
reimbursement.................................. 1.54% 2.00% 2.05% (0.10%) 1.51%
Net investment income.............................. 1.54% 2.00% 3.03% 0.22% 1.64%
Portfolio turnover................................. 115.91% 25.66% 4.80% 13.92% 12.48%
Net assets, end of period (000's omitted).......... $94,059 $73,500 $43,816 $14,402 $32,070
</TABLE>
**Sales load is not reflected in total return.
10
<PAGE>
Independent Auditors' Report
The Board of Directors and Shareholders
Lexington Strategic Investments Fund, Inc.
We have audited the accompanying statements of net assets (including the
portfolio of investments) and assets and liabilities of Lexington Strategic
Investments Fund, Inc. as of June 30, 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 four-year period then ended. The financial highlights for
the year ended June 30, 1991 was audited by other auditors whose report was
dated August 13, 1991. 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 June
30, 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 Strategic Investments Fund, Inc. as of June 30, 1995 and the results
of its operations for the year then ended, changes in its net assets for each of
the years in the two-year period then ended, and financial highlights for each
of the years in the four-year period then ended, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
July 31, 1995
11
<PAGE>
(left column)
Lexington Strategic
Investments 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
- ------------------------------------------
This report has been prepared for the
information of the shareholders of
Lexington Strategic Investments 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
STRATEGIC
INVESTMENTS
FUND, INC.
(filled box)
Seeks capital appreciation.
The Fund's investments
are concentrated in the
common stock of gold
and other precious metals
mining companies located
in the Republic of South Africa.
(filled box)
ANNUAL REPORT
JUNE 30, 1995
