ORBITEX GROUP OF FUNDS, 485APOS, 1998-04-16

ORBITEX GROUP OF FUNDS
485APOS, 1998-04-16

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As filed with the Securities and Exchange Commission on April 16, 1998

Registration Nos. 333-20635, 811-8037

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933 [ ]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 2 [X]
---

and

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]

Amendment No. 4 [X]
---

(Check appropriate box or boxes)

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

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

410 Park Avenue, 18th Floor, New York, New York 10022
(Address of Principal Executive Office)

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

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

James L. Nelson
410 Park Avenue, 18th Floor,
New York, New York 10022
(Name and Address of Agent for Service)

Copies to:

Joseph J. McBrien, Esq. Leonard B. Mackey, Jr., Esq.
Vice President & Counsel Rogers & Wells

State Street Bank and Trust Company 200 Park Avenue
1776 Heritage Drive, AFB 4 New York, New York 10166
North Quincy, Massachusetts 02171

Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective. It is proposed that this filing will
become effective: (check appropriate box)

____ on __________ pursuant to paragraph (a)(1) of Rule 485

____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485

X 75 days after filing pursuant to paragraph (a)(2) of Rule 485
----

____ on days after filing pursuant to paragraph (a)(2) of Rule 485

____ immediately upon filing pursuant to paragraph (b) of Rule 485

____ on ________ pursuant to paragraph (b) of Rule 485

1
<PAGE>

CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>
Form N-1A Item No. Caption in Prospectus
- ------------------ ---------------------
<S> <C>
1. Cover Page Cover Page

2. Synopsis Cover Page; The Funds at a Glance

3. Condensed Financial Information Financial Highlights

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 Policies Investment Restrictions; Description Securities, Other
Investment Policies and Risk Considerations

14. Management of the Fund Management of the Trust

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

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

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

18. Capital Stock and Other Securities Organization of the Trust

<PAGE>

Caption in Statement of
Form N-1A Item No. Additional Information
- ----------------- -----------------------
19. Purchase, Redemption and Pricing of Purchase and Redemption of Securities Being Offered;
Securities Being Offered Determination of Net Asset

20. Tax Status Taxes

21. Underwriters Distribution of Shares

22. Calculation of Performance Data Performance Information About the Funds

23. Financial Statements Financial Statements
</TABLE>

3
<PAGE>

ORBITEX GROUP OF FUNDS
410 Park Avenue
New York, New York 10022

PROSPECTUS

June _____, 1998

Orbitex Group of Funds (the "Trust") is a mutual fund that currently
consists of six 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. Each Fund offers two
classes of shares: an ordinary class, Class A, and an institutional class, Class
I. Purchasers of Class A Shares pay a 4.75% sales charge for the Orbitex Asian
High Yield Fund and a 5.75% sales charge for all other Funds. These sales
charges are not applicable to purchasers of Class I Shares.

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

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

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

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

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

Orbitex West Coast Fund seeks capital appreciation through investment
in securities of companies headquartered or having their largest operating
exposure in the states of California, Oregon and Washington.

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 both classes
of each Fund that you should know before investing. It should be retained for
future reference. A Statement of Additional Information ("SAI"), dated June
_____, 1998, about the Funds has been filed with the Securities and Exchange
Commission (the "SEC") and is incorporated herein by reference. You may obtain a
copy of the SAI at no charge by calling the Trust at the number shown above.

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

A-1
<PAGE>

TABLE OF CONTENTS PAGE
The Funds at a Glance

The Funds' Expenses

Financial Highlights

Investment Objectives, Strategies and Policies

Description of Securities, Other Investment
Policies and Risk Considerations

Investment Performance

Portfolio Turnover

Dividends, Distributions and Taxes

How to Purchase Shares

How to Redeem Shares

How to Exchange Shares

Shareholder Services

How Each Fund's Net Asset Value is Determined

How the Trust is Managed

Portfolio Transactions and Brokerage Practices

Organization of the Trust

Appendix

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

A-2
<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 six Funds: Orbitex Strategic Natural Resources Fund,
Orbitex Info-Tech & Communications Fund, Orbitex Growth Fund, Orbitex Asian
Select Advisors Fund, Orbitex Asian High Yield Fund and Orbitex West Coast Fund.
Each Fund in the Trust is a separate investment portfolio and has its own
investment objective, investment programs, policies and restrictions.
Additionally, each Fund offers two classes of shares: an ordinary class, Class
A, and an institutional class, Class I. Each Fund operates as a diversified
investment company except for the Asian High Yield Fund and the West Coast Fund
which operate as non-diversified investment companies. See "Investment
Objectives, Strategies and Policies."

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

Purchases and Sales of Shares. Generally, Class A Shares of each Fund are
offered to investors at net asset value plus any applicable sales charge
(maximum for the Asian High Yield Fund is 4.75% and for each other Fund is 5.75%
of public offering price) and subject to a service and distribution fee at the
rate of .30% (in the case of the Asian High Yield Fund) and .40% (in the case of
the other Funds) of the average daily net assets of the Fund. The minimum
initial investment for the Class A Shares is $2,500 ($2,000 for individual
retirement accounts) and the minimum for subsequent investments is $500. See
"How to Purchase Shares."

Class I Shares of each Fund are offered to certain institutional
investors purchasing shares in amounts greater than or equal to $250,000 for
each Fund and to other qualified investors described later in this Prospectus.
There is no minimum for subsequent investments. See "How to Purchase Shares."

Shares may be redeemed at any time at the net asset value of a Fund next
determined after receipt of the redemption request. The redemption price may be
more or less than the purchase price. See "How to Redeem Shares."

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

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

High yielding fixed-income securities, such as those in which the Asian
High Yield Fund may invest without limit and each of the other Funds may invest
up to 35%, respectively, of total assets, are

A-3
<PAGE>

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.

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

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

Although the West Coast Fund tends to invest a significant portion of its
assets in companies whose financial prospects are dependent upon the national
and international economies, its investments in the securities of companies
headquartered or having their largest operating exposure in the states of
California, Oregon and Washington may depend on the strength of those states'
economies and principal industry sectors. As a result, an investment in the West
Coast Fund may be more volatile than an investment in an investment company that
does not concentrate in such a manner.

Because the Asian High Yield Fund and the West Coast Fund are
non-diversified, they are permitted greater flexibility to invest their assets
in the securities of any one issuer and therefore will be exposed to increased
risk of loss if such an investment underperforms expectations. However, under
normal market conditions, the Advisor of the West Coast Fund does not expect the
Fund to hold fewer than 20 investment securities or for any individual position
to exceed 10% of the Fund's total assets at the time of purchase.

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."

A-4
<PAGE>

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
class of shares of each Fund would be subject. Actual fees and expenses for each
class of shares of each Fund for the current year may be more or less than those
shown below. A more complete description of all fees and expenses is included in
this Prospectus under the section "How the Trust is Managed."

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

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

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

Redemption Fee(3) None None None None None None

Exchange Fee None None None None None None
</TABLE>

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

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

2 Purchases of Class A Shares of $1 million or more by certain investors are
not subject to any sales load at the time of purchase, 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."

3 A fee of $10.00 is charged by the Trust's transfer agent for each wire
redemption.

A-5
<PAGE>

<TABLE>
<CAPTION>
Strategic
Annual Fund Natural Info-Tech & Asian
Operating Expenses Resources Communications Growth Asian Select High Yield West Coast
for Class A Shares Fund Fund Fund Advisors Fund Fund Fund
- ------------------ ---- ---- ------- ------------- ---- ----
(as a percentage
of average net
assets)

<S> <C> <C> <C> <C> <C> <C>
Investment
Advisory Fee
(after fee waivers
and expense
reimbursements) .53% .53% 0% .63% .26% 1.00%

12b-1 Fees .40% .40% .40% .40% .30% .40%

Other Expenses
(after fee waivers
and expense
reimbursements) 1.47% 1.47% 1.20% 1.47% 1.11% .60%

Total Fund
Operating Expenses
(after fee waivers
and expense
reimbursements) 2.40% 2.40% 1.60% 2.50% 1.67% 2.00%
</TABLE>

<TABLE>
<CAPTION>
Strategic
Annual Fund Natural Info-Tech & Asian
Operating Expenses Resources Communications Growth Asian Select High Yield West Coast
for Class I Shares Fund Fund Fund Advisors Fund Fund Fund
- ------------------ ---- ---- ------- ------------- ---- ----
(as a percentage
of average net
assets)
<S> <C> <C> <C> <C> <C> <C>
Investment
Advisory Fee
(after fee waivers
and expense
reimbursements) .53% .53% 0% .63% .26% 1.00%

12b-1 Fees None None None None None None

Other Expenses
(after fee waivers
and expense
reimbursements) 1.87% 1.87% 1.60% 1.87% 1.41% 1.00%

Total Fund
Operating Expenses
(after fee waivers
and expense
reimbursements) 2.40% 2.40% 1.60% 2.50% 1.67% 2.00%
</TABLE>

The section entitled, "Other Expenses," is based on estimated amounts for
the current fiscal year. The Advisor has agreed to waive or limit its fees and
to pay certain operating expenses to the extent necessary to limit Total Fund
Operating Expenses to 2.40%, 2.40%, 1.60%, 2.50% and 2.00% for the Class A [and
Class I Shares] of the Strategic Natural Resources Fund, the Info-Tech &
Communications Fund, the Growth Fund, the Asian Select Advisors Fund and the
West Coast Fund, respectively, subject to possible

A-6
<PAGE>

reimbursement by the Funds in future years if such reimbursement can be achieved
within the foregoing expense limits. Consequently, the Investment Advisory Fees
actually charged may in the future be higher than reflected above, if consistent
with the limits on the Total Fund Operating Expenses. Absent the waiver or
limitation of fees, the Investment Advisory Fees and Total Fund Operating
Expenses for the Class A Shares are anticipated to be 1.25% and 3.12%,
respectively, for the Strategic Natural Resources Fund, 1.25% and 3.12%,
respectively, for the Info-Tech & Communications Fund and 1.50% and 3.37%,
respectively, for the Asian Select Advisors Fund; and Investment Advisory Fees,
Other Expenses and Total Fund Operating Expenses for the Growth Fund are
anticipated to be 0.75%, 1.40% and 2.55%, respectively. The fee waivers and
limitations are expected to be in effect during the Trust's current fiscal year.
Since inception, the Advisor has voluntarily waived its entire advisory fee and
reimbursed all expenses of the Asian High Yield Fund. The Advisor may in its
discretion extend this waiver for additional sixty (60) day periods. The Advisor
has voluntarily agreed thereafter to waive its fees and reimburse certain
expenses to the extent necessary to keep total operating expenses for the Class
A and Class I Shares to 2.00% of average net assets on an annual basis. All
waivers and limitations of fees are subject to possible reimbursement by the
Asian High Yield Fund in future years if such reimbursement can be achieved
within the 2.00% expense limit. Absent the waiver or limitation of fees the
Investment Advisory Fee, 12b-1 Fees, Other Expenses and Total Fund Operating
Expenses for the Class A Shares are anticipated to be 1.25%, 0.30%, 1.39% and
2.94%, respectively. These fee waivers and limitations are expected to be in
effect during the Trust's current fiscal year. [ADD DISCUSSION OF WEST COAST
FUND AND FEE WAIVERS FOR CLASS I SHARES]

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.

Class A Shares Class I Shares
Fund 1 Year 3 Years 1 Year 3 Years
Strategic Natural Resources $81 $130 $25 $76
Info-Tech & Communications $81 $130 $25 $76
Growth $73 $106 $16 $51
Asian Select Advisors $82 $132 $26 $79
Asian High Yield $64 $98 $17 $53
West Coast Fund $77 $118 $21 $63

The Example above for the Class A Shares assumes 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 of Class A Shares in an amount of $1
million or more are made at net asset value and are subject to a contingent
deferred sales charge for one year following purchase. As a result of 12b-1
fees, a long-term shareholder may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the rules of the National
Association of Securities Dealers, Inc.

These Examples should not be considered to be a representation of past
or future fees or expenses for each Fund. Actual fees and expenses may be
greater or lesser 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.

A-7
<PAGE>

FINANCIAL HIGHLIGHTS

This information is part of the Trust's financial statements which are
included in the SAI. It should be read in conjunction with the financial
statements and notes thereto. The information is unaudited and applies only to
the Class A Shares as there were no Class I Shares outstanding for the period
ending January 31, 1998. Additionally, the West Coast Fund is not covered in
this chart because there were no shares of the Fund outstanding during the
period ending January 31, 1998.

For the period ended January 31, 1998 (Unaudited)
Selected Data based on a share outstanding throughout the period indicated.

<TABLE>
<CAPTION>
Strategic Asian
Natural Info-Tech & Asian Select
Resources Communications Growth High Yield 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 (loss) ......................... 0.13 (0.06) (0.05) 0.27 (0.06)
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions ............ (0.50) (0.49) 0.26 (1.51) (0.55)
---------- -------- -------- ---------- --------
Total income (loss) from investment operations ....... (0.37) (0.55) 0.21 (1.24) (0.61)
---------- -------- -------- ---------- --------
Less dividends from net investment income ............ (0.03) 0.00 0.00 (0.19) 0.00
Less distributions from capital gains ................ (0.03) 0.00 0.00 0.00 0.00
---------- -------- -------- ---------- --------
Total dividends/distributions from net investment
income and net capital gains ......................... (0.06) 0.00 0.00 (0.19) 0.00
---------- -------- -------- ---------- --------
Net asset value, end of period ....................... $14.57 $14.45 $15.21 $10.57 $14.39
========== ======== ======== ========== ========
Total Return (b) ..................................... (2.44)% (3.64)% 1.41% (10.27)% (4.09)%
Ratios and Supplemental Data:
Net assets, end of period ............................ $3,725,017 $501,232 $536,566 $2,228,823 $115,411
Ratio of operating expenses to average net assets
(c)(e) ............................................... 2.40% 2.40% 1.60% 0.00% 2.50%
Ratio of net investment income (loss) (with
reimbursement) to average net assets
(c) .................................................. 2.55% (1.45)% (1.08)% 8.89% (1.50)%

Portfolio turnover rate ...................... 330% 149% 212% 223% 0%

Average broker commissions (d) ................. $0.06 $0.06 $0.06 N/A $0.01
</TABLE>

(a) The commencement of investment operations was October 23, 1997, for
Strategic Natural Resources Fund, October 22, 1997, for Info-Tech &
Communications Fund and Growth Fund, October 20, 1997, for Asian High Yield
Fund and October 31, 1997, for 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
sales 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.

(d) A Fund is required to disclose its average commission rate per share for
trades on which commissions are charged.

(e) Ratio of operating expenses to average net assets is after waiver of fees
and reimbursement of certain fees and expenses. Had the fees not been
waived and the expenses reimbursed, the ratio of expenses to average net
assets would have been as follows: Strategic Natural Resources Fund,
11.14%; Info-Tech & Communications Fund 65.05%; Growth Fund 61.77%; Asian
High Yield Fund, 15.31%; and Asian Select Advisors Fund, 285.04%,
respectively.

A-8
<PAGE>

The Orbitex Group of Funds

Orbitex Management, Inc. offers specialized and opportunistic mutual funds with
the potential to enhance returns and diversify overall risk in an investor's
portfolio. Through its investment management team and carefully selected
sub-advisors, Orbitex emphasizes well-articulated investment philosophies and
consistent management styles to ensure that investors and investment
professionals get what they expect from each Orbitex Fund.

<TABLE>
<CAPTION>
Fund Objective Suitable Investors
<S> <C> <C>
Orbitex Strategic Natural Capital growth through a flexible policy Growth-oriented individuals who
Resources Fund of investing in common stocks of see strong economic trends as an
Managed by Orbitex companies engaged in natural resource indicator of natural resource
Management, Inc. industries and industries supportive to demand.
natural resource industries.

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

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

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

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

Orbitex West Coast Fund Capital appreciation through investment Growth-oriented investors who
Managed by Orbitex in securities of companies headquartered wish to capitalize on
Management, Inc. or having their largest operating opportunities in California,
exposure in the states of California, Oregon and Washington.
Oregon and Washington.
</TABLE>

A-9
<PAGE>

Please consult the "Description of Securities, Other Investment Policies and
Risk Considerations" section of the prospectus for information on the risks
involved in investing in any of the Funds.

Set forth below is a chart illustrating the results of hypothetical $10,000
investments in certain market sectors. This information is provided for your
information to illustrate how these sectors have performed in the past. The
performance of the Funds may vary significantly from the performance described
below.

- ---------------------------- [LINE CHART] -----------------------------------
Index Performance (Results of a Hypothetical $10,000 Investment)

<TABLE>
<CAPTION>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Lipper Science &
Technology Fund Index $10,000 $12,185 $13,324 $18,461 $21,583 $23,257
MSCI Asia Ex-Japan Index $10,000 $20,339 $16,893 $17,570 $19,335 $11,542
S & P 500 Composite Index $10,000 $11,008 $11,153 $15,344 $18,867 $25,162
Lipper Natual Resources
Funds Category $10,000 $12,638 $12,164 $14,377 $19,118 $19,999
Lipper Emerging Markets
Debt Funds Category $10,000 $15,111 $12,175 $14,578 $19,873 $22,167
</TABLE>
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Average Annual Returns
(for periods ended 12/31/97) 1 year 3 years 5 years 10 years
- ---------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Lipper Emerging Market Debt Funds Category 13.82% 24.17% 17.26% N/A%
Lipper Natural Resources Funds Category 0.06 15.75 14.19 9.95
MSCI Asia Ex-Japan Index -40.31 -11.93 2.91 11.45
Standard & Poor's 500 Index 33.36 31.15 20.27 18.05
Lipper Science and Technology Index 7.75 20.40 18.39 16.85
</TABLE>

All of the Indexes noted above are unmanaged indexes. The performance of these
indexes does not reflect sales charges; direct investment in the indexes is not
possible. Index performance is not intended to represent the future performance
of any Orbitex Fund. Past performance is no guarantee of future results. The
investment return and principal value of a Fund investment will fluctuate and
shares, when redeemed, may be worth more or less than their original cost.

INVESTMENT OBJECTIVES, STRATEGIES AND POLICIES

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

ORBITEX STRATEGIC NATURAL RESOURCES FUND

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

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

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

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

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

ORBITEX INFO-TECH & COMMUNICATIONS FUND

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

It is expected that the Fund will invest in communications, information
and related technology companies in the United States and other developed
countries, and will also invest in companies that are well positioned to benefit
from the rapid growth in the telecommunications infrastructure in emerging
economies. The Advisor's market expectations will determine the allocation of
the Fund's investments between industries.

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

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be invested in debt securities issued by communications, information and related
technology companies and/or equity and debt securities of companies outside of
those industries.

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

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

The growth in global communications and the increasing popularity of
the Internet and the World Wide Web has led to dramatic changes in the
networking, computer, and software industries. It has created sharp changes in
the value of many companies. The Advisor seeks out companies that it believes
will capitalize on these changes. In addition, communications technology is
enabling young entrepreneurial companies to bring new ideas to the market in
competition with large more established companies. The opportunity to capitalize
on these trends is to provide small amounts of capital to private, early stage
communications companies. Hence, the Fund may invest up to 5% of its total
assets (at time of purchase) in private companies the Advisor believes will
eventually become publicly traded entities 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 Advisor 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 Advisor to have significant appreciation potential.

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

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

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

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

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

ORBITEX ASIAN SELECT ADVISORS FUND

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

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

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

The Fund is structured to try to capitalize on the profit potential
from investing in Asia while attempting to reduce the risk. Most people
recognize that diversification is a way to reduce risk. The Advisor believes
that diversification is particularly important in the Asian markets where
quality information is more difficult to find.

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<PAGE>

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

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

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

ORBITEX ASIAN HIGH YIELD FUND

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

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

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

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

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

The debt securities in which the Fund may invest include: fixed and
floating rate bonds, notes and debentures of corporate issuers, including
convertible bonds; notes; commercial paper; certificates of deposit; time
deposits; obligations issued or guaranteed by foreign governments, their
agencies, instrumentalities, political subdivisions and authorities, including
obligations of central banks and Brady

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bonds; loans, including loan participations; asset-backed securities; Eurobonds,
Yankee Bonds and Global Bonds. Although the Fund is permitted to invest in
common stock, it has no present intention of doing so.

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

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

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

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

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

ORBITEX WEST COAST FUND

The objective of the Orbitex West Coast Fund (the "West Coast Fund") is
capital appreciation. The Fund seeks to achieve its objective through investing
primarily in the securities of companies headquartered or having their largest
operating exposure in the states of California, Oregon and Washington.

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Under normal market circumstances, at least 80% of the Fund's total
assets will be invested in the securities of companies headquartered or having
their largest operating exposure in the states of California, Oregon and
Washington. The Fund may invest in common stock, preferred stock, warrants for
purchase of common stock, debt securities convertible or exchangeable for common
or preferred stock, and fixed-income securities issued by these companies. The
securities in which the Fund invests are traded primarily on the NYSE or AMEX or
in the over-the-counter markets.

In attempting to achieve its objective, the Fund expects to invest a
significant portion of its assets in small to mid-size capitalization companies
with market capitalizations of up to $2.5 billion at the time of the Fund's
investment. The Fund may also invest in relatively well known, larger
capitalization companies in mature industries which the Advisor believes have
the potential for capital appreciation.

The remainder of the Fund's assets may be invested in securities of
companies headquartered or having their largest operating exposure outside the
states of California, Oregon and Washington. The Fund may invest in common
stock, preferred stock, warrants for the purchase of common stock, debt
securities convertible or exchangeable for common or preferred stock, and
fixed-income securities issued by these companies. In this way, the Fund seeks
to benefit from its research into companies and industries within or beyond the
Fund's primary region. The Fund seeks to leverage its research into companies
and industries within the Fund's primary region, via investment in companies
engaged in similar industries but operating in different geographic regions.

The Fund may also invest up to 35% of its total assets in debt
securities, including bonds, notes and debentures, if the Advisor believes the
investment presents a favorable investment opportunity consistent with the
Fund's objective.

The Fund is classified as a non-diversified investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"). A
non-diversified investment company may invest more than 25% of its assets in
securities of individual issuers representing greater than 5% each of the
investment company's total assets, whereas a diversified investment company may
only invest up to 25% of its assets in positions of greater than 5%. Both
diversified and non-diversified investment companies are subject to
diversification requirements under the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code") which require that, as of the close of each fiscal
quarter, (i) no more than 25% of the investment company's total assets may be
invested in the securities of a single issuer (except for U.S. Government
securities) and (ii) with respect to 50% of its total assets, no more than 5% of
such assets may be invested in the securities of a single issuer (except for
U.S. Government securities) or invested in more than 10% of the outstanding
voting securities of a single issuer. Because of its non-diversified status, the
Fund may be subject to greater credit and other risks than a diversified
investment company. The Fund reserves the right to operate as a diversified
investment company if such course appears desirable in the opinion of the Board
of Trustees. While the Fund will be classified as a non-diversified company, the
Advisor of the West Coast Fund, under normal market conditions, does not expect
the Fund to hold fewer than 20 investment securities or for any individual
position to exceed 10% of the Fund's total assets at the time of purchase.

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DESCRIPTION OF SECURITIES, OTHER INVESTMENT POLICIES AND RISK
CONSIDERATIONS

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

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

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

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

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

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

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

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

A Fund may also incur additional expenses to the extent the Fund is
required to seek recovery upon a default in the payment of principal or interest
on its portfolio holdings, and the Fund may have limited legal recourse in the
event of a default. Debt securities issued by governments in emerging markets
can differ from debt obligations issued by private entities in that remedies for
defaults generally must be pursued in the courts of the defaulting government,
and legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt obligations,
also are of considerable significance. There can be no assurance that the
holders of

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commercial bank debt may not contest payments to the holders of debt securities
issued by governments in emerging markets in the event of default by the
governments under commercial bank loan agreements.

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

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

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

Concentration. Because of the focus of each of the Strategic Natural
Resources Fund and the Info-Tech & Communications Fund on its industries and the
West Coast Fund's focus on a particular region of the United States, 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 (or in the case of the West Coast Fund, the region) in
which it focuses. These Funds should not be considered as a complete investment
program.

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

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

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

Special Risks Associated with the West Coast Fund. The following
information about certain California, Oregon and Washington risk factors is
given to you in view of the Fund's policy of investing primarily in companies
headquartered or having their largest operating exposure in California, Oregon
and Washington. Although the financial prospects of a number of the companies in
which the Fund invests, at any given time, may depend on the strength of the
California, Oregon or Washington economies, the Fund tends to invest a
significant portion of its assets in companies whose financial prospects are
dependent on the national and international economies, thereby reducing the
effect on the Fund of fluctuations in economic conditions in California, Oregon
or Washington and their principal industry sectors. This information is only a
brief discussion, does not purport to be a complete description, and is based
primarily upon information derived from independent credit reports and
historically reliable sources. It has not been independently verified by the
Fund.

Like many other states, California was significantly affected by the
national recession of the early 1990s, especially in the southern portion of the
state. Between 1990 and 1993, the state's employment dropped 2.8% on an
annualized basis and real per capita income declined by 4%. Almost half of the
state's job losses resulted from military cutbacks and close to 40% were caused
by a downturn

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<PAGE>

in the construction industry. Downsizing in the state's aerospace industry,
excess office space capacity, and slow growth in California's significant export
market also contributed to the state's recession.

Since mid-1993, California's economic recovery has been fueled by
growth in the export, entertainment, tourism and computer services sectors. In
1996, the state's employment reached pre-recession levels. The employment base
is diverse with manufacturing accounting for 14% of employment, trade 22.8%,
services 29% and government 16.4% at the end of 1995. Despite its strong
employment growth, California's unemployment rate is expected to remain above
the national average and wages, although still above national levels, have
declined with the loss of high paying aerospace jobs. Gross state product is
expected to grow at an inflation-adjusted rate of 4.5% in 1997 and 4% in 1998.
Personal income levels are expected to rise 6.8% in 1997 and 6% in 1998. Exports
of California-produced goods are expected to reach $108 billion in 1997 and $120
billion in 1998.

Over the past eight years, Oregon's rates of growth in per capita
income, population and employment have all exceeded the national average. The
state's economy has continued to diversify, with less dependence on the timber
industry and more emphasis on services. Recently, the service sector accounted
for 25.9% of total non-farm employment and much of the state's employment
growth. Hi-tech manufacturing, especially semi-conductors, and housing
construction spurred by significant immigration, primarily from California, have
also contributed to the state's growth.

Oregon's growth is expected to continue, although at a slower pace.
Future growth is dependent on the continued strength of the national economy, as
well as the strength of the state's high-tech industries. Economic growth may be
hampered, however, by an improving economy in California, as well as Oregon's
rising labor and housing costs.

The strength of Oregon's economy has helped the state maintain positive
financial results. Recently, however, voters approved two initiatives limiting
property taxes. The full implementation of these initiatives may create fiscal
pressures going forward.

Washington's economic base has become more diversified and less
vulnerable to cyclical downturns in its aerospace industry. During 1996,
Washington's aerospace industry experienced renewed strength with Boeing Co.
adding more than 10,000 new employees and further employment increases are
expected during 1997. This strength, together with continued growth in the
state's services, trade and construction sectors, resulted in strong overall
economic performance for the state during 1996.

The state's financial performance has also been strong. Revenue
estimates for the 1995-1997 biennium ended June 30 show an increase of 7.1% over
the prior biennium's revenues. Based on Washington's strong economic and
financial performance, S&P considered the state's outlook to be positive as of
January 1997.

The Fund's policy of investing primarily in the securities of
California, Oregon and Washington companies does involve certain additional
risks, including the risk that economic, business, political, regulatory or
other developments or changes affecting one portfolio security or industry may
have a greater impact on the Fund's portfolio than would be the case if the Fund
were diversified among more issuers.

The effects of a strong or weak U.S. dollar upon earnings will most
likely be amplified compared to the U.S. or stock market as a whole, since the
Fund will tend to emphasize investment in multinational and global companies
rather than those dependent solely upon the regional economy. Since the Fund can

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<PAGE>

be expected to be more heavily weighted within the various high technology
sectors most of the time, it will also fluctuate to some degree differently than
the market as a whole, and the region's economy. The region is far more
economically dependent upon trade with Pacific Rim nations (including Latin
America) than the national economy as a whole. Certain industries in which the
Fund invests such as construction, real estate, transportation services,
tourism, natural resources and manufacturing may also fluctuate in performance
in a different manner than the market or U.S. economy as a whole.

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

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

Depositary Receipts and Securities of Supranational Entities. Each Fund
may invest in securities of foreign issuers directly or in the form of American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs") or Global
Depositary Receipts ("GDRs") representing securities

A-22
<PAGE>

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

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

Derivatives. Each Fund may buy and write covered call and put options
on securities, securities indices and foreign currencies, and may enter into
futures contracts and use options on futures contracts. Each Fund may also enter
into currency exchange contracts and swap agreements relating to interest rates,
foreign currencies and securities indices. All of these may be referred to as
"derivatives" transactions. The Funds may use these techniques to hedge against
changes in interest rates, foreign currency exchange rates, changes in
securities prices or other factors affecting the value of their investments. The
Funds may also use these techniques to change the duration of fixed income
holdings or as a substitute for the purchase or sale of securities or currency.
Each Fund will maintain accounts consisting of liquid assets such as cash, U.S.
Government securities, or other securities (or, as permitted by applicable
regulations, enter into certain offsetting positions to cover its obligations
under futures, options and certain foreign currency transactions) to avoid
"leveraging" the Fund through these transactions.

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

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

In addition, a Fund may purchase and sell put and call options on
equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by that Fund or that the Advisor or Sub-Advisor
intends to include in the Fund's portfolio. A Fund also may purchase and sell
put and call

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<PAGE>

options on stock indexes. Such stock index options serve to hedge against
overall fluctuations in the securities markets generally or in a specific market
sector rather than anticipated increases or decreases in the value of a
particular security.

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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<PAGE>

Each Fund may invest in issuers domiciled in "emerging markets," those
countries determined by the Advisor or Sub-Advisor to have developing or
emerging economies and markets. Emerging market investing involves risks in
addition to those risks involved in foreign investing. For example, many
emerging market countries have experienced substantial, and in some periods
extremely high, rates of inflation for many years. In addition, economies in
emerging markets generally are dependent heavily upon international trade and,
accordingly, have been and continue to be affected adversely by trade barriers,
exchange controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which they
trade. The securities markets of emerging countries are substantially smaller,
less developed, less liquid and more volatile than the securities markets of the
United States and other more developed countries. Brokerage commissions,
custodial services and other costs relating to investment in foreign markets
generally are more expensive than in the United States, particularly with
respect to emerging markets. In addition, some emerging market countries impose
transfer taxes or fees 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 Advisor or
Sub-Advisor, under guidelines approved by the Board of Trustees of the Trust,
may determine that some Rule 144A securities are liquid. Institutional trading
markets for Rule 144A securities are relatively new. Liquidity of the Fund's
investments could be impaired if trading markets for these securities do not
develop further or decline. If, through a change in values, net assets or other
circumstances, a Fund were in a position where more than 15% of its net assets
was invested in illiquid securities, it would seek to take appropriate steps to
protect liquidity.

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

Other Investment Companies. Each Fund may invest up to 10% of its total
assets in other investment companies, but only up to 5% of its assets in any one
other investment company. In addition, a Fund may not purchase more than 3% of
the securities of any one investment company. As a

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<PAGE>

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

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

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<PAGE>

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

Small Companies. While each Fund's portfolio normally will include
securities of established suppliers of traditional products and services, each
Fund may invest in smaller companies which can benefit from the development of
new products and services. These smaller companies may present greater
opportunities for capital appreciation, but may also involve greater risks than
large, established issuers. Such smaller companies may have limited product
lines, markets or financial resources, and their securities may trade less
frequently and in more limited volume than the securities of larger, more
established companies. As a result, the prices of the securities of such smaller
companies may fluctuate to a greater degree than the prices of the securities of
other issuers.

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

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

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

When-Issued or Forward Commitment Securities. Each Fund may purchase
securities on a "when-issued" basis and may purchase or sell such securities on
a "forward commitment" basis in order to hedge against anticipated changes in
interest rates and prices. The price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but a Fund will purchase
or sell when-issued securities or enter into forward

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<PAGE>

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

INVESTMENT PERFORMANCE

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

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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 simultaneously buy and sell the same
security to take advantage of short-term differences in bond yields. The Funds
may buy individual securities in anticipation of relatively short-term price
gains. A Fund's liquidity needs may also necessitate sales. Because these
factors generally are not tied to the length of time a security has been held, a
significant number of short-term transactions may result.

Although the Funds cannot accurately predict their annual turnover
rates, it is estimated that annual turnover rates will generally be 90% for the
Strategic Natural Resources Fund, 100% for the Info-Tech & Communications Fund,
100% for the Growth Fund, 50% - 75% for the Asian Select Advisors Fund, 40% -
50% for the Asian High Yield Fund and 50% - 75% for the West Coast 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.

DIVIDENDS, DISTRIBUTIONS AND TAXES

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

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

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<PAGE>

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 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.

Distributions with respect to each class of shares will be calculated in
the same manner on the same day and will be in the same amount except that the
different distribution and service fees and administrative expenses relating to
each class of shares will be borne exclusively by the respective class of
shares. Generally, distributions with respect to a class of shares subject to a
higher distribution or service fee will be lower than for a class of shares
subject to a lower distribution or service fee.

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

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

Under existing provisions of the Internal Revenue Code, individuals,
corporations and other shareholders that are not "U.S. Persons" under such Code
may be subject to federal income tax withholding at the 30% 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.

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<PAGE>

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

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

HOW TO PURCHASE SHARES

The Funds offer two classes of shares: an ordinary class, Class A Shares,
and institutional class, Class I Shares. The main difference between the two
classes of shares lies in the applicable sales charges borne by the Class A
Shareholders, which are not applicable to the Class I Shareholders. Both classes
of shares represent interests in the same portfolios of securities and each has
the same rights, except that Class A Shareholders have exclusive voting rights
with respect to the Funds' Distribution Plan and Agreement pursuant to Rule
12b-1 under the Investment Company Act of 1940.

CLASS A SHARES

Class A Shares are generally available to investors making a minimum
initial investment of $2,500 ($2,000 for individual retirement accounts) per
Fund. The minimum for subsequent investments is $500. Such minimum initial
investment amounts may, in certain cases, be waived or lowered by the Trust.

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

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

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

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<PAGE>

<TABLE>
<CAPTION>
Sales Charge as a Percentage of
-------------------------------
Broker Reallowance as a
Offering Net Investment Percentage of Offering
Amount of Purchase Price (Net Asset Value) Price
- ------------------ ----- ----------------- -----------------------
<S> <C> <C> <C>
Less than $50,000 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>
- -------------
* No initial sales charge applies on investments in Class A Shares by
residents of the United States of $1 million or more, but a contingent
deferred sales charge of 1% is imposed on certain redemptions of those
Class A Shares within one year of the purchase. See "How to Redeem Shares -
Contingent Deferred Sales Charge."

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

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

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

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

[bullet] Right of Accumulation. Under the Right of Accumulation, a
"single purchaser" may combine a current purchase of Class A Shares of a Fund
with prior purchases of Class A 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

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<PAGE>

Class A Shares already owned, the investor must ask the Distributor for such
entitlement at the time of purchase and provide the account number(s) of the
investor, the investor and spouse, and their minor children, and the age of any
such child.

[bullet] Other Circumstances. The initial sales charge will be waived
on the following types of purchases of Class A Shares: (1) purchases of Class A
Shares by investors who have invested $1 million or more in one Fund alone or in
any combination of Funds; (2) purchases of Class A Shares with redemption
proceeds from another mutual fund (which is not a series of the Trust) on which
the investor has paid a front-end sales charge only and (3) clients of certain
securities dealers offering programs in which the client pays a separate fee to
an advisor providing financial management or consulting services, including WRAP
fee programs. The securities dealers offering WRAP fees or similar programs may
charge a separate fee for purchases and redemptions of Class A Shares. Neither
the Fund, the Advisor, nor the Distributor receives any part of the fees charged
clients of such securities dealers or financial advisors. To qualify for the
purchase of such Class A Shares, Fund Employees and other persons listed in
section (3) must provide the Transfer Agent with a letter stating that the
purchase is for their own investment purposes only and that the shares will not
be resold except to the Funds.

CLASS I SHARES

Investors in the Class I Shares are required to make a minimum
investment of $250,000. There is no minimum for subsequent investments. Class I
Shares may only be purchased by the following classes of investors:

(i) benefit plans with at least $10,000,000 in plan assets and 200 participants,
that either have a separate trustee vested with investment discretion and
certain limitations on the ability of plan beneficiaries to access their plan
investments without incurring adverse tax consequences or which allow their
participants to select among one or more investment options, including the Fund;
(ii) banks and insurance companies purchasing shares for their own account;
(iii) a bank, trust company, credit union, savings institution or other
depository institution, its trust departments or common trust funds purchasing
for non-discretionary customers or accounts; (iv) certain fee paid registered
investment advisors purchasing on behalf of their clients; (v) investors who
hold Class I Shares purchasing for existing Class I Share accounts. (vi)
charitable organizations (as defined in Section 501(c)(3) of the Internal
Revenue Code); and (vii) charitable remainder trusts or life income pools
established for the benefit of charitable organizations (as defined in Section
501(c)(3) of the Internal Revenue Code).

The following classes of investors may also purchase Class I Shares and are not
subject to the minimum initial investment requirements:

i) any state, county, city or any instrumentality, department, authority or
agency of these entities or any trust, pension, profit-sharing or other benefit
plan for the benefit of the employees of these entities which is prohibited by
applicable investment laws from paying a sales charge or commission when it
purchases shares of any registered investment management company; (ii) officers,
partners, Trustees or directors and employees of the Funds, the Funds'
affiliated corporations, or of the Funds' Advisors and their affiliated
corporations (a "Fund Employee"), the spouse or child of a Fund Employee, a Fund
Employee acting as custodian for a minor child, any trust, pension,
profit-sharing or other benefit plan for the benefit of a Fund Employee or
spouse and maintained by one of the above entities, an employee of the
Distributor or a broker-dealer with whom the Distributor has a sales agreement
or the spouse or child of such employee; and (iii) clients of certain securities
dealers offering programs in which the client pays a separate fee to an advisor
providing financial management or consulting services, including WRAP fee
programs. The

A-34
<PAGE>

securities dealers offering WRAP fees or similar programs may charge a separate
fee for purchases and redemptions of Class I Shares. Neither the Fund, the
Advisor, nor the Distributor receives any part of the fees charged clients of
such securities dealers or financial advisors. To qualify for the purchase of
such Class I Shares, Fund Employees and other persons listed in section (iii)
must provide the Transfer Agent with a letter stating that the purchase is for
their own investment purposes only and that the shares will not be resold except
to the Funds.

[bullet] Shareholder Services Plan. The Trust has adopted a Shareholder
Services Plan (the "Services Plan") with respect to the Class I Shares of the
Funds. Under the Services Plan, institutional investors which are shareholders
or dealers of record or which have a servicing relationship with the beneficial
owners of Class I Shares of the Fund, receive a fee at an annual rate of up to
0.25% of the average daily net asset value of the Class I Shares beneficially
owned by the clients. This fee is compensation for providing certain services
including processing purchase and redemption transactions, assisting in change
of address requests and similar administrative details, and providing other
information and assistance with respect to a Fund, including responding to
shareholder inquiries.

Investments in Class I Shares require a special Account Application.
Please call 1-888-ORBITEX for the Application.

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

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 your
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 each class of the Funds
by mailing the completed Application, with your check made payable to Orbitex
Group of Funds - (Name of Fund), to: Orbitex Group of Funds, P.O. Box 8069,
Boston, MA 02266-8069.

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

To make an initial purchase by wire, please telephone the Trust at
1-888-ORBITEX for instructions and to receive an account number. You should
instruct a Federal Reserve System member bank to wire funds to: State Street
Bank and Trust Company, ABA No. 011000028, Attn: Custody & Shareholder Services,
Credit: Name of Fund, DDA No. 9905-295-3, FBO: Shareholder Name, Name of Fund,
Shareholder Account Number. Please complete and mail an Application to the
address shown above under "Purchases by Mail."

You may make subsequent purchases in an existing account by wiring
funds to: State Street Bank and Trust Company, ABA No. 011000028, Attn: Custody
& Shareholder Services, Credit: Name of Fund, DDA No. 9905-295-3, FBO:
Shareholder Name, Name of Fund, Shareholder Account Number.

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<PAGE>

Subsequent Purchases. The minimum subsequent investment for Class A
Shares is $500 per Fund, except for reinvestment of dividends and distributions.
Subsequent purchases in an existing account may be made (i) through the
Distributor by mail (see instructions above) or by wire (see instructions
above), (ii) through Selling Group Members or (iii) through use of certain
services available to shareholders of the Funds, such as the Telephone
Investment Privilege and the Exchange Privilege described below under "How to
Exchange Shares." There is no minimum for subsequent investments in the Class I
Shares.

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

Share Price. To make an initial purchase of shares of the Funds, a
completed and signed Application must first be received and accepted. Purchases
in each Fund will be effected at the public offering price of that Fund next
determined after your purchase order has been received and accepted by the
Trust. The public offering price of a Fund is the per share net asset value of
that Fund next determined after receipt of the purchase order, plus any
applicable initial sales charge.

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

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

HOW TO REDEEM SHARES

Shareholders have the right to redeem (subject to the restrictions
outlined below) all or any part of their shares in the Funds at a price equal to
the net asset value of such shares next computed following receipt in proper
form of the redemption request by the Trust. Unless you have selected the
Telephone Redemption Privilege and provided the required information, in order
to redeem shares in the Funds, a written request in "proper form" (as explained
below) must be sent directly to Orbitex Group of Funds, P.O. Box 8069, Boston,
MA 02266-8069. You cannot redeem shares by telephone unless you are eligible to
use the Telephone Redemption Privilege. In addition, the Trust cannot accept
requests which specify a particular date for redemption or which specify any
other special conditions. All requests to redeem shares from a retirement
account must be made in writing. Please call 1-888-ORBITEX for further
information.

Proper Form for All Redemption Requests. Your redemption request must
be in proper form. To be in proper form, your redemption request must include:
(1) for written redemption requests, a "letter of

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<PAGE>

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

Signature Guarantees. Signature guarantees, when required, can be
obtained from any one of the following institutions: (i) a bank; (ii) a
securities broker or dealer, including a government or municipal securities
broker or dealer, that is a member of a clearing corporation or has net capital
of at least $100,000; (iii) a credit union having authority to issue signature
guarantees; (iv) a savings and loan association, a building and loan
association, a cooperative bank, a federal savings bank or association; or (v) a
national securities exchange, a registered securities exchange or a clearing
agency. Notary publics are not acceptable guarantors.

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

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

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

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

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

Contingent Deferred Sales Charge. In order to recover commissions paid
to Selling Group Members, a contingent deferred sales charge of 1% applies to
certain redemptions of Class A Shares made

A-37
<PAGE>

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

HOW TO EXCHANGE SHARES

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

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

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Please notify the Trust in writing of all shareholder service privileges you
wish to continue in any new account opened by a telephone exchange request.

SHAREHOLDER SERVICES

Shareholder Inquiries and Services Offered. If you have any questions
about the Trust or the following services, please call 1-888-ORBITEX and ask
about the Trust or write Orbitex Group of Funds, P.O. Box 8069, Boston, MA
02266-8069. The Trust reserves the right to change the shareholder services
described below or to amend their terms or conditions upon sixty (60) days'
notice to shareholders.

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

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

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

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

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

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completing and submitting the appropriate application to the transfer agent. The
Systematic Withdrawal Program is voluntary and may be terminated at any time by
the shareholder.

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

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

HOW EACH FUND'S NET ASSET VALUE IS DETERMINED

The net asset value per share of a Fund will be determined for each
class of shares. The net asset value per share of a given class of shares of a
Fund is determined by calculating the total value of the Fund's assets
attributable to such class of shares, deducting its total liabilities
attributable to such class of shares in conformance with the provisions of the
plan adopted by the Fund in accordance with Rule 18f-3 under the 1940 Act, and
dividing the result by the number of shares of such class outstanding. Each Fund
calculates its net asset value as of the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time, unless weather, equipment failure or other
factors contribute to an earlier closing time), each day the Fund is open for
business. The net asset value per share of the different classes of shares are
expected to be substantially the same; from time to time, however, the per share
net asset value of the different classes of shares may differ.

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

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

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

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

HOW THE TRUST IS MANAGED

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

Advisor. The Trust is managed by Orbitex Management, Inc. (the
"Advisor"), 410 Park Avenue, New York, New York 10022. The Advisor was founded
in 1995 and is registered with the SEC as an investment advisor. The Advisor has
no prior experience in managing registered investment companies. The Advisor,
however, is affiliated with Orbitex Management Ltd., an investment advisor which
provides investment services to individuals and institutions including Canadian
unit trusts. As of December 31, 1997 Orbitex Management Ltd. managed
approximately $1.2 billion of assets. The Advisor is a wholly-owned subsidiary
of Orbitex, Inc., a business development company which is a wholly-owned
subsidiary of Capital Management Ltd., an investment management firm. Mr. Thomas
Bachmann is a controlling person of Capital Management Ltd.

Under the terms of an investment advisory agreement (the "Advisory
Agreement") with the Trust on behalf of each Fund, the Advisor is responsible
for formulating the Funds' investment programs, allocating assets among
Sub-Advisors, and monitoring and evaluating the investment programs and
performance of the Sub-Advisors. In addition, the Advisor is responsible for
making day-to-day investment decisions and engaging in portfolio transactions on
behalf of the Strategic Natural Resources Fund, the Info-Tech & Communications
Fund, the Growth Fund and the West Coast Fund. The Advisor also furnishes
corporate officers, provides office space, services and equipment and supervises
all matters relating to the Trust's operations. The Advisory Agreement also
provides that the Advisor may retain Sub-Advisors at the Advisor's own cost and
expense, for the purpose of managing the investment of the assets of one or more
Fund's of the Trust.

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

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

As compensation for its services under the Advisory Agreement, each of
the Funds will pay the Advisor a fee, computed daily and paid monthly, at the
annualized rate (expressed as a percentage of average daily net assets) of 1.25%
for the Strategic Natural Resources Fund, 1.25% for the Info-Tech &
Communications Fund, .75% for the Growth Fund, 1.50% for the Asian Select
Advisors Fund, 1.25% for the Asian High Yield Fund and 1% for the West Coast
Fund.

In the interest of limiting the expenses of the Funds, the Advisor has
voluntarily agreed to waive its advisory fees and reimburse certain expenses to
the extent necessary to keep total operating expenses

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(expressed as a percentage of average net assets on an annual basis) for the
Class A and Class I Shares of: the Strategic Natural Resources Fund to 2.40%,
the Info-Tech & Communications Fund to 2.40%, the Growth Fund to 1.60%, the
Asian Select Advisors Fund to 2.50% and the West Coast Fund to 2.00%. This
waiver is expected to be in effect during the Trust's current fiscal year. Since
inception, the Advisor has voluntarily waived its entire advisory fee and
reimbursed all expenses of the Asian High Yield Fund. The Advisor may in its
discretion extend this waiver for additional sixty (60) day periods. The Advisor
has voluntarily agreed thereafter to waive its fees and reimburse certain
expenses to the extent necessary to keep total operating expenses for the
Class A [and Class I] Shares to 2.00% of average net assets on an annual basis.

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

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

Bankers Trust Company ("Bankers Trust"), One Bankers Trust Plaza, New
York, New York 10006 is a Sub-Advisor for the Asian Select Advisors Fund.
Bankers Trust has delegated its duties for providing subadvisory services to the
Fund to BT Fund Managers (International) Limited ("BT International"). Through
its office in New York and its global affiliates, including BT International,
Bankers Trust provides a full range of investment advisory services for
individual and institutional clients worldwide. As of December 31, 1997, Bankers
Trust and its affiliates managed over $317 billion of assets. Bankers Trust is a
wholly-owned subsidiary of Bankers Trust New York Corporation. BT International
is a wholly-owned subsidiary of Bankers Trust Australia Limited, a wholly-owned
subsidiary of Bankers Trust New York Corporation.

Asia Strategic Investment Management Limited ("ASIM"), Chekiang First
Bank Center, 1 Duddell Street, Hong Kong, is a Sub-Advisor for the Asian Select
Advisors Fund. Incorporated in Hong Kong in July 1995, ASIM is an investment
management company specializing in Asian equities. As of December 31, 1997, ASIM
had $48.3 million in assets under management. ASIM is an investment advisor 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 King Wah Woo.

J.P. Morgan Investment Management Inc. ("J.P. Morgan Investment"), 522
Fifth Avenue, New York, New York 10036 is a Sub-Advisor for the Asian High Yield
Fund. J.P. Morgan Investment provides

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investment management services to employee benefit funds, foundations,
endowments, insurance companies, governments and other mutual funds. As of
December 31, 1997, J.P. Morgan Investment managed over $[ ] billion of assets.
Incorporated in 1984, J.P. Morgan Investment is a wholly-owned subsidiary of
J.P. Morgan & Co. Incorporated, a publicly held bank holding company.

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

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

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

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

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

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

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

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Average Annual Total Return

for the periods noted through May 31, 1997

June 1, 1996-May 31, 1997 April 1, 1995-May 31, 1997
Prior Fund 22.64 23.33
Lipper Average 13.48 21.38

Info-Tech and Communications Fund. Craig W. Ellis is the portfolio
manager for the Info-Tech and Communications Fund. Mr. Ellis joined Orbitex
Management, Inc. in 1998. Formerly he was with Alliance Capital Management
Corporation where from 1997 to 1998 he was a senior vice president responsible
for the firm's investments in the global communications technology area. Prior
to joining Alliance, Mr. Ellis was a managing director at Wheat First Union
where he served as a telecommunications services analyst.

Growth Fund and West Coast Fund. Nicholas E. Moore is the portfolio
manager for the Growth Fund. Mr. Moore joined Orbitex Management, Inc. in 1998.
Prior to joining Orbitex Management, Inc., he worked for the Franklin Templeton
Group for 11 years where he was most recently co-manager of the Franklin
California Growth Fund, assistant manager of the Franklin Small Cap Growth Fund
and was the software, networking and Internet analyst for all of the Franklin
Funds. Mr. Moore was previously a securities analyst and senior securities
analyst at Franklin covering numerous industries. His areas of expertise include
aerospace, defense, airlines, automobiles, data services, railroads, shipping
and trucking.

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

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

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

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

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

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

Prior Performance of Sub-Advisors of the Asian Select Advisors Fund.
Set forth below is certain information regarding the performance, for certain
periods through December 31, 1997, of funds or accounts managed by the
Sub-Advisors of the Asian Select Advisors Fund. Although the investment
objectives, policies and strategies of these funds and accounts are
substantially the same as those of the Asian Select Advisors Fund, it should be
noted that only one of these funds is registered as an investment company under
the 1940 Act and none of the rest of these funds or accounts are registered as
investment companies under the 1940 Act nor are any of them subject to
investment restrictions that are identical to those that apply to the Fund.
Therefore, the performance of the funds and accounts set forth below may be
better or worse than it would have been had all of the funds or accounts been
subject to requirements applicable to a registered investment company and the
investment restrictions applicable to the Fund. For

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BT International, the funds and accounts include a U.S. registered investment
company, two offshore investment funds, a group trust for investment by trust
accounts and a separately managed account and include funds and accounts managed
by an affiliated entity employing the same personnel as that employed by BT
International. Performance information for the BT International funds and
accounts is provided below on a composite basis, showing the combined
performance of the funds and accounts over various periods of time up to five
years. Not all the funds and accounts that comprise the composite have been
operational for the full five year period indicated below. The prior performance
for ASIM reflects the performance of an offshore investment company.

The prior performance information below for each of the Sub-Advisors is
presented net of (or after payment of) fees and expenses by the relevant funds
and accounts. For the funds and accounts included in the composite for BT
International, these fees and expenses averaged on a weighted basis
approximately .85% per year of the average assets under management. For the
offshore investment company managed by ASIM, the fees and expenses averaged
approximately 1.8% per year of the average assets under management. On the other
hand it is anticipated that the Asian Select Advisors Fund will, during its
initial period of operation, incur expenses at an annualized rate of 3.37% of
its average daily net assets (which the Advisor has undertaken to reduce to
2.50% through fee waivers and expense reimbursements). Accordingly, had the
funds and accounts reflected in the performance information set forth below been
subject to fees and expenses at the higher level expected to be incurred by the
Asian Select Advisors Fund, the performance shown below would be reduced by an
amount approximately equal to the difference between those anticipated expenses
and the approximate expenses incurred by the funds and accounts included in the
performance information below.

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

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

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

Average Annual Total Return
(after fees and expenses) for
periods through December 31, 1997
---------------------------------
One Two Three Four Five
Year Years Years Years Years
---- ----- ----- ----- -----
BT International Composite -40.05 -17.44 -9.69 -11.35 6.65%

MSCI Index -40.31 -18.95 -11.92 -13.21 2.91

Average Annual Total Return
(after fees and expenses)
for periods through December 31, 1997
-------------------------------------
Since Inception
One Year Two Years (October 5, 1995)
-------- --------- ---------------
ASIM Offshore Investment Company -29.05% -6.84% -4.88%

MSCI Index -40.31% -18.95% N/A(1)

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

Asian High Yield Fund. David Tan and Kimberly A. Conroy are the
portfolio managers of the Asian High Yield Fund.

Mr. Tan joined J.P. Morgan Investment Management, Inc. in October 1997
as a fixed income portfolio manager. Mr. Tan graduated with a MA degree in
Economics from the University of Cambridge, and obtained his MSc in Economics
from the London School of Economics. He has been working in the fixed income
market since 1984 when he joined Morgan Guaranty Trust ("MGT") in Singapore.
After leaving MGT in 1986, Mr. Tan worked at Lehman Brothers in Tokyo.
Subsequently, he worked in London as an Economic Advisor in the Debt and
Reserves Management Division of the UK Treasury, providing advice on gilts
issuance and foreign exchange reserves management from 1989 through 1995. Since
his return to Singapore in 1995, Mr. Tan has specialized in Asian bonds.

Ms. Conroy is an emerging markets portfolio manager within the Fixed
Income Group of J.P. Morgan Investment Management, Inc. She joined the group in
1997 after spending four years with J.P. Morgan's Global Credit Group where she
established and managed an emerging markets fixed income portfolio. Ms. Conroy
is a graduate of Dartmouth College and has an MBA with honors from Columbia
University.

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

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

- --------------------------
(1) The comparable MSCI Index performance since inception is not available as
the ASCI AC Asia (ex Japan) Free Index (total return) is only published on
a monthly basis.

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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 Distribution Plan and
Agreement Pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Rule 12b-1 Plan and Agreement"), the Class A Shares of the Funds are authorized
to use a portion of their assets to finance certain activities relating to
distribution services provided to investors in their shares. The Rule 12b-1 Plan
and Agreement permits payments to be made by the Class A Shares of 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 the
Class A Shares of each Fund to the Distributor to compensate the Distributor for
providing distribution services to investors in the Fund, including arranging
for Selling Group Members to provide these services and paying compensation for
these services. The Rule 12b-1 Plan and Agreement provides for payment of a fee
to the Distributor at an annualized rate of 0.30% of the average daily net
assets of the Asian High Yield Fund and 0.40% of the average daily net assets of
each of the other Funds. The Rule 12b-1 Plan and Agreement will continue in
effect, if not sooner terminated in accordance with its terms, for successive
one-year periods, provided that its continuance is specifically approved by the
vote of the Board of Trustees of the Trust, including a majority of the Trustees
who are not interested persons of the Trust and do not have a direct or indirect
financial interest in the Rule 12b-1 Plan and Agreement. For further information
regarding the Rule 12b-1 Plan and Agreement, see the SAI.

Expenses. Each Fund pays all its expenses not assumed by the Advisor,
Distributor or other agents. In addition to the investment advisory and other
fees described previously, each Fund pays other expenses, such as brokerage,
legal, audit, transfer agency and custodial fees; proxy solicitation costs;
compensation of Trustees who are not affiliated with the Advisor; 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.

Year 2000. The Funds' operations depend on the seamless functioning of
computer systems in the financial service industry, including those of the
Advisor, the Administrator, the Custodian and the Transfer Agent. Many computer
software systems in use today cannot properly process date-related information
after December 31, 1999 because of the method by which dates are encoded and
calculated. This failure, commonly referred to as the "Year 2000 Issue," could
adversely affect the handling of securities trades, pricing and account
servicing for the Funds. The Adviser has made compliance with the Year 2000
Issue a high priority and is taking steps that it believes are reasonably
designed to address the Year 2000 Issue with respect to its computer systems.
The Adviser has also been informed that comparable steps are being taken by the
Fund's other major service providers. The Adviser does not currently anticipate
that the Year 2000 Issue will have a material impact on its ability to continue
to fulfill its duties as investment adviser.

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PORTFOLIO TRANSACTIONS AND BROKERAGE PRACTICES

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

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 six portfolios (i.e. the Funds), each
of which represents a separate series of beneficial interests in the Trust
having different investment objectives, investment programs, policies and
restrictions. Each share of each Fund represents an equal proportionate interest
in that Fund with each other share, and each share is entitled to such dividends
and distributions of income belonging to that Fund as are declared by the Board
of Trustees of the Trust. In the event of the liquidation of a Fund, each share
of that Fund is entitled to a pro rata share of the net assets of that Fund.

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

A-48
<PAGE>

APPENDIX

Description of Bond Ratings

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

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

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

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

Excerpts from Standard & Poor's Corporation Bond Ratings:

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

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

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

A-49
<PAGE>

The Orbitex Group of Funds

Orbitex Management, Inc. offers specialized and opportunistic mutual funds with
the potential to enhance returns and diversify overall risk in an investor's
portfolio. Through its investment management team and carefully selected
subadvisors, Orbitex emphasizes well-articulated investment philosophies and
consistent management styles to ensure that investors and investment
professionals get what they expect from each Orbitex Fund.

<TABLE>
<CAPTION>
Fund Objective Suitable Investors
- ---- --------- ------------------
<S> <C> <C>
Orbitex Strategic Natural Resources Capital growth through a flexible policy Growth-oriented individuals who see
Fund of investing in common stock of strong economic trends as an indicator of
Managed by Orbitex Management, Inc. companies engaged in natural resource natural resource demand.
industries and industries supportive to
natural resource industries.

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

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

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

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

Orbitex West Coast Fund Capital appreciation through investment Growth-oriented investors who wish to
Managed by Orbitex Management, Inc. in securities of companies headquartered capitalize on opportunities in
or having their largest operating California, Oregon and Washington.
exposure in the states of California,
Oregon and Washington.
</TABLE>

Please consult the "Description of Securities, Other Investment Policies and
Risk Considerations" section of the prospectus for information on the risks
involved in investing in any of the funds.

A-50
<PAGE>

- ---------------------------- [LINE CHART] -----------------------------------
Index Performance (Results of a Hypothetical $10,000 Investment)

<TABLE>
<CAPTION>
Average Annual Returns
(for periods ended 12/31/97) 1 year 3 years 5 years 10 years
- ---------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Lipper Emerging Market Debt Funds Category 13.82 24.17 17.26 N/A
Lipper Natural Resources Funds Category 0.06 15.75 14.19 9.95
MSCI Asia Ex-Japan Index -40.31 -11.93 2.91 11.45
Standard & Poor's 500 Index 33.36 31.15 20.27 18.05
Lipper Science and Technology Index 7.75 20.40 18.39 16.85
</TABLE>

All of the Indexes noted above are unmanaged indexes. The performance of these
indexes does not reflect sales charges; direct investment in the indexes is not
possible. Index performance is not intended to represent the future performance
of any Orbitex Funds. Past performance is no guarantee of future results. The
investment return and principal value of a Fund investment will fluctuate and
shares, when redeemed, may be worth more or less than their original cost.

A-51
<PAGE>

PART B

ORBITEX GROUP OF FUNDS
410 Park Avenue
New York, New York 10022

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 June ___, 1998, which may be obtained by telephoning 1-888-ORBITEX and
asking about the Trust.

The date of this Statement of Additional Information is June ___, 1998.

TABLE OF CONTENTS

ITEM PAGE

General Information and History
Investment Restrictions
Description of Securities, Other Investment Policies and Risk Considerations
Management of the Trust
Principal Holders of Securities
Investment Management and Other Services
Administrator
Custodian
Transfer Agent Services
Distribution of Shares
Brokerage Allocation and Other Practices
Purchase and Redemption of Securities Being Offered
Shareholder Services
Determination of Net Asset Value
Taxes
Organization of the Trust
Performance Information About the Funds
Independent Accountants
Legal Matters
Financial Statements

B-1
<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 six portfolios, the Orbitex Strategic
Natural Resources Fund ("Strategic Natural Resources Fund"), Orbitex Info-Tech &
Communications Fund ("Info-Tech & Communications Fund"), Orbitex Growth Fund
("Growth Fund"), Orbitex Asian Select Advisors Fund ("Asian Select Advisors
Fund"), Orbitex Asian High Yield Fund ("Asian High Yield Fund") and Orbitex West
Coast Fund ("West Coast 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 offers two classes of shares: an ordinary class,
Class A Shares, and an institutional class, Class I Shares.

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

INVESTMENT RESTRICTIONS

Each Fund has adopted the following fundamental investment policies
which may be changed only with the consent of a "majority of the outstanding
voting securities" of the particular Fund. As used in the Prospectus and in this
Statement of Additional Information, the term "majority of the outstanding
voting securities" 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 purposes in excess of
33-1/3% of the value of its total assets, including any amount borrowed less its
liabilities not including any such borrowings. Any borrowings which come to
exceed this amount will be reduced in accordance with applicable law.
Additionally, each Fund may borrow up to 5% of its total assets (not including
the amount borrowed) for temporary or emergency purposes.

B-2
<PAGE>

(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.

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

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

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

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

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

A Fund may not:

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

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

B-3
<PAGE>

(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.

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

With respect to investment restriction No. 4 above, the Advisor, as a
matter of policy, under normal circumstances, will limit the investment of the
Info-Tech and Communications Fund to a maximum of 5% of the total assets (at the
time of purchase) in private, early stage communications companies.

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

DESCRIPTION OF SECURITIES, OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

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

United States Government Agency Securities. These consist of debt
securities issued by agencies and instrumentalities of the United States
Government, including the various types of instruments currently outstanding or
which may be offered in the future. Agencies include, among others, the Federal
Housing Administration, Government National Mortgage Association ("GNMA"),
Farmer's Home Administration, Export-Import Bank of the United States, Maritime
Administration, and General Services Administration. Instrumentalities include,
for example, each of the Federal Home Loan Banks, the National Bank for
Cooperatives, the Federal Home Loan Mortgage Corporation ("FHLMC"), the Farm
Credit Banks, the Federal National Mortgage Association ("FNMA"), and the United
States Postal Service. These securities are either: (i) backed by the full faith
and credit of the United States Government (e.g., United

B-4
<PAGE>

States Treasury Bills); (ii) guaranteed by the United States Treasury (e.g.,
GNMA mortgage-backed securities); (iii) supported by the issuing agency's or
instrumentality's right to borrow from the United States Treasury (e.g., FNMA
Discount Notes); or (iv) supported only by the issuing agency's or
instrumentality's own credit (e.g., Tennessee Valley Association).

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

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

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

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

B-5
<PAGE>

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.

B-6
<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 sellers/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Mortgage pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA but are not
backed by the full faith and credit of the U.S. Treasury.

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

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

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

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

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

Maturity of Debt Securities. The maturity of debt securities may be
considered long (10 or more years), intermediate (3 to 10 years), or short-term
(1 to 3 years). In general, the principal values of longer-

B-7
<PAGE>

term securities fluctuate more widely in response to changes in interest rates
than those of shorter-term securities, providing greater opportunity for capital
gain or risk of capital loss. A decline in interest rates usually produces an
increase in the value of debt securities, while an increase in interest rates
generally reduces their value.

When-Issued Securities. Each Fund may, from time to time, purchase
securities on a "when-issued" or delayed delivery basis. The price for such
securities, which may be expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase, but may take up to three months. During the
period between purchases and settlement, no payment is made by a Fund to the
issuer and no interest accrues to a Fund. At the time a Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. Each Fund will maintain, in a segregated account with the custodian, cash
or appropriate liquid securities equal in value to commitments for when-issued
securities.

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

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

Warrants. Each Fund may invest in warrants. Warrants are pure
speculation in that they have no voting rights, pay no dividends and have no
rights with respect to the assets of the corporation issuing them. Warrants
basically are options to purchase equity securities at a specific price valid
for a specific period of

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time. They do not represent ownership of the securities, but only the right to
buy them. Warrants differ from call options in that warrants are issued by the
issuer of the security which may be purchased on their exercise, whereas call
options may be written or issued by anyone. The prices of warrants do not
necessarily move parallel to the prices of the underlying securities.

Special Considerations Affecting Canada. Canada is one of the richest
nations in the world in terms of natural resources. Within this sector
particularly strong commodities are forest products, mining and metals products,
and agricultural products such as grains. Additionally, energy related products
such as oil, gas and hydroelectricity are important components of the economy.
Accordingly, the Canadian stock market is strongly represented by such basic
materials stocks, and movements in the supply and demand for industrial
materials, agriculture, and energy, both domestically and internationally, can
have a strong effect on market performance. Canada is a confederation of 10
provinces with a parliamentary system of government. The area, the world's
second largest nation by landmass, is inhabited by 30.2 million people, most of
whom are descendants of France, the United Kingdom and indigenous peoples. The
country has a work force of over 15 million, spread over a variety of industries
from trade, manufacturing, and mining to finance, construction and government.
While the country has many institutions which closely parallel the U.S., such as
a transparent stock market and similar accounting practices, it differs from the
US in that it has an extensive social welfare system, much more akin to European
welfare states.

The confederated structure combined with recent financial pressure on
the federal government have pushed some provinces, Quebec in particular, to call
for a reevaluation of the legal and financial relationships between the federal
government in Ottawa and the provinces. This issue came to a head in 1995 with a
referendum on Quebec sovereignty, which was ultimately won by Ottawa
(50.56-49.44%) The very narrow defeat of the referendum and the return of Bloc
Quebecois to parliament with a lower but still substantial number of seats
indicate that the issue is far from resolved. Accordingly, a large amount of the
government's energy is spent considering new constitutional arrangements. In the
meantime, markets react to the periodic escalations of separatist calls with
caution.

The current government of the Liberal party was reelected in June 1997
with a clear majority of 155 of the 301 parliamentary seats. This is a drop in
majority status during their previous government, during which they held 60% of
the seats. Opposition is currently divided amongst 4 parties, none of which
occupies more than 60 seats. The historical opposition to the Liberals, the
Conservatives, has had to fight back onto the political stage after being
marginalized in the 1993 elections. Reclaiming enough seats in 1997 to be
restored to official status, the Conservatives currently hold 20 seats.

Economically, GDP growth in Canada was 1.5% in 1996, down from 2.3% in
1995. Driving growth was optimism in the government's stability and fiscal
health following the Quebec referendum and the achievement of a current account
surplus (which was subsequently lost, then regained in early 1997). Particularly
strong market performers were financial services, real estate, utilities and
merchandising. Consumer demand was strong in 1996, financed by borrowing.

The Bank of Canada is fairly independent from the government and has
the latitude to manipulate interest rates to keep inflation within its self
imposed target of less than 3%. The Canadian dollar has benefited from internal
fiscal successes, specifically the balancing of the current account. Despite the
strong link to the U.S. dollar, the Bank of Canada won't automatically raise
rates in response to U.S. hikes. The U.S. is Canada's biggest trading partner,
representing over 75% of total trade. Strong export industries are energy,
mining and forest products. Canada is the largest energy supplier to the U.S.
Main imports are industrial machinery and chemicals. The US is also Canada's
largest foreign investor, responsible for 71%

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of all foreign direct investment in Canada (worth approximately $87 billion).
Main targets for investment are metals and mining industries, energy, and
finance.

Recently the Finance Ministry has kept demands for spending on social
programs at bay in the name of eradicating the budget deficit. Once they feel
this is firmly behind them, social spending could possibly resume.

Privatization programs, facing increased opposition from trade unions,
interest groups and the general public, are slowly shrinking, with many
large-scale services remaining public.

There are four primary securities exchanges in Canada: Toronto,
Montreal, Vancouver, and Alberta. The Toronto and Montreal exchanges list the
older, larger, more established firms. Combined, these two exchanges accounted
for 95.2% of the total trading value in 1996. The Vancouver and Alberta
exchanges list smaller, younger start up firms which tend to represent the
natural resources sectors. In 1996 these two exchanges accounted for 4.8% of the
total value of equity trading.

Special Considerations Affecting The Pacific Basin and Southeast Asia.
Asia has undergone an impressive economic transformation in the past decade.
Many developing economies, utilizing massive foreign investments, established
themselves as inexpensive producers of manufactured and re-manufactured consumer
goods for export. As household incomes rose, birth was given to rising middle
classes, stimulating domestic consumption. More recently, large projects in
infrastructure and energy resource development have been undertaken, again
utilizing cheap labor, foreign investment, and a business friendly regulatory
environment. During the course of development, governments, many of which are
democratic, at least in a formal sense, fought to maintain the stability and
control necessary to attract investment and provide labor. Subsequently, Asian
countries today are coming under increasing, if inconsistent, pressure from
western governments regarding human rights practices.

GDP growth in Asia increased in 1996 to 4.9% over its 1995 level of
3.2%. It is the fastest growing region of the world, with China leading the way
at 9.1%. Of the 20 fastest growing economies in the world, half of them are in
Asia. Inflation in 1996 was reduced to 2.6%, down from 3.0% the previous year.
Nevertheless it is a significant concern given the areas high levels of domestic
consumption and capital inflows.

Manufacturing exports declined significantly in 1996, due to drops in
demand, increased competition, and also strong US dollar performance. This is
particularly true of electronics, a critical industry for several Asian
economies. Declines in exports reveal how much of the recent growth in these
countries is dependent on their trading partners. Many Asian exports are priced
in dollars, while the majority of its imports are paid for in local currencies.
A stable exchange rate between the dollar and other Asian currencies is
important to Asian trade balances.

Despite the impressive economic growth experienced by Asia's emerging
economies, currency and economic concerns have recently roiled these markets.
Over the summer of 1997, a plunge in Thailand's currency set off a wave of
currency deprecations throughout South and Southeast Asia. The Thai crisis was
brought on by the country's failure to take steps to curb its current account
deficit, reduce short-term foreign borrowing and strengthen its troubled banking
industry, which was burdened by speculative property loans. Most of the area's
stock markets tumbled in reaction to these events. Investors were heavy sellers
as they became increasingly concerned that other countries in the region, faced
with similar problems, would have to allow their currencies to weaken further or
take steps that would choke off economic growth and erode

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company profits. For U.S. investors, the impact of the market declines were
further exacerbated by the effect of the decline in the value of their local
currencies versus the U.S. dollar.

CHINA AND HONG KONG. China is one of the world's last remaining
communist systems, and the only one that appears poised to endure due to its
measured embrace of capitalist institutions. It is the world's most populous
nation, with 1.3 billion people creating a work force of 630 million. Today's
Chinese economy, roughly separated between the largely agricultural interior
provinces and the more industrialized coastal and southern provinces, has its
roots in the reforms of the recently deceased communist leader Deng Xiaoping.
Originally an orthodox communist system, China undertook economic reforms in
1978 by providing broad autonomy to certain industries and establishing special
economic zones (SEZ's) to attract foreign investment. Attracted to low labor
costs and favorable government policies, investment flowed from many sources,
with Hong Kong, Taiwan, and the United States leading the way. Most of the
investment, totaling $37 billion by the end of 1995, has located in the southern
provinces, establishing manufacturing facilities to process goods for re-export.
The result has been a steadily high level of real GDP growth, averaging 11.35%
per year so far this decade. With this growth has come a doubling of total
consumption, a tripling of real incomes for many workers, and a reduction in the
number of people living in absolute poverty from 270 to 100 million. Today there
is a market of more that 80 million who are now able to afford middle class
western goods. China has two stock exchanges that are set up to accommodate
foreign investment, in Shenzhen and in Shanghai. In both cases, foreign trading
is limited to a special class of shares (Class B) which was created for that
purpose. Only foreign investors may own Class B shares, but the government must
approve sales of Class B shares among foreign investors. As of December 1996,
there were 42 companies with Class B shares on the two exchanges, for a total
Class B market capitalization of U.S. $4.7 billion.

AUSTRALIA. Australia is a 3 million sq. mile continent (about the size
of the 48 continental United States) with a predominantly European ethnic
population of 18.2 million people. A member of the British Commonwealth, its
government is a democratic, federal-state system. The country has a western
style capitalist economy with a work force of 9.2 million that is concentrated
in services, mining, and agriculture. Australia's natural resources are bauxite,
coal, iron ore, copper, tin, silver, uranium, nickel, tungsten, mineral sands,
lead, zinc, diamonds, natural gas, and oil. Primary trading partners are the US,
Japan, South Korea, New Zealand, UK and Germany. Imports revolve around
machinery and high technology equipment, while exports are heavy in the
agricultural and mineral products, making them sensitive to world commodity
prices. Historically, Australia's strong points were its agricultural and mining
sectors. While this is still true to a large extent, the government managed to
boost its manufacturing sector by undertaking protective measures in the 1970's
and early 1980's. These have subsequently been liberalized in an effort to
kindle growth in the industrial sector. Today's economy is more diverse, as
manufactures' share of total exports is increasing. Part of the government's
effort to make manufacturing more competitive was a floating of the Australian
dollar in 1984, precipitating an initial depreciation, and a campaign to reduce
taxes. Such reforms have attracted foreign investment, particularly in the
transport and manufacturing sectors. Restrictions do exist on investment in
certain areas, such as media, mining and some real estate. In 1995, cumulative
US investment in Australia totaled more than $65 billion and accounted for 21%
of total foreign investment. GDP growth reached 3.6% in 1996; a steady increase
over the days of the early 1990's which saw a recession. The recession was
followed in 1992 by a jump in growth (from 0.4-2.8%), but this initial boost
seems to have leveled off. The election of a new Liberal/National coalition
government after 13 years of Labor rule has brought with it new efforts to cut
public spending and eliminate the projected $6 billion. budget deficit. This
step, coupled with a steady unemployment rate (8%), could slow down the recent
ascent in growth. Australia is fully integrated into the world economy,
participating in GATT and also more regional trade associations such as the Asia
and the Pacific Economic Cooperation (APEC) forum. Future growth could result
from their movement towards regional economic liberalization,

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but a countervailing force is the reality that some export markets in Europe
could be lost to continued European economic integration.

INDONESIA. Indonesia is a country that encompasses over 17,000 islands
on which live 195 million people. It is a mixed economy that balances free
enterprise with significant government intervention. Deregulation policies,
diversification of strong domestic sectors, and investment in infrastructure
projects have all contributed to high levels of growth since the late 1980's.
Indonesia's economy grew at 7.1% in 1996, the exact average of its performance
for the current decade. Growth in the 1990's has been fairly steady, hovering
between 6.5-7.5% for the most part, peaking at 8.1% in 1995. Moderate growth in
investment, including public investment, and also in import growth, helped to
slowdown GDP growth. Growth has been accompanied by moderately high levels of
inflation, ranging from the recent high of 9.7% in 1993 to a low of 7.1%, as
witnessed last year. Indonesia is currently undergoing a diversification of the
core of its economy. No longer strictly revolving around oil and textiles, it is
now gaining strength in high technology manufacture, such as electronics.
Indonesia consistently runs a positive trade balance. Strong export performers
are oil, gas, and textiles and apparel. Oil, once responsible for 80% of export
revenues, now accounts for only 25%, an indication of how far other (mostly
manufacturing and apparel) sectors have developed. Main imports are raw
materials and capital goods. In 1994 the country underwent deregulation measures
which further boosted investment. By 1996, foreign direct investment levels
dropped from the record high in 1995, and the trend was away from large projects
including infrastructure to smaller more manageable projects. Many consider this
a reflection of a desire to avoid the notoriously nepotism ridden bureaucracy.

The Indonesian government is strongly authoritarian. Treatment of
political opponents, workers and ethnic minorities has put Indonesia in the
world spotlight with criticism of its human rights practices. One source of
outspoken popular discontent is the glaring discrepancy in income distribution,
particularly across ethnic lines. World attention to the problems in Indonesia
has given support to the various causes, but it does not seem to have had much
impact on the government. Efforts to impose sanctions on the country by both
federal and state level politicians in the U.S. have so far proven unsuccessful,
but are likely to continue to persist.

Politically, the ruling party, Golkar, faces frequent challenges from
unofficially sanctioned opposition parties, but these efforts are effectively
marginalized. The key political question in Indonesia is who will replace the
aging ruler, President Suharto who, at 76, has been the county's only leader for
over 30 years. His long tenure and the country's nascent democratic institutions
leave the question of proper succession open. During his career he has amassed
support from a directly appointed insider bureaucracy of political and business
elites which features immediate members of his family. As well, he has relied
strongly upon the army to provide the force necessary to contain social unrest.
Which among these two institutions will emerge to replace Suharto is far from
clear, and the surrounding intrigue could lead to some instability. As economic
policies have been crafted to benefit Suharto's supporters in the business
community, any deviation from Suharto's position would likely impact the
economy. Additionally, a key ingredient to Indonesia's success has been its
ability to contain social unrest. Maintaining this control, especially in the
face of recently escalated tensions and political uncertainty, is an important
anchor for economic performance. Proof of this is the Jakarta Stock Exchange's
volatile reaction to riots in July 1995.

MALAYSIA. 1996 saw Malaysia's GDP growth slow to 8.3%, down from over
9% in 1994 and 1995. Inflation has been kept relatively low at 3.8%. Performance
in 1996 avoided the economy's potential overheating as export growth,
investment, and consumption all slowed. This helped to bring the current

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account deficit down by $1.7 billion to settle at approximately 6.0% of GDP. A
large part of Malaysia's recent growth is due to its manufacturing industries,
particularly electronics and especially semiconductors. This has led to an
increased reliance on imports; thus the economy is sensitive to shifts in
foreign production and demand. This is particularly true regarding its main
trading partners: the U.S., Japan, and Singapore. Such shifts were partly
responsible for the slowdown in 1996. In addition, monetary policies to stem the
threat of overheating were evident, but the country still needs massive public
and private investment to finance several large infrastructure projects.
Government industrial policy seeks investment to create more value added high
technology manufacturing and service sectors in order to decrease the emphasis
on low skilled manufacturing. Already U.S. investors have invested over $9
billion, and most of this is in electronics and energy projects.

Unemployment remains extremely low (2.6%) and labor for completing the
various projects is becoming costly, especially as industry has to go abroad to
search for higher skilled workers. Wages have soared so high that Malaysia no
longer qualifies for the special trading benefits that the U.S. and the E.U.
bestow upon developing nations. This could hurt exports. A further catch is that
rapidly increasing wages could cause inflationary pressures, yet a shortage of
labor could threaten development.

The political situation in Malaysia is stable and could possibly remain
so up to and including the next election in the year 2000.

SINGAPORE. Since achieving independence from the British in 1965,
Singapore has repeatedly elected the People's Action Party (PAP) as their
government. It is a party that is so consistent it has only offered up two prime
ministers in this 32-year period. Elections in January 1997 returned the PAP to
power, signaling satisfaction with their policy of close coordination with the
private sector to stimulate investment. Typical policies include selective tax
incentives, subsidies for R&D, and joint ventures with private firms. While the
combination of consistent leadership and interventionist policies is sometimes
seen as impeding civil liberties and laissez-faire economics, it has produced an
attractive investment environment.

The Singapore economy is almost devoid of agriculture and natural
resources, not surprising given the island nation's geographic size. Its
strongest sector is manufacturing, particularly of electronics, machinery and
petroleum and chemical products. They produce 45% of the world's computer disk
drives. Major trading partners are Japan, Malaysia and the U.S.

The economic situation in Singapore registered a passable year in 1996.
The regional trend toward slowed electronics exports made clear the country's
strong reliance on this sector. GDP growth dropped from 8.8% to 6.5%, while
inflation remained low (1.4%) and the current account balance maintained its
large surplus. Property values have gone up recently, partially in response to
uncertainty surrounding Hong Kong. Interest rates are consistently low, and
wages high, leaving some at a loss to explain the repeatedly low inflation rate.

SOUTH KOREA. South Korea is one of the more spectacular economic
stories of the post war period. Coming out of a civil war in the mid-1950's the
country found itself with a destroyed economy and boundaries that excluded most
of the peninsula's mineral and industrial resources. It proceeded over the next
40 years to create a society that includes a highly skilled and educated labor
force and an economy that exploited the large amounts of foreign aid given to it
by the U.S. and other countries. Exports of labor intensive products such as
textiles initially drove the economy, to be replaced later by heavy industries
such as automobiles. Hostile relations with North Korea dictate large
expenditures on the military, and political uncertainty and potential famine in
the north has put the south on high alert. Any kind of significant military

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effort could have multiple effects, both positive and negative, on the economy.
South Korea's lack of natural resources put a premium on imported energy
products, making the economy very sensitive to oil prices.

Since 1991, GDP growth has fluctuated widely between 5% and 9%,
settling down at 6.8% last year. Currently the labor market is in need of
restructuring, and its rigidity has hurt performance. Relations between labor
and the large conglomerates, or Chaebols, could prove to be a significant
influence on future growth. Inflation in the same period has been consistently
dropping, save a brief rise in 1994, and finished the year at 4.5%. The country
consistently runs trade deficits, and the current account deficit widened
sharply in 1996, more than doubling to $19.3 billion. South Korea's strong
domestic sectors are electronics, textiles and industrial machinery. Exports
revolve around electronics, textiles, automobiles, steel and footwear, while
imports focus on oil, food, chemicals and metals. The stock market (Korea Stock
Exchange) is currently undergoing liberalization to include more foreign
participation, which was only first allowed in 1992, but the bond market remains
off limits until 1999. Liberalization is in response to the KSE 1996
performance, which was down 18%. While the number of listed companies increased
by 39 in 1996, total market capitalization fell 24% from its 1995 level.

THAILAND. The political situation in Thailand is tenuous. Democracy has
a short history in the country, and power is alternatively obtained by the
military, a non-elected bureaucratic elite, and democratically elected
officials. The frequent transfers of power have generally gone without divisive,
bloody conflicts, but there are bitter differences between the military and the
political parties. Free elections in 1992 and again in 1995 have produced
non-military democratic leaders from different parties, a healthy sign of party
competition. While democratic institutions are stabilizing, the current
government is under increasing pressure due to recent poor economic performance.

The Thai economy has witnessed a fundamental transition in recent
years. Traditionally it was a strong producer of textiles, minerals and
agricultural products, but more recently it has tried to build high tech export
industries. This proved particularly fortuitous in the mid 1990's when flooding
wiped out much of their traditional exports, but the newer industries remained
strong, keeping the growth rate above 8%. (This level had been achieved through
the 1990's, giving the economy a name as one of the fastest growing in the
region.) The government has also taken steps toward reducing the influence of
central planning, opening its market to foreigners and abandoning five-year
plans. This restructuring is still underway, and the change can cause difficulty
at times.

GDP growth slowed a bit last year to 7.2%, down from 8.6% in 1995. The
current account deficit was 7.9% of GDP, and inflation was 5.8%, both considered
high but steady and controllable results in line with recent years' performance.
One cause for the slowdown was a decline in export growth as its manufacturing
industry faces stiff competition from low priced competitors and its agriculture
suffers drops in production. In 1996, Thailand's currency, the baht, was linked
to a US dollar dominated basket, and monetary policy had remained tight to keep
that link strong and avoid inflationary pressures. The situation changed in
early 1997, however, with the revelation of many bad bank loans and a bubbling
of property prices due to over-investment. Many companies, faced with slowing
exports, stopped servicing their debts. Many other firms have stayed alive only
with infusions of public cash, and the government has been slow to let many
property laden financial firms fail. The stock market has reacted strongly,
dropping to new lows for the decade. Reluctant to float the baht, indeed
promising that it wouldn't, the government relented in early July hoping to
revive export and stock market growth. The subsequent devaluation (approximately
20% against the dollar in the first month) led to the need for a $16 billion
loan coordinated by the IMF to shore up foreign reserves. Most of the loan came
from neighboring countries led by Japan, indicating their desire to both protect
their own investments in Thailand, and also mitigate the effect of the
devaluation on

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their home currencies. The total impact of the entire situation is negative,
particularly on inflation, unemployment and foreign debt. Significant turnover
and a major gamble on the currency has put the government in a precarious
position, especially given the fact that it is a six party coalition.
Dissatisfaction among the military, always a political factor, is high.

INDIA. Although India's economy has grown at an average rate of 7% over
the past three years, growth has slowed to about 6% during 1997. Economic
growth, which had been fueled by strong industrial and export sectors, slowed
along with growth in these sectors. It is uncertain whether India will be able
to sustain the high growth rates it experienced through 1996. Subsidies amount
to almost 15% of GDP, while agriculture accounts for about 25%. In 1997, annual
inflation has been approximately 3.8% down from about 6.6% the previous year.
During 1997, the current account deficit has been roughly 1.2% of GDP, down from
1.5% in 1996. The exchange rate has been gradually devalued in the 1980's and
1990's, and could be devalued further. Beginning in 1992, industry, financial
markets, and the country's trade have been gradually liberalized. Fifty-five
percent of India's population is illiterate, roughly half live in poverty, and
unemployment remains high.

Since the dissolution of the Narasimha Rao government in early 1996,
India has experienced several weak, coalition governments that have been unable
to consolidate their position for an extended period. Partially as a result,
economic reforms have proceeded slowly though gradually. Future changes in
government could weaken or set back the reform process.

India does not enjoy trouble-free relations with its neighbors. India
and Pakistan have fought two wars since their independence in 1947 and have yet
to resolve a continuing dispute over the status of the northern Indian state of
Kashmir. Various Kashmiri separatist groups, Indian, and Pakistani military been
involved in armed conflict within the state. Neither India nor Pakistan have
signed the Comprehensive Nuclear Test Ban Treaty, which prohibits nuclear
weapons testing. A border dispute with China and questions over the involvement
of elements within India in the internal affairs of Sri Lanka also affect
India's relations with these countries.

PAKISTAN, BANGLADESH, AND SRI LANKA. The other, smaller South Asian
countries of Pakistan, Bangladesh, and Sri Lanka share with India the challenges
of reducing poverty and illiteracy and improving infrastructure and economic
growth. While each of these countries has taken steps to liberalize their
economies, their economies are far from mature, as are their legal and
regulatory systems. In addition, because they have small and relatively less
diversified economies and public markets, they are susceptible to external
economic shocks, which may result in currency declines. Sri Lanka has been
plagued by internal challenges to its security, while Pakistan has faced
significant political infighting and instability. Bangladesh's largely
agricultural economy is heavily dependent on the severity of the monsoons.

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

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the Advisor or a Sub-Advisor will be able to anticipate these potential events
or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments, economies
based on only a few industries, and securities markets that trade a small number
of securities.

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

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

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

B-16
<PAGE>

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

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

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

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

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

Options. Writing Covered Call Options. Each Fund may write (sell)
American or European style "covered" call options and purchase options to close
out options previously written by the Fund. In writing covered call options, the
Fund expects to generate additional premium income which should

B-17
<PAGE>

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 Advisor's or
a Sub-Advisor's opinion, are not expected to have any major price increases or
moves in the near future but which, over the long term, are deemed to be
attractive investments for the Fund.

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

B-18
<PAGE>

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

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 Advisor or
a Sub-Advisor 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

B-19
<PAGE>

received. Such a decline could be substantial and result in a significant loss
to the Fund. In addition, the Fund, because it does not own the specific
securities or currencies which it may be required to purchase in exercise of the
put, cannot benefit from appreciation, if any, with respect to such specific
securities or currencies.

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

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

B-20
<PAGE>

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

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

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

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

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

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

A Fund will enter into futures contracts which are traded on national
or foreign futures exchanges, and are standardized as to maturity date and
underlying financial instrument. Futures

B-21
<PAGE>

exchanges and trading in the United States are regulated under the Commodity
Exchange Act by the Commodity Futures Trading Commission ("CFTC"). Futures are
traded in London at the London International Financial Futures Exchange in Paris
at the MATIF and in Tokyo at the Tokyo Stock Exchange. Although techniques other
than the sale and purchase of futures contracts could be used for the
above-referenced purposes, futures contracts offer an effective and relatively
low cost means of implementing the Fund's objectives in these areas.

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

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

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

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.

B-22
<PAGE>

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

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

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

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

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

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

B-23
<PAGE>

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 Advisor or Sub-Advisor will, however, attempt to reduce this risk
by entering into futures contracts whose movements, in its judgment, will have a
significant correlation with movements in the prices of the Fund's underlying
instruments sought to be hedged.

Successful use of futures contracts by the Fund for hedging purposes is
also subject to the Advisor's or Sub-Advisor's ability to correctly predict
movements in the direction of the market. It is possible that, when the Fund has
sold futures to hedge its portfolio against a decline in the market, the index,
indices, or instruments underlying futures might advance and the value of the
underlying instruments held in the Fund's portfolio might decline. If this were
to occur, the Fund would lose money on the futures and also would experience a
decline in value in its underlying instruments. However, while this might occur
to a certain degree, the Advisor and each Sub-Advisor believe that over time the
value of the Fund's portfolio will tend to move in the same direction as the
market indices used to hedge the portfolio. It is also possible that if a Fund
were to hedge against the possibility of a decline in the market (adversely
affecting the underlying instruments held in its portfolio) and prices instead
increased, the Fund would lose part or all of the benefit of increased value of
those underlying instruments that it has hedged, because it would have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund had insufficient cash, it might have to sell underlying instruments to
meet daily variation margin requirements. Such sales of underlying instruments
might be, but would not necessarily

B-24
<PAGE>

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 Advisor or
Sub-Advisor might not result in a successful hedging transaction over a very
short time period.

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

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

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

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

B-25
<PAGE>

clearing corporations inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders.

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

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

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

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

Second, when the Advisor or Sub-Advisor believes that one currency may
experience a substantial movement against another currency, including the U.S.
dollar, or it wishes to alter the Fund's exposure to the currencies of the
countries in its investment universe, it may enter into a forward contract to
sell or buy foreign currency in exchange for the U.S. dollar or another foreign
currency. Alternatively, where appropriate, a Fund may manage all or part of its
foreign currency exposure through the use of a basket of currencies or a proxy
currency where such currency or currencies act as an effective proxy for other
currencies. In such a case, the Fund may enter into a forward contract where the
amount of the foreign currency to be sold exceeds the value of the securities
denominated in such currency. The use of this basket hedging technique may be
more efficient and economical than entering into separate forward contracts for
each currency held in the Fund. The precise matching of the forward contract
amounts and

B-26
<PAGE>

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 Advisor and
Sub-Advisors believe that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of a Fund will
be served.

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

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

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

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

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

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

B-27
<PAGE>

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. 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.

Swap Agreements. Each of the Funds may enter into interest rate, index
and currency exchange rate swap agreements in attempts to obtain a particular
desired return at a lower cost to the Fund than if the Fund 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 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.

B-28
<PAGE>

Whether a Fund's use of swap agreements enhance the Fund's total return
will depend on the Advisor's or Sub-Advisor's ability correctly to predict
whether certain types of investments are likely to produce greater returns than
other investments. Because they are two-party contracts and may have terms of
greater than seven days, swap agreements may be considered to be illiquid.
Moreover, a Fund bears the risk of loss of the amount expected to be received
under a swap agreement in the event of the default or bankruptcy of a swap
agreement counterparty. The Advisor or Sub-Advisor will cause a Fund to enter
into swap agreements only with counterparties that would be eligible for
consideration as repurchase agreement counterparties under the Funds' repurchase
agreement guidelines. The swap market is a relatively new market and is largely
unregulated. It is possible that developments in the 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 1940 Act, commodity pool, corporation, partnership,
proprietorship, organization, trust or other entity, employee benefit plan,
governmental entity, broker-dealer, futures commission merchant, natural person.
or regulated foreign person. To be eligible, natural persons and most other
entities must have total assets exceeding $10 million; commodity pools and
employees benefit plans must have assets exceeding $5 million. In addition, an
eligible swap transaction must meet three conditions. First, the swap agreement
may not be part of a fungible class of agreements that are standardized as to
their material economic terms. Second, the creditworthiness of parties with
actual or potential obligations under the swap agreement must be a material
consideration in entering into or determining the terms of the swap agreement,
including pricing, cost or credit enhancement terms. Third, swap agreements may
not be entered into and traded on or through a multilateral transaction
execution facility.

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

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

B-29
<PAGE>

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

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

Direct indebtedness purchased by a Fund may include letters of credit,
revolving credit facilities, or other standby financing commitments obligating
the Fund to pay additional cash on demand. These commitments may have the effect
of requiring the Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. A Fund will set aside appropriate
liquid assets in a custodial account to cover its potential obligations under
standby financing commitments.

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

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

B-30
<PAGE>

MANAGEMENT OF THE TRUST

Trustees and Officers

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

<TABLE>
<CAPTION>
Position with the Trust and
Name, Age and Principal Occupation within
Business Address Age the Past Five Years
- ---------------- --- -------------------
<S> <C> <C>
Ronald Altbach 51 Trustee of the Trust. Chairman, Paul Sebastian, Inc. (perfume
1540 West Park Avenue distributor) (1994 - present); President, Olcott Corporation
Ocean, New Jersey 07712 (perfume distributor) (1992 - 1994).

*Thomas T. Bachmann 52 Trustee of the Trust. Chairman, Orbitex Management Ltd.
Maritime House (investment management) (1986 - present).
Frederick Street
Nassau, Bahamas

*Otto J. Felber 65 Trustee of the Trust. President of Felcom Capital, Corp. (1985 -
250 Bloor Street East present); President and Vice-Chairman, Altamira Management Ltd.
Suite 300 (investment management) (1987 - 1997).
Toronto, Ontario
Canada M4W 1E6

Robert F. Raucci 43 Trustee of the Trust. President, RAM Investment Corp.
599 Lexington Avenue (investment management) (1994 - present); Vice President,
New York, NY 10022 Alliance Capital Management Corp. (investment management) (1985 -
1994).

*James L. Nelson 48 Trustee, President, Assistant Treasurer and Assistant Secretary
410 Park Avenue of the Trust. Director and Chief Executive Officer, Orbitex
New York, NY 10022 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).

James Kegley, MBA, CPA 42 Treasurer of the Trust. Chief Financial Officer, Orbitex
410 Park Avenue Management, Inc. (1998); Vice President and Comptroller, Morgan
New York, NY 10022 Stanley Dean Witter (1996-1997); CFO Gale and Wentworth
Investment Company (1994-1996); Comptroller of Capital Markets,
Prudential Insurance Company (1988-1994).

B-31
<PAGE>

Position with the Trust and
Name, Age and Principal Occupation within
Business Address Age the Past Five Years
- ---------------- --- -------------------
Mark Breault 30 Secretary of the Trust. Vice President - Operations, Orbitex
410 Park Avenue Management, Inc. (1996 - present); Vice President, State Street
New York, NY 10022 Bank and Trust Company (1991 - 1996).
</TABLE>

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

The following table estimates the amount of compensation to be paid to
the Trustees during the fiscal year ending April 30, 1998.

Name Compensation Paid
- ---- -----------------
Ronald Altbach $3,750
Thomas T. Bachmann $0
Otto J. Felber $0
James L. Nelson $0
Robert F. Raucci $3,750

As of January 31, 1998, Trustees and officers of the Trust, as a group,
owned less than 1% of the Strategic Natural Resources Fund, the Info-Tech and
Communications Fund, the Growth Fund and the Asian High Yield Fund, and 83.13%
of the Asian Select Advisors Fund.

PRINCIPAL HOLDERS OF SECURITIES

As of January 31, 1998 the following shareholders were beneficial owners of 5%
or more of the outstanding shares of the Funds listed because they possessed
voting or investment power with respect to such shares:

<TABLE>
<CAPTION>
<S> <C>
Strategic Natural Resources Fund Asian Select Advisors
Sidney Kimmel 26.89% Konrad Krill 83.13%
c/o Cones Apparel Group 138 Weston Ave.
1411 Broadway 21st Floor Chatham, New Jersey 07928-2256
New York, New York 10018-3403

Westmount Investments, LTD 41.04% Orbitex Management, Inc. 16.62%
Maritime House 2nd Floor 400 Park Ave.
PO Box N-9932 New York, New York 10022
Nassau, BAHAMAS

Info-Tech and Communications Asian High Yield Fund

Cresta LTD 96.12% Bank J. Vontobel & Co 16.91%
Maritime House, Frederick Street Bahnhofster 3
PO Box N-9932 CH-8022 Zurich Switzerland
Nassau, BAHAMAS

B-32
<PAGE>

Orbitex Growth Fund SEMA & Co. 56.05%
100 Wall Street
New York, NY 10005-3701
Cresta LTD 94.49%
Maritime House, Frederick Street Egger & Co. 16.60%
PO Box N-9932 c/o Chase Manhattan Bank, Attn: Mutual Funds Dept.
Nassau, BAHAMAS 4 New York Plaza 13th Floor
New York, NY 10004-2413
</TABLE>

INVESTMENT MANAGEMENT AND OTHER SERVICES

Advisor

Orbitex Management, Inc., 410 Park Avenue, New York, NY 10022, serves
as the Advisor of each Fund pursuant to an Investment Advisory Agreement that
has been approved by the Board, including a majority of the independent
Trustees. The initial term of the Investment Advisory Agreement is two years.
However, the Investment Advisory Agreement may continue in effect from year to
year if approved at least annually by a vote of a majority of the Board
(including a majority of the Trustees who are not parties to the Investment
Advisory Agreement or interested persons of any such parties) cast in person at
a meeting called for the purpose of voting on such renewal, or by the vote of a
majority of the outstanding shares of the particular Fund.

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

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

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

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

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<PAGE>

Sub-Advisors

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

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

ADMINISTRATOR

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

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

Under the Administration Agreement with the Trust, State Street
provides administrative services including, without limitation: (i) services of
personnel competent to perform such administrative and clerical functions as are
necessary to provide effective administration of the Trust; (ii) maintaining the
Trust's books and records (other than financial and accounting books and records
and records maintained by the Trust's custodian or transfer agent); (iii)
overseeing the Trust's insurance relationships; (iv) preparing or assisting in
the preparation of all required tax returns, proxy statements and reports to the
Trust's shareholders and Trustees and reports to and filings with the SEC and
any other governmental agency; (v) preparing or assisting in the preparation of
such notices and reports as may be necessary to offer and sell the

B-34
<PAGE>

Trust's shares under applicable state securities laws; (vi) preparing or
assisting in the preparation of, and coordinating the distribution of all
materials for meetings of the Board of Trustees of the Trust; (vii) monitoring
daily and periodic compliance with respect to all requirements and restrictions
of the 1940 Act, the Internal Revenue Code and the Prospectus; (viii) monitoring
the calculation of all income and expense accruals, sales and redemptions of
capital shares outstanding by the Trust's custodian; (ix) evaluating expenses,
projecting future expenses, and processing payments of expenses; and (x)
monitoring and evaluating performance of accounting and related services by the
Trust's custodian.

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

CUSTODIAN

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

TRANSFER AGENT SERVICES

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

DISTRIBUTION OF SHARES

Funds Distributor, Inc. (the "Distributor") serves as the distributor
of the shares of each Fund pursuant to a Distribution Agreement between the
Distributor and the Trust. The Distributor's principal business address is 60
State Street, Boston, Massachusetts 02108.

Under the terms of the Distribution Plan and Agreement pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "Rule 12b-1 Plan"), the
Distributor receives front-end or contingent deferred sales commissions or sales
loads on Class A Shares for providing services to the Class A Shares of each
Fund under the Distribution Agreement. In addition, pursuant to the Rule 12b-1
Plan, each of the Funds are authorized to use a portion of their assets
attributable to the Class A Shares to finance certain activities relating to the
distribution of their shares to investors.

Each Fund is authorized to pay the Distributor quarterly at a rate
equal to an annualized rate of .30% (in the case of the Asian High Yield Fund)
and .40% (in the case of the other Funds) of the average daily net assets of the
Fund during that quarter. A Fund may pay fees to the Distributor at a lesser
rate, as agreed upon by the Board of Trustees of the Trust and the Distributor.
The Rule 12b-1 Plan and Agreement authorizes payments to the Distributor as
compensation for providing account maintenance services to investors in the
Class A Shares of the Fund, including arranging for certain securities dealers
or brokers,

B-35
<PAGE>

administrators and others ("Recipients") to provide these services and paying
compensation for these services. Each Fund will bear its own costs of
distribution with respect to its Class A Shares.

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

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

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

B-36
<PAGE>

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

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

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

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

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

The Advisor and Sub-Advisors receive a wide range of research services
from brokers and dealers covering investment opportunities throughout the world,
including information on the economies, industries, groups of securities,
individual companies, statistics, political developments, technical market
action, pricing and appraisal services, and performance analyses of all the
countries in which a Fund's portfolio is likely to be invested. The Advisor and
Sub-Advisors cannot readily determine the extent to

B-37
<PAGE>

which commissions charged by brokers reflect the value of their research
services, but brokers occasionally suggest a level of business they would like
to receive in return for the brokerage and research services they provide. To
the extent that research services of value are provided by brokers, the Advisor
and Sub-Advisors may be relieved of expenses which they might otherwise bear. In
some cases, research services are generated by third parties but are provided to
the Advisor and Sub-Advisors by or through brokers.

Certain broker-dealers which provide quality execution services also
furnish research services to the Advisor and Sub-Advisors. The Advisor and
Sub-Advisors have adopted a brokerage allocation policy embodying the concepts
of Section 28(e) of the Securities Exchange Act of 1934, which permits an
investment advisor 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 advisor with
respect to the accounts as to which it exercises investment discretion.
Accordingly, the Advisor and Sub-Advisors may assess the reasonableness of
commissions in light of the total brokerage and research services provided by
each particular broker.

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

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

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

PURCHASE AND REDEMPTION OF SECURITIES BEING OFFERED

Letter of Intent. In submitting a Letter of Intent to purchase Class A
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 Class A 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

B-38
<PAGE>

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
Class A Shares, but if the investor's purchases of Class A 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 of 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, Class
A Shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer of record
and/or the investor to refer to the Letter in placing any purchase orders for
the investor during the Letter of Intent period. All of such purchases must be
made through the Distributor.

Terms of Escrow

1. Out of the initial purchase (or subsequent purchases if necessary)
made pursuant to a Letter, Class A 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

B-39
<PAGE>

dealer, the Distributor will, within sixty days of the expiration of the Letter,
redeem the number of escrowed shares necessary to realize such difference in
sales charges. Full and fractional shares remaining after such redemption will
be released from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales charge will be
withheld from the redemption proceeds.

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

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

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

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

SHAREHOLDER SERVICES

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

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

B-40
<PAGE>

of purchase, each withdrawal will result in a capital gain or loss. See
"Dividends, Distributions and Taxes" in this SAI and in the Funds' Prospectus.

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

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

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

DETERMINATION OF NET ASSET VALUE

The net asset value per share of a Fund will be determined for each
class of shares. The net asset value per share of a given class of shares of a
Fund is determined by calculating the total value of the Fund's assets
attributable to such class of shares, deducting its total liabilities
attributable to such class of shares in conformance with the provisions of the
plan adopted by the Fund in accordance with Rule 18f-3 under the 1940 Act., and
dividing the result by the number of shares of such class outstanding. The net
asset value of shares of each class of each Fund is normally calculated as of
the close of trading on the NYSE on every day the NYSE is open for trading. The
NYSE is open Monday through Friday except on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset
value per share of the different classes of shares are expected to be
substantially the same; from time to time, however, the per share net asset
value of the different classes of shares may differ.

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

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

B-41
<PAGE>

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

TAXES

Each Fund intends to qualify as a "regulated investment company"
("RIC") under Subchapter M of the Internal Revenue Code. In general, to qualify
as a RIC: (a) at least 90% of the gross income of a Fund for the taxable year
must be derived from dividends, interest, payments with respect to loans of
securities, gains from the sale or other disposition of securities, or other
income derived with respect to its business of investing in securities; (b) a
Fund must distribute to its shareholders 90% of its ordinary income and net
short-term capital gains; and (c) 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 are
taxable as such to shareholders in the year in which they are received except
dividends declared in October, November and December to the shareholders of
record on a specified date in such a month and paid in January of the following
year are taxable in the previous year.

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

B-42
<PAGE>

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

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

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

Passive Foreign Investment Companies. If a Fund purchases shares in
certain foreign passive investment entities described in the Internal Revenue
Code as passive foreign investment companies ("PFIC"), the Fund will be subject
to U.S. federal income tax on a portion of any "excess distribution" (the Fund's
ratable share of distributions in any year that exceeds 125% of the average
annual distribution received by the Fund in the three preceding years or the
Fund's holding period, if shorter, and any gain from the disposition of such
shares) even if such income is distributed as a taxable dividend by the Fund to
its shareholders. Additional charges in the nature of interest may be imposed on
the Fund in respect of deferred taxes arising from such "excess distributions."
If the Fund were to invest in a PFIC and elect to treat the PFIC as a "qualified
electing fund" under the Internal Revenue Code (and if the PFIC were to comply
with certain reporting requirements), in lieu of the foregoing requirements the
Fund would be

B-43
<PAGE>

required to include in income each year its pro rata share of the PFIC's
ordinary earnings and net realized capital gains, whether or not such amounts
were actually distributed to the Fund.

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

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. Average annual total
return will be calculated separately for Class A and Class I Shares. 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:

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

B-44
<PAGE>

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. Yield will be calculated separately for each class of
shares of the Fund.

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:

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

B-45
<PAGE>

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

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

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

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

INDEPENDENT ACCOUNTANTS

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

LEGAL MATTERS

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

FINANCIAL STATEMENTS

Following are (1) the Schedules of Investments for the Orbitex Group of
Funds as of January 31, 1998, (2) the Statements of Changes in Net Assets as of
January 1, 1998, (3) the Statements of Operations as of January 31, 1998, (4)
the Statements of Assets and Liabilities as of January 1, 1998, (5) the
Financial Highlights as of January 31, 1998 and (6) the Notes to the Financial
Statements. The following financial

B-46
<PAGE>

statements are unaudited. The West Coast Fund is not included as there were no
shares of the Fund outstanding during the period ending January 31, 1998.

B-47
<PAGE>

ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS
January 31, 1998 (Unaudited)

B-48
<PAGE>

ORBITEX GROUP OF FUNDS
STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS (continued)
January 31, 1998 (Unaudited)

- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 94.05%
International Oil - 5.84%
Exxon Corp. .................................... 1,200 $ 71,175
Mobil Corp. .................................... 1,000 68,125
Texaco, Inc. ................................... 1,500 78,094
--------
217,394
--------
Mining - 6.92%
Barrick Gold Corp. ............................. 4,000 77,500
Compania De Minas Buenaventura SA .............. 3,500 41,562
Getchell Gold Corp. (a) ........................ 2,000 51,000
Newmont Mining Corp. ........................... 2,000 57,000
TVX Gold, Inc. (a) ............................. 10,000 30,625
--------
257,687
--------
Natural Gas- 3.60%
Canadian 88 Energy Corp. (a) ................... 20,000 74,189
Renaissance Energy Ltd. (a) .................... 3,000 59,969
--------
134,158
--------
Oil & Gas Drilling - 3.22%
Marine Drilling Co., Inc. (a) .................. 4,000 72,000
Noble Drilling Corp. (a) ....................... 1,800 48,150
--------
120,150
--------
Oil & Gas Exploration & Production - 22.82%
Anadarko Petroleum Corp. ....................... 1,500 88,500
Anderson Exploration Ltd. (a) .................. 5,000 51,176
Coho Energy, Inc. (a) .......................... 8,000 65,500
Edge Petroleum Corp. (a) ....................... 6,000 65,625
EEX Corp. (a) .................................. 9,000 75,938
Forcenergy, Inc. (a) ........................... 2,500 55,781
Mallon Resources Corp. (a) ..................... 5,000 39,375
Noble Affiliates, Inc. ......................... 2,000 72,750
Oryx Energy Co. (a) ............................ 2,500 60,000
Pacalta Resources Ltd. (a) ..................... 3,800 26,495
Pogo Producing Co. ............................. 1,500 42,563
Ranger Oil Ltd. ................................ 10,000 59,375
Santa Fe Energy Resources, Inc. ................ 6,000 63,000
Triton Energy Ltd. (a) ......................... 3,000 83,812
--------
849,890
--------
Oil Field Machine & Equipment Manufacturing - 4.87%
Cooper Cameron Corp. (a) ....................... 500 25,719
Global Industries, Inc. (a) .................... 5,000 73,750
Varco International, Inc. (a) .................. 4,000 82,000
--------
181,469
--------

B-49
<PAGE>

STRATEGIC NATURAL RESOURCES FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
January 31, 1998 (Unaudited)

- --------------------------------------------------------------------------------
Shares or Market
Principal Amount Value
- --------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Oil Field Service - 7.25%
Baker Hughes, Inc. ............................. 1,500 $ 57,844
Schlumberger Ltd. .............................. 1,000 73,687
Shaw Group, Inc. (a) ........................... 2,000 43,875
Stolt Comex Seaway, SA (a) ..................... 1,500 32,250
Western Atlas, Inc. ............................ 1,000 62,313
----------
269,969
----------
Paper & Related Products - 8.19%
Champion International Corp. ................... 1,500 76,781
Louisiana-Pacific Corp. ........................ 3,000 60,188
Union Camp Corp. ............................... 1,200 68,625
Weyerhaeuser Co. ............................... 2,000 99,625
----------
305,219
----------
Petroleum Services - 1.49%
Veritas DGC, Inc. (a) .......................... 1,500 55,406
----------
Pollution Control - 1.48%
USA Waste Services, Inc. (a) ................... 1,500 55,125
----------
Steel - 2.81%
AK Steel Holding Corp. ......................... 2,500 44,687
Steel Dynamics, Inc. (a) ....................... 3,000 60,000
----------

TOTAL COMMON STOCKS - (Cost $3,460,139) $3,503,479
----------
SHORT TERM INVESTMENT - 19.27%
United States Treasury Bill, 4.51%,
2/5/1998 (b) ................................... $718,000 $ 717,641
----------
TOTAL SHORT TERM INVESTMENT - (Cost $717,641) $ 717,641
----------

Total Investments (Cost $4,177,780) - 113.32% 4,221,120
Other Assets Less Liabilities - (13.32)% (496,103)
----------

Net Assets - 100.00% $3,725,017
==========

(a) Non-Income producing security.
(b) Rate represents annualized yield at date of purchase.

B-50
<PAGE>

INFO-TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS
January 31, 1998 (Unaudited)

- -------------------------------------------------------------------------
Market
Shares Value
- -------------------------------------------------------------------------
COMMON STOCKS - 95.26%
Communication Services - 7.03%
American Communications Services (a) ... 900 $ 14,063
Metronet Communications Corp. (a) ...... 1,000 21,156
-----------
35,219
-----------
Computers & Business Equipment - 3.77%
Cisco Systems, Inc. (a) ................ 300 18,919
-----------
Electronics - 8.83%
Advanced Fibre Communications (a) ...... 700 20,825
Lexmark International Group, Inc. (a) .. 600 23,438
-----------
44,263
-----------
Networking - 3.80%
Bay Networks, Inc. (a) ................. 700 19,031
-----------
Telecommunications Equipment - 19.67%
Lucent Technologies, Inc. .............. 200 17,700
Nokia Corp. ............................ 200 15,200
Northern Telecom Ltd. .................. 400 18,050
Pairgain Technologies, Inc. (a) ........ 1,200 22,050
Tellabs, Inc. (a) ...................... 500 25,594
-----------
98,594
-----------
Telecommunications Services - 11.53%
At Home Corp. (a) ...................... 900 20,812
BCE, Inc. .............................. 500 15,625
Tel-Save Holdings, Inc. (a) ............ 900 21,375
-----------
57,812
-----------
Telephone - 36.71%
AT&T Corp. ............................. 400 25,050
Bell Atlantic Corp. .................... 300 27,769
NEXTLINK Communications, Inc. (a) ...... 800 19,900
Powertel, Inc. (a) ..................... 1,000 20,500
SBC Communications, Inc. ............... 300 23,325
Sprint Corp. ........................... 400 23,750
Telecomunicacoes Brasileiras ........... 200 22,200
WorldCom, Inc. ......................... 600 21,487
-----------
183,981
-----------
Unit Investment Trust - 3.92%
SPDR Trust Series 1 .................... 200 19,656
-----------
TOTAL COMMON STOCKS - (Cost $449,812) $ 477,475
-----------

B-51
<PAGE>

INFO-TECH & COMMUNICATIONS FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
January 31, 1998 (Unaudited)

- --------------------------------------------------------------------------------
Principal Market
Amount Value
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENT - 41.28%
United States Treasury Bill, 4.51%, 2/5/1998 (b) ... 207,000 $ 206,897
---------
TOTAL SHORT TERM INVESTMENT - (Cost $206,897) $ 206,897
---------

Total Investments (Cost $656,709) - 136.54% 684,372
Other Assets Less Liabilities - (36.54)% (183,140)
---------
Net Assets - 100.00% $ 501,232
=========

(a) Non-Income producing security.
(b) Rate represents annualized yield at date of purchase.

B-52
<PAGE>

GROWTH FUND
SCHEDULE OF INVESTMENTS
January 31, 1998 (Unaudited)

- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 86.81%
Air Travel - 2.35%
AMR Corp. (a) .......................... 100 $ 12,625
--------
Banks - 13.44%
AmSouth Bancorporation ................. 300 16,200
Comerica, Inc. ......................... 100 9,438
FirstFed Financial Corp. (a) ........... 500 17,562
Fleet Financial Group, Inc. ............ 200 14,325
Norwest Corp. .......................... 100 3,650
U.S. Bancorp ........................... 100 10,950
--------
72,125
--------
Building Construction - 3.51%
Centex Corp. ........................... 300 18,825
--------
Chemicals - 3.28%
Goodrich (B.F.) Co. .................... 420 17,614
--------
Computers & Business Equipment - 7.20%
Cisco Systems, Inc. (a) ................ 300 18,919
International Business Machines ........ 200 19,737
--------
38,656
--------
Containers & Glass - 3.34%
ZERO Corp. ............................. 700 17,938
--------
Drugs & Health Care - 6.38%
Cellegy Pharmaceuticals, Inc. (a) ...... 2,600 18,525
Healthsouth Corp. (a) .................. 700 15,706
--------
34,231
--------
Electronics - 4.37%
Lexmark International Group, Inc. (a) .. 600 23,438
--------
Financial Services - 3.69%
Travelers Group, Inc. .................. 400 19,800
--------
Food & Beverages - 4.93%
International Home Foods, Inc. (a) ..... 1,000 26,438
--------
Insurance - 1.67%
MedPartners, Inc. (a) .................. 900 8,944
--------
Lease Rental Obligations - 4.45%
United Rentals, Inc. (a) ............... 1,000 23,875
--------
Machinery - 3.73%
Tokheim Corp. (a) ...................... 1,000 20,000
--------

B-53
<PAGE>

GROWTH FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
January 31, 1998 (Unaudited)

- --------------------------------------------------------------------------------
Market
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS - (Continued)
Unit Investment Trust - 3.66%
SPDR Trust Series 1 ..................... 200 $ 19,656
---------
Retail - 8.78%
Longs Drug Stores Corp. ................. 600 17,362
Ross Stores, Inc. ....................... 200 6,500
Viking Office Products, Inc. (a) ........ 1,000 23,250
---------
47,112
---------
Software - 4.46%
Computer Associate International, Inc. .. 450 23,934
---------
Telephone - 7.57%
AT&T Corp. .............................. 400 25,050
SBC Communications, Inc. ................ 200 15,550
---------
40,600
---------
TOTAL COMMON STOCKS - (Cost $461,849) $ 465,811
---------

Total Investments (Cost $461,849) - 86.81% 465,811
Other Assets Less Liabilities - 13.19% 70,755
---------
Net Assets - 100.00% $ 536,566
=========

(a) Non-Income producing security.

B-54
<PAGE>

ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS
January 31, 1998 (Unaudited)

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Principal Market
Amount Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
FOREIGN BONDS AND NOTES - 80.30%
China - 3.82%
Finance - 1.87%
Guangdong International Trust & Investment Corp., 8.750% due
10/24/2016 (a)..................................................... 50,000 $ 41,687
---------
Municipal - 1.95%
Zhuhai Highway Co., Ltd., 11.500% due 7/1/2008 (a) ................... 50,000 43,500
---------
India - 9.59%
Energy - 7.57%
Tata Electric Co., 7.875% due 8/19/2007 (a)........................... 200,000 168,700
---------
Industrials - 2.02%
Reliance Industries, Ltd., 8.125% due 9/27/2005 (a)................... 50,000 45,000
---------
Indonesia - 3.92%
Food, Beverage & Tobacco - 1.30%
Sampoerna International Financial Co., 8.375% due 6/15/2006 (a)....... 50,000 29,000
---------
Retail - 2.62%
Matahari International Financial Co., 11.250% due 3/15/2001 (a) ...... 90,000 58,500
---------
Korea - 23.55%
Banks - 4.25%
Korea Development Bank, 7.000% due 7/15/1999 ......................... 100,000 94,750
---------
Energy - 3.41%
Korea Electric Power Corp., 6.375% due 12/1/2003 ..................... 90,000 76,050
---------
Industrials - 8.00%
Pohang Iron & Steel, Ltd., 7.500% due 8/1/2002 ....................... 200,000 178,250
---------
Telephone - 7.89%
SK Telecom Co., Ltd., 7.750% due 4/29/2004 ........................... 200,000 175,750
---------
Malaysia - 4.14%
Industrials - 4.14%
Petroliam Nasional Berhad, 7.125% due 8/15/2005 (a)................... 100,000 92,200
---------
Philippines - 16.98%
Energy - 4.20%
Ce Casecnan Water & Energy, Inc., Senior Note, 11.450% due
11/15/2005 ........................................................ 100,000 93,744
---------
Government - 3.72%
Bangko Sentral Ng Philipinas, 8.600% due 6/15/2027 ................... 100,000 83,000
---------
Telephone - 9.06%
Philippine Long Distance Telephone, 10.625% due 6/2/2004 ............. 200,000 202,000
---------

B-55
<PAGE>

ASIAN HIGH YIELD FUND
SCHEDULE OF INVESTMENTS (CONTINUED)
January 31, 1998 (Unaudited)

- ---------------------------------------------------------------------------------------------------------
Principal Market
Amount Value
- ---------------------------------------------------------------------------------------------------------
FOREIGN BONDS AND NOTES - (Continued)
Thailand - 7.22%
Banks - 7.22%
Bangkok Bank Public Co., Ltd., 7.250% due 9/15/2005 (a) .............. $200,000 $ 160,880
----------
Turkey - 8.91%
Government - 8.91%
Republic of Turkey, 10.000% due 9/19/2007 ............................ 100,000 101,250
Sultan, Ltd., Floating Rate Note, 8.687% due 6/11/1999 (b) ........... 100,000 97,300
----------
198,550
----------
United Kingdom - 2.17%
Corporate - 2.17%
Cheung Kong Finance, 5.500% due 9/30/1998 ............................ 50,000 48,313
----------
TOTAL FOREIGN BONDS AND NOTES - (Cost $1,918,807) $1,789,874
----------
SHORT TERM INVESTMENT - 22.96%
United States Treasury Bill, 4.87%, 3/19/1998 (c) .................... 515,000 511,818
----------
TOTAL SHORT TERM INVESTMENT - (Cost $511,818) $ 511,818
----------

Total Investments (Cost $2,430,625) - 103.26% 2,301,692
Other Assets Less Liabilities - (3.26)% (72,869)
----------
Net Assets - 100.00% $2,228,823
==========
</TABLE>

(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 January 31, 1998, these securities amounted to
$639,467 or 28.69% of the Fund's net assets.
(b) Floating rate note. Rate noted represents rate at January 31, 1998.
(c) Rate represents annualized yield at date of purchase.

B-56
<PAGE>

ORBITEX GROUP OF FUNDS
ASIAN SELECT ADVISORS FUND
SCHEDULE OF INVESTMENTS
January 31, 1998 (Unaudited)

Total Investments (Cost $33,609) - 25.22% 29,105
Other Assets Less Liabilities - 74.78% 86,306
---------
Net Assets - 100.00% $ 115,411
=========

(a) Non-Income producing security.

B-57
<PAGE>

ORBITEX GROUP OF FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
January 31, 1998 (Unaudited)

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

Investments in securities, at market
(Cost $4,177,780, $656,709, $461,849,
$2,430,625, and $33,609, respectively).... $ 4,221,120 $ 684,372 $ 465,811 $ 2,301,692 $ 29,105
Cash, including foreign currency............ 70,286 676 69,893 2,171 84,096
Receivable for securities sold.............. 202,111 0 0 0 0
Interest receivable......................... 0 0 0 49,251 0
Dividends receivable........................ 19,458 573 298 0 0
Receivable for fund shares sold............. 4,712 0 0 0 0
Receivable from investment advisor.......... 32,083 39,723 42,795 45,858 38,610
Prepaid expenses............................ 7,814 7,778 7,110 7,037 7,455
Deferred organization expenses.............. 13,334 13,330 13,330 13,321 13,370
------------ ----------- ------------ ----------- ------------
TOTAL ASSETS.......................... 4,570,918 746,452 599,237 2,419,330 172,636

LIABILITIES

Payable for securities purchased............ 773,116 184,157 0 127,097 0
Payable to investment advisor............... 29,533 29,533 28,865 28,865 28,865
Accounts payable and other
accrued expenses.......................... 43,252 31,530 33,806 34,545 28,360
------------ ----------- ------------ ----------- ------------
TOTAL LIABILITIES..................... 845,901 245,220 62,671 190,507 57,225
------------ ----------- ------------ ----------- ------------
NET ASSETS............................ $ 3,725,017 $ 501,232 $ 536,566 $ 2,228,823 $ 115,411
============ =========== ============ =========== ============

NET ASSETS CONSIST OF:

Paid-in capital ($.01 par value),
unlimited number of shares
authorized................................ 4,092,703 520,174 529,394 2,478,726 120,324
Undistributed net investment income
(loss).................................... 16,919 (1,954) (1,600) 16,627 (456)
Accumulated net realized gain (loss)
on investments............................ (426,402) (44,651) 4,810 (137,597) 47
Net unrealized appreciation
(depreciation) on investments and foreign
currency related transactions............. 41,797 27,663 3,962 (128,933) (4,504)
------------ ----------- ------------ ----------- ------------
NET ASSETS............................ $ 3,725,017 $ 501,232 $ 536,566 $ 2,228,823 $ 115,411
============ =========== ============ =========== ============

NET ASSET VALUE PER SHARE

Net Asset Value per share
(based on shares of beneficial
interest outstanding)..................... $ 14.57 $ 14.45 $ 15.21 $ 10.57 $ 14.39
------------ ----------- ------------ ----------- ------------
Offering Price Per Share
($14.57/.9425, $14.45/.9425,
$15.21/.9425, $10.57/.9525,
$14.39/.9425 respectively)................ $ 15.46 $ 15.33 $ 16.14 $ 11.10 $ 15.27
------------ ----------- ------------ ----------- ------------
Total shares outstanding at end
of period................................. 255,634 34,679 35,274 210,882 8,022
</TABLE>

B-58
<PAGE>

ORBITEX GROUP OF FUNDS
STATEMENTS OF OPERATIONS
For the Period Ended January 31, 1998 (Unaudited)

<TABLE>
<CAPTION>
Strategic
Natural Info-Tech & Asian High Asian
Resources Communications Growth Yield Select Advisors
Fund* Fund* Fund* Fund* Fund*
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest Income............................. $ 18,084 $ 569 $ 401 $ 54,242 $ 79
Dividend income............................. 28,520 713 379 0 227
Foreign taxes withheld...................... 0 0 0 (179) 0
------------ ----------- ------------ ----------- ------------
Total Investment Income..................... 46,604 1,282 780 54,063 306

EXPENSES

Investment advisor fee...................... 11,788 1,685 1,116 7,723 457
Administration fees......................... 23,257 23,364 23,364 23,575 22,355
Professional fees........................... 12,758 12,817 12,817 12,932 12,264
Custodian fees.............................. 23,380 20,769 23,488 19,311 25,466
Trustees' fees.............................. 1,063 1,068 1,068 1,078 1,022
Transfer agent fees......................... 10,366 10,414 10,413 10,508 9,964
Distribution fees........................... 3,772 539 595 1,854 122
Amortization of organization expense........ 931 935 935 944 895
Miscellaneous expenses...................... 17,908 16,115 17,989 15,127 14,346
------------ ----------- ------------ ----------- ------------
Total operating expenses before
waivers and reimbursements................ 105,223 87,706 91,785 93,052 86,891
Less: Expenses waived
and reimbursed............................ (82,685) (84,470) (89,405) (93,052) (86,129)
------------ ----------- ------------ ----------- ------------
Net Expenses................................ 22,538 3,236 2,380 0 762
------------ ----------- ------------ ----------- ------------

Net Investment Income (Loss)................ 24,066 (1,954) (1,600) 54,063 (456)
------------ ----------- ------------ ----------- ------------

NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS

Net realized gain (loss) on:
Investments............................... (419,429) (44,651) 4,810 (137,597) 0
Foreign currency related transactions..... (57) 0 0 0 47
------------ ----------- ------------ ----------- ------------
(419,486) (44,651) 4,810 (137,597) 47
------------ ----------- ------------ ----------- ------------

Net change in unrealized appreciation
(depreciation) on investments and foreign
currency related transactions............. 41,797 27,663 3,962 (128,933) (4,504)
------------ ----------- ------------ ----------- ------------

Net realized and unrealized gain (loss)
on investments and foreign currency
related transactions...................... (377,689) (16,988) 8,772 (266,530) (4,457)
------------ ----------- ------------ ----------- ------------

Net increase (decrease) in net assets
resulting from operations................... $ (353,623) $ (18,942) $ 7,172 $ (212,467) $ (4,913)
============ =========== ============ =========== ============
</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.

B-59
<PAGE>

ORBITEX GROUP OF FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended January 31, 1998 (Unaudited)

From Operations:
Net investment income (loss)................... $ 24,066 $ (1,954) $ (1,600) $ 54,063 $ (456)
Net realized gain (loss) on investments
and foreign currency
related transactions........................ (419,486) (44,651) 4,810 (137,597) 47
Net change in unrealized appreciation
(depreciation) on investments and foreign
currency related transactions............... 41,797 27,663 3,962 (128,933) (4,504)
------------ ----------- ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations................... (353,623) (18,942) 7,172 (212,467) (4,913)
------------ ----------- ------------ ----------- ------------

Distributions to Shareholders:
From net investment income..................... (7,147) 0 0 (37,436) 0
From capital gains............................. (6,916) 0 0 0 0
------------ ----------- ------------ ----------- ------------
Total distributions from net investment income
and net capital gains....................... (14,063) 0 0 (37,436) 0
------------ ----------- ------------ ----------- ------------

From Fund Share Transactions:
Proceeds from fund shares sold................. 9,194,988 500,174 509,394 4,347,959 100,324
Net asset value of shares issued to shareholders
in reinvestment of distributions............ 10,136 0 0 12,910 0
Cost of shares redeemed........................ (5,132,421) 0 0 (1,902,143) 0
------------ ----------- ------------ ----------- ------------
Net increase in net assets from Fund
share transactions.......................... 4,072,703 500,174 509,394 2,458,726 100,324
------------ ----------- ------------ ----------- ------------

Total increase in net assets................... 3,705,017 481,232 516,566 2,208,823 95,411
------------ ----------- ------------ ----------- ------------

Net Assets:
Beginning of period (Note 7)................... 20,000 20,000 20,000 20,000 20,000
------------ ----------- ------------ ----------- ------------
End of period.................................. $ 3,725,017 $ 501,232 $ 536,566 $ 2,228,823 $ 115,411
============ =========== ============ =========== ============

Number of Fund Shares:
Shares outstanding at beginning of period...... 1,333 1,333 1,333 1,667 1,333
------------ ----------- ------------ ----------- ------------
Shares sold.................................... 605,440 33,346 33,941 376,418 6,689
Shares issued to shareholders in reinvestment
of distributions............................ 712 0 0 1,263 0
Shares redeemed................................ (351,851) 0 0 (168,466) 0
------------ ----------- ------------ ----------- ------------
Net increase in shares outstanding............. 254,301 33,346 33,941 209,215 6,689
------------ ----------- ------------ ----------- ------------
Total shares outstanding at end of period...... 255,634 34,679 35,274 210,882 8,022
============ =========== ============ =========== ============
</TABLE>

B-60
<PAGE>

ORBITEX GROUP OF FUNDS
FINANCIAL HIGHLIGHTS
For the period ended January 31, 1998 (Unaudited)
Selected data based on a shares outstanding throughout the period indicated

Net investment income (loss) ......................... 0.13 (0.06) (0.05) 0.27 (0.06)

Net realized and unrealized gain (loss) on investments
and foreign currency related transactions ............ (0.50) (0.49) 0.26 (1.51) (0.55)
---------- -------- -------- ---------- --------

Total income (loss) from investment operations ....... (0.37) (0.55) 0.21 (1.24) (0.61)
---------- -------- -------- ---------- --------

Less dividends from net investment income ............ (0.03) 0.00 0.00 (0.19) 0.00

Less distributions from capital gains ................ (0.03) 0.00 0.00 0.00 0.00
---------- -------- -------- ---------- --------
Total dividends/distributions from net investment
income and net capital gains ......................... (0.06) 0.00 0.00 (0.19) 0.00
---------- -------- -------- ---------- --------

Net asset value, end of period ....................... $ 14.57 $ 14.45 $ 15.21 $ 10.57 $ 14.39
========== ======== ======== ========== ========

Total Return (b) ..................................... (2.44)% (3.64)% 1.41% (10.27)% (4.09)%

Ratios and Supplemental Data:

Net assets, end of period ............................ $3,725,017 $501,232 $536,566 $2,228,823 $115,411

Ratio of operating expenses to average net assets (c) 2.40% 2.40% 1.60% 0.00% 2.50%

Ratio of net investment income (loss) (with
reimbursement) to average net assets (c) ............. 2.55% (1.45)% (1.08)% 8.89% (1.50)%

Portfolio turnover rate .............................. 330% 149% 212% 223% 0%

Average broker commissions (d) ....................... $ 0.06 $ 0.06 $ 0.06 N/A $ 0.01
</TABLE>

(b) Total returns are historical and assume changes in share price, reinvestment
of dividends and capital gains distributions, and assume no sales charge.
Had the Advisor not absorbed a portion of expenses, total returns would have
been lower. Periods less than one year are not annualized.

(d) A Fund is required to disclose its average commission rate per share for
trades on which commissions are charged.

(e) Ratio of operating expenses to average net assets is after waiver of fees
and reimbursement of certain fees and expenses. Had the fees not been waived
and the expenses reimbursed the ratio of expenses to average net assets
would have been as follows: Strategic Natural Resources Fund, 11.14%;
Info-Tech & Communications Fund 65.05%; Growth Fund 61.77%; Asian High Yield
Fund, 15.31%; and Asian Select Advisors Fund, 285.04%, respectively.

B-61
<PAGE>

Orbitex Group of Funds
Notes to Financial Statements
January 31, 1998 (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 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. The
following summarizes the significant accounting policies of the Trust:

Security Valuation and Transactions

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 rate established at the time of the trade.

B-62
<PAGE>

Orbitex Group of Funds
Notes to Financial Statements (continued)
January 31, 1998 (Unaudited)

2. Summary of Significant Accounting Policies (continued)

Foreign Currency Translation (continued)

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 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.

B-63
<PAGE>

Orbitex Group of Funds
Notes to Financial Statements (continued)
January 31, 1998 (Unaudited)

2. Summary of Significant Accounting Policies (continued)

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 Advisor has agreed to waive or limit its fees and to pay certain operating
expenses to the extent necessary to limit total fund operating expenses to
2.40%, 2.40%, 1.60%, 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 Advisor has agreed to waive or limit its fees and to pay all
operating expenses of the Asian High Yield Fund for the first one hundred fifty
days of Fund operations. The waivers for the period ended January 31, 1998
amounted to $11,788, $1,685, $1,116, $7,723 and $457 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 January 31, 1998 amounted
to $32,083, $39,723, $42,795, $45,858 and $38,610 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.

B-64
<PAGE>

Orbitex Group of Funds
Notes to Financial Statements (continued)
January 31, 1998 (Unaudited)

3. Fees and Compensation Paid to Affiliates and Other Parties (continued)

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 January 31, 1998 amounted
to $22,319, $23,229, $23,215, $22,966 and $22,321 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 January 31, 1998
amounted to $16,495, $19,833, $22,279, $16,505 and $24,741 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 the 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.

B-65
<PAGE>

Orbitex Group of Funds
Notes to Financial Statements (continued)
January 31, 1998 (Unaudited)

4. Aggregate Unrealized Appreciation and Depreciation

Aggregate gross unrealized appreciation/(depreciation) of investments for each
Fund at January 31, 1998, were as follows:

<TABLE>
<CAPTION>
Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation
Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Orbitex Strategic Natural Resources Fund $ 131,609 $ 88,269 $ 43,340
Orbitex Info-Tech & Communications Fund 30,167 2,504 27,663
Orbitex Growth Fund 34,863 30,901 3,962
Orbitex Asian High Yield Fund 10,365 139,298 (128,933)
Orbitex Asian Select Advisors Fund 1,196 5,700 (4,504)
</TABLE>

The aggregate cost of each Fund's investments was substantially the same for
book and federal income tax purposes at January 31, 1998.

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
January 31, 1998, were:

Purchases Sales
- ---------------------------------------------------------------------------
Orbitex Strategic Natural Resources Fund $ 9,912,778 $6,033,218
Orbitex Info-Tech & Communications Fund 808,433 313,970
Orbitex Growth Fund 1,094,176 637,138
Orbitex Asian High Yield Fund 3,815,835 1,760,849
Orbitex Asian Select Advisors Fund 33,610 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 68%
Orbitex Info-Tech & Communications Fund 1 96%
Orbitex Growth Fund 1 94%
Orbitex Asian High Yield Fund 3 90%
Orbitex Asian Select Advisors Fund 2 100%

B-66
<PAGE>

Orbitex Group of Funds
Notes to Financial Statements (continued)
January 31, 1998 (Unaudited)

6. Beneficial Interest (continued)

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:

<TABLE>
<CAPTION>
10% or Greater Affiliates
-------------------------
Fund Name % of Fund Held
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Orbitex Strategic Natural Resources Fund Westmount Investments Limited 41%
Orbitex Info-Tech & Communications Fund Cresta Limited 96%
Orbitex Growth Fund Cresta Limited 94%
Orbitex Select Advisors Fund Konrad Krill 83%
Orbitex Select Advisors Fund Orbitex Management, Inc. 17%
</TABLE>

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.

B-67
<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) (1) Financial Statements for the Orbitex Group of Funds
as of January 31, 1998, included in the Prospectus:

1. Financial Highlights

(2) Financial Statements for the Oribtex Group of Funds
as of January 31, 1998, included in the Statement of
Additional Information:

1. Schedules of Investments
2. Statements of Changes in Net Assets
3. Statements of Operations
4. Statements of Assets and Liabilities
5. Financial Highlights
6. Notes to Financial Statements

(b) Exhibits:
1. a. Declaration of Trust of Orbitex Group of
Funds (the "Trust) previously filed in the
Registration Statement on January 29, 1997
is incorporated herein by reference.

b. Amendment to Declaration of Trust of Orbitex
Group of Funds (the "Trust") dated January
21, 1998 will be filed by amendment.

2. By-Laws of the Trust previously filed in the
Registration Statement on January 29, 1997 are
incorporated herein by reference.

3. Not applicable.

4. Not applicable.

5(a). i. Form of Investment Advisory Agreement by
and between the Trust on behalf of each Fund
and Orbitex Management, Inc. previously
filed in Pre-Effective Amendment No. 1 to
the Registration Statement on April 14, 1997
is incorporated herein by reference.

ii. Form of Amended Investment Advisory
Agreement by and between the Trust on behalf
of each Fund and Orbitex Management, Inc.
dated January 21, 1998 will be filed by
amendment.

5(b). Form of Sub-Advisory Agreement among the Trust, on
behalf of the Asian High Yield Fund, Orbitex
Management, Inc. and J.P. Morgan Investment
Management, Inc. previously filed in Pre-Effective
Amendment No. 2 to the Registration Statement dated
September 26, 1997 is incorporated herein by
reference.

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

C-1
<PAGE>

Management (HK) Limited previously filed in
Pre-Effective Amendment No. 1 to the Registration
Statement on April 14, 1997 is incorporated herein by
reference.

5(d). Form of Sub-Advisory Agreement among the Trust, on
behalf of the Asian Select Advisors Fund, Orbitex
Management, Inc. and Bankers Trust Company previously
filed in Pre-Effective Amendment No. 2 to the
Registration Statement dated September 26, 1997 is
incorporated herein by reference.

5(e). Form of Sub-Subadvisory Agreement among the Trust, on
behalf of the Asian Select Advisors Fund, Orbitex
Management, Inc., Bankers Trust Company and BT Fund
Managers International Limited previously filed in
Pre-Effective Amendment No. 2 to the Registration
Statement dated September 26, 1997 is incorporated
herein by reference.

6(a) i. Form of Distribution Agreement between the Trust
and Funds Distributor, Inc. previously filed in
the Registration Statement on January 29, 1997 is
incorporated herein by reference.

ii. Form of Amended Distribution Agreement between
the Trust and Funds Distributor, Inc. dated
January 21, 1998 will be filed by amendment.

6(b) Form of Selected Dealers Agreement previously filed
in the Registration Statement on January 29, 1997 is
incorporated herein by reference.

7. Not applicable.

8. i. Form of Custodian Contract by and between
the Trust and State Street Bank and Trust
Company previously filed in the Registration
Statement on January 29, 1997 is
incorporated herein by reference.

ii. Form of Amended Custodian Contract by and
between the Trust and State Street Bank and
Trust Company dated January 21, 1998 will be
filed by amendment.

9(a). i. Form of Transfer Agency and Service
Agreement by and between the Trust and State
Street Bank and Trust Company previously
filed in the Registration Statement on
January 29, 1997 is incorporated herein by
reference.

ii. Form of Amended Transfer Agency and Service
Agreement by and between the Trust and State
Street Bank and Trust Company dated January
21, 1998 will be filed by amendment.

9(b). i. Form of Administration Agreement by and
between the Trust and State Street Bank and
Trust Company previously filed in the
Registration Statement on January 29, 1997
is incorporated herein by reference.

C-2
<PAGE>

ii. Form of Amended Administration Agreement by
and between the Trust and State Street Bank
and Trust Company dated January 21, 1998
will be filed by amendment.

10. Opinion and Consent of Rogers & Wells regarding the
legality of the securities being registered
previously filed in Pre-Effective Amendment No. 2 to
the Registration Statement dated September 26, 1997
is incorporated herein by reference.

11. Not applicable.

12. Not applicable.

13. i. Form of Shareholder Subscription Agreement
by and between Orbitex Management, Inc. and
the Trust on behalf of each Fund previously
filed in Pre-Effective Amendment No. 2 to
the Registration Statement dated September
26, 1997 is incorporated herein by
reference.

ii. Form of Amended Shareholder Subscription
Agreement by and between Orbitex Management,
Inc. and the Trust on behalf of each Fund
will be filed by amendment.

14. Form of Individual Retirement Account Agreement
previously filed in Pre-Effective Amendment No. 2 to
the Registration Statement dated September 26, 1997
is incorporated herein by reference.

15(a). i. Distribution Plan and Agreement Pursuant
to Rule 12b-1 under the Investment Company
Act of 1940 previously filed in
Pre-Effective Amendment No. 2 to the
Registration Statement dated September 26,
1997 is incorporated herein by reference.

ii. Amended Distribution Plan and Agreement
Pursuant to Rule 12b-1 under the Investment
Company Act of 1940 dated January 21, 1998
will be filed by amendment.

15(b). Form of Distribution Sub-Agreement previously filed
in Pre-Effective Amendment No. 2 to the Registration
Statement dated September 26, 1997 is incorporated
herein by reference.

16. Schedule for Computation of Performance Quotation
previously filed in Post-Effective Amendment No. 1 to
the Registration Statement dated March 27, 1998 is
incorporated herein by reference.

17. Financial Data Schedule is filed herewith.

18. Rule 18f-3 Plan for Multiple Classes of Shares dated
January 21, 1998 will be filed by amendment.

C-3
<PAGE>

19. Powers of Attorney previously filed in Pre-Effective
Amendment No. 2 to the Registration Statement dated
September 26, 1997 is incorporated herein by
reference.

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

None.

Item 26. Number of Holders of Securities as of January 31, 1998.

Number of
Title of Class Record Holders
-------------- --------------
Orbitex Strategic Natural Resources Fund 107
Orbitex Info-Tech & Communications Fund 8
Orbitex Growth Fund 9
Orbitex Asian High Yield Fund 15
Orbitex Asian Select Advisors Fund 8
Orbitex West Coast Fund 0

Item 27. Indemnification.

Reference is made to Article VI of the Registrant's Amended
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 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

C-4
<PAGE>

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 Advisor and the
Sub-Advisors.

(a) Certain information pertaining to business and other
connections of the Registrant's Advisor, 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).

(b) Certain information pertaining to business and other
connections of Asia Strategic Investment Management Limited,
one of the Registrant's Sub-Advisors, 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.

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

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

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

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

C-5
<PAGE>

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

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

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

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

(c) Certain information pertaining to business and other
connections of Bankers Trust Company, one of the Registrant's
Sub-Advisors, 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 Bankers Trust Company 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 One Bankers Trust
Plaza, New York, New York 10006

Position with Bankers Trust Company
and Business and Other Positions
Name within Last Two Years
---- ---------------------

Donald L. Staheli Chairman of the Board and Chief
Executive Officer, Continental Grain
Company. Director of Bankers Trust
Company. Also a director of
Continental Grain Company,
ContiFinancial Corporation,
Prudential Life Insurance Company of
America, Fresenius Medical Care,
A.G., National Committee on United
States-China Relations and America's
Promise; member, Council on Foreign
Relations; and chairman of The Points
of Light Foundation.

Patricia Carry Stewart Former Vice President, The Edna
McConnell Clark Foundation (a
charitable foundation). Director of
Bankers Trust. Also a director of CVS
Corporation and of the Community
Foundation for Palm Beach and Martin
Counties, and a trustee emerita of
Cornell University.

George J. Vojta Vice Chairman of the Corporation,
Bankers Trust Company. Director of
Bankers Trust Company. Also a
director of Alicorp S.A., Northwest
Airlines, Private Export Funding
Corp., the New York State Banking
Board; vice chairman of the Board of
Trustees of

C-6
<PAGE>

Position with Bankers Trust Company
and Business and Other Positions
Name within Last Two Years
---- ---------------------
St. Lukes-Roosevelt Hospital Center;
a partner of New York City
Partnership; chairman, Wharton
Financial Services Center; and a
member of the Bretton Woods
Committee.

Paul A. Volcker Director of Various Corporations.
Director of Bankers Trust Company.
Former Chairman and Chief Executive
Officer of Wolfensohn & Co., Inc. and
former Chairman of the Board of
Governors of the Federal Reserve
System. Also a director of the
American Stock Exchange, Nestle S.A.,
Prudential Insurance Company and UAL
Corporation and an overseer of
TIAA-CREF; director of American
Council on Germany, Council on
Foreign Relations and The Japan
Society; trustee of The American
Assembly; and member of the advisory
boards of several international
corporations.

Hamish Maxwell Retired Chairman and Chief Executive
Officer, Philip Morris Companies,
Inc. Director of Bankers Trust
Company. Also a director of Sola
International Inc., and chairman of
WWP Group plc.

Frank N. Newman Chairman of the Board, Chief
Executive Officer and President of
the Corporation and Bankers Trust
Company. Director of Bankers Trust
Company. Former Deputy Secretary of
the United States Treasury and former
Vice Chairman of the Board and
director of BankAmerica Corporation
and Bank of America NT&SA. Also a
director of Dow-Jones, Inc., trustee
of Carnegie Hall; and member, Board
of Overseers of Cornell University
Medical College and the Graduate
School of Medical Sciences.

N.J. Nicholas Jr. Investor. Director of Bankers Trust
Company. Former Co-chief Executive
Officer of Time Warner Inc. Also a
director of Boston Scientific
Corporation and Xerox Corporation.

Russell E. Palmer Chairman and Chief Executive Officer,
The Palmer Group. Director of Bankers
Trust Company. Former Dean of The
Wharton School, University of
Pennsylvania and former Chief
Executive Officer of Touche Ross &
Co. (now Deloitte & Touche). Also a
director of Allied-Signal Inc.,
Federal Home Loan

C-7
<PAGE>

Position with Bankers Trust Company
and Business and Other Positions
Name within Last Two Years
---- ---------------------
Mortgage Corporation, GTE
Corporation, The May Department
Stores Company and Safeguard
Scientifics, Inc.; and a trustee, the
University of Pennsylvania.

George B. Beitzel Director of Various Corporations.
Director of Bankers Trust Company.
Retired Senior Vice President and
director, International Business
Machines Corporation. Also a director
of Computer Task Group, Phillips
Petroleum Company, Rohm and Haas
Company and TIG Holdings; chairman
emeritus of Amherst College; and
chairman of the Colonial Williamsburg
Foundation.

Phillip A. Griffiths Director, Institute for Advanced
Study. Director of Bankers Trust
Company. Chairman, Committee on
Science, Engineering and Public
Policy of the National Academies of
Sciences and Engineering & the
Institute of Medicine; member,
National Academy of Sciences,
American Academy of Arts and Sciences
and American Philosophical Society;
and trustee of North Carolina School
of Science and Mathematics and the
Woodward Academy. Former member of
the board of directors, Research
Triangle Institute.

William R. Howell Chairman Emeritus, J.C. Penny
Company, Inc. Director of Bankers
Trust Company. Also a director of
Exxon Corporation, Halliburton
Company, Warner-Lambert Company,
Williams, Inc., Central & South West
Corp., and the National Retail
Federation.

Vernon E. Jordan, Jr. Senior Partner, Akin Gump, Strauss,
Hauer & Feld, LLP, Attorneys-at-law
Washington, D.C. and Dallas, TX.
Director of Bankers Trust Company.
Former president of the National
Urban League, Inc. Also a director of
American Express Company, Chancellor
Media Corporation, Dow-Jones, Inc.,
J.C. Penny Company, Inc., Revlon
Group Incorporated, Ryder Systems,
Inc., Sara Lee Corporation, Union
Carbide Corporation and Xerox
Corporation; and a trustee of
Brookings Institution, The Ford
Foundation and Howard University.

Lee A. Ault, III Private Investor. Director of Bankers
Trust Company. Former Chairman and
Chief Executive Officer, Telecredit,
Inc.

C-8
<PAGE>

Position with Bankers Trust Company
and Business and Other Positions
Name within Last Two Years
---- ---------------------
Also a director of Equifax, Inc.,
Sunrise Medical Inc., Viking Office
Products, Inc., and Pacific Crest
Outward Bound School.

Neil R. Austrian President and Chief Operating
Officer, National Football League.
Director of Bankers Trust Company.
Also a director of Rafac Technology
and Viking Office Products, Inc., and
trustee of Swarthmore College.

G. Richard Thoman President, Chief Operating Officer
and Director, Xerox Corporation.
Director of Bankers Trust Company.
Also a director of Fuji Xerox
Company, Ltd., and Union Bancaire
Privee (Switerland); member, General
Electric Investments Equity Advisory
Board, Yale School of Management
Advisory Board, Fletcher School of
Law and Diplomacy Advisory Board, and
the INSEAD U.S. Advisory Board;
director, The Americas Society; and
member, Council on Foreign Relations.

(d) Certain information pertaining to business and other
connections of J.P. Morgan Investment Management Inc., one of
the Registrant's Sub-Advisors, 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 J.P. Morgan
Investment Management Inc. is incorporated by reference to
Form ADV filed by J.P. Morgan Investment Management Inc. with
the Securities and Exchange Commission pursuant to the
Investment Advisers Act of 1940, as amended (File No.
801-21011).

Item 29. Principal Underwriters.

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

American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds

C-9
<PAGE>

American Century Strategic Assets Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
BJB Investment Funds
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Funds
The JPM Series Trust
The JPM Series Trust II
LaSalle Partners Funds, Inc.
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds
The Munder Funds Trust
The Munder Funds, Inc.
Orbitex Group of Funds
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index 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 located at 60 State Street, Suite 1300, Boston,
Massachusetts 02109. 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 following is a list of the executive directors,
officers, and partners of Funds Distributor, Inc.

Director, President and Chief -Marie E. Connolly
Executive Officer
Executive Vice President -Richard W. Ingram
Executive Vice President -Donald R. Roberson
Executive Vice President -William S. Nichols
Senior Vice President -Michael S. Petrucelli
Director, Senior Vice President, -Joseph F. Tower, III
Treasurer and Chief
Financial Officer
Senior Vice President -Paula R. David
Senior Vice President -Allen B. Closser
Senior Vice President -Bernard A. Whalen
Director -William J. Nutt

C-10
<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-Advisor, 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 Distribution 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 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-11
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant 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 16th
day of March 1998.

ORBITEX GROUP OF FUNDS

By:______________________
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
--------- ----- ----
/s/ Otto J. Felber* Trustee March 16, 1998
--------------------
Otto J. Felber

/s/ James L. Nelson Trustee, President, March 16, 1998
-------------------- Assistant Treasurer &
James L. Nelson Assistant Secretary

/s/ Mark Breault Secretary March 16, 1998
--------------------
Mark Breault

/s/ James Kegley Treasurer March 16, 1998
--------------------
James Kegley

/s/ Ronald Altbach* Trustee March 16, 1998
--------------------
Ronald Altbach

/s/ Thomas Bachmann* Trustee March 16, 1998
--------------------
Thomas Bachmann

/s/ Robert Raucci* Trustee March 16, 1998
--------------------
Robert Raucci

* By:________________________________
James L. Nelson, Attorney-in-Fact

C-12

<PAGE>

EXHIBIT LIST

Exhibit
Number Description
17. Financial Data Schedule.

C-13

<ARTICLE> 6
<CIK> 0001029068
<NAME> ORBITEX GROUP OF FUNDS
<SERIES>
<NUMBER> 1
<NAME> STRATEGIC

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Apr-30-1998
<PERIOD-START> May-01-1997
<PERIOD-END> Jan-31-1998
<INVESTMENTS-AT-COST> 4,177,780
<INVESTMENTS-AT-VALUE> 4,221,120
<RECEIVABLES> 258,364
<ASSETS-OTHER> 21,148
<OTHER-ITEMS-ASSETS> 70,286
<TOTAL-ASSETS> 4,570,918
<PAYABLE-FOR-SECURITIES> 773,116
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 72,785
<TOTAL-LIABILITIES> 845,901
<SENIOR-EQUITY> 2,556
<PAID-IN-CAPITAL-COMMON> 4,090,147
<SHARES-COMMON-STOCK> 255,634
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 16,919
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (426,402)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41,797
<NET-ASSETS> 3,725,017
<DIVIDEND-INCOME> 28,520
<INTEREST-INCOME> 18,084
<OTHER-INCOME> 0
<EXPENSES-NET> 22,538
<NET-INVESTMENT-INCOME> 24,066
<REALIZED-GAINS-CURRENT> (419,486)
<APPREC-INCREASE-CURRENT> 41,797
<NET-CHANGE-FROM-OPS> (353,623)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7,147)
<DISTRIBUTIONS-OF-GAINS> (6,916)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 9,194,988
<NUMBER-OF-SHARES-REDEEMED> (5,132,421)
<SHARES-REINVESTED> 10,136
<NET-CHANGE-IN-ASSETS> 3,705,017
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,788
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 105,223
<AVERAGE-NET-ASSETS> 3,412,891
<PER-SHARE-NAV-BEGIN> 15.00
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> (0.50)
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> (0.03)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 14.57
<EXPENSE-RATIO> 2.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<CIK> 0001029068
<NAME> ORBITEX GROUP OF FUNDS
<SERIES>
<NUMBER> 2
<NAME> INFO-TECH AND

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Apr-30-1998
<PERIOD-START> May-01-1997
<PERIOD-END> Jan-31-1998
<INVESTMENTS-AT-COST> 656,709
<INVESTMENTS-AT-VALUE> 684,372
<RECEIVABLES> 40,296
<ASSETS-OTHER> 21,108
<OTHER-ITEMS-ASSETS> 676
<TOTAL-ASSETS> 746,452
<PAYABLE-FOR-SECURITIES> 184,157
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 61,063
<TOTAL-LIABILITIES> 245,220
<SENIOR-EQUITY> 347
<PAID-IN-CAPITAL-COMMON> 519,827
<SHARES-COMMON-STOCK> 34,679
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (1,954)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (44,651)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 27,663
<NET-ASSETS> 501,232
<DIVIDEND-INCOME> 713
<INTEREST-INCOME> 569
<OTHER-INCOME> 0
<EXPENSES-NET> 3,236
<NET-INVESTMENT-INCOME> (1,954)
<REALIZED-GAINS-CURRENT> (44,651)
<APPREC-INCREASE-CURRENT> 27,663
<NET-CHANGE-FROM-OPS> (18,942)
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</TABLE>