Shell Variables!?

How do you pass a C or Korn shell variable to an xterm from another machine? To give you and example:

WRKST% rsh SERV
SERV% setenv DISPLAY WRKST:0.0
SERV% echo $DISPLAY
SERV% WRKST:0.0
SERV% xterm &
SERV% echo $DISPLAY #Done on the xterm
#window.
SERV% SERV:0.0 #Output of the xterm
#when you echo the
#$DISPLAY variable in
#the xterm window. I
#need it to show
#WRKST:0.0
Why wouldn't the DISPLAY global variable take effect in the sub-xterm? Same thing happens for the Korn shell's export. So there must be something I'm overlooking.