ORBITEX GROUP OF FUND, N-1A EL/A, 1997-04-14

ORBITEX GROUP OF FUND
N-1A EL/A, 1997-04-14

Previous: EMPIRE STATE MUNICIPAL EXEMPT TRUST GUARANTEED SERIES 136, S-6, 1997-04-14

Next: GO2NET INC, RW, 1997-04-14

<PAGE>

Registration Nos. 333-20635
811-8037

As filed with the Securities and Exchange Commission on
April 14, 1997
-------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 / /

Pre-Effective Amendment No. 1 /X/

Post-Effective Amendment No. ___ / /

and

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /

Amendment No. 1 /X/

(Check appropriate box or boxes)

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

ORBITEX GROUP OF FUNDS
(Exact Name of Registrant as Specified in Charter)

660 Madison Avenue, New York, New York 10021
(Address of Principal Executive Office)

Registrant's Telephone Number, including Area Code:
(212) 207-4000

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

James L. Nelson
660 Madison Avenue
New York, New York 10021
(Name and Address of Agent for Service)

Copies to:

Cynthia Surprise Leonard B. Mackey, Jr., Esq.
Vice President & Associate Counsel Rogers & Wells
State Street Bank and Trust Company 200 Park Avenue
1776 Heritage Drive, A4N New York, New York 10166
North Quincy, Massachusetts 02171

<PAGE>

Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this Registration Statement.

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

The Registrant elects to register an indefinite number or amount of its shares
of beneficial interest under the Securities Act of 1933 pursuant to Rule 24f-2
under the Investment Company Act of 1940.
<PAGE>

ORBITEX GROUP OF FUNDS

CROSS-REFERENCE SHEET

Form N-1A Item No. Caption in Prospectus
- ------------------ ---------------------

1. Cover Page Cover Page

2. Synopsis Cover Page; The Funds at a Glance

3. Condensed Financial Information Not Applicable

4. General Description of Registrant The Funds at a Glance; Investment
Objectives Strategies and Policies;
Description of Securities, Other
Investment Policies and Risk
Considerations

5. Management of the Fund How the Trust is Managed

6. Capital Stock and Other Securities Organization of the Trust; Dividends,
Distributions, and Taxes; How to
Purchase Shares

7. Purchase of Securities How to Purchase Shares; Shareholder
Services; How Each Fund's Net Asset
Value is Determined

8. Redemption or Repurchase Shareholder Services; How to
Redeem Shares

9. Pending Legal Proceedings Not Applicable

Caption in Statement of
Form N-1A Item No. Additional Information
- ------------------ ----------------------

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and History General Information and History

13. Investment Objectives and Investment Restrictions; Description
Policies of Securities, Other Investment Policies
and Risk Considerations

14. Management of the Fund Management of the Trust
<PAGE>

Caption in Statement of
Form N-1A Item No. Additional Information
- ------------------ ----------------------

15. Control Persons and Principal Principal Holders of Securities
Holders of Securities

16. Investment Advisory and Other Investment Management and Other
Services Services

17. Brokerage Allocation and Other Brokerage Allocation and Other
Practices Practices

18. Capital Stock and Other Organization of the Trust
Securities

19. Purchase, Redemption and Pricing Purchase and Redemption of Securities
of Securities Being Offered Being Offered; Determination of Net Asset
Value

20. Tax Status Taxes

21. Underwriters Distribution of Shares

22. Calculation of Performance Data Performance Information About the Funds

23. Financial Statements Financial Statements

<PAGE>

ORBITEX GROUP OF FUNDS

660 Madison Avenue
New York, New York 10021

PROSPECTUS
May , 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 Global Natural Resources Fund seeks capital growth through a
flexible policy of investing in stock and debt obligations of companies engaged
in natural resource industries and industries supportive to natural resource
industries.

Orbitex Info-Tech & Communications Fund seeks superior long-term
returns 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 High Yield Fund seeks high current income through
investment in securities of issuers based in Asia. The Fund will invest
significantly in high yield, high risk securities (commonly referred to as junk
bonds). Investments of this type are subject to greater risk of loss of
principal and interest.

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

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 May , 1997,
about each Fund 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 4
Description of Securities, Other Investment
Policies and Risk Considerations 8
Investment Performance 20
Portfolio Turnover 20
Dividends, Distributions, and Taxes 21
How to Purchase Shares 22
How to Redeem Shares 26
How to Exchange Shares 28
Shareholder Services 28
How Each Fund's Net Asset Value is Determined 30
How the Trust is Managed 30
Portfolio Transactions and Brokerage Practices 34
Organization of the Trust 34

<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 Global Natural Resources Fund, Orbitex
Info-Tech & Communications Fund, Orbitex Growth Fund, Orbitex Asian High Yield
Fund and Orbitex Asian Select Advisers 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 "Adviser"),
which directs the day-to-day operations of each Fund. However, certain of the
Funds have one or more investment sub-advisers (each a "Sub-Adviser") which
selects the investments made by that Fund, subject to oversight and direction by
the Adviser. 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 is 5.75% of public offering
price) and subject to a service and distribution fee at the rate of .25% of the
average daily net assets of the Fund. The minimum initial investment is $2,500,
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 will invest at least 65% of its total assets 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, options on indexes,
options on foreign currencies, foreign currency exchange transactions, lending
of securities and when-issued securities and delayed-delivery transactions.

<PAGE>

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 Global 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."

Global Natural Info-Tech & Asian Select
Shareholder Transaction Resources Communications Growth Asian High Advisers
Expenses Fund Fund Fund Yield Fund Fund
-------- ---- ---- ---- ---------- ----
<S> <C> <C> <C> <C> <C>
Maximum Sales Load Imposed
on Purchase Price (as a % 5.75%(1) 5.75%(1) 5.75%(1) 4.75%(1) 5.75%(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)

- ----------
(1) Reduced for purchases over $50,000. See "How to Purchase Shares - Initial
Sales Charge."
(2) Purchases over $1 million 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>

2
<PAGE>

</TABLE>

Global Natural Info-Tech & Asian Select
Annual Fund Operating Resources Communications Growth Asian High Advisers
Expenses Fund Fund Fund Yield Fund Fund
-------- ---- ---- ---- ---------- ----
<S> <C> <C> <C> <C> <C>
(as a percentage of average
net assets)
Investment Advisory Fee
(after fee waivers) .68% .68% 0% .31% .78%
12b-1 Fees .25% .25% .25% .25% .25%
Other Expenses (estimated) 1.47% 1.47% 1.35% 1.44% 1.47%
----- ----- ----- ----- -----
Total Fund Operating
Expenses (after fee waivers) 2.40% 2.40% 1.60% 2.00% 2.50%

</TABLE>

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 the Global Natural Resources Fund, the
Info-Tech & Communications Fund, the Growth Fund, the Asian High Yield Fund and
the 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. Consequently, the Investment Advisory Fees actually
charged will 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, Other Expenses and Total Fund Operating
Expenses are anticipated to be 1.25%, 1.47% and 2.97%, respectively, for the
Global Natural Resources Fund, 1.25%, .25% and 2.97%, respectively for the
Info-Tech & Communications Fund .75%, 1.40% and 2.40%, respectively for the
Growth Fund, 1.25%, 1.44% and 2.94%, respectively for the Asian High Yield Fund
and 1.50%, 1.47% and 3.22%, respectively for the Asian Select Advisers Fund. The
fee waivers and limitations will remain in effect until further notice.

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
- ---- ------ -------
Global Natural Resources $81 $130
Info-Tech & Communications $81 $130
Growth $73 $106
Asian High Yield $68 $108
Asian Select Advisers $82 $132

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

3
<PAGE>

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.

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.

4
<PAGE>

ORBITEX GLOBAL NATURAL RESOURCES FUND

The objective of the Orbitex Global Natural Resources Fund (the "Global Natural
Resources Fund") is capital growth. The Fund seeks to achieve its objective
through a flexible policy of investing primarily in equity and debt securities
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 securities
issued by natural resource companies. The remainder of the Fund's assets may be
invested in equity and debt securities of companies outside of the natural
resource industries.

Under normal circumstances, the Adviser will invest at least 65% of the Fund's
total assets in securities of issuers located in at least three different
countries, including the United States, with emphasis on securities of Canadian
companies; investments in securities of issuers in any one country other than
Canada will represent no more than 45% of the Fund's total assets. The Fund may
invest substantially all of its assets in securities denominated in one or more
currencies.

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. Examples of 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); and (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.

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 above-average long-term returns. 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 in emerging economies. The
Adviser's market expectations will determine the allocation of the Fund's
investments between industries.

5
<PAGE>

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 it 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 attempts to find those companies which are expected to capitalize on
the emerging changes in the global telecommunications industry. The Adviser
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 Adviser 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 Adviser 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.

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 Adviser 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 capitalization
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 Adviser 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 Adviser
seeks to buy stocks that are at the low end of their historical range within
those same categories. In other words, the Adviser attempts to buy stocks
that are commonly considered cheap.

At the same time, the Adviser prefers to buy stocks with strong cash flow or
earnings momentum. In particular, the Adviser 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 Adviser prefers to buy stocks that show positive price momentum.
In other words, the Adviser 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 Adviser believes that this combination of searching for strong value,
growth, and price momentum will provide for superior capital gains.

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

6
<PAGE>

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 Sub-Adviser expects that 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-Adviser'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.

The Sub-Adviser expects to focus on issuers based in Indonesia, Thailand, the
Philippines, Malaysia and Hong Kong, but may also invest in securities of other
issuers based in Asia and on the Asian side of the Pacific Ocean such as
Australia, New Zealand, India, Singapore, Taiwan, the People's Republic of
China, South Korea, Vietnam, Cambodia, Laos, Sri Lanka and Pakistan. A company
is "based in" Asia if it is domiciled in Asia or it derives more than half of
its assets, revenues or profits from such region.

The debt securities in which the Fund may invest include: bonds (including
convertible bonds); notes; commercial paper; certificates of deposit; time
deposits; obligations of foreign governments, their agencies, instrumentalities
and political subdivisions; asset-backed securities, Eurobonds; Yankee Bonds and
Global Bonds. While the Fund focuses on debt securities, it may also invest in
equity securities.

Growth of capital in 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.

Non-Diversified Status: The Fund is classified as a non-diversified investment
company under the 1940 Act. A non-diversified investment company may invest more
than 25% of 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 "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.

7
<PAGE>

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.
At the same time, however, the Adviser believes that recent political and
economic events are creating an environment where credit risks will decline.
The Adviser believes that decreasing credit risk can lead to capital gains in
the Fund. In addition, the Adviser believes that the current yields in Asia
are relatively high given the current environment and that yields will
generally be reduced over time in Asia.

In the meantime, yields remain high due to greater risk. To counteract that
risk, the Fund diversifies across a number of countries and instruments and
keeps the average maturity of the instruments it purchases to less than three
years. In fact, many of these instruments are expected to mature within 90
days. This tends to substantially reduce the risk of default and increases
liquidity in the Fund.

The Adviser believes that investing in Asian high yield securities requires a
high degree of knowledge of local market conditions. As a result, the Fund
will use only local experts to evaluate the investment opportunities.

ORBITEX ASIAN SELECT ADVISERS FUND

The objective of the Orbitex Asian Select Advisers Fund (the "Asian Select
Advisers Fund") is superior long-term capital appreciation. 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 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. 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.

The assets of the Fund will be managed by one or more Sub-Advisers selected by
the Adviser who have demonstrated expertise in the Asian equity markets. The
Adviser will select these Sub-Advisers on the basis of their track records, as
well as the mix of investment styles and approaches. The Adviser will seek a
combination of Sub-Advisers that will maximize returns while minimizing risk
through diversification of investment style, and a portion of the assets of the
Fund will be managed by each Sub-Adviser.

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

The Asian markets tend to be more volatile than the U.S. market. At the same
time, the returns from investing in Asia have been higher over the last
twenty years than investing in the United States.

The Fund is structured to try to capitalize on the profit potential while
attempting to reduce the risk. Most people recognize that diversification is
a way to reduce risk. The Adviser 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-Advisers. The
Sub-Advisers are selected to complement each other. In other words, the
Adviser seeks to find Sub-Advisers that have differing investment styles and
expertise to reduce risk within the Fund.

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

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

DESCRIPTION OF SECURITIES, OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

In attempting to achieve its investment objective and policies, 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 interest 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

8
<PAGE>

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 High Yield Fund and
the Asian Select Advisers 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 will
invest at least 65% of its total assets 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. A Fund will not invest in debt securities that are in default in
payment of principal or interest.

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.

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 Adviser
and Sub-Advisers 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
Adviser's or Sub-Adviser'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

9
<PAGE>

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 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 Adviser and Sub-Advisers 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

10
<PAGE>

to pay the cost of obtaining a rating for their bonds. The Adviser or
Sub-Adviser will analyze the creditworthiness of the issuer of an unrated
security, as well as 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). It may borrow only
from banks and may not borrow in excess of one-third of the market value of its
assets, less liabilities other than such borrowing. 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 Global 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 Global 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 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 Global 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 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

11
<PAGE>

factors, including national and international politics. The Global Natural
Resources Fund's investments in precious metals are subject to many risks,
including substantial price fluctuations over short periods of time. Further,
the Global 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.

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 Adviser or Sub-Adviser 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 Global Natural Resources Fund, the Asian High Yield Fund or
the Asian Select Advisers Fund may be made in the United States and denominated
in

12
<PAGE>

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 Adviser or Sub-Adviser 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.
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 derivatives transactions) to avoid "leveraging" the Fund through
derivatives 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

13
<PAGE>

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. 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 Adviser or
Sub-Adviser 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 Adviser or Sub-Adviser 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 on 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 Adviser or Sub-Adviser 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.

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 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

14
<PAGE>

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 Adviser's or Sub-Adviser'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 Adviser or Sub-Adviser 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 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 Adviser's or
Sub-Adviser'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.

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

15
<PAGE>

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 Adviser or Sub-Adviser 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.

Certain restricted securities may be resold to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933. The Adviser or
Sub-Adviser, 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

16
<PAGE>

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 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

17
<PAGE>

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 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 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

18
<PAGE>

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 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

19
<PAGE>

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
Global 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. The Global Natural Resources Fund will invest at
least 65% of its total assets in securities of companies in natural resource
industries and industries supportive to natural resource industries. The
Info-Tech & Communications Fund will invest at least 65% of its total assets in
securities of companies in the communications, information and related
technology industries. A Fund may borrow money but not in an amount exceeding 33
1/3% of its total assets. 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 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

20
<PAGE>

simultaneously buy and sell the same security to take advantage of short-term
differences in bond yields. 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 Global
Natural Resources Fund; 100% for the Info-Tech & Communications Fund; 100% for
the Growth Fund; 40% - 50% for the Asian High Yield Fund; and 50% - 75% for the
Asian Select Advisers 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 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 shareholder held shares for six months or less and
during that period received a

21
<PAGE>

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 back-up 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 Code, individuals, corporations and other
shareholders that are not U.S. Persons under the 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 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. In some cases, a Fund may be able to avoid this tax by electing to be
taxed currently on its share of PFIC income, whether or not such income is
actually distributed by the PFIC. Each Fund will endeavor to limit its exposure
to the PFIC tax by investing in PFICs only where the election to be taxed
currently will be made. 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 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

22
<PAGE>

Funds are open for business. A COMPLETED AND SIGNED APPLICATION IS REQUIRED FOR
EACH NEW ACCOUNT YOU OPEN WITH EACH FUND.

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, to: State
Street Bank and Trust Company, Attn: Transfer Agent Operations, P.O. Box [ ],
Boston, MA 02105.

Subsequent Purchases. Minimum $500 per Fund, except for reinvestment of
dividends and distributions. After your account with the Trust has been opened
subsequent purchases of shares of the Funds may be made (i) through the
Distributor by mail (see instructions above) or by wire (see instructions below)
(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."

Purchases By Wire. Subsequent purchase shares of each Fund may be made by wiring
funds to the wire bank account for each Fund. If you already have an account
with Orbitex funds, you may wire money directly from your bank to: State Street
Bank & Trust Company, ABA No. 01100028, Attn: Custody & Shareholder Services,
Credit: Name of Fund, DDA No. [ ], FBO: Orbitex DDA No. [ ], Shareholder Name,
Name of Fund, Shareholder Account Number. Before wiring funds, please call the
Trust toll free at 1-888-ORBITEX to advise the Trust of your intention to invest
in one or more of the Funds and to receive instructions as to how and where to
wire your investment. Your bank may charge you a fee for the wire.

Telephone Investment Privilege. After your account with the Trust has been
opened, 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 Fund shares, 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 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.

23
<PAGE>

Share Certificates. In the interest of economy and convenience, share
certificates will not be issued except at the written request of the
shareholder. Certificates for fractional shares, however, 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 will vary
with the size of the purchase as shown in the following tables:

For all Funds other than the Asian High Yield Fund:

<TABLE>
<CAPTION>
Sales Charge as a Percentage of
Broker Reallowance
Offering Net Investment as a Percentage of
Amount of Purchase Price (Net Asset Value) Offering Price
- ------------------ ----- ----------------- --------------
<C> <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:

<TABLE>
<CAPTION>
Sales Charge as a Percentage of
Broker Reallowance
Offering Net Investment as a Percentage of
Amount of Purchase Price (Net Asset Value) Offering Price
- ------------------ ----- ----------------- --------------
<C> <C> <C> <C>
Less than $50,000 4.75% 4.99 4.00%
$50,000 but less than $100,000 3.50% 3.63 2.75%
$100,000 but less than $250,000 2.50% 2.56 1.75%
$250,000 but less than $500,000 1.50% 1.52 1.00%
$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>

24
<PAGE>

- ----------
* No initial sales charge applies on investments 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 dealers who
initiate and are responsible for purchases of any single purchaser 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, elect to re-allow up to the entire initial sales
charge to Selling Group Members for all sales with respect to which orders are
placed with the Distributor during the first 90 days from commencement of the
selling agreement between the Distributor and the Selling Group Member. Selling
Group Members to whom substantially the entire sales charge is re-allowed 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 in the tables above may
be obtained as follows:

o 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.

o 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.

o 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

25
<PAGE>

alone or in any combination of Funds; (2) purchases by the officers,
directors/trustees, and employees of the Trust, the Adviser or the Distributor;
the immediate family members of any such Person; any trust or 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 Funds) 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 the Orbitex Group of Funds, State Street Bank and Trust
Company, Attn: Transfer Agent Operations, P.O. Box , Boston, MA 02105-1978. 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.

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

26
<PAGE>

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 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 ten day check clearing period by purchasing
shares with a certified, treasurer's or cashier's check, or with a federal funds
or bank wire.

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 the 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
dealers, 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 Trust
is open. In accordance with your telephone instructions, we will redeem your
Fund 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

27
<PAGE>

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. Signature
guarantees are also required if the accounts will not be identically registered.
(See "How to Redeem Shares" concerning requirements relating to signature
guarantees.) No initial sales charge, redemption fee or penalty is imposed on
exchanges. The minimum initial investment in each Fund, whether by exchange or
purchase, is $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 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. In establishing a new account by exchange, the shares being exchanged
must have a value of at least $2,500. All subsequent purchases by shares
exchanged must have a value of $500 or more. 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, State Street Bank and Trust Company,
Attn: Transfer Agency Operations [address]. 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. 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.

28
<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. To utilize these telephone
privileges, you must select such services by checking the appropriate boxes on
the Application and supply us with the information required. 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 investing
whereby the Transfer Agent will be authorized to initiate a debit to your bank
account for a specific amount ($500 minimum) each month 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 $5,000 you may participate in a systematic withdrawal program providing for
fixed payments to you (or to a third party) of $1,500 or more at regular monthly
or quarterly 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 ($500 minimum) to an identically registered
account in another Orbitex Fund. The account from which the exchanges are being
processed must have a minimum balance of $2,000. The account into which the
exchange is being processed must have a minimum of $2,000. 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.

29
<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 Trust 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 Adviser or Sub-Adviser 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.

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 (the "Board"). Although the Board is not
involved in the day-to-day operations of the Funds, the Board has the
responsibility for establishing broad operating policies and supervising the
overall performance of the Funds.

Adviser. The Trust is managed by Orbitex Management, Inc. (the "Adviser"), 660
Madison Avenue, New York, New York 10021. The Adviser was founded in 1995 and is
registered with the SEC as an investment adviser. The Adviser has no prior
experience in managing registered investment companies. The Adviser, however, is
affiliated with Orbitex Management Ltd., an investment adviser which manages
Canadian unit trusts which had approximately $350 million in assets as of
December 31, 1996. The Adviser 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.

30
<PAGE>

Under the terms of an investment advisory agreement (the "Advisory Agreement")
with the Trust on behalf of each Fund, the Adviser is responsible for
formulating the Funds' investment programs, allocating assets among
Sub-Advisers, and monitoring and evaluating the investment programs and
performance of the Sub-Advisers. In addition, the Adviser is responsible for
making day-to-day investment decisions and engaging in portfolio transactions on
behalf of the Global Natural Resources Fund, the Info-Tech & Communications Fund
and the Growth Fund. The Adviser 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 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 Fund's of the Trust.

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

The Trust intends to apply to the SEC for an exemptive order which, if granted,
will permit the Adviser subject to approval by the Board to engage and terminate
Sub-Advisers 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 Adviser 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
Global Natural Resources Fund, 1.25% for the Info-Tech & Communications Fund,
.75% for the Growth Fund, 1.25% for the Asian High Yield Fund and 1.50% for the
Asian Select Advisers Fund.

In the interest of limiting the expenses of the Funds, the Adviser 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 Global Natural Resources Fund
to 2.40%, the Info-Tech & Communications Fund to 2.40%, the Growth Fund to
1.60%, the Asian High Yield Fund to 2.00% and the Asian Select Advisers Fund to
2.50%. This waiver will continue until further notice.

Reimbursement by a Fund of the fees waived or other expenses paid by the Adviser
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%, 2.00% and 2.50% in the case of
the Global Natural Resources Fund, the Info-Tech & Communications Fund, the
Growth Fund, the Asian High Yield Fund and the Asian Select Advisers 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 Adviser may be entitled in any year will be equal to the sum of all
fees waived and/or assumed by the Adviser during any of the previous two fiscal
years, less any reimbursement amount previously paid to it.

Sub-Advisers. Pursuant to separate Sub-Advisory Agreements among each
Sub-Adviser, the Adviser and the Trust, each Sub-Adviser 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

31
<PAGE>

Fund's investment objective and policies and under the supervision of the
Adviser. The following organizations act as Sub-Advisers to the Funds:

ImPac Asset Management (HK) Ltd. ("ImPac"), 1205 Universal Trade Centre, 3
Arbuthnot Road, Central, Hong Kong, is the Sub-Adviser for the Asian High Yield
Fund. ImPac was incorporated in Hong Kong in November 1990 as AsiaInvest
Consultants Limited, a limited liability company. ImPac provides a range of
investment management services to Asian and overseas clients and as of December
31, 1996 had $120 million in assets under management. ImPac specializes in
equities and related products in the Pacific Rim.

Asia Strategic Investment Management Limited ("ASIM"), Chekiang First Bank
Center, 1 Duddell Street, Hong Kong, is one of the Sub-Advisers of the Asian
Select Advisers 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.

On a monthly basis, each Sub-Adviser receives a sub-advisory fee, paid by the
Adviser, based on the applicable Fund's average daily net assets at the
annualized rate of: .40% for ImPac and .50% for ASIM.

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

Global Natural Resources 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. He
is also President and Chief Investment Officer of Pinnacle Capital Management,
Inc.

Valerie Chou is the portfolio manager for the Asian High Yield Fund. Ms. Chou
has been a director of ImPac since 1995. In 1991 she founded Tatkit Management,
an investment management firm, which merged with ImPac in 1995.

32
<PAGE>

Michael Lee is a portfolio manager for the Asian Select Advisers Fund. 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.

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 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.

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 Service 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 account maintenance 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 account maintenance
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 0.25% of each Fund's average daily net assets. 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, including a
majority of the Trustees who are not interested persons of the Trust and do

33
<PAGE>

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 Adviser,
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 Adviser in its 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 Adviser 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 Statement of Additional
Information.

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. 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.

34
<PAGE>

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.

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

35
<PAGE>

principal payments are not made on the date due even if the applicable grace
period has not expired, unless S&P's 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.

36
<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 ___________, 1997, which may be obtained by telephoning 1-888-ORBITEX and
asking about the Trust.

The date of this Statement of Additional Information is _________,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 23
Principal Holders of Securities 24
Investment Management and Other Services 24
Administrator 25
Custodian 25
Transfer Agent Services 26
Distribution of Shares 26
Brokerage Allocation and Other Practices 27
Purchase and Redemption of Securities Being Offered 29
Shareholder Services 30
Determination of Net Asset Value 31
Taxes 31
Organization of the Trust 33
Performance Information About the Funds 33
Independent Accountants 35
Legal Matters 35
Financial Statements 35

<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 Global Natural
Resources Fund ("Global Natural Resources Fund"), Orbitex Info-Tech &
Communications Fund ("Info-Tech & Communications Fund"), Orbitex Growth Fund
("Growth Fund"), Orbitex Asian High Yield Fund ("Asian High Yield Fund") and
Orbitex Asian Select Advisers Fund ("Asian Select Advisers 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 "Adviser"), which directs
the day-to-day operations of each Fund and directs the investment of assets of
the Global Natural Resources Fund, the Info-Tech & Communications Fund and the
Growth Fund. The investments of the Asian High Yield Fund and the Asian Select
Advisers Fund are directed by one or more sub-advisers (each a "Sub-Adviser").
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 one-third 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 a portion of
an issue of publicly issued or privately placed bonds, debentures, notes, and
other debt securities 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 Global 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>

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 CERTAIN INVESTMENTS

The following is a description of certain types of investments which may be made
by the Funds.

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 Portfolio 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 Portfolio 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

4
<PAGE>

15% of the net asset value of the Fund would be invested in such agreements or
other securities which are not readily marketable.

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 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.

5
<PAGE>

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 seller/services 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.

6
<PAGE>

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 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 Adviser or Sub-Adviser 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 Adviser or Sub-Adviser will consider the trading markets
for the specific security taking into account the unregistered nature of a Rule
144A security. In addition, the Adviser or Sub-Adviser 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.

Investments of the Asian High Yield Fund

The following paragraphs contain a description of the principal types of
investments in Indonesia, Thailand, the Philippines, Malaysia and Hong Kong in
which the Sub-Adviser for the Asian High Yield Fund currently expects to

7
<PAGE>

invest the assets of that Fund. However, it should be appreciated that the
Sub-Adviser may in the future invest in or use other debt instruments or
strategies which may arise as the markets in those countries develop and the
Sub-Adviser reserves the right to employ such investment strategies (such as
forward currency swap contracts) as it may from time to time think necessary in
order to improve or protect the Fund's return in US dollar terms.

Indonesia - the Sub-Adviser expects to focus primarily on corporate commercial
paper and bonds issued by governmental agencies, state-owned entities and
corporations, all of which will normally be denominated in Indonesian rupiah.
Bonds in Indonesia generally have a five year maturity and, although some have a
fixed rate of interest throughout their life, most carry interest at a floating
rate (i.e., interest is at a margin above a cost of funds benchmark which is
reassessed at regular intervals (normally quarterly in Indonesia)). Commercial
paper normally takes the form of negotiable promissory notes which are issued at
a discount, carry no right of interest but are payable at their face value at
maturity (which normally ranges from one week to six months from the date of
issue). The Sub-Adviser may also invest part of the Fund's portfolio in
negotiable certificates of deposit and in time deposits (ranging from one month
to two years) with Indonesian banks. In 1994, the first domestic credit rating
agency was established in Indonesia and this development is expected to
contribute to greater liquidity in Indonesia's debt securities markets.

Thailand - there is at present in Thailand a number of available debt
instruments (with maturities ranging from two weeks to seven years) in which the
Fund may invest. These instruments include certificates of deposit issued by
banks which carry interest, are not issued at a discount and may be either
negotiable or non-negotiable; promissory notes issued by finance companies which
carry interest but are not negotiable; bank guaranteed bills of exchange, which
are in effect corporate commercial paper guaranteed by a bank or finance
company, normally have a maturity of up to 90 days and are issued at a discount;
Government bonds issued by the Government or certain state enterprises, which
have a maturity of up to seven years; corporate convertible debentures listed on
the Stock Exchange of Thailand; and "clean" bills of exchange, which are
non-guaranteed corporate commercial paper and generate a higher return than bank
guaranteed bills of exchange because of the higher risk involved. In addition,
the Sub-Adviser will consider making deposits (for any period from one week to
12 months) with banks and finance companies (which usually offer higher interest
rates than banks) in Thailand. It should be appreciated that liquidity varies
between these types of instruments (the market in Government bonds being
particularly illiquid) and this is a factor which the Sub-Adviser will take into
account in selecting instruments for the Fund. However, the establishment in
1993 of Thai Rating and Information Service (TRIS) as Thailand's first domestic
credit rating agency is expected to contribute to greater liquidity in all debt
securities trading in Thailand. In addition, corporate bonds of Thai issuers are
not widely available and, with the rating of those bonds by TRIS, the
Sub-Adviser expects the market in Thai corporate bonds to develop and expand
significantly in the foreseeable future.

Philippines - the Philippine debt market is principally a domestic market with
limited foreign participation. The main instruments which are available in this
market are Treasury Bills issued by the Central Bank or the Government (these
are auctioned on a weekly basis and normally have a maturity of 90, 180, or 360
days); corporate commercial paper with maturities ranging from one month to five
years; Government bonds issued to finance the Government deficit; corporate
bonds; and asset participation certificates (which have maturities ranging from
one to seven years). A market in asset-backed securities is also developing. All
these instruments may be denominated in either US dollars or Philippine pesos.

Malaysia - when compared with Thailand, the Malaysian debt market is less
developed in terms of the number of available debt instruments but is more
developed in terms of liquidity. There is an active market in Government bonds
and a reasonably liquid money market, as a result of the Government's
designation of a number of financial institutions as market makers in the debt
market. Available debt instruments can be divided into two categories, money
market instruments (which are short-term instruments with a maturity of less
than one year) and bonds (which are medium-term corporate debentures or
Government bonds with a maturity of one to five years). The principal money
market instruments which are currently available in Malaysia are bankers
acceptances, negotiable certificates of deposit, Bank Negara Bills (bills of
exchange accepted by the Central Bank). Treasury bills and "clean" private debt
securities; the latter are acceptances of bills by corporate obligors which can
be issued only if rated by the Rating Agency of Malaysia. There is an active
market in corporate bonds listed on the Kuala Lumpur Stock Exchange, which
typically have a maturity of up to five years and earn interest at a fixed rate.
Bonds in Malaysia are frequently issued together with equity warrants, which are
detachable and, following issue, traded separately from the bonds; the
Sub-Adviser may, but

8
<PAGE>

does not normally expect to, invest in such warrants. Although bonds of this
type are usually listed on the Kuala Lumpur Stock Exchange, they are normally
most actively traded over-the-counter by financial institutions. It is the
intention of the Sub-Adviser normally to invest in bonds only if they are rated
BBB or above by the Rating Agency of Malaysia.

Hong Kong - there have been issues of certificates of deposits since the late
1970s but a more widely based HK dollar-denominated fixed income market has been
growing in Hong Kong in recent years. The principal instruments in this market
are short-term Exchange Fund Bills (with maturities of one week, one month,
three months, six months and one year) and Exchange Fund Notes (having
maturities of two, three and five years) issued by the Hong Kong Monetary
Authority. In addition, a number of bonds of corporate issuers are available and
there is a wide range of floating rate notes from which to choose. There is no
local credit rating agency in Hong Kong but most of the more significant issuers
in the Hong Kong debt market have issued US dollar-denominated instruments which
have been rated by Standard & Poor and/or Moody's.

In addition to domestically-traded debt securities of the types described in the
paragraphs above, a wide range of bonds and other fixed income instruments of
Asian issuers are available in markets outside Asia, and the Fund is likely to
invest in those instruments. These instruments are normally denominated in US
dollars and are traded primarily in Europe (Eurobonds, which are not offered
directly in the United States) or the United States (Yankee Bonds). Some very
large issues described as Global Bonds are structured for offering
simultaneously in both the United States and Europe and trading in those issues
can take place in both markets as well as other bond trading centres virtually
on a 24-hour basis. There is a wide range of issuers from Asia in those markets,
the most active being companies and governmental agencies from South Korea, the
Philippines, Malaysia, Indonesia and Hong Kong.

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 enjoys an able bureaucracy
that

9
<PAGE>

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.

10
<PAGE>

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

11
<PAGE>

or fee at a different point in time as the foreign investor perfects his
interest in the securities acquired in the local 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, Philippines), against the seller (e.g., Argentina, Australia, China,
Egypt, Indonesia, Kenya, Portugal, South Korea, Trinidad and Tobago, 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

12
<PAGE>

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 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

13
<PAGE>

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.

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.

14
<PAGE>

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 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

15
<PAGE>

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 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
Adviser or Sub-Adviser 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 as a hedge against
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

16
<PAGE>

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.

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.

17
<PAGE>

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 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

18
<PAGE>

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 Adviser's or Sub-Adviser'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 value in its underlying instruments. However, while this might occur
to a certain degree, the Adviser and each Sub-Adviser 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.

19
<PAGE>

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 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 securities portion 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

20
<PAGE>

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 Adviser or Sub-Adviser believes that one currency may
experience a substantial movement against another currency, including the U.S.
dollar, it may enter into a forward contract to sell or buy the amount of the
former foreign currency, approximating the value of some or all of the Fund's
portfolio securities denominated in such foreign currency. Alternatively, where
appropriate, a Fund may hedge 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 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
Adviser or a Sub-Adviser. 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

21
<PAGE>

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.

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

22
<PAGE>

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 Adviser's or Sub-Adviser'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 Adviser or Sub-Adviser will cause a Fund to enter into swap
agreements only with courterparties 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 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.

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 Investment Company Act of 1940, 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.

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.

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

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

23
<PAGE>

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

*James L. Nelson, 47 Trustee, President, Assistant Treasurer and Assistant
660 Madison Avenue Secretary of the Trust. Director and Chief Executive
New York, NY 10021 Officer, Orbitex 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).

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

Each Trustee of the Trust who is not an interested person of the Trust or
Adviser or Sub-Adviser receives an annual fee of $5,000 plus a fee of $500 for
each meeting of the Board of Trustees attended. 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.

Estimated Annual
Benefits at
Name Compensation Paid Pension Benefits Retirement
---- ----------------- ---------------- ----------
Otto J. Felber $0 $0 $0
James L. Nelson $0 $0 $0
[ ] $7,000 $0 $0
[ ] $7,000 $0 $0
[ ] $7,000 $0 $0

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

Adviser

Orbitex Management, Inc., 660 Madison Avenue, New York, NY 10021, serves as the
Adviser 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.

24
<PAGE>

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

In addition to the duties set forth in the Prospectus under "How the Trust is
Managed - Adviser", the Adviser, 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-Advisers 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 Adviser
manages the operations of the Funds. In addition to providing advisory services,
the Adviser 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 Adviser; that such name is the property of the Adviser for
copyrights and/or other purposes; and that therefore, such name may freely be
used by the Adviser for other investment companies, entities or products. The
Trust has further agreed that in the event that for any reason, the Adviser
ceases to be its investment adviser, the Trust will, unless the Adviser
otherwise consents, promptly take all steps necessary to change its name to one
which does not include "Orbitex."

Sub-Advisers

Each of the Sub-Advisers 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 Adviser and the
Sub-Adviser.

In addition to the duties set forth in the Prospectus, each Sub-Adviser, 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 "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-Adviser'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-Adviser; (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 Adviser, 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 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 Adviser and Sub-Advisers; 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
Service 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.

The Trust will pay the Distributor quarterly at a rate equal to an annualized
rate of .25% of the average daily net assets of each Fund during that quarter.
The Rule 12b-1 Plan and Agreement authorizes payments to the Distributor as
compensation for providing account maintenance services to investors in the
Fund, including arranging for certain

26
<PAGE>

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: 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 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
Adviser and Sub-Advisers are responsible for making decisions with respect to
the purchase and sale of portfolio securities on behalf of the Funds. The
Adviser and Sub-Advisers 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.

In purchasing and selling each Fund's portfolio securities, it is the Adviser's
and each Sub-Adviser'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

27
<PAGE>

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 Adviser or a Sub-Adviser or
the Funds. It is not the policy of the Adviser or Sub-Advisers 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 Adviser and Sub-Advisers
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 Adviser and Sub-Advisers may receive research services in
connection with brokerage transactions, including designations in fixed price
offerings.

The Adviser and Sub-Advisers 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 Adviser and
Sub-Advisers 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 Adviser and Sub-Advisers 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 Adviser and
Sub-Advisers by or through brokers.

Certain broker-dealers which provide quality execution services also furnish
research services to the Adviser and Sub-Advisers. The Adviser and Sub-Advisers
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
Adviser and Sub-Advisers 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 Adviser,
Sub-Advisers, 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 Commission.

28
<PAGE>

The Sub-Advisers 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-Adviser may engage in simultaneous
purchase and sale transactions of securities that are consistent with the
investment objectives and programs of the Trust, and other accounts.

On those occasions when such simultaneous investment decisions are made, the
Sub-Adviser 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-Adviser 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.

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.

29
<PAGE>

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.

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 ("Exchange") 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.

SHAREHOLDER SERVICES

Systematic Withdrawal Program. A shareholder owning or purchasing shares of any
Fund having a total value of $5,000 or more may participate in a systematic
withdrawal program providing regular monthly or quarterly payments in the amount
of $1,500 or more. 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.

30
<PAGE>

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 of at least $500 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 $2,000 in the first account and at least $2,000 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 Exchange on every day the Exchange is open for trading.
The Exchange 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
Adviser or a Sub-Adviser 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.

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 Exchange 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

31
<PAGE>

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
Exchange once on each day on which the Exchange 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.

TAXES

Each Fund intends to qualify as a "regulated investment company" ("RIC") under
Subchapter M of the 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.

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 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

32
<PAGE>

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 Global Natural Resources Fund, the Asian High Yield Fund and the Asian
Select Advisers Fund intend to meet the requirements of the 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 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 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.

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:

33
<PAGE>

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):

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

34
<PAGE>

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 the Fund's holdings such as: [Please provide.]

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

The Financial Statements for the Orbitex Group of Funds at , 1997 including the
notes thereto and the report of Price Waterhouse LLP thereon are contained in
this SAI on the following pages.

35
<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements included in Prospectus: None

Financial Statements included in the Statement of Additional
Information:
1. Report of Independent Auditor*
2. Statement of Assets and Liabilities*
3. Notes to Financial Statements*
4. Consent of Independent Auditors*

(b) Exhibits:

1. Declaration of Trust of Orbitex Group of Funds (the
"Trust").**

2. Form of By-Laws of the Trust.**

3. Not applicable.

5(a). Form of Investment Advisory Agreement by and between
the Trust on behalf of each Fund and Orbitex
Management, Inc.

5(b). Form of Sub-Advisory Agreement among the Trust, on
behalf of the Asian High Yield Fund, Orbitex
Management, Inc. and ImPac Asset Management (HK) Ltd.

5(c). Form of Sub-Advisory Agreement among the Trust, on
behalf of the Asian Select Advisers Fund, Orbitex
Management, Inc. and Asia Strategic Investment
Management (HK) Limited.

6(a). Form of Distribution Agreement between the Trust and
Funds Distributor, Inc.**

6(b). Form of Selected Dealers Agreement.**

7. Not applicable.

8. Form of Custodian Contract by and between the Trust
and State Street Bank and Trust Company.**

9(a). Form of Transfer Agency and Service Agent Agreement
by and between the Trust and State Street Bank and
Trust Company.**

9(b) Form of Administration Agreement by and between the
Trust and State Street Bank and Trust Company.**

- ----------
* To be filed by amendment.

** Previously filed in the Registration Statement on January 29, 1997 and
incorporated herein by reference.

C-1-
<PAGE>

10. Opinion and Consent of Rogers & Wells regarding the
legality of the securities being registered. *

11(a). Consent of Independent Auditors.*

11(b). Consent of Rogers & Wells.*

12. Not applicable.

13. Form of Share Subscription Agreement by and between
Orbitex Management, Inc. and the Trust on behalf of
each Fund.*

14. Not applicable.

15(a). Form of Service Plan and Agreement Pursuant to Rule
12b-1 under the Investment Company Act of 1940.

16. Schedule for Computation of Performance Quotation.*

17. Not applicable.

18. Not applicable.

Item 25. Persons Controlled by or under Common Control with Registrant.

None.

Item 26. Number of Holders of Securities, as of the effective date of
this Registration Statement.

Title of Class Number of Record Holders
-------------- ------------------------

Orbitex Global Natural Resources Fund 1
Orbitex Info-Tech & Communications Fund 1
Orbitex Growth Fund 1
Orbitex Asian High Yield Fund 1
Orbitex Asian Select Advisers Fund 1

Item 27. Indemnification

Reference is made to Article VI of the Registrant's
Declaration of Trust filed herein as Exhibit 1 to this
Registration Statement.

The Registrant will indemnify its Trustees and officers to the
extent permitted by law. Indemnification may not be made if
the Trustee or officer has incurred liability by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of duties in the conduct of his office ("Disabling
Conduct"). The means of determining whether indemnification
shall be made are (1) a final decision on the merits by a
court or other body before whom the proceeding is brought that
the Trustee or officer was not liable by reason of Disabling
Conduct, or (2) in the absence of such a decision, a
reasonable determination, based on a review of the facts, that
the Trustee or officer was not liable by reason of Disabling
Conduct. Such latter determination may be made either by (a)
vote

- ----------
* To be filed by amendment.

C-2-
<PAGE>

of a majority of Trustees who are neither interested persons
(as defined in the Investment Company Act of 1940) nor parties
to the proceeding or (b) independent legal counsel in a
written opinion. The advancement of legal expenses may not
occur unless the Trustee or officer agrees to repay the
advance (if it is determined that he is not entitled to the
indemnification) and one of three other conditions is
satisfied: (1) he provides security for his agreement to
repay; (2) the Registrant is insured against loss by reason of
lawful advances; or (3) the Trustees who are not interested
persons and are not parties to the proceedings, or independent
counsel in a written opinion, determine that there is reason
to believe that the Trustee or officer will be found entitled
to indemnification.

Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to
Trustees, officers, controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
Trustee, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the 1933 Act and will be governed by the final adjudication of
such issue.

Item 28. Business and Other Connections of the Adviser and the
Sub-Advisers.

(a) Certain information pertaining to business and other
connections of the Registrant's Adviser, Orbitex Management,
Inc. is hereby incorporated herein by reference to the section
of the Prospectus captioned "How the Trust is Managed" and to
the section of the Statement of Additional Information
captioned "Investment Management and Other Services." The
information required by this Item 28 with respect to each
director, officer or partner of Orbitex Management, Inc. is
incorporated by reference to Form ADV filed by Orbitex
Management, Inc. with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940, as amended
(File No. 801-52312).

C-3-
<PAGE>

(b) Certain information pertaining to business and other
connections of Asia Strategic Investment Management Limited,
one of the Registrant's Sub-Advisers, is hereby incorporated
herein by reference to the section of the Prospectus captioned
"How the Trust is Managed" and to the section of the Statement
of Additional Information captioned "Investment Management and
Other Services." Set forth below is a list of each director
and officer of Asia Strategic Investment Management Limited
indicating each business, profession, vocation, or employment
of a substantial nature in which each such person has been, at
any time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, partner, or
trustee. The principal business address of each individual
listed in the table below, unless otherwise indicated, is
Chekiang First Bank Center, 1 Duddell Street, Hong Kong.

C-4-
<PAGE>

Position with Asian Strategic Investment
Management Limited ("ASIM") and
Name Other Positions within Last Two Years
---- -------------------------------------

Michael Tze Han Lee Managing Director, ASIM, 1995 - present;
Director/Equity Partner, Lloyd George Management
(Hong Kong) Ltd., 1992 - 1995.

Patrick Wai Cheong Shun Chief Investment Officer, ASIM, 1995 - present;
Director/Senior Fund Manager, Barclays de Zoete
Wedd Investment Management (Hong Kong) Limited,
1990 - 1995.

James Kuang Kno Cheng Research Director, ASIM, April 1996 - present;
Executive Director/Senior Fund Manager, Morgan
Stanely Asset Management (Singapore) Ltd., 1988 -
1996.

Peter King Wah Woo Director, ASIM, 1995 - present; Director/Associate
Director, Kim Eng Securities (Hong Kong) Ltd.
(investment management firm), 1993 - 1995.

Dr. The Honourable David Non-executive director, ASIM; Deputy Chairman
K.P. Li and Chief Executive of the Bank of East Asia,
Limited.

Li Kai Cheong Samson Non-executive director, ASIM; Deputy General
Manager of the Bank of East Asia, Limited.

(c) Certain information pertaining to business and other
connections of ImPac Asset Management (HK) Ltd., one of the
Registrant's Sub-Advisers, is hereby incorporated herein by
reference to the section of the Prospectus captioned "How the
Trust is Managed" and to the section of the Statement of
Additional Information captioned "Investment Management and
Other Services." Set forth below is a list of each director
and officer of ImPac Asset Management (HK) Ltd. indicating
each business, profession, vocation, or employment of a
substantial nature in which each such person has been, at any
time during the past two fiscal years, engaged for his own
account or in the capacity of director, officer, partner, or
trustee. The principal business address of each individual
listed in the table below, unless otherwise indicated, is 1205
Universal Trade Center, 3 Arbuthnot Road, Central, Hong Kong.

Position with ImPac Asset
Management Limited (HK) Ltd. and
Name Business and Other Positions within Last Two Years
---- --------------------------------------------------

Virginia Wong Devereux Director

Joseph Ho Managing Director

Alfred Lo Director

Gary Ting Director

C-5-
<PAGE>

Position with ImPac Asset
Management Limited (HK) Ltd. and
Name Business and Other Positions within Last Two Years
---- --------------------------------------------------

Walter Wu Director

Valerie Chou Director

Item 29. Principal Underwriters.

(a) Funds Distributor, Inc. (the "Funds Distributor") acts as
principal underwriter for the following investment companies.

BJB Investment Funds
Foreign Fund, Inc.
Fremont Mutual Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
The JPM Advisor Funds
The JPM Institutional Funds
The JPM Pierpont Funds
The JPM Series Trust
LKCM Fund
The Munder Funds Trust
The Munder Funds, Inc.
The PanAgora Institutional Funds
RCM Capital Funds, Inc.
RCM Equity Funds, Inc.
St. Clair Money Market Fund
The Skyline Funds
Waterhouse Investors Cash Management Fund, Inc.

Funds Distributor is registered with the Securities and
Exchange Commission as a broker-dealer and is a member of the
National Association of Securities Dealers. Funds Distributor
is an indirect wholly-owned subsidiary of Boston Institutional
Group, Inc., a holding company all of whose outstanding shares
are owned by key employees.

(b) The information required by this Item 29(b) with respect
to each director, officer, or partner of Funds Distributor is
incorporated by reference to Schedule A of Form BD filed by
Funds Distributor with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934 (File No.
8-20518).

C-6-
<PAGE>

Item 30. Location of Accounts and Records.

The following entities prepare, maintain and preserve the
records required by Section 31(a) of the 1940 Act for the
Registrant. These services are provided to the Registrant
through written agreements between the parties to the effect
that such services will be provided to the Registrant for such
periods prescribed by the rules and regulations of the
Securities and Exchange Commission under the 1940 Act and such
records are the property of the entity required to maintain
and preserve such records and will be surrendered promptly on
request.

State Street Bank and Trust Company ("State Street") provides
custodian and accounting services pursuant to a Custodian
Contract between State Street and the Trust and provides
transfer agent and dividend disbursing services pursuant to a
Transfer Agency and Service Agreement between State Street and
the Trust. In such capacities, State Street provides pricing
for each Fund's portfolio securities, keeps records regarding
securities and other assets in custody and in transfer, bank
statements, canceled checks, financial books and records, and
keeps records of each shareholder's account and all
disbursements made to shareholders. Orbitex Management, Inc.,
pursuant to its Investment Advisory Agreement with respect to
each Fund, maintains all records required pursuant to such
agreement. Each Sub-Adviser, pursuant to its Sub-Advisory
Agreement with Orbitex Management, Inc. and the Trust with
regard to each Fund, maintains all records required pursuant
to such agreement. State Street, pursuant to its
Administration Agreement with the Trust, maintains all records
required pursuant to such agreement. Funds Distributor, Inc.,
as principal underwriter for the Trust, maintains all records
required to be kept pursuant to the Distribution Agreement
with the Trust, and such other records as must be maintained
pursuant to the Trust's Service Plan and Agreement adopted
pursuant to Rule 12b-1 under the 1940 Act.

Item 31. Management Services.

Not applicable.

Item 32. Undertakings.

(a) Not applicable.

(b) Registrant undertakes to file a post-effective amendment,
using financial statements which need not by certified, within
four to six months after the commencement of operations of
each Fund.

(c) Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without
charge, beginning with the fiscal year ending April 30, 1998.

C-7-
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized in the City of New York, and the State of New York on
the 14th day of April 1997.

ORBITEX GROUP OF FUNDS

By: /s/ James L. Nelson
----------------------
James L. Nelson
Trustee and President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

Signature Title Date
--------- ----- ----

Otto J. Felber Trustee April 14, 1997
- ---------------------------
Otto J. Felber

James L. Nelson Trustee, President, Assistant April 14, 1997
- --------------------------- Treasurer & Assistant Secretary
James L. Nelson

Mark Breault Treasurer and Secretary April 14, 1997
- ---------------------------
Mark Breault

<PAGE>

EXHIBIT LIST

Exhibit
Number Description
------ -----------

5(a). Form of Investment Advisory Agreement by and between the Trust
on behalf of each Fund and Orbitex Management, Inc.

5(b). Form of Sub-Advisory Agreement among the Trust, on behalf of
the Asian High Yield Fund, Orbitex Management, Inc. and ImPac
Asset Management (HK) Ltd.

5(c). Form of Sub-Advisory Agreement among the Trust, on behalf of
the Asian High Yield Fund, Orbitex Management, Inc. and Asia
Strategic Investment Management Limited.

15(a). Form of Service Plan and Agreement Pursuant to Rule 12b-1
under the Investment Company Act of 1940.

<PAGE>

Exhibit 5(a)

Form of Investment Advisory Agreement between Orbitex Group of Funds and Orbitex
Management, Inc.
<PAGE>

INVESTMENT ADVISORY AGREEMENT

AGREEMENT, made as of the ________ day of _______, 1997 between Orbitex
Group of Funds, a Delaware business trust (the "Trust"), and Orbitex Management,
Inc., a New York corporation (the "Adviser").

WITNESSETH:

WHEREAS, the Trust intends to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act");

WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series, each having its own investment objective or objectives,
policies and limitations;

WHEREAS, the Trust intends initially to offer shares in five series,
designated as the Orbitex Global Natural Resources Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Growth Fund, Orbitex Asian High Yield Fund and
Orbitex Asian Select Advisers Fund (each, a "Fund"), and the Trust may offer
shares of one or more additional series in the future;

WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940; and

WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and administrative services to the Trust with respect to each Fund in
the manner and on the terms and conditions hereinafter set forth;

NOW, THEREFORE, the parties hereto agree as follows:

1. Services of the Adviser.

1.1 Investment Advisory Services. The Adviser shall act as the investment
adviser to each Fund and, as such, shall (i) obtain and evaluate such
information relating to the economy, industries, business, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of each Fund in a manner consistent with its investment
objective(s), policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by each Fund, and implement
those decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; provided, that the Adviser will
place orders pursuant to its investment determinations either directly with the
issuer or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best price and execution of its orders, and (b) may
nevertheless in its discretion purchase and sell portfolio securities from and
to brokers who provide the Adviser with research, analysis, advice and similar
services and pay such brokers in return a higher commission or spread than may
be charged by other brokers.
<PAGE>

The Trust hereby authorizes any entity or person associated with the
Adviser or any Sub-Adviser retained by the Adviser pursuant to Section 7 of this
Agreement, which is a member of a national securities exchange, to effect any
transaction on the exchange for the account of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(iv).

The Adviser shall carry out its duties with respect to each Fund's
investments in accordance with applicable law and the investment objectives,
policies and restrictions set forth in each Fund's then-current Prospectus and
Statement of Additional Information, and subject to such further limitations as
the Trust may from time to time impose by written notice to the Adviser.

1.2 Administrative Services. The Adviser shall manage the Trust's business
and affairs and shall provide such services required for effective
administration of the Trust as are not provided by employees or other agents
engaged by the Trust; provided, that the Adviser shall not have any obligation
to provide under this Agreement any direct or indirect services to Trust
shareholders, any services related to the distribution of Trust shares, or any
other services which are the subject of a separate agreement or arrangement
between the Trust and the Adviser. Subject to the foregoing, in providing
administrative services hereunder, the Adviser shall:

1.2.1 Office Space, Equipment and Facilities. Furnish without cost to the
Trust, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Trust's need.

1.2.2 Personnel. Provide, without remuneration from or other cost to the
Trust, the services of individuals competent to perform all of the Trust's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Trust or by the Adviser acting in some
other capacity pursuant to a separate agreement or arrangement with the Trust.

1.2.3 Agents. Assist the Trust in selecting and coordinating the
activities of the other agents engaged by the Trust, including the Trust's
shareholder servicing agent, custodian, administrator, independent auditors and
legal counsel.

1.2.4 Trustees and Officers. Authorize and permit the Adviser's directors,
officers and employees who may be elected or appointed as Trustees or officers
of the Trust to serve in such capacities, without remuneration from or other
cost to the Trust.

1.2.5 Books and Records. Assure that all financial, accounting and other
records required to be maintained and preserved by the Trust are maintained and
preserved by it or on its behalf in accordance with applicable laws and
regulations.

1.2.6 Reports and Filings. Assist in the preparation of (but not pay for)
all periodic reports by the Trust to its shareholders and all reports and
filings required to maintain the registration and qualification of the Trust and
Trust shares, or to meet other regulatory or tax requirements applicable to the
Trust, under federal and state securities and tax laws.

2
<PAGE>

1.3 Additional Series. In the event that the Trust from time to time
designates one or more series in addition to the initial series ("Additional
Series"), it shall notify the Adviser in writing. If the Adviser is willing to
provide services hereunder to the Additional Series, it shall so notify the
Trust in writing. Thereupon, the Trust and the Adviser shall enter into an
Addendum to this Agreement for the Additional Series and the Additional Series
shall be subject to this Agreement. The initial series, together with all
Additional Series, shall be referred to collectively as the "Funds".

2. Expenses of the Trust.

2.1 Expenses to be Paid by Adviser. The Adviser shall pay all salaries,
expenses and fees of the officers, Trustees and employees of the Trust who are
officers, directors or employees of the Adviser.

In the event that the Adviser pays or assumes any expenses of the Trust
not required to be paid or assumed by the Adviser under this Agreement, the
Adviser shall not be obligated hereby to pay or assume the same or any similar
expense in the future; provided, that nothing herein contained shall be deemed
to relieve the Adviser of any obligation to the Trust under any separate
agreement or arrangement between the parties.

2.2 Expenses to be Paid by the Trust. The Trust shall bear all expenses of
its operation, except those specifically allocated to the Adviser under this
Agreement or under any separate agreement between the Trust and the Adviser.
Subject to any separate agreement or arrangement between the Trust and the
Adviser, the expenses hereby allocated to the Trust, and not to the Adviser,
include but are not limited to:

2.2.1 Custody. All charges of depositories, custodians, and other agents
for the transfer, receipt, safekeeping, and servicing of its cash, securities,
and other property.

2.2.2 Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including but not limited to the charges of any
shareholder servicing agent, dividend disbursing agent or other agent engaged by
the Trust to service shareholder accounts.

2.2.3 Shareholder Reports. All expenses of preparing, setting in type,
printing and distributing reports and other communications to shareholders.

2.2.4 Prospectuses. All expenses of preparing, setting in type, printing
and mailing annual or more frequent revisions of the Trust's Prospectus and
Statement of Additional Information and any supplements thereto and of supplying
them to shareholders.

2.2.5 Pricing and Portfolio Valuation. All expenses of computing the
Trust's net asset value per share, including any equipment or services obtained
for the purpose of pricing shares or valuing the Trust's investment portfolio.

2.2.6 Communications. All charges for equipment or services used for
communications between the Adviser or the Trust and any custodian, shareholder
servicing agent, portfolio accounting services agent, or other agent engaged by
the Trust.

3
<PAGE>

2.2.7 Legal and Accounting Fees. All charges for services and expenses of
the Trust's legal counsel and independent accountants.

2.2.8 Trustees' Fees and Expenses. All compensation of Trustees other than
those affiliated with the Adviser, all expenses incurred in connection with such
unaffiliated Trustees' services as Trustees, and all other expenses of meetings
of the Trustees and committees of the Trustees.

2.2.9 Shareholder Meetings. All expenses incidental to holding meetings of
shareholders, including the printing of notices and proxy materials, and proxy
solicitations therefor.

2.2.10 Federal Registration Fees. All fees and expenses of registering and
maintaining the registration of the Trust under the Act and the registration of
the Trust's shares under the Securities Act of 1933 (the "1933 Act"), including
all fees and expenses incurred in connection with the preparation, setting in
type, printing, and filing of any Registration Statement, Prospectus and
Statement of Additional Information under the 1933 Act or the Act, and any
amendments or supplements that may be made from time to time.

2.2.11 State Registration Fees. All fees and expenses of taking required
action to permit the offer and sale of the Trust's shares under securities laws
of various states or jurisdictions, and of registration and qualification of the
Trust under all other laws applicable to the Trust or its business activities
(including registering the Trust as a broker-dealer, or any officer of the Trust
or any person as agent or salesperson of the Trust in any state).

2.2.12 Confirmations. All expenses incurred in connection with the issue
and transfer of Trust shares, including the expenses of confirming all share
transactions.

2.2.13 Bonding and Insurance. All expenses of bond, liability, and other
insurance coverage required by law or regulation or deemed advisable by the
Trustees of the Trust, including, without limitation, such bond, liability and
other insurance expenses that may from time to time be allocated to the Trust in
a manner approved by its Trustees.

2.2.14 Brokerage Commissions. All brokers' commissions and other charges
incident to the purchase, sale or lending of the Trust's portfolio securities.

2.2.15 Taxes. All taxes or governmental fees payable by or with respect to
the Trust to federal, state or other governmental agencies, domestic or foreign,
including stamp or other transfer taxes.

2.2.16 Trade Association Fees. All fees, dues and other expenses incurred
in connection with the Trust's membership in any trade association or other
investment organization.

2.2.17 Nonrecurring and Extraordinary Expenses. Such nonrecurring and
extraordinary expenses as may arise including the costs of actions, suits, or
proceedings to which the Trust is a party and the expenses the Trust may incur
as a result of its legal obligation to provide indemnification to its officers,
Trustees and agents.

4
<PAGE>

3. Advisory Fee.

3.1 Fee. As compensation for all services rendered, facilities provided
and expenses paid or assumed by the Adviser under this Agreement, each Fund
shall pay the Adviser on the last day of each month, or as promptly as possible
thereafter, a fee calculated by applying a monthly rate, based on the following
annual percentage rates, to the Fund's average daily net assets for the month:

3.1.1 Orbitex Global Natural Resources Fund - 1.25%.

3.1.2 Orbitex Info-Tech & Communications Fund - 1.25%.

3.1.3 Orbitex Growth Fund - .75%.

3.1.4 Orbitex Asian High Yield Fund - 1.25%.

3.1.5 Orbitex Asian Select Advisers Fund - 1.50%.

4. Records.

4.1 Tax Treatment. The Adviser shall maintain, or arrange for others to
maintain, the books and records of the Trust in such a manner that treats each
Fund as a separate entity for federal income tax purposes.

4.2 Ownership. All records required to be maintained and preserved by the
Trust pursuant to the provisions or rules or regulations of the Securities and
Exchange Commission under Section 31(a) of the Act and maintained and preserved
by the Adviser on behalf of the Trust are the property of the Trust and shall be
surrendered by the Adviser promptly on request by the Trust; provided, that the
Adviser may at its own expense make and retain copies of any such records.

5. Reports to Adviser.

The Trust shall furnish or otherwise make available to the Adviser such
copies of the Trust's Prospectus, Statement of Additional Information, financial
statements, proxy statements, reports and other information relating to its
business and affairs as the Adviser may, at any time or from time to time,
reasonably require in order to discharge its obligations under this Agreement.

6. Reports to the Trust.

The Adviser shall prepare and furnish to the Trust such reports,
statistical data and other information in such form and at such intervals as the
Trust may reasonably request.

7. Retention of Sub-Adviser.

Subject to the Trust's obtaining the initial and periodic approvals
required under Section 15 of the Act, the Adviser may retain one or more
sub-advisers, at the Adviser's own cost and expense, for the purpose of managing
the investments of the assets of one or more Funds of the

5
<PAGE>

Trust. Retention of one or more sub-advisers shall in no way reduce the
responsibilities or obligations of the Adviser under this Agreement and the
Adviser shall, subject to Section 9 of this Agreement, be responsible to the
Trust for all acts or omissions of any sub-adviser in connection with the
performance of the Adviser's duties hereunder.

8. Services to Other Clients.

Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management and
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or to
engage in other business activities.

9. Limitation of Liability of Adviser and its Personnel.

Neither the Adviser nor any director, officer of employee of the Adviser
performing services for the Trust at the direction or request of the Adviser in
connection with the Adviser's discharge of its obligations hereunder shall be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with any matter to which this Agreement relates, and the
Adviser shall not be responsible for any action of the Trustees of the Trust in
following or declining to follow any advice or recommendation of the Adviser or
any sub-adviser retained by the Adviser pursuant to Section 7 of this Agreement;
provided, that nothing herein contained shall be construed (i) to protect the
Adviser against any liability to the Trust or its shareholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of the Adviser's duties, or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement, or (ii) to protect any director, officer or employee of the Adviser
who is or was a Trustee or officer of the Trust against any liability of the
Trust or its shareholders to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office with the Trust.

10. Effect of Agreement.

Nothing herein contained shall be deemed to require to the Trust to take
any action contrary to its Declaration of Trust or its By-Laws or any applicable
law, regulation or order to which it is subject or by which it is bound, or to
relieve or deprive the Trustees of the Trust of their responsibility for and
control of the conduct of the business and affairs of the Trust.

11. Term of Agreement.

The term of this Agreement shall begin on the date first above written,
and unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect for a period of two years from the date of this Agreement.
Thereafter, this Agreement shall continue in effect with respect to each Fund
from year to year, subject to the termination provisions and all other terms and
conditions hereof; provided, such continuance with respect to a Fund is approved
at least annually by vote of the holders of a majority of the outstanding voting
securities of the Fund or by the Trustees of the Trust; provided, that in either
event such continuance is also approved annually by the vote, cast in person at
a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not parties to this Agreement or interested
persons of either party hereto. The Adviser shall furnish to the Trust, promptly
upon

6
<PAGE>

its request, such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal or amendment thereof.

12. Amendment or Assignment of Agreement.

Any amendment to this Agreement shall be in writing signed by the parties
hereto; provided, that no such amendment shall be effective unless authorized
(i) by resolution of the Trustees of the Trust, including the vote or written
consent of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons of either party hereto, and (ii) by vote of a
majority of the outstanding voting securities of the Fund affected by such
amendment. This Agreement shall terminate automatically and immediately in the
event of its assignment.

13. Termination of Agreement.

This Agreement may be terminated as to any Fund at any time by either
party hereto, without the payment of any penalty, upon sixty (60) days' prior
written notice to the other party; provided, that in the case of termination as
to any Fund, such action shall have been authorized (i) by resolution of the
Trust's Board of Trustees, including the vote or written consent of Trustees of
the Trust who are not parties to this Agreement or interested persons of either
party hereto, or (ii) by vote of majority of the outstanding voting securities
of the Fund.

14. Use of Name.

The Trust is named the Orbitex Group of Funds and each Fund may be
identified, in part, by the name "Orbitex." The Adviser hereby grants to the
Trust a nonexclusive right and license to use the Orbitex name and as part of
the name of the Trust and each Fund of the Trust only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the Adviser's business as adviser or any extension, renewal or amendment
thereof remain in effect. The Trust agrees that it shall acquire no interest in
the name "Orbitex," that all uses thereof by the Trust shall inure to the
benefit of the Adviser and that is shall not challenge the validity or Adviser's
ownership thereof.

15. Declaration of Trust.

The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust or a Fund, as the case may be,
pursuant to this Agreement shall be limited in all cases to the Trust or a Fund,
as the case may be, and its assets, and the Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the Trust. In
addition, the Adviser shall not seek satisfaction of any such obligations from
the Trustees or any individual Trustee. The Adviser understands that the rights
and obligations of any Fund under the Declaration of Trust are separate and
distinct from those of any and all other Funds. The Adviser further understands
and agrees that no Fund of the Trust shall be liable for any claims against any
other Fund of the Trust and that the Adviser must look solely to the assets of
the pertinent Fund of the Trust for the enforcement or satisfaction of any
claims against the Trust with respect to that Fund.

7
<PAGE>

16. This Agreement shall be governed and construed in accordance with the laws
of the State of New York.

17. Interpretation and Definition of Terms.

Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the Act
shall be resolved by reference to such term or provision of the Act and to
interpretation thereof, if any, by the United States courts, or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, when the effect of a requirement of the Act reflected in
any provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.

18. Captions.

The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.

19. Execution in Counterparts.

This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date and year
first above written.

ORBITEX GROUP OF FUNDS on behalf of its Orbitex
Global Natural Resources Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Growth Fund, Orbitex
Asian High Yield Fund and Orbitex Asian Select
Advisers Fund

By:_______________________________________________
James L. Nelson
President

ORBITEX MANAGEMENT, INC.

By:_______________________________________________
James L. Nelson
President

<PAGE>

Exhibit 5(b)

Form of Sub-Advisory Agreement among Orbitex Group of Funds, Orbitex
Management, Inc. and ImPac Asset Management Ltd.
<PAGE>

SUBADVISORY AGREEMENT

This Subadvisory Agreement is made and entered into on this day of , 1997, by
ImPac Asset Management (HK) Ltd., a [ ] (the "Sub-Adviser"), Orbitex Management,
Inc., a New York corporation (the "Adviser"), and Orbitex Group of Funds, a
Delaware business trust (the "Trust").

WlTNESSETH:

WHEREAS, the Adviser is engaged pursuant to an Investment Advisory
Agreement (the "Advisory Agreement") with the Trust in the investment of the
Trust's assets in accordance with the Trust's Prospectus and Statement of
Additional Information (collectively the "Prospectus"); and

WHEREAS, pursuant to the Advisory Agreement the Adviser may delegate its
responsibilities for the management of the investment of the assets of one or
more series of the Trust to one or more sub-advisers; and

WHEREAS, the Adviser desires to so delegate responsibility for management
of the investments of one or more series of the Trust to the Sub-Adviser, and
the Sub-Adviser agrees to manage the investment of one or more series of the
Trust in accordance with this Subadvisory Agreement and the Prospectus;

NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:

1. The Adviser hereby appoints the Sub-Adviser to act as the investment adviser
to the Adviser with respect to one or more Series of the Trust (singly or
collectively the "Fund") as identified in Schedule A, which is attached hereto
and by this reference is incorporated herein. The Sub-Adviser hereby accepts
such appointment and agrees to render the services herein set forth, for the
compensation set forth on Schedule B, which is attached hereto and by this
reference is incorporated herein. The Adviser represents to the Sub-Adviser that
it is authorized pursuant to the Advisory Agreement to delegate to the
Sub-Adviser all of the services to be performed by the Sub-Adviser pursuant
hereto.

2. Subject to the supervision of the Trustees of the Trust and the Adviser, the
Sub-Adviser will manage the securities and investments (including cash) of the
Fund, including the purchase, retention, disposition and lending thereof, and
the execution of agreements relating thereto in accordance with the Fund's
investment objective(s), policies and restrictions as those are stated in the
Prospectus and further subject to the following understandings:

(a) The Sub-Adviser shall furnish a continuous investment program for the
Fund and in so doing shall determine from time to time what investments or
securities will be purchased, retained, sold or lent by the Fund, and what
portion of the assets will be invested or held uninvested as cash;

(b) The Sub-Adviser in the performance of its duties and obligations under
this Subadvisory Agreement shall act in conformity with the Declaration of
Trust, Bylaws and the Prospectus of the Trust, and with the instructions and
directions of the Trustees of the Trust and, to the extent consistent therewith
and herewith, of the Adviser, and will conform to and comply with the
requirements of the Investment Company Act of 1940, as amended (the "1940 Act"),
and all other applicable federal and state laws and regulations;
<PAGE>

(c) The Sub-Adviser shall determine the securities to be purchased or sold
by the Fund and, as agent for the Fund, will effect transactions pursuant to its
determinations either directly with the issuer or with any broker and/or dealer
in such securities. The Sub-Adviser shall also determine whether or not the Fund
shall enter into repurchase agreements or engage in any other investment
transactions or techniques that are consistent with subsection (b) above;

(d) The Sub-Adviser shall maintain, or arrange for others to maintain, all
books and records with respect to the securities transactions of the Fund and
shall render to the Adviser or Adviser's designees, such periodic and special
reports as the Adviser may reasonably request;

(e) The Sub-Adviser shall, to the extent the information is within its
control, provide or cause to be provided to the Trust's Custodian all requested
information relating to all transactions concerning the assets of the Fund
(other than share transactions of the Fund);

(f) The investment advisory services of the Sub-Adviser to the Fund under
this Subadvisory Agreement are not to be deemed exclusive, and the Sub-Adviser
shall be free to render similar service to others;

(g) The Sub-Adviser is authorized, subject to the supervision of the
Adviser and the Trustees of the Trust, to place orders for the purchase and sale
of the Fund's investments with or through such persons, brokers or dealers,
including the Sub-Adviser or affiliates thereof, and to negotiate commissions to
be paid in such transactions in accordance with the Fund's policy with respect
to brokerage as set forth in the Prospectus. The Sub-Adviser may, on behalf of
the Fund, pay brokerage commissions to a broker which provides brokerage and
research services to the Sub-Adviser in excess of the amount another broker
would have charged for effecting the transaction, provided the Sub-Adviser
determines in good faith that the amount is reasonable in relation to the value
of the brokerage and research services provided by the executing broker in terms
of the particular transaction or in terms of the Sub-Adviser's overall
responsibilities with respect to the Fund and the accounts as to which the
Sub-Adviser exercises investment discretion. It is recognized that the services
provided by such brokers may be useful to the Sub-Adviser in connection with the
Sub-Adviser's service to other clients. On occasions when the Sub-Adviser deems
the purchase or sale of a security to be in the best interests of the Fund as
well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions, if any. In such event, allocation of the securities
so sold or purchased, as well as the expenses incurred in the transaction, will
be made by the Sub-Adviser in the manner it considers to be the most equitable
and consistent with its fiduciary obligations to the Fund and, if applicable, to
such other customers. The Trust and the Adviser acknowledge that in order to
comply with Federal securities laws and related regulatory requirements, there
may be periods when the Sub-Adviser will not be permitted to initiate or
recommend certain types of transactions in the securities of issuers for which
affiliates of the Sub-Adviser are performing investment banking services, and
neither the Trust nor the Adviser will be advised of that fact. For example,
during certain periods when affiliates of the Sub-Adviser are engaged in an
underwriting or other distribution of a company's securities, the Sub-Adviser
may be prohibited from purchasing or recommending the purchase of certain
securities of that company for its clients. Similarly, the Sub-Adviser may on
occasion be prohibited from selling or recommending the sale of securities of a
company for which affiliates are providing investment banking services.

(h) The Sub-Adviser shall provide marketing support to the Adviser in
connection with the sale of Trust shares, as reasonably requested by the
Adviser. Such support shall include, but not

2
<PAGE>

necessarily be limited to, presentations by representatives of the Sub-Adviser
at investment seminars, conferences and other industry meetings. Any materials
utilized by the Adviser which contain any information relating to the
Sub-Adviser shall be submitted to the Sub-Adviser for approval prior to use, not
less than five (5) business days before such approval is needed by the Adviser.
Any materials utilized by the Sub-Adviser which contain any information relating
to the Adviser or the Trust shall be submitted to the Adviser for approval prior
to use, not less than five (5) business days before such approval is needed by
the Sub-Adviser, which approval shall not be unreasonably withheld.

(i) The Trust represents that is has delivered true and correct copies to
the Sub-Adviser of, and agrees to promptly notify and deliver to the Sub-Adviser
all future amendments and supplements to, the Prospectus, the Trust's
Declaration of Trust, the Trust's Bylaws, resolutions or other instructions of
the Trustees relevant to the Sub-Adviser's performance of its duties under this
Agreement, the Advisory Agreement and the Trust's Registration Statement on Form
N1-A.

3. The Sub-Adviser agrees that all records which it maintains for the Fund
pursuant to Section 2(d) of this Subadvisory Agreement are the property of the
Trust and will promptly surrender any of such records to the Adviser upon the
Trustees' or the Adviser's request. The Sub-Adviser shall preserve for periods
prescribed by Rule 31a-2 of the 1940 Act any such records as are required to be
maintained by the Sub-Adviser with respect to the Fund by Rule 31a-1 of the 1940
Act.

4. For performance of the services hereunder with respect to the Fund, the
Adviser shall pay the Sub-Adviser pursuant to the Fee Schedule set forth in
Schedule B. The fee prescribed in Schedule B shall be calculated daily and
payable monthly in arrears at an annual rate per Schedule B of the Fund's
average daily net assets.

5. The Sub-Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust, Fund or the Adviser in connection
with the matters to which this Subadvisory Agreement relates, except for a loss
resulting from willful misfeasance, bad faith or gross negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Subadvisory Agreement.

6. The term of this Subadvisory Agreement shall begin on the date first above
written, and unless sooner terminated as hereinafter provided, this Subadvisory
Agreement shall remain in effect for a period of two years from the date of this
Subadvisory Agreement. Thereafter, this Subadvisory Agreement shall continue in
effect with respect to the Fund from year to year, subject to the termination
provisions and all other terms and conditions hereof; provided, such continuance
with respect to the Fund is approved at least annually by vote of the holders of
a majority of the outstanding voting securities of the Fund or by the Trustees
of the Trust; provided, that in either event such continuance is also approved
annually by the vote, cast in person at a meeting called for the purpose of
voting on such approval, of a majority of the Trustees of the Trust who are not
parties to this Subadvisory Agreement or interested persons of any party hereto.
The Sub-Adviser shall furnish to the Trust, promptly upon its request, such
information as may reasonably be necessary to evaluate the terms of this
Subadvisory Agreement or any extension, renewal or amendment thereof. This
Subadvisory Agreement may be terminated at any time by any party hereto, without
the payment of any penalty, upon sixty (60) days' prior written notice to the
other parties; provided, that in the case of termination by the Trust, such
action shall have been authorized (i) by resolution of the Trust's Board of
Trustees, including the vote or written consent of Trustees of the Trust who are
not parties to this Subadvisory Agreement or interested persons of any party
hereto, or (ii) by vote of a majority of the outstanding voting securities of
the Fund. This Agreement shall automatically terminate in the event of its
"assignment" (as defined in the 1940 Act).

3
<PAGE>

7. The Sub-Adviser shall for all purposes herein be deemed to be an independent
contractor and shall not, unless otherwise expressly provided herein or
authorized by the Trustees of Trust from time to time, have any authority to act
for or represent the Fund or Trust in any way or otherwise be deemed to be an
agent of the Fund or the Trust.

8. Any amendment to this SubAdvisory Agreement shall be in writing signed by the
parties hereto; provided, that no such amendment shall be effective unless
authorized (i) by resolution of the Trustees of the Trust, including the vote or
written consent of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons of either party hereto, and (ii) by vote
of a majority of the outstanding voting securities of the Fund affected by such
amendment. This Agreement shall terminate automatically and immediately in the
event of its assignment.

9. Any notice that is required to be given by the parties to each other under
the terms of this Subadvisory Agreement shall be in writing, delivered, or
mailed postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:

(a) If to the Sub-Adviser:

(b) If to the Adviser:

Orbitex Management, Inc.
600 Madison Avenue
New York, NY 10021
Attention: James L. Nelson
Facsimile:

Orbitex Group of Funds
600 Madison Avenue
New York, NY 10021
Attention: James L. Nelson
Facsimile:

10. This Subadvisory Agreement shall be governed and construed in
accordance with the laws of the State of New York.

11. The Sub-Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust or the Fund, as the case may
be, pursuant to this Subadvisory Agreement shall be limited in all cases to the
Trust or the Fund, as the case may be, and its assets, and the Sub-Adviser shall
not seek satisfaction of any such obligation from the shareholders or any
shareholder of the Trust. In addition, the Sub-Adviser shall not seek
satisfaction of any such obligations from the Trustees or any individual
Trustee. The Sub-Adviser

4
<PAGE>

understands that the rights and obligations of any Fund under the Declaration of
Trust are separate and distinct from those of any and all other Funds. The
Sub-Adviser further understands and agrees that no Fund of the Trust shall be
liable for any claims against any other Fund of the Trust and that the
Sub-Adviser must look solely to the assets of the pertinent Fund of the Trust
for the enforcement or satisfaction of any claims against the Trust with respect
to that Fund.

12. Any question of interpretation of any term or provision of this SubAdvisory
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts, or, in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission validly issued pursuant to the
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, when the effect of a requirement of the Act reflected in
any provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.

13. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

13. This Agreement shall be governed and construed in accordance with the laws
of the State of New York.

IN WlTNESS WHEREOF, the parties hereto have caused this Subadvisory
Agreement to be executed by their respective officers designated below as of the
day and year first above written.

ORBITEX MANAGEMENT, INC. ORBITEX GROUP OF FUNDS

By:_______________________________ By:__________________________________
James L. Nelson, President James L. Nelson, President

IMPAC ASSET MANAGEMENT (HK) LTD.

By:_______________________________

5
<PAGE>

SUBADVISORY AGREEMENT
ORBITEX GROUP OF FUNDS

Schedule A

Funds Subject to SubAdvisory Agreement

Orbitex Asian High Yield Fund

6
<PAGE>

SUBADVISORY AGREEMENT
ORBITEX GROUP OF FUNDS

Schedule B

Fee Schedule

<PAGE>

Exhibit 5(c)

Form of Sub-Advisory Agreement among Orbitex group of Funds, Orbitex
Management, Inc. and Asia Strategic Investment Management Limited
<PAGE>

SUBADVISORY AGREEMENT

This Subadvisory Agreement is made and entered into on this day of , 1997, by
Asia Strategic Investment Management (HK) Limited, a [ ] (the "Sub-Adviser"),
Orbitex Management, Inc., a New York corporation (the "Adviser"), and Orbitex
Group of Funds, a Delaware business trust (the "Trust").

WlTNESSETH:

NOW, THEREFORE, in consideration of the premises and mutual promises
hereinafter set forth, the parties hereto agree as follows:

2
<PAGE>

(h) The Sub-Adviser shall provide marketing support to the Adviser in
connection with the sale of Trust shares, as reasonably requested by the
Adviser. Such support shall include, but not necessarily be limited to,
presentations by representatives of the Sub-Adviser at investment seminars,
conferences and other industry meetings. Any materials utilized by the Adviser
which contain any information relating to the Sub-Adviser shall be submitted to
the Sub-Adviser for approval prior to use, not less than five (5) business days
before such approval is needed by the Adviser. Any materials utilized by the
Sub-Adviser which contain any information relating to the Adviser or the Trust
shall be submitted to the Adviser for approval prior to use, not less than five
(5) business days before such approval is needed by the Sub-Adviser, which
approval shall not be unreasonably withheld.

3
<PAGE>

by vote of a majority of the outstanding voting securities of the Fund. This
Agreement shall automatically terminate in the event of its "assignment" (as
defined in the 1940 Act).

(a) If to the Sub-Adviser:

(b) If to the Adviser:

Orbitex Management, Inc.
600 Madison Avenue
New York, NY 10021
Attention: James L. Nelson
Facsimile:

Orbitex Group of Funds
600 Madison Avenue
New York, NY 10021
Attention: James L. Nelson
Facsimile:

10. This Subadvisory Agreement shall be governed and construed in accordance
with the laws of the State of New York.

4
<PAGE>

obligation from the shareholders or any shareholder of the Trust. In addition,
the Sub-Adviser shall not seek satisfaction of any such obligations from the
Trustees or any individual Trustee. The Sub-Adviser understands that the rights
and obligations of any Fund under the Declaration of Trust are separate and
distinct from those of any and all other Funds. The Sub-Adviser further
understands and agrees that no Fund of the Trust shall be liable for any claims
against any other Fund of the Trust and that the Sub-Adviser must look solely to
the assets of the pertinent Fund of the Trust for the enforcement or
satisfaction of any claims against the Trust with respect to that Fund.

13. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

13. This Agreement shall be governed and construed in accordance with the laws
of the State of New York.

IN WlTNESS WHEREOF, the parties hereto have caused this Subadvisory
Agreement to be executed by their respective officers designated below as of the
day and year first above written.

ORBITEX MANAGEMENT, INC. ORBITEX GROUP OF FUNDS

By:_________________________________ By:___________________________________
James L. Nelson, President James L. Nelson, President

ASIA STRATEGIC INVESTMENT MANAGEMENT (HK) LIMITED

By:________________________________

5
<PAGE>

SUBADVISORY AGREEMENT
ORBITEX GROUP OF FUNDS

Schedule A

Funds Subject to SubAdvisory Agreement

Orbitex Asian Select Advisers Fund

6
<PAGE>

SUBADVISORY AGREEMENT
ORBITEX GROUP OF FUNDS

Schedule B

Fee Schedule

<PAGE>

Exhibit 15(a)

Form of Service Plan and Agreement Pursuant to Rule 12b-1
<PAGE>

SERVICE PLAN AND AGREEMENT PURSUANT TO RULE 12B-1
UNDER THE INVESTMENT COMPANY ACT OF 1940

PLAN AND AGREEMENT made as of the day of , 1997, by and between Orbitex
Group of Funds (the "Trust") and Funds Distributor, Inc. ("FDI").

WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company which
offers for public sale separate series of shares of beneficial interest, each
corresponding to a distinct portfolio which may be further divided into separate
classes of shares (the "Shares"); and

WHEREAS, the Trust has entered into a Distribution Agreement (the
"Distribution Agreement") with FDI pursuant to which FDI has agreed to serve as
the Distributor of the Shares; and

WHEREAS, the Trust desires to adopt this Service Plan and Agreement
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") on behalf of its series
with respect to the Shares of the Orbitex Global Natural Resources Fund, Orbitex
Info-Tech & Communications Fund, Orbitex Growth Fund, Orbitex Asian High Yield
Fund and Orbitex Asian Select Advisers Fund and of such other series as may
hereafter be designated (the "Funds") by the Trust's Board of Trustees (the
"Board"); and

WHEREAS, FDI desires to serve as Distributor of the Shares and to provide,
or arrange for the provision of services pursuant to the Plan;

NOW THEREFORE, the parties agree as follows:

1. A. Each Fund is authorized to pay to FDI, as compensation for FDI's
services under this Plan and Agreement, a fee at the rate of 0.25% on an
annualized basis of the average net assets of the Fund. Such fees are to be paid
by the Funds monthly, or at such other intervals as the Board shall determine.
Such fees shall be based upon the applicable Fund's average daily net assets
during the preceding month, and shall be calculated and accrued daily.

B. Any Fund may pay fees to FDI at a lesser rate than the fees
specified in Section I.A. of this Plan and Agreement as agreed upon by the Board
and FDI and as approved in the manner specified in subsections (a) and (b) of
paragraph 3 of this Plan and Agreement.

2. FDI shall provide, or arrange for securities dealers or brokers,
administrators and others ("Recipients") with which FDI has entered Service
Sub-Agreements in the form attached hereto to provide, account maintenance
services, and to the extent that those services are provided by a Recipient, FDI
shall pay the Recipient a fee based on the net asset value of shares of the Fund
held by clients or customers of that Recipient. The account maintenance services
shall include answering routine inquiries concerning a Fund; assisting in the
maintenance of accounts or sub-accounts in a Fund and in processing purchase or
redemption transactions; making a Fund's investment plans and shareholder
services available; and providing such other information and services to
investors in shares of the Fund as FDI or the Trust, on behalf of a Fund, may
reasonably request.
<PAGE>

3. This Plan and Agreement shall not take effect with respect to any Fund
unless it has been approved, together with any related agreements, by a majority
vote, cast in person at a meeting (or meetings) called for the purpose of voting
on such approval, of : (a) the Board; and (b) those Trustees of the Trust who
are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Plan and Agreement or any agreements
related thereto (the "Independent Trustees").

4. This Plan and Agreement may continue in full force and effect with
respect to each Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan and Agreement in
subsections (a) and (b) of paragraph 3.

5. FDI shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended with respect to each Fund by
FDI under this Plan and Agreement and the purposes for which such expenditures
were made.

6. The Trust or any Fund may terminate this Plan and Agreement at any
time, without the payment of any penalty, by vote of the Board, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities of the affected Fund. FDI may terminate this Plan
and Agreement with respect to the Trust or any Fund, without payment of penalty,
upon sixty (60) days written notice to the Trust or the affected Fund.
Notwithstanding the foregoing, this Plan and Agreement shall terminate
automatically in the event of its assignment.

7. This Plan and Agreement may not be amended to increase materially the
amount of distribution fees to be paid by a Fund unless such amendment is
approved by a vote of a majority of the outstanding voting securities of the
affected Fund, and no material amendment to the other provisions of the Plan and
Agreement shall be made unless approved in the manner provided for approval and
annual renewal in subsections (a) and (b) of paragraph 3 hereof.

8. The amount of distribution fees payable by any Fund to FDI under this
Plan and Agreement and the amounts received by FDI under the Distribution
Agreement may be greater or lesser than the expenses actually incurred by FDI on
behalf of such Fund in serving as Distributor of the Shares. The distribution
fees with respect to a Fund will be payable by such Fund to FDI until either the
Plan and Agreement or the Distribution Agreement is terminated or not renewed
with respect to the Shares of that Fund. If either the Plan and Agreement or the
Distribution Agreement is terminated or not renewed with respect to the Shares
of any Fund, any distribution expenses incurred by FDI on behalf of the Fund
which are in excess of payments which FDI has received or accrued through the
termination date shall be the sole responsibility and liability of FDI, and are
not obligations of the Fund.

9. While this Plan and Agreement is in effect, the selection and
nomination of the Trustees who are not interested persons of the Trust shall be
made solely at the discretion of the Trustees who are not interested persons of
the Trust.

10. As used in this Plan and Agreement, the terms "majority of the
outstanding voting securities," "assignment" and "interested person" shall have
the same meanings as those terms have in the 1940 Act.

2
<PAGE>

11. The Trust shall preserve copies of this Plan and Agreement (including
any amendments thereto) and any related agreements and all reports made pursuant
to paragraph 5 hereof for a period of not less than six years from the date
thereof, the first two years in an easily accessible place.

12. The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or any Fund under this Plan and
Agreement, and FDI or any other person, in asserting any rights or claims under
this Plan, shall look only to the assets and property of the Trust or such Fund
in settlement of any such right or claim, and not to such Trustees or
shareholders.

IN WITNESS WHEREOF, the Trust and FDI have executed this Distribution Plan
and Agreement on the day and year set forth above.

ORBITEX GROUP OF FUNDS

Attest:________________________ By:____________________________
Secretary President

FUNDS DISTRIBUTOR, INC.

Attest:________________________ By:____________________________
Secretary President