<PAGE>
As filed with the Securities and Exchange Commission on April 23, 1999
Securities Act of 1933 File No. 333-20635
Investment Company Act of 1940 File No. 811-8037
--------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
---
Post-Effective Amendment No. 5 /X/
---
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 7 /X/
---
(Check appropriate box or boxes)
--------------------------------
ORBITEX GROUP OF FUNDS
(Exact Name of Registrant as Specified in Charter)
410 Park Avenue, 18th Floor, New York, New York 10022
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
(212) 891-7900
----------------------------------------------------
James L. Nelson
410 Park Avenue, 18th Floor,
New York, New York 10022
(Name and Address of Agent for Service)
Copies to:
M. Fyzul Khan, Legal Counsel Leonard B. Mackey, Jr., Esq.
Orbitex Management, Inc. Rogers & Wells
410 Park Avenue, 18th Floor 200 Park Avenue
New York, New York 10022 New York, New York 10166
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective: (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
on _________ pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a)(1)
---
X 75 days after filing pursuant to paragraph (a)(2)
---
on ______ days after filing pursuant to paragraph (a)(2)
---
If appropriate, check the following box:
This post-effective amendment designates a new effective date for
--- a previously filed post-effective amendment.
<PAGE>
ORBITEX GROUP OF FUNDS
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for Orbitex Group of Funds:
Orbitex Growth Fund
Orbitex Info-Tech & Communications Fund
Orbitex Strategic Natural Resources Fund
Orbitex Focus 30 Fund
Orbitex Health & Biotechnology Fund
PART A
Item No. Heading
- -------- -------
1. Front and Back Cover Pages Front and Back Cover
2. Risk/Return Summary: Investment, Funds at a Glance; Fund Details; More
Risks, and Performance Information About Risk
3. Risk/Return Summary: Fee Table Funds at Glance
4. Investment Objectives, Investment Funds at a Glance; Fund Details; More
Strategies, and Related Risks Information About Risk
5. Management's Discussion of Fund N/A
Performance
6. Management, Organization, and Management
Capital Structure
7. Shareholder Information Your Account; Pricing of Fund Shares;
Federal Tax Considerations
8. Distribution Arrangements Your Account; Pricing of Fund Shares;
Federal Tax Considerations
9. Financial Highlights Information N/A
<PAGE>
ORBITEX GROUP OF FUNDS
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for Orbitex Group of Funds:
Orbitex Prime Reserves Fund
PART A
Item No. Heading
- -------- -------
1. Front and Back Cover Pages Front and Back Cover
2. Risk/Return Summary: Investment, The Fund at a Glance; Fund Details;
Risks, and Performance More Information About Risk
3. Risk/Return Summary: Fee Table The Fund at a Glance
4. Investment Objectives, Investment Fund at a Glance; Fund Details; More
Strategies, and Related Risks Information About Risk
5. Management's Discussion of Fund N/A
Performance
6. Management, Organization, and Management
Capital Structure
7. Shareholder Information Your Account; Pricing of Fund Shares;
Federal Tax Considerations
8. Distribution Arrangements Your Account; Pricing of Fund Shares;
Federal Tax Considerations
9. Financial Highlights Information N/A
<PAGE>
ORBITEX GROUP OF FUNDS
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Prospectus for Orbitex Group of Funds:
Orbitex Prime Reserves Fund
Institutional Shares
PART A
<TABLE>
<CAPTION>
Item No. Heading
- -------- -------
<S> <C>
1. Front and Back Cover Pages Front and Back Cover
2. Risk/Return Summary: Investment, Risks, The Fund at a Glance; Fund Details/ More
and Performance Information About Risk
3. Risk/Return Summary: Fee Table The Fund at Glance
4. Investment Objectives, Investment Fund at a Glance; Fund Details; More Information
Strategies, and Related Risks About Risk
5. Management's Discussion of Fund N/A
Performance
6. Management, Organization, and Capital Management
Structure
7. Shareholder Information Your Account; Pricing of Fund Shares; Federal Tax
Considerations
8. Distribution Arrangements Your Account; Pricing of Fund Shares: Federal Tax
Considerations
9. Financial Highlights Information N/A
</TABLE>
<PAGE>
ORBITEX GROUP OF FUNDS
CROSS-REFERENCE SHEET
Pursuant to Rule 495(a)
Statement of Additional Information for Orbitex Group of Funds:
Orbitex Growth Fund
Orbitex Info-Tech & Communications Fund
Orbitex Strategic Natural Resources Fund
Orbitex Focus 30 Fund
Orbitex Health & Biotechnology Fund
Orbitex Prime Reserves Fund
PART B
Item No. Heading
- -------- -------
10. Cover Page and Table of Front and Back Cover
Contents
11. Fund History General Information and History;
Organization of the Trust
12. Description of the Fund and Investment Restrictions; Description of
Its Investments and Risks Securities, Other Investment Policies
and Risk Considerations
13. Management of the Fund Management of the Trust
14. Control Persons and Principal Principal Holders of Securities
Holders of Securities
15. Investment Advisory and Other Investment Management and Other
Services Services Administrator; Custodian;
Transfer Agenct Services
16. Brokerage Allocation and Other Distribution of Shares; Brokerage
Practices Allocation and Other Practices
17. Capital Stock and Other Purchase, Redemption, and Pricing of
Securities Shares
18. Purchase, Redemption, and Purchase, Redemption, and Pricing of
Pricing of Shares Shares
19. Taxation of the Fund Taxes
20. Underwriters Distribution of Shares
21. Calculation of Performance Performance Information About the Funds
Data
22. Financial Statements N/A
<PAGE>
Prospectus
Orbitex Growth Fund
Orbitex Info-Tech & Communications Fund
Orbitex Strategic Natural Resources Fund
Orbitex Focus 30 Fund
Orbitex Health & Biotechnology Fund
--------------------------------
The
ORBITEX
Group of
FUNDS
--------------------------------
These securities have not been approved or
disapproved by the Securities and Exchange
Commission nor has the Commission passed
upon the accuracy or adequacy of this
prospectus. Any representation to the
contrary is a criminal offense.
June ___, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
FUNDS AT A GLANCE
Key Investment Concepts...............................................
Orbitex Growth Fund...................................................
Orbitex Info-Tech and Communications Fund.............................
Orbitex Strategic Natural Resources Fund..............................
Orbitex Focus 30 Fund ................................................
Orbitex Health & Biotechnology Fund...................................
FUND DETAILS
Orbitex Growth Fund...................................................
Orbitex Info-Tech and Communications Fund.............................
Orbitex Strategic Natural Resources Fund..............................
Orbitex Focus 30 Fund ................................................
Orbitex Health & Biotechnology Fund...................................
MORE INFORMATION ABOUT RISKS...................................................
YOUR ACCOUNT...................................................................
Types of Accounts.....................................................
Choosing a Class......................................................
Classes in Detail.....................................................
12b-1 Plans in Detail.................................................
Purchasing Shares.....................................................
Redeeming Shares......................................................
Exchanging Shares.....................................................
PRICING OF FUND SHARES.........................................................
DISTRIBUTIONS..................................................................
FEDERAL TAX CONSIDERATIONS.....................................................
Taxes on Distributions................................................
Taxes on Sales or Exchanges...........................................
"Buying a Dividend"...................................................
Tax Withholding.......................................................
MANAGEMENT.....................................................................
Investment Adviser....................................................
Other Service Providers...............................................
FINANCIAL HIGHLIGHTS...........................................................
</TABLE>
<PAGE>
FUNDS AT A GLANCE - KEY INVESTMENT CONCEPTS
This Prospectus describes the Funds' investment objectives, principal investment
strategies, principal investments and risks. You may find the following
definitions of these terms useful as you read the description of the Orbitex
Group of Funds.
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
A Fund's investment objective is its ultimate, overriding goal. It is the way in
which the Fund defines itself amongst all other mutual funds. There is a wide
range of different potential investment objectives. There can be no assurance
that any given Fund will attain its investment objective. You should think
carefully about whether a Fund's investment objective is consistent with your
own objective for the money that you are contemplating investing in that Fund.
If not, you should consider another Fund.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
A Fund's principal investment strategies are the primary means by which the
investment adviser for the Fund (the "Adviser") seeks to attain its investment
objective. A strategy may, among other things, take the form of an intention on
the part of the Adviser to invest primarily in certain types of securities such
as stocks, bonds, or money market instruments, or to concentrate investments in
a particular industry (e.g. technology, healthcare, energy) or group of
industries. A strategy may also take the form of a particular investment style
or technique for selecting which companies the Fund will invest in. For example,
some advisers use a "bottom-up" approach which involves focusing first on the
fundamentals of a particular company, then the industry, and finally broader
economic factors. A "top-down" approach would reverse this order of selection
criteria. You should understand and be comfortable with the principal investment
strategies of a Fund before you invest. Your financial consultant can assist you
in understanding these strategies.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
As part of its investment strategy, each Fund invests in certain types of
securities. One basic type of security is an equity security. An equity security
represents an ownership interest, or the right to acquire an ownership interest,
in an issuer. Different types of equity securities provide different voting and
dividend rights and priority in the event of the bankruptcy of the issuer.
Equity securities include common stocks, preferred stocks, convertible
securities and warrants.
Another basic type of security is a debt security. Issuers use debt securities
to borrow money. The issuer usually pays a fixed, variable or floating rate of
interest, and must repay the amount borrowed on a fixed date (the bond's
"maturity date"). Some debt securities, such as zero coupon bonds, do not pay
interest but are sold at a discount from their face value. Debt securities
include corporate bonds, government securities, and mortgage and other
asset-backed securities.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
The principal risks of a Fund are those potential occurrences that, in the
judgement of the Adviser, have the greatest likelihood of disrupting,
interfering with, or preventing a Fund from attaining its investment objective.
It is possible that other risks, not yet identified or not deemed to be likely
or significant by the Adviser, could effect the value of your investment in a
Fund and cause you to lose money. You should understand and be comfortable with
these risks before you invest. Your financial consultant can assist you in
understanding these risks.
WHO MAY WANT TO INVEST IN THE ORBITEX FUNDS - GENERALLY
The Orbitex Funds offered in this Prospectus are designed for investors who:
- - Are willing to tolerate significant changes in the value of their
investment
- - Are willing to accept higher short-term risk for higher potential long-term
returns
- - Are pursing a long-term investment strategy
The Funds are NOT appropriate for investors who:
- - want to avoid high volatility or possible losses
- - are making short-term investments
- - are investing emergency reserve money
- - are seeking regular income
- - are seeking tax-exempt income
Prospectus - 3
<PAGE>
FUNDS AT A GLANCE - ORBITEX GROWTH FUND
This section briefly describes the Orbitex Growth Fund's goals, principal
investment strategies, risks, expenses and performance. For further information
on how this Fund is managed, please read the section entitled "Fund Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The objective of the Orbitex Growth Fund is to provide long-term growth of
capital through selective investment in securities of companies of all sizes
that offer potential for growth.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Composing a portfolio based upon a "bottom-up" blending of value and
growth criteria. The Adviser seeks to identify companies that are
undervalued by the stock market and less expensive than comparable
companies. To do so, the Adviser employs measures of intrinsic value,
such as the company's price-to-earnings ratio (the price of a stock
divided by its earnings per share), historical stock prices and cash flows
(earnings before depreciation and non-cash charges). The Adviser also
employs criteria to identify companies it believes will experience
earnings growth. Finally, the Adviser attempts to identify investment
and economic themes that can drive profits.
- - Investing primarily in common stocks.
- - Investing primarily in the securities of domestic issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization).
[GRAPHIC OMITTED]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
- - STOCK MARKET RISK: Stock markets are volatile and there is a risk that the
price of a security will rise or fall due to changing economic, political
or market conditions, as well as company-specific factors (see
"Issuer-Specific Risk" below). Consequently, the value of your investment
in the Fund will go up and down, which means that you could lose money.
- - ISSUER-SPECIFIC RISK: The price of an individual security or particular
type of security can be more volatile than the market as a whole and can
fluctuate differently than the market as a whole. An individual issuer's
securities can rise or fall dramatically with little or no warning based
upon such things as a better (or worse) than expected earnings report, news
about the development of a promising product, or the loss of key management
personnel. There is also a risk that the price of a security may never
reach a level that the Adviser believes is representative of its full value
or that it may even go down in price.
- - RISKS OF INVESTING IN FOREIGN SECURITIES. Foreign securities may be riskier
than U.S. investments because of factors such as unstable international
political and economic conditions, currency fluctuations, foreign controls
on investment and currency exchange, withholding taxes, a lack of adequate
company information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
- - INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
WHO MAY WANT TO INVEST IN THE ORBITEX GROWTH FUND
We designed the ORBITEX GROWTH FUND for investors who seek one or more of the
following:
- - high long-term growth
- - a stock fund to serve as a core holding in an investor's portfolio
- - a stock fund to complement a portfolio of more conservative investments
- - a stock fund that uses a blend of value and growth investment styles
- - a stock fund that invests in domestic and foreign companies
Prospectus - 4
<PAGE>
FUNDS AT A GLANCE - ORBITEX GROWTH FUND
PERFORMANCE AND VOLATILITY
The bar chart and table below show the performance of Class A Shares of the
Orbitex Growth Fund during the last year. The information in the table gives
some indication of the risks of an investment in the Fund by comparing the
Fund's performance with a broad measure of market performance. Past performance
does not necessarily indicate how the Fund will perform in the future.
The returns in the chart do not include the effect of the Fund's front-end sales
charge for Class A Shares. If the effect of the sales charge were reflected,
returns would be lower than those shown.
[GRAPH OMITTED]
The year-to-date return of Class A Shares for the fiscal quarter ended April 30,
1999, was _____%. During the period shown in the bar chart, the highest return
for a quarter was _____% (quarter ended [date]) and the lowest return for a
quarter was _____% (quarter ended [date]).
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1998)
The returns in the following table include the effect of Class A Shares' maximum
applicable front-end sales charge and Class B Shares' maximum applicable
contingent deferred sales charge (CDSC).
<TABLE>
<CAPTION>
PAST 1 YEAR LIFE OF FUND
<S> <C> <C>
Orbitex Growth Fund Class A* __% __%
Orbitex Growth Fund Class B** ___% __%
S&P 500-Registered Trademark-Index*** __% __%
</TABLE>
* CLASS A COMMENCED OPERATIONS ON OCTOBER 22, 1997.
** CLASS B COMMENCED OPERATIONS ON SEPTEMBER 16, 1998. CLASS B'S RETURNS PRIOR
TO SEPTEMBER 16, 1998 THROUGH OCTOBER 22, 1997 ARE THOSE OF CLASS A, WHICH
REFLECT A 12B-1 FEE OF 0.40%. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO SEPTEMBER 16, 1998 WOULD HAVE BEEN LOWER.
*** 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.
Prospectus - 5
<PAGE>
FUNDS AT A GLANCE - ORBITEX GROWTH FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares or Class B Shares of the Orbitex Growth Fund.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering price) 5.75% (1) None
Maximum Deferred Sales Charge (Load) (as a % of lower of
original purchase price or redemption proceeds) None (2) 5.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None None
Redemption Fee (as a % of amount redeemed, if applicable) None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75%
Distribution and/or Service Fee (12b-1) Fees 0.40% 1.00%(3)
Other Expenses % %
--------- ---------
Total Annual Operating Expenses %(4) %(4)
</TABLE>
(1) Reduced for purchases of $50,000 or more by certain investors. See
"Your Account - Classes in Detail - Class A - Reduced Sales Charge."
(2) Purchases of Class A Shares of $1 million or more by certain investors
are not subject to any sales load at the time of purchase, but a 1%
contingent deferred sales charge applies on amounts redeemed within
one year of purchase. See "Your Account - Classes in Detail - Class A
- Reduced Sales Charge."
(3) Including a 0.25% shareholder servicing fee.
(4) The Adviser has agreed to waive and/or reimburse fees and expenses
to the extent necessary so that Class A Shares' and Class B Shares'
total operating expenses do not exceed ___% and ___% of average daily
net assets. The information contained in the above table and the
example below reflects the expenses of each class of the Fund without
taking into account any applicable fee waivers and/or reimbursements.
The Adviser may discontinue such fee waivers and/or expense
reimbursements at any time, in its sole discretion.
EXAMPLE
This example is intended to help you compare the cost of investing in
the Orbitex Growth Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year, that you
reinvest all dividends and distributions, and that the Fund's operating expenses
remain the same. Although your actual costs and the return on your investment
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
5 $ $
10 $ $
</TABLE>
Prospectus - 6
<PAGE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
5 $ $
10 $ $
</TABLE>
Prospectus - 7
<PAGE>
FUNDS AT A GLANCE - ORBITEX INFO-TECH & COMMUNICATIONS FUND
This section briefly describes the Orbitex Info-Tech & Communications Fund's
goals, principal investment strategies, risks, expenses and performance. For
further information on how this Fund is managed, please read the section
entitled "Fund Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Info-Tech & Communications Fund is long-term
growth of capital through selective investment in the securities of
communications, information and related technology companies (see
description of communications and information companies in "Fund Details"
section on page 13).
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Investing at least 65% of its total assets in equity securities issued by
communications, information and related technology companies.
- - The Adviser will attempt to modify portfolio composition to benefit from
changing relative performance among various sub-sectors of the
communications, information and related technology industries.
- - Investing primarily in common stocks.
- - Investing in securities of both domestic and foreign issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
[GRAPHIC OMITTED]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
- - STOCK MARKET RISK: Stock markets are volatile and there is a risk that the
price of a security will rise or fall due to changing economic, political
or market conditions, as well as company-specific factors (see
"Issuer-Specific Risk" below). Consequently, the value of your investment
in the Fund will go up and down, which means that you could lose money.
- - RISKS OF INFORMATION AND COMMUNICATIONS SECTOR: Because of its narrow
focus, the Fund's performance is closely tied to, and affected by, events
occurring in the information, communications, and related technology
industries. Companies in the same industry often face similar obstacles,
issues and regulatory burdens. As a result, the securities owned by the
Fund may react similarly to and move in unison with one another. Because
technology continues to advance at an accelerated rate, and the number of
companies and product offerings continues to expand, these companies could
become increasingly sensitive to short product cycles, aggressive pricing
and intense competition. Many technology companies sell stock before they
have a commercially viable product, and may be acutely susceptible to
problems relating to bringing their products to market. Additionally, many
technology companies have very high price/earnings ratios, high price
volatility, and high personnel turnover due to severe labor shortages for
skilled technology professionals.
- - ISSUER-SPECIFIC RISKS: The price of an individual security or particular
type of security can be more volatile than the market as a whole and can
fluctuate differently than the market as a whole. An individual issuer's
securities can rise or fall dramatically with little or no warning based
upon such things as a better (or worse) than expected earnings report, news
about the development of a promising product, or the loss of key management
personnel. There is also a risk that the price of a security may never
reach a level that the Adviser believes is representative of its full value
or that it may even go down in price.
- - INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- - RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than U.S.
investments because of factors such as unstable international political and
economic conditions, currency fluctuations, foreign controls on investment
and currency exchange, withholding taxes, a lack of adequate company
information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
WHO MAY WANT TO INVEST IN THE THE ORBITEX INFO-TECH & COMMUNICATIONS FUND
Prospectus - 8
<PAGE>
We designed the ORBITEX INFO-TECH & COMMUNICATIONS FUND for investors who want
to capitalize on potential opportunities in telecommunications and information
industries and who seek one or more of the following:
- - high long-term growth
- - a stock fund to complement a portfolio of more conservative investments
- - a stock fund that uses primarily a growth-oriented investment strategy
- - a stock fund that invests in foreign and domestic companies
Prospectus - 9
<PAGE>
FUNDS AT A GLANCE - ORBITEX INFO-TECH & COMMUNICATIONS FUND
PERFORMANCE AND VOLATILITY
The bar chart and table below show the performance of the Orbitex Info-Tech &
Communications Fund during the last year. The information in the table gives
some indication of the risks of an investment in the Fund by comparing the
Fund's performance with a broad measure of market performance. Past performance
does not necessarily indicate how the Fund will perform in the future.
The returns in the chart do not include the effect of the Fund's front-end sales
charge for Class A Shares. If the effect of the sales charge were reflected,
returns would be lower than those shown.
[GRAPH OMITTED]
The year-to-date return of Class A Shares for the fiscal quarter ended April 30,
1999, was _____%. During the period shown in the bar chart, the highest return
for a quarter was _____% (quarter ended [date]) and the lowest return for a
quarter was _____% (quarter ended [date]).
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1998)
The returns in the following table include the effect of Class A Shares' maximum
applicable front-end sales charge and Class B Shares' maximum applicable
contingent deferred sales charge (CDSC).
<TABLE>
<CAPTION>
PAST 1 YEAR LIFE OF FUND
<S> <C> <C>
Orbitex Info-Tech & Communications Fund Class A* __% __%
Orbitex Info-Tech & Communications Fund Class B** __% __%
S&P 500-Registered Trademark- Index*** __% __%
Lipper Science and Technology Index**** __% __%
</TABLE>
* CLASS A COMMENCED OPERATIONS ON OCTOBER 22, 1997.
** CLASS B COMMENCED OPERATIONS ON SEPTEMBER 16, 1998. CLASS B'S RETURNS PRIOR
TO SEPTEMBER 16, 1998 THROUGH OCTOBER 22, 1997 ARE THOSE OF CLASS A, WHICH
REFLECT A 12B-1 FEE OF 0.40%. IF CLASS B'S 12B-1 FEE HAS BEEN REFLECTED,
TOTAL RETURNS PRIOR TO SEPTEMBER 16, 1998 WOULD HAVE BEEN LOWER.
*** 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.
**** 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 in this investment objective,
and is compiled by Lipper, Inc.
Prospectus - 10
<PAGE>
FUNDS AT A GLANCE - ORBITEX INFO-TECH & COMMUNICATIONS FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares or Class B Shares of the Orbitex Info-Tech & Communications Fund.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
-------------- --------------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering price) 5.75% (1) None
Maximum Deferred Sales Charge (Load) (as a % of lower of
original purchase price or redemption proceeds) None (2) 5.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None None
Redemption Fee (as a % of amount redeemed, if applicable) None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.25% 1.25%
Distribution and/or Service Fee (12b-1) Fees 0.40% 1.00%(3)
Other Expenses % %
--------- ---------
Total Annual Operating Expenses %(4) %(4)
</TABLE>
(1) Reduced for purchases of $50,000 or more by certain investors. See
"Your Account - Classes in Detail - Class A - Reduced Sales Charge."
(2) Purchases of Class A Shares of $1 million or more by certain investors
are not subject to any sales load at the time of purchase, but a 1%
contingent deferred sales charge applies on amounts redeemed within
one year of purchase. See "Your Account - Classes in Detail - Class A
- Reduced Sales Charge."
(3) Including a 0.25% shareholder servicing fee.
(4) The Adviser has agreed to waive and/or reimburse fees and expenses
to the extent necessary so that Class A Shares' and Class B Shares'
total operating expenses do not exceed ___% and ___% of average
daily net assets. The information contained in the above table and
the example below reflects the expenses of each class of the Fund
without taking into account any applicable fee waivers and/or
reimbursements. The Adviser may discontinue such fee waivers and/or
expense reimbursements at any time, in its sole discretion.
EXAMPLE
This example is intended to help you compare the cost of investing in
the Orbitex Info-Tech & Communications Fund with the cost of investing in other
mutual funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each
year, that you reinvest all dividends and distributions, and that the Fund's
operating expenses remain the same. Although your actual costs and the return on
your investment may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
5 $ $
10 $ $
</TABLE>
Prospectus - 11
<PAGE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
5 $ $
10 $ $
</TABLE>
Prospectus - 12
<PAGE>
FUNDS AT A GLANCE - ORBITEX STRATEGIC NATURAL RESOURCES FUND
This section describes the Orbitex Strategic Natural Resources Fund's goals,
principal investment strategies, risks, expenses and performance. For further
information on how this Fund is managed, please read the section entitled "Fund
Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Strategic Natural Resources Fund is long-term
growth of capital through selective investment in the securities of
companies engaged in natural resources industries and industries supportive
to natural resources industries.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in securities of companies that the Adviser believes are
positioned to benefit from increasing worldwide demand for natural resources.
The Fund's principal investment strategies include:
- - Investing at least 65% of its total assets in equity securities issued by
natural resources companies (see description of natural resources companies
in "Fund Details" section on page 14).
- - Investing primarily in common stocks.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
- - Investing up to 15% of total assets in securities of foreign companies
(with no limit on the percentage the Fund may invest in Canadian issuers).
[GRAPHIC OMITTED]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
- - STOCK MARKET RISK: Stock markets are volatile and there is a risk that the
price of a security will rise or fall due to changing economic, political
or market conditions, as well as company-specific factors (see
"Issuer-Specific Risks" below). Consequently, the value of your investment
in the Fund will go up and down, which means that you could lose money.
- - RISKS OF NATURAL RESOURCES SECTOR: Because of its narrow focus, the Fund's
performance is closely tied to and affected by events occurring in the
natural resources industries. Companies in the same industry often face
similar obstacles, issues and regulatory burdens. As a result, the
securities owned by the Fund may react similarly to and move in unison with
one another. Companies in the natural resources sector are subject to swift
fluctuations in supply and demand. These fluctuations may be caused by
events relating to international political and economic developments,
energy conservation, the success of exploration projects, and tax and other
governmental regulatory policies. Consequently, the Fund's performance may
sometimes be significantly better or worse than that of other types of
funds.
- - ISSUER-SPECIFIC RISKS: The price of an individual security or particular
type of security can be more volatile than the market as a whole and can
fluctuate differently than the value of the market as a whole. An
individual issuer's securities can rise or fall dramatically with little or
no warning based upon such things as a better (or worse) than expected
earnings report, news about the development of a promising product, or the
loss of key management personnel. There is also a risk that the price of a
security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in price.
- - RISKS OF INVESTING IN FOREIGN SECURITIES. Foreign securities may be riskier
than U.S. investments because of factors such as unstable international
political and economic conditions, currency fluctuations, foreign controls
on investment and currency exchange, withholding taxes, a lack of adequate
company information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
Prospectus - 13
<PAGE>
WHO MAY WANT TO INVEST IN THE THE ORBITEX STRATEGIC NATURAL RESOURCES FUND
We designed the ORBITEX STRATEGIC NATURAL RESOURCES FUND for investors who see
strong economic trends as an indicator of future natural resource demand and who
seek one or more of the following:
- - high long-term growth
- - a stock fund to complement a portfolio of more conservative investments
- - a stock fund that uses primarily a growth-oriented investment strategy
- - a stock fund that invests in foreign and domestic companies
Prospectus - 14
<PAGE>
FUNDS AT A GLANCE - ORBITEX STRATEGIC NATURAL RESOURCES FUND
PERFORMANCE AND VOLATILITY
The bar chart and table below show the performance of the Orbitex Natural
Resources Fund during the last year. The information in the table gives some
indication of the risks of an investment in the Fund by comparing the Fund's
performance with a broad measure of market performance. Past performance does
not necessarily indicate how the Fund will perform in the future.
The returns in the chart do not include the effect of the Fund's front-end sales
charge for Class A Shares. If the effect of the sales charge were reflected,
returns would be lower than those shown.
[GRAPH OMITTED]
The year-to-date return of Class A Shares for the fiscal quarter ended April 30,
1999, was _____%. During the period shown in the bar chart, the highest return
for a quarter was _____% (quarter ended [date]) and the lowest return for a
quarter was _____% (quarter ended [date]).
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1998)
The returns in the following table include the effect of Class A Shares' maximum
applicable front-end sales charge and Class B Shares' maximum applicable
contingent deferred sales charge (CDSC).
<TABLE>
<CAPTION>
PAST 1 YEAR LIFE OF FUND
<S> <C> <C>
Orbitex Natural Resources Fund Class A* __% __%
Orbitex Natural Resources Fund Class B** __% __%
S&P 500-Registered Trademark- Index*** __% __%
Lipper Natural Resources Funds Index**** __% __%
</TABLE>
* CLASS A COMMENCED OPERATIONS ON OCTOBER 23, 1997.
** CLASS B COMMENCED OPERATIONS ON SEPTEMBER 21, 1998. CLASS B'S RETURNS PRIOR
TO SEPTEMBER 21, 1998 THROUGH OCTOBER 23, 1997 ARE THOSE OF CLASS A, WHICH
REFLECT A 12B-1 FEE OF 0.40%. IF CLASS B'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO SEPTEMBER 16, 1998 WOULD HAVE BEEN LOWER.
*** 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.
**** 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 in this investment objective, and is compiled by
Lipper, Inc.
Prospectus - 15
<PAGE>
FUNDS AT A GLANCE - ORBITEX STRATEGIC NATURAL RESOURCES FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares or Class B Shares of the Orbitex Natural Resources Fund.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering price) 5.75% (1) None
Maximum Deferred Sales Charge (Load) (as a % of lower of
original purchase price or redemption proceeds) None (2) 5.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None None
Redemption Fee (as a % of amount redeemed, if applicable) None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.25% 1.25%
Distribution and/or Service Fee (12b-1) Fees 0.40% 1.00% (3)
Other Expenses % %
--------- ---------
Total Annual Operating Expenses % (4) % (4)
</TABLE>
(1) Reduced for purchases of $50,000 or more by certain investors. See
"Your Account - Classes in Detail - Class A - Reduced Sales Charge."
(2) Purchases of Class A Shares of $1 million or more by certain investors
are not subject to any sales load at the time of purchase, but a 1%
contingent deferred sales charge applies on amounts redeemed within
one year of purchase. See "Your Account - Classes in Detail - Class A
- Reduced Sales Charge."
(3) Including a 0.25% shareholder servicing fee.
(4) The Adviser has agreed to waive and/or reimburse fees and expenses
to the extent necessary so that Class A Shares' and Class B Shares'
total operating expenses do not exceed ___% and ___% of average
daily net assets. The information contained in the above table and
the example below reflects the expenses of each class of the Fund
without taking into account any applicable fee waivers and/or
reimbursements. The Adviser may discontinue such fee waivers and/or
expense reimbursements at any time, in its sole discretion.
EXAMPLE
This example is intended to help you compare the cost of investing in
the Orbitex Natural Resources Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each
year, that you reinvest all dividends and distributions, and that the Fund's
operating expenses remain the same. Although your actual costs and the return on
your investment may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
5 $ $
10 $ $
</TABLE>
Prospectus - 16
<PAGE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
5 $ $
10 $ $
</TABLE>
Prospectus - 17
<PAGE>
FUNDS AT A GLANCE - ORBITEX FOCUS 30 FUND
This section describes the Orbitex Focus 30 Fund's goals, principal investment
strategies, risks, expenses and performance. For further information on how this
Fund is managed, please read the section entitled "Fund Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Focus 30 Fund is long-term growth of capital
and current income through focused investment in the securities of some or
all of the 30 companies listed on the New York Stock Exchange that make up
the Dow Jones Industrial Average.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - [Investing at least 90% of its total assets in the common stock of some or
all of the 30 companies that make up the Dow Jones Industrial Average
("DJIA").* The stocks of these widely known companies are all listed on the
New York Stock Exchange and represent major American corporations engaged
in a variety of industries. The Adviser will weight the Fund's investments
toward the DJIA companies that its believes will perform better than other
DJIA companies. ]
OR
- - Investing up to 10% of its assets in common stocks of "large
capitalization" companies included in the S&P 500-Registered Trademark-
Index.**
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
- - STOCK MARKET RISK: Stock markets are volatile and there is a risk that the
price of a security will rise or fall due to changing economic, political
or market conditions, as well as company-specific factors (see
"Issuer-Specific Risks" below). Consequently, the value of your investment
in the Fund will go up and down, which means that you could lose money.
- - ISSUER-SPECIFIC RISKS: The price of an individual security or particular
type of security can be more volatile than the market as a whole and can
fluctuate differently than the value of the market as a whole. An
individual issuer's securities can rise or fall dramatically with little or
no warning based upon such things as a better (or worse) than expected
earnings report, news about the development of a promising product, or the
loss of key management personnel. There is also a risk that the price of a
security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in price.
- - INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
WHO MAY WANT TO INVEST IN THE ORBITEX FOCUS 30 FUND
We designed the ORBITEX FOCUS 30 FUND for investors who seek one or more of the
following:
- - high long-term growth
- - a stock fund that focuses its investments in the 30 companies included in
the Dow Jones Industrial Average
- a stock fund to complement a portfolio of more conservative
investments
- ----------
* "Dow Jones Industrial Average" and "DJIA" are the property of Dow Jones &
Company. The Orbitex Focus 30 Fund is neither affiliated with, nor endorsed by,
Dow Jones & Company.
** "S&P 500 Index" is a registered trademark of McGraw-Hill Co., Inc. The
Orbitex Focus 30 Fund is neither affiliated with, nor endorsed by, McGraw-Hill
Co., Inc.
Prospectus - 18
<PAGE>
- a stock fund that uses primarily a blend of value and growth oriented
investment strategies
Prospectus - 19
<PAGE>
FUNDS AT A GLANCE - ORBITEX FOCUS 30 FUND
PERFORMANCE AND VOLATILITY
Before [date of prospectus: June __, 1999], the Fund operated as a separate fund
called the ASM Index 30 Fund ("ASM Fund"). On [date of reorganization: June __,
1999], the Fund was reorganized as a new Fund of the Orbitex Group of Funds. In
connection with this reorganization, Class A Shares and Class B Shares were
added to the Fund, while existing shareholders of the ASM Fund received Class D
Shares in exchange for their ASM Fund shares. Upon the effectiveness of the
reorganization, the investment policy of the Fund changed from the "passive"
investment in an equal number of shares of each of the companies in the DJIA to
the "active" investment in some or all of those companies based on the Adviser's
assessment of the prospects for those companies. In addition, the Fund may now
invest up to 10% of its assets in other companies included in the
S&P 500-Registered Trademark- Index. Moreover, the ASM Fund was subject to a
different level of fees than will be the Fund.
The bar chart and table below show the performance of Class D Shares of the
Orbitex Focus 30 Fund during the last year when it operated as the ASM Fund. The
information gives some indication of the risks of an investment in the Fund by
comparing the Fund's performance with a broad measure of market performance.
Past performance does not necessarily indicate how the Fund will perform in the
future. Furthermore, because of the change in investment policy and different
fee level, the performance shown below, which reflects the Fund's previous
"passive" investment policy, should not be considered indicative of the
performance of the Fund as an actively managed Fund.
[GRAPH OMITTED]
The year-to-date return of the ASM Index 30 Fund for the fiscal quarter ended
April 30 was _____%. During the period shown in the bar chart, the highest
return for a quarter was _____% (quarter ended [date]) and the lowest return for
a quarter was _____% (quarter ended [date]).
Prospectus - 20
<PAGE>
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1998)
The returns in the following table include the effect of Class A Shares' maximum
applicable front-end sales charge and Class B Shares' maximum applicable
contingent deferred sales charge (CDSC).
<TABLE>
<CAPTION>
PAST 1 YEAR PAST 5 YEARS LIFE OF FUND
<S> <C> <C> <C>
Orbitex Focus 30 Fund Class A* __% __% __%
Orbitex Focus 30 Fund Class B** __% __% __%
Orbitex Focus 30 Fund Class D*** __% __% __%
Dow Jones Industrial Average**** __% __% __%
</TABLE>
* AS OF DECEMBER 31, 1998, CLASS A SHARES HAD NOT COMMENCED OPERATIONS. CLASS
A SHARES' RETURNS FROM[DATE OF ASM INDEX 30 COMMENCEMENT OF OPERATIONS
_______] THROUGH DECEMBER 31, 1998 ARE THOSE OF THE ASM FUND. IF CLASS A'S
12B-1 FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO DECEMBER 31, 1998
WOULD HAVE BEEN LOWER.
** AS OF DECEMBER 31, 1998, CLASS B SHARES HAD NOT COMMENCED OPERATIONS. CLASS
B'S RETURNS FROM [DATE OF ASM INDEX 30 COMMENCEMENT OF OPERATIONS _______]
THROUGH DECEMBER 31, 1998, ARE THOSE OF THE ASM FUND. IF CLASS B'S 12B-1
FEE HAD BEEN REFLECTED, TOTAL RETURNS PRIOR TO DECEMBER 31, 1998 WOULD HAVE
BEEN LOWER.
*** CLASS D RETURNS ARE THOSE OF THE ASM FUND.
**** THE DOW JONES INDUSTRIAL AVERAGE IS AN UNMANAGED INDEX. THE INDEX RETURNS
ASSUME REINVESTMENT OF DIVIDENDS; UNLIKE THE FUND'S RETURNS, HOWEVER, THEY
DO NOT REFLECT ANY FEES OR EXPENSES.
Prospectus - 21
<PAGE>
FUNDS AT A GLANCE - ORBITEX FOCUS 30 FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares, Class B Shares or Class D Shares of the Orbitex Focus 30 Fund .
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
SHARES SHARES SHARES
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering price) 5.75% (1) None None
Maximum Deferred Sales Charge (Load) (as a % of lower of original purchase price or None (2) 5.00% None
redemption proceeds)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None None None
Redemption Fee (as a % of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and/or Service Fee (12b-1) Fees 0.40% 1.00%(3) 0.00%
Other Expenses % % %
Total Annual Operating Expenses % (4) % (4) % (4)
</TABLE>
(1) Reduced for purchases of $50,000 or more by certain investors. See
"Your Account - Classes in Detail - Class A - Reduced Sales Charge."
(2) Purchases of Class A Shares of $1 million or more by certain investors
are not subject to any sales load at the time of purchase, but a 1%
contingent deferred sales charge applies on amounts redeemed within
one year of purchase. See "Your Account - Classes in Detail - Class A
- Reduced Sales Charge."
(3) Including a 0.25% shareholder servicing fee.
(4) The Adviser has agreed to waive and/or reimburse fees and expenses to
the extent necessary so that Class A Shares', Class B Shares' and
Class D Shares' total operating expenses do not exceed ___%, ____%
and ____% of average daily net assets. The information contained in
the above table and the example below reflects the expenses of each
class of the Fund without taking into account any applicable fee
waivers and/or reimbursements. The Adviser may discontinue such fee
waivers and/or expense reimbursements at any time, in its sole
discretion.
Prospectus - 22
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Orbitex Focus 30 Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year, that you
reinvest all dividends and distributions, and that the Fund's operating expenses
remain the same. Although your actual costs and the return on your investment
may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
1 $ $ $
3 $ $ $
5 $ $ $
10 $ $ $
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B CLASS D
------- ------- -------
<S> <C> <C> <C>
1 $ $ $
3 $ $ $
5 $ $ $
10 $ $ $
</TABLE>
Prospectus - 23
<PAGE>
FUNDS AT A GLANCE - ORBITEX HEALTH & BIOTECHNOLOGY FUND
This section briefly describes the Orbitex Health & Biotechnology Fund's goals,
principal investment strategies, risks, expenses and performance. For further
information on how this Fund is managed, please read the section entitled "Fund
Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Health & Biotechnology Fund is 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.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Investing at least 65% of its total assets in equity securities issued by
healthcare companies and biotechnology companies (see description of
healthcare companies and biotechnology companies in "Fund Details" section
on page ___).
- - Composing a portfolio based upon a "bottom-up" blending of value and growth
criteria as well as identifying investment and economic themes that can
drive profits.
- - Investing primarily in common stocks.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
- - Investing up to 25% of its total assets in foreign companies.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
- - STOCK MARKET RISK: Stock markets are volatile and there is a risk that the
price of a security will rise or fall due to changing economic, political
or market conditions, as well as company-specific factors (see
"Issuer-Specific Risks" below). Consequently, the value of your investment
in the Fund will go up and down, which means that you could lose money.
- - RISKS OF HEALTHCARE AND BIOTECHNOLOGY SECTOR: Because of its narrow focus,
the Fund's performance is closely tied to and affected by events occurring
in the healthcare and biotechnology industries. Companies in the same
industry often face similar obstacles, issues and regulatory burdens. As a
result, the securities owned by the Fund may react similarly to and move in
unison with one another.
Healthcare companies are subject to government regulation and approval of
their products and services, which can have a significant effect on their
market price. Furthermore, the types of products or services produced
or provided by these companies may quickly become obsolete. Moreover,
liability for products that are later alleged to be harmful or unsafe may
be substantial, and may have a significant impact on a healthcare company's
market value and/or share price.
Biotechnology companies are affected by patent considerations, intense
competition, rapid technology change and obsolescence, and regulatory
requirements of various federal and state agencies. In addition, many of
these companies are relatively small and have thinly traded securities, may
not yet offer products or offer a single product, and may have persistent
losses during a new product's transition from development to production or
erratic revenue patterns. Moreover, stock prices of biotechnology companies
are very volatile, particularly when their products are up for regulatory
approval and/or under regulatory scrutiny. Consequently, the Fund's
performance may sometimes be significantly better or worse than that of
other types of funds.
- - ISSUER-SPECIFIC RISKS: The price of an individual security or particular
type of security can be more volatile than the market as a whole and can
fluctuate differently than the value of the market as a whole. An
individual issuer's securities can rise or fall dramatically with little or
no warning based upon such things as a better (or worse) than expected
earnings report, news about the development of a promising product, or the
loss of key management personnel. There is also a risk that the price of a
security may never reach the level that the Adviser believes is
representative of its full value or that it may even go down in price.
- - RISKS OF INVESTING IN FOREIGN SECURITIES. Foreign securities may be riskier
than U.S. investments because of factors such as unstable international
political and economic conditions, currency fluctuations, foreign
Prospectus - 24
<PAGE>
controls on investment and currency exchange, withholding taxes, a lack of
adequate company information, less liquid and more volatile markets, and a
lack of governmental regulation. Consequently, there is a risk that a
foreign security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
- - RISKS OF NON-DIVERSIFICATION: Because the Orbitex Health & Biotechnology
Fund is non-diversified, it may have greater exposure to volatility than
other funds. Because a non-diversified fund may invest a larger percentage
of its assets in the securities of a single company than diversified funds,
the performance of that company can have a substantial impact on the fund's
share price.
- - INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
WHO MAY WANT TO INVEST IN THE ORBITEX HEALTH & BIOTECHNOLOGY FUND
We designed the ORBITEX HEALTH & BIOTECHNOLOGY FUND for investors who want to
capitalize on potential opportunities in the health and biotechnology industries
and who seek one or more of the following:
- high long-term growth
- a stock fund that invests in companies that are involved in the
healthcare and biotechnology industries
- a stock fund to complement a portfolio of more conservative
investments
- a stock fund that uses primarily a growth-oriented investment strategy
- a stock fund that invests in domestic and foreign companies
Prospectus - 25
<PAGE>
FUNDS AT A GLANCE - ORBITEX HEALTH & BIOTECHNOLOGY FUND
PERFORMANCE AND VOLATILITY
As of [_____], the Orbitex Health & Biotechnology Fund had not commenced
operations.
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares or Class B Shares of the Orbitex Health & Biotechnology Fund.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering price) 5.75% (1) None
Maximum Deferred Sales Charge (Load) (as a % of lower of
original purchase price or redemption proceeds) None (2) 5.00%
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None None
Redemption Fee (as a % of amount redeemed, if applicable) None None
Exchange Fee None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.25% 1.25%
Distribution and/or Service Fee (12b-1) Fees 0.40% 1.00% (3)
Other Expenses % %
--------- ---------
Total Annual Operating Expenses % (4) % (4)
</TABLE>
(1) Reduced for purchases of $50,000 or more by certain investors. See
"Your Account - Classes in Detail - Class A - Reduced Sales Charge."
(2) Purchases of Class A Shares of $1 million or more by certain investors
are not subject to any sales load at the time of purchase, but a 1%
contingent deferred sales charge applies on amounts redeemed within
one year of purchase. See "Your Account - Classes in Detail - Class A
- Reduced Sales Charge."
(3) Including a 0.25% shareholder servicing fee.
(4) The Adviser has agreed to waive and/or reimburse fees and expenses
to the extent necessary so that Class A Shares' and Class B Shares'
total operating expenses do not exceed ___% and ___% of average daily
net assets. The information contained in the above table and the
example below reflects the expenses of each class of the Fund without
taking into account any applicable fee waivers and/or reimbursements.
The Adviser may discontinue such fee waivers and/or expense
reimbursements at any time, in its sole discretion.
EXAMPLE
This example is intended to help you compare the cost of investing in
the Orbitex Health & Biotechnology Fund with the cost of investing in other
mutual funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return each
year, that you reinvest all dividends and distributions, and that the Fund's
operating expenses remain the same. Although your actual costs and the return on
your investment may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B
------- -------
<S> <C> <C>
1 $ $
3 $ $
</TABLE>
Prospectus - 26
<PAGE>
FUND DETAILS - ORBITEX GROWTH FUND
INVESTMENT DETAILS OF THE ORBITEX GROWTH FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The Orbitex Growth Fund seeks to provide long-term growth of capital through
selective investment in securities of companies of all sizes that offer
potential for growth.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund strives to provide a high return through a unique multi-factor
selection process. The Adviser generally screens first for "value stocks." These
stocks tend to trade at below market price/earnings, price/cash flow, and
price/book value ratios. The Adviser looks for stocks that are at the low end of
their historical range within those same categories.
Next, the Adviser screens for stocks with strong cash flow or earnings momentum.
In particular, the Adviser seeks out stocks that it expects to grow cash flow or
earnings by at least 20% per year over the next several years.
Finally, the Adviser screens stocks that show positive price momentum. In other
words, the Adviser seeks stocks that it believes have a strong fundamental case
for purchase but generally defers purchasing those stocks until the market
begins to perceive the positive fundamentals.
The Adviser believes that this combination of searching for stocks having the
attributes of value, growth, and price momentum will provide superior
performance. However, if the Adviser's strategies do not work as intended, the
Fund may not achieve its objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
The Fund may invest in the securities of any issuer, including U.S. and foreign
companies, governments and government agencies. The Fund expects to invest
primarily in U.S. common stocks, but may also invest in other types of equity
securities and debt securities of any quality.
PORTFOLIO MANAGER
Courtney D. Smith is the portfolio manager for the Growth Fund. Mr. Smith joined
Orbitex Management, Inc. in 1996. Formerly, he was President and Chief
Investment Officer of Pinnacle Capital Management, Inc., which provides managed
futures accounts. He was also President and Chief Executive Officers of Quantum
Financial Services, Inc., a futures and stock brokerage firm. Mr. Smith also
manages the Orbitex Focus 30 Fund and the Orbitex Health & Biotechnology Fund.
Prospectus - 27
<PAGE>
FUND DETAILS - ORBITEX INFO-TECH & COMMUNICATIONS FUND
INVESTMENT DETAILS OF THE ORBITEX INFO-TECH & COMMUNICATIONS FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The Orbitex Info-Tech & Communications Fund seeks long-term growth of capital
through selective investment in the securities of communications, information
and related technology companies.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund will invest in companies that the Adviser expects to capitalize on
emerging changes in the global communications and information technology
industries.
The Fund defines a "communications company" as an entity in which:
- - at least 50% of the company's revenues or earnings were derived from
communications activities; or
- - at least 50% of the company's assets were devoted to such activities, based
upon the company's most recent fiscal year.
The Fund defines an "information company" as an entity in which:
- - at least 50% of the company's revenues or earnings were derived from
information activities; or
- - at least 50% of the company's assets were devoted to such activities, based
upon the company's most recent fiscal year.
Communications, information and related technology companies may include, among
others, those engaged primarily in designing, developing or providing the
following products and services: communications, electronic components and
equipment, broadcasting, computer software and hardware, semiconductors,
internet and network equipment and services.
In buying and selling securities for the Fund, the Adviser relies on fundamental
analysis of each issuer and its potential for success in light of its current
financial condition, its industry position and economic and market conditions.
Factors considered include growth potential, earnings estimates and management.
However, if the Adviser's strategies do not work as intended, the Fund may not
achieve its objective.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in equity
securities issued by communications, information and related technology
companies. The Fund expects to invest primarily in U.S. and foreign common
stocks but may also invest in other types of equity securities, investment
grade debt securities and in securities of companies outside the
communications, information and technology industries.
PORTFOLIO MANAGER
Craig W. Ellis is the portfolio manager for the Info-Tech & Communications Fund.
Mr. Ellis joined Orbitex Management, Inc. in 1998. Formerly he was with Alliance
Capital Management Corporation where he was a senior vice president from 1997 to
1998. At Alliance, Mr. Ellis was responsible for the firm's investments in the
global communications technology area. Prior to joining Alliance, Mr. Ellis was
a managing director at Wheat First Union where he served as a telecommunications
services analyst.
Prospectus - 28
<PAGE>
FUND DETAILS - ORBITEX STRATEGIC NATURAL RESOURCES FUND
INVESTMENT DETAILS OF THE ORBITEX STRATEGIC NATURAL RESOURCES FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The Orbitex Strategic Natural Resources Fund seeks to provide long-term growth
of capital through selective investment in the securities of companies engaged
in natural resources industries and industries supportive to natural resources
industries.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in securities of companies that the Adviser believes are
positioned to benefit from increasing worldwide demand for natural resources.
There is no guarantee, however, that the Adviser's strategies will work as
intended.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in equity
securities issued by natural resources companies. The Fund expects to invest
primarily in U.S. common stocks but may also invest in other types of equity
securities, debt securities of any quality and in securities of companies
outside of the natural resources industries.
The Fund defines a "natural resources company" as an entity in which:
- - at least 50% of the company's revenues or earnings were derived from
natural resource activities; or
- - at least 50% of the company's assets were devoted to such activities, based
upon the company's most recent fiscal year.
Natural resources companies include service companies that provide services to
producers and refiners of natural resources or provide other products and
services, which the Adviser believes are significant to the ownership and
development of natural resources and companies that develop energy efficient
technologies, such as systems for energy conversion, conservation, and pollution
control. Natural resource companies also include companies that own, explore,
develop or produce:
- - precious metals (e.g., gold, platinum and silver),
- - ferrous and non-ferrous metals (e.g., iron, aluminum and copper),
- - strategic metals (e.g., uranium and titanium),
- - hydrocarbons (e.g., coal, oil and natural gases),
- - forest products,
- - other basic commodities (such as foodstuffs),
- - refined products (such as chemicals and steel)
PORTFOLIO MANAGER
Konrad Krill is the portfolio manager for the Strategic Natural Resources Fund.
Mr. Krill joined Orbitex Management, Inc. in 1997. From 1986 to 1997, he was
Vice President and portfolio manager at Morgan Stanley Dean Witter, where he
managed over $500 million in mutual fund and high net worth individual pension
assets.
Prospectus - 29
<PAGE>
FUND DETAILS - ORBITEX FOCUS 30 FUND
INVESTMENT DETAILS OF THE ORBITEX FOCUS 30 FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The objective of the Orbitex Focus 30 Fund is long-term growth of capital and
current income through focused investment in the securities of some or all of
the 30 companies listed on the New York Stock Exchange that make up the Dow
Jones Industrial Average.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Orbitex Focus 30 Fund seeks to achieve its investment objective
principally by investing in companies with large market capitalizations and
well-established earnings and dividend histories. The market capitalization
of a company is the company's stock price multiplied by the total number of
shares of its stock outstanding; in other words, the value placed on the
company by the stock markets. The companies in which the Fund invests
represent dominant, key firms in their respective industries, and almost all
of the equity securities held by the Fund trade on the New York Stock
Exchange.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
The Fund invests at least 90% of its assets in the common stock of some or
all of the 30 companies that make up the Dow Jones Industrial Average
("DJIA"). The Adviser will weight the Fund's investments toward the DJIA
companies that its believes will perform better than other DJIA companies.
The Fund also invests up to 10% of its assets in common stocks of "large
capitalization" companies included in the S&P 500-Registered Trademark- Index.
PORTFOLIO MANAGER
Courtney D. Smith is the portfolio manager for the Focus 30 Fund. Mr. Smith
joined Orbitex Management, Inc. in 1996. Formerly, he was President and Chief
Investment Officer of Pinnacle Capital Management, Inc., which provides managed
futures accounts. He was also President and Chief Executive Officers of Quantum
Financial Services, Inc., a futures and stock brokerage firm. Mr. Smith also
manages the Orbitex Growth Fund and the Orbitex Health & Biotechnology Fund.
Prospectus - 30
<PAGE>
FUND DETAILS - ORBITEX HEALTH & BIOTECHNOLOGY FUND
INVESTMENT DETAILS OF THE ORBITEX HEALTH & BIOTECHNOLOGY FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The Orbitex Health & Biotechnology Fund seeks to provide long-term growth of
capital through selective investment in securities of healthcare and
biotechnology companies of all sizes that offer potential for growth.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund will invest in companies that the Adviser expects to capitalize on
emerging changes in the healthcare and biotechnology industries.
The Fund defines a "healthcare company" as an entity that is principally engaged
in:
- - the design, manufacture or sale of products or services used for or in
connection with health care, medicine, personal care or cosmetics.
- - research and development of pharmaceutical products and services.
- - the operation of healthcare facilities.
- - design, manufacture, or sale of healthcare-related products and services.
The Fund defines a "biotechnology company" as an entity that is principally
engaged in:
- - research, development, manufacture or distribution of products and services
relating to human health care, pharmaceuticals, agricultural and veterinary
applications, and the environment.
- - manufacturing and/or distributing biotechnological and biomedical products,
including devices, instruments and/or drug delivery systems.
The Fund also defines a "healthcare or biotechnology company" as an entity that
is principally engaged in providing materials, products or services to a
healthcare or biotechnology company.
The Fund considers a company to be "principally engaged" in one of the above
activities if at least 50% of its revenues or profits come from those
activities.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
Under normal market conditions, the Fund intends to invest at least 65% of its
assets in equity, equity-related or debt securities of healthcare and
biotechnology companies.
The Fund expects to invest primarily in U.S. common stocks, but may also invest
in other types of equity securities and investment grade debt securities. The
Fund may invest up to 25% of its assets in the securities of foreign issuers,
however.
In addition, the Fund expects to invest at least 80% of its assets in equity and
convertible securities and derivatives on equity securities of these companies.
PORTFOLIO MANAGER
Courtney D. Smith is the portfolio manager for the Orbitex Health &
Biotechnology Fund. Mr. Smith joined Orbitex Management, Inc. in 1996. Formerly,
he was President and Chief Investment Officer of Pinnacle Capital Management,
Inc., which provides managed futures accounts. He was also President and Chief
Executive Officers of Quantum Financial Services, Inc., a futures and stock
brokerage firm. Mr. Smith also manages the Orbitex Growth Fund and the Orbitex
Focus 30 Fund.
Prospectus - 31
<PAGE>
MORE INFORMATION ABOUT RISKS
[GRAPHIC OMITTED]
Many factors affect the Funds' performance. The Funds' share prices change daily
based on changes in market conditions in response to economic, political and
financial developments. The direction and extent of those price changes will be
affected by the financial condition, industry and economic sector, and
geographic location of the companies in which the Funds invest, and the Funds'
level of investment in the securities of those companies. WHEN YOU REDEEM YOUR
SHARES OF THE FUNDS, THEY COULD BE WORTH MORE OR LESS THAN WHAT YOU PAID FOR
THEM.
The Orbitex Group of Funds' Statement of Additional Information includes
additional information regarding the risks associated with the Funds'
investments.
The following factors may significantly affect each Fund's performance:
STOCK MARKET VOLATILITY: The value of equity securities fluctuates in response
to issuer, political, market and economic developments. Equity prices can
fluctuate dramatically in response to these developments. Different parts of the
market can react differently to these developments. For example, large cap
stocks can react differently than small cap stocks, and "growth" stocks can
react differently than "value" stocks. Political or economic developments can
affect a single issuer, issuers within an industry or economic sector or
geographic region, or the market as a whole.
INTEREST RATE CHANGES: Debt securities have varying levels of sensitivity to
changes in interest rates. In general, the price of a debt security may fall
when interest rates rise and may rise when interest rates fall. Securities with
longer maturities may be more sensitive to interest rate changes.
DEFENSIVE STRATEGIES: In response to market, economic, political or other
conditions, the Adviser may temporarily use a different investment strategy for
a Fund for defensive purposes. Such a strategy could include investing up to
100% of the Fund's assets in cash or cash equivalent securities. If the Adviser
does so, it could affect a Fund's performance and the Fund might not achieve its
investment objective.
RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than U.S.
investments because of factors such as unstable international political and
economic conditions, currency fluctuations, foreign controls on investment and
currency exchange, withholding taxes, a lack of adequate company information,
less liquid and more volatile markets, and a lack of governmental regulation.
LOWER-QUALITY DEBT SECURITIES: The Orbitex Growth Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Strategic Natural Resources Fund, and the Orbitex
Health & Biotechnology Fund may each invest up to 35% of their assets in
lower-quality debt securities, otherwise known as "junk bonds." Junk bonds are
debt securities that are rated below investment-grade by Standard & Poor's
Rating Service or Moody's Investors Service, Inc. These securities are generally
considered to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity to pay.
DERIVATIVES AND OTHER STRATEGIES: The Funds may invest in options, futures,
foreign securities, foreign currencies, and other derivatives (collectively,
"Derivative Transactions"), and may enter into certain types of short sales.
If these practices are used by the Funds, the intent would be primarily to hedge
the Funds' portfolios. For example, a Fund may purchase or sell options
contracts on equity securities to hedge against the risk of fluctuations in the
prices of securities held by the Fund. Or, a Fund may purchase or sell stock
index futures contracts and would purchase put options or write call options on
such futures contracts to protect against a general stock market decline or
decline in a specific market sector that could adversely affect the Fund's
holdings.
Investing for hedging purposes may result in certain transaction costs, which
may reduce a Fund's performance. In addition, no assurances can be given that
hedging will be implemented or that each derivative position will achieve a
perfect correlation with the security or currency being hedged against.
PORTFOLIO TURNOVER RATES. The portfolio turnover rates for the fiscal year
ending April 30, 1999, of the Growth Fund, the Info-Tech & Communications
Fund and the Strategic Natural Resources Fund were %, % and %,
respectively. These turnover rates are higher than the average of many mutual
funds, and are the result of and are the result of the focused and
specialized nature of the Funds and the resulting need for the Funds to seek
out investment opportunities to achieve each Fund's investment objectives.
High portfolio turnover involves additional brokerage expense and may increase
realized capital gains distributions, with adverse tax consequences for the
Fund's shareholders. See "Taxation of the Fund" below.
Prospectus - 32
<PAGE>
MORE INFORMATION ABOUT RISKS
YEAR 2000: The Funds' operations depend on the seamless functioning of computer
systems in the financial service industry, including those of the Adviser,
Administrator, Sub-Administrator, Custodian, Distributor and the Transfer Agent.
Many computer software systems in use today cannot properly process date-related
information after December 31, 1999. The "Year 2000" issue stems from the use of
a two-digit format to define the year in certain date-sensitive application
systems rather than the use of a four-digit format. As a result, date-sensitive
software programs could recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in major systems or process failures or the
generation of erroneous data, which would lead to disruptions in the Funds'
business operations.
The Adviser has made compliance with the Year 2000 issue a high priority and is
taking steps to address the issue with respect to its computer systems. The
Funds' major service providers have informed the Adviser that they are taking
comparable steps. The Adviser does not currently believe that the Year 2000
issue will have a material impact on its ability to continue to fulfill its
duties as investment adviser. In addition, the issuers of securities the Funds
own could have Year 2000 computer problems. These problems could negatively
affect the value of their securities, which, in turn, could impact the Funds'
performance. An issuer's Year 2000 readiness is only one of many factors the
Adviser may consider when making investment decisions, and other factors may
receive greater weight.
LITIGATION THAT MAY AFFECT THE FOCUS 30 FUND: On February 8, 1999, a suit was
filed against a former director and officer of the ASM Index 30 Fund (the
"ASM Fund"), the former investment adviser Vector Investment Advisors, Inc.
of the ASM Fund, and the ASM Fund itself alleging that the former officer of
the ASM failed to invest in the ASM Fund amounts purportedly paid by the
plaintiffs to the ASM Fund's investment adviser. The relief sought is the
recovery of the investment amounts and interest thereon, additional general,
consequential and incidental damages, legal costs and disbursements, and
declaratory and injunctive relief to preclude the ASM Index 30 Fund from
transferring or permitting the dissipation of its assets. With the possible
exception of Steven H. Adler, a former officer and director of the ASM Index
30 Fund, that fund had no knowledge that the amounts purportedly paid by the
plaintiffs to the former investment adviser were, as the plaintiffs have
alleged, to be invested in the fund. Upon consummation of the reorganization
of the ASM Index 30 Fund into the Orbitex Focus 30 Fund, the Orbitex Focus 30
Fund will succeed to the obligations, if any, of the ASM Fund with respect to
this suit, 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.
Prospectus - 33
<PAGE>
YOUR ACCOUNT
[GRAPHIC OMITTED]
This section describes the services that are available to shareholders.
TYPES OF ACCOUNTS
If you are making an initial investment in the Funds, you will need to open an
account. You may establish the following types of accounts:
- - INDIVIDUAL OR JOINT OWNERSHIP. One person owns an individual account while
two or more people own a joint account. We will treat each individual owner
of a joint account as authorized to give instructions on purchases, sales
and exchanges of shares without notice to the other owners. However, we
will require each owner's signature guarantee for any transaction requiring
a signature guarantee.
- - GIFT OR TRANSFER TO MINORS. A Custodian maintains a Uniform Gifts to Minors
Act (UGMA) or Uniform Transfers to Minors Act (UTMA) account for the
benefit of a minor. To open an UGMA or UTMA account, you must include the
minor's social security number on the application.
- - TRUST. A trust can open an account. You must include the name of each
trustee, the name of the trust and the date of the trust agreement on the
application.
- - CORPORATIONS, PARTNERSHIPS AND OTHER LEGAL ENTITIES. Corporations,
partnerships and other legal entities may also open an account. A general
partner of the partnership or an authorized officer of the corporation or
other legal entity must sign the application and resolution form.
- - RETIREMENT. If you are eligible, you may set up your account under a
tax-sheltered retirement plan, such as an Individual Retirement Account.
Your financial consultant can help you determine if you are eligible.
Prospectus - 34
<PAGE>
CHOOSING A CLASS
After deciding which type of account to open, you must select a class of
shares. All the Funds offer two classes of shares (Class A and Class B). The
Focus 30 Fund also offers a third class of shares ( Class D). Class D Shares
are only available to shareholders who previously were shareholders of the
ASM Index 30 Fund at the time of the reorganization.
Each share class has its own sales charge and expense structure, including
different 12b-1 fees (see "Classes in Detail" below and "Rule 12b-1 Plans in
Detail" on page __ for additional information). The Class A Shares have an
initial sales charge while the Class B Shares have a contingent deferred
sales charge if you redeem shares held for six years or less. There are no
sales charges, 12b-1 fees or shareholder services fees for Class D Shares.
Each class represents an interest in the same portfolio of securities and each
has the same rights with one exception. Pursuant to the Investment Company Act
of 1940, you will have exclusive voting rights with respect to the Distribution
Plan and Agreement pursuant to Rule 12b-1, if any, for the class you choose.
We offer these classes to allow you to choose the class that will be most
beneficial to you. Your decision should depend upon a number of factors
including the amount you purchase and the length of time you plan to hold the
shares. For example, if you are investing a large amount of money and plan to
hold your shares for a long period of time, the Class A Shares may make the most
sense for you. However, if you plan to invest less money and are investing for
at least six years, Class B Shares might make better sense. Your financial
consultant can assist you in determining which class is best for you. Because
all future investments in your account will be made in the share class you
designate when opening the account, you should make your decision carefully.
COMPARISON OF CLASSES
CLASS A--INITIAL SALES CHARGE
- - Initial sales charge of 5.75% or less (see chart on page 19).
- - Lower sales charges for larger investments (see page __).
- - Lower annual expenses than Class B Shares due to lower marketing and
service (12b-1) fee of .40%.
CLASS B--CONTINGENT DEFERRED SALES CHARGE
- - No initial sales charge. This allows 100% of your purchase price to be
invested in the Fund.
- - Deferred sales charge of 5% or less on shares you redeem within six years
(see chart on page ___).
- - An annual fee of 1.00% under each Fund's rule 12b-1 plan, 0.75% of which is
for marketing and 0.25% of which is for shareholder services. This will
result in a lower total return than comparable Class A Shares.
- - Automatic conversion to Class A Shares after six years, thereby reducing
future annual expenses.
CLASS D--NO SALES CHARGE (FOCUS 30 FUND ONLY)
Note: Class D Shares are only available to shareholders who were shareholders of
the ASM Index 30 Fund and certain Institutional investors.
- - No initial or contingent deferred sales charge.
- - No annual marketing and service (12b-1) fee.
- - Lower annual expenses than Class A and Class B.
Prospectus - 35
<PAGE>
CLASSES IN DETAIL
CLASS A--INITIAL SALES CHARGE
The sales charge for Class A Shares of all Funds is 5.75% of the offering price.
However, the Adviser may reduce or waive this sales charge as described in
"Reduced Sales Charge."
REDUCED SALES CHARGE
You can qualify for a reduction or waiver of this sales charge by investing one
lump sum in a particular class of a Fund. You can also qualify for a sales
charge reduction or waiver through a right of accumulation or a letter of intent
if you are a United States resident. See the discussions of "Right of
Accumulation" and "Letter of Intent" on page ---."
If you are a United States resident and are investing more than $50,000, the
Adviser will reduce the sales charge you pay. The chart at the bottom of this
page shows the sales charge you will pay based on the amount of your purchase.
You can purchase Class A Shares without any initial sales charge if you are a
United States resident and invest $1 million or more in Class A shares. However,
if you redeem those shares within one year of the purchase, you must pay a
contingent deferred sales charge of 1%. We will waive the contingent deferred
sales charge only in the following situations:
- - If the Fund involuntarily redeems your shares; or
- - If you reinvest the proceeds from your redemption in the Funds within 90
days of your redemption.
REDUCED SALES CHARGE FOR U.S. RESIDENTS
<TABLE>
<CAPTION>
SALES CHARGE AS A SALES CHARGE AS A PERCENTAGE
PERCENTAGE OF OF NET INVESTMENT BROKER REALLOWANCE AS A
AMOUNT OF PURCHASE OFFERING PRICE (NET ASSET VALUE) PERCENTAGE OF OFFERING PRICE (1)
- ------------------ -------------- ----------------- ----------------------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 2.75%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None (See below) (2) None (See below) (2) (See below)*
</TABLE>
(1) At the discretion of the Orbitex Group of Funds, however, the entire sales
charge may at times be reallowed to dealers. The Staff of the Securities and
Exchange Commission has indicated that dealers who receive more than 90% of the
sales charge may be considered underwriters.
(2) The distributor will pay certain commissions to Selling Group Members
(See page ) who initiate and are responsible for purchases by any single
purchaser who is a resident of the United States. For purchases of $1 million
to $3 million, the Distributor will pay 1%, plus 0.50% on any amounts over $3
million up to $50 million, and 0.25% on any amounts over $50 million.
Prospectus - 36
<PAGE>
RIGHT OF ACCUMULATION
For the purposes of determining the sales charge, the right of accumulation
allows you to include prior purchases of Class A Shares of any Orbitex Fund as
part of your current investment. To qualify for this option, you must be either:
- - an individual;
- - an individual and spouse purchasing shares for your own account or trust or
custodial accounts for your minor children; or
- - a fiduciary purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401 or 457 of the
Internal Revenue Code, including related plans of the same employer.
If you plan to rely on this right of accumulation, you must notify the
Distributor at the time of your purchase. You will need to give the Distributor
your account numbers. If applicable, you will need to provide the account
numbers of your spouse and your minor children as well as the ages of your minor
children.
LETTER OF INTENT
The letter of intent allows you to count all investments within a 13-month
period in a Fund as if you were making them all at once for the purposes of
calculating the sales charges. The minimum initial investment under a letter of
intent is 5% of the total letter of intent amount. You may include a purchase
not originally made pursuant to a letter of intent under a letter of intent
entered into within 90 days of the original purchase.
EXCHANGES OF CLASS D SHARES OF THE ORBITEX FOCUS 30 FUND INTO CLASS A SHARES OF
OTHER ORBITEX FUNDS
If you received Class D Shares of the Orbitex Focus 30 Fund in exchange for
shares of the ASM Index 30 Fund, you may exchange your Class D Shares for Class
A Shares of another Orbitex Fund without paying any sales charge. If you close
your Class D account in the Focus 30 Fund (either by redeeming or by exchanging
all of your Class D Shares), however, you may not later reopen your account with
Class D Shares of the Focus 30 Fund.
OTHER CIRCUMSTANCES
We also offer Class A Shares with low or no sales charges through various other
special arrangements. Your financial consultant can help you determine if any of
these programs is appropriate for you.
Class A Shares issued pursuant to the automatic reinvestment of income dividends
and capital gains distributions are not subject to any sales charges.
Prospectus - 37
<PAGE>
CLASS B--CONTINGENT DEFERRED SALES CHARGE
You will not pay an initial sales charge if you choose to invest in Class B
Shares. However, if you redeem your shares within six years, you will pay a
contingent deferred sales charge as described in the table below. The amount of
this charge is based on your original purchase price, or the current net asset
value of the shares you redeem, whichever is less.
We will waive the contingent deferred sales charge under the following
circumstances:
- - redemptions made within one year after the death of a shareholder or
registered joint owner;
- - redemptions made to facilitate minimum required distributions made from an
IRA or other retirement plan account after age 70 1/2; and
- - involuntary redemptions made by a Fund.
Class B Shares will automatically convert to Class A Shares after six years
after you purchase them. This conversion relieves Class B shareholders who have
held their shares for more than six years of the higher asset-based distribution
charge that applies to Class B Shares under the 12b-1 Plan described in the
section entitled "Rule 12b-1 Plans in Detail."
Class B Shares issued pursuant to the automatic reinvestment of income dividends
and capital gains distributions are not subject to any contingent deferred or
other sales charges.
CONTINGENT DEFERRED SALES CHARGE
<TABLE>
<CAPTION>
YEARS AFTER PURCHASE THAT YOU REDEEM YOUR SHARES CONTINGENT DEFERRED SALES CHARGE(1)
<S> <C>
1st Year 5.00%
2nd Year 4.00%
3rd Year 3.00%
4th Year 3.00%
5th Year 2.00%
6th Year 1.00%
After 6 Years None
</TABLE>
(1) The contingent deferred sales charge will be the lesser of (1) the
original purchase price or (2) the net asset value of the shares being
redeemed.
Prospectus - 38
<PAGE>
CLASS D
Class D Shares are offered without any sale charges, and are not subject to any
12b-1 or shareholder servicing fees.
CLASS D SHARES ARE ONLY AVAILABLE TO SHAREHOLDERS WHO HELD SHARES OF THE ASM
INDEX 30 FUND ON THE DATE THE ASM FUND WAS REORGANIZED AS THE ORBITEX FOCUS 30
FUND, AND TO CERTAIN INSTITUTIONAL INVESTORS.
If you held shares of the ASM Index 30 Fund, you may purchase additional
Class D Shares of the Orbitex Focus 30 Fund for the account that was
established when your received shares of the Focus 30 Fund in exchange for
your ASM Fund Shares.
In addition, if you held shares of the ASM Fund on the date of reorganization,
you may purchase Class D Shares of the Orbitex Focus 30 Fund for a new account
established for:
- - you
- - one of your immediate family members
- - a trust or individual retirement account or self-employed retirement place
for the benefit of you or any of your immediate family members
- - your or an immediate family member's estate.
Prospectus - 39
<PAGE>
RULE 12B-1 PLANS IN DETAIL
The Board of Trustees of the Orbitex Group of Funds has adopted for Class A
Shares and Class B Shares separate Distribution Plans and Agreements pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (the "Plans").
The Plan adopted for Class A Shares allows each Fund to use part of its assets
for the sale and distribution of its Class A Shares, including advertising,
marketing and other promotional activities. Under this Plan, each Fund pays
Funds Distributor, Inc. (the "Distributor"), an amount equal to 0.40% of average
net assets attributable to Class A Shares of that Fund on an annualized basis.
The Plan adopted for Class B Shares also allows each Fund to use part of its
assets for the sale and distribution of its Class B Shares, including
advertising, marketing and other promotional activities. For these services,
under the Plan, each Fund pays Funds Distributor, Inc., the Distributor, an
amount equal to 0.75% of average net assets attributable to Class B Shares of
that Fund on an annualized basis. The Class B Plan also allows each Fund to pay
the Distributor for certain shareholder services provided to Class B
shareholders or other service providers that have entered into agreements with
the Distributor to provide these services. For these services, each Fund pays a
shareholder service fee equal to 0.25% of average net assets attributable to
Class B Shares of that Fund on an annualized basis.
Because these distribution and shareholder service fees are paid out of a Fund's
assets on an ongoing basis, the fees may, over time, increase the cost of an
investing in a Fund and cost investors more than other types of sales loads.
PURCHASING SHARES
Once you have chosen the type of account and a class of shares, you are ready to
establish an account. Class A Shares and Class B Shares of each Fund are
available to investors making a minimum initial investment of $2,500 per Fund
for regular accounts and $2,000 for individual retirement accounts. The minimum
for subsequent investments is $250.
Class D shares of the Focus 30 Fund are available only to individuals who were
shareholders of the ASM Index 30 Fund on the date it was reorganized as the
Orbitex Focus 30 Fund, and to certain institutional investors. The minimum for
subsequent investments in Class D Shares of the Focus 30 Fund by individual
investors is $100.
The Trust or Adviser may waive or lower these minimums in certain cases. YOU
MUST COMPLETE AND SIGN AN APPLICATION FOR EACH ACCOUNT YOU OPEN WITH EACH FUND.
The price for Fund shares is the Fund's net asset value per share (NAV) plus any
applicable sales charge. We determine the NAV as of the close of trading on the
New York Stock Exchange (normally 4:00 p.m. Eastern time) every day that the
Exchange is open. We will price your order at the next NAV calculated after the
Fund accepts your order. For more information on how we price shares, see
"Pricing of Fund Shares" on page ___.
The Funds and the Distributor each reserve the right to reject any purchase for
any reason and to cancel any purchase due to non-payment. You must make all
purchases in United States dollars and draw all checks on United States banks.
If we cancel your purchase due to non-payment, you will be responsible for any
loss the Funds incur. We will not accept cash or third-party checks for the
purchase of shares.
Prospectus - 40
<PAGE>
<TABLE>
<CAPTION>
METHOD OF PURCHASE PURCHASE PROCEDURES
<S> <C>
- -------------------- -------------------------------------------------------
THROUGH A Contact your financial consultant.
FINANCIAL
PROFESSIONAL
[GRAPHIC OMITTED]
- -------------------- -------------------------------------------------------
THROUGH SELLING The Distributor authorizes certain securities
GROUP MEMBERS dealers, banks or other financial service firms
(collectively, "Selling Group Members") to redeem
[GRAPHIC OMITTED] your shares. To receive that day's share price:
- you must place your order with the Selling Group
Member before the close of regular trading on the
New York Stock Exchange (normally 4:00 p.m.
Eastern time); and
- the Selling Group Member must transmit the order
to the [Funds before 5:00 p.m.] Eastern time on
that same day.
- -------------------- -------------------------------------------------------
BY MAIL To purchase Shares of the Orbitex Growth Fund, Orbitex
Info-Tech & Communications Fund, or the Orbitex
Strategic Natural Resources Fund, send your completed
application to:
[GRAPHIC OMITTED]
Orbitex Group of Funds
P.O. Box 8069
Boston, Massachusetts 02266-8069
To purchase Shares of the Orbitex Focus 30 Fund or the
Orbitex Health & Biotechnology Fund, send your
completed application to:
Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box XXXX
Hauppage, New York 11788
Include with your application your check, payable to
"Orbitex Group of Funds - (Name of Fund)." If you are
purchasing Shares of more than one Orbitex Fund, you
must include a separate application and a separate
check for each Fund.
- -------------------- -------------------------------------------------------
BY WIRE - INITIAL PURCHASE: Call us at 1-888-ORBITEX for
instructions and to receive an account number.
[GRAPHIC OMITTED] You will need to instruct a Federal Reserve System
member bank to wire Funds to: State Street Bank
and Trust Company, ABA No. 011000028,
Attn.: Custody & Shareholder Services, Credit:
Name of Fund, DDA No. 9905-295-3, FBO: Shareholder
Name, Name of Fund, Shareholder Account Number.
You must also complete and mail an application to
the address shown above under "By Mail."
- SUBSEQUENT PURCHASE: Wire Funds to the designated
bank account for each Fund.
You may wire funds between 8:00 a.m. and 4:00 p.m.
Eastern time. To make a same-day wire investment,
please call 1-888-ORBITEX by 12:00 noon to notify
us of your intention to wire Funds, and make sure
your wire arrives by 4:00 p.m. Eastern time.
Please note that your bank may charge a fee for
the wire. WIRE TRANSACTIONS ARE NOT AVAILABLE FOR
RETIREMENT ACCOUNTS.
- -------------------- -------------------------------------------------------
</TABLE>
Prospectus - 41
<PAGE>
<TABLE>
<S> <C>
- -------------------- -------------------------------------------------------
BY EXCHANGE You may exchange your shares for the same class of
shares of another Fund by written request sent to the
Funds at:
Orbitex Group of Funds
[GRAPHIC OMITTED] c/o American Data Services, Inc.
P.O. Box XXXX
Hauppage, New York 11788-0132
- -------------------- -------------------------------------------------------
BY TELEPHONE You may make subsequent purchases in your account by
telephoning 1-888-ORBITEX between 8:30 a.m. and
4:00 p.m. Eastern time on any day the Funds are open.
We will electronically transfer money from the bank
account you designate on your Application to your
account with the Trust. This investment option is only
[GRAPHIC OMITTED] available if you have not declined, or cancelled your
telephone investment privilege. See the discussion of
"Telephone Redemptions" on page ---.
- -------------------- -------------------------------------------------------
SUBSEQUENT The minimum subsequent purchase is $250 per Fund,
PURCHASES except for reinvestment of dividends and
distributions and Class D purchases with minimum
amount of $100.
[GRAPHIC OMITTED]
- -------------------- -------------------------------------------------------
IMPORTANT NOTES Once you have requested a telephone transaction, and
a confirmation number has been assigned, the
transaction cannot be revoked. We reserve the right to
refuse any purchase request.
You can redeem shares that you purchased by check.
However, while we will process your redemption request
at the next-determined net asset value after we receive
it, your redemption proceeds will be not available
until your check clears. This could take up to ten
calendar days.
</TABLE>
REDEEMING SHARES
You have the right to sell ("redeem")all or any part of your shares subject to
certain restrictions. Selling your shares in a Fund is referred to as a
"redemption" because the Fund buys back its shares. We will redeem your shares
at the net asset value next computed following receipt of your redemption
request in good order.
See "Redemption Procedures - Request in `Good Order'" on page ___.
We will mail your redemption proceeds to your current address or transmit them
electronically to your designated bank account. Except under certain emergency
conditions, we will send your redemption to you within seven days after we
receive your redemption request.
The Funds cannot accept requests that specify a certain date for redemption or
which specify any other special conditions. Please call 1-888-ORBITEX for
further information. WE WILL NOT PROCESS YOUR REDEMPTION REQUEST IF IT IS NOT IN
PROPER FORM (SEE CHART BELOW). WE WILL NOTIFY YOU IF YOUR REDEMPTION REQUEST IS
NOT IN PROPER FORM.
If, as a result of your redemption, your account value drops below $1,000, we
may redeem the remaining shares in your account. We will notify you in writing
of our intent to redeem your shares. We will allow at least sixty days
thereafter for you to make an additional investment to bring your account value
up to at least $1,000 before we will process the redemption.
If you purchased your Class A Shares without any sales charge because your
initial investment was $1 million or more, you will pay a redemption fee equal
to1.00% of the proceeds from the redemption of your Shares you are redeeming if
you purchased those Shares within one year of the date of your purchase. See the
discussion of "Reduced Sales Charges" on page ____.
SIGNATURE GUARANTEES
Your redemption request must be accompanied by a "signature guarantee" under
certain circumstances, such as if you are redeeming shares valued at $50,000 or
greater or if you ask us to send the redemption proceeds to an address other
than the address of record or to a person other than the registered
shareholder(s) for the account.
CONTINGENT DEFERRED SALES CHARGES
If you redeem your Class B Shares within six years of the date you purchased the
Shares, you will pay a contingent deferred sales charge as described on page
___. There is no such charge for the sale of Class A Shares or Class D Shares,
except that investors who paid no initial sales charge on their
Prospectus - 42
<PAGE>
purchase of Class A Shares by investing $1 million or more will pay a 1%
contingent deferred sales charge on any Class A Shares redeemed within one year
of purchase. There are no a contingent deferred sales charges imposed on
redemptions of Class D Shares of the Orbitex Focus 30 Fund.
THIRD PARTY TRANSACTIONS
If you buy and redeem shares of the Funds through a member of the National
Association of Securities Dealers, Inc., that member may charge a fee for that
service.
The Orbitex Group of Funds has authorized one or more brokers to accept on its
behalf purchase and redemption orders. Such brokers are authorized to designate
intermediaries to accept orders on the Fund's behalf. The Fund will be deemed to
have received the order when an authorized broker or a broker authorized
designee accepts your order. You order will be priced at the Funds' net asset
value next computed after it is accepted by the authorized broker or broker
authorized designee.
REDEMPTION-IN-KIND
The Funds reserve the right to honor requests for redemption or repurchase
orders by making payment in whole or in part in readily marketable securities
("redemption in kind") if the amount of such a request is large enough to affect
operations (for example, if the request is greater than $250,000 or 1% of a
Fund's assets). The securities will be chosen by the Fund and valued at the
Fund's net asset value. A shareholder may incur transaction expenses in
converting these securities to cash.
<TABLE>
<CAPTION>
METHOD OF
REDEMPTION REDEMPTION PROCEDURES
- ------------------ ------------------------------------------------------------
<S> <C>
BY TELEPHONE You may authorize redemption of some or all shares in your
account with the Funds by telephoning the Funds at
1-888-ORBITEX between 8:30 a.m. and 4:00 p.m. Eastern time
on any day the Funds are open. You will NOT be eligible to
[GRAPHIC OMITTED] use the telephone redemption service if you:
- have declined or canceled your telephone investment
privilege;
- wish to redeem less than $1,500;
- must provide supporting legal documents such as a
signature guarantee, or if necessary, for redemption
requests by corporations, trusts and partnerships; and
- wish to redeem from a retirement account.
- ------------------ ------------------------------------------------------------
BY MAIL If you are redeeming Shares of the Orbitex Growth Fund,
Orbitex Info-Tech & Communications Fund, or the Orbitex
Strategic Natural Resources Fund, you may send your
redemption request to:
[OBJECT OMITTED] Orbitex Group of Funds
P.O. Box 8069
Boston, Massachusetts 02266-8069
If you are redeeming Shares of the Orbitex Focus 30 Fund or
the Orbitex Health & Biotechnology Fund, you may send your
redemption request to:
Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box XXXX
Hauppage, New York 11788
You must include the following information in your written
request:
- a letter of instruction stating the name of the Fund,
the number of shares you are redeeming, the names in
which the account is registered and your account
number;
- other supporting legal documents, if necessary, for
redemption requests by corporations, trusts and
partnerships;
- a signature guarantee, if necessary
- ------------------ ------------------------------------------------------------
</TABLE>
Prospectus - 43
<PAGE>
<TABLE>
<S> <C>
- ------------------ ------------------------------------------------------------
BY WIRE You may request your redemption proceeds be wired directly
to the bank account designated on your application. The
[GRAPHIC OMITTED] Funds' transfer agent will charge you a $10.00 fee for each
wire redemption. The transfer agent will deduct the fee
directly from your account. Your bank may also impose a fee
for the incoming wire.
- ------------------ ------------------------------------------------------------
REQUEST IN "GOOD For our mutual protection, all redemption requests must
ORDER" include:
- your account number
- the amount of the transaction
- for mail request, signatures of all owners EXACTLY as
registered on the account o signature guarantees, if
required (signature guarantees can be obtained at most
banks, credit unions, and licensed brokers
- any supporting legal documentation that may be required
YOUR REDEMPTION REQUEST WILL BE PROCESSED AT THE
NEXT-DETERMINED SHARE PRICE AFTER WE HAVE RECEIVED ALL
REQUIRED INFORMATION.
- ------------------ ------------------------------------------------------------
IMPORTANT NOTE Once we have processed your redemption request, and a
confirmation number has been given, the transaction CANNOT
be revoked.
- ------------------ ------------------------------------------------------------
</TABLE>
OPTIONS FOR REDEMPTION PROCEEDS
You may receive your redemption proceeds by check or by wire.
CHECK REDEMPTIONS. Normally we will mail your check within two business days of
a redemption.
WIRE REDEMPTIONS. Before you can receive redemption proceeds by wire, you must
establish this option by completing a special form or the appropriate section of
your account application.
If we receive your request for a wire redemption by noon Eastern Time, the wire
will arrive at your bank by the close of business that same day. Requests that
we receive later than noon Eastern Time will arrive at your bank by the close of
business the following business day.
We require a minimum redemption of $10,000 in order to send your redemption
proceeds by wire.
TELEPHONE REDEMPTIONS AND EXCHANGES.
We will automatically establish the telephone redemption option for your
account, unless you instruct us otherwise in writing. Telephone redemptions are
easy and convenient, but this account option involves a risk of loss from
unauthorized or fraudulent transactions. We will take reasonable precautions to
protect your account from fraud. You should do the same by keeping your account
information private and by reviewing immediately any account statements and
confirmations that you receive. Please contact us immediately about any
transaction you believe to be unauthorized.
Orbitex reserves the right to refuse a telephone redemption or exchange if the
caller cannot provide:
- - the account number
- - the name and address exactly as registered on the account
- - the primary social security or employer identification number as registered
on the account
We may also require a password from the caller.
Orbitex will not be responsible for any account losses due to telephone fraud,
so long as we have taken reasonable steps to verify the caller's identity. If
you wish to cancel the telephone redemption feature for your account, please
notify us in writing.
EXCHANGING SHARES
The exchange privilege is a convenient way to buy shares in each Fund in order
to respond to changes in your investment goals or in market conditions. You may
exchange your shares for shares of the same class of another Fund at no cost to
you (or, if you hold D Class Shares of the Orbitex Focus 30 Fund, you may
exchange them for Class A Shares of another Orbitex Fund). If you establish a
new account by exchange, the exchanged shares must have a minimum value of
$2,500. All subsequent exchanges must have a minimum value of $250 per Fund. You
may exchange shares either by telephone, if you have not canceled your telephone
privilege, or in writing. Written requests for exchange must provide the
following:
Prospectus - 44
<PAGE>
- - current Fund's name;
- - account names and numbers;
- - name of the Fund you wish to exchange your shares into;
- - the amount you wish to exchange;
- - specify the shareholder privileges you wish to retain (e.g., Telephone
Privileges); and
- - signatures of all registered owners.
To exchange shares by telephone, you should call 1-888-ORBITEX between 8:30 a.m.
and 4:00 p.m. Eastern time on any day the Funds are open. We will process
telephone requests made after 4:00 p.m. Eastern Time at the close of business on
the next business day. You should notify the Funds in writing of all shareholder
service privileges you wish to continue in any new account opened by a telephone
exchange request.
Please note that we will only accept exchanges if your ownership registrations
in both accounts are identical.
We will value your exchanged shares at their respective net asset value next
determined after the receipt of the exchange request. We will not impose an
initial sales charge, redemption fee or penalty on exchanges. Please note that
an exchange may have tax consequences for you. We reserve the right to modify or
terminate the exchange privilege upon sixty days' written notice to you.
TRANSFERRING REGISTRATION
You can transfer the registration of your shares in an Orbitex Fund to another
owner by completing a transfer form and sending to American Data Services, Inc.,
P.O. Box XXXX, Hauppage, New York 11788-0132.
.
Prospectus - 45
<PAGE>
Prospectus - 46
<PAGE>
PRICING OF FUND SHARES
Each Fund's net asset value per share or NAV is calculated on each day that the
New York Stock Exchange is open. The NAV is the value of a single share of a
Fund. The administrators calculate the NAV for each Funds they administer at the
close of business of the New York Stock Exchange, normally 4:00 p.m. Eastern
time. The NAV is determined by subtracting the total of the Fund's liabilities
from its total assets and dividing the remainder by the number of shares
outstanding. The value of each Fund's total assets is generally based on the
market value of the securities that the Fund holds. If market values are not
available, we will determine the fair value of securities using procedures that
the Board of Trustees has approved. We will also fair value securities whose
values are materially affected by events occurring after the closing of a
foreign market. In those circumstances where a security's price is not
considered to be market indicative, the security's valuation may differ from an
available market quotation. Foreign securities may be traded in their primary
markets on weekends or other days when the Fund does not price its shares.
Therefore, the NAV of Funds holding foreign securities may change on days when
shareholders will not be able to buy or redeem their Fund shares.
DISTRIBUTIONS
As a shareholder, you are entitled to your share of a Fund's net income and
capital gains on its investments. Each Fund passes substantially all of its
earnings along to its investors as distributions. When a Fund earns dividends
from stocks and interest from bonds and other debt securities and distributes
these earnings to shareholders, it is called a dividend distribution. A Fund
realizes capital gains when it sells securities for a higher price than it paid.
When net long-term capital gains are distributed to shareholders, it is called a
capital gain distribution. Net short-term capital gains are considered ordinary
income and are included in dividend distributions.
LONG-TERM VS. SHORT-TERM CAPITAL GAINS:
- - Long-term capital gains are realized on securities held for more than one
year and are part of your capital gain distribution.
- - Short-term capital gains are realized on securities held less then one year
and are part of your dividend distributions.
The Orbitex Focus 30 Fund distributes dividends quarterly, and capital gains
annually. The capital gain distributions will typically be declared and paid in
December.
The other Orbitex Funds distribute dividends and capital gains annually. These
distributions will typically be declared and paid in December.
You will receive distributions from a Fund in additional shares of the Fund
unless you choose to receive your distributions in cash. If you wish to change
the way in which you receive distributions, you should call 1-888-ORBITEX for
instructions.
If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Funds as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.
Prospectus - 47
<PAGE>
FEDERAL TAX CONSIDERATIONS
Your investment will have tax consequences that you should consider. Some of
the more common federal tax consequences are described here but you should
consult your tax consultant about your particular situation. ALTHOUGH IT IS
NOT AN INVESTMENT OBJECTIVE, THE FUNDS' ADVISER WILL ATTEMPT TO TAKE INTO
ACCOUNT THE TAX CONSEQUENCES OF ITS INVESTMENT DECISIONS. However, there may
be occasions when the Adviser's investment decisions will result in a
negative tax consequence for the Funds' shareholders.
TAXES ON DISTRIBUTIONS
You will generally be subject to pay federal income tax and possibly state
taxes on all Fund distributions. Your distributions will be taxed in the same
manner whether you receive the distributions in cash or additional shares of
the Fund. Distributions that are derived from net long-term capital gains
will generally be taxed as long-term capital gains. The rate of tax will
depend on how long the Fund held the securities on which it realized the
gains. In general, for individual shareholders, the maximum capital gain rate
is 20 percent. All other distributions, including short-term capital gains,
will be taxed as ordinary income. The Fund sends detailed tax information to
its shareholders about the amount and type of its distributions by January 31
for the prior calendar year.
TAXES ON SALES OR EXCHANGES
If you redeem your shares of a Fund, or exchange them for shares of another
Fund, you will be subject to tax on any taxable gain. Your taxable gain or loss
is computed by subtracting your tax basis in the shares from the redemption
proceeds (in the case of a sale) or the value of the shares received (in the
case of an exchange). Because your tax basis depends on the original purchase
price and on the price at which any dividends may have been reinvested, you
should keep your account statements so that you or your tax preparer will be
able to determine whether a sale or exchange will result in a taxable gain or
loss.
"BUYING A DIVIDEND"
Unless your investment is in a tax-deferred account, you may want to avoid
investing in a Fund close to the date of a distribution because you pay the full
pre-distribution price for your shares and then receive part of your investment
back as a taxable distribution.
TAX WITHHOLDING
The Funds may be required to withhold U.S. federal income tax at the rate of 31%
from all taxable distributions and from proceeds from certain sales and
exchanges payable to shareholders who fail to provide the Funds with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the IRS that they are subject to backup withholding.
Any such withheld amounts may be credited against the shareholder's U.S. federal
income tax liability.
Prospectus - 48
<PAGE>
MANAGEMENT
INVESTMENT ADVISER
Orbitex Management, Inc., is the Funds' investment adviser (the "Adviser"). The
Adviser's address is 410 Park Avenue, New York, NY 10022. The Adviser is an
affiliate of Orbitex Management Ltd., an investment adviser that provides
investment services to individuals and institutions including Canadian unit
trusts.
Under the terms of an investment advisory agreement, the Adviser is responsible
for formulating the Funds' investment programs and for making day-to-day
investment decisions and engaging in portfolio transactions. The Adviser also
furnishes corporate officers, provides office space, services and equipment and
supervises all matters relating to the Fund's operations.
As compensation for its services, each of the following Funds paid the Adviser a
fee for the fiscal year ended April 30, 1999, at the annualized rate (expressed
as a percentage of average daily net assets) of ____% for the Growth Fund, ___%
for the Info-Tech & Communications Fund, ____% for the Strategic Natural
Resources Fund. [On ______, 1999, the Adviser began managing the Focus 30 Fund,
pursuant to an interim advisory agreement. During the period _______, 1999
through _______, 1999, the Focus 30 Fund paid the Adviser at the annualized rate
of ____%. As of June ___, 1999, the Health & Biotechnology Fund had not
commenced operations.
OTHER SERVICE PROVIDERS
The Funds rely on other companies to provide necessary services for their
day-to-day operations. Below is a list of these service providers.
ADMINISTRATOR FOR THE TRUST
American Data Services, Inc.
The Hauppage Corporate Center
150 Motor Parkway
Hauppage, New York 11788
SUB-ADMINISTRATOR FOR THE GROWTH FUND, INFO-TECH & COMMUNICATIONS FUND AND
STRATEGIC NATURAL RESOURCES FUND
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN FOR TRUST
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
TRANSFER AND DIVIDEND DISBURSING AGENT FOR THE GROWTH FUND, INFO-TECH &
COMMUNICATIONS FUND AND STRATEGIC NATURAL RESOURCES FUND
Boston Financial Data Service, Inc.
Two Heritage Drive
North Quincy, Massachusetts 02171
TRANSFER AND DIVIDEND DISBURSING AGENT FOR THE FOCUS 30 FUND AND HEALTH &
BIOTECHNOLOGY FUND,
American Data Services, Inc.
The Hauppage Corporate Center
150 Motor Parkway
Hauppage, New York 11788
COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
INDEPENDENT ACCOUNTANTS
[To be added in a subsequent filing]
Prospectus - 49
<PAGE>
FINANCIAL HIGHLIGHTS
[GRAPHIC OMITTED]
FINANCIAL HIGHLIGHTS
The Financial Highlights table is intended to help you understand the Funds'
financial performance for the fiscal period ended April 30, 1999. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned [or
lost] on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by [name of auditors to be
added in subsequent filing], whose report, along with the Funds' financial
statements, are included in the Funds' annual report, which is available upon
request.
FINANCIAL HIGHLIGHTS
Period Ended [date]
Financial Highlights For A Fund Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
ORBITEX GROWTH FUND ORBITEX STRATEGIC
NATURAL RESOURCES FUND
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD a b x y
INCOME FROM INVESTMENT OPERATIONS a b x y
Net investment loss a b x y
Net realized and unrealized gains a b x y
on investments
Total from investment operations a b x y
LESS DISTRIBUTIONS a b x y
Dividends (from net investment income) a b x y
Distributions (from capital gains) a b x y
Returns of Capital a b x y
Total Distributions a b x y
NET ASSET VALUE, END OF PERIOD a b x y
TOTAL RETURN a b x y
SUPPLEMENTAL DATA AND RATIOS a b x y
Net assets, end of period (000s) a b x y
Ratio of expenses to average net a b x y
assets[, less waivers and before
expenses paid indirectly]
Ratio of net investment loss to a b x y
average net assets[, net waivers and
expenses paid indirectly]
Ratio of expenses to average net a b x y
assets[, before waivers and
expenses paid indirectly]
Ratio of net investment loss to a b x y
average net assets[, before waivers
and expenses paid indirectly]
Portfolio turnover rate a b x y
</TABLE>
Prospectus - 50
<PAGE>
<TABLE>
<CAPTION>
ORBITEX INFO-TECH & COMMUNICATIONS ORBITEX FOCUS 30
FUND EQUITY FUND
CLASS A CLASS B CLASS A CLASS B CLASS D
------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD a b x y z
INCOME FROM INVESTMENT OPERATIONS a b x y z
Net investment loss a b x y z
Net realized and unrealized gains a b x y z
on investments
Total from investment operations a b x y z
LESS DISTRIBUTIONS a b x y z
Dividends (from net investment income) a b x y z
Distributions (from capital gains) a b x y z
Returns of Capital a b x y z
Total Distributions a b x y z
NET ASSET VALUE, END OF PERIOD a b x y z
TOTAL RETURN a b x y z
SUPPLEMENTAL DATA AND RATIOS a b x y z
Net assets, end of period (000s) a b x y z
Ratio of expenses to average net a b x y z
assets[, less waivers and before
expenses paid indirectly]
Ratio of net investment loss to a b x y z
average net assets[, net waivers and
expenses paid indirectly]
Ratio of expenses to average net a b x y z
assets[, before waivers and
expenses paid indirectly]
Ratio of net investment loss to a b x y z
average net assets[, before waivers
and expenses paid indirectly]
Portfolio turnover rate a b x y z
</TABLE>
Prospectus - 51
<PAGE>
[As of June ___, 1999, the Health & Biotechnology Fund has not commenced
operations]
<TABLE>
<CAPTION>
ORBITEX HEALTH & BIOTECHNOLOGY FUND
CLASS A CLASS B
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD a c
INCOME FROM INVESTMENT OPERATIONS a c
Net investment loss a c
Net realized and unrealized gains a c
on investments
Total from investment operations a c
LESS DISTRIBUTIONS a c
Dividends (from net investment income) a c
Distributions (from capital gains) a c
Returns of Capital a c
Total Distributions a c
NET ASSET VALUE, END OF PERIOD a c
TOTAL RETURN a c
SUPPLEMENTAL DATA AND RATIOS a c
Net assets, end of period (000s) a c
Ratio of expenses to average net a c
assets[, less waivers and before
expenses paid indirectly]
Ratio of net investment loss to a c
average net assets[, net waivers and
expenses paid indirectly]
Ratio of expenses to average net a c
assets[, before waivers and
expenses paid indirectly]
Ratio of net investment loss to a c
average net assets[, before waivers
and expenses paid indirectly]
Portfolio turnover rate a c
</TABLE>
Prospectus - 52
<PAGE>
[This page intentionally left blank]
Prospectus - 53
<PAGE>
WHERE TO GO FOR MORE INFORMATION:
You will find more information about the Orbitex Group of Funds in the following
documents:
- - ANNUAL AND SEMI-ANNUAL REPORTS: Our annual and semi-annual reports list the
holdings in each Fund, describe each Fund's performance, include financial
statements for the Funds, and discuss the market conditions and strategies
that significantly affected the Funds' performance during their last fiscal
year.
- - STATEMENT OF ADDITIONAL INFORMATION ("SAI"): The Statement of Additional
Information contains additional and more detailed information about each
Fund.
The SAI and the financial statements included in the current annual and
semi-annual reports are incorporated by reference into (and are thus a part of)
this Prospectus.
THERE ARE THREE WAYS TO GET A COPY OF THESE DOCUMENTS:
1. Call or write for one, and a copy will be sent without charge.
ORBITEX GROUP OF FUNDS
C/O AMERICAN DATA SERVICES, INC.
P.O. BOX XXXX
HAUPPAGE, NEW YORK 11788-0132
1-888-ORBITEX (OR 1-888-672-4839)
WWW.ORBITEXUSA.COM
2. Call or write the Public Reference Room of the Securities and Exchange
Commission ("SEC") and ask them to mail you a copy. The SEC charges a fee
for this service. You can also go to the Public Reference Room and copy the
documents while you are there. Information about the Public Reference Room
may be obtained by calling the number below.
PUBLIC REFERENCE ROOM OF THE SEC
WASHINGTON, D.C. 20549-6009
1-800-SEC-0330
3. Go to the SEC's website (www.sec.gov) and download a free text-only
version.
IF YOU ARE A CURRENT FUND SHAREHOLDER WOULD LIKE INFORMATION ABOUT YOUR ACCOUNT,
ACCOUNT TRANSACTIONS, OR ACCOUNT STATEMENTS, PLEASE CALL US AT 1-888-ORBITEX (OR
1-888-672-4839)
IF YOU PURCHASED YOUR SHARES THROUGH A FINANCIAL INSTITUTION, YOU MAY CONTACT
THAT INSTITUTION FOR MORE INFORMATION.
The Orbitex Group of Funds' Investment Company Act File Number is 811-8037.
Prospectus - 54
<PAGE>
Prospectus
--------------------------------
The
ORBITEX
Cash Reserves
Fund
--------------------------------
Institutional Service Shares
June ___, 1999
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL INVESTMENT INFORMATION.................................................
THE FUND AT A GLANCE
FUND DETAILS
WHO MAY WANT TO INVEST IN THE ORBITEX FUNDS....................................
MORE INFORMATION ABOUT RISKS...................................................
YOUR ACCOUNT...................................................................
Types of Accounts.....................................................
Shareholder Services Plan (a non-12b-1 Plan)..........................
Purchasing Shares.....................................................
Selling Shares........................................................
How to Reach the Funds................................................
PRICING OF FUND SHARES.........................................................
DISTRIBUTIONS..................................................................
FEDERAL TAX CONSIDERATIONS.....................................................
Taxes on Distributions................................................
Taxes on Sales........................................................
Tax Withholding.......................................................
MANAGEMENT.....................................................................
Investment Adviser....................................................
Other Service Providers...............................................
</TABLE>
PLEASE READ THIS PROSPECTUS. This prospectus explains the objective, risks, and
policies of the Orbitex Cash Reserves Fund Institutional Shares. Reading the
prospectus will help you decide whether the Fund is the right investment for
you. The Prospectus also includes information that you will need to open your
account and to buy or sell (redeem) shares of the Fund.
Please keep it for future reference.
IMPORTANT NOTE. The Orbitex Cash Reserves Fund features two separate classes of
shares: Institutional Service Shares and Institutional Shares. Institutional
Service Shares are offered through this prospectus, and are available through
certain financial institutions. Institutional Shares of the Cash Reserves Fund
require a minimum initial investment of $5 million, and are offered through a
separate prospectus. Unlike the Institutional Service Shares offered here,
Institutional Shares are not subject to a shareholder services fee; as a result,
the performance of these two classes will differ.
UNLESS OTHERWISE INDICATED, ALL REFERENCES IN THIS PROSPECTUS TO THE FEES,
EXPENSES, OR INVESTMENT PERFORMANCE OF THE CASH RESERVES FUND RELATE
SPECIFICALLY TO THE INSTITUTIONAL SERVICE SHARES OF THE FUND.
<PAGE>
THE FUND AT A GLANCE - ORBITEX CASH RESERVES FUND
This risk/return summary briefly describes the Orbitex Cash Reserves Fund's
goals, principal investments, risks, expenses and performance. For further
information on how this Fund is managed, please read the section entitled "Fund
Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The objective of the Orbitex Cash Reserves Fund is to provide current income
while maintaining liquidity and a stable share price of $1.00.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
The Fund invests primarily in high-quality, short-term money market instruments,
including commercial paper, notes and bonds issued by U.S. corporations,
obligations issued by the U.S. Government and its agencies and
instrumentalities, and obligation issued by U.S. and foreign banks, such as
banker's acceptances and certificates of deposit. The Fund also invests in
repurchase agreements backed by U.S. Government obligations.
To be considered high-quality, a security generally must be rated in one of the
two highest credit-quality categories for short-term securities by at least two
nationally recognized rating services (or by one, if only one rating service has
rated the security). If a security is unrated, the Adviser or Sub-adviser must
determine that it is a quality equivalent to those in the two highest
credit-quality categories.
The Fund will maintain an average portfolio maturity of 90 days or less.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
Although money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:
- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates. Falling short-term interest rates will cause the
Fund's income to decline.
- - CREDIT RISK: Because the Fund only invests in high quality obligations,
credit risk is very low. Nevertheless, if an issuer fails to pay interest
or repay principal, the value of your investment could decline.
- - REPURCHASE AGREEMENTS. Repurchase agreements carry the risk that the other
party may not fulfill its obligations under the agreement. This could cause
the value of your investment to decline.
- - SHARE PRICE. There is no guarantee that the Fund will be able to preserve
the value of your investment at $1.00 per shares.
- - INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- - SELECTION OF INVESTMENTS. The Adviser and Sub-adviser evaluate the risk and
reward presented by all securities purchased by the Fund and how they
advance the Fund's investment objective. It is possible, however, that
these evaluations may be inaccurate.
AN INVESTMENT IN THE CASH RESERVES FUND IS NOT A DEPOSIT OF ANY BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
Prospectus - 3
<PAGE>
THE FUND AT A GLANCE - ORBITEX CASH RESERVES FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Service Shares of the Orbitex Cash Reserves Fund.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.15%
Distribution and/or Service Fee (12b-1) Fees 0.00%
Other Expenses
Other 0.10%
---------
Shareholder Service Fees* 0.25%
---------
Total Annual Operating Expenses 0.50%**
---------
</TABLE>
* The Fund may pay financial institutions and investment professionals
for providing investment and account services a fee up to 0.25% of the
total assets attributable to Institutional Service Shares held by their
customers.
** The information contained in the above table and the example below is
based upon the fee stated in the Fund's contract with the Adviser and
the estimated amount of Other Expenses for the current fiscal year of
the Institutional class of the Fund without taking into account any
applicable fee waivers and/or reimbursements. The Adviser has agreed
voluntarily to waive and/or reimburse fees and expenses to the extent
necessary so that Institutional Service Shares total operating expenses
do not exceed 0.50%, of the Fund's average daily net assets. The
Adviser may discontinue such fee waivers and/or expense reimbursements
at any time, in its sole discretion.
EXAMPLE
This example is intended to help you compare the cost of investing
in the Orbitex Cash Reserves Fund with the cost of investing in other money
market funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your shares at the end of those
periods. The example also assumes that your investment has a 5% annual
return, the reinvestment of all dividends and distributions and that the
Fund's operating expenses remain the same as shown in the table above.
Although your actual costs and the return on your investment may be higher or
lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
<S> <C>
1 $
3 $
</TABLE>
Prospectus - 4
<PAGE>
WHO MAY WANT TO INVEST IN THE ORBITEX CASH RESERVES FUND
We designed the ORBITEX CASH RESERVES FUND for investors who:
- - are making short-term investments
- - are investing emergency reserve money
- - want to avoid high volatility or possible losses on their investment
- - are seeking regular income consistent with these goals
The ORBITEX CASH RESERVES FUND is NOT appropriate for investors who seek one or
more of the following:
- - high long-term growth
- - a stock fund to serve as a core holding in an investor's portfolio
- - a stock fund to complement a portfolio of more conservative investments
- - a stock fund that uses a blend of value and growth investment styles
- - are seeking tax-exempt income
IF YOU ARE SEEKING INVESTMENTS WITH THESE CHARACTERISTICS, YOU MAY WISH TO
CONSIDER OTHER FUNDS IN THE ORBITEX GROUP OF FUNDS. TO OBTAIN A FREE PROSPECTUS,
PLEASE CALL US AT 1-888-ORBITEX (OR 1-888-672-4839).
Prospectus - 5
<PAGE>
FUND DETAILS - ORBITEX CASH RESERVES FUND
INVESTMENT DETAILS OF THE ORBITEX GROWTH FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The Orbitex Cash Reserves Fund seeks to provide as high a level of current
income as is consistent with liquidity and stability of principal
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in high quality, short-term money market instruments. Money
market instruments are short-term investments, usually with a maturity of 13
months or less. Some common money market instruments are:
- - Treasury bills and notes, which are securities issued by the U.S.
government or its agencies and instrumentalities.
- - Commercial paper, which is a promissory note issued by a large company or
financial firm
- - Banker's acceptances, which are credit instruments guaranteed by a bank;
- - Negotiable certificates of deposit, which are issued by banks in large
denominations.
Although the Fund may invest in banker's acceptances and certificates of deposit
issued by U.S. or foreign banks, it restricts its currency exposure to U.S.
dollars.
To be considered high-quality, a security generally must be rated in one of the
two highest credit-quality categories for short-term securities by at least two
nationally recognized rating services (or by one, if only one rating service has
rated the security). If a security is unrated, it must be determined by the
Adviser or Sub-adviser to be of quality equivalent to those in the two highest
credit-quality categories.
The Fund may also invest in repurchase agreements backed by U.S. Government
obligations. Repurchase agreements are transactions in which the Fund buys
securities from a seller (usually a bank or broker-dealer) that agrees to buy
them back from the Fund on a certain date and at a certain price.
When the Adviser or Sub-adviser anticipates that short-term interest rates will
decrease, the average maturity of the Fund's portfolio may be increased to
lock-in prevailing rates before the anticipated decrease in rates. Conversely,
when the Adviser or Sub-adviser anticipates that short-term interest rates will
increase, the average maturity of the portfolio may be reduced. In any event,
the Fund will maintain a dollar-weighed average maturity of 90 days or less and
will not invest in securities with remaining maturity of more than 397 days.
INVESTMENT ADVISER
Orbitex Management, Inc., is the Funds' investment adviser ("Adviser"). The
Adviser's address is 410 Park Avenue, New York, NY 10022. The Adviser is an
affiliate of Orbitex Management Ltd., an investment adviser that provides
investment services to individuals and institutions including Canadian unit
trusts.
INVESTMENT SUB-ADVISER
[to be identified in a subsequent filing]
PORTFOLIO MANAGER
[describe background of portfolio manager]
Prospectus - 6
<PAGE>
MORE INFORMATION ABOUT RISKS
[GRAPHIC OMITTED]
The main risks associated with an investment in the Orbitex Cash Reserves Fund
have been described above. The following supplements that discussion.
INTEREST RATE CHANGES: Debt securities have varying levels of sensitivity to
changes in interest rates. In general, the price of a debt security may fall
when interest rates rise and may rise when interest rates fall. Securities with
longer maturities may be more sensitive to interest rate changes.
YEAR 2000: The Funds' operations depend on the seamless functioning of computer
systems in the financial service industry, including those of the Adviser, the
Sub-Adviser, the Administrator, the Custodian, Distributor and the Transfer
Agent. Many computer software systems in use today cannot properly process
date-related information after December 31, 1999. The "Year 2000" issue stems
from the use of a two-digit format to define the year in certain date-sensitive
application systems rather than the use of a four-digit format. As a result,
date-sensitive software programs could recognize a date using "00" as the year
1900 rather than the year 2000. This could result in major systems or process
failures or the generation of erroneous data, which would lead to disruptions in
the Funds' business operations.
The Adviser and Sub-Adviser have made compliance with the Year 2000 issue a high
priority and are taking steps to address the issue with respect to its computer
systems. The Funds' major service providers have informed the Adviser that they
are taking comparable steps. The Adviser does not currently believe that the
Year 2000 issue will have a material impact on its ability to continue to
fulfill its duties as investment adviser. In addition, the issuers of securities
the Fund own could have Year 2000 computer problems. These problems could
negatively affect the value of their securities, which, in turn, could impact
the Fund's performance. An issuer's Year 2000 readiness is only one of many
factors the Adviser or Sub-Adviser may consider when making investment
decisions, and other factors may receive greater weight.
Prospectus - 7
<PAGE>
YOUR ACCOUNT
[GRAPHIC OMITTED]
This section describes the services that are available to shareholders.
TYPES OF ACCOUNTS
If you are making an initial investment in the Funds, you will need to open an
account. You may establish the following types of accounts:
- - INDIVIDUAL OR JOINT OWNERSHIP. One person owns an individual account while
two or more people own a joint account. We will treat each individual owner
of a joint account as authorized to give instructions on purchases, sales
and exchanges of shares without notice to the other owners. However, we
will require each owner's signature guarantee for any transaction requiring
a signature guarantee.
- - TRUST. A trust can open an account. You must include the name of each
trustee, the name of the trust and the date of the trust agreement on the
application.
- - CORPORATIONS, PARTNERSHIPS AND OTHER LEGAL ENTITIES. Corporations,
partnerships and other legal entities may also open an account. A general
partner of the partnership or an authorized officer of the corporation or
other legal entity must sign the application and resolution form.
PURCHASING SHARES
Once you have chosen the type of account you are ready to establish an account.
Institutional Service Shares of the Cash Reserves Fund are available to
investors making a minimum initial investment of $25,000. The minimum for
subsequent investments is $1,000. The Trust or Adviser may waive or lower these
minimums in certain cases.
You may purchase Shares through a financial institution, investment professional
or directly from the Fund.
SHAREHOLDER SERVICES PLAN
The Trustees of the Orbitex Group of Funds has adopted a shareholders
services plan for Institutional Service Shares of the Cash Reserves Fund.
This plan allows the Distributor to enter into shareholder services
agreements on the Fund's behalf with certain institutional investors
("Shareholder Service Organizations"). Under these shareholder service
agreements, the Fund may pay fees to financial institutions and investment
professionals for providing investment and account services to their
customers that hold Institutional Service Shares of the Orbitex Cash Reserves
Fund.
Because Institutional Service Shares pay these service fees on an ongoing basis,
your investment cost may be higher over time than Institutional Shares of the
Fund that are not subject to these shareholder service fees.
THROUGH A FINANCIAL INSTITUTION OR INVESTMENT PROFESSIONAL
You should contact your financial institution or investment professional to
establish an account.
After your account is established, submit your purchase order to your financial
institution or investment professional ("financial consultant") before 3:00 p.m.
Eastern time. If the financial consultant forwards the order to the Fund and the
Fund receives payment by 3:00 p.m. Eastern time, you will become the owner of
Shares and begin receiving dividends that day. If the Fund receives the order
and payment after 3:00 p.m. Eastern time, you will become the owner of the
Shares and begin earning dividends on the next day the Fund is open for
business.
Financial consultants should send payments according to the instructions in the
sections "By Wire" or "By Check."
DIRECTLY FROM THE FUND
You can establish your account with the Fund by submitting a completed account
application and sending your payment by Federal Reserve wire or check.
YOU MUST COMPLETE AND SIGN AN APPLICATION FOR EACH ACCOUNT YOU OPEN WITH THE
FUND.
The price for Fund shares is the Fund's net asset value per share (NAV). We
determine the NAV at 3:00 p.m. Eastern time every day that the Federal Reserve
Bank of New York is open. We will price your order at the next NAV calculated
after the Fund accepts your order. For more information on how we price shares,
see "Pricing of Fund Shares" on page ___.
Before your payment can be invested in the Orbitex Cash Reserves Fund, it must
be converted to "federal funds," which are Federal Reserve deposits that banks
and other financial institutions draw upon to meet short-term cash needs, and
which the Cash Reserves Fund uses to pay for the securities it buys.
If you or your financial consultant notifies us by 2:00 p.m. Eastern time that
you intend to purchase shares that day, and if we receive your purchase order in
good form and your
Prospectus - 8
<PAGE>
payment by federal funds wire by 3:00 p.m. Eastern time that same day, you will
begin earning dividends on your investment that day.
If you pay for your shares by check, it will typically take us one business day
to convert your payment to federal funds. Because of this conversion period, if
we receive your check before 3:00 p.m. Eastern time, your account will be
credited with the purchase, and normally you will begin earning dividends on the
next business day.
The Fund, the Adviser and the Distributor each reserve the right to reject any
purchase for any reason and to cancel any purchase due to non-payment. You must
make all purchases in United States dollars and draw all checks on United States
banks. If we cancel your purchase due to non-payment, you will be responsible
for any loss the Fund incurs. We will not accept cash or third-party checks for
the purchase of shares.
<TABLE>
<CAPTION>
- -------------------- ----------------------------------------------------------
METHOD OF PURCHASE PURCHASE PROCEDURES
- -------------------- ----------------------------------------------------------
<S> <C>
- -------------------- ----------------------------------------------------------
THROUGH A Contact your financial consultant.
FINANCIAL
PROFESSIONAL
[GRAPHIC OMITTED]
- -------------------- ----------------------------------------------------------
THROUGH SELLING Funds Distributor, Inc. authorizes certain securities
dealers, banks or other financial service firms
GROUP MEMBERS (collectively, "Selling Group Members") to sell you shares.
To receive that day's share price:
- you must place your order with the Selling Group
Member before 2:00 p.m. Eastern time; and
[GRAPHIC OMITTED] - the Selling Group Member must transmit the order to
the Funds before 3:00 p.m.[CONFIRM]
- -------------------- ----------------------------------------------------------
BY MAIL OR FAX Send your completed application with your check, payable to
"Orbitex Group of Funds - Cash Reserves Fund" to:
[GRAPHIC OMITTED] Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box XXXX
Hauppage, New York 11788-0132
You may also fax your application. Our fax number is
xxx-xxx-xxxx. Please note that we cannot open your account
until we receive your payment by check or federal funds
wire.
- -------------------- ----------------------------------------------------------
BY WIRE - INITIAL PURCHASE: Call the Fund at 1-888-ORBITEX
for instructions and to receive an account number.
You will need to instruct a Federal Reserve System
member bank to wire Funds to: State Street Bank
and Trust Company, ABA No. 011000028, Attn.:
Custody & Shareholder Services, Credit: Orbitex
Cash Reserves Fund, DDA No. 9905-295-3, FBO:
[Shareholder Name], Orbitex Cash Reserves Fund,
[Shareholder Account Number]. You must also
complete and mail or fax an application to the
[GRAPHIC OMITTED] address shown above under "By Mail."
- SUBSEQUENT PURCHASE: Wire Funds to the designated
account at State Street Bank and Trust Company.
You may wire funds between 8:30 a.m. and 3:00 p.m. Eastern
time. To make a same-day wire investment, please notify
Orbitex by 2:00 p.m. Eastern time of your intention to wire
Funds, and make sure your wire arrives by 3:00 p.m. Eastern
time. Please note that your bank may charge a fee for the
wire.
- -------------------- ----------------------------------------------------------
</TABLE>
Prospectus - 9
<PAGE>
<TABLE>
<S> <C>
BY TELEPHONE If you have not declined or canceled your telephone
investment privilege, you may make subsequent purchases
in your account by telephoning 1-888-ORBITEX between
8:30 a.m. and 3:00 p.m. Eastern time on any day the
Fund is open. We will electronically transfer money from
the bank account you designate on your Application to your
[GRAPHIC OMITTED] account with the Trust.
- -------------------- ----------------------------------------------------------
IMPORTANT NOTES Once you have requested a telephone transaction, and
a confirmation number has been assigned, the transaction
cannot be revoked. We reserve the right to refuse any
purchase request.
You can redeem shares that you purchased by check. However,
while we will process your redemption request at the next
-determined net asset value after we receive it, your
redemption proceeds will be not available until your check
clears. This could take up to ten calendar days.
- -------------------- ----------------------------------------------------------
</TABLE>
Prospectus - 10
<PAGE>
SELLING SHARES
You have the right to sell all or any part of your shares subject to certain
restrictions. Selling your shares in a Fund is a "redemption" because the Fund
buys back its shares. We will redeem your shares at the net asset value next
computed following receipt of your redemption request.
We will mail your redemption proceeds to your current address or transmit them
electronically to your designated bank account. Except under certain emergency
conditions, we will send your redemption to you within seven days after we
receive your redemption request.
The Fund cannot accept requests that specify a certain date for redemption or
which specify any other special conditions.
Please call 1-888-ORBITEX for further information. WE WILL NOT PROCESS YOUR
REDEMPTION REQUEST IF IT IS NOT IN PROPER FORM (SEE CHART BELOW). WE WILL NOTIFY
YOU IF YOUR REDEMPTION REQUEST IS NOT IN PROPER FORM.
If, as a result of your redemption, your account value drops below $XXXX, we may
redeem the remaining shares in your account. We will notify you in writing of
our intent to redeem your shares. We will allow at least sixty days thereafter
for you to make an additional investment to bring your account value up to at
least $XXXX before we will process the redemption.
<TABLE>
<CAPTION>
- -------------------- ----------------------------------------------------------
METHOD OF REDEMPTION REDEMPTION PROCEDURES
- -------------------- ----------------------------------------------------------
<S> <C>
- -------------------- ----------------------------------------------------------
THROUGH A FINANCIAL Contact your financial consultant.
PROFESSIONAL
[GRAPHIC OMITTED]
- -------------------- ----------------------------------------------------------
- -------------------- ----------------------------------------------------------
BY TELEPHONE You may authorize redemption of some or all shares in
your account with the Fund by telephoning the Fund at
1-888-ORBITEX between 8:30 a.m. and 3:00 p.m. Eastern
time on any day the Fund is open. You will not be
[GRAPHIC OMITTED] eligible to use the telephone redemption service if you:
- Have declined or canceled your telephone investment
privilege;
- wish to redeem less than $XX,000; or,
- must provide supporting legal documents.
- -------------------- ----------------------------------------------------------
BY MAIL You may mail a written request to Orbitex Group of
Funds. Our mailing address is c/o American Data
[OBJECT OMITTED] Services, Inc. P.O. Box XXXX Hauppage, New York
11788-0132. You must include the following information
in your written request:
- a letter of instruction stating the name of the Fund,
the number of shares you are redeeming, the names in
which the account is registered and your account
number;
- other supporting legal documents, if necessary, for
redemption requests by corporations, trusts and
partnerships; and
- a signature guarantee when you request us to send the
redemption proceeds to an address other than the
address of record or to a person other than the
registered shareholder(s) for the account.
- -------------------- ----------------------------------------------------------
</TABLE>
Prospectus - 11
<PAGE>
<TABLE>
<S> <C>
- -------------------- ----------------------------------------------------------
BY FAX You may fax a written request to Orbitex Group of Funds.
Our fax number is xxx-xxx-xxxx. You must include the
following information in your written request:
- a letter of instruction stating the name of the
Fund, the number of shares you are redeeming, the
names in which the account is registered and your
account number;
NOTE: WE CANNOT ACCEPT A WRITTEN REDEMPTION REQUEST IF
SUPPORTING LEGAL DOCUMENTS OR A SIGNATURE GUARANTEE IS
NECESSARY FOR THE REQUEST TO BE IN "GOOD ORDER."
- -------------------- ----------------------------------------------------------
- -------------------- ----------------------------------------------------------
REQUEST IN "GOOD For our mutual protection, your redemption request must
ORDER" include:
- your account number
- the amount of the transaction
- for mail request, signatures of all owners EXACTLY as
registered on the account
- signature guarantees, if required (signature guarantees
can be obtained at most banks, credit unions, and
licensed brokers
- any supporting legal documentation that may be required
YOUR REDEMPTION REQUEST WILL BE PROCESSED AT THE
NEXT-DETERMINED SHARE PRICE AFTER WE HAVE RECEIVED ALL
REQUIRED INFORMATION.
- -------------------- ----------------------------------------------------------
IMPORTANT NOTE Once we have processed your redemption request, and a
confirmation number has been given, the transaction
CANNOT be revoked.
- -------------------- ----------------------------------------------------------
</TABLE>
Prospectus - 12
<PAGE>
TELEPHONE REDEMPTIONS.
We will automatically establish the telephone redemption option for your
account, unless you instruct us otherwise in writing. Telephone redemptions are
easy and convenient, but this account option involves a risk of loss from
unauthorized or fraudulent transactions. We will take reasonable precautions to
protect your account from fraud. You should do the same by keeping your account
information private and by reviewing immediately any account statements and
confirmations that you receive. Please contact us immediately about any
transaction you believe to be unauthorized.
Orbitex reserves the right to refuse a telephone redemption if the caller cannot
provide:
- - the account number
- - the name and address exactly as registered on the account
- - the primary social security or employer identification number as registered
on the account
We may also require a password from the caller.
Orbitex will not be responsible for any account losses due to telephone fraud so
long as we have taken reasonable steps to verify the caller's identity. If you
wish to cancel the telephone redemption feature for your account, please notify
us in writing.
OPTIONS FOR REDEMPTION PROCEEDS
You may receive your redemption proceeds by check or by wire.
CHECK REDEMPTIONS. Normally we will mail your check within two business days of
a redemption.
WIRE REDEMPTIONS. Before you can receive redemption proceeds by wire, you must
establish this option by completing a special form or the appropriate section of
your account application.
If we receive your request for a wire redemption by noon Eastern time, the wire
will arrive at your bank by the close of business that same day. Requests that
we receive later than noon Eastern time will arrive at your bank by the close of
business the following business day.
We require a minimum redemption of $25,000 in order to send your redemption
proceeds by wire.
TRANSFERRING REGISTRATION
You can transfer the registration of your shares in the Cash Reserves Fund to
another owner by completing a transfer form and sending it to American Data
Services, Inc., P.O. Box XXXX, Hauppage, New York 11788-0132.
HOW TO REACH THE FUND
- -------------------------------------------------------------------------------
We are available to answer your questions about the Fund or your account by
telephone or by mail Monday through Friday 8:30 a.m. to 5:30 p.m. Eastern time.
Please note, however, that purchase or redemption requests must be received by
3:00 p.m. Eastern time on a day the Fund is open for business. Purchase or
redemption requests received after 3:00 p.m. Eastern time will be executed on
the next day that the Fund is open for business.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------- -----------------------------------
By telephone 1-888-ORBITEX (or 1-888-672-4839)
Call for account or Fund information
[GRAPHIC OMITTED]
- ------------------------------------------- -----------------------------------
- ------------------------------------------- -----------------------------------
By regular mail Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box XXXX
[GRAPHIC OMITTED] Hauppage, New York 11788-0132
- ------------------------------------------- -----------------------------------
By express or registered mail Orbitex Group of Funds
c/o American Data Services, Inc.
150 Motor Parkway
Hauppage, New York 11788-0132
- ------------------------------------------- -----------------------------------
</TABLE>
Prospectus - 13
<PAGE>
PRICING OF FUND SHARES
The Fund's net asset value per share or NAV is calculated each day the Federal
Reserve Bank of New York is open. The NAV is the value of a single share of a
Fund. The NAV is calculated at 3:00 p.m. Eastern time. The NAV is determined by
subtracting the total of the Fund's liabilities from its total assets and
dividing the remainder by the number of shares outstanding. The securities in
the Fund's portfolio are valued at their amortized cost which does not take into
account unrealized gains or losses on securities. This method involves initially
valuing a security at its cost and thereafter assuming a constant amortization
to maturity of any premium paid or accreting discount. The amortized cost method
minimizes changes in the market value of the Fund's portfolio securities and
helps it maintain a stable price of $1.00 per share. There can be no assurance,
however, that the Fund will maintain its net asset value at $1.00 per shares.
DISTRIBUTIONS
As a shareholder, you are entitled to your share of a Fund's net income
(interest less expenses) and capital gains on its investments. The Cash Reserves
Fund declares dividends from net investment income daily and pays them the first
business day after the end of each month. Although the Fund does not expect to
realize net long-term capital gains, any capital gains realized will be
distributed at least annually.
You will receive distributions from a Fund in additional shares of the Fund
unless you choose to receive your distributions in cash. If you wish to change
the way in which you receive distributions, you should call 1-888-ORBITEX for
instructions.
If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Fund as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.
FEDERAL TAX CONSIDERATIONS
Your investment will have tax consequences that you should consider. Some of the
more common federal tax consequences are described here but you should consult
your tax consultant about your particular situation.
TAXES ON DISTRIBUTIONS
You will generally be subject to federal income tax and possibly state taxes on
all Fund distributions. Your distributions will be taxed in the same manner
whether you receive the distributions in cash or additional shares of the Fund.
The Fund expects that all, or substantially all, of its distributions will
consist of ordinary income. Taxable dividends paid in January may be taxable as
if they had been paid the previous December. The Fund sends detailed tax
information to its shareholders about the amount and type of its distributions
by January 31 for the prior calendar year.
TAX WITHHOLDING
The Fund may be required to withhold U.S. federal income tax at the rate of 31%
from all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Any such withheld amounts may be credited against the
shareholder's U.S. federal income tax liability.
OTHER STATE AND LOCAL TAX MATTERS
Generally, shareholders may also be subject to state and local taxes on
distributions and redemption. State income taxes may not apply, however, to the
portions of the Fund's distributions, if any, that are attributable to interest
on U.S. Government securities or on securities of the particular state.
Prospectus - 14
<PAGE>
MANAGEMENT
INVESTMENT ADVISER
Orbitex Management, Inc., is the Fund's investment adviser ("Adviser"). The
Adviser's address is 410 Park Avenue, New York, NY 10022. The Adviser is an
affiliate of Orbitex Management Ltd., an investment adviser that provides
investment services to individuals and institutions including Canadian unit
trusts.
Under the terms of an investment advisory agreement, the Adviser is responsible
for formulating the Funds' investment programs and for making day-to-day
investment decisions and engaging in portfolio transactions. The Adviser also
furnishes corporate officers, provides office space, services and equipment and
supervises all matters relating to the Fund's operations. The advisory agreement
also provides that the Adviser may retain sub-advisers at the Adviser's own cost
and expense, for the purpose of managing the investment of the assets of one or
more Funds.
As compensation for its services, the Fund pays the Adviser a fee at an
annualized rate of ____% of the Fund's average daily net assets.
INVESTMENT SUB-ADVISER
[to be identified in a subsequent filing]
OTHER SERVICE PROVIDERS
The Fund also relies on other companies to provide necessary services for its
day-to-day operations. Below is a list of these service providers.
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
American Data Services, Inc.
The Hauppage Corporate Center
150 Motor Parkway
Hauppage, New York 11788
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
INDEPENDENT ACCOUNTANTS
[to be identified in a subsequent filing]
Prospectus - 15
<PAGE>
WHERE TO GO FOR MORE INFORMATION:
You will find more information about the Orbitex Group of Funds in the following
documents:
- - ANNUAL AND SEMI-ANNUAL REPORTS: Our annual and semi-annual reports list the
Fund's holdings, describe its performance, include financial statements for
the Fund, and discuss the market conditions and strategies that
significantly affected the Fund's performance during their last fiscal
year.
- - STATEMENT OF ADDITIONAL INFORMATION: The Statement of Additional
Information contains additional and more detailed information about the
Fund, and is incorporated by reference into this prospectus (it is
considered to be a part of this Prospectus).
The SAI and the financial statements included in the current annual and
semi-annual reports are incorporated by reference into (and are thus a part of)
this prospectus.
THERE ARE THREE WAYS TO GET A COPY OF THESE DOCUMENTS:
1. Call or write for one, and a copy will be sent without charge.
ORBITEX GROUP OF FUNDS
C/O AMERICAN DATA SERVICES, INC.
P.O. BOX XXXX
HAUPPAGE, NEW YORK 11788-0132
1-888-ORBITEX (OR 1-888-672-4839)
WWW.ORBITEXUSA.COM
2. Call or write the Public Reference Room of the Securities and Exchange
Commission ("SEC") and ask them to mail you a copy. The SEC charges a fee
for this service. You can also go to the Public Reference Room and copy the
documents while you are there. Information about the Public Reference Room
may be obtained by calling the number below.
PUBLIC REFERENCE ROOM OF THE SEC
WASHINGTON, D.C. 20549-6009
1-800-SEC-0330
3. Go to the SEC's website (www.sec.gov) and download a free text-only version.
IF YOU ARE A CURRENT FUND SHAREHOLDER WOULD LIKE INFORMATION ABOUT YOUR ACCOUNT,
ACCOUNT TRANSACTIONS, OR ACCOUNT STATEMENTS, PLEASE CALL US AT 1-888-ORBITEX (OR
1-888-672-4839)
IF YOU PURCHASED YOUR SHARES THROUGH A FINANCIAL INSTITUTION, YOU MAY CONTACT
THAT INSTITUTION FOR MORE INFORMATION.
The Orbitex Group of Funds Investment Company Act File Number is 811-8037.
Prospectus - 16
<PAGE>
Prospectus
--------------------------------
The
ORBITEX
Cash Reserves
Fund
--------------------------------
Institutional Shares
June ___, 1999
These securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
GENERAL INVESTMENT INFORMATION..................................................
THE FUND AT A GLANCE
FUND DETAILS
WHO MAY WANT TO INVEST IN THE ORBITEX FUNDS.....................................
MORE INFORMATION ABOUT RISKS....................................................
YOUR ACCOUNT....................................................................
Types of Accounts......................................................
Purchasing Shares......................................................
Selling Shares.........................................................
How to Reach the Funds.................................................
PRICING OF FUND SHARES..........................................................
DISTRIBUTIONS...................................................................
FEDERAL TAX CONSIDERATIONS......................................................
Taxes on Distributions.................................................
Taxes on Sales.........................................................
Tax Withholding........................................................
MANAGEMENT......................................................................
Investment Adviser.....................................................
Other Service Providers................................................
</TABLE>
PLEASE READ THIS PROSPECTUS. This prospectus explains the objective, risks, and
policies of the Orbitex Cash Reserves Fund Institutional Shares. Reading the
prospectus will help you decide whether the Fund is the right investment for
you. The Prospectus also includes information that you will need to open your
account and to buy or sell (redeem) shares of the Fund. Please keep it for
future reference.
IMPORTANT NOTE. The Orbitex Cash Reserves Fund features two separate classes of
shares: Institutional Shares and Institutional Service Shares. Institutional
Shares of the Cash Reserves Fund require a minimum initial investment of $5
million, and are offered through this prospectus. Institutional Service Shares
are available through certain financial institutions, and are offered through a
separate prospectus. Institutional Shares and Institutional Service Shares do
not have the same expenses; as a result, the performance of these two classes
will differ.
UNLESS OTHERWISE INDICATED, ALL REFERENCES IN THIS PROSPECTUS TO THE FEES,
EXPENSES, OR INVESTMENT PERFORMANCE OF THE CASH RESERVES FUND RELATE
SPECIFICALLY TO THE INSTITUTIONAL SHARES OF THE FUND.
<PAGE>
THE FUND AT A GLANCE - ORBITEX CASH RESERVES FUND
This risk/return summary briefly describes the Orbitex Cash Reserves Fund's
goals, principal investments, risks, expenses and performance. For further
information on how this Fund is managed, please read the section entitled "Fund
Details."
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Cash Reserves Fund is to provide current
income while maintaining liquidity and a stable share price of $1.00.
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENTS
The Fund invests primarily in high-quality, short-term money market instruments,
including commercial paper, notes and bonds issued by U.S. corporations,
obligations issued by the U.S. Government and its agencies and
instrumentalities, and obligation issued by U.S. and foreign banks, such as
banker's acceptances and certificates of deposit. The Fund also invests in
repurchase agreements backed by U.S. Government obligations.
To be considered high-quality, a security generally must be rated in one of the
two highest credit-quality categories for short-term securities by at least two
nationally recognized rating services (or by one, if only one rating service has
rated the security). If a security is unrated, the Adviser or Sub-adviser must
determine that it is a quality equivalent to those in the two highest
credit-quality categories.
The Fund will maintain an average portfolio maturity of 90 days or less.
[GRAPHIC OMITTED]
PRINCIPAL RISKS
Although money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:
- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates. Falling short-term interest rates will cause the
Fund's income to decline.
- - CREDIT RISK: Because the Fund only invests in high quality obligations,
credit risk is very low. Nevertheless, if an issuer fails to pay interest
or repay principal, the value of your investment could decline.
- - REPURCHASE AGREEMENTS. Repurchase agreements carry the risk that the other
party may not fulfill its obligations under the agreement. This could cause
the value of your investment to decline.
- - SHARE PRICE. There is no guarantee that the Fund will be able to preserve
the value of your investment at $1.00 per shares.
- - INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- - SELECTION OF INVESTMENTS. The Adviser and Sub-adviser evaluate the risk and
reward presented by all securities purchased by the Fund and how they
advance the Fund's investment objective. It is possible, however, that
these evaluations may be inaccurate.
AN INVESTMENT IN THE CASH RESERVES FUND IS NOT A DEPOSIT OF ANY BANK AND IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR
INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE
FUND.
Prospectus - 3
<PAGE>
THE FUND AT A GLANCE - ORBITEX CASH RESERVES FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Orbitex Cash Reserves Fund.
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends Distributions None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 0.15%
Distribution and/or Service Fee (12b-1) Fees 0.00%
Other Expenses 0.10%
------
Total Annual Operating Expenses 0.25%*
------
</TABLE>
* The information contained in the above table and the example below is
based upon the fee stated in the Fund's contract with the Adviser and
the estimated amount of Other Expenses for the current fiscal year of
the Institutional class of the Fund without taking into account any
applicable fee waivers and/or reimbursements. The Adviser has agreed
voluntarily to waive and/or reimburse fees and expenses to the extent
necessary so that Institutional Shares total operating expenses do not
exceed 0.25%, of the Fund's average daily net assets. The Adviser may
discontinue such fee waivers and/or expense reimbursements at any time,
in its sole discretion.
EXAMPLE
This example is intended to help you compare the cost of investing
in the Orbitex Cash Reserves Fund with the cost of investing in other money
market funds. The example assumes that you invest $10,000 in the Fund for the
time periods indicated and then sell all of your shares at the end of those
periods. The example also assumes that your investment has a 5% annual
return, the reinvestment of all dividends and distributions and that the
Fund's operating expenses remain the same as shown in the table above.
Although your actual costs and the return on your investment may be higher or
lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
<S> <C>
1 $
3 $
</TABLE>
Prospectus - 4
<PAGE>
WHO MAY WANT TO INVEST IN THE ORBITEX CASH RESERVES FUND
We designed the ORBITEX CASH RESERVES FUND for investors who:
- - are making short-term investments
- - are investing emergency reserve money
- - want to avoid high volatility or possible losses on their investment
- - are seeking regular income consistent with these goals
The ORBITEX CASH RESERVES FUND is NOT appropriate for investors who seek one or
more of the following:
- - high long-term growth
- - a stock fund to serve as a core holding in an investor's portfolio
- - a stock fund to complement a portfolio of more conservative investments
- - a stock fund that uses a blend of value and growth investment styles
- - are seeking tax-exempt income
IF YOU ARE SEEKING INVESTMENTS WITH THESE CHARACTERISTICS, YOU MAY WISH TO
CONSIDER OTHER FUNDS IN THE ORBITEX GROUP OF FUNDS. TO OBTAIN A FREE PROSPECTUS,
PLEASE CALL US AT 1-888-ORBITEX (OR 1-888-672-4839).
Prospectus - 5
<PAGE>
FUND DETAILS - ORBITEX CASH RESERVES FUND
INVESTMENT DETAILS OF THE ORBITEX GROWTH FUND
[GRAPHIC OMITTED]
INVESTMENT OBJECTIVE
The Orbitex Cash Reserves Fund seeks to provide as high a level of current
income as is consistent with liquidity and stability of principal
[GRAPHIC OMITTED]
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in high quality, short-term money market instruments. Money
market instruments are short-term investments, usually with a maturity of 13
months or less. Some common money market instruments are:
- - Treasury bills and notes, which are securities issued by the U.S.
government or its agencies and instrumentalities.
- - Commercial paper, which is a promissory note issued by a large company or
financial firm
- - Banker's acceptances, which are credit instruments guaranteed by a bank;
- - Negotiable certificates of deposit, which are issued by banks in large
denominations.
Although the Fund may invest in banker's acceptances and certificates of deposit
issued by U.S. or foreign banks, it restricts its currency exposure to U.S.
dollars.
To be considered high-quality, a security generally must be rated in one of the
two highest credit-quality categories for short-term securities by at least two
nationally recognized rating services (or by one, if only one rating service has
rated the security). If a security is unrated, it must be determined by the
Adviser or Sub-adviser to be of quality equivalent to those in the two highest
credit-quality categories.
The Fund may also invest in repurchase agreements backed by U.S. Government
obligations. Repurchase agreements are transactions in which the Fund buys
securities from a seller (usually a bank or broker-dealer) that agrees to buy
them back from the Fund on a certain date and at a certain price.
When the Adviser or Sub-adviser anticipates that short-term interest rates will
decrease, the average maturity of the Fund's portfolio may be increased to
lock-in prevailing rates before the anticipated decrease in rates. Conversely,
when the Adviser or Sub-adviser anticipates that short-term interest rates will
increase, the average maturity of the portfolio may be reduced. In any event,
the Fund will maintain a dollar-weighed average maturity of 90 days or less and
will not invest in securities with remaining maturity of more than 397 days.
INVESTMENT ADVISER
Orbitex Management, Inc., is the Funds' investment adviser ("Adviser"). The
Adviser's address is 410 Park Avenue, New York, NY 10022. The Adviser is an
affiliate of Orbitex Management Ltd., an investment adviser that provides
investment services to individuals and institutions including Canadian unit
trusts.
INVESTMENT SUB-ADVISER
[to be identified in a subsequent filing]
PORTFOLIO MANAGER
[describe background of portfolio manager]
Prospectus - 6
<PAGE>
MORE INFORMATION ABOUT RISKS
[GRAPHIC OMITTED]
The main risks associated with an investment in the Orbitex Cash Reserves Fund
have been described above. The following supplements that discussion.
INTEREST RATE CHANGES: Debt securities have varying levels of sensitivity to
changes in interest rates. In general, the price of a debt security may fall
when interest rates rise and may rise when interest rates fall. Securities with
longer maturities may be more sensitive to interest rate changes.
YEAR 2000: The Funds' operations depend on the seamless functioning of computer
systems in the financial service industry, including those of the Adviser, the
Sub-Adviser, the Administrator, the Custodian, Distributor and the Transfer
Agent. Many computer software systems in use today cannot properly process
date-related information after December 31, 1999. The "Year 2000" issue stems
from the use of a two-digit format to define the year in certain date-sensitive
application systems rather than the use of a four-digit format. As a result,
date-sensitive software programs could recognize a date using "00" as the year
1900 rather than the year 2000. This could result in major systems or process
failures or the generation of erroneous data, which would lead to disruptions in
the Funds' business operations.
The Adviser and Sub-Adviser have made compliance with the Year 2000 issue a high
priority and are taking steps to address the issue with respect to its computer
systems. The Funds' major service providers have informed the Adviser that they
are taking comparable steps. The Adviser does not currently believe that the
Year 2000 issue will have a material impact on its ability to continue to
fulfill its duties as investment adviser. In addition, the issuers of securities
the Fund own could have Year 2000 computer problems. These problems could
negatively affect the value of their securities, which, in turn, could impact
the Fund's performance. An issuer's Year 2000 readiness is only one of many
factors the Adviser or Sub-Adviser may consider when making investment
decisions, and other factors may receive greater weight.
Prospectus - 7
<PAGE>
YOUR ACCOUNT
[GRAPHIC OMITTED]
This section describes the services that are available to shareholders.
TYPES OF ACCOUNTS
If you are making an initial investment in the Funds, you will need to open an
account. You may establish the following types of accounts:
- - INDIVIDUAL OR JOINT OWNERSHIP. One person owns an individual account while
two or more people own a joint account. We will treat each individual owner
of a joint account as authorized to give instructions on purchases, sales
and exchanges of shares without notice to the other owners. However, we
will require each owner's signature guarantee for any transaction requiring
a signature guarantee.
- - TRUST. A trust can open an account. You must include the name of each
trustee, the name of the trust and the date of the trust agreement on the
application.
- - CORPORATIONS, PARTNERSHIPS AND OTHER LEGAL ENTITIES. Corporations,
partnerships and other legal entities may also open an account. A general
partner of the partnership or an authorized officer of the corporation or
other legal entity must sign the application and resolution form.
PURCHASING SHARES
Once you have chosen the type of account you are ready to establish an account.
Institutional shares of the Cash Reserves Fund are available to investors making
a minimum initial investment of $5,000,000. The minimum for subsequent
investments is $1,000,000. The Trust or Adviser may waive or lower these
minimums in certain cases. YOU MUST COMPLETE AND SIGN AN APPLICATION FOR EACH
ACCOUNT YOU OPEN WITH THE FUND.
The price for Fund shares is the Fund's net asset value per share (NAV). We
determine the NAV at 3:00 p.m. Eastern time every day that the Federal Reserve
Bank of New York is open. We will price your order at the next NAV calculated
after the Fund accepts your order. For more information on how we price shares,
see "Pricing of Fund Shares" on page 25.
Before your payment can be invested in the Cash Reserves Fund, it must be
converted to "federal funds," which are Federal Reserve deposits that banks and
other financial institutions draw upon to meet short-term cash needs, and which
the Cash Reserves Fund uses to pay for the securities it buys.
If you notify us by 2:00 p.m. Eastern time that you intend to purchase shares
that day, and if we receive your purchase order in good form and your payment by
federal funds wire by 3:00 p.m. Eastern time that same day, you will begin
earning dividends on your investment that day.
If you pay for your shares by check, it will typically take us one business day
to convert your payment to federal funds. Because of this conversion period, if
we receive your check before 3:00 p.m. Eastern time, your account will be
credited with the purchase, and normally you will begin earning dividends on the
next business day.
The Fund, the Adviser and the Distributor each reserve the right to reject any
purchase for any reason and to cancel any purchase due to non-payment. You must
make all purchases in United States dollars and draw all checks on United States
banks. If we cancel your purchase due to non-payment, you will be responsible
for any loss the Fund incurs. We will not accept cash or third-party checks for
the purchase of shares.
Prospectus - 8
<PAGE>
<TABLE>
<CAPTION>
- -------------------- ----------------------------------------------------------
METHOD OF PURCHASE PURCHASE PROCEDURES
- -------------------- ----------------------------------------------------------
<S> <C>
- -------------------- ----------------------------------------------------------
BY MAIL OR FAX Send your completed application with your check, payable to
"Orbitex Group of Funds - Cash Reserves Fund" to:
[GRAPHIC OMITTED] Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box XXXX
Hauppage, New York 11788-0132
You may also fax your application. Our fax number is
xxx-xxx-xxxx. Please note that we cannot open your account
until we receive your payment by check or federal funds
wire.
- -------------------- ----------------------------------------------------------
BY WIRE - INITIAL PURCHASE: Call the Fund at 1-888-ORBITEX
for instructions and to receive an account number.
You will need to instruct a Federal Reserve System
member bank to wire Funds to: State Street Bank and
Trust Company, ABA No. 011000028, Attn.: Custody &
Shareholder Services, Credit: Orbitex Cash Reserves
[GRAPHIC OMITTED] Fund, DDA No. 9905-295-3, FBO: [Shareholder Name],
Orbitex Cash Reserves Fund, [Shareholder Account
Number]. You must also complete and mail or fax an
application to the address shown above under
"By Mail."
- SUBSEQUENT PURCHASE: Wire Funds to the designated
account at State Street Bank and Trust Company.
You may wire funds between 8:30 a.m. and 3:00 p.m. Eastern
time. To make a same-day wire investment, please notify
Orbitex by 2:00 p.m. Eastern time of your intention to wire
Funds, and make sure your wire arrives by 3:00 p.m. Eastern
time. Please note that your bank may charge a fee for the
wire.
- -------------------- ----------------------------------------------------------
BY TELEPHONE If you have not declined or canceled your
telephone investment privilege, you may make subsequent
purchases in your account by telephoning 1-888-ORBITEX
between 8:30 a.m. and 3:00 p.m. Eastern time on any day the
Fund is open. We will electronically transfer money from
the bank account you designate on your Application to your
[GRAPHIC OMITTED] account with the Trust.
- -------------------- ----------------------------------------------------------
IMPORTANT NOTES Once you have requested a telephone transaction, and
a confirmation number has been assigned, the transaction
cannot be revoked. We reserve the right to refuse any
purchase request.
You can redeem shares that you purchased by check. However,
while we will process your redemption request at the next
-determined net asset value after we receive it, your
redemption proceeds will be not available until your check
clears. This could take up to ten calendar days.
- -------------------- ----------------------------------------------------------
</TABLE>
SELLING SHARES
You have the right to sell all or any part of your shares subject to certain
restrictions. Selling your shares in a Fund is a "redemption" because the Fund
buys back its shares. We will redeem your shares at the net asset value next
computed following receipt of your redemption request.
We will mail your redemption proceeds to your current address or transmit them
electronically to your designated bank account. Except under certain emergency
conditions, we will send your redemption to you within seven days after we
receive your redemption request.
The Fund cannot accept requests that specify a certain date for redemption or
which specify any other special conditions.
Please call 1-888-ORBITEX for further information. WE WILL NOT PROCESS YOUR
REDEMPTION REQUEST IF IT IS NOT IN PROPER FORM (SEE CHART BELOW). WE WILL NOTIFY
YOU IF YOUR REDEMPTION REQUEST IS NOT IN PROPER FORM.
If, as a result of your redemption, your account value drops below $5 million,
we may redeem the remaining shares in your account. We will notify you in
writing of our intent to redeem your shares. We will allow at least sixty days
thereafter for you to make an additional investment to bring your account value
up to at least $5 million before we will process the redemption.
Prospectus - 9
<PAGE>
<TABLE>
<CAPTION>
- ----------------------- -------------------------------------------------------
METHOD OF REDEMPTION REDEMPTION PROCEDURES
- ----------------------- -------------------------------------------------------
<S> <C>
- ----------------------- -------------------------------------------------------
BY TELEPHONE You may authorize redemption of some or all shares in
your account with the Fund by telephoning the Fund at
1-888-ORBITEX between 8:30 a.m. and 3:00 p.m. Eastern
time on any day the Fund is open. You will not be
[GRAPHIC OMITTED] eligible to use the telephone redemption service if you:
- Have declined or canceled your telephone investment
privilege;
- wish to redeem less than $25,000; or,
- must provide supporting legal documents.
- ----------------------- -------------------------------------------------------
BY MAIL You may mail a written request to Orbitex Group of
Funds. Our mailing address is c/o American Data
Services, Inc. P.O. Box XXXX Hauppage, New York
[OBJECT OMITTED] 11788-0132. You must include the following information
in your written request:
- a letter of instruction stating the name of the
Fund, the number of shares you are redeeming, the
names in which the account is registered and your
account number;
- other supporting legal documents, if necessary, for
redemption requests by corporations, trusts and
partnerships; and
- a signature guarantee when you request us to send
the redemption proceeds to an address other than
the address of record or to a person other than the
registered shareholder(s) for the account.
- ----------------------- -------------------------------------------------------
BY FAX You may fax a written request to Orbitex Group of
Funds. Our fax number is xxx-xxx-xxxx. You must
include the following information in your written
request:
- a letter of instruction stating the name of the
Fund, the number of shares you are redeeming, the
names in which the account is registered and your
account number;
NOTE: WE CANNOT ACCEPT A WRITTEN REDEMPTION REQUEST IF
SUPPORTING LEGAL DOCUMENTS OR A SIGNATURE GUARANTEE IS
NECESSARY FOR THE REQUEST TO BE IN "GOOD ORDER."
- ----------------------- -------------------------------------------------------
REQUEST IN "GOOD For our mutual protection, your redemption request must
ORDER" include:
- your account number
- the amount of the transaction
- for mail request, signatures of all owners EXACTLY
as registered on the account
- signature guarantees, if required (signature
guarantees can be obtained at most banks, credit
unions, and licensed brokers
- any supporting legal documentation that may be
required
YOUR REDEMPTION REQUEST WILL BE PROCESSED AT THE
NEXT-DETERMINED SHARE PRICE AFTER WE HAVE RECEIVED ALL
REQUIRED INFORMATION.
- ----------------------- -------------------------------------------------------
IMPORTANT NOTE Once we have processed your redemption request, and a
confirmation number has been given, the transaction
CANNOT be revoked.
- ----------------------- -------------------------------------------------------
</TABLE>
Prospectus - 10
<PAGE>
TELEPHONE REDEMPTIONS.
We will automatically establish the telephone redemption option for your
account, unless you instruct us otherwise in writing. Telephone redemptions are
easy and convenient, but this account option involves a risk of loss from
unauthorized or fraudulent transactions. We will take reasonable precautions to
protect your account from fraud. You should do the same by keeping your account
information private and by reviewing immediately any account statements and
confirmations that you receive. Please contact us immediately about any
transaction you believe to be unauthorized.
Orbitex reserves the right to refuse a telephone redemption if the caller cannot
provide:
- - the account number
- - the name and address exactly as registered on the account
- - the primary social security or employer identification number as registered
on the account
We may also require a password from the caller.
Orbitex will not be responsible for any account losses due to telephone fraud so
long as we have taken reasonable steps to verify the caller's identity. If you
wish to cancel the telephone redemption feature for your account, please notify
us in writing.
OPTIONS FOR REDEMPTION PROCEEDS
You may receive your redemption proceeds by check or by wire.
CHECK REDEMPTIONS. Normally we will mail your check within two business days
of a redemption.
WIRE REDEMPTIONS. Before you can receive redemption proceeds by wire, you must
establish this option by completing a special form or the appropriate section of
your account application.
If we receive your request for a wire redemption by noon Eastern time, the wire
will arrive at your bank by the close of business that same day. Requests that
we receive later than noon Eastern time will arrive at your bank by the close of
business the following business day.
We require a minimum redemption of $25,000 in order to send your redemption
proceeds by wire.
TRANSFERRING REGISTRATION
You can transfer the registration of your shares in the Cash Reserves Fund to
another owner by completing a transfer form and sending it to American Data
Services, Inc., P.O. Box XXXX, Hauppage, New York 11788-0132.
HOW TO REACH THE FUND
- -------------------------------------------------------------------------------
We are available to answer your questions about the Fund or your account by
telephone or by mail Monday through Friday 8:30 a.m. to 5:30 p.m. Eastern time.
Please note, however, that purchase or redemption requests must be received by
3:00 p.m. Eastern time on a day the Fund is open for business. Purchase or
redemption requests received after 3:00 p.m. Eastern time will be executed on
the next day that the Fund is open for business.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------- -----------------------------------
By telephone 1-888-ORBITEX (or 1-888-672-4839)
Call for account or Fund information
[GRAPHIC OMITTED]
- ------------------------------------------- -----------------------------------
By regular mail Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box XXXX
[GRAPHIC OMITTED] Hauppage, New York 11788-0132
- ------------------------------------------- -----------------------------------
By express or registered mail Orbitex Group of Funds
c/o American Data Services, Inc.
150 Motor Parkway
Hauppage, New York 11788-0132
- ------------------------------------------- -----------------------------------
</TABLE>
Prospectus - 11
<PAGE>
PRICING OF FUND SHARES
The Fund's net asset value per share or NAV is calculated each day the Federal
Reserve Bank of New York is open. The NAV is the value of a single share of a
Fund. The NAV is calculated at 3:00 p.m. Eastern time. The NAV is determined by
subtracting the total of the Fund's liabilities from its total assets and
dividing the remainder by the number of shares outstanding. The securities in
the Fund's portfolio are valued at their amortized cost which does not take into
account unrealized gains or losses on securities. This method involves initially
valuing a security at its cost and thereafter assuming a constant amortization
to maturity of any premium paid or accreting discount. The amortized cost method
minimizes changes in the market value of the Fund's portfolio securities and
helps it maintain a stable price of $1.00 per share. There can be no assurance,
however, that the Fund will maintain its net asset value at $1.00 per shares.
DISTRIBUTIONS
As a shareholder, you are entitled to your share of a Fund's net income
(interest less expenses) and capital gains on its investments. The Cash Reserves
Fund declares dividends from net investment income daily and pays them the first
business day after the end of each month. Although the Fund does not expect to
realize net long-term capital gains, any capital gains realized will be
distributed at least annually.
You will receive distributions from a Fund in additional shares of the Fund
unless you choose to receive your distributions in cash. If you wish to change
the way in which you receive distributions, you should call 1-888-ORBITEX for
instructions.
If you have elected to receive distributions in cash, and the postal or other
delivery service returns your check to the Fund as undeliverable, you will not
receive interest on amounts represented by the uncashed checks.
FEDERAL TAX CONSIDERATIONS
Your investment will have tax consequences that you should consider. Some of the
more common federal tax consequences are described here but you should consult
your tax consultant about your particular situation.
TAXES ON DISTRIBUTIONS
You will generally be subject to federal income tax and possibly state taxes on
all Fund distributions. Your distributions will be taxed in the same manner
whether you receive the distributions in cash or additional shares of the Fund.
The Fund expects that all, or substantially all, of its distributions will
consist of ordinary income. Taxable dividends paid in January may be taxable as
if they had been paid the previous December. The Fund sends detailed tax
information to its shareholders about the amount and type of its distributions
by January 31 for the prior calendar year.
TAX WITHHOLDING
The Fund may be required to withhold U.S. federal income tax at the rate of 31%
from all taxable distributions payable to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications, or who have been notified by the IRS that they are subject to
backup withholding. Any such withheld amounts may be credited against the
shareholder's U.S. federal income tax liability.
OTHER STATE AND LOCAL TAX MATTERS
Generally, shareholders may also be subject to state and local taxes on
distributions and redemption. State income taxes may not apply, however, to the
portions of the Fund's distributions, if any, that are attributable to interest
on U.S. Government securities or on securities of the particular state.
Prospectus - 12
<PAGE>
MANAGEMENT
INVESTMENT ADVISER
Orbitex Management, Inc., is the Fund's investment adviser ("Adviser"). The
Adviser's address is 410 Park Avenue, New York, NY 10022. The Adviser is an
affiliate of Orbitex Management Ltd., an investment adviser that provides
investment services to individuals and institutions including Canadian unit
trusts.
Under the terms of an investment advisory agreement, the Adviser is responsible
for formulating the Funds' investment programs and for making day-to-day
investment decisions and engaging in portfolio transactions. The Adviser also
furnishes corporate officers, provides office space, services and equipment and
supervises all matters relating to the Fund's operations. The advisory agreement
also provides that the Adviser may retain sub-advisers at the Adviser's own cost
and expense, for the purpose of managing the investment of the assets of one or
more Funds.
As compensation for its services, the Fund pays the Adviser a fee at an
annualized rate of ____% of the Fund's average daily net assets.
INVESTMENT SUB-ADVISER
[to be identified in a subsequent filing]
OTHER SERVICE PROVIDERS
The Fund also relies on other companies to provide necessary services for its
day-to-day operations. Below is a list of these service providers.
ADMINISTRATOR, TRANSFER AGENT AND FUND ACCOUNTANT
American Data Services, Inc.
The Hauppage Corporate Center
150 Motor Parkway
Hauppage, New York 11788
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
INDEPENDENT ACCOUNTANTS
[to be identified in a subsequent filing]
Prospectus - 13
<PAGE>
WHERE TO GO FOR MORE INFORMATION:
You will find more information about the Orbitex Group of Funds in the following
documents:
- - ANNUAL AND SEMI-ANNUAL REPORTS: Our annual and semi-annual reports list the
Fund's holdings, describe its performance, include financial statements for
the Fund, and discuss the market conditions and strategies that
significantly affected the Fund's performance during their last fiscal
year.
- - STATEMENT OF ADDITIONAL INFORMATION: The Statement of Additional
Information contains additional and more detailed information about the
Fund, and is incorporated by reference into this prospectus (it is
considered to be a part of this Prospectus).
The SAI and the financial statements included in the current annual and
semi-annual reports are incorporated by reference into (and are thus a part of)
this prospectus.
THERE ARE THREE WAYS TO GET A COPY OF THESE DOCUMENTS:
1. Call or write for one, and a copy will be sent without charge.
ORBITEX GROUP OF FUNDS
C/O AMERICAN DATA SERVICES, INC.
P.O. BOX XXXX
HAUPPAGE, NEW YORK 11788-0132
1-888-ORBITEX (OR 1-888-672-4839)
WWW.ORBITEXUSA.COM
2. Call or write the Public Reference Room of the Securities and Exchange
Commission ("SEC") and ask them to mail you a copy. The SEC charges a fee
for this service. You can also go to the Public Reference Room and copy the
documents while you are there. Information about the Public Reference Room
may be obtained by calling the number below.
PUBLIC REFERENCE ROOM OF THE SEC
WASHINGTON, D.C. 20549-6009
1-800-SEC-0330
3. Go to the SEC's website (www.sec.gov) and download a free text-only version.
IF YOU ARE A CURRENT FUND SHAREHOLDER WOULD LIKE INFORMATION ABOUT YOUR ACCOUNT,
ACCOUNT TRANSACTIONS, OR ACCOUNT STATEMENTS, PLEASE CALL US AT 1-888-ORBITEX (OR
1-888-672-4839)
IF YOU PURCHASED YOUR SHARES THROUGH A FINANCIAL INSTITUTION, YOU MAY CONTACT
THAT INSTITUTION FOR MORE INFORMATION.
The Orbitex Group of Funds Investment Company Act File Number is 811-8037.
Prospectus - 14
<PAGE>
ORBITEX GROUP OF FUNDS
Orbitex Growth Fund
Orbitex Info-Tech & Communications Fund
Orbitex Strategic Natural Resources Fund
Orbitex Focus 30 Fund
Orbitex Health & Biotechnology Fund
Orbitex Cash Reserves Fund
STATEMENT OF ADDITIONAL INFORMATION
[JUNE ___, 1999]
This Statement of Additional Information is not a Prospectus, but is an
incorporated part of the Prospectuses and should be read in conjunction with
the Prospectuses of the Orbitex Group of Funds (the "Trust") dated June ___,
1999. To obtain a free copy of the Prospectuses or an annual report, please
call the Trust at 1-888-ORBITEX.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
- ---- ----
<S> <C>
General Information and History 2
Investment Restrictions 2
Description of Securities, Other Investment Policies and Risk Considerations 4
Management of the Trust
Principal Holders of Securities
Investment Management and Other Services
Administrator
Custodian
Transfer Agent Services
Distribution of Shares
Brokerage Allocation and Other Practices
Purchase and Redemption of Securities Being Offered
Shareholder Services
Determination of Net Asset Value
Taxes
Organization of the Trust
Performance Information About the Funds
Independent Accountants
Legal Matters
Financial Statements
</TABLE>
For more information on any Orbitex Fund, including charges and expenses, call
Orbitex at the number indicated above for a free prospectus. Read it carefully
before you invest or send money.
1
<PAGE>
GENERAL INFORMATION AND HISTORY
The Trust is an open-end management investment company, commonly known as
"mutual fund," and sells and redeems shares every day that it is open for
business. The Trust was organized as a Delaware business trust by a Declaration
of Trust dated December 13, 1996 and is registered with the Securities and
Exchange Commission (the "SEC") under the Investment Company Act of 1940 (the
"1940 Act").
The Trust currently consists of six portfolios: Orbitex Growth Fund ("Growth
Fund"), Orbitex Info-Tech & Communications Fund ("Info-Tech & Communications
Fund"), Orbitex Strategic Natural Resources Fund ("Strategic Natural Resources
Fund"), Orbitex Focus 30 Fund ("Focus 30 Fund"), Orbitex Health &
Biotechnology Fund ("Health & Biotechnology Fund") and Orbitex Cash Reserves
Fund ("Cash Reserves Fund") (individually a "Fund" and collectively the
"Funds"). Each Fund other than the Health & Biotechnology Fund is diversified,
and represents a separate series of beneficial interest in the Trust having
different investment objectives, investment programs, policies and restrictions.
Each Fund, except for the Focus 30 Fund offers two classes of shares: a
front-end load Class A, a contingent deferred sales charge Class B. The
Focus 30 Fund offers three classes of shares: Class A, Class B and a no-load
Class D.
Each Fund is managed by Orbitex Management, Inc. (the "Adviser"), which directs
the day-to-day operations and the investment of assets of each Fund. [SUB-
ADVISER FOR THE MONEY MARKET FUND] American Data Services, Inc. ("ADS") is the
administrator for each of the Funds, and the accounting agent, transfer agent
and dividend disbursing agent for Focus 30 Fund, Health & Biotechnology
Fund, and the Cash Reserves Fund. State Street Bank and Trust Company ("State
Street") is the sub-administrator, accounting agent, transfer agent and dividend
disbursing agent for the Growth Fund, the Info-Tech & Communications Fund and
the Strategic Natural Resources Fund. State Street is the custodian for each of
the Funds. Funds Distributor, Inc. (the "Distributor") distributes the shares
of the Funds.
INVESTMENT RESTRICTIONS
The following policies and limitations supplement those set forth in the
Prospectuses. Unless otherwise noted, whenever a policy or limitation states a
maximum percentage of a Fund's assets that may be invested in any security or
other asset, or set forth a policy regarding quality standards, such standard or
percentage limitations will be determined immediately after and as a result of
the Fund's acquisition of such security or other asset. Accordingly, any
subsequent change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with a Fund's
investment policies and limitations.
A Fund's fundamental investment policies and limitations may be changed only
with the consent of a "majority of the outstanding voting securities" of the
particular Fund. As used in this Statement of Additional Information, the term
"majority of the outstanding voting securities" means the lesser of (1) 67% of
the shares of a Fund present at a meeting where the holders of more than 50% of
the outstanding shares of a Fund are present in person or by proxy, or (2) more
than 50% of the outstanding shares of a Fund. Shares of each Fund will be voted
separately on matters affecting only that Fund, including approval of changes in
the fundamental investment policies of that Fund. Except for the fundamental
investment limitations listed below, the investment policies and limitations
described in this Statement of Additional Information are not fundamental and
may be changed without shareholder approval.
THE FOLLOWING ARE THE FUNDS' FUNDAMENTAL INVESTMENT LIMITATIONS. A FUND WILL
NOT:
(1) Purchase securities on margin, except a Fund may make margin deposits
in connection with permissible options and futures transactions subject to
(5) below and may obtain short-term credits as may be necessary for
clearance of transactions.
(2) Issue any class of securities senior to any other class of securities
except in compliance with the 1940 Act.
2
<PAGE>
(3) Borrow money for investment purposes in excess of 33-1/3% of the value
of its total assets, including any amount borrowed less its liabilities not
including any such borrowings. Any borrowings which come to exceed this
amount will be reduced in accordance with applicable law. Additionally,
each Fund may borrow up to 5% of its total assets (not including the amount
borrowed) for temporary or emergency purposes.
(4) Purchase or sell real estate, or invest in real estate limited
partnerships, except each Fund may, as appropriate and consistent with its
respective investment objective, policies and other investment
restrictions, buy securities of issuers that engage in real estate
operations and securities that are secured by interests in real estate
(including shares of real estate mortgage investment conduits, mortgage
pass-through securities, mortgage-backed securities and collateralized
mortgage obligations) and may hold and sell real estate acquired as a
result of ownership of such securities.
(5) Purchase or sell physical commodities or contracts thereon, except that
each Fund may enter into financial futures contracts and options thereon.
(6) Underwrite securities issued by other persons, except to the extent
that a Fund may be deemed to be an underwriter, within the meaning of the
Securities Act of 1933, in connection with the purchase of securities
directly from an issuer in accordance with each Fund's investment
objective, policies and restrictions.
(7) Make loans, except that each Fund in accordance with that Fund's
investment objective, policies and restrictions may: (i) invest in all or a
portion of an issue of publicly issued or privately placed bonds,
debentures, notes, other debt securities and loan participation interests
for investment purposes; (ii) purchase money market securities and enter
into repurchase agreements; and (iii) lend its portfolio securities in an
amount not exceeding one-third of the value of that Fund's total assets.
(8) Other than the Health & Biotechnology Fund, make an investment unless
75% of the value of that Fund's total assets is represented by cash, cash
items, U.S. Government securities, securities of other investment companies
and "other securities." For purposes of this restriction, the term "other
securities" means securities as to which the Fund invests no more than 5%
of the value of its total assets in any one issuer or purchases no more
than 10% of the outstanding voting securities of any one issuer. As a
matter of operating policy, each Fund will not consider repurchase
agreements to be subject to the above-stated 5% limitation if all of the
collateral underlying the repurchase agreements are U.S. Government
securities and such repurchase agreements are fully collateralized.
(9) Invest 25% or more of the value of its total assets in any one
industry, except that: (i) the Strategic Natural Resources Fund will invest
at least 25% of its total assets in securities of companies in natural
resource industries and industries supportive to natural resource
industries; (ii) the Info-Tech & Communications Fund will invest at least
25% of its total assets in the securities of companies in the
communications, information and related technology industries; and (iii)
the Health & Biotechnology Fund will invest at least 25% of its total
assets in the securities of companies in health, biotechnology and related
industries. This limitation (9) does not apply to securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or
repurchase agreements secured by U.S. Government securities.
THE FOLLOWING RESTRICTIONS ARE DESIGNATED AS NON-FUNDAMENTAL AND MAY BE CHANGED
BY THE BOARD OF TRUSTEES OF THE TRUST WITHOUT THE APPROVAL OF SHAREHOLDERS. A
FUND MAY NOT:
(1) Invest in portfolio companies for the purpose of acquiring or
exercising control of such companies.
(2) Invest in the securities of other investment companies except in
compliance with the 1940 Act.
(3) Invest in puts, calls, straddles, spreads or any combination thereof,
except to the extent permitted by the Prospectus and Statement of
Additional Information.
3
<PAGE>
(4) Purchase or otherwise acquire any security or invest in a repurchase
agreement if, as a result, more than 15% (or, in the case of the Cash
Reserves Fund, 10%) of the net assets of the Fund would be invested in
securities that are illiquid or not readily marketable, including
repurchase agreements maturing in more than seven days and non-negotiable
fixed time deposits with maturities over seven days. Each Fund may invest
without limitation in restricted securities provided such securities are
considered to be liquid. If, through a change in values, net assets or
other circumstances, a Fund were in a position where more than 15% of its
net assets was invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
(5) Mortgage, pledge, or hypothecate in any other manner, or transfer as
security for indebtedness any security owned by a Fund, except as may be
necessary in connection with permissible borrowings and then only if such
mortgaging, pledging or hypothecating does not exceed 33 1/3% of such
Fund's total assets. Collateral arrangements with respect to margin, option
and other risk management and when-issued and forward commitment
transactions are not deemed to be pledges or other encumbrances for
purposes of this restriction.
With respect to investment restriction No. 4 above, the Adviser, as a matter of
policy, under normal circumstances, will limit the investment of the Info-Tech
and Communications Fund and the Health & Biotechnology Fund to a maximum of 5%
of the total assets (at the time of purchase) in private, early stage
communications or health and biotechnology companies, respectively.
DESCRIPTION OF SECURITIES, OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
The following pages contain more detailed information about the types of
instruments in which a Fund may invest, strategies the Adviser [(or Sub-Adviser,
as the case may be)] may employ in pursuit of a Fund's investment objective and
a summary of related risks. The Adviser [(or Sub-Adviser, as the case may be)]
may not buy all of these instruments or use all of these techniques unless it
believes that doing so will help a Fund achieve its investment objectives.
ADJUSTABLE RATE SECURITIES (ALL FUNDS). Adjustable rate securities (i.e.,
variable rate and floating rate instruments) are securities that have interest
rates that are adjusted periodically, according to a set formula. The maturity
of some adjustable rate securities may be shortened under certain special
conditions described more fully below.
Variable rate instruments are obligations that provide for the adjustment of
their interest rates on predetermined dates or whenever a specific interest rate
changes. A variable rate instrument whose principal amount is scheduled to be
paid in 397 days or less is considered to have a maturity equal to the period
remaining until the next readjustment of the interest rate. Many variable rate
instruments are subject to demand features which entitle the purchaser to resell
such securities to the issuer or another designated party, either (1) at any
time upon notice of usually 397 days or less, or (2) at specified intervals, not
exceeding 397 days, and upon 30 days notice. A variable rate instrument subject
to a demand feature is considered to have a maturity equal to the longer of the
period remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand, if final
maturity exceeds 397 days or the shorter of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand if final maturity is within 397 days.
Floating rate instruments have interest rate reset provisions similar to those
for variable rate instruments and may be subject to demand features like those
for variable rate instruments. The interest rate is adjusted, periodically
(e.g., daily, monthly, semi-annually), to the prevailing interest rate in the
marketplace. The interest rate on floating rate securities is ordinarily
determined by reference to the 90-day U.S. Treasury bill rate, the rate of
return on commercial paper or bank certificates of deposit or an index of
short-term interest rates. The maturity of a floating
4
<PAGE>
rate instrument is considered to be the period remaining until the principal
amount can be recovered through demand.
BELOW-INVESTMENT-GRADE DEBT SECURITIES (ALL FUNDS EXCEPT FOCUS 30 FUND AND
CASH RESERVES FUND). Each Fund may invest up to 35% of its net assets in debt
securities that are rated below "investment grade" by Standard and Poor's Rating
Group ("S&P") or Moody's Investors Services, Inc. ("Moody's") or, if unrated,
are deemed by the Adviser to be of comparable quality. Securities rated less
than Baa by Moody's or BBB by S&P are classified as below investment grade
securities and are commonly referred to as "junk bonds" or high yield, high risk
securities. Debt rated BB, B, CCC, CC and C and debt rated Ba, B, Caa, Ca, C is
regarded by S&P and Moody's, respectively, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. For S&P, BB indicates
the lowest degree of speculation and C the highest degree of speculation. For
Moody's, Ba indicates the lowest degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions. Similarly, debt rated Ba or BB and below
is regarded by the relevant rating agency as speculative. Debt rated C by
Moody's or S&P is the lowest rated debt that is not in default as to principal
or interest, and such issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing. Such securities are
also generally considered to be subject to greater risk than securities with
higher ratings with regard to a deterioration of general economic conditions.
Excerpts from S&P's and Moody's descriptions of their bond ratings are contained
in the Appendix to this SAI.
Ratings of debt securities represent the rating agency's opinion regarding their
quality and are not a guarantee of quality. Rating agencies attempt to evaluate
the safety of principal and interest payments and do not evaluate the risks of
fluctuations in market value. Also, since rating agencies may fail to make
timely changes in credit ratings in response to subsequent events, the Adviser
and/or Sub-Advisers continuously monitor the issuers of high yield bonds in the
portfolios of the Funds to determine if the issuers will have sufficient cash
flows and profits to meet required principal and interest payments. The
achievement of a Fund's investment objective may be more dependent on the
Adviser's or Sub-Adviser's own credit analysis than might be the case for a fund
which invests in higher quality bonds. A Fund may retain a security whose rating
has been changed. The market values of lower quality debt securities tend to
reflect individual developments of the issuer to a greater extent than do higher
quality securities, which react primarily to fluctuations in the general level
of interest rates. In addition, lower quality debt securities tend to bemore
sensitive to economic conditions and generally have more volatile prices than
higher quality securities. Issuers of lower quality securities are often highly
leveraged and may not have available to them more traditional methods of
financing. For example, during an economic downturn or a sustained period of
rising interest rates, highly leveraged issuers of lower quality securities may
experience financial stress. During such periods, such issuers may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service debt obligations may also be adversely affected by specific
developments affecting the issuer, such as the issuer's inability to meet
specific projected business forecasts or the unavailability of additional
financing. Similarly, certain emerging market governments that issue lower
quality debt securities are among the largest debtors to commercial banks,
foreign governments and supranational organizations such as the World Bank and
may not be able or willing to make principal and/or interest repayments as they
come due. The risk of loss due to default by the issuer is significantly greater
for the holders of lower quality securities because such securities are
generally unsecured and are often subordinated to other creditors of the issuer.
Lower quality debt securities frequently have call or buy-back features which
would permit an issuer to call or repurchase the security from a Fund. In
addition, a Fund may have difficulty disposing of lower quality securities
because they may have a thin trading market. There may be no established retail
secondary market for many of these securities, and each Fund anticipates that
such securities could be sold only to a limited number of dealers or
institutional investors. The lack of a liquid secondary
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market also may have an adverse impact on market prices of such instruments and
may make it more difficult for a Fund to obtain accurate market quotations for
purposes of valuing the Fund's portfolios. A Fund may also acquire lower quality
debt securities during an initial underwriting or which are sold without
registration under applicable securities laws. Such securities involve special
considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest,
include: (i) potential adverse publicity, (ii) heightened sensitivity to general
economic or political conditions and (iii) the likely adverse impact of a major
economic recession. A Fund may also incur additional expenses to the extent the
Fund is required to seek recovery upon a default in the payment of principal or
interest on its portfolio holdings, and the Fund may have limited legal recourse
in the event of a default. Debt securities issued by governments in emerging
markets can differ from debt obligations issued by private entities in that
remedies for defaults generally must be pursued in the courts of the defaulting
government, and legal recourse is therefore somewhat diminished. Political
conditions, in terms of a government's willingness to meet the terms of its debt
obligations, also are of considerable significance. There can be no assurance
that the holders of commercial bank debt may not contest payments to the holders
of debt securities issued by governments in emerging markets in the event of
default by the governments under commercial bank loan agreements. The Adviser
attempts to minimize the speculative risks associated with investments in lower
quality securities through credit analysis and by carefully monitoring current
trends in interest rates, political developments and other factors. Nonetheless,
investors should carefully review the investment objective and policies of the
Fund and consider their ability to assume the investment risks involved before
making an investment. Each Fund may also invest in unrated debt securities.
Unrated debt securities, while not necessarily of lower quality than rated
securities, may not have as broad a market. Because of the size and perceived
demand for an issue, among other factors, certain issuers may decide not to pay
the cost of obtaining a rating for their bonds. The Adviser will analyze the
creitworthiness of the issuer of an unrated security, as well as any financial
institution or other party responsible for payments on the security.
CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES (ALL FUNDS). Each Fund may
invest in certificates of deposit and bankers' acceptances which are considered
to be short-term money market instruments.
Certificates of deposit are receipts issued by a depository institution in
exchange for the deposit of funds. The issuer agrees to pay the amount deposited
plus interest to the bearer of the receipt on the date specified on the
certificate. The certificate usually can be traded in the secondary market prior
to maturity. Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.
COMMERCIAL PAPER (ALL FUNDS). Each Fund may purchase commercial paper.
Commercial paper consists of short-term (usually from 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their current
operations.
DEALER (OVER-THE-COUNTER) OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each
Fund may engage in transactions involving dealer options. Certain risks are
specific to dealer options. While the Fund would look to a clearing corporation
to exercise exchange-traded options, if the Fund were to purchase a dealer
option, it would rely on the dealer from whom it purchased the option to perform
if the option were exercised. Failure by the dealer to do so would result in the
loss of the premium paid by the Fund as well as loss of the expected benefit of
the transaction.
Exchange-traded options generally have a continuous liquid market while dealer
options have none. Consequently, the Fund will generally be able to realize the
value of a dealer option it has purchased only by exercising it or reselling it
to the dealer who issued it. Similarly, when the Fund writes a dealer option, it
generally will be able to close out the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which the Fund
originally wrote the option. While the Fund will seek to enter into dealer
options only with dealers
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who will agree to and which are expected to be capable of entering into closing
transactions with the Fund, there can be no assurance that the Fund will be able
to liquidate a dealer option at a favorable price at any time prior to
expiration. Until the Fund, as a covered dealer call option writer, is able to
effect a closing purchase transaction, it will not be able to liquidate
securities (or other assets) or currencies used as cover until the option
expires or is exercised. In the event of insolvency of the contra party, the
Fund may be unable to liquidate a dealer option. With respect to options written
by the Fund, the inability to enter into a closing transaction may result in
material losses to the Fund. For example, since the Fund must maintain a secured
position with respect to any call option on a security it writes, the Fund may
not sell the assets which it has segregated to secure the position while it is
obligated under the option. This requirement may impair a Fund's ability to sell
portfolio securities or currencies at a time when such sale might be
advantageous.
The Staff of the SEC has taken the position that purchased dealer options and
the assets used to secure the written dealer options are illiquid securities. A
Fund may treat the cover used for written OTC options as liquid if the dealer
agrees that the Fund may repurchase the OTC option it has written for a maximum
price to be calculated by a predetermined formula. In such cases, the OTC option
would be considered illiquid only to the extent the maximum repurchase price
under the formula exceeds the intrinsic value of the option. Accordingly, the
Fund will treat dealer options as subject to the Fund's limitation on
unmarketable securities. If the SEC changes its position on the liquidity of
dealer options, the Fund will change its treatment of such instrument
accordingly.
EXPOSURE TO FOREIGN MARKETS (ALL FUNDS EXCEPT FOCUS 30 FUND AND CASH
RESERVES FUND). Foreign securities, foreign currencies, and securities issued
by U.S. entities with substantial foreign operations may involve significant
risks in addition to the risks inherent in U.S. investments. The value of
securities denominated in foreign currencies, and of dividends and interest paid
with respect to such securities will fluctuate based on the relative strength of
the U.S. dollar.
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There may be less publicly available information about foreign securities and
issuers than is available about domestic securities and issuers. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards, practices and requirements comparable to those
applicable to domestic companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable
domestic companies. The Funds' interest and dividends from foreign issuers maybe
subject to non-U.S. withholding taxes, thereby reducing the Funds' net
investment income.
Currency exchange rates may fluctuate significantly over short periods and can
be subject to unpredictable change based on such factors as political
developments and currency controls by foreign governments. Because the Funds may
invest in securities denominated in foreign currencies, they may seek to hedge
foreign currency risks by engaging in foreign currency exchange transactions.
These may include buying or selling foreign currencies on a spot basis, entering
into foreign currency forward contracts, and buying and selling foreign currency
options, foreign currency futures, and options on foreign currency futures. Many
of these activities constitute "derivatives" transactions. See "Derivatives",
above.
Each Fund may invest in issuers domiciled in "emerging markets," those countries
determined by the Adviser to have developing or emerging economies and markets.
Emerging market investing involves risks in addition to those risks involved in
foreign investing. For example, many emerging market countries have experienced
substantial, and in some periods extremely high, rates of inflation for many
years. In addition, economies in emerging markets generally are dependent
heavily upon international trade and, accordingly, have been and continue to be
affected adversely by trade barriers, exchange controls, managed adjustments in
relative currency values and other protectionist measures imposed or negotiated
by the countries with which they trade. The securities markets of emerging
countries are substantially smaller, less developed, less liquid and more
volatile than the securities markets of the United States and other more
developed countries. Brokerage commissions, custodial services and other costs
relating to investment in foreign markets generally are more expensive than in
the United States, particularly with respect to emerging markets. In addition,
some emerging market countries impose transfer taxes or fees on a capital market
transaction.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
is no assurance that the Adviser will be able to anticipate these potential
events or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade a
small number of securities.
Economies of particular countries or areas of the world may differ favorably or
unfavorably from the economy of the United States. Foreign markets may offer
less protection to investors than U.S. markets. It is anticipated that in most
cases the best available market for foreign securities will be on an exchange or
in over-the-counter markets located outside the United States. Foreign stock
markets, while growing in volume and sophistication, are generally not as
developed as those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. issuers. Foreign security trading
practices, including those involving securities settlement where Fund assets may
be released prior to receipt of payment, may result in increased risk in the
event of a failed trade or the insolvency of a foreign broker-dealer, and may
involve substantial delays. In addition, the costs of foreign investing,
including withholding taxes, brokerage commissions and custodial costs, are
generally higher than for U.S. investors. In general, there is less overall
governmental supervision and regulation of securities exchanges, brokers, and
listed companies than in the United States. It may also be difficult to enforce
legal rights in foreign countries. Foreign issuers are generally not bound by
uniform accounting, auditing, and financial reporting requirements and standards
of practice comparable to those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the United States
or to U.S. persons. Although securities subject to such transfer restrictions
may be marketable abroad, they may be less liquid than foreign securities of the
same class that are not subject to such restrictions. American Depository
Receipts (ADRs), as well as other "hybrid" forms of ADRs, including European
Depository Receipts (EDRs) and Global Depository Receipts (GDRs), are
certificates evidencing ownership of shares of a foreign issuer. These
certificates are issued by depository banks and generally trade on an
established market in the United States or elsewhere. The underlying shares are
held in trust by a custodian bank or similar financial institution in the
issuer's home country. The depository bank may not have physical custody of the
underlying securities at all times and may charge fees for various services,
including forwarding dividends and interest and corporate actions. ADRs are
alternatives to directly purchasing the underlying foreign securities in their
national markets and currencies. However, ADRs continue to be subject to many of
the risks associated with investing directly in foreign securities. These risks
include foreign exchange risk as well as the political and economic risks of the
underlying issuer's country.
Investments in emerging markets can be subject to a number of types of taxes
that vary by country, change frequently, and are sometime defined by custom
rather than written regulation. Emerging countries can tax interest, dividends,
and capital gains through the application of a withholding tax. The local
custodian normally withholds the tax upon receipt of a payment and forwards such
tax payment to the foreign government on behalf of the Fund. Certain foreign
governments can also require a foreign investor to file an income tax return and
pay the local tax through estimated tax payments, or pay with the tax return.
Although not frequently used, some emerging markets have attempted to slow
conversion of their currency by imposing a repatriation tax. Generally, this tax
is applied to amounts which are converted from the foreign currency to the
investor's currency and withdrawn from the local bank account. Transfer taxes or
fees, such as stamp duties, security transfer taxes, and registration and script
fees, are generally imposed by emerging markets as a tax or fee on a capital
market transaction. Each emerging country may impose a tax or fee at a different
point in time as the foreign investor perfects his interest in the securities
acquired in the local market. A stamp duty is generally a tax on the official
recording of a capital market transaction. Payment of such duty is generally a
condition of the transfer of assets and failure to pay such duty can result in a
loss of title to such asset as well as loss of benefit from any corporate
actions. A stamp duty is generally determined based on a percentage of the value
of the transaction conducted and can be charged against the buyer (e.g., Cyprus,
India, Israel, Jordan, Malaysia, Pakistan, and the Philippines), against the
seller (e.g., Argentina, Australia, China, Egypt, Indonesia, Kenya, Portugal,
South Korea, Trinidad, Tobago, and Zimbabwe). Although such a fee does not
generally exceeded 100 basis points, certain emerging markets have assessed a
stamp duty as high as 750 basis points (e.g., Pakistan). A security transfer tax
is similar to a stamp duty and is generally applied to the purchase, sale or
exchange of securities which occur in a particular foreign market. These taxes
are based on the value of the trade and similar to stamp taxes, can be assessed
against the buyer, seller or both. Although the
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securities transfer tax may be assessed in lieu of a stamp duty, such tax can be
assessed in addition to a stamp duty in certain foreign markets (e.g.,
Switzerland, South Korea, Indonesia). Upon purchasing a security in an emerging
market, such security must often be submitted to a registration process in order
to record the purchaser as a legal owner of such security interest. Often
foreign countries will charge a registration or script fee to record the change
in ownership and, where physical securities are issued, issue a new security
certificate. In addition to assessing this fee upon the acquisition of a
security, some markets also assess registration charges upon the registration of
local shares to foreign shares.
FEDERAL TAX TREATMENT OF OPTIONS, FUTURES CONTRACTS AND FORWARD FOREIGN EXCHANGE
CONTRACTS. Each Fund may enter into certain option, futures, and forward foreign
exchange contracts, including options and futures on currencies, which are
Section 1256 contracts and may result in the Fund entering into straddles.
Open Section 1256 contracts at fiscal year end will be considered to have been
closed at the end of the Fund's fiscal year and any gains or losses will be
recognized for tax purposes at that time. Such gains or losses from the normal
closing or settlement of such transactions will be characterized as 60%
long-term capital gain or loss and 40% short-term capital gain or loss
regardless of the holding period of the instrument. The Fund will be required to
distribute net gains on such transactions to shareholders even though it may not
have closed the transaction and received cash to pay such distributions.
Options, futures and forward foreign exchange contracts, including options and
futures on currencies, which offset a security or currency position may be
considered straddles for tax purposes, in which case a loss on any position in a
straddle will be subject to deferral to the extent of unrealized gain in an
offsetting position. The holding period of the securities or currencies
comprising the straddle may be deemed not to begin until the straddle is
terminated. The holding period of the security offsetting an "in-the-money
qualified covered call" option will not include the period of time the option is
outstanding.
Losses on written covered calls and purchased puts on securities, excluding
certain "qualified covered call" options, may be long-term capital loss, if the
security covering the option was held for more than twelve months prior to the
writing of the option.
In order for each Fund to continue to qualify for federal income tax treatment
as a regulated investment company, at least 90% of its gross income for a
taxable year must be derived from qualifying income; i.e., dividends, interest,
income derived from loans of securities, and gains from the sale of securities
or currencies.
FOREIGN CURRENCY TRANSACTIONS (ALL FUNDS EXCEPT FOCUS 30 FUND AND CASH
RESERVES FUND). A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. These contracts are
principally traded in the interbank market conducted directly between currency
traders (usually large, commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades.
Each Fund may enter into forward contracts for a variety of purposes in
connection with the management of the foreign currency exposure of its
portfolio. The Fund's use of such contracts would include, but not be limited
to, the following: First, when the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security. By entering into a forward contract
for the purchase or sale, for a fixed amount of dollars of the amount of foreign
currency involved in the underlying security transactions, the Fund will be able
to protect itself against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the subject foreign currency during
the period between the date the security is purchased or sold and the date on
which payment is made or received.
Second, when the Adviser believes that one currency may experience a substantial
movement against another currency, including the U.S. dollar, or it wishes to
alter the Fund's exposure to the currencies of the countries in its investment
universe, it may enter into a forward contract to sell or buy foreign currency
in exchange for the U.S. dollar or another foreign currency. Alternatively,
where appropriate, a Fund may manage all or part of its foreign currency
exposure through the use of a basket of currencies or a proxy currency where
such currency or currencies act as an effective proxy for other currencies. In
such a case, the Fund may enter into a forward contract where the
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amount of the foreign currency to be sold exceeds the value of the securities
denominated in such currency. The use of this basket hedging technique may be
more efficient and economical than entering into separate forward contracts for
each currency held in the Fund. The precise matching of the forward contract
amounts and the value of the securities involved will not generally be possible
since the future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those securities between the
date the forward contract is entered into and the date it matures. The
projection of short-term currency market movement is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.
Under normal circumstances, consideration of the prospect for currency parities
will be incorporated into the longer term investment decisions made with regard
to overall diversification strategies. However, each of the Adviser and
Sub-Advisers believe that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of a Fund will
be served.
Each Fund may enter into forward contacts for any other purpose consistent with
the Fund's investment objective and program. However, the Fund will not enter
into a forward contract, or maintain exposure to any such contract(s), if the
amount of foreign currency required to be delivered thereunder would exceed the
Fund's holdings of liquid securities and currency available for cover of the
forward contract(s). In determining the amount to be delivered under a contract,
the Fund may net offsetting positions.
At the maturity of a forward contract, the Fund may sell the portfolio security
and make delivery of the foreign currency, or it may retain the security and
either extend the maturity of the forward contract (by "rolling" that contract
forward) or may initiate a new forward contract.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent of the price of the currency it has agreed to
purchase exceeds the price of the currency it has agreed to sell.
Each Fund's dealing in forward foreign currency exchange contracts will
generally be limited to the transactions described above. However, each Fund
reserves the right to enter into forward foreign currency contracts for
different purposes and under different circumstances. Of course, the Fund is not
required to enter into forward contracts with regard to its foreign currency
denominated securities and will not do so unless deemed appropriate by the
Adviser or a Sub-Adviser. It also should be realized that this method of hedging
against a decline in the value of a currency does not eliminate fluctuations in
the underlying prices of the securities. It simply establishes a rate of
exchange at a future date. Additionally, although such contracts tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time, they tend to limit any potential gain which might result from
an increase in the value of that currency.
Although each Fund values its assets daily in terms of U.S. dollars, it does not
intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. It will do so from time to time, and investors should be aware of
the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer.
FOREIGN FUTURES AND OPTIONS (ALL FUNDS EXCEPT FOCUS 30 FUND AND CASH
RESERVES FUND). Participation in foreign futures and foreign options
transactions involves the execution and clearing of trades on or subject to the
rules of a foreign board of trade. Neither the National Futures Association nor
any domestic exchange regulates activities of any foreign boards of trade,
including the execution, delivery and clearing of transactions, or has the power
to compel enforcement of the rules of a foreign board of trade or any applicable
foreign law. This is true even if the exchange is formally linked to a domestic
market so that a position taken on the market may be liquidated by a transaction
on another market. Moreover, such laws or regulations will vary depending on the
foreign country in which the foreign futures or foreign options transaction
occurs. For these reasons, customers
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who trade foreign futures or foreign options contracts may not be afforded
certain of the protective measures provided by the Commodity Exchange Act, the
CFTC's regulations and the rules of the National Futures Association and any
domestic exchange, including the right to use reparations proceedings before the
Commission and arbitration proceedings provided by the National Futures
Association or any domestic futures exchange. In particular, funds received from
a Fund for foreign futures or foreign options transactions may not be provided
the same protections as funds received in respect of transactions on United
States futures exchanges. In addition, the price of any foreign futures or
foreign options contract and, therefore, the potential profit and loss thereon
may be affected by any variance in the foreign exchange rate between the time
the Fund's order is placed and the time it is liquidated, offset or exercised.
FUTURES CONTRACTS (ALL FUNDS EXCEPT CASH RESERVES FUND). Transactions in
Futures. Each Fund may enter into futures contracts, including stock index,
interest rate and currency futures ("futures or futures contracts").
Stock index futures contracts may be used to provide a hedge for a portion of
the Fund's portfolio, as a cash management tool, or as an efficient way for the
Adviser to implement either an increase or decrease in portfolio market exposure
in response to changing market conditions. A Fund may, purchase or sell futures
contracts with respect to any stock index. Nevertheless, to hedge the Fund's
portfolio successfully, the Fund must sell futures contacts with respect to
indices or sub-indices whose movements will have a significant correlation with
movements in the prices of the Fund's portfolio securities.
Interest rate or currency futures contracts may be used to manage a Fund's
exposure to changes in prevailing levels of interest rates or currency exchange
rates in order to establish more definitely the effective return on securities
or currencies held or intended to be acquired by the Fund. In this regard, the
Fund could sell interest rate or currency futures as an offset against the
effect of expected increases in interest rates or currency exchange rates and
purchase such futures as an offset against the effect of expected declines in
interest rates or currency exchange rates.
A Fund will enter into futures contracts which are traded on national or foreign
futures exchanges, and are standardized as to maturity date and underlying
financial instrument. Futures exchanges and trading in the United States are
regulated under the Commodity Exchange Act by the Commodity Futures Trading
Commission ("CFTC"). Futures are traded in London at the London International
Financial Futures Exchange in Paris at the MATIF and in Tokyo at the Tokyo Stock
Exchange. Although techniques other than the sale and purchase of futures
contracts could be used for the above-referenced purposes, futures contracts
offer an effective and relatively low cost means of implementing the Fund's
objectives in these areas.
Although the Funds have no current intention of engaging in futures or options
transactions other than those described above, they reserve the right to do so.
Such futures and options trading might involve risks which differ from those
involved in the futures and options described in this Statement of Additional
Information.
HEDGING RISK. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some degree
because of unexpected market behavior or market or interest rate trends. There
are several risks in connection with the use by a Fund of futures contracts as a
hedging device. One risk arises because of the possible imperfect correlation
between movements in the prices of the futures contracts and movements in the
prices of the underlying instruments which are the subject of the hedge. The
Adviser or Sub-Adviser will, however, attempt to reduce this risk by entering
into futures contracts whose movements, in its judgment, will have a significant
correlation with movements in the prices of the Fund's underlying instruments
sought to be hedged.
Successful use of futures contracts by the Fund for hedging purposes is also
subject to the Adviser's or Sub-Adviser's ability to correctly predict movements
in the direction of the market. It is possible that, when the Fund has sold
futures to hedge its portfolio against a decline in the market, the index,
indices, or instruments underlying futures might advance and the value of the
underlying instruments held in the Fund's portfolio might decline. If this were
to occur, the Fund would lose money on the futures and also would experience a
decline in value in its underlying instruments. However, while this might occur
to a certain degree, the Adviser and each Sub-Adviser believe that over time the
value of the Fund's portfolio will tend to move in the same direction as the
market indices used to hedge the portfolio. It is also possible that if a Fund
were to hedge against the possibility of a decline in the
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market (adversely affecting the underlying instruments held in its portfolio)
and prices instead increased, the Fund would lose part or all of the benefit of
increased value of those underlying instruments that it has hedged, because it
would have offsetting losses in its futures positions. In addition, in such
situations, if the Fund had insufficient cash, it might have to sell underlying
instruments to meet daily variation margin requirements. Such sales of
underlying instruments might be, but would not necessarily be, at increased
prices (which would reflect the rising market). The Fund might have to sell
underlying instruments at a time when it would be disadvantageous to do so.
In addition to the possibility that there might be an imperfect correlation, or
no correlation at all, between price movements in the futures contracts and the
portion of the portfolio being hedged, the price movements of futures contracts
might not correlate perfectly with price movements in the underlying instruments
due to certain market distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors might close futures contracts
through offsetting transactions, which could distort the normal relationship
between the underlying instruments and futures markets. Second, the margin
requirements in the futures market are less onerous than margin requirements in
the securities markets, and as a result the futures market might attract more
speculators than the securities markets do. Increased participation by
speculators in the futures market might also cause temporary price distortions.
Due to the possibility of price distortion in the futures market and also
because of the imperfect correlation between price movements in the underlying
instruments and movements in the prices of futures contracts, even a correct
forecast of general market trends by the Adviser or Sub-Adviser might not result
in a successful hedging transaction over a very short time period.
ILLIQUID OR RESTRICTED SECURITIES (ALL FUNDS). Restricted securities may be sold
only in privately negotiated transactions or in a public offering with respect
to which a registration statement is in effect under the Securities Act of 1933
(the "1933 Act"). Where registration is required, a Fund may be obligated to pay
all or part of the registration expenses and a considerable period may elapse
between the time of the decision to sell and the time the Fund may be permitted
to sell a security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to sell. Restricted securities
will be priced at fair value as determined in accordance with procedures
prescribed by the Board of Trustees of the Trust. If through the appreciation of
illiquid securities or the depreciation of liquid securities, the Fund should be
in a position where more than 15% (or, in the case of the Cash Reserves Fund,
10%) of the value of its net assets are invested in illiquid assets, including
restricted securities, the Fund will take appropriate steps to protect
liquidity.
Notwithstanding the above, each Fund may purchase securities which, while
privately placed, are eligible for purchase and sale under Rule 144A under the
1933 Act. This rule permits certain qualified institutional buyers to trade in
privately placed securities even though such securities are not registered under
the 1933 Act. The Adviser or Sub-Adviser under the supervision of the Board of
Trustees of the Trust, will consider whether securities purchased under Rule
144A are illiquid and thus subject to the Fund's restriction of investing no
more than 15% of its net assets in illiquid securities. A determination of
whether a Rule 144A security is liquid or not is a question of fact. In making
this determination, the Adviser or Sub-Adviser will consider the trading markets
for the specific security taking into account the unregistered nature of a Rule
144A security. In addition, the Adviser or Sub-Adviser could consider (1) the
frequency of trades and quotes, (2) the number of dealers and potential
purchases, (3) any dealer undertakings to make a market, and (4) the nature of
the security and of marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of transfer). The
liquidity of Rule 144A securities would be monitored, and if as a result of
changed conditions it is determined that a Rule 144A security is no longer
liquid, the Fund's holdings of illiquid securities would be reviewed to
determine what, if any, steps are required to assure that the Fund does not
invest more than 15% of its net assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of the Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
LOANS AND OTHER DIRECT DEBT INSTRUMENTS (ALL FUNDS). Direct debt instruments are
interests in amounts owed by a corporate, governmental, or other borrower to
lenders or lending syndicates (loans and loan participations), to suppliers of
goods or services (trade claims or other receivables), or to other parties.
Direct debt instruments are subject to each Fund's policies regarding the
quality of debt securities.
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Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If a Fund does not receive scheduled interest or principal payments on
such indebtedness, the Fund's share price and yield could be adversely affected.
Loans that are fully secured offer a Fund more protections than an unsecured
loan in the event of non-payment of scheduled interest or principal. However,
there is no assurance that the liquidations of collateral from a secured loan
would satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks and may be highly speculative. Borrowers that are in
bankruptcy or restructuring may never pay off their indebtedness, or may pay
only a small fraction of the amount owed. Direct indebtedness of developing
countries also involves a risk that the governmental entities responsible for
the repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, the Fund could be held liable as a colender.
Direct debt instruments may also involve a risk of insolvency of the lending
bank or other intermediary. Direct debt instruments that are not in the form of
securities may offer less legal protection to a Fund in the event of fraud or
misrepresentation. In the absence of definitive regulatory guidance, each Fund
relies on the Adviser's research in an attempt to avoid situations where fraud
or misrepresentation could adversely affect the Fund.
A loan is often administered by a bank or other financial institution that acts
as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement. Unless, under the terms of the loan or other
indebtedness, a Fund has direct recourse against the borrower, it may have to
rely on the agent to apply appropriate credit remedies against a borrower. If
assets held by the agent for the benefit of a Fund were determined to be subject
to the claims of the agent's general creditors, the Fund might incur certain
costs and delays in realizing payment on the loan or loan participation and
could suffer a loss of principal or interest.
Direct indebtedness purchased by a Fund may include letters of credit, revolving
credit facilities, or other standby financing commitments obligating the Fund to
pay additional cash on demand. These commitments may have the effect of
requiring the Fund to increase its investment in a borrower at a time when it
would not otherwise have done so, even if the borrower's condition makes it
unlikely that the amount will ever be repaid. A Fund will set aside appropriate
liquid assets in a custodial account to cover its potential obligations under
standby financing commitments.
Each Fund limits the amount of total assets that it will invest in any one
issuer or, except for the Strategic Natural Resources Fund and the Info-Tech &
Communications Fund, in issuers within the same industry (see each Fund's
investment limitations). For purposes of these limitations, a Fund generally
will treat the borrower as the "issuer" of indebtedness held by the Fund. In the
case of loan participations where a bank or other lending institution serves as
financial intermediary between a Fund and the borrower, if the participation
does not shift to the Fund the direct debtor-creditor relationship with the
borrower, SEC interpretations require the Fund, in appropriate circumstances, to
treat both the lending bank or other lending institution and the borrower as
"issuers" for these purposes. Treating a financial intermediary as an issuer of
indebtedness may restrict a Fund's ability to invest in indebtedness related to
a single financial intermediary, or a group of intermediaries engaged in the
same industry, even if the underlying borrowers represent many different
companies and industries.
MATURITY OF DEBT SECURITIES. The maturity of debt securities may be considered
long (10 years or more), intermediate (3 to 10 years), or short-term (less than
3 years). In general, the principal values of longer-term securities fluctuate
more widely in response to changes in interest rates than those of shorter-term
securities, providing greater opportunity for capital gain or risk of capital
loss. A decline in interest rates usually produces an increase in the value of
debt securities, while an increase in interest rates generally reduces their
value.
MORTGAGE PASS-THROUGH SECURITIES (ALL FUNDS EXCEPT FOCUS 30 FUND AND CASH
RESERVES FUND). Interests in pools of mortgage pass-through securities differ
from other forms of debt securities (which normally provide periodic payments of
interest in fixed amounts and the payment of principal in a lump sum at maturity
or on specified call dates). Instead, mortgage pass-through securities provide
monthly payments consisting of both
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interest and principal payments. In effect, these payments are a "pass-through"
of the monthly payments made by the individual borrowers on the underlying
residential mortgage loans, net of any fees paid to the issuer or guarantor of
such securities. Unscheduled payments of principal may be made if the underlying
mortgage loans are repaid or refinanced or the underlying properties are
foreclosed, thereby shortening the securities' weighted average life. Some
mortgage pass-through securities (such as securities guaranteed by GNMA) are
described as "modified pass-through securities." These securities entitle the
holder to receive all interest and principal payments owed on the mortgage pool,
net of certain fees, on the scheduled payment dates regardless of whether the
mortgagor actually makes the payment.
The principal governmental guarantor of mortgage pass-through securities is
GNMA. GNMA is authorized to guarantee, with the full faith and credit of the
U.S. Treasury, the timely payment of principal and interest on securities issued
by lending institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of mortgage loans.
These mortgage loans are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgage
loans is assembled and after being approved by GNMA, is offered to investors
through securities dealers.
Government-related guarantors of mortgage pass-through securities (i.e., not
backed by the full faith and credit of the U.S. Treasury) include FNMA and
FHLMC. FNMA is a Government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any Government agency) residential mortgages from a list of
approved sellers/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Mortgage pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA but are not
backed by the full faith and credit of the U.S. Treasury.
FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a U.S.
Government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues Participation
Certificates ("PCs") which represent interests in conventional mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but PCs are not backed by the full faith and
credit of the U.S. Treasury.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage pass-through securities. The
Funds do not purchase interests in pools created by such non-governmental
issuers.
Resets. The interest rates paid on the Adjustable Rate Mortgage Securities
("ARMs") in which a Fund may invest generally are readjusted or reset at
intervals of one year or less to an increment over some predetermined interest
rate index. There are two main categories of indices: those based on U.S.
Treasury securities and those derived from a calculated measure, such as a cost
of funds index or a moving average of mortgage rates. Commonly utilized indices
include the one-year and five-year constant maturity Treasury Note rates, the
three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on
longer-term Treasury securities, the National Median Cost of Funds, the
one-month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a specific bank, or commercial paper rates. Some indices, such as the
one-year constant maturity Treasury Note rate, closely mirror changes in market
interest rate levels. Others tend to lag changes in market rate levels and tend
to be somewhat less volatile.
Caps and Floors. The underlying mortgages which collateralize the ARMs in which
a Fund invests will frequently have caps and floors which limit the maximum
amount by which the loan rate to the residential borrower may change up or down:
(1) per reset or adjustment interval and (2) over the life of the loan. Some
residential mortgage loans restrict periodic adjustments by limiting changes in
the borrower's monthly principal and interest payments rather than limiting
interest rate changes. These payment caps may result in negative amortization.
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The value of mortgage securities in which a Fund invests may be affected if
market interest rates rise or fall faster and farther than the allowable caps or
floors on the underlying residential mortgage loans. Additionally, even though
the interest rates on the underlying residential mortgages are adjustable,
amortization and prepayments may occur, thereby causing the effective maturities
of the mortgage securities in which the Fund invests to be shorter than the
maturities stated in the underlying mortgages.
OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Writing Covered Call Options.
Each Fund may write (sell) American or European style "covered" call options and
purchase options to close out options previously written by the Fund. In writing
covered call options, the Fund expects to generate additional premium income
which should serve to enhance the Fund's total return and reduce the effect of
any price decline of the security or currency involved in the option. Covered
call options will generally be written on securities or currencies which, in the
Adviser's opinion, are not expected to have any major price increases or moves
in the near future but which, over the long term, are deemed to be attractive
investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a security or
currency at a specified price (the exercise price) at expiration of the option
(European style) or at any time until a certain date (the expiration date)
(American style). So long as the obligation of the writer of a call option
continues, he may be assigned an exercise notice by the broker-dealer through
whom such option was sold, requiring him to deliver the underlying security or
currency against payment of the exercise price. This obligation terminates upon
the expiration of the call option, or such earlier time at which the writer
effects a closing purchase transaction by repurchasing an option identical to
that previously sold. To secure his obligation to deliver the underlying
security or currency in the case of a call option, a writer is required to
deposit in escrow the underlying security or currency or other assets in
accordance with the rules of a clearing corporation.
Each Fund will write only covered call options. This means that the Fund will
own the security or currency subject to the option or an option to purchase the
same underlying security or currency, having an exercise price equal to or less
than the exercise price of the "covered" option, or will establish and maintain
with its custodian for the term of the option, an account consisting of cash,
U.S. government securities or other liquid securities having a value equal to
the fluctuating market value of the securities or currencies on which the Fund
holds a covered call position.
Portfolio securities or currencies on which call options may be written will be
purchased solely on the basis of investment considerations consistent with the
Fund's investment objective. The writing of covered call options is a
conservative investment technique believed to involve relatively little risk (in
contrast to the writing of naked or uncovered options, which the Funds will not
do), but capable of enhancing the Fund's total return. When writing a covered
call option, a Fund, in return for the premium, gives up the opportunity for
profit from a price increase in the underlying security or currency above the
exercise price, but conversely retains the risk of loss should the price of the
security or currency decline. Unlike one who owns securities or currencies not
subject to an option, the Fund has no control over when it may be required to
sell the underlying securities or currencies, since it may be assigned an
exercise notice at any time prior to the expiration of its obligation as a
writer. If a call option which the Fund has written expires, the Fund will
realize a gain in the amount of the premium; however, such gain may be offset by
a decline in the market value of the underlying security or currency during the
option period. If the call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security or currency. The Fund does not
consider a security or currency covered by a call to be "pledged" as that term
is used in the Fund's policy which limits the pledging or mortgaging of its
assets.
The premium received is the market value of an option. The premium the Fund will
receive from writing a call option will reflect, among other things, the current
market price of the underlying security or currency, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security or currency, and the length of the option period. Once the
decision to write a call option has been made, the Adviser, in determining
whether a particular call option should be written on a particular security or
currency, will consider the reasonableness of the anticipated premium and the
likelihood that a liquid secondary market will exist for those options. The
premium received by the Fund for writing covered call options will be recorded
as a liability of the Fund. This liability will be adjusted daily to the
option's current market value, which will be the latest sale price at the time
at which the net asset value per share of the Fund is computed (close of the New
York Stock Exchange), or, in the absence of such sale, the latest asked price.
The option will be terminated upon expiration of the option, the
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purchase of an identical option in a closing transaction, or delivery of the
underlying security or currency upon the exercise of the option.
Closing transactions will be effected in order to realize a profit on an
outstanding call option, to prevent an underlying security or currency from
being called, or, to permit the sale of the underlying security or currency.
Furthermore, effecting a closing transaction will permit the Fund to write
another call option on the underlying security or currency with either a
different exercise price or expiration date or both. If the Fund desires to sell
a particular security or currency from its portfolio on which it has written a
call option, or purchased a put option, it will seek to effect a closing
transaction prior to, or concurrently with, the sale of the security or
currency. There is, of course, no assurance that the Fund will be able to effect
such closing transactions at favorable prices. If the Fund cannot enter into
such a transaction, it may be required to hold a security or currency that it
might otherwise have sold. When the Fund writes a covered call option, it runs
the risk of not being able to participate in the appreciation of the underlying
securities or currencies above the exercise price, as well as the risk of being
required to hold on to securities or currencies that are depreciating in value.
This could result in higher transaction costs. The Fund will pay transaction
costs in connection with the writing of options to close out previously written
options. Such transaction costs are normally higher than those applicable to
purchases and sales of portfolio securities.
Call options written by a Fund will normally have expiration dates of less than
nine months from the date written. The exercise price of the options may be
below, equal to, or above the current market values of the underlying securities
or currencies at the time the options are written. From time to time, a Fund may
purchase an underlying security or currency for delivery in accordance with an
exercise notice of a call option assigned to it, rather than delivering such
security or currency from its portfolio. In such cases, additional costs may be
incurred.
A Fund will realize a profit or loss from a closing purchase transaction if the
cost of the transaction is less or more than the premium received from the
writing of the option. Because increases in the market price of a call option
will generally reflect increases in the market price of the underlying security
or currency, any loss resulting from the repurchase of a call option is likely
to be offset in whole or in part by appreciation of the underlying security or
currency owned by the Fund.
OPTIONS ON FUTURES CONTRACTS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each Fund
may purchase and sell options on the same types of futures in which it may
invest.
Options on futures are similar to options on underlying instruments except that
options on futures give the purchaser the right, in return for the premium paid,
to assume a position in a futures contract (a long position if the option is a
call and a short position if the option is a put), rather than to purchase or
sell the futures contract, at a specified exercise price at any time during the
period of the option. Upon exercise of the option, the delivery of the futures
position by the writer of the option to the holder of the option will be
accompanied by the delivery of the accumulated balance in the writer's futures
margin account which represents the amount by which the market price of the
futures contract, at exercise, exceeds (in the case of a call) or is less than
(in the case of a put) the exercise price of the option on the futures contract.
Purchasers of options who fail to exercise their options prior to the exercise
date suffer a loss of the premium paid.
As an alternative to writing or purchasing call and put options on stock index
futures, each Fund may write or purchase call and put options on stock indices.
Such options would be used in a manner similar to the use of options on futures
contracts.
PURCHASING CALL OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each Fund may
purchase American or European style call options. As the holder of a call
option, the Fund has the right to purchase the underlying security or currency
at the exercise price at any time during the option period (American style) or
at the expiration of the option (European style). The Fund may enter into
closing sale transactions with respect to such options, exercise them or permit
them to expire. The Fund may purchase call options for the purpose of increasing
its current return or avoiding tax consequences which could reduce its current
return. The Fund may also purchase call options in order to acquire the
underlying securities or currencies. Examples of such uses of call options are
provided below.
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Call options may be purchased by the Fund for the purpose of acquiring the
underlying securities or currencies for its portfolio. Utilized in this fashion,
the purchase of call options enables the Fund to acquire the securities or
currencies at the exercise price of the call option plus the premium paid. At
times the net cost of acquiring securities or currencies in this manner may be
less than the cost of acquiring the securities or currencies directly. This
technique may also be useful to the Fund in purchasing a large block of
securities or currencies that would be more difficult to acquire by direct
market purchases. So long as it holds such a call option rather than the
underlying security or currency itself, the Fund is partially protected from any
unexpected decline in the market price of the underlying security or currency
and in such event could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
PURCHASING PUT OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each Fund may
purchase American or European style put options. As the holder of a put option,
the Fund has the right to sell the underlying security or currency at the
exercise price at any time during the option period (American style) or at the
expiration of the option (European style). The Fund may enter into closing sale
transactions with respect to such options, exercise them or permit them to
expire. The Fund may purchase put options for defensive purposes in order to
protect against an anticipated decline in the value of its securities or
currencies. An example of such use of put options is provided below.
Each Fund may purchase a put option on an underlying security or currency (a
"protective put") owned by the Fund as a defensive technique in order to protect
against an anticipated decline in the value of the security or currency. Such
hedge protection is provided only during the life of the put option when the
Fund, as the holder of the put option, is able to sell the underlying security
or currency at the put exercise price regardless of any decline in the
underlying security's market price or currency's exchange value. For example, a
put option may be purchased in order to protect unrealized appreciation of a
security or currency where the Adviser deems it desirable to continue to hold
the security or currency because of tax considerations. The premium paid for the
put option and any transaction costs would reduce any capital gain otherwise
available for distribution when the security or currency is eventually sold.
Each Fund may also purchase put options at a time when the Fund does not own the
underlying security or currency. By purchasing put options on a security or
currency it does not own, the Fund seeks to benefit from a decline in the market
price of the underlying security or currency. If the put option is not sold when
it has remaining value, and if the market price of the underlying security or
currency remains equal to or greater than the exercise price during the life of
the put option, the Fund will lose its entire investment in the put option. In
order for the purchase of a put option to be profitable, the market price of the
underlying security or currency must decline sufficiently below the exercise
price to cover the premium and transaction costs, unless the put option is sold
in a closing sale transaction.
REGULATORY LIMITATIONS. A Fund will engage in futures contracts and options
thereon only for bona fide hedging, yield enhancement, and risk management
purposes, in each case in accordance with rules and regulations of the CFTC.
A Fund may not purchase or sell futures contracts or related options if, with
respect to positions which do not qualify as bona fide hedging under applicable
CFTC rules, the sum of the amounts of initial margin deposits and premiums paid
on those portions would exceed 5% of the net asset value of the Fund after
taking into account unrealized profits and unrealized losses on any such
contracts it has entered into; provided, however, that in the case of an option
that is in-the money at the time of purchase, the in-the-money amount may be
excluded in calculating the 5% limitation. For purposes of this policy options
on futures contracts and foreign currency options traded on a commodities
exchange will be considered "related options." This policy may be modified by
the Board of Trustees without a shareholder vote and does not limit the
percentage of the Fund's assets at risk to 5%.
A Fund's use of futures contracts may result in leverage. Therefore, to the
extent necessary, in instances involving the purchase of futures contracts or
the writing of call or put options thereon by the Fund, an amount of cash, U.S.
Government securities or other appropriate liquid securities, equal to the
market value of the futures contracts and options thereon (less any related
margin deposits), will be identified in an account with the Fund's custodian to
cover (such as owning an offsetting position) the position, or alternative cover
will be employed. Assets used as cover or held in an identified account cannot
be sold while the position in the corresponding option or future is
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open, unless they are replaced with similar assets. As a result, the commitment
of a large portion of a Fund's assets to cover or identified accounts could
impede portfolio management or the Fund's ability to meet redemption requests or
other current obligations.
If the CFTC or other regulatory authorities adopt different (including less
stringent) or additional restrictions, each Fund would comply with such new
restrictions.
OTHER INVESTMENT COMPANIES. Each Fund may invest up to 10% of its total assets
in other investment companies, but only up to 5% of its assets in any one other
investment company. In addition, a Fund may not purchase more than 3% of the
securities of any one investment company. As a shareholder in an investment
company, that Fund would bear its ratable share of that investment company's
expenses, including its advisory and administration fees. At the same time, the
Fund would continue to pay its own management fees and other expenses.
MASTER/FEEDER STRUCTURE. Notwithstanding these limitations, each Fund
reserves the right to convert to a "master/feeder" structure at a future
date. Under such a structure, one or more "feeder" funds, such as the Funds,
invest all of their assets in a "master" fund, which, in turn, invests
directly in a portfolio of securities. If required by applicable law, the
Funds will seek shareholder approval before converting to a master/feeder
structure. If the requisite regulatory authorities determine that such
approval is not required, shareholders will be deemed, by purchasing shares,
to have consented to such a conversion and no further shareholder approval
will be sought. Such a conversion is expressly permitted under the investment
objective and fundamental policies of each Fund.
REPURCHASE AGREEMENTS (ALL FUNDS). The Funds may invest in repurchase
agreements. A repurchase agreement is an instrument under which the investor
(such as the Fund) acquires ownership of a security (known as the "underlying
security") and the seller (i.e., a bank or primary dealer) agrees, at the time
of the sale, to repurchase the underlying security at a mutually agreed upon
time and price, thereby determining the yield during the term of the agreement.
This results in a fixed rate of return insulated from market fluctuations during
such period, unless the seller defaults on its repurchase obligations. A Fund
will only enter into repurchase agreements where (i) the underlying securities
are of the type (excluding maturity limitations) which the Fund's investment
guidelines would allow it to purchase directly, (ii) the market value of the
underlying security, including interest accrued, will be at all times at least
equal to the value of the repurchase agreement, and (iii) payment for the
underlying security is made only upon physical delivery or evidence of
book-entry transfer to the account of the Fund's custodian. Repurchase
agreements usually are for short periods, often under one week, and will not be
entered into by a Fund for a duration of more than seven days if, as a result,
more than 15% (or, in the case of the Cash Reserves Fund, 10%) of the net asset
value of the Fund would be invested in such agreements or other securities which
are not readily marketable.
The Funds will assure that the amount of collateral with respect to any
repurchase agreement is adequate. As with a true extension of credit, however,
there is risk of delay in recovery or the possibility of inadequacy of the
collateral should the seller of the repurchase agreement fail financially. In
addition, a Fund could incur costs in connection with the disposition of the
collateral if the seller were to default. The Funds will enter into repurchase
agreements only with sellers deemed to be creditworthy by, or pursuant to
guidelines established by, the Board of Trustees of the Trust and only when the
economic benefit to the Funds is believed to justify the attendant risks. The
Funds have adopted standards for the sellers with whom they will enter into
repurchase agreements. The Board of Trustees of the Trust believe these
standards are designed to reasonably assure that such sellers present no serious
risk of becoming involved in bankruptcy proceedings within the time frame
contemplated by the repurchase agreement. The Funds may enter into repurchase
agreements only with well-established securities dealers or with member banks of
the Federal Reserve System.
SHORT SALES (ALL FUNDS EXCEPT CASH RESERVES FUND). The Funds may sell securities
short as part of their overall portfolio management strategies involving the use
of derivative instruments and to offset potential declines in long positions in
similar securities. A short sale is a transaction in which a Fund sells a
security it does not own or have the right to acquire (or that it owns but does
not wish to deliver) in anticipation that the market price of that security will
decline.
When a Fund makes a short sale, the broker-dealer through which the short sale
is made must borrow the security sold short and deliver it to the party
purchasing the security. The Fund is required to make a margin deposit in
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connection with such short sales; the Fund may have to pay a fee to borrow
particular securities and will often be obligated to pay over any dividends and
accrued interest on borrowed securities.
If the price of the security sold short increases between the time of the short
sale and the time the Fund covers its short position, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a capital gain.
Any gain will be decreased, and any loss increased, by the transaction costs
described above. The successful use of short selling may be adversely affected
by imperfect correlation between movements in the price of the security sold
short and the securities being hedged.
To the extent a Fund sells securities short, it will provide collateral to the
broker-dealer and (except in the case of short sales "against the box") will
maintain additional asset coverage in the form of cash, U.S. Government
securities or other liquid securities with its custodian in a segregated account
in an amount at least equal to the difference between the current market value
of the securities sold short and any amounts required to be deposited as
collateral with the selling broker (not including the proceeds of the short
sale). The Funds do not intend to enter into short sales (other than short sales
"against the box") if immediately after such sales the aggregate of the value of
all collateral plus the amount in such segregated account exceeds 10% of the
value of the Fund's net assets. This percentage may be varied by action of the
Board of Trustees. A short sale is "against the box" to the extent the Fund
contemporaneously owns, or has the right to obtain at no added cost, securities
identical to those sold short.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. Volatility and Leverage. The
prices of futures contracts are volatile and are influenced, among other things,
by actual and anticipated changes in the market and interest rates, which in
turn are affected by fiscal and monetary policies and national and international
political and economic events.
Most United States futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
futures contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses, because the limit may prevent
the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting some futures traders to substantial losses.
Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss, as
well as gain, to the investor. For example, if at the time of purchase, 10% of
the value of the futures contract is deposited as margin, a subsequent 10%
decrease in the value of the futures contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount of margin deposited to maintain the futures contract. However, a Fund
would presumably have sustained comparable losses if, instead of the futures
contract, it had invested in the underlying financial instrument and sold it
after the decline. Furthermore, in the case of a futures contract purchase, in
order to be certain that the Fund has sufficient assets to satisfy its
obligations under a futures contract, the Fund earmarks to the futures contract
money market instruments or other liquid securities equal in value to the
current value of the underlying instrument less the margin deposit.
Liquidity. A Fund may elect to close some or all of its futures positions at any
time prior to their expiration. The Fund would do so to reduce exposure
represented by long futures positions or short futures positions. The Fund may
close its positions by taking opposite positions which would operate to
terminate the Fund's position in the futures contracts. Final determinations of
variation margin would then be made, additional cash would be required to be
paid by or released to the Fund, and the Fund would realize a loss or a gain.
Futures contracts may be closed out only on the exchange or board of trade where
the contracts were initially traded. Although each Fund intends to purchase or
sell futures contracts only on exchanges or boards of trade where there appears
to be an active market, there is no assurance that a liquid market on an
exchange or board of trade will exist for any particular contract at any
particular time. The reasons for the absence of a liquid secondary market on an
19
<PAGE>
exchange are substantially the same as those discussed under "Special Risks of
Transactions in Options on Futures Contracts." In the event that a liquid market
does not exist, it might not be possible to close out a futures contract, and in
the event of adverse price movements, the Fund would continue to be required to
make daily cash payments of variation margin. However, in the event futures
contracts have been used to hedge the underlying instruments, the Fund would
continue to hold the underlying instruments subject to the hedge until the
futures contracts could be terminated. In such circumstances, an increase in the
price of underlying instruments, if any, might partially or completely offset
losses on the futures contract. However, as described below, there is no
guarantee that the price of the underlying instruments will, in fact, correlate
with the price movements in the futures contract and thus provide an offset to
losses on a futures contract.
SPECIAL RISKS OF TRANSACTIONS IN OPTIONS ON FUTURES CONTRACTS. The risks
described under "Special Risks of Transactions on Futures Contracts" are
substantially the same as the risks of using options on futures. In addition,
where a Fund seeks to close out an option position by writing or buying an
offsetting option covering the same underlying instrument, index or contract and
having the same exercise price and expiration date, its ability to establish and
close out positions on such options will be subject to the maintenance of a
liquid secondary market. Reasons for the absence of a liquid secondary market on
an exchange include the following: (i) there may be insufficient trading
interest in certain options; (ii) restrictions may be imposed by an exchange on
opening transactions or closing transactions or both; (iii) trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options, or underlying instruments; (iv) unusual or
unforeseen circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or a clearing corporation may not at all times be
adequate to handle current trading volume; or (vi) one or more exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue the trading of options (or a particular class or series of options),
in which event the secondary market on that exchange (or in the class or series
of options) would cease to exist, although outstanding options on the exchange
that had been issued by a clearing corporation as a result of trades on that
exchange would continue to be exercisable in accordance with their terms. There
is no assurance that higher than anticipated trading activity or other
unforeseen events might not, at times, render certain of the facilities of any
of the clearing corporations inadequate, and thereby result in the institution
by an exchange of special procedures which may interfere with the timely
execution of customers' orders.
SWAP AGREEMENTS (ALL FUNDS EXCEPT FOCUS 30 FUND AND CASH RESERVES FUND).
Each of the Funds may enter into interest rate, index and currency exchange rate
swap agreements in attempts to obtain a particular desired return at a lower
cost to the Fund than if the Fund has invested directly in an instrument that
yielded that desired return. Swap agreements are two-party contracts entered
into primarily by institutional investors for periods ranging from a few weeks
to more than one year. In a standard "swap" transaction, two parties agree to
exchange the returns (or differentials in rates of returns) earned or realized
on particular predetermined investments or instruments. The gross returns to be
exchanged or "swapped" between the parties are calculated with respect to a
"notional amount," i.e., the return on or increase in value of a particular
dollar amount invested at a particular interest rate, in a particular foreign
currency, or in a "basket" of securities representing a particular index. The
"notional amount" of the swap agreement is only a fictive basis on which to
calculate the obligations the parties to a swap agreement have agreed to
exchange. A Fund's obligations (or rights) under a swap agreement will generally
be equal only to the amount to be paid or received under the agreement based on
the relative values of the positions held by each party to the agreement (the
"net amount"). A Fund's obligations under a swap agreement will be accrued daily
(offset against any amounts owing to the Fund) and any accrued but unpaid net
amounts owed to a swap counterparty will be covered by the maintenance of a
segregated account consisting of cash, U.S. Government securities, or other
liquid securities, to avoid leveraging of the Fund's portfolio. A Fund will not
enter into a swap agreement with any single party if the net amount owed or to
be received under existing contracts with that party would exceed 5% of the
Fund's assets.
Whether a Fund's use of swap agreements enhance the Fund's total return will
depend on the Adviser's ability correctly to predict whether certain types of
investments are likely to produce greater returns than other investments.
Because they are two-party contracts and may have terms of greater than seven
days, swap agreements may be considered to be illiquid. Moreover, a Fund bears
the risk of loss of the amount expected to be received under a swap agreement in
the event of the default or bankruptcy of a swap agreement counterparty. The
Adviser will cause a Fund to enter into swap agreements only with counterparties
that would be eligible for consideration as repurchase agreement counterparties
under the Funds' repurchase agreement guidelines. The swap market is a
relatively new market and is largely unregulated. It is possible that
developments in the swaps market, including potential
20
<PAGE>
government regulation, could adversely affect a Fund's ability to terminate
existing swap agreements or to realize amounts to be received under such
agreements.
Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations of the CFTC. To
qualify for this exemption, a swap agreement must be entered into by "eligible
participants," which include the following, provided the participants' total
assets exceed established levels: a bank or trust company, savings association
or credit union, insurance company, investment company subject to regulation
under the 1940 Act, commodity pool, corporation, partnership, proprietorship,
organization, trust or other entity, employee benefit plan, governmental entity,
broker-dealer, futures commission merchant, natural person, or regulated foreign
person. To be eligible, natural persons and most other entities must have total
assets exceeding $10 million; commodity pools and employees benefit plans must
have assets exceeding $5 million. In addition, an eligible swap transaction must
meet three conditions. First, the swap agreement may not be part of a fungible
class of agreements that are standardized as to their material economic terms.
Second, the creditworthiness of parties with actual or potential obligations
under the swap agreement must be a material consideration in entering into or
determining the terms of the swap agreement, including pricing, cost or credit
enhancement terms. Third, swap agreements may not be entered into and traded on
or through a multilateral transaction execution facility.
TRADING IN FUTURES CONTRACTS (ALL FUNDS EXCEPT CASH RESERVES FUND). A futures
contract provides for the future sale by one party and purchase by another party
of a specified amount of a specific financial instrument (e.g., units of a stock
index) for a specified price, date, time and place designated at the time the
contract is made. Brokerage fees are incurred when a futures contract is bought
or sold and margin deposits must be maintained. Entering into a contract to buy
is commonly referred to as buying or purchasing a contract or holding a long
position. Entering into a contract to sell is commonly referred to as selling a
contract or holding a short position.
Unlike when a Fund purchases or sells a security, no price would be paid or
received by the Fund upon the purchase or sale of a futures contract. Upon
entering into a futures contract, and to maintain the Fund's open positions in
futures contracts, the Fund would be required to deposit with its custodian or
futures broker in a segregated account in the name of the futures broker an
amount of cash, U.S. government securities, suitable money market instruments,
or other liquid securities, known as "initial margin." The margin required for a
particular futures contract is set by the exchange on which the contract is
traded, and may be significantly modified from time to time by the exchange
during the term of the contract. Futures contracts are customarily purchased and
sold on margins that may range upward from less than 5% of the value of the
contract being traded.
If the price of an open futures contract changes (by increase in underlying
instrument or index in the case of a sale or by decrease in the case of a
purchase) so that the loss on the futures contract reaches a point at which the
margin on deposit does not satisfy margin requirements, the broker will require
an increase in the margin. However, if the value of a position increases because
of favorable price changes in the futures contract so that the margin deposit
exceeds the required margin, the broker will pay the excess to the Fund.
These subsequent payments, called "variation margin," to and from the futures
broker, are made on a daily basis as the price of the underlying assets
fluctuate making the long and short positions in the futures contract more or
less valuable, a process known as "marking to the market." Each Fund expects to
earn interest income on its margin deposits.
Although certain futures contracts, by their terms, require actual future
delivery of and payment for the underlying instruments, in practice most futures
contracts are usually closed out before the delivery date. Closing out an open
futures contract purchase or sale is effected by entering into an offsetting
futures contract sale or purchase, respectively, for the same aggregate amount
of the identical underlying instrument or index and the same delivery date. If
the offsetting purchase price is less than the original sale price, the Fund
realizes a gain; if it is more, the Fund realizes a loss. Conversely, if the
offsetting sale price is more than the original purchase price, the Fund
realizes a gain; if it is less, the Fund realizes a loss. The transaction costs
must also be included in these calculations. There can be no assurance, however,
that the Fund will be able to enter into an offsetting transaction with respect
to a particular futures contract at a particular time. If the Fund is not able
to enter into an offsetting transaction, the Fund will continue to be required
to maintain the margin deposits on the futures contract.
21
<PAGE>
For example, one contract in the Financial Times Stock Exchange 100 Index future
is a contract to buy 25 pounds sterling multiplied by the level of the UK
Financial Times 100 Share Index on a given future date. Settlement of a stock
index futures contract may or may not be in the underlying instrument or index.
If not in the underlying instrument or index, then settlement will be made in
cash, equivalent over time to the difference between the contract price and the
actual price of the underlying asset at the time the stock index futures
contract expires.
WARRANTS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each Fund may invest in
warrants. Warrants are pure speculation in that they have no voting rights, pay
no dividends and have no rights with respect to the assets of the corporation
issuing them. Warrants basically are options to purchase equity securities at a
specific price valid for a specific period of time. They do not represent
ownership of the securities, but only the right to buy them. Warrants differ
from call options in that warrants are issued by the issuer of the security
which may be purchased on their exercise, whereas call options may be written or
issued by anyone. The prices of warrants do not necessarily move parallel to the
prices of the underlying securities.
WHEN-ISSUED SECURITIES (ALL FUNDS). Each Fund may, from time to time, purchase
securities on a "when-issued" or delayed delivery basis. The price for such
securities, which may be expressed in yield terms, is fixed at the time the
commitment to purchase is made, but delivery and payment for the when-issued
securities take place at a later date. Normally, the settlement date occurs
within one month of the purchase, but may take up to three months. During the
period between purchases and settlement, no payment is made by a Fund to the
issuer and no interest accrues to a Fund. At the time a Fund makes the
commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value. Each Fund will maintain, in a segregated account with the custodian, cash
or appropriate liquid securities equal in value to commitments for when-issued
securities.
WRITING COVERED PUT OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each Fund may
write American or European style covered put options and purchase options to
close out options previously written by the Fund. A put option gives the
purchaser of the option the right to sell and the writer (seller) has the
obligation to buy, the underlying security or currency at the exercise price
during the option period (American style) or at the expiration of the option
(European style). So long as the obligation of the writer continues, he may be
assigned an exercise notice by the broker-dealer through whom such option was
sold, requiring him to make payment of the exercise price against delivery of
the underlying security or currency. The operation of put options in other
respects, including their related risks and rewards, is substantially identical
to that of call options.
A Fund would write put options only on a covered basis, which means that the
Fund would maintain in a segregated account cash, U.S. government securities or
other liquid appropriate securities in an amount not less than the exercise
price or the Fund will own an option to sell the underlying security or currency
subject to the option having an exercise price equal to or greater than the
exercise price of the "covered" option at all times while the put option is
outstanding. (The rules of a clearing corporation currently require that such
assets be deposited in escrow to secure payment of the exercise price.) The Fund
would generally write covered put options in circumstances where the Adviser
wishes to purchase the underlying security or currency for the Fund's portfolio
at a price lower than the current market price of the security or currency. In
such event the Fund would write a put option at an exercise price which, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund would also receive interest on debt securities or currencies
maintained to cover the exercise price of the option, this technique could be
used to enhance current return during periods of market uncertainty. The risk in
such a transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premiums received. Such
a decline could be substantial and result in a significant loss to the Fund. In
addition, the Fund, because it does not own the specific securities or
currencies which it may be required to purchase in exercise of the put, cannot
benefit from appreciation, if any, with respect to such specific securities or
currencies.
UNITED STATES GOVERNMENT OBLIGATIONS (ALL FUNDS). These consist of various types
of marketable securities issued by the United States Treasury, i.e., bills,
notes and bonds. Such securities are direct obligations of the United States
Government and differ mainly in the length of their maturity. Treasury bills,
the most frequently issued marketable government security, have a maturity of up
to one year and are issued on a discount basis.
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<PAGE>
UNITED STATES GOVERNMENT AGENCY SECURITIES (ALL FUNDS). These consist of debt
securities issued by agencies and instrumentalities of the United States
Government, including the various types of instruments currently outstanding or
which may be offered in the future. Agencies include, among others, the Federal
Housing Administration, Government National Mortgage Association ("GNMA"),
Farmer's Home Administration, Export-Import Bank of the United States, Maritime
Administration, and General Services Administration. Instrumentalities include,
for example, each of the Federal Home Loan Banks, the National Bank for
Cooperatives, the Federal Home Loan Mortgage Corporation ("FHLMC"), the Farm
Credit Banks, the Federal National Mortgage Association ("FNMA"), and the United
States Postal Service. These securities are either: (i) backed by the full faith
and credit of the United States Government (e.g., United States Treasury Bills);
(ii) guaranteed by the United States Treasury (e.g., GNMA mortgage-backed
securities); (iii) supported by the issuing agency's or instrumentality's right
to borrow from the United States Treasury (e.g., FNMA Discount Notes); or (iv)
supported only by the issuing agency's or instrumentality's own credit (e.g.,
Tennessee Valley Association).
SPECIAL CONSIDERATIONS AFFECTING CANADA
Canada is a confederation of 10 provinces with a parliamentary system of
government. The area, the world's second largest nation by landmass, is
inhabited by 30.2 million people, most of whom are decedents of France, the
United Kingdom and indigenous peoples. The country has a work force of over 15
million people in various industries such as trade, manufacturing, mining,
finance, construction and government. As an affluent, high-tech industrial
society, Canada today closely resembles the US in its market-oriented economic
system, pattern of production, and high living standards. Since World War II,
the impressive growth of the manufacturing, mining, and service sectors has
transformed the nation from a largely rural economy into one primarily
industrial and urban. While the country has many institutions which closely
parallel the United States, such as a transparent stock market and similar
accounting practices, it differs from the United States in that it has an
extensive social welfare system, much more akin to European welfare states.
Canada is endowed with extensive energy resources, and is a large producer and
net exporter of natural gas, coal, hydropower and uranium. Within this sector,
Canada is a major supplier of electric power and natural gas to the United
States. In addition, Canada's other particularly strong commodities are forest
products, mining, metals, and agricultural products such as grains. Accordingly,
the Canadian stock market is strongly represented by such basic materials
stocks, and movements in the supply and demand of industrial materials,
agriculture, and energy, both domestically and internationally, can have a
strong effect on market performance.
The United States is Canada's biggest trading partner, representing over 80% of
total trade in 1997. Automobiles and auto parts accounted for the largest
export items followed by energy, mining and forest products. Canada is the
largest energy supplier to the United States, while the United States is
Canada's largest foreign investor. The United States investment has been largely
focused on financial, energy, metals, and mining industries. The expanding
economic and financial integration of the United States and Canada will likely
make the Canadian economy and securities markets increasingly sensitive to U.S.
economic and market events.
For United States investors in Canadian markets, currency has become an
important determinant of investment return. Since Canada let its dollar float in
1970, its value has been in a steady decline against its United States
counterpart. While the decline has enabled Canada to stay competitive with its
more efficient southern neighbor, which buys four-fifths of its exports, United
States investors have seen their investment returns eroded by the impact of the
currency conversion.
MANAGEMENT OF THE TRUST
Trustees and Officers
Because Orbitex Group of Funds is a Delaware business trust, there are Trustees
appointed to run the Trust. These Trustees are responsible for overseeing the
general operations of the Adviser and the general operations of the Trust. These
responsibilities include approving the arrangements with companies that provide
necessary services to the Funds, ensuring the Funds' compliance with applicable
securities laws and that dividends and capital gains are
23
<PAGE>
distributed to shareholders. The Trustees have appointed officers to provide
many of the functions necessary for day-to-day operations.
Trustees and officers of the Trust, together with information as to their
principal business occupations during the last five years, are shown below. Each
Trustee who is considered an "interested person" of the Trust (as defined in
Section 2(a)(19) of the 1940 Act) is indicated by an asterisk next to his name.
<TABLE>
<CAPTION>
POSITION WITH THE TRUST AND PRINCIPAL
NAME, AGE AND BUSINESS ADDRESS AGE OCCUPATION WITHIN THE PAST FIVE YEARS
- ------------------------------ --- -------------------------------------
<S> <C> <C>
Ronald S. Altbach 51 Trustee of the Trust.
1540 West Park Avenue Chairman, Paul Sebastian, Inc.(1994 - present)
Ocean, New Jersey (perfume distributor);
07712 President, Olcott Corporation (1992- 1994)
(perfume distributor).
*Thomas T. Bachmann 52 Trustee of the Trust. Co-
410 Park Avenue Chairman of the Board of
New York, NY 10022 Trustees of Orbitex Management
(1996 - present) (investment management); Chairman,
Orbitex Management, Ltd. (1986 to present)
(investment management).
*Otto J. Felber 66 Trustee of the Trust.
130 Adelaide Street President, Felcom Capital, Corp. (1985 - present)
West, (investment management)
Suite 3205 President and Vice Chairman,
Toronto, Ontario, Altamira Management, Ltd.
M5H3P5 (1987 - 1997) (investment management).
*James L. Nelson 50 Chairman of Trust, President, Assistant
410 Park Avenue Treasurer and Assistant
New York, New York Secretary of the Trust.
10022 Director and Chief Executive Officer,
Orbitex Management, Inc.
(1995 - present) (investment management); Chief
Executive Officer and President,
Orbitex, Inc. (1995 - present)
(business development);
President, AVIC Group International
(1993 - 1995) (communications);
President, Eaglescliff
Corporation (1986 - present) (consulting).
24
<PAGE>
*Richard E. Stierwalt 44 Trustee of the Trust.
410 Park Avenue President, Chief Executive
New York, New York Officer, President and
10022 Director, Orbitex
Management, Inc. (1998 - present);
Consultant, Bisys Management, Inc. (1996-1998)
(mutual fund distributor);
Chairman of the Board and
Chief Executive Officer,
Concord Financial Group
(1987 - 1996) (administrator
and distributor of mutual funds).
Stephen H. Hamrick 47 Trustee of the Trust.
Carey Financial Corp. Chairman, Carey Financial
50 Rockfeller Plaza Corporation (1995 - present)
New York, New York (broker-dealer); Chief
10020 Executive Officer, Wall
Street Investors Services (1994 - 1995) (retail
brokerage firm); Senior Vice
President, PaineWebber, Inc.
(1998 - 1994) (investment services).
John D. Morgan 69 Trustee of the Trust.
32 Edgehill Road Chairman and Director, CIBC
Westmount, Quebec, Trust Company (1997 -
Canada H3Y1E9 present) (trust management);
(Vice President, Midland Walwyn
(1990 - 1997) (investment banking).
M. Fyzul Khan 27 Secretary of the Trust.
410 Park Avenue Legal Counsel, Orbitex
New York, New York Management, Inc. (1998 to
10022 present) (investment adviser);
Attorney, CIBC Oppenheimer
(August 1997 March 1998) (hedge fund);
Law student, Widener
University School of Law (September 1994 - June 1997)
Kimberly Ratz 38 Treasurer of the Trust.
410 Park Avenue Chief Financial Officer,
New York, New York America's Mortgage Source
10022 (1996-1997)(mortgage banking); Finance
Management, Chase Manhattan
Mortgage (1988 - 1998) (mortgage banking).
</TABLE>
Each Trustee of the Trust who is not an interested person of the Trust or
Adviser receives a fee of $1,250 for each regular and special meeting of the
Board that the Trustee attends. The Trust also reimburses each such Trustee for
travel and other expenses incurred in attending meetings of the Board.
COMPENSATION TABLE*
25
<PAGE>
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION FROM
RETIREMENT BENEFITS ESTIMATED ANNUAL REGISTRANT AND FUND
AGGREGATE COMPENSATION ACCRUED AS PART OF BENEFITS UPON COMPLEX PAID
NAME OF PERSON FROM FUND FUND EXPENSES RETIREMENT TO TRUSTEES
<S> <C> <C> <C> <C>
Ronald S. Altbach $5,000 N/A N/A $5,000
Thomas T. Bachmann $0 N/A N/A $0
Otto J. Felber $0 N/A N/A $0
Stephen H. Hamrick $_____ N/A N/A $_____
John D. Morgan $_____ N/A N/A $_____
James L. Nelson $0 N/A N/A $0
Richard E. Stierwalt $0 N/A N/A $0
</TABLE>
- --------------------------
* The compensation table covers the period May 1, 1998 through April 30, 1999.
As of April 30, 1999, Trustees and officers of the Trust, as a group, owned less
than 1% of each of the Funds.
PRINCIPAL HOLDERS OF SECURITIES
As of March 31, 1999, the following shareholders were beneficial owners of 5% or
more of the outstanding shares of the Funds listed because they possessed voting
or investment power with respect to such shares:
ORBITEX GROWTH FUND - CLASS A % HELD
Cresta Ltd. 31.55%
P.O. Box N9932
Maritime House, Frederick Street
Nassua, Bahamas
Sharon Miller & Richard Mosse 12.30%
Attorney Trustees
Lauren E. Mosse Trust
142 E. 71st Street Apt. 3D
New York, NY 10021-5133
26
<PAGE>
Sharon Miller & Richard Mosse 12.30%
Attorney Trustees
Danielle T. Mossee Trust
142 E. 71st Street Apt. 3D
New York, NY 10021-5133
Sharon Miller & Richard Mosse 12.30%
Attorney Trustees
Julia B. Mosse Trust
142 E. 71st Street Apt. 3D
New York, NY 10021-5133
Donaldson Lufkin Jenrette 7.05%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
ORBITEX GROWTH FUND - CLASS B
Thomas F. Fitzpatrick 85.00%
Linda Fitzpatrick
1610 Barkalow Road
Wall, NJ 07719-3843
CIBC Oppenheimer Corporation 13.32%
FBO 376-10055-15
P.O. Box 3484
Church Street Station
New York, NY 10008-3484
ORBITEX INFO-TECH & COMMUNICATIONS FUND - CLASS A
PaineWebber for the benefit of 11.14%
Melrich Associates
A Partnership
C/O RTA Associates
2000 S. Winston Road Building #4
Rochester, NY 14618-3922
ORBITEX INFO-TECH & COMMUNICATIONS FUND - CLASS B
27
<PAGE>
PaineWebber for the benefit of 6.76%
Paul W. Kinney and
E. Yukiko Kinney
391 Plantation Drive
Titusville, FL 32780-2558
ORBITEX STRATEGIC NATURAL RESOURCES FUND -
CLASS A
Sidney Kimmel 26.93%
C/O Jones Apparel Group
1411 Broadway Floor 21
New York, NY 10018-3403
Daniel A. McAloon 7.95%
Clare M. McAloon Ten Comm
66 Union Hill Road
Madison, NJ 07940-2300
ORBITEX STRATEGIC NATURAL RESOURCES FUND -
CLASS B
Guarantee & Trust 5.77%
FBO Judith Borden IRA
PO BOX 8963
Wilmington, DE 19899-8963
First Clearing Corporation 6.92%
WFS AS CUSTODIAN
William L. Harper IRA
209 Church Street
Hackettstown, NJ 07840-2207
28
<PAGE>
First Clearing Corporation 11.44%
Earl D. Stires
34 Route 31 S
Pennington, NJ 08822-2504
First Clearing Corporation 8.69%
Edit Zeloof
581 Sergeantsville Road
Flemington, NJ 08822-2703
First Clearing Corporation 20.16%
Dr. George S. Naifeh IRA
WFS AS Custodian
265 Long Branch East
Prescott, AZ 86303-5327
First Clearing Corporation 5.78%
Charles I. Adler DDS PC
DEF BEN PEN PL
3353 82nd Street
Jackson Heights, NY 11372-1447
First Clearing Corporation 8.82%
Norma Mass
765 Woodland Avenue
Oradell, NJ 07649-1431
29
<PAGE>
First Clearing Corporation 5.33%
Myron G. Dumoff & Judith Lomson
1381 Plymouth Road
Bridgewater, NJ 08807-1461
First Clearing Corporation 5.22%
Dorothy Waltz IRA
WFS AS Custodian
2486 Glasgo Road
Norwich, CT 06360-9117
A shareholder owning of record or beneficially more than 25% of a Fund's
outstanding shares may be considered a controlling person. That shareholder's
vote could have more significant effect on matters presented at a shareholder's
meeting than votes of other shareholders.
INVESTMENT MANAGEMENT AND OTHER SERVICES
INVESTMENT ADVISER. Orbitex Management, Inc., located at 410 Park Avenue, New
York, NY 10022, serves as the Adviser of each Fund pursuant to Investment
Advisory Agreements that have been approved by the Board, including a majority
of the independent Trustees. The initial term of each Investment Advisory
Agreement is two years. However, the Investment Advisory Agreements may
continue in effect from year to year if approved at least annually by a vote
of a majority of the Board (including a majority of the Trustees who are not
parties to the Investment Advisory Agreements or interested persons of any
such parties) cast in person at a meeting called for the purpose of voting on
such renewal, or by the vote of a majority of the outstanding shares of the
particular Fund. The Advisory Agreement for the Growth, Info-Tech &
Communications and Strategic Natural Resources Funds was last renewed by the
Board of Trustees on March 9, 1999. The Advisory Agreement for the Focus
30, Health & Biotechnology, and Cash Reserves Funds was initially approved by
the Board of Trustees on June --, 1999.
The directors and the principal executive officers of the Adviser are: Otto
J. Felber, Chairman; Thomas T. Bachmann, Co-Chairman; Richard E. Stierwalt,
Director, CEO and President; James L. Nelson, Director; M. Fyzul Khan,
Secretary and Legal Counsel; and Kimberly Ratz, Treasurer and Chief Financial
Officer. The Adviser is a subsidiary of Orbitex, Inc., a business
development firm.
In addition to the duties set forth in the Prospectus under the section entitled
"Management," the Adviser, in furtherance of such duties and responsibilities,
is authorized in its discretion to engage in the following activities or to
cause or permit Sub-Advisers to engage in the following activities on behalf of
the Trust: (i) develop a continuing program for the management of the assets of
each Fund; (ii) buy, sell, exchange, convert, lend, or otherwise trade in
portfolio securities and other assets; (iii) place orders and negotiate the
commissions for the execution of transactions in securities with or through
broker-dealers, underwriters, or issuers; (iv) prepare and supervise the
30
<PAGE>
preparation of shareholder reports and other shareholder communications; and (v)
obtain and evaluate business and financial information in connection with the
exercise of its duties.
Subject to policies established by the Board of Trustees of the Trust, which has
overall responsibility for the business and affairs of each Fund, the Adviser
manages the operations of the Funds. In addition to providing advisory services,
the Adviser furnishes the Funds with office space and certain facilities and
personnel required for conducting the business of the Funds.
For the advisory services provided and expenses assumed by it, the Adviser has
agreed to a fee from each Fund, computed daily and payable monthly at an
annual rate of 0.75% for the Growth Fund, 1.25% for the Info-Tech &
Communications Fund, 1.25% for the Strategic Natural Resources Fund, 0.75% for
the Focus 30 Fund, 1.25% for the Health & Biotechnology Fund and 0.15%
for the Cash Reserves Fund.
The following table shows the amount of advisory fees paid by each Fund to the
Adviser and the amount of the advisory fees waived by the Adviser for the past
two fiscal years.
<TABLE>
<CAPTION>
Advisory Fees Advisory Fees Waived
Fund paid by Fund by the Adviser
---- ------------- --------------------
<S> <C> <C>
Growth Fund
April 30, 1998* $ $
April 30, 1999 $ $
Info-Tech & Communications Fund
April 30, 1998* $ $
April 30, 1999 $ $
Strategic Natural Resources Fund
April 30, 1998** $ $
April 30, 1999 $ $
</TABLE>
* Fiscal period October 22, 1997 through April 30, 1998
** Fiscal period October 23, 1997 through April 30, 1998
The Adviser has voluntarily agreed to waive or limit its fees and pay certain
operating expenses to the extent necessary to limit total fund operating of each
Fund with respect to each class of shares as follows:
<TABLE>
<CAPTION>
Fund Class A Class B Class D
- ---- ------- ------- -------
<S> <C> <C> <C>
Growth Fund % % N/A
Info-Tech & Communications Fund % % N/A
Strategic Natural Resources Fund % % N/A
Focus 30 Fund % % %
Health & Biotechnology Fund % % N/A
31
<PAGE>
Institutional Institutional
Class Service Class
Money Market Fund
</TABLE>
The Adviser may discontinue such fee waivers and/or expense reimbursements at
any time, in its sole discretion.
The following table shows the amount of fee waivers and/or reimbursements by the
Adviser for the last three fiscal years. As of June ___, 1999, the Focus 30
Fund, Health & Biotechnology Fund and the Cash Reserves Fund had not commenced
operations.
<TABLE>
<CAPTION>
Amount of Reimbursed
Fund Expenses by the Adviser
---- -----------------------
<S> <C>
Growth Fund - Class A
April 30, 1998* $
April 30, 1999 $
Growth Fund - Class B
April 30, 1999** $
Info-Tech & Communications Fund - Class A
April 30, 1998* $
April 30, 1999 $
Info-Tech & Communications Fund - Class B
April 30, 1999** $
Strategic Natural Resources Fund - Class A
April 30, 1998*** $
April 30, 1999 $
Strategic Natural Resources Fund - Class B
April 30, 1999**** $
</TABLE>
* Fiscal period October 22, 1997 through April 30, 1998.
** Fiscal period September 16, 1998 through April 30, 1999.
*** Fiscal period October 23, 1998 through April 30, 1998.
**** Fiscal period September 21, 1998 through April 30, 1999.
INVESTMENT SUB-ADVISER
[add information when available]
ADMINISTRATOR
32
<PAGE>
The Administrator for the Funds is American Data Services, Inc. (the
"Administrator"), which has its principal office at The Hauppauge Corporate
Center, 150 Motor Parkway, Hauppauge, New York 11788, and is primarily in the
business of providing administrative, fund accounting and stock transfer
services to retail and institutional mutual funds through its offices in New
York, Denver and Los Angeles.
Pursuant to an Administrative Service Agreement with the Funds, the
Administrator provides all administrative services necessary for the Fund,
subject to the supervision of the Board of Directors. The Administrator will
provide persons to serve as officers of the Fund. Such officers may be
directors, officers or employees of the Administrator or its affiliates.
The Administration Agreement was initially approved by the Board of Trustees at
a meeting on June ---, 1999. The Agreement shall remain in effect for two
years from the date of its initial approval, and subject to annual approval of
the Board of Trustees for one-year periods thereafter. The Administrative
Service Agreement is terminable by the Board of Trustees or the Administrator on
sixty days' written notice and may be assigned provided the non-assigning party
provides prior written consent. The Agreement provides that in the absence of
willful misfeasance, bad faith or gross negligence on the part of the
Administrator or reckless disregard of its obligations thereunder, the
Administrator shall not be liable for any action or failure to act in accordance
with its duties thereunder.
Under the Administrative Service Agreement, the Administrator provides all
administrative services, including, without limitation: (i) providing services
of persons competent to perform such administrative and clerical functions as
are necessary to provide effective administration of the Funds; (ii) overseeing
the performance of administrative and professional services to the Funds by
others, including the Funds' Custodian; (iii) preparing, but not paying for, the
periodic updating of the Funds' Registration Statement, Prospectus and Statement
of Additional Information in conjunction with Fund counsel, including the
printing of such documents for the purpose of filings with the Securities and
Exchange Commission and state securities administrators, preparing the Funds'
tax returns, and preparing reports to the Funds' shareholders and the Securities
and Exchange Commission; (iv) preparing in conjunction with Fund counsel, but
not paying for, all filings under the securities or "Blue Sky" laws of such
states
33
<PAGE>
or countries as are designated by the Distributor, which may be required to
register or qualify, or continue the registration or qualification, of the Funds
and/or its shares under such laws; (v) preparing notices and agendas for
meetings of the Board of Trustees and minutes of such meetings in all matters
required by the 1940 Act to be acted upon by the Board; and (vi) monitoring
daily and periodic compliance with respect to all requirements and restrictions
of the Investment Company Act, the Internal Revenue Code and the Prospectus.
The Administrator, pursuant to the Fund Accounting Service Agreement,
provides the Funds with all accounting services, including, without limitation:
(i) daily computation of net asset value; (ii) maintenance of security ledgers
and books and records as required by the Investment Company Act; (iii)
production of the Funds's listing of portfolio securities and general ledger
reports; (iv) reconciliation of accounting records; (v) calculation of yield and
total return for the Funds; (vi) maintaining certain books and records described
in Rule 31a-1 under the 1940 Act, and reconciling account information and
balances among the Funds's Custodian and Adviser; and (vii) monitoring and
evaluating daily income and expense accruals, and sales and redemptions of
shares of the Funds.
For the services rendered to the Funds by the Administrator, the Funds pay the
Administrator a fee, computed daily and payable monthly at annual rate of 0.---%
of each Funds average daily net assets. The Funds also pay the Administrator for
any out-of-pocket expenses.
In return for providing the Funds with all accounting related services, the
Funds pays the Administrator a monthly fee based on the Funds's average net
assets, plus any out-of-pocket expenses for such services.
34
<PAGE>
SUB-ADMINISTRATOR
[State Street is the sub-administrator of the Growth Fund, the Info-Tech &
Communications Fund and the Strategic Natural Resources Fund. State Street is a
Massachusetts trust company with a principal office at 225 Franklin Street,
Boston, Massachusetts 02111. State Street serves as administrator for other
mutual funds.
Pursuant to the Sub-Administration Agreement with ADS, State Street provides
all administrative services reasonably necessary for the Growth Fund, the
Info-Tech & Communications Fund and the Strategic Natural Resources Fund,
other than those provided by the Adviser and/or ADS, subject to the
supervision of the Administrator.
Under the Sub-Administration Agreement with the Administrator, State Street,
assists the Administrator with certain of its responsibilities under the
administration agreement, including providing, without limitation: (i)
services of personnel competent to perform such administrative and clerical
functions as are necessary to provide effective administration of the Growth
Fund, the Info-Tech & Communications Fund and the Strategic Natural Resources
Fund; (ii) maintaining the books and records of the Growth Fund, the
Info-Tech & Communications Fund and the Strategic Natural Resources Fund
(other than financial and accounting books and records and records maintained
by the Trust's custodian or transfer agent); (iii) overseeing the insurance
relationships of the Growth Fund, the Info-Tech & Communications Fund and the
Strategic Natural Resources Fund; (iv) preparing or assisting in the
preparation of all required tax returns, proxy statements and reports to
shareholders of the Growth Fund, the Info-Tech & Communications Fund and the
Strategic Natural Resources Fund, and the Board of Trustees and reports to
and filings with the SEC and any other governmental agency; (v) preparing or
assisting in the preparation of such notices and reports as may be necessary
to offer and sell shares of the Growth Fund, the Info-Tech & Communications
Fund and the Strategic Natural Resources Fund under applicable state
securities laws; (vi) preparing or assisting in the preparation of, and
coordinating the distribution of all materials for meetings of the Board of
Trustees of the Trust; (vii) monitoring daily and periodic compliance of the
Growth Fund, the Info-Tech & Communications Fund and the Strategic Natural
Resources Fund with respect to all requirements and restrictions of the 1940
Act, the Internal Revenue Code and the Prospectus; (viii) monitoring the
calculation of all income and expense accruals, sales and redemptions of
capital shares outstanding with respect to the Growth Fund, the Info-Tech &
Communications Fund and the Strategic Natural Resources Fund by the Trust's
custodian; (ix) evaluating expenses, projecting future expenses, and
processing payments of expenses; and (x) monitoring and evaluating
performance of accounting and related services provided to the Growth Fund,
the Info-Tech & Communications Fund and the Strategic Natural Resources Fund,
by the Trust's custodian.
The Agreement is terminable at any time by the Administrator or State Street
on sixty days' written notice. If the Trust terminates the Agreement within
three years of its effective date, the Fund must reimburse State Street for
any fees waived by State Street.
For the period September 16, 1997 through April 30, 1998, fees of State Street
accrued were: $__________ for the Growth Fund, $_________ for the Info-Tech &
Communications Fund and $__________ for the Strategic Natural Resources Fund.
For fiscal year ended April 30, 1999, fees of State Street accrued were:
$__________ for the Growth Fund, $_________ for the Info-Tech & Communications
Fund and $__________ for the Strategic Natural Resources Fund.]
35
<PAGE>
CUSTODIAN
State Street serves as the custodian of the Trust's assets pursuant to a
Custodian Contract by and between State Street and the Trust. State Street's
responsibilities include safeguarding and controlling the Trust's cash and
securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. Pursuant to the Custodian
Contract, State Street also provides certain accounting and pricing services to
the Trust, including calculating the daily net asset value per share for [each
Fund]; maintaining original entry documents and books of record and general
ledgers; posting cash receipts and disbursements; reconciling bank account
balances monthly; recording purchases and sales based upon communications from
the Adviser and Sub-Advisers; and preparing monthly and annual summaries to
assist in the preparation of financial statements of, and regulatory reports
for, the Trust. The Trust may employ foreign sub-custodians that are approved by
the Board of Trustees to hold foreign assets.
For the period September 16, 1997 through April 30, 1998, custodian fees of
State Street accrued were: $__________ for the Growth Fund, $_________ for
the Info-Tech & Communications Fund and $__________ for the Strategic Natural
Resources Fund.
For fiscal year ended April 30, 1999, custodian fees of State Street accrued
were: $__________ for the Growth Fund, $_________ for the Info-Tech &
Communications Fund and $__________ for the Strategic Natural Resources Fund.
TRANSFER AGENT SERVICES
ADS provides transfer agent and dividend disbursing services to the Focus
30 Fund, Health & Biotechnology Fund, and the Cash Reserves Fund.
State Street provides transfer agent and dividend disbursing services to the
Growth Fund, the Info-Tech & Communications Fund and the Strategic Natural
Resources Fund pursuant to the terms of a Transfer Agency and Service Agreement
by and between State Street and the Trust.
For the period September 16, 1997 through April 30, 1998, transfer agent fees
of State Street accrued were: $__________ for the Growth Fund, $_________ for
the Info-Tech & Communications Fund and $__________ for the Strategic Natural
Resources Fund.
For fiscal year ended April 30, 1999, transfer agent fees of State Street
accrued were: $__________ for the Growth Fund, $_________ for the Info-Tech &
Communications Fund and $__________ for the Strategic Natural Resources Fund.
DISTRIBUTION OF SHARES
Funds Distributor, Inc. (the "Distributor" or "FDI") serves as the distributor
of the shares of each class of each Fund pursuant to a Distribution Agreement
between the Distributor and the Trust. The Distributor's principal business
address is 60 State Street, Boston, Massachusetts 02108.
Under the terms of the Class A and Class B Distribution Plans and Agreements
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the "Rule 12b-1
Plans"), the Distributor receives front-end or contingent deferred sales
commissions or sales loads on Class A and Class B Shares and fees for providing
services to the Class A and Class B Shares of each Fund, other than the Cash
Reserves Fund, under the Distribution Agreements. In addition, pursuant to the
Rule 12b-1 Plans, each of the Funds are
36
<PAGE>
authorized to use a portion of their assets attributable to the Class A and
Class B Shares to finance certain activities relating to the distribution of
their shares to investors.
The Plan adopted for Class A Shares, allows each Fund, other than the Cash
Reserves Fund, to pay the Distributor quarterly at a rate equal to an
annualized rate of 0.40% of the average daily net assets attributable to the
Class A Shares of that Fund. The Plan adopted for Class B Shares allows each
Fund, other than the Cash Reserves Fund, to pay the Distributor quarterly at
a rate equal to 0.75% of the average daily net assets attributable to the
Class B Shares of that Fund during that quarter. The Class B Plan also allows
each Fund to pay the Distributor for certain shareholder services provided to
Class B shareholders or other service providers that have entered into
agreements with the Distributor to provide these services. For these
services, each Fund pays a shareholder service fee equal to 0.25% of average
net assets attributable to Class B Shares of the Fund on an annualized basis.
A Fund may pay fees to the Distributor at a lesser rate, as agreed upon by
the Board of Trustees of the Trust and the Distributor. The Rule 12b-1 Plans
authorize payments to the Distributor as compensation for providing account
maintenance services to investors in the Class A and Class B Shares of the
Fund, including arranging for certain securities dealers or brokers,
administrators and others ("Recipients") to provide these services and paying
compensation for these services. Each Fund will bear its own costs of
distribution with respect to its Shares.
The services to be provided by Recipients may include, but are not limited to,
the following: assistance in the offering and sale of the Class A and Class B
Shares of the Funds and in other aspects of the marketing of the shares to
clients or prospective clients of the respective recipients; answering routine
inquiries concerning a Fund; assisting in the establishment and maintenance of
accounts or sub-accounts in a Fund and in processing purchase and redemption
transactions; making a Fund's investment plans and shareholder services
available; and providing such other information and services to investors in
shares of a Fund as the Distributor or the Trust, on behalf of a Fund, may
reasonably request. The distribution services shall also include any advertising
and marketing services provided by or arranged by the Distributor with respect
to the Funds.
The Distributor is required to provide a written report, at least quarterly to
the Board of Trustees of the Trust, specifying in reasonable detail the
amounts expended pursuant to the Rule 12b-1 Plans and the purposes for which
such expenditures were made. Further, the Distributor will inform the Board of
any Rule 12b-1 fees to be paid by the Distributor to Recipients.
The initial term of the Rule 12b-1 Plans is one year and this will continue in
effect from year to year thereafter, provided such continuance is specifically
approved at least annually by a majority of the Board of Trustees of the Trust
and a majority of the Trustees who are not "interested persons" of the Trust and
do not have a direct or indirect financial interest in the Rule 12b-1 Plans
("Rule 12b-1 Trustees") by votes cast in person at a meeting called for the
purpose of voting on the Rule 12b-1 Plans. The Rule 12b-1 Plans and Agreements
may be terminated at any time by the Trust or any Fund by vote of a majority of
the Rule 12b-1 Trustees or by vote of a majority of the outstanding voting Class
A or B Shares of the Trust or the affected Fund. The Rule 12b-1 Plans will
terminate automatically in the event of their assignment (as defined in the 1940
Act).
The Rule 12b-1 Plans may not be amended to increase materially the amount of the
Distributor's compensation to be paid by a Fund, unless such amendment is
approved by the vote of a majority of the outstanding voting securities of the
Fund (as defined in the 1940 Act). All material amendments must be approved by a
majority of the Board of Trustees of the Trust and a majority of the Rule 12b- 1
Trustees by votes cast in person at a meeting called for the purpose of voting
on a Rule 12b-1 Plan. During the term of the Rule 12b-1 Plans, the selection and
nomination of non-interested Trustees of the Trust will be committed to the
discretion of current non-interested Trustees. The Distributor will preserve
copies of the Rule 12b-1 Plans, any related agreements, and all reports, for a
period of not less than six years from the date of such document and for at
least the first two years in an easily accessible place.
Any agreement related to a Rule 12b-1 Plan will be in writing and provide that:
(a) it may be terminated by the Trust or a Fund at any time upon sixty days'
written notice, without the payment of any penalty, by vote of a majority of the
respective Rule 12b-1 Trustees, or by vote of a majority of the outstanding
voting securities of the Trust or the affected Fund; (b) it will automatically
terminate in the event of its assignment (as defined in the 1940 Act); and (c)
it will continue in effect for a period of more than one year from the date of
its execution or adoption only so long as such continuance is specifically
approved at least annually
37
<PAGE>
by a majority of the Board and a majority of the Rule 12b-1 Trustees by votes
cast in person at a meeting called for the purpose of voting on such agreement.
The following table shows the distribution fees paid for Class A shares of the
Funds for the fiscal years ended April 30, 1998 and April 30, 1999. As of June
___, 1999, the Focus 30 Fund, Health & Biotechnology Fund and the Cash
Reserves Fund had not commenced operations.
Class A Distribution Fees
<TABLE>
<CAPTION>
Paid to Investment
Fund Professionals Retained by FDI
---- ------------------ ---------------
<S> <C> <C>
Growth Fund
April 30, 1998* $ $
April 30, 1999 $ $
Info-Tech & Communications Fund $
April 30, 1998* $ $
April 30, 1999 $ $
Strategic Natural Resources Fund
April 30, 1998** $ $
April 30, 1999 $ $
</TABLE>
* Fiscal period October 22, 1997 through April 30, 1998.
** Fiscal period October 23, 1997 through April 30, 1998.
The following table shows the distribution fees paid and retained by the
Distributor for Class B shares of the Funds for the fiscal years ended April 30,
1998 and April 30, 1999. As of June ___, 1999, the Focus 30 Fund, the
Health & Biotechnology Fund and the Cash Reserves Fund had not commenced
operations.
Class B Distribution and Services Fees
<TABLE>
<CAPTION>
Distribution Fees Paid
to Investment Distribution Fees Shareholder Service
Fund Professionals retained by FDI Fees Retained by FDI
---- ---------------------- ----------------- ------------------- ---------------
<S> <C> <C> <C> <C>
Growth Fund
April 30, 1999* $ $ $ $
Info-Tech & Communications Fund $
April 30, 1999* $ $ $ $
38
<PAGE>
Strategic Natural Resources Fund
April 30, 1999** $ $ $ $
</TABLE>
* Fiscal period September 16, 1998 through April 30, 1999.
** Fiscal period September 21, 1998 through April 30, 1999.
The following table shows the sales charge revenues collected, and retained by
FDI for the past two fiscal years.
<TABLE>
<CAPTION>
Sales Charge CDSC Revenue
Revenue
Amount Amount Amount Amount
Paid Retained Paid Retained
Fund to FDI by FDI to FDI by FDI
---- ------ ------ ------ ------
<S> <C> <C> <C> <C>
Growth Fund - Class A
April 30, 1998* $ $ $ $
April 30, 1999 $ $ $ $
Growth Fund - Class B
April 30, 1999** $ $ $ $
$ $ $ $
Info-Tech & Communications Fund -
Class A
April 30, 1998* $ $ $ $
April 30, 1999 $ $ $ $
Info-Tech & Communications Fund -
Class B
April 30, 1999** $ $ $ $
Strategic Natural Resources Fund -
Class A
April 30, 1998*** $ $ $ $
April 30, 1999 $ $ $ $
Strategic Natural Resources Fund -
Class B
April 30, 1999**** $ $ $ $
</TABLE>
39
<PAGE>
* Fiscal period October 22, 1997 through April 30, 1998.
** Fiscal period September 16, 1998 through April 30, 1999.
*** Fiscal period October 23, 1997 through April 30, 1998.
*** Fiscal period September 21, 1998 through April 30, 1999.
The following table shows amounts paid by each Fund under its Class A 12b-1
Plans during the fiscal year ended April 30, 1999. As of June ___, 1999, the
Focus 30 Fund, the Health & Biotechnology Fund and the Cash Reserves Fund
had not commenced operations.
<TABLE>
<CAPTION>
Printing and
Mailing of Interest
Prospectuses to Carrying or
other than other
Current Compensation to Compensation to Compensation to Financing
Fund Advertising Shareholders Underwriters Dealers Sales Personnel Charges
---- ----------- ------------ ------------ ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C>
Growth Fund $ $ $ $ $ $
Info-Tech & $ $ $ $ $ $
Communications Fund
Strategic Natural $ $ $ $ $ $
Resources Fund
</TABLE>
The following table shows amounts paid by each Fund under its Class B 12b-1
Plans during the fiscal year ended April 30, 1999. As of June ___, 1999, the
Focus 30 Fund, the Health & Biotechnology Fund and the Cash Reserves Fund
had not commenced operations.
<TABLE>
<CAPTION>
Printing and
Mailing of Interest
Prospectuses to Carrying or
other than other
Current Compensation to Compensation to Compensation to Financing
Fund Advertising Shareholders Underwriters Dealers Sales Personnel Charges
---- ----------- ------------ ------------ ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C>
40
<PAGE>
Growth Fund $ $ $ $ $ $
Info-Tech & $ $ $ $ $ $
Communications Fund
Strategic Natural $ $ $ $ $ $
Resources Fund
</TABLE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
Subject to the general supervision of the Board of Trustees of the Trust, the
Adviser is responsible for making decisions with respect to the purchase and
sale of portfolio securities on behalf of the Funds. The Adviser is also
responsible for the implementation of those decisions, including the
selection of broker-dealers to effect portfolio transactions, the negotiation
of commissions, and the allocation of principal business and portfolio
brokerage.
In purchasing and selling each Fund's portfolio securities, it is the
Adviser's policy to obtain quality execution at the most favorable prices
through responsible broker-dealers and, in the case of agency transactions,
at competitive commission rates where such rates are negotiable. However,
under certain conditions, a Fund may pay higher brokerage commissions in
return for brokerage and research services. In selecting broker-dealers to
execute a Fund's portfolio transactions, consideration is given to such
factors as the price of the security, the rate of the commission, the size
and difficulty of the order, the reliability, integrity, financial condition,
general execution and operational capabilities of competing brokers and
dealers, their expertise in particular markets and the brokerage and research
services they provide to the Adviser or the Funds. It is not the policy of
the Adviser to seek the lowest available commission rate where it is believed
that a broker or dealer charging a higher commission rate would offer greater
reliability or provide better price or execution.
Transactions on stock exchanges involve the payment of brokerage commissions. In
transactions on stock exchanges in the United States, these commissions are
negotiated. Traditionally, commission rates have generally not been negotiated
on stock markets outside the United States. In recent years, however, an
increasing number of overseas stock markets have adopted a system of negotiated
rates, although a number of markets continue to be subject to an established
schedule of minimum commission rates. It is expected that equity securities will
ordinarily be purchased in the primary markets, whether over-the-counter or
listed, and that listed securities may be purchased in the over-the-counter
market if such market is deemed the primary market. In the case of securities
traded on the over-the-counter markets, there is generally no stated commission,
but the price usually includes an undisclosed commission or markup. In
underwritten offerings, the price includes a disclosed, fixed commission or
discount.
For fixed income securities, it is expected that purchases and sales will
ordinarily be transacted with the issuer, the issuer's underwriter, or with a
primary market maker acting as principal on a net basis, with no brokerage
commission being paid by the Fund. However, the price of the securities
generally includes compensation which is not disclosed separately. Transactions
placed through dealers who are serving as primary market makers reflect the
spread between the bid and asked prices.
41
<PAGE>
With respect to equity and fixed income securities, the Adviser may effect
principal transactions on behalf of the Funds with a broker or dealer
whofurnishes brokerage and/or research services, designate any such broker or
dealer to receive selling concessions, discounts or other allowances or
otherwise deal with any such broker or dealer in connection with the
acquisition of securities in underwritings. The prices the Funds pay to
underwriters of newly-issued securities usually include a concession paid by
the issuer to the underwriter. The Adviser may receive research services in
connection with brokerage transactions, including designations in fixed price
offerings.
The Adviser and Sub-Adviser receive a wide range of research services from
brokers and dealers covering investment opportunities throughout the world,
including information on the economies, industries, groups of securities,
individual companies, statistics, political developments, technical market
action, pricing and appraisal services, and performance analyses of all the
countries in which a Fund's portfolio is likely to be invested. The Adviser or
Sub-Adviser cannot readily determine the extent to which commissions charged by
brokers reflect the value of their research services, but brokers occasionally
suggest a level of business they would like to receive in return for the
brokerage and research services they provide. To the extent that research
services of value are provided by brokers, the Adviser [or Sub-Adviser] may be
relieved of expenses which it might otherwise bear. In some cases, research
services are generated by third parties but are provided to the Adviser and
Sub-Adviser by or through brokers.
Certain broker-dealers which provide quality execution services also furnish
research services to the Adviser and Sub-Adviser. The Adviser and Sub-Adviser
have adopted brokerage allocation policies embodying the concepts of Section
28(e) of the Securities Exchange Act of 1934, which permits an investment
adviser to cause its clients to pay a broker which furnishes brokerage or
research services a higher commission than that which might be charged by
another broker which does not furnish brokerage or research services, or which
furnishes brokerage or research services deemed to be of lesser value, if such
commission is deemed reasonable in relation to the brokerage and research
services provided by the broker, viewed in terms of either that particular
transaction or the overall responsibilities of the adviser with respect to the
accounts as to which it exercises investment discretion. Accordingly, the
Adviser or Sub-Adviser may assess the reasonableness of commissions in light of
the total brokerage and research services provided by each particular broker.
The Adviser or Sub-Adviser may also consider sales of the Funds' Shares as a
factor in the selection of broker-dealers.
Portfolio securities will not be purchased from or sold to the Adviser or
Sub-Adviser, or the Distributor, or any affiliated person of any of them acting
as principal, except to the extent permitted by rule or order of the SEC.
For the fiscal period October 16, 1997 through April 30, 1998, the Funds paid
brokerage commissions as follows: $_____________ for the Growth Fund,
$___________ for the Info-Tech & Communications Fund and $____________ for the
Strategic Natural Resources Fund.
For the fiscal year ended April 30, 1999, the Funds paid brokerage commissions
as follows: $_____________ for the Growth Fund, $___________ for the Info-Tech &
Communications Fund and $____________ for the Strategic Natural Resources Fund.
PURCHASE AND REDEMPTION OF SECURITIES BEING OFFERED
WAIVERS OF INITIAL SALES CHARGE FOR CLASS A SHARES. The initial sales charge
Class A
42
<PAGE>
Shares of the Funds is waived on the following types of purchases: (1) purchases
by investors who have invested $1 million or more in one Fund alone or in any
combination of Funds;(2) purchases by the officers, directors/trustees, and
employees of the Trust, the Advisor or the Distributor; the immediate family
members of any such person; any trust or individual retirement account or self-
employed retirement plan for the benefit of any such person or family members;
or the estate of any such person or family members; (3) purchases by Selling
Group Members, for their own accounts, or for retirement plans for their
employees or sold to registered representatives or full time employees (and
their immediate families) that certify to the Distributor at the time of
purchase that such purchase is for their own account (or for the benefit of
their immediate families); (4)purchases by a charitable organization (as defined
in Section 501(c)(3) of the Internal Revenue Code) investing $100,000 or more;
(5) purchases by a charitable remainder trust or life income pool established
for the benefit of a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code); (6)purchases with trust assets; (7) purchases in
accounts as to which a Selling Group Member charges an account management fee;
(8) purchases by any state, county, or city, or any governmental
instrumentality, department, authority or agency; (9) purchases with redemption
proceeds from another mutual fund (which is not a series of the Trust) on which
the investor has paid a front-end sales charge only; (10) purchases of Class A
Shares by clients of certain securities dealers offering programs in which the
client pays a separate fee to an advisor providing financial management or
consulting services, including WRAP fee programs; (11) purchases of Class A
Shares by certain fee paid investment advisers purchasing on behalf of their
clients; (12) purchases of Class A Shares made through certain fee-waived
programs sponsored by third parties; (13) Class A Shares issued in plans of
reorganization such as mergers, asset acquisitions and exchange offers to which
a Fund is a party; and, (14) purchases made through a broker-dealer or financial
intermediary which maintains a net asset value purchase program that enables the
Funds to realize certain economies of scale.
In addition, purchases may be made at net asset value by the following:
Investment Advisors or Financial Planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of such investment
advisors or financial planners who place trades for their own accounts if the
accounts are linked to the master account of such investment advisor or
financial planner on the books and records of the broker or agent.
Retirement and deferred compensation plans and trusts used to fund those
plans, including, but not limited to, those defined in section 401(a),
403(b), or 457 of the Internal Revenue Code and "rabbi trusts".
The securities dealers offering WRAP fees or similar programs may charge a
separate fee for purchases and redemptions of Class A Shares. Neither the Fund,
the Advisor, nor the Distributor receives any part of the fees charged clients
of such securities dealers or financial advisors. To qualify for the purchase of
such Class A Shares, Fund Employees and other persons listed in section (2) must
provide the Transfer Agent with a letter stating that the purchase is for their
own investment purposes only and that the shares will not be resold except to
the Funds.
LETTER OF INTENT. In submitting a Letter of Intent to purchase Class A Shares of
the Funds at a reduced sales charge, the investor agrees to the terms of the
Prospectus, the Applications used to buy such shares, and the language in this
Statement of Additional Information as to Letters of Intent, as they may be
amended from time to time by the Trust. Such amendments will apply automatically
to existing Letters of Intent.
A Letter of Intent ("Letter") is the investor's statement of intention to
purchase Class A Shares of one or more of the Funds during the 13-month period
from the investor's first purchase pursuant to the Letter (the "Letter of Intent
period"), which may, at the investor's request, include purchases made up to 90
days prior to the date of the Letter. The investor states the intention to make
the aggregate amount of purchases (excluding any reinvestment of dividends or
distributions or purchases made at net asset value without sales charge), which
together with the investor's holdings of such funds (calculated at their
respective public offering prices calculated on the date of the Letter) will
equal or exceed the amount specified in the Letter to obtain the reduced sales
charge rate (as set forth in "How To Purchase Shares" in the Prospectus)
applicable to purchases of shares in that amount (the "intended amount"). Each
purchase under the Letter will be made at the public offering price applicable
to a single lump-sum purchase of shares in the intended amount, as described in
the Prospectus.
In submitting a Letter, the investor makes no commitment to purchase Class A
Shares, but if the investor's purchases of Class A Shares within the Letter of
Intent period, when added to the value (at offering price) of the investor's
holdings of such Fund shares on the last day of that period, do not equal or
exceed the intended amount, the investor agrees to pay the additional amount of
sales charge applicable to such purchases, as set forth in "Terms of Escrow,"
below, as those terms may be amended from time to time.
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The investor agrees that shares equal in value to 5% of the intended amount will
be held in escrow by the Trust's transfer agent subject to the Terms of Escrow.
If the total eligible purchases made during the Letter of Intent period do not
equal or exceed the intended amount, the commissions previously paid to the
dealer of record for the account and the amount of sales charge retained by the
Distributor will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period exceed the
intended amount and exceed the amount needed to qualify for the next sales
charge rate reduction set forth in the applicable prospectus, the sales charges
paid will be adjusted to the lower rate, but only if and when the dealer returns
to the Distributor the excess of the amount of commissions allowed or paid to
the dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be used to
purchase additional shares for the investor's account at the net asset value per
share in effect on the date of such purchase, promptly after the Distributor's
receipt thereof.
In determining the total amount of purchases made under a Letter, Class A Shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to refer to the Letter in placing any purchase orders for the investor
during the Letter of Intent period. All of such purchases must be made through
the Distributor.
Terms of Escrow
1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, Class A Shares of the Fund equal in value to 5% of the
intended amount specified in the Letter shall be held in escrow by the Fund's
transfer agent. For example, if the intended amount specified under the Letter
is $50,000, the escrow shall be shares valued in the amount of $2,500 (computed
at the public offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited to the
investor's account.
2. If the total minimum investment specified under the Letter is completed
within the thirteen-month Letter of Intent period, the escrowed shares will be
promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended amount specified in
the Letter, the investor must remit to the Distributor an amount equal to the
difference between the dollar amount of sales charges actually paid and the
amount of sales charges which would have been paid if the total amount purchased
had been made at a single time. Such sales charge adjustment will apply to any
shares redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares necessary to
realize such difference in sales charges. Full and fractional shares remaining
after such redemption will be released from escrow. If a request is received to
redeem escrowed shares prior to the payment of such additional sales charge, the
sales charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and appoints the
transfer agent of the Trust as attorney-in-fact to surrender for redemption any
or all escrowed shares.
5. Shares held in escrow hereunder will automatically be exchanged for shares of
another Fund to which an exchange is requested, and the escrow will be
transferred to that other Fund.
In-Kind. Each Fund intends to pay all redemptions of its shares in cash.
However, each Fund may make full or partial payment of any redemption request by
the payment to shareholders of portfolio securities of the applicable Fund
(i.e., by redemption-in-kind), at the value of such securities used in
determining the redemption price. The Funds, nevertheless, pursuant to Rule
18f-1 under the 1940 Act, have filed a notification of election under which each
Fund is committed to pay in cash to any shareholder of record, all such
shareholder's requests for redemption made during any 90-day period, up to the
lesser of $250,000 or
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1% of the applicable Fund's net asset value at the beginning of such period. The
securities to be paid in-kind to any shareholders will be readily marketable
securities selected in such manner as the Board of Trustees of the Trust deems
fair and equitable. If shareholders were to receive redemptions-in-kind, they
would incur brokerage costs should they wish to liquidate the portfolio
securities received in such payment of their redemption request. The Trust does
not anticipate making redemptions-in-kind.
The right to redeem shares or to receive payment with respect to any redemption
of shares of the Funds may only be suspended (1) for any period during which
trading on the New York Stock Exchange ("NYSE") is restricted or such Exchange
is closed, other than customary weekend and holiday closings, (2) for any period
during which an emergency exists as a result of which disposal of securities or
determination of the net asset value of the Fund is not reasonably practicable,
or (3) for such other periods as the SEC may by order permit for protection of
shareholders of the Funds.
SHAREHOLDER SERVICES
Systematic Withdrawal Program. A shareholder owning or purchasing shares of any
Fund having a total value of $10,000 or more may participate in a systematic
withdrawal program providing regular monthly or quarterly payments. An
application form containing details of the Systematic Withdrawal Program is
available upon request from the Funds' transfer agent. The Program is voluntary
and may be terminated at any time by the shareholders.
Income dividends and capital gain distributions on shares of the Funds held in a
Systematic Withdrawal Program are automatically reinvested in additional shares
of the relevant Fund at net asset value. A Systematic Withdrawal Program is not
an annuity and does not and cannot protect against loss in declining markets.
Amounts paid to a shareholder from the Systematic Withdrawal Program represents
the proceeds from redemptions of Fund shares, and the value of the shareholder's
investment in a Fund will be reduced to the extent that the payments exceed any
increase in the aggregate value of the shareholder's shares (including shares
purchased through reinvestment of dividends and distributions). If a shareholder
receives payments that are greater than the appreciation in value of his or her
shares, plus the income earned on the shares, the shareholder may eventually
withdraw his or her entire account balance. This will occur more rapidly in a
declining market. For tax purposes, depending upon the shareholder's cost basis
and date of purchase, each withdrawal will result in a capital gain or loss. See
"Dividends, Distributions and Taxes" in this SAI and in the Funds' Prospectus.
The Funds offer certain shareholder services, which are designed to facilitate
investment in their shares. Each of the options is described in the Funds'
Prospectus. All of these special services may be terminated by either the Funds
or the shareholder without any prior written notice.
Systematic Exchange Program. The Systematic Exchange Program allows you to make
regular, systematic exchanges from one Orbitex Fund account into another Orbitex
Fund account. By setting up the program, you authorize the Fund and its agents
to redeem a set dollar amount or number of shares from the first account and
purchase shares of a second Fund. An exchange transaction is a sale and a
purchase of shares for federal income tax purposes and may result in a capital
gain or loss.
To participate in the Systematic Exchange Program, you must have an initial
account balance of $10,000 in the first account and at least $1,000 in the
second account. Exchanges may be made on any day or days of your choice. If the
amount remaining in the first account is less than the exchange amount you
requested, then the remaining amount will be exchanged. At such time as the
first account has a zero balance, your participation in the program will be
terminated. You may also terminate the program by calling or writing the Fund.
Once participation in the program has been terminated for any reason, to
reinstate the program you must do so in writing; simply investing additional
funds will not reinstate the program.
DETERMINATION OF NET ASSET VALUE
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The net asset value per share of a Fund will be determined for each class of
shares. The net asset value per share of a given class of shares of a Fund is
determined by calculating the total value of the Fund's assets attributable to
such class of shares, deducting its total liabilities attributable to such class
of shares in conformance with the provisions of the plan adopted by the Fund in
accordance with Rule 18f-3 under the 1940 Act., and dividing the result by the
number of shares of such class outstanding. The net asset value of shares of
each class of each Fund, other than the Cash Reserves Fund, is normally
calculated as of the close of trading on the NYSE on every day the NYSE is open
for trading. The NYSE is open Monday through Friday except on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The net asset value of the Cash Reserves Fund is normally
calculated at 3:00 p.m. Eastern time on each day that the Federal Reserve Bank
of New York is open. The Federal Reserve Bank of New York is open Monday through
Friday except on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day [CONFIRM FEDERAL HOLIDAYS].
The net asset value per share of the different classes of shares is expected to
be substantially the same; from time to time, however, the per share net asset
value of the different classes of shares may differ.
For each Fund, other than the Cash Reserves Fund, short-term debt instruments
with a remaining maturity of more than 60 days, intermediate and long-term
bonds, convertible bonds, and other debt securities are generally valued on the
basis of dealer supplied quotations or by pricing system selected by the Adviser
and approved by the Board of Trustees of the Trust. Where such prices are not
available, valuations will be obtained from brokers who are market makers for
such securities. However, in circumstances where the Adviser or a Sub-Adviser
deems it appropriate to do so, the mean of the bid and asked prices for over-
the-counter securities or the last available sale price for exchange-traded debt
securities may be used. Where no last sale price for exchange traded debt
securities is available, the mean of the bid and asked prices may be used.
Short-Term debt securities with a remaining maturity of 60 days or less are
amortized to maturity, provided such valuations represent par value.
Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided, as described above, are
valued as determined in good faith in accordance with procedures approved by the
Board of Trustees of the Trust.
Trading in securities on Far Eastern securities exchanges and over-the-counter
markets is normally completed well before the close of business on each business
day in New York (i.e., a day on which the NYSE is open). In addition, Far
Eastern securities trading generally or in a particular country or countries may
not take place on all business days in New York. Furthermore, trading takes
place in Japanese markets on certain Saturdays in various foreign markets on
days which are not business days in New York and on which a Fund's net asset
value is not calculated. Each Fund calculates net asset value per share, and
therefore effects sales, redemptions and repurchases of its shares, as of the
close of regular trading on the NYSE once on each day on which the NYSE is open.
Such calculation may not take place contemporaneously with the determination of
the prices of the majority of the portfolio securities used in such calculation.
If events materially affecting the value of such securities occur between the
time when their price is determined and the time when the Fund's net asset value
is calculated, such securities will be valued at fair value as determined in
good faith in accordance with procedures approved by the Board of Trustees of
the Trust.
The securities in the Cash Reserve Fund's portfolio are valued at their
amortized cost which does not take into account unrealized gains or losses on
securities. This method involves initially valuing a security at its cost and
thereafter assuming a constant amortization to maturity of any premium paid or
accreting discount. The amortized cost method minimizes changes in the market
value of the Fund's portfolio securities and is intended to help maintain a
stable price of $1.00 per share; there can be no assurance, however, that the
net asset value of the Cash Reserves Fund will remain at $1.00.
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TAXES
Each Fund intends to qualify as a "regulated investment company" ("RIC") under
Subchapter M of the Internal Revenue Code. In general, to qualify as a RIC: (a)
at least 90% of the gross income of a Fund for the taxable year must be derived
from dividends, interest, payments with respect to loans of securities, gains
from the sale or other disposition of securities, or other income derived with
respect to its business of investing in securities; (b) a Fund must distribute
to its shareholders 90% of its ordinary income and net short-term capital gains;
and (c) a Fund must diversity its assets so that, at the close of each quarter
of its taxable year, (i) at least 50% of the fair market value of its total
(gross) assets is comprised of cash, cash items, U.S. Government securities,
securities of other regulated investment companies and other securities limited
in respect of any one issuer to no more than 5% of the fair market value of the
Fund's total assets and 10% of the outstanding voting securities of such issuer
and (ii) no more than 25% of the fair market value of its total assets is
invested in the securities of any one issuer (other than U.S. Government
securities and securities of other regulated investment companies) or of two or
more issuers controlled by the Fund and engaged in the same, similar, or related
trades or businesses.
In addition, each Fund must declare and distribute dividends equal to at least
98% of its ordinary income (as of the twelve months ended December 31) and at
least 98% of its net capital gain (as of the twelve months ended October 31), in
order to avoid a federal excise tax. Each Fund intends to make the required
distributions, but they cannot guarantee that they will do so. Dividends
attributable to a Fund's ordinary income and net capital gain are taxable as
such to shareholders in the year in which they are received except dividends
declared in October, November and December to the shareholders of record on a
specified date in such a month and paid in January of the following year are
taxable in the previous year.
A corporate shareholder may be entitled to take a deduction for income dividends
received by it that are attributable to dividends received from a domestic
corporation, provided that both the corporate shareholder retains its shares in
the applicable Fund for more than 45 days and the Fund retains its shares in the
issuer from whom it received the income dividends for more than 45 days. A
distribution of net capital gain reflects a Fund's excess of net long-term gains
over its net short-term losses. Each Fund must designate distributions of net
capital gain and must notify shareholders of this designation within sixty days
after the close of the Trust's taxable year. A corporate shareholder of a Fund
cannot use a dividends-received deduction for distributions of net capital gain.
Foreign currency gains and losses, including the portion of gain or loss on the
sale of debt securities attributable to foreign exchange rate fluctuations are
taxable as ordinary income. If the net effect of these transactions is a gain,
the dividend paid by the Fund will be increased; if the result is a loss, the
income dividend paid by the Fund will be decreased. Adjustments to reflect these
gains and losses will be made at the end of each Fund's taxable year.
At the time of purchase, each Fund's net asset value may reflect undistributed
income or net capital gains. A subsequent distribution to shareholders of such
amounts, although constituting a return of their investment, would be taxable
either as dividends or capital gain distributions. For federal income tax
purposes, each Fund is permitted to carry forward its net realized capital
losses, if any, for eight years, and realize net capital gains up to the amount
of such losses without being required to pay taxes on, or distribute such gains.
Income received by each Fund from sources within various foreign countries may
be subject to foreign income taxes withheld at the source. Under the Internal
Revenue Code, if more than 50% of the value of a Fund's total assets at the
close of its taxable year comprise securities issued by foreign corporations,
the Fund may file an election with the Internal Revenue Service to "pass
through" to the Fund's shareholders the amount of any foreign income taxes paid
by the Fund. Pursuant to this election, shareholders will be required to: (i)
include in gross income, even though not actually received, their respective pro
rata share of
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foreign taxes paid by the Fund; (ii) treat their pro rata share of foreign taxes
as paid by them; and (iii) either deduct their pro rata share of foreign taxes
in computing their taxable income, or use it as a foreign tax credit against
U.S. income taxes (but not both). No deduction for foreign taxes may be claimed
by a shareholder who does not itemize deductions.
The Strategic Natural Resources Fund intends to meet the requirements of the
Internal Revenue Code to "pass through" to its shareholders foreign income taxes
paid, but there can be no assurance that it will be able to do so. Shareholders
ofthe Strategic Natural Resources Fund will be notified within 60 days after the
close of each taxable year of a Fund, if that Fund will "pass through" foreign
taxes paid for that year, and, if so, the amount of each shareholder's pro rata
share (by country) of (i) the foreign taxes paid, and (ii) the Fund's gross
income from foreign sources. Of course, shareholders who are not liable for
federal income taxes, such as retirement plans qualified under Section 401 of
the Internal Revenue Code, will not be affected by any such "pass through" of
foreign tax credits.
If, in any taxable year, a Fund should not qualify as a RIC under the Internal
Revenue Code: (1) that Fund would be taxed at normal corporate rates on the
entire amount of its taxable income without deduction for dividends paid or
other distributions to its shareholders, and (2) that Fund's distributions to
the extent made out of that Fund's current or accumulated earnings and profits
would be taxable to its shareholders (other than shareholders in tax deferred
accounts) as ordinary dividends (regardless of whether they would otherwise have
been considered capital gain dividends), and may qualify for the deduction for
dividends received by corporations.
PASSIVE FOREIGN INVESTMENT COMPANIES. Each Fund may invest in the stock of
foreign companies that may be treated as "passive foreign investment companies"
("PFICs") under the Internal Revenue Code. Certain other foreign corporations,
not operated as investment companies, may also satisfy the PFIC definition. A
portion of the income and gains that a Fund derives may be subject to a
non-deductible federal income tax unless the Fund makes a mark-to-market
election. Because it is not always possible to identify a foreign issuer as a
PFIC in advance of making the investment, the Fund's will elect to do
mark-to-market and identified PFIC to avoid the PFIC tax.
If a Fund purchases shares in certain foreign passive investment entities
described in the Internal Revenue Code as passive foreign investment companies
("PFIC"), the Fund will be subject to U.S. federal income tax on a portion of
any "excess distribution" (the Fund's ratable share of distributions in any year
that exceeds 125% of the average annual distribution received by the Fund in the
three preceding years or the Fund's holding period, if shorter, and any gain
from the disposition of such shares) even if such income is distributed as a
taxable dividend by the Fund to its shareholders. Additional charges in the
nature of interest may be imposed on the Fund in respect of deferred taxes
arising from such "excess distributions." If the Fund were to invest in a PFIC
and elect to treat the PFIC as a "qualified electing fund" under the Internal
Revenue Code (and if the PFIC were to comply with certain reporting
requirements), in lieu of the foregoing requirements the Fund would be required
to include in income each year its pro rata share of the PFIC's ordinary
earnings and net realized capital gains, whether or not such amounts were
actually distributed to the Fund.
Pursuant to legislation enacted on August 5, 1997 any taxpayer holding shares of
"marketable" PFICs may make an election to mark that stock to market at the
close of the taxpayer's taxable year. A Fund making an irrevocable election will
mark its PFICs to market at taxable year-end for income tax purposes and at
October 31 for purposes of the excise tax minimum distribution requirements of
Code Section 4982. This provision is effective for taxable years of U.S.
persons beginning after December 31, 1997.
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ORGANIZATION OF THE TRUST
As a Delaware business trust entity, the Trust need not hold regular annual
shareholder meetings and, in the normal course, does not expect to hold such
meetings. The Trust, however, must hold shareholder meetings for such purposes
as, for example: (1) approving certain agreements as required by the 1940 Act;
(2) changing fundamental investment objectives, policies, and restrictions of
the Funds; and (3) filling vacancies on the Board of Trustees of the Trust in
the event that less than a majority of the Trustees were elected by
shareholders. The Trust expects that there will be no meetings of shareholders
for the purpose of electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders. At
such time, the Trustees then in office will call a shareholders meeting for the
election of Trustees. In addition, holders of record of not less than two-thirds
of the outstanding shares of the Trust may remove a Trustee from office by a
vote cast in person or by proxy at a shareholder meeting called for that purpose
at the request of holders of 10% or more of the outstanding shares of the Trust.
The Funds have the obligation to assist in such shareholder communications.
Except as set forth above, Trustees will continue in office and may appoint
successor Trustees.
Costs incurred by the Growth Fund, Info-Tech & Communications Fund and
Strategic Natural Resources Fund in connection with their organization,
estimated at $15,000 for, will be amortized on a straight line basis over a
five year period beginning at the commencement of operations of each Funds.
In the event that any of the initial shares of the Funds are redeemed during
the amortization period, the redemption proceeds will be reduced by any
unamortized organization expenses in the same proportion as the number of
initial shares outstanding at the time of such redemption.
PERFORMANCE INFORMATION ABOUT THE FUNDS
Total Return Calculations
Each Fund may provide average annual total return information calculated
according to a formula prescribed by the SEC. Average annual total return will
be calculated separately for Class A, Class B and Class D Shares. According to
that formula, average annual total return figures represent the average annual
compounded rate of return for the stated period. Average annual total return
quotations reflect the percentage change between the beginning value of a static
account in the Fund and the ending value of that account measured by then
current net asset value of that Fund assuming that all dividends and capital
gains distributions during the stated period were reinvested in shares of the
Fund when paid. Total return is calculated by finding the average annual
compounded rates of return of a hypothetical investment that would equate the
initial amount invested to the ending redeemable value of such investment,
according to the following formula:
1/n
T=(ERV/P) -1
Where:
T = average annual total return.
P = a hypothetical initial payment of $1,000.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1,5, or 10 year periods at the
end of the1, 5, or 10 year periods (or fractional portion).
Each Fund, from time to time, also may advertise its cumulative total return
figures. Cumulative total return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Fund's shares and
assume that all
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dividends and capital gains distributions during the period were
reinvested in shares of that Fund. Cumulative total return is calculated by
finding the compound rates of a hypothetical investment over such period,
according to the following formula (cumulative total return is then expressed as
a percentage):
C = (ERV/P) - 1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value; ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at
the beginning of the applicable period.
Yield Calculations.
In addition to providing cumulative total return information, the Cash Reserves
Fund may also illustrate its performance by providing information concerning its
yield and effective yield. Yield and effective yield will be calculated
separately for each class of shares of the Fund.
The Prime Reserve Fund's yield is computed by (a) determining the net change in
the value of a hypothetical pre-existing account in the Fund having a balance of
one share at the beginning of a seven calendar day period for which yield is to
be quoted; (b) dividing the net change by the value of the account at the
beginning of the period to obtain the base period return; and (c) annualizing
the results (I.E., multiplying the base period return by 365/7).
In addition, the Cash Reserves Fund may calculate a compound effective
annualized yuield by determing the net change in the valueof a hypothetical
pre-existing account in the Fund having a balance of one share at the beginning
of a seven calendar day period for which yield is to be quoted according to the
following formula:
365/7
Effective Yield = [(Base Period return + 1) -- 1
The net change in the value of the account reflects the value of additional
shares, but does not include realized gains and losses or unrealized
appreciation and depreciation.
[Yield fluctuations may reflect changes in the Fund's net income, and portfolio
changes resulting from net purchases or net redemptions of the Fund's shares may
affect its yield. Accordingly, the Fund's yield may vary from day to day, and
the yield stated for a particular past period is not necessarily representative
of the Fund's future yield. The Fund's yield is not guaranteed, and its
principal is not insured.]
From time to time, in reports and promotional literature, each Fund's
performance may be compared to: (1) other groups of mutual funds tracked by: (A)
Lipper Analytical Services, a widely-used independent research firm which ranks
mutual funds by overall performance, investment objectives, and asset size; (B)
Forbes Magazine's Annual Mutual Funds Survey and Mutual Fund Honor Roll; or (C)
other financial or business publications, such as Business Week, Money Magazine,
and Barron's, which provide similar information; (2) the Consumer Price Index
(measure for inflation), which may be used to assess the real rate of return
from an investment in each Fund; (3) other Government statistics such as GNP,
and net import and export figures derived from Governmental publications, e.g.,
The Survey of Current Business, which may be used to illustrate investment
attributes of each Fund or the general economic, business, investment, or
financial environment in which each Fund operates; (4) Alexander Steele's Mutual
Fund Expert, a tracking service which ranks various mutual funds according to
their performance; and (5) Morningstar, Inc. which ranks mutual funds on the
basis of historical risk and total return. Morningstar's rankings are calculated
using the mutual fund's average annual returns for a certain period and a risk
factor
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that reflects the mutual fund's performance relative to three-month Treasury
bill monthly returns. Morningstar's rankings range from five star (highest) to
one star (lowest) and represent Morningstar's assessment of the historical risk
level and total return of a mutual fund as a weighted average for 3, 5, and
10-year periods. In each category, Morningstar limits its five star rankings to
10% of the funds it follows and its four star rankings to 22.5% of the funds it
follows. Rankings are not absolute or necessarily predictive of future
performance.
In addition, the performance of the Funds may be compared to indices of broad
groups of similar but unmanaged securities or other benchmarks considered to be
representative of a Fund's holdings.
The performance of the indices that may be used as benchmarks for each Fund's
performance, unlike the returns of the Funds, do not include the effect of
paying brokerage costs (for equity securities) and other transaction costs that
investors normally incur when investing directly in the securities in those
indices.
The Trust may also illustrate a particular Fund's investment returns or returns
in general by graphs and charts, that compare, at various points in time, the
return from an investment in the particular Fund (or returns in general) on a
tax-deferred basis (assuming reinvestment of capital gains and dividends and
assuming one or more tax rates) with the same return on a taxable basis.
INDEPENDENT ACCOUNTANTS
[-------------------] whose address is [---------------], Boston, Massachusetts
02110 serves as the Trust's Independent Accountants providing services including
(1) audit of annual financial statements, (2) assistance and consultation in
connection with SEC filings and (3) review of the annual federal income tax
returns filed on behalf of the Funds.
LEGAL MATTERS
Legal advice regarding certain matters relating to the federal securities laws
applicable to the Trust and the offer and sale of its shares has been provided
by Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166, which serves
as Counsel to the Trust.
The Trust has agreed that the word "Orbitex" in its name is derived from the
name of the Adviser; that such name is the property of the Adviser for
copyrights and/or other purposes; and that therefore, such name may freely be
used by the Adviser for other investment companies, entities or products. The
Trust has further agreed that in the event that for any reason, the Adviser
ceases to be its investment adviser, the Trust will, unless the Adviser
otherwise consents, promptly take all steps necessary to change its name to one
which does not include "Orbitex."
FINANCIAL STATEMENTS
Following are (1) the Schedules of Investments for the Orbitex Group of Funds as
of April 30, 1999, (2) the Statements of Assets and Liabilities as of April 30,
1999, (3) the Statements of Operations as of April 30, 1999, (4) the Statements
of Changes in Net Assets as of April 30, 1999, (5) the Financial Highlights as
of April 30, 1999 and (6) the Notes to the Financial Statements.
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APPENDIX A
- RATED INVESTMENTS -
CORPORATE BONDS
Excerpts from MOODY'S INVESTORS SERVICES, INC. ("MOODY'S") description
of its bond ratings:
"Aaa":
Bonds that are rated "Aaa" are judged to be of the best
quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.
"Aa":
Bonds that are rated "Aa" are judged to be of high-quality
by all standards. Together with the "Aaa" group they comprise
what are generally known as "high-grade" bonds. They are rated
lower than the best bonds because margins of protection may not
be as large as in "Aaa" securities or fluctuation of protective
elements may be of greater amplitude or there may be other
elements present which make the long-term risks appear somewhat
larger than in "Aaa" securities.
"A":
Bonds that are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium-grade
obligations. Factors giving security to principal and interest
are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future.
"Baa":
Bonds that are rated "Baa" are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appears
adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as
well.
"Ba":
Bonds that are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
"B":
Bonds that are rated "B" generally lack characteristics of
desirable investments. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
"Caa":
Bonds that are rated "Caa" are of poor standing. These
issues may be in default or present elements of danger may exist
with respect to principal or interest.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds
rated "Aa" through "B". The modifier 1 indicates that the bond being rated ranks
in the higher end of its generic rating category; the
52
<PAGE>
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
bond ranks in the lower end of its generic rating category.
Excerpts from STANDARD & POOR'S CORPORATION ("S&P") description of its
bond ratings:
"AAA":
Debt rated "AAA" has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
"AA":
Debt rated "AA" has a very strong capacity to pay interest
and repay principal and differs from "AAA" issues by a small
degree.
"A":
Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
"BBB":
Bonds rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for bonds
in this category than for bonds in higher rated categories.
"BB", "B" AND "CCC":
Bonds rated "BB" and "B" are regarded, on balance, as
predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligations. "BB" represents a lower degree of speculation than
"B" and "CCC" the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
To provide more detailed indications of credit quality, the "AA" or "A"
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
COMMERCIAL PAPER
The rating "PRIME-1" is the highest commercial paper rating assigned by
MOODY'S. These issues (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issues rated "PRIME-2" (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics of "Prime-1" rated issues, but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still appropriate,
may be more affected by external conditions. Ample alternate liquidity is
maintained.
Commercial paper ratings of S&P are current assessments of the
likelihood of timely payment of debt having original maturities of no more than
365 days. Commercial paper rated "A-1" by S&P indicates that the degree of
safety regarding timely payment is either overwhelming or very strong. Those
issues determined to possess overwhelming safety characteristics are denoted
"A-1+." Commercial paper rated "A-2" by S&P indicates that capacity for timely
payment is strong. However, the relative degree of safety is not as high as for
issues designated "A-1."
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PART C. OTHER INFORMATION
Item 23. FINANCIAL STATEMENTS AND EXHIBITS
(a) Declaration of Trust of Orbitex Group of Funds (the "Trust), dated
December 13, 1996, previously filed in the Registration Statement
on January 29, 1997 is incorporated herein by reference.
(b) By-Laws of the Trust previously filed in the Registration Statement
on January 29, 1997 are incorporated herein by reference.
(c) Not applicable.
(d)(1) Investment Advisory Agreement, dated June 1, 1997, by and between
the Trust and Orbitex Management, Inc. on behalf of the Orbitex
Growth Fund, the Orbitex Info-Tech & Communications Fund and the
Orbitex Strategic Natural Resources Fund and Orbitex Management,
Inc. is filed herein.
(2) Investment Advisory Agreement by and between the Trust and Orbitex
Management, Inc. on behalf of the Orbitex Health & Biotechnology
Fund, the Orbitex Prime Reserves Fund and the Orbitex U.S. Focus
30 Fund will be filed by subsequent amendment.
(e)(1) Distribution Agreement, dated June 1, 1997, between the Trust and
Funds Distributor, Inc. on behalf of the Orbitex Growth Fund, the
Orbitex Info-Tech & Communications Fund and the Orbitex Strategic
Natural Resources Fund is filed herein.
(2) Form of Distribution Sub-Agreement previously filed in
Pre-Effective Amendment No. 2 to the Registration Statement dated
September 26, 1997 is incorporated herein by reference.
(3) Distribution Agreement on behalf of the Orbitex Health &
Biotechnology Fund, the Orbitex Prime Reserves Fund and the Orbitex
U.S. Focus 30 Fund will be filed by subsequent amendment.
(f) Not applicable.
(g)(1) Custodian Contract, dated May 14, 1997, by and between the Trust
and State Street Bank and Trust Company on behalf of the Orbitex
Growth Fund, the Orbitex Info-Tech & Communication Fund and the
Orbitex Strategic Natural Resources Fund is filed herein.
(2) Custodian Contract on behalf of the Orbitex Health & Biotechnology
Fund, the Orbitex Prime Reserves Fund and the Orbitex U.S. Focus
30 Fund will be filed by subsequent amendment.
(h)(1) Transfer Agency and Service Agreement, dated May 14, 1997, by and
between the Trust and State Street Bank and Trust Company on behalf
of the Orbitex Growth Fund, the Orbitex Info-Tech & Communication
Fund and the Orbitex Strategic Natural Resources Fund is filed
herein.
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(2) Transfer Agency and Service Agreement on behalf of the Orbitex
Health & Biotechnology Fund, the Orbitex Prime Reserves Fund and
the Orbitex U.S. Focus 30 Fund will be filed by subsequent
amendment.
(2) Administration Agreement, dated May 14, 1997, by and between the
Trust and State Street Bank and Trust Company on behalf of the
Orbitex Growth Fund, the Orbitex Info-Tech & Communication Fund and
the Orbitex Strategic Natural Resources Fund is filed herein.
(3) Administration Agreement on behalf of the Orbitex Health &
Biotechnology Fund, the Orbitex Prime Reserves Fund and the Orbitex
U.S. Focus 30 Fund will be filed by subsequent amendment.
(4) Form of Individual Retirement Account Agreement previously filed in
Pre-Effective Amendment No. 2 to the Registration Statement dated
September 26, 1997 is incorporated herein by reference.
(i)(1) Opinion and Consent of Rogers & Wells regarding the legality of the
securities being registered previously filed in Pre-Effective
Amendment No. 2 to the Registration Statement dated September 26,
1997 is incorporated herein by reference.
(2) Consent of Rogers & Wells to continued validity of the September
26, 1997 opinion letter previously filed in Post-Effective
Amendment No. 4 to the Registration Statement dated August 19, 1998
is incorporated herein by reference.
(3) Consent of Rogers & Wells regarding the legality of the securities
of the Orbitex Health & Biotechnology Fund, the Orbitex Prime
Reserves Fund and the Orbitex U.S. Focus 30 Fund will be filed by
subsequent amendment.
(j)(1) Consent of Independent Accountants, dated August 18, 1998,
previously filed in Post-Effective Amendment No. 4 to the
Registration Statement dated August 19, 1998 is incorporated herein
by reference.
(2) Power of Attorney, dated March 29, 1999, is filed herein.
(3) Schedule for Computation of Performance Quotation previously filed
in Post-Effective Amendment No. 1 to the Registration Statement
dated March 27, 1998 is incorporated herein by reference.
(k) Not applicable.
(l) Form of Shareholder Subscription Agreement by and between Orbitex
Management, Inc. and the Trust on behalf of each Fund previously
filed in Pre-Effective Amendment No. 2 to the Registration
Statement dated September 26, 1997 is incorporated herein by
reference.
(m)(1) 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, is filed herein.
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(2) 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 herein
by reference.
(3) Shareholder Services Plan and Shareholder Servicing Agreement
(Non-Rule 12b-1 Plan) approved May 27, 1998 previously filed in
Post-Effective Amendment No. 4 to the Registration Statement dated
August 19, 1998 is incorporated herein by reference.
(n) Financial Data Schedule to be filed by subsequent Amendment.
(o) Form of Revised Rule 18f-3 Plan for Multiple Classes of Shares
dated May 27, 1998, is filed herein.
Item 24 PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Not applicable.
Item 25. 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.
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
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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 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Certain information pertaining to business and other connections of
the Registrant's Adviser, Orbitex Management, Inc. is hereby
incorporated herein by reference to the section of the Prospectus
captioned "Management" and to the section of the Statement of
Additional Information captioned "Investment Management and Other
Services." The information required by this Item 26 with respect
to each director, officer or partner of Orbitex Management, Inc. is
incorporated by reference to Form ADV filed by Orbitex Management,
Inc. with the Securities and Exchange Commission pursuant to the
Investment Advisers Act of 1940, as amended (File No. 801-52312).
Item 27. PRINCIPAL UNDERWRITER
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies.
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Kobrick Investment Trust
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Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Orbitex Group of Funds
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
Funds Distributor is registered with the Securities and Exchange Commission
as a broker-dealer and is a member of the National Association of Securities
Dealers. Funds Distributor is located at 60 State Street, Suite 1300, Boston,
Massachusetts 02109. Funds Distributor is an indirect wholly-owned subsidiary
of Boston Institutional Group, Inc., a holding company all of whose outstanding
shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
Director, President and Chief - Marie E. Connolly
Executive Officer
Executive Vice President - George A. Rio
Executive Vice President - Donald R. Roberson
Executive Vice President - William S. Nichols
Senior Vice President, General - Margaret W. Chambers
Counsel, Chief Compliance Officer,
Secretary and Clerk
Director, Senior Vice President, - Joseph F. Tower, III
Treasurer and Chief Financial Officer
Senior Vice President - Paula R. David
Senior Vice President - Gary S. MacDonald
Senior Vice President - Judith K. Benson
Chairman and Director - William J. Nutt
(c) Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
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The following entities prepare, maintain and preserve the records
required by Section 31 (a) of the 1940 Act for the Registrant.
These services are provided to the Registrant through written
agreements between the parties to the effect that such services
will be provided to the Registrant for such periods prescribed by
the rules and regulations of the Securities and Exchange Commission
under the 1940 Act and such records are the property of the entity
required to maintain and preserve such records and will be
surrendered promptly on request.
State Street Bank and Trust Company ("State Street") provides
custodian and accounting services pursuant to a Custodian Contract
between State Street and the Trust and provides transfer agent and
dividend disbursing services pursuant to a Transfer Agency and
Service Agreement between State Street and the Trust. In such
capacities, State Street provides pricing for each Fund's portfolio
securities, keeps records regarding securities and other assets in
custody and in transfer, bank statements, canceled checks,
financial books and records, and keeps records of each
shareholder's account and all disbursement made to shareholders.
Orbitex Management, Inc., pursuant to its Investment Advisory
Agreement with respect to each Fund, maintains all records required
pursuant to such agreement. Each Sub-Adviser, pursuant to its
Sub-Advisory Agreement with Orbitex Management, Inc. and the Trust
with regard to each Fund, maintains all records required pursuant
to such agreement. State Street, pursuant to its Administration
Agreement with the Trust, maintains all records required pursuant
to such agreement. Funds Distributor, Inc., as principal
underwriter for the Trust, maintains all records required to be
kept pursuant to the Distribution Agreement with the Trust, and
such other records as must be maintained pursuant to the Trust's
Distribution Plan and Agreement adopted to Rule 12b-1 under the
1940 Act.
Item 29. MANAGEMENT SERVICES
Not applicable.
Item 30. UNDERTAKINGS.
Not applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirement for effectiveness of this registration statement under rule
485(a) under the Securities Act of 1933 and has duly caused this amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized in the City of New York, and the State of New York on
the 23rd day of April 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, 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 April 23, 1999
------------------------
Otto J. Felber
/s/James L. Nelson Trustee, President, April 23, 1999
------------------------ Assistant Treasurer &
James L. Nelson Assistant Secretary
/s/M. Fyzul Khan Secretary April 23, 1999
------------------------
M. Fyzul Khan
/s/Kimberly Ratz Treasurer April 23, 1999
------------------------
Kimberly Ratz
/s/Ronald Altbach* Trustee April 23, 1999
------------------------
Ronald Altbach
/s/Thomas Bachmann* Trustee April 23, 1999
------------------------
Thomas Bachmann
/s/Richard E. Stierwalt Trustee & Assistant April 23, 1999
------------------------ Secretary
Richard E. Stierwalt
/s/John D. Morgan* Trustee April 23, 1999
------------------------
John D. Morgan
/s/Stephen H. Hamrick* Trustee April 23, 1999
------------------------
Stephen H. Hamrick
* By:/s/James L. Nelson
----------------------------
James L. Nelson, Attorney-in-Fact
</TABLE>
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EXHIBIT LIST
Exhibit
Number Description
------- -----------
Exhibit 1 Investment Advisory Agreement, dated June 1, 1997, by and
between the Trust and Orbitex Management, Inc. on behalf of the
Orbitex Growth Fund, the Orbitex Info-Tech & Communications Fund
and the Orbitex Strategic Natural Resources Fund.
Exhibit 2 Distribution Agreement, dated June 1, 1997, by and between the
Trust and Funds Distributor, Inc, on behalf of the Orbitex
Growth Fund, the Orbitex Info-Tech & Communications Fund and the
Orbitex Strategic Natural Resources Fund.
Exhibit 3 Custodian Contract, dated May 14, 1997, by and between the Trust
and State Street Bank and Trust Company on behalf of the Orbitex
Growth Fund, the Orbitex Info-Tech & Communications Fund and
the Orbitex Strategic Natural Resources Fund.
Exhibit 4 Transfer Agency and Service Agreement, dated May 14, 1997, by
and between the Trust and State Street Bank and Trust Company on
behalf of the Orbitex Growth Fund, the Orbitex Info-Tech &
Communications Fund and the Orbitex Strategic Natural Resources
Fund.
Exhibit 5 Administration Agreement, dated May 14, 1997, by and between the
Trust and State Street Bank and Trust Company on behalf of the
Orbitex Growth Fund, the Orbitex Info-Tech & Communications Fund
and the Orbitex Strategic Natural Resources Fund.
Exhibit 6 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.
Exhibit 7 Power of Attorney
Exhibit 8 Form of Revised Rule 18f-3 Plan for Multiple Classes of
Shares, dated May 27, 1998.
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Exhibit 1
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 1st day of June 1, 1997 between Orbitex Group of
Funds, a Delaware business trust (the "Trust"), and Orbitex Management, Inc., a
New York corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust intends to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act");
WHEREAS, the Trust is authorized to issue shares of beneficial interest in
separate series, each having its own investment objective or objectives,
policies and limitations;
WHEREAS, the Trust intends initially to offer shares in five series,
designated as the Orbitex Global Natural Resources Fund, Orbitex Communications
& Info-Tech Fund, Orbitex Growth Fund, Orbitex Asian High Yield Fund and Orbitex
Asian Select Advisers Fund ("Initial Series"), and the Trust may offer shares of
one or more additional series in the future;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and administrative services to the Trust with respect to each Initial
Series as indicated on the signature page in the manner and on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. SERVICES OF THE ADVISER.
1.1 INVESTMENT ADVISORY SERVICES. The Adviser shall act as the
investment adviser to the Trust and, as such, shall (i) obtain and evaluate such
information relating to the economy, industries, business, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of the Trust in a manner consistent with its investment
objectives, policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by the Trust, and implement
those decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; provided, that the Adviser will
place orders pursuant to its investment determinations either directly with the
issuer or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best price and execution of its orders, and (b) may
nevertheless in its discretion purchase and sell portfolio securities from and
to brokers and dealers who provide the Adviser with research, analysis, advice
and similar services and pay such brokers and dealers in return a higher
commission or spread than may be charged by other brokers or dealers.
<PAGE>
The Trust hereby authorizes any entity or person associated with the
Adviser or any Sub-Adviser retained by Adviser pursuant to Section 7 of this
Agreement, which is a member of a national securities exchange, to effect any
transaction on the exchange for the account of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(iv).
The Adviser shall carry out its duties with respect to the Trust's
investments in accordance with applicable law and the investment objectives,
policies and restrictions set forth in the Trust's then-current Prospectus and
Statement of Additional Information, and subject to such further limitations as
the Trust may from time to time impose by written notice to the Adviser.
1.2 ADMINISTRATIVE SERVICES. The Adviser shall manage the Trust's
business and affairs and shall provide such services required for effective
administration of the Trust as are not provided by employees or other agents
engaged by the Trust; provided, that the Adviser shall not have any obligation
to provide under this Agreement any direct or indirect services to Trust
shareholders, any services related to the distribution of Trust shares, or any
other services which are the subject of a separate agreement or arrangement
between the Trust and the Adviser. Subject to the foregoing, in providing
administrative services hereunder, the Adviser shall:
1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to
the Trust, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Trust's need.
1.2.2 PERSONNEL. Provide, without remuneration from or other cost to
the Trust, the services of individuals competent to perform all of the Trust's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Trust or by the Adviser acting in some
other capacity pursuant to a separate agreement or arrangement with the Trust.
1.2.3 AGENTS. Assist the Trust in selecting and coordinating the
activities of the other agents engaged by the Trust, including the Trust's
shareholder servicing agent, custodian, independent auditors and legal counsel.
1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the Adviser's
directors, officers and employees who may be elected or appointed as Trustees or
officers of the Trust to service in such capacities, without remuneration from
or other cost to the Trust.
1.2.5 BOOKS AND RECORDS. Assure that all financial, accounting and
other records required to be maintained and preserved by the Trust are
maintained and preserved by it or on its behalf in accordance with applicable
laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the preparation of (but not pay
for) all periodic reports by the Trust to its shareholders and all reports and
filings required to maintain the registration and qualification of the Trust and
Trust shares, or to meet other regulatory or tax requirements applicable to the
Trust, under federal and state securities and tax laws.
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<PAGE>
1.3 ADDITIONAL SERIES. In the event that the Trust from time to time
designates one or more series in addition to the Initial Series ("Additional
Series"), it shall notify the Adviser in writing. If the Adviser is willing to
perform services hereunder to the Additional Series, it shall so notify the
Trust in writing. Thereupon, the Trust and the Adviser shall enter into an
Addendum to this Agreement for the Additional Series and the Additional Series
shall be subject to this Agreement. The Initial Series, together with all
Additional Series, shall hereinafter be referred to collectively as the
"Series".
2. EXPENSES OF THE TRUST.
2.1 EXPENSES TO BE PAID BY ADVISER. The Adviser shall pay all
salaries, expenses and fees of the officers, Trustees and employees of the Trust
who are officers, directors or employees of the Adviser.
In the event that the Adviser pays or assumes any expenses of the Trust not
required to be paid or assumed by the Adviser under this Agreement, the Adviser
shall not be obligated hereby to pay or assume the same or any similar expense
in the future; provided, that nothing herein contained shall be deemed to
relieve the Adviser of any obligation to the Trust under any separate agreement
or arrangement between the parties.
2.2 EXPENSES TO BE PAID BY THE TRUST. The Trust shall bear all
expenses of its operation, except those specifically allocated to the Adviser
under this Agreement or under any separate agreement between the Trust and the
Adviser. Subject to any separate agreement or arrangement between the Trust and
the Adviser, the expenses hereby allocated to the Trust, and not to the Adviser,
include but are not limited to:
2.2.1 CUSTODY. All charges of depositories, custodians, and other
agents for the transfer, receipt, safekeeping, and servicing of its cash,
securities, and other property.
2.2.2 SHAREHOLDER SERVICING. All expenses of maintaining and servicing
shareholder accounts, including but not limited to the charges of any
shareholder servicing agent, dividend disbursing agent or other agent engaged by
the Trust to service shareholder accounts.
2.2.3 SHAREHOLDER REPORTS. All expenses of preparing, setting in type,
printing and distributing reports and other communications to shareholders.
2.2.4 PROSPECTUSES. All expenses of preparing, setting in type,
printing and mailing annual or more frequent revisions of the Trust's Prospectus
and Statement of Additional Information and any supplements thereto and of
supplying them to shareholders.
2.2.5 PRICING AND PORTFOLIO VALUATION. All expenses of computing the
Trust's net asset value per share, including any equipment or services obtained
for the purpose of pricing shares or valuing the Trust's investment portfolio.
2.2.6 COMMUNICATIONS. All charges for equipment or services used for
communications between the Adviser or the Trust and any custodian, shareholder
servicing agent, portfolio accounting services agent, or other agent engaged by
the Trust.
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2.2.7 LEGAL AND ACCOUNTING FEES. All charges for services and expenses
of the Trust's legal counsel and independent auditors.
2.2.8 TRUSTEES' FEES AND EXPENSES. All compensation of Trustees other
than those affiliated with the Adviser, all expenses incurred in connection with
such unaffiliated Trustees' services as Trustees, and all other expenses of
meetings of the Trustees and committees of the Trustees.
2.2.9 SHAREHOLDER MEETINGS. All expenses incidental to holding meetings
of shareholders, including the printing of notices and proxy materials, and
proxy solicitations therefor.
2.2.10 FEDERAL REGISTRATION FEES. All fees and expenses of registering
and maintaining the registration of the Trust under the Act and the registration
of the Trust's shares under the Securities Act of 1933 (the "1933 Act"),
including all fees and expenses incurred in connection with the preparation,
setting in type, printing, and filing of any Registration Statement, Prospectus
and Statement of Additional Information under the 1933 Act or the Act, and any
amendments or supplements that may be made from time to time.
2.2.11 STATE REGISTRATION FEES. All fees and expenses of taking required
action to permit the offer and sale of the Trust's shares under securities laws
of various states or jurisdictions, and of registration and qualification of the
Trust under all other laws applicable to the Trust or its business activities
(including registering the Trust as a broker-dealer, or any officer of the Trust
or any person as agent or salesperson of the Trust in any state).
2.2.12 CONFIRMATIONS. All expenses incurred in connection with the issue
and transfer of Trust shares, including the expenses of confirming all share
transactions.
2.2.13 BONDING AND INSURANCE. All expenses of bond, liability, and other
insurance coverage required by law or regulation or deemed advisable by the
Trustees of the Trust, including, without limitation, such bond, liability and
other insurance expenses that may from time to time be allocated to the Trust in
a manner approved by its Trustees.
2.2.14 BROKERAGE COMMISSIONS. All brokers' commissions and other charges
incident to the purchase, sale or lending of the Trust's portfolio securities.
2.2.15 TAXES. All taxes or governmental fees payable by or with respect
to the Trust to federal, state or other governmental agencies, domestic or
foreign, including stamp or other transfer taxes.
2.2.16 TRADE ASSOCIATION FEES. All fees, dues and other expenses
incurred in connection with the Trust's membership in any trade association or
other investment organization.
2.2.17 NONRECURRING AND EXTRAORDINARY EXPENSES. Such nonrecurring and
extraordinary expenses as may arise including the costs of actions, suits, or
proceedings to which the Trust is a party and the expenses the Trust may incur
as a result of its legal obligation to provide indemnification to its officers,
Trustees and agents.
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3. ADVISORY FEE.
3.1 FEE. As compensation for all services rendered, facilities
provided and expenses paid or assumed by the Adviser under this Agreement, the
Trust shall pay the Adviser on the last day of each month, or as promptly as
possible thereafter, a fee calculated at the annual rate of the average daily
net assets during such month of each series of the Trust as set forth below:
3.1.1 ORBITEX GLOBAL NATURAL RESOURCES FUND.
3.1.2 ORBITEX COMMUNICATIONS & INFO-TECH FUND.
3.1.3 ORBITEX GROWTH FUND.
3.1.4 ORBITEX ASIAN HIGH YIELD FUND.
3.1.5 ORBITEX ASIAN SELECT ADVISERS FUND.
4. RECORDS.
4.1 TAX TREATMENT. The Adviser shall maintain the books and records
of the Trust in such a manner that treats each series as a separate entity for
federal income tax purposes.
4.2 OWNERSHIP. All records required to be maintained and preserved by
the Trust pursuant to the provisions or rules or regulations of the Securities
and Exchange Commission under Section 31(a) of the Act and maintained and
preserved by the Adviser on behalf of the Trust are the property of the Trust
and shall be surrendered by the Adviser promptly on request by the Trust;
provided, that the Adviser may at its own expense make and retain copies of any
such records.
5. REPORTS TO ADVISER.
The Trust shall furnish or otherwise make available to the Adviser such
copies of the Trust's Prospectus, Statement of Additional Information, financial
statements, proxy statements, reports and other information relating to its
business and affairs as the Adviser may, at any time or from time to time,
reasonably require in order to discharge its obligations under this Agreement.
6. REPORTS TO THE TRUST.
The Adviser shall prepare and furnish to the Trust such reports,
statistical data and other information in such form and at such intervals as the
Trust may reasonably request.
7. RETENTION OF SUB-ADVISER.
Subject to the Trust's obtaining the initial and periodic approvals
required under Section 15 of the Act, the Adviser may retain one or more
sub-advisers, at the Adviser's own cost and expense, for the purpose of managing
the investments of the assets of one or more Series of the Trust. Retention of
one or more sub-advisers shall in no way reduce the responsibilities or
obligations of the Adviser under this Agreement and the Adviser shall be
responsible to the Trust
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for all acts or omissions of any sub-adviser in connection with the performance
of the Adviser's duties hereunder.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management and
administrative services to other investment companies, to act as investment
adviser or investment counselor to other persons, firms or corporations, or to
engage in other business activities.
9. LIMITATION OF LIABILITY OF ADVISER AND ITS PERSONNEL.
Neither the Adviser nor any director, officer of employee of the Adviser
performing services for the Trust at the direction or request of the Adviser in
connection with the Adviser's discharge of its obligations hereunder shall be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with any matter to which this Agreement relates, and the
Adviser shall not be responsible for any action of the Trustees of the Trust in
following or declining to follow any advice or recommendation of the Adviser;
PROVIDED, that nothing herein contained shall be construed (i) to protect the
Adviser against any liability to the Trust or its shareholders to which the
Adviser would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of the Adviser's duties, or by reason of
the Adviser's reckless disregard of its obligations and duties under this
Agreement, or (ii) to protect any director, officer or employee of the Adviser
who is or was a Trustee or officer of the Trust against any liability of the
Trust or its shareholders to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office with the Trust.
10. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require to the Trust to take
any action contrary to its Declaration of Trust or its By-Laws or any applicable
law, regulation or order to which it is subject or by which it is bound, or to
relieve or deprive the Trustees of the Trust of their responsibility for and
control of the conduct of the business and affairs of the Trust.
11. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first above written, and
unless sooner terminated as hereinafter provided, this Agreement shall remain in
effect for a period of two years from the date of this Agreement. Thereafter,
this Agreement shall continue in effect with respect to the Trust from year to
year, subject to the termination provisions and all other terms and conditions
hereof; PROVIDED, such continuance with respect to the Trust is approved at
least annually by vote of the holders of a majority of the outstanding voting
securities of the Trust or by the Trustees of the Trust; PROVIDED, that in
either event such continuance is also approved annually by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees of the Trust who are not parties to this Agreement or
interested persons of either party hereto. The Adviser shall furnish to the
Trust, promptly upon its request, such information as may reasonably be
necessary to evaluate the terms of this Agreement or any extension, renewal or
amendment thereof.
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12. AMENDMENT OR ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing signed by the parties
hereto; PROVIDED, that no such amendment shall be effective unless authorized on
behalf of the Trust (i) by resolution of the Trust's Trustees, including the
vote or written consent of a majority of the Trust's Trustees who are not
parties to this Agreement or interested persons of either party hereto, and (ii)
by vote of a majority of the outstanding voting securities of the Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment.
13. TERMINATION OF AGREEMENT.
This Agreement may be terminated at any time by either party hereto,
without the payment of any penalty, upon sixty (60) days' prior written notice
to the other party; PROVIDED, that in the case of termination by the Trust, such
action shall have been authorized (i) by resolution of the Trust's Board of
Trustees, including the vote or written consent of Trustees of the Trust who are
not parties to this Agreement or interested persons of either party hereto, or
(ii) by vote of majority of the outstanding voting securities of the Trust.
14. USE OF NAME.
The Trust is named the Orbitex Group of Funds and each Series may be
identified, in part, by the name "Orbitex." The Adviser hereby grants to the
Trust a nonexclusive right and license to use the Orbitex name and as part of
the name of the Trust and each Series of the Trust only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the Adviser's business as Adviser or any extension, renewal or amendment
thereof remain in effect. The Trust agrees that it shall acquire no interest in
the name "Orbitex," that all uses thereof by the Trust shall inure to the
benefit of the Adviser and that is shall not challenge the validity or Adviser's
ownership thereof.
15. DECLARATION OF TRUST.
The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust and agrees
that the obligations assumed by the Trust or a Fund, as the case may be,
pursuant to this Agreement shall be limited in all cases to the Trust or a Fund,
as the case may be, and its assets, and the Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the Trust.
In addition, the Adviser shall not seek satisfaction of any such obligations
from the Trustees or any individual Trustee. The Adviser understands that the
rights and obligations of any Fund under the Declaration of Trust are separate
and distinct from those of any and all other Funds. The Adviser further
understands and agrees that no Fund of the Trust shall be liable for any claims
against any other Fund of the Trust and that the Adviser must look solely to the
assets of the pertinent Fund of the Trust for the enforcement or satisfaction of
any claims against the Trust.
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16. INTERPRETATION AND DEFINITION OF TERMS.
Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the Act
shall be resolved by reference to such term or provision of the Act and to
interpretation thereof, if any, by the United States courts, or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the Act.
Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, when the effect of a requirement of the Act reflected in
any provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
17. CAPTIONS.
The captions in this Agreement are included for convenience of reference
only and in no way define or delineate any of the provisions hereof or otherwise
affect their construction or effect.
18. EXECUTION IN COUNTERPARTS.
This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers thereunto duly authorized as of the date and year
first above written.
ORBITEX GROUP OF FUNDS for its Orbitex Global
Natural Resources Fund, Orbitex Communications &
Info-Tech Fund, Orbitex Growth Fund, Orbitex Asian
High Yield, Fund and Orbitex Asian Select
Advisers Fund
By: /s/ James L. Nelson
----------------------------------------------
James L. Nelson
President
ORBITEX MANAGEMENT, INC.
By: /s/ James L. Nelson
----------------------------------------------
James L. Nelson
President
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Exhibit 2
DISTRIBUTION AGREEMENT
ORBITEX GROUP OF FUNDS
660 Madison Avenue
New York, New York 10021
June 1, 1997
Funds Distributor, Inc.
60 State Street
Suite 1300
Boston, Massachusetts 02109
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the above-named investment company (the "Fund") has agreed that you
shall be, for the period of this agreement, the distributor of (a) shares of
each Series of the Fund set forth on Exhibit A hereto, as such Exhibit may be
revised from time to time (each, a "Series") or (b) if no Series are set forth
on such Exhibit, shares of the Fund. For purposes of this agreement the term
"Shares" shall mean the authorized shares of each of the relevant Series, if
any, and otherwise shall mean the Fund's authorized shares.
1. Services as Distributor
1.1 You will act as agent for the distribution of Shares covered by,
and in accordance with, the Fund's registration statement and prospectus then in
effect under the Securities Act of 1933, as amended, and will transmit promptly
any orders received by you for purchase or redemption of Shares to the Transfer
and Dividend Disbursing Agent for the Fund of which the Fund has notified you in
writing from time to time.
1.2 You agree to use your best efforts to solicit orders for the sale
of Shares. It is contemplated that you may enter into sales or servicing
agreements with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing you will act only on your own behalf as principal.
1.3 You shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitations, the
Investment Company Act of 1940, as amended, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and the National
Association of Securities Dealers, Inc.'s (the "NASD") Rules of Fair Practice,
Constitution and By-Laws. You represent and warrant that you are a broker-dealer
registered with the Securities and Exchange Commission and that you are
registered with the relevant securities regulatory agencies in all fifty states,
the District of Columbia and Puerto
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Rico. You also represent and warrant that you are a member in good standing of
the NASD and that you will maintain registration and membership for the life of
the agreement.
1.4 You shall file Fund advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory agencies
and shall obtain such approvals for their use as may be required by the
Securities and Exchange Commission, the National Association of Securities
Dealers, Inc. and/or state securities administrators.
1.5 Whenever in its judgment such action is warranted by unusual
market, economic or political conditions, or by abnormal circumstances of any
kind deemed by either of the parties hereto to render sales of a Fund's Shares
not in the best interest of the Fund, either of the parties hereto may decline
to accept any orders for, or make any sales of, any Shares until such time as
those parties deem it advisable to accept such orders and to make such sales and
the party making such determination shall advise promptly the other party of
any such determination.
1.6 The Fund agrees to pay all costs and expenses in connection with
the registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Fund hereunder, and all expenses in connection with the preparation and
printing of the Fund's prospectuses and statements of additional information for
regulatory purposes and for distribution to shareholders; provided however, that
the Fund shall not pay any of the costs of advertising or promotion for the sale
of Shares.
1.7 The Fund agrees to execute any and all documents and to furnish any
and all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as you may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all reasonable expenses
which may be incurred in connection with such qualification. You shall pay all
expenses connected with your own qualification as a dealer under state or
Federal laws and, except as otherwise specifically provided in this agreement,
all other expenses incurred by you in connection with the sale of Shares as
contemplated in this agreement.
1.8 The Fund shall furnish you from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund or any
relevant Series and the Shares as you may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information, when so signed
by the Fund's officers, shall be true and correct. The Fund also shall furnish
you upon request with: (a) semi-annual reports and annual audited reports of
the Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements prepared by the Fund,
(c) a monthly itemized list of the securities in the Fund's or, if applicable,
each Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the Fund's financial condition as you may reasonably request.
1.9 The Fund represents to you that all registration statements and
prospectuses filed by the Fund with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, and under the Investment Company Act of
1940, as amended, with respect to the
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Shares and the Fund have been carefully prepared in conformity with the
requirements of said Acts and rules and regulations of the Securities and
Exchange Commission thereunder. As used in this agreement the terms
"registration statement" and "prospectus" shall mean any registration statement
and prospectus, including the statement of additional information incorporated
by reference therein, filed with the Securities and Exchange Commission and any
amendments and supplements thereto which at any time shall have been filed with
said Commission. The Fund represents and warrants to you that any registration
statement and prospectus, when such registration statement becomes effective,
will contain all statements required to be stated therein in conformity with
said Acts and the rules and regulations of said Commission; that all statements
of fact contained in any such registration statement and prospectus will be true
and correct when such registration statement becomes effective; and that neither
any registration statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Fund may, but shall not be obligated to,
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as, in the light
of future developments, may, in the opinion of the Fund's counsel, be necessary
or advisable. If the Fund shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Fund of a
written request from you to do so, you may, at your option, terminate this
agreement or decline to make offers of the Fund's securities until such
amendments are made. The Fund shall not file any amendment to any registration
statement or supplement to any prospectus without giving you reasonable notice
thereof in advance; provided, however, that nothing contained in this agreement
shall in any way limit the Fund's right to file at any time such amendments to
any registration statement and/or supplements to any prospectus, of whatever
character, as the Fund may deem advisable, such right being in all respects
absolute and unconditional.
1.10 The Fund authorizes you and any dealers with whom you have entered
into dealer agreements to use any prospectus in the form furnished by the Fund
in connection with the sale of Shares. The Fund agrees to indemnify, defend and
hold you, your several officers and directors, and any person who controls you
within the meaning of Section 15 of the Securities Act of 1933, as amended, free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the reasonable cost of investigating or defending such
claims, demands or liabilities and any reasonable counsel fees incurred in
connection therewith) which you, your officers and directors, or any such
controlling persons, may incur under the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, or common law or otherwise,
arising out of or on the basis of any untrue statement, or alleged untrue
statement, of a material fact required to be stated in either any registration
statement or any prospectus or any statement of additional information, or
arising out of or based upon any omission, or alleged omission, to state a
material fact required to be stated in any registration statement, any
prospectus or any statement of additional information or necessary to make the
statements in any of them not misleading, except that the Fund's agreement to
indemnify you, your officers or directors, and any such controlling person will
not be deemed to cover any such claim, demand, liability or expense to the
extent that it arises out of or is based upon any such untrue statement, alleged
untrue statement, omission or alleged omission made in any registration
statement, any prospectus or any statement of additional information in reliance
upon information furnished by you, your officers, directors or any such
controlling person to the Fund or its representatives for
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use in the preparation thereof, and except that the Fund's agreement to
indemnify you and the Fund's representations and warranties set out in paragraph
1.9 of this Agreement will not be deemed to cover any liability to the Funds or
their shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless disregard of your obligations and duties under this
Agreement ("Disqualifying Conduct"). The Fund's agreement to indemnify you,
your officers and directors, and any such controlling person, as aforesaid, is
expressly conditioned upon the Fund's being notified of any action brought
against you, your officers or directors, or any such controlling person, such
notification to be given by letter, by facsimile or by telegram addressed to the
Fund at its address set forth above within a reasonable period of time after the
summons or other first legal process shall have been served. The failure so to
notify the Fund of any such action shall not relieve the Fund from any liability
which the Fund may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Fund's indemnity agreement contained
in this paragraph 1.10. The Fund will be entitled to assume the defense of any
suit brought to enforce any such claim, demand or liability, but, in such case,
such defense shall be conducted by counsel of good standing chosen by the Fund
and approved by you. In the event the Fund elects to assume the defense of any
such suit and retain counsel of good standing approved by you, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Fund does not elect to assume
the defense of any such suit, the Fund will reimburse you, your officers and
directors, or the controlling person or persons named as defendant or defendants
in such suit, for the reasonable fees and expenses of any counsel retained by
you or them. The Fund's indemnification agreement contained in this paragraph
1.10 and the Fund's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of you, your officers and directors, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to your benefit, to the benefit of your several
officers and directors, and their respective estates, and to the benefit of any
controlling persons and their successors. The Fund agrees promptly to notify
you of the commencement of any litigation or proceedings against the Fund or any
of its officers or Board members in connection with the issue and sale of
Shares.
1.11 You agree to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, as amended, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the reasonable cost of investigating or defending such claims,
demands or liabilities and any reasonable counsel fees incurred in connection
therewith) which the Fund, its officers or Board members, or any such
controlling person, may incur under the Securities Act of 1933, as amended, the
Investment Company Act of 1940, as amended, or under common law or otherwise,
but only to the extent that such liability or expense incurred by the Fund, its
officers or Board members, or such controlling person resulting from such claims
or demands, (a) shall arise out of or be based upon any unauthorized sales
literature, advertisements, information, statements or representations or any
Disqualifying Conduct in connection with the offering and sale of any Shares, or
(b) shall arise out of or be based upon any untrue, or alleged untrue, statement
of a material fact contained in information furnished in writing by you to the
Fund specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements
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made in the prospectus or statement of additional information, or shall arise
out of or be based upon any omission, or alleged omission, to state a material
fact in connection with such information furnished in writing by you to the Fund
and required to be stated in such answers or necessary to make such information
not misleading. Your agreement to indemnify the Fund, its officers and Board
members, and any such controlling person, as aforesaid, is expressly conditioned
upon your being notified of any action brought against the Fund, its officers or
Board members, or any such controlling person, such notification to be given by
letter, by facsimile or by telegram addressed to you at your address set forth
above within a reasonable period of time after the summons or other first legal
process shall have been served. The failure so to notify you of any such action
shall not relieve you from any liability which you may have to the person
against whom such action is brought by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 1.11. You will be entitled
to assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by you and approved by the Fund. In the event you elect to
assume the defense of any such suit and retain counsel of good standing approved
by the Fund, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in the case you
do not elect to assume the defense of any such suit, you will reimburse the
Fund, the Fund's officers and directors, or the controlling person or persons
named as defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by the Fund or them. Your indemnification
agreement contained in this paragraph 1.11 and your representations and
warranties in this agreement shall remain operative and in full force and effect
regardless of any investigation made by you or on behalf of you, your officers
and directors, or any controlling person, and shall survive the delivery of any
Shares. This agreement of indemnity will inure exclusively to the Fund's
benefit, to the benefit of the Fund's officers and Board members, and their
respective estates, and to the benefit of any controlling persons and their
successors. You agree promptly to notify the Fund of the commencement of any
litigation or proceedings against you or any of your officers or directors in
connection with the issue and sale of Shares.
1.12 No Shares shall be offered by either you or the Fund under any of
the provisions of this agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as a current prospectus as
required by Section 10 of said Act, as amended, is not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.12 shall in any way restrict or have an application to or
bearing upon the Fund's obligation to repurchase any Shares from any shareholder
in accordance with the provisions of the Fund's prospectus or charter documents.
5
<PAGE>
1.13 The Fund agrees to advise you immediately in writing:
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectus then in effect or
for additional information;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectus then in effect or the initiation of
any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectus then in
effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the Securities and Exchange Commission with
respect to any amendments to any registration statement or prospectus which
may from time to time be filed with the Securities and Exchange Commission.
2. Offering Price
Shares of any class of the Fund offered for sale by you shall be offered
at a price per share (the "offering price") approximately equal to (a) the net
asset value (determined in the manner set forth in the Fund's charter documents)
plus (b) a sales charge, if any and except to those persons set forth in the
then-current prospectus, which shall be the percentage of the offering price of
such Shares as set forth in the Fund's then-current prospectus. The offering
price, if not an exact multiple of one cent, shall be adjusted to the nearest
cent. In addition, Shares of any class of the Fund offered for sale by you may
be subject to a contingent deferred sales charge as set forth in the Fund's
then-current prospectus. You shall be entitled to receive any sales charge or
contingent deferred sales charge in respect of the Shares. Any payments to
dealers shall be governed by a separate agreement between you and such dealer
and the Fund's then-current prospectus.
3. Term
This Agreement shall become effective with respect to the Fund as of the
date hereof and will continue for an initial two-year term and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Fund's Board or (ii) by a vote of a majority of the Shares
of the Fund or the relevant Series, as the case may be, provided that in either
event its continuance also is approved by a majority of the Board members who
are not "interested persons" of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
agreement is terminable with respect to the Fund, without penalty, on not less
than sixty days' notice, by the Fund's Board of Trustees, by vote of a majority
of the outstanding voting securities of such Fund, or by you. This Agreement
will automatically and immediately terminate in the event of its "assignment."
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the Investment Company Act of 1940, as amended). You agree
to notify the Fund immediately upon the event of your
6
<PAGE>
expulsion or suspension by the NASD. This Agreement will automatically and
immediately terminate in the event of your expulsion or suspension by the NASD.
4. Miscellaneous
4.1 The Fund recognizes that, except to the extent otherwise agreed to
by the parties hereto, your directors, officers and employees may from time to
time serve as directors, trustees, officers and employees of corporations and
business trusts (including other investment companies), and that you or your
affiliates may enter into distribution or other agreements with such other
corporations and trusts.
4.2 No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
4.3 This Agreement shall be governed by the internal laws of the
Commonwealth of Massachusetts without giving effect to principles of conflicts
of laws.
4.4 If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
7
<PAGE>
Please confirm that the foregoing is in accordance with your
understanding and indicate your acceptance hereof by signing below, whereupon it
shall become a binding Agreement between us.
Very truly yours,
ORBITEX GROUP OF FUNDS
By: /s/ James L. Nelson
----------------------------------------
Name: James L. Nelson
Title: President of Orbitex Group of Funds
Accepted:
FUNDS DISTRIBUTOR, INC.
By: /s/ Marie E. Connolly
-----------------------------------------
Name: Marie E. Connolly
Title: President and Chief Executive Officer
8
<PAGE>
EXHIBIT A
SERIES OF FUNDS
Orbitex Stragtegic Natural Resources Fund
Orbitex Info-Tech & Communications Fund
Orbitex Growth Fund
Orbitex Asian High Yield Fund
9
<PAGE>
Exhibit 3
CUSTODIAN CONTRACT
Between
ORBITEX GROUP OF FUNDS
and
STATE STREET BANK AND TRUST COMPANY
Global/Series/Trust
21E593
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Employment of Custodian and Property to be Held By It . . . . . . . . . . . . .1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States. . . . . . . . . . . . .2
2.1 Holding Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.2 Delivery of Securities. . . . . . . . . . . . . . . . . . . . . . . . . .2
2.3 Registration of Securities. . . . . . . . . . . . . . . . . . . . . . . .4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.5 Availability of Federal Funds . . . . . . . . . . . . . . . . . . . . . .5
2.6 Collection of Income. . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.7 Payment of Fund Monies. . . . . . . . . . . . . . . . . . . . . . . . . .5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased. . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . . . . . . . . . . .7
2.10 Deposit of Fund Assets in U.S. Securities System. . . . . . . . . . . . .7
2.11 Fund Assets Held in the Custodian's Direct Paper System . . . . . . . . .8
2.12 Segregated Account. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.13 Ownership Certificates for Tax Purposes . . . . . . . . . . . . . . . . 10
2.14 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.15 Communications Relating to Portfolio Securities . . . . . . . . . . . . 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States. . . . . . . . . . . . . . . . . . 11
3.1 Appointment of Foreign Sub-Custodians . . . . . . . . . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Systems. . . . . . . . . . . . . . . . . . . . . . . 11
3.4 Holding Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Agreements with Foreign Banking Institutions. . . . . . . . . . . . . . 12
3.6 Access of Independent Accountants of the Fund . . . . . . . . . . . . . 12
3.7 Reports by Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.8 Transactions in Foreign Custody Account . . . . . . . . . . . . . . . . 12
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . . . . . . 13
3.10 Liability of Custodian. . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 Reimbursement for Advances. . . . . . . . . . . . . . . . . . . . . . . 13
3.12 Monitoring Responsibilities . . . . . . . . . . . . . . . . . . . . . . 14
3.13 Branches of U.S. Banks. . . . . . . . . . . . . . . . . . . . . . . . . 14
<PAGE>
3.14 Tax Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6. Actions Permitted Without Express Authority . . . . . . . . . . . . . . . . . 15
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . . . . . . . . . . 16
9. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
10. Opinion of Fund's Independent Accountants . . . . . . . . . . . . . . . . . . 17
11. Reports to Fund by Independent Public Accountants . . . . . . . . . . . . . . 17
12. Compensation of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13. Responsibility of Custodian . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. Effective Period, Termination and Amendment . . . . . . . . . . . . . . . . . 19
15. Successor Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
16. Interpretive and Additional Provisions. . . . . . . . . . . . . . . . . . . . 20
17. Additional Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
18. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . . . . . . . . . 21
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
20. Reproduction of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . 21
21. Shareholder Communications Election . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
This Contract between Orbitex Group of Funds, a business trust organized
and existing under the laws of Delaware , having its principal place of business
at 660 Madison Avenue, New York, New York hereinafter called the "Fund", and
State Street Bank and Trust Company, a Massachusetts trust company, having its
principal place of business at 225 Franklin Street, Boston, Massachusetts,
02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in five series,
Orbitex Global Natural Resources Fund, Orbitex Info-Tech & Communications Fund,
Orbitex Growth Fund, Orbitex Asian High Yield Fund and Orbitex Asian Select
Advisers Fund (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Declaration of
Trust. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios, ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Trustees of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
<PAGE>
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by it
in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury (each, a U.S. Securities System") and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian (the "Direct Paper System") pursuant
to Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate
by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in
any such case, the cash or other consideration is to be delivered
to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee
2
<PAGE>
name of any sub-custodian appointed pursuant to Article 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; PROVIDED that, in any such case, the new securities are to
be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except as
may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund on
behalf of the Portfolio, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in
the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible for
the delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, BUT ONLY against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national
3
<PAGE>
securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity Futures
Trading Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the currently effective
prospectus and statement of additional information of the Fund,
related to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board
of Trustees or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such securities shall be
made.
2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, UNLESS the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed pursuant
to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Portfolio under the terms of this Contract
shall be in "street name" or other good delivery form. If, however, the
Fund directs the Custodian to maintain securities in "street name", the
Custodian shall utilize its best efforts only to timely collect income
due the Fund on such securities and to notify the Fund on a best efforts
basis only of relevant corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange offers.
4
<PAGE>
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from
or for the account of the Portfolio, other than cash maintained by the
Portfolio in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; PROVIDED, however, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Trustees of the Fund. Such funds shall be deposited by the Custodian in
its capacity as Custodian and shall be withdrawable by the Custodian only
in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of such
Portfolio which are deposited into the Portfolio's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2 (10) shall be the responsibility of the Fund. The Custodian
will have no duty or responsibility in connection therewith, other than
to provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
5
<PAGE>
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options on
futures contracts to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad which
is qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of the Portfolio
or in the name of a nominee of the Custodian referred to in Section
2.3 hereof or in proper form for transfer; (b) in the case of a
purchase effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.10 hereof; (c) in the
case of a purchase involving the Direct Paper System, in accordance
with the conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf of
the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of
the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the Custodian to
repurchase such securities from the Portfolio or (e) for transfer
to a time deposit account of the Fund in any bank, whether domestic
or foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
6
<PAGE>
7) For any other proper purpose, BUT ONLY upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee of the Fund signed by an officer of the Fund
and certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to be
a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written instructions
from the Fund on behalf of such Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such securities to
the same extent as if the securities had been received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "U.S. Securities System" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
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3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities
System that payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the U.S. Securities
System of transfers of securities for the account of the Portfolio
shall identify the Portfolio, be maintained for the Portfolio by
the Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account of
the Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from
use of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents or
of any of its or their employees or from failure of the Custodian
or any such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the Fund, it
shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
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1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the
Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry
on the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as the
Fund may reasonably request from time to time.
2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio,
the Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of
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segregating cash or government securities in connection with options
purchased, sold or written by the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Portfolio, (iii)
for the purposes of compliance by the Portfolio with the procedures
required by Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission relating to
the maintenance of segregated accounts by registered investment companies
and (iv) for other proper corporate purposes, BUT ONLY, in the case of
clause (iv), upon receipt of, in addition to Proper Instructions from the
Fund on behalf of the applicable Portfolio, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 PROXIES. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund on behalf of the Portfolio and
the maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities being held for
the Portfolio. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Portfolio all written information received
by the Custodian from issuers of the securities whose tender or exchange
is sought and from the party (or his agents) making the tender or
exchange offer. If the Portfolio desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days prior
to the date on which the Custodian is to take such action.
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3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Trustees, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian.
3.3 FOREIGN SECURITIES SYSTEMS. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof (Foreign
Securities Systems and U.S. Securities Systems are collectively referred
to herein as the "Securities Systems"). Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 HOLDING SECURITIES. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a Foreign
Sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, PROVIDED HOWEVER, that (i)
the records of the Custodian with respect to securities and other
non-cash property of the Fund which are maintained in such account shall
identify by book-entry those securities and other non-cash property
belonging to the Fund and (ii) the Custodian shall require that
securities and other non-cash property so held by the foreign
sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
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3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records will
be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Portfolios held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.
3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities
and other assets of the Portfolio(s) held by foreign sub-custodians,
including but not limited to an identification of entities having
possession of the Portfolio(s) securities and other assets and advices or
notifications of any transfers of securities to or from each custodial
account maintained by a foreign banking institution for the Custodian on
behalf of each applicable Portfolio indicating, as to securities acquired
for a Portfolio, the identity of the entity having physical possession of
such securities.
3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of Sections
2.2 and 2.7 of this Contract shall apply, MUTATIS MUTANDIS to the foreign
securities of the Fund held outside the United States by foreign
sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the
account of each applicable Portfolio may be effected in accordance with
the customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities
to the purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
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(c) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent as
set forth in Section 2.3 of this Contract, and the Fund agrees to hold
any such nominee harmless from any liability as a holder of record of
such securities.
3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall
be entitled to be subrogated to the rights of the Custodian with respect
to any claims against a foreign banking institution as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the
extent that the Fund has not been made whole for any such loss, damage,
cost, expense, liability or claim.
3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street London
Ltd. not caused by political risk) due to Acts of God, nuclear incident
or other losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be
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entitled to utilize available cash and to dispose of such Portfolio's
assets to the extent necessary to obtain reimbursement.
3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund
with the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 TAX LAW. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the tax
law of jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental reporting.
The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of jurisdictions for
which the Fund has provided such information.
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4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor checks
drawn on the Custodian by a holder of Shares, which checks have been furnished
by the Fund to the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually agreed upon from
time to time between the Fund and the Custodian.
5. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Trustees
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
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1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, PROVIDED that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except
as otherwise directed by the Board of Trustees of the Fund.
7. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Trustees of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Trustees pursuant to the Declaration of Trust as described in
such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION
OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value
per share and the daily income of each Portfolio shall be made at the time or
times described from time to time in the Fund's currently effective prospectus
related to such Portfolio.
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9. RECORDS
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.
10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto
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received by it or delivered by it pursuant to this Contract and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. The
Custodian shall be held to the exercise of reasonable care in carrying out the
provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
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<PAGE>
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the Custodian
shall be entitled to utilize available cash and to dispose of the Fund assets to
the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; PROVIDED,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of the Fund has
approved the initial use of a particular Securities System by such Portfolio, as
required by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under Section 2.11
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Trustees has approved the initial use
of the Direct Paper System by such Portfolio; PROVIDED FURTHER, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and further provided, that the Fund on behalf of one or more of the
Portfolios may at any time by action of its Board of Trustees (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
19
<PAGE>
15. SUCCESSOR CUSTODIAN
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Trustees of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
20
<PAGE>
17. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Orbitex Global Natural Resources Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Growth Fund, Orbitex Asian High Yield Fund and
Orbitex Asian Select Advisers Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
18. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
21. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the
21
<PAGE>
Fund's protection, the Rule prohibits the requesting company from using the
Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
22
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 14th day of May, 1997.
ATTEST ORBITEX GROUP OF FUNDS
/s/Mark Breault By /s/ James L. Nelson
- ------------------------------ ------------------------------------------
Mark Breault James L. Nelson
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/Cynthia Surprise By /s/ Ronald E. Logue
- ------------------------------ ------------------------------------------
Cynthia Surprise Ronald E. Logue
Executive Vice President
23
<PAGE>
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Orbitex Group of
Funds for use as sub-custodians for the Fund's securities and other assets:
(Insert banks and securities depositories)
Certified:
- ------------------------------------
Fund's Authorized Officer
Date:
------------------------------
24
<PAGE>
SCHEDULE A
COUNTRIES, FOREIGN SUB-CUSTODIANS AND
FOREIGN SECURITIES DEPOSITORIES
APPROVED FOR THE
ORBITEX GROUP OF FUNDS
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
Australia Westpac Banking Corporation Austraclear Limited;
Reserve Bank Information and
Transfer System (RITS)
Canada Canada Trustco Mortgage Company The Canadian Depository
for Securities Limited (CDS)
People's Republic The Hongkong and Shanghai Shanghai Securities Central Clearing and
of China Banking Corporation Limited, Registration Corporation (SSCCRC);
Shanghai and Shenzhen branches Shenzhen Securities Central Clearing
Co., Ltd. (SSCC)
Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
India Deutsche Bank AG None
Indonesia Standard Chartered Bank None
Republic of Korea SEOULBANK Korea Securities Depository (KSD)
Malaysia Standard Chartered Bank Malaysian Central Depository Sdn.
Malaysia Berhad Bhd. (MCD)
New Zealand ANZ Banking Group New Zealand Central Securities
(New Zealand) Limited Depository Limited (NZCSD)
Pakistan Deutsche Bank AG None
Philippines Standard Chartered Bank None
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
Singapore The Development Bank The Central Depository (Pte)
of Singapore Ltd. Limited (CDP)
Sri Lanka The Hongkong and Shanghai Central Depository System
Banking Corporation Limited (Pvt) Limited
Taiwan - R.O.C. Central Trust of China The Taiwan Securities Central
Depository Company, Ltd. (TSCD)
Thailand Standard Chartered Bank Thailand Securities Depository
Company Limited (TSD)
</TABLE>
Euroclear (The Euroclear System)/State Street London Limited
Cedel (Cedel Bank, societe anonyme)/State Street London Limited
26
<PAGE>
Exhibit 4
TRANSFER AGENCY AND SERVICE AGREEMENT
between
ORBITEX GROUP OF FUNDS
and
STATE STREET BANK AND TRUST COMPANY
1C-Domestic Trust/Series
<PAGE>
TABLE OF CONTENTS
Page
----
1. Terms of Appointment; Duties of the Bank. . . . . . . . . . . . . . . . . 1
2. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Representations and Warranties of the Bank. . . . . . . . . . . . . . . . 4
4. Representations and Warranties of the Fund. . . . . . . . . . . . . . . . 4
5. Data Access and Proprietary Information . . . . . . . . . . . . . . . . . 5
6. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
8. Covenants of the Fund and the Bank. . . . . . . . . . . . . . . . . . . . 8
9. Termination of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 9
10. Additional Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
13. Massachusetts Law to Apply. . . . . . . . . . . . . . . . . . . . . . . .10
14. Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
15. Consequential Damages . . . . . . . . . . . . . . . . . . . . . . . . . .10
16. Merger of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .10
17. Limitations of Liability of the Trustees
or Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
18. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 14th day of May, 1997 , by and between Orbitex Group of
Funds, a Delaware business trust, having its principal office and place of
business at 660 Madison Avenue, New York, New York 10021 (the "Fund"), and STATE
STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in five series, the Orbitex
Global Natural Resources Fund, Orbitex Info-Tech & Communications Fund, Orbitex
Growth Fund, Orbitex Asian High Yield Fund and Orbitex Select Advisers Fund
(each such series, together with all other series subsequently established by
the Fund and made subject to this Agreement in accordance with Article 10, being
herein referred to as a "Portfolio", and collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this Agreement, the
Fund, on behalf of the Portfolios, hereby employs and appoints the Bank
to act as, and the Bank agrees to act as its transfer agent for the
Fund's authorized and issued shares of beneficial interest ("Shares")
and dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders
of each of the respective Portfolios of the Fund ("Shareholders") and
set out in the currently effective prospectus and statement of
additional information ("prospectus") of the Fund on behalf of the
applicable Portfolio, including without limitation any periodic
investment plan or periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios,
as applicable, and the Bank, the Bank shall:
<PAGE>
(i) Receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation thereof to the Custodian of the Fund (the
"Custodian");
(ii) Pursuant to purchase orders, issue the appropriate
number of Shares and hold such Shares in the appropriate
Shareholder account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate
documentation thereof to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and
(iii) above, the Bank shall execute transactions
directly with broker-dealers authorized by the Fund who
shall thereby be deemed to be acting on behalf of the
Fund;
(v) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption, pay over or cause to be paid over in the
appropriate manner such monies as instructed by the
redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the
applicable Portfolio;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt by the Bank of indemnification satisfactory to
the Bank and protecting the Bank and the Fund, and the
Bank at its option, may issue replacement certificates
in place of mutilated stock certificates upon
presentation thereof and without such indemnity;
(ix) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total
number of shares of the Fund which are authorized, based
upon data provided to it by the Fund, and issued and
outstanding. The Bank shall also provide the Fund on a
regular basis with the total number of shares which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of shares, to
monitor the issuance of such shares or to take
cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole
responsibility of the Fund.
2
<PAGE>
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall:
(i) perform the customary services of a transfer agent, dividend
disbursing agent and, as relevant, agent in connection with
accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal
program), including but not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, mailing Shareholder reports and prospectuses to
current Shareholders, withholding taxes on U.S. resident and
non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for
all Shareholders, preparing and mailing confirmation forms and
statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in
Shareholder accounts, preparing and mailing activity statements
for Shareholders, and providing Shareholder account information
and (ii) provide a system which will enable the Fund to monitor
the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue
sky reporting for each State and (ii) verify the establishment
of transactions for each State on the system prior to activation
and thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State
registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by
the Fund and the reporting of such transactions to the Fund as
provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement
between the Fund on behalf of each Portfolio and the Bank per the
attached service responsibility schedule. The Bank may at times
perform only a portion of these services and the Fund or its
agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement, the Fund
agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial
fee schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.2 below may be changed from time to
time subject to mutual written agreement between the Fund and the Bank.
3
<PAGE>
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses, including but not limited to confirmation production,
postage, forms, telephone, microfilm, microfiche, tabulating proxies,
records storage, or advances incurred by the Bank for the items set out
in the fee schedule attached hereto. In addition, any other expenses
incurred by the Bank at the request or with the consent of the Fund,
will be reimbursed by the Fund on behalf of the applicable Portfolio.
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies,
Fund reports and other mailings to all shareholder accounts shall be
advanced to the Bank by the Fund at least seven (7) days prior to the
mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware.
4.2 It is empowered under applicable laws and by its Declaration of Trust
and By-Laws to enter into and perform this Agreement.
4
<PAGE>
4.3 All corporate proceedings required by said Declaration of Trust and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.4 It is an open-end management investment company registered under the
Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios is currently effective and will remain
effective, and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of the Fund
being offered for sale.
5. DATA ACCESS AND PROPRIETARY INFORMATION
5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Bank as part of the
Fund's ability to access certain Fund-related data ("Customer Data")
maintained by the Bank on data bases under the control and ownership of
the Bank or other third party ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the
Bank or other third party. In no event shall Proprietary Information be
deemed Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it shall
not divulge any Proprietary Information to any person or organization
except as may be provided hereunder. Without limiting the foregoing,
the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance with
the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose
of such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired hereunder
from being retransmitted to any other computer facility or other
location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
5
<PAGE>
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services do
not operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely
manner to correct such failure. Organizations from which the Bank may
obtain certain data included in the Data Access Services are solely
responsible for the contents of such data and the Fund agrees to make no
claim against the Bank arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA ACCESS
SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE
BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED
HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability to
originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder
information or other information, then in such event the Bank shall be
entitled to rely on the validity and authenticity of such instruction
without undertaking any further inquiry as long as such instruction is
undertaken in conformity with security procedures established by the
Bank from time to time.
6. INDEMNIFICATION
6.1 The Bank shall not be responsible for, and the Fund shall on behalf of
the applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required
to be taken pursuant to this Agreement, provided that such
actions are taken in good faith and without negligence or willful
misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct
which arise out of the breach of any representation or warranty
of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services
which (i) are received by the Bank or its agents or
6
<PAGE>
subcontractors, and (ii) have been prepared, maintained or
performed by the Fund or any other person or firm on behalf of
the Fund including but not limited to any previous transfer agent
or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on
behalf of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities laws
or regulations of any state that such Shares be registered in
such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
(f) The negotiation and processing by the Bank of checks not made
payable to the order of the Bank, the Fund, the Fund's management
company, transfer agent or distributor or the retirement account
custodian or trustee for a plan account investing in Shares,
which checks are tendered to the Bank for the purchase of Shares
(i.e., checks made payable to prospective or existing
Shareholders, such checks are commonly known as "third party
checks").
6.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any
matter arising in connection with the services to be performed by the
Bank under this Agreement, and the Bank and its agents or subcontractors
shall not be liable and shall be indemnified by the Fund on behalf of
the applicable Portfolio for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel.
The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on
behalf of the Fund, reasonably believed to be genuine and to have been
signed by the proper person or persons, or upon any instruction,
information, data, records or documents provided the Bank or its agents
or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund. The Bank, its agents and
subcontractors shall also be protected and indemnified in recognizing
stock certificates which are reasonably believed to bear the proper
manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund
of such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend
against said claim in its own name or in the name of the Bank. The Bank
shall in no case confess any claim or
7
<PAGE>
make any compromise in any case in which the Fund may be required to
indemnify the Bank except with the Fund's prior written consent.
7. STANDARD OF CARE
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall
not be liable for loss or damage due to errors unless said errors are
caused by its negligence, bad faith, or willful misconduct or that of
its employees.
8. COVENANTS OF THE FUND AND THE BANK
8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to
the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of
the Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and
all amendments thereto.
8.2 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if
any; and for the preparation or use, and for keeping account of, such
certificates, forms and devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as
amended, and the Rules thereunder, the Bank agrees that all such records
prepared or maintained by the Bank relating to the services to be
performed by the Bank hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such Section
and Rules, and will be surrendered promptly to the Fund on and in
accordance with its request.
8.4 The Bank and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged
or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right,
8
<PAGE>
however, to exhibit the Shareholder records to any person whenever it is
advised by its counsel that it may be held liable for the failure to
exhibit the Shareholder records to such person.
9. TERMINATION OF AGREEMENT
9.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be
borne by the Fund on behalf of the applicable Portfolio(s).
Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees.
10. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to Orbitex Global Natural Resources Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Growth Fund, Orbitex Asian High Yield Fund
and Orbitex Select Advisers Fund with respect to which it desires to
have the Bank render services as transfer agent under the terms hereof,
it shall so notify the Bank in writing, and if the Bank agrees in
writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
11. ASSIGNMENT
11.1 Except as provided in Section 11.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly
registered as a transfer agent pursuant to Section 17A(c)(2) of the
Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"), (ii)
a BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(2) or (iii) a BFDS affiliate; provided, however, that the
Bank shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
9
<PAGE>
12. AMENDMENT
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of
the Board of Trustees of the Fund.
13. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of
Massachusetts.
14. FORCE MAJEURE
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to
perform or otherwise from such causes.
15. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act
hereunder.
16. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
17. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
ORBITEX GROUP OF FUNDS
BY: /s/ James L. Nelson
----------------------------------------
James L. Nelson
ATTEST:
/s/ Mark Breault
- ------------------------------
Mark Breault
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
------------------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/ Cynthia Surprise
- ------------------------------
Cynthia Surprise
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue Replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
<PAGE>
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
18. Provide Shareholder account
information.
19. Blue sky reporting.
* Such services are more fully described in Section 1.2 (a), (b) and (c) of the
Agreement.
ORBITEX GROUP OF FUNDS
BY: /s/ James L. Nelson
------------------------------------------
James L. Nelson
ATTEST:
/s/ Mark Breault
- ------------------------------
Mark Breault
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
------------------------------------------
Ronald E. Logue
Executive Vice President
ATTEST:
/s/ Cynthia Surprise
- ------------------------------
Cynthia Surprise
<PAGE>
Exhibit 5
ADMINISTRATION AGREEMENT
Agreement dated as of May 14, 1997 by and between State Street Bank
and Trust Company, a Massachusetts trust company (the "Administrator"), and
Orbitex Group of Funds (the "Fund").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund desires to retain the Administrator to furnish
certain administrative services to the Fund, and the Administrator is willing to
furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Fund hereby appoints the Administrator to act as administrator
with respect to the Fund for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Fund will initially consist of the portfolio(s) and/or class(es)
of shares (each an "Investment Fund") listed in Schedule A to this Agreement.
In the event that the Fund establishes one or more additional Investment Funds
with respect to which it wishes to retain the Administrator to act as
administrator hereunder, the Fund shall notify the Administrator in writing.
Upon written acceptance by the Administrator, such Investment Fund shall become
subject to the provisions of this Agreement to the same extent as the existing
Investment Funds, except to the extent that such provisions (including those
relating to the compensation and expenses payable by the Fund and its Investment
Funds) may be modified with respect to each additional Investment Fund in
writing by the Fund and the Administrator at the time of the addition of the
Investment Fund.
2. DELIVERY OF DOCUMENTS
To the extent not prepared by the Administrator for the Fund, the Fund
will promptly deliver to the Administrator copies of each of the following
documents and all future amendments and supplements, if any:
a. The Fund's charter document and by-laws;
b. The Fund's currently effective registration statement under the
Securities Act of 1933, as amended (the "1933 Act"), and the 1940
Act and the Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all
<PAGE>
Investment Funds and all amendments and supplements thereto as in
effect from time to time;
c. Certified copies of the resolutions of the Board of Trustees of
the Fund (the "Board") authorizing (1) the Fund to enter into
this Agreement and (2) certain individuals on behalf of the Fund
to (a) give instructions to the Administrator pursuant to this
Agreement and (b) sign checks and pay expenses;
d. A copy of the investment advisory agreement between the Fund and
its investment adviser; and
e. Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary
or appropriate in the proper performance of its duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Fund that:
a. It is a Massachusetts trust company, duly organized, existing and
in good standing under the laws of The Commonwealth of
Massachusetts;
b. It has the corporate power and authority to carry on its business
in The Commonwealth of Massachusetts;
c. All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement;
d. No legal or administrative proceedings have been instituted or
threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
e. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation
applicable to it.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Administrator that:
a. It is a business trust, duly organized and existing and in good
standing under the laws of Delaware;
b. It has the corporate power and authority under applicable laws
and by its charter and by-laws to enter into and perform this
Agreement;
2
<PAGE>
c. All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
d. It is an investment company properly registered under the 1940
Act;
e. Subject to Administrator performing under Section 5 (x), a
registration statement under the 1933 Act and the 1940 Act has
been filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the
Administrator that as of the effective date of this Agreement,
all necessary filings under the securities laws of the states in
which the Fund offers or sells its shares have been made;
f. No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement;
g. Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Fund or any law or regulation applicable to it;
and
h. As of the close of business on the date of this Agreement, the
Fund is authorized to issue an unlimited amount of shares of
beneficial interest.
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of the Fund and the review and
comment by the Fund's auditors and legal counsel and in accordance with
procedures which may be established from time to time between the Fund and the
Administrator:
a. Oversee the determination and publication of the Fund's net asset
value in accordance with the Fund's policy as adopted from time
to time by the Board;
b. Oversee the maintenance by the Fund's custodian of certain books
and records of the Fund as required under Rule 31a-1(b) of the
1940 Act;
c. Prepare the Fund's federal, state and local income tax returns
for review by the Fund's independent accountants and filing by
the Fund's treasurer;
d. Review calculation, submit for approval by officers of the Fund
and arrange for payment of the Fund's expenses;
e. Prepare for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports, proxy
statements and other communications required or otherwise to be
sent to Fund shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
3
<PAGE>
f. Prepare for review by an officer of and legal counsel for the
Fund the Fund's periodic financial reports required to be filed
with the Securities and Exchange Commission ("SEC") on Form N-SAR
and financial information required by Form [N-1A/N-2] and such
other reports, forms or filings as may be mutually agreed upon;
g. Prepare reports relating to the business and affairs of the Fund
as may be mutually agreed upon and not otherwise prepared by the
Fund's investment adviser, custodian, legal counsel or
independent accountants;
h. Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may
reasonably request;
i. Make such reports and recommendations to the Board concerning the
performance and fees of the Fund's custodian and transfer and
dividend disbursing agent ("Transfer Agent") as the Board may
reasonably request or deems appropriate;
j. Oversee and review calculations of fees paid to the Fund's
investment adviser, custodian and Transfer Agent;
k. Consult with the Fund's officers, independent accountants, legal
counsel, custodian and Transfer Agent in establishing the
accounting policies of the Fund;
l. Review implementation of any dividend reinvestment programs
authorized by the Board;
m. Respond to, or refer to the Fund's officers or Transfer Agent,
shareholder inquiries relating to the Fund;
n. Provide periodic testing of portfolios to assist the Fund's
investment adviser in complying with Internal Revenue Code
mandatory qualification requirements, the requirements of the
1940 Act and Fund prospectus limitations as may be mutually
agreed upon;
o. Review and provide assistance on shareholder communications;
p. Maintain general corporate calendar;
q. Maintain copies of the Fund's charter and by-laws;
r. File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's
letters" to shareholders and "Management's Discussion of Fund
Performance" (which shall also be subject to review by the Fund's
legal counsel);
4
<PAGE>
s. Organize, attend and prepare minutes of shareholder meetings;
t. Provide consultation on regulatory matters relating to portfolio
management, Fund operations and any potential changes in the
Fund's investment policies, operations or structure; act as
liaison to legal counsel to the Fund and, where applicable, to
legal counsel to the Fund's independent Board members;
u. Maintain continuing awareness of significant emerging regulatory
and legislative developments which may affect the Fund, update
the Board and the investment adviser on those developments and
provide related planning assistance where requested or
appropriate;
v. Develop or assist in developing guidelines and procedures to
improve overall compliance by the Fund and its various agents;
w. Counsel and assist the Fund in the handling of routine regulatory
examinations and work closely with the Fund's legal counsel in
response to any non-routine regulatory matters;
Subject to review and comment by the Fund's legal counsel:
x. Prepare and file with the SEC the Fund's registration statement
and amendments thereto, including updating the Prospectus and
Statement of Additional Information, where applicable;
y. Prepare and file with the SEC proxy statements; provide
consultation on proxy solicitation matters;
z. Prepare agenda and background materials for Board meetings, make
presentations where appropriate, prepare minutes and follow-up on
matters raised at Board meetings;
aa. Prepare and file with the SEC Rule 24f-2 notices; and
bb. Prepare and file necessary documentation to allow the Fund to
offer and sell its shares in various states pursuant to the
specific instructions of the Fund and as detailed in Schedule C
to this Agreement.
The Administrator shall provide the office facilities and the personnel required
by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Fund such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee
5
<PAGE>
schedule approved by the parties and initially set forth in Schedule B to this
Agreement. The fees are accrued daily and billed monthly and shall be due and
payable upon receipt of the invoice. Upon the termination of this Agreement
before the end of any month, the fee for the part of the month before such
termination shall be prorated according to the proportion which such part bears
to the full monthly period and shall be payable upon the date of termination of
this Agreement. In addition, the Fund shall reimburse the Administrator for its
reasonable out-of-pocket costs incurred in connection with this Agreement.
The Fund agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Fund through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Fund's behalf at the Fund's request or with
the Fund's consent.
The Fund will bear all expenses that are incurred in its operation and
not specifically assumed by the Administrator. Expenses to be borne by the
Fund, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Fund's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Fund directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Fund; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director\trustee or
employee of the Fund; costs incidental to the preparation, printing and
distribution of the Fund's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation and filing of the Fund's tax returns, Form N-1A or N-2 and Form
N-SAR, and all notices, registrations and amendments associated with applicable
federal and state tax and securities laws; all applicable registration fees and
filing fees required under federal and state securities laws; fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services used in computing the Fund's net asset value.
The Administrator is authorized to and may employ or associate with such
person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Fund for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
6
<PAGE>
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Fund
for instructions and may consult with its own legal counsel or outside counsel
for the Fund or the independent accountants for the Fund at the expense of the
Fund, with respect to any matter arising in connection with the services to be
performed by the Administrator under this Agreement. The Administrator shall
not be liable, and shall be indemnified by the Fund, for any action taken or
omitted by it in good faith in reliance upon any such instructions or advice or
upon any paper or document believed by it to be genuine and to have been signed
by the proper person or persons. The Administrator shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Fund. Nothing in this paragraph shall be construed as imposing
upon the Administrator any obligation to seek such instructions or advice, or to
act in accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall
have no liability for any error of judgment or mistake of law or for any loss or
damage resulting from the performance or nonperformance of its duties hereunder
unless solely caused by or resulting from the gross negligence or willful
misconduct of the Administrator, its officers or employees. The Administrator
shall not be liable for any special, indirect, incidental, or consequential
damages of any kind whatsoever (including, without limitation, attorneys' fees)
under any provision of this Agreement or for any such damages arising out of any
act or failure to act hereunder. In any event, the Administrator's liability
under this Agreement shall be limited to its total annual compensation earned
and fees paid hereunder during the preceding twelve months for any liability or
loss suffered by the Fund including, but not limited to, any liability relating
to qualification of the Fund as a regulated investment company or any liability
relating to the Fund's compliance with any federal or state tax or securities
statute, regulation or ruling.
The Administrator shall not be responsible or liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption, nor shall any such failure or delay give the Fund the right to
terminate this Agreement.
The Fund shall indemnify and hold the Administrator harmless from all
loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Fund, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own gross negligence or willful misconduct.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain counsel,
7
<PAGE>
the Administrator or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and expenses of such counsel unless (i) the Fund shall have specifically
authorized the retaining of such counsel or (ii) the Administrator shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Fund or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Fund.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS
Without derogating from obligations of the Administrator hereunder,
the Fund assumes full responsibility for complying with all securities, tax,
commodities and other laws, rules and regulations applicable to it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Fund shall
at all times remain the property of the Fund, shall be readily accessible during
normal business hours, and shall be promptly surrendered upon the termination of
the Agreement or otherwise on written request. The Administrator further agrees
that all records which it maintains for the Fund pursuant to Rule 31a-1 under
the 1940 Act will be preserved for the periods prescribed by Rule 31a-2 under
the 1940 Act unless any such records are earlier surrendered as provided above.
Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Fund are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Fund from
time to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall be effective as of the date first written above
and shall remain in effect until terminated in writing by either party on sixty
(60) days' prior written notice given by either party to the other party;
provided, however, that without limitation of any other remedy available at law
or in equity, upon termination of this Agreement by the Fund prior to three
years from the effective date of this Agreement, the Fund shall pay to the
Administrator an amount equal to fees waived by the Administrator under this
Agreement. Termination of this Agreement with respect to any given Investment
Fund shall in no way affect the continued validity of this Agreement with
respect to any other Investment Fund. Upon termination of this Agreement, the
Fund shall pay to the Administrator such compensation and any reimbursable
expenses as may be due under the terms hereof as of the date of such
termination,
8
<PAGE>
including reasonable out-of-pocket expenses associated with such termination.
This Agreement may be modified or amended from time to time by mutual written
agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Fund: ______________________, Attn: _________________, fax: _________________;
if to the Administrator: State Street Bank and Trust Company, 1776 Heritage
Drive, North Quincy, Massachusetts 02171, Attn: Mutual Funds Legal Division,
fax: (617) 985-2497.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Administrator.
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Fund and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed
by the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
9
<PAGE>
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
20. REPRODUCTION OF DOCUMENTS
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm, micro-
card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first written above.
ORBITEX GROUP OF FUNDS
By: /s/ James L. Nelson
--------------------------------
Name: James L. Nelson
Title: President
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
--------------------------------
Name: Ronald E. Logue
Title: Executive Vice President
10
<PAGE>
ADMINISTRATION AGREEMENT
ORBITEX GROUP OF FUNDS
SCHEDULE A
LISTING OF INVESTMENT FUNDS
Orbitex Global Natural Resources Fund
Orbitex Info-Tech & Communications Fund
Orbitex Growth Fund
Orbitex Asian High Yield Fund
Orbitex Asian Select Advisers Fund
11
<PAGE>
ADMINISTRATION AGREEMENT
ORBITEX GROUP OF FUNDS
SCHEDULE B
FEES AND EXPENSES
12
<PAGE>
ADMINISTRATION AGREEMENT
[NAME OF FUND]
SCHEDULE C
NOTICE FILING WITH
STATE SECURITIES ADMINISTRATORS
AT THE SPECIFIC DIRECTION OF THE FUND, THE ADMINISTRATOR WILL PREPARE REQUIRED
DOCUMENTATION AND MAKE NOTICE FILINGS IN ACCORDANCE WITH THE SECURITIES LAWS OF
EACH JURISDICTION IN WHICH FUND SHARES ARE TO BE OFFERED OR SOLD PURSUANT TO
INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE FUND.
THE FUND SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (i) OF THOSE
JURISDICTIONS IN WHICH NOTICE FILINGS ARE TO BE SUBMITTED AND (ii) THE NUMBER OF
FUND SHARES TO BE PERMITTED TO BE SOLD IN EACH SUCH JURISDICTION. IN THE EVENT
THAT THE ADMINISTRATOR BECOMES AWARE OF (a) THE SALE OF FUND SHARES IN A
JURISDICTION IN WHICH NO NOTICE FILING HAS BEEN MADE OR (b) THE SALE OF FUND
SHARES IN EXCESS OF THE NUMBER OF FUND SHARES PERMITTED TO BE SOLD IN SUCH
JURISDICTION, THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE FUND, AND
IT SHALL BE THE FUND'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE ACTION
AND INSTRUCT THE ADMINISTRATOR WITH RESPECT THERETO.
The Blue Sky services shall consist of the following:
1. Filing of Fund's Initial Notice Filings, as directed by the Fund;
2. Filing of Fund's renewals and amendments as required;
3. Filing of amendments to the Fund's registration statement where
required;
4. Filing Fund sales reports where required;
5. Payment at the expense of the Fund of all Fund Notice Filing fees;
6. Filing the Prospectuses and Statements of Additional Information and
any amendments or supplements thereto where required;
7. Filing of annual reports and proxy statements where required; and
8. The performance of such additional services as the Administrator and
the Fund may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky services by
the Administrator shall not include determining the availability of exemptions
under a jurisdiction's blue sky law. Any such determination shall be made by
the Fund or its legal counsel. In connection with the services described
herein, the Fund shall issue in favor of the Administrator a power of attorney
to submit Notice Filings on behalf of the Fund, which power of attorney shall be
substantially in the form of Exhibit I attached hereto.
13
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of May 14, 1997 that the undersigned Orbitex
Group of Funds with principal offices at 660 Madison Avenue, New York, NY (the
"Fund") makes, constitutes, and appoints STATE STREET BANK AND TRUST COMPANY
(the "Administrator") with principal offices at 225 Franklin Street, Boston,
Massachusetts its lawful attorney-in-fact for it to do as if it were itself
acting, the following:
1. REGISTRATION OF FUND SHARES. The power to register shares of the Fund in
each jurisdiction in which Fund shares are offered or sold and in
connection therewith the power to prepare, execute, and deliver and file
any and all Fund applications, including without limitation, applications
to register shares, consents, including consents to service of process,
reports, including without limitation, all periodic reports, claims for
exemption, or other documents and instruments now or hereafter required or
appropriate in the judgment of the Administrator in connection with the
registration of Fund shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney, individuals
holding the titles of Officer, Blue Sky Manager, or Senior Blue Sky
Administrator at the Administrator shall have authority to act on behalf of
the Fund with respect to item 1 above.
The execution of this limited power of attorney shall be deemed coupled with an
interest and shall be revocable only upon receipt by the Administrator of such
termination of authority. Nothing herein shall be construed to constitute the
appointment of the Administrator as or otherwise authorize the Administrator to
act as an officer, director or employee of the Fund.
IN WITNESS WHEREOF, the Fund has caused this Agreement to be executed in its
name and on its behalf by and through its duly authorized officer, as of the
date first written above.
ORBITEX GROUP OF FUNDS
By: /s/ James L. Nelson
---------------------------
Name: James L. Nelson
Title: Chairman, Board of Trustees
14
<PAGE>
Exhibit 6
CLASS A DISTRIBUTION PLAN AND AGREEMENT PURSUANT TO RULE 12B-1
UNDER THE INVESTMENT COMPANY ACT OF 1940
PLAN AND AGREEMENT made as of the 1st day of June, 1997, and amended on
January 21, 1998, by and between Orbitex Group of Funds (the "Trust") and Funds
Distributor, Inc. ("FDI").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company which
offers for public sale separate series of shares of beneficial interest, each
corresponding to a distinct portfolio which may be further divided into separate
classes of shares (the "Shares"); and
WHEREAS, the Trust has entered into a Distribution Agreement (the
"Distribution Agreement") with FDI pursuant to which FDI has agreed to serve as
the Distributor of the Shares; and
WHEREAS, the Trust desires to adopt this Distribution Plan and Agreement
pursuant to Rule 12b-1 under the 1940 Act (the "Plan") on behalf of its series
with respect to the Class A Shares of the Orbitex Strategic Natural Resources
Fund, Orbitex Info-Tech & Communications Fund, Orbitex Growth Fund and Orbitex
Asian High Yield Fund and of such other series as may hereafter be designated
(the "Funds") by the Trust's Board of Trustees (the "Board"); and
WHEREAS, FDI desires to serve as Distributor of the Shares and to provide,
or arrange for the provision of distribution services pursuant to the Plan;
NOW THEREFORE, the parties agree as follows:
1. A. Each Fund is authorized to pay to FDI, as compensation for FDI's
services under this Plan and Agreement, a fee at the rate of 0.30% on an
annualized basis (in the case of the Asian High Yield Fund) and 0.40% on an
annualized basis (in the case of the other Funds) of the average net assets
attributable to Class A Shares of the Fund. Such fees are to be paid by the
Funds monthly, or at such other intervals as the Board shall determine. Such
fees shall be based upon the applicable Fund's average daily net assets during
the preceding month, and shall be calculated and accrued daily.
B. Any Fund may pay fees to FDI at a lesser rate than the fees
specified in Section I.A. of this Plan and Agreement as agreed upon by the Board
and FDI and as approved in the manner specified in subsections (a) and (b) of
paragraph 3 of this Plan and Agreement.
2. FDI shall provide, or arrange for securities dealers or brokers,
administrators and others ("Recipients") with which FDI has entered Distribution
Sub-Agreements in the form attached hereto to provide, distribution services,
and to the extent that those services are provided by a Recipient, FDI shall pay
the Recipient a fee based on the net asset value of shares of the Fund held by
clients or customers of that Recipient. The distribution services shall include
assistance in the offering and sale of shares of the Funds and in other aspects
of the marketing of the shares to clients or prospective clients of the
respective Recipients; answering routine
<PAGE>
inquiries concerning a Fund; assisting in the maintenance of accounts or
sub-accounts in a Fund and in processing purchase or redemption transactions;
making a Fund's investment plans and shareholder services available; and
providing such other information and services to investors in shares of the Fund
as FDI or the Trust, on behalf of a Fund, may reasonably request. The
distribution services shall also include any advertising or marketing services
provided by or arranged by FDI with respect to the Funds.
3. This Plan and Agreement shall not take effect with respect to any Fund
unless it has been approved, together with any related agreements, by a majority
vote, cast in person at a meeting (or meetings) called for the purpose of voting
on such approval, of : (a) the Board; and (b) those Trustees of the Trust who
are not "interested persons" of the Trust and have no direct or indirect
financial interest in the operation of this Plan and Agreement or any agreements
related thereto (the "Independent Trustees").
4. This Plan and Agreement may continue in full force and effect with
respect to each Fund for so long as such continuance is specifically approved at
least annually in the manner provided for approval of this Plan and Agreement in
subsections (a) and (b) of paragraph 3.
5. FDI shall provide to the Board and the Board shall review, at least
quarterly, a written report of the amounts expended with respect to each Fund by
FDI under this Plan and Agreement and the purposes for which such expenditures
were made.
6. The Trust or any Fund may terminate this Plan and Agreement at any
time, without the payment of any penalty, by vote of the Board, by vote of a
majority of the Independent Trustees, or by vote of a majority of the
outstanding voting securities of the affected Fund. FDI may terminate this Plan
and Agreement with respect to the Trust or any Fund, without payment of penalty,
upon sixty (60) days written notice to the Trust or the affected Fund.
Notwithstanding the foregoing, this Plan and Agreement shall terminate
automatically in the event of its assignment.
7. This Plan and Agreement may not be amended to increase materially the
amount of distribution fees to be paid by a Fund unless such amendment is
approved by a vote of a majority of the outstanding voting securities of the
Class A of the affected Fund, and no material amendment to the other provisions
of the Plan and Agreement shall be made unless approved in the manner provided
for approval and annual renewal in subsections (a) and (b) of paragraph 3
hereof.
8. The amount of distribution fees payable by any Fund to FDI under this
Plan and Agreement and the amounts received by FDI under the Distribution
Agreement may be greater or lesser than the expenses actually incurred by FDI on
behalf of such Fund in serving as Distributor of the Shares. The distribution
fees with respect to a Fund will be payable by such Fund to FDI until either the
Plan and Agreement or the Distribution Agreement is terminated or not renewed
with respect to the Shares of that Fund. If either the Plan and Agreement or
the Distribution Agreement is terminated or not renewed with respect to the
Shares of any Fund, any distribution expenses incurred by FDI on behalf of the
Fund which are in excess of payments which FDI has received or accrued through
the termination date shall be the sole responsibility and liability of FDI, and
are not obligations of the Fund.
2
<PAGE>
9. While this Plan and Agreement is in effect, the selection and
nomination of the Trustees who are not interested persons of the Trust shall be
made solely at the discretion of the Trustees who are not interested persons of
the Trust.
10. As used in this Plan and Agreement, the terms "majority of the
outstanding voting securities," "assignment" and "interested person" shall have
the same meanings as those terms have in the 1940 Act.
11. The Trust shall preserve copies of this Plan and Agreement (including
any amendments thereto) and any related agreements and all reports made pursuant
to paragraph 5 hereof for a period of not less than six years from the date
thereof, the first two years in an easily accessible place.
12. The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or any Fund under this Plan and
Agreement, and FDI or any other person, in asserting any rights or claims under
this Plan, shall look only to the assets and property of the Trust or such Fund
in settlement of any such right or claim, and not to such Trustees or
shareholders.
IN WITNESS WHEREOF, the Trust and FDI have executed this Distribution Plan
and Agreement on the day and year set forth above.
ORBITEX GROUP OF FUNDS
Attest: /s/ Mark Breault By: /s/ James L. Nelson
--------------------------- ------------------------------------
Mark Breault James L. Nelson
Secretary President
FUNDS DISTRIBUTOR, INC.
Attest: /s/ Margaret W. Chambers By: /s/ George A. Rio
--------------------------- ------------------------------------
Margaret W. Chambers George A. Rio
Secretary Executive Vice President
3
<PAGE>
Exhibit 7
POWER OF ATTORNEY
We, the undersigned Trustees, of Orbitex Group of Funds (the "Trust")
hereby constitute and appoint James L. Nelson and Richard E. Stierwalt, each of
them singly, our true and lawful attorneys-in-fact, with full power of
substitution, and with full power to each of them, to sign for us and in our
names in the appropriate capacities, with authority to execute in the name of
such Trustee on behalf of the Trust and to file with the United States
Securities & Exchange Commission, Commodity Futures Trading Commission or any
other federal or state regulatory bodies ("Regulatory Agencies"), on behalf of
the Trust any and all regulatory materials necessary or advisable to enable the
Trust to comply with the Securities Act of 1933, as amended and/or the
Investment Company Act of 1940, as amended, and any other rules, regulations and
requirements of such Regulatory Agencies. The powers of the aforesaid
attorneys-in-fact are hereby expressly limited to the execution and filing of
such documents with the appropriate Regulatory Agencies.
WITNESS our hands on this 29th day of March, 1999
/s/ Otto J. Felber
- ------------------------------
Otto J. Felber
/s/ Ronald S. Altbach
- ------------------------------
Ronald S. Altbach
/s/ Thomas Bachmann
- ------------------------------
Thomas Bachmann
/s/ John D. Morgan
- ------------------------------
John D. Morgan
/s/ Stephen H. Hamrick
- ------------------------------
Stephen H. Hamrick
<PAGE>
Exhibit 8
FORM OF
ORBITEX GROUP OF FUNDS
REVISED RULE 18f-3 PLAN FOR MULTIPLE CLASSES OF SHARES
MAY 27, 1998
WHEREAS, The Orbitex Group of Funds (the "Trust") is a Delaware business
trust, registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), with the Securities and Exchange Commission (the "SEC") as an
open-end management investment company;
WHEREAS, pursuant to the terms of the Trust's Declaration of Trust, as well
as the 1940 Act and the rules and regulations thereunder, the Board of Trustees
of the Trust (the "Board") has authority to approve and authorize the issuance
of, and has approved and authorized the issuance of shares of beneficial
interest of, Class A, Class B and Class I of each fund (a "Fund") of the Trust
listed herein on Schedule A, as may be amended;
WHEREAS, the Trust wishes to adopt this Plan for Multiple Classes of Shares
(the "Multi-Class Plan"), which is a plan as contemplated by Rule 18f-3 of the
1940 Act; and
WHEREAS, at a meeting held on May 27, 1998, the Board, including a majority
of the Trustees who are not interested persons of the Trust (as defined in
section 2(a)(19) of the 1940) (the "Independent Trustees"), approved and adopted
this Revised Multi-Class Plan and determined that this Multi-Class Plan is:
(a) in the best interests of the holders of Class A Shares; (b) in the best
interests of the holders of Class B Shares; (c) in the best interests of the
holders of Class I Shares; and (d) in the best interests of the Trust as a
whole;
NOW THEREFORE, this Multi-Class Plan, as amended from time to time, shall
remain in effect until such time as the Board terminates this Multi-Class Plan.
SECTION 1. CLASS DISTRIBUTION AND SHAREHOLDER SERVICES FEES
Class A Shares are principally offered by Funds Distributor, Inc. (the
"Distributor") to individuals at net asset value plus any applicable sales
charge. The maximum sales charge for the Asian High Yield Fund is 4.75% and for
each other Fund is 5.75% of the public offering price. These charges may be
reduced for investors who invest more than $50,000. The sales charge will also
be waived in certain circumstances including for purchases of $1 million or
more. However, the Trust will apply a contingent deferred sales charge of 1% to
certain redemptions made within the first year after investing with respect to
shares purchased at net asset value without a sales charge.
<PAGE>
Class A Shares are also subject to a distribution fee (as provided for by the
Distribution Plan and Agreement Pursuant to 12b-1 under the Investment Company
Act of 1940) of .30% (in the case of the Asian High Yield Fund) and .40% (in the
case of the other Funds) of the average daily net assets of the Fund. The
minimum initial investment for Class A Shares is $2,500 ($2,000 for individual
retirement accounts).
Class B Shares are offered at their net asset value per share, without any
initial sales charge. However, there is a contingent deferred sales charge on
shares which are sold within five years of their purchase. There will be no
contingent deferred sales charge on shares acquired through reinvestment of
dividends. The contingent deferred sales charge will be based on the original
purchase cost or the current market value of the shares being sold, whichever is
less. The contingent deferred sales charges are as follows:
<TABLE>
<CAPTION>
YEARS AFTER PURCHASE CONTINGENT DEFERRED SALES
CHARGE ON SHARES BEING SOLD
<S> <C>
1st Year 5.00%
2nd Year 4.00%
3rd Year 3.00%
4th Year 3.00%
5th Year 2.00%
6th Year 1.00%
After 6th Year None
</TABLE>
Class B Shares will automatically be converted to Class A Shares after seven
years. Class B Shares are also subject to a distribution fee (as provided for
by the Distribution Plan and Agreement Pursuant to 12b-1 under the Investment
Company Act of 1940) of 0.75% of the average daily net assets of the Fund. The
minimum initial investment for Class B Shares is $2,500 ($2,000 for individual
retirement accounts).
Class I Shares, the institutional class, are offered to qualified
institutions and certain fee-based investment and financial advisers at net
asset value and are not subject to any asset-based distribution or shareholder
servicing fee. Investors in the Class I Shares will be required to make a
minimum investment of one hundred thousand dollars ($100,000).
Notwithstanding the foregoing, the aggregate amounts of any asset-based
distribution and/or shareholder service fee paid by the Trust shall not exceed
such amount as is permitted under Section 26(d) of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc. (the "NASD"), as amended
form time to time, and any other rules or regulations promulgated by the NASD or
the SEC applicable to mutual fund distribution and service fees.
<PAGE>
SECTION 2. ALLOCATION OF CLASS EXPENSES
Class A, Class B and Class I represent interests in the same Fund of the
Trust and have no exchange privileges or conversion features except as noted
above. Each class of shares shall have the same rights, preferences, voting
powers, restrictions and limitations, except as follows:
(a) expenses related to the distribution of a class of shares or to the
services provided to shareholders of a class of shares shall be
borne solely by such class;
(b) each class will bear different Class Expenses ( as defined below);
(c) each class will have exclusive voting rights with respect to
matters that exclusively affect such class and separate voting
rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other
class; and
(d) each class will bear a different name or designation.
The Board, acting in its sole discretion, has determined that the following
expenses attributable to the shares of a particular class ("Class Expenses")
will be borne solely by the class to which they are attributable:
(1) asset-based distribution and shareholder service fees and
(2) extraordinary non-recurring expenses including litigation and other
legal expenses relating to a particular class.
Investment advisory fees, custodial fees, and other expenses relating to
the management of a Fund's assets shall not be allocated on a class-specific
basis.
SECTION 3. ALLOCATION OF FUND INCOME AND EXPENSES
Income realized and unrealized capital gains and losses, and expenses that
are not allocated to a specific class pursuant to Section 2 above, shall be
allocated to each class of a Fund on the basis of the net asset value of that
class in relation to the net asset value of the Fund.
SECTION 4. EXPENSE WAIVERS OR REIMBURSEMENTS
All expense waivers or reimbursements will be in compliance with Rule 18f-3
issued under the 1940 Act.
<PAGE>
SECTION 5. AMENDMENTS
This Multi-Class Plan may not be amended to change any material provision
unless such amendment is approved by a vote of the majority of the Board,
including a majority of the Trustees who are not interested persons of the
Trust, based on its finding that the amendment is in the best interest of each
class individually and the Trust as a whole.
IN WITNESS WHEREOF, the Trust has executed this Multi-Class Plan on the day
and year set forth below.
ORBITEX GROUP OF FUNDS
By:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
Attest:
-------------------------------
<PAGE>
SCHEDULE A
ORBITEX GROUP OF FUNDS
Asian High Yield Fund
Strategic Natural Resources Fund
Info-Tech and Communications Fund
Growth Fund
