LEXINGTON GLOBAL TECHNOLOGY FUND INC
N-1A/A, 1999-12-20
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SEC File No. 333-89733
811-9649

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
   Pre-Effective Amendment No. 1                                                  X

   Post-Effective Amendment No.
         and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 1                    X

(Check appropriate box or boxes.)

LEXINGTON GLOBAL TECHNOLOGY FUND, INC.
----------------------------------------------------
(Exact name of Registrant as specified in Charter)

Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
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(Address of principal executive offices)

Registrant's Telephone Number: (201) 845-7300

Lisa Curcio, Secretary
LEXINGTON GLOBAL TECHNOLOGY FUND, INC.
Park 80 West Plaza Two, Saddle Brook, New Jersey 07663
-------------------------------------
(Name and address of agent for service)

With a copy to:
Carl Frischling, Esq.
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue, New York, New York 10022
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Approximate date of proposed public offering
As soon as practicable after the Registration Statement become effective
----------------------------------------------

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8 (a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 
(LOGO OF LEXINGTON)
Prospectus December 27, 1999
 
Lexington Global Technology Fund, Inc.
 
The Securities and Exchange Commission has not approved the shares of this Fund. The Securities and Exchange Commission also has not determined whether this Prospectus is accurate or complete. Any person who tells you that the Securities and Exchange Commission has made such an approval or determination is committing a crime.
The Lexington Funds®
 
 
 
Lexington Global Technology Fund
a series of Lexington Global Technology Fund, Inc.
 
 
Risk/Return Summary
 
  
Investment
Objective
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The Lexington Global Technology Fund’s investment objective is to seek long term growth of capital. This objective may not be changed without the approval of shareholders, and there is no assurance that the Fund will achieve its objective.
 
 
Investment
Strategy
The Fund seeks to achieve its objective by investing at least 80% of its total assets in equity securities or equity equivalents of technology or information infrastructure related companies. The Manager considers technology or information age companies to be in the following sectors: biotechnology, broadcasting and media content, computers, electronic components and equipment, electronic commerce and data services, data processing, information systems, internet, medical technology, networking, office automation, on-line services, semiconductors, semiconductor capital equipment, server hardware producers, software companies, telecommunications, telecommunications equipment and services, and companies involved in the distribution, servicing, science and development of these industries.
 
The Fund expects that such companies will be located within Africa, Asia, Europe, the Middle East and Latin America. However, the Fund is not limited to these countries and may invest in any country so long as it meets the Fund’s objective. Many of the regions in which the Fund will invest will include emerging market countries.
 
The Fund’s management uses a “bottom-up” approach in stock selection focusing on those companies that it believes have rising earnings expectations and rising valuations. The Fund seeks growth companies with long-term capital appreciation potential. In selecting individual securities the Manager looks for companies that it believes display or are expected to display the following characteristics:
 
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Robust growth prospects
 
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High profit margins or return on capital
 
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Attractive valuations relative to expected earnings or cash flow
 
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Quality management
 
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Unique technological and competitive advantages
 
The Fund generally sells a stock if the Manager believes that its target price has been reached, its earnings are disappointing, its revenue growth has slowed or its underlying fundamentals have deteriorated. In addition, the Manager will overlay a top-down macro economic and political screening process in order to assess country specific risks and enhance returns. The Fund may invest in larger, more established companies or in smaller or unseasoned companies.
 
The Fund may invest the remaining 20% of its assets in debt securities denominated in U.S. or foreign currencies.
 
 
Principal Risks
Through stock investment, the Fund may expose you to common stock risks which may cause you to lose money if there is a sharp or sudden decline in the share price of one of the companies in the Fund’s portfolio. Investments in companies in the rapidly changing fields of technology and science face special risks such as competitive pressures and technological obsolescence and may be subject to greater governmental regulation than many other industries. In addition, the risks of investing in foreign markets, especially emerging markets are considerable. Emerging stock markets tend to be more volatile than the U.S. market due to the relative immaturity, and occasional instability, of the countries political and economic systems. In the past many emerging markets restricted the flow of money into or out of their stock markets, and some continue to impose restrictions on foreign investors. These markets tend to be less liquid and offer less regulatory protection for investors. The economies of emerging countries may be predominately based on only a few industries or on revenue from particular commodities, international aid and other assistance. In addition, most of the foreign securities in which the Fund invests are denominated in foreign currencies, whose values may decline against the U.S. dollar.
 
The Fund is a non-diversified investment company. There is additional risk associated with being non-diversified, since a greater proportion of total assets may be invested in a single company.
 
For a more detailed discussion involving investments in the Fund, please read “Risks of Investing” on page 4.
 
Fees and Expenses
This table describes the fees and expenses that you may pay if you buy and hold shares of the Fund.
 
Shareholder Fees (Paid directly from your investment)     
   Maximum Sales Charges (Load) Imposed on Purchases (as a % of offering price)      None
   Maximum Deferred Sales Charge (Load)      None
   Maximum Sales Charge (Load) Imposed on Reinvested Dividends/Distributions      None
   Redemption Fee (as a % of amount redeemed, if applicable)†      2.00%
   Exchange Fee      None
   Maximum Account Fee      None
 
 
Annual Fund Operating Expenses (Paid from Fund assets)     
   Management Fees      1.25%
   Rule 12b-1 Fees      None
   Other Fees      1.75%
Total Fund Operating Expenses*      3.00%
 
†
The 2.00% redemption fee only applies to shares held less than 90 days.
*
The Manager has agreed to voluntarily waive a portion of the management fee so that total net operating expenses do not exceed 2.50%.
 
Example of Expenses:  This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds.
 
This example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. It also assumes that your investment has a 5% annual return each year and that the operating expenses remain the same. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
 
1 Year    3 Years
$253.13    $778.52
 
See “Management of the Fund” for more complete descriptions of such costs and expenses.
 
3
 
 
 
 
Risks of Investing
 
Risks of Investing in Mutual Funds
 
The following risks are common to all mutual funds and, therefore, apply to the Fund:
 
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Market Risk.   The market value of a security may go up or down, sometimes rapidly and unpredictably. A decline in market value may cause a security to be worth less than it was at the time of purchase. Market risk applies to individual securities, a particular sector or the entire economy.
 
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Manager Risk.   Fund management affects Fund performance. The Fund may lose money if the Fund Manager’s investment strategy does not achieve the Fund’s objective or the manager does not implement the strategy properly.
 
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Year 2000 Risk.   Preparing for Year 2000 is a high priority for the Manager. The Manager is diligently working with external partners, suppliers, vendors and other service providers to ensure that the systems with which it interacts will remain operational at all times. The Manager does not anticipate that the move to Year 2000 will have a material impact on its ability to continue to provide the Fund with service at current levels; however, the Manager cannot make any assurances that the steps it has taken to ensure Year 2000 compliance will be successful. In addition, there can be no assurance that Year 2000 issues will not affect the companies in which the Fund invests or worldwide markets and economies.
 
The Fund may trade in certain foreign securities markets which are less developed than comparable U.S. markets. The risks associated with trading in such markets include:
 
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limited product lines;
 
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limited markets or financial or managerial resources;
 
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their securities may be more susceptible to losses and risks of bankruptcy;
 
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their securities may trade less frequently and with lower volume, leading to greater price fluctuations; and,
 
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their securities are subject to increased volatility and reduced liquidity due to limited market making and arbitrage securities.
 
 
Risks of Investing in Foreign Securities
 
The following risks apply to all mutual funds that invest in foreign securities.
 
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Legal Systems and Regulation Risk.  Foreign countries have different legal systems and different regulations concerning financial disclosure, accounting and auditing standards. Corporate financial information that would be disclosed under U.S. law may not be available. Foreign accounting and auditing standards may render a foreign corporate balance sheet more difficult to understand and interpret than one subject to U.S. law and standards. Additionally, government oversight of foreign stock exchanges and brokerage industries may be less stringent than in the U.S.
 
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Currency Risk.   Most foreign stocks are denominated in the currency of the stock exchange where they are traded. The Fund’s Net Asset Value is denominated in U.S. dollars. The exchange rate between the U.S. dollar and most foreign currencies fluctuates; therefore, the Net Asset Value of the Fund will be affected by a change in the exchange rate between the U.S. dollar and the currencies in which the Fund’s stocks are denominated. The Fund may also incur transaction costs associated with exchanging foreign currencies into U.S. dollars.
 
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Stock Exchange and Market Risk.  Foreign stock exchanges generally have less volume than U.S. stock exchanges. Therefore, it may be more difficult to buy or sell shares of foreign securities, which increases the volatility of share prices on such markets. Additionally, trading on foreign stock markets may involve longer settlement periods and higher transaction costs.
 
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Expropriation Risk.   Foreign governments may expropriate the Fund’s investments either directly by restricting the Fund’s ability to sell a security or by imposing exchange controls that restrict the sale of a currency or by taxing the Fund’s investments at such high levels as to constitute confiscation of the security. There may be limitations on the ability of the Fund to pursue and collect a legal judgment against a foreign government.
 
Non-diversified Portfolio
 
The Fund may invest a greater proportion of its total assets in a single company, which increases risk. However, the Fund intends to comply with diversification requirements of the federal tax law to qualify as a regulated investment company. For more detailed information on the federal tax law diversification requirements, see the tax section of the Fund’s Statement of Additional Information.
 
Temporary Defensive Position
 
When the Fund anticipates unusual market or other conditions, it may temporarily depart from its goal and invest substantially in high-quality short-term investments. This could help the Fund avoid losses but may mean lost opportunities.
 
RISKS OF INVESTING
 
 
5
 
 
 
 
Management of the Funds
 
Investment Adviser
 
Lexington Management Corporation (LMC), a wholly-owned subsidiary of Lexington Global Asset Managers, Inc. (“LGAM”), is the investment adviser to the Fund. LMC and its predecessor companies, registered investment advisers under the Investment Advisers Act of 1940, as amended, were established in 1938. LMC is located at P.O. Box 1515, Park 80 West Plaza Two, Saddle Brook, New Jersey 07663. Descendants of Lunsford Richardson, Sr., their spouses, trusts and other related entities have a controlling interest in Lexington Global Asset Managers, Inc., a Delaware corporation. LMC advises private clients as well as the Lexington Funds. LMC supervises and assists in the overall management of the Funds, subject to the oversight by the Board of Directors. The Fund pays LMC a monthly fee at the annual rate of 1.25% of the Fund’s average daily net assets for investment management services. LMC has voluntarily agreed to limit annual expenses to 2.50% of average daily net assets.
 
Sub-Adviser
 
Stratos Advisors, Inc. (Stratos) is the sub-adviser of the Fund. Stratos is located at 20 Exchange Place, 52nd Floor, New York, NY 10005. Stratos provides investment advice and management to the Fund. Stratos receives a sub-advisory fee from LMC.
 
 
 
Portfolio Managers
 
ALFREDO M. VIEGAS .  Mr. Viegas is Chief Executive Officer and Senior Portfolio Manager at Stratos. Mr. Viegas is responsible for macro asset allocation across developed and developing markets. He has concentrated on analyzing equity opportunities not only in emerging markets but also in newly developing or frontier markets where the quality of public available information is scarce and direct research is imperative. In 1995, Mr. Viegas established VZB Partners LLC (“VZB”), an offshore investment manager. Prior to VZB, Mr. Viegas was an emerging markets strategist with Salomon Brothers from 1993 to 1995. From 1991 to 1993, he was a research analyst with Morgan Stanley. Mr. Viegas is a graduate of Wesleyan University with a B.A. in Classics and Medieval History.
 
MOHAMMED ZAIDI .  Mr. Zaidi is a Portfolio Manager at Stratos. Mr. Zaidi is responsible for technology specific stock selection. Mr. Zaidi is also a Portfolio Manager at VZB and has been since 1997. Mr. Zaidi was Chief Financial Officer and a Partner at Paradigm Software, Inc. from 1992 to 1995. Mr. Zaidi is a graduate of the University of Pennsylvania with a B.S. in Economics from the Wharton School. Mr. Zaidi also holds an M.B.A. in Finance from M.I.T. Sloan School of Management.
 
 
7
 
 
 
 
Investment Options
 
 
To open a new account, complete and mail the New Account application included with this prospectus.
 
Mail your completed application, any checks and correspondence to the Transfer Agent:
 
Transfer Agent    Overnight Mail
State Street Bank and Trust Company    State Street Bank and Trust Company
c/o National Financial Data Services    c/o National Financial Data Services
Lexington Funds    Lexington Funds
P.O. Box 219648    330 W. 9th Street
Kansas City, Missouri 64121-9648    Kansas City, MO 64105-1514
 
Checks should be made payable to: The Lexington Funds
 
Call a Lexington shareholder service representative Monday through Friday between 9:00 A.M. and 5:00 P.M. Eastern time for information on the Fund or your account, at:
 
(800) 526-0056 or (201) 845-7300 for Service M-F 9 A.M.-5 P.M. Eastern Time
 
(800) 526-0052 for 24 Hour Account Information “LEXLINE”
 
(800) 526-0057 for 24 Hour Prospectus Information
 
or visit our website at www.lexingtonfunds.com
 
Trade requests received after 4 P.M. Eastern time (1 P.M. Pacific time) will be executed at the following business day’s closing price.
 
Once an account is established you can:
 
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Sell or exchange shares by phone
Contact the Lexington Funds at 800-526-0056.
 
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Buy or exchange shares online
Go to www.lexingtonfunds.com. and follow our online instructions to enable this service.
 
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Buy, sell or exchange shares by mail
Mail buy/sell order(s), investment, redemption or exchange instructions and any required payment by check to:
 
State Street Bank and Trust Company
c/o National Financial Data Services
Lexington Funds
P.O. Box 219648
Kansas City, Missouri 64121-9648
 
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Buy shares by wiring funds to:
State Street Bank and Trust Company DDA Account #99043713;
Lexington Global Technology Fund, Inc.
For credit to: [shareholder(s) name]
Account number:
ABA Routing #011000028
 
 
 
 
 
Shareholder Information
 
What You Need To Know About Your Lexington Account
 
You pay no sales charges to invest in the Fund. The minimum initial investment is $1,000, and the minimum subsequent investment is $50. The minimum initial investment for IRAs is $250. Under certain conditions we may waive these minimums for qualified plan accounts. If you buy shares through a broker or investment advisor, they may apply different requirements. All investments must be made in U.S. dollars. In addition, we reserve the right to reject any purchase.
 
Becoming a Lexington Shareholder
 
To open a new account:
 
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By Mail.  Send your completed application, with a check payable to The Lexington Global Technology Fund, to the appropriate address. Your check must be in U.S. dollars and drawn only on a bank located in the United States. We do not accept third-party checks, “starter” checks, credit-card checks, traveler’s checks, instant-loan checks or cash investments. We may impose a charge on checks that do not clear.
 
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By Wire.  Call us at 800-526-0056 to let us know that you intend to make your initial investment by wire. Tell us your name and the amount you want to invest. We will give you further instructions and a fax number to which you should send your completed New Account application. To ensure that we handle your investment accurately, include complete account information in all wire instructions.
 
Then request your bank to wire money from your account to the attention of:
 
State Street Bank and Trust Company
DDA Account #99043713
Lexington Global Technology Fund
For credit to: [shareholder(s) name]
Shareholder(s) account #
ABA Routing #011000028
 
Please note that your bank may charge a wire transfer fee.
 
Buying Additional Shares
 
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By Mail.  Complete the form at the bottom of any Lexington statement and mail it with your check payable to Lexington Global Technology Fund. Or mail the check with a signed letter noting the name of the Fund, your account number and telephone number.
 
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“Lex-O-Matic” the Automatic Investment Plan:
 
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A shareholder may make additional purchases of shares automatically on a monthly or quarterly basis with the automatic investing plan, “Lex-O-Matic. ”
 
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You may not use a “Lex-O-Matic” investment to open a new account. The minimum investment amount must still be made into the Fund. The minimum Lex-O-Matic investment amount is $50.
 
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Your bank must be a member of the Automated Clearing House.
 
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To establish “Lex-O-Matic,” attach a voided check (checking account) or preprinted deposit slip (savings account) from your bank account to your Lexington Account Application or a “Lex-O-Matic” Application.
 
9
 
 
 
 
 
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Investments will automatically be transferred into your Lexington Account from your checking or savings account.
 
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Investments may be transferred either monthly or quarterly on or about the 15th day of the month.
 
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You should allow 20 business days for this service to become effective.
 
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You may cancel or change the amount of your Lex-O-Matic at any time provided that a letter is sent to the Transfer Agent ten days prior to the scheduled investment date. Your request will be processed upon receipt.
 
By investing in the Fund, you appoint the Transfer Agent as your agent to establish an open account to which all shares purchased will be credited, along with any dividends and capital gain distributions which are paid in additional shares (see “Dividends and Distributions”). Stock certificates will be issued, upon written request, for full shares of the Fund. Certificates will not be issued for 30 days after payment is received. In order to facilitate redemptions and transfers, most shareholders elect not to receive certificates.
 
You may purchase shares of the Fund through broker-dealers and financial institutions that have selling agreements with Lexington Funds Distributor, Inc. Broker-dealer and financial institutions that process such orders for customers may charge a fee for their services. The fee may be avoided by purchasing shares directly from the Fund.
 
Exchanging Shares
 
Shares of the Fund may be exchanged for shares of equivalent value of any Lexington Fund. If an exchange involves investing in a Lexington Fund not already owned, the dollar amount of the exchange must meet the minimum initial investment amount of the new Fund. An exchange will result in a recognized gain or loss for income tax purposes. Exchanges of over $500,000 may take three days to complete.
 
You may make exchange requests in writing or telephone. Telephone exchanges may only be made if you have completed a Telephone Authorization form which is included on your new account application, or you can request it separately by calling Shareholder Services at 800-526-0056. Telephone exchanges may not be made within 7 calendar days of a previous exchange.
 
If not a new account, the minimum exchange required is $500; $250 for Individual Retirement Accounts.
 
Telephone exchanges may only involve shares held on deposit by the Transfer Agent, not shares held in certificate form by the shareholder.
 
Any new account established by a shareholder will also have the privilege of exchange by telephone in the Lexington Funds unless you decline this privilege on the application or the transfer agent is notified by the shareholder in writing to remove the privilege. All accounts involved in a telephone exchange must have the same dividend option, registration and social security number as the account from which the shares are transferred.
 
Shareholders contemplating an exchange should obtain and review the prospectus of the Fund to be acquired.
 
Minimum Account Balances
 
Due to the costs of maintaining small accounts, we require a minimum account balance of $1,000. If your account balance falls below that amount for any reason other than market fluctuations, we will ask you to add to your account. If your account balance is not brought up to the minimum or you do not send us other instructions, we will redeem your shares and send you the proceeds. We believe that this policy is in the best interests of all our shareholders.
 
 
Redeeming Your Shares
 
The Fund will redeem all or any portion of your outstanding shares upon request. Redemptions can be made on any day that the NYSE is open for trading. The redemption price is the net asset value per share next determined after the shares are validly tendered for redemption and such request is received by the Transfer Agent. Payment of redemption proceeds is made promptly regardless of when redemption occurs and normally within three business days after receipt of all documents in proper form by the Transfer Agent, including a written redemption order with appropriate signature guarantee. Redemption proceeds will be mailed or wired in accordance with the shareholder’s instructions. The Fund may suspend the right of redemption under certain extraordinary circumstances in accordance with the rules of the SEC. In the case of shares purchased by check and redeemed shortly after the purchase, the Transfer Agent will not mail redemption proceeds until it has been notified that the monies used for the purchase have been collected, which may take up to 15 days from the purchase date. Shares tendered for redemptions through brokers or dealers (other than the Distributor) may be subject to a service charge by such brokers or dealers. Procedures for requesting a redemption are set forth below.
 
A 2% redemption fee will be charged on the redemption of shares of the Fund held less than 90 days. The redemption fee will not apply to shares representing the reinvestment of dividends and capital gains distributions. The redemption fee will be applied on a share by share basis using the “first shares in, first shares out” (FIFO) method. Therefore, the oldest shares are sold first.
 
The Transfer Agent will restrict the mailing of redemption proceeds to a shareholder address of record within 30 days of such address being changed, unless the shareholder provides a signature guaranteed letter of instruction.
 
Redeeming by Written Instruction
 
Write a letter giving your name, account number, the name of the fund from which you wish to redeem and the dollar amount or number of shares you wish to redeem.
 
Signature-guarantee your letter if you want the redemption proceeds to be made payable and/or mailed to a party other than the account owner(s) as registered in our records or your predesignated bank account or if the dollar amount of the redemption exceeds $25,000. Signature guarantees may be provided by an eligible guarantor institution such as a commercial bank, an NASD member firm such as a stockbroker, a savings association or national securities exchange. Notary Publics are not acceptable Guarantors. Contact the Transfer Agent for more information.
 
If a redemption request is sent to the Fund in New Jersey, it will be forwarded to the Transfer Agent and the effective date of redemption will be the date received by the Transfer Agent. Checks for redemption proceeds will normally be mailed within three business days. Shareholders who redeem all their shares will receive a check representing the value of the shares redeemed.
 
Redeeming by Telephone
 
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Shares of the Fund may be redeemed by telephone. Call the Fund toll free at 1-800-526-0056. New applicants may decline this privilege by checking the appropriate box on the application.
 
SHAREHOLDER INFORMATION
 
 
11
 
 
 
 
 
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For shareholders who have not previously authorized the redemption privilege a redemption authorization and signature guarantee must be given before a shareholder may redeem by telephone. Authorization forms may be obtained by calling the Fund at 800-526-0056.
 
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Telephone redemption privileges may be cancelled by instructing the Transfer Agent in writing. Your request will be processed upon receipt.
 
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Exchange by telephone. (See “Exchanging Shares”)
 
Systematic Withdrawal Plan
 
Under a Systematic Withdrawal Plan, a shareholder with an account value of $10,000 or more in a fund may receive (or have sent to a third party) periodic payments (by check or electronic funds). If the proceeds are to be mailed to a third party a signature guarantee is required. The minimum payment amount is $100 from each Fund account. Payments may be made either monthly, quarterly, semi-annually or annually on the 28th of each month. If the 28th falls on a weekend or a holiday, the withdrawal will occur on the preceding business day. The redemption will result in the recognition of a gain or loss for income tax purposes.
 
How Fund Shares Are Priced
 
How and when we calculate the Funds’ price or net asset value (NAV) determines the price at which you will buy or sell shares. The net asset value of the Fund is determined once daily as of 4:00 p.m., New York time, on each day that the NYSE is open for trading. Per share net asset value is calculated by dividing the value of the Fund’s total net assets by the total number of the Fund’s shares then outstanding.
 
As more fully described in the Statement of Additional Information, portfolio securities are valued using current market valuations: either the last reported sales price or, in the case of securities for which there is no reported last sale and fixed-income securities, the mean between the closing bid and asked prices. Securities traded over-the-counter are valued at the mean between the last current bid and asked prices. Securities for which market quotations are not readily available or which are illiquid are valued at their fair values as determined in good faith under the supervision of the Fund’s officers, and by the Manager and the Board in accordance with methods that are specifically authorized by the Board. Short-term obligations with maturities of 60 days or less are valued at amortized cost as reflecting fair value. When Fund management deems it appropriate, prices obtained for the day of valuation from a third party pricing service will be used to value portfolio securities.
 
The value of securities denominated in foreign currencies and traded on foreign exchanges or in foreign markets will be translated into U.S. dollars at the last price of their respective currency denomination against U.S. dollars quoted by a major bank or, if no such quotation is available, at the rate of exchange determined in accordance with policies established in good faith by the Board. Because the value of securities denominated in foreign currencies must be translated into U.S. dollars, fluctuations in the value of such currencies in relation to the U.S. dollar may affect the net asset value of Fund shares even without any change in the foreign-currency denominated values of such securities.
 
Because foreign securities markets may close before the Fund determines its net asset value, events affecting the value of portfolio securities occurring between the time prices are determined and the time the Fund calculates their net asset values may not be reflected unless the Manager, under supervision of the Board, determines that a particular event would materially affect the Fund’s net asset value. In addition, some foreign exchanges are open for trading when the U.S. market is closed. As a result, the Fund’s foreign securities — and its price  — may fluctuate during periods when you cannot buy, sell or exchange shares in the Fund.
 
 
Dividends and Capital Gains Distributions
 
The Fund distributes substantially all its net investment income and net capital gains to shareholders each year.
 
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You are not guaranteed any distributions.
 
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The Board of Directors has discretion in determining the amount and frequency of any distributions.
 
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Unless you request cash distributions in writing, all dividends and other distributions will be reinvested automatically in additional shares and credited to the shareholders’ account.
 
Distributions Affect NAV.
 
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The Fund will pay distributions as of the record date.
 
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Dividends and capital gains waiting to be distributed are included in the Fund’s daily NAV.
 
Buying a Dividend. If you buy shares of the Fund just before a distribution, you will pay the full price for the shares and receive a portion of the purchase price back as a taxable distribution when the distribution is made.
 
Taxes
 
The Fund intends to qualify as a regulated investment company, which means that it pays no federal income tax on the earnings or capital gains it distributes to its shareholders. The following statements apply with respect to the Fund:
 
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Ordinary dividends from the Fund are taxable as ordinary income and distributions from the Fund ’s long-term capital gains are taxable as capital gain.
 
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Dividends are treated in the same manner for federal income tax purposes whether you receive them in the form of cash or additional shares. They may also be subject to state and local taxes.
 
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Certain dividends paid to you in January will be taxable as if they had been paid the previous December.
 
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We will mail you tax statements annually showing the amounts and tax status of the distributions you received.
 
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When you sell (redeem) or exchange shares of the Fund, you must recognize any gain or loss.
 
n
Under certain circumstances, the Fund may be in a position to “pass-through” to you the right to a credit or deduction for foreign taxes paid by the Fund.
 
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Because your tax treatment depends on your purchase price and tax position, you should keep your regular account statements for use in determining your tax.
 
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You should review the more detailed discussion of federal income tax considerations in the Statement of Additional Information, which is available for free by calling 1-800-526-0056.
 
***We provide this tax information for your general information. You should consult your own tax adviser about the tax consequences of investing in the Fund.***
 
SHAREHOLDER INFORMATION
 
 
13
 
 
 
 
 
Shareholder Servicing Agreements.  The Fund may enter into Shareholder Servicing Agreements with one or more Shareholder Servicing Agents to provide various services to shareholders as follows:
 
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Each Agent receives fees up to 0.25% of the average daily net assets of the Fund.
 
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LMC may pay additional fees from its past profits, at no additional costs to the Fund.
 
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Each Agent may waive all or a portion of the fees.
 
 
Statement of Additional Information
 
The Statement of Additional Information (SAI) provides a more complete discussion about the Fund and is incorporated by reference, which means that it is considered a part of this prospectus.
 
Annual and Semi-Annual Reports
 
The annual and semi-annual reports to shareholders have more information about the Fund’s investments, including a discussion about the market conditions and investment strategies that significantly affected the Fund’s performance during its last fiscal year.
 
Trademarks
 
Lexington® is a registered trademark of Lexington Management Corporation.
 
Reviewing or Obtaining Additional Information
 
You may obtain a copy of the SAI and the annual and semi-annual reports (free of charge) by contacting a broker-dealer or other financial intermediaries that sell the Fund’s shares or by writing or calling:
 
THE LEXINGTON FUNDS ®
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
Attn: Shareholder Services
 
Tel: (800) 526-0056 or (201) 845-7300
www.lexingtonfunds.com
 
You may also obtain a copy of the SAI and the annual and semi-annual reports (for a fee) by contacting the Public Reference Room of the Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-6009, telephone 800-SEC-0330. You may also obtain this information by visiting the SEC’s Worldwide Website at http://www.sec.gov.
 
SHAREHOLDER INFORMATION
 
 
15
 
 
[LOGO OF LEXINGTON FUNDS]
 
Investment Adviser:
 
Lexington Management Corporation
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
 
Distributor:
 
Lexington Funds Distributor, Inc.
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
 
LEXINGTON FUNDS –Providing Global Solutions  sm
 
Shareholder Services: 1-800-526-0056 (9 A.M. – 5 P.M. ET)
 
24 Hour Account Access: 1-800-526-0052
 
Lexington Funds website: www.lexingtonfunds.com
 
 
 
THE LEXINGTON FUNDS®
P.O. Box 1515
Park 80 West Plaza Two
Saddle Brook, New Jersey 07663
 
PRSRT STD
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Lexington
Management Corp

LEXINGTON GLOBAL TECHNOLOGY FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

December 27, 1999

This Statement of Additional Information which is not a prospectus, should be read in conjunction with the current prospectus, of Lexington Global Technology Fund, Inc. (the "Fund "), dated December 27, 1999, and as it may be revised from time to time. To obtain a copy of the Fund's prospectus at no charge, please write to the Fund at P.O. Box 1515/Park 80 West - Plaza Two, Saddle Brook, New Jersey 07663 or call the following toll-free numbers:

Shareholder Services Information:-- 1-800-526-0056
Institutional/Financial Adviser Services:-- 1-800-367-9160
24 Hour Account Information:-- 1-800-526-0052
or visit our website at www.lexingtonfunds.com

Lexington Management Corporation ( "LMC") is the Fund's investment adviser. Stratos Advisors, Inc is the Fund's sub-adviser. Lexington Funds Distributor, Inc. ("LFD") is the Fund's distributor.

TABLE OF CONTENTS
  
 
Page
   
History of the Fund
3
   
Investment Strategies and Risks of the Fund
3
   
Investment Policies and Restrictions
9
 
Portfolio Transactions and Turnover
11
   
Management of the Fund
12
   
Control Persons and Principal Holders of Securities
16
   
Investment Adviser, Administrator and Distributor
16
   
Determination of Net Asset Value
18
   
Telephone Exchange Provisions
18
   
Tax Sheltered Retirement Plans
19
   
Capital Stock of the Fund
20
   
Dividend Distribution and Reinvestment Policy
20
   
Tax Matters
21
   
Calculation of Performance Data
27
   
Custodian, Transfer Agent and Dividend Disbursing Agent
28
   
Counsel and Independent Auditors
28
   
Financial Statements
29
   

 

 

History of the Fund


Lexington Global Technology Fund, Inc. (the "Company") is a corporation organized under the laws of the State of Maryland on September 13, 1999 under the name of Lexington Emerging Technology Fund, Inc. The Company is an open-end management investment company. The name of the Company was changed on October 8, 1999. Lexington Global Technology Fund (the "Fund") originally named Lexington Emerging Technology Fund is a non-diversified management investment company.

Investment Strategies and Risks of the Fund

The Fund may purchase stock equivalents including warrants, options, convertible debt securities and depository receipts. The common stock equivalents may be converted into or provide the holder with the right to common stock. These investments are made in order to limit the risk of a substantial increase in the market price of a security (or an adverse movement in its applicable currency).

A warrant typically is a long-term option that permits the holder to buy a specified number of shares of the issuer's underlying common stock at a specified exercise price by a particular expiration date. A warrant not exercised or disposed of by its expiration date expires worthless. The Fund will not purchase warrants except in units with other securities in original issuance thereof or attached to other securities, if at the time of the purchase, the Fund's investment in warrants, valued at the lower of cost or market, would exceed 5% of the Fund's total assets. For these purposes, warrants attached to units or other securities shall be deemed to be without value.

The Fund may purchase put options on particular securities (or on currencies in which those securities are denominated) in order to protect against a decline in the market value of the underlying security below the exercise price less the premium paid for the option (or an adverse movement in the applicable currency relative to the U.S. dollar). Prior to expiration, most options are expected to be sold in a closing sale transaction. Profit or loss from the sale depends upon whether the amount received is more or less than the premium paid plus transaction costs. The Fund may purchase put and call options on stock indices in order to hedge against risks of stock market or industry wide stock price fluctuations.

A convertible security is a fixed-income security (a bond or preferred stock) that may be converted at a stated price within a specified period of time into a certain quantity of the common stock of the same or a different issuer. Convertible securities are senior to common stock in a corporation's capital structure but are usually subordinated to similar non-convertible securities. The price of a convertible security is influenced by the market value of the underlying common stock.

Depositary receipts include American depositary receipts ("ADRs"), European depositary receipts ( "EDRs"), global depositary receipts ("GDRs") and other similar instruments. Depositary receipts are receipts typically issued in connection with a U.S. or foreign bank or trust company and evidence ownership of underlying securities issued by a foreign corporation.

The Fund may also invest in other types of equity securities including preferred stocks. A preferred stock is a class of capital stock that pays dividends at a specified rate and that has preference over common stock in the payment of dividends and the liquidation of assets. Preferred stock does not normally carry voting rights.

When the Fund's investment adviser believes that debt securities will provide capital appreciation through favorable changes in relative foreign exchange rates, in relative interest rate levels or in the creditworthiness of issuers, the Fund may invest primarily in debt securities.

 

The Fund may invest up to 10% of its total assets in shares of other investment companies that invest in securities in which it may otherwise invest. The Fund may hedge against changes in financial markets, currency rates and interest rates. The Fund may hedge with "derivatives." Derivatives are instruments whose value is linked to, or derived from, another instrument, like an index or a commodity. The Fund, for hedging purposes only, may also enter into forward foreign currency exchange contracts to increase its exposure to a foreign currency that LMC expects to increase in value relative to the United States dollar. The Fund will not attempt to hedge all of its foreign portfolio positions and will enter into such transactions only to the extent, if deemed appropriate by the investment adviser or sub-adviser. Hedging against a decline in the value of currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. The Fund will not enter into forward foreign currency exchange transactions for speculative purposes. The Fund intends to limit transactions as described in this paragraph to not more than 70% of the total Fund assets.

Covered Call Options - Call options may also be used as a means of participating in an anticipated price increase of a security on a more limited basis than would be possible if the security itself were purchased. The Fund may write only covered call options. Since it can be expected that a call option will be exercised if the market value of the underlying security increases to a level greater than the exercise price, this strategy will generally be used when the investment adviser believes that the call premium received by the Fund plus anticipated appreciation in the price of the underlying security, up to the exercise price of the call, will be greater than the appreciation in the price of the security. The Fund intends to limit transactions as described in this paragraph to less than 5% of total Fund assets. The Fund will not purchase put and call options written by others. Also, the Fund will not write any put options.

Futures, Swaps and Options on Futures - An interest rate futures contract is an agreement to purchase or sell debt securities, usually U.S. government securities, at a specified date and price. For example, the fund may sell interest rate futures contracts (i.e., enter into a futures contract to sell the underlying debt security) in an attempt to hedge against an anticipated increase in interest rates and a corresponding decline in debt securities it owns. The Fund will have collateral assets equal to the purchase price of the portfolio securities represented by the underlying interest rate futures contracts it has an obligation to purchase. The Fund may purchase and sell futures contracts and related options under the following conditions: (a) the then-current aggregate futures market prices of financial instruments required to be delivered and purchased under open futures contracts shall not exceed 30% of the Fund's total assets, at market value; and (b) no more than 5% of the assets, at market value at the time of entering into a contract, shall be committed to margin deposits in relation to futures contracts.

Equity swaps allow the parties to exchange the dividend income or other components of return on an equity investment (e.g., a group of equity securities or an index) for a component of return on another non-equity or equity investment. Equity swap transactions may be volatile and may present the Fund with counterparty risks.

Repurchase Agreements - A repurchase agreement is a contract under which the Fund would acquire a security for a relatively short period (usually not more than 7 days) subject to the obligations of the seller to repurchase and the Fund to resell such security at a fixed time and price (representing the Fund's cost plus interest). Under the Investment Company Act, repurchase agreements are considered to be loans by the Fund and must be fully collateralized by collateral assets. If the seller defaults on its obligations to repurchase the underlying security, the Fund may experience delay or difficulty in exercising its rights to realize upon the security, may incur a loss if the value of the security declines and may incur disposition costs in liquidating the security. The Fund intends to limit repurchase agreements to transactions with institutions believed by LMC to present minimal credit risk. Although the Fund may enter into repurchase agreements with respect to any portfolio securities which it may acquire consistent with its investment policies and restrictions, it is the Fund's present intention to enter into repurchase agreements only with respect to obligations of the United States government or its agencies or instrumentalities. The Fund will enter into repurchase agreements only with member banks of the Federal Reserve System and with "primary dealers" in United States government securities. In addition, if bankruptcy proceedings

 

are commenced with respect to the seller, realization on the collateral by the Fund may be delayed or limited and the Fund may incur additional costs. In such case the Fund will be subject to risks associated with changes in market value of the collateral securities. The Fund will not enter into repurchase agreements maturing in more than seven days if the aggregate of such repurchase agreements and all other illiquid securities when taken together would exceed 15% of the total assets of the Fund. The Fund treats any securities subject to restrictions on repatriation for more than seven days, and securities issued in connection with foreign debt conversion programs that are restricted as to remittance of invested capital or profit, as illiquid. Illiquid securities do not include securities that are restricted from trading on formal markets for some period of time but for which an active informal market exists, or securities that meet the requirements of Rule 144A under the Securities Act of 1933 and that, subject to the review by the Board of Directors and guidelines adopted by the Board of Directors, LMC has determined to be liquid.

Reverse Repurchase Agreements - The Fund may purchase reverse repurchase agreements. In a reverse repurchase agreement, the Fund sells to a financial institution a security that it holds and agrees to repurchase the same security at an agreed-upon price and date.

When Issued and Forward Commitment Securities - The Fund may make contracts to purchase securities for a fixed price at a future date beyond customary settlement time ("forward commitments ") because new issues of securities are typically offered to investors, such as the Fund, on that basis. Forward commitments involve a risk of loss if the value of the security to be purchased declines prior to the settlement date. This risk is in addition to the risk of decline in value of the Fund's other assets. Although the Fund will enter into such contracts with the intention of acquiring the securities, the Fund may dispose of a commitment prior to settlement if the investment adviser deems it appropriate to do so. The Fund may realize short-term profits or losses upon the sale of forward commitments. The Fund may purchase U.S. government or other securities on a "when-issued" basis and may purchase or sell securities on a "delayed delivery" basis. The price is fixed at the time the commitment is made, but delivery and payment for the securities take place at a later date. When-issued securities and forward commitments may be sold prior to the settlement date, but the Fund will enter into when-issued and forward commitments only with the intention of actually receiving or delivering the securities. No income accrues on securities that have been purchased pursuant to a forward commitment or on a when-issued basis prior to delivery to the Fund. At the time the Fund enters into a transaction on a when-issued or forward commitment basis, it supports its obligation with collateral assets equal to the value of the when-issued or forward commitment securities and causes the collateral assets to be marked to market daily. There is a risk that the securities may not be delivered and that the Fund may incur a loss.

Forward Currency Contracts - A forward currency contract is a contract individually negotiated and privately traded by currency traders and their customers and creates an obligation to purchase or sell a specific currency for an agreed-upon price at a future date. The Fund generally does not enter into forward contracts with terms greater than one year. The Fund generally enters into forward contracts only under two circumstances. First, if the Fund enters into a contract for the purchase or sale of a security denominated in a foreign currency, it may desire to "lock in" the U.S. dollar price of the security by entering into a forward contract to buy the amount of a foreign currency needed to settle the transaction. Second, if LMC believes that the currency of a particular foreign country will substantially rise or fall against the U.S. dollar, it may enter into a forward contract to buy or sell the currency approximating the value of some or all of a fund's portfolio securities denominated in such currency. The Fund will not enter into a forward contract if, as a result, it would have more than one-third of total assets committed to such contracts (unless it owns the currency that it is obligated to deliver or has caused its custodian to segregate segregable assets having a value sufficient to cover its obligations). Although forward contracts are used primarily to protect the Fund from adverse currency movements, they involve the risk that currency movements will not be accurately predicted.

 

Investors should recognize that investing in securities of foreign companies and in particular securities of companies domiciled in or doing business in emerging markets and emerging countries involves certain risk considerations, including those set forth below, which are not typically associated with investing in securities of U.S. companies.

Foreign Currency Considerations

The Fund's assets will be invested in securities of foreign companies and substantially all income will be received by the Fund in foreign currencies. However, the Fund will compute and distribute its income in dollars, and the computation of income will be made on the date of its receipt by the Fund at the foreign exchange rate in effect on that date. Therefore, if the value of the foreign currencies in which the Fund receives its income falls relative to the dollar between receipt of the income and the making of Fund distributions, the Fund will be required to liquidate securities in order to make distributions if the Fund has insufficient cash in dollars to meet distribution requirements.

The value of the assets of the Fund as measured in dollars also may be affected favorably or unfavorably by fluctuations in currency rates and exchange control regulations. Further, the Fund may incur costs in connection with conversions between various currencies. Foreign exchange dealers realize a profit based on the difference between the prices at which they are buying and selling various currencies. Thus, a dealer normally will offer to sell a foreign currency to the Fund at one rate, while offering a lesser rate of exchange should the Fund desire immediately to resell that currency to the dealer. The Fund will conduct its foreign currency exchange transactions either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign currency exchange market, or through entering into forward or futures contracts to purchase or sell foreign currencies.

Risks Associated With Hedging Transactions

Hedging transactions have special risks associated with them, including possible default by the Counterparty to the transaction, illiquidity and, to the extent the Adviser's view as to certain market movements is incorrect, the risk that the use of a hedging transaction could result in losses greater than if it had not been used. Use of call options could result in losses to the Fund, force the sale or purchase of portfolio securities at inopportune times or for prices lower than current market values, or cause the Fund to hold a security it might otherwise sell.

Currency hedging involves some of the same risks and considerations as other transactions with similar instruments. Currency transactions can result in losses to the Fund if the currency being hedged fluctuates in value to a degree or in a direction that is not anticipated. Further, the risk exists that the perceived linkage between various currencies may not be present or may not be present during the particular time that the Fund is engaging in portfolio hedging. Currency transactions are also subject to risks different from those of other portfolio transactions. Because currency control is of great importance to the issuing governments and influences economic planning and policy, purchases and sales of currency and related instruments can be adversely affected by government exchange controls, limitations or restrictions on repatriation of currency, and manipulations or exchange restrictions imposed by governments. These forms of governmental actions can result in losses to the Fund if it is unable to deliver or receive currency or monies in settlement of obligations and could also cause hedges it has entered into to be rendered useless, resulting in full currency exposure as well as incurring transaction costs.

In addition, the Fund pays commissions and other costs in connection with such investments. Losses resulting from the use of hedging transactions will reduce the Fund's net asset value, and possibly income, and the losses can be greater than if hedging transactions had not been used.

Risks of Hedging Transactions Outside the United States

When conducted outside the U.S., hedging transactions may not be regulated as rigorously as in the U.S., may not involve a clearing mechanism and related guarantees, and will be subject to the risk of government actions affecting trading in, or the price of, foreign

 

securities, currencies and other instruments. The value of positions taken as part of non-U.S. hedging transactions also could be adversely affected by: (1) other complex foreign political, legal and economic factors; (2) lesser availability of data on which to make trading decisions than in the U.S.; (3) delays in the Fund's ability to act upon economic events occurring in foreign markets during non-business hours in the U.S.; (4) the imposition of different exercise and settlement terms and procedures and margin requirements than in the U.S.; and (5) lower trading volume and liquidity.

Investment and Repatriation Restrictions

Some foreign countries may have laws and regulations which currently preclude direct foreign investment in the securities of their companies. However, indirect foreign investment in the securities of companies listed and traded on the stock exchanges in these countries is permitted by certain foreign countries through investment funds which have been specifically authorized. The Fund may invest in these investment funds subject to the provisions of the 1940 Act as discussed below under "Investment Restrictions". If the Fund invests in such investment funds, the Fund's shareholders will bear not only their proportionate share of the expenses of the Fund (including operating expenses and the fees of the Investment Manager), but also will bear indirectly similar expenses of the underlying investment funds.

In addition, prior governmental approval for foreign investments may be required under certain circumstances in some foreign countries, while the extent of foreign investment in domestic companies may be subject to limitation in other foreign countries. Foreign ownership limitations also may be imposed by the charters of individual companies in foreign countries to prevent, among other concerns, violation of foreign investment limitations.

Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some foreign countries. The Fund could be adversely affected by delays in or a refusal to grant any required governmental approval for such repatriation.

Foreign Securities Markets

Trading volume on foreign country stock exchanges is substantially less than that on the New York Stock Exchange. Further, securities of some foreign companies are less liquid and more volatile than securities of comparable U.S. companies. Similarly, volume and liquidity in most foreign bond markets is substantially less than in the U.S. and, consequently, volatility of price can be greater than in the U.S. Fixed commissions on foreign exchanges are generally higher than negotiated commissions on U.S. exchanges, although the Fund endeavors to achieve the most favorable net results on its portfolio transactions and may be able to purchase the securities in which the Fund may invest on other stock exchanges where commissions are negotiable.

Companies in foreign countries are not generally subject to uniform accounting, auditing and financial reporting standards, practices and disclosure requirements comparable to those applicable to U.S. companies. Consequently, there may be less publicly available information about a foreign company than about a U.S. company. Further, there is generally less governmental supervision and regulation of foreign stock exchanges, brokers and listed companies than in the U.S. Further, these Funds may encounter difficulties or be unable to pursue legal remedies and obtain judgments in foreign courts.

Economic and Political Risks

The economies of individual foreign countries in which the Fund invests may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Further, the economies of foreign countries generally are heavily dependent upon international trade and, accordingly, have been and may continue to

be adversely affected by trade barriers, managed adjustments in relative currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These economies also have been and may continue to be adversely affected by economic conditions in the countries with which they trade. The export driven nature of Asian economies is often dependent on the strength of their trading partners in the United States and Europe, although growing intra-regional trade is seen mitigating some of this external dependence.

With respect to any foreign country, there is the possibility of nationalization, expropriation or confiscatory taxation, political changes, government regulation, social instability or diplomatic developments (including war) which could affect adversely the economies of such countries or the Fund's investments in those countries. In addition, it may be more difficult to obtain a judgement in a court outside of the United States.

Investment Restrictions

The Fund's investment objective and the following investment restrictions are matters or fundamental policy which may not be changed without the affirmative vote of the lesser of (a) 67% or more of the shares of the Fund present at a shareholders' meeting at which more than 50% of the outstanding shares are present or represented by proxy or (b) more than 50% of the outstanding shares. Under these investment restrictions:



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