Dear Shareholders:
- --------------------------------------------------------------------------------
The price of gold bullion was $293.80 an ounce on June 30, 1998. It began
1998 at $289.05 an ounce. The Lexington Strategic Investments Fund, Inc.
finished the fiscal year ended June 30, 1998 with a decline of 38.40%* versus
the 34.97% decline for the average gold fund monitored by Lipper Analytical
Services, Inc.
As the most recent quarter ended, a change was made in the portfolio
management team. Robert Radsch, the Portfolio Manager and a member of the
natural resources investment team, left Lexington. The Fund will continue to be
managed by other members of that team, which include Robert M. DeMichele,
President, and James Vail.
Throughout the year gold suffered from a litany of woes that included
seemingly endless central bank sales, record lending of gold to producers, Far
Eastern gold sales and concern over the soon to be constituted European Central
Bank. Talk of $250 an ounce gold dissipated, as it became clear that the
European Central Bank would indeed hold gold bullion in its reserves, probably
in excess of 15%. It also began to appear likely that the further sales of gold
bullion by individual European Central Banks would not be a factor for the rest
of the year.
The Fund was also impacted by the consolidation taking place in the South
African gold mining industry in which the Fund is concentrated. The South
African industry, the world's largest producer of gold, is seeking to maintain
its annual production at between 15 and 16 million ounces through the year 2001.
Faced with lower gold prices, the South African industry has reorganized in
order to lower costs and boost productivity to hold a production decline that
began in the 1960's.
The Fund is investing in selective opportunities in gold mining shares
around the world as well as investments in other natural resources commodities
such as palladium. At December 31, 1997 the Fund held a 2% position in palladium
bullion. This investment represented a unique precious metal opportunity due to
its increasing use in catalytic converters and the reduction of stockpile
supplies. Russia is the largest supplier of palladium followed by South Africa.
As a result of suspended palladium shipments from Russia, the price of this
bullion spurted to a twelve year high. With Russia about to begin shipping
palladium the prospect of sharp price declines made the sale of this position
imperative for the Fund. The Fund realized a substantial gain from this sale.
However, the gain, when coupled with the lack of gains generated by its gold
equity positions, generated more than 10% of the Fund's gross income. To qualify
as a regulated investment company, under IRS rules, a Fund is required to
generate at least 90% of its gross income from the sale of stock or securities
or other qualifying income. If a Fund does not meet this criteria, then the Fund
incurs a tax at both the Fund level and at the shareholder level when the net
gains and income are distributed. This is an annual test and the decision to
sell the palladium was based upon the investment rationale for what was
perceived to be a rapidly deteriorating investment situation for palladium.
Palladium continues to trade with high price volatility. The net result is that
despite taxation at the Fund level, the Fund achieved a net gain on this
transaction.
As we look forward, the outlook for gold bullion has improved. It appears
that the new European Central Bank will have a significant position of its
reserves in gold, but not as high as we would have liked. It also appears that
strict limits on further Central Bank sales will be imposed by the stronger
members of the new governing council. Finally, the deficit of gold production
versus fabrication appears to have been seriously understated due to a major
1
<PAGE>
underestimation of gold loans. With a change in sentiment and perception, the
huge short position (including sales by producers) may create a severe squeeze,
particularly should the new European Central Bank decide to increase rates on
gold bullion. The expectation of gradual improvement in markets around the world
should bode well for gold.
Sincerely,
/s/Robert M. DeMichele
----------------------
Robert M. DeMichele
President
August, 1998
[GRAPHIC OMITTED]
* -41.98%, -13.88% and -8.37% are the one year, five year and since commencement
(1/2/92) average annual standard total returns, respectively, for the period
ended June 30, 1998. Prior to January, 1992, the Fund was managed by a
different investment advisor. 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 and
is not predictive of future results.
2
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENT OF NET ASSETS
(Including the Portfolio of Investments)
June 30, 1998
<TABLE>
<CAPTION>
Number of Value
Shares Security (Note 1)
- ------------ ----------------------------------------------------------------------- -----------
<S> <C> <C>
COMMON STOCKS: 88.7%
CANADA: 6.7%
40,000 Barrick Gold Corporation ............................................. $ 767,500
50,000 Etruscan Resources, Inc.1 ............................................. 133,624
100,000 Golden Knight Resources, Inc.1 ....................................... 56,442
50,000 Namibian Minerals Corporation1 ....................................... 116,406
30,000 Sutton Resources, Ltd.1 ............................................. 170,345
----------
1,244,317
----------
GHANA: 1.4%
31,969 Ashanti Goldfields Company, Ltd. (GDR) .............................. 259,748
----------
SOUTH AFRICA: 74.5%
15,000 Anglo American Corporation of South Africa, Ltd. ..................... 509,336
68,954 Anglo American Platinum Corporation, Ltd. ........................... 755,096
95,727 AngloGold, Ltd. ...................................................... 3,884,308
5,795 AngloGold, Ltd. (ADR) ................................................ 117,572
447,918 Avgold, Ltd.1 ......................................................... 277,571
750,000 Avmin, Ltd. ......................................................... 445,669
150,000 Barnato Exploration, Ltd.1 .......................................... 158,531
125,000 Driefontein Consolidated, Ltd. ....................................... 651,526
262,080 Durban Roodepoort Deep, Ltd.1 ....................................... 578,443
154,480 Durban Roodepoort Deep, Ltd. (Options)1 .............................. 65,569
33,700 Durban Roodepoort Deep, Ltd. (Warrants)1 .............................. 12,473
400,000 Eastvaal Gold Holdings, Ltd.1 ....................................... 366,722
269,343 Evander Gold Mines, Ltd.1 ............................................. 594,473
116,000 Gencor, Ltd. ......................................................... 180,203
30,500 Gold Fields of South Africa, Ltd. .................................... 352,121
178,229 Gold Fields, Ltd.1 ................................................... 756,487
230,630 Harmony Gold Mining, Ltd.1 .......................................... 959,324
28,000 Impala Platinum Holdings, Ltd. ....................................... 240,067
49,731 JCI, Ltd. ............................................................ 260,475
200,000 New East Daggafontein Mines, Ltd. .................................... 161,290
179,600 New Wits, Ltd. ...................................................... 327,792
29,200 PGM Investments, Ltd. ................................................ 14,873
186,700 Randfontein Estates Gold Mining Company Witwatersrand, Ltd.1 ......... 399,391
22,451 Randfontein Estates Gold Mining Company Witwatersrand, Ltd. (Options)1 12,579
324,500 Randgold and Exploration Company, Ltd.1 .............................. 247,919
7,000 Samancor, Ltd. ...................................................... 29,711
75,000 Sasol, Ltd. ......................................................... 437,393
175,900 St. Helena Gold Mines, Ltd. .......................................... 373,301
</TABLE>
3
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENT OF NET ASSETS
(Including the Portfolio of Investments)
June 30, 1998 (continued)
<TABLE>
<CAPTION>
Number of
Shares
or
Principal Value
Amount Security (Note 1)
- ------------ -------------------------------------------------------------------- -----------
<S> <C> <C>
SOUTH AFRICA (continued):
200,000 West Rand Consolidated Mines, Ltd.1 .............................. $ 174,872
157,900 Western Areas Gold Mining Company, Ltd.1 ........................... 509,352
-----------
13,854,439
-----------
UNITED STATES: 6.1%
75,000 Homestake Mining Company .......................................... 778,125
15,000 Newmont Mining Corporation ....................................... 354,375
-----------
1,132,500
-----------
TOTAL COMMON STOCKS
(cost $35,977,845) ................................................ 16,491,004
-----------
SHORT-TERM INVESTMENT: 10.8%
U.S. Government Agency Obligation
$2,000,000 Federal Home Loan Bank, 5.40%, due 07/01/98 (cost $2,000,000) ...... 2,000,000
-----------
TOTAL INVESTMENTS: 99.5%
(cost $37,977,845+) (Note 1)........................................ 18,491,004
Other assets in excess of liabilities: 0.5% ........................ 93,322
-----------
TOTAL NET ASSETS: 100.0% (equivalent to $1.08 per share on
17,130,312 shares outstanding) .................................... $18,584,326
===========
</TABLE>
ADR-American Depository Receipt.
GDR-Global Depository Receipt.
1 Non-income producing security.
+ Aggregate cost for Federal income tax purposes is $38,592,639.
The Notes to Financial Statements are an integral part of this statement.
4
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $37,977,845) (Note1) .................................... $ 18,491,004
Cash ................................................................................. 271,624
Due from Lexington Management Corporation (Note 2) .................................... 21,561
Receivable for shares sold ............................................................ 167,567
Dividends and interest receivable ................................................... 16,945
Foreign taxes recoverable ............................................................ 13,920
------------
Total Assets ..................................................................... 18,982,621
------------
LIABILITIES
Payable for shares redeemed ......................................................... 189,669
Income taxes payable (Note 1) ......................................................... 140,825
Accrued expenses ..................................................................... 67,801
------------
Total Liabilities .................................................................. 398,295
------------
NET ASSETS (equivalent to $1.08 per share on 17,130,312 shares outstanding) (Note 3) $ 18,584,326
============
NET ASSETS consist of:
Capital stock-authorized 1,000,000,000 shares, $.001 par value per share ............ $ 17,139
Additional paid in capital (Notes 1 and 6) .......................................... 69,310,863
Distributions in excess of net investment income (Note 1) ........................... (34,909)
Accumulated net realized loss on investments and foreign currency holdings
(Notes 1 and 6) ..................................................................... (31,219,905)
Unrealized depreciation on investments and foreign currency holdings .................. (19,488,862)
------------
TOTAL NET ASSETS .................................................................. $ 18,584,326
============
NET ASSET VALUE, REDEMPTION PRICE PER SHARE .......................................... $1.08
=====
Offering price per share (100/94.25 of $1.08 adjusted to nearest cent) ............... $1.15
=====
</TABLE>
The Notes to Financial Statements are an integral part of this statement.
5
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENT OF OPERATIONS
Year ended June 30, 1998
INVESTMENT INCOME
Dividends ........................ $ 965,757
Interest ........................... 92,187
------------
1,057,944
Less: foreign tax expense ......... 4,694
------------
Total investment income ......... $ 1,053,250
Expenses
Investment advisory fee
(Note 2) ........................ 240,211
Transfer agent and
shareholder servicing
expenses (Note 2) ............... 179,680
Printing and mailing
expenses ........................ 89,196
Custodian expenses ............... 48,108
Accounting expenses (Note 2) ...... 33,981
Professional fees .................. 30,317
Registration fees .................. 25,108
Directors' fees and expenses ...... 16,936
Computer processing fees ......... 7,748
Other expenses ..................... 47,724
------------
Total expenses .................. 719,009
Less: expenses recovered
under contract with
investment adviser
(Note 2) ..................... 118,355
------------
Total net expenses ............... 600,654
Investment income before
income tax expense. ............ 452,596
Income tax expense (Note 1) . 140,825
------------
Net investment income ............ 311,771
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS (NOTE 4)
Net realized loss on:
Investments ..................... (5,167,512)
Foreign currency transactions (26,364)
------------
Net realized loss ............... (5,193,876)
Net change in unrealized
depreciation on:
Investments ..................... (4,726,503)
Foreign currency
translation of other
assets and liabilities ......... (1,629)
------------
Net change in unrealized
depreciation .................. (4,728,132)
------------
Net realized and
unrealized loss ............... (9,922,008)
------------
DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................. $ (9,610,237)
============
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
Years ended June 30, 1998 and 1997
1998 1997
------------ -------------
Net investment income ............... $ 311,771 $ 604,454
Net realized loss from
investments and foreign
currency transactions ............ (5,193,876) (564,051)
Net change in unrealized
depreciation of investments
and foreign currency
translation ..................... (4,728,132) (19,330,979)
------------ -------------
Net decrease in
net assets resulting
from operations ............... (9,610,237) (19,290,576)
Distributions to shareholders
from net investment income ...... (345,646) (768,498)
Decrease in net assets from
capital share transactions
(Note 3) ........................ (2,663,286) (6,901,652)
------------ -------------
Net decrease in
net assets .................. (12,619,169) (26,960,726)
NET ASSETS:
Beginning of period ............... 31,203,495 58,164,221
------------ -------------
Endof period (including
distributions in excess of net
investment income of
$34,909 and undistributed
net investment income of
$152,145, 1998 and 1997,
respectively) .................. $ 18,584,326 $ 31,203,495
============ =============
The Notes to Financial Statements are an integral part of these statements.
6
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 and 1997
1. SIGNIFICANT ACCOUNTING POLICIES
Lexington Strategic Investments Fund, Inc. (the "Fund") is an open-end
non-diversified management investment company registered under the Investment
Company Act of 1940, as amended. The Fund's investment objective is capital
appreciation. The investment concentration is currently in the common stock of
gold and other precious metals mining companies located primarily in South
Africa. The following is a summary of significant accounting policies followed
by the Fund in the preparation of its financial statements:
INVESTMENTS Securities 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 prices is used. Securities traded on the over-the-counter market and
bullion are valued at the mean between the last current bid and asked prices.
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 are no forward
foreign currency exchange contracts outstanding at June 30, 1998.
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. For
the year ended June 30, 1998, the Fund did not qualify as a regulated investment
company as the Fund's qualifying gross income did not equal or exceed 90% of its
total gross income. As a result, the Fund accrued a tax liability at June 30,
1998, of $140,825. The difference between the combined Federal and state
statutory income tax rate of 43% and the effective tax rate of 31.1% is
primarily attributable to the corporate dividends received deduction available
to the Fund. Management anticipates the Fund will qualify as a regulated
investment company in fiscal 1999 and, as a result, will not be subject to
Federal and state corporate income taxes.
7
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 and 1997 (continued)
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 are determined in accordance with income tax regulations that may
differ from generally accepted accounting principles. At June 30, 1998,
reclassifications were made to the Fund's capital accounts to reflect permanent
book/tax differences and income and gains available for distribution under
income tax regulations. Net investment income, net realized gains and net assets
were not affected by this change.
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 and
disclosure of contingent 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 an annual rate of 1.00% of the Fund's average daily net assets up to
$30 million and at an annual rate of 0.75% thereafter. For 1998, LMC has
voluntarily agreed to limit the total expenses of the Fund (including management
fees, but excluding interest, taxes, brokerage commissions and extraordinary
expenses) to an annual rate of 2.50% of the Fund's average daily net assets.
Total reimbursement was $118,355 for the year ended June 30, 1998, and is set
forth in the statement of operations.
The Fund reimburses LMC for certain expenses, including accounting and
shareholder servicing costs of $43,788, which are incurred by the Fund, but paid
by LMC.
3. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
Year ended
==================================================================
June 30, 1998 June 30, 1997
------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Shares Amount Shares Amount
----------- ------------- ----------- --------------
Shares sold .............................. 43,277,982 $ 56,943,518 40,011,394 $ 99,573,956
Shares issued on reinvestment of dividends 245,887 312,276 304,025 681,017
----------- ------------- ----------- --------------
43,523,869 57,255,794 40,315,419 100,254,973
Shares redeemed ........................... (43,887,327) (59,919,080) (43,519,439) (107,156,625)
----------- ------------- ----------- --------------
Net decrease ........................... (363,458) $ (2,663,286) (3,204,020) $ (6,901,652)
=========== ============= =========== ==============
</TABLE>
8
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 and 1997 (continued)
4. PURCHASES AND SALES OF INVESTMENT SECURITIES
The cost of purchases and proceeds from sales of securities for the year ended
June 30, 1998, excluding short-term securities, were $21,930,769 and
$25,137,668, respectively.
At June 30, 1998, the aggregate gross unrealized appreciation for all securities
in which there is an excess of value over tax cost amounted to $25,051 and
aggregate gross unrealized depreciation for all securities in which there is an
excess of tax cost over value amounted to $20,126,686.
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, all of which could affect the market and/or credit risk of the
investments.
In addition to the risks described above, risks may arise from forward foreign
currency contracts as a result of the potential inability of counterparties to
meet the terms of their contracts.
6. FEDERAL INCOME TAXES--CAPITAL LOSS CARRYFORWARDS
As of June 30, 1998, $13,348,932 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, 1998,
are:
$ 1,703,574 expiring in 1999;
14,932,782 expiring in 2000;
591,575 expiring in 2001;
753,540 expiring in 2002;
2,902,447 expiring in 2003;
4,076,418 expiring in 2004;
518,308 expiring in 2005; and
5,190,797 expiring in 2006.
To the extent any future capital gains are offset by these losses, such gains
may not be distributed to shareholders.
1 Temporary book-tax differences of $550,464 are the result of losses generated
from wash sales.
9
<PAGE>
LEXINGTON STRATEGIC INVESTMENTS FUND, INC.
FINANCIAL HIGHLIGHTS
Selected per share data for a share outstanding throughout the period:
<TABLE>
<CAPTION>
Year ended June 30,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $1.78 $2.81 $2.51 $2.48 $2.30
----- ----- ----- ----- -----
Income (loss) from investment operations:
Net investment income ..................... 0.02 0.03 0.02 0.04 0.04
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions ..................... (0.70) (1.02) 0.31 0.03 0.18
------ ----- ----- ----- -----
Total income (loss) from investment
operations. .............................. (0.68) (0.99) 0.33 0.07 0.22
------ ----- ----- ----- -----
Less distributions from net investment
income .................................... (0.02) (0.04) (0.03) (0.04) (0.04)
------ ----- ----- ----- -----
Net asset value, end of period. ............ $1.08 $1.78 $2.81 $2.51 $2.48
====== ===== ===== ===== =====
Total return* .............................. (38.40)% (35.51)% 13.02% 2.47% 9.26%
Ratio to average net assets:
Expenses, before reimbursement
or waivers .............................. 3.58% 1.93% 1.77% 1.70% 1.76%
Expenses, net of reimbursement or
waivers ................................. 3.09% 1.93% 1.77% 1.70% 1.76%
Net investment income, before
reimbursement or waivers .................. 0.81% 1.24% 0.44% 1.54% 2.00%
Net investment income ..................... 1.30% 1.24% 0.44% 1.54% 2.00%
Portfolio turnover rate ..................... 94.47% 85.10% 84.44% 115.91% 25.66%
Average commissions paid on equity
security transactions** .................. $ 0.02 $0.01 $ 0.03 -- --
Net assets, end of period (000's omitted) . $ 18,584 $31,203 $58,164 $94,059 $73,500
</TABLE>
* Sales load is not reflected in total return.
** In accordance with SEC disclosure guidelines, the average commissions are
calculated for the periods beginning with the year ended June 30, 1996, but
not for prior periods.
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, 1998, and the related statements of
operations for the year ended, changes in net assets for each of the years in
the two-year period then ended and the financial highlights for each of the
years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted on 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, 1998, by correspondence with the custodian. 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, 1998, the results of
its operations for the year then ended, the changes in its net assets for each
of the years in the two-year period then ended, and the financial highlights for
each of the years in the five-year period then ended, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
New York, New York
August 10, 1998
11
<PAGE>
LEXINGTON
STRATEGIC INVESTMENTS FUNDS, 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
Outside U.S. (201) 845-7300
- ---------------------------------------------------------
This report has been prepared for the information of
the shareholders of Lexington Ramirez Global Income
Fund 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.
L E X I N G T O N
[GRAPHIC OMITTED]
LEXINGTON
STRATEGIC
INVESTMENTS
FUND, INC.
----------------------------
Seeks capital appreciation.
The Fund's investments
are concentrated in the
common stock of gold
and other precious metals
mining companies and bullion.
-----------------------------
ANNUAL REPORT
JUNE 30, 1998
