ORBITEX GROUP OF FUND, 497, 1997-10-09

ORBITEX GROUP OF FUND
497, 1997-10-09

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ORBITEX(R)
Group of Funds

PROSPECTUS

SEPTEMBER 30, 1997

ORBITEX ASIAN
HIGH YIELD FUND

ORBITEX ASIAN SELECT
ADVISORS FUND

ORBITEX STRATEGIC
NATURAL RESOURCES FUND

ORBITEX INFO-TECH AND
COMMUNICATIONS FUND

ORBITEX GROWTH FUND

<PAGE>

ORBITEX GROUP OF FUNDS

660 Madison Avenue
New York, New York 10021

PROSPECTUS
September 30, 1997

Orbitex Group of Funds (the "Trust") is a mutual fund that currently
consists of five investment portfolios (each a "Fund" and collectively the
"Funds"). Each Fund is managed separately and has its own investment objective,
strategies and policies designed to meet different goals.

Orbitex Strategic Natural Resources Fund seeks capital growth through a
flexible policy of investing in common stocks of companies engaged in natural
resource industries and industries supportive to natural resource industries.

Orbitex Info-Tech & Communications Fund seeks superior long-term
capital growth through selective investment in communication, information and
related technology companies.

Orbitex Growth Fund seeks long-term growth of capital through
investment in securities of companies of all sizes that offer potential for
growth.

Orbitex Asian Select Advisors Fund seeks superior long-term capital
growth through selective investment in Asian companies.

Orbitex Asian High Yield Fund seeks high current income through
investment in securities of issuers based in Asia. The Fund will invest in
high yield, high risk debt obligations of issuers in developing Asian markets
(commonly referred to as "junk bonds"). Investments of this type are subject to
greater risk of loss of principal and interest.

There can be no assurance that the objective of each Fund will be
realized. For general information about the Trust, please call 1-888-ORBITEX.

This Prospectus sets forth concisely the information about each Fund
that you should know before investing. It should be retained for future
reference. A Statement of Additional Information ("SAI"), dated September 30,
1997, about the Funds has been filed with the Securities and Exchange Commission
(the "SEC") and is incorporated herein by reference. You may obtain a copy of
the SAI at no charge by calling the Trust at the number shown above.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS PAGE

The Funds at a Glance 1
The Funds' Expenses 2
Investment Objectives, Strategies and Policies 5
Description of Securities, Other Investment
Policies and Risk Considerations 11
Investment Performance 22
Portfolio Turnover 23
Dividends, Distributions and Taxes 23
How to Purchase Shares 24
How to Redeem Shares 28
How to Exchange Shares 29
Shareholder Services 30
How Each Fund's Net Asset Value is Determined 31
How the Trust is Managed 32
Portfolio Transactions and Brokerage Practices 38
Organization of the Trust 39
Appendix 40

No person has been authorized to give any information, or to make any
representations not contained in this Prospectus, or in the Trust's Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Trust
or Funds Distributor, Inc. (the "Distributor"). This Prospectus does not
constitute an offering by the Funds or by the Distributor in any jurisdiction in
which such offering may not lawfully be made.

<PAGE>

THE FUNDS AT A GLANCE

The Trust is a Delaware business trust registered with the SEC as an
open-end management investment company, commonly known as a "mutual fund." The
Trust currently consists of five Funds: Orbitex Strategic Natural Resources
Fund, Orbitex Info-Tech & Communications Fund, Orbitex Growth Fund, Orbitex
Asian Select Advisors Fund and Orbitex Asian High Yield Fund. Each Fund in the
Trust is a separate investment portfolio and has its own investment objective,
investment programs, policies and restrictions. Each Fund operates as a
diversified investment company except the Asian High Yield Fund which operates
as a non-diversified investment company. See "Investment Objectives, Strategies
and Policies."

Management. Each Fund is managed by Orbitex Management, Inc. (the
"Advisor"), which directs the day-to-day operations of each Fund. Certain of the
Funds, however, have one or more investment sub-advisors (each a "Sub-Advisor")
which selects the investments made by that Fund, subject to oversight and
direction by the Advisor. Funds Distributor, Inc. (the "Distributor") serves as
the distributor for the Trust. State Street Bank and Trust Company ("State
Street") serves as the administrator, custodian, accounting services agent,
transfer agent and dividend disbursing agent for the Trust. See "How the Trust
is Managed."

Purchases and Sales of Shares. Shares of each Fund are offered at net
asset value plus any applicable sales charge (maximum for the Asian High Yield
Fund is 4.75% and for each other Fund is 5.75% of public offering price) and
subject to a service and distribution fee at the rate of .30% (in the case of
the Asian High Yield Fund) and .40% (in the case of the other Funds) of the
average daily net assets of the Fund. The minimum initial investment is $2,500
($2,000 for individual retirement accounts) and the minimum for subsequent
investments is $500. See "How to Purchase Shares." Shares may be redeemed at any
time at the net asset value of a Fund next determined after receipt of the
redemption request. The redemption price may be more or less than the purchase
price. See "How to Redeem Shares."

Risk Considerations. The value of a Fund's shares will fluctuate with the
value of the underlying securities in its investment portfolio, and in the case
of debt securities, with the general level of interest rates. When interest
rates decline, the value of a portfolio invested in fixed-income securities can
be expected to rise. Conversely, when interest rates rise, the value of a
portfolio invested in fixed-income securities can be expected to decline. In the
case of foreign currency denominated securities, these trends may be offset or
amplified by fluctuations in foreign currencies.

Investing in securities of foreign issuers involves certain risks and
considerations not typically associated with investing in securities of U.S.
companies.

High yielding fixed-income securities, such as those in which the Asian
High Yield Fund may invest without limit and each of the other Funds may
invest up to 35%, respectively, of total assets, are subject to greater market
fluctuations and risk of loss of income and principal than investments in lower
yielding fixed-income securities.

The Funds intend to employ from time to time certain investment
techniques which are designed to enhance income or total return or hedge against
market or currency risks but which themselves involve additional risks. These
techniques include options on securities, futures, options on futures,

<PAGE>

options on indexes, options on foreign currencies, foreign currency exchange
transactions, lending of securities and when-issued securities and
delayed-delivery transactions.

Each Fund may, from time to time, leverage the assets it has by using
borrowed money to increase its portfolio positions.

Because of the focus of each of the Strategic Natural Resources Fund
and the Info-Tech & Communications Fund on its industries, an investment in
these Funds may be more volatile than an investment in an investment company
that does not concentrate its investments in such a manner.

Because the Asian High Yield Fund is non-diversified, it is permitted
greater flexibility to invest its assets in the securities of any one issuer and
therefore will be exposed to increased risk of loss if such an investment
underperforms expectations.

Finally, each Fund may invest in smaller companies. Securities of smaller
companies may be more volatile due to their limited product lines, markets or
financial resources or their susceptibility to major setbacks or downturns.

For additional risk information, see "Description of Securities, Other
Investment Policies and Risk Considerations."

THE FUNDS' EXPENSES

The Fee Table, including the Examples below, is included to assist your
understanding of the various costs and expenses to which an investment in each
Fund would be subject. Actual fees and expenses for each Fund for the current
year may be more or less than those shown below. A more complete description of
all fees and expenses is included in this Prospectus under the section "How the
Trust is Managed."

<TABLE>

<CAPTION>
Strategic Info-Tech & Asian Select
Shareholder Transaction Natural Resources Communications Growth Advisors Asian High
Expenses Fund Fund Fund Fund Yield Fund
----------------------- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed
on Purchases (as a % 5.75%(1) 5.75%(1) 5.75%(1) 5.75%(1) 4.75%(1)
of offering price)

Maximum Sales Load
Imposed on Reinvested None None None None None
Dividends

Maximum Deferred Sales
Load Imposed on None(2) None(2) None(2) None(2) None(2)
Redemptions (as a % of
lower of original purchase
price or redemption
proceeds)
</TABLE>

2
<PAGE>

- -------------------------

(1) Reduced for purchases of $50,000 or more by certain investors. See "How to
Purchase Shares - Initial Sales Charge."

(2) Purchases of $1 million or more by certain investors are not subject to any
sales load at the time of purchases, but a 1% contingent deferred sales charge
applies on amounts redeemed within one year of purchase. See "How to Redeem
Shares - Contingent Deferred Sales Charge."

<TABLE>

<CAPTION>
Strategic Info-Tech & Asian Select
Shareholder Transaction Natural Resources Communications Growth Advisors Asian High
Expenses Fund Fund Fund Fund Yield Fund
- ----------------------- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
Redemption Fee(a) None None None None None
Exchange Fee None None None None None
</TABLE>

<TABLE>

<CAPTION>
Strategic Info-Tech & Asian Select
Annual Fund Operating Natural Resources Communications Growth Advisors Asian High
Expenses Fund Fund Fund Fund Yield Fund
----------------------- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
(as a percentage of average
net assets)
Investment Advisory Fee
(after fee waivers) .53% .53% 0% .63% .26%

12b-1 Fees (after fee waivers) .40% .40% .40% .40% .25%

Other Expenses 1.47% 1.47% 1.20%* 1.47% 1.16%*
----- ----- ----- ----- ----
Total Fund Operating
Expenses (after fee waivers) 2.40% 2.40% 1.60% 2.50% 1.67%
</TABLE>
- ----------------------------
(a) A fee of $10.00 is charged by the Trust's transfer agent for each wire
redemption.
* After fee waivers.

"Other Expenses" is based on estimated amounts for the current fiscal
year. The Advisor has agreed to waive or limit its fees and to pay certain
operating expenses to the extent necessary to limit Total Fund Operating
Expenses to 2.40%, 2.40%, 1.60% and 2.50% for the Strategic Natural Resources
Fund, the Info-Tech & Communications Fund, the Growth Fund and the Asian Select
Advisors Fund, respectively, subject to possible reimbursement by the Funds in
future years if such reimbursement can be achieved within the foregoing expense
limits. Consequently, the Investment Advisory Fees actually charged may in the
future be higher than reflected above, if consistent with the limits on the
Total Fund Operating Expenses. Absent the waiver or limitation of fees: the
Investment Advisory Fees and Total Fund Operating Expenses are anticipated to be
1.25% and 3.12%, respectively for the Strategic Natural Resources Fund, 1.25%
and 3.12%, respectively for the Info-Tech & Communications Fund and 1.50% and
3.37%, respectively for the Asian Select Advisors Fund; and Investment Advisory
Fees, Other Expenses and Total Fund Operating Expenses for the Growth Fund are
anticipated to be 0.75%, 1.40% and 2.55%, respectively. The fee waivers and
limitations are expected to be in effect during the Trust's current fiscal year.
The Advisor has agreed to waive or limit its fees and to pay all operating
expenses of the Asian High Yield Fund for the first sixty days of Fund
operations. Thereafter, the Adviser has agreed to waive or limit its fees and to
pay certain operating expenses to the extent necessary to limit Total Fund
Operating Expenses to 2.00%. All waivers and limitations of fees are subject to
possible reimbursement by the Asian High Yield Fund in future years if such
reimbursement can be achieved

3
<PAGE>

within the 2.00% expense limit. Absent the waiver or limitation of fees the
Investment Advisory Fee, 12b-1 Fees, Other Expenses and Total Fund Operating
Expenses are anticipated to be 1.25%, 0.30%, 1.39% and 2.94%, respectively.
These fee waivers and limitations are expected to be in effect during the
Trust's current fiscal year.

Examples: An investor in each Fund would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return and (2) redemption at the end
of each future time period.

Fund 1 Year 3 Years
- ---- ------ -------
Strategic Natural Resources $81 $130
Info-Tech & Communications $81 $130
Growth $73 $106
Asian Select Advisors $82 $132
Asian High Yield $64 $98

The Examples above assume payment of a sales charge at the time of
purchase; actual expenses may vary for purchases of shares in amounts of $50,000
or more. Purchases in an amount of $1 million or more are made at net asset
value and are subject to a contingent deferred sales charge for one year
following purchase. As a result of 12b-1 fees, a long-term shareholder may pay
more than the economic equivalent of the maximum front-end sales charges
permitted by the rules of the National Association of Securities Dealers, Inc.

These Examples should not be considered to be a representation of past
or future fees or expenses for each Fund. Actual fees and expenses may be
greater or less than those shown above. Similarly, the annual rate of return
assumed in the Example is not an estimate or guarantee of future investment
performance, but is included for illustrative purposes.

4
<PAGE>
The Orbitex Group of Funds

Orbitex Management, Inc. offers specialized and opportunistic mutual funds with
the potential to enhance returns and diversify overall risk in an investor's
portfolio. Through its investment management team and carefully selected
subadvisers, Orbitex emphasizes well-articulated investment philosophies and
consistent management styles to ensure that investors and investment
professionals get what they expect from each Orbitex Fund.
<TABLE>
<CAPTION>
Fund Objective Suitable Investors
- ---- --------- ------------------
<S> <C> <C>
Orbitex Strategic Natural Resources Capital growth through a Growth-oriented individuals who
Fund flexible policy of investing in see strong economic trends as an
Managed by Orbitex Management, Inc. common stocks of companies indicator of natural resource
engaged in natural resource demand.
industries and industries
supportive to natural resource
industries.

Orbitex Info-Tech & Communications Superior long-term capital Growth oriented investors who want
Fund growth through selective to capitalize on opportunities in
Managed by Orbitex Management, Inc. investment in communication, global telecommunications and
information, and related information industries.
technology companies.

Orbitex Growth Fund Long-term growth of capital Long-term investors interested in
Managed by Orbitex Management, Inc. through investment in growth opportunities in the U.S.
securities of companies that stock market.
offer potential for growth.

Orbitex Asian Select Advisors Fund Superior long-term capital Individuals attracted to the
Subadvised by: growth through selective growth potential of Asian stocks
BT Fund Managers International/Asia investment in Asian companies. and who can accept the risks of
Strategic Investment Management Ltd. international investing.

Orbitex Asian High Yield Fund High current income through Individuals seeking high income
Subadvised by: investment in securities of from a portion of their bond
J.P. Morgan Investment Management, Inc. issuers based in Asia. The Fund portfolios and who can accept the
will invest in high-yield, risks of international investing.
high-risk debt obligations.

</TABLE>
Please consult the "Description of Securities, Other Investment Policies and
Risk Considerations" section of the prospectus for information on the risks
involved in investing in any of the funds.
**********************[line chart]*********************************************
<TABLE>
<CAPTION>
3/31/92 3/31/93 3/31/94 3/31/95 3/31/96 3/31/97
<S> <C> <C> <C> <C> <C> <C>
Lipper Science & Technology Fund Index $10,000 $11,483 $13,368 $16,012 $20,598 $22,046
MSCI Asia Ex-Japan Index $10,000 $12,110 $17,920 $18,172 $21,349 $20,791
S & P 500 Composite Index $10,000 $11,523 $11,693 $13,513 $17,851 $21,390
Lipper Natural Resources Funds Category $10,000 $11,842 $12,402 $13,177 $16,648 $19,329
Lipper Emerging Markets Debt Funds Category $10,000 $8,832 $12,458 $16,886
</TABLE>
*******************************************************************************
<TABLE>
<CAPTION>
Average Annual Returns
(for periods ended 3/31/97) 1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lipper Emerging Market Debt Funds Category 38.90% 19.54% n/a n/a
- ------------------------------------------------------------------------------------------------------------------
Lipper Natural Resources Funds Category 14.00% 16.24% 14.22% 6.98%
- ------------------------------------------------------------------------------------------------------------------
MSCI Asia Ex-Japan Index -2.61% 5.08% 15.76% n/a
- ------------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index 19.83% 22.30% 16.42% 13.38%
- ------------------------------------------------------------------------------------------------------------------
Lipper Science and Technology Index 7.03% 18.15% 17.13% 12.65%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
The Lipper Analytical Services Averages and Indexes, Standard & Poor's 500
Composite Index, and Morgan Stanley Capital International Asia Ex-Japan are
unmanaged indexes. The performance of these indexes does not reflect sales
charges; direct investment in the indexes is not possible. Index performance is
not intended to represent the future performance of any Orbitex Funds. Past
performance is no guarantee of future results. The investment return and
principal value of a Fund investment will fluctuate and shares, when redeemed,
may be worth more or less than their original cost.
5
<PAGE>

INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES

Each Fund's objective is a fundamental policy and may not be changed
without a shareholder vote. Any investment involves risk and, therefore, there
can be no assurance that any Fund will achieve its objective. All investment
policies stated throughout this Prospectus, other than those identified as
fundamental, may be changed by the Board of Trustees of the Trust without
shareholder approval. A complete statement of each Fund's investment
restrictions is included in the SAI. Compliance with policies and limitations is
determined at the time of purchase of a security; a Fund is not required to sell
an investment because of a later change in circumstances.

ORBITEX STRATEGIC NATURAL RESOURCES FUND

The objective of the Orbitex Strategic Natural Resources Fund (the
"Strategic Natural Resources Fund") is capital growth. The Fund seeks to achieve
its objective through a flexible policy of investing primarily in common stock
of United States and foreign companies engaged in natural resource industries
and industries supportive to natural resource industries.

At least 65% of the Fund's total assets will normally be invested in
common stock issued by natural resource companies and companies supportive to
natural resource companies. The remainder of the Fund's assets may be invested
in equity and debt securities of natural resource companies and of companies
outside of the natural resource industries.

The Fund may invest in securities of foreign companies. However, the
Fund will not invest more than 10% of its net assets in securities of such
issuers (other than Canadian issuers on which there is no limit). Investments in
certain Canadian issuers may be speculative due to certain policies risks and
may be subject to substantial price fluctuations.

A "natural resource company" is an entity in which (i) at least 50% of
either the revenues or earnings was derived from natural resource activities, or
(ii) at least 50% of the assets was devoted to such activities, based upon the
company's most recent fiscal year. Natural resource companies include: (i)
those which own, explore, develop or produce: energy sources (such as oil, gas
and coal); ferrous and non-ferrous metals (such as iron, aluminum, copper,
nickel, zinc and lead); strategic metals (such as uranium and titanium) and
precious metals (such as gold, silver and platinum); chemicals; forest products
(such as timber, coated and uncoated tree sheet, pulp and newsprint); other
basic commodities (such as foodstuffs); refined products (such as chemicals and
steel); (ii) service companies that provide services to producers and refiners
of natural resources or provide other products and services, which, in the
Adviser's opinion are significant to the ownership and development of natural
resources and other basic commodities and (iii) companies that develop
energy-efficient technologies, such as systems for energy conversion,
conservation and pollution control.

Please refer to the section entitled "Description of Securities, Other
Investment Policies and Risk Considerations" below for a description of the
types of securities in which the Fund may invest and the types of practices in
which the Fund may engage.

ORBITEX INFO-TECH & COMMUNICATIONS FUND

The objective of the Orbitex Info-Tech & Communications Fund (the
"Info-Tech & Communications Fund") is superior long-term capital growth.
The Fund seeks to achieve its objective through selective investment in
companies engaged in the communications, information and related technology
industries.

It is expected that the Fund will invest in communications, information
and related technology companies in the United States and other developed
countries, and will also invest in companies that are well positioned to benefit
from the rapid growth in the telecommunications infrastructure

6
<PAGE>

in emerging economies. The Advisor's market expectations will determine the
allocation of the Fund's investments between industries.

At least 65% of the Fund's total assets normally will be invested in
equity securities issued by communications, information and related technology
companies. The remainder of the Fund's assets may be invested in debt securities
issued by communications, information and related technology companies and/or
equity and debt securities of companies outside of those industries.

A "communications" company is an entity in which (i) at least 50% of
either its revenues or earnings was derived from communications activities, or
(ii) at least 50% of its assets was devoted to communications activities, based
on the company's most recent fiscal year. An "information" company is an entity
in which (i) at least 50% of either its revenues or earnings was derived from
information activities, or (ii) at least 50% of its assets was devoted to
information activities, based on the company's most recent fiscal year. For
purposes of the Fund's policy of investing at least 65% of its total assets in
the securities of communications, information and related technology companies,
the companies in which the Fund will invest are those engaged primarily in
designing, developing or providing the following products and services:
communications equipment and services (including equipment and services for both
data and voice transmission); electronic components and equipment; broadcasting
(including television and radio, satellite, microwave and cable television and
narrowcasting); computer equipment, mobile communications and cellular
radio/paging; electronic mail; local and wide area networking and linkage of
word and data processing systems; publishing and information systems; videotext
and teletext; and emerging technologies combining telephone, television and/or
computer systems.

The Fund will attempt to find those companies which are expected to
capitalize on the emerging changes in the global telecommunications industry.
The Advisor believes that two major themes currently dominate the industry: the
Internet explosion and the global deregulation of the telecommunications
industry.

The increasing popularity of the Internet and the World Wide Web has
led to dramatic changes in the networking, computer, and software industries. It
has created sharp changes in the value of many companies. The Advisor seeks out
companies that it believes will capitalize on these changes. One of the problems
with Internet related stocks, however, is that they tend to trade at rich
valuations. Rich valuations tend to be associated with sub-par stock price
performance. One way to counteract this problem is to provide small amounts of
seed capital to Internet related companies. The Advisor believes that some of
these seeded companies will eventually become publicly traded companies and
create the potential for significant capital gains.

Countries around the globe are deregulating their computer and
telecommunications industries. Many countries are privatizing their state-owned
monopolies. This is creating a dramatic change in the global telecommunications
industry. The Adviser attempts to find companies that will capitalize on this
major trend.

7
<PAGE>

ORBITEX GROWTH FUND

The objective of the Orbitex Growth Fund (the "Growth Fund") is
long-term growth of capital. The production of income will be incidental to this
objective. The Fund seeks to achieve its objective through investment in
securities believed by the Advisor to have significant appreciation potential.

The Fund may invest in the securities of any issuer, including U.S. and
foreign companies, governments and government agencies. The Fund, however, will
tend to focus on the securities of both established and newer or smaller
capitalized companies. The Fund expects to invest a majority of its assets in
equity securities, but may also invest in debt securities of any quality.

The Fund strives to provide a high return through a unique multi-factor
selection process. In general, the Advisor looks first for stocks that are
commonly called "value stocks." These stocks tend to trade at below market
price/earnings, price/cash flow, and price/book value ratios. The Advisor seeks
to buy stocks that are at the low end of their historical range within those
same categories. In other words, the Advisor attempts to buy stocks that are
commonly considered cheap.

At the same time, the Advisor prefers to buy stocks with strong cash
flow or earnings momentum. In particular, the Advisor will seek out stocks that
are expected by analyst consensus to grow cash flow or earnings by at least 20%
per year over the next several years.

Finally, the Advisor prefers to buy stocks that show positive price
momentum. In other words, the Advisor will first seek stocks that it believes
have a strong fundamental case for purchase but will defer purchasing the stocks
until the market perceives the same positive fundamentals.

The Advisor believes that this combination of searching for strong
value, growth, and price momentum will provide superior capital gains.

ORBITEX ASIAN SELECT ADVISORS FUND

The objective of the Orbitex Asian Select Advisors Fund (the "Asian
Select Advisors Fund") is superior long-term capital growth. The Fund seeks to
achieve its objective by investing at least 65% of its total assets in equity
securities of Asian companies.

The Fund expects to invest in companies domiciled in Asia and on the
Asian side of the Pacific Ocean, such as Bangladesh, the People's Republic of
China, South Korea, Vietnam, Hong Kong, Singapore, the Philippines, Australia,
New Zealand, Cambodia, Laos, Thailand, India, Pakistan, Sri Lanka, Malaysia,
Indonesia and Taiwan but excluding Japan. The Fund may also invest in securities
of issuers in other Asian markets such as republics of the former Soviet Union.
In addition, companies domiciled outside of Asia but which derive over 50% of
their gross revenues from operations or sales in Asia may be included in the
Fund.

While the Fund will focus on equity securities, it may also invest in
debt securities.

The Fund is structured to try to capitalize on the profit potential
from investing in Asia while attempting to reduce the risk. Most people
recognize that diversification is a way to reduce

8
<PAGE>

risk. The Advisor believes that diversification is particularly important in the
Asian markets where quality information is more difficult to find.

The Fund is therefore structured with the use of multiple Sub-Advisors
each of which manages a portion of the assets of the Fund. The Sub-Advisors are
selected to complement each other. In other words, the Advisor seeks to find
Sub-Advisors that have differing investment styles and expertise to reduce risk
within the Fund.

The Advisor also attempts to find Sub-Advisors that have a track record
that has consistently outperformed common benchmarks or that have a style which
should outperform those benchmarks. In addition, the Advisor prefers to employ
Sub-Advisors that have shown a high degree of profit for the amount of risk they
take.

The Advisor has researched potential Sub-Advisors from all the major
investment centers of the world in an effort to find these types of
Sub-Advisors. The Advisor constantly monitors the current Sub-Advisors as well
as potential Sub-Advisors in an effort to maintain a high level of return to the
shareholders in the Fund.

Although the Fund is permitted to do so, it is not expected that the
Fund will employ leveraging, invest in real estate or commodities, engage in
underwritings or make loans. Please refer to the section entitled "Description
of Securities, Other Investment Policies and Risk Considerations" below for a
description of the types of securities in which the Fund may invest and the
types of practices in which the Fund may engage.

ORBITEX ASIAN HIGH YIELD FUND

The objective of the Orbitex Asian High Yield Fund (the "Asian High
Yield Fund") is high current income. The Fund seeks to achieve this objective by
investing primarily in lower rated and unrated debt securities of companies,
financial institutions and governments based in Asia. Capital appreciation is a
secondary objective.

Under normal circumstances, at least 65% of the Fund's total assets
will be invested in debt securities of issuers based in Asia, the credit quality
of which is generally considered the equivalent of U.S. corporate debt
securities commonly known as "junk bonds." See Appendix for description of bond
ratings.

The Fund expects to focus on issuers based in developing Asian
countries including Bangladesh, Cambodia, the People's Republic of China, Hong
Kong, India, Indonesia, Korea, Laos, Malaysia, Pakistan, the Philippines,
Singapore, Sri Lanka, Thailand, Taiwan and Vietnam. The Fund may also invest in
securities of issuers in other Asian markets such as republics of the former
Soviet Union and Middle Eastern countries as well as issuers in other developing
and developed countries. An issuer is based in Asia if it is domiciled in Asia,
including republics of the former Soviet Union and countries in the Middle East,
or it derives more than half of its assets, revenues or profits from that
region.

The Fund will normally invest in at least three different countries,
although it may invest all of its assets in a single country. The geographical
diversification of the Fund's investments will vary from time to time according
to the Sub-Advisor's assessment of the instruments available for investment, the
rates of return available from them and the risks associated with investing in
each market. The instruments in which the Fund will invest may be denominated in
a number of different currencies.

9
<PAGE>

It is anticipated that on a regular basis the Fund will leverage its
investments by borrowing. For a description of the limitations on and the risks
of borrowing, see "Description of Securities, Other Investment Policies and Risk
Considerations - Borrowing."

The debt securities in which the Fund may invest include: fixed and
floating rate bonds, notes and debentures of corporate issuers, including
convertible bonds; notes; commercial paper; certificates of deposit; time
deposits; obligations issued or guaranteed by foreign governments, their
agencies, instrumentalities , political subdivisions and authorities,
including obligations of central banks and Brady bonds; loans, including loan
participations; asset-backed securities; Eurobonds, Yankee Bonds and Global
Bonds. Although the Fund is permitted to invest in common stock, it has no
present intention of doing so.

Under normal market conditions, the Fund's duration will generally
be approximately three to six years. The maturities of the securities in the
Fund may vary widely. In addition to securities selection, the Sub-Advisor may
use futures contracts to adjust the Fund's duration. Generally, the longer the
duration of the Fund the more sensitive it will be to changes in interest rates.

Increases and decreases in the market value of the debt securities in
which the Fund invests may arise as a result of favorable changes in relative
foreign exchange rates, in relative interest rate levels and/or in the
creditworthiness of issuers.

Current yields tend to be higher in Asia than in the United States.
This is due to such factors as poorly developed capital markets and political
risk. However, the Sub-Advisor believes it is possible that creditworthiness
will improve with economic growth.

The Advisor believes that investing in Asian high yield securities
requires a high degree of knowledge of local market conditions. As a result, the
assets of the Fund will be managed by one or more Sub-Advisors, selected by the
Advisor, who have demonstrated expertise in the Asian fixed income markets.

The Fund is classified as a non-diversified investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"). A
non-diversified investment company may invest more than 25% of its assets in
securities of individual issuers representing greater than 5% each of the
investment company's total assets, whereas diversified investment companies may
only invest up to 25% of assets in positions of greater than 5%. Both
diversified and non-diversified investment companies are subject to
diversification specifications under the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code") which require that, as of the close of
each fiscal quarter, (i) no more than 25% of the investment company's total
assets may be invested in the securities of a single issuer (except for U.S.
Government securities) and (ii) with respect to 50% of its total assets, no more
than 5% of such assets may be invested in the securities of a single issuer
(except for U.S. Government securities) or invested in more than 10% of the
outstanding voting securities of a single issuer. Because of its non-diversified
status, the Fund may be subject to greater credit and other risks than a
diversified investment company. The Fund reserves the right to operate as a
diversified investment company if such course appears desirable in the opinion
of the Board of Trustees.

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11
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DESCRIPTION OF SECURITIES, OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

In attempting to achieve its investment objective , each Fund employs
a variety of instruments, strategies and techniques which are described below
and in greater detail in the SAI. Risks and restrictions associated with these
practices are also described. A Fund might not buy all of the securities or use
all of the techniques described below to the full extent permitted unless the
Adviser or Sub-Adviser believes that doing so will help the Fund achieve its
goal.

Asset-Backed Securities. Each Fund may invest in asset-backed
securities. The Asian High Yield Fund is more likely to do so than the other
Funds. Asset-backed securities represent fractional interests in pools of
leases, retail installment loans, revolving credit receivables and other payment
obligations, both secured and unsecured. These assets are generally held by a
trust and payments of principal and interest or interest only are passed through
monthly or quarterly to certificate holders and may be guaranteed up to certain
amounts by letters of credit issued by a financial institution affiliated or
unaffiliated with the trustee or originator of the trust. The payment
obligations that may underlie certain asset-backed securities are subject to
prepayment, which may reduce the overall return to certificate holders.
Certificate holders may also experience delays in payment on the certificates if
the full amounts due on underlying sales contracts or receivables are not
realized by the trust because of unanticipated legal or administrative costs of
enforcing the contracts or because of depreciation or damage to the collateral
securing certain contracts, or other factors.

Bank Obligations. Each Fund may invest in bank obligations, which
include certificates of deposit, time deposits and bankers' acceptances of U.S.
commercial banks or savings and loan institutions. The Asian Select Advisers
Fund and the Asian High Yield Fund may also invest in foreign
currency-denominated bank obligations, including Eurocurrency instruments and
securities of U.S. and foreign banks and thrifts.

Below-Investment-Grade Securities. Each Fund other than the Asian High
Yield Fund may invest up to 35% of its net assets in debt securities that are
rated below "investment grade" by Standard and Poor's Rating Group ("S&P") or
Moody's Investors Services, Inc. ("Moody's") or, if unrated, are deemed by the
Adviser or Sub-Adviser to be of comparable quality. The Asian High Yield Fund
may invest without limit in such securities. Securities rated less than Baa by
Moody's or BBB by S&P are classified as below investment grade securities and
are commonly referred to as "junk bonds" or high yield, high risk securities.

Debt rated BB, B, CCC, CC and C and debt rated Ba, B, Caa, Ca, C is
regarded by S&P and Moody's, respectively, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. For S&P, BB indicates
the lowest degree of speculation and C the highest degree of speculation. For
Moody's, Ba indicates the lowest degree of speculation and C the highest degree
of speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions. Similarly, debt rated Ba or BB and below is
regarded by the relevant rating agency as speculative. Debt rated C by Moody's
or S&P is the lowest rated debt that is not in default as to principal or
interest, and such issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing. Such securities are
also generally considered to be subject to greater risk than securities with
higher ratings with regard to a deterioration of general economic conditions.

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Ratings of debt securities represent the rating agency's opinion
regarding their quality and are not a guarantee of quality. Rating agencies
attempt to evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, since rating agencies
may fail to make timely changes in credit ratings in response to subsequent
events, the Advisor and Sub-Advisors continuously monitor the issuers of high
yield bonds in the portfolios of the Funds to determine if the issuers will have
sufficient cash flows and profits to meet required principal and interest
payments. The achievement of a Fund's investment objective may be more dependent
on the Advisor's or Sub-Advisor's own credit analysis than might be the case for
a fund which invests in higher quality bonds. A Fund may retain a security whose
rating has been changed. The market values of lower quality debt securities tend
to reflect individual developments of the issuer to a greater extent than do
higher quality securities, which react primarily to fluctuations in the general
level of interest rates. In addition, lower quality debt securities tend to be
more sensitive to economic conditions and generally have more volatile prices
than higher quality securities. Issuers of lower quality securities are often
highly leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service debt obligations may also be adversely affected by specific
developments affecting the issuer, such as the issuer's inability to meet
specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market governments that issue lower
quality debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank and
may not be able or willing to make principal and/or interest repayments as they
come due. The risk of loss due to default by the issuer is significantly greater
for the holders of lower quality securities because such securities are
generally unsecured and are often subordinated to other creditors of the issuer.

Lower quality debt securities frequently have call or buy-back features
which would permit an issuer to call or repurchase the security from a Fund. In
addition, a Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and each Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary market also may have an
adverse impact on market prices of such instruments and may make it more
difficult for a Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolios. A Fund may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.

In addition to the foregoing, factors that could have an adverse effect
on the market value of lower quality debt securities in which the Funds may
invest, include: (i) potential adverse publicity, (ii) heightened sensitivity
to general economic or political conditions and (iii) the likely adverse
impact of a major economic recession.

A Fund may also incur additional expenses to the extent the Fund is
required to seek recovery upon a default in the payment of principal or interest
on its portfolio holdings, and the Fund may have limited legal recourse in the
event of a default. Debt securities issued by governments in emerging markets
can differ from debt obligations issued by private entities in that remedies for
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of

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<PAGE>

its debt obligations, also are of considerable significance. There can be no
assurance that the holders of commercial bank debt may not contest payments to
the holders of debt securities issued by governments in emerging markets in the
event of default by the governments under commercial bank loan agreements.

The Advisor and Sub-Advisors attempt to minimize the speculative risks
associated with investments in lower quality securities through credit analysis
and by carefully monitoring current trends in interest rates, political
developments and other factors. Nonetheless, investors should carefully review
the investment objective and policies of the Fund and consider their ability to
assume the investment risks involved before making an investment.

Each Fund may also invest in unrated debt securities. Unrated debt
securities, while not necessarily of lower quality than rated securities, may
not have as broad a market. Because of the size and perceived demand for an
issue, among other factors, certain issuers may decide not to pay the cost of
obtaining a rating for their bonds. The Advisor or Sub-Advisor will analyze the
creditworthiness of the issuer of an unrated security, as well as any financial
institution or other party responsible for payments on the security.

Borrowing. Each Fund may from time to time borrow money for investment
purposes (i.e., "leverage" to increase its portfolio of securities). Each Fund
may borrow only from banks and as a fundamental investment policy may not borrow
in excess of 33 1/3% of the market value of its assets, less liabilities other
than such borrowing. The Asian Select Advisors Fund has also adopted a
non-fundamental investment policy that limits borrowing for investment purposes
to 25% of its net asset value. Each Fund may borrow an additional 5% of its
total assets without regard to the foregoing limitation for temporary or
emergency purposes, such as the meeting of redemption requests or the clearance
of portfolio transactions. This limitation may be changed only by a vote of the
shareholders of the Fund. Current asset value coverage of three times any amount
borrowed is required at all times. Borrowed money creates an opportunity for
greater capital appreciation, but at the same time increases exposure to capital
risk. The net cost of any money borrowed would be an expense that otherwise
would not be incurred, and this expense could limit the Fund's net investment
income in any given period.

Concentration. Because of the focus of each of the Strategic Natural
Resources Fund and the Info-Tech & Communications Fund on its industries, an
investment in each Fund may be more volatile than that of other investment
companies that do not concentrate their investments in such a manner. Moreover,
the value of the shares of each Fund will be especially susceptible to factors
affecting the industries on which it focuses. Neither Fund should be considered
as a complete investment program.

Special Risks Associated with the Strategic Natural Resources Fund.
In the United States and foreign countries, natural resource industries may be
subject to greater political, environmental and other governmental regulation
than many other industries. The nature of such regulation continues to evolve in
both the United States and foreign countries, and changes in governmental
policies and the need for regulatory approvals may have a material effect on the
products and services of natural resource companies. For example, the
exploration, development and distribution of coal, oil and gas in the United
States are subject to significant federal and state regulation, which may affect
rates of return on such investments and the kinds of services that may be
offered.

In addition, many natural resource companies historically have been
subject to significant costs associated with compliance with environmental and
other safety regulations and changes in the

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<PAGE>

regulatory climate. Such governmental regulations may also hamper the
development of new technologies, and it is impossible to predict the direction,
type or effect of any future regulation.

Further, competition is intense for many natural resource companies. As
a result, many of these companies may be adversely affected in the future and
the value of the securities issued by such companies may be subject to increased
share price volatility.

The value of the Strategic Natural Resources Fund's securities will
fluctuate in response to stock market developments, as well as market conditions
for the particular natural resources with which the issuer is involved. The Fund
may invest in companies whose financial success is dependent on price changes of
a particular commodity. The price of the commodity will fluctuate due to changes
in the worldwide levels of inventory, and changes, perceived or actual, in
production and consumption. The values of natural resources may fluctuate
directly with respect to various stages of the inflationary cycle and perceived
inflationary trends and are subject to numerous factors, including national and
international politics. The Strategic Natural Resources Fund's investments in
precious metals are subject to many risks, including substantial price
fluctuations over short periods of time. Further, the Strategic Natural
Resources Fund's investments in companies are expected to be subject to
irregular fluctuations in earnings, because these companies are affected by
changes in the availability of money, the level of interest rates, and other
factors.

Special Risks Associated with the Info-Tech & Communications Fund. The
communications, information and related technology industries may be subject to
greater governmental regulation than many other industries and changes in
governmental policies and the need for regulatory approvals may have a material
effect on the products and services of these industries. Telephone operating
companies in the United States, for example, are subject to both federal and
state regulation affecting permitted rates of return and the kinds of services
that may be offered. Certain types of companies represented in the Fund are
engaged in fierce competition for market share. In recent years, these have been
companies providing goods and services such as private and local area networks
and telephone set equipment. In addition, the products of the companies
represented in the Fund may become obsolete quickly.

Convertible Securities. Each Fund may invest in convertible securities.
A convertible security is a security that may be converted either at a stated
price or rate within a specified period of time into a specified number of
shares of common stock. By investing in convertible securities, a Fund seeks the
opportunity, through the conversion feature, to participate in the capital
appreciation of the common stock into which the securities are convertible,
while earning a higher fixed rate of return than is available in common stocks.

Debt Securities. Each Fund may invest in debt securities. The debt
securities in which the Funds may invest consist of corporate bonds, debentures,
notes and other similar corporate debt instruments, including convertible
securities, obligations of foreign governments and their agencies and political
instrumentalities. The market value of debt securities held by the Funds and,
consequently, the net asset value per share of the Funds, to the extent they
hold debt securities, can be expected to vary inversely to changes in prevailing
interest rates. Investors should also recognize that, in periods of declining
interest rates, the yields of the Funds with significant holdings of debt
securities will tend to be somewhat higher than prevailing market rates and, in
periods of rising interest rates, the opposite can be expected to occur. Prices
of longer-term debt securities generally increase or decrease more sharply than
those of shorter-term debt securities in response to interest rate changes.

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Defensive Strategies. Each Fund retains the flexibility to respond
promptly to changes in market and economic conditions. Accordingly, in the
interest of preserving shareholders' capital and consistent with each Fund's
investment objective, the Advisor or Sub-Advisor may employ a temporary
defensive investment strategy if it determines such a strategy to be warranted
due to market, economic or political conditions. Under a defensive strategy,
each Fund may invest up to 100% of its total assets in cash (U.S. dollars,
foreign currencies or multinational currency units) and/or high quality debt
securities or money market instruments issued by corporations or the U.S. or a
foreign government. In addition, for temporary defensive purposes, such as
during times of international political or economic uncertainty, most or all of
the investments of the Asian Select Advisors Fund or the Asian High Yield
Fund may be made in the United States and denominated in U.S. dollars. To the
extent any Fund adopts a temporary defensive posture, it will not be invested so
as to achieve directly its investment objective.

In addition, pending investment of proceeds from new sales of the
Funds' shares or to meet its ordinary daily cash needs, up to 25% of each Fund's
assets may be held in cash (in U.S. dollars, foreign currencies or multinational
currency units) or may be invested in foreign or domestic high quality money
market instruments. Money market instruments in which each Fund may invest
include, but are not limited to: U.S. or foreign government securities,
high-grade commercial paper, bank certificates of deposit, bankers'
acceptances and repurchase agreements related to any of the foregoing.
High-grade commercial paper refers to commercial paper rated A-1 by S&P or P-1
by Moody's or, if not rated, determined by the Advisor or Sub-Advisor to be of
comparable quality.

Depositary Receipts and Securities of Supranational Entities. Each Fund
may invest in securities of foreign issuers directly or in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or Global
Depositary Receipts ("GDRs") representing securities of foreign issuers. ADRs
are depositary receipts typically issued by a U.S. bank or trust company that
evidence ownership of underlying securities issued by a foreign corporation.
EDRs and GDRs are typically issued by foreign banks or trust companies and
evidence ownership of underlying securities issued by either a foreign or a U.S.
company. Depositary receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted. In
addition, the issuers of the stock of unsponsored depositary receipts are not
obligated to disclose material information in the United States and, therefore,
there may not be a correlation between such information and the market value of
the depositary receipts. Generally, depositary receipts in registered form are
designed for use in the U.S. securities markets, and depositary receipts in
bearer form are designed for use in foreign securities markets.

Each Fund may invest in equity and debt securities issued or guaranteed
by supranational entities. A supranational entity is an entity designated or
supported by the national government of one or more countries to promote
economic reconstruction or development. Examples of supranational entities
include, among others, the World Bank, the Asian Development Bank and the
European Investment Bank.

Derivatives. Each Fund may buy and write covered call and put options
on securities, securities indices and foreign currencies, and may enter into
futures contracts and use options on futures contracts. Each Fund may also enter
into currency exchange contracts and swap agreements relating to interest rates,
foreign currencies and securities indices. All of these may be referred to as
"derivatives" transactions. The Funds may use these techniques to hedge against
changes in interest rates, foreign currency exchange rates, changes in
securities prices or other factors affecting the value of their investments. The
Funds may also use these techniques to change the duration of fixed

16
<PAGE>

income holdings or as a substitute for the purchase or sale of securities or
currency. Each Fund will maintain accounts consisting of liquid assets such as
cash, U.S. Government securities, or other securities (or, as permitted by
applicable regulations, enter into certain offsetting positions to cover its
obligations under futures, options and certain foreign currency transactions) to
avoid "leveraging" the Fund through these transactions.

To attempt to hedge against adverse movement in exchange rates between
currencies, each Fund may enter into forward currency contracts for the purchase
or sale of a specified currency at a specified future date. Such contracts may
involve the purchase or sale of a foreign currency against the U.S. dollar or
may involve two foreign currencies. The Funds may enter into forward currency
contracts either with respect to specific transactions or with respect to that
Fund's portfolio positions or to manage that Fund's exposure to a foreign
currency. For example, when a Fund anticipates making a purchase or sale of a
security, that Fund may enter into a forward currency contract in order to set
the rate (either relative to the U.S. dollar or another currency) at which a
currency exchange transaction related to the purchase or sale will be made.
Further, when the Advisor or Sub-Advisor believes that a particular currency may
decline compared to the U.S. dollar or another currency, a Fund may enter into a
forward contract to sell the currency the Advisor or Sub-Advisor expects to
decline in an amount approximating the value of some or all of that Fund's
portfolio securities denominated in that foreign currency.

Each Fund also may purchase and sell put and call options on
currencies, futures contracts on currencies and options on futures contracts
or currencies to hedge against movements in exchange rates.

In addition, a Fund may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by that Fund or that the Advisor or Sub-Advisor
intends to include in the Fund's portfolio. A Fund also may purchase and sell
put and call options on stock indexes. Such stock index options serve to hedge
against overall fluctuations in the securities markets generally or in a
specific market sector rather than anticipated increases or decreases in the
value of a particular security.

Further, a Fund may sell stock index futures contracts and may purchase
put options or write call options on such futures contracts to protect against a
general stock market decline or a decline in a specific market sector that could
affect adversely a Fund's holdings. A Fund also may buy stock index futures
contracts and purchase call options or write put options on such contracts to
hedge against a general stock market or market sector advance and thereby
attempt to lessen the cost of future securities acquisitions. A Fund may use
interest rate futures contracts and options thereon to hedge the debt portion of
its portfolio against changes in the general level of interest rates, to change
the duration of fixed income holdings or as a substitute for the purchase or
sale of securities.

In addition, each Fund may purchase and sell put and call options on
securities, currencies and indices that are traded on recognized securities
exchanges and over-the-counter markets.

Each of the Funds may enter into interest rate, index and currency
exchange rate swap agreements in attempts to obtain a particular desired return
at a lower cost to the Fund than if the Fund has invested directly in an
instrument that yielded that desired return. Swap agreements are two-party
contracts entered into primarily by institutional investors for periods ranging
from a few weeks to more than one year. In a standard "swap" transaction, two
parties agree to exchange the returns (or differentials in rates of returns)
earned or realized on particular predetermined investments or

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instruments. The gross returns to be exchanged or "swapped" between the parties
are calculated with respect to a "notional amount," i.e., the return on or
increase in value of a particular dollar amount invested at a particular
interest rate, in a particular foreign currency, or in a "basket" of securities
representing a particular index. The "notional amount" of the swap agreement is
only a fictive basis on which to calculate the obligations the parties to a swap
agreement have agreed to exchange. A Fund's obligations (or rights) under a swap
agreement will generally be equal only to the amount to be paid or received
under the agreement based on the relative values of the positions held by each
party to the agreement (the "net amount"). A Fund's obligations under a swap
agreement will be accrued daily (offset against any amounts owing to the Fund)
and any accrued but unpaid net amounts owed to a swap counterparty will be
covered by the maintenance of a segregated account consisting of cash, U.S.
Government securities, or other liquid securities, to avoid leveraging of the
Fund's portfolio. A Fund will not enter into a swap agreement with any single
party if the net amount owed or to be received under existing contracts with
that party would exceed 5% of the Fund's assets.

Whether a Fund's use of swap agreements enhance the Fund's total return
will depend on the Advisor's or Sub-Advisor's ability correctly to predict
whether certain types of investments are likely to produce greater returns than
other investments. Because they are two-party contracts and may have terms of
greater than seven days, swap agreements may be considered to be illiquid.
Moreover, a Fund bears the risk of loss of the amount expected to be received
under a swap agreement in the event of the default or bankruptcy of a swap
agreement counterparty. The Advisor or Sub-Advisor will cause a Fund to enter
into swap agreements only with counterparties that would be eligible for
consideration as repurchase agreement counterparties under the Funds' repurchase
agreement guidelines. Certain restrictions imposed on the Funds by the Internal
Revenue Code may limit the Funds' ability to use swap agreements. The swap
market is a relatively new market and is largely unregulated. It is possible
that developments in the swaps market, including potential government
regulation, could adversely affect a Fund's ability to terminate existing swap
agreements or to realize amounts to be received under such agreements.

Gains and losses on "derivatives" transactions depend on the Advisor's
or Sub-Advisor's ability to predict correctly the direction of interest rates,
securities prices, currency exchange rates, or other factors. Risks in the use
of these derivatives include: a) the risk that interest rates, securities
prices, or currency exchange rates or other factors affecting the value of the
Fund's investments do not move in the directions being hedged against, in which
case the Fund will have incurred the cost of the derivative (either its purchase
price or, by writing an option, losing the opportunity to profit from increases
in the value of the securities covered) with no tangible benefit; b) imperfect
correlation between the prices of derivatives and the movements of the
securities prices, interest rates or currency exchange rates being hedged; c)
the possible absence of a liquid secondary market for any particular derivative
at any time; d) the potential loss if the counterparty to the transaction does
not perform as promised; and e) the possible need to defer closing out certain
positions to avoid adverse tax consequences. In particular, the risk of loss
from certain types of futures transactions is potentially unlimited. More
information on derivatives is contained in the SAI.

Direct Debt. The Asian High Yield Fund may invest in loans and other
direct debt instruments. Loans and other direct debt instruments are interests
in amounts owed to another party by a company, government, or other borrower.
They have additional risks beyond conventional debt securities because they may
entail less legal protection for the Fund, or there may be a requirement that
the Fund supply additional cash to a borrower on demand.

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<PAGE>

Equity Securities. Each Fund may invest in equity securities. The
equity securities in which the Funds may invest consist of common stock,
preferred stock, convertible securities, rights and warrants. Common stock
represents an ownership interest in a corporation.

Foreign Securities. Each Fund may invest in securities of foreign
issuers. Securities of foreign issuers involve different, and sometimes greater,
risks than securities of U.S. issuers. These include an increased risk of
adverse political and economic developments, and, as to certain countries, the
possibility of expropriation, nationalization or confiscatory taxation or
limitations on the removal of the funds or other assets of a Fund.

There may be less publicly available information about foreign
securities and issuers than is available about domestic securities and issuers.
Foreign companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable
domestic companies. The Funds' interest and dividends from foreign issuers may
be subject to non-U.S. withholding taxes, thereby reducing the Funds' net
investment income.

Currency exchange rates may fluctuate significantly over short periods
and can be subject to unpredictable change based on such factors as political
developments and currency controls by foreign governments. Because the Funds may
invest in securities denominated in foreign currencies, they may seek to hedge
foreign currency risks by engaging in foreign currency exchange transactions.
These may include buying or selling foreign currencies on a spot basis, entering
into foreign currency forward contracts, and buying and selling foreign currency
options, foreign currency futures, and options on foreign currency futures. Many
of these activities constitute "derivatives" transactions. See "Derivatives",
above.

Each Fund may invest in issuers domiciled in "emerging markets," those
countries determined by the Advisor or Sub-Advisor to have developing or
emerging economies and markets. Emerging market investing involves risks in
addition to those risks involved in foreign investing. For example, many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. In addition, economies in
emerging markets generally are dependent heavily upon international trade and,
accordingly, have been and continue to be affected adversely by trade barriers,
exchange controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which they
trade. The securities markets of emerging countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Brokerage commissions,
custodial services and other costs relating to investment in foreign markets
generally are more expensive than in the United States, particularly with
respect to emerging markets. In addition, some emerging market countries impose
transfer taxes or fees as a tax or fee on a capital market transaction.

Illiquid Securities. Each Fund may invest up to 15% of its net assets
in illiquid securities -- securities that may not be sold within seven days at
approximately the price used in determining the Fund's net asset value.
Securities may be illiquid when they are held subject to legal or contractual
restrictions on resale, usually because they have not been registered for sale
to the general public ("restricted securities"), or when there is limited market
for them. Repurchase agreements that mature in more than seven days are
considered illiquid securities.

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Certain restricted securities may be resold to qualified institutional
buyers pursuant to Rule 144A under the Securities Act of 1933. The Advisor or
Sub-Advisor, under guidelines approved by the Board of Trustees of the Trust,
may determine that some Rule 144A securities are liquid. Institutional trading
markets for Rule 144A securities are relatively new. Liquidity of the Fund's
investments could be impaired if trading markets for these securities do not
develop further or decline. If, through a change in values, net assets or other
circumstances, a Fund were in a position where more than 15% of its net assets
was invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.

Mortgage-Backed Securities. Each Fund may invest in mortgage-backed
securities, which represent an interest in a pool of mortgage loans. The primary
government issuers or guarantors of mortgage-backed securities are the
Government National Mortgage Association ("GNMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC").
Interest and principal payments (including prepayments) on the mortgages
underlying mortgage-backed securities are passed through to the holders of the
securities. As a result of the pass-through of prepayments of principal on the
underlying securities, mortgage-backed securities are often subject to more
rapid prepayment of principal than their stated maturity would indicate.
Prepayments occur when the mortgagor on a mortgage prepays the remaining
principal before the mortgage's scheduled maturity date. Because the prepayment
characteristics of the underlying mortgages vary, it is impossible to predict
accurately the realized yield or average life of a particular issue of
pass-through certificates. Prepayments are important because of their effect on
the yield and price of the mortgage-backed securities. During periods of
declining interest rates, prepayments can be expected to accelerate and a Fund
investing in such securities would be required to reinvest the proceeds at the
lower interest rates then available. In addition, prepayments of mortgages
underlying securities purchased at a premium could result in capital losses.

Other Investment Companies. Each Fund may invest up to 10% of its total
assets in other investment companies, but only up to 5% of its assets in any one
other investment company. In addition, a Fund may not purchase more than 3% of
the securities of any one investment company. As a shareholder in an investment
company, that Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Fund would continue to pay its own management fees and other expenses.

Notwithstanding these limitations, each Fund reserves the right to
convert to a "master/feeder" structure at a future date. Under such a structure,
one or more "feeder" funds, such as the Funds, invest all of their assets in a
"master" fund, which, in turn, invests directly in a portfolio of securities. If
required by applicable law, the Funds will seek shareholder approval before
converting to a master/feeder structure. If the requisite regulatory authorities
determine that such approval is not required, shareholders will be deemed, by
purchasing shares, to have consented to such a conversion and no further
shareholder approval will be sought. Such a conversion is expressly permitted
under the investment objective and fundamental policies of each Fund.

Repurchase Agreements. Each Fund may enter into repurchase agreements.
In a repurchase agreement, a Fund buys a security and the seller simultaneously
agrees to repurchase the security on a specified future date at an agreed-upon
price. The repurchase price reflects an agreed-upon interest rate during the
time the Fund's money is invested in the security. Because the security
constitutes collateral for the repurchase obligation, a repurchase agreement can
be considered a collateralized loan. The Fund's risk is the ability of the
seller to pay the agreed-upon price on the delivery date. If the seller is
unable to make a timely repurchase, the Fund could experience delays in the
receipt of

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<PAGE>

expected proceeds, suffer a loss in principal or current interest, or incur
costs in liquidating the collateral. The Board of Trustees of the Trust has
established criteria to evaluate the creditworthiness of parties with which the
Funds may enter into repurchase agreements.

Rights and Warrants. Each Fund may invest in rights and warrants. A
Fund will invest in rights or warrants only if the underlying equity securities
themselves are deemed appropriate by the Adviser or Sub-Adviser for inclusion in
the Fund's portfolio. Rights and warrants entitle the holder to buy equity
securities at a specific price for a specific period of time. Rights are similar
to warrants except that they have a substantially shorter duration. Rights and
warrants may be considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or voting rights
with respect to the underlying securities nor do they represent any rights in
the assets of the issuing company. The value of a right or warrant does not
necessarily change with the value of the underlying security, although the value
of a right or warrant may decline because of a decrease in the value of the
underlying security, the passage of time or a change in perception as to the
potential of the underlying security, or any combination thereof. If the market
price of the underlying security is below the exercise price set forth in the
warrant on the expiration date, the warrant will expire worthless. Moreover, a
right or warrant ceases to have value if it is not exercised prior to the
expiration date.

Securities Lending. Each Fund may lend its portfolio securities to
broker/dealers or to other institutional investors. The borrower must maintain
with the Fund's custodian collateral consisting of cash, U.S. Government
securities or other liquid securities equal to at least the value of the
borrowed securities, plus any accrued interest. The Fund will receive any
interest paid on the loaned securities and a fee and/or a portion of the
interest earned on the collateral. Income received in connection with securities
lending may be used to offset a Fund's custody fees. Each Fund limits its loans
of portfolio securities to an aggregate of 33 1/3% of the value of its total
assets, measured at the time any such loan is made. The risks in lending
portfolio securities, as with other extensions of secured credit, consist of
possible delays in receiving additional collateral or in recovery of the
securities and possible loss of rights in the collateral should the borrower
fail financially.

Short Sales. Each Fund may sell securities that it does not own or have
the right to acquire. When a Fund does so, it will maintain with its custodian
in a segregated account cash or liquid securities in an amount at least equal to
the difference between the current market value of the securities sold short and
any amounts required to be deposited as collateral with the selling broker in
connection with the short sale (not including the proceeds of the short sale).
It is currently expected that a Fund will not sell securities short if, as a
result, the total amount of all "open" short positions would exceed 10% of the
value of its total assets. This limitation may be changed at any time. Each Fund
may also sell securities that it owns or has the right to acquire at no
additional cost but does not intend to deliver to the buyer, a practice known as
selling short "against the box." These transactions allow a Fund to hedge
against price fluctuations by locking in a sale price for securities the Fund
does not wish to sell immediately, for example, to postpone recognition of a
gain or loss for federal income tax purposes or satisfy certain tests applicable
to regulated investment companies under the Internal Revenue Code.

Small Companies. While each Fund's portfolio normally will include
securities of established suppliers of traditional products and services, each
Fund may invest in smaller companies which can benefit from the development of
new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks than
large, established issuers. Such smaller companies may have limited product
lines, markets or financial resources, and

21
<PAGE>

their securities may trade less frequently and in more limited volume than the
securities of larger, more established companies. As a result, the prices of the
securities of such smaller companies may fluctuate to a greater degree than the
prices of the securities of other issuers.

Structured Notes. Each Fund may invest up to 25% of its total assets in
debt securities, preferred stock, or convertible securities, the principal
amount, redemption terms, or conversion terms of which are related to a
specified securities or other index, the market prices of specified securities,
commodities, or other assets, or specified foreign currency exchange rates.
These securities are sometimes referred to as "structured notes" or "structured
securities." The prices of structured securities have historically been subject
to high volatility and their interest or dividend rates may at times be
substantially below prevailing market rates.

U.S. Government Securities. All of the Funds may invest in U.S.
Government Securities, which include direct obligations of the U.S. Treasury
(such as U.S. Treasury bills, notes and bonds) and obligations directly issued
or guaranteed by U.S. Government agencies or instrumentalities. Some obligations
issued or guaranteed by agencies or instrumentalities of the U.S. Government are
backed by the full faith and credit of the U.S. Government (such as GNMA bonds),
others are backed only by the right of the issuer to borrow from the U.S.
Treasury (such as securities of Federal Home Loan Banks) and still others are
backed only by the credit of the instrumentality (such as FNMA and FHLMC bonds).

Variable Rate, Floating Rate, or Variable Amount Securities. Each Fund
may invest in variable rate, floating rate, or variable amount securities. These
are generally short-term unsecured obligations of private issuers. They are
generally interest-bearing notes on which the interest rate fluctuates on a
scheduled basis.

When-Issued or Forward Commitment Securities. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, 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 a Fund will purchase
or sell when-issued securities or enter into forward commitments only with the
intention of actually receiving or delivering the securities, as the case may
be. No income accrues on securities which have been purchased on a forward
commitment or when-issued basis prior to delivery to the Fund. If the Fund
disposes of the right to acquire a when-issued security prior to its acquisition
or disposes of its right to deliver or receive against a forward commitment, it
may incur a gain or loss. At the time a Fund enters into a transaction on a
when-issued or forward commitment basis, a segregated account consisting of cash
or liquid securities equal to the value of the when-issued or forward commitment
securities will be established and maintained with its custodian and will be
marked to market daily. There is a risk that the securities may not be delivered
and that the Fund may incur loss.

Zero-Coupon and Payment-in-Kind Bonds. Each Fund may invest in
zero-coupon and payment-in-kind bonds. The Asian High Yield Fund is more likely
to do so than the other Funds. Zero-coupon bonds are issued at a significant
discount from their principal amount in lieu of paying interest periodically.
Payment-in-kind bonds allow the issuer, at its option, to make current interest
payments on the bonds either in cash or in additional bonds. Because zero-coupon
bonds do not pay current interest, their value is generally subject to greater
fluctuation in response to changes in market interest rates than bonds that pay
interest currently. Both zero-coupon and payment-in-kind bonds

22
<PAGE>

allow an issuer to avoid the need to generate cash to meet current interest
payments. Accordingly, such bonds may involve greater credit risks than bonds
paying interest currently. Even though such bonds do not pay current interest in
cash, a Fund is nonetheless required to accrue interest income on such
investments and to distribute such amounts at least annually to shareholders.
Thus, a Fund could be required at times to liquidate other investments in order
to satisfy its dividend requirements.

Fundamental Investment Policies and Restrictions. Some of the policies
and restrictions discussed throughout this Prospectus are fundamental, this is,
subject to change only by shareholder approval. The following paragraph restates
all those that are fundamental.

For each Fund other than the Asian High Yield Fund, with respect to 75%
of its total assets, a Fund may not purchase a security if, as a result, more
than 5% would be invested in the securities of any one issuer and may not
purchase more than 10% of the outstanding voting securities of a single issuer.
Except for the Strategic Natural Resources Fund and the Info-Tech &
Communications Fund, a Fund will not invest 25% or more of the value of the
Fund's total assets in the securities of issuers in any one industry. These
limitations do not apply to U.S. Government securities. As a fundamental
policy, the Strategic Natural Resources Fund will invest at least 25% of its
total assets in securities of companies in natural resource industries and
industries supportive to natural resource industries. As a fundamental
policy, the Info-Tech & Communications Fund will invest at least 25% of its
total assets in securities of companies in the communications, information and
related technology industries. A Fund may borrow money for investment purposes,
but not in an amount exceeding 33 1/3% of its total assets, and may borrow up to
an additional 5% of its total assets for temporary or emergency purposes. Loans
by a Fund, in the aggregate, may not exceed 33 1/3% of a Fund's total assets.

INVESTMENT PERFORMANCE

Each Fund may illustrate in advertisements its average annual total
return, which is the rate of growth of the Fund that would be necessary to
achieve the ending value of an investment kept in the Fund for the period
specified and is based on the following assumptions: (1) all dividends and
distributions by the Fund are reinvested in shares of the Fund at net asset
value, and (2) all recurring fees are included for applicable periods.

Each Fund may also illustrate in advertisements its cumulative total
return for several time periods throughout the Fund's life based on an assumed
initial investment of $1,000. Any such cumulative total return for each Fund
will assume the reinvestment of all income dividends and capital gains
distributions for the indicated periods and will include all recurring fees.

The Asian High Yield Fund may further illustrate in advertisements its
yield based on a recent thirty (30) day period, which reflects the income per
share earned by the Fund's portfolio investments. The yield is calculated by
dividing the Fund's net investment income per share during that period by the
net asset value on the last day of that period and annualizing the result.

Further information on each Fund's performance calculations is described
in the SAI.

PORTFOLIO TURNOVER

The rate of portfolio turnover generally will not be important in
investment decision making for any of the Funds. Decisions to buy and sell
securities will be based on the anticipated contribution of a

23
<PAGE>

security to achievement of a Fund's investment objectives. Sales can result
from, for example, securities reaching a price objective, anticipated changes in
interest rates, changes in the creditworthiness of issuers, or general financial
or market developments. The Funds may sell one security and simultaneously buy
another of comparable quality and may simultaneously buy and sell the same
security to take advantage of short-term differences in bond yields. The Funds
may buy individual securities in anticipation of relatively short-term price
gains. A Fund's liquidity needs may also necessitate sales. Because these
factors generally are not tied to the length of time a security has been held, a
significant number of short-term transactions may result.

Although the Funds cannot accurately predict their annual turnover
rates, it is estimated that annual turnover rates will generally be 90% for the
Strategic Natural Resources Fund, 100% for the Info-Tech & Communications
Fund, 100% for the Growth Fund, 50% - 75% for the Asian Select Advisors Fund
and 40% - 50% for the Asian High Yield Fund. A 100% annual turnover rate would
occur if all of a Fund's securities were replaced one time during a one year
period.

While portfolio transactions will be necessary to achieve a Fund's
investment objective, a high level of turnover (100% or more) entails certain
costs. The higher the turnover, the higher the overall brokerage commissions,
dealer mark-ups and mark-downs, and other direct transaction costs incurred.
High turnover can also result in acceleration of the realization of gains, which
may be short-term in nature and thus taxable to shareholders at ordinary rates.

Certain tax considerations can restrict a Fund's ability to sell
securities in some circumstances when those securities have been held for less
than three months. See the SAI.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund intends to elect to be treated and to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code, and, if it
so qualifies, it will not be subject to federal income tax on any income and net
capital gain distributed to its shareholders.

As a result, it is the policy of each Fund to declare and distribute to
its shareholders as income dividends or capital gain dividends, at least
annually, substantially all of its net investment income and net capital gain
realized from the sale of its portfolio securities, if any.

Income dividends will normally be distributed quarterly for the Asian
High Yield Fund and annually for each of the other Funds. Income dividends are
derived from each Fund's net investment income, including any net short-term
capital gain and dividends received by a Fund, and are taxable to shareholders
as ordinary income. The excess of net long-term capital gain over the net
short-term capital losses realized and distributed by a Fund as net capital gain
dividends are taxable to shareholders as long-term capital gain, regardless of
how long the shareholder has held the shares. Income dividends and net capital
gain dividends declared in October, November or December of one year to
shareholders of record as of a specified date in such a month and paid in
January of the following year are taxable in the year they are declared. The
Trust will mail to its shareholders a Form 1099 by the end of January of each
year indicating the federal tax status of each Fund's income dividends and net
capital gain dividends.

Both income dividends and net capital gain dividends are paid by the
Funds on a per share basis to the shareholders of record as of the distribution
date of that Fund, regardless of how long the shares have been held. That means
that if shareholders buy shares just before or on the record date, they will pay
the full price for the shares and then may receive a portion of the price back
as a taxable distribution. If a

24
<PAGE>

shareholder held shares for six months or less and during that period received a
distribution taxable to such shareholder as a long-term capital gain, any loss
realized on the sale of such shares during such six-month period would be a
long-term loss to the extent of such distribution.

Each Fund is required by federal law to withhold 31% of reportable
payments (which may include income dividends, net capital gain dividends, and
share redemption proceeds) paid to shareholders who have not complied with IRS
regulations. In order to avoid this backup withholding requirement, a
shareholder must certify on the shareholder's purchase application form
("Application"), or on a separate W-9 Form supplied by the Trust's transfer
agent, that the shareholder's Social Security or Taxpayer Identification Number
is correct (or that the shareholder has applied for such a number and is waiting
for it to be issued) and that the shareholder is not currently subject to backup
withholding, or the shareholder is exempt from backup withholding.

Unless the shareholder elects otherwise, as permitted on the Application,
income dividends and net capital gain dividends with respect to a particular
Fund will be reinvested in additional shares of that Fund and will be credited
to the shareholder's account with that Fund at the net asset value per share
next determined as of the ex-dividend date.

Under existing provisions of the Internal Revenue Code, individuals,
corporations and other shareholders that are not "U.S. Persons" under such
Code may be subject to federal income tax withholding at the applicable rate on
income dividends and net capital gain dividends. Under applicable treaty law,
residents of treaty countries may qualify for a reduced rate of withholding or a
withholding exemption.

Payments from a Fund to shareholders of income dividends and net capital
gain dividends are taxable to shareholders of a Fund when such dividends are
paid, regardless of whether they are taken in cash or reinvested in shares of
the Fund.

Each Fund may invest in the stock of foreign investment companies that
may be treated as "passive foreign investment companies" ("PFICs") under the
Internal Revenue Code. Certain other foreign corporations, not operated as
investment companies, may nevertheless satisfy the PFIC definition. A portion of
the income and gains that a Fund derives may be subject to a non-deductible
federal income tax at the Fund level. A Fund may be able to avoid this tax by
making a mark-to-market election. Because it is not always possible to identify
a foreign issuer as a PFIC in advance of making the investment, a Fund may incur
the PFIC tax in some instances.

Shareholders are urged to consult their tax advisers concerning the
effect of Federal income taxes in their individual circumstances.

HOW TO PURCHASE SHARES

The initial minimum investment is $2,500 ($2,000 for individual
retirement accounts) per Fund. Such minimum investment amount may, in certain
cases, be waived or lowered by the Trust.

Opening an Account. You may make an initial purchase of shares of each
Fund through the Distributor or its Selling Group Members. Shares of the Funds
may be purchased on any day the Funds are open for business. A COMPLETED AND
SIGNED APPLICATION IS REQUIRED FOR EACH NEW ACCOUNT YOU OPEN WITH EACH FUND.

25
<PAGE>

Purchases Through Selling Group Members. Securities dealers, banks, or
other financial service firms having Selected Dealer Agreements with the
Distributor (collectively, "Selling Group Members") are authorized to sell you
shares of the Funds. If you purchase shares through a Selling Group Member, such
member must receive your order before the close of regular trading on the New
York Stock Exchange ("NYSE"), which normally is 4:00 p.m. Eastern time, and
transmit it to the Trust by 5:00 p.m., Eastern time, to receive that day's share
price. (See "Share Price" below.) Selling Group Members are responsible for
promptly transmitting purchase orders to the Distributor.

Purchases By Mail. You may purchase shares of the Funds by mailing the
completed Application, with your check made payable to Orbitex Group of Funds -
(Name of Fund), to: Orbitex Group of Funds, P.O. Box 8069, Boston, MA
02269-8069.

Purchases By Wire. Shares of each Fund may be purchased by wiring funds
to the wire bank account for each Fund. Your bank may charge you a fee for the
wire. Wire transactions are not available for retirement accounts.

To make an initial purchase by wire, please telephone the Trust at
1-888-ORBITEX for instructions and to receive an account number. You should
instruct a Federal Reserve System member bank to wire funds to: State Street
Bank & Trust Company, ABA No. 01100028, Attn: Custody & Shareholder Services,
Credit: Name of Fund, DDA No. 9905-295-3, FBO: Shareholder Name, Name of Fund,
Shareholder Account Number. Please complete and mail an Application to the
address shown above under purchases by mail.

You may make subsequent purchases in an existing account by wiring
funds to: State Street Bank & Trust Company, ABA No. 01100028, Attn: Custody &
Shareholder Services, Credit: Name of Fund, DDA No. 9905-295-3, FBO: Shareholder
Name, Name of Fund, Shareholder Account Number.

Subsequent Purchases. Minimum $500 per Fund, except for reinvestment of
dividends and distributions. Subsequent purchases in an existing account may
be made (i) through the Distributor by mail (see instructions above) or by wire
(see instructions above), (ii) through Selling Group Members or (iii) through
use of certain services available to shareholders of the Funds, such as the
Telephone Investment Privilege and the Exchange Privilege described below under
"How to Exchange Shares."

Telephone Investment Privilege. If you are eligible to use the
Telephone Investment Privilege, you may make additional purchases in your
account of $500 or more by telephoning the Trust at 1-888-ORBITEX between 8:30
a.m. and 4:00 p.m. Eastern time on any day the Trust is open. Telephone
investment requests made after 4:00 p.m. Eastern time will be processed as of
the close of business on the next business day. In accordance with your
instructions, we will electronically transfer monies from your bank account
designated on the Application to your account with the Trust. Please see
"Shareholder Services - Telephone Privileges" below.

Share Price. To make an initial purchase of shares of the Funds, a
completed and signed Application must first be received and accepted. Purchases
in each Fund will be effected at the public offering price of that Fund next
determined after your purchase order has been received and accepted by the

26
<PAGE>

Trust. The public offering price of a Fund is the per share net asset value of
that Fund next determined after receipt of the purchase order, plus any
applicable initial sales charge.

Share Certificates. In the interest of economy and convenience, share
certificates will not be issued.

Conditions of Your Purchase. The Trust and the Distributor each reserve
the right to reject any purchase for any reason and to cancel any purchase due
to nonpayment. Purchases are not binding on the Trust or the Distributor or
considered received until such purchase orders are received and accepted by the
Trust. All purchases must be made in United States dollars and, to avoid fees
and delays, all checks must be drawn only on United States banks. No cash will
be accepted. As a condition of this offering, if your purchase is canceled due
to nonpayment or because your check does not clear, you will be responsible for
any loss the Funds incur. Due to the high risk of fraud, the Trust will not
accept third-party checks to purchase shares of the Funds. (A third-party check
is a check that has been endorsed by the payee and signed over to the Fund.)

Initial Sales Charge. The public offering price of shares is the next
determined net asset value of a Fund, plus any applicable sales charge, which,
for investors who are residents of the United States, will vary with the size of
the purchase as shown in the following tables:

For all Funds other than the Asian High Yield Fund, the sales charge is
5.75% of the offering price; however, for investors who are residents of the
United States, the sales charge will be reduced for purchases of $50,000 or more
as follows:

<TABLE>
<CAPTION>
Sales Charge as a Percentage of
------------------------------- Broker Reallowance as a
Offering Net Investment Percentage of Offering
Amount of Purchase Price (Net Asset Value) Price
- ------------------ ----- ----------------- -----
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10 5.00%
$50,000 but less than $100,000 4.50% 4.71 3.75%
$100,000 but less than $250,000 3.50% 3.63 2.75%
$250,000 but less than $500,000 2.50% 2.56 2.00%
$500,000 but less than $1,000,000 2.00% 2.04 1.75%
$1,000,000 but less than $3,000,000 None* None* (see below)**
$3,000,000 but less than $50,000,000 None* None* (see below)**
$50,000,000 or more None* None* (see below)**
</TABLE>

For the Asian High Yield Fund, the sales charge is 4.75% of the
offering price; however, for investors who are residents of the United States,
the sales charge will be reduced for purchases of $50,000 or more as follows:

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<PAGE>

$500,000 but less than $1,000,000 1.00% 1.01 .75%
$1,000,000 but less than $3,000,000 None* None* (see below)**
$3,000,000 but less than $50,000,000 None* None* (see below)**
$50,000,000 or more None* None* (see below)**
</TABLE>

28
<PAGE>

- -------------------
* No initial sales charge applies on investments by residents of the United
States of $1 million or more, but a contingent deferred sales charge of 1% is
imposed on certain redemptions within one year of the purchase. See "How to
Redeem Shares - Contingent Deferred Sales Charge."

** The following commissions will be paid by the Distributor to Selling Group
Members who initiate and are responsible for purchases of any single purchaser
who is a resident of the United States of $1 million or more: 1% on purchase
amounts up to $3 million, plus 0.50% on the excess up to $50 million, plus 0.25%
on the excess over $50 million.

Shares issued pursuant to the automatic reinvestment of income
dividends and capital gains distributions are not subject to any sales charges.
The Distributor's commission is the sales charge shown above less any applicable
discount "reallowed" to Selling Group Members. Normally, the Distributor will
reallow discounts to Selling Group Members in the amounts indicated above. The
Distributor may, however, from time to time elect to reallow up to the entire
initial sales charge to Selling Group Members. Selling Group Members to whom
substantially the entire sales charge is reallowed may be deemed to be
"underwriters" as that term is defined under the Securities Act of 1933.

Reduced Sales Charges. A reduction of sales charge rates for purchasers
who are residents of the United States in the tables above may be obtained as
follows:

[bullet] Letter of Intent. Investors may qualify for reduced sales
charges on all investments by completing the Letter of Intent section in the
Application, expressing an intention to invest an amount within a 13-month
period in a Fund which, if made at one time, would qualify for a reduced sales
charge. The minimum initial investment under a Letter of Intent is 5% of the
total Letter of Intent amount. Shares purchased with the first 5% of such amount
will be held in escrow to secure payment of the higher sales charge applicable
to the shares actually purchased if the full amount indicated is not purchased,
and such escrowed shares will be involuntarily redeemed to pay the additional
sales charge, if necessary. A purchase not originally made pursuant to a Letter
of Intent may be included under a subsequent Letter of Intent executed within 90
days of the purchase. For a further description of the Letter of Intent, see
"Purchase and Redemption of Securities Being Offered - Letter of Intent" in the
SAI.

[bullet] Right of Accumulation. Under the Right of Accumulation, a
"single purchaser" may combine a current purchase of shares of a Fund with prior
purchases of shares of any Fund to qualify for a reduced sales charge. The term
"single purchaser" refers to: (i) an individual; (ii) an individual and spouse
purchasing shares of the Fund for their own account or for trust or custodial
accounts for their minor children; or (iii) a fiduciary purchasing for any one
trust, estate or fiduciary account, including employee benefit plans created
under Sections 401 or 457 of the Internal Revenue Code, including related plans
of the same employer. To be entitled to a reduced sales charge based upon shares
already owned, the investor must ask the Distributor for such entitlement at the
time of purchase and provide the account number(s) of the investor, the investor
and spouse, and their minor children, and the age of any such child.

[bullet] Other Circumstances. The initial sales charge will be waived
on the following types of purchases: (1) purchases by investors who have
invested $1 million or more in one Fund alone or in any combination of Funds;
(2) purchases by the officers, directors/trustees, and employees of the Trust,
the Advisor or the Distributor; the immediate family members of any such person;
any trust or

29
<PAGE>

individual retirement account or self-employed retirement plan for the benefit
of any such person or family members; or the estate of any such person or family
members; (3) purchases by Selling Group Members, for their own accounts, or for
retirement plans for their employees or sold to registered representatives or
full time employees (and their immediate families) that certify to the
Distributor at the time of purchase that such purchase is for their own account
(or for the benefit of their immediate families); (4) purchases by a charitable
organization (as defined in Section 501(c)(3) of the Internal Revenue Code)
investing $100,000 or more; (5) purchases by a charitable remainder trust or
life income pool established for the benefit of a charitable organization (as
defined in Section 501(c)(3) of the Internal Revenue Code); (6) purchases with
trust assets; (7) purchases in accounts as to which a Selling Group Member
charges an account management fee; (8) purchases by any state, county, or city,
or any governmental instrumentality, department, authority or agency; (9)
purchases with redemption proceeds from another mutual fund (which is not a
series of the Trust) on which the investor has paid a front-end sales charge
only; and (10) purchases by such other persons as are determined by the Board of
Trustees of the Trust (or by the Adviser pursuant to guidelines established by
such Board) to have acquired shares under circumstances not involving any sales
expenses to the Fund or the Distributor.

HOW TO REDEEM SHARES

Shareholders have the right to redeem (subject to the restrictions
outlined below) all or any part of their shares in the Funds at a price equal to
the net asset value of such shares next computed following receipt in proper
form of the redemption request by the Trust. Unless you have selected the
Telephone Redemption Privilege and provided the required information, in order
to redeem shares in the Funds, a written request in "proper form" (as explained
below) must be sent directly to Orbitex Group of Funds, P.O. Box 8069,
Boston, MA 02269-8069. You cannot redeem shares by telephone unless you are
eligible to use the Telephone Redemption Privilege. In addition, the Trust
cannot accept requests which specify a particular date for redemption or which
specify any other special conditions. All requests to redeem shares from a
retirement account must be made in writing. Please call 1-888-ORBITEX for
further information.

Proper Form for All Redemption Requests. Your redemption request must
be in proper form. To be in proper form, your redemption request must include:
(1) for written redemption requests, a "letter of instruction," which is a
letter specifying the name of the Fund, the number of shares to be sold, the
name(s) in which the account is registered, and your account number. The letter
of instruction must be signed by all registered shareholders for the account
using the exact names in which the account is registered; (2) other supporting
legal documents, as may be necessary, for redemption requests by corporations,
trusts, and partnerships; and (3) any signature guarantees that are required by
the Trust where the value of the shares being redeemed is $50,000 or greater, or
where the redemption proceeds are to be sent to an address other than the
address of record or to a person other than the registered shareholder(s) for
the account. Signature guarantees are required if the amount being redeemed is
$50,000 or more but are not required for redemptions made using the Telephone
Redemption Privilege, unless redemption proceeds are to be sent to a person
other than the registered shareholders or for the account or to an address or
account other than that of record.

Signature Guarantees. Signature guarantees, when required, can be
obtained from any one of the following institutions: (i) a bank; (ii) a
securities broker or dealer, including a Government or municipal securities
broker or dealer, that is a member of a clearing corporation or has net capital
of at least $100,000; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national

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<PAGE>

securities exchange, a registered securities exchange or a clearing agency.
Notary publics are not acceptable guarantors.

Your request for redemption will not be processed if it is not in
proper form and will be held until it is in proper form, as described above. The
Trust will notify you if your redemption request is not in proper form.

Receiving Your Redemption Payment. Except under certain emergency
conditions, your redemption payment will be sent to you within seven days after
receipt of your telephone or written redemption request, in proper form, by the
Trust.

If your redemption request is with respect to shares purchased by a
personal, corporate, or government check within ten days of the purchase date,
the redemption payment will be held until the purchase check has cleared (which
may take up to fifteen days from the purchase date), although the shares
redeemed will be priced for redemption upon receipt of your redemption request.
You can avoid the inconvenience of this check clearing period by purchasing
shares with a certified, treasurer's or cashier's check, or with a federal funds
or bank wire.

Wire Redemption. You may request that your redemption proceeds be wired
directly to your bank account. The Trust's transfer agent imposes a $10.00 fee
for each wire redemption and deducts the fee directly from your account. Your
bank may also impose a fee for the incoming wire. The redemption proceeds must
be paid to the same bank and account as designated on the Application or in
written instructions in proper form subsequently received by the Trust.

Minimum Account Size. Due to the relatively high cost of maintaining
accounts, the Trust reserves the right to redeem shares in any account if, as
the result of investor redemptions, the value of that account drops below
$1,000. You will be allowed at least sixty (60) days, after written notice by
the Trust, to make an additional investment to bring your account value up to at
least $1,000 before the redemption is processed.

Contingent Deferred Sales Charge. In order to recover commissions paid
to Selling Group Members, a contingent deferred sales charge of 1% applies to
certain redemptions made within the first year after investing with respect to
shares purchased at net asset value without a sales charge at time of purchase
due to purchases of $1 million or more.

No charge is imposed to the extent that the net asset value of the
shares redeemed does not exceed (a) the current net asset value of shares
purchased through reinvestment of dividends or capital gain distributions plus
(b) the current net asset value of shares purchased more than one year prior to
the redemption, plus (c) increases in the net asset value of the shareholder's
shares above the purchase payments made during the preceding one year.

The contingent deferred sales charge will be waived on (1) involuntary
redemptions effected pursuant to the Trust's right to liquidate shareholder
accounts having an aggregate net asset value of less than $1,000; and (2)
redemptions the proceeds of which are reinvested in the Trust within 90 days of
the redemption.

Telephone Redemption Privilege. If you are eligible to use the
Telephone Redemption Privilege, you may authorize the redemption of some ($1,500
minimum) or all shares in your account with the Trust by telephoning the Trust
at 1-888-ORBITEX between 8:30 a.m. and 4:00 p.m. Eastern time on any day the

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<PAGE>

Trust is open. In accordance with your telephone instructions, we will redeem
your shares at their net asset value next determined after your telephone
redemption request is received. Telephone redemption requests received after
4:00 p.m. Eastern time will be processed as of the close of business on the next
business day. Redemption proceeds will, in accordance with your prior election,
be mailed to you at your current address or electronically transmitted to your
designated bank account. Please see "Shareholder Services - Telephone
Privileges" below.

HOW TO EXCHANGE SHARES

Exchange Privilege. The exchange privilege is a convenient way to buy
shares in each Fund in order to respond to changes in your investment goals or
in market conditions. In addition to the Telephone Exchange Privilege described
below, shareholders in each Fund may exchange their shares for shares in the
other Fund by a written request, in proper form, sent to the Trust, as described
under "Purchase By Mail" above. Such shares exchanged will be valued at their
respective net asset values next determined after the receipt of the written
exchange request. When making a written exchange request, please provide your
current Fund's name, your account name(s) and number(s), the name of the Fund
into which you wish to exchange your investment, the amount you wish to
exchange, and specify all current shareholder service privileges you wish to
continue in your new account (e.g., Telephone Privileges). For written exchange
requests, the signatures of all registered owners are required. Exchanges are
accepted only if the ownership registrations of both accounts are identical. No
initial sales charge, redemption fee or penalty is imposed on exchanges. In
establishing a new account by exchange, the shares being exchanged must have a
value of at least $2,500. All subsequent amounts exchanged must be $500 or more
per Fund. Please note that, for tax purposes, depending on your tax status, an
exchange may involve a taxable transaction. The exchange privilege may be
modified or terminated upon sixty (60) days' written notice to shareholders.

Telephone Exchange Privilege. The Telephone Exchange Privilege permits
you to exchange shares from your account in one Fund for shares in another Fund
(if the accounts in each Fund are identically registered) by telephoning the
Trust at 1-888-ORBITEX between 8:30 a.m. and 4:00 p.m. Eastern time on any day
the Trust is open. Shares exchanged will be valued at their respective net
asset value next determined after a telephone exchange request is received.
Telephone exchange requests made after 4:00 p.m. Eastern time will be processed
as of the close of business on the next business day. Please notify the Trust in
writing of all shareholder service privileges you wish to continue in any new
account opened by a telephone exchange request.

SHAREHOLDER SERVICES

Shareholder Inquiries and Services Offered. If you have any questions
about the Trust or the following services, please call 1-888-ORBITEX and ask
about the Trust or write Orbitex Group of Funds, P.O. Box 8069, Boston, MA
02269-8069. The Trust reserves the right to change the shareholder services
described below or to amend their terms or conditions upon sixty (60) days'
notice to shareholders.

Shareholder Statements and Reports. Each time you buy or sell shares or
reinvest a dividend or distribution in any Fund, you will receive an account
statement with respect to that Fund confirming such transaction and listing your
current share balance with that Fund. You will also receive account statements
quarterly. The Trust also will send you annual and semi-annual shareholder
reports that contain certain financial information concerning the Funds. In
addition, you will receive year-end tax information about your accounts with
each Fund.

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<PAGE>

Telephone Privileges. For your convenience, the Trust provides
telephone privileges that allow you by telephone authorization to (i) purchase
shares in each Fund; (ii) exchange shares from your account in one Fund for
shares in another Fund; and (iii) redeem shares in each Fund. If you do not
want the ability to redeem and exchange by telephone, call 1-888-ORBITEX for
instructions. Procedures have been established by the Trust and its transfer
agent that are considered to be reasonable and are designed to confirm personal
identification information prior to acting on telephone instructions, including
tape recording telephone communications and providing written confirmation of
instructions communicated by telephone. If the Trust or the transfer agent does
not employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, the Trust may be liable for any losses arising out of any
action on its part or any failure or omission to act as a result of its own
negligence, lack of good faith, or willful misconduct. In light of the
procedures established, neither the Trust nor the transfer agent will be liable
for following telephone instructions that it believes to be genuine. During
periods of extreme economic conditions or market changes, requests by telephone
may be difficult to make due to heavy volume. During such times, please consider
placing your order by mail.

The telephone privileges are not available with respect to redemptions
for accounts requiring supporting legal documents.

Systematic Investment Program. You may arrange for automatic monthly or
quarterly investing whereby the transfer agent will be authorized to initiate
a debit to your bank account for a specific amount ($50 minimum) each month or
quarter which will be used to purchase shares. For institutions that are members
of the Automated Clearing House System (ACH), such purchases can be processed
electronically on any day of the month between the 3rd and 28th. The Application
contains the requirements applicable to this program. To establish the
Systematic Investment Program for a new account, complete the appropriate
section of the Application. To establish the Systematic Investment Program for
an existing account call the Trust at 1-888-ORBITEX.

Systematic Withdrawal Program. If you own shares with a total value of
not less than $10,000, you may participate in a systematic withdrawal program
providing for fixed payments to you (or to a third party) at regular monthly,
quarterly or annual intervals. You may realize a capital gain or loss on each
fixed-amount payment. Additional information concerning the Systematic
Withdrawal Program is set forth in the SAI. If you desire to participate in the
Systematic Withdrawal Program, you may do so by completing and submitting the
appropriate application to the transfer agent. The Systematic Withdrawal Program
is voluntary and may be terminated at any time by the shareholder.

Systematic Exchange Program. Under a Systematic Exchange Program a
shareholder may set up periodic exchanges to an identically registered
account in another Orbitex Fund. The account from which the exchanges are being
processed must have a minimum balance of $10,000. The account into which the
exchange is being processed must have a minimum of $1,000. An exchange
transaction is a sale and purchase of shares for federal income tax purposes and
may result in a gain or loss. To establish a Systematic Exchange Program call
the Trust at 1-888-ORBITEX after both accounts are established. For further
details concerning this program, see the SAI.

Retirement Accounts. The Trust makes available individual retirement
account plans ("IRAs"), including IRA "Rollover Accounts". There is an annual
fee of $10 per Fund in which you own shares up to a maximum fee of $30 for
administering your retirement account. Detailed information about these plans
and a retirement account application package are available from the Trust by
calling 1-888-ORBITEX. Investors should consult with their own tax advisors
before establishing a retirement plan.

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<PAGE>

HOW EACH FUND'S NET ASSET VALUE IS DETERMINED

Each Fund calculates its net asset value as of the close of regular
trading on the NYSE (currently 4:00 p.m. Eastern time, unless weather, equipment
failure or other factors contribute to an earlier closing time), each day the
Fund is open for business. Each Fund's net asset value per share is computed by
determining the value of its total assets, subtracting all of its liabilities,
and dividing the result by the total number of shares outstanding at such time.

Equity securities are valued at the last sale price on the exchange or
in the over-the-counter market in which such securities are primarily traded, as
of the close of business on the day the securities are being valued, or, lacking
any sales, at the last available bid price. Long-term debt obligations are
valued at the mean of representative quoted bid and asked prices for such
securities or, if such prices are not available, at prices for securities of
comparable maturity, quality and type; however, when the Advisor or Sub-Advisor
deems it appropriate, prices obtained from a bond pricing service will be used.
Short-term debt investments are amortized to maturity, provided such valuations
represent fair value. When market quotations for futures and options positions
held by a Fund are readily available, those positions are valued based upon such
quotations.

Foreign securities are valued on the basis of market quotations from
the primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates.

If market quotations are not readily available or if the values have
been materially affected by events occurring after the closing of a foreign
market, securities and other assets are valued as determined in good faith by or
under the direction of the Board of Trustees of the Trust.

Certain securities from time to time may be listed primarily on foreign
exchanges which trade on days when the NYSE is closed (such as a Saturday). As a
result, the net asset value of a Fund's shares may be significantly affected by
such trading on days when shareholders have no access to that Fund.

HOW THE TRUST IS MANAGED

Board of Trustees. The management of the Trust's business and affairs
is the responsibility of its Board of Trustees. Although the Board of Trustees
is not involved in the day-to-day operations of the Funds, it has the
responsibility for establishing broad operating policies and supervising the
overall performance of the Funds.

Advisor. The Trust is managed by Orbitex Management, Inc. (the
"Advisor"), 660 Madison Avenue, New York, New York 10021. The Advisor was
founded in 1995 and is registered with the SEC as an investment adviser. The
Advisor has no prior experience in managing registered investment companies. The
Advisor, however, is affiliated with Orbitex Management Ltd., an investment
adviser which provides investment services to individuals and institutions
including Canadian unit trusts. As of December 31, 1996 Orbitex Management Ltd.
managed approximately $1.2 billion of assets. The Advisor is a wholly-owned
subsidiary of Orbitex, Inc., a business development company which is a
wholly-owned subsidiary of Capital Management Ltd., an investment management
firm. Mr. Thomas Bachmann is a controlling person of Capital Management Ltd.

Under the terms of an investment advisory agreement (the "Advisory
Agreement") with the Trust on behalf of each Fund, the Advisor is responsible
for formulating the Funds' investment programs, allocating assets among
Sub-Advisors, and monitoring and evaluating the investment programs and

34
<PAGE>

performance of the Sub-Advisors. In addition, the Advisor is responsible for
making day-to-day investment decisions and engaging in portfolio transactions on
behalf of the Strategic Natural Resources Fund, the Info-Tech &
Communications Fund and the Growth Fund. The Advisor also furnishes corporate
officers, provides office space, services and equipment and supervises all
matters relating to the Trust's operations. The Advisory Agreement also provides
that the Advisor may retain Sub-Advisors at the Advisor's own cost and expense,
for the purpose of managing the investment of the assets of one or more Fund's
of the Trust.

Courtney D. Smith, Chief Investment Officer of Orbitex Management,
Inc., is responsible for allocating assets among the Sub-Advisors of Funds
with multiple Sub-Advisors and, if the Advisor is to use a Sub-Advisor in
managing a Fund, for selecting the Sub-Advisor. Please refer to "Portfolio
Managers" below.

The Trust intends to apply to the SEC for an exemptive order which, if
granted, will permit the Advisor subject to approval by the Board of Trustees of
the Trust to engage and terminate Sub-Advisors without shareholder approval.
There is no assurance that the SEC will grant such exemptive order.

As compensation for its services under the Advisory Agreement, each of
the Funds will pay the Advisor a fee, computed daily and paid monthly, at the
annualized rate (expressed as a percentage of average daily net assets) of 1.25%
for the Strategic Natural Resources Fund, 1.25% for the Info-Tech &
Communications Fund, .75% for the Growth Fund, 1.50% for the Asian Select
Advisors Fund and 1.25% for the Asian High Yield Fund .

In the interest of limiting the expenses of the Funds, the Advisor has
voluntarily agreed to waive its advisory fees and reimburse certain expenses to
the extent necessary to keep total operating expenses (expressed as a percentage
of average net assets on an annual basis) of: the Strategic Natural Resources
Fund to 2.40%, the Info-Tech & Communications Fund to 2.40%, the Growth Fund to
1.60% and the Asian Select Advisors Fund to 2.50%. This waiver is expected
to be in effect during the Trust's current fiscal year. The Adviser has
voluntarily agreed to waive its entire advisory fee and reimburse all expenses
of the Asian High Yield Fund for the first sixty (60) days of Fund operations
and thereafter to waive its fees and reimburse certain expenses to the extent
necessary to keep total operating expenses to 2.00% of average net assets on an
annual basis.

Reimbursement by a Fund of the fees waived or other expenses paid by
the Advisor may be made at a later date when the Fund has reached a sufficient
asset size to permit reimbursement to be made without causing the annual expense
ratio of a Fund to exceed the amount of the relevant expense limitation.
Consequently, no reimbursement by a Fund would be made unless a Fund's actual
annual operating expense ratio were less than 2.40%, 2.40%, 1.60%, 2.50% and
2.00% in the case of the Strategic Natural Resources Fund, the Info-Tech &
Communications Fund, the Growth Fund, the Asian Select Advisors Fund and the
Asian High Yield Fund , respectively, and payment of such reimbursement was
approved by the Board of Trustees of the Trust on a quarterly basis. The total
amount of reimbursement to which the Advisor may be entitled in any year will be
equal to the sum of all fees waived and/or assumed by the Advisor during any of
the previous two fiscal years, less any reimbursement amount previously paid to
it.

Sub-Advisors. Pursuant to separate Sub-Advisory Agreements among each
Sub-Advisor, the Advisor and the Trust, each Sub-Advisor is responsible for the
selection and management of portfolio investments for a Fund or for its segment
of a particular Fund in accordance with the Fund's investment objective and
policies and under the supervision of the Advisor. The following organizations
act as Sub-Advisors to the Funds:

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<PAGE>

Bankers Trust Company ("Bankers Trust"), One Bankers Trust Plaza, New
York, New York 10006 is a Sub-Advisor for the Asian Select Advisors Fund.
Bankers Trust has delegated its duties for providing subadvisory services to the
Fund to BT Fund Managers (International) Limited ("BT International"). Through
its office in New York and its global affiliates, including BT International,
Bankers Trust provides a full range of investment advisory services for
individual and institutional clients worldwide. As of December 31, 1996 ,
Bankers Trust and its affiliates managed over $200 billion of assets. Bankers
Trust is a wholly-owned subsidiary of Bankers Trust New York Corporation. BT
International is a wholly-owned subsidiary of Bankers Trust Australia Limited, a
wholly-owned subsidiary of Bankers Trust.

Asia Strategic Investment Management Limited ("ASIM"), Chekiang First
Bank Center, 1 Duddell Street, Hong Kong, is a Sub-Advisor for the Asian
Select Advisors Fund. Incorporated in Hong Kong in July 1995, ASIM is an
investment management company specializing in Asian equities. As of January
1997, ASIM had $59 million in assets under management. ASIM is an investment
adviser to two non-U.S. registered investment funds. ASIM is a wholly-owned
subsidiary of Asia Strategic Capital Limited, a holding company, which is owned
by KHWC Partners Limited, a holding company, and the Bank of East Asia Limited.
The partners of KHWC Partners are Michael Tze Hau Lee, Patrick Wai Cheong Shum,
James Kuang Kuo Cheng and Peter Kung Wah Woo.

J.P. Morgan Investment Management Inc. ("J.P. Morgan Investment"), 522
Fifth Avenue, New York, New York 10036 is a Sub-Advisor for the Asian High Yield
Fund. J.P. Morgan Investment provides investment management services to employee
benefit funds, foundations, endowments, insurance companies, governments and
other mutual funds. As of December 31, 1996, J.P. Morgan Investment managed over
$208 billion of assets. Incorporated in 1984, J.P. Morgan Investment is a
wholly-owned subsidiary of J.P. Morgan & Co. Incorporated, a publicly held bank
holding company.

On a monthly basis, each Sub-Advisor receives a sub-advisory fee, paid
by the Advisor, based on the applicable Fund's average daily net assets at the
annualized rate of: .70% of the average daily net assets of the portion of the
Asian Select Advisors Fund advised by Bankers Trust; and .50% of the average
daily net assets of the portion of the Asian Select Advisors Fund advised by
ASIM; .50% on the first $50 million of average daily net assets of the Asian
High Yield Fund, .45% on next $50 million of net assets, and .40% of net assets
over $100 million for J.P. Morgan Investment.

Portfolio Managers. The investment professionals who are primarily
responsible for the day-to-day management of the Funds' portfolios are as
follows:

Strategic Natural Resources Fund. Konrad Krill is the portfolio manager
for the Strategic Natural Resources Fund. Mr. Krill joined Orbitex Management,
Inc. in 1997. From 1986 to 1997, he was Vice President and portfolio manager at
Dean Witter Intercapital, Inc.

Prior Performance of Portfolio Manager of Strategic Natural Resources
Fund. Set forth below is certain information regarding the performance, for
certain periods through May 31, 1997, of a fund (the "Prior Fund") previously
managed by Mr. Krill, the current portfolio manager for the Strategic Natural
Resources Fund. Mr. Krill was primarily responsible for making the investment
decisions of the Prior Fund. The Prior Fund is a registered investment company
and has investment objectives, policies and strategies that are substantially
the same as those of the Strategic Natural Resources Fund, as well as investment
restrictions that are substantially similar to those of the Strategic Natural
Resources Fund.

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<PAGE>

The prior performance information of the Prior Fund below is presented
net of the payment of fees and expenses, which were approximately 1.90% of the
average daily net assets. On the other hand, it is anticipated that the
Strategic Natural Resources Fund will, during its initial period of operation,
incur expenses at an annualized rate of 2.97% of its average daily net assets
(which the Advisor has undertaken to reduce to 2.40% through fee waivers and
expense reimbursements). Accordingly, had the Prior Fund been subject to fees
and expenses similar to those expected to be incurred by the Strategic Natural
Resources Fund, the performance shown below would be reduced by an amount equal
to the difference of those anticipated expenses and the expenses of the Prior
Fund.

The performance below of the Prior Fund is compared to the Lipper
Natural Resource Average which reflects the average performance of all U.S.
registered investment companies that are categorized as natural resources funds
by Lipper Analytical Services, Inc., and reflects the average fees and expenses
incurred by those funds.

The prior performance information shown below should not be considered
a representation of future performance of the Strategic Natural Resources Fund.

Average Annual Total Return
For the period

June 1, 1996 - May 31, 1997 April 1, 1995 - May 31, 1997

Prior Fund 22.64 23.33
Lipper Average 13.48 21.38

Info-Tech & Communications Fund and Growth Fund. Courtney D. Smith is
the portfolio manager for the Info-Tech & Communications Fund and the Growth
Fund. Mr. Smith joined Orbitex Management, Inc. in 1996. Formerly, he was
President and Chief Investment Officer of Pinnacle Capital Management, Inc.

Asian Select Advisors Fund. Paul Durham is responsible for managing
that portion of the assets of the Fund managed by Bankers Trust. James Cheng,
Michael Lee, Patrick Shum and Peter Woo are responsible for managing that
portion of the assets of the Fund managed by ASIM.

Mr. Durham joined Bankers Trust's Australian Equity Group in 1988 and
was a member of the U.S. Equities Group based in New York from December 1992 to
March 1994. In April 1994, Mr. Durham returned to Australia and is currently
Head of the Asian Equity Group.

Mr. Cheng has been Director of ASIM since 1996. From 1988 to 1996, he
was Executive Director/Senior Fund Manager of Morgan Stanley Asset Management
(Singapore) Ltd.

Mr. Lee has been Managing director of ASIM since 1995. From 1992 to
1995, he was a director and partner of Lloyd George Management (Hong Kong) Ltd.

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<PAGE>

Mr. Shum has been Chief Investment Officer of ASIM since 1995. From
1990 to 1995, he was Director/Senior Fund Manager of Barclays de Zoete Wedd
Investment Management (Hong Kong) Limited.

Mr. Woo has been Director of ASIM since 1995. From 1993 to 1995, he was
Director of Kim Eng Securities (Hong Kong) Ltd.

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<PAGE>

Prior Performance of Sub-Advisors of the Asian Select Advisors Fund.
Set forth below is certain information regarding the performance, for certain
periods through March 31, 1997, of funds or accounts managed by the Sub-Advisors
of the Asian Select Advisors Fund. Although the investment objectives, policies
and strategies of these funds and accounts are substantially the same as those
of the Asian Select Advisors Fund, it should be noted that only one of these
funds is registered as an investment company under the 1940 Act and none of the
rest of these funds or accounts are registered as investment companies under the
1940 Act nor are any of them subject to investment restrictions that are
identical to those that apply to the Fund. Therefore, the performance of the
funds and accounts set forth below may be better or worse than it would have
been had all of the funds or accounts been subject to requirements applicable to
a registered investment company and the investment restrictions applicable to
the Fund. For BT International, the funds and accounts include a U.S. registered
investment company, two offshore investment funds, a group trust for investment
by trust accounts and a separately managed account and include funds and
accounts managed by an affiliated entity employing the same personnel as that
employed by BT International. Performance information for the BT International
funds and accounts is provided below on a composite basis, showing the combined
performance of the funds and accounts over various periods of time up to five
years. Not all of the funds and accounts that comprise the composite have been
operational for the full five year period indicated below. The prior performance
for ASIM reflects the performance of an offshore investment company.

The prior performance information below for each of the Sub-Advisors is
presented net of (or after payment of) fees and expenses by the relevant funds
and accounts. For the funds and accounts included in the composite for BT
International, these fees and expenses averaged on a weighted basis
approximately 0.92% per year of the average assets under management. For the
offshore investment company managed by ASIM, the fees and expenses averaged
approximately 1.92% per year of the average assets under management. On the
other hand, it is anticipated that the Asian Select Advisors Fund will, during
its initial period of operation, incur expenses at an annualized rate of 3.37%
of its average daily net assets (which the Adviser has undertaken to reduce to
2.50% through fee waivers and expense reimbursements). Accordingly, had the
funds and accounts reflected in the performance information set forth below been
subject to fees and expenses at the higher level expected to be incurred by the
Asian Select Advisors Fund, the performance shown below would be reduced by an
amount approximately equal to the difference between those anticipated expenses
and the approximate expenses incurred by the funds and accounts included in the
performance information below.

The prior performance of the BT International funds and accounts is
included as a comparison for the portion of the Asian Select Advisors Fund that
is managed by BT International. In addition, the prior performance of the
offshore investment company managed by ASIM is included as a comparison for the
portion of the Asian Select Advisors Fund that is managed by ASIM.

The performance below of both BT International and ASIM is compared to
the Morgan Stanley Capital International AC Asia (excluding Japan) Free Index
which is an index of securities traded in various markets in Asia, excluding
Japan and reflects the reinvestment of dividends. Since the Index represents the
performance of unmanaged portfolios of securities, the performance of the Index
is not subject to any fees or expenses, nor is it subject to any brokerage fees
or other transaction costs.

The prior performance information shown below should not be considered
a representation of future performance of the Asian Select Advisors Fund.

Average Annual Total Return
(after fees and expenses) for
periods through March 31, 1997
------------------------------
One Two Three Four Five
Year Years Years Years Years
---- ----- ----- ----- ------
BT International Composite 1.73 12.59 9.39 18.24 23.58
MSCI Index -2.61 6.96 5.08 14.47 15.76

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<PAGE>

Average Annual Total Return (after fees and expenses)
for periods from Inception
(October 5, 1995) to:
---------------------
September 30, 1996 March 31, 1997
------------------ --------------
ASIM 18.50 13.91
MSCI Index 8.34 5.09

Average annual total return for the BT International Composite was
computed as follows. The total returns of each of the funds were weighted by
their respective previous month's market values to obtain the total return for
the composite. The average annual total return for the composite was calculated
using the formula prescribed by the SEC which is described in the SAI. Average
annual total return for the ASIM offshore investment company was computed using
the formula prescribed by the SEC.

Asian High Yield Fund. Joseph Bohrer, Eduardo L. Cortes and Jennifer A.
Lloyd are the portfolio managers of the Asian High Yield Fund.

Mr. Bohrer joined J.P. Morgan Investment in New York in 1985 and became
a portfolio manager in the Equity and Balanced Group in 1988. He transferred to
J.P. Morgan Investment London in 1992, where he was a portfolio manager
responsible for U.S. and global equity portfolios. In September 1996, he moved
to Singapore to become head of investments for that office.

Mr. Cortes is the portfolio manager responsible for J.P. Morgan
Investment's emerging markets debt product. He is a member of the Fixed Income
Asset Allocation Committee and the Global Extended Markets Strategy Team. He
joined the Fixed Income Group in 1991 after spending six years in other
capacities at J.P. Morgan Investment.

Ms. Lloyd is responsible for the fixed income component of the J.P.
Morgan Investment Global Balanced Group. In 1997, Ms. Lloyd returned from the
J.P. Morgan Investment Paris office where she was responsible for the Fixed
Income Group. Prior to that, Ms. Lloyd was a multiple currency fixed income and
currency manager in the London Fixed Income Group. She joined J.P. Morgan
Investment in 1987 as a trader, dealing in multiple currency fixed income
securities, after working as a foreign exchange trader at Sumitomo Corporation
for three years.

Administrator. State Street Bank and Trust Company ("State Street")
serves as the administrator of the Trust. State Street's principal business
address is 225 Franklin Street, Boston, Massachusetts 02110.

State Street provides each Fund with administrative services pursuant
to an Administration Agreement. The services under this Agreement are subject to
the supervision of the Board of Trustees and the officers of the Trust, and
include the day-to-day administration of matters necessary to each Fund's
operations, maintenance of its records and the books of the Trust, preparation
of reports, and compliance monitoring of its activities. For providing
administrative services to the Funds, State Street will receive from each Fund a
monthly fee at an annual rate of .10% of the first $100 million of each Fund's
average daily net assets, plus .08% of the next $100 million of each Fund's
average daily net assets, plus .06% of each Fund's average daily net assets in
excess of $200 million (with a minimum annual fee of $75,000 for each Fund, a
portion of which will be waived for the first year of operation).

Custodian, Transfer and Dividend Disbursing Agent. State Street serves
as the Trust's custodian and holds all portfolio securities and cash assets of
the Trust. State Street is authorized to deposit securities in securities
depositories or to use the services of subcustodians. State Street also provides
accounting services including daily valuation of the shares of each Fund. State
Street also serves as the Trust's transfer agent and dividend disbursing agent
and maintains the Trust's shareholder records.

40
<PAGE>

Distributor. Funds Distributor, Inc. (the "Distributor") serves as the
distributor of the shares of each Fund pursuant to a Distribution Agreement
between the Distributor and the Trust. The Distributor's principal business
address is 60 State Street, Boston, Massachusetts 02109. The Distributor is a
broker-dealer registered with the SEC and is a member of the National
Association of Securities Dealers, Inc. Pursuant to a Distribution Plan and
Agreement Pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Rule 12b-1 Plan and Agreement"), the Funds are authorized to use a portion of
their assets to finance certain activities relating to distribution services
provided to investors in their shares. The Rule 12b-1 Plan and Agreement permits
payments to be made by each Fund to the Distributor to compensate the
Distributor for its activities in providing these services to investors.

The Rule 12b-1 Plan and Agreement permits payments to be made by each
Fund to the Distributor to compensate the Distributor for providing
distribution services to investors in the Fund, including arranging for Selling
Group Members to provide these services and paying compensation for these
services. The Rule 12b-1 Plan and Agreement provides for payment of a fee to the
Distributor at an annualized rate of 0.30% of the average daily net assets
of the Asian High Yield Fund and 0.40% of the average daily net assets of each
of the other Funds. The Rule 12b-1 Plan and Agreement will continue in effect,
if not sooner terminated in accordance with its terms, for successive one-year
periods, provided that its continuance is specifically approved by the vote of
the Board of Trustees of the Trust, including a majority of the Trustees who are
not interested persons of the Trust and do not have a direct or indirect
financial interest in the Rule 12b-1 Plan and Agreement. For further information
regarding the Rule 12b-1 Plan and Agreement, see the SAI.

Expenses. Each Fund pays all its expenses not assumed by the Advisor,
Distributor or other agents. In addition to the investment advisory and other
fees described previously, each Fund pays other expenses, such as brokerage,
legal, audit, transfer agency and custodial fees; proxy solicitation costs;
compensation of Trustees who are not affiliated with the Adviser; fidelity
bond and other insurance premiums; organizational expenses; taxes; expenses of
reports and prospectuses sent to existing investors; and extraordinary expenses.
All general expenses of the Trust and joint expenses of the Funds are allocated
among the Funds on a basis deemed fair and equitable.

PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES

Allocations of portfolio transactions for the Funds, including their
frequency, to various brokers is determined by the Advisor or Sub-Advisor in
their best judgment and in a manner deemed fair and reasonable to shareholders.
The primary consideration is prompt and efficient execution of orders in an
effective manner at the most favorable price. The Advisor and Sub-Advisors may
also consider sales of the Funds' shares as a factor in the selection of
broker-dealers, subject to the policy of obtaining best price and execution. For
further information regarding the allocation of portfolio transactions and
brokerage, see the SAI.

41
<PAGE>

ORGANIZATION OF THE TRUST

The Trust is a Delaware business trust organized in December 1996 and
registered with the SEC under the 1940 Act as an open-end management investment
company. The Trust currently consists of five portfolios (i.e. the Funds),
each of which represents a separate series of beneficial interests in the Trust
having different investment objectives, investment programs, policies and
restrictions. Each share of each Fund represents an equal proportionate interest
in that Fund with each other share, and each share is entitled to such dividends
and distributions of income belonging to that Fund as are declared by the Board
of Trustees of the Trust. In the event of the liquidation of a Fund, each share
of that Fund is entitled to a pro rata share of the net assets of that Fund.

Shareholders having at least two-thirds of the outstanding shares of
the Trust may remove a Trustee from office by a vote cast in person or by proxy
at a meeting of shareholders called for that purpose at the request of holders
of 10% or more of the outstanding shares of the Trust. The Trust has an
obligation to assist in such shareholder communications. The Trust does not
routinely hold annual meetings of shareholders. Each share of the Trust is
entitled to one vote on all matters submitted to a vote of all shareholders of
the Trust. Fractional shares, when issued, have the same rights,
proportionately, as full shares. Shares of a particular Fund will be voted
separately from shares of the other Funds on matters affecting only that Fund,
including approval of the Investment Advisory Agreement, Rule 12b-1 Plan and
Agreement for that Fund and changes in the fundamental objective, policies or
restrictions of that Fund. All shares are fully paid and nonassessable when
issued and have no preemptive, conversion or cumulative voting rights. The
Trustees in their discretion, may authorize the division of shares of the Funds
into different classes permitting shares of different classes to be distributed
by different methods although shareholders of different classes would have an
interest in the same portfolio of assets. Shareholders of different classes
may bear different expenses in connection with different methods of
distribution.

As of the date of this Prospectus, Orbitex Management, Inc. provided
the initial seed capital for the Trust and owned 100% of the outstanding voting
shares of each Fund. Furthermore, as ownership of more than 25% of the
outstanding voting securities of a Fund may result in a person being deemed a
controlling entity of that Fund, Orbitex Management, Inc. may be deemed a
control person of each Fund. Such control by Orbitex Management, Inc. will
dilute the effect of the votes of other shareholders.

42
<PAGE>

APPENDIX

Description of Bond Ratings

Excerpts from Moody's Investors Services, Inc. Corporate Bond Ratings:

Aaa: judged to be the best quality; carry the smallest degree of
investment risk; Aa: judged to be of high quality by all standards; A: possess
many favorable investment attributes and are to be considered as higher medium
grade obligations; Baa: considered as lower medium grade obligations, i.e. they
are neither highly protected nor poorly secured; Ba: B: protection of interest
and principal payments is questionable.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest. Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings. C: Bonds which are rated C are lowest rated class of bonds
and issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

Note: Moody's may apply numerical modifiers, 1, 2, and 3 in each
generic rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher end of
its generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.

Excerpts from Standard & Poor's Corporation Bond Ratings:

AAA: highest grade obligations; possess the ultimate degree of
protection as to principal and interest; AA: also qualify as high grade
obligations, and in the majority of instances differs from AAA issues only in
small degree; A: regarded as upper medium grade; have considerable investment
strength but are not entirely free from adverse effects of changes in economic
and trade conditions. Interest and principal are regarded as safe; BBB: regarded
as borderline between definitely sound obligations and those where the
speculative element begins to predominate; this group is the lowest which
qualifies for commercial bank investments.

BB, B, CCC, CC, C: Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. CI: The rating CI is reserved for income bonds on which no
interest is being paid. D: Debt rated D is in payment default. The D rating
category is used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition if debt service
payments are jeopardized.

Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.

43
<PAGE>

The Orbitex Group of Funds

Orbitex Management, Inc. offers specialized and opportunistic mutual funds with
the potential to enhance returns and diversify overall risk in an investor's
portfolio. Through its investment management team and carefully selected
subadvisers, Orbitex emphasizes well-articulated investment philosophies and
consistent management styles to ensure that investors and investment
professionals get what they expect from each Orbitex Fund.
<TABLE>
<CAPTION>
Fund Objective Suitable Investors
- ---- --------- ------------------
<S> <C> <C>
Orbitex Strategic Natural Resources Capital growth through a flexible policy Growth-oriented individuals who see
Fund of investing in common stocks of strong economic trends as an indicator of
Managed by Orbitex Management, Inc. companies engaged in natural resource natural resource demand.
industries and industries supportive
to natural resource industries.

Orbitex Info-Tech & Communications Superior long-term capital growth Growth oriented investors who want to
Fund through selective investment in capitalize on opportunities in global
Managed by Orbitex Management, Inc. communication, information, and related telecommunications and information
technology companies. industries.

Orbitex Growth Fund Long-term growth of capital through Long-term investors interested in growth
Managed by Orbitex Management, Inc. investment in securities of companies opportunities in the U.S. stock market.
that offer potential for growth.

Orbitex Asian Select Advisors Fund Superior long-term capital growth Individuals attracted to the growth
Subadvised by: through selective investment in Asian potential of Asian stocks and who can
BT Fund Managers International/Asia companies. accept the risks of international
Strategic Investment Management Ltd. investing.

Orbitex Asian High Yield Fund High current income through investment Individuals seeking high income from a
Subadvised by: in securities of issuers based in Asia. portion of their bond portfolios and who
J.P. Morgan Investment Management, Inc. The Fund will invest in high-yield, can accept the risks of international
high-risk debt obligations. investing.

</TABLE>
Please consult the "Description of Securities, Other Investment Policies and
Risk Considerations" section of the prospectus for information on the risks
involved in investing in any of the funds.
*************************[line chart]******************************************
<TABLE>
<CAPTION>
3/31/92 3/31/93 3/31/94 3/31/95 3/31/96 3/31/97
<S> <C> <C> <C> <C> <C> <C>
Lipper Science & Technology Fund Index $10,000 $11,483 $13,368 $16,012 $20,598 $22,046
MSCI Asia Ex-Japan Index $10,000 $12,110 $17,920 $18,172 $21,349 $20,791
S & P 500 Composite Index $10,000 $11,523 $11,693 $13,513 $17,851 $21,390
Lipper Natural Resources Funds Category $10,000 $11,842 $12,402 $13,177 $16,648 $19,329
Lipper Emerging Markets Debt Funds Category $10,000 $8,832 $12,458 $16,886
</TABLE>
*******************************************************************************
<TABLE>
<CAPTION>
Average Annual Returns
- ---------------------------------------
(for periods ended 3/31/97) 1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Lipper Emerging Market Debt Funds Category 38.90% 19.54% n/a n/a
- -----------------------------------------------------------------------------------------------------------------
Lipper Natural Resources Funds Category 14.00% 16.24% 14.22% 6.98%
- -----------------------------------------------------------------------------------------------------------------
MSCI Asia Ex-Japan Index -2.61% 5.08% 15.76% n/a
- -----------------------------------------------------------------------------------------------------------------
Standard & Poor's 500 Index 19.83% 22.30% 16.42% 13.38%
- -----------------------------------------------------------------------------------------------------------------
Lipper Science and Technology Index 7.03% 18.15% 17.13% 12.65%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The Lipper Analytical Services Averages and Indexes, Standard & Poor's 500
Composite Index, and Morgan Stanley Capital International Asia Ex-Japan are
unmanaged indexes. The performance of these indexes does not reflect sales
charges; direct investment in the indexes is not possible. Index performance is
not intended to represent the future performance of any Orbitex Funds. Past
performance is no guarantee of future results. The investment return and
principal value of a Fund investment will fluctuate and shares, when redeemed,
may be worth more or less than their original cost.

<PAGE>

ORBITEX(r)
Group of Funds

New York London Zurich Nassau Frankfurt

ORB-PRO-97

<PAGE>

PART B

ORBITEX GROUP OF FUNDS
660 Madison Avenue
New York, New York 10021

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information is not a Prospectus, but
should be read in conjunction with the Prospectus of the Orbitex Group of Funds
(the "Trust") dated September 30, 1997, which may be obtained by telephoning
1-888-ORBITEX and asking about the Trust.

The date of this Statement of Additional Information is September 30, 1997.

TABLE OF CONTENTS

ITEM PAGE
- ---- ----
General Information and History 2
Investment Restrictions 2
Description of Securities, Other Investment Policies and Risk Considerations 4
Management of the Trust 24
Principal Holders of Securities 25
Investment Management and Other Services 25
Administrator 26
Custodian 27
Transfer Agent Services 27
Distribution of Shares 27
Brokerage Allocation and Other Practices 28
Purchase and Redemption of Securities Being Offered 30
Shareholder Services 32
Determination of Net Asset Value 32
Taxes 33
Organization of the Trust 35
Performance Information About the Funds 35
Independent Accountants 37
Legal Matters 37
Financial Statements 37

<PAGE>

GENERAL INFORMATION AND HISTORY

The Trust is a Delaware business trust registered with the Securities
and Exchange Commission ("SEC") under the Investment Company Act of 1940 (the
"1940 Act") as an open-end management investment company, commonly known as a
"mutual fund."

The Trust currently consists of five portfolios, the Orbitex
Strategic Natural Resources Fund ("Strategic Natural Resources Fund"), Orbitex
Info-Tech & Communications Fund ("Info-Tech & Communications Fund"), Orbitex
Growth Fund ("Growth Fund"), Orbitex Asian Select Advisors Fund ("Asian Select
Advisors Fund") and Orbitex Asian High Yield Fund ("Asian High Yield Fund")
(individually a "Fund" and collectively the "Funds"), each of which represents a
separate series of beneficial interest in the Trust having different investment
objectives, investment programs, policies and restrictions.

Each Fund is managed by Orbitex Management, Inc. (the "Advisor"), which
directs the day-to-day operations of each Fund and directs the investment of
assets of the Strategic Natural Resources Fund, the Info-Tech &
Communications Fund and the Growth Fund. The investments of the Asian Select
Advisors Fund and the Asian High Yield Fund are directed by one or more
sub-advisers (each a "Sub-Advisor"). State Street Bank and Trust Company ("State
Street") is the administrator, custodian, accounting agent, transfer agent and
dividend disbursing agent for the Trust. Funds Distributor, Inc. (the
"Distributor") is the distributor for the Trust.

INVESTMENT RESTRICTIONS

Each Fund has adopted the following fundamental investment policies
which may be changed only with the consent of a "majority of the outstanding
voting securities" of the particular Fund. As used in the Prospectus and in this
Statement of Additional Information, the term "majority of the outstanding
voting shares" means the lesser of (1) 67% of the shares of a Fund present at a
meeting where the holders of more than 50% of the outstanding shares of a Fund
are present in person or by proxy, or (2) more than 50% of the outstanding
shares of a Fund. Shares of each Fund will be voted separately on matters
affecting only that Fund, including approval of changes in the fundamental
objectives, policies, or restrictions of that Fund.

A Fund will not:

(1) Margin: Purchase securities on margin, except a Fund may make
margin deposits in connection with permissible options and futures transactions
subject to (5) below and may obtain short-term credits as may be necessary for
clearance of transactions.

(2) Senior Securities: Issue any class of securities senior to any
other class of securities except in compliance with the 1940 Act.

(3) Borrowing: Borrow money for investment purpose in excess of
33-1/3% of the value of its total assets, including any amount borrowed less
its liabilities not including any such borrowings. Any borrowings which come to
exceed this amount will be reduced in accordance with applicable law.
Additionally, each Fund may borrow up to 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.

(4) Real Estate: Purchase or sell real estate, or invest in real estate
limited partnerships, except each Fund may, as appropriate and consistent with
its respective investment objective, policies and other investment restrictions,
buy securities of issuers that engage in real estate operations and securities
that are secured by interests in real estate (including shares of real estate
mortgage investment conduits, mortgage pass-through securities, mortgage-backed
securities and collateralized mortgage obligations) and may hold and sell real
estate acquired as a result of ownership of such securities.

(5) Commodities: Purchase or sell physical commodities or contracts
thereon, except that each Fund may enter into financial futures contracts and
options thereon.

2
<PAGE>

(6) Underwriting: Underwrite securities issued by other persons, except
to the extent that a Fund may be deemed to be an underwriter, within the meaning
of the Securities Act of 1933, in connection with the purchase of securities
directly from an issuer in accordance with each Fund's investment objective,
policies and restrictions.

(7) Loans: Make loans, except that each Fund in accordance with that
Fund's investment objective, policies and restrictions may: (i) invest in all or
a portion of an issue of publicly issued or privately placed bonds, debentures,
notes, other debt securities and loan participation interests for investment
purposes; (ii) purchase money market securities and enter into repurchase
agreements; and (iii) lend its portfolio securities in an amount not exceeding
one-third of the value of that Fund's total assets.

(8) Diversification: Except for the Asian High Yield Fund, make an
investment unless 75% of the value of that Fund's total assets is represented by
cash, cash items, U.S. Government securities, securities of other investment
companies and "other securities." For purposes of this restriction, the term
"other securities" means securities as to which the Fund invests no more than 5%
of the value of its total assets in any one issuer or purchases no more than 10%
of the outstanding voting securities of any one issuer. As a matter of operating
policy, each Fund will not consider repurchase agreements to be subject to the
above-stated 5% limitation if all of the collateral underlying the repurchase
agreements are U.S. Government securities and such repurchase agreements are
fully collateralized.

(9) Concentration: Invest 25% or more of the value of its total assets
in any one industry, except that: (i) the Strategic Natural Resources Fund
will invest at least 25% of its total assets in securities of companies in
natural resource industries and industries supportive to natural resource
industries; and (ii) the Info-Tech & Communications Fund will invest at least
25% of its total assets in the securities of companies in the communications,
information and related technology industries. This limitation (9) does not
apply to securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities or repurchase agreements secured by U.S. Government
securities.

The following restrictions are designated as non-fundamental and may be
changed by the Board of Trustees of the Trust without the approval of
shareholders.

A Fund may not:

(1) Control of Portfolio Companies: Invest in portfolio companies for
the purpose of acquiring or exercising control of such companies.

(2) Investment Companies: Invest in the securities of other investment
companies except in compliance with the 1940 Act.

(3) Options, Straddles and Spreads: Invest in puts, calls, straddles,
spreads or any combination thereof, except to the extent permitted by the
Prospectus and Statement of Additional Information.

(4) Restricted Securities, Illiquid Securities and Securities Not
Readily Marketable: Purchase or otherwise acquire any security or invest in a
repurchase agreement if, as a result, more than 15% of the net assets of the
Fund would be invested in securities that are illiquid or not readily
marketable, including repurchase agreements maturing in more than seven days and
non-negotiable fixed time deposits with maturities over seven days. Each Fund
may invest without limitation in restricted securities provided such securities
are considered to be liquid. If, through a change in values, net assets or other
circumstances, a Fund were in a position where more than 15% of its net assets
was invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.

(5) Mortgaging: Mortgage, pledge, or hypothecate in any other manner,
or transfer as security for indebtedness any security owned by a Fund, except as
may be necessary in connection with permissible borrowings and then only if such
mortgaging, pledging or hypothecating does not exceed 33 1/3% of such Fund's
total assets. Collateral arrangements with respect to margin, option and other
risk management and when-issued and forward commitment transactions are not
deemed to be pledges or other encumbrances for purposes of this restriction.

3
<PAGE>

The Asian Select Advisors Fund may not borrow for investment purposes
in excess of 25% of its net asset value.

If a percentage limitation is adhered to at the time of investment, a
later increase or decrease in that percentage amount resulting from any change
in value of the portfolio securities or a Fund's net assets will not result in a
violation of the above fundamental and non-fundamental investment restrictions.

DESCRIPTION OF SECURITIES, OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

United States Government Obligations. These consist of various types
of marketable securities issued by the United States Treasury, i.e., bills,
notes and bonds. Such securities are direct obligations of the United States
Government and differ mainly in the length of their maturity. Treasury bills,
the most frequently issued marketable Government security, have a maturity of up
to one year and are issued on a discount basis.

United States Government Agency Securities. These consist of debt
securities issued by agencies and instrumentalities of the United States
Government, including the various types of instruments currently outstanding or
which may be offered in the future. Agencies include, among others, the Federal
Housing Administration, Government National Mortgage Association ("GNMA"),
Farmer's Home Administration, Export-Import Bank of the United States, Maritime
Administration, and General Services Administration. Instrumentalities include,
for example, each of the Federal Home Loan Banks, the National Bank for
Cooperatives, the Federal Home Loan Mortgage Corporation ("FHLMC"), the Farm
Credit Banks, the Federal National Mortgage Association ("FNMA"), and the United
States Postal Service. These securities are either: (i) backed by the full faith
and credit of the United States Government (e.g., United States Treasury Bills);
(ii) guaranteed by the United States Treasury (e.g., GNMA mortgage-backed
securities); (iii) supported by the issuing agency's or instrumentality's right
to borrow from the United States Treasury (e.g., FNMA Discount Notes); or (iv)
supported only by the issuing agency's or instrumentality's own credit (e.g.,
Tennessee Valley Association).

Certificates of Deposit and Bankers' Acceptances. Each Fund may
invest in certificates of deposit and bankers' acceptances which are considered
to be short-term money market instruments. Certificates of deposit are receipts
issued by a depository institution in exchange for the deposit of funds. The
issuer agrees to pay the amount deposited plus interest to the bearer of the
receipt on the date specified on the certificate. The certificate usually can be
traded in the secondary market prior to maturity. Bankers' acceptances typically
arise from short-term credit arrangements designed to enable business to obtain
funds to finance commercial transactions. Generally, an acceptance is a time
draft drawn on a bank by an exporter or an importer to obtain a stated amount of
funds to pay for specific merchandise. The draft is then "accepted" by a bank
that, in effect, unconditionally guarantees to pay the face value of the
instrument on its maturity date. The acceptance may then be held by the
accepting bank as an earning asset or it may be sold in the secondary market at
the going rate of discount for a specific maturity. Although maturities for
acceptances can be as long as 270 days, most acceptances have maturities of six
months or less.

Commercial Paper. Each Fund may purchase commercial paper.
Commercial paper consists of short-term (usually from 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their current
operations.

Repurchase Agreements. The Funds may invest in repurchase agreements.
A repurchase agreement is an instrument under which the investor (such as the
Fund) acquires ownership of a security (known as the "underlying security") and
the seller (i.e., a bank or primary dealer) agrees, at the time of the sale, to
repurchase the underlying security at a mutually agreed upon time and price,
thereby determining the yield during the term of the agreement. This results in
a fixed rate of return insulated from market fluctuations during such period,
unless the seller defaults on its repurchase obligations. A Fund will only enter
into repurchase agreements where (i) the underlying securities are of the type
(excluding maturity limitations) which the Fund's investment guidelines would
allow it to purchase directly, (ii) the market value of the underlying security,
including interest accrued, will be at all times at least equal to the value of
the repurchase agreement, and (iii) payment for the underlying security is made
only upon physical delivery or evidence of book-entry transfer to the account of
the Fund's custodian. Repurchase agreements usually are for short periods, often
under one week, and will not be entered into by a Fund for a duration of more
than seven days if, as a result, more than 15% of the net asset value of the
Fund would be invested in such agreements or other securities which are not
readily marketable.

4
<PAGE>

The Funds will assure that the amount of collateral with respect to any
repurchase agreement is adequate. As with a true extension of credit, however,
there is risk of delay in recovery or the possibility of inadequacy of the
collateral should the seller of the repurchase agreement fail financially. In
addition, a Fund could incur costs in connection with the disposition of the
collateral if the seller were to default. The Funds will enter into repurchase
agreements only with sellers deemed to be creditworthy by, or pursuant to
guidelines established by, the Board of Trustees of the Trust and only when the
economic benefit to the Funds is believed to justify the attendant risks. The
Funds have adopted standards for the sellers with whom they will enter into
repurchase agreements. The Board of Trustees of the Trust believe these
standards are designed to reasonably assure that such sellers present no serious
risk of becoming involved in bankruptcy proceedings within the time frame
contemplated by the repurchase agreement. The Funds may enter into repurchase
agreements only with well-established securities dealers or with member banks of
the Federal Reserve System.

Adjustable Rate Securities. Adjustable rate securities (i.e.,
variable rate and floating rate instruments) are securities that have interest
rates that are adjusted periodically, according to a set formula. The maturity
of some adjustable rate securities may be shortened under certain special
conditions described more fully below.

Variable rate instruments are obligations that provide for the
adjustment of their interest rates on predetermined dates or whenever a specific
interest rate changes. A variable rate instrument whose principal amount is
scheduled to be paid in 397 days or less is considered to have a maturity equal
to the period remaining until the next readjustment of the interest rate. Many
variable rate instruments are subject to demand features which entitle the
purchaser to resell such securities to the issuer or another designated party,
either (1) at any time upon notice of usually 397 days or less, or (2) at
specified intervals, not exceeding 397 days, and upon 30 days notice. A variable
rate instrument subject to a demand feature is considered to have a maturity
equal to the longer of the period remaining until the next readjustment of the
interest rate or the period remaining until the principal amount can be
recovered through demand, if final maturity exceeds 397 days or the shorter of
the period remaining until the next readjustment of the interest rate or the
period remaining until the principal amount can be recovered through demand if
final maturity is within 397 days.

Floating rate instruments have interest rate reset provisions similar
to those for variable rate instruments and may be subject to demand features
like those for variable rate instruments. The interest rate is adjusted,
periodically (e.g., daily, monthly, semi-annually), to the prevailing interest
rate in the marketplace. The interest rate on floating rate securities is
ordinarily determined by reference to the 90-day U.S. Treasury bill rate, the
rate of return on commercial paper or bank certificates of deposit or an index
of short-term interest rates. The maturity of a floating rate instrument is
considered to be the period remaining until the principal amount can be
recovered through demand.

Mortgage Pass-Through Securities. Interests in pools of mortgage
pass-through securities differ from other forms of debt securities (which
normally provide periodic payments of interest in fixed amounts and the payment
of principal in a lump sum at maturity or on specified call dates). Instead,
mortgage pass-through securities provide monthly payments consisting of both
interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on the underlying
residential mortgage loans, net of any fees paid to the issuer or guarantor of
such securities. Unscheduled payments of principal may be made if the underlying
mortgage loans are repaid or refinanced or the underlying properties are
foreclosed, thereby shortening the securities' weighted average life. Some
mortgage pass-through securities (such as securities guaranteed by GNMA) are
described as "modified pass-through securities." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, on the scheduled payment dates regardless of whether the
mortgagor actually makes the payment.

The principal governmental guarantor of mortgage pass-through
securities is GNMA. GNMA is authorized to guarantee, with the full faith and
credit of the U.S. Treasury, the timely payment of principal and interest on
securities issued by lending institutions approved by GNMA (such as savings and
loan institutions, commercial banks and mortgage bankers) and backed by pools of
mortgage loans. These mortgage loans are either insured by the Federal Housing
Administration or guaranteed by the Veterans Administration. A "pool" or group
of such mortgage loans is assembled and after being approved by GNMA, is offered
to investors through securities dealers.

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Government-related guarantors of mortgage pass-through securities
(i.e., not backed by the full faith and credit of the U.S. Treasury) include
FNMA and FHLMC. FNMA is a Government-sponsored corporation owned entirely by
private stockholders. It is subject to general regulation by the Secretary of
Housing and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any Government agency) residential mortgages from a list of
approved sellers/servicers which include state and federally chartered
savings and loan associations, mutual savings banks, commercial banks and credit
unions and mortgage bankers. Mortgage pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA but are not
backed by the full faith and credit of the U.S. Treasury.

FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a U.S.
Government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues Participation
Certificates ("PCs") which represent interests in conventional mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but PCs are not backed by the full faith and
credit of the U.S. Treasury.

Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional residential mortgage loans. Such
issuers may, in addition, be the originators and/or servicers of the underlying
mortgage loans as well as the guarantors of the mortgage pass-through
securities. The Funds do not purchase interests in pools created by such
non-governmental issuers.

Resets. The interest rates paid on the Adjustable Rate Mortgage
Securities ("ARMs") in which a Fund may invest generally are readjusted or reset
at intervals of one year or less to an increment over some predetermined
interest rate index. There are two main categories of indices: those based on
U.S. Treasury securities and those derived from a calculated measure, such as a
cost of funds index or a moving average of mortgage rates. Commonly utilized
indices include the one-year and five-year constant maturity Treasury Note
rates, the three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates
on longer-term Treasury securities, the National Median Cost of Funds, the
one-month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a specific bank, or commercial paper rates. Some indices, such as the
one-year constant maturity Treasury Note rate, closely mirror changes in market
interest rate levels. Others tend to lag changes in market rate levels and tend
to be somewhat less volatile.

Caps and Floors. The underlying mortgages which collateralize the ARMs
in which a Fund invests will frequently have caps and floors which limit the
maximum amount by which the loan rate to the residential borrower may change up
or down: (1) per reset or adjustment interval and (2) over the life of the loan.
Some residential mortgage loans restrict periodic adjustments by limiting
changes in the borrower's monthly principal and interest payments rather than
limiting interest rate changes. These payment caps may result in negative
amortization.

The value of mortgage securities in which a Fund invests may be
affected if market interest rates rise or fall faster and farther than the
allowable caps or floors on the underlying residential mortgage loans.
Additionally, even though the interest rates on the underlying residential
mortgages are adjustable, amortization and prepayments may occur, thereby
causing the effective maturities of the mortgage securities in which the Fund
invests to be shorter than the maturities stated in the underlying mortgages.

Maturity of Debt Securities.The maturity of debt securities may be
considered long (10 or more years), intermediate (3 to 10 years), or short-term
(1 to 3 years). In general, the principal values of longer-term securities
fluctuate more widely in response to changes in interest rates than those of
shorter-term securities, providing greater opportunity for capital gain or risk
of capital loss. A decline in interest rates usually produces an increase in the
value of debt securities, while an increase in interest rates generally reduces
their value.

When-Issued Securities.Each Fund may, from time to time, purchase
securities on a "when-issued" or delayed delivery basis. The price for such
securities, which may be expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase, but may take up to three months. During the

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period between purchases and settlement, no payment is made by a Fund to the
issuer and no interest accrues to a Fund. At the time a Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. Each Fund will maintain, in a segregated account with the custodian, cash
or appropriate liquid securities equal in value to commitments for when-issued
securities.

Illiquid or Restricted Securities.Restricted securities may be sold
only in privately negotiated transactions or in a public offering with respect
to which a registration statement is in effect under the Securities Act of 1933
(the "1933 Act"). Where registration is required, a Fund may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell. Restricted securities
will be priced at fair value as determined in accordance with procedures
prescribed by the Board of Trustees of the Trust. If through the appreciation of
illiquid securities or the depreciation of liquid securities, the Fund should be
in a position where more than 15% of the value of its net assets are invested in
illiquid assets, including restricted securities, the Fund will take appropriate
steps to protect liquidity.

Notwithstanding the above, each Fund may purchase securities which,
while privately placed, are eligible for purchase and sale under Rule 144A under
the 1933 Act. This rule permits certain qualified institutional buyers to trade
in privately placed securities even though such securities are not registered
under the 1933 Act. The Advisor or Sub-Advisor under the supervision of the
Board of Trustees of the Trust, will consider whether securities purchased under
Rule 144A are illiquid and thus subject to the Fund's restriction of investing
no more than 15% of its net assets in illiquid securities. A determination of
whether a Rule 144A security is liquid or not is a question of fact. In making
this determination, the Advisor or Sub-Advisor will consider the trading markets
for the specific security taking into account the unregistered nature of a Rule
144A security. In addition, the Advisor or Sub-Advisor could consider (1) the
frequency of trades and quotes, (2) the number of dealers and potential
purchases, (3) any dealer undertakings to make a market, and (4) the nature of
the security and of marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). The
liquidity of Rule 144A securities would be monitored, and if as a result of
changed conditions it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities would be reviewed to
determine what, if any, steps are required to assure that the Fund does not
invest more than 15% of its net assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of the Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.

Warrants.Each Fund may invest in warrants. Warrants are pure
speculation in that they have no voting rights, pay no dividends and have no
rights with respect to the assets of the corporation issuing them. Warrants
basically are options to purchase equity securities at a specific price valid
for a specific period of time. They do not represent ownership of the
securities, but only the right to buy them. Warrants differ from call options in
that warrants are issued by the issuer of the security which may be purchased on
their exercise, whereas call options may be written or issued by anyone. The
prices of warrants do not necessarily move parallel to the prices of the
underlying securities.

Special Considerations Affecting Canada. Canada occupies the
northern part of North America and is the second largest country in the world
(3.97 million square miles in area) extending from the Atlantic Ocean to the
Pacific Ocean. The companies in which a fund may invest include those involved
in the energy industry, industrial materials (chemicals, base metals, timber and
paper) and agricultural materials (grain cereals). The securities of companies
in the energy industry are subject to changes in value and dividend yield which
depend, to a large extent, on the price and supply of energy fuels. Rapid price
and supply fluctuations may be caused by events relating to international
politics, energy conservation and the success of exploration products. Canada is
one of the world's leading industrial countries and is rich in natural resources
such as zinc, uranium, nickel, gold, silver, aluminum, iron and copper. Forest
covers over 44% of land area, making Canada a leading world producer of
newsprint. Canada is also a major exporter of agricultural products. The economy
of Canada is strongly influenced by the activities of companies and industries
involved in the production and processing of natural resources. Canada is a
major producer of hydroelectricity, oil and gas. The business activities of
companies in the energy field may include the production, generation,
transmission, marketing, control or

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measurement of energy or energy fuels. Economic prospects are changing due to
recent government attempts to reduce restrictions against foreign investments.

Securities of Canadian companies are not considered by the Adviser to
have the same level of risk as those of other non-U.S. companies. Canadian and
U.S. companies are generally subject to similar auditing and accounting
procedures, and similar government supervision and regulation. Canadian markets
are more liquid than many other foreign markets and share similar
characteristics with U.S. markets. A fund may elect to participate in new equity
issues or initial public offerings of Canadian companies.

Many factors affect and could have an adviser impact on the financial
condition of Canada, including social, environmental and economic conditions,
factors which are not within the control of Canada. Although the Canadian
political system is generally more stable than that of many other foreign
countries, continued tension with respect to greater independence for, or
possible separation of, Quebec causes political uncertainty. Moreover, while the
Canadian dollar is generally less volatile relative to the U.S. dollar than
other foreign currencies, the value of the Canadian dollar has decreased
significantly in recent years. Continued efforts to reduce the structural
Canadian budget deficit will be required. The Adviser is unable to predict what
effect, if any, such factors would have on instruments held in a fund's
portfolio

The United States-Canada Free Trade Agreement, which became effective
in January 1989, will be phased in over a period of ten years. This agreement
will remove tariffs on U.S. technology and Canadian agricultural products in
addition to removing trade barriers affecting other important sectors of each
country's economy. Canada, the United States, and Mexico have implemented the
North American Free Trade Agreement (NAFTA), which was entered into in 1994.
This cooperation is expected to lead to increased trade and reduced trade
barriers.

Special Considerations Affecting The Pacific Basin and Southeast Asia.
Many Asian countries may be subject to a greater degree of social, political and
economic instability than is the case in the United States and western European
countries. Such instability may result from (i) authoritarian governments or
military involvement in political and economic decision-making; (ii) popular
unrest associated with demands for improved political, economic and social
conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring
countries; and (v) ethnic, religious, and racial disaffection.

The economies of most of the Asian countries are heavily dependent upon
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally, the United
States, China and the European Community. The enactment by the United States or
other principal trading partners of protectionist trade legislation, reduction
of foreign investment in the local economies and general declines in the
international securities markets could have a significant adverse effect upon
the securities markets of the Asian countries.

The success of market reforms and a surge in infrastructure spending
have fueled rapid growth in many developing countries in Asia. Rapidly rising
household incomes have fostered large middle classes and new waves of consumer
spending. The increases in infrastructure and consumer spending have made
domestic demand the growth engine for these countries. Thus, their growth now
depends less upon exports to Organization for Economic Cooperation and
Development (OECD) countries. While exports may no longer be the sole source of
growth for developing economies, improved competitiveness in export markets has
contributed to growth in many of these nations. The increased productivity in
many Asian countries has enabled them to achieve, or maintain, their status as
top exporters while improving their national living standards.

Thailand has one of the fastest growing stockmarkets in the world. The
manufacturing sector is becoming increasingly sophisticated and is benefiting
from export-oriented investing. The manufacturing and service sectors continue
to account for the bulk of Thailand's economic growth. The agricultural sector
continues to become less important. The government has followed fairly sound
fiscal and monetary policies, aided by increased tax receipts from a fast moving
economy. The government also continues to move ahead with new projects
especially telecommunications, roads and port facilities - needed to refurbish
the country's overtaxed infrastructure. The country

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enjoys an able bureaucracy that has maintained economic policy during the
country's many coups. In recent years, the risk of a coup has diminished, but
corruption remains widespread.

Hong Kong's impending return to Chinese dominion in 1997 has not
initially had a positive effect on its economic growth, which was vigorous in
the 1980s. Although China has committed by treaty to preserve the economic and
social freedoms enjoyed in Hong Kong for 50 years after regaining control of
Hong Kong, the continuation of the current form of the economic system in Hong
Kong after the reversion will depend on the actions of the government of China.
Business confidence in Hong Kong, therefore, can be significantly affected by
developments, which in turn can affect markets and business performance. In
preparation for 1997, Hong Kong has continued to develop trade with China, where
it is the largest foreign investor, while also maintaining its long-standing
export relationship with the United States. Spending on infrastructure
improvements is a significant priority of the colonial government while the
private sector continues to diversify abroad based on its position as an
established international trade center in the Far East.

In terms of GDP, industrial standards and level of education, South
Korea is second only to Japan in Asia. It enjoys the benefits of a diversified
economy with well developed sectors in electronics, automobiles, textiles and
shoe manufacturing, steel and shipbuilding among others. The driving force
behind the economy's dynamic growth has been the planned development of an
export-oriented economy in a vigorously entrepreneurial society. Real GDP grew
about 8.3% in 1994. Both South Korea and North Korea joined the United Nations
separately in late 1991, creating another forum for negotiation and joint
cooperation. The reunification of North and South Korea could have a detrimental
effect on the economy of South Korea.

Indonesia is a mixed economy with many socialist institutions and
central planning but with a recent emphasis on deregulation and private
enterprise. Like Thailand, Indonesia has extensive natural wealth, yet with a
large and rapidly increasingly population, it remains a poor country. Dependent
on oil prices during the 1980s, its manufactured products now predominate,
contributing 21% of GDP. Indonesia's development is progressing smoothly, and it
has become the world's twelfth largest economy.

Malaysia has one of the fastest growing economies in the Asian-Pacific
region. Malaysia has become the world's third-largest producer of semiconductor
devices (after the United States and Japan) and the world's largest exporter of
semiconductor devices. More remarkable is the country's ability to achieve rapid
economic growth with relative price stability as the government followed prudent
fiscal and monetary policies. Malaysia's high export dependence level leaves it
vulnerable to recession in the OECD countries or to a fall in world commodity
prices.

India is one of the world's top fifteen industrial nations and has
considerable natural resources. The government exercises significant influence
over many aspects of the economy. Accordingly, future government actions could
have a significant effect on private sector companies, market conditions, and
prices and yields of securities of Indian issuers held by a fund. Policymakers
in India actively encourage foreign direct investment, particularly in labor
intensive industries. In addition, Indian stock exchanges rely entirely on
delivery of physical share certificates and have experienced operational
difficulties. These problems have included the existence of fraudulent shares in
the market, failed trades, and delays in the settlement and registration of
securities transactions. Indian stock exchanges have in the past been forced to
close for political reasons; for example, a brokers' strike closed the exchange
for ten days in December 1993, and there is no assurance that the exchanges will
not be forced to close again.

Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived from its
history. During the 1970s and the early 1980s, the economy expanded rapidly,
achieving an average annual growth rate of 9%. Per capita GDP is among the
highest in Asia. Singapore holds a position as a major oil refining and services
center.

Australia has a prosperous Western-style capitalist economy, with a per
capita GDP comparable to levels in industrialized West European countries. It is
rich in natural resources and is the world's largest exporter of beef and wool,
second-largest exporter of mutton, and among the top wheat exporters. Australia
is also a major exporter of minerals, metals and fossil fuels. Due to the nature
of its exports, a downturn in world commodity prices could have a significant
negative impact on its economy.

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Exposure to Foreign Markets.Foreign securities, foreign currencies,
and securities issued by U.S. entities with substantial foreign operations may
involve significant risks in addition to the risks inherent in U.S. investments.
The value of securities denominated in foreign currencies, and of dividends and
interest paid with respect to such securities will fluctuate based on the
relative strength of the U.S. dollar.

Foreign investments involve a risk of local political, economic, or
social instability, military action or unrest, or adverse diplomatic
developments, and may be affected by actions of foreign governments adverse to
the interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation, restrictions
on U.S. investment or on the ability to repatriate assets or convert currency
into U.S. dollars, or other government intervention. There is no assurance that
the Adviser or a Sub-Adviser will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments, economies
based on only a few industries, and securities markets that trade a small number
of securities.

Economies of particular countries or areas of the world may differ
favorably or unfavorably from the economy of the United States. Foreign markets
may offer less protection to investors than U.S. markets. It is anticipated that
in most cases the best available market for foreign securities will be on an
exchange or in over-the-counter markets located outside the United States.
Foreign stock markets, while growing in volume and sophistication, are generally
not as developed as those in the United States, and securities of some foreign
issuers (particularly those located in developing countries) may be less liquid
and more volatile than securities of comparable U.S. issuers. Foreign security
trading practices, including those involving securities settlement where fund
assets may be released prior to receipt of payment, may result in increased risk
in the event of a failed trade or the insolvency of a foreign broker-dealer, and
may involve substantial delays. In addition, the costs of foreign investing,
including withholding taxes, brokerage commissions and custodial costs, are
generally higher than for U.S. investors. In general, there is less overall
governmental supervision and regulation of securities exchanges, brokers, and
listed companies than in the United States. It may also be difficult to enforce
legal rights in foreign countries. Foreign issuers are generally not bound by
uniform accounting, auditing, and financial reporting requirements and standards
of practice comparable to those applicable to U.S.
issuers.

Some foreign securities impose restrictions on transfer within the
United States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions. American
Depository Receipts (ADRs), as well as other "hybrid" forms of ADRs, including
European Depository Receipts (EDRs) and Global Depository Receipts (GDRs), are
certificates evidencing ownership of shares of a foreign issuer. These
certificates are issued by depository banks and generally trade on an
established market in the United States or elsewhere. The underlying shares are
held in trust by a custodian bank or similar financial institution in the
issuer's home country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions. ADRs are
alternatives to directly purchasing the underlying foreign securities in their
national markets and currencies. However, ADRs continue to be subject to many of
the risks associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks of the
underlying issuer's country.

Investments in emerging markets can be subject to a number of types of
taxes which vary by country, change frequently, and are sometime defined by
custom rather than written regulation. Emerging countries can tax interest,
dividends, and capital gains through the application of a withholding tax. The
local custodian normally withholds the tax upon receipt of a payment and
forwards such tax payment to the foreign government on behalf of the fund.
Certain foreign governments can also require a foreign investor to file an
income tax return and pay the local tax through estimated tax payments, or pay
with the tax return. Although not frequently used, some emerging markets have
attempted to slow conversion of their currency by imposing a repatriation tax.
Generally, this tax is applied to amounts which are converted from the foreign
currency to the investor's currency and withdrawn from the local bank account.
Transfer taxes or fees, such as stamp duties, security transfer taxes, and
registration and script fees, are generally imposed by emerging markets as a tax
or fee on a capital market transaction. Each emerging country may impose a tax
or fee at a different point in time as the foreign investor perfects his
interest in the securities acquired in the local

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<PAGE>

market. A stamp duty is generally a tax on the official recording of a capital
market transaction. Payment of such duty is generally a condition of the
transfer of assets and failure to pay such duty can result in a loss of title to
such asset as well as loss of benefit from any corporate actions. A stamp duty
is generally determined based on a percentage of the value of the transaction
conducted and can be charged against the buyer (e.g., Cyprus, India, Israel,
Jordan, Malaysia, Pakistan, and the Philippines), against the seller (e.g.,
Argentina, Australia, China, Egypt, Indonesia, Kenya, Portugal, South Korea,
Trinidad , Tobago, and Zimbabwe). Although such a fee does not generally
exceeded 100 basis points, certain emerging markets have assessed a stamp duty
as high as 750 basis points (e.g., Pakistan). A security transfer tax is similar
to a stamp duty and is generally applied to the purchase, sale or exchange of
securities which occur in a particular foreign market. These taxes are based on
the value of the trade and similar to stamp taxes, can be assessed against the
buyer, seller or both. Although the securities transfer tax may be assessed in
lieu of a stamp duty, such tax can be assessed in addition to a stamp duty in
certain foreign markets (e.g., Switzerland, South Korea, Indonesia). Upon
purchasing a security in an emerging market, such security must often be
submitted to a registration process in order to record the purchase as a legal
owner of such security interest. Often foreign countries will charge a
registration or script fee to record the change in ownership and, where physical
securities are issued, issue a new security certificate. In addition to
assessing this fee upon the acquisition of a security, some markets also assess
registration charges upon the registration of local shares to foreign shares.

Short Sales. The Funds may sell securities short as part of their
overall portfolio management strategies involving the use of derivative
instruments and to offset potential declines in long positions in similar
securities. A short sale is a transaction in which a Fund sells a security it
does not own or have the right to acquire (or that it owns but does not wish to
deliver) in anticipation that the market price of that security will decline.

When a Fund makes a short sale, the broker-dealer through which the
short sale is made must borrow the security sold short and deliver it to the
party purchasing the security. The Fund is required to make a margin deposit in
connection with such short sales; the Fund may have to pay a fee to borrow
particular securities and will often be obligated to pay over any dividends and
accrued interest on borrowed securities.

If the price of the security sold short increases between the time of
the short sale and the time the Fund covers its short position, the Fund will
incur a loss; conversely, if the price declines, the Fund will realize a capital
gain. Any gain will be decreased, and any loss increased, by the transaction
costs described above. The successful use of short selling may be adversely
affected by imperfect correlation between movements in the price of the security
sold short and the securities being hedged.

To the extent a Fund sells securities short, it will provide collateral
to the broker-dealer and (except in the case of short sales "against the box")
will maintain additional asset coverage in the form of cash, U.S. Government
securities or other liquid securities with its custodian in a segregated account
in an amount at least equal to the difference between the current market value
of the securities sold short and any amounts required to be deposited as
collateral with the selling broker (not including the proceeds of the short
sale). The Funds do not intend to enter into short sales (other than short sales
"against the box") if immediately after such sales the aggregate of the value of
all collateral plus the amount in such segregated account exceeds 10% of the
value of the Fund's net assets. This percentage may be varied by action of the
Board of Trustees. A short sale is "against the box" to the extent the Fund
contemporaneously owns, or has the right to obtain at no added cost, securities
identical to those sold short.

Options. Writing Covered Call Options. Each Fund may write (sell)
American or European style "covered" call options and purchase options to close
out options previously written by the Fund. In writing covered call options, the
Fund expects to generate additional premium income which should serve to enhance
the Fund's total return and reduce the effect of any price decline of the
security or currency involved in the option. Covered call options will generally
be written on securities or currencies which, in the Adviser's or a
Sub-Adviser's opinion, are not expected to have any major price increases or
moves in the near future but which, over the long term, are deemed to be
attractive investments for the Fund.

A call option gives the holder (buyer) the "right to purchase" a
security or currency at a specified price (the exercise price) at expiration of
the option (European style) or at any time until a certain date (the expiration
date) (American style). So long as the obligation of the writer of a call option
continues, he may be assigned an exercise

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notice by the broker-dealer through whom such option was sold, requiring him to
deliver the underlying security or currency against payment of the exercise
price. This obligation terminates upon the expiration of the call option, or
such earlier time at which the writer effects a closing purchase transaction by
repurchasing an option identical to that previously sold. To secure his
obligation to deliver the underlying security or currency in the case of a call
option, a writer is required to deposit in escrow the underlying security or
currency or other assets in accordance with the rules of a clearing corporation.

Each Fund will write only covered call options. This means that the
Fund will own the security or currency subject to the option or an option to
purchase the same underlying security or currency, having an exercise price
equal to or less than the exercise price of the "covered" option, or will
establish and maintain with its custodian for the term of the option, an account
consisting of cash, U.S. government securities or other liquid securities having
a value equal to the fluctuating market value of the optioned securities or
currencies.

Portfolio securities or currencies on which call options may be written
will be purchased solely on the basis of investment considerations consistent
with the Fund's investment objective. The writing of covered call options is a
conservative investment technique believed to involve relatively little risk (in
contrast to the writing of naked or uncovered options, which the Fund will not
do), but capable of enhancing the Fund's total return. When writing a covered
call option, a Fund, in return for the premium, gives up the opportunity for
profit from a price increase in the underlying security or currency above the
exercise price, but conversely retains the risk of loss should the price of the
security or currency decline. Unlike one who owns securities or currencies not
subject to an option, the Fund has no control over when it may be required to
sell the underlying securities or currencies, since it may be assigned an
exercise notice at any time prior to the expiration of its obligation as a
writer. If a call option which the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency. The Fund does not
consider a security or currency covered by a call to be "pledged" as that term
is used in the Fund's policy which limits the pledging or mortgaging of its
assets.

The premium received is the market value of an option. The premium the
Fund will receive from writing a call option will reflect, among other things,
the current market price of the underlying security or currency, the
relationship of the exercise price to such market price, the historical price
volatility of the underlying security or currency, and the length of the option
period. Once the decision to write a call option has been made, the Adviser or a
Sub-Adviser, in determining whether a particular call option should be written
on a particular security or currency, will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will exist
for those options. The premium received by the Fund for writing covered call
options will be recorded as a liability of the Fund. This liability will be
adjusted daily to the option's current market value, which will be the latest
sale price at the time at which the net asset value per share of the Fund is
computed (close of the New York Stock Exchange), or, in the absence of such
sale, the latest asked price. The option will be terminated upon expiration of
the option, the purchase of an identical option in a closing transaction, or
delivery of the underlying security or currency upon the exercise of the option.

Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security or currency from
being called, or, to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date or both. If the Fund desires to sell
a particular security or currency from its portfolio on which it has written a
call option, or purchased a put option, it will seek to effect a closing
transaction prior to, or concurrently with, the sale of the security or
currency. There is, of course, no assurance that the Fund will be able to effect
such closing transactions at favorable prices. If the Fund cannot enter into
such a transaction, it may be required to hold a security or currency that it
might otherwise have sold. When the Fund writes a covered call option, it runs
the risk of not being able to participate in the appreciation of the underlying
securities or currencies above the exercise price, as well as the risk of being
required to hold on to securities or currencies that are depreciating in value.
This could result in higher transaction costs. The Fund will pay transaction
costs in connection with the writing of options to close out previously written
options. Such transaction costs are normally higher than those applicable to
purchases and sales of portfolio securities.

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Call options written by a Fund will normally have expiration dates of
less than nine months from the date written. The exercise price of the options
may be below, equal to, or above the current market values of the underlying
securities or currencies at the time the options are written. From time to time,
a Fund may purchase an underlying security or currency for delivery in
accordance with an exercise notice of a call option assigned to it, rather than
delivering such security or currency from its portfolio. In such cases,
additional costs may be incurred.

A Fund will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more than the premium
received from the writing of the option. Because increases in the market price
of a call option will generally reflect increases in the market price of the
underlying security or currency, any loss resulting from the repurchase of a
call option is likely to be offset in whole or in part by appreciation of the
underlying security or currency owned by the Fund.

Writing Covered Put Options. Each Fund may write American or European
style covered put options and purchase options to close out options previously
written by the Fund. A put option gives the purchaser of the option the right to
sell and the writer (seller) has the obligation to buy, the underlying security
or currency at the exercise price during the option period (American style) or
at the expiration of the option (European style). So long as the obligation of
the writer continues, he may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring him to make payment of the exercise
price against delivery of the underlying security or currency. The operation of
put options in other respects, including their related risks and rewards, is
substantially identical to that of call options.

A Fund would write put options only on a covered basis, which means
that the Fund would maintain in a segregated account cash, U.S. government
securities or other liquid appropriate securities in an amount not less than the
exercise price or the Fund will own an option to sell the underlying security or
currency subject to the option having an exercise price equal to or greater than
the exercise price of the "covered" option at all times while the put option is
outstanding. (The rules of a clearing corporation currently require that such
assets be deposited in escrow to secure payment of the exercise price.) The Fund
would generally write covered put options in circumstances where the Adviser or
a Sub-Adviser wishes to purchase the underlying security or currency for the
Fund's portfolio at a price lower than the current market price of the security
or currency. In such event the Fund would write a put option at an exercise
price which, reduced by the premium received on the option, reflects the lower
price it is willing to pay. Since the Fund would also receive interest on debt
securities or currencies maintained to cover the exercise price of the option,
this technique could be used to enhance current return during periods of market
uncertainty. The risk in such a transaction would be that the market price of
the underlying security or currency would decline below the exercise price less
the premiums received. Such a decline could be substantial and result in a
significant loss to the Fund. In addition, the Fund, because it does not own the
specific securities or currencies which it may be required to purchase in
exercise of the put, cannot benefit from appreciation, if any, with respect to
such specific securities or currencies.

Purchasing Put Options. Each Fund may purchase American or European
style put options. As the holder of a put option, the Fund has the right to sell
the underlying security or currency at the exercise price at any time during the
option period (American style) or at the expiration of the option (European
style). The Fund may enter into closing sale transactions with respect to such
options, exercise them or permit them to expire. The Fund may purchase put
options for defensive purposes in order to protect against an anticipated
decline in the value of its securities or currencies. An example of such use of
put options is provided below.

Each Fund may purchase a put option on an underlying security or
currency (a "protective put") owned by the Fund as a defensive technique in
order to protect against an anticipated decline in the value of the security or
currency. Such hedge protection is provided only during the life of the put
option when the Fund, as the holder of the put option, is able to sell the
underlying security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's exchange value.
For example, a put option may be purchased in order to protect unrealized
appreciation of a security or currency where the Adviser or a Sub-Adviser deems
it desirable to continue to hold the security or currency because of tax
considerations. The premium paid for the put

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<PAGE>

option and any transaction costs would reduce any capital gain otherwise
available for distribution when the security or currency is eventually sold.

Each Fund may also purchase put options at a time when the Fund does
not own the underlying security or currency. By purchasing put options on a
security or currency it does not own, the Fund seeks to benefit from a decline
in the market price of the underlying security or currency. If the put option is
not sold when it has remaining value, and if the market price of the underlying
security or currency remains equal to or greater than the exercise price during
the life of the put option, the Fund will lose its entire investment in the put
option. In order for the purchase of a put option to be profitable, the market
price of the underlying security or currency must decline sufficiently below the
exercise price to cover the premium and transaction costs, unless the put option
is sold in a closing sale transaction.

Purchasing Call Options. Each Fund may purchase American or European
style call options. As the holder of a call option, the Fund has the right to
purchase the underlying security or currency at the exercise price at any time
during the option period (American style) or at the expiration of the option
(European style). The Fund may enter into closing sale transactions with respect
to such options, exercise them or permit them to expire. The Fund may purchase
call options for the purpose of increasing its current return or avoiding tax
consequences which could reduce its current return. The Fund may also purchase
call options in order to acquire the underlying securities or currencies.
Examples of such uses of call options are provided below.

Call options may be purchased by the Fund for the purpose of acquiring
the underlying securities or currencies for its portfolio. Utilized in this
fashion, the purchase of call options enables the Fund to acquire the securities
or currencies at the exercise price of the call option plus the premium paid. At
times the net cost of acquiring securities or currencies in this manner may be
less than the cost of acquiring the securities or currencies directly. This
technique may also be useful to the Fund in purchasing a large block of
securities or currencies that would be more difficult to acquire by direct
market purchases. So long as it holds such a call option rather than the
underlying security or currency itself, the Fund is partially protected from any
unexpected decline in the market price of the underlying security or currency
and in such event could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.

Dealer (Over-the-Counter) Options. Each Fund may engage in transactions
involving dealer options. Certain risks are specific to dealer options. While
the Fund would look to a clearing corporation to exercise exchange-traded
options, if the Fund were to purchase a dealer option, it would rely on the
dealer from whom it purchased the option to perform if the option were
exercised. Failure by the dealer to do so would result in the loss of the
premium paid by the Fund as well as loss of the expected benefit of the
transaction.

Exchange-traded options generally have a continuous liquid market while
dealer options have none. Consequently, the Fund will generally be able to
realize the value of a dealer option it has purchased only by exercising it or
reselling it to the dealer who issued it. Similarly, when the Fund writes a
dealer option, it generally will be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to which the Fund originally wrote the option. While the Fund will seek to enter
into dealer options only with dealers who will agree to and which are expected
to be capable of entering into closing transactions with the Fund, there can be
no assurance that the Fund will be able to liquidate a dealer option at a
favorable price at any time prior to expiration. Until the Fund, as a covered
dealer call option writer, is able to effect a closing purchase transaction, it
will not be able to liquidate securities (or other assets) or currencies used as
cover until the option expires or is exercised. In the event of insolvency of
the contra party, the Fund may be unable to liquidate a dealer option. With
respect to options written by the Fund, the inability to enter into a closing
transaction may result in material losses to the Fund. For example, since the
Fund must maintain a secured position with respect to any call option on a
security it writes, the Fund may not sell the assets which it has segregated to
secure the position while it is obligated under the option. This requirement may
impair a Fund's ability to sell portfolio securities or currencies at a time
when such sale might be advantageous.

The Staff of the SEC has taken the position that purchased dealer
options and the assets used to secure the written dealer options are illiquid
securities. A Fund may treat the cover used for written OTC options as liquid if

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<PAGE>

the dealer agrees that the Fund may repurchase the OTC option it has written for
a maximum price to be calculated by a predetermined formula. In such cases, the
OTC option would be considered illiquid only to the extent the maximum
repurchase price under the formula exceeds the intrinsic value of the option.
Accordingly, the Fund will treat dealer options as subject to the Fund's
limitation on unmarketable securities. If the SEC changes its position on the
liquidity of dealer options, the Fund will change its treatment of such
instrument accordingly.

Futures Contracts. Transactions in Futures. Each Fund may enter into
futures contracts, including stock index, interest rate and currency futures
("futures or futures contracts").

Stock index futures contracts may be used to provide a hedge for a
portion of the Fund's portfolio, as a cash management tool, or as an efficient
way for the Advisor or Sub-Advisor to implement either an increase or decrease
in portfolio market exposure in response to changing market conditions. A Fund
may, purchase or sell futures contracts with respect to any stock index.
Nevertheless, to hedge the Fund's portfolio successfully, the Fund must sell
futures contacts with respect to indices or subindices whose movements will have
a significant correlation with movements in the prices of the Fund's portfolio
securities.

Interest rate or currency futures contracts may be used to manage a
Fund's exposure to changes in prevailing levels of interest rates or currency
exchange rates in order to establish more definitely the effective return on
securities or currencies held or intended to be acquired by the Fund. In this
regard, the Fund could sell interest rate or currency futures as an offset
against the effect of expected increases in interest rates or currency exchange
rates and purchase such futures as an offset against the effect of expected
declines in interest rates or currency exchange rates.

A Fund will enter into futures contracts which are traded on national
or foreign futures exchanges, and are standardized as to maturity date and
underlying financial instrument. Futures exchanges and trading in the United
States are regulated under the Commodity Exchange Act by the Commodity Futures
Trading Commission ("CFTC"). Futures are traded in London at the London
International Financial Futures Exchange in Paris at the MATIF and in Tokyo at
the Tokyo Stock Exchange. Although techniques other than the sale and purchase
of futures contracts could be used for the above-referenced purposes, futures
contracts offer an effective and relatively low cost means of implementing the
Fund's objectives in these areas.

Regulatory Limitations. A Fund will engage in futures contracts and
options thereon only for bona fide hedging, yield enhancement, and risk
management purposes, in each case in accordance with rules and regulations of
the CFTC.

A Fund may not purchase or sell futures contracts or related options
if, with respect to positions which do not qualify as bona fide hedging under
applicable CFTC rules, the sum of the amounts of initial margin deposits and
premiums paid on those portions would exceed 5% of the net asset value of the
Fund after taking into account unrealized profits and unrealized losses on any
such contracts it has entered into; provided, however, that in the case of an
option that is in-the money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5% limitation. For purposes of this policy
options on futures contracts and foreign currency options traded on a
commodities exchange will be considered "related options". This policy may be
modified by the Board of Trustees without a shareholder vote and does not limit
the percentage of the Fund's assets at risk to 5%.

A Fund's use of futures contracts may result in leverage. Therefore, to
the extent necessary, in instances involving the purchase of futures contracts
or the writing of call or put options thereon by the Fund, an amount of cash,
U.S. Government securities or other appropriate liquid securities, equal to the
market value of the futures contracts and options thereon (less any related
margin deposits), will be identified in an account with the Fund's custodian to
cover (such as owning an offsetting position) the position, or alternative cover
will be employed. Assets used as cover or held in an identified account cannot
be sold while the position in the corresponding option or future is open, unless
they are replaced with similar assets. As a result, the commitment of a large
portion of a Fund's assets to cover or identified accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.

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<PAGE>

If the CFTC or other regulatory authorities adopt different (including
less stringent) or additional restrictions, each Fund would comply with such new
restrictions.

Trading in Futures Contracts. A futures contract provides for the
future sale by one party and purchase by another party of a specified amount of
a specific financial instrument (e.g., units of a stock index) for a specified
price, date, time and place designated at the time the contract is made.
Brokerage fees are incurred when a futures contract is bought or sold and margin
deposits must be maintained. Entering into a contract to buy is commonly
referred to as buying or purchasing a contract or holding a long position.
Entering into a contract to sell is commonly referred to as selling a contract
or holding a short position.

Unlike when a Fund purchases or sells a security, no price would be
paid or received by the Fund upon the purchase or sale of a futures contract.
Upon entering into a futures contract, and to maintain the Fund's open positions
in futures contracts, the Fund would be required to deposit with its custodian
or futures broker in a segregated account in the name of the futures broker an
amount of cash, U.S. government securities, suitable money market instruments,
or other liquid securities, known as "initial margin." The margin required for a
particular futures contract is set by the exchange on which the contract is
traded, and may be significantly modified from time to time by the exchange
during the term of the contract. Futures contracts are customarily purchased and
sold on margins that may range upward from less than 5% of the value of the
contract being traded.

If the price of an open futures contract changes (by increase in
underlying instrument or index in the case of a sale or by decrease in the case
of a purchase) so that the loss on the futures contract reaches a point at which
the margin on deposit does not satisfy margin requirements, the broker will
require an increase in the margin. However, if the value of a position increases
because of favorable price changes in the futures contract so that the margin
deposit exceeds the required margin, the broker will pay the excess to the Fund.

These subsequent payments, called "variation margin," to and from the
futures broker, are made on a daily basis as the price of the underlying assets
fluctuate making the long and short positions in the futures contract more or
less valuable, a process known as "marking to the market." Each Fund expects to
earn interest income on its margin deposits.

Although certain futures contracts, by their terms, require actual
future delivery of and payment for the underlying instruments, in practice most
futures contracts are usually closed out before the delivery date. Closing out
an open futures contract purchase or sale is effected by entering into an
offsetting futures contract sale or purchase, respectively, for the same
aggregate amount of the identical underlying instrument or index and the same
delivery date. If the offsetting purchase price is less than the original sale
price, the Fund realizes a gain; if it is more, the Fund realizes a loss.
Conversely, if the offsetting sale price is more than the original purchase
price, the Fund realizes a gain; if it is less, the Fund realizes a loss. The
transaction costs must also be included in these calculations. There can be no
assurance, however, that the Fund will be able to enter into an offsetting
transaction with respect to a particular futures contract at a particular time.
If the Fund is not able to enter into an offsetting transaction, the Fund will
continue to be required to maintain the margin deposits on the futures contract.

For example, one contract in the Financial Times Stock Exchange 100
Index future is a contract to buy 25 pounds sterling multiplied by the level of
the UK Financial Times 100 Share Index on a given future date. Settlement of a
stock index futures contract may or may not be in the underlying instrument or
index. If not in the underlying instrument or index, then settlement will be
made in cash, equivalent over time to the difference between the contract price
and the actual price of the underlying asset at the time the stock index futures
contract expires.

Special Risks of Transactions in Futures Contracts. Volatility and
Leverage. The prices of futures contracts are volatile and are influenced, among
other things, by actual and anticipated changes in the market and interest
rates, which in turn are affected by fiscal and monetary policies and national
and international political and economic events.

Most United States futures exchanges limit the amount of fluctuation
permitted in futures contract prices during a single trading day. The daily
limit establishes the maximum amount that the price of a futures contract

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<PAGE>

may vary either up or down from the previous day's settlement price at the end
of a trading session. Once the daily limit has been reached in a particular type
of futures contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses, because the limit may prevent
the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses.

Because of the low margin deposits required, futures trading involves
an extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the futures contract is deposited as margin, a subsequent 10%
decrease in the value of the futures contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount of margin deposited to maintain the futures contract. However, a Fund
would presumably have sustained comparable losses if, instead of the futures
contract, it had invested in the underlying financial instrument and sold it
after the decline. Furthermore, in the case of a futures contract purchase, in
order to be certain that the Fund has sufficient assets to satisfy its
obligations under a futures contract, the Fund earmarks to the futures contract
money market instruments or other liquid securities equal in value to the
current value of the underlying instrument less the margin deposit.

Liquidity. A Fund may elect to close some or all of its futures
positions at any time prior to their expiration. The Fund would do so to reduce
exposure represented by long futures positions or short futures positions. The
Fund may close its positions by taking opposite positions which would operate to
terminate the Fund's position in the futures contracts. Final determinations of
variation margin would then be made, additional cash would be required to be
paid by or released to the Fund, and the Fund would realize a loss or a gain.

Futures contracts may be closed out only on the exchange or board of
trade where the contracts were initially traded. Although each Fund intends to
purchase or sell futures contracts only on exchanges or boards of trade where
there appears to be an active market, there is no assurance that a liquid market
on an exchange or board of trade will exist for any particular contract at any
particular time. The reasons for the absence of a liquid secondary market on an
exchange are substantially the same as those discussed under "Special Risks of
Transactions in Options on Futures Contracts." In the event that a liquid market
does not exist, it might not be possible to close out a futures contract, and in
the event of adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin. However, in the event futures
contracts have been used to hedge the underlying instruments, the Fund would
continue to hold the underlying instruments subject to the hedge until the
futures contracts could be terminated. In such circumstances, an increase in the
price of underlying instruments, if any, might partially or completely offset
losses on the futures contract. However, as described below, there is no
guarantee that the price of the underlying instruments will, in fact, correlate
with the price movements in the futures contract and thus provide an offset to
losses on a futures contract.

Hedging Risk. A decision of whether, when, and how to hedge involves
skill and judgment, and even a well-conceived hedge may be unsuccessful to some
degree because of unexpected market behavior or market or interest rate trends.
There are several risks in connection with the use by a Fund of futures
contracts as a hedging device. One risk arises because of the possible imperfect
correlation between movements in the prices of the futures contracts and
movements in the prices of the underlying instruments which are the subject of
the hedge. The Adviser or Sub-Adviser will, however, attempt to reduce this risk
by entering into futures contracts whose movements, in its judgment, will have a
significant correlation with movements in the prices of the Fund's underlying
instruments sought to be hedged.

Successful use of futures contracts by the Fund for hedging purposes is
also subject to the Advisor's or Sub-Advisor's ability to correctly predict
movements in the direction of the market. It is possible that, when the Fund has
sold futures to hedge its portfolio against a decline in the market, the index,
indices, or instruments underlying futures might advance and the value of the
underlying instruments held in the Fund's portfolio might decline. If this were
to occur, the Fund would lose money on the futures and also would experience a
decline in

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<PAGE>

value in its underlying instruments. However, while this might occur to a
certain degree, the Advisor and each Sub-Advisor believe that over time the
value of the Fund's portfolio will tend to move in the same direction as the
market indices used to hedge the portfolio. It is also possible that if a Fund
were to hedge against the possibility of a decline in the market (adversely
affecting the underlying instruments held in its portfolio) and prices instead
increased, the Fund would lose part or all of the benefit of increased value of
those underlying instruments that it has hedged, because it would have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund had insufficient cash, it might have to sell underlying instruments to
meet daily variation margin requirements. Such sales of underlying instruments
might be, but would not necessarily be, at increased prices (which would reflect
the rising market). The Fund might have to sell underlying instruments at a time
when it would be disadvantageous to do so.

In addition to the possibility that there might be an imperfect
correlation, or no correlation at all, between price movements in the futures
contracts and the portion of the portfolio being hedged, the price movements of
futures contracts might not correlate perfectly with price movements in the
underlying instruments due to certain market distortions. First, all
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors might close futures contracts through offsetting transactions, which
could distort the normal relationship between the underlying instruments and
futures markets. Second, the margin requirements in the futures market are less
onerous than margin requirements in the securities markets, and as a result the
futures market might attract more speculators than the securities markets do.
Increased participation by speculators in the futures market might also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market and also because of the imperfect correlation between price
movements in the underlying instruments and movements in the prices of futures
contracts, even a correct forecast of general market trends by the Adviser or
Sub-Adviser might not result in a successful hedging transaction over a very
short time period.

Options on Futures Contracts. Each Fund may purchase and sell options
on the same types of futures in which it may invest.

Options on futures are similar to options on underlying instruments
except that options on futures give the purchaser the right, in return for the
premium paid, to assume a position in a futures contract (a long position if the
option is a call and a short position if the option is a put), rather than to
purchase or sell the futures contract, at a specified exercise price at any time
during the period of the option. Upon exercise of the option, the delivery of
the futures position by the writer of the option to the holder of the option
will be accompanied by the delivery of the accumulated balance in the writer's
futures margin account which represents the amount by which the market price of
the futures contract, at exercise, exceeds (in the case of a call) or is less
than (in the case of a put) the exercise price of the option on the futures
contract. Purchasers of options who fail to exercise their options prior to the
exercise date suffer a loss of the premium paid.

As an alternative to writing or purchasing call and put options on
stock index futures, each Fund may write or purchase call and put options on
stock indices. Such options would be used in a manner similar to the use of
options on futures contracts.

Special Risks of Transactions in Options on Futures Contracts. The
risks described under "Special Risks of Transactions on Futures Contracts" are
substantially the same as the risks of using options on futures. In addition,
where a Fund seeks to close out an option position by writing or buying an
offsetting option covering the same underlying instrument, index or contract and
having the same exercise price and expiration date, its ability to establish and
close out positions on such options will be subject to the maintenance of a
liquid secondary market. Reasons for the absence of a liquid secondary market on
an exchange include the following: (i) there may be insufficient trading
interest in certain options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options, or underlying instruments; (iv) unusual or
unforeseen circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class

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<PAGE>

or series of options), in which event the secondary market on that exchange (or
in the class or series of options) would cease to exist, although outstanding
options on the exchange that had been issued by a clearing corporation as a
result of trades on that exchange would continue to be exercisable in accordance
with their terms. There is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render certain of the
facilities of any of the clearing corporations inadequate, and thereby result in
the institution by an exchange of special procedures which may interfere with
the timely execution of customers' orders.

Additional Futures and Options Contracts. Although the Funds have no
current intention of engaging in futures or options transactions other than
those described above, they reserve the right to do so. Such futures and options
trading might involve risks which differ from those involved in the futures and
options described above.

Foreign Futures and Options. Participation in foreign futures and
foreign options transactions involves the execution and clearing of trades on or
subject to the rules of a foreign board of trade. Neither the National Futures
Association nor any domestic exchange regulates activities of any foreign boards
of trade, including the execution, delivery and clearing of transactions, or has
the power to compel enforcement of the rules of a foreign board of trade or any
applicable foreign law. This is true even if the exchange is formally linked to
a domestic market so that a position taken on the market may be liquidated by a
transaction on another market. Moreover, such laws or regulations will vary
depending on the foreign country in which the foreign futures or foreign options
transaction occurs. For these reasons, customers who trade foreign futures or
foreign options contracts may not be afforded certain of the protective measures
provided by the Commodity Exchange Act, the CFTC's regulations and the rules of
the National Futures Association and any domestic exchange, including the right
to use reparations proceedings before the Commission and arbitration proceedings
provided by the National Futures Association or any domestic futures exchange.
In particular, funds received from a Fund for foreign futures or foreign options
transactions may not be provided the same protections as funds received in
respect of transactions on United States futures exchanges. In addition, the
price of any foreign futures or foreign options contract and, therefore, the
potential profit and loss thereon may be affected by any variance in the foreign
exchange rate between the time the Fund's order is placed and the time it is
liquidated, offset or exercised.

Foreign Currency Transactions. A forward foreign currency exchange
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. These
contracts are principally traded in the interbank market conducted directly
between currency traders (usually large, commercial banks) and their customers.
A forward contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.

Each Fund may enter into forward contracts for a variety of purposes in
connection with the management of the foreign currency exposure of its
portfolio. The Fund's use of such contracts would include, but not be limited
to, the following: First, when 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 for the purchase or sale, for a fixed amount of dollars of the amount
of foreign currency involved in the underlying security transactions, the Fund
will be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received.

Second, when the Advisor or Sub-Advisor believes that one currency may
experience a substantial movement against another currency, including the U.S.
dollar, or it wishes to alter the Fund's exposure to the currencies of the
countries in its investment universe, it may enter into a forward contract to
sell or buy foreign currency in exchange for the U.S. dollar or another
foreign currency. Alternatively, where appropriate, a Fund may manage all or
part of its foreign currency exposure through the use of a basket of currencies
or a proxy currency where such currency or currencies act as an effective proxy
for other currencies. In such a case, the Fund may enter into a forward contract
where the amount of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in the Fund. The precise matching of
the forward contract amounts and the value of the securities involved will not
generally be possible since the

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<PAGE>

future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the forward contract is entered into and the date it matures. The
projection of short-term currency market movement is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.
Under normal circumstances, consideration of the prospect for currency parities
will be incorporated into the longer term investment decisions made with regard
to overall diversification strategies. However, each of the Adviser and
Sub-Advisers believe that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of a Fund will
be served.

Each Fund may enter into forward contacts for any other purpose
consistent with the Fund's investment objective and program. However, the Fund
will not enter into a forward contract, or maintain exposure to any such
contract(s), if the amount of foreign currency required to be delivered
thereunder would exceed the Fund's holdings of liquid securities and currency
available for cover of the forward contract(s). In determining the amount to be
delivered under a contract, the Fund may net offsetting positions.

At the maturity of a forward contract, the Fund may sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and either extend the maturity of the forward contract (by "rolling"
that contract forward) or may initiate a new forward contract.

If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent of the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.

Each Fund's dealing in forward foreign currency exchange contracts will
generally be limited to the transactions described above. However, each Fund
reserves the right to enter into forward foreign currency contracts for
different purposes and under different circumstances. Of course, the Fund is not
required to enter into forward contracts with regard to its foreign currency
denominated securities and will not do so unless deemed appropriate by the
Advisor or a Sub-Advisor. It also should be realized that this method of hedging
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. It simply establishes a rate of
exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result from
an increase in the value of that currency.

Although each Fund values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S. dollars
on a daily basis. It will do so from time to time, and investors should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.

Federal Tax Treatment of Options, Futures Contracts and Forward Foreign
Exchange Contracts. Each Fund may enter into certain option, futures, and
forward foreign exchange contracts, including options and futures on currencies,
which are Section 1256 contracts and may result in the Fund entering into
straddles.

Open Section 1256 contracts at fiscal year end will be considered to
have been closed at the end of the Fund's fiscal year and any gains or losses
will be recognized for tax purposes at that time. Such gains or losses from the
normal closing or settlement of such transactions will be characterized as 60%
long-term capital gain or loss and 40% short-term capital gain or loss
regardless of the holding period of the instrument. The Fund will be required to
distribute net gains on such transactions to shareholders even though it may not
have closed the transaction and received cash to pay such distributions.

20
<PAGE>

Options, futures and forward foreign exchange contracts, including
options and futures on currencies, which offset a security or currency position
may be considered straddles for tax purposes, in which case a loss on any
position in a straddle will be subject to deferral to the extent of unrealized
gain in an offsetting position. The holding period of the securities or
currencies comprising the straddle may be deemed not to begin until the straddle
is terminated. For securities offsetting a purchased put, this adjustment of the
holding period may increase the gain from sales of securities held less than
three months. The holding period of the security offsetting an "in-the-money
qualified covered call" option will not include the period of time the option is
outstanding.

Losses on written covered calls and purchased puts on securities,
excluding certain "qualified covered call" options, may be long-term capital
loss, if the security covering the option was held for more than twelve months
prior to the writing of the option.

In order for each Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or currencies. In addition, gains realized on the sale or other
disposition of securities, including options, futures or forward contracts on
securities or securities indexes and, in some cases, currencies, held for less
than three months, must be limited to less than 30% of the Fund's annual gross
income. In order to avoid realizing excessive gains on securities or currencies
held less than three months, the Fund may be required to defer the closing out
of options, futures or foreign forward exchange contracts beyond the time when
it would otherwise be advantageous to do so. Unrealized gains on Section 1256
options, futures and foreign forward exchange contracts, which have been open
for less than three months as of the end of the Fund's fiscal year and which are
recognized for tax purposes, will not be considered gains on securities or
currencies held less than three months for purposes of the 30% test.

Swap Agreements. Each of the Funds may enter into interest rate,
index and currency exchange rate swap agreements in attempts to obtain a
particular desired return at a lower cost to the Fund than if the Fund had
invested directly in an instrument that yielded that desired return. Swap
agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard "swap" transaction, two parties agree to exchange the returns (or
differentials in rates of returns) earned or realized on particular
predetermined investments or instruments. The gross returns to be exchanged or
"swapped" between the parties are calculated with respect to a "notional
amount," i.e., the return on or increase in value of a particular dollar amount
invested at a particular interest rate, in a particular foreign currency, or in
a "basket" of securities representing a particular index. The "notional amount"
of the swap agreement is only a fictive basis on which to calculate the
obligations the parties to a swap agreement have agreed to exchange. A Fund's
obligations (or rights) under a swap agreement will generally be equal only to
the amount to be paid or received under the agreement based on the relative
values of the positions held by each party to the agreement (the "net amount").
A Fund's obligations under a swap agreement will be accrued daily (offset
against any amounts owing to the Fund) and any accrued but unpaid net amounts
owed to a swap counterparty will be covered by the maintenance of a segregated
account consisting of cash, U.S. Government securities, or other liquid
securities, to avoid leveraging of the Fund's portfolio. A Fund will not enter
into a swap agreement with any single party if the net amount owed or to be
received under existing contracts with that party would exceed 5% of the Fund's
assets.

Whether a Fund's use of swap agreements enhance the Fund's total return
will depend on the Advisor's or Sub-Advisor's ability correctly to predict
whether certain types of investments are likely to produce greater returns than
other investments. Because they are two-party contracts and may have terms of
greater than seven days, swap agreements may be considered to be illiquid.
Moreover, a Fund bears the risk of loss of the amount expected to be received
under a swap agreement in the event of the default or bankruptcy of a swap
agreement counterparty. The Advisor or Sub-Advisor will cause a Fund to enter
into swap agreements only with counterparties that would be eligible for
consideration as repurchase agreement counterparties under the Funds' repurchase
agreement guidelines. The swap market is a relatively new market and is largely
unregulated. It is possible that developments in the swap market, including
potential government regulation, could adversely affect a Fund's ability to
terminate existing swap agreements or to realize amounts to be received under
such agreements.

21
<PAGE>

Certain swap agreements are exempt from most provisions of the
Commodity Exchange Act ("CEA") and, therefore, are not regulated as futures or
commodity option transactions under the CEA, pursuant to regulations of the
CFTC. To qualify for this exemption, a swap agreement must be entered into by
"eligible participants," which include the following, provided the participants'
total assets exceed established levels: a bank or trust company, savings
association or credit union, insurance company, investment company subject to
regulation under the 1940 Act, commodity pool, corporation, partnership,
proprietorship, organization, trust or other entity, employee benefit plan,
governmental entity, broker-dealer, futures commission merchant, natural person.
or regulated foreign person. To be eligible, natural persons and most other
entities must have total assets exceeding $10 million; commodity pools and
employees benefit plans must have assets exceeding $5 million. In addition, an
eligible swap transaction must meet three conditions. First, the swap agreement
may not be part of a fungible class of agreements that are standardized as to
their material economic terms. Second, the creditworthiness of parties with
actual or potential obligations under the swap agreement must be a material
consideration in entering into or determining the terms of the swap agreement,
including pricing, cost or credit enhancement terms. Third, swap agreements may
not be entered into and traded on or through a multilateral transaction
execution facility.

Loans and Other Direct Debt Instruments. Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower to
lenders or lending syndicates (loans and loan participations), to suppliers of
goods or services (trade claims or other receivables), or to other parties.
Direct debt instruments are subject to each Fund's policies regarding the
quality of debt securities.

Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally recognized
rating service. If a Fund does not receive scheduled interest or principal
payments on such indebtedness, the Fund's share price and yield could be
adversely affected. Loans that are fully secured offer a Fund more protections
than an unsecured loan in the event of non-payment of scheduled interest or
principal. However, there is no assurance that the liquidations of collateral
from a secured loan would satisfy the borrower's obligation, or that the
collateral could be liquidated. Indebtedness of borrowers whose creditworthiness
is poor involves substantially greater risks and may be highly speculative.
Borrowers that are in bankruptcy or restructuring may never pay off their
indebtedness, or may pay only a small fraction of the amount owed. Direct
indebtedness of developing countries also involves a risk that the governmental
entities responsible for the repayment of the debt may be unable, or unwilling,
to pay interest and repay principal when due.

Investments in loans through direct assignment of a financial
institution's interests with respect to a loan may involve additional risks to a
Fund. For example, if a loan is foreclosed, the Fund could become part owner of
any collateral, and would bear the costs and liabilities associated with owning
and disposing of the collateral. In addition, it is conceivable that under
emerging legal theories of lender liability, the Fund could be held liable as a
co-lender. Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary. Direct debt instruments that are not in the
form of securities may offer less legal protection to a Fund in the event of
fraud or misrepresentation. In the absence of definitive regulatory guidance,
each Fund relies on the Adviser's or Sub-Adviser's research in an attempt to
avoid situations where fraud or misrepresentation could adversely affect the
Fund.

A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be subject
to the claims of the agent's general creditors, the Fund might incur certain
costs and delays in realizing payment on the loan or loan participation and
could suffer a loss of principal or interest.

Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
the Fund to pay additional cash on demand. These commitments may have the effect
of requiring the Fund to increase its investment in a borrower at a time

22
<PAGE>

when it would not otherwise have done so, even if the borrower's condition makes
it unlikely that the amount will ever be repaid. A Fund will set aside
appropriate liquid assets in a custodial account to cover its potential
obligations under standby financing commitments.

Each Fund limits the amount of total assets that it will invest in any
one issuer or, except for the Strategic Natural Resources Fund and the Info-Tech
& Communications Fund, in issuers within the same industry (see each Fund's
investment limitations). For purposes of these limitations, a Fund generally
will treat the borrower as the "issuer" of indebtedness held by the Fund. In the
case of loan participations where a bank or other lending institution serves as
financial intermediary between a Fund and the borrower, if the participation
does not shift to the Fund the direct debtor-creditor relationship with the
borrower, SEC interpretations require the Fund, in appropriate circumstances, to
treat both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an issuer of
indebtedness may restrict a Fund's ability to invest in indebtedness related to
a single financial intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent many different
companies and industries.

Brady Bonds. Brady bonds are securities created through the exchange of existing
commercial bank loans to public and private entities in certain emerging markets
for new bonds in connection with debt restructurings. Brady bonds have been
issued since 1989 and do not have a long payment history. In light of the
history of defaults of countries issuing Brady bonds on their commercial bank
loans, investments in Brady bonds may be viewed as speculative. Brady bonds may
be fully or partially collateralized or uncollateralized, are issued in various
currencies (but primarily the dollar) and are actively traded in
over-the-counter secondary markets. Incomplete collateralization of interest or
principal payment obligations results in increased credit risk.
Dollar-denominated collateralized Brady bonds, which may be fixed-rate bonds or
floating-rate bonds, are generally collateralized by U.S. Treasury zero coupon
bonds having the same maturity as the Brady bonds.

MANAGEMENT OF THE TRUST

Trustees and Officers

Trustees and officers of the Trust, together with information as to
their principal business occupations during the last five years, are shown
below. Each Trustee who is considered an "interested person" of the Trust (as
defined in Section 2(a)(19) of the 1940 Act) is indicated by an asterisk next to
his name.

<TABLE>
<CAPTION>
Position with the Trust and
Name, Age and Principal Occupation within
Business Address the Past Five Years
<S> <C>

Ronald Altbach, 50 Trustee of the Trust. Chairman, Paul Sebastian, Inc. (perfume
1540 West Park Avenue distributor) (1994 - present); President, Olcott Corporation
Ocean, New Jersey 07712 (perfume distributor) (1992 - 1994).

*Thomas T. Bachmann, 51 Trustee of the Trust. Chairman, Orbitex Management Ltd.
Maritime House (investment management) (1986 - present).
Frederick Street
Nassau, Bahamas

*Otto J. Felber, 64 Trustee of the Trust. President and Vice-Chairman, Altamira
250 Bloor Street East Management Ltd. (investment management) (1987 - present).
Suite 300
Toronto, Ontario
Canada M4W 1E6

23
<PAGE>

Position with the Trust and
Name, Age and Principal Occupation within
Business Address the Past Five Years

Robert F. Raucci, 42 Trustee of the Trust. President, RAM Investment Corp.
599 Lexington Avenue (investment management) (1994 - present); Vice President,
New York, NY 10022 Alliance Capital Management Corp. (investment management) (1985 -
1994).

*James L. Nelson, 47 Trustee, President, Assistant Treasurer and Assistant Secretary
660 Madison Avenue of the Trust. Director and Chief Executive Officer, Orbitex
New York, NY 10021 Management, Inc., Chief Executive Officer and President, Orbitex,
Inc. (business development) (1995 - present); President, AVIC
Group International (communications) (1993 - 1995); President,
Eaglescliff Corporation (consulting) (1986 - present).

Timothy P. Mullaney, 29 Treasurer of the Trust. Chief Financial Officer, Orbitex
660 Madison Avenue Management, Inc. (August 1997 - present), Treasurer and Chief
New York, NY 10021 Financial Officer, Manning & Napier Insurance Fund, Inc.
(September 1994 - August 1997), Chief Financial Officer, Manning &
Napier Fund, Inc. (October 1994 - August 1997), Mutual Fund Chief
Financial Officer, Manning & Napier Advisors, Inc. (July 1994 -
December 1994), Tax Manager, Investors Bank & Trust (January 1994 -
August 1994), Senior Tax Associate, Coopers & Lybrand, LLP (1990 - 1994).

Mark Breault, 30 Secretary of the Trust. Vice President - Operations,
660 Madison Avenue Orbitex Management, Inc. (1996 - present); Vice President,
New York, NY 10021 State Street Bank and Trust Company (1991 - 1996).
</TABLE>

Each Trustee of the Trust who is not an interested person of the Trust
or Advisor or Sub-Advisor receives an annual fee of $5,000 . The Trust also
reimburses each such Trustee for travel and other expenses incurred in attending
such meetings.

The following table estimates the amount of compensation to be paid to
the Trustees during the fiscal year ending April 30, 1998. The Trust is newly
organized and has not paid any fees to Trustees.

Name Compensation Paid
Ronald Altbach $5,000
Thomas T. Bachmann $0
Otto J. Felber $0
James L. Nelson $0
Robert F. Raucci $5,000

Trustees and officers of the Trust, as a group, owned less than 1% of
each Fund's outstanding voting securities as of the date of this Statement of
Additional Information.

PRINCIPAL HOLDERS OF SECURITIES

As of the date of this Statement of Additional Information, Orbitex
Management, Inc. held 100% of the outstanding voting shares of each Fund.

INVESTMENT MANAGEMENT AND OTHER SERVICES

Advisor

Orbitex Management, Inc., 660 Madison Avenue, New York, NY 10021,
serves as the Advisor of each Fund pursuant to an Investment Advisory Agreement
that has been approved by the Board, including a majority of the independent
Trustees. The initial term of the Investment Advisory Agreement is two years.
However, the Investment Advisory Agreement may continue in effect from year to
year if approved at least annually by a vote of a majority of the Board
(including a majority of the Trustees who are not parties to the Investment
Advisory Agreement or interested persons of any such parties) cast in person at
a meeting called for the purpose of voting on such renewal, or by the vote of a
majority of the outstanding shares of the particular Fund.

The directors and the principal executive officers of the Advisor are:
Otto J. Felber, Director and James L. Nelson, Director and Chief Executive
Officer. The Advisor is a subsidiary of Orbitex, Inc., a business development
firm.

24
<PAGE>

In addition to the duties set forth in the Prospectus under "How the
Trust is Managed - Advisor", the Advisor, in furtherance of such duties and
responsibilities, is authorized in its discretion to engage in the following
activities or to cause or permit the Sub-Advisors to engage in the following
activities on behalf of the Trust: (i) develop a continuing program for the
management of the assets of each Fund; (ii) buy, sell, exchange, convert, lend,
or otherwise trade in portfolio securities and other assets; (iii) place orders
and negotiate the commissions for the execution of transactions in securities
with or through broker-dealers, underwriters, or issuers; (iv) prepare and
supervise the preparation of shareholder reports and other shareholder
communications; and (v) obtain and evaluate business and financial information
in connection with the exercise of its duties.

Subject to policies established by the Board of Trustees of the Trust,
which has overall responsibility for the business and affairs of each Fund, the
Advisor manages the operations of the Funds. In addition to providing advisory
services, the Advisor furnishes the Funds with office space and certain
facilities and personnel required for conducting the business of the Funds.

The Trust has agreed that the word "Orbitex" in its name is derived
from the name of the Advisor; that such name is the property of the Advisor for
copyrights and/or other purposes; and that therefore, such name may freely be
used by the Advisor for other investment companies, entities or products. The
Trust has further agreed that in the event that for any reason, the Advisor
ceases to be its investment advisor, the Trust will, unless the Advisor
otherwise consents, promptly take all steps necessary to change its name to one
which does not include "Orbitex."

Sub-Advisers

Each of the Sub-Advisors described in the Prospectus serves as
sub-adviser to one or more of the Funds pursuant to separate Sub-Advisory
Agreements by and among the Trust on behalf of the applicable Fund, the Advisor
and the Sub-Advisor.

In addition to the duties set forth in the Prospectus, each
Sub-Advisor, in furtherance of such duties and responsibilities, is authorized
and has agreed to provide or perform the following functions with respect to a
particular Fund or its segment of a particular Fund: (1) formulate and implement
a continuing investment program for use in managing the assets and resources of
each Fund in a manner consistent with each Fund's investment objective,
policies, and restrictions, which program may be amended and updated from time
to time to reflect changes in financial and economic conditions; (2) make all
determinations with respect to the investment of each Fund's assets in
accordance with (a) applicable law, (b) each Fund's investment objective,
policies, and restrictions as provided in the Trust's Prospectus and Statement
of Additional Information, as amended from time to time, (c) provisions of the
Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
relating to regulated investment companies, and (d) such other limitations as
the Board of Trustees of the Trust may impose by written notice; (3) make all
determinations as to the purchase or sale of portfolio securities, including
advising the Board of Trustees of the Trust as to certain matters involving each
Fund's portfolio securities that are not in the nature of investment decisions;
(4) buy, sell, exchange, convert for each Fund's use, and otherwise trade in
portfolio securities and other assets; (5) furnish to the Board of Trustees of
the Trust periodic reports concerning the Sub-Advisor's economic outlook and
investment strategy, as well as information concerning each Fund's portfolio
activity and investment performance; (6) place orders for the execution of
portfolio transactions with such broker-dealers, underwriters or issuers, and
negotiate the commissions (if any) for the execution of transactions in
securities with or through such broker-dealers, underwriters or issuers selected
by the Sub-Advisor; (7) obtain and evaluate business and financial information
in connection with the exercise of its duties; (8) determine the
creditworthiness of the issuers, obligors, or guarantors of portfolio
securities; and (9) evaluate the creditworthiness of any entities with which the
Fund proposes to engage in repurchase transactions.

ADMINISTRATOR

State Street is the administrator of the Trust. State Street is a
Massachusetts trust company with a principal office at 225 Franklin Street,
Boston, Massachusetts 02111. State Street serves as administrator of other
mutual funds.

25
<PAGE>

Pursuant to the Administration Agreement with the Trust, State Street
provides all administrative services reasonably necessary for the Trust, other
than those provided by the Advisor, subject to the supervision of the Board of
Trustees of the Trust.

Under the Administration Agreement with the Trust, State Street
provides administrative services including, without limitation: (i) services of
personnel competent to perform such administrative and clerical functions as are
necessary to provide effective administration of the Trust; (ii) maintaining the
Trust's books and records (other than financial and accounting books and records
and records maintained by the Trust's custodian or transfer agent); (iii)
overseeing the Trust's insurance relationships; (iv) preparing or assisting in
the preparation of all required tax returns, proxy statements and reports to the
Trust's shareholders and Trustees and reports to and filings with the SEC and
any other governmental agency; (v) preparing or assisting in the preparation of
such notices and reports as may be necessary to offer and sell the Trust's
shares under applicable state securities laws; (vi) preparing or assisting in
the preparation of, and coordinating the distribution of all materials for
meetings of the Board of Trustees of the Trust; (vii) monitoring daily and
periodic compliance with respect to all requirements and restrictions of the
1940 Act, the Internal Revenue Code and the Prospectus; (viii) monitoring the
calculation of all income and expense accruals, sales and redemptions of capital
shares outstanding by the Trust's custodian; (ix) evaluating expenses,
projecting future expenses, and processing payments of expenses; and (x)
monitoring and evaluating performance of accounting and related services by the
Trust's custodian.

The Agreement is terminable at any time by the Trust or State Street on
sixty days' written notice. If the Trust terminates the Agreement within three
years of its effective date, the Fund must reimburse State Street for any fees
waived by State Street.

CUSTODIAN

State Street serves as the custodian of the Trust's assets pursuant to
a Custodian Contract by and between State Street and the Trust. State Street's
responsibilities include safeguarding and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. Pursuant to the Custodian
Contract, State Street also provides certain accounting and pricing services to
the Trust, including calculating the daily net asset value per share for each
Fund; maintaining original entry documents and books of record and general
ledgers; posting cash receipts and disbursements; reconciling bank account
balances monthly; recording purchases and sales based upon communications from
the Advisor and Sub-Advisors; and preparing monthly and annual summaries to
assist in the preparation of financial statements of, and regulatory reports
for, the Trust. The Trust may employ foreign sub-custodians that are approved by
the Board of Trustees to hold foreign assets.

TRANSFER AGENT SERVICES

State Street provides transfer agent and dividend disbursing services
to each Fund pursuant to the terms of a Transfer Agency and Service Agreement by
and between State Street and the Trust.

DISTRIBUTION OF SHARES

Funds Distributor, Inc. (the "Distributor") serves as the distributor
of the shares of each Fund pursuant to a Distribution Agreement between the
Distributor and the Trust. The Distributor's principal business address is 60
State Street, Boston, Massachusetts 02108. The Distributor receives front-end or
contingent deferred sales commissions or sales loads for providing such services
to the Trust under the Distribution Agreement. In addition, pursuant to a
written Distribution Plan and Agreement pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (the "Rule 12b-1 Plan and Agreement"), the Funds
are authorized to use a portion of their assets to finance certain activities
relating to the distribution of their shares to investors.

Each Fund is authorized to pay the Distributor quarterly at a rate
equal to an annualized rate of .30% (in the case of the Asian High Yield Fund)
and .40% (in the case of the other Funds) of the average daily net assets of the
Fund during that quarter. Any Fund may pay fees to the Distributor at a lesser
rate, as agreed upon by the Board of Trustees of the Trust and the Distributor.
The Rule 12b-1 Plan and Agreement authorizes payments to

26
<PAGE>

the Distributor as compensation for providing account maintenance services to
investors in the Fund, including arranging for certain securities dealers or
brokers, administrators and others ("Recipients") to provide these services and
paying compensation for these services. Each Fund will bear its own costs of
distribution.

The services to be provided by Recipients may include, but are not
limited to, the following: assistance in the offering and sale of shares of the
Funds and in other aspects of the marketing of the shares to clients or
prospective clients of the respective recipients, answering routine inquiries
concerning a Fund; assisting in the establishment and maintenance of accounts or
sub-accounts in a Fund and in processing purchase and redemption transactions;
making a Fund's investment plans and shareholder services available; and
providing such other information and services to investors in shares of a Fund
as the Distributor or the Trust, on behalf of a Fund, may reasonably request.
The distribution services shall also include any advertising and marketing
services provided by or arranged by the Distributor with respect to the Funds.

The Distributor is required to provide a written report, at least
quarterly to the Board of Trustees of the Trust, which the Trustees will review,
specifying in reasonable detail the amounts expended pursuant to the Rule 12b-1
Plan and Agreement and the purposes for which such expenditures were made.
Further, the Distributor will inform the Board of any Rule 12b-1 fees to be paid
by the Distributor to Recipients.

The initial term of the Rule 12b-1 Plan and Agreement is one year and
it will continue in effect from year to year thereafter, provided such
continuance is specifically approved at least annually by a majority of the
Board of Trustees of the Trust and a majority of the Trustees who are not
"interested persons" of the Trust and do not have a direct or indirect financial
interest in the Rule 12b-1 Plan and Agreement ("Rule 12b-1 Trustees") by votes
cast in person at a meeting called for the purpose of voting on the Rule 12b-1
Plan and Agreement. The Rule 12b-1 Plan and Agreement may be terminated at any
time by the Trust or any Fund by vote of a majority of the Rule 12b-1 Trustees
or by vote of a majority of the outstanding voting securities of the Trust or
the affected Fund. The Rule 12b-1 Plan and Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).

The Rule 12b-1 Plan and Agreement may not be amended to increase
materially the amount of the Distributor's compensation to be paid by a Fund,
unless such amendment is approved by the vote of a majority of the outstanding
voting securities of the Fund (as defined in the 1940 Act). All material
amendments must be approved by a majority of the Board of Trustees of the Trust
and a majority of the Rule 12b-1 Trustees by votes cast in person at a meeting
called for the purpose of voting on the Rule 12b-1 Plan and Agreement. During
the term of the Rule 12b-1 Plan and Agreement, the selection and nomination of
non-interested Trustees of the Trust will be committed to the discretion of
current non-interested Trustees. The Distributor will preserve copies of the
Rule 12b-1 Plan and Agreement, any related agreements, and all reports, for a
period of not less than six years from the date of such document and for at
least the first two years in an easily accessible place.

Any agreement related to the Rule 12b-1 Plan and Agreement will be in
writing and provide that: (a) it may be terminated by the Trust or a Fund at any
time upon sixty days' written notice, without the payment of any penalty, by
vote of a majority of the Rule 12b-1 Trustees, or by vote of a majority of the
outstanding voting securities of the Trust or the affected Fund; (b) it will
automatically terminate in the event of its assignment (as defined in the 1940
Act); and (c) it will continue in effect for a period of more than one year from
the date of its execution or adoption only so long as such continuance is
specifically approved at least annually by a majority of the Board and a
majority of the Rule 12b-1 Trustees by votes cast in person at a meeting called
for the purpose of voting on such agreement.

BROKERAGE ALLOCATION AND OTHER PRACTICES

Subject to the general supervision of the Board of Trustees of the
Trust, the Advisor and Sub-Advisors are responsible for making decisions with
respect to the purchase and sale of portfolio securities on behalf of the Funds.
The Advisor and Sub-Advisors are also responsible for the implementation of
those decisions, including the selection of broker-dealers to effect portfolio
transactions, the negotiation of commissions, and the allocation of principal
business and portfolio brokerage.

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<PAGE>

In purchasing and selling each Fund's portfolio securities, it is the
Advisor's and each Sub-Advisor's policy to obtain quality execution at the most
favorable prices through responsible broker-dealers and, in the case of agency
transactions, at competitive commission rates where such rates are negotiable.
However, under certain conditions, a Fund may pay higher brokerage commissions
in return for brokerage and research services. In selecting broker-dealers to
execute a Fund's portfolio transactions, considerations is given to such factors
as the price of the security, the rate of the commission, the size and
difficulty of the order, the reliability, integrity, financial condition,
general execution and operational capabilities of competing brokers and dealers,
their expertise in particular markets and the brokerage and research services
they provide to the Advisor or a Sub-Advisor or the Funds. It is not the policy
of the Advisor or Sub-Advisors to seek the lowest available commission rate
where it is believed that a broker or dealer charging a higher commission rate
would offer greater reliability or provide better price or execution.

Transactions on stock exchanges involve the payment of brokerage
commissions. In transactions on stock exchanges in the United States, these
commissions are negotiated. Traditionally, commission rates have generally not
been negotiated on stock markets outside the United States. In recent years,
however, an increasing number of overseas stock markets have adopted a system of
negotiated rates, although a number of markets continue to be subject to an
established schedule of minimum commission rates. It is expected that equity
securities will ordinarily be purchased in the primary markets, whether
over-the-counter or listed, and that listed securities may be purchased in the
over-the-counter market if such market is deemed the primary market. In the case
of securities traded on the over-the-counter markets, there is generally no
stated commission, but the price usually includes an undisclosed commission or
markup. In underwritten offerings, the price includes a disclosed, fixed
commission or discount.

For fixed income securities, it is expected that purchases and sales
will ordinarily be transacted with the issuer, the issuer's underwriter, or with
a primary market maker acting as principal on a net basis, with no brokerage
commission being paid by the Fund. However, the price of the securities
generally includes compensation which is not disclosed separately. Transactions
placed through dealers who are serving as primary market makers reflect the
spread between the bid and asked prices.

With respect to equity and fixed income securities, the Advisor and
Sub-Advisors may effect principal transactions on behalf of the Funds with a
broker or dealer who furnishes brokerage and/or research services, designate any
such broker or dealer to receive selling concessions, discounts or other
allowances or otherwise deal with any such broker or dealer in connection with
the acquisition of securities in underwritings. The prices the Funds pay to
underwriters of newly-issued securities usually include a concession paid by the
issuer to the underwriter. The Advisor and Sub-Advisors may receive research
services in connection with brokerage transactions, including designations in
fixed price offerings.

The Advisor and Sub-Advisors receive a wide range of research services
from brokers and dealers covering investment opportunities throughout the world,
including information on the economies, industries, groups of securities,
individual companies, statistics, political developments, technical market
action, pricing and appraisal services, and performance analyses of all the
countries in which a Fund's portfolio is likely to be invested. The Advisor and
Sub-Advisors cannot readily determine the extent to which commissions charged by
brokers reflect the value of their research services, but brokers occasionally
suggest a level of business they would like to receive in return for the
brokerage and research services they provide. To the extent that research
services of value are provided by brokers, the Advisor and Sub-Advisors may be
relieved of expenses which they might otherwise bear. In some cases, research
services are generated by third parties but are provided to the Advisor and
Sub-Advisors by or through brokers.

Certain broker-dealers which provide quality execution services also
furnish research services to the Advisor and Sub-Advisors. The Advisor and
Sub-Advisors have adopted a brokerage allocation policy embodying the concepts
of Section 28(e) of the Securities Exchange Act of 1934, which permits an
investment adviser to cause its clients to pay a broker which furnishes
brokerage or research services a higher commission than that which might be
charged by another broker which does not furnish brokerage or research services,
or which furnishes brokerage or research services deemed to be of lesser value,
if such commission is deemed reasonable in relation to the brokerage and
research services provided by the broker, viewed in terms of either that
particular transaction or the overall responsibilities of the adviser with
respect to the accounts as to which it exercises investment discretion.
Accordingly, the Advisor and Sub-

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<PAGE>

Advisors may assess the reasonableness of commissions in light of the total
brokerage and research services provided by each particular broker.

Portfolio securities will not be purchased from or sold to the Advisor,
Sub-Advisors, or the Distributor, or any affiliated person of any of them acting
as principal, except to the extent permitted by rule or order of the SEC.

The Sub-Advisors currently provide investment advice to private
advisory accounts that have investment objectives and programs similar to the
Trust. Accordingly, occasions may arise when a Sub-Advisor may engage in
simultaneous purchase and sale transactions of securities that are consistent
with the investment objectives and programs of the Trustand other accounts.

On those occasions when such simultaneous investment decisions are
made, the Sub-Advisor will allocate purchase and sale transactions in an
equitable manner according to written procedures approved by the Board of
Trustees of the Trust. Specifically, such written procedures provide that, in
allocating purchase and sale transactions made on a combined basis, the
Sub-Advisor will seek to achieve the same average unit price of securities for
each entity and will seek to allocate, as nearly as practicable, such
transactions on a pro-rata basis substantially in proportion to the amounts
ordered to be purchased or sold by each entity. Such procedures may, in certain
instances, be either advantageous or disadvantageous to the Trust.

PURCHASE AND REDEMPTION OF SECURITIES BEING OFFERED

Letter of Intent. In submitting a Letter of Intent to purchase shares
of the Funds at a reduced sales charge, the investor agrees to the terms of the
Prospectus, the Applications used to buy such shares, and the language in this
Statement of Additional Information as to Letters of Intent, as they may be
amended from time to time by the Trust. Such amendments will apply automatically
to existing Letters of Intent.

A Letter of Intent ("Letter") is the investor's statement of intention
to purchase shares of one or more of the Funds during the 13-month period from
the investor's first purchase pursuant to the Letter (the "Letter of Intent
period"), which may, at the investor's request, include purchases made up to 90
days prior to the date of the Letter. The investor states the intention to make
the aggregate amount of purchases (excluding any reinvestment of dividends or
distributions or purchases made at net asset value without sales charge), which
together with the investor's holdings of such funds (calculated at their
respective public offering prices calculated on the date of the Letter) will
equal or exceed the amount specified in the Letter to obtain the reduced sales
charge rate (as set forth in "How To Purchase Shares" in the Prospectus)
applicable to purchases of shares in that amount (the "intended amount"). Each
purchase under the Letter will be made at the public offering price applicable
to a single lump-sum purchase of shares in the intended amount, as described in
the Prospectus.

In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of Intent
period, when added to the value (at offering price) of the investor's holdings
of such Fund shares on the last day of that period, do not equal or exceed the
intended amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below,
as those terms may be amended from time to time. The investor agrees that shares
equal in value to 5% of the intended amount will be held in escrow by the
Trust's transfer agent subject to the Terms of Escrow.

If the total eligible purchases made during the Letter or Intent period
do not equal or exceed the intended amount, the commissions previously paid to
the dealer of record for the account and the amount of sales charge retained by
the Distributor will be adjusted to the rates applicable to actual total
purchases. If total eligible purchases during the Letter of Intent period exceed
the intended amount and exceed the amount needed to qualify for the next sales
charge rate reduction set forth in the applicable prospectus, the sales charges
paid will be adjusted to the lower rate, but only if and when the dealer returns
to the Distributor the excess of the amount of commissions allowed or paid to
the dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be used to
purchase additional shares for the investor's account at the net asset value per
share in effect on the date of such purchase, promptly after the Distributor's
receipt thereof.

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<PAGE>

In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of Intent
period will be deducted. It is the responsibility of the dealer of record and/or
the investor to refer to the Letter in placing any purchase orders for the
investor during the Letter of Intent period. All of such purchases must be made
through the Distributor.

Terms of Escrow

1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, shares of the Fund equal in value to 5% of the
intended amount specified in the Letter shall be held in escrow by the Fund's
transfer agent. For example, if the intended amount specified under the Letter
is $50,000, the escrow shall be shares valued in the amount of $2,500 (computed
at the public offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited to the
investor's account.

2. If the total minimum investment specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed shares
will be promptly released to the investor.

3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended amount
specified in the Letter, the investor must remit to the Distributor an amount
equal to the difference between the dollar amount of sales charges actually paid
and the amount of sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge adjustment will
apply to any shares redeemed prior to the completion of the Letter. If such
difference in sales charges is not paid within twenty days after a request from
the Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales charge, the
sales charge will be withheld from the redemption proceeds.

4. By signing the Letter, the investor irrevocably constitutes and
appoints the transfer agent of the Trust as attorney-in-fact to surrender for
redemption any or all escrowed shares.

5. Shares held in escrow hereunder will automatically be exchanged for
shares of another Fund to which an exchange is requested, and the escrow will be
transferred to that other Fund.

In-Kind. Each Fund intends to pay all redemptions of its shares in
cash. However, each Fund may make full or partial payment of any redemption
request by the payment to shareholders of portfolio securities of the applicable
Fund (i.e., by redemption-in-kind), at the value of such securities used in
determining the redemption price. The Funds, nevertheless, pursuant to Rule
18f-1 under the 1940 Act, have filed a notification of election under which each
Fund is committed to pay in cash to any shareholder of record, all such
shareholder's requests for redemption made during any 90-day period, up to the
lesser of $250,000 or 1% of the applicable Fund's net asset value at the
beginning of such period. The securities to be paid in-kind to any shareholders
will be readily marketable securities selected in such manner as the Board of
Trustees of the Trust deems fair and equitable. If shareholders were to receive
redemptions-in-kind, they would incur brokerage costs should they wish to
liquidate the portfolio securities received in such payment of their redemption
request. The Trust does not anticipate making redemptions-in-kind.

The right to redeem shares or to receive payment with respect to any
redemption of shares of the Funds may only be suspended (1) for any period
during which trading on the New York Stock Exchange ("NYSE") is restricted or
such Exchange is closed, other than customary weekend and holiday closings, (2)
for any period during which an emergency exists as a result of which disposal of
securities or determination of the net asset value of the Fund is not reasonably
practicable, or (3) for such other periods as the SEC may by order permit for
protection of shareholders of the Funds.

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<PAGE>

SHAREHOLDER SERVICES

Systematic Withdrawal Program. A shareholder owning or purchasing
shares of any Fund having a total value of $10,000 or more may participate in
a systematic withdrawal program providing regular monthly or quarterly payments
. An application form containing details of the Systematic Withdrawal Program
is available upon request from the Funds' transfer agent. The Program is
voluntary and may be terminated at any time by the shareholders.

Income dividends and capital gain distributions on shares of the Funds
held in a Systematic Withdrawal Program are automatically reinvested in
additional shares of the relevant Fund at net asset value. A Systematic
Withdrawal Program is not an annuity and does not and cannot protect against
loss in declining markets. Amounts paid to a shareholder from the Systematic
Withdrawal Program represents the proceeds from redemptions of Fund shares, and
the value of the shareholder's investment in a Fund will be reduced to the
extent that the payments exceed any increase in the aggregate value of the
shareholder's shares (including shares purchased through reinvestment of
dividends and distributions). If a shareholder receives payments that are
greater than the appreciation in value of his or her shares, plus the income
earned on the shares, the shareholder may eventually withdraw his or her entire
account balance. This will occur more rapidly in a declining market. For tax
purposes, depending upon the shareholder's cost basis and date of purchase, each
withdrawal will result in a capital gain or loss. See "Dividends, Distributions
and Taxes" in this SAI and in the Funds' Prospectus.

The Funds offer certain shareholder services, which are designed to
facilitate investment in their shares. Each of the options is described in the
Funds' Prospectus. All of these special services may be terminated by either the
Funds or the shareholder without any prior written notice.

Systematic Exchange Program. The Systematic Exchange Program allows you
to make regular, systematic exchanges from one Orbitex Fund account into
another Orbitex Fund account. By setting up the program, you authorize the Fund
and its agents to redeem a set dollar amount or number of shares from the first
account and purchase shares of a second Fund. An exchange transaction is a sale
and a purchase of share for federal income tax purposes and may result in a
capital gain or loss.

To participate in the Systematic Exchange Program, you must have an
initial account balance of $10,000 in the first account and at least
$1,000 in the second account. Exchanges may be made on any day or days of your
choice. If the amount remaining in the first account is less than the exchange
amount you requested, then the remaining amount will be exchanged. At such time
as the first account has a zero balance, your participation the program will be
terminated. You may also terminate the program by calling or writing the Fund.
Once participation in the program has been terminated for any reason, to
reinstate the program you must do so in writing; simply investing additional
funds will not reinstate the program.

DETERMINATION OF NET ASSET VALUE

The net asset value of shares of each Fund is normally calculated as of
the close of trading on the NYSE on every day the NYSE is open for
trading. The NYSE is open Monday through Friday except on the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Short-term debt instruments with a remaining maturity of more than 60
days, intermediate and long-term bonds, convertible bonds, and other debt
securities are generally valued at prices obtained from an independent pricing
service. Where such prices are not available, valuations will be obtained from
brokers who are market makers for such securities. However, in circumstances
where the Advisor or a Sub-Advisor deems it appropriate to do so, the mean of
the bid and asked prices for over-the-counter securities or the last available
sale price for exchange-traded debt securities may be used. Where no last sale
price for exchange traded debt securities is available, the mean of the bid and
asked prices may be used.

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<PAGE>

Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided, as described above, are
valued as determined in good faith in accordance with procedures approved by the
Board of Trustees of the Trust.

Trading in securities on Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of business
on each business day in New York (i.e., a day on which the NYSE is open). In
addition, Far Eastern securities trading generally or in a particular country or
countries may not take place on all business days in New York. Furthermore,
trading takes place in Japanese markets on certain Saturdays in various foreign
markets on days which are not business days in New York and on which a Fund's
net asset value is not calculated. Each Fund calculates net asset value per
share, and therefore effects sales, redemptions and repurchases of its shares,
as of the close of regular trading on the NYSE once on each day on which the
NYSE is open. Such calculation may not take place contemporaneously with the
determination of the prices of the majority of the portfolio securities used in
such calculation. If events materially affecting the value of such securities
occur between the time when their price is determined and the time when the
Fund's net asset value is calculated, such securities will be valued at fair
value as determined in good faith in accordance with procedures approved by the
Board of Trustees of the Trust.

TAXES

Each Fund intends to qualify as a "regulated investment company"
("RIC") under Subchapter M of the Internal Revenue Code. In general, to qualify
as a RIC: (a) at least 90% of the gross income of a Fund for the taxable year
must be derived from dividends, interest, payments with respect to loans of
securities, gains from the sale or other disposition of securities, or other
income derived with respect to its business of investing in securities; (b) less
than 30% of a Fund's gross income for the taxable year can be attributable to
gains (without deductions for losses) from the sale or other disposition of
securities held for less than three months; (c) a Fund must distribute to its
shareholders 90% of its ordinary income and net short-term capital gains; and
(d) a Fund must diversity its assets so that, at the close of each quarter of
its taxable year, (i) at least 50% of the fair market value of its total (gross)
assets is comprised of cash, cash items, U.S. Government securities, securities
of other regulated investment companies and other securities limited in respect
of any one issuer to no more than 5% of the fair market value of the Fund's
total assets and 10% of the outstanding voting securities of such issuer and
(ii) no more than 25% of the fair market value of its total assets is invested
in the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies) or of two or more issuers
controlled by the Fund and engaged in the same, similar, or related trades or
businesses.

In addition, each Fund must declare and distribute dividends equal to
at least 98% of its ordinary income (as of the twelve months ended December 31)
and at least 98% of its net capital gain (as of the twelve months ended October
31), in order to avoid a federal excise tax. Each Fund intends to make the
required distributions, but they cannot guarantee that they will do so.
Dividends attributable to a Fund's ordinary income and net capital gain
dividends are taxable as such to shareholders in the year in which they are
received except dividends declared in October, November and December and paid in
January.

A corporate shareholder may be entitled to take a deduction for income
dividends received by it that are attributable to dividends received from a
domestic corporation, provided that both the corporate shareholder retains its
shares in the applicable Fund for more than 45 days and the Fund retains its
shares in the issuer from whom it received the income dividends for more than 45
days. A distribution of net capital gain reflects a Fund's excess of net
long-term gains over its net short-term losses. Each Fund must designate
distributions of net capital gain and must notify shareholders of this
designation within sixty days after the close of the Trust's taxable year. A
corporate shareholder of a Fund cannot use a dividends-received deduction for
distributions of net capital gain.

Foreign currency gains and losses, including the portion of gain or
loss on the sale of debt securities attributable to foreign exchange rate
fluctuations are taxable as ordinary income. If the net effect of these
transactions is a gain, the dividend paid by the Fund will be increased; if the
result is a loss, the income dividend paid by the Fund will be decreased.
Adjustments, to reflect these gains and losses will be made at the end of each
Fund's taxable year.

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<PAGE>

At the time of purchase, each Fund's net asset value may reflect
undistributed income or net capital gains. A subsequent distribution to
shareholders of such amounts, although constituting a return of their
investment, would be taxable either as dividends or capital gain distributions.
For federal income tax purposes, each Fund is permitted to carry forward its net
realized capital losses, if any, for eight years, and realize net capital gains
up to the amount of such losses without being required to pay taxes on, or
distribute such gains.

Income received by each Fund from sources within various foreign
countries may be subject to foreign income taxes withheld at the source. Under
the Internal Revenue Code, if more than 50% of the value of a Fund's total
assets at the close of its taxable year comprise securities issued by foreign
corporations, the Fund may file an election with the Internal Revenue Service to
"pass through" to the Fund's shareholders the amount of any foreign income taxes
paid by the Fund. Pursuant to this election, shareholders will be required to:
(i) include in gross income, even though not actually received, their respective
pro rata share of foreign taxes paid by the Fund; (ii) treat their pro rata
share of foreign taxes as paid by them; and (iii) either deduct their pro rata
share of foreign taxes in computing their taxable income, or use it as a foreign
tax credit against U.S. income taxes (but not both). No deduction for foreign
taxes may be claimed by a shareholder who does not itemize deductions.

The Strategic Natural Resources Fund, the Asian High Yield Fund and
the Asian Select Advisors Fund intend to meet the requirements of the Internal
Revenue Code to "pass through" to its shareholders foreign income taxes paid,
but there can be no assurance that they will be able to do so. Shareholders of
such Funds will be notified within 60 days after the close of each taxable year
of a Fund, if that Fund will "pass through" foreign taxes paid for that year,
and, if so, the amount of each shareholder's pro rata share (by country) of (i)
the foreign taxes paid, and (ii) the Fund's gross income from foreign sources.
Of course, shareholders who are not liable for federal income taxes, such as
retirement plans qualified under Section 401 of the Internal Revenue Code, will
not be affected by any such "pass through" of foreign tax credits.

If, in any taxable year, a Fund should not qualify as a RIC under the
Internal Revenue Code: (1) that Fund would be taxed at normal corporate rates on
the entire amount of its taxable income without deduction for dividends or other
distributions to its shareholders, and (2) that Fund's distributions to the
extent made out of that Fund's current or accumulated earnings and profits would
be taxable to its shareholders (other than shareholders in tax deferred
accounts) as ordinary dividends (regardless of whether they would otherwise have
been considered capital gain dividends), and may qualify for the deduction for
dividends received by corporations.

Passive Foreign Investment Companies. If a Fund purchases shares in
certain foreign passive investment entities described in the Internal Revenue
Code as passive foreign investment companies ("PFIC"), the Fund will be subject
to U.S. federal income tax on a portion of any "excess distribution" (the Fund's
ratable share of distributions in any year that exceeds 125% of the average
annual distribution received by the Fund in the three preceding years or the
Fund's holding period, if shorter, and any gain from the disposition of such
shares) even if such income is distributed as a taxable dividend by the Fund to
its shareholders. Additional charges in the nature of interest may be imposed on
the Fund in respect of deferred taxes arising from such "excess distributions."
If the Fund were to invest in a PFIC and elect to treat the PFIC as a "qualified
electing fund" under the Internal Revenue Code (and if the PFIC were to comply
with certain reporting requirements), in lieu of the foregoing requirements the
Fund would be required to include in income each year its pro rata share of the
PFIC's ordinary earnings and net realized capital gains, whether or not such
amounts were actually distributed to the Fund.

Pursuant to legislation enacted August 5, 1997 any taxpayer holding
shares of "marketable" PFICs may make an election to mark that stock to market
at the close of the taxpayer's taxable year. A Fund making an irrevocable
election will mark its PFICs to market at taxable year-end for income tax
purposes and at October 31 for purposes of the excise tax minimum distribution
requirements of Code Section 4982. This provision is effective for taxable years
of U.S. persons beginning after December 31, 1997, and taxable years of foreign
corporations ending with or within such taxable years of U.S. persons.

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<PAGE>

ORGANIZATION OF THE TRUST

As a Delaware business trust entity, the Trust need not hold regular
annual shareholder meetings and, in the normal course, does not expect to hold
such meetings. The Trust, however, must hold shareholder meetings for such
purposes as, for example: (1) approving certain agreements as required by the
1940 Act; (2) changing fundamental investment objectives, policies, and
restrictions of the Funds; and (3) filling vacancies on the Board of Trustees of
the Trust in the event that less than a majority of the Trustees were elected by
shareholders. The Trust expects that there will be no meetings of shareholders
for the purpose of electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders. At
such time, the Trustees then in office will call a shareholders meeting for the
election of Trustees. In addition, holders of record of not less than two-thirds
of the outstanding shares of the Trust may remove a Trustee from office by a
vote cast in person or by proxy at a shareholder meeting called for that purpose
at the request of holders of 10% or more of the outstanding shares of the Trust.
The Funds have the obligation to assist in such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.

Costs incurred by the Funds in connection with their organization,
estimated at $15,000 for each Fund, will be amortized on a straight line basis
over a five year period beginning at the commencement of operations of the
Funds. In the event that any of the initial shares of the Funds are redeemed
during the amortization period, the redemption proceeds will be reduced by any
unamortized organization expenses in the same proportion as the number of
initial shares outstanding at the time of such redemption.

PERFORMANCE INFORMATION ABOUT THE FUNDS

Total Return Calculations

Each Fund may provide average annual total return information
calculated according to a formula prescribed by the SEC. According to that
formula, average annual total return figures represent the average annual
compounded rate of return for the stated period. Average annual total return
quotations reflect the percentage change between the beginning value of a static
account in the Fund and the ending value of that account measured by then
current net asset value of that Fund assuming that all dividends and capital
gains distributions during the stated period were reinvested in shares of the
Fund when paid. Total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment that would equate the
initial amount invested to the ending redeemable value of such investment,
according to the following formula:

T = (ERV/P)(1/n) - 1

where T equals average annual total return; where ERV, the ending redeemable
value, is the value at the end of the applicable period of a hypothetical $1,000
payment made at the beginning of the applicable period; where P equals a
hypothetical initial payment of $1,000; and where n equals the number of years.

Each Fund, from time to time, also may advertise its cumulative total
return figures. Cumulative total return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Fund's shares and
assume that all dividends and capital gains distributions during the period were
reinvested in shares of that Fund. Cumulative total return is calculated by
finding the compound rates of a hypothetical investment over such period,
according to the following formula (cumulative total return is then expressed as
a percentage):

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<PAGE>

C = (ERV/P) - 1

Where:

C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value; ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at
the beginning of the applicable period.

Yield Calculation.

In addition to providing cumulative total return information, the Asian
High Yield Fund may also illustrate its performance by providing information
concerning its yield.

The Fund's yield is based on a specified 30-day (or one month) period
and is computed by dividing the net investment income per share earned during
the specified period by the maximum offering price (i.e., net asset value) per
share on the last day of the specified period, and annualizing the net results
according to the following formula:

YIELD = 2[(a-b + 1)(6) - 1]
---
cd

Where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends.
d = the maximum offering price per share on the last day
of the period.

Yield fluctuations may reflect changes in the Fund's net income, and
portfolio changes resulting from net purchases or net redemptions of the Fund's
shares may affect its yield. Accordingly, the Fund's yield may vary from day to
day, and the yield stated for a particular past period is not necessarily
representative of the Fund's future yield. The Fund's yield is not guaranteed,
and its principal is not insured.

From time to time, in reports and promotional literature, each Fund's
performance may be compared to: (1) other groups of mutual funds tracked by: (A)
Lipper Analytical Services, a widely-used independent research firm which ranks
mutual funds by overall performance, investment objectives, and asset size; (B)
Forbes Magazine's Annual Mutual Funds Survey and Mutual Fund Honor Roll; or (C)
other financial or business publications, such as Business Week, Money Magazine,
and Barron's, which provide similar information; (2) the Consumer Price Index
(measure for inflation), which may be used to assess the real rate of return
from an investment in each Fund; (3) other Government statistics such as GNP,
and net import and export figures derived from Governmental publications, e.g.,
The Survey of Current Business, which may be used to illustrate investment
attributes of each Fund or the general economic, business, investment, or
financial environment in which each Fund operates; (4) Alexander Steele's Mutual
Fund Expert, a tracking service which ranks various mutual funds according to
their performance; and (5) Morningstar, Inc. which ranks mutual funds on the
basis of historical risk and total return. Morningstar's rankings are calculated
using the mutual fund's average annual returns for a certain period and a risk
factor that reflects the mutual fund's performance relative to three-month
Treasury bill monthly returns. Morningstar's rankings range from five star
(highest) to one star (lowest) and represent Morningstar's assessment of the
historical risk level and total return of a mutual fund as a weighted average
for 3, 5, and 10-year periods. In each category, Morningstar limits its five
star rankings to 10% of the funds it follows and its four star rankings to 22.5%
of the funds it follows. Rankings are not absolute or necessarily predictive of
future performance.

In addition, the performance of the Funds may be compared to indices of
broad groups of similar but unmanaged securities or other benchmarks considered
to be representative of a Fund's holdings.

35
<PAGE>

The performance of the indices that may be used as benchmarks for each
Fund's performance, unlike the returns of the Funds, do not include the effect
of paying brokerage costs (for equity securities) and other transaction costs
that investors normally incur when investing directly in the securities in those
indices.

The Trust may also illustrate a particular Fund's investment returns or
returns in general by graphs and charts, that compare, at various points in
time, the return from an investment in the particular Fund (or returns in
general) on a tax-deferred basis (assuming reinvestment of capital gains and
dividends and assuming one or more tax rates) with the same return on a taxable
basis.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP whose address is 160 Federal Street, Boston,
Massachusetts 02110 serves as the Trust's Independent Accountants providing
services including (1) audit of annual financial statements, (2) assistance and
consultation in connection with SEC filings and (3) review of the annual federal
income tax returns filed on behalf of the Funds.

LEGAL MATTERS

Legal advice regarding certain matters relating to the federal
securities laws applicable to the Trust and the offer and sale of its shares has
been provided by Rogers & Wells, 200 Park Avenue, New York, New York 10166,
which serves as Counsel to the Trust.

FINANCIAL STATEMENTS

Following are (1) the Statement of Assets and Liabilities for the
Orbitex Group of Funds at May 29, 1997 including the notes thereto and the
report of Price Waterhouse LLP thereon and (2) the unaudited Statement of Assets
and Liabilities for the Orbitex Group of Funds at September 24, 1997 including
the notes thereto.

36
<PAGE>

ORBITEX GROUP OF FUNDS
STATEMENT OF ASSETS AND LIABILITIES
MAY 29, 1997

<TABLE>
<CAPTION>
Global Info-Tech & Asian High
Natural Resources Communications Growth Yield Asian Select
Fund Fund Fund Fund Advisers Fund
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
ASSETS

Cash $20,000 $20,000 $20,000 $20,000 $20,000
Deferred organizational
expenses 14,265 14,265 14,265 14,265 14,265
Prepaid registration 14,600 14,600 14,600 14,600 14,600
------ ------ ------ ------ ------

Total Assets 48,865 48,865 48,865 48,865 48,865

LIABILITIES

Payable to Adviser 28,865 28,865 28,865 28,865 28,865
------ ------ ------ ------ ------

NET ASSETS $20,000 $20,000 $20,000 $20,000 $20,000
======= ======= ======= ======= =======

Shares outstanding 1,333.333 1,333.333 1,333.333 1,666.667 1,333.333
(unlimited amount
authorized ,$.001 par value)

Net asset value per share $15.00 $15.00 $15.00 $12.00 $15.00

Offering price per share $15.92 $15.92 $15.92 $12.60 $15.92

Net assets consist of:
Capital paid in $20,000 $20,000 $20,000 $20,000 $20,000
======= ======= ======= ======= =======

NET ASSETS $20,000 $20,000 $20,000 $20,000 $20,000
======= ======= ======= ======= =======

</TABLE>
See Notes to Financial Statements.
<PAGE>
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS
MAY 29, 1997

1. Organization

The Orbitex Group of Funds (the "Trust"), an open-end diversified
management investment company, was organized as a Delaware business trust in
December, 1996. The Trust has been inactive since that date except for matters
relating to its organization and registration as an investment company under the
Investment Company Act of 1940 and the sale of its shares to Orbitex Management,
Inc., the Trust's Investment Adviser. The Trust currently consists of five
portfolios, Global Natural Resources Fund, Info-Tech & Communications Fund,
Growth Fund, Asian High Yield Fund and Asian Select Advisers Fund (collectively
the "Funds" and individually the "Fund"), each of which represents a separate
series of beneficial interest in the Trust. All funds are offered at net asset
value plus a maximum sales load of 5.75%, except for the Asian High Yield Fund,
which is offered at net asset value plus a maximum sales load of 4.75%.

2. Deferred Organizational Expenses

Estimated organizational expenses will be deferred and amortized over a
period not to exceed five years commencing with operations. In the event that
any of the initial shares are redeemed by the Adviser during the amortization
period, the proceeds of such redemption will be reduced by an amount equal to
the pro-rata portion of unamortized deferred organizational expense in the same
proportion as the number of shares being redeemed bears to the number of initial
shares of the respective portfolio outstanding at the time of such redemption.

3. Agreements and Transactions with Affiliates

Each Fund has entered into an Investment Advisory Agreement with Orbitex
Management, Inc. (the "Adviser"), as described under "How the Trust is Managed"
in the Prospectus. As compensation for the services rendered, facilities
furnished, and expenses borne by the Adviser, the Funds will pay the Adviser a
fee accrued daily and paid monthly, at the annualized rate of 1.25% for Global
Natural Resources Fund, 1.25% for Info-Tech & Communications Fund, 0.75% for
Growth Fund, 1.25% for Asian High Yield Fund, and 1.50% for Asian Select
Advisers Fund. The Advisory Agreement also provides that the Adviser may retain
Sub-Advisers at the Adviser's own cost and expense, for the purpose of managing
the investment of the assets of one or more Funds of the Trust.

Report of Independent Accountants
---------------------------------

To the Shareholders and Trustees of the Orbitex Group of Funds:

In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial positions of Global Natural
Resources Fund, Info-Tech & Communications Fund, Growth Fund, Asian High Yield
Fund, and Asian Select Advisers Fund, constituting of the Orbitex Group of Funds
( the "Trust") at May 29, 1997, in conformity with generally accepted accounting
principles. This financial statement is the responsibility of the Trust's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this financial statement
in accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.

Price Waterhouse LLP
Boston, MA
May 30, 1997

<PAGE>
ORBITEX GROUP OF FUNDS
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 24, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Strategic Info-Tech & Asian High
Natural Resources Communications Growth Yield Asian Select
Fund Fund Fund Fund Advisers Fund
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
ASSETS

Total Assets 48,865 48,865 48,865 48,865 48,865

LIABILITIES

Payable to Adviser 28,865 28,865 28,865 28,865 28,865
------ ------ ------- ------ -------

NET ASSETS $20,000 $20,000 $20,000 $20,000 $20,000
======= ======= ======= ======= =======

Shares outstanding 1,333.333 1,333.333 1,333.333 1,666.667 1,333.333
(unlimited amount
authorized ,$.001 par value)

Net asset value per share $15.00 $15.00 $15.00 $12.00 $15.00

Offering price per share $15.92 $15.92 $15.92 $12.60 $15.92

Net assets consist of:
Capital paid in $20,000 $20,000 $20,000 $20,000 $20,000
======= ======= ======= ======= =======

NET ASSETS $20,000 $20,000 $20,000 $20,000 $20,000
======= ======== ======= ======= =======
</TABLE>

See Notes to Financial Statements.
<PAGE>

ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 24, 1997 (UNAUDITED)

1. Organization

The Orbitex Group of Funds (the "Trust"), an open-end diversified
management investment company, was organized as a Delaware business trust in
December, 1996. The Trust has been inactive since that date except for matters
relating to its organization and registration as an investment company under the
Investment Company Act of 1940 and the sale of its shares to Orbitex Management,
Inc., the Trust's Investment Adviser. The Trust currently consists of five
portfolios, Strategic Natural Resources Fund, Info-Tech & Communications Fund,
Growth Fund, Asian High Yield Fund and Asian Select Advisers Fund (collectively
the "Funds" and individually the "Fund"), each of which represents a separate
series of beneficial interest in the Trust. All funds are offered at net asset
value plus a maximum sales load of 5.75%, except for the Asian High Yield Fund,
which is offered at net asset value plus a maximum sales load of 4.75%.

Effective June, 1997 the name of the Global Natural Resources Fund was
changed to the Strategic Natural Resources Fund.

2. Deferred Organizational Expenses

3. Agreements and Transactions with Affiliates

Each Fund has entered into an Investment Advisory Agreement with Orbitex
Management, Inc. (the "Adviser"), as described under "How the Trust is Managed"
in the Prospectus. As compensation for the services rendered, facilities
furnished, and expenses borne by the Adviser, the Funds will pay the Adviser a
fee accrued daily and paid monthly, at the annualized rate of 1.25% for
Strategic Natural Resources Fund, 1.25% for Info-Tech & Communications Fund,
0.75% for Growth Fund, 1.25% for Asian High Yield Fund, and 1.50% for Asian
Select Advisers Fund. The Advisory Agreement also provides that the Adviser may
retain Sub-Advisers at the Adviser's own cost and expense, for the purpose of
managing the investment of the assets of one or more Funds of the Trust.

The Adviser has agreed to waive or limit its fees and to pay certain
operating expenses to the extent necessary to limit total fund operating
expenses to 2.40%, 2.40%, 1.60%, 2.00%, and 2.50% for Strategic Natural
Resources Fund, Info-Tech & Communications Fund, Growth Fund, Asian High Yield
Fund and Asian Select Advisers Fund, respectively, subject to possible
reimbursement by the Funds in future years if such reimbursement can be achieved
within the foregoing expense limits. The Adviser has agreed to waive or limit
its fees and to pay all operating expenses of the Asian High Yield Fund for the
first sixty days of Fund operations, thereby resulting in a lower annualized
expense limitation.