ORBITEX
GROUP OF FUNDS
SEMI-ANNUAL
REPORT OCTOBER 31, 1997
ORBITEX ASIAN
HIGH YIELD FUND
ORBITEX ASIAN SELECT
ADVISORS FUND
ORBITEX STRATEGIC
NATURAL RESOURCES FUND
ORBITEX INFO-TECH AND
COMMUNICATIONS FUND
ORBITEX GROWTH FUND
LETTER TO SHAREHOLDERS
Dear Shareholders,
Welcome to the Orbitex Family of Funds. You will find an exciting group of
funds that can help you achieve your investment goals.
Orbitex was founded on the principle of providing unique and high value added
funds to individual investors. We manage three of the funds ourselves because
we have the expertise. For our Asian funds, we sought the best managers we
could find and are pleased to have Bankers Trust Company and Asia Strategic
Investment Management Limited sub-advise our Orbitex Asian Select Advisors Fund
and JP Morgan Investment Management Inc. sub-advise our Asian High Yield Fund.
We are not like most other fund management companies. We do not subscribe to a
particular investment style, such as focusing on growth or value styles.
Instead, we seek out the best managers or sub-advisors we can find and create
an environment for them to excel. We do not believe that just one style can
create consistent excellence for our shareholders. Our mission is to bring the
best to our shareholders.
ORBITEX MARKET COMMENTARY
This is Courtney Smith, Chief Investment Officer for the Orbitex Group of
Funds, with an overview of our current fund management strategies.
ORBITEX MANAGEMENT INC. STRATEGIC NATURAL RESOURCES FUND
In November, natural resources markets felt the impact of the Asian currency
crisis, as GDP growth forecasts for Asia were slashed from 6.9% to 3.0%. We
remain enthusiastic about the prospects for natural gas and believe that
selected exploration and production company stocks will provide exceptional
opportunities in both the near and the long term. Oil service experienced a
sharp sell-off after profit taking, but we believe that the positive
fundamentals have not changed. We expect oil to trade in the $18 to $21 range
for the next 6-12 months and are looking at companies that are leveraged to oil
refining where their margins should increase. We are also selectively targeting
specialty chemical firms that are less cyclical and growing volumes
consistently.
ORBITEX MANAGEMENT INC. ASIAN HIGH YIELD FUND
Asian bonds have weathered the recent events in Asia relatively well. Looking
ahead, we expect slower economic growth and tighter monetary policy to rein in
inflation and create additional value for bonds. The Mexico crisis in 1994
provides critical insights into the situation in Asia. In Mexico, structural
changes led to a quick recovery of confidence and fixed income investments did
well. As of November 30, our bond portfolio held 13.9% in Korea, 13.6% in
Indonesia, 12.8% in India, 12.1% in the Philippines, and 18.6% in cash. The
average credit quality of the portfolio is BB; the average duration is 3.8
years.
ORBITEX MANAGEMENT INC. ASIAN SELECT ADVISORS FUND
The current situation in Asia is leading to profound changes in the investment
landscape. We expect economic growth in the region to decline sharply, though
only Thailand is likely to move into recession. The stabilization of the
crisis, through firm action by the IMF and other global agencies, should lead
to sharp improvement in the outlook for exporting companies. Although the Asian
markets offer very attractive value, there could be continued volatility for
the next three to six months. We believe that a selective approach to stock
selection will be crucial. If the Mexico crisis in 1994 can be used to provide
insights into the situation in Asia, this could prove to be a unique buying
opportunity for Asian stocks.
ORBITEX MANAGEMENT INC. INFO-TECH AND COMMUNICATIONS FUND
We believe several factors should aid earnings growth forecasts for the
info-tech and communications sector. European businesses are expected to
increase spending on information technology. The dollar has stabilized in
recent months, and a stable dollar would boost growth for U.S.-based tech
vendors. Lastly, the need to build up Internet infrastructure and prepare for
the year 2000 could signal continued growth. Our current strategy leads us to
a heavy weighting in the telecom group, where we expect demand to remain strong
given the low penetration of phone service in many countries and the
proliferation of new operators. As many U.S. technology companies manufacture
in Southeast Asia, currency devaluations should lead to lower and more
competitive production costs. Telecom stocks are also perceived to be less
sensitive to the economic cycle.
ORBITEX MANAGEMENT INC. GROWTH FUND
We are optimistic for the U.S. market, and expect it to move higher in the
coming year. Slower economic growth in 1998 should lead to slower earnings
growth, but the effect of lower interest rates could more than offset this
factor. We believe the key to 1998 will be to take a highly selective approach
to finding key undervalued sectors. We recently added to the consumer products,
biotech and telecom sectors of the portfolio. Biotechnology stocks have
benefited from limited sensitivity to economic cycles and the favorable
interest rate outlook. Telecom stocks are benefiting from strong overseas
demand and lower production costs since many U.S. producers manufacture in Asia.
We appreciate your support and continued confidence moving forward into 1998.
We look forward to helping you realize your financial goals and objectives.
Sincerely,
Orbitex Management Inc.
ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
MARKET
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 74.98%
ALUMINUM - 2.53%
Aluminum Company of America 200 $ 14,600
CHEMICALS - 4.31%
Olin Corp. 300 13,631
Solutia, Inc. 500 11,249
------------
24,880
DOMESTIC OIL - 5.04%
Pennzoil Co. 200 14,800
USX-Marathon Group 400 14,300
------------
29,100
GAS & PIPELINE UTILITIES - 2.83%
Consolidated Natural Gas Co. 300 16,349
INTERNATIONAL OIL - 1.82%
Royal Dutch Petroleum Co. - New York Shares 200 10,525
MARINE SERVICES - 9.64%
Transcoastal Marine Services, Inc. (a) 1,500 37,313
Trico Marine Services, Inc. (a). 500 18,376
------------
55,689
MINING - 2.49%
Getchell Gold Corp. (a) 400 14,400
OIL & GAS DRILLING - 14.93%
Cabot Oil & Gas Corp. 800 19,201
Cliffs Drilling Co. (a) 250 18,141
Falcon Drilling Co., Inc. (a) 400 14,550
Grey Wolf, Inc. (a) 2,000 16,500
Marine Drilling Co., Inc. (a) 600 17,775
------------
86,167
OIL & GAS EXPLORATION AND PRODUCTION - 12.67%
Edge Petroleum Corp. (a) 1,000 14,799
Enserch Exploration Partners LP (a) 1,500 13,500
Forcenergy, Inc. (a) 500 16,313
Renaissance Energy Ltd. (a) 500 11,601
United Meridian Corp. (a) 500 16,969
------------
73,182
See Notes to Financial Statements.
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
MARKET
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS-(CONTINUED)
OIL FIELD MACHINE & EQUIPMENT
MANUFACTURING - 3.13%
Cooper Cameron Corp. (a) 250 $ 18,064
OIL FIELD SERVICE - 9.21%
Bouygues Offshore SA ADR 500 12,125
Seacor Smit, Inc. (a) 300 19,538
Western Atlas, Inc. (a) 250 21,548
------------
53,211
PAPER & RELATED PRODUCTS - 3.44%
Fort James Corp. 500 19,845
STEEL PRODUCTS - 2.94%
Steel Dynamics, Inc. (a) 800 17,000
TOTAL COMMON STOCKS - (COST $432,030) 433,012
PRINCIPAL
AMOUNT
------------
SHORT TERM INVESTMENT - 47.77%
United States Treasury Bill,
4.00%, 11/6/1997 (b) $276,000 275,847
TOTAL SHORT TERM INVESTMENT - (COST $275,847) 275,847
TOTAL INVESTMENTS (COST $707,877) - 122.75% 708,859
OTHER ASSETS LESS LIABILITIES - (22.75)% (131,370)
NET ASSETS - 100.00% $ 577,489
(a) Non-Income producing security.
(b) Rate represents annualized yield at date of purchase.
ADR - American Depository Receipt
See Notes to Financial Statements.
INFO-TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
MARKET
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 36.28%
AEROSPACE - 3.80%
Rohr, Inc. (a) 600 $ 18,187
COMPUTERS & BUSINESS EQUIPMENT - 11.53%
Cisco Systems, Inc. (a) 200 16,406
Compaq Computer Corp. 300 19,125
International Business Machines 200 19,613
------------
55,144
ELECTRONICS EQUIPMENT - 3.76%
Pioneer Standard Electronics, Inc. 1,100 18,012
MUTUAL FUNDS - 3.84%
S&P Depository Receipts 200 18,375
TELEPHONE - 13.35%
Bell Atlantic Corp. 300 23,963
SBC Communications, Inc. 300 19,088
Sprint Corp. 400 20,800
------------
63,851
TOTAL COMMON STOCKS - (COST $182,624) 173,569
PRINCIPAL
AMOUNT
------------
SHORT TERM INVESTMENT - 60.58%
United States Treasury Bill,
4.00% due 11/6/97 (b) $ 290,000 289,839
TOTAL SHORT TERM INVESTMENT - (COST $289,839) 289,839
TOTAL INVESTMENTS (COST $472,463) - 96.86% 463,408
OTHER ASSETS LESS LIABILITIES - 3.14% 15,052
NET ASSETS - 100.00% $ 478,460
(a) Non-Income producing security.
(b) Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
GROWTH FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
MARKET
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS - 34.34%
AEROSPACE-3.50%
Rohr, Inc. (a) 600 $ 18,187
INSURANCE - 4.51%
MedPartners, Inc. (a) 900 22,894
MUTUAL FUNDS - 3.54%
S&P Depository Receipts 200 18,375
OIL FIELD MACHINE & EQUIPMENT - 4.71%
Varco International, Inc. (a) 400 24,375
OIL FIELD SERVICES - 4.91%
BJ Services Co. (a) 300 25,425
RETAIL - 4.61%
Viking Office Products, Inc. (a) 1,000 23,937
SECURITY SERVICES - 4.24%
Borg-Warner Securities Corp. (a) 1,300 22,019
SOFTWARE - 4.32%
Computer Associate International, Inc. 300 22,369
TOTAL COMMON STOCKS - (COST $179,511) 177,581
PRINCIPAL
AMOUNT
------------
SHORT TERM INVESTMENT - 23.36%
United States Treasury Bill,
4.00% due 11/6/1997 (b) $ 121,000 120,933
TOTAL SHORT TERM INVESTMENT - (COST $120,933)
TOTAL INVESTMENTS (COST $300,444) - 57.70% 298,514
OTHER ASSETS LESS LIABILITIES - 42.30% 219,137
NET ASSETS - 100.00% $ 517,651
(a) Non-Income producing security.
(b) Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
FOREIGN BONDS AND NOTES - 93.83%
ARGENTINA - 4.19%
GOVERNMENT - 4.19%
Province of Mendoza,
10.000% due 9/4/2007 $ 88,000 $ 80,960
BRAZIL - 9.64%
BROADCASTING & CABLE - 4.93%
Abril, SA, 12.000% due 10/25/2003 90,000 95,294
STEEL - 4.71%
Metalurgica Gerdau,
10.250% due 11/23/2001 90,000 90,900
------------
186,194
CHINA - 8.12%
MUNICIPAL - 8.12%
Zhuhai Hwy Co., Ltd.,
11.500% due 7/1/2008 (a) 150,000 156,750
INDONESIA - 25.16%
FOOD, BEVERAGE & TOBACCO - 4.68%
Sampoerna International Financial Co.,
8.375% due 6/15/2006 (a) 100,000 90,320
OIL & GAS - 2.36%
Polytama International Financial Co.,
BV, 11.250% due 6/15/2007 50,000 45,500
PAPER - 8.84%
Indah Kiat Financial Mauritius, Ltd.,
10.000% due 7/1/2007 (a) 100,000 89,375
Tjiwi Kimia Financial Mauritius, Ltd.,
10.000% due 8/1/2004 (a) 90,000 81,225
------------
170,600
RETAIL - 4.68%
Matahari International Financial Co.,
11.250% due 3/15/2001 (a) 90,000 90,450
TEXTILES - 4.60%
Polysindo International Financial Co.,
BV, 9.375% due 7/30/2007 100,000 88,875
------------
485,745
MEXICO - 5.34%
STEEL - 5.34%
Altos Hornos de Mexico, SA,
11.875% due 4/30/2004 100,000 103,125
PHILIPPINES - 9.56%
ENERGY - 9.56%
Ce Casecnan Water & Energy, Inc.,
Senior Note, 11.450% due 11/15/2005 100,000 103,546
Subic Power Corp.,
9.500% due 12/28/2008 (a) 79,310 81,043
------------
184,589
See Notes to Financial Statements.
ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
FOREIGN BOND & NOTES - (CONTINUED)
RUSSIA - 4.64%
GOVERNMENT - 4.64%
Russian Federation,
10.000% due 6/26/2007 (a) $ 100,000 $ 89,626
THAILAND - 12.64%
BANK - 8.40%
Bangkok Bank Public Co., Ltd.,
7.250% due 9/15/2005 (a) 200,000 162,250
GOVERNMENT - 4.24%
Kingdom of Thailand,
7.750% due 4/15/2007 100,000 81,951
------------
244,201
TURKEY - 14.54%
GOVERNMENT - 14.54%
Republic of Turkey,
10.000% due 9/19/2007 100,000 91,875
Sultan, Ltd., Floating Rate Note,
8.687% due 6/11/1999 (b) 200,000 189,250
------------
281,125
TOTAL FOREIGN BONDS & NOTES - (COST $1,955,031) $ 1,812,315
SHORT TERM INVESTMENT - 8.37%
United States Treasury Bill,
4.85% due 11/13/1997 (c) 162,000 161,738
TOTAL SHORT TERM INVESTMENT - (COST $161,738)
TOTAL INVESTMENTS (COST $2,116,769) - 102.20% 1,974,053
OTHER ASSETS LESS LIABILITIES - (2.20)% (42,556)
NET ASSETS - 100.00% $ 1,931,497
(a) Pursuant to Rule 144A of the Securities Act of 1933, these securities may
be resold in transactions exempt from registration, normally to qualified
institutional buyers. At October 31, 1997, these securities amounted to
$841,039 or 43.54% of the Fund's net assets.
(b) Floating rate note. Rate noted represents rate at October 31, 1997.
(c) Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
ASIAN SELECT ADVISORS FUND
SCHEDULE OF INVESTMENTS
OCTOBER 31, 1997 (UNAUDITED)
_______________________________________________________________________________
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------
SHORT TERM U.S. INVESTMENT - 99.12%
U.S. GOVERNMENT SECURITIES - 99.12%
United States Treasury Bill,
4.00% due 11/6/1997 (a) $ 119,000 $ 118,934
TOTAL SHORT TERM INVESTMENT - (COST $118,934)
TOTAL INVESTMENT (COST $118,934) - 99.12% 118,934
OTHER ASSETS LESS LIABILITIES - 0.88% 1,054
NET ASSETS - 100.00% $ 119,988
(a) Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
ORBITEX GROUP OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC INFO-TECH & ASIAN HIGH ASIAN
NATURAL RESOURCES COMMUNICATIONS GROWTH YIELD SELECT ADVISORS
FUND FUND FUND FUND FUND
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in securities, at
market (Cost $432,030, $182,624,
$179,511, $1,955,031, and $0,
respectively) $ 433,012 $ 173,569 $ 177,581 $ 1,812,315 $ 0
Short term investments
(at amortized cost) 275,847 289,839 120,933 161,738 118,934
Cash 1,100 950 379 406,668 1,063
Receivable for securities sold 346,740 90,318 399,976 9,982 0
Interest receivable 0 0 0 53,526 0
Receivable from investment advisor 3,675 3,788 4,061 4,839 405
Prepaid expenses 14,561 14,486 13,819 13,672 14,518
Deferred organization expenses 14,183 14,174 14,174 14,157 14,255
TOTAL ASSETS 1,089,118 587,124 730,923 2,476,897 149,175
LIABILITIES
Payable for securities purchased 479,046 75,923 181,011 512,732 0
Payable to investment advisor 29,533 29,533 28,865 28,865 28,865
Accounts payable and other
accrued expenses 3,050 3,208 3,396 3,803 322
TOTAL LIABILITIES 511,629 108,664 213,272 545,400 29,187
NET ASSETS $ 577,489 $ 478,460 $ 517,651 $ 1,931,497 $ 119,988
NET ASSETS CONSIST OF:
Paid In Capital ($.01 par value),
unlimited number of shares
authorized $ 569,981 $ 519,983 $ 519,983 $ 2,070,000 $ 119,983
Undistributed net investment
income (loss) (134) (117) 39 4,081 5
Accumulated net realized
gain (loss) on investments 6,660 (32,351) (441) 132 0
Net unrealized appreciation
(depreciation) on investments 982 (9,055) (1,930) (142,716) 0
NET ASSETS $ 577,489 $ 478,460 $ 517,651 $ 1,931,497 $ 119,988
NET ASSET VALUE PER SHARE
Net Asset Value per share (based
on shares of beneficial
interest outstanding) $ 15.20 $ 13.80 $ 14.93 $ 11.20 $ 15.00
Offering Price Per Share
($15.20/.9425, $13.80/.9425,
$14.93/.9425, $11.20/.9525,
$15.00/.9425, respectively) $ 16.13 $ 14.64 $ 15.84 $ 11.76 $ 15.92
Total shares outstanding at end
of period 37,999 34,666 34,666 172,510 7,999
</TABLE>
See Notes to Financial Statements.
ORBITEX GROUP OF FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC INFO-TECH & ASIAN HIGH ASIAN
NATURAL RESOURCES COMMUNICATIONS GROWTH YIELD SELECT ADVISORS
FUND * FUND * FUND * FUND * FUND *
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 31 $ 177 $ 245 $ 4,081 $ 13
EXPENSES
Investment advisor fee 87 152 96 752 6
Administration fees 2,062 2,279 2,279 2,466 239
Professional fees 1,131 1,250 1,250 1,485 131
Custodian fees 2,073 2,026 2,291 2,217 272
Trustees' fees 94 104 104 124 11
Transfer agent fees 919 1,016 1,016 1,206 107
Distribution fees 28 49 51 180 1
Amortization of organizational
expense 82 91 91 108 10
Miscellaneous expenses 1,586 1,572 1,755 1,736 153
Total operating expenses before
waivers and reimbursements 8,062 8,539 8,933 10,274 930
Less: Expenses waived
and reimbursed (7,897) (8,245) (8,727) (10,274) (922)
NET EXPENSES 165 294 206 0 8
NET INVESTMENT INCOME (LOSS) (134) (117) 39 4,081 5
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Investments 6,569 (32,351) (441) 132 0
Foreign currency related transactions 91 0 0 0 0
6,660 (32,351) (441) 132 0
Net change in unrealized appreciation
(depreciation) on investment
transactions 982 (9,055) (1,930) (142,716) 0
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions 7,642 (41,406) (2,371) (142,584) 0
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 7,508 $ (41,523) $ (2,332) $ (138,503) $ 5
</TABLE>
* The commencement of investment operations was October 23, 1997, for the
Strategic Natural Resources Fund, October 22, 1997, for the Info-Tech &
Communications Fund and the Growth Fund, October 20, 1997, for the Asian High
Yield Fund, and October 31, 1997 for the Asian Select Advisors Fund.
See Notes to Financial Statements.
ORBITEX GROUP OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED OCTOBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
STRATEGIC INFO-TECH & ASIAN HIGH ASIAN
NATURAL RESOURCES COMMUNICATIONS GROWTH YIELD SELECT ADVISORS
FUND * FUND * FUND * FUND * FUND *
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) $ (134) $ (117) $ 39 $ 4,081 $ 5
Net realized gain (loss) on
investments and foreign currency
related transactions 6,660 (32,351) (441) 132 0
Net change in unrealized
appreciation (depreciation) on
investment transactions 982 (9,055) (1,930) (142,716) 0
Net increase (decrease) in net
assets resulting from operations 7,508 (41,523) (2,332) (138,503) 5
FROM FUND SHARE TRANSACTIONS:
Proceeds from fund shares sold 549,981 499,983 499,983 2,050,000 99,983
Total increase in net assets 557,489 458,460 497,651 1,911,497 99,988
NET ASSETS:
Beginning of period (Note 7) 20,000 20,000 20,000 20,000 20,000
End of period $ 577,489 $ 478,460 $ 517,651 $ 1,931,497 $ 119,988
NUMBER OF FUND SHARES:
Shares outstanding at beginning
of period 1,333 1,333 1,333 1,667 1,333
Shares sold 36,666 33,333 33,333 170,843 6,666
Net increase in shares outstanding 36,666 33,333 33,333 170,843 6,666
Total shares outstanding at end
of period 37,999 34,666 34,666 172,510 7,999
</TABLE>
* The commencement of investment operations was October 23, 1997, for the
Strategic Natural Resources Fund, October 22, 1997, for the Info-Tech &
Communications Fund and the Growth Fund, October 20, 1997, for the Asian High
Yield Fund, and October 31, 1997 for the Asian Select Advisors Fund.
See Notes to Financial Statements.
ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
FOR THE PERIOD ENDED OCTOBER 31, 1997 (UNAUDITED)
SELECTED DATA BASED ON A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
<TABLE>
<CAPTION>
STRATEGIC INFO-TECH & ASIAN HIGH ASIAN
NATURAL RESOURCES COMMUNICATIONS GROWTH YIELD SELECT ADVISORS
FUND (a) FUND (a) FUND (a) FUND (a) FUND (a)
---------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.00 $15.00 $15.00 $12.00 $15.00
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income 0.00 0.00 0.00 0.02 0.00
Net realized and unrealized gain
(loss) on investments and foreign
currency related transactions 0.20 (1.20) (0.07) (0.82) 0.00
Total income (loss) from investment
operations 0.20 (1.20) (0.07) (0.80) 0.00
NET ASSET VALUE, END PERIOD $15.20 $13.80 $14.93 $11.20 $15.00
TOTAL RETURN (b) 1.33% (8.00)% (0.47)% (6.67)% N/A
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period $ 577,489 $ 478,460 $ 517,651 $ 1,931,497 $ 119,988
Ratio of operating expenses
(with reimbursement) to
average net assets (c) 2.40% 2.40% 1.60% 0.00% 2.50%
Ratio of operating expenses
(without reimbursement) to
average net assets (c) 117.28% 69.83% 69.52% 17.08% 282.68%
Ratio of net investment income
(loss) (with reimbursement) to
average net assets (c) (1.95)% (.96)% 0.30% 6.78% 1.52%
Portfolio turnover rate 160% 242% 450% 220% 0%
Average broker commissions (d) $0.04 $0.06 $0.06 N/A $0.00
</TABLE>
(a) The commencement of investment operations was October 23, 1997, for the
Strategic Natural Resources Fund, October 22, 1997, for the Info-Tech &
Communications Fund and the Growth Fund, October 20, 1997, for the Asian High
Yield Fund, and October 31, 1997 for the Asian Select Advisors Fund.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no sale
charge. Had the advisor not absorbed a portion of expenses, total returns would
have been lower. Periods less than one year are not annualized.
(c) Annualized for periods less than one year.
(d) A Fund is required to disclose its average commission rate per share for
trades on which commissions are charged.
ORBITEX GROUP OF FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1997 (UNAUDITED)
1. ORGANIZATION
Orbitex Group of Funds (the "Trust") was incorporated in Delaware in December
1996 and is registered under the Investment Company Act of 1940 (the "1940
Act"), as amended, as an open-end management investment company. The Trust is
comprised of five portfolios (collectively the "Funds" and individually the
"Fund") as follows: Orbitex Strategic Natural Resources Fund, Orbitex Info-Tech
& Communications Fund, Orbitex Growth Fund, Orbitex Asian High Yield Fund and
Orbitex Asian Select Advisors Fund. Each Fund operates as a diversified
investment company except the Asian High Yield Fund which operates as a
non-diversified investment company. All Funds are offered at net asset value
plus a maximum sales load of 5.75%, except for the Asian High Yield Fund, which
is offered at net asset value plus a maximum sales load of 4.75%.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summarizes the significant accounting policies of the Trust:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results may differ from those estimates.
SECURITY VALUATION AND TRANSACTIONS
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. Short term debt investments are valued at amortized cost or
original cost plus accrued interest, each of which approximates fair value.
Foreign securities are valued on the basis of market quotations from the
primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates.
If market quotations are not readily available or if the values have been
materially affected by events occurring after the closing of a foreign market,
securities and other assets are valued as determined in good faith by or under
the direction of the Board of Trustees of the Trust.
Investment security transactions are accounted for as of the trade date. Cost
is determined and gains and losses are based upon the specific identification
method for both financial statement and federal income tax purposes.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the prevailing rates of exchange at period
end. Income receipts and expense payments are translated into U.S. dollars at
the prevailing exchange rate on the respective dates of the transactions.
Purchases and sales of securities are translated into U.S. dollars at the
contractual currency established at the time of the trade.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from currency gains and losses realized between the trade and
settlement dates on securities transactions. The effects of changes in foreign
currency exchange rates on investments in securities are included with the net
realized and unrealized gain or loss on investment securities.
INCOME TAXES
It is each Fund's policy to intend to comply with all sections of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income and gains to its shareholders and therefore, no provision
for federal income tax has been made. Each Fund is treated as a separate
taxpayer for federal income tax purposes.
INVESTMENT INCOME
Corporate actions (including cash dividends) are recorded net of nonreclaimable
tax withholdings on the ex-dividend date, except for certain foreign securities
for which corporate actions are recorded as soon after ex-dividend date as such
information is available. Dividend and interest income are recorded on the
accrual basis. Original issue discount and premium are accreted and amortized
respectively, on a yield to maturity basis. Market discount is recognized at
disposition using the straight line method.
EXPENSES
Expenses of the Trust which are directly identifiable to a specific Fund are
allocated to that Fund. Expenses which are not readily identifiable to a
specific Fund are allocated in such a manner as deemed equitable, taking into
consideration the nature and type of expense and the relative sizes of the
Funds.
DISTRIBUTIONS TO SHAREHOLDERS
Income dividends will normally be declared and distributed quarterly for the
Asian High Yield Fund and annually for each of the other Funds. All Funds
declare and pay net realized capital gain distributions annually. The
character of income and gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
DEFERRED ORGANIZATIONAL COSTS
Estimated organizational expenses will be deferred and amortized over a period
of five years commencing with operations. Orbitex Management, Inc. (the
"Advisor") has agreed with respect to each of the Funds that, if any of the
initial shares of a Fund are redeemed during such amortization period by the
holder thereof, the redemption proceeds will be reduced for any unamortized
organization expenses in the same ratio as the number of shares redeemed bears
to the number of initial shares held at the time of redemption. The Advisor has
paid all of the organizational costs of the Funds and will be reimbursed by the
Funds.
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.
OTHER
There are certain additional risks involved when investing in foreign
securities that are not inherent in domestic securities. These risks may
involve foreign currency exchange rate fluctuations, adverse political and
economic developments and the imposition of unfavorable foreign governmental
laws and restrictions.
The Orbitex Strategic Natural Resources Fund and the Orbitex Info-Tech &
Communications Fund may focus their investments in certain industries,
subjecting them to greater risk than funds that are more diversified.
3. FEES AND COMPENSATION PAID TO AFFILIATES AND OTHER PARTIES
ADVISORY FEES
Each Fund has entered into an Investment Advisory Agreement with the Advisor.
As compensation for the services rendered, facilities furnished, and expenses
borne by the Advisor, the Funds will pay the Advisor a fee accrued daily and
paid monthly, at the annualized rate of 1.25% for the Strategic Natural
Resources Fund, 1.25% for the Info-Tech & Communications Fund, 0.75% for the
Growth Fund, 1.25% for the Asian High Yield Fund, and 1.50% for the Asian
Select Advisors Fund. The Advisory Agreement also provides that the Advisor may
retain Sub-Advisers at the Advisor's own cost and expense, for the purpose of
managing the investment of the assets of one or more Funds of the Trust.
The Adviser has agreed to waive or limit its fees and to pay certain operating
expenses to the extent necessary to limit total fund operating expenses to
2.40%, 2.40%, 1.60%, 2.00%, and 2.50% for the Strategic Natural Resources Fund,
Info-Tech & Communications Fund, Growth Fund, Asian High Yield Fund and Asian
Select Advisors Fund, respectively, subject to possible reimbursement by the
Funds in future years if such reimbursement can be achieved within the
foregoing expense limits. The Adviser has agreed to waive or limit its fees and
to pay all operating expenses of the Asian High Yield Fund for the first sixty
days of Fund operations. The waivers for the period ended October 31, 1997
amounted to $87, $152, $96, $752 and $6 for Orbitex Strategic Natural Resources
Fund, Orbitex Info-Tech & Communications Fund, Orbitex Growth Fund, Orbitex
Asian High Yield Fund and Orbitex Asian Select Advisors Fund, respectively. The
reimbursements for the period ended October 31, 1997 amounted to $3,675,
$3,788, $4,061, $4,839 and $405 for Orbitex Strategic Natural Resources Fund,
Orbitex Info-Tech & Communications Fund, Orbitex Growth Fund, Orbitex Asian
High Yield Fund and Orbitex Asian Select Advisors Fund, respectively.
SUB-ADVISORY FEES
Pursuant to separate Sub-Advisory Agreements among each Sub-Advisor, the
Advisor and the Trust, each Sub-Advisor is responsible for the selection and
management of portfolio investments for a Fund, or for its segment of a
particular Fund, in accordance with the Fund's investment objective and
policies and under the supervision of the Advisor.
On a monthly basis, each Sub-Advisor receives a sub-advisory fee, paid by the
Advisor, based on the applicable Fund's average daily net assets at the
annualized rate of: .70% of the average daily net assets of the portion of the
Asian Select Advisors Fund advised by Bankers Trust Company; and .50% of the
average daily net assets of the portion of the Asian Select Advisors Fund
advised by Asia Strategic Investment Management Limited; .50% on the first $50
million of average daily net assets of the Asian High Yield Fund, .45% on next
$50 million of net assets, and .40% of net assets over $100 million for J.P.
Morgan Investment Management Inc.
ADMINISTRATION FEES
State Street Bank and Trust Company ("State Street") serves as the
Administrator of the Trust. 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, subject
to certain minimum requirements. The waivers for the period ended October 31,
1997 amounted to $2,062, $2,279, $2,279, $2,466 and $239 for Orbitex Strategic
Natural Resources Fund, Orbitex Info-Tech & Communications Fund, Orbitex Growth
Fund, Orbitex Asian High Yield Fund and Orbitex Asian Select Advisors Fund,
respectively.
CUSTODIAN FEES
State Street serves as the Trust's custodian, including holding all portfolio
securities and cash assets of the Trust and providing accounting services
including daily variation of the shares of each Fund, for which it receives an
annual accounting fee. The waivers for the period ended October 31, 1997
amounted to $2,073, $2,026, $2,291, $2,217 and $272 for Orbitex Strategic
Natural Resources Fund, Orbitex Info-Tech & Communications Fund, Orbitex Growth
Fund, Orbitex Asian High Yield Fund and Orbitex Asian Select Advisors Fund,
respectively.
DISTRIBUTOR
Funds Distributor, Inc. (the "Distributor") serves as the distributor of the
shares of each Fund pursuant to a Distribution Plan and Agreement, pursuant to
Rule 12b-1 under the 1940 Act, between the Distributor and the Trust. The Rule
12b-1 Plan and Agreement provides for payment of a fee to the Distributor at an
annualized rate of 0.30% of the average daily net assets of the Asian High
Yield Fund and 0.40% of the average daily net assets of each of the other Funds.
TRUSTEES FEES
The Funds pay no compensation to their Trustees who are employees of the
Advisor or Sub-Advisor. Trustees who are not Advisor or Sub-Advisor employees
receive an annual fee of $5,000.
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at October 31, 1997, were as follows:
NET
GROSS GROSS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION DEPRECIATION (DEPRECIATION)
- -------------------------------------------------------------------------------
Orbitex Strategic Natural
Resources Fund $ 12,788 $ 11,806 $ 982
Orbitex Info-Tech &
Communications Fund 0 9,055 (9,055)
Orbitex Growth Fund 1,407 3,337 (1,930)
Orbitex Asian High Yield Fund 0 142,716 (142,716)
Orbitex Asian Select Advisors Fund 0 0 0
The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at October 31, 1997.
5. INVESTMENT TRANSACTIONS
The cost of purchases and the proceeds from sales of investments, other than
U.S. Government obligations and short term securities, for the period ended
October 31, 1997, were:
PURCHASES SALES
- -------------------------------------------------------------------------------
Orbitex Strategic Natural Resources Fund $ 772,201 $ 346,740
Orbitex Info-Tech & Communications Fund 425,294 210,319
Orbitex Growth Fund 579,928 399,976
Orbitex Asian High Yield Fund 3,952,890 1,997,957
Orbitex Asian Select Advisors Fund 0 0
6. BENEFICIAL INTEREST
The following schedule shows the number of shareholders each owning 5% or more
of a Fund and the total percentage of the Fund held by such shareholders:
5% OR GREATER SHAREHOLDERS
--------------------------
NUMBER % OF FUND HELD
- -------------------------------------------------------------------------------
Orbitex Strategic Natural Resources Fund 2 96%
Orbitex Info-Tech & Communications Fund 1 96%
Orbitex Growth Fund 1 96%
Orbitex Asian High Yield Fund 1 97%
Orbitex Asian Select Advisors Fund 2 100%
The following schedule shows the number of affiliates each owning 10% or more
of a Fund and the total percentage of the Fund held by such affiliates:
10% OR GREATER AFFILIATES
----------------------------------------------
FUND NAME % OF FUND HELD
- -------------------------------------------------------------------------------
Orbitex Strategic Natural
Resources Fund Cresta Limited 88%
Orbitex Info-Tech &
Communications Fund Cresta Limited 96%
Orbitex Growth Fund Cresta Limited 96%
Orbitex Asian High Yield Fund Thomas T. Bachmann 97%
Orbitex Select Advisors Fund Konrad Krill 83%
Orbitex Select Advisors Fund Orbitex Management, Inc. 17%
7. INITIAL CAPITALIZATION AND OFFERING OF SHARES
During the period May 29, 1997 to commencement of investment operations for
each of the Funds, each Fund had no operations other than those related to
organizational matters, including the initial capital contribution of $20,000
for each Fund and the issuance of 1,333 shares for each of the Funds, with the
exception of the Orbitex Asian High Yield Fund which issued 1,667 shares. There
were no additional transactions until commencement of investment operations for
each of the Funds.
ORBITEX GROUP OF FUNDS
410 PARK AVENUE
NEW YORK, NY 10022
TRUSTEES AND OFFICERS
Ronald Altbach Trustee
Thomas T. Bachmann Trustee
Otto J. Felber Trustee
Robert F. Raucci Trustee
James L. Nelson Trustee, President, Assistant Treasurer
and Assistant Secretary
Timothy P. Mullaney Treasurer
Mark Breault Secretary
INVESTMENT ADVISER
Orbitex Management, Inc.
410 Park Avenue
New York, NY 10022
ADMINISTRATOR AND CUSTODIAN
State Street Bank and Trust Company
150 Newport Avenue
North Quincy, MA 02171
TRANSFER AND DIVIDEND DISBURSING AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, MA 02171
Telephone: 1-888-672-4839
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street
Boston, MA 02109
INDEPENDENT AUDITORS
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
LEGAL COUNSEL
Rogers & Wells
200 Park Avenue
New York, NY 10166
