<PAGE>
As filed with the Securities and Exchange Commission on July 9, 1999
Registration No. ____
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. [ ] Post-Effective Amendment No.
ORBITEX GROUP OF FUNDS
(Exact Name of Registrant as specified in Charter)
410 Park Avenue
New York, New York 10022
(Address of Principal Executive Offices)
(888) - ORBITEX
(Area Code and Telephone Number)
------------------
Mr. James L. Nelson
Orbitex Group of Funds
410 Park Avenue
New York, New York 10022
(Name and Address of Agent for Service)
------------------
copies to:
Leonard B. Mackey, Jr., Esq. M. Fyzul Khan, Esq. Thomas R. Westle, Esq.
Rogers & Wells LLP Orbitex Management, Inc. Spitzer & Feldman P.C.
200 Park Avenue 410 Park Avenue 405 Park Avenue
New York, New York 10166 New York, New York 10022 New York, New York 10022
- --------------------------------------------------------------------------------
It is proposed that this filing become effective on August 9, 1999 pursuant to
Rule 488 under the Securities Act of 1933, as amended.
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.
Title of Securities Being Registered: Orbitex Growth Fund Class A Shares of
beneficial interest, no par value.
Registrant has registered an indefinite amount of securities pursuant to Rule
24f-2 under the Investment Company Act of 1940, as amended; accordingly, no fee
is payable herewith.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FORM N-14 CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
PART A ITEM NO. AND CAPTION PROSPECTUS/PROXY STATEMENT CAPTION
<S> <C> <C>
Item 1. Beginning of Registration Statement and Cover Page; Cross Reference Sheet
Outside Front Cover Page of Prospectus
Item 2. Beginning and Outside Back Cover Page of Table of Contents
Prospectus
Item 3. Synopsis Information and Risk Factors Synopsis; Risk Factors; Introduction; Comparative Investment
Policies and Styles
Item 4. Information About the Transaction Synopsis; Reasons for the Reorganization; Procedures for the
Reorganization; Certain Comparative Information About
Maryland funds and Delaware funds; Required Vote; Annex A
(Reorganization Agreement)
Item 5. Information About the Registrant Cover Page; Synopsis; Reasons for the Reorganization;
Comparative Investment Policies and Styles; The Orbitex
Group of Funds; Description of the Orbitex Growth Fund
Item 6. Information About the Company Being Cover Page; Synopsis; Reasons for the Reorganization;
Acquired Comparative Investment Policies and Styles; Certain
Comparative Information About Maryland funds and Delaware
funds; Recommendation of the ADGVF Board of Directors
Item 7. Voting Information Synopsis; Reasons for the Reorganization; Required Vote;
Recommendation of the ADGVF Board of Directors
Item 8. Interest of Certain Persons and Experts Security Ownership of Certain Beneficial Owners
Item 9. Additional Information Required for Not Applicable
Re-offering By Persons Deemed to be
Underwriters
PART B ITEM NO. AND CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
Item 10. Cover Page Cover Page
Item 11. Table of Contents Financial Statements of the Registrant and the Company being
acquired, including the Statements of Additional
Information contained therein, are incorporated herein
by reference.
Item 12. Additional Information About the Financial Statements of the Registrant and the Company being
Registrant acquired, including the Statements of Additional Information
contained therein, are incorporated herein by reference.
Item 13. Additional Information About the Company Financial Statements of the Registrant and the Company being
Being Acquired acquired, including the Statements of Additional Information
contained therein, are incorporated herein by reference.
Item 14. Financial Statements Financial Statements of the Registrant and the Company being
acquired, including the Statements of Additional
Information contained therein, are incorporated herein
by reference.
PART C ITEM NO. AND CAPTION OTHER INFORMATION CAPTION
Item 15. Indemnification Indemnification: Incorporated by reference to part A caption
"Certain Comparative Information About Maryland funds and
Delaware funds -- Liability of Directors in Maryland and
Trustees in Delaware"
Item 16. Exhibits Exhibits
Item 17. Undertakings Undertakings
</TABLE>
<PAGE>
AMERICAN DIVERSIFIED FUNDS, INC.
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 Park Avenue
New York, New York 10022
August 9, 1999
Dear Stockholder:
A special meeting of stockholders of American Diversified Global Value Fund
("ADGVF") will be held at the principal executive offices of Orbitex Management,
Inc. ("Orbitex Management") on September 10, 1999, at 12:00 p.m. local time
(including any adjustment or postponement thereof, the "Special Meeting"). ADGVF
is the only active series of American Diversified Funds, Inc. ("ADFI"), a
Maryland corporation. Formal notice of the Special Meeting appears on the next
page and is followed by the Prospectus/Proxy Statement.
In the attached Prospectus/Proxy Statement, stockholders of ADGVF are being
requested to consider and approve the proposed business combination (the
"Reorganization") of ADGVF with the Orbitex Growth Fund, a separate series of
Orbitex Group of Funds, a business trust organized under the laws of the State
of Delaware, pursuant to an Agreement and Plan of Reorganization, dated as of
July 8, 1999, by and between ADFI and the Orbitex Group of Funds, whereby ADGVF
would, in exchange for shares of the Orbitex Growth Fund, sell, transfer and
assign to the Orbitex Growth Fund, and the Orbitex Growth Fund would purchase
from ADGVF, certain of the assets and certain of the liabilities of ADGVF. The
investment objectives and policies of ADGVF and the Orbitex Growth Fund are
generally similar. ADGVF employs a value-oriented strategy for selecting
investments with a secondary focus on growth stocks; and the Orbitex Growth Fund
employs a growth-oriented strategy for selecting investments with a secondary
focus on value stocks. In other words, the Orbitex Management employs measures
of intrinsic value, such as the company's price-to-earnings ratio, historical
trends and cash flows to select investments for Orbitex Growth Fund. Unlike
ADGVF, however, in addition to limiting its investment to securities that meet
traditional value investing criteria, Orbitex Growth Fund also seeks companies
that the Orbitex Management believes will experience earnings and cash flow
growth. Also, even though the Orbitex Growth Fund is permitted to invest in the
securities of foreign issuers, it typically does not do so to the same extent
that the ADGVF Fund has historically been permitted to do. In addition, Orbitex
Growth Fund does not seek current income, and consequently does not invest any
significant portion of its assets in debt securities. THE DOLLAR VALUE OF EACH
ADGVF STOCKHOLDER'S ACCOUNT WITH THE ORBITEX GROWTH FUND IMMEDIATELY AFTER THE
REORGANIZATION WILL BE THE SAME AS THE DOLLAR VALUE OF SUCH STOCKHOLDER'S
ACCOUNT WITH ADGVF IMMEDIATELY BEFORE THE REORGANIZATION. THE REORGANIZATION IS
INTENDED TO QUALIFY AS A TAX-FREE REORGANIZATION.
Orbitex Management, a New York corporation, has served as the investment adviser
to ADGVF since May 7, 1999, pursuant to an investment advisory agreement (the
"Orbitex Agreement"), dated May 5, 1999, between Orbitex Management and ADGVF
and approved by the Board of Directors of ADFI (the "Board"). The Board made
this appointment after it terminated the engagement of American Diversified
Asset Management, Inc. ("ADAM") and Ladas & Hulings, Inc. as ADGVF's investment
adviser and sub-adviser, respectively, following notice from ADAM of its
insolvency and the insolvency of its parent company. The Reorganization is
designed to permit the stockholders of ADGVF to merge into the Orbitex Growth
Fund and become part of the Orbitex Group of Funds, for which Orbitex Management
also serves as investment adviser. As part of the Orbitex Group of Funds, ADGVF
through its merger into the Orbitex Growth Fund would have the benefits of
certain economies with respect to administrative expenses and of being marketed
together with the other funds in the Orbitex Group of Funds.
Orbitex Management has agreed that if ADGVF's stockholders fail to approve the
Reorganization by the requisite vote, it will continue to serve as investment
adviser to ADGVF for a reasonable period of time without fees until a
replacement adviser is selected or until ADGVF is liquidated. The Board believes
that in such a case the prospects of finding a replacement adviser would be
minimal.
After careful consideration, the Board has unanimously approved the
Reorganization and recommends that you read the enclosed materials carefully and
then vote "FOR" the Reorganization. It is important that you sign and return
your proxy card because approval of the Reorganization requires a minimum number
of affirmative votes.
You are cordially invited to attend the Special Meeting. If you do not expect to
attend the Special Meeting, the Board requests that you vote by taking a moment
to sign and return your proxy cards in the enclosed postage paid return
envelope. You may also vote by telephone at 1-800-690-6903 or through the
internet at www.proxyvote.com by following the simple instructions on the Proxy
card provided. If we do not hear from you after a reasonable amount of time, you
may receive a telephone call from our proxy solicitor, Shareholder
Communications Corporation, reminding you to vote your shares.
Sincerely,
James B. Rea, Jr., President
<PAGE>
--------------------
PART A
--------------------
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
c/o ORBITEX Management, Inc.
410 Park Avenue
New York, New York 10022
(888) ORBITEX
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To be held on September 10, 1999
-----------------------------------------------------------
To the stockholders of American Diversified Global Value Fund:
NOTICE IS HEREBY GIVEN that a special meeting of stockholders
(including any adjournment or postponement thereof, the "Special Meeting") of
American Diversified Global Value Fund ("ADGVF"), a series of American
Diversified Funds, Inc. ("ADFI"), a Maryland corporation, will be held at the
principal executive offices of Orbitex Management at 410 Park Avenue, New York,
New York 10022 on September 10, 1999, at 12:00 p.m., local time, for the
following purposes:
I. To consider and approve the proposed business combination (the
"Reorganization") of ADGVF with the Orbitex Growth Fund ("OGF"), a
separate series of the Orbitex Group of Funds, a business trust
organized under the laws of the State of Delaware, pursuant to an
Agreement and Plan of Reorganization, dated as of July 8, 1999, by and
between ADFI and the Orbitex Group of Funds, whereby ADGVF would sell,
transfer and assign to the Orbitex Group of Funds certain of the assets
ADGVF, in exchange for which the Orbitex Group of Funds would assume
certain of the liabilities of ADGVF and deliver to ADGVF no par, Class
A Shares of OGF having an aggregate value equal to the aggregate value
of the shares of common stock, par value $1.00 per share, of ADGVF
outstanding (the "ADGVF Common Stock") as of the Closing Date.
II. To transact any other business, not currently contemplated, that may
properly come before the Special Meeting, in the discretion of the
proxies or their substitutes.
ADGVF's stockholders of record as of the close of business on July 8,
1999, (the "Record Date") are entitled to notice of, and to vote at, the Special
Meeting or any adjournment thereof. On the Record Date, (number of shares)
shares of ADGVF common stock were issued and outstanding and entitled to vote.
A copy of the Reorganization Agreement is attached as APPENDIX A to the
attached Prospectus/Proxy Statement and forms a part of such Prospectus/Proxy
Statement.
THE BOARD HAS UNANIMOUSLY APPROVED THE REORGANIZATION AS BEING IN THE
BEST INTEREST OF ADGVF'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE REORGANIZATION.
STOCKHOLDERS ARE ENCOURAGED TO VOTE PROMPTLY BY EXECUTING AND RETURNING
IN THE ENCLOSED ENVELOPE THE ACCOMPANYING PROXY. STOCKHOLDERS MAY ALSO VOTE BY
TELEPHONE OR THROUGH THE INTERNET BY FOLLOWING THE SIMPLE INSTRUCTIONS ON THE
PROXY CARD PROVIDED. YOUR VOTE IS IMPORTANT FOR THE PURPOSE OF ENSURING A QUORUM
AT THE SPECIAL MEETING. ANY PROXY MAY BE REVOKED AT ANY TIME BEFORE THEY ARE
EXERCISED BY THE SUBSEQUENT EXECUTION AND SUBMISSION OF A REVISED PROXY, BY
GIVING WRITTEN NOTICE OF REVOCATION TO ADGVF AT ANY TIME BEFORE THE PROXY IS
EXERCISED OR BY VOTING IN PERSON AT THE SPECIAL MEETING.
BY THE ORDER OF THE BOARD OF DIRECTORS
Secretary
M. Fyzul Khan
August 9, 1999
<PAGE>
---------------------
PROSPECTUS/PROXY STATEMENT
---------------------
ORBITEX GROUP OF FUNDS
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(888)-ORBITEX
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(800)-348-5032
---------------------
This Prospectus/Proxy Statement, dated August 9, 1999, is being
furnished in connection with the solicitation of proxies by the Board of
Directors (the "Board") of American Diversified Funds, Inc. ("ADFI") for use at
a special meeting of the stockholders of American Diversified Global Value Fund
("ADGVF") to be held in connection with the proposed business combination (the
"Reorganization") of ADGVF with the Orbitex Growth Fund ("OGF" or "Orbitex
Growth Fund"), a separate series of the Orbitex Group of Funds, a business
trust organized under the laws of the State of Delaware (the "Orbitex Group
of Funds"), at the principal executive offices of Orbitex Management on
September 10, 1999, at 12:00 p.m., local time (including any adjournment or
postponement thereof, the "Special Meeting"). It is expected that the Notice
of Special Meeting of Stockholders, this Prospectus/Proxy Statement and the
accompanying materials will first be mailed to stockholders on or about
August __, 1999.
In connection with the Reorganization, you should note that:
- The holders of outstanding shares of ADGVF's common stock
(including fractional shares) will receive a proportionate number
of Class A Shares (or fractions thereof) of OGF, based on the
relative net asset values per share of each of ADGVF and OGF as of
the Closing Date;
- ADGVF employs a value-oriented strategy for selecting investments
with a secondary focus on growth stocks; and Orbitex Growth Fund
employs a growth-oriented strategy for selecting investments with
a secondary focus on value stocks. In other words, Orbitex
Management employs measures of intrinsic value, such as the
company's price-to-earnings ratio, historical trends and cash
flows to select investments for OGF. Unlike ADGVF, however, in
addition to limiting its investment to securities that meet
traditional value investing criteria, OGF also seeks companies
that Orbitex Management believes will experience earnings and cash
flow growth. Also, even though Orbitex Growth Fund is permitted to
invest in the securities of foreign issuers, it typically does not
do so to the same extent that ADGVF Fund has historically done. In
addition, OGF does not seek current income, and consequently does
not invest any significant portion of its assets in debt
securities; and
- Orbitex Management is the investment adviser to OGF.
A representative of Tait, Weller & Baker, independent accountants to
ADGVF, will be available for the Special Meeting.
THE BOARD OF DIRECTORS OF AMERICAN DIVERSIFIED FUNDS, INC. UNANIMOUSLY
RECOMMENDS THAT YOU VOTE "FOR" THE REORGANIZATION DESCRIBED IN THE NOTICE OF
SPECIAL MEETING OF STOCKHOLDERS.
This Prospectus/Proxy Statement provides you with detailed information
about the proposed Reorganization that a prospective investor ought to know
before voting. We encourage you to read this entire document carefully and
retain it for future reference.
The following documents are incorporated herein in their entirety by
reference.
1. The Current Prospectus of ADGVF, dated July 31, 1998, as
supplemented May 7, 1999, which may be obtained without charge by writing to
ADGVF, c/o PFPC, Inc. ("PFPC"), 400 Bellevue Parkway, Suite 108, Wilmington, DE
19809, or by calling 1-800-348-5032.
2. The Annual Report of ADGVF for the fiscal year ended March 31, 1999,
which may be obtained without charge by writing or calling PFPC at the address
or telephone number listed above in (1).
3. The Current Prospectus of the Orbitex Group of Funds, dated July
9, 1999, which may be obtained without charge by writing to the Orbitex Group
of Funds, 410 Madison Avenue, New York, New York 10022 or by calling
(888)-ORBITEX.
-i-
<PAGE>
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
I. SYNOPSIS.............................................................................1
A. Questions and Answers About the Reorganization..............................1
B. ADFI and ADGVF..............................................................2
C. The Orbitex Growth Fund.....................................................2
D. The Orbitex Group of Funds..................................................4
E. Orbitex Management..........................................................4
F. The Reorganization..........................................................5
G. The Special Meeting of Stockholders.........................................5
II. RISK FACTORS.........................................................................6
III. THE PROPOSAL: TO CONSIDER AND APPROVE THE PROPOSED REORGANIZATION....................6
A. Introduction................................................................6
B. Reasons For The Reorganization..............................................6
C. Procedures for the Reorganization...........................................7
D. Orbitex Management..........................................................8
E. Description of the Orbitex Growth Fund Agreement............................9
F. Pro Forma Capitalization...................................................11
G. Comparative Investment Policies and Styles.................................12
H. The Orbitex Group of Funds.................................................12
I. Certain Comparative Information about Maryland funds and Delaware Funds....13
J. Federal Income Tax Consequences............................................15
K. Accounting Consequences....................................................15
L. Expenses...................................................................15
M. Required Vote..............................................................15
N. Recommendation of the ADGVF Board of Directors.............................15
IV. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.....................................16
V. OTHER MATTERS.......................................................................16
VI. ADDITIONAL INFORMATION..............................................................16
</TABLE>
-i-
<PAGE>
I. SYNOPSIS
The following summary is qualified in its entirety by the more detailed
information contained in other parts of this Prospectus/Proxy Statement. We urge
you to review this entire Prospectus/Proxy Statement.
A. QUESTIONS AND ANSWERS ABOUT THE REORGANIZATION
Q: WHAT IS THE PURPOSE OF THE REORGANIZATION?
A: The purpose of the Reorganization is to transfer certain of the assets
and certain of the liabilities of ADGVF to OGF, which has as its
adviser, Orbitex Management. Orbitex Management was selected by
the Board of Directors of ADFI and is now serving as investment
adviser to ADGVF pending completion of the Reorganization.
Q: WHAT ARE THE BENEFITS OF THE PROPOSED REORGANIZATION?
A: We believe the Reorganization should offer the following benefits:
- After the Reorganization, ADGVF stockholders will hold Class A
Shares of beneficial interest in OGF. As holders of these Class A
Shares, they will have the benefit of exchange privileges with
Class A Shares of beneficial interest in the Orbitex Group of
Funds.
- OGF, as part of the Orbitex Group of Funds, will have the benefit
of marketing and administrative resources significantly greater
than those available to ADGVF in the past.
- While the expense ratio of managing OGF in respect of the Class A
Shares is likely to be higher than ADGVF's expense cap (ADGVF
imposed an expense cap on August 1, 1988 of 1.88%), the overall
expenses of managing OGF can be spread over the several classes of
shares that are to be issued by OGF in the future.
Q: WHAT WILL HAPPEN IF THE REORGANIZATION IS NOT COMPLETED?
A: If the Reorganization is not approved by the requisite vote of ADGVF's
stockholders, Orbitex Management is not expected to continue to provide
investment advisory services to ADGVF beyond a reasonable transitional
period required for ADGVF to retain another investment adviser or
liquidate. The Board believes that, in that situation, the prospects of
finding another investment adviser would be minimal.
Q: WHAT ARE THE DETRIMENTS OF THE PROPOSED REORGANIZATION?
A: We expect the Reorganization to have the following detriments:
- Since August 1, 1998, the expense ratio of OGF in respect of the
Class A shares has been voluntarily capped by Orbitex Management
at 2.00% of average net assets. The prior adviser of ADGVF had
voluntarily imposed a lower annual expense cap of 1.88% of ADGVF's
average net assets on ADGVF's total expenses.
Q: WHAT WILL HAPPEN TO THE ADGVF SHARES IN MY ACCOUNT?
A: For the ADGVF shares in your account (including fractional shares), you
will receive a proportionate number of Class A Shares (or fractions
thereof) of OGF, based on the relative net asset values per share of
each of ADGVF and OGF as of the Closing Date. The value of your account
will be the same immediately after the Reorganization as it was
immediately before the Reorganization.
Q: WHAT DO I NEED TO DO NOW?
A: Just vote your shares as soon as possible by mail by signing and
returning the Proxy Card in the enclosed envelope, or by telephone at
1-800-690-6903 or through the internet at www.proxyvote.com by
following the simple instructions on the Proxy Card, so that your
shares can be voted at the Special Meeting.
Q: WHEN DO WE EXPECT THE REORGANIZATION TO BE COMPLETED?
<PAGE>
A: We hope to complete the Reorganization as quickly as possible after
the stockholder vote.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: If you have more questions about the Reorganization, you should
contact:
M. Fyzul Khan
410 Park Avenue
New York, New York 10022
Telephone No.: (212) 891-7900
Fax No.: (212) 616-7954
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote at any time before your proxy is voted at
the Special Meeting. You can do this in one of three ways. First, you
can send a written notice stating that you revoke your proxy. Second,
you can complete and submit a new Proxy Card, dated a later date than
the first Proxy Card. Third, you can attend the Special Meeting and
vote in person. Your attendance at the meeting without voting will not,
however, revoke your proxy. If you have instructed a broker to vote
your shares, you must follow directions received from your broker to
change those instructions.
Q: WHAT ARE THE TAX CONSEQUENCES OF THE REORGANIZATION?
A: We have structured the Reorganization so that neither ADGVF nor its
stockholders will recognize any gain or loss for federal income tax
purposes in the Reorganization. The closing of the Reorganization is
conditioned, among other things, on the delivery of the legal opinion
of counsel to the Orbitex Group of Funds as to the tax consequences as
to ADGVF and ADGVF's stockholders.
B. ADFI AND ADGVF
ADFI is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended. ADGVF is a separate series, and
the only active series, of ADFI. ADGVF's investment objective is to achieve
medium-term capital growth, income and safety through investments in common
stock, preferred stocks (or common stock equivalents, such as convertible
securities), money market instruments and corporate, U.S. Government and agency
debt securities. Under normal market conditions, ADGVF invests 75% of its assets
in equity securities. At July [1], 1999, ADGVF's net asset value was $7.4
million.
C. THE ORBITEX GROWTH FUND
OGF is a separate series of the Orbitex Group of Funds. The number of
Class A Shares of beneficial interest of OGF issued in the Reorganization will
correspond to a proportionate number of shares of ADGVF Common Stock issued and
outstanding under Maryland law immediately prior to the Reorganization, based on
the relative net asset values per share of each of ADGVF and OGF as of the
Closing Date. Although Class A Shares of OGF are normally subject to a front-end
sales load, the shares issued in the Reorganization will not be subject to any
sales load. Class A shares are also subject to an annual sales or distribution
("Rule 12b-1") charge equal to 0.40% of the Orbitex Growth Fund's average daily
net assets, whereas the ADGVF shares are subject to an annual distribution fee
under Rule 12b-1 equal to 0.35% of ADGVF's average daily net assets. OGF also
offers Class B Shares that are subject to a deferred sales charges and higher
Rule 12b-1 fees than Class A Shares.
The investment objective of OGF is long-term growth of capital through
selective investment in securities of companies of all sizes that offer
potential for growth. The Fund's investment adviser applies a "bottom-up"
blending of value and growth criteria to select the Fund's investments, seeking
to identify companies that are undervalued by the stock market and less
expensive than comparable companies. To do so, Orbitex Management employs
measures of intrinsic value, such as the company's price-to-earnings ratio,
historical stock prices and cash flows. Orbitex Management also employs criteria
to identify companies it believes will experience earnings growth. Finally,
Orbitex Management attempts to identify investment and economic themes that can
drive profits.
3
<PAGE>
Like ADGVF, OGF invests primarily in common stocks. Although OGF is
permitted to invest in the securities of foreign issuers, unlike ADGVF, it
invests primarily in the securities of domestic issuers. OGF invests in
companies regardless of their stock market value (or "market capitalization").
D. THE ORBITEX GROUP OF FUNDS
The Orbitex Group of Funds, like ADFI, is an open-end management
investment company. The Orbitex Group of Funds was established pursuant to an
Agreement and Declaration of Trust, as amended, dated December 31, 1996 (the
"Trust Agreement"). Currently, the Orbitex Group of Funds consists of five funds
that invest primarily in equity securities ("Equity Funds"): Orbitex Growth
Fund, Orbitex Info-Tech & Communications Fund, Orbitex Strategic Natural
Resources Fund, Orbitex Focus 30 Fund and the Orbitex Health & Biotechnology
Fund. The Orbitex Group of Funds also includes a money market fund, the Orbitex
Cash Reserves Fund.
Each Equity Fund is a separate investment portfolio and has its own
investment objectives, programs, policies and restrictions. The Orbitex
Info-Tech & Communications Fund seeks superior long-term capital growth through
selective investment in communication, information and related technology
companies. The Orbitex Strategic Natural Resources Fund seeks capital growth
through a flexible policy of investing in securities of companies engaged in
natural resources industries and industries supportive to natural resources
industries. The Orbitex Focus 30 Fund seeks long-term growth of capital and
current income through focused investment primarily in the securities of the 30
companies listed on the New York Stock Exchange that make up the Dow Jones
Industrial Average. The Orbitex Health & Biotechnology Fund seeks long-term
growth of capital through selective investment in the securities of companies
engaged in the healthcare, health products, pharmaceuticals, medical research
and biotechnology research development and implementation and other areas
related to the health industry.
Each Equity Fund offers two classes of shares: Class A Shares, which
have an initial sales charge, and Class B Shares, which have a deferred sales
charge. Class A Shares have a front end load, and purchasers thereof pay a
charge of up to 5.75% of the purchase price. Purchases of Class A Shares of $1
million or more are not subject to any front load sales charge, but may be
subject to a 1.0% contingent sales charge if redeemed within one year. Class A
Shares of an Equity Fund are subject to a service and distribution fee pursuant
to Rule 12b-1 at the rate of 0.40% of the average daily net assets of the Fund.
Although there is no front end load sales charge for purchasers of Class B
Shares, there is a contingent deferred sales charge on shares redeemed within
six years of purchase ranging from 5% in the first year to 1% in the sixth year.
After the sixth year, Class B Shares convert to Class A Shares. Class B Shares
of an Equity Fund are subject to service and distribution fees pursuant to Rule
12b-1 at the rate of 1.0% of the average daily net assets of the Fund. The
Orbitex Focus 30 Fund also has Class D Shares outstanding that were issued in
connection with the acquisition of the assets and liabilities of the ASM Index
30 Fund. The Orbitex Cash Reserves Fund is also a separate investment portfolio
of the Orbitex Group of Funds. Its investment objective is to provide current
income while maintaining liquidity and a stable share price of $1.00. The
Orbitex Cash Reserves Fund offers two classes of shares: Institutional Service
Shares which provide shareholder services at an additional 0.25% fee and
Institutional Shares which offer no shareholder services.
Each Equity Fund is managed by Orbitex Management, which directs the
day-to-day operations of each Equity Fund. The Orbitex Group of Funds principal
executive offices are at 410 Park Avenue, New York, New York 10022 and its
telephone number is 1-888-ORBITEX.
E. ORBITEX MANAGEMENT
Orbitex Management is a registered investment adviser under the
Investment Advisers Act of 1940, as amended. Orbitex Management is currently
organized as a New York corporation. Orbitex Management is a majority owned
subsidiary of Capital Management Ltd., a Bahamian corporation and an investment
management firm. Mr. Thomas Bachmann is the controlling person of Capital
Management Ltd. Orbitex Management is the parent corporation of ORBITEX
Strategies, Inc., a Delaware corporation whose primary business is commodities,
futures, foreign exchange and separate account management. Orbitex Management's
principal executive offices are at 410 Park Avenue, New York, New York 10022.
Orbitex Management is affiliated with Orbitex Management Ltd., a Bahamian
4
<PAGE>
corporation and investment adviser that provides investment services to
individuals and institutions including Canadian unit trusts.
F. THE REORGANIZATION
In the Reorganization:
- Each outstanding share of ADGVF's common stock (including
fractional shares) will be converted into a proportionate number
of Class A Shares (or fractions thereof) of OGF, based on the
relative net asset values per share of each of ADGVF and OGF as of
the Closing Date.
- OGF GENERALLY HAS SIMILAR INVESTMENT OBJECTIVES AND POLICIES AS
ADGVF. ADGVF employs a value-oriented strategy for selecting
investments with a secondary focus on growth stocks; and Orbitex
Growth Fund employs a growth-oriented strategy for selecting
investments with a secondary focus on value stocks. In other
words, Orbitex Management employs measures of intrinsic value,
such as the company's price-to-earnings ratio, historical trends
and cash flows to select investments for OGF. Unlike ADGVF,
however, in addition to limiting its investment to securities that
meet traditional value investing criteria, OGF also seeks
companies that Orbitex Management believes will experience
earnings and cash flow growth. Also, even though the OGF is
permitted to invest in the securities of foreign issuers, it
typically does not do so to the same extent that ADGVF has
historically been permitted to do. In addition, OGF does not seek
current income, and consequently does not invest any significant
portion of its assets in debt securities.
- Orbitex Management, the current investment advisor to ADGVF, is
also the investment adviser to OGF. Orbitex Management is entitled
to an investment management fee at an annual rate equal to 0.75 of
1% of the net assets of OGF whereas it is entitled to receive an
advisory fee equal to 1% of the net assets of ADGVF.
- OGF WILL ACQUIRE ALL OF ADGVF'S ASSETS AND CERTAIN OF ITS
LIABILITIES.
- Following the Reorganization, ADGVF may be continued under
Maryland law. None of the members of the Board is a member of the
Board of Trustees of the Orbitex Group of Funds.
G. THE SPECIAL MEETING OF STOCKHOLDERS
Time, Place: The Special Meeting is scheduled to be held at
12:00 p.m., on September 10, 1999 at the principal
executive offices of Orbitex Management, 410 Park
Avenue, New York, New York 10022.
Record Date: The Board has fixed the close of business on
July 8, 1999 as the record date (the "Record Date")
for the determination of ADGVF's stockholders
entitled to notice of and to vote at the Special
Meeting. On the Record Date, [
] shares of ADGVF's common stock were
issued and outstanding and entitled to vote. Each
share is entitled to one vote and each fractional
share is entitled to a fractional vote. All voting
rights are non-cumulative.
Required Vote: The affirmative vote of the holders of a majority
of ADGVF's outstanding shares of common stock is
required to approve the Reorganization. Broker
non-votes and abstentions will have the same effect
as votes against the Reorganization.
Quorum: The presence, in person or by proxy, at the Special
Meeting of a majority of ADGVF's shares of common
stock outstanding on the record date is required
for a quorum. Shares represented by abstentions or
broker non-votes are counted for quorum purposes.
5
<PAGE>
Voting of Proxies: If the Proxy Card furnished with this
Prospectus/Proxy Statement is properly signed and
returned, or if you vote your proxy by telephone at
1-800-690-6903 or through the internet at
www.proxyvote.com by following the simple
instructions on the Proxy Card, it will be voted in
accordance with the instructions on that Proxy
Card. If no instructions are specified on a Proxy
Card that is properly signed and returned, the
shares represented by the Proxy Card will be voted
"FOR" the Reorganization.
Recommendation of THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
the Board: "FOR" THE REORGANIZATION.
II. RISK FACTORS
Because OGF invests primarily in the securities of domestic companies,
its returns are more affected by developments in the economy of the United
States than ADGVF, which historically spread its investments throughout the
global economy. On the other hand, because OGF does not invest significantly in
foreign companies, it is less subject than ADGVF to risks of foreign investments
such as the impact on its investments from unstable international political and
economic conditions, currency fluctuation, foreign controls on investment and
currency exchange, withholding taxes, a lack of adequate information regarding
the companies in which it invests, less liquid and more volatile markets, and
the lack of government regulation in certain foreign markets.
III. THE PROPOSAL: TO CONSIDER AND APPROVE THE PROPOSED REORGANIZATION
A. INTRODUCTION
On May 4, 1999, the Board unanimously approved, and recommended that
the ADGVF stockholders approve, an Agreement and Plan of Reorganization (the
"Reorganization Agreement") by and between ADFI and the Orbitex Group of Funds
substantially in the form attached hereto as APPENDIX A. The Reorganization
Agreement provides, among other things, for the sale, transfer and assignment to
OGF, a separate series of the Orbitex Group of Funds, and the purchase from ADFI
of certain of the assets and certain of the liabilities of ADFI. Each ADGVF
stockholder will receive for his or her shares of ADGVF common stock a
proportionate number of no par value, Class A Shares of beneficial interest of
OGF (each an "OGF Share" and together the "OGF Shares"), based on the relative
net asset values per share of each of ADGVF and OGF as of the Closing Date. (See
"Federal Income Tax Consequences" below). The mailing address and principal
executive offices of the Orbitex Group of Funds are located at 410 Park Avenue,
New York, New York 10022.
B. REASONS FOR THE REORGANIZATION
Orbitex Management serves as the investment adviser to ADGVF. The
principal business address of Orbitex Management is 410 Park Avenue, New York,
New York 10022. Orbitex Management is also adviser to the Orbitex Group of
Funds. The purpose of the Reorganization is to merge ADGVF into OGF. As of May
5, 1999, Orbitex Management replaced ADGVF's previous investment adviser. On May
4, 1999, at a meeting of the Board including, all of the independent directors
of the Board, the Board unanimously voted to terminate ADGVF's former advisor,
American Diversified Asset Management, Inc.'s ("ADAM") investment advisory
agreement, by and between ADFI, on behalf of ADGVF and ADAM (the "ADAM
Agreement"), effective immediately, following ADAM's notice to the Board that it
and its parent company were insolvent. The Board also terminated the
sub-advisory agreement with Ladas & Hulings, Inc. ("Ladas") at that meeting. In
seeking a replacement for ADAM and Ladas, the Board interviewed several
potential replacement advisers, including Orbitex Management. Orbitex Management
agreed to serve as investment adviser to ADGVF and to assume ADAM's obligation
to ADGVF under the voluntary expense reimbursement limitation if, among other
things, the Board would agree to recommend the Reorganization to the ADGVF
stockholders for consideration and approval. In evaluating Orbitex Management
and the Reorganization, the Board reviewed materials furnished, and considered
representations made, by Orbitex Management regarding its philosophy of
management, performance expectations and methods of operation insofar as they
related to ADGVF, and its prior performance as investment adviser to the Orbitex
Group of Funds. In selecting Orbitex Management and
6
<PAGE>
recommending the Reorganization for approval by the ADGVF stockholders, the
Board, considering the best interests of the ADGVF stockholders, took into
account all such factors as they deemed relevant, but gave equal consideration
to each of the following factors. Among such factors were the following: nature,
quality and extent of the services furnished by Orbitex Management; the
advantages and possible disadvantages to ADGVF of merging into OGF; the
investment record of OGF and Orbitex Management; possible economies of scale
resulting from an enhanced distribution network and the elimination of
duplicative fixed overhead expenses; comparative data as to advisory fees; the
voluntary expense limitation assumed by Orbitex Management; the financial
resources of Orbitex Management; and the importance of obtaining high quality
professional services for the stockholders of ADGVF.
Orbitex Management currently serves as the adviser pursuant to an
investment advisory agreement, dated May 5, 1999, by and between ADGVF and
Orbitex Management (the "Orbitex Agreement"). The Board approved the Orbitex
Agreement on May 4, 1999. The Orbitex Agreement is permitted pursuant to Rule
15a-4 under the Investment Company Act of 1940, as amended (the "1940 Act").
Rule 15a-4 allows an investment adviser to be retained by a fund in the event
that the agreement between the fund's former investment adviser and the fund has
been terminated. Under this rule, the newly-retained investment adviser to a
fund is permitted to serve the fund under an investment advisory agreement that
has not yet been approved by shareholders if (i) the agreement has been approved
by the fund's governing board as specified in the 1940 Act, (ii) the
compensation to be received by the investment adviser does not exceed the
compensation paid to the former investment adviser and (iii) the agreement is
approved by shareholders within the one hundred twenty (120) day period
following the termination of the prior agreement. The terms and conditions of
the Orbitex Agreement are substantially the same as those of the ADAM Agreement
including, that Orbitex has continued ADAM's voluntary agreement to limit
ADGVF's annual expenses to 1.88% of the average daily net assets of ADGVF. Under
the Orbitex Agreement, Orbitex Management maintains a continuous investment
program for ADGVF by making decisions and placing orders to buy, sell or hold
particular securities. Orbitex Management also supervises most, if not all,
matters relating to the operation of ADGVF and supplies, or arranges for others
to supply, most of ADGVF's corporate officers, clerical staff, office space,
equipment and services. Under the Management Agreement, Orbitex Management is
entitled to receive a monthly fee at an annual rate of 1% of ADGVF's average
daily net assets for services provided to ADGVF. In addition to the fee payable
to Orbitex Management, ADGVF is responsible for its operating expenses,
including: (i) interest and taxes; (ii) brokerage and futures commissions; (iii)
insurance premiums; (iv) compensation and expenses of directors other than those
affiliated with Orbitex Management; (v) legal and audit expenses; (vi) fees and
expenses of the custodian, shareholder servicing agent and transfer agent; (vii)
fees and expenses for registration or qualification of ADGVF and its shares
under federal or state securities laws; (viii) expenses of preparing, printing
and mailing reports and notices and proxy material to shareholders; (ix) other
expenses incidental to holding any shareholders' meetings; (x) dues or
assessments of or contributions to the Investment Company Institute or any
successor; and (xi) such non-recurring expenses as may arise, including
litigation affecting ADGVF and the legal obligations with respect to which ADGVF
may have to indemnify its officers and directors.
The Orbitex Agreement terminates pursuant to the provisions of Rule
15a-4 upon the expiration of 120 days of the date of the investment advisory
agreement, unless earlier terminated by either ADGVF or Orbitex Management upon
sixty (60) days' notice to the other party. Orbitex Management has advised the
Board that it currently does not intend to continue as adviser to ADGVF if the
ADGVF stockholders fail to approve the Reorganization. Orbitex Management has,
however, agreed that if the ADGVF stockholders fail to approve the
Reorganization by the requisite vote, it will continue to serve as interim
investment adviser to ADGVF for a reasonable period of time until a replacement
adviser is selected or until ADGVF is liquidated. The Board believes that in
such a case the prospects of finding a replacement adviser would be minimal.
C. PROCEDURES FOR THE REORGANIZATION
In order to accomplish the Reorganization, OGF will transfer to each
stockholder a proportionate number of OGF Shares that correspond to the dollar
value of shares of ADGVF common stock issued and outstanding on the Closing Date
under Maryland law, based on the relative net asset values per share of each of
ADGVF and OGF as of the Closing Date. The obligations of each of ADGVF and the
Orbitex Group of Funds to consummate the Reorganization are conditioned upon
several customary conditions having been satisfied including, the approval of
the Reorganization by the holders of the requisite number of ADGVF shareholders.
On the Closing Date, as defined in the
7
<PAGE>
Reorganization Agreement (the "Closing Date"), ADGVF will sell, transfer and
assign to OGF, and OGF will purchase from ADGVF, certain of the assets and
certain of the liabilities of ADGVF in exchange for shares of OGF. Holders of
the shares of ADGVF Common Stock outstanding (including fractional shares) prior
to the Reorganization will receive a proportionate number of OGF shares (or
fraction thereof) after the Reorganization based on the relative net asset
values per share of each of ADGVF and OGF as of the Closing Date. The dollar
value of each ADGVF stockholder's account with OGF immediately after the
Reorganization will be the same as the dollar value of such ADGVF stockholder's
account with ADGVF immediately prior to the Reorganization.
It will not be necessary for holders of certificates representing
shares of ADGVF Common Stock to exchange their certificates for new certificates
representing the OGF Shares following consummation of the Reorganization. New
certificates will not be issued by ADGVF after the Reorganization to the ADGVF
stockholders unless specifically requested in writing. ADGVF stockholders who
have not been issued certificates and whose shares are held in an open account
will automatically have the OGF shares issued to them in the Reorganization held
in an open account of OGF.
D. ORBITEX MANAGEMENT
Orbitex Management is a registered investment adviser under the
Investment Advisers Act of 1940, as amended. Orbitex Management is currently
organized as a New York corporation. Orbitex Management is a majority owned
subsidiary of Capital Management Ltd., a Bahamian corporation and an investment
management firm. Mr. Thomas Bachmann is the controlling person of Capital
Management Ltd. Orbitex Management is the parent corporation of Orbitex
Strategies, Inc., a Delaware corporation whose primary business is commodities,
futures, foreign exchange and separate account management. Orbitex Management's
principal executive offices are at 410 Park Avenue, New York, New York 10022.
Orbitex Management is affiliated with Orbitex Management Ltd., a Bahamian
corporation and an investment adviser that provides investment services to
individuals and institutions including Canadian unit trusts.
Set forth below is a list of the directors and principal executive
officers of Orbitex Management, which indicates each business, profession,
vocation or employment of a substantial nature in which each director or
principal executive officer has been engaged for the past five (5) years for his
or her own account or in the capacity of director, officer, partner or trustee.
All directors and officers have as their business address 410 Park Avenue, New
York, New York 10022. Each director or principal executive of Orbitex Management
that is an officer or trustee of the Orbitex Group of Funds is indicated by an
asterisk next to his or her name.
<TABLE>
<CAPTION>
Position with Orbitex Management and
Name, Age and Business Address Age Principal Occupation within the Past Five (5) Years
- ------------------------------ --- ---------------------------------------------------
<S> <C> <C>
*THOMAS T. BACHMANN 52 Co-Chairman of the Board of Directors. Chairman of the Board
of Directors of Orbitex Management, Ltd. (1986-present).
OTTO J. FEBER 66 Director. President and Vice Chairman, Altamira Management
Ltd. (Investment Management Company) (1987-1997); President of
Felcom Capital Corp. (1985-present).
*M. FYZUL KHAN 28 Legal Counsel and Secretary; Corporate Secretary of Orbitex
Group of Funds; Attorney at CIBC Oppenheimer (investment
banking and management) (August 1997-March 1998); law student
at Widener University School of Law (September 1994-June 1997).
*JAMES L. NELSON 49 Co-Chairman of the Board of Directors. President, AVIC Group
International (Telecommunication) (1993-1995); President,
Eaglescliff Corporation (Consulting) (1987-present).
8
<PAGE>
*KIMBERLY S. RATZ 38 Treasurer. Chief Financial Officer, America's Mortgage Source
(Mortgage banking) (1996-1997); Vice President and Retail
Finance Manager, Chase Manhattan Mortgage (Mortgage banking)
(1984-96).
*RICHARD E. STIERWALT 44 Chief Executive Officer, President and Director. Consultant,
Bisys Management Inc. (Mutual Fund Distributor) (1996-1998);
President, Bisys Management Inc. (Mutual Fund Distributor)
(1995-1996); Chairman and Chief Executive Officer, Concord
Financial Group (Mutual Fund Distributor) (1987-1995).
JOHN W. DAVIDSON 53 Chief Investment Officer. President and Chief Executive
Officer, Mutual of America Capital Management (1996-1998).
President and Chief Executive Officer, Munich Re Capital
Management (1994-1996). Vice President, Investment Strategist
and Portfolio Manager, Bankers Trust Company (1987-1994).
</TABLE>
E. DESCRIPTION OF THE ORBITEX GROWTH FUND AGREEMENT
The Investment Advisory Agreement between the Orbitex Group of Funds
and Orbitex Management in respect of OGF (the "OGF Agreement") provides that
Orbitex Management will render investment supervisory and corporate
administrative services to OGF, subject to the general supervision of the
trustees of the Orbitex Group of Funds (the "Trustees") and the stated policies
of OGF. It will be the responsibility of Orbitex Management to perform, or
supervise the performance of, services in connection with OGF, including (i) the
development of a continuing program for the management of OGF's assets; (ii) the
placement of buy, sell or exchange orders, or other trades in portfolio
securities and other assets; (iii) the placement of orders and the negotiation
of commissions for the execution of transactions in securities with or through
broker-dealers, underwriters or issuers; (iv) the preparation and supervision of
the preparation of shareholder reports and other shareholder communications; and
(v) the assimilation and evaluation of business and financial information in
connection with the exercise of its duties.
As compensation for all services rendered, facilities provided and
expenses paid or assumed by Orbitex Management under the OGF Agreement, Orbitex
Management is entitled to receive a management fee at an annual rate of 0.75 of
1%. In addition, Orbitex Management has voluntarily agreed to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratio with respect to Class A Shares
of OGF does not exceed 2.00%. Orbitex Management may discontinue this waiver
and reimbursement at any time without notice.
The information set forth below shows what ADGVF's management and
administrative fee, other expense and total operating expense ratios would have
been for its most recent fiscal year if the proposed management fee payable to
Orbitex Management had been in effect, based on ADGVF's assets as of March 31,
1999 of approximately $X million.
9
<PAGE>
<TABLE>
<CAPTION>
12 MONTHS ENDED MARCH 31, 1999
- ------------------------------------------------------------------------------------------------------------
% OF AVERAGE DAILY
NET ASSETS AMOUNT OF FEE % CHANGE
------------------ ------------------------ ---------------
<S> <C> <C> <C>
MANAGEMENT FEE
Present Fee 1.00% $88,174
Proposed Fee 0.75% $66,130
Difference (0.25)% $(22,044) [(0.25)]%
ADMINISTRATIVE FEE
Present Fee N/A(1) $31,679
Proposed Fee 0.10% $40,000
Difference N/A $(8,321) [(0.26)]%
--------
</TABLE>
The following table describes the fees and expenses that an ADGVF
Stockholder may pay in connection with an investment in ADGVF today and in OGF
on a pro forma basis.
<TABLE>
<CAPTION>
SHAREHOLDER FEES ORBITEX GROWTH FUND
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) ADGVF CLASS A
<S> <C> <C>
Maximum Sales Charge (load) on Purchases 4.75% 5.75%
(as a percentage of offering price
Sales charge on Reinvested Dividends None None
Redemption Fees None None
Exchange Fees None None
<CAPTION>
ANNUAL OPERATING EXPENSES ORBITEX GROWTH FUND
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)) ADGVF CLASS A
<S> <C> <C>
Advisory Fee 1.00% 0.75%
Distribution and/or Service Fee (12b-1) 0.35% 0.40%
Other Annual Expenses 1.78% 16.88%
TOTAL FUND OPERATING EXPENSES 3.13%(2) 18.03%(3)
</TABLE>
The following example(4) indicates both for the current expenses of ADGVF and
the expenses of OGF, the direct and indirect expenses an investor could expect
to incur in a one-year, three-year, five-year and ten-year period, respectively:
- -----------------------------
(1) The present fee is determined by administrative and overhead costs rather
than by a fixed percentage of average daily net assets.
(2) Prior to March 1, 1999, ADGVF's prior adviser voluntarily agreed to waive
fees and reimbursement expenses so that the expense ratio would not exceed
1.88%.
(3) Orbitex Management has voluntarily agreed to waive its management fee and to
reimburse expenses, other than extraordinary or non-recurring expenses, so
that the expense ratio with respect to Class A Shares of OGF does not exceed
2.00%. Orbitex Management may discontinue this waiver and reimbursement at
any time without notice.
(4) This example is based on the same hypothetical factors used by other funds
in their prospectuses: a $10,000 investment, 5% total return each year and
no change in ADGVF's expense levels. This example is the same whether an
ADGVF Stockholder sold his or her shares at the end of the period or kept
them. This example is for comparison only since actual returns and expenses
will be different.
10
<PAGE>
<TABLE>
<CAPTION>
One Year Three Years Five years Ten Years
-------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Current ADGVF: $766 $1,395 $2,037 $3,750
Current of OGF: $2,164 $4,747 $6,701 $9,749
</TABLE>
The OGF Agreement may be terminated at any time by either party
thereto, without the payment of any penalty, upon sixty (60) days' prior written
notice to the other party; PROVIDED, that in the case of termination by the
Orbitex Group of Funds, such action has been authorized (i) by resolution of the
Orbitex Group of Funds' Board of Trustees, including the vote or written consent
of Trustees of the Orbitex Group of Funds who are not parties to OGF Agreement
or interested persons of either party thereto, or (ii) by vote of a majority of
the outstanding voting securities of the Orbitex Group of Funds.
Securities held by OGF may also be held by other funds or clients for
which Orbitex Management acts as a manager or adviser. Securities may be held
by, or be appropriate investments for, OGF as well as such other clients of
Orbitex Management. Because of different objectives or other factors, a
particular security may be bought for one or more clients when one or more
clients are selling the same security. If purchases or sales of securities for
OGF, or other funds or clients for which Orbitex Management acts as manager or
adviser arise for consideration at or about the same time, transactions in such
securities will be made, insofar as feasible, for the respective funds and
clients in a manner deemed equitable to all. To the extent that transactions on
behalf of more than one client of Orbitex Management during the same period may
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price.
The advisory services of Orbitex Management to OGF are not exclusive
under the terms of the Orbitex Growth Fund Agreement, and Orbitex Management is
also free to, and does, render such services to others.
Set forth below is a table listing the other funds for which Orbitex
Management currently acts as investment adviser, together with certain
information concerning the investment advisory fees paid by each such fund, all
of which are funds within the Orbitex Group of Funds.
<TABLE>
<CAPTION>
ADVISORY FEE
-------------------------------------------------------------
NET ASSETS AT JUNE 22, ANNUALIZED RATE
1999 (PERCENTAGE OF AVERAGE DAILY NET
Fund (IN MILLIONS) ASSETS)
- ---- --------------------------- -------------------------------
<S> <C> <C>
Orbitex Strategic Natural Resources Fund $5.2 1.25%
Orbitex Info-Tech & Communications Fund $68.0 1.25%
Orbitex Growth Fund $1.5 0.75%
</TABLE>
F. PRO FORMA CAPITALIZATION
The capitalization of ADGVF and OGF as of April 30, 1999, and their pro
forma combined capitalization as of that date after giving effect to the
Reorganization are as follows:
<TABLE>
<CAPTION>
(Unaudited) (Unaudited) Pro Forma
OGF - Class A ADGVF Combined
------------- ----- --------
<S> <C> <C> <C>
Aggregate Net Assets $1,421,648 $7,904,113 $9,352,761
Shares Outstanding 76,173 495,664 499,759
Net Asset Value Per Share $18.66 $15.95 $18.66
</TABLE>
11
<PAGE>
G. COMPARATIVE INVESTMENT POLICIES AND STYLES
ADGVF's investment objective is medium-term capital growth, income and
safety through investments in common stocks, preferred stocks (or common stock
equivalents, such as convertible securities), money market instruments and
corporate, government and agency debt securities. Up to 75% of the Fund's assets
normally are invested in selected equity securities. Normally, 25% of the Fund's
assets are invested in government, agency or corporate notes (usually two to ten
year maturities at the time of purchase) or in short-term money market
instruments, or cash or cash equivalents (including repurchase agreements with
respect to obligations of the U.S. Government, its agencies or
instrumentalities, maturing in seven days or less).
As the adviser to ADGVF, Orbitex Management generally seeks to purchase
equity securities it believes are priced at a discount to or below their
long-term fundamental value. This strategy includes a dividend-yield test that
seeks to determine the historical trading ranges of companies' securities and to
identify companies whose dividend yields are near their highs for the preceding
five to seven years. In addition, Orbitex Management normally reviews historic,
absolute and relative ranges of the traditional value analysis factors seeking
one or more of the following characteristics: above-average dividend yield, low
stock price in relation to book value, low price-to-earnings ratio, low
price-to-cash flow ratio, low price-to-sales ratio, low corporate leverage or
high normalized-earnings power. Orbitex Management also endeavors to determine
which of these relationships is relevant to a portfolio company or its industry
in determining over-valuation and under-valuation. Prior to buying a company's
securities, Orbitex Management generally looks for a "value catalyst" - some
fundamental change occurring that might cause the securities markets to
recognize the long-term fundamental value. Orbitex Management also seeks to sell
a Fund investment as its market price approaches Orbitex Management's estimated
fundamental value and reinvest the proceeds in other securities offering a
greater discount to fundamental value.
ADGVF employs a value-oriented strategy for selecting investments with
a secondary focus on growth stocks; and Orbitex Growth Fund employs a
growth-oriented strategy for selecting investments with a secondary focus on
value stocks. In other words, Orbitex Management employs measures of intrinsic
value, such as the company's price-to-earnings ratio, historical trends and cash
flows to select investments for OGF. Unlike ADGVF, however, in addition to
limiting its investment to securities that meet traditional value investing
criteria, OGF also seeks companies that Orbitex Management believes will
experience earnings and cash flow growth. Also, even though the Orbitex Growth
Fund is permitted to invest in the securities of foreign issuers, it typically
does not do so to the same extent that ADGVF has historically been permitted to
do. In addition, OGF does not seek current income, and consequently does not
invest any significant portion of its assets in debt securities.
ADGVF's fundamental investment restrictions are virtually identical to
those of the Orbitex Growth Fund. The text of ADGVF's investment restrictions
and OGF's investment restrictions are attached hereto as APPENDIX B.
H. THE ORBITEX GROUP OF FUNDS
GENERAL. The Orbitex Group of Funds, like ADGVF, is an open-end
management investment company. Its principal executive offices are at 410 Park
Avenue, New York, New York 10022 and its telephone number is 1-888-ORBITEX. The
Prospectus of the Orbitex Group of Funds, as filed with the SEC on April 23,
1999 is incorporated herein by reference and forms part of this Prospectus/Proxy
Statement in its entirety. The financial statements of the Orbitex Group of
Funds for the period ended April 30, 1999 are attached hereto as APPENDIX C.
The Orbitex Group of Funds was established pursuant to the Trust
Instrument. Currently, the Orbitex Group of Funds consists of six funds, the
Orbitex Strategic Natural Resources Fund, the Orbitex Info-Tech & Communications
Fund, the Orbitex Focus 30 Funds, the Orbitex Health and Biotechnology Fund, the
Orbitex Cash Reserves Fund and OGF. Each fund is a separate investment portfolio
and has its own investment objectives, programs, policies and restrictions.
Each fund is managed by Orbitex Management, which directs the
day-to-day operations of each fund. American Data Services, an affiliate of
Orbitex Management, serves as administrator, custodian, accounting services
12
<PAGE>
agent, transfer agent and dividend dispensing agent for: Orbitex Focus 30 Fund,
Orbitex Cash Reserves Fund and Orbitex Health & Bio-Technology Fund. State
Street Bank and Trust Company serves as sub-administrator, custodian, accounting
services agent, transfer agent and dividend dispensing agent for: Orbitex
Strategic Natural Resource Fund, Orbitex Info-Tech & Communications Fund and
Orbitex Growth Fund.
I. CERTAIN COMPARATIVE INFORMATION ABOUT MARYLAND FUNDS AND DELAWARE FUNDS
SUMMARY OF THE TRUST INSTRUMENT AND BY-LAWS. OGF has been formed as one
of several series established by the Orbitex Group of Funds pursuant to the
Trust Instrument and under Delaware law. As such, the operations of OGF will be
governed by the Trust Instrument, the Orbitex Group of Funds' By-Laws (the
"By-Laws") and applicable Delaware law, rather than by ADFI's Articles of
Incorporation, ADFI's By-Laws and Maryland Law. The operations of OGF will be
subject to the provisions of the 1940 Act, the rules and regulations of the SEC
thereunder and applicable state securities law. The Trust Instrument and By-Laws
will govern OGF. In addition, the Orbitex Group of Funds' By-Laws require the
affirmative vote of at least a majority of the Trustees to amend the provisions
of the By-Laws.
TRUSTEES OF THE ORBITEX GROUP OF FUNDS. Subject to the provisions of
the Trust Instrument, the operations of OGF are supervised by the Trustees. The
responsibilities, powers and fiduciary duties of the Trustees will be
substantially the same as those of the directors of ADFI. Under Maryland Law, a
director of ADFI may be removed with or without cause only by the affirmative
vote of a majority of shares entitled to vote for the election of directors. The
provisions of the Trust Instrument would permit the Board of Trustees to remove
a Trustee with or without cause by action of two-thirds of the Trustees or by
the vote of holders of shares of beneficial interest ("Beneficial Owners") of
two-thirds of the shares of the Orbitex Group of Funds present, in person or
represented by proxy, at a special meeting of stockholders called for such
purpose. The Trust Instrument also requires a vote of a majority of the Trustees
or the vote of Beneficial Owners of a majority of the outstanding shares of the
Orbitex Group of Funds to amend such removal provision. The incumbent Trustees
of the Orbitex Group of Funds will remain as the Trustees of the Orbitex Group
of Funds upon consummation of the Reorganization.
SERIES OF DELAWARE TRUSTS AND MARYLAND CORPORATIONS. The Trust
Instrument permits the Board of Trustees to create one or more series of the
Orbitex Group of Funds and, with respect to each series, to issue an unlimited
number of full or fractional shares of that series or of one or more classes of
shares of that series. Each share of a series of a Delaware Trust, like each
share of a series of a Maryland corporation, represents an equal proportionate
interest with each other share in that series, none having priority or
preference over another. The directors of ADFI have substantially similar rights
under ADFI's Articles of Incorporation and Maryland law, except that they are
required to specify a fixed number of shares authorized for issuance. Delaware
law also provides that liabilities arising under a series shall only be
enforceable against that series and not the entire business trust or any other
series thereunder if (i) the trustees maintain separate and distinct records for
each series, (ii) the trustees hold and account for the assets of each series
separately from the other assets of the business trust or any series thereof,
(iii) if the trust instrument so provides and (iv) if the business trust's
certificate of trust sets forth notice of such limited liability. As the Trust
Instrument provides for such limited liability, the Orbitex Group of Funds'
Certificates of Trust gives notice of such limited liability and the Trustees
maintain separate records and assets for each series, any liability arising
under one series would not affect the other series. Maryland law has no such
provision.
DELAWARE TRUST BENEFICIAL OWNER LIABILITY AND MARYLAND CORPORATION
STOCKHOLDER LIABILITY. One area of difference between the two forms of
organizations is the potential liability of Beneficial Owners and ADGVF
stockholders. Under Delaware law, Beneficial Owners generally are not personally
liable for the obligations of a Delaware business trust, such as the Orbitex
Group of Funds. A Beneficial Owner is entitled to the same limitation of
liability extended to stockholders of private, for-profit corporations. Similar
statutes or other authority limiting Beneficial Owner liability, however, do not
exist in most other states. As a result, to the extent that the Orbitex Group of
Funds or a Beneficial Owner thereof is subject to the jurisdiction of courts in
those states, the courts may not apply Delaware law, thereby subjecting the
Beneficial Owner to liability. To guard against this risk, the Trust Instrument
(i) contains an express disclaimer of Beneficial Owner liability for acts or
obligations of the Orbitex Group of Funds and requires that notice of such
disclaimer be given in each agreement, obligation and instrument entered into by
the Orbitex Group of Funds or its Trustees and (ii) provides for indemnification
out of the Orbitex Group of Funds' property for any Beneficial Owner held
personally liable for the obligations of the Orbitex Group of Funds. Thus, the
risk of a Beneficial
13
<PAGE>
Owner incurring financial loss beyond his or her investment because of
Beneficial Owner liability is limited to circumstances in which (i) a court
refuses to apply Delaware law, (ii) no contractual limitation of liability is in
effect or (iii) the Orbitex Group of Funds is unable to meet its obligations to
indemnify a Beneficial Owner. In light of Delaware law, the nature of OGF's
business and the nature of its assets, the Board believes that the risk of
personal liability to a Beneficial Owner is extremely remote.
Stockholders of a Maryland corporation currently have no personal
liability for the corporation's acts or obligations, except that a stockholder
may be liable to the extent that: (i) the dividends he or she receives exceed
the amount which properly could have been paid under Maryland law, (ii) the
consideration paid to him by the Maryland corporation for his or her stock was
paid in violation of Maryland law or (iii) he or she otherwise receives any
distribution, payment or release which exceeds the amount which he or she could
properly receive under Maryland law.
LIABILITY OF DIRECTORS IN MARYLAND AND TRUSTEES IN DELAWARE. Maryland
law provides that in addition to any other liability imposed by law, the
directors of a Maryland corporation may be liable to a Maryland corporation: (i)
for voting or assenting to the declaration of any dividend or other distribution
of assets to stockholders which is contrary to Maryland law, (ii) for voting or
assenting to certain distributions of assets to stockholders during liquidation
of the corporation, and (iii) for voting or assenting to a repurchase of the
shares of a Maryland corporation in violation of Maryland law. In the event of
any litigation against the directors or officers of ADFI, Maryland law permits
ADFI to indemnify a director or officer for certain expenses and to advance
money for such expenses only if he or she demonstrates that he or she acted in
good faith and reasonably believed that his or her conduct was in the best
interest of ADFI. In addition, ADFI's Articles of Incorporation limit the
personal liability of directors and officers to the corporation and its
stockholders for monetary damages, except to the extent that a judgment or other
final adjudication adverse to the director or officer is entered in a proceeding
based on a finding in the proceeding that the director's or officer's action, or
failure to act, was the result of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
Under Delaware law, a trustee of a business trust, while acting in such
capacity, is not personally liable to any person other than the business trust
and beneficial owners for any act, omission or obligation of the business trust
or any trustee thereof. In addition, to protect the Trustees against such
liability, the Trust Instrument provides that the Trustees will not be liable to
any person in connection with the assets or affairs of the Orbitex Group of
Funds and that a Trustee will not be liable for any errors of judgment or
mistakes of fact or law; but nothing in the Trust Instrument protects a trustee
against any liability to the Orbitex Group of Funds or its Beneficial Owners to
which he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his or her office.
VOTING RIGHTS OF MARYLAND CORPORATION STOCKHOLDERS AND DELAWARE
BENEFICIAL OWNERS. Neither Maryland corporations nor Delaware business trusts
are required to hold annual meetings. ADFI's By-laws, however, require ADFI to
hold an annual meeting of stockholders in every year in which the 1940 Act
requires stockholders to elect directors, approve an investment advisory
agreement, ratify the selection of an independent public accountant or approve a
distribution agreement. Maryland law and the Articles of Incorporation and
By-laws of ADFI provide that a special meeting of stockholders may be called by
(i) the Chairman of the Board, (ii) the President of ADFI, (iii) a majority of
the Board of Directors, (iv) for matters not substantially the same as a matter
voted on at any special meeting of the shareholders held during the preceding
twelve (12) months, the holders of shares representing at least 25% of the
shares entitled to vote at such meeting and (v) for matters substantially the
same as a matter voted on at any special meeting of the shareholders held during
the preceding twelve (12) months, the holders of shares representing at least
50% of the shares entitled to vote at such meeting. The Trust Instrument
provides that Trustees may call special meetings of Beneficial Owners from time
to time for any purpose as may be prescribed by Delaware law, the Trust
Instrument or the Orbitex Group of Funds' By-laws. The Trust Instrument,
however, does not grant Beneficial Owners the right to call such special
meetings.
The Trust Instrument provides that the Beneficial Owners have the power
to vote only with respect to (i) the election or removal of Trustees as provided
therein, (ii) the approval or termination of investment advisory agreements or
distribution contracts, (iii) the termination or reorganization of the Orbitex
Group of Funds or any series of the Orbitex Group of Funds, (iv) with respect to
amendments of the Trust Instrument, to the extent the amendment adversely
14
<PAGE>
affect the rights of the Beneficial Owners, and (v) with respect to such
additional matters as may be required by law, the Trust Instrument, By-Laws or
as the Trustees may consider necessary or desirable. ADFI's Articles of
Incorporation and Maryland law generally give stockholders substantially similar
voting rights. The Trust Instrument requires 30% of the Beneficial Owners of
shares entitled to vote to establish a quorum for the transaction of business at
a meeting of Beneficial Owners. ADFI's Articles of Incorporation require a
majority of the holders of shares present, in person or by proxy, at the meeting
to constitute a quorum.
The Trust Instrument provides that Beneficial Owners of each series
also have the power to vote on any matter required to be submitted to the
Beneficial Owners by the 1940 Act, Delaware law or otherwise. Under the Trust
Instrument, any matter affecting a particular series will not be considered
approved unless approved by the required vote of the Beneficial Owners of that
series, and, to the extent permitted by the 1940 Act, only Beneficial Owners of
the affected series are entitled to vote on matters concerning that series.
Subject to the foregoing, Beneficial Owners are not required to vote separately
on the selection of independent accountants, the election of trustees or any
submission with respect to a contract with a principal underwriter or
distributor.
RIGHT OF INSPECTION. Maryland law provides that persons who have been
stockholders of record for six (6) months or more and who own at least five
percent of the shares of ADGVF may inspect the books of account and stock ledger
of ADGVF. OGF's Beneficial Owners have the same rights to inspect the records,
accounts and books of OGF as are permitted stockholders of a Delaware business
corporation. Currently, each stockholder of a Delaware business corporation is
permitted to inspect the records, accounts and books of a business corporation
for any legitimate business purposes.
The foregoing is only a summary of certain of the differences between
ADFI, its Articles of Incorporation and By-laws and Maryland law and the Orbitex
Group of Funds, the Trust Instrument, the By-Laws and Delaware Law. It is not a
complete list of differences. ADGVF Stockholders should refer to the provisions
of such Articles of Incorporation, By-laws and Maryland law and the Trust
Instrument, By-laws and Delaware Law directly for a more thorough comparison.
ADGVF Stockholders on the Record Date may obtain copies of the organizational
documents of ADGVF by calling the telephone number set forth on the first page
of this Proxy Statement.
J. FEDERAL INCOME TAX CONSEQUENCES
It is anticipated that the transactions contemplated by the
Reorganization Agreement will be tax-free. Consummation of the Reorganization is
subject to receipt of an opinion of Rogers & Wells LLP, counsel to the Orbitex
Group of Funds, that, under Section 368(a) of the Internal Revenue Code of 1986,
as amended, the merger of ADGVF into OGF pursuant to the Reorganization
Agreement will not give rise to the recognition of income, gain or loss for
federal income tax purposes to ADGVF or the ADGVF Stockholders. An ADGVF
Stockholder's adjusted basis for tax purposes in shares of OGF after the
Reorganization will be the same as his or her adjusted basis for tax purposes in
the shares of ADGVF Common Stock immediately before the Reorganization. Each
ADGVF Stockholder should consult his or her own tax adviser with respect to the
state and local tax consequences of the proposed transaction.
K. ACCOUNTING CONSEQUENCES
The Reorganization will be accounted for as a business combination
under generally accepted accounting principles for investment companies.
L. EXPENSES
The expenses related to the Reorganization will be borne by Orbitex
Management.
15
<PAGE>
M. REQUIRED VOTE
The affirmative vote of a majority of the shares of ADGVF Common Stock
entitled to vote on the Proposal is required to approve the Proposal. For
purposes of the vote for the Proposal, abstentions and broker non-votes will
have the same effect as votes cast against the Proposal.
N. RECOMMENDATION OF THE ADGVF BOARD OF DIRECTORS
The Board has unanimously approved the Reorganization and has
determined that the Reorganization is in the best interests of ADGVF and that
the interests of existing stockholders of ADGVF will not be diluted as a result
of the Reorganization. THE ADGVF BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE REORGANIZATION.
IV. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
To the knowledge of the Board, the following persons owned of record 5%
or more of ADGVF Common Stock outstanding shares at June 30, 1999 and have as
their business address American Diversified Funds, Inc., 410 Park Avenue, New
York, New York 10022.
<TABLE>
<CAPTION>
Amount and Nature of Ownership
Name and Address of Beneficial Owner Beneficial Ownership of Class
- ------------------------------------- -------------------- ----------
<S> <C> <C>
James B. Rea, Jr.
and immediate family 8.75
Gerald H. Borden 5.53
R. Paul Toeppen 15.18
</TABLE>
As of June 24, 1999 there were 479,525 shares outstanding, of which 162,856.401
shares (or 33.95% of the total outstanding shares) were owned beneficially,
directly or indirectly, controlled or held with power to vote, by the directors
and officers of the Fund.
V. OTHER MATTERS
The Board does not intend to bring any matters before the Special
Meeting other than the Reorganization described above, and the Board is not
aware of any other matters to be brought before the Special Meeting thereof by
others. If any other matters legally come before the Special Meeting, it is
intended that the accompanying proxy will be voted on such matters in accordance
with the best judgment of the persons named in said proxy.
In the event that sufficient votes in favor of the proposals set forth
in the Notice of Special Meeting of Stockholders are not received by the date of
the Meeting, the proxyholders may propose one or more adjournments of the
Special Meeting for a period or periods of not more than sixty (60) days in the
aggregate to permit further solicitation of proxies, even though a quorum is
present. Any such adjournment will require the affirmative vote of a majority of
the votes cast on the question, in person or by proxy, at the session of the
Special Meeting to be adjourned. Proxies which are instructed to be voted
against the matters to be considered at the Special Meeting when it convenes
will be voted against a proposal to adjourn.
VI. ADDITIONAL INFORMATION
PERSONS MAKING THE SOLICITATION. The solicitation of proxies may be
made by, among others, directors of ADFI and officers and employees of
Orbitex Management.
Shareholders Communication Corporation ("SCC") has been retained to
assist in the solicitation of proxies. SCC shall be paid approximately $5,000 by
Orbitex Management. In addition, Automatic Data Processing ("ADP") has been
retained to assist in the voting of proxies by telephone or the internet. ADP
will be paid approximately $3,500 by Orbitex Management. Orbitex Management will
reimburse ADP and SCC for their related out-of-pocket expenses. The solicitation
of proxies will be largely by mail, but may include, without additional cost to
ADGVF, telephone, telegraphic or oral communications by directors, officers or
employees of Orbitex Management.
The expense of preparation, printing and mailing this Prospectus/Proxy
Statement and the other proxy materials that accompany the Prospectus/Proxy
Statement will be borne by Orbitex Management. Orbitex Management will
16
<PAGE>
reimburse banks, brokers and others for their reasonable expenses in forwarding
proxy solicitation materials to the beneficial owners of the ADGVF Common Stock.
RESPECTFULLY SUBMITTED,
M. Fyzul Khan
Secretary
Dated: August 9, 1999
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE SPECIAL MEETING AND
WHO WISH TO HAVE THEIR SHARES VOTED ARE URGED TO VOTE THEIR SHARES BY MAIL BY
SIGNING AND RETURNING THE PROXY CARD IN THE ENCLOSED ENVELOPE (NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES), OR BY TELEPHONE OR THROUGH THE
INTERNET BY FOLLOWING THE SIMPLE INSTRUCTIONS ON THE PROXY CARD.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE YOUR FULL TITLE AS SUCH, WHERE STOCK IS HELD JOINTLY, BOTH
SIGNATURES ARE REQUIRED.
17
<PAGE>
APPENDIX A
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
ORBITEX GROUP OF FUNDS
AND
AMERICAN DIVERSIFIED FUNDS, INC.
DATED AS OF JULY 8, 1999
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
PAGE
TABLE OF CONTENTS
<S> <C>
ARTICLE I......................................................................................CERTAIN DEFINITIONS 1
ARTICLE II......................................................................................THE REORGANIZATION 3
2.1. The Reorganization.............................................................................3
2.2. Closing........................................................................................3
2.3. Trustees and Officers of the Surviving Entity..................................................4
ARTICLE III.....................................................................VALUATION AND CONVERSION OF SHARES 4
3.1. Exchange of Shares.............................................................................4
3.2. Exchange of Certificates.......................................................................4
ARTICLE IV...........................................................REPRESENTATIONS AND WARRANTIES OF THE COMPANY 4
4.1. Organization and Qualification.................................................................4
4.2. Authority, Authorization and Enforceability....................................................5
4.3. Capitalization.................................................................................5
4.4. Subsidiaries...................................................................................5
4.5. No Conflicts...................................................................................5
4.6. Financial Statements; No Undisclosed Liabilities...............................................5
4.7. Books and Records..............................................................................6
4.8. Legal Proceedings..............................................................................6
4.9. No Brokers or Finders..........................................................................6
4.10. Investment Company Registration................................................................6
ARTICLE V..............................................................REPRESENTATIONS AND WARRANTIES OF THE TRUST 6
5.1. Organization and Qualification.................................................................6
5.2. Authority, Authorization and Enforceability....................................................6
5.3. Capitalization.................................................................................7
5.4. No Conflicts...................................................................................7
5.5. Legal Proceedings..............................................................................7
5.6. No Brokers or Finders..........................................................................7
ARTICLE VI...................................................................................PRE-CLOSING COVENANTS 7
6.1. Investigations and Examinations................................................................7
6.2. Conduct of Business............................................................................7
6.3. Covenant to Proceed............................................................................7
6.4. Notice of Material Changes.....................................................................8
6.5. Regulatory Approvals...........................................................................8
6.6. No Default.....................................................................................8
6.7. Preparation of Proxy Materials.................................................................8
A-i
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.8. Investment Company Registration................................................................8
ARTICLE VII..............................................................................CONDITIONS TO THE CLOSING 8
7.1. Conditions Precedent to the Obligations of the Company on behalf of the Fund to
Complete the Closing...........................................................................8
7.2. Conditions Precedent to the Obligations of the Trust on behalf of OGF to Complete the
Closing........................................................................................9
ARTICLE VIII............................................................SURVIVAL OF REPRESENTATIONS AND WARRANTIES 10
ARTICLE IX.............................................................................................TERMINATION 11
ARTICLE X............................................................................................MISCELLANEOUS 11
10.1. Publicity; Confidentiality....................................................................11
10.2. Waivers and Amendments........................................................................11
10.3. Governing Law.................................................................................11
10.4. Notices.......................................................................................12
10.5. Binding Effect; Assignment....................................................................12
10.6. Variations in Pronouns........................................................................13
10.7. Counterparts..................................................................................13
10.8. Complete Agreement............................................................................13
10.9. Headings......................................................................................13
10.10. Severability of Provisions....................................................................13
</TABLE>
A-ii
<PAGE>
EXHIBITS
EXHIBIT A - Officer's Certificate of the Trust
EXHIBIT B - Secretary's Certificate of the Trust
EXHIBIT C - Opinion of Counsel to the Trust
EXHIBIT D - Officer's Certificate of the Fund
EXHIBIT E - Opinion of Counsel to the Fund
APPENDICES
APPENDIX 2.1 - Excluded Assets and Liabilities
A-iii
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") dated as of
July 8, 1999, by and between ORBITEX GROUP OF FUNDS, a Delaware business trust
(the "Trust"), on behalf of its series, ORBITEX GROWTH FUND ("OGF"), and
AMERICAN DIVERSIFIED FUNDS, INC., a Maryland corporation (the "Company"), on
behalf of its series, AMERICAN DIVERSIFIED GLOBAL VALUE FUND (the "Fund").
WHEREAS, the Board of Trustees of the Trust and the Board of Directors
of the Company have each determined that it is advisable and in the best
interests of their respective shareholders to consummate, and have approved, the
business combination transaction provided for herein pursuant to which the Fund
would sell, transfer and assign to the Trust, and the Trust would purchase from
the Fund, certain of the assets and certain of the liabilities of the Fund (the
"Reorganization"); and
WHEREAS, ORBITEX MANAGEMENT, INC., a New York corporation ("Orbitex"),
has been engaged pursuant to Investment Advisory Agreement, dated May 5, 1999,
by and between Orbitex and the Company on behalf of the Fund to serve as interim
investment advisor to the Fund in accordance with Rule 15a-4 under the 1940 Act;
and
WHEREAS, it is the intention of the parties that the Reorganization
shall qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the Trust, on behalf of OGF, and the Company, on behalf of the
Fund, desire to make certain representations, warranties and agreements in
connection with the Reorganization and also to prescribe various conditions to
the Reorganization.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants, representations and warranties herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is agreed:
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the following
meanings:
"ACTION OR PROCEEDING" means any action, suit, proceeding or
arbitration by any Person, or any investigation or audit by any Governmental or
Regulatory Body.
"ADS" has the meaning specified in Section 3.1(c).
"AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person.
"ASSUMED ASSETS" has the meaning specified in Section 2.1.
"ASSUMED LIABILITIES" has the meaning specified in Section 2.1.
"AUTHORITIES" has the meaning specified in Section 2.2.
"BOOKS AND RECORDS" means the Fund's or OGF's, as the case may be,
minute books, stock transfer ledgers, financial statements, tax returns and
related work papers and letters from accountants, and other similar records.
"BUSINESS COMBINATION" means, with respect to any Person, any
reorganization, consolidation, conversion, or combination to which such Person
is a party, any sale, dividend, split or other disposition of capital stock or
other equity
A-1
<PAGE>
interests of such Person, any sale, dividend or other disposition of all or
substantially all of the assets and properties of such Person or any sale,
dividend or disposition of a portion of the assets or properties of such Person
(other than in the ordinary course of business).
"BUSINESS DAY" means a day other than Saturday, Sunday or a day on
which banks located in New York City are authorized or obligated to close.
"CLOSING" has the meaning specified in Section 2.3.
"CLOSING DATE" has the meaning specified in Section 2.3.
"CONTRACT" means any agreement, lease, evidence of indebtedness,
mortgage, indenture, security agreement or other contract.
"DELAWARE LAW" has the meaning specified in Section 2.1 hereof.
"DECLARATION OF TRUST" has the meaning specified in Section 5.1.
"FUND" has the meaning specified in the preamble hereof.
"FUND SHARE" has the meaning specified in Section 4.3.
"GCLM" has the meaning specified in Section 2.1.
"GOVERNMENTAL OR REGULATORY BODY" means any court, tribunal, arbitrator
or any government or political subdivision thereof, whether federal, state,
county, local or foreign, or any agency, authority, official or instrumentality
of any such government or political subdivision.
"LAW" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of any Governmental or Regulatory Body.
"LIABILITIES" means all indebtedness, obligations and other liabilities
of the Fund or OGF, as the case may be, whether absolute, accrued, contingent,
fixed or otherwise, or whether due or to become due.
"MATERIAL ADVERSE EFFECT" as to any Person means a material adverse
effect on the business, prospects, results of operations or financial condition
of such Person.
"1940 ACT" means the Investment Company Act of 1940, as amended.
"1933 ACT" means the Securities Act of 1933, as amended.
"OGF" has the meaning specified in the preamble hereof.
"OGF SHARE" has the meaning specified in Section 3.1(b).
"ORBITEX" has the meaning specified in the preamble hereof.
"ORDER" means any writ, judgment, decree, injunction or similar order
of any Government or Regulatory Body, in each case whether preliminary or final.
"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental or Regulatory Body or other entity.
"PROXY MATERIALS" has the meaning specified in Section 6.8 hereof.
A-2
<PAGE>
"REGULATORY REPORTS" has the meaning specified in Section 4.10.
"REORGANIZATION" has the meaning specified in the recitals.
"SEC" means the United States Securities and Exchange Commission.
"SURVIVING ENTITY" has the meaning specified in Section 2.1 hereof.
"TRUST" has the meaning specified in the preamble hereof.
THE REORGANIZATION
THE REORGANIZATION.
Subject to the requisite approval of the stockholders of the
Company and to the other terms and conditions contained herein, the Company
agrees to assign, sell, convey, transfer, and deliver to the Trust as of the
Closing Date certain of the assets of the Fund of every kind and nature existing
on the Closing Date, other than those assets set forth on Appendix 2.1 (the
"Assumed Assets"). The Trust agrees in exchange therefor: (i) to assume all of
the Fund's liabilities existing on or after the Closing Date, whether or not
determinable on the Closing Date, other than those liabilities set forth on
Appendix 2.1 hereto (the "Assumed Liabilities") and (ii) to issue and deliver to
the Fund a number of full and fractional OGF Shares having an aggregate net
asset value equal to the value of the Assumed Assets of the Fund less the
Assumed Liabilities of the Fund, determined as provided for under Article III.
The Assumed Assets of the Fund to be acquired by the Trust
shall include (except for the excluded assets set forth on appendix 2.1 hereto),
without limitation, all cash, cash equivalents, securities, receivables
(including interest or dividends receivables), claims, choses in action, and
other property owned by the Fund, and any deferred or prepaid expenses shown as
an asset on the books of the Fund on the Closing Date. The Fund will pay or
cause to be paid to the Trust any dividend or interest payments received by it
on or after the Closing Date with respect to the Assumed Assets transferred to
the Trust hereunder, and the Trust will retain any dividend or interest payments
received by it after the Valuation Time with respect to the Assumed Assets
transferred hereunder without regard to the payment date thereof.
The Assumed Liabilities shall include (except for the excluded
liabilities set forth on Appendix 2.1 hereto) all of the Fund's liabilities,
debts, obligations, and duties, of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary course
of business, whether or not determinable on the Closing Date, and whether or not
specifically referred to in this Agreement. Notwithstanding the foregoing, the
Company agrees to use its best efforts to discharge all of the Fund's known
liabilities prior to the Closing Date, other than liabilities incurred in the
ordinary course of business.
Any reporting responsibility of the Company with respect to
the Fund is and shall remain the Company's responsibility.
Any transfer taxes payable upon issuance of the OGF Shares in
a name other than that of the registered holder on the Fund's books of the Fund
shares constructively exchanged for the OGF
A-3
<PAGE>
Shares shall be paid by the person to whom such OGF Shares are to be issued, as
a condition of such transfer.
CLOSING. The closing of the Reorganization (the "Closing") will take
place at the offices of Rogers & Wells LLP, 200 Park Avenue, New York, New York
10166, or at such other place as the parties hereto mutually agree, on a date
and at a time to be specified by the parties, which shall in no event be later
than 10:00 a.m., local time, on the fifth Business Day following satisfaction of
the conditions set forth in ARTICLE VII or, if permissible, waived in accordance
with this Agreement, or on such other date as the parties hereto mutually agree
(the "Closing Date"). Following the closing on the Closing Date, the parties
shall file the Certificates with the Authorities.
TRUSTEES AND OFFICERS OF THE SURVIVING ENTITY. From and after the
Closing Date, the trustees and officers of the Surviving Entity shall be the
same persons who were the trustees and officers of the Trust immediately prior
to the Closing Date, and each of them shall continue in office until their
successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Entity's Declaration of Trust and applicable law.
VALUATION AND CONVERSION OF SHARES
EXCHANGE OF SHARES.
The Valuation Time shall be as of the close of business of the
New York Stock Exchange on the Closing Date, or such other date as may be
mutually agreed upon in writing by the parties hereto (the "Valuation Time").
The net asset value per share of the shares of OGF to be
delivered to the Fund (the "OGF Shares"), the value of the Assumed Assets of the
Fund transferred hereunder, and the value of the Assumed Liabilities of the Fund
to be assumed hereunder shall in each case be determined as of the Valuation
Time.
All computations pursuant to this Section shall be made by or
under the direction of PFPC, Inc., as the Fund's administrator, and American
Data Services, Inc. ("ADS"), as the Trust's administrator, in accordance with
their regular practices.
EXCHANGE OF CERTIFICATES. On the Closing Date, the Trust shall
establish an open account in the share records of OGF in the name of each
stockholder of the Fund and representing the number of OGF Shares having an
aggregate net asset value equal to the value of the Assumed Assets of the Fund
transferred hereunder less the Assumed Liabilities, determined as provided in
Section 3.1. The accounts of stockholders of the Fund who have not been issued
certificates representing Fund shares and whose shares are held in open account
with PFPC, Inc., as the Fund's transfer agent, shall become open accounts with
ADS in its capacity as the transfer agent for OGF.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Trust as follows:
A-4
<PAGE>
ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Maryland and is duly qualified, licensed or admitted to do business and is in
good standing as a foreign corporation under the laws of the State of California
and each other jurisdiction in which the nature of the business to be conducted
by it makes such qualification, licensing or admission necessary, except in such
other jurisdictions where the failure to be so qualified, licensed or admitted
and in good standing would not, individually or in the aggregate, have a
Material Adverse Effect on the Fund or its properties and assets.
AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. The execution, delivery
and performance by the Company of this Agreement and the consummation of the
transactions contemplated herein have been duly and validly authorized by the
Board of Directors of the Company (the "Board") and the Board has resolved to
recommend the Reorganization to the Fund's stockholders and to call a special
meeting of the stockholders for the purpose of approving the Reorganization and
this Agreement, to be held as soon as is practicable after the execution of this
Agreement, but in no event later than sixty (60) days after OGF has furnished
the Proxy Materials to the Fund's stockholders. Other than the affirmative vote
of the holders of a majority of the Fund Shares at the Fund's stockholders
meeting or any adjournment thereof, no other corporate action on the part of the
Company or its stockholders is necessary to authorize the execution, delivery
and performance of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by the Company on behalf of the Fund and is a
legal, valid and binding obligation of the Company and the Fund enforceable in
accordance with its terms.
CAPITALIZATION. The authorized capital of the Fund consists of
20,000,000 shares of common stock, $1.00 par value per share, of which as of
July 6, 1999, 476,311.328 shares have been issued and are outstanding (each, a
"Fund Share" and collectively, the "Fund Shares"). The Fund Shares are duly
authorized, validly issued, outstanding, fully paid and nonassessable. The Fund
has no shares of its capital stock reflected on the Books and Records of the
Fund as treasury shares. There are no outstanding options, warrants or other
rights of any kind to acquire from the Fund any shares of capital stock or
equity interests of the Fund or securities convertible into or exchangeable for,
or which otherwise confer on the holder thereof any right to acquire, any such
additional shares, nor is the Fund committed to issue any stock appreciation or
similar rights or option, warrant, right or security.
SUBSIDIARIES. The Company has no subsidiaries.
NO CONFLICTS. Except for consents, approvals, or waivers to be received
prior to Closing, the execution, delivery and performance by the Company on
behalf of the Fund of this Agreement does not, and the consummation of the
transactions contemplated herein will not, (i) violate or conflict with the
terms, conditions or provisions of its Articles of Incorporation, By-Laws or any
Contract to which the Fund is a party or by which it or its assets are bound,
(ii) result in a breach or violation by the Company or the Fund of any of the
terms, conditions or provisions of any Law or Order, or (iii) require any
consent or approval of, filing with or notice to, any Governmental or Regulatory
Body.
FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
a. Prior to the execution of this Agreement, the Company on
behalf of the Fund has delivered to the Trust on behalf of OGF true and complete
copies of the audited balance sheet of the Fund as of March 31, 1999, and the
related audited statements of income and retained earnings and cash flows for
the period then ended, together with a true and correct copy of the report on
such audited information by Tait, Weller & Baker, certified public accountants,
and all letters from such accountants with respect to the results of such
audits; and
A-5
<PAGE>
Except as set forth in the notes thereto, all such
financial statements were prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods then ended,
and fairly present the financial condition and results of operations of the Fund
as of the respective dates thereof and for the respective periods covered
thereby subject, in the case of the unaudited financial statements, to normal
year-end audit adjustments and the absence of footnotes.
Except as reflected or reserved against in the audited March
31, 1999 balance sheet or in the notes thereto, there are no Liabilities
against, relating to or affecting the Company or the Fund or any of their
respective properties and assets, other than those incurred in the ordinary
course of business consistent with past practice, which, individually or in the
aggregate, would have a Material Adverse Effect on the Fund or its properties or
assets.
BOOKS AND RECORDS. The minute books and other similar records of the
Company as made available to OGF prior to the execution of this Agreement
contain a true and complete record of all action taken at all meetings and by
all written consents in lieu of meetings of the stockholders, the Board and
committees of the Board of the Company. The stock transfer ledgers and other
similar records of the Company as made available to OGF prior to the execution
of this Agreement accurately reflect all record transfers prior to the execution
of this Agreement in the capital stock of the Fund. The Company does not have
any Books and Records which have not been made available to OGF.
LEGAL PROCEEDINGS. There is no Action or Proceeding pending or, to the
best of the Company's knowledge, threatened against, relating to or affecting
the Fund.
NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of the
Company in connection with the negotiation, execution or performance of this
Agreement or any other agreement contemplated hereby, or the consummation of the
transactions contemplated hereby, is or will be entitled to any broker's or
finder's or similar fees or other commissions as a result of the consummation of
such transactions.
INVESTMENT COMPANY REGISTRATION. The Company is duly registered as a
diversified, open-end management investment company under the 1940 Act, and
under all applicable state statutes or related laws. The Company has delivered
to OGF a true and complete copy of the Company's currently effective
registration statement on Form N-1A relating to the Fund, as filed with the SEC,
and has made available to OGF all state and federal registration forms, all
prior Form N-1A filings relating to the Fund and all reports filed by the
Company with the SEC under the 1940 Act and the rules promulgated thereunder or
otherwise and under similar state statutes (together, the "Regulatory Reports")
within the last five (5) years. The information contained in the Regulatory
Reports was true and complete in all material respects as of the time of filing
and, except as indicated on a subsequent form or report filed before the Closing
Date, continues to be true and complete in all material respects. Each such
registration is in full force and effect. The Company has timely computed and
publicized the Fund's net asset value in accordance with the provisions of the
1940 Act.
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to the Company as follows:
ORGANIZATION AND QUALIFICATION. The Trust was organized pursuant to an
Agreement and Declaration of Trust, dated December 31, 1996 (the "Declaration of
Trust"), under the laws of the State
A-6
<PAGE>
of Delaware and is duly qualified, licensed or admitted to do business and in
good standing as a foreign trust under the laws of each jurisdiction in which
the nature of the business to be conducted by it makes such qualification,
licensing or admission necessary, except in such jurisdictions where the failure
to be so qualified, licensed or admitted or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect on the Trust or
its properties and assets.
AUTHORITY, AUTHORIZATION AND ENFORCEABILITY. The execution, delivery
and performance of this Agreement by the Trust and the consummation of the
transactions contemplated herein have been duly and validly authorized by all
necessary corporate action on the part of the Trust. This Agreement has been
duly and validly executed and delivered by the Trust and is a legal, valid and
binding obligation of the Trust enforceable against it in accordance with its
terms.
CAPITALIZATION. The OGF Shares, when issued, will be duly authorized,
validly issued, fully paid and non-assessable. The Trust is authorized to issue
an unlimited number of no par shares of beneficial interest with respect to its
series including OGF.
NO CONFLICTS. Except for consents, approvals, or waivers to be received
prior to Closing, the execution, delivery and performance of this Agreement by
the Trust on behalf of OGF does not, and the consummation of the transactions
contemplated herein will not, (i) violate or conflict with the terms, conditions
or provisions of the Declaration of Trust, By-Laws or any Contract to which OGF
is a party or by which it or its assets are bound, (ii) result in a breach or
violation by the Trust or OGF of any of the terms, conditions or provisions of
any Law or Order, or (iii) require any consent or approval of, filing with or
notice to, any Governmental or Regulatory Body.
LEGAL PROCEEDINGS. There is no Action or Proceeding pending or, to the
best of the Trust's knowledge, threatened against, relating to or affecting the
Trust or OGF which (i) could reasonably be expected to result in the issuance of
an Order restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated herein or (ii) could
reasonably be expected, individually or in the aggregate with any other such
Action or Proceeding, to have a Material Adverse Effect on the Trust, OGF or its
properties and assets.
NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other Person or firm engaged by or acting on behalf of the
Trust in connection with the negotiation, execution or performance of this
Agreement or the consummation of the transactions contemplated herein, is or
will be entitled to any broker's or finder's or similar fees or other
commissions as a result of the consummation of such transactions.
PRE-CLOSING COVENANTS
From the date of the execution of this Agreement through the Closing
Date:
INVESTIGATIONS AND EXAMINATIONS. Each party will cooperate and will
cause its representatives and agents to cooperate, in all reasonable respects in
connection with the performance by the other party of its inspection and
examination of such party.
CONDUCT OF BUSINESS. Each party will (i) conduct its business in the
ordinary and normal course of business consistent with past practice in all
material respects and (ii) comply with any Law and Order applicable to such
business.
A-7
<PAGE>
COVENANT TO PROCEED. Each party hereto covenants to use all reasonable
efforts within its control (i) to prevent the breach of any representation or
warranty of such party hereunder, (ii) to satisfy all covenants of such party
and closing conditions hereunder, (iii) to cooperate with the other party hereto
and to take or cause to be taken all other actions and do, or cause to be done,
all other things necessary, proper or appropriate to consummate and make
effective the transactions contemplated by this Agreement and (iv) to promptly
cure any breach of a representation, warranty or covenant of such party
hereunder upon its learning of same.
NOTICE OF MATERIAL CHANGES. Each party will notify the other party
hereto of any material adverse change in such party's business, prospects,
results of operations or financial condition as soon as practicable following
such change.
REGULATORY APPROVALS. Each party will (i) use best efforts and proceed
diligently and in good faith as promptly as practicable to obtain all consents,
approvals or actions of, to make all filings with and to give all notices to
Governmental or Regulatory Bodies required of the respective party or its
respective Affiliates to consummate the transactions contemplated hereby and
(ii) provide such other information and communications to such Governmental or
Regulatory Bodies as each such Governmental or Regulatory Body may reasonably
request in connection therewith. Each party will provide prompt notification to
the other party when any such consent, approval, action, filing or notice
referred to in clause (i) above is obtained, taken, made or given, as
applicable, and, prior to the Closing, will advise the other party of any
communications (and, unless precluded by Law, provide copies to the other party
of any such communications that are in writing) with any Governmental or
Regulatory Body regarding any of the transactions contemplated herein.
NO DEFAULT. No party hereto shall do any act or intentionally omit to
do any act which would cause a breach of any representation, warranty, covenant
or agreement by it under this Agreement.
PREPARATION OF PROXY MATERIALS. The Fund and OGF shall cooperate with
each other in the preparation of the Registration Statement on Form N-14
including the prospectus/proxy statement contained therein and other materials
(collectively, the "Proxy Materials") required to be delivered to the Fund's
stockholders pursuant to the 1933 Act and 1940 Act and any other applicable
federal or state securities laws in connection with the Reorganization and this
Agreement and to cause such Proxy Materials to be filed with the SEC as promptly
as practicable after the execution of this Agreement.
INVESTMENT COMPANY REGISTRATION. The Company will provide the Trust and
OGF with true and complete copies of all the Regulatory Reports filed from and
after the date hereof and prior to the Closing Date.
CONDITIONS TO THE CLOSING
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY ON BEHALF OF THE
FUND TO COMPLETE THE CLOSING. The obligations of the Company on behalf of the
Fund herein are subject to the fulfillment on or prior to the Closing Date of
the conditions set forth in this Section 7.1 below, any one or more of which may
be waived by the Company.
REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Trust contained in this Agreement shall be true, correct
and complete in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date except
A-8
<PAGE>
those representations and warranties expressly stated herein to be made as of a
specified date shall be true in all material respects only as of such date. The
Trust shall have performed and complied in all material respects with its
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
NO INJUNCTIONS. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of this Agreement or the related transactions shall be in effect.
SEC RELATED MATTERS. The Trust on behalf of OFG shall have
filed with the SEC a Registration Statement on Form N-14 under the 1933 Act and
the 1940 Act relating to the OGF Shares and that such registration statement,
including the Proxy Materials, shall have become effective and no order shall
have issued withdrawing, suspending or terminating such effectiveness, no stop
order shall have been issued with respect to the OGF Shares and no proceeding
for any such purpose shall have been initiated or threatened by the SEC.
CLOSING CERTIFICATES. The Trust shall have delivered to the
Fund a certificate, dated the Closing Date and executed by the Chairman of the
Board, the President or any Executive or Senior Vice President of the Trust,
substantially in the form and to the effect of Exhibit A hereto, and a
certificate, dated the Closing Date and executed by the Secretary or Assistant
Secretary of the Trust, substantially in the form and to the effect of Exhibit B
hereto.
OPINION OF COUNSEL. The Fund shall have received an opinion of
Rogers & Wells LLP, counsel to the Trust, dated the Closing Date, substantially
in the form and to the effect of Exhibit C hereto.
TAX OPINION OF COUNSEL. The Fund shall have received an
opinion from Rogers & Wells LLP, counsel to the Trust, to the effect that the
Reorganization will constitute a tax free reorganization as defined in Section
368(a) of the Code.
CLOSING DOCUMENTS. The Trust will execute and deliver, or
cause to be executed and delivered, to the Company all documents reasonably
requested by the Company or reasonably necessary to effectuate the transactions
contemplated hereby, including without limitation, state and local transfer tax
and gains tax returns and any other filings in any applicable governmental
jurisdiction.
FUND STOCKHOLDERS' MEETING. The Reorganization shall have
been approved by the holders of two-thirds of the Fund Shares, in accordance
with the requirements of the GCLM.
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE TRUST ON BEHALF OF OGF
TO COMPLETE THE CLOSING. The obligations of the Trust on behalf of OGF herein
are subject to the fulfillment on or prior to the Closing Date of the conditions
specified in this Section 7.2, any one or more of which may be waived by the
Trust.
REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations
and warranties of the Company contained in this Agreement shall be true, correct
and complete in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date except those
representations and warranties expressly stated herein to be made as of a
specified date shall be true in all material respects only as of such date. The
Company shall have performed and complied in all material respects with all
covenants and agreements required by this Agreement to be performed or complied
with by it on or prior to such Closing Date.
A-9
<PAGE>
NO INJUNCTIONS. No temporary restraining order, preliminary or
permanent injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the consummation
of this Agreement or the related transactions shall be in effect.
CLOSING CERTIFICATES. The Company shall have delivered to the
Trust a certificate, dated the Closing Date and executed by the Chairman of the
Board, the President or any Executive Vice President of the Company,
substantially in the form and to the effect of Exhibit D hereto and a
certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of the Company, substantially in the form and to the effect
of Exhibit E hereto.
OPINION OF COUNSEL. The Trust shall have received an opinion
of Spitzer & Feldman P.C., counsel to the Fund, dated the Closing Date,
substantially in the form and to the effect of Exhibit F hereto.
TAX OPINION OF COUNSEL. The Trust shall have received an
opinion from Rogers & Wells LLP, counsel to the Trust, to the effect that the
Reorganization will constitute a tax free reorganization as defined in Section
368(a) of the Code.
CLOSING DOCUMENTS. The Company will execute and deliver, or
cause to be executed and delivered, to the Trust all documents reasonably
requested by the Trust or reasonably necessary to effectuate the transactions
contemplated hereby, including without limitation, state and local transfer tax
and gains tax returns and any other filings in any applicable governmental
jurisdiction.
GOVERNMENTAL AND REGULATORY CONSENTS AND APPROVALS. Other than
the filing provided for by Section 2.3, all consents, approvals and actions of,
filings with and notices to any Governmental or Regulatory Body, required under
applicable securities "blue sky" laws, or the failure of which to be obtained or
taken could be reasonably expected to have a Material Adverse Effect on OGF, or
on the ability of the Trust to consummate the transactions contemplated hereby,
shall have been obtained, all in form and substance reasonably satisfactory to
the Trust and no such consent, approval or action shall contain any term or
condition which could be reasonably expected to result in a material diminution
of the benefits of the Reorganization to the Trust or OGF.
GOOD STANDING CERTIFICATES. The Company shall have delivered
to the Trust (a) copies of the articles of incorporation (or other comparable
corporate charter documents), including all amendments thereto, of the Company
certified by the Secretary of State of the State of Maryland or other
appropriate official of the jurisdiction of incorporation, (b) certificates from
the Secretary of State of the State of Maryland or other appropriate official of
the respective jurisdictions of incorporation to the effect that the Company is
in good standing or subsisting in such jurisdiction, listing all charter
documents of the Company on file and attesting to its payment of all franchise
or similar taxes, and (c) a certificate from the Secretary of State of the State
of California or other appropriate official in each jurisdiction in which the
Fund is qualified or admitted to do business to the effect that the Fund is duly
qualified or admitted and in good standing in such jurisdiction.
DUE DILIGENCE. The Trust shall have completed, to its
satisfaction, its due diligence investigation of the Fund.
FUND'S STOCKHOLDERS' MEETING. The Reorganization shall have
been approved by the holders of two-thirds of the Fund's Shares in accordance
with the GCLM.
A-10
<PAGE>
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party contained in this
Agreement or any certificate delivered at the Closing shall survive to, and
shall expire upon, the Closing. No claim may be made against any party hereto,
and no party hereto shall have any liability to the other party hereto, with
respect to any inaccuracy in or any breach of any representation or warranty
after the Closing.
TERMINATION
Anything contained in this Agreement to the contrary notwithstanding,
this Agreement may be terminated at any time prior to the Closing Date:
by the mutual consent of the parties hereto;
by the Trust upon any material breach by the Company of any of
its representations, warranties or covenants contained in this Agreement;
provided, that the Company shall have been given written notice of such breach
and a reasonable opportunity to cure such breach;
by the Company upon any material breach by the Trust of any of
its representations, warranties or covenants contained in this Agreement;
provided, that the Trust shall have been given written notice of such breach and
a reasonable opportunity to cure such breach; and
by either party if the Closing hereunder does not occur by
August 31, 1999, unless such date is extended by mutual consent of the parties
hereto.
In the event that this Agreement shall be terminated pursuant to this
ARTICLE IX, all further obligations of the parties under this Agreement shall
terminate without further liability of either party to the other party, except
for any liability of either party for any of its representations, warranties or
covenants, the breach of which was the cause of a termination pursuant to (b) or
(c) above.
MISCELLANEOUS
PUBLICITY; CONFIDENTIALITY. No publicity release or public announcement
concerning this Agreement or the transactions contemplated herein shall be made
by either party hereto without advance approval thereof by the other party
hereto; provided, however, that (i) approval by such other party of any proposed
press release or other public disclosure shall not be unreasonably withheld or
delayed and (ii) if any such party is advised by legal counsel that such public
disclosure by such party is required by Law or by any listing agreement with any
national securities exchange or automated quotation system to which such party
is subject, such party may make such disclosure without the prior approval of
the other party hereto, provided that the disclosing party, to the extent
practicable, first provides the other party with a copy or draft of such
proposed disclosure and provides such other party an opportunity to review and
comment thereon.
WAIVERS AND AMENDMENTS. This Agreement may be amended, superseded,
cancelled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties or,
A-11
<PAGE>
in the case of a waiver, by the party waiving compliance. No delay on the part
of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof.
GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Any judicial proceeding
brought against any of the parties to this Agreement on any dispute arising out
of this Agreement or any matter related hereto may be brought in the courts of
the State of New York and, by execution and delivery of this Agreement, each of
the parties hereto accepts and consents to the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement.
NOTICES. All notices and other communications required or permitted to
be given hereunder shall be in writing and shall be given by (i) personal
delivery, (ii) United States registered or certified mail (postage prepaid,
return receipt requested) addressed as hereinafter provided, (iii) a nationally
recognized overnight courier or (iv) telephonic facsimile transmission. Notice
shall be sent and deemed given when (i) if personally delivered or via overnight
courier, then upon receipt (or the date delivery is refused) by the receiving
party, or (ii) if mailed, then three business days after being postmarked, or
(iii) if sent via telephonic facsimile transmission, then upon receipt by a
designated facsimile receiving device in the office of the receiving party.
Until further notice, notices and other communications hereunder shall
be addressed to the parties as follows:
IF TO THE TRUST:
ORBITEX GROUP OF FUNDS
c/o Orbitex Management, Inc.
410 Park Avenue, 18th Floor
New York, NY 10022
Attention: M. Fyzul Khan
Telephone: (212) 891-7914
Facsimile: (212) 616-7954
WITH A COPY TO:
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166-0153
Attention: John A. Healy, Esq.
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
IF TO THE FUND:
American Diversified Funds, Inc.
c/o James B. Rea, Jr.
2305 Donella Circle
Los Angeles, CA 90077
Telephone: (310) 472-2495
Facsimile: (310) 209-2610
WITH A COPY TO:
A-12
<PAGE>
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022-4405
Attention: Thomas R. Westle, Esq.
Telephone: (212) 888-6680
Facsimile: (212) 838-7472
BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and legal
representatives. Except as otherwise provided herein, this Agreement is not
assignable by any party hereto without the prior written consent of the other
parties hereto and any other purported assignment shall be null and void.
VARIATIONS IN PRONOUNS. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
COUNTERPARTS. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
COMPLETE AGREEMENT. This Agreement constitutes the complete agreement
of the parties with respect to the subject matter thereof, and supersedes all
prior agreements or understandings among the parties hereto.
HEADINGS. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
SEVERABILITY OF PROVISIONS. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
thereof to any Person or circumstance, shall be held invalid or unenforceable,
the remaining portion of such provision and the remaining provisions of this
Agreement, or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affected thereby.
A-13
<PAGE>
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement on the date first above written.
ORBITEX GROUP OF FUNDS
By:
-------------------------------------------
Name: James L. Nelson
Title: President and Chief Executive Officer
AMERICAN DIVERSIFIED FUNDS, INC.
By:
-------------------------------------------
Name: James B. Rea, Jr.
Title: President
A-14
<PAGE>
APPENDIX 2.1
EXCLUDED ASSETS AND LIABILITIES
EXCLUDED ASSETS
The following corporate names:
1. American Diversified Funds, Inc.;
2. American Diversified Global Value Fund; and
3. Rea Graham Value Fund.
EXCLUDED LIABILITIES
All liabilities not directly related to, arising out of, or resulting
from the operation of the Fund.
A-15
<PAGE>
EXHIBIT A TO REORGANIZATION AGREEMENT
OFFICER'S CERTIFICATE
I, JAMES L. NELSON, President and Chief Executive Officer of Orbitex
Group of Funds, a Delaware business trust (the "Trust"), pursuant to Section
7.1(d) of the Agreement and Plan of Reorganization, dated as of July 8, 1999
(the "Reorganization Agreement"; capitalized terms not defined herein shall have
the meanings ascribed to them in the Reorganization Agreement), by and between
the Trust and American Diversified Funds, Inc., a Maryland corporation, DO
HEREBY CERTIFY on behalf of the Trust that:
Each of the representations and warranties made by the Trust
in the Reorganization Agreement is true, correct and complete in all material
respects on and as of the date hereof with the same force and effect as though
made on and as of the date hereof except that those representations and
warranties expressly stated herein to be made as of a specified date are true in
all material respects only as of such date.
Each of the covenants and agreements required by the
Reorganization Agreement to be performed or complied with by the Trust on or
prior to the Closing has been performed or complied with in all material
respects.
IN WITNESS WHEREOF, the Trust has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of ______,
1999.
ORBITEX GROUP OF FUNDS
By:_______________________________________
Name: James L. Nelson
Title: President and Chief Executive Officer
A-16
<PAGE>
EXHIBIT B TO REORGANIZATION AGREEMENT
ASSISTANT SECRETARY'S CERTIFICATE
I, KEVIN P. MEEHAN, Assistant Secretary of Orbitex Group of Funds, a
Delaware business trust (the "Trust"), pursuant to Section 7.1(d) of the
Agreement and Plan or Reorganization, dated as of July 8, 1999 (the
"REORGANIZATION AGREEMENT"), by and between the Trust and American Diversified
Funds, Inc., a Maryland corporation, DO HEREBY CERTIFY on behalf of the Trust as
follows:
Attached hereto as Exhibit A is a true, complete and correct
copy of the Agreement and Declaration of Trust of the Trust and all amendments
thereto (as so amended, the "Declaration of Trust"), and no amendment to the
Declaration of Trust has been authorized or become effective since the date of
the last of such amendments, no amendment or other document relating to or
affecting the Declaration of Trust has been filed in the office of the Secretary
of State of the State of Delaware since such date and no action has been taken
by the Trust, its stockholders, directors or officers in contemplation of the
filing of any such amendment or other document or in contemplation of the
liquidation or dissolution of the Trust.
Attached hereto as Exhibit B is a true, complete and correct
copy of the By-Laws of the Trust as in full force and effect on the date hereof
and at all times since [date of last amendment].
Attached hereto as Exhibit C is a true, complete and correct
copy of resolutions adopted by the Board of Trustees of the Trust with respect
to the Reorganization Agreement and the transactions contemplated thereby, which
resolutions were duly and validly adopted at a meeting of the Board of Trustees
of the Trust on ___________, 1999, at which a quorum was present and acting
throughout. All such resolutions are in full force and effect on the date hereof
in the form in which adopted and no other resolutions have been adopted by the
Board of Trustees of the Trust or any committee thereof relating to the
Reorganization Agreement and the transactions contemplated thereby.
Each of the following named individuals is a duly elected or
appointed, qualified and acting officer of the Trust who holds, and at all times
since _________, 1999 has held, the office set opposite such individual's name,
and the signature written opposite the name and title of such officer is such
officer's genuine signature:
James L. Nelson President and
Chief Executive Officer
----------------------
Kimberly S. Ratz Treasurer
----------------------
Kevin P. Meehan Assistant Secretary
----------------------
A-17
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Certificate to be
executed on its behalf by the undersigned on and as of the _____ day of
__________, 1999.
ORBITEX GROUP OF FUNDS
By:
---------------------------------------------------
Name: Kevin P. Meehan
Title: Assistant Secretary
I, JAMES L. NELSON, President and Chief Executive Officer of the Trust,
DO HEREBY CERTIFY, on behalf of the Trust that KEVIN P. MEEHAN is the duly
elected or appointed, qualified and acting Assistant Secretary of the Trust, and
the signature set forth above is the genuine signature of such officer.
------------------------------------------------------
Name: James L. Nelson
Title: President and Chief Executive Officer
A-18
<PAGE>
EXHIBIT C TO REORGANIZATION AGREEMENT
[R&W LETTERHEAD]
-----------, ----
American Diversified Funds, Inc.
c/o Mr. James B. Rea, President
2305 Donella Circle
Los Angeles, CA 90077
Dear Sirs:
We have acted as special counsel to Orbitex Group of Funds, a Delaware
business trust (the "Trust"), in connection with the Agreement and Plan of
Reorganization, dated as of July 8, 1999 (the "Reorganization Agreement"), by
and between the Trust and American Diversified Funds, Inc., a Maryland
corporation, and the transactions contemplated thereby. Capitalized terms not
defined herein shall have the meanings ascribed to them in the Reorganization
Agreement. We are rendering this opinion to you pursuant to Section 7.1(e) of
the Reorganization Agreement.
In rendering the opinions expressed below, we have examined such
documents and such corporate records of the Trust as we have deemed necessary as
a basis for the opinions hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of documents
submitted to us as originals, the conformity with the original documents of all
documents submitted to us as copies and the authenticity of the originals of
such latter documents. When facts relevant to such opinions were not
independently established, we have relied upon the representations and
warranties as to factual matters made in or pursuant to the Reorganization
Agreement and upon certificates of government officials and of the Trust and its
officers.
Based upon the foregoing and having regard to legal considerations we
deem relevant, we are of the opinion that:
The Trust was organized under the laws of the State of Delaware and is
duly qualified, licensed or admitted to do business and in good standing as a
foreign trust under the laws of each jurisdiction in which the nature of the
business to be conducted by it makes such qualification, licensing or admission
necessary, except in such jurisdictions where the failure to be so qualified,
licensed or admitted or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on the Trust or its properties and
assets.
The execution, delivery and performance of the Reorganization Agreement
by the Trust and the consummation of the transactions contemplated therein have
been duly and validly authorized by all necessary corporate action on the part
of the Trust. The Reorganization Agreement has been duly and validly executed
and delivered by the Trust and is a legal, valid and binding obligation of the
Trust enforceable against it in accordance with its terms.
A-19
<PAGE>
The OGF Shares, when issued, will be duly authorized, validly issued,
fully paid and non-assessable. The Trust is authorized to issue an unlimited
number of no par shares of beneficial interest with respect to OGF.
The execution, delivery and performance by the Trust of the
Reorganization Agreement did not, and the consummation of the transactions
contemplated thereby will not, (a) violate or conflict with the terms,
conditions or provisions of the Declaration of Trust, By-Laws or any Contract to
which the Trust is a party or by which it or its assets are bound, (b) result in
a breach or violation by the Trust of any terms, conditions or provisions of any
Law or Order, or (c) require any consent or approval of, filing with or notice
to, any Governmental or Regulatory Body.
We express no opinion herein as to (i) the "blue sky" laws of any
State, (ii) the laws of any jurisdiction other than the laws of the State of New
York and Title 12 of the Delaware Code ("Delaware Law") and (iii) the bulk sales
or transfer laws of any jurisdiction. With respect to matters concerning the
Delaware Law involved in the opinions set forth above, we draw your attention to
the fact that we are not admitted to the Bar in the State of Delaware and we are
not experts in the laws of the State of Delaware and that any such opinions
concerning Delaware Law are based on our reasonable familiarity with Delaware
Law as a result of our prior involvement in transactions involving such laws.
These opinions may not be relied on by any person or entity other than
you without our prior written consent.
Very truly yours,
A-20
<PAGE>
EXHIBIT D TO REORGANIZATION AGREEMENT
OFFICER'S CERTIFICATE
I, JAMES B. REA, JR., President of American Diversified Funds, Inc., a
Maryland corporation (the "Company"), pursuant to Section 7.2(d) of the
Agreement and Plan of Reorganization, dated as of July 8, 1999 (the
"Reorganization Agreement"; capitalized terms not defined herein shall have the
meanings ascribed to them in the Reorganization Agreement), by and between
Orbitex Group of Funds, a Delaware business trust, and the Company, DO HEREBY
CERTIFY on behalf of the Company that:
(1) Each of the representations and warranties made by the Company in the
Reorganization Agreement is true, correct and complete in all material respects
on and as of the date hereof with the same force and effect as though made on
and as of the date hereof except that those representations and warranties
expressly states herein to be made as of a specified date are true in all
material respects only as of such date.
Each of the covenants and agreements required by the Reorganization
Agreement to be performed or complied with by the Company on or prior to the
Closing has been performed or complied with in all material respects.
Attached hereto as EXHIBIT A is a true, complete and correct copy of
the Articles of Incorporation of the Company and all amendments thereto (as so
amended, the "Articles of Incorporation"), and no amendment to the Articles of
Incorporation has been authorized or become effective since [date of the last of
such amendments], no amendment or other document relating to or affecting the
Articles of Incorporation has been filed in the office of the Secretary of State
of the State of Maryland since such date and no action has been taken by the
Company, its stockholders, directors or officers in contemplation of the filing
of any such amendment or other document or in contemplation of the liquidation
or dissolution of the Company.
Attached hereto as EXHIBIT B is a true, complete and correct copy of
the By-Laws of the Company as in full force and effect on the date hereof and at
all times since [date of last amendment].
Attached hereto as EXHIBIT C is a true, complete and correct copy of
resolutions adopted by the Board of Directors of the Company with respect to the
Reorganization Agreement and the transactions contemplated thereby, which
resolutions were duly and validly adopted at a meeting of the Board of Directors
of the Company on May __, 1999, at which a quorum was present and acting
throughout. All such resolutions are in full force and effect on the date hereof
in the form in which adopted and no other resolutions have been adopted by the
Board of Directors of the Company or any committee thereof relating to the
Reorganization Agreement and the transactions contemplated thereby.
Attached hereto as EXHIBIT D is a true, complete and correct copy of
the minutes from the Special Meeting of Stockholders of the American Diversified
Global Value Fund (the "Fund"), held on ______, 1999, with respect to the
Reorganization Agreement and the transactions contemplated thereby, which
contain resolutions which were duly adopted by a two-thirds vote of the
stockholders at a meeting of the stockholders of the Fund on ______, 1999, at
which a quorum was present and acting throughout. All such resolutions are in
full force and effect on the date hereof in the form in which adopted and no
other resolutions have been adopted by the stockholders of the Fund relating to
the Reorganization Agreement and the transactions contemplated thereby.
A-21
<PAGE>
IN WITNESS WHEREOF, the Trust has caused this Certificate to be
executed on its behalf by the undersigned on and as of the _____ day of
__________, 1999.
AMERICAN DIVERSIFIED FUNDS, INC.
By:
-----------------------------------------
Name: James B. Rea, Jr.
Title: President
A-22
<PAGE>
EXHIBIT E TO REORGANIZATION AGREEMENT
SECRETARY'S CERTIFICATE
The following named individual is a duly elected or appointed,
qualified and acting officer of the Company who holds, and at all times since
June __, 1999 has held, the office set opposite such individual's name, and the
signature written opposite the name and title of such officer is such officer's
genuine signature:
James B. Rea, Jr., President
----------------------------------------
M. Fyzul Khan, Secretary
----------------------------------------
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed on its behalf by the undersigned on and as of the ____ day of ________,
1999.
AMERICAN DIVERSIFIED FUNDS, INC.
By:
-----------------------------------------------------------
Name: M. Fyzul Khan
Title: Secretary
I, JAMES B. REA, JR., President of the Fund, DO HEREBY CERTIFY, on
behalf of the Fund that M. FYZUL KHAN is the duly elected or appointed,
qualified and acting Secretary of the Fund, and the signature set forth above is
the genuine signature of such officer.
--------------------------------------------------------------
Name: James B. Rea, Jr.
Title: President
A-23
<PAGE>
EXHIBIT F TO REORGANIZATION AGREEMENT
[SPITZER & FELDMAN P.C. LETTERHEAD]
---------------, ----
Orbitex Group of Funds
410 Park Avenue
18th Floor
New York, NY 10022
Dear Sirs:
We have acted as special counsel to American Diversified Funds, Inc., a
Maryland corporation (the "Company"), in connection with the Agreement and Plan
of Reorganization, dated as of July 8, 1999 (the "Reorganization Agreement"), by
and between Orbitex Group of Funds, a Delaware business trust, and the Company
and the transactions contemplated thereby. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Reorganization Agreement. We are
rendering this opinion to you pursuant to Section 7.2(e) of the Reorganization
Agreement.
In rendering the opinions expressed below, we have examined such
documents and such corporate records of the Company and the Fund as we have
deemed necessary as a basis for the opinions hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures, the authenticity
of documents submitted to us as originals, the conformity with the original
documents of all documents submitted to us as copies and the authenticity of the
originals of such latter documents. When facts relevant to such opinions were
not independently established, we have relied upon the representations and
warranties as to factual matters made in or pursuant to the Reorganization
Agreement and upon certificates of government officials and of the Company and
its respective officers.
Based upon the foregoing and having regard to legal considerations we
deem relevant, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Maryland and is duly qualified,
licensed or admitted to do business and is in good standing as a foreign
corporation under the laws of each jurisdiction in which the nature of the
business to be conducted by it makes such qualification, licensing or admission
necessary, except in such jurisdictions where the failure to be so qualified,
licensed or admitted and in good standing would not, individually or in the
aggregate, have a Material Adverse Effect on its series, American Diversified
Global Value Fund (the "Fund") or its properties and assets.
2. The execution, delivery and performance by the Company of the
Reorganization Agreement and the consummation of the transactions contemplated
therein have been duly and validly authorized by the Board of Directors of the
Company and by the stockholders of the Fund and no other corporate action on the
part of the Company or the Fund's stockholders is necessary to authorize the
execution, delivery and performance of the Reorganization Agreement by the
Company or the consummation by the Company of the transactions contemplated
thereby. The Reorganization Agreement has been duly and validly executed and
delivered by the Company and is a legal, valid and binding obligation of Company
enforceable against the Company in accordance with its terms.
3. The authorized capital stock of the Fund consists solely of
20,000,000 shares of Common Stock, $1.00 par value per share, of which only the
Fund Shares have been issued and are outstanding. The Fund Shares are duly
authorized, validly issued, outstanding, fully paid and nonassessable. The Fund
has no shares of its capital stock reflected on the Books and Records of the
Fund as treasury shares. There are no outstanding options, warrants or other
rights of any kind to acquire from the Fund any shares of capital stock or
equity interests of the Fund or securities convertible into or exchangeable for,
or which otherwise confer on the holder thereof any right to acquire, any such
A-24
<PAGE>
additional shares, nor is the Fund committed to issue any stock appreciation or
similar rights or option, warrant, right or security.
4. The Company has no subsidiaries.
5. The execution, delivery and performance by the Company of the
Reorganization Agreement did not, and the consummation of the transactions
contemplated thereby will not, (a) violate or conflict with the terms,
conditions or provisions of the Articles of Incorporation or By-Laws or any
Contract to which the Fund is a party or by which it or its assets are bound,
(b) result in a breach or violation by the Fund of any of the terms, conditions
or provisions of any Law or Order or (c) require any consent or approval of,
filing with or notice to, any Governmental or Regulatory Body.
6. The Company is duly registered as a diversified, open-end management
investment company under the 1940 Act, and under all applicable state and
foreign investment company or related laws. Each such registration is in full
force and effect. The Company has timely computed and publicized the Fund's net
asset value in accordance with the provisions of the 1940 Act.
We express no opinion herein as to (i) the "blue sky" laws of any
State, or (ii) laws of any jurisdiction other than the laws of the State of New
York and the General Corporation Law of the State of Maryland. With respect to
matters concerning the Maryland Law involved in the opinions set forth above, we
draw your attention to the fact that we are not admitted to the Bar in the State
of Maryland and we are not experts in the laws of the State of Maryland and that
any such opinions concerning Maryland Law are based on our reasonable
familiarity with Maryland Law as a result of our prior involvement in
transactions involving such laws.
These opinions may not be relied on by any person or entity other than
you without our prior written consent.
Very truly yours
A-25
<PAGE>
APPENDIX B
ADGVF's INVESTMENT RESTRICTIONS STATE:
The Fund has adopted the following restrictions (in addition to those
indicated in its prospectus) as fundamental policies, which may not be changed
without the favorable vote of the holders of a "majority", as defined in the
1940 Act, of the Fund's outstanding voting securities. Under the 1940 Act, the
vote of the holders of a majority of a Fund's outstanding voting securities
means the vote of the holders of the lesser of (i) 67% of the shares of the Fund
represented at a meeting at which the holders of more than 50% of its
outstanding shares are represented or (ii) more than 50% of the outstanding
shares.
The Fund may not:
1. Purchase or sell real estate or interests therein, although the Fund
may purchase securities of issuers, which engage in real estate
operations, and securities which are secured by real estate or
interests therein.
2. Purchase or sell commodities or commodity futures contracts, except
that the Fund may enter into foreign currency forward contracts for the
purpose of hedging against foreign currency risk in connection with the
purchase or sale of foreign securities.
3. Purchase oil, gas or other mineral leases, rights or royalty contracts
or exploration or development programs, except that the Fund may invest
in the securities of companies which operate, invest in or sponsor such
programs.
4. Write, purchase or sell puts, calls, or combinations thereof.
5. Make short sales of securities.
6. Purchase securities on margin, except for such short-term loans as are
necessary for the clearance of purchases of portfolio securities.
7. Engage in the underwriting of securities.
8. Make loans of money or securities, except (a) by the purchase of a
portion of an issue of publicly distributed debt obligations in which
the Fund may invest consistent with its investment objectives and
policies, or (b) by in repurchase agreements with respect to
obligations of the U.S. Government, its agencies or instrumentality's,
maturing in seven (7) days or less.
9. Borrow money, except that the Fund may borrow from a bank for temporary
or emergency purposes in amounts not exceeding 5% (taken at the lower
of cost or current value) of its total assets (not including the amount
borrowed).
10. Pledge its assets or assign or otherwise encumber them, except to
secure borrowings effected within the limitations set forth in
Restriction 9. To meet the requirements of regulations in certain
states, the Fund, as a matter of operating policy, but not as a
fundamental policy, will limit any pledge of its assets such that at
the time of sale of Fund shares the market value of unpledged net
assets (per share) is at least 90% of the Offering Price.
11. Issue senior securities, as defined in the Investment Company Act of
1940 ("1940 Act"), except insofar as the Fund may be deemed to have
issued a senior security by reason of (a) entering into any repurchase
agreement, or (b)borrowing money in accordance with Restriction 9.
12. Invest more than 5% of the Fund's total assets in securities of issuers
which have been in continuous operation less than three (3) years.
B-1
<PAGE>
13. Purchase more than 10% of any class of securities of any one issuer,
including its outstanding voting securities, or invest in any issuer
for the purpose of exercising control or management.
14. Invest more than 15% of the Fund's total assets in securities of
foreign issuers that are not listed on a recognized U.S. or foreign
securities exchange, including no more than 10 % of its total assets
which may be invested in securities with a limited trading market.
15. Invest more than 25% of its total net assets in any one
industry(determined by reference to the Standard Industrial
Classification code).
16. Purchase or retain securities of any company in which Directors or
Officers of the Company or of the Fund's Investment Adviser,
individually owning more than 1/2 of 1% of the securities of such
company, in the aggregate own more than 5% of the securities of such
company.
17. Purchase securities of other investment companies, except (a) in
connection with a merger, consolidation, reorganization or acquisition
of assets, or (b) in the open market where no commission or profit to a
sponsor or dealer other than the customary broker's commission results
from such purchase ,in an amount not in excess of 10% of the value of
the Fund's total assets.
18. Invest in "letter stocks" or securities on which there are any sales
restrictions under a purchase agreement or in securities which do not
have readily available market quotations.
19. Participate on a joint or a joint and several basis in any trading
account in securities.
Whenever any investment policy or investment restriction states a maximum
percentage of the Fund's assets which may be invested in any security orother
property, it is intended that such maximum percentage limitation be determined
immediately after and as a result of the Fund's acquisition of such security or
property. Accordingly, the Fund is not required to dispose of common stocks due
to an increase in percentage resulting from a change in market values.
THE ORBITEX GROWTH FUND'S INVESTMENT RESTRICTIONS STATE:
The Fund has adopted the following restrictions (in addition to those
indicated in its prospectus) as fundamental policies, which may not be changed
without the favorable vote of the holders of a "majority", as defined in the
1940 Act, of the Fund's outstanding voting securities. Under the 1940 Act, the
vote of the holders of a majority of a Fund's outstanding voting securities
means the vote of the holders of the lesser of (i) 67% of the shares of the Fund
represented at a meeting at which the holders of more than 50% of its
outstanding shares are represented or (ii) more than 50% of the outstanding
shares.
The Fund may not:
1. Purchase securities on margin, except (a) the Fund may make margin
deposits in connection with permissible options and futures
transactions subject to restriction (4) below and (b) on such
short-term credits as may be necessary for the clearance of
transactions.
2. Make short sales of securities or maintain a short position.
3. Issue senior securities, borrow money or pledge its assets, except that
the Fund may borrow on an unsecured basis from banks for temporary or
emergency purposes or for the clearance of transactions in amounts not
exceeding 10% of its total assets (not including the amount borrowed)
and will not make investments while borrowings in excess of 5% of the
value of the Fund's total assets are outstanding.
4. Buy or sell commodities or commodity futures contracts, or buy or sell
real estate, real estate limited partnership interests or other
interests in real estate, except the Fund may (a) purchase and sell
securities which are secured by real estate and securities of companies
which invest or deal in real estate and (b) enter into financial
futures and options thereon.
5. Make loans (except for purchases of publicly-traded debt securities
consistent with the Fund's investment policies).
B-2
<PAGE>
6. Make investments for the purpose of exercising control or management.
7. Act as underwriter (except to the extent the Fund may be deemed to be
an underwriter in connection with the sale of securities in the Fund's
investment portfolio).
8. Invest 25% or more of its total assets (calculated at the time of
purchase and taken at market value) in any one industry.
9. As to 75% of the value of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer (other
than obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities), or purchase more than 10% of all
outstanding voting securities of any one issuer.
B-3
<PAGE>
- ---------------------------------------------------ORBITEX-Registered Trademark-
GROUP OF FUNDS
FUNDS DISTRIBUTOR, INC., DISTRIBUTOR
ANNUAL REPORT APRIL 30, 1999
THE
ORBITEX-Registered Trademark-
GROUP OF FUNDS
ORBITEX
STRATEGIC
NATURAL
RESOURCES
FUND
ORBITEX
INFO-TECH &
COMMUNICATIONS
FUND
ORBITEX
GROWTH
FUND
THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION UNLESS
PRECEEDED OR ACCOMPANIED BY A PROSPECTUS.
<PAGE>
Letter from the Management of the Orbitex Group of Funds 1
- --------------------------------------------------------------------------------
- -----------------------------------------
Dear Shareholder:
- -----------------------------------------
We are pleased to provide you with
- -----------------------------------------
the Annual Report of the Orbitex Group
- -----------------------------------------
of Funds for the 12 months ended
- -----------------------------------------
April 30, 1999.
- -----------------------------------------
The three equity Funds reflected the upward trending equity markets in general.
Two of the Funds, in particular, delivered strong performance relative to their
benchmarks. We believe the Funds are well positioned to take advantage of
continuing growth of the domestic U.S. economy, as well as the economic
resurgence underway in emerging markets around the world. Assets of two Orbitex
Funds, the Asian Select Advisors Funds and the Asian High Yield Fund, were
returned to shareholders due to the severe economic conditions in Asia.
The Orbitex Group of Funds are pleased to announce the introduction of two
new equity portfolios, the Orbitex Focus 30 Fund and the Orbitex Health &
Biotechnology Fund.
Thank you for choosing the Orbitex Group of Funds to help meet your
investment goals. Should you have any questions or wish to learn more about any
of the Funds, please contact your investment professional or the Orbitex Group
of Funds at 1-888-ORBITEX (672-4839).
Sincerely,
/s/ Richard Stierwalt
RICHARD STIERWALT
CHIEF EXECUTIVE OFFICER
ORBITEX MANAGEMENT, INC.
<PAGE>
Performance Highlights
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF APRIL 30, 1999
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION INCEPTION DATE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ORBITEX
STRATEGIC Class A Shares (12.22%) (1.86%) 10/23/97
NATURAL (incl. max. 5.75% sales charge)
RESOURCES
FUND Class B Shares NA 26.92% 9/21/98
- ---------------------------------------------------------------------------------------------------------------
ORBITEX Class A Shares 48.36% 54.51% 10/22/97
INFO-TECH (incl. max. 5.75% sales charge)
&
COMMUNICATIONS Class B Shares NA 68.67% 9/16/98
FUND
- ---------------------------------------------------------------------------------------------------------------
ORBITEX Class A Shares 2.82% 14.46% 10/22/97
GROWTH (incl. max. 5.75% sales charge)
FUND
Class B Shares NA 18.61% 9/16/98
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Total return is calculated assuming reinvestment of all dividends. Total returns
would have been lower had the Advisor (Orbitex Management, Inc.), the
Distributor (Funds Distributor, Inc.) and the Administrator and Custodian (State
Street Bank and Trust Company) not waived or reimbursed a portion of their fees.
The performance of each class may vary based on differences in loads and fees
paid by the shareholders investing in each class. Results represent past
performance and do not indicate future results. The value of an investment in
the Funds and the return on investment both will fluctuate and redemption
proceeds may be higher or lower than an investor's original cost.
<PAGE>
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
These charts illustrate a comparison of a hypothetical investment of $10,000 in
each of the Orbitex Group of Funds (assumes reinvestment of all dividends and
distributions and a one-time sales charge) versus the Fund's benchmark index.
[GRAPH]
Strategic Natural
Resources Fund Lipper Natural
(incl. 5.75% sales charge) Resources Fund Category S&P 500 Index
- -------------------------------------------------------------------------------
10/23/97 $9,425.00 $10,000.00 $10,000.00
11/30/97 $8,912.67 $9,087.00 $10,463.00
12/31/97 $8,760.59 $9,011.00 $10,643.00
01/31/98 $8,666.47 $8,645.00 $10,760.00
02/28/98 $8,995.73 $9,001.00 $11,536.00
03/31/98 $9,631.91 $9,332.00 $12,127.00
04/30/98 $9,834.06 $9,620.00 $12,249.00
05/31/98 $9,831.43 $8,420.00 $11,587.00
06/30/98 $9,396.02 $7,960.00 $12,058.00
07/31/98 $8,197.06 $7,143.00 $11,929.00
08/31/98 $6,878.21 $5,767.00 $10,207.00
09/30/98 $7,799.51 $6,747.00 $10,858.00
10/31/98 $7,988.82 $6,992.00 $11,742.00
11/30/98 $7,471.38 $6,684.00 $12,454.00
12/31/98 $7,506.14 $6,545.00 $13,171.00
01/31/99 $7,201.32 $6,235.00 $13,721.00
02/28/99 $7,271.57 $6,068.00 $13,295.00
03/31/99 $8,294.54 $6,961.00 $13,827.00
04/30/99 $9,721.49 $8,176.00 $14,362.00
STRATEGIC NATURAL RESOURCES FUND
The Lipper Natural Resources Funds Index is an equal-weighted performance index,
adjusted for capital-gain distributions and income dividends, of the largest
qualifying funds having this investment objective, and is compiled by Lipper,
Inc.
[GRAPH]
Info-Tech &
Communications Fund Lipper Science &
(incl. 5.75% sales charge) Technology Index S&P 500 Index
- -------------------------------------------------------------------------------
10/22/97 $9,425.00 $10,000.00 $10,000.00
11/30/97 $8,878.35 $9,895.00 $10,463.00
12/31/97 $8,859.50 $9,548.00 $10,643.00
01/31/98 $9,081.56 $9,788.00 $10,760.00
02/28/98 $10,706.80 $10,931.00 $11,536.00
03/31/98 $11,498.50 $11,158.00 $12,127.00
04/30/98 $12,327.90 $11,609.00 $12,249.00
05/31/98 $11,611.60 $9,780.00 $11,587.00
06/30/98 $12,918.53 $10,352.00 $12,058.00
07/31/98 $12,987.65 $10,255.00 $11,929.00
08/31/98 $10,656.53 $8,330.00 $10,207.00
09/30/98 $11,077.52 $9,313.00 $10,858.00
10/31/98 $12,239.93 $10,024.00 $11,742.00
11/30/98 $12,786.58 $11,147.00 $12,454.00
12/31/98 $13,481.90 $12,950.00 $13,171.00
01/31/99 $16,163.06 $14,628.00 $13,721.00
02/28/99 $15,567.25 $13,101.00 $13,295.00
03/31/99 $17,189.89 $14,436.00 $13,827.00
04/30/99 $19,408.40 $14,617.00 $14,362.00
INFO-TECH & COMMUNICATIONS FUND
The Lipper Science and Technology Funds Index is an equal-weighted performance
index, adjusted for capital-gain distributions and income dividends, of the
largest qualifying funds having this investment objective, and is compiled by
Lipper, Inc.
[GRAPH]
Growth Fund
(incl. 5.75% sales charge) S&P 500 Index
- -----------------------------------------------------
10/22/97 $9,425.00 $10,000.00
11/30/97 $9,758.02 $10,463.00
12/31/97 $9,940.23 $10,643.00
01/31/98 $9,557.71 $10,760.00
02/28/98 $10,499.45 $11,536.00
03/31/98 $10,970.70 $12,127.00
04/30/98 $11,266.02 $12,249.00
05/31/98 $11,002.12 $11,587.00
06/30/98 $11,485.93 $12,058.00
07/31/98 $11,705.85 $11,929.00
08/31/98 $9,695.18 $10,207.00
09/30/98 $10,122.45 $10,858.00
10/31/98 $10,468.03 $11,742.00
11/30/98 $10,857.60 $12,454.00
12/31/98 $11,346.23 $13,171.00
01/31/99 $12,156.20 $13,721.00
02/28/99 $11,682.07 $13,295.00
03/31/99 $12,617.16 $13,827.00
04/30/99 $12,287.90 $14,362.00
GROWTH FUND
The S&P 500-Registered Trademark- Index is an unmanaged index. Index returns
assume reinvestment of dividends; unlike the Fund's returns, however, they do
not reflect any fees or expenses.
<PAGE>
Letter from Fund Management ORBITEX STRATEGIC NATURAL RESOURCES FUND
- --------------------------------------------------------------------------------
- -----------------------------------------
Dear Shareholder:
- -----------------------------------------
The Orbitex Strategic Natural Resources
- -----------------------------------------
Fund outperformed the Lipper Natural
- -----------------------------------------
Resources Funds Average for the 12
- -----------------------------------------
months ended April 30, 1999. The Fund's
- -----------------------------------------
total return (Class A shares) was (6.86%)
- -----------------------------------------
versus (11.47%) for the Lipper average.
- -----------------------------------------
The Fund seeks to achieve capital growth
- -----------------------------------------
through a flexible policy of investing
- -----------------------------------------
primarily in common stock of companies
- -----------------------------------------
engaged in, or supportive of, natural
- -----------------------------------------
resource industries.
- -----------------------------------------
<TABLE>
<CAPTION>
TOP 10 PORTFOLIO HOLDINGS*
<S> <C>
- -----------------------------------------
Exxon Corp. 3.9%
- -----------------------------------------
Vastar Resources, Inc. 3.4%
- -----------------------------------------
USX-Marathon Group 3.2%
- -----------------------------------------
Williams Companies, Inc. 2.9%
- -----------------------------------------
Chevron Corp. 2.5%
- -----------------------------------------
Champion International Corp. 2.3%
- -----------------------------------------
Reynolds Metals Co. 2.2%
- -----------------------------------------
Royal Dutch Petroleum Co. 2.1%
- -----------------------------------------
Boise Cascade Corp. 2.1%
- -----------------------------------------
Fort James Corp. 2.0%
- -----------------------------------------
</TABLE>
All holdings as of 4/30/99. Portfolio holdings subject to change and should not
be considered a recommendation to buy individual securities.
* Based on total investment value of the Fund as of 4/30/99.
INVESTMENT ENVIRONMENT The past 12 months have been difficult for most natural
resource commodities and the companies that mine, drill or explore, as well as
those that service the sector. Prices for oil, gas, base and precious metals,
paper, steel and chemicals have collapsed. The Commodities Resource Board Index,
a measure of major natural resources, fell to a 21-year low in 1998. Behind the
soft commodity prices and low demand lie the deep recession in Asian emerging
markets, among other factors.
PORTFOLIO POSITIONING With low commodity prices, consolidation picked up as
companies sought to take advantage of low valuations and improving fundamentals.
The Fund benefited from its holdings in Atlantic Richfield, Mobil, Vastar and
J.R. McDermott. The economies of many Pacific Rim countries have stopped
contracting and, in many instances, are now beginning to expand.
<PAGE>
5
- --------------------------------------------------------------------------------
The Fund emphasized large capitalization, value-oriented securities across the
natural resource sector. During the period, the Fund benefited from its focus on
the oil, natural gas and paper industries, while underweighting precious metals,
due to expected central bank sales of gold. Contributing to the Fund's
performance were Exxon, BP Amoco, Enron, Williams Companies, Boise Cascade,
Champion, DuPont and Alcoa. We were disappointed by returns from investments in
Monsanto, Newmont Mining and Valero Energy.
INVESTMENT OUTLOOK We believe that low valuations, both relative and absolute,
along with sustained global growth, will lead to a strong recovery in
resource-based stocks. As global economies strengthen, demand for most
commodities should also increase while supply declines. Should natural resource
prices stay at current levels or trend higher, we expect to see more
consolidations, restructuring and joint ventures. We believe that international
economic activity will increase, which should benefit our Fund.
Sincerely,
KONRAD KRILL
PORTFOLIO MANAGER
[GRAPHIC]
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION*
<S> <C>
STEEL 2.88%
SHORT-TERM INVESTMENTS 4.05%
MINING 5.49%
PETROLEUM SERVICES 4.56%
OIL 8.44%
PAPER & RELATED PRODUCTS 8.60%
OIL & GAS DRILLING 4.98%
OIL FIELD SERVICES 3.08%
OIL FIELD MACHINE &
EQUIPMENT MANUFACTURING 1.20%
OIL & GAS EXPLORATION
AND PRODUCTION 21.99%
LIFE SCIENCES 1.87%
INTERNATIONAL OIL 14.33%
GOLD 1.62%
ALUMINUM 4.12%
GAS & PIPELINE UTILITIES 4.16%
ELECTRONICS 1.78%
BUILDING CONSTRUCTION 0.98%
ELECTRIC UTILITIES 1.45%
CHEMICALS 4.42%
</TABLE>
* Based on total investment value of the Fund as of 4/30/99.
<PAGE>
Letter from Fund Management ORBITEX INFO-TECH & COMMUNICATIONS FUND
- --------------------------------------------------------------------------------
- -----------------------------------------
Dear Shareholder:
- -----------------------------------------
The Orbitex Info-Tech & Communications
- -----------------------------------------
Fund significantly outperformed the Lipper
- -----------------------------------------
Science & Technology Funds Average for
- -----------------------------------------
the 12 months ended April 30, 1999. The
- -----------------------------------------
Fund's total return (Class A shares) was
- -----------------------------------------
57.43% compared with 38.51% for the
- -----------------------------------------
Lipper average. The Fund seeks to achieve
- -----------------------------------------
superior long-term capital growth through
- -----------------------------------------
selective investment in companies
- -----------------------------------------
engaged in the communication, informa-
- -----------------------------------------
tion and related technology industries.
- -----------------------------------------
<TABLE>
<CAPTION>
TOP 10 PORTFOLIO HOLDINGS*
<S> <C>
- -----------------------------------------
FORE Systems, Inc. 5.52%
- -----------------------------------------
Intermedia Communications, Inc. 4.98%
- -----------------------------------------
MCI WorldCom, Inc. 4.73%
- -----------------------------------------
CIENA Corp. 4.20%
- -----------------------------------------
Applied Materials, Inc. 4.15%
- -----------------------------------------
QUALCOMM, Inc. 3.97%
- -----------------------------------------
WinStar Communications, Inc. 3.86%
- -----------------------------------------
ICG Communications, Inc. 3.15%
- -----------------------------------------
Omnipoint Corp. 3.04%
- -----------------------------------------
CISCO Systems, Inc. 2.94%
- -----------------------------------------
</TABLE>
All holdings as of 4/30/99. Portfolio holdings subject to change and should not
be considered a recommendation to buy individual securities.
* Based on total investment value of the Fund as of 4/30/99.
INVESTMENT ENVIRONMENT Communications networks, computers, and software - the
infrastructure that enables the Internet - are being deployed around the world
at tremendous speed and expense. During the period, this asset base provided the
support behind the valuations of many stocks within the sector. Technology is no
longer about just computers and software, it is about networks.
PORTFOLIO POSITIONING By using the deployment of global networks as our
timeline and analyzing the companies that might benefit, we have been able to
invest successfully across a broad spectrum of network, Internet, global
telephone and media companies.
We focused heavily on telecommunications companies and network stocks, which
were benefiting from strong consumer demand for Internet usage and corporate
demand for greater fiber optic network capacity. Names that were
<PAGE>
7
- --------------------------------------------------------------------------------
emphasized included MCI WorldCom, AT&T, AirTouch, Omnipoint, CISCO, FORE
Systems, QUALCOMM, UNIPHASE and JDS FITEL. Then, later in the year, we shifted
heavily into hardware and semiconductor stocks, benefiting from positions in
Dell, Microsoft, EMC, Sun Microsystems, Hewlett-Packard, PMC Sierra, and Micron
Technology. Throughout the year, the Fund maintained an emphasis on Internet
names, such as OzEmail (acquired by MCI WorldCom), RealNetworks, VerticalNet,
and Priceline.com. Emerging market telecom stocks were largely avoided. The Fund
achieved less than expected returns from our investment in Peoplesoft and
Evolving Systems.
INVESTMENT OUTLOOK We believe strongly that the global deployment of
communications networks, from fiber optics to wireless, has only just begun. We
expect to see continued global mergers across a range of industries,
extraordinary pressure on the existing computer infrastructures of corporations,
and exuberant demand for high-speed networks (bandwidth) from consumers and
businesses alike. This is what we call the "FutureNet," and we anticipate being
fully invested in the companies that are bringing technology solutions to the
marketplace.
Sincerely,
CRAIG ELLIS
PORTFOLIO MANAGER
[GRAPHIC]
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION*
<S> <C>
SHORT-TERM INVESTMENTS 11.95%
BROADCASTING 4.61%
BUSINESS SERVICES 0.88%
COMPUTERS & BUSINESS EQUIPMENT 5.95%
PREFERRED STOCKS 1.81%
ELECTRONICS 14.48%
TELEPHONE 20.50%
FINANCIAL SERVICES 2.01%
FOOD & BEVERAGES 1.71%
GAS & PIPELINE UTILITIES 2.81%
NETWORKING PRODUCTS 9.51%
TELECOMMUNICATIONS SERVICES 19.75%
SOFTWARE 4.03%
</TABLE>
* Based on total investment value of the Fund as of 4/30/99.
<PAGE>
Letter from Fund Management ORBITEX GROWTH FUND
- --------------------------------------------------------------------------------
- -----------------------------------------
Dear Shareholder:
- -----------------------------------------
In the 12 months ended April 30, 1999,
- -----------------------------------------
the Fund underperformed its benchmark,
- -----------------------------------------
the S&P 500-Registered Trademark- Index.
- -----------------------------------------
During that period, the Fund's total
- -----------------------------------------
return (Class A shares) was 9.07%, versus
- -----------------------------------------
a total return of 21.82% for the S&P 500
- -----------------------------------------
Index. The Fund seeks to achieve
- -----------------------------------------
long-term growth of capital through
- -----------------------------------------
investment in U.S. equity securities
- -----------------------------------------
having significant appreciation potential,
- -----------------------------------------
in the opinion of Orbitex Management, Inc.
- -----------------------------------------
<TABLE>
<CAPTION>
TOP 10 PORTFOLIO HOLDINGS*
<S> <C>
- -----------------------------------------
MCI WorldCom 9.54%
- -----------------------------------------
Citigroup Inc. 5.14%
- -----------------------------------------
Chevron Corp. 4.77%
- -----------------------------------------
Lowe's Companies, Inc. 4.32%
- -----------------------------------------
Intel Corp. 4.18%
- -----------------------------------------
Staples, Inc. 4.15%
- -----------------------------------------
Lucent Technologies, Inc. 4.11%
- -----------------------------------------
Home Depot, Inc. 4.09%
- -----------------------------------------
SBC Communications, Inc. 4.02%
- -----------------------------------------
Pfizer, Inc. 3.93%
- -----------------------------------------
</TABLE>
All holdings as of 4/30/99. Portfolio holdings subject to change and should not
be considered a recommendation to buy individual securities.
* Based on total investment value of the Fund as of 4/30/99.
INVESTMENT ENVIRONMENT The U.S. economy continued to show incredible strength.
Inflation is low. However, the strength of the economy is leading to fears that
the Federal Reserve Bank will raise interest rates. We believe that the economy
will cool enough to forestall any move by the Fed. The stock market had one of
the most dramatic shifts in leadership during the first months of 1999 with
cyclicals taking the lead from growth and technology stocks.
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO POSITIONING The Fund uses proprietary techniques to find stocks that
we believe will have exceptional potential for our clients. These techniques
continued to show their value for our clients. Over the long run, the Fund will
focus on the twin drivers of the economy, technology and health care. In
addition, we are also positioned in key specialty and discount retailers, as
well as overweighting certain natural resource stocks. These sectors contributed
to the profits in the Fund. However, investments in the energy sector, including
oil service stocks, were a drag on performance.
INVESTMENT OUTLOOK The outlook remains bullish for U.S. equities with low
inflation, moderate earnings growth, and the possibility of lower interest
rates. There will be the inevitable short-term declines, but we view these as
buying opportunities in a long-term secular bull market.
Sincerely,
COURTNEY SMITH
PORTFOLIO MANAGER
[GRAPHIC]
<TABLE>
<CAPTION>
PORTFOLIO COMPOSITION*
<S> <C>
BROADCASTING 2.32%
COMPUTERS & BUSINESS EQUIPMENT 4.18%
COSMETICS & TOILETRIES 2.88%
SHORT-TERM INVESTMENTS 11.89%
DIVERSIFIED MANUFACTURING 3.60%
DRUGS & HEALTH CARE 3.93%
FINANCIAL SERVICES 8.51%
TELEPHONE 19.73%
FOOD & BEVERAGES 3.00%
INSURANCE 3.61%
TELECOMMUNICATIONS
EQUIPMENT 4.11%
INTERNATIONAL OIL 4.77%
OIL FIELD SERVICE 3.29%
SOFTWARE 11.61%
RETAIL 12.57%
</TABLE>
* Based on total investment value of the Fund as of 4/30/99.
<PAGE>
ORBITEX STRATEGIC NATURAL RESOURCES FUND 10
- --------------------------------------------------------------------------------
Schedule of Investments
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- -----------------------------------------------------------------
COMMON STOCKS--98.81%
ALUMINUM--4.25%
Alcoa, Inc. 1,500 $ 93,375
Reynolds Metals Co. 1,700 106,038
-------------
199,413
-------------
BUILDING CONSTRUCTION--1.01%
J. Ray McDermott SA (a) 1,500 47,250
-------------
CHEMICALS--4.55%
Cytec Industries, Inc. (a) 1,000 28,437
Du Pont (E.I.) de Nemours and Co. 1,000 70,625
Imperial Chemical Industries PLC, ADR 1,000 43,062
Potash Corp of Saskatchewan, Inc. 750 45,375
Union Carbide Corp. 500 25,938
-------------
213,437
-------------
ELECTRIC UTILITIES--1.49%
Duke Energy Corp. 1,250 70,000
-------------
ELECTRONICS--1.83%
Corning, Inc. 1,500 85,875
-------------
GAS & PIPELINE UTILITIES--4.29%
Consolidated Natural Gas Co. 1,000 59,500
Williams Companies, Inc. 3,000 141,750
-------------
201,250
-------------
GOLD--1.67%
Agnico-Eagle Mines, Ltd. 5,000 30,625
Homestake Mining Co. 5,000 47,813
-------------
78,438
-------------
INTERNATIONAL OIL--14.76%
Chevron Corp. 1,200 119,700
Mobil Corp. 750 78,563
Ocean Energy, Inc. (a) 4,000 37,250
Petro-Canada 1,500 20,625
Ranger Oil, Ltd. (a) 10,000 51,875
Royal Dutch Petroleum Co., NY Shares 1,750 102,703
Texaco, Inc. 1,000 62,750
USX-Marathon Group 5,000 156,250
YPF Sociedad Anonima, ADR 1,500 63,000
-------------
692,716
-------------
LIFE SCIENCES--1.93%
Monsanto Co. 2,000 90,500
-------------
MINING--5.66%
CONSOL Energy Inc. (a) 1,000 16,000
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
ORBITEX STRATEGIC NATURAL RESOURCES FUND 11
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- -----------------------------------------------------------------
MINING (Continued)
Cyprus Amax Minerals Co. 3,000 $ 46,125
Freeport-McMoRan Copper & Gold, Inc.,
Class A 2,500 36,406
Newmont Mining Corp. 2,000 48,125
Placer Dome, Inc. 3,000 42,375
Rio Tinto Plc, ADR 500 34,062
Stillwater Mining Co. (a) 1,500 42,469
-------------
265,562
-------------
OIL--8.69%
Atlantic Richfield Co. 1,000 83,937
Canadian 88 Energy Corp. (a) 17,500 73,212
Exxon Corp. 2,250 186,891
Halliburton Co. 1,500 63,937
-------------
407,977
-------------
OIL & GAS DRILLING--5.12%
Ensco International, Inc. 2,000 37,125
Marine Drilling Co., Inc. (a) 2,500 42,969
Nabors Industries, Inc. (a) 2,000 41,125
Precision Drilling Corp. (a) 2,000 34,500
R&B Falcon Corp. (a) 4,000 40,000
Smith International, Inc. (a) 1,000 44,875
-------------
240,594
-------------
OIL & GAS EXPLORATION AND PRODUCTION--22.64%
Anadarko Petroleum Corp. 2,500 94,844
Apache Corp. 1,000 30,687
Benz Energy, Ltd. (a) 15,000 4,218
BP Amoco Plc, ADR 500 56,594
Burlington Resources, Inc. 2,000 92,125
Coastal Corp. 1,500 57,375
Columbia Energy Group 1,250 60,078
Enron Corp. 1,000 75,250
Enron Oil & Gas Company 3,000 57,000
Global Industries, Inc. (a) 4,000 49,250
Gulf Canada Resources, Ltd. 5,000 20,000
Nuevo Energy Co. (a) 4,000 63,500
Swift Energy Co. (a) 4,000 46,000
Total SA, ADR 600 40,800
Union Pacific Resources Group, Inc. 4,500 63,000
Valero Energy Corp. 2,000 44,625
Vastar Resources, Inc. 3,000 164,625
Vintage Petroleum, Inc. 4,000 43,000
-------------
1,062,971
-------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
ORBITEX STRATEGIC NATURAL RESOURCES FUND 12
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- -----------------------------------------------------------------
OIL FIELD MACHINE & EQUIPMENT MANUFACTURING--1.23%
Cooper Cameron Corp. (a) 1,500 $ 57,938
-------------
OIL FIELD SERVICES--3.18%
BJ Services Co. (a) 2,500 66,875
Newpark Resources, Inc. (a) 2,000 18,375
Schlumberger Ltd. 1,000 63,875
-------------
149,125
-------------
PAPER & RELATED PRODUCTS--8.86%
Boise Cascade Corp. 2,500 100,625
Champion International Corp. 2,000 109,375
Fort James Corp. 2,500 95,000
Mead Corp. 1,000 41,812
Temple-Inland, Inc. 1,000 69,000
-------------
415,812
-------------
PETROLEUM SERVICES--4.69%
Callon Petroleum Co. (a) 3,000 32,813
McDermott International, Inc. 1,500 43,500
Phillips Petroleum Co. 1,250 63,281
Varco International, Inc. (a) 4,000 45,250
Veritas DGC, Inc. (a) 1,750 35,437
-------------
220,281
-------------
STEEL--2.96%
Bethlehem Steel Corp. (a) 6,000 54,750
Steel Dynamics, Inc. (a) 5,000 84,375
-------------
139,125
- -----------------------------------------------------------------
TOTAL COMMON STOCKS--(cost $4,178,803) 4,638,264
- -----------------------------------------------------------------
<CAPTION>
Principal
Amount
--------
<S> <C> <C>
SHORT TERM INVESTMENTS (cost $196,000)--4.18%
TIME DEPOSIT--4.18%
State Street Bank and Trust Co., 4.500%
due 5/3/1999 $196,000 196,000
- -----------------------------------------------------------------
TOTAL INVESTMENTS (cost $4,374,803)--102.99% 4,834,264
- -----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--(2.99)% (140,256)
- -----------------------------------------------------------------
NET ASSETS--100.00% $4,694,008
- -----------------------------------------------------------------
</TABLE>
(a) Denotes non-income producing security
ADR--American Depository Receipt
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
ORBITEX INFO-TECH & COMMUNICATIONS FUND 13
- --------------------------------------------------------------------------------
Schedule of Investments
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- -------------------------------------------------------------------
COMMON STOCKS--81.67%
BROADCASTING--4.37%
AT&T Corp.--Liberty Media Group, Class A
(a) 20,000 $ 1,277,500
CBS Corp. (a) 23,000 1,047,938
-------------
2,325,438
-------------
BUSINESS SERVICES--0.84%
Nokia Corp., ADR (a) 6,000 445,125
-------------
COMPUTERS & BUSINESS EQUIPMENT--5.63%
Computer Sciences Corp. 16,000 953,000
Equant NV, NY Shares (a) 13,000 1,160,250
Extreme Networks, Inc. (a) 16,000 887,000
-------------
3,000,250
-------------
ELECTRONICS--13.71%
Applied Materials, Inc. (a) 39,000 2,091,375
CIENA Corp. (a) 90,000 2,115,000
JDS Fitel, Inc. (a) 20,000 1,207,050
PMC-Sierra, Inc. (a) 6,000 575,250
Uniphase Corp. (a) 8,500 1,031,688
Vitesse Semiconductor Corp. (a) 6,000 277,875
-------------
7,298,238
-------------
FINANCIAL SERVICES--1.90%
MBNA Corp. 36,000 1,014,750
-------------
FOOD & BEVERAGES--1.62%
Seagram Company, Ltd. 15,000 860,625
-------------
GAS & PIPELINE UTILITIES--2.66%
Williams Companies, Inc. 30,000 1,417,500
-------------
NETWORKING PRODUCTS--9.00%
Cisco Systems, Inc. (a) 13,000 1,482,812
FORE Systems, Inc. (a) 82,500 2,784,375
Gemstar International Group Ltd (a) 5,000 526,875
-------------
4,794,062
-------------
SOFTWARE--3.82%
Evolving Systems, Inc. (a) 74,500 353,875
ISS Group, Inc. (a) 6,000 318,375
Marimba, Inc. (a) 500 30,375
PeopleSoft, Inc. (a) 70,000 958,125
Razorfish, Inc., Class A (a) 375 16,313
Sybase, Inc. (a) 40,000 310,000
USinternetworking, Inc. (a) 875 44,734
-------------
2,031,797
-------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
ORBITEX INFO-TECH & COMMUNICATIONS FUND 14
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- -------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES--18.70%
AirTouch Communications, Inc. (a) 5,000 $ 466,875
China Telecom Hong Kong, Ltd., ADR (a) 25,000 1,143,750
ICG Communications, Inc. (a) 72,000 1,588,500
IXC Communications, Inc. (a) 26,000 1,030,250
Metronet Communications Corp., Class B
(a) 2,000 111,000
NTL, Inc. (a) 14,000 1,067,500
Omnipoint Corp. (a) 86,200 1,530,050
QUALCOMM, Inc. 10,000 2,000,000
Scientific-Atlanta, Inc. 32,000 1,016,000
-------------
9,953,925
-------------
TELEPHONE--19.42%
ALLTEL Corp. 9,400 633,913
AT&T Corp., Series A 21,307 1,076,003
Intermedia Communications, Inc. (a) 78,000 2,510,625
MCI WorldCom, Inc. (a) 29,000 2,383,437
McLeodUSA, Inc. (a) 7,000 392,438
Powertel, Inc. (a) 30,600 665,550
SBC Communications, Inc. 13,000 728,000
Telecomunicacoes Brasileiras, ADR 10,000 781
WinStar Communications, Inc. (a) 40,000 1,945,000
-------------
10,335,747
- -------------------------------------------------------------------
TOTAL COMMON STOCKS--(cost $35,049,783) 43,477,457
- -------------------------------------------------------------------
PREFERRED STOCKS--(cost $917,274)--1.71%
TELEPHONE--1.71%
Telecomunicacoes Brasileiras, ADR 10,000 911,875
-------------
<CAPTION>
Principal
Amount
----------
<S> <C> <C>
SHORT TERM INVESTMENTS (cost $6,023,000)--11.31%
TIME DEPOSIT--11.31%
State Street Bank and Trust Co., 4.500%
due 5/3/1999 $6,023,000 6,023,000
- -------------------------------------------------------------------
TOTAL INVESTMENTS (COST $41,990,057)--94.69% 50,412,332
OTHER ASSETS AND LIABILITIES--5.31% 2,826,806
- -------------------------------------------------------------------
NET ASSETS--100.00% $53,239,138
- -------------------------------------------------------------------
</TABLE>
(a) Denotes non-income producing security
ADR--American Depository Receipt
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
ORBITEX GROWTH FUND 15
- --------------------------------------------------------------------------------
Schedule of Investments
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- --------------------------------------------------------------------
COMMON STOCKS--87.39%
BROADCASTING--2.30%
United States Satellite Broadcasting
Company, Inc., Class A (a) 1,900 $ 33,963
-------------
COMPUTERS & BUSINESS EQUIPMENT--4.15%
Intel Corp. 1,000 61,187
-------------
COSMETICS & TOILETRIES--2.86%
Procter & Gamble Co. 450 42,216
-------------
DIVERSIFIED MANUFACTURING--3.58%
General Electric Co. 500 52,750
-------------
DRUGS & HEALTH CARE--3.90%
Pfizer, Inc. 500 57,531
-------------
FINANCIAL SERVICES--8.44%
Citigroup, Inc. 1,000 75,250
Hambrecht & Quist Group (a) 1,400 49,350
-------------
124,600
-------------
FOOD & BEVERAGES--2.97%
Anheuser-Busch Companies, Inc. 600 43,875
-------------
INSURANCE--3.58%
American International Group, Inc. 450 52,847
-------------
INTERNATIONAL OIL--4.73%
Chevron Corp. 700 69,825
-------------
OIL FIELD SERVICE--3.26%
BJ Services Co. (a) 1,800 48,150
-------------
RETAIL--12.47%
Home Depot, Inc. 1,000 59,937
Lowe's Companies, Inc. 1,200 63,300
Staples, Inc. (a) 2,025 60,750
-------------
183,987
-------------
SOFTWARE--11.51%
America Online, Inc 400 57,100
Electronic Arts, Inc. (a) 900 45,731
Microsoft Corp. (a) 700 56,919
pcOrder.com, Inc., Class A (a) 50 3,091
Ziff-Davis, Inc. (a) 200 7,050
-------------
169,891
-------------
TELECOMMUNICATIONS EQUIPMENT--4.07%
Lucent Technologies, Inc. 1,000 60,125
-------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
ORBITEX GROWTH FUND 16
- --------------------------------------------------------------------------------
Schedule of Investments (continued)
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Market Value
<S> <C> <C>
- --------------------------------------------------------------------
TELEPHONE--19.57%
AT&T Corp. 300 $ 15,150
MCI WorldCom, Inc. (a) 1,700 139,719
Qwest Communications International, Inc.
(a) 400 34,175
SBC Communications, Inc. 1,050 58,800
Sprint Corp. 400 41,025
-------------
288,869
- --------------------------------------------------------------------
TOTAL COMMON STOCKS--(Cost $1,245,486) 1,289,816
- --------------------------------------------------------------------
<CAPTION>
Principal
Amount
----------
<S> <C> <C>
SHORT TERM INVESTMENTS (COST $174,000)--11.79%
TIME DEPOSIT--11.79%
State Street Bank and Trust Co., 4.500%
due 5/3/1999 $ 174,000 174,000
- --------------------------------------------------------------------
TOTAL INVESTMENTS (Cost $1,419,486)--99.18% 1,463,816
- --------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES--0.82% 12,047
- --------------------------------------------------------------------
NET ASSETS--100.00% $1,475,863
- --------------------------------------------------------------------
</TABLE>
(a) Denotes non-income producing security.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
17
ORBITEX GROUP OF FUNDS
- --------------------------------------------------------------------------------
Statements of Assets and Liabilities
April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strategic Natural Info-Tech &
Resources Fund Communications Fund Growth Fund
------------------ -------------------- ------------
<S> <C> <C> <C>
ASSETS
Investments in securities, at value
(Note 2)......................... $4,638,264 $44,389,332 $1,289,816
Short term investments (Note 2).... 196,000 6,023,000 174,000
- ---------------------------------------------------------------------------------------------
Total investments.................. 4,834,264 50,412,332 1,463,816
- ---------------------------------------------------------------------------------------------
Cash............................... 330 585 443
Foreign currency, at value......... 38 -- --
Receivable for securities sold..... 344,363 3,099,481 --
Interest and dividends
receivable....................... 1,343 14,826 380
Receivable for fund shares sold.... 16,419 1,384,139 195
Receivable due from advisor (Note
3)............................... 39,336 48,865 40,378
Deferred organizational expenses
(Note 2)......................... 13,121 13,111 13,111
Other assets....................... 5,276 2,165 2,163
- ---------------------------------------------------------------------------------------------
TOTAL ASSETS....................... 5,254,490 54,975,504 1,520,486
- ---------------------------------------------------------------------------------------------
LIABILITIES
Payable for securities purchased... 509,548 1,560,535 --
Payable for fund shares redeemed... -- 30,445 --
Payable for professional fees...... 24,863 24,863 24,863
Payable for custodian fees......... 5,490 49,837 2,572
Payable for distribution fees...... 3,436 37,443 1,374
Payable for Trustee fees (Note
3)............................... 1,251 1,251 1,251
Accrued expenses and other
liabilities...................... 15,894 31,992 14,563
- ---------------------------------------------------------------------------------------------
TOTAL LIABILITIES.................. 560,482 1,736,366 44,623
- ---------------------------------------------------------------------------------------------
NET ASSETS......................... $4,694,008 $53,239,138 $1,475,863
- ---------------------------------------------------------------------------------------------
NET ASSETS
Paid-in capital.................... $4,837,542 $40,005,073 $1,269,888
Undistributed net investment income
(loss)........................... (198) -- --
Accumulated net realized gain
(loss) on investments............ (602,798) 4,811,790 161,645
Net unrealized appreciation
(depreciation) on investments.... 459,462 8,422,275 44,330
- ---------------------------------------------------------------------------------------------
NET ASSETS......................... $4,694,008 $53,239,138 $1,475,863
- ---------------------------------------------------------------------------------------------
CLASS A SHARES:
Net assets......................... $4,286,408 $34,334,869 $1,421,648
Net asset value per share (based on
shares of beneficial interest
outstanding, par value $.01 per
share)........................... 14.92 30.62 18.66
Maximum sales charge (Note 1)...... 5.75% 5.75% 5.75%
- ---------------------------------------------------------------------------------------------
Offering price per share........... $ 15.83 $ 32.49 $ 19.80
- ---------------------------------------------------------------------------------------------
Total shares outstanding at end of
period........................... 287,199 1,121,237 76,173
- ---------------------------------------------------------------------------------------------
CLASS B SHARES:
Net assets......................... $ 407,600 $18,904,269 $ 54,215
Net asset value and offering price
per share (based on shares of
beneficial interest outstanding,
par value $.01 per share)........ $ 14.98 $ 30.48 $ 18.61
- ---------------------------------------------------------------------------------------------
Total shares outstanding at end of
period........................... 27,210 620,240 2,913
- ---------------------------------------------------------------------------------------------
INVESTMENTS, AT COST............... $4,374,803 $41,990,057 $1,419,486
- ---------------------------------------------------------------------------------------------
FOREIGN CURRENCY, AT COST.......... $ 37 $ -- $ --
- ---------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
18
ORBITEX GROUP OF FUNDS
- --------------------------------------------------------------------------------
Statements of Operations
For the Year Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Info-Tech &
Strategic Natural Communications
Resources Fund Fund Growth Fund
------------------ --------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income.................... $ 20,863 $ 165,805 $ 5,041
Dividend income.................... 59,590 55,574 5,997
Foreign taxes withheld............. (924) (1,863) (26)
- ----------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME............ 79,529 219,516 11,012
- ----------------------------------------------------------------------------------------
EXPENSES
Administration fee (Note 3)........ 62,858 62,711 62,711
Custodian fee (Note 3)............. 62,781 153,056 51,268
Transfer agent fee................. 48,662 72,375 45,755
Professional fees.................. 47,487 48,403 48,387
Investment advisor fee (Note 3).... 46,098 211,768 8,089
Registration fees.................. 24,430 35,014 23,811
Distribution fees (Note 3):
Class A Shares................... 14,495 53,772 4,257
Class B Shares................... 641 34,918 143
Trustees' fee (Note 3)............. 4,117 4,117 4,117
Amortization of organizational
expenses (Note 2)................ 3,770 3,770 3,770
Miscellaneous expense.............. 7,528 16,970 4,921
- ----------------------------------------------------------------------------------------
Total expenses before waivers,
reimbursements and custodial
credits.......................... 322,867 696,874 257,229
Expenses waived and reimbursed
(Note 3)......................... (241,943) (334,057) (236,419)
Fees reduced by credits allowed by
the custodian.................... (864) (792) (570)
- ----------------------------------------------------------------------------------------
NET EXPENSES....................... 80,060 362,025 20,240
- ----------------------------------------------------------------------------------------
NET INVESTMENT LOSS................ (531) (142,509) (9,228)
- ----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) on:
Investments...................... (285,496) 5,050,603 170,778
Written options.................. (33,980) 91,757 545
- ----------------------------------------------------------------------------------------
Total net realized gain (loss)..... (319,476) 5,142,360 171,323
- ----------------------------------------------------------------------------------------
Net change in unrealized
appreciation (depreciation) on
investment transactions and
foreign currency................. 67,879 8,116,172 (14,256)
- ----------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS)........................... (251,597) 13,258,532 157,067
- ----------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS....................... $(252,128) $13,116,023 $ 147,839
- ----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
19
ORBITEX GROUP OF FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Year Ended April 30, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Strategic Natural Info-Tech &
Resources Communications
Fund Fund Growth Fund
------------------ --------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment loss................ $ (531) $ (142,509) $ (9,228)
Net realized gain (loss) on
investment and foreign currency
related transactions............. (319,476) 5,142,360 171,323
Net change in unrealized
appreciation (depreciation) on
investment transactions.......... 67,879 8,116,172 (14,256)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets resulting from
operations....................... (252,128) 13,116,023 147,839
- ----------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income:
Class A.......................... (107,147) -- (12,649)
Class B.......................... (1,462) -- (425)
Net realized gains................. (160) (157,965) (43,262)
- ----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders.................. (108,769) (157,965) (56,336)
- ----------------------------------------------------------------------------------------
Fund Share Transactions (Note 6)... (642,929) 37,840,738 493,720
- ----------------------------------------------------------------------------------------
Total Increase (Decrease) in Net
Assets........................... (1,003,826) 50,798,796 585,223
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of year.................. 5,697,834 2,440,342 890,640
- ----------------------------------------------------------------------------------------
End of year........................ $ 4,694,008 $53,239,138 $1,475,863
- ----------------------------------------------------------------------------------------
Undistributed net investment income
(loss) at end of year............ $ (198) $ -- $ --
- ----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
20
ORBITEX GROUP OF FUNDS
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
For the Period Ended April 30, 1998*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Info-Tech &
Strategic Natural Communications
Resources Fund Fund Growth Fund
------------------ --------------- ------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss)....... $ 127,318 $ (5,210) $ 14,172
Net realized gain (loss) on
investment and foreign currency
related transactions............. (291,457) (30,284) 41,526
Net change in unrealized
appreciation (depreciation) on
investment transactions.......... 391,583 306,103 58,586
- ----------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations........ 227,444 270,609 114,284
- ----------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment income.............. (7,147) -- --
Distributions in excess of net
realized gains................... (6,916) -- --
- ----------------------------------------------------------------------------------------
Total dividends and distributions
to shareholders.................. (14,063) -- --
- ----------------------------------------------------------------------------------------
Fund Share Transactions (Note 6)... 5,464,453 2,149,733 756,356
- ----------------------------------------------------------------------------------------
Total Increase in Net Assets....... 5,677,834 2,420,342 870,640
- ----------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period................ 20,000 20,000 20,000
- ----------------------------------------------------------------------------------------
End of period...................... $5,697,834 $2,440,342 $890,640
- ----------------------------------------------------------------------------------------
Undistributed net investment income
at end of period................. $ 119,210 $ -- $ 13,074
- ----------------------------------------------------------------------------------------
</TABLE>
* The commencement of investment operations was October 23, 1997 for
Strategic Natural Resources Fund and October 22, 1997 for Info-Tech &
Communications Fund and Growth Fund.
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
21
ORBITEX STRATEGIC NATURAL RESOURCES FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data based on a share outstanding throughout each period indicated
<TABLE>
<CAPTION>
Class A Shares Class A Shares Class B Shares
------------------- ------------------- ----------------------
For the Year For the Period For the Period
Ended Ended Ended
April 30, 1999 (b) April 30, 1998 (a) April 30, 1999 (a)(b)
------------------- ------------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of
period........................... $ 16.54 $ 15.00 $ 12.22
------- ------- -------
Income (Loss) from investment
operations:
Net investment gain (loss)....... 0.00 0.38(e) (0.05)
Net realized and unrealized gain
(loss) on investments and
foreign currency related
transactions................... (1.25) 1.22 3.21(g)
------- ------- -------
Total income (loss) from
investment operations........ (1.25) 1.60 3.16
------- ------- -------
Less distributions from net
investment income................ (0.37) (0.03) (0.40)
Less distributions from net
realized gains................... 0.00(f) (0.03) 0.00(f)
------- ------- -------
Total distributions from net
investment income and net
realized gains................. (0.37) (0.06) (0.40)
------- ------- -------
Net asset value, end of period..... $ 14.92 $ 16.54 $ 14.98
------- ------- -------
------- ------- -------
Total Return(c).................... (6.86)% 10.74% 26.92%
Ratios and Supplemental Data:
Net assets, end of period (in
000's)......................... $ 4,286 $ 5,698 $ 408
Ratio of expenses to average net
assets(d)...................... 2.19% 2.45% 2.40%
Ratio of net expenses to average
net assets (net of custodial
credits)(d).................... 2.17% 2.40% 2.40%
Ratio of total expenses to
average net assets before
waivers, reimbursements and
custodial credits(d)........... 8.76% 9.27% 8.49%
Ratio of net investment income
(loss) to average net
assets(d)...................... 0.00% 6.12% (e) (0.66)%
Portfolio turnover rate.......... 921% 519% 921%
</TABLE>
- ---------------
(a) The commencement of investment operations was October 23, 1997 and
September 21, 1998 for Strategic Natural Resources Fund Class A Shares and
Class B Shares, respectively.
(b) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period.
(c) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Adviser, Administrator, Custodian and Distributor not
absorbed a portion of the expenses, total returns would have been lower.
Total returns for periods less than one year are not annualized.
(d) Annualized for periods less than one year.
(e) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
Adviser during the current fiscal year.
(f) Amount represents less than $0.01 per share.
(g) The amount shown may not accord with the change in aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
- --------------------------------------------------------------------------------
<PAGE>
22
ORBITEX INFO-TECH & COMMUNICATIONS FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data based on a share outstanding throughout each period indicated
<TABLE>
<CAPTION>
Class A Shares Class A Shares Class B Shares
--------------- ------------------- -------------------
For the Year For the Period For the Period
Ended Ended Ended
April 30, 1999 April 30, 1998 (a) April 30, 1999 (a)
--------------- ------------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of
period........................... $ 19.62 $ 15.00 $ 18.23
--------------- ------- --------
Income (Loss) from investment
operations:
Net investment loss.............. (0.08) 0.00 (0.08)
Net realized and unrealized gain
on investments and foreign
currency related
transactions................... 11.26 4.62 12.51
--------------- ------- --------
Total income from investment
operations..................... 11.18 4.62 12.43
--------------- ------- --------
Less distributions from net
investment income................ -- -- --
Less distributions from net
realized gains................... (0.18) -- (0.18)
--------------- ------- --------
Total distributions from net
investment income and net
realized gains................. (0.18) -- (0.18)
--------------- ------- --------
Net asset value, end of period..... $ 30.62 $ 19.62 $ 30.48
--------------- ------- --------
--------------- ------- --------
Total Return(b).................... 57.43% 30.80% 68.67%
Ratios and Supplemental Data:
Net assets, end of period (in
000's)......................... $ 34,335 $ 2,440 $ 18,904
Ratio of expenses to average net
assets(c)...................... 2.07% 2.88% 2.41%
Ratio of net expenses to average
net assets (net of custodial
credits)(c).................... 2.07% 2.40% 2.40%
Ratio of total expenses to
average net assets before
waivers, reimbursements and
custodial credits(c)........... 4.04% 39.06% 4.41%
Ratio of net investment loss to
average net assets(c).......... (0.70)% (1.27)% (1.40)%
Portfolio turnover rate.......... 360% 76% 360%
</TABLE>
- ---------------
(a) The commencement of investment operations was October 22, 1997 and
September 16, 1998 for Info-Tech & Communications Fund Class A Shares and
Class B Shares, respectively.
(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 Adviser, Administrator, Custodian and Distributor not
absorbed a portion of the expenses, total returns would have been lower.
Total returns for periods less than one year are not annualized.
(c) Annualized for periods less than one year.
- --------------------------------------------------------------------------------
<PAGE>
23
ORBITEX GROWTH FUND
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
Selected data based on a share outstanding throughout each period indicated
<TABLE>
<CAPTION>
Class A Shares Class A Shares Class B Shares
------------------- ------------------- ---------------------
For the Year For the Period For the Period
Ended Ended Ended
April 30, 1999 (b) April 30, 1998 (a) April 30, 1999(a)(b)
------------------- ------------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning of
period........................... $ 17.93 $ 15.00 $ 16.46
------- ------- -------
Income (Loss) from investment
operations:
Net investment income (loss)..... (0.15) 0.26(e) (0.12)
Net realized and unrealized gain
on investments and foreign
currency related
transactions................... 1.70 2.67 3.11
------- ------- -------
Total income from investment
operations..................... 1.55 2.93 2.99
------- ------- -------
Less distributions from net
investment income................ (0.19) -- (0.21)
Less distributions from net
realized gains................... (0.63) -- (0.63)
------- ------- -------
Total distributions from net
investment income and net
realized gains................. (0.82) -- (0.84)
------- ------- -------
Net asset value, end of period..... $ 18.66 $ 17.93 $ 18.61
------- ------- -------
------- ------- -------
Total Return(c).................... 9.07% 19.53% 18.61%
Ratios and Supplemental Data:
Net assets, end of period (in
000's)......................... $ 1,422 $ 891 $ 54
Ratio of expenses to average net
assets(d)...................... 1.93% 2.11% 2.03%
Ratio of net expenses to average
net assets (net of custodial
credits)(d).................... 1.88% 1.60% 2.00%
Ratio of total expenses to
average net assets before
waivers, reimbursements and
custodial credits(d)........... 23.92% 50.13% 18.75%
Ratio of net investment income
(loss) to average net
assets(d)...................... (0.85)% 4.41% (e) (1.05)%
Portfolio turnover rate.......... 957% 448% 957%
</TABLE>
- ---------------
(a) The commencement of investment operations was October 22, 1997 and
September 16, 1998 for Growth Fund Class A Shares and Class B Shares,
respectively.
(b) Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period.
(c) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Adviser, Administrator, Custodian and Distributor not
absorbed a portion of the expenses, total returns would have been lower.
Total returns for periods less than one year are not annualized.
(d) Annualized for periods less than one year.
(e) Net investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
Adviser during the current fiscal year.
- --------------------------------------------------------------------------------
<PAGE>
ORBITEX GROUP OF FUNDS 24
- --------------------------------------------------------------------------------
Notes to Financial Statements
April 30, 1999
- ------------------------------------------
- ------------------------------------------
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 and is
authorized to issue an unlimited number of shares. The Trust is comprised of
three funds (collectively the "Funds" and each individually a "Fund") as
follows: Strategic Natural Resources Fund, Info-Tech & Communications Fund and
Growth Fund. Each Fund operates as a diversified investment company. The Funds
offer both Class A and Class B Shares. Class A Shares are offered at net asset
value plus a maximum sales load of 5.75%. Class B Shares are offered subject to
a contingent deferred sales charge and will automatically convert to Class A
Shares after seven years.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Trust in the preparation of its financial statements:
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
SECURITY VALUATION AND TRANSACTIONS
Equity securities are valued at the last sale price on the exchange or in the
over-the-counter market in which such securities are primarily traded, as of the
close of business on the day the securities are being valued, or lacking any
sales, the last available bid price. Long-term debt obligations are valued at
the mean of representative quoted bid and asked prices for such securities or,
if such prices are not available, at prices for securities of comparable
maturity, quality and type; however, when the Adviser or Sub-Adviser deems it
appropriate, prices obtained from an independent pricing service will be used.
Short-term debt investments with maturities less than 60 days are valued at
amortized cost or original cost plus accrued interest, each of which
approximates fair value.
Foreign securities are valued on the basis of market quotations from the primary
market in which they are traded, and are translated from the local currency into
U.S. dollars using current exchange rates.
Securities for which current market quotations are not readily available or for
which quotations are not deemed by Orbitex Management, Inc. (the "Adviser") to
be representative of market values are valued at fair value as determined in
good faith by or under the direction of the Trustees.
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 TRANSLATIONS
The accounting records of the Funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency,
and 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 rates established at the approximate time of the trade.
Net realized gains and losses on foreign currency transactions represent net
gains and losses from currency realized between the trade and settlement dates
on securities transactions and the difference between income accrued and income
received. 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.
<PAGE>
ORBITEX GROUP OF FUNDS 25
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
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 non-reclaimable
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. Interest income is recorded on the accrual basis.
Market discount, original issue discount and premiums are amortized on a yield
to maturity basis. The value of additional securities received as interest or
dividend payments is recorded as income and as the cost basis of such
securities.
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. Each Fund's income, expenses (other than the class specific distribution
fees) and realized and unrealized gains and losses are allocated proportionally
each day between the classes based upon the relative net assets of each class.
DISTRIBUTIONS TO SHAREHOLDERS
Income will normally be declared and distributed annually for each of the 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. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Funds, timing
differences and differing characterization of distributions made by each Fund.
DEFERRED ORGANIZATIONAL COSTS
Organizational expenses have been deferred and are being amortized over a period
of five years commencing with operations. The Adviser 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.
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 maturity 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 Trustees have established criteria to evaluate the creditworthiness of
parties with which the Funds may enter into repurchase agreements.
<PAGE>
ORBITEX GROUP OF FUNDS 26
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
OPTIONS
Each Fund may enter into options contracts. An option contract is a contract in
which the writer of the option grants the buyer of the option the right to
purchase from (call option), or sell to (put option), the writer a designated
instrument at a specified price within a specified period of time. Certain
options, including options on indices, will require cash settlement by the Fund
if the option is exercised.
If the Fund writes an option and the option expires unexercised, the Fund will
realize income, in the form of a capital gain, to the extent of the amount
received for the option (the "premium"). If the Fund elects to close out the
option it would recognize a gain or loss based on the difference between the
cost of closing the option and the initial premium received. If the Fund
purchased an option and allows the option to expire, it would realize a loss to
the extent of the premium paid. If the Fund elects to close out the option, it
would recognize a gain or loss equal to the difference between the cost of
acquiring the option and the amount realized upon the sale of the option.
The gain or loss recognized by the Fund upon the exercise of a written call or
purchased put option is adjusted for the amount of the option premium. If a
written put or purchased call option is exercised, the Fund's cost basis of the
acquired security or currency would be the exercise price adjusted for the
amount of the option premium.
The liability representing the Fund's obligation under an exchange traded
written option or investment in a purchased option is valued at the last sale
price or, in the absence of a sale, the closing bid price or at the most recent
asked price (bid for purchased options) if no bid and asked price are available.
Over-the-counter written or purchased options are valued using dealer supplied
quotations.
When the Fund writes a covered call option, the Fund foregoes, in exchange for
the premium, the opportunity to profit during the option period from an increase
in the market value of the underlying security or currency above the exercise
price. When the Fund writes a put option it accepts the risk of a decline in the
market value of the underlying security or currency below the exercise price.
Over-the-counter options have the risk of the potential inability of
counterparties to meet the terms of their contracts. The Fund's maximum exposure
to purchased options is limited to the premium initially paid. In addition,
certain risks may arise upon entering into option contracts including the risk
that an illiquid secondary market will limit the Fund's ability to close out an
option contract prior to the expiration date and, that a change in the value of
the option contract may not correlate exactly with changes in the value of the
securities or currencies hedged.
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 Strategic Natural Resources Fund and 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 Adviser. As
compensation for the services rendered, facilities furnished, and expenses borne
by the Adviser, the Funds will pay the Adviser a
<PAGE>
ORBITEX GROUP OF FUNDS 27
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
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
and 0.75% for the Growth Fund. The Advisory Agreement also provides that the
Adviser may retain Sub-Advisers at the Adviser's own cost and expense, for the
purpose of managing the investment of the assets of one or more Funds of the
Trust.
Through September 21, 1998 for the Strategic Natural Resources Fund and
September 16, 1998 for the Info-Tech & Communications and Growth Funds, the
Adviser had agreed to waive or limit its fees and to pay certain operating
expenses to the extent necessary to limit total fund operating expenses, net of
waivers and custodial credits, to an annualized rate of 2.40%, 2.40%, and 1.60%,
for Class A Shares of the Strategic Natural Resources Fund, Info-Tech &
Communications Fund, and Growth Fund, respectively, subject to possible
reimbursement by the Funds if such reimbursement can be achieved within the
foregoing expense limits. Effective September 21, 1998 for the Strategic Natural
Resources Fund and September 16, 1998 for the Info-Tech & Communications and
Growth Funds, the Adviser changed the expense limit on Class A Shares of the
Strategic Natural Resources Fund, Info-Tech & Communications Fund, and Growth
Fund, to 2.00% annually of the Funds' relative average daily net assets.
The Adviser has agreed to waive or limit its fees and to pay certain operating
expenses to the extent necessary to limit total fund operating expenses, net of
waivers and custodial credits, to an annualized rate of 2.40%, 2.40%, and 2.00%,
for Class B Shares of the Strategic Natural Resources Fund, Info-Tech &
Communications Fund, and Growth Fund, respectively, subject to possible
reimbursement by the Funds if such reimbursement can be achieved within the
foregoing expense limits.
The waivers for the Adviser's fee for the year ended April 30, 1999 amounted to
$46,098, $211,768, and $8,089 for Strategic Natural Resources Fund, Info-Tech &
Communications Fund and Growth Fund, respectively. The reimbursements for the
year ended April 30, 1999 amounted to $162,323, $15,471 and $205,802 for
Strategic Natural Resources Fund, Info-Tech & Communications Fund and Growth
Fund, respectively.
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 0.10% of the
first $100 million of the Funds average daily net assets, plus 0.08% of the next
$100 million of the Funds average daily net assets, plus 0.06% of the Funds
average daily net assets in excess of $200 million, subject to certain minimum
requirements. State Street agreed to waive certain fees for the year ended April
30, 1999, which amounted to $18,386, $18,128, and $18,128 for Strategic Natural
Resources Fund, Info-Tech & Communications Fund and Growth Fund, respectively.
CUSTODIAN FEES
State Street also serves as the Trust's custodian, including holding all
portfolio securities and cash assets of the Trust and providing accounting
services which includes daily valuation of the shares of each Fund. For its
services State Street receives an annual custody and accounting fee which is
paid monthly.
The Funds have entered into arrangements with its' custodian whereby credits
realized as a result of uninvested cash balances were used to reduce a portion
of the Funds' expenses. During the year ended April 30, 1999, fees reduced by
credits allowed by the custodian amounted to $864, $792 and $570 for Strategic
Natural Resources Fund, Info-Tech & Communications Fund and Growth Fund,
respectively.
<PAGE>
ORBITEX GROUP OF FUNDS 28
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
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 for Class A Shares provides for payment of a fee to the
Distributor at an annualized rate of 0.40% of the average daily net assets of
the Class A Shares of each Fund. The Rule 12b-1 Plan and Agreement for Class B
Shares provides for payment of a fee to the Distributor at an annualized rate of
1.00% of the average daily net assets of the Class B Shares of each Fund. During
the fiscal year ended April 30, 1999 distribution fees were waived which
amounted to $15,136, $88,690, and $4,400 for Strategic Natural Resources Fund,
Info-Tech & Communications Fund and Growth Fund, respectively.
For the year ended April 30, 1999, the Funds have been informed that the
Distributor received sales charges in the amount of $976, $3,771 and $229 from
Strategic Natural Resources Fund, Info-Tech & Communications Fund and Growth
Fund, respectively.
TRUSTEES FEES
The Funds pay no compensation to their Trustees who are employees of the Adviser
or Sub-Advisers. Trustees who are not Adviser or Sub-Adviser employees receive
an annual fee of $5,000.
4. AGGREGATE UNREALIZED APPRECIATION AND DEPRECIATION
The identified cost of investments in securities owned by each Fund for federal
income tax purposes, and their respective gross unrealized appreciation and
depreciation at April 30, 1999, were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
IDENTIFIED UNREALIZED UNREALIZED NET UNREALIZED
COST APPRECIATION DEPRECIATION APPRECIATION
----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Strategic Natural Resources
Fund........................ $ 4,425,602 $ 433,962 $ (25,300) $ 408,662
Info-Tech & Communications
Fund........................ 42,068,721 9,462,445 (1,118,834) 8,343,611
Growth Fund................... 1,425,609 61,581 (23,374) 38,207
</TABLE>
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 year ended April
30, 1999, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Strategic Natural Resources Fund........ $31,075,570 $31,416,769
Info-Tech & Communications Fund......... 81,671,486 52,201,320
Growth Fund............................. 9,215,524 8,987,678
</TABLE>
During the year ended April 30, 1999, the following options were written:
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- -----------
<S> <C> <C>
STRATEGIC NATURAL RESOURCES FUND:
Balance as of April 30, 1998.......... -- $ --
Written............................... 266 33,981
Closed and Expired.................... 266 (33,981)
----------- -----------
Balance as of April 30, 1999.......... -- $ --
----------- -----------
----------- -----------
</TABLE>
<PAGE>
ORBITEX GROUP OF FUNDS 29
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- -----------
<S> <C> <C>
INFO-TECH & COMMUNICATIONS FUND:
Balance as of April 30, 1998.......... -- $ --
Written............................... 80 91,757
Closed and Expired.................... 80 (91,757)
----------- -----------
Balance as of April 30, 1999.......... -- $ --
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS PREMIUM
----------- -----------
<S> <C> <C>
GROWTH FUND:
Balance as of April 30, 1998.......... -- $ --
Written............................... 14 545
Closed and Expired.................... 14 (545)
----------- -----------
Balance as of April 30, 1999.......... -- $ --
----------- -----------
----------- -----------
</TABLE>
6. SHAREHOLDER'S TRANSACTIONS
Following is a summary of shareholder transactions for each Fund:
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
APRIL 30, 1999 APRIL 30, 1998*
--------------------- ---------------------
SHARES DOLLARS SHARES DOLLARS
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
STRATEGIC NATURAL RESOURCES
CLASS A SHARES:
Shares sold............... 131,711 $ 1,760,548 709,678 $10,833,321
Shares issued to
shareholders in
reinvestment............ 6,077 69,465 713 12,051
Shares redeemed........... (195,053) (2,799,209) (367,260) (5,380,919)
-------- ----------- -------- -----------
Net increase (decrease)... (57,265) $ (969,196) 343,131 $ 5,464,453
-------- ----------- -------- -----------
-------- ----------- -------- -----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1999
**
----------------
SHARES DOLLARS
------ --------
<S> <C> <C>
CLASS B SHARES:
Shares sold........................... 28,871 $345,007
Shares issued to shareholders in
reinvestment........................ 129 1,461
Shares redeemed....................... (1,790) (20,201)
------ --------
Net increase.......................... 27,210 $326,267
------ --------
------ --------
</TABLE>
<PAGE>
ORBITEX GROUP OF FUNDS 30
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
APRIL 30, 1999 APRIL 30, 1998*
----------------------- --------------------
SHARES DOLLARS SHARES DOLLARS
---------- ----------- -------- ----------
<S> <C> <C> <C> <C>
INFO-TECH AND COMMUNICATIONS
CLASS A SHARES:
Shares sold................... 1,256,122 $27,412,569 124,204 $2,171,752
Shares issued to shareholders
in reinvestment............. 5,899 123,229 -- --
Shares redeemed............... (265,173) (5,107,233) (1,148) (22,019)
---------- ----------- -------- ----------
Net increase................ 996,848 $22,428,565 123,056 $2,149,733
---------- ----------- -------- ----------
---------- ----------- -------- ----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1999 **
------------------------
SHARES DOLLARS
----------- -----------
<S> <C> <C>
CLASS B SHARES:
Shares sold............................. 627,210 $15,591,987
Shares issued to shareholders in
reinvestment.......................... 1,194 24,861
Shares redeemed......................... (8,164) (204,675)
----------- -----------
Net increase.......................... 620,240 $15,412,173
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
APRIL 30, 1999 APRIL 30, 1998*
------------------ ----------------
SHARES DOLLARS SHARES DOLLARS
------- --------- ------ --------
<S> <C> <C> <C> <C>
GROWTH
CLASS A SHARES:
Shares sold............... 50,700 $ 868,063 48,341 $756,356
Shares issued to
shareholders in
reinvestment............ 2,764 47,377 -- --
Shares redeemed........... (26,965) (473,892) -- --
------- --------- ------ --------
Net increase............ 26,499 $ 441,548 48,341 $756,356
------- --------- ------ --------
------- --------- ------ --------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
APRIL 30, 1999
**
---------------
SHARES DOLLARS
------ -------
<S> <C> <C>
CLASS B SHARES:
Shares sold........................... 3,387 $61,207
Shares issued to shareholders in
reinvestment........................ 46 781
Shares redeemed....................... (520 ) (9,816)
------ -------
Net increase........................ 2,913 $52,172
------ -------
------ -------
</TABLE>
*The commencement of investment operations was October 23, 1997 for Strategic
Natural Resources Fund Class A Shares, October 22, 1997 for Info-Tech &
Communications Fund Class A Shares and October 22, 1997 for Growth Fund Class A
Shares.
**The commencement of investment operations was September 21, 1998 for Strategic
Natural Resources Fund Class B Shares, September 16, 1998 for Info-Tech &
Communications Fund Class B Shares and September 16, 1998 for Growth Fund Class
B Shares.
<PAGE>
ORBITEX GROUP OF FUNDS 31
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
April 30, 1999
- ------------------------------------------
- ------------------------------------------
7. 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:
<TABLE>
<CAPTION>
5% OR GREATER SHAREHOLDERS
----------------------------------------
NUMBER OF
SHAREHOLDERS % OF FUND HELD
-------------------- -----------------
CLASS A CLASS B CLASS A CLASS B
----------- ------- ------- -------
<S> <C> <C> <C> <C>
Strategic Natural Resources
Fund........................ 2 7 33% 59%
Info-Tech & Communications
Fund........................ 1 1 10% 5%
Growth Fund................... 5 5 76% 99%
</TABLE>
There were no affiliated shareholders as of April 30, 1999.
8. CAPITAL LOSS CARRYFORWARD
At April 30, 1999, the Strategic Natural Resources Fund had available for
federal income tax purposes unused capital losses of $544,733, expiring in the
Year 2007.
Under current tax law, capital losses realized after October 31, may be deferred
and treated as occurring on the first day of the following fiscal year. For the
fiscal year ended April 30, 1999, the following Funds have elected to defer
losses occurring between
November 1, 1998 and April 30, 1999 under these rules, as follows:
<TABLE>
<CAPTION>
CAPITAL CURRENCY
LOSSES LOSSES
NAME OF FUND DEFERRED DEFERRED
- ---------------------------------------- --------- ---------
<S> <C> <C>
Strategic Natural Resources Fund........ $7,266 $198
</TABLE>
Such deferred losses will be treated as arising on the first day of the fiscal
year ending April 30, 2000.
9. SUBSEQUENT EVENT
The Adviser has entered into an agreement to merge the assets of the ASM Index
30 Fund, Inc. (the "ASM Fund") with and into a newly created series of the
Trust, the Orbitex Focus 30 Fund. A proxy statement regarding this transaction
has been filed with the Securities and Exchange Commission. The transaction is
pending the approval of the ASM Fund shareholders.
The ASM Fund has been named in a pending litigation relating to alleged
misappropriation of funds by the former advisor. If the merger transaction is
approved, the Orbitex Focus 30 Fund may succeed to the obligations, if any, of
the ASM Fund with respect to the pending litigation, including obligations of
the ASM Fund to indemnify its officers and directors. At the present time, the
liability of the Orbitex Focus 30 Fund, if any, is not readily determinable.
Neither the current Orbitex Funds nor Orbitex Management have been named in the
suit.
<PAGE>
ORBITEX GROUP OF FUNDS 32
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Orbitex Group of Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Strategic Natural Resources
Fund, Info-Tech & Communications Fund, and Growth Fund (each a "Fund"), each a
series of the Orbitex Group of Funds (the "Trust") at April 30, 1999, and the
results of each of their operations, the changes in each of their net assets and
the financial highlights for the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at April 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
June 11, 1999
<PAGE>
ORBITEX GROUP OF FUNDS 33
- --------------------------------------------------------------------------------
MEETING OF SHAREHOLDERS
ORBITEX GROUP OF FUNDS
A special meeting of the shareholders of the Trust was held on December 2, 1998
at the offices of the Trust, 410 Park Avenue, New York, New York. The matters
voted upon by the shareholders and the resulting votes are presented below:
PROPOSAL 1--TO ELECT A BOARD OF TRUSTEES:
<TABLE>
<CAPTION>
# OF SHARES VOTED % OF SHARES VOTED
------------------ -------------------
<S> <C> <C>
Ronald S. Altbach
Affirmative 644,487.6263 99.600%
Withheld 2,633.0000 0.400
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
Thomas T. Bachmann
Affirmative 643,748.2260 99.500%
Withheld 3,372.4003 0.500
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
Otto J. Felber
Affirmative 644,487.6263 99.600%
Withheld 2,633.0000 0.400
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
Stephen H. Hamrick
Affirmative 644,487.6263 99.600%
Withheld 2,633.0000 0.400
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
John D. Morgan
Affirmative 644,487.6263 99.600%
Withheld 2,633.0000 0.400
------------------ --------
TOTAL 647,120.6263 100.000%
------------------ --------
------------------ --------
James L. Nelson
Affirmative 644,487.6263 99.600%
Withheld 2,633.0000 0.400
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
Richard E. Stierwalt
Affirmative 644,487.6263 99.600%
Withheld 2,633.0000 0.400
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
</TABLE>
PROPOSAL 2--TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS OF THE TRUST:
<TABLE>
<CAPTION>
# OF SHARES VOTED % OF SHARES VOTED
------------------ -------------------
<S> <C> <C>
Affirmative 640,354.6263 98.955%
Withheld 1,624.0000 0.250
Abstain 5,142.0000 0.795
------------------ --------
Total 647,120.6263 100.000%
------------------ --------
------------------ --------
</TABLE>
<PAGE>
PROXY
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 Park Avenue
New York, New York 10022
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Keith Kemp and M. Fyzul Khan,
and each of them, as proxies for the undersigned, with full power of
substitution and resubstitution, and hereby authorizes said proxies, and each of
them, to represent and vote, as designated on the card below, all stock of the
above Company held of record by the undersigned on July 8, 1999 at the Special
Meeting of Stockholders to be held on September 10, 1999 and at any adjournment
thereof.
The undersigned hereby revokes any and all proxies with respect to such stock
heretofore given by the undersigned. The undersigned acknowledges receipt of the
Prospectus/Proxy Statement dated August 9, 1999.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER AND, IN THE DISCRETION OF SUCH PROXIES, UPON ANY AND
ALL OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE SPECIAL MEETING OR ANY
ADJOURNMENT THEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN FAVOR
OF THE REORGANIZATION.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. WHEN SHARES ARE HELD BY JOINT TENANTS,
EACH JOINT TENANT SHOULD SIGN.
When signing as attorney, executor, administrator, trustee, guardian or
custodian, please sign full title as such. If a corporation, please sign full
corporate name by authorized officer and indicate the signer's office. If a
partnership, please sign in partnership name. PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
TO VOTE BY TELEPHONE
1) Read the Prospectus/Proxy Statement and have the Proxy Card below at
hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy Card and follow
the simple instructions.
TO VOTE BY INTERNET
1) Read the Prospectus/Proxy Statement and have the Proxy Card below at
hand.
2) Go to Website www.proxyvote.com
3) Enter the 12-digit control number set forth on the Proxy Card and follow
the simple instructions.
<TABLE>
<S> <C>
TO VOTE, MARK BLOCKS IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS
- ---------------------------------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
For address changes and/or comments, please check
this box and write them on the back of the proxy card. / /
FOR AGAINST ABSTAIN
To approve the Reorganization. / / / / / /
- --------------------------------------------- --------------------------------------
- --------------------------------------------- --------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
</TABLE>
<PAGE>
------------------------
PART B
------------------------
STATEMENT OF ADDITIONAL INFORMATION
DATED AUGUST 6, 1999
ORBITEX GROUP OF FUNDS
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(888) ORBITEX
------------------------
AMERICAN DIVERSIFIED GLOBAL VALUE FUND
410 PARK AVENUE
NEW YORK, NEW YORK 10022
(800) 348-5032
------------------------
This Statement of Additional Information relating specifically to the
Reorganization consists of this cover page, the pro forma financial statements
attached as Exhibit A and the following described documents, each of which is
incorporated herein by reference:
1. The Registrant's Statement of Additional Information, as filed with the
Securities and Exchange Commission on July 9, 1999 as part of the
Post-Effective Amendment to its Registration Statement on Form N-1A.
Such Statement of Additional Information may obtained without charge by
writing to or calling the Orbitex Group of Funds at the address or
telephone number listed above.
2. The Statement of Additional Information of ADGVF, as filed with the
Securities and Exchange Commission on July 31, 1998 as part of the
Post-Effective Amendment to its Registration Statement on Form N-1A.
Such Statement of Additional Information can be obtained without charge
by writing to American Diversified Global Value Fund, Inc., c/o PFPC
Inc., 400 Bellevue Parkway, Suite 108, Wilmington, Delaware 19809, or
by calling 1-800-348-5032.
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Prospectus/Proxy Statement, dated July 9, 1999,
which has been filed by the Orbitex Group of Funds ("Orbitex") in connection
with a Special Meeting of Stockholders of the American Diversified Global Value
Fund ("ADGVF"), that has been called to vote on an Agreement and Plan of
Reorganization, dated July 8, 1999, by and between Orbitex and American
Diversified Funds, Inc., and the transactions contemplated thereby. Copies of
the Prospectus/Proxy Statement may be obtained at no charge by writing to
Orbitex at the address listed above or by calling the toll free number listed
above.
<PAGE>
EXHIBIT A
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Pro Forma Combining Statement of Net Assets
(Unaudited)
<TABLE>
<CAPTION>
American
Diversified Orbitex
Global Value Growth Fund
Fund Total Description
- ------------- --------------- --------------- -----------------------------------------
SHARES / PAR SHARES / PAR SHARES / PAR
- ------------------ --------------- ---------------
<C> <C> <C> <S>
COMMON STOCKS - 13.75%
BROADCASTING - 0.36%
- 1,900 1,900 United States Satellite Broadcasting
Company, Inc., Class A (a)
COMPUTERS & BUSINESS EQUIPMENT - 0.65%
- 1,000 1,000 Intel Corp.
COSMETICS & TOILETRIES - 0.45%
- 450 450 Proctor & Gamble Co.
DIVERSIFIED MANUFACTURING - 0.56%
- 500 500 General Electric Co.
DRUGS & HEALTH CARE - 0.61%
- 500 500 Pfizer, Inc.
FINANCIAL SERVICES - 1.33%
- 1,000 1,000 Citigroup, Inc.
- 1,400 1,400 Hambrecht & Quist Group (a)
FOOD & BEVERAGES - 0.47%
- 600 600 Anheuser-Busch Companies,
Inc.
<CAPTION>
American
Diversified Orbitex Growth
Global Value Fund
Description Fund Total
- ----------------------------------------- ---------------- ---------------- -----------------
MARKET VALUE MARKET VALUE MARKET VALUE
---------------- ---------------- -----------------
<S> <C> <C> <C>
COMMON STOCKS - 13.75%
BROADCASTING - 0.36%
United States Satellite Broadcasting - 33,963 33,963
Company, Inc., Class A (a)
COMPUTERS & BUSINESS EQUIPMENT - 0.65%
Intel Corp. - 61,187 61,187
COSMETICS & TOILETRIES - 0.45%
Proctor & Gamble Co. - 42,216 42,216
DIVERSIFIED MANUFACTURING - 0.56%
General Electric Co. - 52,750 52,750
DRUGS & HEALTH CARE - 0.61%
Pfizer, Inc. - 57,531 57,531
FINANCIAL SERVICES - 1.33%
Citigroup, Inc. - 75,250 75,250
Hambrecht & Quist Group (a) - 49,350 49,350
- 124,600 124,600
FOOD & BEVERAGES - 0.47%
Anheuser-Busch Companies, - 43,875 43,875
Inc.
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
American
Diversified Orbitex
Global Value Growth Fund
Fund Total Description
- ------------- --------------- --------------- -----------------------------------------
SHARES / PAR SHARES / PAR SHARES / PAR
- ------------------ --------------- ---------------
<C> <C> <C> <S>
INSURANCE - 0.56%
- 450 450 American International Group,
Inc.
INTERNATIONAL OIL - 0.74%
- 700 700 Chevron Corp.
OIL FIELD SERVICE - 0.51%
- 1,800 1,800 BJ Services Co. (a)
RETAIL - 1.96%
- 1,000 1,000 Home Depot, Inc.
- 1,200 1,200 Lowe's Companies, Inc.
- 2,025 2,025 Staples, Inc. (a)
SOFTWARE - 1.81%
- 400 400 American Online
- 900 900 Electronic Arts, Inc. (a)
- 700 700 Microsoft Corp. (a)
- 50 50 pcOrder. Com, Inc., Class A (a)
- 200 200 Ziff-Davis, Inc. (a)
TELECOMMUNICATIONS EQUIPMENT - 0.64%
- 1,000 1,000 Lucent Technologies, Inc.
TELEPHONE - 3.08%
- 300 300 AT&T Corp.
- 1,700 1,700 MCI WorldCom, Inc. (a)
- 400 400 Qwest Communications
International, Inc. (a)
- 1,050 1,050 SBC Communications, Inc.
- 400 400 Sprint Corp.
<CAPTION>
American
Diversified Orbitex Growth
Global Value Fund
Description Fund Total
- ----------------------------------------- ---------------- ---------------- -----------------
MARKET VALUE MARKET VALUE MARKET VALUE
---------------- ---------------- -----------------
<S> <C> <C> <C>
INSURANCE - 0.56%
American International Group, - 52,847 52,847
Inc.
INTERNATIONAL OIL - 0.74%
Chevron Corp. - 69,825 69,825
OIL FIELD SERVICE - 0.51%
BJ Services Co. (a) - 48,150 48,150
RETAIL - 1.96%
Home Depot, Inc. - 59,937 59,937
Lowe's Companies, Inc. - 63,300 63,300
Staples, Inc. (a) - 60,750 60,750
- 183,987 183,987
SOFTWARE - 1.81%
American Online - 57,100 57,100
Electronic Arts, Inc. (a) - 45,731 45,731
Microsoft Corp. (a) - 56,919 56,919
pcOrder. Com, Inc., Class A (a) - 3,091 3,091
Ziff-Davis, Inc. (a) - 7,050 7,050
- 169,891 169,891
TELECOMMUNICATIONS EQUIPMENT - 0.64%
Lucent Technologies, Inc. - 60,125 60,125
TELEPHONE - 3.08%
AT&T Corp. - 15,150 15,150
MCI WorldCom, Inc. (a) - 139,719 139,719
Qwest Communications - 34,175 34,175
International, Inc. (a)
SBC Communications, Inc. - 58,800 58,800
Sprint Corp. - 41,025 41,025
288,869 288,869
</TABLE>
A-2
<PAGE>
<TABLE>
<CAPTION>
American
Diversified Orbitex Growth
Global Value Fund
Description Fund Total
- ----------------------------------------- ---------------- ---------------- -----------------
MARKET VALUE MARKET VALUE MARKET VALUE
---------------- ---------------- -----------------
<S> <C> <C> <C>
TOTAL COMMON STOCKS - (Cost $1,245,486) 1,289,816 1,289,816
<CAPTION>
American
Diversified Orbitex Growth
Global Value Fund
Fund Total Description
- ---------------- ---------------- -------------- -------------------------------
PRINCIPAL PRINCIPAL
AMOUNT AMOUNT
--------- ---------
<C> <C> <S> <C>
SHORT TERM INVESTMENTS (COST 86.84%
$8,145,160)
- 174,000 174,000 State Street Bank and Trust
Co., 4.500% due 5/3/1999
188,244 - 188,244 Chase Institutional Money
Market
7,800,000 - 7,800,000 US Treasury Bill 4.15%, 5/20/99
TOTAL INVESTMENTS (COST $9,390,646) - 100.59%
OTHER ASSETS AND LIABILITIES - -0.59%
NET ASSETS - 100%
<CAPTION>
American
Diversified Orbitex Growth
Global Value Fund
Description Fund Total
- ----------------------------------------- ---------------- ---------------- -----------------
MARKET VALUE MARKET VALUE MARKET VALUE
---------------- ---------------- -----------------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (COST 86.84%
$8,145,160)
State Street Bank and Trust - 174,000 174,000
Co., 4.500% due 5/3/1999
Chase Institutional Money 188,244 - 188,244
Market
US Treasury Bill 4.15%, 5/20/99 7,782,916 - 7,782,916
7,971,160 174,000 8,145,160
TOTAL INVESTMENTS (COST $9,390,646) - 100.59% 7,971,160 1,463,816 9,434,976
OTHER ASSETS AND LIABILITIES - -0.59% (67,046) 12,047 (54,999)
NET ASSETS - 100% $7,904,114 $ 1,475,863 $ 9,379,977
</TABLE>
A-3
<PAGE>
Pro Forma Combining Statement of Assets & Liabilities
as of April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
AMERICAN DIVERSIFIED ORBITEX PRO FORMA PRO FORMA
GLOBAL VALUE FUND GROWTH FUND COMBINED ADJUSTMENTS COMBINED
--------------------- ---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in Securities, at value $ 7,782,915.86 $ 1,289,816.00 $ 9,072,731.86 $ 9,072,731.86
(See accompanying schedule)
Short term investments (See
accompanying schedule) 188,243.74 174,000.00 362,243.74 362,243.74
Total investments 7,971,159.60 1,463,816.00 9,434,975.60 9,434,975.60
Cash 39,040.00 443.00 39,483.00 39,483.00
Receivable for fund shares sold - 195.00 195.00 195.00
Receivable due from advisor 54,648.46 40,378.00 95,026.46 95,026.46
Deferred organizational expenses - 13,111.00 13,111.00 13,111.00
Interest and dividends receivable 9,516.68 380.00 9,896.68 9,896.68
Other receivables 17,711.00 2,163.00 19,874.00 19,874.00
TOTAL ASSETS 8,092,075.74 1,520,486.00 9,612,561.74 9,612,561.74
LIABILITIES
Reserve for uncollectable assets $ 72,711.00 - $ 72,711.00 $ 72,711.00
Payable for fund shares redeemed 39,992.42 - 39,992.42 39,992.42
Distributions payable - 1,374.00 1,374.00 1,374.00
Payable for pricing 811.35 - 811.35 811.35
Payable state and local taxes 17.22 - 17.22 17.22
Payable for postage 206.37 - 206.37 206.37
Liquidation reserve 27,140.35 - 27,140.35 27,140.35
Payable for Trustee fees - 1,251.00 1,251.00 1,251.00
Other payables and accrued expenses 47,083.49 41,998.00 89,081.49 89,081.49
TOTAL LIABILITIES 187,962.20 44,623.00 232,585.20 232,585.20
NET ASSETS $ 7,904,113.54 $ 1,475,863.00 $9,379,976.54 $9,379,976.54
Net Assets consist of:
</TABLE>
A-4
<PAGE>
<TABLE>
<CAPTION>
AMERICAN DIVERSIFIED ORBITEX PRO FORMA PRO FORMA
GLOBAL VALUE FUND GROWTH FUND COMBINED ADJUSTMENTS COMBINED
--------------------- ---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Paid in capital $ 8,252,967.96 $ 1,269,888.00 $ 9,522,855.96 $ 9,522,855.96
Distributions in excess net
investment income (26,671.84) - $ (26,671.84) (26,671.84)
Accumulated undistributed net
realized gain (loss) on investments (322,182.58) 161,645.00 (160,537.58) (160,537.58)
Net Unrealized appreciation
(depreciation) on investments - 44,330.00 44,330.00 44,330.00
NET ASSETS 7,904,113.54 1,475,863.00 9,379,976.54 9,379,976.54
CLASS A SHARES
Net assets $ 7,904,113.54 $ 1,421,648.00 $ 9,325,761.54 $ 9,325,761.54
Net assets value per share (based
on shares of beneficial interest
outstanding, par value $.01 per
share) 15.95 18.66 18.66
Maximum sales charge 0.00% 5.75% 5.75%
Offering price per share 15.95 19.80 19.80
Total shares outstanding at
end of period 495,664.00 76,173.00 571,837.00 (72,078.07)(A) 499,758.93
CLASS B SHARES
Net assets $ - $ 54,215.00 $ 54,215.00 $ 54,215.00
Net asset value and offering price
per share (based on shares of
beneficial interest outstanding,
par value $.01 per share) - 18.61 18.61 $ 18.61
Total shares outstanding at end - 2,913.00 2,913.00 $ 2,913.00
of period
INVESTMENTS, AT COST $ 7,971,160.00 $ 1,419,486.00 $ 9,390,646.00 $ 9,390,646.00
</TABLE>
A-5
<PAGE>
Pro Forma Combining Statement of Assets & Liabilities
as of April 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
AMERICAN DIVERSIFIED ORBITEX PRO FORMA PRO FORMA
GLOBAL VALUE FUND GROWTH FUND COMBINED ADJUSTMENTS COMBINED
--------------------- ---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest income $ 102,369.55 $ 5,041.00 $ 107,410.55 $ 107,410.55
Dividend income 89,799.81 5,997.00 95,796.81 95,796.81
Short term discount earned 103,822.85 - 103,822.85 103,822.85
Other income (121.39) - (121.39) (121.39)
Amortization of Bond Discount (20.08) - (20.08) (20.08)
Foreign taxes withheld - (26.00) (26.00) (26.00)
Total investment income $ 295,850.74 $ 11,012.00 $ 306,862.74 $ 306,862.74
EXPENSES
Management fee 81,742.29 8,089.00 89,831.29 (16,097.22) (B) 73,734.07
Professional fees 29,306.93 48,387.00 77,693.93 (29,306.93) (C) 48,387.00
Administration fee 29,921.59 62,711.00 92,632.59 (29,921.59) (B) 62,711.00
Transfer agent fees 14,272.96 45,755.00 60,027.96 (5,472.96) (B) 54,555.00
Tax expenses - 843.42 -
843.42 843.42
Pricing expenses 15,164.91 - 15,164.91 (15,164.91) (C) -
Liquidation expense 55,000.00 - 55,000.00 (42,963.70) (C) 12,036.30
Trustees' compensation 11,347.03 4,117.00 15,464.03 (11,347.03) (C) 4,117.00
Custodian fees and expenses 17,733.07 51,268.00 69,001.07 - 69,001.07
Registration fees 23,327.13 23,811.00 47,138.13 (20,995.42) (C) 26,142.71
Distribution fees:
Class A Shares 28,937.63 4,257.00 33,194.63 6,073.08 (B) 39,267.71
Class B Shares - 143.00 143.00 - 143.00
Amortization of organizational - -
expense 3,770.00 3,770.00 3,770.00
Miscellaneous 19,865.22 4,921.00 24,786.22 - 24,786.22
Total expenses before reductions 327,462.18 257,229.00 584,691.18 (165,196.68) 419,494.50
Fees reduced by credits allowed
by the custodian - (570.00) (570.00) (570.00)
Expense reductions (99,192.80) (236,419.00) (335,611.80) 101,477.62 (D) (234,134.18)
</TABLE>
A-6
<PAGE>
<TABLE>
<CAPTION>
AMERICAN DIVERSIFIED ORBITEX PRO FORMA PRO FORMA
GLOBAL VALUE FUND GROWTH FUND COMBINED ADJUSTMENTS COMBINED
--------------------- ---------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Total expenses 228,269.38 20,240.00 248,509.38 (63,719.06) (D) 184,790.32
NET INVESTMENT INCOME $ 67,581.36 $ (9,228.00) $ 58,353.36 $(63,719.06) $ 122,072.42
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on
investment securities 326,206.56 170,778.00 496,984.56 496,984.56
Net realized gain (loss) on written
options - 545.00 545.00 545.00
Total net realized gain (loss) 326,206.56 171,323.00 497,529.56 497,529.56
Change in net unrealized
appreciation (depreciation) on
investment securities 777,962.23 (14,256.00) 763,706.23 763,706.23
NET GAIN (LOSS) 1,104,168.79 157,067.00 1,261,235.79 1,261,235.79
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 1,171,750.15 $ 147,839.00 $ 1,319,589.15 $(63,719.06) $ 1,383,308.21
</TABLE>
A-7
<PAGE>
American Diversified Global Value Fund and
Orbitex Growth Fund
Notes to Pro Forma Combining Financial Statements
(Unaudited)
The accompanying unaudited Pro Forma Combining Schedule of Investments
and Statement of Assets and Liabilities as of April 30, 1999 and the unaudited
Pro Forma Combining Statement of Operations for the twelve months ended April
30, 1999 are intended to present the financial condition and related results of
operations of American Diversified Global Value Fund as if the reorganization
with Orbitex Growth Fund, had been consummated at May 1, 1998. Had the pro forma
adjustments not included the effect of the voluntary expense limitations, Pro
Forma Combined Expense reductions would have been $63,719, resulting in Pro
Forma Combined Net Interest Income and Pro Forma Combined Net Increase in Net
Assets resulting from operations of $58,353 and $1,319,589, respectively.
The pro forma adjustments to these pro forma financial statements are
comprised of:
(a) Reflects the conversion of American Diversified Global
Value Fund shares as of April 30, 1998.
(b) Reflects adjustments to the acquiring fund contractual fee
obligation.
(c) Adjustment reflects expected savings when the two funds
become one.
(d) Reflects adjustment to the level of the acquiring fund's
voluntary expense reimbursement.
The unaudited pro forma combining statements should be read in
conjunction with the separate annual audited financial statements as of April
30, 1999 for Orbitex Growth Fund, and March 31, 1999 for American Diversified
Global Value Fund, which are incorporated by reference in the Statement of
Additional Information to the Proxy Statement and Prospectus.
CAPITALIZATION
Reinvest price: $ 18.66
<TABLE>
<CAPTION>
(Unaudited) (Unaudited) Pro Forma
OGF-Class A ADGVF Combined
----------- ----------- -----------
<S> <C> <C> <C>
Aggregte Net Assets 1,421,648 7,904,113 9,325,761
Shares Outstanding 76,173 495,664 499,759
</TABLE>
A-8
<PAGE>
------------------------------
PART C
------------------------------
OTHER INFORMATION
ITEM 15. INDEMNIFICATION - Reference is made to Article VI of the
Registrant's Amended Declaration of Trust previously filed in the
Registration Statement on January 29, 1997 and to the subsection of
the Prospectus/Proxy Statement entitled "Liability of Directors in
Maryland and Trustees in Delaware" under the caption "Certain
Comparative Information about Maryland funds and Delaware funds" in
Part A of 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 Trustees 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; (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 a
reason to believe that the Trustee or officer will be found
entitled to indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933 (the "1933 Act") may be permitted to
Trustees, officers, controlling persons of the Registrant pursuant
to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is
asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be
governed by the final adjudication of such issue.
ITEM 16. EXHIBITS - References are to Registrant's Post-Effective Amendment
to its Registration Statement on Form N-1A, as filed with the
Securities and Exchange Commission on April 23, 1999 (the "N-1A
Registration Statement").
(1) Declaration of Trust of Orbitex Group of Funds (the "Trust"), dated
December 13, 1996, previously filed in the Registrant's
Registration Statement on January 29, 1997 is incorporated by
reference into this Registration Statement.
1
<PAGE>
(2) By-Laws of the Orbitex Group of Funds previously filed in the
Registrant's Registration Statement on January 29, 1997 are
incorporated by reference into this Registration Statement.
(3) Not Applicable.
(4) Agreement and Plan of Reorganization, dated July 8, 1999, by and
between the Orbitex Group of Funds and ADGVF (included as Annex A
to Registrant's Prospectus/Proxy Statement contained in Part A of
this Registration Statement).
(5)(a) Declaration of Trust of Orbitex Group of Funds (the "Trust"), dated
December 13, 1996, previously filed in the Registrant's
Registration Statement on January 29, 1997 is incorporated by
reference into this Registration Statement.
(5)(b) By-Laws of the Orbitex Group of Funds previously filed in the
Registrant's Registration Statement on January 29, 1997 are
incorporated by reference into this Registration Statement.
(6)(a) Investment Advisory Agreement, dated June 1, 1997, by and between
the Orbitex Group of Funds and Orbitex Management, Inc. on behalf
of OGF, the Orbitex Info-Tech & Communications Fund and the Orbitex
Strategic Natural Resources Fund and Orbitex Management, Inc.
previously filed in the N-1A Registration Statement is incorporated
by reference into this Registration Statement.
(6)(b) Investment Advisory Agreement by and between the Orbitex Group of
Funds and Orbitex Management, Inc. on behalf of the Orbitex Health
& Biotechnology Fund and the Orbitex Cash Reserves Fund previously
filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(6)(c) Investment Advisory Agreement, by and between the Orbitex Group of
Funds and Orbitex Management, Inc. on behalf of the Orbitex Focus
30 Fund previously filed in the N-1A Registration Statement is
incorporated by reference into this Registration Statement.
(7)(a) Distribution Agreement, dated June 1, 1997, between the Orbitex
Group of Funds and Funds Distributor, Inc. on behalf of OGF, the
Orbitex Info-Tech & Communications Fund and the Orbitex Strategic
Natural Resources Fund previously filed in the N-1A Registration
Statement is incorporated by reference into this Registration
Statement.
(7)(b) Form of Distribution Sub-Agreement, previously filed in Pre-
Effective Amendment No. 2 to the Registration Statement, dated
September 26, 1997, is incorporated by reference into this
Registration Statement.
(7)(c) Distribution Agreement on behalf of the Orbitex Health &
Biotechnology Fund, the Orbitex Prime Reserves Fund and the Orbitex
Cash Focus 30 Fund previously filed in the N-1A Registration
Statement is incorporated by reference into this Registration
Statement.
(8) Not Applicable.
(9)(a) Custodian Contract, dated May 14, 1997, by and between the Orbitex
Group of Funds and State Street Bank and Trust Company on behalf of
OGF, the Orbitex Info-Tech & Communications Fund and the Orbitex
Strategic Natural Resources Fund previously filed in the N-1A
Registration Statement is incorporated by reference into this
Registration Statement.
(9)(b) Custodian Contract on behalf of the Orbitex Health & Biotechnology
Fund, the Orbitex Prime Reserves Fund and the Orbitex Cash Focus 30
Fund previously filed in the N-1A Registration Statement is
incorporated reference into this Registration Statement.
(10)(a) Class A Distribution Plan and Agreement pursuant to Rule 12b-1
under the Investment Company Act of 1940, dated June 1, 1997, and
amended January 21, 1998, previously filed in the N-1A Registration
Statement is incorporated by reference into this Registration
Statement.
2
<PAGE>
(10)(b) Class B Distribution Plan and Agreement pursuant to Rule 12b-1
under the Investment Company Act of 1940, dated May 27, 1998,
previously filed in Post-Effective Amendment No. 4 to the
Registration Statement, dated August 19, 1998, is incorporated by
reference into this Registration Statement.
(10)(c) Shareholder Services Plan and Shareholder Servicing Agreement
(Non-Rule 12-1 Plan) approved May 27, 1998 previously filed in the
Registrant's Post-Effective Amendment No. 4 to the Registration
Statement, dated August 19, 1998, is incorporated by reference into
this Registration Statement.
(11) Opinion and Consent of Rogers & Wells LLP, counsel to the
Registrant, with respect to the legality of the Class A Shares of
the Orbitex Growth Fund.*
(12) Opinion and Consent of Rogers & Wells LLP with respect to tax
matters.*
(13)(a) Transfer Agency and Service Agreement, dated May 14, 1997, by and
between the Orbitex Group of Funds and State Street Bank and Trust
Company on behalf of OGF, the Orbitex Info-Tech & Communications
Fund and the Orbitex Strategic Natural Resources Fund previously
filed in the N-1A Registration Statement is incorporated by
reference into this Registration Statement.
(13)(b) Transfer Agency and Service Agreement on behalf of the Orbitex
Health & Biotechnology Fund, the Orbitex Cash Reserves Fund and the
Orbitex Focus 30 Fund previously filed in the N-1A Registration
Statement is incorporated by reference into this Registration
Statement.
(13)(c) Administration Agreement, dated May 14, 1997, by and between the
Orbitex Group of Fund and State Street Bank and Trust Company on
behalf of OGF, the Orbitex Info-Tech & Communication Fund and the
Orbitex Strategic Natural Resources Fund previously filed in the N-
1A Registration Statement is incorporated by reference into this
Registration Statement.
(13)(d) Administration Agreement on behalf of the Orbitex Health &
Biotechnology Fund, the Orbitex Prime Reserves Fund and the Orbitex
U.S. Focus 30 Fund previously filed in the N-1A Registration
Statement is incorporated by reference into this Registration
Statement.
(13)(e) Form of Individual Retirement Account Agreement previously filed in
the Registrant's Pre-Effective Amendment No. 2 to the Registration
Statement, dated September 26, 1997, is incorporated by reference
into the Registration Statement.
(14)(a) Consent of the Registrant's Independent Accountants, dated
___________ __, 1999, filed herewith.
(14)(b) Consent of ADGVF's Independent Accountants, dated ________ __,
1999, is filed herewith.
(15)(a) Financial Statements of the Registrant previously filed in the N-1A
Registration Statement are incorporated by reference into this
Registration Statement.
(15)(b) Financial Statements of ADGVF contained in its Post-Effective
Amendment to its Registration Statement on Form N-1A, dated
April 23, 1999, are incorporated by reference into the Registration
Statement.
(16) Power of Attorney, dated March 28, 1999, contained in the N-1A
Registration Statement is incorporated by reference into this
Registration Statement.
- -------------------
* To Be Filed by Amendment.
ITEM 17. UNDERTAKINGS
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this Registration Statement by any
person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) of the Securities Act [17 CFR 230.145c], the
reoffering prospectus will contain the information called for by
the applicable registration form for reofferings by persons who may
be deemed underwriters, in addition to the information called for
by the other items of the applicable form.
3
<PAGE>
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the Registration Statement and will not be used until
the amendment is effective, and that, in determining any liability
under the Securities Act of 1933, as amended, each post-effective
amendment shall be deemed to be a new registration statement for
the securities offered therein, and the offering of the securities
at that time shall be deemed to be the initial bona fide offering
of them.
4
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of the registrant, in the City of New York
and State of New York, on the 9th day of July, 1999.
ORBITEX GROUP OF FUNDS
By: /s/ James L. Nelson
--------------------------------
James L. Nelson
Trustee and President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Otto J. Felber* Trustee July 9, 1999
- ----------------------------------------
Otto J. Felber
/s/ James L. Nelson Trustee, President
- ---------------------------------------- And Chief Executive Officer July 9, 1999
James L. Nelson
Treasurer and Principal
/s/ Kimberly Ratz Financial and Accounting
- ---------------------------------------- Officer July 9, 1999
Kimberly Ratz
/s/ Ronald Altbach* Trustee July 9, 1999
- ----------------------------------------
Ronald Altbach
/s/ Thomas Bachmann* Trustee July 9, 1999
- ----------------------------------------
Thomas Bachmann
/s/ Richard E. Stierwalt Trustee and Assistant
- ---------------------------------------- Secretary July 9, 1999
Richard E. Stierwalt
/s/ Stephen H. Hamrick* Trustee July 9, 1999
- ----------------------------------------
Stephen H. Hamrick
*By: /s/ James L. Nelson
-----------------------------------
James L. Nelson, Attorney-in-Fact
</TABLE>
<PAGE>
EXHIBIT LIST
Exhibit 1 Opinion and Consent of Rogers & Wells LLP, counsel to the
Registrant, with respect to the legality of the securities of the
Orbitex Group of Funds (to be incorporated by amendment).
Exhibit 2 Opinion and Consent of Rogers & Wells LLP with respect to tax
matters (to be incorporated by amendment).
Exhibit 3 Consent of PricewaterhouseCoopers LLP, independent accountants to
the Registrant, dated July 9, 1999.
Exhibit 4 Consent of Tait, Weller & Baker, independent accountants to
ADGVF, dated July 7, 1999.
<PAGE>
EXHIBIT 3
---------
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in the Prospectus/Proxy Statement constituting part
of this registration statement on Form N-14 (the Registration Statement) of the
Orbitex Group of Funds of our report dated June 10, 1999 relating to the
financial statements and financial highlights appearing in the April 30, 1999
Annual Report to Shareholders of the Orbitex Strategic Natural Resources Fund,
Orbitex Growth Fund and Orbitex Information Technology Fund which appears in
Appendix C to the Prospectus/Proxy Statement.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
July 9, 1999
<PAGE>
EXHIBIT 4
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our report dated May 4, 1999 on the financial
statements and financial highlights of American Diversified Global Value
Fund. Such financial statements and financial highlights appear in the 1999
Annual Report to Shareholders which is incorporated by reference in the
Registration Statement on Form N-14 of Orbitex Group of Funds. We also
consent to the references to our Firm in the Registration Statement and
Prospectus/Proxy.
/s/ TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
July 7, 1999
