<PAGE>
As filed with the Securities and Exchange Commission on March 22, 2000
File Nos. 33-20635 and 811-8037
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Post-Effective Amendment No. 9
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 11
ORBITEX GROUP OF FUNDS
410 Park Avenue, 18th Floor
New York, New York 10022
(212) 891-7900
M. Fyzul Khan 410 Park Avenue, 18th Floor,
New York, New York 10022
Copies to:
Max Berueffy Leonard B. Mackey, Esq.
American Data Services, Inc. Rogers & Wells
150 Motor Parkway 200 Park Avenue
New York, NY 11788-0132 New York, New York 10166
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to Rule 485,paragraph (b)
[ ] on March 1, 1999 pursuant to Rule 485, paragraph (b)
[ ] 60 days after filing pursuant to Rule 485, paragraph (a)(i)
[ ] on _____ pursuant to Rule 485, paragraph (a)(i)
[x] 75 days after filing pursuant to Rule 485, paragraph(a)(ii)
[ ] on _____ pursuant to Rule 485, paragraph(a)(ii)
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Orbitex Info-Tech & Communications Fund,
Orbitex Internet Fund, Orbitex Emerging Technology Fund, Orbitex Strategic
Infrastructure Fund, Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic
Materials Fund, Orbitex Financial Services Fund, Orbitex Focus 30 Fund, Orbitex
Growth Fund, Orbitex Amerigo Fund, and Orbitex Clermont Fund.
<PAGE>
ORBITEX-Registered Trademark-
GROUP OF FUNDS
Prospectus June 5, 2000
ORBITEX-Registered Trademark-
Group of Funds
THE ORBITEX TECHNOLOGY COLLECTION
Orbitex Info-Tech & Communications Fund
Orbitex Internet Fund
Orbitex Emerging Technology Fund
Orbitex Strategic Infrastructure Fund
THE ORBITEX SECTOR COLLECTION
Orbitex Health & Biotechnology Fund
Orbitex Energy & Basic Materials Fund
Orbitex Financial Services Fund
THE ORBITEX CORE EQUITY COLLECTION
Orbitex Focus 30 Fund
Orbitex Growth Fund
THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
Orbitex Amerigo Fund
Orbitex Clermont Fund
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
FUNDS AT A GLANCE....................................................................................... 1
Key Investment Concepts........................................................................ 1
A Word about the Orbitex Group of Funds........................................................ 2
THE ORBITEX TECHNOLOGY COLLECTION
Orbitex Info-Tech & Communications Fund........................................................ 6
Orbitex Internet Fund.......................................................................... 8
Orbitex Emerging Technology Fund............................................................... 12
Orbitex Strategic Infrastructure Fund (Formerly known as Orbitex Utilities Fund)............... 17
THE ORBITEX CORE EQUITY COLLECTION
Orbitex Health & Biotechnology Fund............................................................ x
Orbitex Energy & Basic Materials Fund(Formerly known as Orbitex Strategic Natural Resources
Fund) .........................................................................................
Orbitex Financial Services Fund................................................................ x
Orbitex Focus 30 Fund.......................................................................... x
Orbitex Growth Fund............................................................................ x
THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
Fund Structure and Common Investment Strategies................................................ x
Orbitex Amerigo Fund........................................................................... x
Orbitex Clermont Fund.......................................................................... x
FUND DETAILS............................................................................................ x
THE ORBITEX TECHNOLOGY COLLECTION
Orbitex Info-Tech & Communications Fund........................................................ x
Orbitex Internet Fund..........................................................................
Orbitex Emerging Technology Fund...............................................................
Orbitex Strategic Infrastructure Fund..........................................................
THE ORBITEX SECTOR COLLECTION
Orbitex Health & Biotechnology Fund............................................................ x
Orbitex Energy & Basic Materials Fund..........................................................
Orbitex Financial Services Fund................................................................ x
THE ORBITEX CORE EQUITY COLLECTION
Orbitex Focus 30 Fund.......................................................................... x
Orbitex Growth Fund............................................................................ x
THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
Orbitex Amerigo Fund...........................................................................
Orbitex Clermont Fund..........................................................................
MORE INFORMATION ABOUT RISKS............................................................................ x
YOUR ACCOUNT............................................................................................ x
Types of Accounts.............................................................................. x
Choosing a Class............................................................................... x
Classes in Detail.............................................................................. x
Rule 12b-1 Plans in Detail..................................................................... x
Purchasing Shares.............................................................................. x
Redeeming Shares............................................................................... x
Exchanging Shares.............................................................................. x
PRICING OF FUND SHARES.................................................................................. x
DISTRIBUTIONS........................................................................................... x
FEDERAL TAX CONSIDERATIONS.............................................................................. x
Taxes on Distributions......................................................................... x
Taxes on Sales or Exchanges.................................................................... x
"Buying a Dividend"............................................................................ x
Tax Withholding................................................................................ x
MANAGEMENT.............................................................................................. x
Investment Adviser............................................................................. x
Other Service Providers........................................................................ x
FINANCIAL HIGHLIGHTS.................................................................................... x
</TABLE>
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>
FUNDS AT A GLANCE - KEY INVESTMENT CONCEPTS
This Prospectus describes each funds' investment objectives, principal
investment strategies, principal investments and risks of each Fund in the
Orbitex Group of Funds. You may find the following definitions of these terms
useful as you read the descriptions of the funds.
[LOGO]
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 potential investment objectives. There can be no assurance that any
mutual 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.
[LOGO]
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. Your financial consultant can assist you in understanding these
strategies.
[LOGO]
PRINCIPAL INVESTMENTS
In order to implement its investment strategies, a fund will invest principally
in certain types of securities. These securities may include equity securities,
such as common stocks, preferred stocks, convertible securities and warrants, or
debt securities, such as corporate bonds, government securities and mortgage and
other asset-backed securities.
[LOGO]
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.
Your financial consultant can assist you in understanding these risks.
<PAGE>
A WORD ABOUT THE ORBITEX GROUP OF FUNDS
This prospectus offers eleven different Funds in The Orbitex Group of Funds.
These Funds all invest primarily in equity securities such as common stock, but
they have different investment strategies and emphasize different segments of
the equity markets. In this Prospectus, the Funds are divided into four
collections, each with a different investment focus.
THE ORBITEX TECHNOLOGY COLLECTION
The Orbitex Technology Collection is a group of focused mutual funds that
emphasize the technology sector. The Funds in the series invest in companies
whose principal products and services are in the information technology,
communications, technology infrastructure, Internet and emerging technology
fields.
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."
[LOGO]
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.
[LOGO]
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 (see
description of communications and information companies in "Fund Details"
section on page 42).
- - 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. The Fund may
sell those holdings that the Adviser has identified as having exceeded
their fair market value and may also sell the securities of a company that
has experienced a fundamental shift in its core business processes and
objectives. The Fund may also sell the securities of a company when the
industry in which the company operates has undergone a shift in focus or
industry dynamics.
- - Investing primarily in common stocks.
-2-
<PAGE>
- - Investing in equity securities of both domestic and foreign issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
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 specific
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
-3-
<PAGE>
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 ORBITEX INFO-TECH & COMMUNICATIONS FUND?
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
FUNDS AT A GLANCE - ORBITEX INFO-TECH & COMMUNICATIONS FUND
PERFORMANCE AND VOLATILITY
The bar chart and table below show the performance of the Class A Shares 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, but do include the effect of fee waivers and expense
reimbursements by the Adviser. If the effect of the sales charge were reflected
or if the fee waivers and expense reimbursements had not been in effect, returns
would be lower than those shown.
[EDGAR REPRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC]
ORBITEX INFO-TECH & COMMUNICATIONS
FUND -- CLASS A SHARES
Total Return for the year ended December 31
1998 43.43%
1999 167.86%
2000
During the period shown in the bar chart, the highest return for a quarter was
62.60% (quarter ended 12-31-99) and the lowest return for a quarter was (19.17)%
(quarter ended 9-30-98).
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)
-4-
<PAGE>
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) and the effect of fee waivers and
expense reimbursements by the Adviser. If those waivers and reimbursements had
not been in effect, the returns would have been lower than those shown.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------- ------------------ -----------------
Past 1 Year Life of Fund
- --------------------------------------------------------------------- ------------------ -----------------
<S> <C> <C>
Orbitex Info-Tech & Communications Fund Class A* 152.43% 79.50%
- --------------------------------------------------------------------- ------------------ -----------------
Orbitex Info-Tech & Communications Fund Class B** 161.40% 139.07%
- --------------------------------------------------------------------- ------------------ -----------------
S&P 500-Registered Trademark- Index*** 21.04% 26.21%+
- --------------------------------------------------------------------- ------------------ -----------------
Lipper Science and Technology Index**** 113.92% 57.03%++
- --------------------------------------------------------------------- ------------------ -----------------
</TABLE>
* CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 22, 1997.
** CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 16, 1998.
*** 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.
+ From October 31, 1997.
++ From October 22, 1997
-5-
<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, Class B Shares, or Class C Shares of the Orbitex Info-Tech &
Communications Fund.
<TABLE>
<CAPTION>
Class A CLASS B CLASS C
Shares SHARES SHARES
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<S> <C> <C> <C>
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 None(2) 5.00%(3) 1.00%(4)
purchase price or 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 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 2.63% 2.63% 2.63%(6)
----- ----- ------
Total Annual Operating Expenses 4.28% 4.88% 4.88%(6)
Fee Waiver and Expense Reimbursement 2.28%(7) 2.28%(7) 2.28%(7)
----- ----- -----
Net Expenses 2.00% 2.60% 2.60%
----- ----- -----
</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 ("CDSC") applies on amounts redeemed
within one year of purchase. See "Your Account - Classes in Detail -
Class A Reduced Sales Charge."
(3) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares and
Class C does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in effect until at December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
-6-
<PAGE>
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 CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $766 $763 $363
3 $1,603 $1,564 $1,264
5 $2,452 $2,467 $2,267
10 $4,629 $4,558 $4,785
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $766 $263 $263
3 $1,603 $1,264 $1,264
5 $2,452 $2,267 $2,267
10 $4,629 $4,558 $4,785
</TABLE>
-7-
<PAGE>
FUNDS AT A GLANCE - ORBITEX INTERNET FUND
This section briefly describes the Orbitex Internet Fund's goals, principal
investment strategies, risks, expenses and performance. For further information
on how this is managed, please read the section entitled "Fund Details."
[LOGO]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Internet Fund is long-term growth through
capital appreciation by investing primarily in equity securities of
emerging as well as established Internet companies.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Investing at least 65% of its total assets in equity securities issued by
Internet and related technology companies (see description of Internet and
related technology companies in "Fund Details" section on page XX).
- - The Adviser will attempt to modify portfolio composition to benefit from
changing relative performance among various sub-sectors of the Internet
industry. The Fund may sell those holdings that the Adviser has identified
as having exceeded their fair market value and will also sell the
securities of a company that has experienced a fundamental shift in its
core business processes and objectives. The Fund may also sell the
securities of a company when the industry in which the company operates has
undergone a shift in focus or industry dynamics.
- - Investing primarily in common stocks.
- - Investing in equity securities of both domestic and foreign issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
[LOGO]
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.
-8-
<PAGE>
- - RISKS OF INTERNET SECTOR: Because of its narrow focus, the Fund's
performance is closely tied to, and affected by, events occurring in the
Internet industry. 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 Internet 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 Internet companies
sell NO SPACE HEREstock before they have a commercially viable product, and
may be acutely susceptible to problems relating to bringing their products
to market. Additionally, many Internet companies have very high
price/earnings ratios, high price volatility, and high personnel turnover
due to severe labor shortages for skilled Internet 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's 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.
- - RISKS OF NON-DIVERSIFICATION: Because the Orbitex Internet 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.
WHO MAY WANT TO INVEST IN THE ORBITEX INTERNET FUND?
We designed the ORBITEX INTERNET FUND for investors who want specific Internet
sector exposure or who want to select which sectors to invest in and who seek
one or more of the following:
-9-
<PAGE>
- 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
FUNDS AT A GLANCE - ORBITEX INTERNET FUND
PERFORMANCE
No information regarding the Fund's performance is included because, as of the
date of this Prospectus, the Fund had not commenced operations.
INVESTOR EXPENSES
The table describes the fees and expenses that you may pay if you buy and hold
Class A Shares, Class B Shares or Class C Shares of the Orbitex Internet Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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 1.00%
Maximum Deferred Sales Charge (Load) (as a % of lower of original
purchase price or redemption proceeds) None(2) 5.00%(3) 1.00%(4)
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 (7) 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses% X.XX% X.XX% X.XX%
----- ----- -----
Total Annual Operating Expenses (6) (7) 7.73% 8.33% x.xx%
</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) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares and
Class C does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in
-10-
<PAGE>
effect until at December 31, 2000. The information contained in the table
above and the example below reflects the expenses of each class of the Fund
taking into account any applicable fee waivers and or reimbursements (3) The
CDSC payable upon redemption of Class B shares declines over time.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Internet 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 C
- ---- ------- ------- -------
<S> <C> <C> <C>
1 $980 $988
3 $1,798 $1,767
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR CLASS A CLASS B CLASS C
- ---- ------- ------- -------
<S> <C> <C> <C>
1 $980 $488
3 $1,798 $1,767
</TABLE>
-11-
<PAGE>
FUNDS AT A GLANCE - ORBITEX EMERGING TECHNOLOGY FUND
This section briefly describes the Orbitex Emerging Technology Fund's goals,
principal investment strategies, risks, expenses and performance. For further
information on how this is managed, please read the section entitled "Fund
Details."
[LOGO]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Emerging Technology Fund is long-term growth
of capital through selective investments primarily in a globally
diversified portfolio of equity securities of companies from various
industries introducing emerging technologies.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Investing at least 65% of its total assets in equity securities issued by
emerging technology companies (see description of emerging technology
companies in "Fund Details" section on page XX).
- - The Adviser will attempt to modify portfolio composition to benefit from
changing relative performance among various sub-sectors of the emerging
technology industry. The Fund may sell those holdings that the Adviser has
identified as having exceeded their fair market value and will also sell
the securities of a company that has experienced a fundamental shift in its
core business processes and objectives. The Fund may also sell the
securities of a company when the industry in which the company operates has
undergone a shift in focus or industry dynamics.
- - Investing primarily in common stocks.
- - Investing in equity securities of both domestic and foreign issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
[LOGO]
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.
-12-
<PAGE>
- - RISKS OF EMERGING TECHNOLOGY SECTOR: Because of its narrow focus, the
Fund's performance is closely tied to, and affected by, events occurring in
the emerging technology and general technology industry. 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. In some
cases, there are some emerging technology companies which 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
emerging technology companies have very high price/earnings ratios, high
price volatility, and high personnel turnover due to severe labor shortages
for skilled emerging 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's 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.
- - RISKS OF NON-DIVERSIFICATION: Because the Orbitex Emerging Technology 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.
WHO MAY WANT TO INVEST IN THE ORBITEX EMERGING TECHNOLOGY FUND?
We designed the ORBITEX EMERGING TECHNOLOGY FUND for investors who want specific
sector exposure to emerging technology companies or who want to select which
sectors to invest in and who seek one or more of the following:
-13-
<PAGE>
- 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
-14-
<PAGE>
FUNDS AT A GLANCE - ORBITEX EMERGING TECHNOLOGY FUND
PERFORMANCE
No information regarding the Fund's performance is included because, as of the
date of this Prospectus, the Fund had not commenced operations.
INVESTOR EXPENSES
The table describes the fees and expenses that you may pay if you buy and hold
Class A Shares , Class B Shares, or Class C Shares of the Orbitex Emerging
Technology Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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 1.00%
Maximum Deferred Sales Charge (Load) (as a % of lower of original None(2) 5.00%(3) 1.00%(4)
purchase price or 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 (7) 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses% X.XX% X.XX% X.XX%
----- ----- -----
Total Annual Operating Expenses (6) (7) 7.73% 8.33% x.xx%
</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) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares and
Class C does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in effect until at December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
-15-
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in
the Orbitex Emerging Technology 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 C
- --------------------------------------------------------- --------------- ----------------- -----------------
<S> <C> <C> <C>
1 $980 $988 $
- --------------------------------------------------------- --------------- ----------------- -----------------
3 $1,798 $1,767 $
- --------------------------------------------------------- --------------- ----------------- -----------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- --------------------------------------------------------- --------------- ----------------- -----------------
YEAR CLASS A CLASS B CLASS C
- --------------------------------------------------------- --------------- ----------------- -----------------
<S> <C> <C> <C>
1 $980 $488 $
- --------------------------------------------------------- --------------- ----------------- -----------------
3 $1,798 $1,767 $
- --------------------------------------------------------- --------------- ----------------- -----------------
</TABLE>
-16-
<PAGE>
FUNDS AT A GLANCE - ORBITEX STRATEGIC INFRASTRUCTURE FUND
This section briefly describes the Orbitex Strategic Infrastructure 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."
[LOGO]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Strategic Infrastructure Fund is to seek long
term growth and current income through selective investment in securities
of companies engaged in providing electricity, natural gas, water and
communications services to the public and companies that provide services
to public utilities companies.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- Investing at least 65% of its total assets in U.S. and foreign
securities issued by infrastructure companies (see description
of infrastructure companies in "Fund Details" section on page 47).
As a matter of fundamental policy, the Fund will concentrate (invest
at least 25% of its total assets) in securities issued by companies
in the infrastructure service industry.
- Investing primarily in common stocks.
- Investing in companies regardless of their stock market value (or
"market capitalization").
- Investing up to 50% of its total assets in foreign companies.
- The Fund will sell those holdings that it has identified as having
exceeded their fair market value and may also sell the securities of a
company that has experienced a fundamental shift in its core business
processes and objectives.
[LOGO]
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.
-17-
<PAGE>
- RISKS OF INFRASTRUCTURE SECTOR: Because of its specific focus, the
Fund's performance is closely tied to, and affected by, events
occurring in the strategic infrastructure industries. Companies in
the same industry, especially electric and gas and other energy
related utility companies, 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. These price
movements may have a larger impact on the Fund than on a Fund with a
more broadly diversified portfolio. In the past, strategic
infrastructure company securities have been particularly sensitive to
interest rate movements: when interest rates rise, the stock prices
of these companies have tended to fall. On-going regulatory changes
have led to greater competition in the industry, and the emergence of
non-regulated providers as a significant part of the industry could
reduce the profitability of companies in this sector. In addition,
the industry is subject to risks associated with the difficulty of
obtaining adequate returns on invested capital in spite of frequent
rate increases and of financing large construction programs during
inflationary periods; restrictions on operations and increased costs
due to environmental and safety regulations; difficulties of the
capital markets in absorbing strategic infrastructure debt and equity
securities; difficulties in obtaining fuel for electric generation at
reasonable prices; risks associated with the operation of nuclear
power plants; and the effects of energy conservation and other
factors affecting the level of demand for services. Furthermore,
there are uncertainties resulting from certain telecommunications
companies' diversification into new domestic and international
businesses, as well as agreements by many such companies linking
future rate increases to inflation or other factors not directly
related to the active operating profits of the enterprise. The value
of strategic infrastructure company securities may decline because
governmental regulation controlling companies in the industry can
change, and this regulation may prevent or delay companies from
passing along cost increases to its customers. Furthermore, regulatory
authorities may not grant future rate increases. Any increase granted
may not be adequate to permit the payment of dividends on common
stocks.
- 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 service, 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 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.
-18-
<PAGE>
- - RISKS OF NON-DIVERSIFICATION: Because the Orbitex Strategic Infrastructure
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 STRATEGIC INFRASTRUCTURE FUND?
We designed the ORBITEX STRATEGIC INFRASTRUCTURE FUND for investors who want to
capitalize on potential opportunities in the securities of infrastructure
companies and who seek one or more of the following:
- high long-term growth and income
- a stock fund to complement a portfolio of equity and fixed income
investments
- a stock fund that uses primarily a growth & income oriented investment
strategy
- a stock fund that invests in foreign and domestic companies
-19-
<PAGE>
FUNDS AT A GLANCE - ORBITEX STRATEGIC INFRASTRUCTURE FUND
PERFORMANCE AND VOLATILITY
As of June 5, 2000, the Orbitex Strategic Infrastructure 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, Class B Shares, or Class C Shares of the Orbitex Strategic
Infrastructure Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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 1.00%
Maximum Deferred Sales Charge (Load) (as a % of lower of original
purchase price or redemption proceeds) None(2) 5.00%(3) 1.00%(4)
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 (7) 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses% X.XX% X.XX% X.XX%
----- ----- -----
Total Annual Operating Expenses (6) (7) 7.73% 8.33% x.xx%
</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 1.00%
contingent deferred sales charge ("CDSC") applies on amounts redeemed within
one year of purchase. See "Your Account - Classes in Detail - Class A
Reduced Sales Charge."
(3) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares, and
Class C does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in effect until at least December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
-20-
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Strategic Infrastructure 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 C
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
<S> <C> <C>
1 766 763
- ----------------------------- --------------------------- --------------------------- -----------------------
3 1,166 1,108
- ----------------------------- --------------------------- --------------------------- -----------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- ----------------------------- --------------------------- --------------------------- -----------------------
YEAR
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
CLASS A CLASS B CLASS C
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
<S> <C> <C> <C>
1 $766 $263 $
- ----------------------------- --------------------------- --------------------------- -----------------------
3 $1,166 $808 $
- ----------------------------- --------------------------- --------------------------- -----------------------
</TABLE>
-21-
<PAGE>
THE ORBITEX SECTOR COLLECTION
The Orbitex Sector Collection is a group of focused mutual funds each having an
emphasis on a particular industry, segment or specialty. The mutual funds
specialize in health care and biotechnology, financial services, energy and
basic materials, multi-cap growth companies, and large capitalization companies,
respectively.
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."
[LOGO]
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.
[LOGO]
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 45). As a matter of fundamental policy, the Fund will
concentrate (invest at least 25% of its total assets) in securities
issued by companies in the health and biotechnology industries.
- 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.
- The Fund may sell those holdings that it has identified as having
exceeded their fair market value and may also sell the securities of a
company that has experienced a fundamental shift in its core business
processes and objectives. The Fund may also
-22-
<PAGE>
sell the securities of a company when the industry in which the company
operates has undergone a shift in focus or industry dynamics.
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 specific
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.
-23-
<PAGE>
- 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.
- 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
no spaces
- 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
-24-
<PAGE>
FUNDS AT A GLANCE - ORBITEX HEALTH & BIOTECHNOLOGY FUND
PERFORMANCE AND VOLATILITY
(TO BE ADDED IN SUBSEQUENT FILING)
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 C Shares of the Orbitex Health &
Biotechnology Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------- ------- -------
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 None(2) 5.00%(3) 1.00%(4)
price or 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 OPERATION EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management Fees 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 1.61%(6) 1.61%(6) 1.61%(6)
----- ----- ------
Total Annual Operating Expenses 3.26%(6) 3.86%(6) 3.86%(6)
Fee Waiver and Reimbursement 1.26%(7) 1.26%(7) 1.26%(7)
----- ----- -----
Net Expenses 2.00% 2.60% 2.60%
===== ===== =====
</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) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C Shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares, and
Class C Shares does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in effect until at least December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
-25-
<PAGE>
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 CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $766 $763 $363
3 $1,410 $1,363 $1,063
$ $ $
$ $ $
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $ 766 $ 263 $ 263
3 $1,410 $1,063 $1,063
$ $ $
$ $ $
</TABLE>
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)
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) and the effect of fee waivers and
expense reimbursements by the Adviser. If those waivers and reimbursements had
not been in effect, the returns would have been lower than those shown.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------- ------------------ ----------------
Past 1 Year Life of Fund+
- --------------------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
Orbitex Health & Biotechnology Fund Class A* N/A 29.50%
- --------------------------------------------------------------------- ------------------ ----------------
Orbitex Health & Biotechnology Fund Class B* N/A 32.20%
- --------------------------------------------------------------------- ------------------ ----------------
S&P 500(R) Index ** N/A 4.83%
- --------------------------------------------------------------------- ------------------ ----------------
Lipper Health & Biotechnology Index*** N/A 5.36%
- --------------------------------------------------------------------- ------------------ ----------------
</TABLE>
* CLASS A SHARES AND CLASS B SHARES COMMENCED OPERATIONS ON JULY 15, 1999.
** THE S&P 500 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.
-26-
<PAGE>
*** THE LIPPER HEALTH & BIOTECHNOLOGY 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 compiled by Lipper, Inc.
+ NOT ANNUALIZED
-27-
<PAGE>
FUNDS AT A GLANCE - ORBITEX ENERGY & BASIC MATERIALS FUND
This section describes the Orbitex Energy & Basic Materials 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."
Prior to June 5, 1999, the Orbitex Energy & Basic Materials Fund was known as
the Orbitex Strategic Natural Resources Fund.
[LOGO]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Energy & Basic Materials Fund is long-term
growth of capital through selective investment in the securities of
companies engaged in energy and basic materials industries and industries
supportive to energy and basic materials industries.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in securities of companies that the Adviser believes are
positioned to benefit from increasing worldwide demand for energy and basic
materials. The Fund may sell those holdings that it has identified as having
exceeded their fair market value and may also sell the securities of a company
that has experienced a fundamental shift in its core business processes and
objectives. The Fund may also sell the securities of a company when the industry
in which the company operates has undergone a shift in focus or industry
dynamics.
The Fund's principal investment strategies include:
- - Investing at least 65% of its total assets in equity securities issued by
energy and basic materials companies (see description of energy and basic
materials companies in "Fund Details" section on page 43).
- - Investing primarily in common stocks.
- - Investing in equity securities of both domestic and foreign issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
[LOGO]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
-28-
<PAGE>
- 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 ENERGY AND BASIC MATERIALS SECTOR: Because of its specific
focus, the Fund's performance is closely tied to and affected by events
occurring in the energy and basic materials 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
energy and basic materials 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.
WHO MAY WANT TO INVEST IN THE ORBITEX ENERGY & BASIC MATERIALS FUND?
We designed the ORBITEX ENERGY & BASIC MATERIALS 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
-29-
<PAGE>
- a stock fund that invests in foreign and domestic companies
FUNDS AT A GLANCE - Orbitex Energy & Basic Materials Fund
PERFORMANCE AND VOLATILITY
The bar chart and table below show the performance of the Class A Shares of the
Orbitex Energy & Basic Materials 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, but do include the effect of fee waivers and expense
reimbursements by the Adviser. If the effect of the sales charge were reflected
or if the fee waivers and expense reimbursements had not been in effect, returns
would be lower than those shown.
[EDGAR REPRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC]
ORBITEX ENERGY & BASIC MATERIALS FUND -- CLASS A SHARES
TOTAL RETURN FOR THE YEAR ENDED DECEMBER 31
Total Return for the year ended December 31, 1998 (23.90)%
Total Return for the year ended December 31, 1999 38.54%
During the period shown in the bar chart, the highest return for a quarter was
17.36% (quarter ended 6-30-99) and the lowest return for a quarter was (21.77)%
(quarter ended 9-30-98).
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)
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) and the effect of fee waivers and
expense reimbursements by the Adviser. If those waivers and reimbursements had
not been in effect, the returns would have been lower than those shown.
<TABLE>
<CAPTION>
PAST 1 LIFE OF
YEAR FUND
<S> <C> <C>
Orbitex Energy & Basic Materials Fund Class A* 30.61% 1.79%
Orbitex Energy & Basic Materials Fund Class B** 34.15% 23.66%
S&P 500-Registered Trademark- Index*** 21.04% 26.21%+
Lipper Natural Resources Funds Index**** 31.40)% (2.71)%++
</TABLE>
* CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 23, 1997.
** CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 21, 1998.
-30-
<PAGE>
No space
*** 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.
+ From October 31, 1997
++ From October 23, 1997
FUNDS AT A GLANCE - ORBITEX ENERGY & BASIC MATERIALS 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 C Shares of the Orbitex Energy & Basic
Materials Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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 None(2) 5.00%(3) 1.00%(4)
purchase price or 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 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 5.53% 5.53% 5.53%(6)
----- ----- -------
Total Annual Operating Expenses 7.18% 7.78% 7.78%
Fee Waiver and Expense Reimbursement 5.18%(7) 5.18%(7) 5.18%(7)
----- ----- -------
Net Expenses 2.00% 2.60% 2.60%
===== ===== =====
</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) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C Shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares and
Class C Shares does not exceed
-31-
<PAGE>
2.00%, 2.60% and 2.60%, respectively. This arrangement will remain in effect
until at least December 31, 2000. The information contained in the table
above and the example below reflects the expenses of each class of the Fund
taking into account any applicable fee waivers and or reimbursements.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Energy & Basic Materials 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 C
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
<S> <C> <C> <C>
1 $766 $763 $363
- ----------------------------- --------------------------- --------------------------- -----------------------
3 $1,603 $1,564 $1,264
- ----------------------------- --------------------------- --------------------------- -----------------------
5 $2,452 $2,467 $2,267
- ----------------------------- --------------------------- --------------------------- -----------------------
10 $4,629 $4,558 $4,785
- ----------------------------- --------------------------- --------------------------- -----------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- ----------------------------- --------------------------- --------------------------- -----------------------
YEAR
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
CLASS A CLASS B CLASS C
- ----------------------------- --------------------------- --------------------------- -----------------------
- ----------------------------- --------------------------- --------------------------- -----------------------
<S> <C> <C> <C>
1 $766 $263 $263
- ----------------------------- --------------------------- --------------------------- -----------------------
3 $1,603 $1,564 $1,264
- ----------------------------- --------------------------- --------------------------- -----------------------
5 $2,452 $2,467 $2,267
- ----------------------------- --------------------------- --------------------------- -----------------------
10 $4,629 $4,558 $4,785
- ----------------------------- --------------------------- --------------------------- -----------------------
</TABLE>
-32-
<PAGE>
FUNDS AT A GLANCE - ORBITEX FINANCIAL SERVICES FUND
This section briefly describes the Orbitex Financial Services 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."
[LOGO]
INVESTMENT OBJECTIVE
- - The objective of the Orbitex Financial Services Fund is long-term growth
through selective investment in companies that provide financial services
to consumers and industry. These companies include commercial and
investment banks, thrifts, finance companies, brokerage and advisory firms,
real estate related firms, insurance companies, and service providers to
these companies whose revenue is primarily derived from the financial
services sector.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- Investing at least 65% of its total assets in U.S. and foreign
securities issued by financial service companies (see description of
financial service companies in "Fund Details" section on page 40). As a
matter of fundamental policy, the Fund will concentrate (invest at
least 25% of its total assets) in securities issued by companies in the
financial services industries.
- 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.
- The Fund may sell those holdings that it has identified as having
exceeded their fair market value and may also sell the securities of a
company that has experienced a fundamental shift in its core business
processes and objectives.
-33-
<PAGE>
[LOGO]
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 FINANCIAL SERVICES SECTOR: Because of its specific focus, the
Fund's performance is closely tied to and affected by events occurring
in the financial service industry. 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. Financial services companies are subject to extensive
government regulation which tends to limit both the amount and types of
loans and other financial commitments the company can make, and the
interest rates and fees it can charge. These limitations can have a
significant impact on the profitability of a financial services company
since profitability is impacted by the company's ability to make
financial commitments such as loans. Insurance companies in which the
Fund invests may also have an impact on the Fund's performance as
insurers may be subject to severe price competition, claims activity,
marketing competition and general economic conditions. Certain lines of
insurance can be significantly influenced by specific events. For
example, property and casualty insurer profits may be affected by
certain weather catastrophes and other disasters; and life and health
insurer profits may be affected by mortality risks and morbidity rates.
The repeal of the Glass-Steagall Act of 1933 should also have an impact
on the profitability of financial services companies and on the
performance of the Fund. It will reduce the separation between
commercial and investment banking businesses and permit banks to expand
their services. This expansion could expose banks to increased
competition from well-established competitors. The financial services
industry is currently undergoing a number of changes such as continuing
consolidations, development of new products and structures and changes
to its regulatory framework. These changes are likely to have a
significant impact on the financial services industry and the Fund.
- 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 service, 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.
-34-
<PAGE>
- RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than
U.S. investments because of factors such as unstable international
political and economic 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.
- RISKS OF NON-DIVERSIFICATION: Because the Orbitex Financial Services
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 FINANCIAL SERVICES FUND?
We designed the ORBITEX FINANCIAL SERVICES FUND for investors who want to
capitalize on potential opportunities in the financial service 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
financial services industry
- 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
-35-
<PAGE>
FUNDS AT A GLANCE - ORBITEX FINANCIAL SERVICES FUND
PERFORMANCE AND VOLATILITY
As of June 5, 2000, the Orbitex Financial Services 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, Class B Shares, or Class C Shares of the Orbitex Financial
Services Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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 1.00%
Maximum Deferred Sales Charge (Load) (as a % of lower of original purchase
price or redemption proceeds) None(2) 5.00%(3) 1.00%(4)
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 (6) 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses(6) X.XX%(6) X.XX%(6) X.XX%(6)
----- ----- -----
Total Annual Operating Expenses (7) x.xx% x.xx% x.xx%
Fee Waiver and Expense Reimbursement X.XX%(7) X.XX%(7) X.XX%(7)
----- ----- -----
Net Expenses 2.00% 2.60% x.xx%
===== ===== =====
</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 1.00%
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) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C Shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares , Class B Shares and
Class C Shares does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in effect until at least December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
-36-
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Financial Services 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 C
- ---------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
- ---------------------------- -------------------------- -------------------------- --------------------------
1 $766 $763 $
- ---------------------------- -------------------------- -------------------------- --------------------------
3 1,166 1,108 $
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- ---------------------------- -------------------------- -------------------------- --------------------------
YEAR
- ---------------------------- -------------------------- -------------------------- --------------------------
- ---------------------------- -------------------------- -------------------------- --------------------------
CLASS A CLASS B CLASS C
- ---------------------------- -------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
- ---------------------------- -------------------------- -------------------------- --------------------------
1 $766 $263 $
- ---------------------------- -------------------------- -------------------------- --------------------------
3 $1,166 $808 $
- ---------------------------- -------------------------- -------------------------- --------------------------
</TABLE>
-37-
<PAGE>
THE ORBITEX CORE EQUITY COLLECTION
The Orbitex Diversified Equity Collection is a group of mutual funds that are
focused on more than a single sector. The funds in this series invest in
companies across several sectors and can be considered a Core investment fund.
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."
[LOGO]
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*. The Fund is not an index fund.
[LOGO]
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 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.
- Investing up to 10% of its assets in common stocks of companies
included in the S&P 500-Registered Trademark- Index.**
- The Fund may sell those holdings that the Adviser has identified as
having exceeded their fair market value and may also sell the
securities of a company that has experienced a fundamental shift in its
core business processes and objectives. The Fund may also sell the
securities of a company when the industry in which it operates has
undergone a shift in focus or industry dynamics.
- -------------------------------
* "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.
-38-
<PAGE>
[LOGO]
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
- a stock fund that uses primarily a blend of value and growth oriented
investment strategies
-39-
<PAGE>
FUNDS AT A GLANCE - ORBITEX FOCUS 30 FUND
PERFORMANCE AND VOLATILITY
Before the close of business on July 9, 1999, the Fund operated as a separate
fund called the ASM Index 30 Fund ("ASM Fund"). On July 12, 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 applied to 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 end until July 9, 1999 when it
operated as the ASM Fund. The bar chart and table below also show the
performance of Class D Shares of the Orbitex Focus 30 Fund after the
reorganization of the Fund on July 12, 1999. 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 a 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. In addition, the performance of the ASM Fund would have
been lower had it been subject to the higher level of expenses for the Fund.
[EDGAR REPRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC]
ORBITEX FOCUS 30 FUND -- CLASS D SHARESHARES
TOTAL RETURN FOR THE YEARS ENDED DECEMBER 31
1992 5.70%
1993 13.33%
1994 1.04%
1995 29.05%
1996 24.78%
1997 24.51%
1998 16.78%
1999 27.68%
During the period shown in the bar chart, the highest return for a quarter was
17.08% (quarter ended 3-31-97) and the lowest return for a quarter was (11.72%)
(quarter ended 9-30-98).
-40-
<PAGE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)
- ----------------------------------------------------- ------------------- -------------------- --------------
LIFE OF
PAST 1 YEAR PAST 5 YEARS FUND
- ----------------------------------------------------- ------------------- -------------------- --------------
<S> <C> <C> <C>
Orbitex Focus 30 Fund Class A* 21.46% 8.27% 8.25%
- ----------------------------------------------------- ------------------- -------------------- --------------
Orbitex Focus 30 Fund Class B* 21.21% 22.02% 13.00%
- ----------------------------------------------------- ------------------- -------------------- --------------
Orbitex Focus 30 Fund Class D** 27.68% 24.49% 14.47%
- ----------------------------------------------------- ------------------- -------------------- --------------
Dow Jones Industrial Average*** 27.21% 27.04% 19.85%+
- ----------------------------------------------------- ------------------- -------------------- --------------
Lipper Large Cap Value Funds Index**** 10.78% 22.11% (0.20%)++
- ----------------------------------------------------- ------------------- -------------------- --------------
</TABLE>
* CLASS A SHARES AND CLASS B SHARES COMMENCED OPERATIONS ON JULY 12, 1999. CLASS
A'S AND CLASS B'S RETURNS PRIOR TO JULY 12, 1999 ARE THOSE OF CLASS D, WHICH
REFLECT NO 12B-1 FEE. IF CLASS A'S AND CLASS B'S 12B-1 FEE HAD BEEN REFLECTED,
TOTAL RETURNS PRIOR TO JULY 12, 1999 WOULD HAVE BEEN LOWER.
** CLASS D RETURNS PRIOR TO JULY 12, 1999 ARE THOSE OF THE ASM FUND.
*** THE DOW JONES INDUSTRIAL AVERAGE 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 LARGE CAP VALUE FUNDS INDEX is an equal-weighted performance
index, adjusted for capital-gain distribution and income dividends, of the
largest qualifying funds in this investment objective, and is compiled by
Lipper, Inc.
+ From February 28, 1991
++ From March 3, 1991
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 Shareholder fees (fees paid directly from
your investment)
Maximum Sales Charge (Load) Imposed on Purchase (as a % of 5.75%(1) None None
offering price)
Maximum Deferred Sales Charge (Load) (as a % of lower of None(2) 5.00%(3) None
original purchase price or redemption proceeds)
Maximum Sales Charge (Load) Imposed on Reinvested Dividends/ None None None
Distributions
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 (12b-1) Fees 0.40% 1.00%(4) 0.00%
Other Expenses 4.47% 4.47% 4.47%
----- ----- -----
</TABLE>
-41-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Total Annual Operating Expenses 5.62%(5) 6.22%(5) 5.22%(6)
Fee Waiver and Expense Reimbursement 4.22%(7) 4.22%(7) 4.22%(7)
-------- -------- --------
Net Expenses 1.40%(7) 2.00%(7) 1.00%(7)
-------- -------- --------
-------- -------- --------
</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) The CDSC payable upon redemption of Class B shares declines over time.
(4) Including a 0.25% shareholder servicing fee.
(5) Ratio includes amounts relating to the general reserve expense recognized in
the period. If such expenses had not incurred, the ratios of expenses would be
2.99% for Class A and 3.18% for Class B.
(6) Ratio includes amounts relating to the general operating expense and general
reserve expense recognized as a result of the termination of the investment
advisory agreement with the former Adviser. If such expenses had not been
incurred, the ratio of expense would be 2.78% before waivers and reimbursements
and 1.02% after waivers and reimbursements.
(7) Orbitex Management has agreed contractually to waive its management fee and
to reimburse expenses, other than extraordinary, litigation (see "More
Information About Risks- Litigation that May Affect the Focus 30 Fund") or
non-recurring expenses, so that the expense ratio of Class A Shares, Class B
Shares and Class D Shares does not exceed 1.15%, 1.75% and 0.75% until
July 1, 2000, and 1.40%, 2.00% and 1.00% until at least December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
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 C
------- ------- -------
<S> <C> <C> <C>
1 $ 697 $ 690 $ 89
3 $1,789 $1,758 $1,174
5 $2,868 $2,894 $2,254
</TABLE>
-42-
<PAGE>
<TABLE>
<S> <C> <C> <C>
10 $5,506 $5,455 $4,933
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $ 697 $ 690 $ 89
3 $1,789 $1,458 $1,174
5 $2,868 $2,694 $2,254
10 $5,506 $5,455 $4,933
</TABLE>
-43-
<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."
[LOGO]
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.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Under normal market conditions, investing at least 65% of its total assets
in equity securities such as common and preferred stock and securities
convertible into stock.
- - Composing a portfolio based upon a "bottom-up" growth-oriented strategy for
selecting investments with a secondary focus on value stocks. 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. Finally, the Fund
may sell those holdings that the Adviser has identified as having exceeded
their fair market value and may also sell the securities of a company that
has experienced a fundamental shift in its core business processes and
objectives. The Fund may also sell the securities of a company when the
industry in which the company operates has undergone a shift in focus or
industry dynamics.
- - Investing in equity securities of domestic and foreign issuers.
- - Investing in companies regardless of their stock market value (or "market
capitalization").
[LOGO]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
-44-
<PAGE>
- - 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
-45-
<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, but do include the effect of fee waivers and expense
reimbursements by the Adviser. If the effect of the sales charge were reflected
or if the fee waivers and expense reimbursements had not been in effect, returns
would be lower than those shown.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ORBITEX GROWTH FUND -- CLASS A SHARES
Total Return for the year ended December
31
Total Return for the year ended December 31, 1998 7.55%
Total Return for the year ended December 31, 1999 93.39%
During the period shown in the bar chart, the highest return for a quarter was
66.34% (quarter ended 12-31-99) and the lowest return for a quarter was (16.96)%
(quarter ended 9-30-98).
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)
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) and the effect of fee waivers and
expense reimbursements by the Adviser. If those waivers and reimbursements had
not been in effect, the returns would have been lower than those shown.
<TABLE>
<CAPTION>
------------------------------------------- ----------------- ------------------
Past 1 Year Life of Fund
------------------------------------------- ----------------- ------------------
<S> <C> <C>
Orbitex Growth Fund Class A* 86.99% 44.71%
------------------------------------------- ----------------- ------------------
Orbitex Growth Fund Class B** 92.98% 79.54%
------------------------------------------- ----------------- ------------------
S&P 500-Registered Trademark- Index*** 21.04% 26.21%+
------------------------------------------- ----------------- ------------------
Lipper Multi-Cap Core Funds Index**** 20.79% 16.54%++
------------------------------------------- ----------------- ------------------
</TABLE>
* CLASS A SHARES COMMENCED OPERATIONS ON OCTOBER 22, 1997.
** CLASS B SHARES COMMENCED OPERATIONS ON SEPTEMBER 16, 1998. CLASS B'S
RETURNS PRIOR TO SEPTEMBER16,
-46-
<PAGE>
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.
****THE LIPPER MULIT-CAP CORE FUND 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.
+ From October 31, 1997.
++ From October 22, 1997.
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, Class B Shares or Class C Shares of the Orbitex Growth Fund.
Please note that the following information does not include fees that other
financial institutions may charge you for their services.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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
Maximum Deferred Sales Charge (Load) (as a% of lower of original
purchase price or redemption proceeds) None(2) 5.00%(3)
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 (12b-1) Fees 0.40% 1.00%(4)
Other Expenses 16.88% 16.88%
------ ------
Total Annual Operating Expenses 18.03% 18.63%
Fee Waiver and Reimbursement 16.03%(5) 16.03%(5)
------ ------
Net Expenses 2.00% 2.60%
===== =====
</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) The CDSC payable upon redemption of Class B shares declines over time.
(4) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(5) Including a 0.25% shareholder servicing fee.
-47-
<PAGE>
(6) Other Expenses and Total Annual Operating Expenses are estimated.
(7) Orbitex Management has agreed contractually to waive its management fee
and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratio of Class A Shares, Class B Shares and
Class C Shares does not exceed 2.00%, 2.60% and 2.60%, respectively. This
arrangement will remain in effect until at least December 31, 2000. The
information contained in the table above and the example below reflects the
expenses of each class of the Fund taking into account any applicable fee
waivers and or reimbursements.
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 CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $ 766 $ 763 $
3 $3,826 $3,876 $
5 $6,140 $6,248 $
10 $9,749 $9,761 $
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR
- ----
CLASS A CLASS B CLASS C
------- ------- -------
<S> <C> <C> <C>
1 $ 766 $ 263 $
3 $3,826 $3,576 $
5 $6,140 $6,048 $
10 $9,749 $9,761 $
</TABLE>
-48-
<PAGE>
THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
This section briefly describes the AdvisorOne Asset Allocation Collection, a
group of diversified mutual funds each with a specific asset allocation and
investment objective.
FUND STRUCTURE AND COMMON INVESTMENT STRATEGIES
The Orbitex Amerigo Fund and the Orbitex Clermont Fund are each a "fund of
funds." In other words, the Funds pursue their investment goals by investing
primarily in other open-end investment companies -- either open-end investment
companies (commonly known as "mutual funds") or closed-end investment companies
("closed-end funds"). In this Prospectus, the mutual funds and closed-end funds
in which the Amerigo and Clermont Funds invest are referred to as the
"underlying funds." In addition to the underlying funds, each Fund may invest
directly in individual securities or may invest up to 100% of its total assets
in one underlying fund.
The Fund's investment adviser, Clarke Lanzen Skalla Investment Firm, Inc. (the
"Manager") allocates each Fund's assets among the underlying funds or individual
securities among segments of the financial markets based upon the mix of these
investments that the Manager believes will most likely achieve the Fund's
investment objective. Using fundamental and technical analysis, the Manager
assesses the relative risk and reward potential throughout the financial
markets, underweighting low risk assets if the performance is weak; and
overweighting investments in segments where the Manager believes performance
will justify the risk.
The Manager selects specific underlying funds for investment, in part, on their
investment goals and strategies, their investment advisor and portfolio manager,
and on the analysis of their past performance (absolute, relative and
risk-adjusted). The Manager also considers other factors in the selection of
underlying funds, such as fund size, liquidity, expense ratio, quality of
shareholder service, reputation and tenure of portfolio manager, general
composition of its investment portfolio and current and expected portfolio
holdings. Many funds in which a fund invests may not share the same investment
goal and investment limitations as the fund. Normally, a fund will invest its
assets in mutual funds from several different mutual funds families, managed by
a variety of investment advisors, and having a variety of different investment
goals and strategies. However, a fund may invest up to 100% of its total assets
in one underlying fund.
RISKS ASSOCIATED WITH INVESTMENTS IN UNDERLYING FUNDS. Because the Funds invest
primarily in underlying funds, the value of your investment will fluctuate in
response to the performance of the underlying funds. In addition, investing
through the Funds in an underlying portfolio of funds involves certain
additional expenses and certain tax results that would not arise if you invested
directly in the underlying funds. By investing indirectly in underlying funds
through a Fund, you will bear not only your proportionate share of the Fund's
expenses (including operating costs and investment advisory, 12b-1 and
administrative fees), but also, indirectly, similar expenses and charges of the
underlying funds, including any contingent deferred sales charges and redemption
charges. The Amerigo Fund and the Clermont Fund will invest in underlying funds
that invest primarily in common stock or securities convertible into or
exchangeable for common stock such as
-49-
<PAGE>
convertible preferred stock, convertible debentures or warrants. These
underlying funds may trade their portfolios more actively resulting in higher
brokerage commissions as well as increased realization of taxable gains.
-50-
<PAGE>
FUNDS AT A GLANCE - ORBITEX AMERIGO FUND
This section briefly describes the Orbitex Amerigo Fund's goals, principal
investment strategies, risks, expenses and performance. For further information
on how the Fund is managed, please read the section entitled "Fund Details."
[LOGO]
INVESTMENT OBJECTIVE
- - The objective of the Amerigo Fund is capital appreciation and long-term
growth of capital without regard to current income.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
- - The Fund invests primarily in underlying funds that seek capital growth or
appreciation by investing in common stock or securities convertible into or
exchangeable for common stock (such as convertible preferred stock,
convertible debentures or warrants), including the stock of foreign
issuers.
- - Although the Fund does not seek current income, it may invest up to 20% of
its assets in underlying funds that invest primarily in long- or short-term
bonds and other fixed income securities whenever the Adviser believes these
underlying funds offer a potential for capital appreciation.
- - The underlying funds in which the Fund invests may invest up to 100% of
their assets in securities of foreign issuers and engage in foreign
currency transactions with respect to these investments.
- - The Fund may invest up to 100% of its assets directly in, or in underlying
funds investing in, futures contracts and options on futures contracts. The
Fund may also invest temporarily up to 100% of its assets in money market
securities and investment grade bonds as a defensive tactic. When invested
defensively, the Fund may be unable to achieve its investment goal.
[LOGO]
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.
-51-
<PAGE>
- - 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
service, 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.
- - DEBT SECURITIES. When the Fund invests in underlying funds that own bonds,
the value of your investment in the fund will fluctuate with changes in
interest rates. Typically, a rise in interest rates causes a decline in the
value of bond funds owned by the fund. In addition, underlying funds may
invest in what are sometimes referred to as "junk bonds." Such securities
are speculative investments that carry greater risks and are more
susceptible to real or perceived adverse economic and competitive industry
conditions than higher quality debt securities.
- - UNDERLYING FUND STRATEGIES. When the Fund invests in underlying funds that
use margin, leverage, short sales and other forms of financial derivatives,
such as options and futures, an investment in the fund may be more volatile
than investments in other mutual funds. Short sales are speculative
investments and will cause the Fund to lose money if the value of a
security sold short by the fund, or an underlying fund in which the fund
invests, does not go down as the Adviser expects.
- - 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 Advisor 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 AMERIGO FUND?
We designed the ORBITEX AMERIGO FUND for investors who seek one or more of the
following:
- long-term growth potential
- a fund that offers diversification by investing in other mutual funds
- a fund that provides access to multiple market segments that may be
less accessible to individual investors
- a stock fund that invests in domestic and foreign companies
-52-
<PAGE>
FUNDS AT A GLANCE - ORBITEX AMERIGO FUND
PERFORMANCE AND VOLATILITY
Before June 5, 2000, the Fund operated as a separate fund called the CLS
AdvisorOne Fund - Amerigo Fund ("CLS Amerigo Fund"). On or about June 5, 2000,
the Fund was reorganized as a new series of the Orbitex Group of Funds.
The bar chart and table below provide some indication of the risks of investing
in the Orbitex Amerigo Fund by comparing the performance of Class N Shares of
the CLS Amerigo Fund with a broad measure of market performance. Past
performance does not necessarily indicate how the Fund will perform in the
future.
[Plot Points for EDGAR format]:
YEAR ANNUAL TOTAL RETURN(1)
---- --------------------
1998 16.50%
During the period shown in the bar chart, the highest return for a quarter was
20.92% (quarter ended December 31, 1998) and the lowest return for a quarter was
(- 13.87%) (quarter ended September 30, 1998).
Average Annual Total Return (for the Period Ended December 31, 1998)(1)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Past 1 Year Life Of Fund
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Orbitex Amerigo Fund (1) 16.50% 12.17%
S & P 500 Index(2) 28.34% 21.41%
Morningstar Average Multi-Asset Global Funds(3) 7.78% 3.32%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) The performance figures shown above are for Class N Shares of the CLS
Amerigo Fund, the predecessor of the Orbitex Amerigo Fund. Class N Shares had
lower expenses than Class C Shares of the Orbitex Amerigo Fund, and unlike Class
C Shares, were not subject to any contingent deferred sales load. The annual
returns shown in the bar chart and the average annual total return show above
have not be adjusted to reflect these expenses or sales loads. If they were, the
returns would have been lower.
(3) The S&P 500 is a widely-recognized unmanaged index of common stocks. The
Index returns assume reinvestment of dividends; unlike the Fund's returns,
however, they do not reflect any fees or expenses.
(4) The Morningstar Multi-Asset Global Fund Average is an index that consists of
mutual funds that seek total return by investing in varying combinations of
equities, fixed-income securities, and other asset classes. These funds may
invest a significant portion of their assets in securities of foreign issuers.
-53-
<PAGE>
FUNDS AT A GLANCE - ORBITEX AMERIGO FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Orbitex Amerigo Fund. Please note that the following information
does not include fees that other financial institutions may charge you for their
services.
<TABLE>
<CAPTION>
<S><C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) Class C Class N
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering
price) None None
Maximum Deferred Sales Charge (Load) (as a % of lower of original 1.00% None
purchase price or redemption proceeds)
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 1.00% 1.00%
Distribution and/or Service (12b-1) Fees 1.00%(3) None
Other Expenses 2.31% 2.31%
----- -----
Total Annual Operating Expenses 4.31% 3.31%%
Fee Waiver and Reimbursement -2.16% -2.16%
------ ------
Net Expenses 2.15% 1.15%
===== =====
</TABLE>
(1) The CDSC applies to redemptions of Class C shares within eighteen
months of purchase.
(2) Including a 0.25% shareholder servicing fee.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Amerigo 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:
YEAR
- ----
CLASS C CLASS N
------- -------
1 $321 $
3 $906 $
5 $1,619 $
10 $3,508 $
You would pay the following expenses if you did not redeem your shares:
YEAR
- ----
-54-
<PAGE>
CLASS C CLASS N
------- -------
1 $218 $
3 $906 $
5 $1,619 $
10 $3,508 $
-55-
<PAGE>
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
This section briefly describes the Orbitex Clermont 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."
[LOGO]
INVESTMENTOBJECTIVE
- - The objective of the Orbitex Clermont Fund is growth of capital and a
reasonable level of current income.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund's principal investment strategies include:
- - Investing primarily in underlying funds that seek capital growth or
appreciation by investing in common stock or securities convertible into or
exchangeable for common stock (such as convertible preferred stock,
convertible debentures or warrants), including the stock of foreign
issuers.
- - The Fund will invest at least 20% of its assets in underlying funds that
invest primarily in long- or short-term bonds and other fixed income
securities. In the underlying funds, current income will usually be of
secondary importance.
- - The underlying funds in which the Fund invests may invest up to 100% of
their assets in securities of foreign issuers and engage in foreign
currency transactions with respect to these investments.
- - The Fund may invest up to 80% of its assets directly in, or in underlying
funds investing in, futures contracts and options on futures contracts. The
Fund may also invest temporarily up to 100% of its assets in money market
securities and investment grade bonds as a defensive tactic. When invested
defensively, the Fund may be unable to achieve its investment goal.
-56-
<PAGE>
[LOGO]
PRINCIPAL RISKS
The Fund is subject to the following principal risks:
- STOCK MARKET RISK: The securities 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.
- EQUITY SECURITIES. When the Fund invests in underlying funds that own
equity securities such as common or preferred stock or stock warrants,
the value of your investment in the Fund will fluctuate in response to
stock market movements.
- DEBT SECURITIES. When the Fund invests in underlying funds that own
debt securties such as bonds, the value of your investment in the Fund
will fluctuate with changes in interest rates. Typically, a rise in
interest rates causes a decline in the value of bond funds owned by the
fund. In addition, underlying funds may invest in what are sometimes
referred to as "junk bonds." Such securities are speculative
investments that carry greater risks and are more susceptible to real
or perceived adverse economic and competitive industry conditions than
higher quality debt securities.
- 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 service, 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.
- UNDERLYING FUND STRATEGIES. When the Fund invests in underlying funds
that use margin, leverage, short sales and other forms of financial
derivatives, such as options and futures, an investment in the fund may
be more volatile than investments in other mutual funds. Short sales
are speculative investments and will cause the Fund to lose money if
the value of a security sold short by the fund, or an underlying fund
in which the fund invests, does not go down as the Adviser expects.
- 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
-57-
<PAGE>
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 CLERMONT FUND?
We designed the ORBITEX CLERMONT FUND for investors who seek one or more of the
following:
- a more conservative alternative to mutual funds that invest exclusively
for growth
- long-term growth of capital as a primary goal but with a reasonable
amount of current income
- a fund that offers diversification by investing in other mutual funds
- a fund that provides access to markets that may be less accessible to
individual investors
- a stock fund that invests in domestic and foreign companies
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
PERFORMANCE AND VOLATILITY
Before June, 2000, the Fund operated as a separate fund called the CLS
AdvisorOne Fund - Clermont Fund ("CLS Clermont Fund"). On or about June 5, 2000,
the Fund was reorganized as a new series of the Orbitex Group of Funds.
The bar chart and table below provide some indication of the risks of investing
in the Orbitex Clermont Fund by comparing the performance of Class N Shares of
the CLS Clermont Fund with a broad measure of market performance. Past
performance does not necessarily indicate how the Fund will perform in the
future.
[Plot Points for EDGAR format]:
YEAR ANNUAL TOTAL RETURN(1)
---- --------------------
1998 6.93%
During the period shown in the bar chart, the highest return for a quarter was
12.35% (quarter ended December 31, 1998) and the lowest return for a quarter was
(- 10.28%) (quarter ended September 30, 1998).
-58-
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Return (for the Period Ended December 31, 1998)(1)
- ----------------------------------------------------------------------------------------------------
Past 1 Year Life Of Fund
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Orbitex Clermont Fund (1) 5.93% 5.91%
S & P 500 Index(2) 28.34% 21.41%
Morningstar Average Multi-Asset Global Funds(3) 7.78% 3.32%
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) The performance figures show above are for Class N Shares of the CLS
Clermont Fund, the predecessor of the Orbitex Clermont Fund. Class N Shares had
lower expenses than Class C Shares of the Orbitex Clermont Fund, and unlike
Class C Shares, were not subject to any contingent deferred sales load. The
annual returns shown in the bar chart and the average annual total return show
above have not be adjusted to reflect these expenses or sales loads. If they
were, the returns would have been lower.
(3) The S&P 500 is a widely-recognized unmanaged index of common stocks. The
Index returns assume reinvestment of dividends; unlike the Fund's returns,
however, they do not reflect any fees or expenses.
(4) The Morningstar Multi-Asset Global Fund Average is an index that consists of
mutual funds that seek total return by investing in varying combinations of
equities, fixed-income securities, and other asset classes. These funds may
invest a significant portion of their assets in securities of foreign issuers.
-59-
<PAGE>
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Orbitex Clermont Fund.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT) Class C Class N
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchase (as a % of offering None None
price)
Maximum Deferred Sales Charge (Load) (as a % of lower of original 1.00% None
purchase price or redemption proceeds)
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 1.00% 1.00%
Distribution and/or Service (12b-1) Fees 1.00%(3) 2.31%
Other Expenses 2.31% 3.31%
------- ------
Total Annual Operating Expenses 4.31% (2.16%)
Fee Waiver and Reimbursement (2.16)% 1.15%
------- ------
Net Expenses 2.15% 1.15%
======= ======
</TABLE>
(1) The CDSC applies to redemptions of Class C shares within eighteen
months of purchase.
(2) Including a 0.25% shareholder servicing fee.
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Clermont 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:
YEAR
- ----
CLASS C CLASS N
------- -------
1 $321 $
3 $906 $
5 $1,619 $
10 $3,508 $
You would pay the following expenses if you did not redeem your shares:
YEAR
- ----
CLASS C CLASS N
------- -------
1 $218 $
3 $906 $
5 $1,619 $
10 $3,508 $
-60-
<PAGE>
FUND DETAILS - ORBITEX INFO-TECH & COMMUNICATIONS FUND
INVESTMENT DETAILS OF THE ORBITEX
INFO-TECH & COMMUNICATIONS FUND
[LOGO]
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.
[LOGO]
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.
-61-
<PAGE>
[LOGO]
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 from 1992 to 1997.
FUND DETAILS - ORBITEX INTERNET FUND
INVESTMENT DETAILS OF THE ORBITEX INTERNET FUND
INVESTMENT OBJECTIVE
The Orbitex Internet Fund seeks long-term growth through capital appreciation by
investing primarily in equity securities of emerging as well as established
Internet companies.
PRINCIPAL INVESTMENT STRATEGIES
The Fund will invest in companies that the Adviser expects to capitalize on
emerging changes in the Internet industry.
The Fund defines an "Internet company" as an entity in which:
- - at least 50% of the company's revenues or earnings are derived from
Internet activities; or
- - at least 50% of the company's assets were devoted to such activities, based
upon the company's most recent fiscal year.
Internet companies may include, among others, those companies exhibiting rapid
growth and that are engaged in the research, design, development or
manufacturing of Internet, Intranet and other Internet-related "high tech"
businesses. Such high tech companies may include firms in the computer,
communication, video and electronic sectors.
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
-62-
<PAGE>
position and economic and market conditions. Factors considered include
long-term growth potential, earnings estimates and management. However, if the
Adviser's strategies do not work as intended, the Fund may not achieve its
objective.
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in equity
securities issued by Internet related 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 securities and in securities of companies
outside the Internet industry.
PORTFOLIO MANAGER
Richard A. Begun is the portfolio manager for the Internet Fund. Mr. Begun
joined Orbitex in 1999 and brings with him 11 years of investment management
experience. Formerly, he was with the Bank of New York from 1995 to 1999 where
he co-managed the bank's institutional small cap growth fund and its
institutional large cap growth fund. Prior to joining the Bank, Mr. Begun was an
Investment Management Consultant at Evaluation Associates, Inc. from 1993 to
1995.
FUND DETAILS - ORBITEX EMERGING TECHNOLOGY FUND
INVESTMENT DETAILS OF THE ORBITEX EMERGING TECHNOLOGY FUND
INVESTMENT OBJECTIVE
The Orbitex Emerging Technology Fund seeks long-term growth by investing
primarily in a globally diversified portfolio of equity securities of companies
from various industries introducing emerging technologies.
PRINCIPAL INVESTMENT STRATEGIES
The Fund will invest in companies that the Adviser expects to capitalize on
emerging changes in technology.
The Fund defines an "emerging technology company" as an entity in which:
- - at least 50% of the company's revenues or earnings are derived from
emerging technology activities; or
- - at least 50% of the company's assets were devoted to such activities, based
upon the company's most recent fiscal year.
Emerging technology companies may include, among others, those companies
exhibiting rapid growth and that are engaged in the research, design,
development or manufacturing of innovate technologies. These companies include
those in the Internet, medical,
-63-
<PAGE>
pharmaceutical, manufacturing, computer software and hardware industries that
are seeking better ways to leverage technology. The Fund maintains a high degree
of flexibility to avoid being limited to a narrow band of investments.
In buying and selling securities for the Fund, the Adviser relies on a top-down,
bottom-up investment approach that allows for the identification 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
long-term growth potential, earnings estimates and management. However, if the
Adviser's strategies do not work as intended, the Fund may not achieve its
objective.
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in equity
securities issued by emerging 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 securities and in securities of companies
outside the emerging technology industry.
PORTFOLIO MANAGER
TBA
FUND DETAILS - ORBITEX STRATEGIC INFRASTRUCTURE FUND
INVESTMENT DETAILS OF THE ORBITEX STRATEGIC INFRASTRUCTURE FUND
[LOGO]
INVESTMENT OBJECTIVE
The Orbitex Strategic Infrastructure Fund seeks to provide long-term growth of
capital and current income through selective investment in securities of utility
companies of all sizes that offer potential for growth.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund will invest in companies that the Adviser expects to capitalize on
emerging changes in the an infrastructure industries.
The Fund defines a infrastructure company as an entity that:
- at least 50% of its revenues or earnings were derived from
infrastructure services; or
- at least 50% of its assets were devoted to such activities, based upon
the company's most recent fiscal year.
-64-
<PAGE>
The Fund defines "infrastructure services" as companies that manufacture,
produce, sell, or transmit gas or electric energy; water supply, waste
disposal and sewerage, sanitary service companies; and companies involved in
telephone, satellite, and other communication fields.
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.
[LOGO]
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in equity
securities issued by infrastructure companies. The Fund expects to invest
primarily in U.S. and foreign common stocks, but may also invest in other
types of equity securities and investment grade debt securities.
PORTFOLIO MANAGER
[TO BE DETERMINED]
FUND DETAILS - ORBITEX HEALTH & BIOTECHNOLOGY FUND
INVESTMENT DETAILS OF THE ORBITEX
HEALTH & BIOTECHNOLOGY FUND
[LOGO]
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.
[LOGO]
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.
-65-
<PAGE>
- 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.
[LOGO]
PRINCIPAL INVESTMENTS
Under normal market conditions, the Fund intends to invest at least 65% of its
total 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.
PORTFOLIO MANAGER
Timothy F. Bepler, CFA is the portfolio manager for the Health & Biotechnology
Fund. Mr. Bepler joined Orbitex in 1999 and brings with him eight years of
investment analysis and management experience in the healthcare industry.
Formerly, he was a vice president at Merrill Lynch Asset Management from 1996 to
1999 where he was a Healthcare analyst for a Growth and Income fund. Prior to
joining Merrill Lynch, he was the sole healthcare analyst for a division of
Credit Suisse from 1995 to 1996 and he was a senior analyst at Value Line, Inc.
from 1994-1995.
-66-
<PAGE>
FUND DETAILS - ORBITEX ENERGY & BASIC MATERIALS FUND
INVESTMENT DETAILS OF THE ORBITEX
ENERGY & BASIC MATERIALS FUND
Prior to June 5, 1999, the Orbitex Energy & Basic Materials Fund was known as
the Orbitex Strategic Natural Resources Fund.
[LOGO]
INVESTMENT OBJECTIVE
The Orbitex Energy & Basic Materials Fund seeks to provide long-term growth of
capital through selective investment in the securities of companies engaged in
energy and basic materials industries and industries supportive to energy and
basic materials industries.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests in securities of companies that the Adviser believes are
positioned to benefit from increasing worldwide demand for energy and basic
materials. There is no guarantee, however, that the Adviser's strategies will
work as intended.
[LOGO]
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in equity
securities issued by energy and basic materials 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 energy and basic materials industries.
The Fund defines " energy and basic materials companies" as any entity in which:
- at least 50% of the company's revenues or earnings were derived from
energy and basic materials activities; or
- at least 50% of the company's assets were devoted to such activities,
based upon the company's most recent fiscal year.
Energy and basic materials 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 energy and basic materials and companies that
develop energy efficient technologies, such as systems for energy conversion,
conservation, and pollution control. Energy and basic materials 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),
-67-
<PAGE>
- 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
Kenneth Hoffman, CFA is the portfolio manager for the Energy & Basic Materials
Fund. Mr. Hoffman joined Orbitex Management, Inc. in February 2000, bringing
with him more than seven years experience as an analyst covering non-ferrous,
precious metals and the steel industry. Prior to joining Orbitex, Mr. Hoffman
had been an analyst with Prudential Securities Equity Research since 1993.
-68-
<PAGE>
FUND DETAILS - ORBITEX FINANCIAL SERVICES FUND
INVESTMENT DETAILS OF THE ORBITEX
FINANCIAL SERVICES FUND
[LOGO]
INVESTMENT OBJECTIVE
The Orbitex Financial Services Fund seeks long-term growth through selective
investment in companies that provide financial services to consumers and
industry.
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Fund will invest in companies that the Adviser expects to capitalize on
emerging changes in the global financial service industries.
The Fund defines a Financial Service Company as an entity in which:
- at least 50% of the company's revenues or earnings were derived from
financial services; or
- at least 50% of the company's assets were devoted to such activities,
based upon the company's most recent fiscal year.
Financial Service companies provide financial services to consumers and
industry. Examples of companies in the financial services sector include
commercial banks, investment banks, savings and loan associations, thrifts,
finance companies, brokerage and advisory firms, insurance companies, real
estate and leasing companies, and companies that span across these segments, and
service providers whose revenue is primarily derived from the financial services
sector. Under SEC regulations, the Fund may not invest more than 5% of its total
assets in the equity securities of any company that derives more than 15% of its
revenues from brokerage or investment management activities.
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.
[LOGO]
PRINCIPAL INVESTMENTS
The Fund will normally invest at least 65% of its total assets in U.S. and
foreign financial services companies, including commercial and financial
banks, thrifts, finance companies, brokerage and advisory firms, real
estate-related firms and insurance companies. The Fund expects to invest
primarily in U.S. and foreign common
-69-
<PAGE>
stocks but may also invest in other types of equity securities, investment grade
debt securities and in securities of companies outside the financial services
industries.
PORTFOLIO MANAGER
[TO BE DETERMINED]
-70-
<PAGE>
FUND DETAILS - ORBITEX FOCUS 30 FUND
INVESTMENT DETAILS OF THE ORBITEX
FOCUS 30 FUND
[LOGO]
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 ("DJIA").
[LOGO]
PRINCIPAL INVESTMENT STRATEGIES
The Orbitex Focus 30 Fund seeks to achieve its investment objective principally
by investing in companies with large market capitalization's 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.
[LOGO]
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. 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
Richard A. Begun is the portfolio manager for the Focus 30 Fund. Mr. Begun
joined Orbitex in 1999 and brings with him 11 years of investment management
experience. Formerly, he was with the Bank of New York from 1995 to 1999 where
he co-managed the bank's institutional small cap growth fund and its
institutional large cap growth fund. Prior to joining the Bank, Mr. Begun was an
Investment Management Consultant at Evaluation Associates, Inc. from 1993 to
1995.
FUND DETAILS - ORBITEX GROWTH FUND
INVESTMENT DETAILS OF THE ORBITEX GROWTH FUND
-71-
<PAGE>
[LOGO]
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.
[LOGO]
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.
[LOGO]
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
Richard A. Begun is the portfolio manager for the Growth Fund. Mr. Begun joined
Orbitex in 1999 and brings with him 11 years of investment management
experience. Formerly, he was with the Bank of New York from 1995 to 1999 where
he co-managed the bank's institutional small cap growth fund and its
institutional large cap growth fund. Prior to joining the Bank, Mr. Begun was an
Investment Management Consultant at Evaluation Associates, Inc. from 1993 to
1995.
-72-
<PAGE>
FUND DETAILS -- COMMON INVESTMENT STRATEGIES OF THE ADVISORONE ASSET ALLOCATION
COLLECTION FUNDS
[LOGO]
ALLOCATION OF FUND ASSETS AMONG MARKET SEGMENTS. The Adviser allocates each
Fund's assets among the following types of open-end and closed-end mutual funds:
aggressive growth, growth, growth and income, small capitalization, specialty
and industry sector funds (including utility funds); international and global
stock funds (including developed and emerging markets, regional funds and
country specific funds), and international and global bond funds; U.S.
Government securities, corporate bond, and high yield bond funds; and money
market funds.
Using fundamental and technical analysis, the Adviser assesses the relative risk
and reward potential of these segments of the financial markets, with the
objective of providing you with the best opportunity for achieving a fund's
investment objective. The Fund's portfolio is expected to vary considerably
among the various market segments as changes in economic and market trends
occur. The Adviser substantially underweights asset classes that it believes
have above average market risk with below average market potential over the
short-term, and overweights market segments that it believes have above average
market potential with below average market risk. By allocating its investments
in this manner, each fund believes it will not be exposed to the same degree of
market risk as a mutual fund that invests in only one market segment.
ALLOCATION OF FUND ASSETS AMONG ASSET SUBCLASSES. The asset allocation process
is not limited to determining the degree to which a Fund's assets should be
invested in a given market segment. The Adviser continually explores
opportunities in various subclasses of assets:
- - geoeconomic considerations (for example, "foreign" versus "domestic")
- - maturities of fixed income securities (for example, "short term" versus
"long term")
- - market capitalization (for example, "blue chip" versus "small
capitalization")
- sector rotation (for example, "high tech" versus "industrial")
STOCKSEGMENT A fund may invest in one or more stock funds owning domestic and
foreign equity securities, including common stocks and warrants. Common stocks,
the most familiar type, represent an ownership interest in a corporation.
Although equity securities have a history of long-term growth in value, their
prices fluctuate based on changes in a company's financial condition and on
overall market and economic conditions.
The stock segment includes domestic and foreign equity securities of all types.
The Adviser seeks a high total return within this asset class by actively
allocating assets to industry sectors expected to benefit from major trends, and
to individuals stocks that the Adviser believes to have superior investment
potential. When the Adviser selects stock funds, it considers both growth and
anticipated dividend income. Securities in the stock class may include common
stocks, fixed-rate preferred stocks (including convertible preferred stocks),
warrants, rights,
-73-
<PAGE>
depository receipts, securities of closed-end investment companies, and other
equity securities issued by companies of any size, located anywhere in the
world.
BOND SEGMENT. A fund may invest in one or more bond funds owning domestic and
foreign debt securities. Bonds and other debt securities are used by issuers to
borrow money from investors. The issuer pays the investor a fixed or variable
rate of interest, and must repay the amount borrowed at maturity. The bond
segment includes all varieties of domestic and foreign fixed-income securities.
The Adviser will seek to maximize total return within the bond segment by
adjusting the fund's investments in bond funds that hold securities with
different credit qualities, maturities, and coupon or dividend rates, and by
seeking to take advantage of yield differentials between securities. Securities
in this class may include bonds, notes, adjustable-rate preferred stocks,
convertible bonds, domestic and foreign government and government agency
securities, zero coupon bonds, and other intermediate and long-term securities.
As with the money market segment, these securities may be denominated in U.S.
dollars of foreign currency. A fund may also invest in bond funds that hold
lower quality, high-yielding debt securities (commonly referred to as "junk
bonds"). In general, bond prices rise when interest rates fall, and fall when
interest rates rise. Bonds and other debt securities have varying degrees of
quality and varying levels of sensitivity to changes in interest rates.
Longer-term bonds are generally more sensitive to interest rate changes than
short-term bonds.
MONEY MARKET SEGMENT. A fund may invest directly in, or in one or more money
market funds owning, money market securities. Money market securities are high
quality securities (rated in one of the two highest rating categories for
short-term debt obligations) and present minimal credit risk. They may include
U.S. government obligations, commercial paper and other short-term corporate
obligations, and certificates of deposit, bankers' acceptances, bank deposits,
repurchase agreements and other financial institution obligations. The money
market segment includes all types of domestic and foreign securities. These
securities may be denominated in U.S. dollars or foreign currency.
SALES CHARGES ASSESSED BY UNDERLYING FUNDS. The Amerigo and Clermont Funds may
purchase "no-load" mutual funds, which are sold and purchased without a sales
charge. A fund may also purchase "load" mutual funds, but only if the load, or
sales commission, is waived for purchases or sales made by the fund. In
addition, when the Adviser believes it is appropriate, a fund may purchase
mutual funds that charge a redemption fee of up to 2% for short-term sales, but
not mutual funds that charge a sales load upon redemption. The funds, the
Adviser, and the distributors do not receive Rule 12b-1 distribution fees
generated from the purchase of underlying funds.
Although the funds may invest in shares of the same underlying fund, the
percentage of each fund's assets so invested may vary, and the Adviser will
determine that such investments are consistent with the investment objectives
and policies of each fund.
DEFENSIVE INVESTMENTS. The Adviser, or the investment advisers of the underlying
funds in which the Amerigo or Clermont Funds invest, may invest in a fully or
partially defensive position when they believe it is appropriate to do so. When
this happens, the Funds, or the underlying funds in which the Funds invest, may
increase temporarily their investment in government securities and other
short-term securities without regard to the Fund's, or the
-74-
<PAGE>
underlying funds', investment restrictions, policies or normal investment
emphasis. During such a period, a fund, or the underlying funds in which the
fund invests, could be unable to achieve their investment objectives. In
addition, this defensive investment strategy may cause frequent trading and high
portfolio turnover ratios when calculated in accordance with SEC rules. High
transaction costs could result from this frequent trading; however, because a
significant portion of a fund's assets are invested in no-load mutual funds,
which do not charge commissions upon the purchase or sale of their shares, the
fund will pay less commissions than many mutual funds of similar size and
portfolio turnover. Trading may also result in realization of net short-term
capital gains upon which you may be taxed at ordinary tax rates when distributed
from a fund.
PORTFOLIO MANAGER
Randal D. Skalla, Portfolio Manager, is primarily responsible for the day to day
management of the funds. Mr. Skalla has managed the funds since their inception
on July 14, 1997.
Mr. Skalla has been the Chief Investment Officer of the Adviser since December
1992. He is a graduate of Brigham Young University, where he earned a Bachelor
of Science degree in Economics and a Masters of Business Administration degree
with an emphasis in Finance and Investments.
MORE INFORMATION ABOUT RISKS
[LOGO]
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 is a principal risk for each Fund, as are the risks of foreign
securities for all Funds within the Orbitex Group of Funds, except for the Focus
30 Fund. The other factors set forth below are not considered principal risks
for any of the Funds.
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. All Funds within the Orbitex Group
of Funds are subject to stock market volatility.
-75-
<PAGE>
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. All Funds
within the Orbitex Group of Funds are subject 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. All Funds within the Orbitex Group of Funds except, for
the Focus 30 Fund, expect to employ defensive strategies.
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.
All Funds within the Orbitex Group of Funds, except for the Focus 30 Fund, are
subject to risks of foreign securities.
LOWER-QUALITY DEBT SECURITIES: The Orbitex Financial Services Fund, Orbitex
Growth Fund, Orbitex Info-Tech & Communications Fund, Orbitex Energy & Basic
Materials Fund, the Orbitex Health & Biotechnology Fund and Orbitex Strategic
Infrastructure 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 (investment grade securities are rated BBB
or better by Standard & Poor's Rating Service or Baa or better by Moody's
Investors Service) 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. All
Funds within the Orbitex Group of Funds are subject to risks from Derivative
Transactions.
-76-
<PAGE>
PORTFOLIO TURNOVER RATES. The portfolio turnover rates for the fiscal year ended
April 30, 1999, of the Growth Fund, the Info-Tech & Communications Fund and the
Energy & Basic Materials Fund were 957%, 360% and 921%, respectively. These
turnover rates are higher than the average of many mutual funds, 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. Controlling risk in each of the funds is critical. The
Growth Fund experienced high turnover as a result of the sharp drop in the
market for this sector which required that positions be reduced to protect
client assets. In addition, there was a period of extreme sector rotation in
early 1999 which led to higher than normal turnover. The turnover was higher as
a result of protective measures taken during each of these periods. The turnover
rate for the Energy & Basic Materials Fund was impacted by the overall size of
the Fund and the Fund's need for liquidity. In addition, energy and basic
materials securities have been trading in a narrow range without direction. As a
result, the Adviser of the Fund traded positions in the Fund to capture
investment profit. The Info-Tech and Communications Fund's turnover rate was
primarily driven by the introduction and heightened market interest in the
internet sector; and the Fund's turnover is consistent with the trading market
for this sector.
High portfolio turnover (i.e., 100% or greater) 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" on page 65.
MORE INFORMATION ABOUT RISKS
LITIGATION THAT MAY AFFECT THE FOCUS 30 FUND: On February 8 and June 2, 1999,
suits were filed against a former director and officer of the ASM Index 30 Fund
(the "ASM Fund"), the former investment adviser Vector Investment Advisors, Inc.
(Vector) of the
-77-
<PAGE>
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. One suit also alleged improper and
unauthorized redemptions of ASM Fund Shares owned by the plaintiffs. The relief
sought in one suit 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. The
relief sought in the other suit is recovery of the investment amounts and
amounts derived from the alleged improper redemptions. 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 to be invested in the Fund, as
the plaintiffs have alleged. The Orbitex Focus 30 Fund has succeeded to the
obligations, if any, of the ASM Fund with respect to these suits 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.
-78-
<PAGE>
YOUR ACCOUNT
[LOGO] 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.
CHOOSING A CLASS
After deciding which type of account to open, you must select a class of shares.
The following chart indicates which classes of shares are available for each
Fund:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
/ / Classes Offered by Fund / /
- -----------------------------------------------------------------------------------------------------
Class A Class B Class C Class D* Class N
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Info-Tech & Communications Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Internet Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Emerging Technology Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Strategic Infrastructure Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Health & Biotechnology Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Energy and Basic Materials Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Financial Services Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Focus 30 Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Growth Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
Amerigo Fund / / / / / /
- -----------------------------------------------------------------------------------------------------
</TABLE>
-79-
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Clermont Fund / / / /
- -----------------------------------------------------------------------------------------------------
</TABLE>
* Class D Shares of the Focus 30 Fund are only available to: 1) shareholders who
previously were shareholders of the ASM Index 30 Fund at the time of the
reorganization; 2) employees, and certain related accounts of employees, of
Orbitex Financial Services Group, Inc. ("OFGS") and its affiliates; and 3)
certain institutional investors.
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 57 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. Class C Shares have a
deferred sales charge that is lower than Class A or Class B, but higher 12b-1
fees than Class A. There are no sales charges, 12b-1 fees or shareholder
services fees for Class D and Class N 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. 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.
-80-
<PAGE>
<TABLE>
<S><C>
- -------------------------------------------------------------------------------------------------------------
CLASS A--INITIAL CLASS B--CONTINGENT CLASS C - LEVEL CLASS D--NO SALES CLASS N - (AMERIGO
SALES CHARGE DEFERRED SALES CHARGE LOAD (ALL FUNDS CHARGE (FOCUS 30 AND CLERMONT FUNDS
EXCEPT THE FOCUS FUND ONLY) Note: ONLY)
30 FUND) Class D Shares are
only available to
shareholders who
were shareholders
of the ASM Index 30
Fund, certain
Institutional
Investors, and
individuals
specified on page
__.
- -------------------------------------------------------------------------------------------------------------
Initial sales charge No initial sales No initial or No initial or No initial or
of 5.75% or less (see charge. This allows contingent contingent deferred contingent
chart on page 53). 100% of your deferred sales sales charge. deferred sales
purchase price to be charge. charge
invested in the
Fund.
- -------------------------------------------------------------------------------------------------------------
Lower sales charges Deferred sales Deferred sales
for larger charge of 5.00% or charge of 1.00%
investments (see page less on shares you paid only on
53) redeem within six shares redeemed
years (see chart on within 18 months
page 55). of purchase.
- -------------------------------------------------------------------------------------------------------------
Lower annual expenses An annual fee of An annual fee of No annual marketing No annual marketing
annual than Class B 1.00% under each 1.00% under each or service (12b-1) or service (12b-1)
Shares due to lower Fund's rule 12b-1 Fund's rule 12b-1 fee. fee.
marketing and service plan, 0.75% of which plan, 0.75% of
(12b-1) fee of 0.40%. is for marketing and which is for
0.25% of which is marketing and
for shareholder 0.25% of which is
services. This will for shareholder
result in a lower services. This
total return than will result in a
comparable Class A lower total
Shares. return than
comparable Class
A Shares.
- -------------------------------------------------------------------------------------------------------------
Automatic conversion Class C Shares do Lower annual Lower annual
to Class A Shares not convert to expenses than Class expenses than
after six years, another class. A, Class B or Class Class A, Class B
thereby reducing C. or Class C.
future annual
expenses.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
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 54."
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.
-81-
<PAGE>
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 CHARGES FOR U.S. RESIDENTS
<TABLE>
<CAPTION>
BROKER
SALES CHARGE AS A SALES CHARGE AS A REALLOWANCE AS
AMOUNT OF PURCHASE PERCENTAGE OF PERCENTAGE OF A PERCENTAGE
- ------------------ OFFERING PRICE NET INVESTMENT OF OFFERING
-------------- (NET ASSET VALUE) 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)(2)
</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 47) 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.
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.
-82-
<PAGE>
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 ORBITEX FOCUS 30 FUND AND CLASS N SHARES OF
AMERIGO AND CLERMONT FUNDS INTO CLASS A SHARES OF OTHER ORBITEX FUNDS
You may exchange your Class D Shares of the Focus 30 Fund, or your Class N
Shares of the Amerigo or Clermont Fund, 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.
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.
-83-
<PAGE>
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.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE
- -------------------------------------------------------------------------------------------------------------
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(2)
- -------------------------------------------------------------------------------------------------------------
</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.
(2) Class B Shares will automatically convert to Class A Shares 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 C--LEVEL LOAD
If you redeem your shares within eighteen months of the date of purchase, you
will pay a 1.00% deferred sales charge. 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.
CLASS C SHARES ARE AVAILABLE FOR ALL THE FUNDS EXCEPT THE FOCUS 30 FUND.
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, TO EMPLOYEES OF THE ORBITEX FINANCIAL SERVICES GROUP, INC. ("OFSG") OR ITS
AFFILIATES (AND CERTAIN RELATED ACCOUNTS) 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.
-84-
<PAGE>
In addition, if you held shares of the ASM Fund on the date of reorganization,
or if you are an employee of OFSG, or one of its affiliated companies, 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
plan for the benefit of you or any of your immediate family members
- you or an immediate family member's estate.
CLASS N
Class N Shares are offered without any sales charges, and are not subject to any
12b-1 or shareholder servicing fees.
Class N Shares are offered by the Clermont Fund and the Amerigo Fund only. Class
N Shares are offered only through wrap programs maintained by registered
investment advisors that have contractual arrangements with Clarke Lanzen Skalla
Investment Firm, Inc.
RULE 12b-1 PLANS IN DETAIL
The Board of Trustees of the Orbitex Group of Funds has adopted for Class A
Shares, Class B Shares, and Class C Shares separate Distribution Plans and
Agreements pursuant to Rule 12b-1 under the Investment Company Act of 1940 (the
"Plans").
CLASS A. 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 Orbitex 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.
CLASS B AND CLASS C. The Plans adopted for Class B and Class C Shares also allow
each Fund to use part of its assets for the sale and distribution of these
Shares, including advertising, marketing and other promotional activities. For
these services, under each Plan, each Fund pays the Distributor an amount equal
to 0.75% of average net assets attributable to Class B or Class C Shares, as
applicable, of that Fund on an annualized basis. The Class B and Class C Plans
also allow each Fund to pay the Distributor for certain shareholder services
provided to Class B and Class C 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 or Class C Shares, as applicable, of
that Fund on an annualized basis.
-85-
<PAGE>
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
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, Class B and Class C 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 (1) shareholders who
previously were shareholders of the ASM Index 30 Fund at the time of the
reorganization, (2) employees of OFSG, its affiliates and certain related
accounts, and (3) 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 SING 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 receives your order. For more information on how we price shares, see
"Pricing of Fund Shares" on page 64.
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.
<TABLE>
<CAPTION>
<S><C>
- ------------------------------------------------------------------------------------------------------------
Method Of Purchase Procedures
Purchase
- ------------------------------------------------------------------------------------------------------------
THROUGH A Contact your financial consultant.
FINANCIAL
PROFESSIONAL
[LOGO]
- ------------------------------------------------------------------------------------------------------------
-86-
<PAGE>
- ------------------------------------------------------------------------------------------------------------
THROUGH The Distributor authorizes certain securities
dealers, banks or other financial service firms
SELLING GROUP (collectively, "Selling Group Members")
to purchase your shares. To receive that day's
MEMBERS share price:
- you must place your order with the Selling
[LOGO] 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 Orbitex
Energy & Basic Materials Fund, send your completed
[LOGO] application to:
Orbitex Group of Funds
P.O. Box 8069
Boston, Massachusetts 02266-8069
To purchase Shares of the Orbitex Internet
Fund, Orbitex Emerging Technology Fund, Orbitex
Strategic Infrastructure Fund, Orbitex Health &
Biotechnology Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, Orbitex
Amerigo Fund, or the Orbitex Clermont Fund,
send your completed application to:
Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box 5786
Hauppauge, New York 11788-0786
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.
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
-87-
<PAGE>
- ------------------------------------------------------------------------------------------------------------
BY WIRE - Initial Purchase: For the Orbitex Growth
Fund, Orbitex Info-Tech & Communications Fund
[LOGO] or Orbitex Energy & Basic Materials Fund,
call us 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: 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."
- Initial Purchase: For the Orbitex Internet
Fund, Orbitex Emerging Technology Fund,
Orbitex Strategic Infrastructure Fund, Orbitex
Health & Biotechnology Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, Orbitex
Amerigo Fund, or the Orbitex Clermont Fund,
call us 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,
Credit: Name of Fund, DDA No. 51815926, 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.
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
BY EXCHANGE You may exchange your shares for the same class of
shares of another Fund by written request sent to
[LOGO] the Funds at:
Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box 5786
Hauppauge, New York 11788-0786
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
BY TELEPHONE You may make subsequent purchases in your account
by telephoning 1-888-ORBITEX between 8:30 a.m. and
[LOGO] 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 our account with the Trust. This investment
option is only available if you have not declined
or cancelled your telephone investment privilege.
See the discussion of "Telephone Redemptions" on
page 61.
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
SUBSEQUENT The minimum subsequent purchase is $250 per Fund,
PURCHASES except for reinvestment of dividends and
distributions and Class D purchases with minimum
[LOGO] amount of $100.
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
-88-
<PAGE>
- ------------------------------------------------------------------------------------------------------------
Important Once you have requested a telephone transaction,
and a confirmation number has been assigned, the
Notes 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 62.
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 ON PAGE 61). 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
to 1.00% 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 53.
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
CLASS A SHARES. There are no deferred charges for the sale of Class A Shares,
except that investors who paid no initial sales charge on their purchase of
Class A Shares by investing $1
-89-
<PAGE>
million or more will pay a 1% contingent deferred sales charge on any Class A
Shares redeemed within one year of purchase.
CLASS B SHARES. 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 55.
CLASS C SHARES. If you redeem your Class C Shares within eighteen months of the
date you purchased the Shares, you will pay a contingent deferred sales charge
equal to 1.00% of the lesser of (1) the original purchase price or (2) the net
asset value of the shares being redeemed.
CLASS D SHARES. 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. Your order will be priced at the Funds' net asset
value next computed after it is received 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>
<S> <C>
- ------------------------------------------------------------------------------------------------------------
Method Of Redemption Procedures
Redemption
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
-90-
<PAGE>
- ------------------------------------------------------------------------------------------------------------
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
[LOGO] p.m. Eastern time on any day the Funds are open.
You will not be eligible to 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.
NO DOUBLE SPACES
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
BY MAIL If you are redeeming Shares of the Orbitex Growth
Fund, Orbitex Info-Tech & Communications Fund, or
Orbitex Energy & Basic Materials Fund, you may send
[LOGO] your redemption request to:
Orbitex Group of Funds
P.O. Box 8069
Boston, Massachusetts 02266-8069
If you are redeeming Shares of the Orbitex
Internet Fund, Orbitex Emerging Technology Fund,
Orbitex Strategic Infrastructure Fund, Orbitex
Health & Biotechnology Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, Orbitex
Amerigo Fund, or Orbitex Clermont Fund you may
send your redemption request to:
Orbitex Group of Funds
c/o American Data Services, Inc.
P.O. Box 5786
Hauppauge, New York 11788-0786
You must include the following information in your
written request:
No double spaces
- 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
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
BY WIRE You may request your redemption proceeds be wired
directly to the bank account designated on your
[LOGO] application. The 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.
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
-91-
<PAGE>
- ------------------------------------------------------------------------------------------------------------
REQUEST IN "GOOD ORDER" For our mutual protection, all redemption requests
must include:
- your account number
- the amount of the transaction
- for mail request, signatures of all owners
EXACTLY as registered on the account and
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 Once we have processed your redemption request, and
a confirmation number has been given, the
NOTE 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.
You may request that your redemption proceeds be wired directly to your bank
account. The Trust's transfer agent imposes a $10.00 fee for each wire
redemption and deducts the fee directly from your account. Your bank may also
impose a fee for the incoming wire. The redemption proceeds must be paid to the
same bank and account as designated on the Application or in written
instructions in proper form subsequently received by the Trust.
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
-92-
<PAGE>
- - 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 Class D 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:
- - 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
-93-
<PAGE>
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 it to American Data Services,
Inc., P.O. Box 5786, Hauppauge, New York 11788-0786.
PRICING OF FUND SHARES
Each Fund's net asset value for each class of shares 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 Fund 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.
-94-
<PAGE>
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 Orbitex Info-Tech & Communications Fund, Orbitex Internet Fund, Orbitex
Emerging Technology Fund, Orbitex Strategic Infrastructure Fund, The Orbitex
Sector Collection, Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic
Materials Fund, Orbitex Financial Services Fund, and Orbitex Growth Fund
distribute dividends and capital gains annually. These distributions will
typically be declared and paid in December.
The Orbitex Amerigo Fund and Orbitex Clermont Fund distribute dividends and
capital gains annually. These distributions are declared in in December and paid
in January of the current year, but which are taxable as if paid on December 31
of the prior year. The IRS requires you to report these amounts on your income
tax return for the prior year.
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.
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
-95-
<PAGE>
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.
MANAGEMENT
ORBITEX MANAGEMENT, INC.
Orbitex Management, Inc., is the investment adviser (the "Adviser") to the
following funds: Info-Tech & Communications Fund, Internet Fund, Emerging
Technology Fund, Strategic Infrastructure Fund, Health & Biotechnology Fund,
Energy & Basic Materials Fund, Orbitex Financial Services Fund, Focus 30 Fund
and Growth Fund. 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.
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 0% for the Growth Fund, 0% for
the Info-Tech & Communications Fund, 0% for the Energy & Basic Materials Fund.
As of July 12, 1999,the Health & Biotechnlogy Fund and Focus 30 Fund commenced
operations.
The Financial Services Fund, the Strategic Infrastructure Fund, the Emerging
Technology Fund, and the Internet Fund are expected to commence operations in
June, 2000.
CLARKE LANZEN SKALLA INVESTMENT FIRM, INC.
Clarke Lanzen Skalla Investment Firm, Inc., a New York corporation ("CLS" or
the "Adviser") serves as investment advisor to the following funds. The
Adviser has been an investment advisor to individuals, employee
-96-
<PAGE>
benefit plans, trusts, and corporations since 1989. The Adviser has managed the
funds since their inception on July 14, 1997. As of April 30, 1999, the Adviser
managed approximately $850 million in assets. The Adviser maintains its
principal offices at 14747 California Street, Omaha, Nebraska 68154-1979.
Under the terms of their investment advisory agreement, Orbitex Management,
Inc. and Clarke Lanzen Skalla Investment Firm, Inc (the "Advisers") are
responsible for formulating their Funds' investment programs and for making
day-to-day investment decisions and engaging in portfolio transactions. The
AdviserS also furnish corporate officers, provide office space, services and
equipment and supervise all matters relating to their Funds' 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. American Data
Services, Inc. is an affiliate of Orbitex Management, Inc.
ADMINISTRATOR
American Data Services, Inc.
Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
CUSTODIAN
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 ENERGY & BASIC MATERIALS FUND
Boston Financial Data Service, Inc.
Two Heritage Drive North Quincy
Massachusetts 02171
TRANSFER AND DIVIDEND DISBURSING AGENT FOR THE
ORBITEX INTERNET FUND, ORBITEX EMERGING TECHNOLOGIES FUND,
-97-
<PAGE>
ORBITEX STRATEGIC INFRASTRUCTURE FUND, ORBITEX HEALTH &
BIOTECHNOLOGY FUND, ORBITEX FINANCIAL SERVICES FUND,
ORBITEX FOCUS 30 FUND, ORBITEX AMERIGO FUND, AND ORBITEX CLERMONT FUND
American Data Services, Inc.
Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, New York 11788
COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
INDEPENDENT ACCOUNTANTS
(TO BE ADDED IN SUBSEQUENT AMENDMENT)
-98-
<PAGE>
FINANCIAL HIGHLIGHTS
[LOGO]
FINANCIAL HIGHLIGHTS
The Financial Highlights table is intended to help you understand the Funds'
financial performance for the fiscal period presented. 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 PricewaterhouseCoopers LLP,
whose report, along with the Funds' financial statements, are included in the
Funds' annual report, which is available upon request.
FINANCIAL HIGHLIGHTS
Financial Highlights For a Fund Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
ORBITEX GROWTH FUND
-------------------
CLASS A SHARES CLASS A SHARES CLASS B SHARES
-------------- -------------- --------------
FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED ENDED ENDED
APRIL 30, 1999 (a) APRIL 30, 1998 (a) APRIL 30, 1999 (a)(b)
------------------ ------------------- ---------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $17.93 $15.00 $16.46
------ ------ ------
Income (Loss) from investment operations:
Net investment income (loss)..................... (0.15) 0.26(e) (0.12)
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 1.70 2.67 3.11
---- ---- ----
Total income from investment operations.......... 1.55 2.93 2.99
---- ---- ----
Less distributions from net investment
income........................................... (0.19) -- (0.21)
Less distributions from net realized gains....... (0.63) -- (0.63)
------ -- ------
Total distributions from net investment
income and net realized gains.......... (0.82) -- (0.84)
------ -- ------
NET ASSET VALUE, END OF PERIOD................... $18.66 $17.93 $18.61
------ ------ ------
TOTAL RETURN(c).................................. 9.07% 19.53% 18.61%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)............. $1,422 $891 $54
Ratio of expenses to average net
assets(d).............................. 1.93% 2.11% 2.03%
Ratio of net expenses to average net
assets (net of custodial
credits)(d)............................ 1.88% 1.60% 2.00%
Ratio of total expenses to average net
assets before waivers, reimbursements
and custodial credits(d)............... 23.92% 50.13% 18.75%
Ratio of net investment income (loss) to
-99-
<PAGE>
<S> <C> <C> <C>
average net assets(d).................. (0.85)% 4.41%(e) (1.05)%
Portfolio turnover rate.......................... 957% 448% 957%
</TABLE>
(a) The commencement of investment operations was October 22, 1997 and
September 16, 1998 for Growth Fund Class A Shares and Class B Shares,
respectively.
(b) Per share numbers have been calculated using the average shares
method, which more appropriately presents the per share data for the
period.
(c) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Adviser, Administrator, Custodian and Distributor
not absorbed a portion of the expenses, total returns would have been
lower. Total returns for periods less than one year are not annualized.
(d) Annualized for periods less than one year.
(e) Net investment income per share and the net investment income ratio
would have been lower without a certain investment strategy followed by
the Adviser during the current fiscal year.
-100-
<PAGE>
<TABLE>
<CAPTION>
ORBITEX INFO-TECH &
COMMUNICATIONS FUND
-------------------
CLASS A SHARES CLASS A SHARES CLASS B SHARES
-------------- -------------- --------------
FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED ENDED ENDED
APRIL 30, 1999 APRIL 30, 1998 (a) APRIL 30, 1999 (a)
-------------- ------------------ ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............... $19.62 $15.00 $18.23
------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:.
Net investment loss................................ (0.08) 0.00 (0.08)
Net realized and unrealized gain on
investments and foreign currency
related transactions..................... 11.26 4.62 12.51
----- ---- -----
Total income from investment operations............ 11.18 4.62 12.43
----- ---- -----
Less distributions from net investment
income............................................. -- -- --
Less distributions from net realized gains......... (0.18) -- (0.18)
------ ------ ------
Total distributions from net investment
income and net realized gains............ (0.18) -- (0.18)
------ ------ ------
NET ASSET VALUE, END OF PERIOD..................... $30.62 $19.62 $30.48
------ ------ ------
TOTAL RETURN(b).................................... 57.43% 30.80% 68.67%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)............... $34,335 $2,440 $18,904
Ratio of expenses to average net
assets(c)................................ 2.07% 2.88% 2.41%
Ratio of net expenses to average net
assets (net of custodial
credits)(c).............................. 2.07% 2.40% 2.40%
Ratio of total expenses to average net
assets before waivers, reimbursements
and custodial credits(c)................. 4.04% 39.06% 4.41%
Ratio of net investment loss to average
net assets(c)............................ (0.70)% (1.27)% (1.40)%
Portfolio turnover rate............................ 360% 76% 360%
</TABLE>
(a) The commencement of investment operations was October 22, 1997 and
September 16, 1998 for Info-Tech & Communications Fund Class A Shares and
Class B Shares, respectively.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Adviser, Administrator, Custodian and Distributor
not absorbed a portion of the expenses, total returns would have been
lower. Total returns for periods less than one year are not annualized.
(c) Annualized for periods less than one year.
<TABLE>
<CAPTION>
<S><C>
ORBITEX ENERGY & BASIC MATERIALS FUND
-------------------------------------
CLASS A SHARES CLASS A SHARES CLASS B SHARES
-------------- -------------- --------------
FOR THE YEAR FOR THE PERIOD FOR THE PERIOD
ENDED ENDED ENDED
APRIL 30, 1999 (b) APRIL 30, 1998 (a) APRIL 30, 1999 (a)(b)
------------------ ------------------ ---------------------
</TABLE>
-101-
<PAGE>
<TABLE>
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.............................. $16.54 $15.00 $12.22
------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment gain (loss)........................................ 0.00 0.38(e) (0.05)
Net realized and unrealized gain (loss) on investments and
foreign currency related transactions.................... (1.25) 1.22 3.21(g)
------ ---- -------
Total income (loss) from investment operations.................... (1.25) 1.60 3.16
------ ---- ----
Less distributions from net investment income..................... (0.37) (0.03) (0.40)
Less distributions from net realized gains........................ 0.00(f) (0.03) 0.00(f)
------- ------ -------
Total distributions from net investment income and net realized
gains.................................................... (0.37) (0.06) (0.40)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.................................... $14.92 $16.54 $14.98
------ ------ ------
TOTAL RETURN(c)................................................... (6.86)% 10.74% 26.92%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).............................. $4,286 $5,698 $408
Ratio of expenses to average net assets(d)........................ 2.19% 2.45% 2.40%
Ratio of net expenses to average net assets (net of custodial
credits)(d).............................................. 2.17% 2.40% 2.40%
Ratio of total expenses to average net assets before waivers,
reimbursements and custodial credits(d).................. 8.76% 9.27% 8.49%
Ratio of net investment income (loss) to average net
assets(d)................................................ 0.00% 6.12%(e) (0.66)%
Portfolio turnover rate........................................... 921% 519% 921%
</TABLE>
(a) The commencement of investment operations was October 23, 1997 and
September 21, 1998 for Energy & Basic Materials Fund Class A Shares and
Class B Shares, respectively.
(b) Per share numbers have been calculated using the average shares
method, which more appropriately presents the per share data for the
period. (c) Total returns are historical and assume changes in share
price, reinvestment of dividends and capital gains distributions, and
assume no sales charge. Had the Adviser, Administrator, Custodian and
Distributor not absorbed a portion of the expenses, total returns would
have been lower. Total returns for periods less than one year are not
annualized. (d) Annualized for periods less than one year. (e) Net
investment income per share and the net investment income ratio would
have been lower without a certain investment strategy followed by the
Adviser during the current fiscal year. (f) Amount represents less than
$0.01 per share. (g) The amount shown may not accord with the change in
aggregate gains and losses of portfolio securities due to the timing of
sales and redemptions of Fund shares.
-102-
<PAGE>
<TABLE>
<CAPTION>
ORBITEX FOCUS 30 FUND CLASS D(1)
--------------------------------
YEAR ENDED OCTOBER 31
---------------------
1998 1997 1996 1995 (a) 1994 (a)
SIX MONTHS ---------- ---------- ---------- ---------- ----------
ENDED
APRIL 30,
1999 (b)
--------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $19.02 $17.21 $14.13 $11.37 $9.78 $10.07
------ ------ ------ ------ ----- ------
INVESTMENT OPERATIONS:
Net investment income
(loss)............... (0.12) 0.32 0.18 0.08 -- 0.56
Net gains (losses) from
investments (realized
and unrealized)...... 4.62 2.54 3.34 2.76 1.77 (0.16)
---- ---- ---- ---- ---- ------
Total from investment
operations........... 4.50 2.86 3.52 2.84 1.77 0.40
---- ---- ---- ---- ---- ----
DISTRIBUTIONS:
From net investment
income............... (0.17) (0.27) (0.18) (0.07) (0.05) (0.52)
In excess of net
investment income.... -- -- (0.11) (0.01) (0.13) --
From net realized gains....... (1.23) (0.78) (0.15) -- -- --
Tax return of capital......... -- -- -- -- -- (0.17)
-- -- -- -- -- ------
Total distributions........... (1.40) (1.05) (0.44) (0.08) (0.18) (0.69)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD........................ $22.12 $19.02 $17.21 $14.13 $11.37 $9.78
------ ------ ------ ------ ------ -----
TOTAL RETURN.................. 24.93%(2) 17.13% 25.18% 25.01% 18.10% 3.97%
--------- ------ ------ ------ ------ -----
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000)................. $27,426 $29,535 $21,127 $9,315 $9,704 $7,277
Ratio of expenses to
average net
assets*.............. 2.85%(2)(c) 0.18% 0.42% 1.86% 3.01%** 0.75%
Ratio of net investment
income (loss) to
average net
assets*.............. (1.14%)(3) 1.60% 1.15% 0.53% 0.04% 2.17%
Portfolio turnover
rate***.............. 30.20%(2) 196.35% 264.69% 391.00% 340.00% 1193.00%
--------- ------- ------- ------- ------- --------
* Ratios are presented net of fees
voluntarily reduced. If such voluntary fee reductions had not occured, the ratios would have been as follows:
Ratio of expenses to
average net assets............ 4.09%(3) 0.91% 1.05% 2.59% 5.77% 2.94%
Ratio of net investment
income (loss) to average
net assets.................... (2.38%)(3) 0.87% 0.88% (0.20%) (2.72%) (0.02%)
</TABLE>
As a result of certain tax adjustments necessitated by the Fund's failure to
qualify as a regulated investment company for the years ended October 31, 1995
and 1994, as well as other adjustments, the gross expense ratios previously
reported for these periods have been restated.
** Includes $50,460 of interest expense not subject to the expense reimbursement
agreement.
*** The Fund continues to be as fully invested in equities as possible.
Therefore, portfolio turnover is higher than most equity mutual funds because
purchases and sales of securities are necessary for settlement of transactions
requested by Fund shareholders.
(1) This information reflects the operation of the ASM Index 30 Fund, Inc.,
which was reorganized into Class D Shares of the Orbitex Focus 30 Fund on or
about July 12, 1999.
(2) Not Annualized
-103-
<PAGE>
(3) Annualized
(a) Audited by predecessor auditor.
(b) Prior to March 1, 1999, Vector Index Advisors, Inc. served the ASM Index 30
Fund, Inc. as investment advisor.
(c) Ratio includes amounts related to the general operating expnese and general
reserve expense recognized as a result of the termination of the investment
advisory agreement with the former Advisor (see Note 2 of the Notes to Financial
Statements). If such expenses had not been incurred, the ratio of expense to
average net assets would be 0.57% (annualized).
-104-
<PAGE>
<TABLE>
<CAPTION>
THE AMERIGO FUND
CLASS N SHARES
For the Period
For the Year From July 14,
Ended 1997* through
APRIL 30, 1999 APRIL 30, 1998
<S> <C> <C>
Net asset value, beginning of period $11.37 $10.00
- ------------------------------------ ------ ------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.05) 0.02
Net realized and unrealized gain on investments 1.56 1.39
Total 1.51 1.41
Distributions:
from net investment income -- (0.02)
in excess of net investment income -- (0.02)
Total distributions -- (0.04)
-- ------
Net asset value, end of period $12.88 $11.37
- ------------------------------ ====== ======
TOTAL RETURN 13.28% 14.11% (1)
- -----------
Ratios and Supplemental Data:
Net assets, end of period $19,553,954 $7,557,532
Ratio of expenses to average net assets(3) 1.15% (4) 1.15% (2)
Ratio of net investment income (loss) to (0.51%) (5) 0.15% (2)
average net assets
Portfolio turnover rate 37.56% 14.36% (1)
</TABLE>
*Date of Commencement of Operations
(1) Not annualized.
(2) Annualized.
(3) These ratios exclude the expenses of the mutual funds in which the fund
invests.
(4) Ratios of expenses to average net assets before voluntary expense reductions
and reimbursements were 2.29% for the year ended April 30, 1999 and 4.45% for
the period from July 14, 1997 through April 30, 1998.
(5) Ratios of net investment income (loss) to average net assets before
voluntary expense reductions and reimbursements were (1.65%) for the year ended
April 30, 1999 and (3.15%) for the period from July 14, 1997 through April 30,
1998.
Financial Statements and Notes pertaining thereto appear in the Statement of
Additional Information.
-105-
<PAGE>
<TABLE>
<CAPTION>
THE CLERMONT FUND
CLASS N SHARES
For the Period
For the Year from July 14, 1997*
Ended through
April 30, 1999 April 30, 1998
------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.81 $10.00
- ------------------------------------ ------ ------
Income (loss) from investment operations:
Net investment income 0.14 0.17
Net realized and unrealized gains on investments 0.42 0.80
TOTAL 0.56 0.97
- ----- ---- ----
Distributions:
from net investment income (0.14) (0.16)
In excess of net investment income -- --
TOTAL DISTRIBUTIONS (0.14) (0.16)
- ------------------- ------ ------
NET ASSET VALUE, END OF PERIOD $11.23 $10.81
- ------------------------------ ====== ======
TOTAL RETURN 5.31% 9.84% (1)
- ------------
Ratios and supplemental data:
Net assets, end of period $7,820,083 $4,440,554
Ratio of expenses to average net assets (3) 1.15% (4) 1.15% (2)(4)
Ratio of net investment income to average net assets 1.46% (5) 2.53% (2)(5)
Portfolio turnover rate 64.67% 22.24% (1)
</TABLE>
*Date of Commencement of Operations
(1) Not annualized.
(2) Annualized.
(3) These ratios exclude the expenses of the mutual funds in which the fund
invests.
(4) Ratios of expenses to average net assets before voluntary expense reductions
and reimbursements were 3.31% for the year ended April 30, 1999 and 5.95% for
the period from July 14, 1997 through April 30, 1998.
(5) Ratios of net investment income (loss) to average net assets before
voluntary expense reductions and reimbursements were (0.70%) for the year ended
April 30, 1999 and (2.27%) for the period from July 14, 1997 through April 30,
1998.
-106-
<PAGE>
Financial Statements and Notes pertaining thereto appear in the Statement of
Additional Information.
-107-
<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 5786 HAUPPAUGE, NEW YORK 11788-0786
1-888-ORBITEX (OR 1-888-672-4839)
www.orbitexusa.com
2. Write to the Public Reference Room of the Securities and Exchange Commission
("SEC") and ask them to mail you a copy. Or, you may by e-mail your request to
[email protected]. The SEC charges a fee for this service. You can also go to
the Public Reference Room.
You can also go to the Public Reference Room and copy the documents while you
are there. The SEC is located at 450 Fifth Street, NW, Washington, DC
20549-0102.
You may get information about the Public Reference Room and its business hours
by writing or calling the number below.
PUBLIC REFERENCE ROOM -- U.S. SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-6009
1-202-942-8090
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)
-108-
<PAGE>
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.
-109-
<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
STATEMENT OF ADDITIONAL INFORMATION
June 5, 2000
---------------------------------
This Statement of Additional Information is not a Prospectus, but is an
incorporated part of the Prospectus and should be read in conjunction with the
Prospectus of the Orbitex Group of Funds (the "Trust") dated June 5, 2000.
To obtain a free copy of the Prospectus or an annual report, please call the
Trust at 1-888-ORBITEX.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History.............................................2
Investment Restrictions.....................................................2
Description of Securities, Other Investment Policies
and Risk Considerations.....................................................5
Management of the Trust.....................................................28
Principal Holders of Securities.............................................29
Investment Management and Other Services....................................32
Administrator...............................................................34
Sub-administrator...........................................................35
Custodian...................................................................36
Transfer Agent Services.....................................................36
Distribution of Shares......................................................36
Brokerage Allocation and Other Practices....................................40
Purchase and Redemption of Securities Being Offered.........................41
Shareholder Services........................................................44
Determination of Net Asset Value............................................45
Taxes.......................................................................46
Organization of the Trust...................................................48
Performance Information About the Funds.....................................48
Independent Accountants.....................................................50
Legal Matters...............................................................50
Financial Statements........................................................51
</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.
<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 thirteen portfolios: Orbitex Info-Tech &
Communications Fund ("Info-Tech & Communications Fund"), Orbitex Internet
Fund ("Internet Fund"), Orbitex Emerging Technologies Fund ("Emerging
Technologies Fund"), Orbitex Strategic Infrastructure Fund ("Strategic
Infrastructure Fund"), Orbitex Health & Biotechnology Fund ("Health &
Biotechnology Fund"), Orbitex Energy and Basic Materials Fund ("Energy and
Basic Materials Fund"), Orbitex Financial Services Fund ("Financial Services
Fund"), Orbitex Focus 30 Fund ("Focus 30 Fund"), Orbitex Growth Fund ("Growth
Fund"), Orbitex Amerigo Fund ("Amerigo Fund"), Orbitex Clermont Fund
("Clermont Fund"); and Orbitex Cash Reserves Fund ("Cash Reserves Fund").
Each Fund other than the Health & Biotechnology Fund is diversified. Each
Fund represents a separate series of beneficial interest in the Trust having
different investment objectives, investment programs, policies and
restrictions.
<TABLE>
<CAPTION>
The Funds offer the following classes of shares:
<S> <C>
CLASS FUNDS OFFERING CLASS
----- --------------------
Class A All Funds except Amerigo Fund, Clermont Fund, and Cash Reserves Fund
Class B All Funds except Amerigo Fund, Clermont Fund, and Cash Reserves Fund
Class C All Funds except Focus 30 Fund and Cash Reserves Fund
Class D Focus 30 Fund only
Class N Amerigo Fund and Clermont Fund only
Institutional Cash Reserves Fund only
Institutional Service Cash Reserves Fund only
</TABLE>
Each Fund other than Amerigo Fund and Clermont Fund, is managed by Orbitex
Management, Inc. (the "Adviser"). The Amerigo Fund and the Clermont Fund are
managed by Clarke Lanzen Skalla Investment Firm, Inc., a New York
corporation, is the Funds' investment advisor (the "CLS"). CLS is an
affiliate of Orbitex Management Inc. CLS and Orbitex Management, Inc. direct
the day-to-day operations and the investment of assets of the Funds that they
manage. They are referred to as the "Advisor" or the "Advisors" in this
Statement of Additional Information.
2
<PAGE>
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 and Health & Biotechnology 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
Prospectus. 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 sets 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
- 3 -
<PAGE>
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.
(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 Info-Tech & Communications Fund, Internet Fund,
Emerging Technologies Fund, Strategic Infrastructure Fund, Health &
Biotechnology Fund, Energy and Basic Materials Fund, Financial Services
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 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 as defined in the
prospectus;
(ii) the Internet Fund will invest at least 25% of its total assets in
the securities of internet companies as defined in the prospectus,
4
<PAGE>
(iii) the Emerging Technologies Fund will invest at least 25% of its
total assets in the securities of emerging technology companies as
defined in the prospectus,
(iv) the Strategic Infrastructure Fund will invest at least 25% of its
total assets in [what?];
(v) the Health & Biotechnology Fund will invest at least 25% of its
total assets in the securities of companies in health, biotechnology
and related industries;
(vi) the Energy and Basic Materials 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,
(vii) the Financial Services Fund will invest at least 25% of its total
assets in securities of companies in the financial services industry as
defined in the prospectus.
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.
(4) Purchase or otherwise acquire any security or invest in a repurchase
agreement if, as a result, more than 15% of the net assets of the Fund
would be invested in securities that are illiquid or not readily
marketable, including repurchase agreements maturing in more than seven
days and non-negotiable fixed time deposits with maturities over seven
days. Each Fund may invest without limitation in restricted securities
provided such securities are considered to be liquid. If, through a
change in values, net assets or other circumstances, a Fund were in a
position where more than 15% of its net assets was invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
(5) 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.
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 Advisers may employ
in pursuit of a Fund's investment objective and a summary of related risks. A
Fund will make only those investments described below that are in accordance
with its investment objectives and policies. The Amerigo and Clermont Funds
may invest in the following instruments either directly, or through its
investments in other investment companies (the "underlying funds"). The
Adviser 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
5
<PAGE>
exceeding 397 days, and upon 30 days notice. A variable rate instrument subject
to a demand feature is considered to have a maturity equal to the longer of the
period remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand, if final
maturity exceeds 397 days or the shorter of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand if final maturity is within 397 days.
Floating rate instruments have interest rate reset provisions similar to those
for variable rate instruments and may be subject to demand features like those
for variable rate instruments. The interest rate is adjusted, periodically
(e.g., daily, monthly, semi-annually), to the prevailing interest rate in the
marketplace. The interest rate on floating rate securities is ordinarily
determined by reference to the 90-day U.S. Treasury bill rate, the rate of
return on commercial paper or bank certificates of deposit or an index of
short-term interest rates. The maturity of a floating rate instrument is
considered to be the period remaining until the principal amount can be
recovered through demand.
BELOW-INVESTMENT-GRADE DEBT SECURITIES (ALL FUNDS EXCEPT FOCUS 30 FUND AND
CASH RESERVE 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 Advisers 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
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 own credit analysis
than might be the case for a fund which invests in higher quality bonds. A Fund
may retain a security whose rating has been changed. The market values of lower
quality debt securities tend to reflect individual developments of the issuer to
a greater extent than do higher quality securities, which react primarily to
fluctuations in the general level of interest rates. In addition, lower quality
debt securities tend to be more sensitive to economic conditions and generally
have more volatile prices than higher quality securities. Issuers of lower
quality securities are often highly leveraged and may not have available to them
more traditional methods of financing. For example, during an economic downturn
or a sustained period of rising interest rates, highly leveraged issuers of
lower quality securities may experience financial stress. During such periods,
such issuers may not have sufficient revenues to meet their interest payment
obligations. The issuer's ability to service debt obligations may also be
adversely affected by specific developments affecting the issuer, such as the
issuer's inability to meet specific projected business forecasts or the
unavailability of additional financing. Similarly, certain emerging market
governments that issue lower quality debt securities are among the largest
debtors to commercial banks, foreign governments and supranational organizations
such as the World Bank and may not be able or willing to make principal and/or
interest repayments as they come due. The risk of loss due to default by the
issuer is significantly greater for the holders of lower quality securities
6
<PAGE>
because such securities are generally unsecured and are often subordinated to
other creditors of the issuer. Lower quality debt securities frequently have
call or buy-back features which would permit an issuer to call or repurchase the
security from a Fund. In addition, a Fund may have difficulty disposing of lower
quality securities because they may have a thin trading market. There may be no
established retail secondary market for many of these securities, and each Fund
anticipates that such securities could be sold only to a limited number of
dealers or institutional investors. The lack of a liquid secondary market also
may have an adverse impact on market prices of such instruments and may make it
more difficult for a Fund to obtain accurate market quotations for purposes of
valuing the Fund's portfolios. A Fund may also acquire lower quality debt
securities during an initial underwriting or which are sold without registration
under applicable securities laws. Such securities involve special considerations
and risks.
In addition to the foregoing, factors that could have an adverse effect on the
market value of lower quality debt securities in which the Funds may invest,
include: (i) potential adverse publicity, (ii) heightened sensitivity to general
economic or political conditions and (iii) the likely adverse impact of a major
economic recession. A Fund may also incur additional expenses to the extent the
Fund is required to seek recovery upon a default in the payment of principal or
interest on its portfolio holdings, and the Fund may have limited legal recourse
in the event of a default. Debt securities issued by governments in emerging
markets can differ from debt obligations issued by private entities in that
remedies for defaults generally must be pursued in the courts of the defaulting
government, and legal recourse is therefore somewhat diminished. Political
conditions, in terms of a government's willingness to meet the terms of its debt
obligations, also are of considerable significance. There can be no assurance
that the holders of commercial bank debt may not contest payments to the holders
of debt securities issued by governments in emerging markets in the event of
default by the governments under commercial bank loan agreements. The Adviser
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
creditworthiness 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
7
<PAGE>
option were exercised. Failure by the dealer to do so would result in the loss
of the premium paid by the Fund as well as loss of the expected benefit of the
transaction.
Exchange-traded options generally have a continuous liquid market while dealer
options have none. Consequently, the Fund will generally be able to realize the
value of a dealer option it has purchased only by exercising it or reselling it
to the dealer who issued it. Similarly, when the Fund writes a dealer option, it
generally will be able to close out the option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which the Fund
originally wrote the option. While the Fund will seek to enter into dealer
options only with dealers who will agree to and which are expected to be capable
of entering into closing transactions with the Fund, there can be no assurance
that the Fund will be able to liquidate a dealer option at a favorable price at
any time prior to expiration. Until the Fund, as a covered dealer call option
writer, is able to effect a closing purchase transaction, it will not be able to
liquidate securities (or other assets) or currencies used as cover until the
option expires or is exercised. In the event of insolvency of the contra party,
the Fund may be unable to liquidate a dealer option. With respect to options
written by the Fund, the inability to enter into a closing transaction may
result in material losses to the Fund. For example, since the Fund must maintain
a secured position with respect to any call option on a security it writes, the
Fund may not sell the assets which it has segregated to secure the position
while it is obligated under the option. This requirement may impair a Fund's
ability to sell portfolio securities or currencies at a time when such sale
might be advantageous.
The Staff of the SEC has taken the position that purchased dealer options and
the assets used to secure the written dealer options are illiquid securities. A
Fund may treat the cover used for written OTC options as liquid if the dealer
agrees that the Fund may repurchase the OTC option it has written for a maximum
price to be calculated by a predetermined formula. In such cases, the OTC option
would be considered illiquid only to the extent the maximum repurchase price
under the formula exceeds the intrinsic value of the option. Accordingly, the
Fund will treat dealer options as subject to the Fund's limitation on
unmarketable securities. If the SEC changes its position on the liquidity of
dealer options, the Fund will change its treatment of such instrument
accordingly.
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.
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
8
<PAGE>
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 Depositary
Receipts (ADRs), as well as other "hybrid" forms of ADRs, including European
Depositary Receipts (EDRs) and Global Depositary 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
9
<PAGE>
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 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
10
<PAGE>
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 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, the Adviser believes 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
11
<PAGE>
unless deemed appropriate by the 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 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
12
<PAGE>
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) ability to correctly predict movements
in the direction of the market. It is possible that, when the Fund has sold
futures to hedge its portfolio against a decline in the market, the index,
indices, or instruments underlying futures might advance and the value of the
underlying instruments held in the Fund's portfolio might decline. If this were
to occur, the Fund would lose money on the futures and also would experience a
decline in value in its underlying instruments. However, while this might occur
to a certain degree, the Adviser and each Sub-Adviser believe that over time the
value of the Fund's portfolio will tend to move in the same direction as the
market indices used to hedge the portfolio. It is also possible that if a Fund
were to hedge against the possibility of a decline in the market (adversely
affecting the underlying instruments held in its portfolio) and prices instead
increased, the Fund would lose part or all of the benefit of increased value of
those underlying instruments that it has hedged, because it would have
offsetting losses in its futures positions. In addition, in such situations, if
the Fund had insufficient cash, it might have to sell underlying instruments to
meet daily variation margin requirements. Such sales of underlying instruments
might be, but would not necessarily be, at increased prices (which would reflect
the rising market). The Fund might have to sell underlying instruments at a time
when it would be disadvantageous to do so.
In addition to the possibility that there might be an imperfect correlation, or
no correlation at all, between price movements in the futures contracts and the
portion of the portfolio being hedged, the price movements of futures contracts
might not correlate perfectly with price movements in the underlying instruments
due to certain market distortions. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors might close futures contracts
through offsetting transactions, which could distort the normal relationship
between the underlying instruments and futures markets. Second, the margin
requirements in the futures market are less onerous than margin requirements in
the securities markets, and as a result the futures market might attract more
speculators than the securities markets do. Increased participation by
speculators in the futures market might also cause temporary price distortions.
Due to the possibility of price distortion in the futures market and also
because of the imperfect correlation between price movements in the underlying
instruments and movements in the prices of futures contracts, even a correct
forecast of general market trends by the Adviser (or Sub-Adviser) might not
result in a successful hedging transaction over a very short time period.
ILLIQUID OR RESTRICTED SECURITIES (ALL FUNDS EXCEPT FOCUS 30 FUND). 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
13
<PAGE>
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 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 will consider the trading markets for the specific security taking
into account the unregistered nature of a Rule 144A security. In addition, the
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 EXCEPT FOCUS 30 FUND). Direct
debt instruments are interests in amounts owed by a corporate, governmental, or
other borrower to lenders or lending syndicates (loans and loan participations),
to suppliers of goods or services (trade claims or other receivables), or to
other parties. Direct debt instruments are subject to each Fund's policies
regarding the quality of debt securities.
Purchasers of loans and other forms of direct indebtedness depend primarily upon
the creditworthiness of the borrower for payment of principal and interest.
Direct debt instruments may not be rated by any nationally recognized rating
service. If a Fund does not receive scheduled interest or principal payments on
such indebtedness, the Fund's share price and yield could be adversely affected.
Loans that are fully secured offer a Fund more protections than an unsecured
loan in the event of non-payment of scheduled interest or principal. However,
there is no assurance that the liquidations of collateral from a secured loan
would satisfy the borrower's obligation, or that the collateral could be
liquidated. Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks and may be highly speculative. Borrowers that are in
bankruptcy or restructuring may never pay off their indebtedness, or may pay
only a small fraction of the amount owed. Direct indebtedness of developing
countries also involves a risk that the governmental entities responsible for
the repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
Investments in loans through direct assignment of a financial institution's
interests with respect to a loan may involve additional risks to a Fund. For
example, if a loan is foreclosed, the Fund could become part owner of any
collateral, and would bear the costs and liabilities associated with owning and
disposing of the collateral. In addition, it is conceivable that under emerging
legal theories of lender liability, the Fund could be held liable as a
co-lender. Direct debt instruments may also involve a risk of insolvency of the
lending bank or other intermediary. Direct debt instruments that are not in the
form of securities may offer less legal protection to a Fund in the event of
fraud or misrepresentation. In the absence of definitive regulatory guidance,
each Fund relies on the 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
14
<PAGE>
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 Financial Services Fund, Health & Biotechnology Fund,
and the Utilities 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 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
15
<PAGE>
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved sellers/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Mortgage pass-through securities issued by FNMA are
guaranteed as to timely payment of principal and interest by FNMA but are not
backed by the full faith and credit of the U.S. Treasury.
FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a U.S.
government-sponsored corporation formerly owned by the twelve Federal Home Loan
Banks and now owned entirely by private stockholders. FHLMC issues Participation
Certificates ("PCs") which represent interests in conventional mortgages from
FHLMC's national portfolio. FHLMC guarantees the timely payment of interest and
ultimate collection of principal, but PCs are not backed by the full faith and
credit of the U.S. Treasury.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may,
in addition, be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage pass-through securities. The
Funds do not purchase interests in pools created by such non-governmental
issuers.
Resets. The interest rates paid on the Adjustable Rate Mortgage Securities
("ARMs") in which a Fund may invest generally are readjusted or reset at
intervals of one year or less to an increment over some predetermined interest
rate index. There are two main categories of indices: those based on U.S.
Treasury securities and those derived from a calculated measure, such as a cost
of funds index or a moving average of mortgage rates. Commonly utilized indices
include the one-year and five-year constant maturity Treasury Note rates, the
three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on
longer-term Treasury securities, the National Median Cost of Funds, the
one-month or three-month London Interbank Offered Rate (LIBOR), the prime rate
of a specific bank, or commercial paper rates. Some indices, such as the
one-year constant maturity Treasury Note rate, closely mirror changes in market
interest rate levels. Others tend to lag changes in market rate levels and tend
to be somewhat less volatile.
Caps and Floors. The underlying mortgages which collateralize the ARMs in which
a Fund invests will frequently have caps and floors which limit the maximum
amount by which the loan rate to the residential borrower may change up or down:
(1) per reset or adjustment interval and (2) over the life of the loan. Some
residential mortgage loans restrict periodic adjustments by limiting changes in
the borrower's monthly principal and interest payments rather than limiting
interest rate changes. These payment caps may result in negative amortization.
The value of mortgage securities in which a Fund invests may be affected if
market interest rates rise or fall faster and farther than the allowable caps or
floors on the underlying residential mortgage loans. Additionally, even though
the interest rates on the underlying residential mortgages are adjustable,
amortization and prepayments may occur, thereby causing the effective maturities
of the mortgage securities in which the Fund invests to be shorter than the
maturities stated in the underlying mortgages.
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
16
<PAGE>
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 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.
17
<PAGE>
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.
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). 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.
18
<PAGE>
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 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 (ALL FUNDS). 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.
19
<PAGE>
OTHER INVESTMENT COMPANIES (AMERIGO FUND AND CLERMONT FUND). The Amerigo Fund
and the Clermont Fund may invest in a number of underlying funds. A Fund and any
"affiliated persons" of that Fund, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"), may purchase in the aggregate only up to 3%
of the total outstanding securities of any underlying fund. Accordingly, when
affiliated persons hold shares of any of the underlying funds, each Fund's
ability to invest fully in shares of those funds is restricted, and the Adviser
Manager must then, in some instances, select alternative investments that would
not have been its first preference.
The Amerigo Fund's and the Clermont Fund's investments in in an underlying
portfolio of mutual funds and closed-end funds involve certain additional
expenses and certain tax results which would not be present in a direct
investment in the underlying funds.
OPEN-END INVESTMENT COMPANIES. The 1940 Act provides that an underlying fund
whose shares are purchased by the Amerigo and Clermont Fundwill be obligated to
redeem shares held by the Fund only in an amount up to 1% of the underlying
fund's outstanding securities during any period of less than 30 days. Shares
held by a Fund in excess of 1% of an underlying fund's outstanding securities
therefore, will be considered not readily marketable securities which, together
with other such securities, may not exceed 15% of the Amerigo Fund's assets and
10% of the Clermont Fund's assets.
Under certain circumstances an underlying fund may determine to make payment of
a redemption by a Fund wholly or partly by a distribution in kind of securities
from its portfolio, in lieu of cash, in conformity with the rules of the
Securities and Exchange Commission. In such cases, the Funds may hold securities
distributed by an underlying fund until the Manager determines that it is
appropriate to dispose of such securities.
Investment decisions by the investment advisors of the underlying funds are made
independently of the Funds and their Manager. Therefore, the investment advisor
of one underlying fund may be purchasing shares of the same issuer whose shares
are being sold by the investment advisor of another such fund. The result of
this would be an indirect expense to a Fund without accomplishing any investment
purpose.
CLOSED-END INVESTMENT COMPANIES. The Amerigo Fund and the Clermont Fund may
invest their assets in "closed-end" investment companies (or "closed-end
funds"), subject to the investment restrictions set forth below. The Funds,
together with any company or companies controlled by the Funds, and any other
investment companies having the Manager as an investment advisor, may purchase
in the aggregate only up to 3% of the total outstanding voting stock of any
closed-end fund. Shares of closed-end funds are typically offered to the public
in a one-time initial public offering by a group of underwriters who retain a
spread or underwriting commission of between 4% or 6% of the initial public
offering price. Such securities are then listed for trading on the New York
Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers Automated Quotation System (commonly known as "NASDAQ") and,
in some cases, may be traded in other over-the-counter markets. Because the
shares of closed-end funds cannot be redeemed upon demand to the issuer like the
shares of an open-end investment company (such as a Fund), investors seek to buy
and sell shares of closed-end funds in the secondary market.
A Fund generally will purchase shares of closed-end funds only in the secondary
market. A Fund will incur normal brokerage costs on such purchases similar to
the expenses a Fund would incur for the purchase of securities of any other type
of issuer in the secondary market. A Fund may, however, also purchase securities
of a closed-end fund in an initial public offering when, in the opinion of the
Manager, based on a consideration of the nature of the closed-end fund's
proposed investments, the prevailing market conditions and the level of demand
for such securities, they represent an attractive opportunity for growth of
capital. The initial offering price typically will include a dealer spread,
which may be higher than the applicable brokerage cost if a Fund purchased such
securities in the secondary market.
The shares of many closed-end funds, after their initial public offering,
frequently trade at a price per share which is less than the net asset value per
share, the difference representing the "market discount" of such shares. This
market discount may be due in part to the investment objective of long-term
appreciation, which is sought by many closed-end funds, as well as to the fact
that the shares of closed-end funds are not redeemable by the holder upon demand
to the issuer at the next determined net asset value but rather are subject to
the principles of supply and demand in the secondary market. A relative lack of
secondary market purchasers of closed-end fund shares also may contribute to
such shares trading at a discount to their net asset value.
20
<PAGE>
A Fund may invest in shares of closed-end funds that are trading at a discount
to net asset value or at a premium to net asset value. There can be no assurance
that the market discount on shares of any closed-end fund purchased by a Fund
will ever decrease. In fact, it is possible that this market discount may
increase and a Fund may suffer realized or unrealized capital losses due to
further decline in the market price of the securities of such closed-end funds,
thereby adversely affecting the net asset value of a Fund's shares. Similarly,
there can be no assurance that any shares of a closed-end fund purchased by a
Fund at a premium will continue to trade at a premium or that the premium will
not decrease subsequent to a purchase of such shares by a Fund.
Closed-end funds may issue senior securities (including preferred stock and debt
obligations) for the purpose of leveraging the closed-end fund's common shares
in an attempt to enhance the current return to such closed-end fund's common
shareholders. A Fund's investment in the common shares of closed-end funds that
are financially leveraged may create an opportunity for greater total return on
its investment, but at the same time may be expected to exhibit more volatility
in market price and net asset value than an investment in shares of investment
companies without a leveraged capital structure.
MASTER/FEEDER STRUCTURE (ALL FUNDS). 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,
21
<PAGE>
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
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
22
<PAGE>
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
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.
23
<PAGE>
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 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
24
<PAGE>
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.
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.
25
<PAGE>
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.
26
<PAGE>
Treasury bills, the most frequently issued marketable government security, have
a maturity of up to one year and are issued on a discount basis.
UNITED STATES GOVERNMENT AGENCY SECURITIES (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.
27
<PAGE>
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 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 OCCUPATION
NAME, AGE AND BUSINESS ADDRESS DATE OF BIRTH WITHIN THE PAST FIVE YEARS
<S> <C> <C>
Ronald S. Altbach 12/24/46 Trustee of the Trust.
1540 West Park Avenue Chairman, Paul Sebastian, Inc. (1994 -- present)
Ocean, New Jersey 07712 (Perfume distributor); President, Olcott Corporation
(1992 -- 1994) (Perfume distributor).
*Richard E. Stierwalt 9/25/54 President, Chairman and Trustee of the Trust.
410 Park Avenue President, Chief Executive Officer and Director,
New York, New York 10022 Orbitex Management, Inc. (1998 -- present) (Investment
management); 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 J. Hamrick 4/1/52 Carey Financial Corporation (1995 - present)
Carey Financial Corp. (Broker-dealer); Chief Executive Officer, Wall
50 Rockfeller Plaza Street Investors Services (1994 - 1995) (Retail
New York, New York 10020 brokerage firm); Senior Vice President, PaineWebber,
Inc. (1998 - 1994) (Investment Services)
Keith Kemp Vice-President and Assistant Treasurer
410 Park Avenue
New York, New York 10022
M. Fyzul Khan 8/27/71 Vice-president and Secretary of the Trust.
410 Park Avenue Legal Counsel, Orbitex Mangement, Inc. (1998 -
New York, New York 10022 present); Attorney, CIBC Oppenheimer (1997 - 1998);
Law student, Widener University School of Law (1994
- 1997)
Kevin Meehan Vice-President and Assistant Secretary
410 Park Avenue
New York, New York 10022
Vali Nasr Vice-president and Treasurer of the Trust.
410 Park Avenue Chief Financial Officer, Orbitex Mangement, Inc.
New York, New York 10022 (1999 - present); Chief Financial Officer and Chief
Operating Officer, Investment Advisory Network
(1998 - 1999) (Software developer); Chief Financial
Officer and Chief Operations Officer, PMC
International, Inc. (1992 - 1998) (Investment
Advisor, broker-dealer, and software developer).
Catherine McCabe Assistant Vice-President and Assistant Secretary
410 Park Avenue
New York, New York 10022
Michael Wagner Senior Vice-presdent, American Data Services, Inc.
150 Motor Parkway (19__ -- present)
Hauppauge, New York 11788-0132
Max Berueffy 1/4/52 General Counsel, American Data Services, Inc. (1999
150 Motor Parkway -- present) (Mutual fund administrator and
Hauppauge, New York 11788-0132 distributor); Self-employed (1998 -- 1999) (Mutual
fund consultant);Senior Counsel, Forum Financial
Group (1994 - 1998) (Mutual fund administrator and
distributor)
</TABLE>
28
<PAGE>
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.
As of December 31, 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 December 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:
<TABLE>
<CAPTION>
ORBITEX GROWTH FUND - CLASS A% HELD
<S> <C>
None
ORBITEX GROWTH FUND - CLASS B
Painewebber for the Benefit of 16.46%
Dr. Emilio Del Toro Agrelot
P. O. Box 5300
Ponce, PR 00733
Painewebber for the Benefit of 5.83%
Olga Del Valle Yordan
URB Pradera
AM-31 Calle 19
Toja Baja, PR
San Juan PR 00949
ORBITEX INFO-TECH & COMMUNICATIONS FUND - CLASS A
None
29
<PAGE>
ORBITEX INFO-TECH & COMMUNICATIONS FUND - CLASS B
None
ORBITEX STRATEGIC NATURAL RESOURCES FUND - CLASS A
Sidney Kimmel 35.78%
Arista Group
1 Rockefeller Plaza Rm. 1010
New York, NY 10020-2002
First Clearin Corporation 9.60%
Peter DePaul Irrevocable Family Trust
Trust #1 Andrea Naticchione
1750 Walton Rd.
Blue Bell, PA 19422-2303
Daniel A. McAloon 5.64%
Clare M. McAloon Ten Comm
132 Green Ave.
Madison, NJ 07940-2300
ORBITEX STRATEGIC NATURAL RESOURCES FUND - CLASS B
MSB Investment Trust 8.38%
Special Escrow Account P
28222 Agoura Rd #200
Agoura Hills CA 91301
ORBITEX FOCUS 30 FUND CLASS A
Donaldson Lufkin Jenrette Securities Corp. 37.84%
P.O. Box 2052
Jersey City, NJ 07303-99982
National Financial Services Corp. 6.16%
FBO Susan K. Gage
6191 Gale Rd.
Pataskala, OH 43062
National Financial Services Corp. 5.83%
E.B Alphin
325 Lakeview Ridge West
Roswell, GA 30076
National Financial Services Corp. 7.42%
FBO Bruce E. Smith
1836 Cedar Willow Dr.
Columbus, OH 43229
National Financial Services Corp. 19.20%
FBO Randall L. Dougherty
3110 Walden Ravines
Columbus, OH 43221
ORBITEX FOCUS 30 FUND CLASS B
30
<PAGE>
Dr. David Berndt 13.70%
5930 SW 64th Ave.
Davie, FL 33314-7116
Donaldson Lufkin Jenrette Securities Corp. 18.21%
P.O. Box 2052
Jersey City, NJ 07303-99982
Guarantee & Trust Co. 5.49%
FBO Kathryn H. Bowles
P.O. Box 8963
Wilmington, DE 19899
John M. Landry & Teresa H. Landry JTWROS 30.04%
2420 Cotesworth Dr.
Wake Forest, NC 25758
National Financial Services Corp. 11.77%
FBO James R. Bergandy
1017 Harvest Court
Coraopolis, PA 15108
National Financial Services Corp. 9.57%
FBO Patricia Dellovade
190 Ros Common Pl.
McMurry, PA 15317
Mark E. Winston, M.D. & Janice T. Winston, JTRS 11.20%
9610 Melvin Ave.Northridge, CA 91324
ORBITEX FOCUS 30 FUND CLASS D
National Financial Services Corp. 18.49%
Church Street Station
P O Box 3908 New York, NY 10008-3908
National Investor Services 8.32%
For the Exclusive Benefit
Of Our Customers
55 Water Street
New York, NY 10041
ORBITEX HEALTH & BIOTECHNOLOGY FUND CLASS A
None
ORBITEX HEALTH & BIOTECHNOLOGY FUND CLASS B
CIBC World Markets Corp 8.72%
FBO 092-45360-14
P.O. Box 3484
Church Street Station
New York, NY 10008-3484
31
<PAGE>
Painewebber 7.63%
FBO Victor A. Peralta
1750 Ave. Fernandez Juncos
San Juan, PR 00909-2900
</TABLE>
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 ADVISERS. 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 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.
Orbitex Management, Inc., is the investment adviser for all of the Funds
except the Amerigo Fund and the Clermont Fund. Orbitex Management, Inc. is
located at 410 Park Avenue, New York, NY 10022, and serves as the Adviser
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 all
the Funds was last renewed on March 16, 2000. The portfolio managers are
supervised by John W. Davidson, CFA, President and Chief Investment Officer
of the Adviser.
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 1.25% for the Financial Services Fund, 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, 1.25% for the Utilities Fund, and 0.15% for the Cash
Reserves Fund.
Clarke Lanzen Skalla Investment Firm, Inc. ("CLS" or the "Adviser")") is the
investment advisor for the Amerigo Fund and the Clermont Fund. CLS is located
at 14747 California Street, Omaha, Nebraska 68154-1979. It has been an
investment advisor to individuals, employee benefit plans, trusts and
corporations since 1989.
The following table shows the amount of advisory fees paid by each Fund to
the Advisers and the amount of the advisory fees waived by the Advisers for
the past two fiscal years.
32
<PAGE>
<TABLE>
<CAPTION>
ADVISORY FEES ADVISORYFEES WAIVED
PAID BY FUND BY THE ADVISER
------------ --------------
<S> <C> <C>
Growth Fund
April 30, 1998* 0 $2,423
April 30, 1999 0 $8,089
Info-Tech & Communications Fund
April 30, 1998* 0 $5,113
April 30, 1999 0 $211,268
Strategic Natural Resources Fund
April 30, 1998** 0 $25,989
April 30, 1999 0 $46,098
Focus 30 Fund
October 31, 1999 0 $53,750
</TABLE>
* Fiscal period October 22, 1997 through April 30, 1998
** Fiscal period October 23, 1997 through April 30, 1998
The Adviser has contractually agreed to fee waivers and/or expense
reimbursements on the following funds for the contractual periods stated in the
chart below and in its sole discretion thereafter.
<TABLE>
<CAPTION>
- - ------------------------------------------- --------- ------------- -------- --------------------------------
Contractual
Fund Class A Class B Class C Class D Period
- - ---- ------- ------- ------- ------- ------
- - ------------------------------------------- --------- ------------- -------- --------------------------------
<S> <C> <C> <C> <C> <C>
Growth Fund 2.00% 2.60% 2.60% N/A 12/31/2000
- - ------------------------------------------- --------- ------------- -------- --------------------------------
Info-Tech & Communications Fund 2.00% 2.60% 2.60% N/A 12/31/2000
- - ------------------------------------------- --------- ------------- -------- --------------------------------
Strategic Natural Resources Fund 2.00% 2.60% 2.60% N/A 12/31/2000
- - ------------------------------------------- --------- ------------- -------- --------------------------------
Focus 30 Fund 1.15% 1.75% N/A 0.75% Until 7/1/2000
- - ------------------------------------------- --------- ------------- -------- --------------------------------
1.40% 2.00% N/A 1.00% 7/1 to 12/31/2000
- - ------------------------------------------- --------- ------------- -------- --------------------------------
Health & Biotechnology Fund 2.00% 2.60% 2.60% N/A 12/31/2000
- - ------------------------------------------- --------- ------------- -------- --------------------------------
</TABLE>
The following table shows the amount of fee waivers and/or reimbursements by the
Adviser for the last three fiscal years. The Focus 30 Fund and Health &
Biotechnology Fund commenced operations on July 12, 1999, and July 15, 1999,
respectively.
<TABLE>
<CAPTION>
Amount of Reimbursed
Fund Expenses by the Adviser
-----------------------
<S> <C>
Growth Fund - Class A
April 30, 1998* $80,890
April 30, 1999 $203,594
Growth Fund - Class B
April 30, 1999** $2,208
Info-Tech & Communications Fund - Class A
April 30, 1998* $74,137
April 30, 1999 $11,543
Info-Tech & Communications Fund - Class B
April 30, 1999** $3,928
Strategic Natural Resources Fund - Class A
April 30, 1998*** $55,295
April 30, 1999 $159,491
Strategic Natural Resources Fund - Class B
33
<PAGE>
April 30, 1999**** $2,832
Focus 30 Fund - Class A
October 31, 1999***** $226
Focus 30 Fund - Class B
October 31, 1999***** $33
Focus 30 Fund - Class D
October 31, 1999****** $284,697
</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.
***** Fiscal period July 12, 1999 through October 31, 1999.
****** Before the close of business on July 9, 1999, the Class D
shares of the Orbitex Focus 30 Fund operated as a separate
fund called the ASM Index 30 Fund ("ASM Fund"). From March
1, 1999, until it was reorganized as the Orbitex Focus 30
Fund, the ASM Fund was managed by Orbitex Management, Inc.
Before March 1, 1999, the ASM Fund was managed by Vector
Index Advisors, Inc. ("Vector"). For the period November 1,
1998 through February 28, 1999, Vector waived fees and
expenses of the ASM Fund of approximately $155,000 which
were determined to be uncollectible from Vector and were
written off, net of management fees due Vector. For the
year ended October 31, 1998, Vector waived fees and
reimbursed the ASM Fund for expenses in the amount of
$242,280 which included management fees of $26,302. For the
fiscal year ended October 31, 1997, Vector was not entitled
to any fees, and reimbursed the ASM Fund for expenses in
the amount of $180,781.
ADMINISTRATOR
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 Trustees. The Administrator may
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 29, 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 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.
34
<PAGE>
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' 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' custodian and Advisers; 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 0.10%
on assets up to $100 million; 0.08% on assets from $100 million to $250 million;
0.05% on assets from $250 million to $500 million; and 0.03% on assets greater
than $500 million, or a minimum fee of $40,000 per Fund per year of each Fund's
average daily net assets. The Cash Reserves Fund pays the Administrator a fee
equal to 0.02% based upon prior months' average 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' average net
assets, plus any out-of-pocket expenses for such services.
For fiscal year ended October 31, 1999, fees of ADS accrued were: $23,958 for
the Focus 30 Fund.
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 02110. State Street serves as administrator for other
mutual funds.
Pursuant to a Sub-Administration Agreement for the benefit of the Trust, 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 for the benefit of the Trust, 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
35
<PAGE>
provided to the Growth Fund, the Info-Tech & Communications Fund and the
Strategic Natural Resources Fund, by the Trust's custodian.
The Sub-Administration Agreement is terminable at any time by the parties
thereto on sixty days' written notice. If a party other that State Street
terminates the original agreement within three years of its effective date, the
Fund must reimburse State Street for any fees waived by State Street. A
modification of the original administrative services agreement with State Street
shall not cause a termination of that agreement.
For the period September 16, 1997 through April 30, 1998, fees of State Street
accrued were: $43,750 for the Growth Fund, $43,750 for the Info-Tech &
Communications Fund and $43,750 for the Strategic Natural Resources Fund.
For fiscal year ended April 30, 1999, fees of State Street accrued were: $62,711
for the Growth Fund, $62,711 for the Info-Tech & Communications Fund and $62,858
for the Strategic Natural Resources Fund.
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; 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 preparing monthly and annual summaries to assist in the
preparation of financial statements of, and regulatory reports for, the Trust.
The Trust may employ foreign sub-custodians that are approved by the Board of
Trustees to hold foreign assets.
TRANSFER AGENT SERVICES
ADS provides transfer agent and dividend disbursing services to the Financial
Services Fund, Focus 30 Fund, Health & Biotechnology Fund, Utilities 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.
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 FDI and the Trust. FDI's principal business address is 60 State
Street, Boston, Massachusetts 02109.
Under the terms of the Class A, Class B and Class C 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, contingent deferred
sales commissions and a level load on Class A, Class B, and Class C Shares,
respectively, and fees for providing services to the Class A, Class B and Class
C 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
authorized to use a portion of their assets attributable to the Class A, Class B
and Class C 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. The Plan adopted for Class C 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 C Shares of that Fund during that quarter. The Class C Plan also allows
each Fund to pay the Distributor for certain shareholder services provided to
Class C shareholders or other service providers that have entered into
agreements with the Distributor to provide these services. For
36
<PAGE>
these services, each Fund pays a shareholder service fee equal to 0.25% of
average net assets attributable to Class C 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, Class B and Class C 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, Class B and
Class C 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. Class A
shares of the Focus 30 Fund and Health & Biotechnology Fund commenced
operations on July 12, 1999 and July 15, 1999 respectively.
<TABLE>
<CAPTION>
Class A Distribution Fees
Paid to Investment
Fund Professionals Retained by FDI
------------- ---------------
<S> <C> <C>
Growth Fund
April 30, 1998* $549.20 $487.28
April 30, 1999 $2,656.81 $1,595.25
Info-Tech & Communications Fund
April 30, 1998* $809.40 $620.63
April 30, 1999 $33,787.95 $20,190.48
Strategic Natural Resources Fund
April 30, 1998** $3,625.67 $3,149.26
April 30, 1999 $8,942.34 $5,429.90
Focus 30 Fund
October 31, 1999*** $26.47 $15.89
</TABLE>
* Fiscal period October 22, 1997 through April 30, 1998.
** Fiscal period October 23, 1997 through April 30, 1998.
*** Fiscal period July 12, 1999 through October 31, 1999.
The following table shows the distribution fees paid and retained by FDI for
Class B shares of the Funds for the fiscal years ended April 30, 1998 and
April 30, 1999. Class B shares of the Focus 30 Fund and Health & Biotechnology
Fund commenced operations July 12, 1999 and July 15, 1999, respectively.
<TABLE>
<CAPTION>
Class B Distribution and Services Fees
Distribution Fees Paid
Fund to Investment Distribution Fees Shareholder Service
Retained by FDI Professionals Retained by FDI Fees
- --------------- ------------- --------------- -------------------
<S> <C> <C> <C>
Growth Fund
April 30, 1999* $0 $0 $ 111.13
$20.27
Info-Tech & Communications Fund
April 30, 1999* $0 $0 $ 26,078.91
$1,940.14
Strategic Natural Resources Fund
April 30, 1999** $0 $0 $ 475.52
$158.50
Focus 30 Fund
October 31, 1999*** $0 $0 $ 9.30
$3.10
</TABLE>
* Fiscal period September 16, 1998 through April 30, 1999.
** Fiscal period September 21, 1998 through April 30, 1999.
*** Fiscal period July 12, 1999 through October 31, 1999.
38
<PAGE>
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* $5,000 $0 $0 $0
April 30, 1999 $27,000 $0 $0 $0
Growth Fund - Class B
April 30, 1999** $2,472.10 $0 $228.91 $0
Info-Tech & Communications Fund -
<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>
Class A
April 30, 1998* $48,000 $0 $0 $0
April 30, 1999 $1,872,000 $0 $0 $0
Info-Tech & Communications Fund -
Class B
April 30, 1999** $589,551 $0 $3,770.57 $0
Strategic Natural Resources Fund -
Class A
April 30, 1998*** $39,000 $0 $0 $0
April 30, 1999 $113,000 $0 $0 $0
Strategic Natural Resources Fund -
Class B
April 30, 1999**** $13,768.29 $0 $975.50 $0
Focus 30 Fund - Class A
October 31, 1999***** $200.00 $0 $0 $0
Focus 30 Fund - Class B
October 31, 1999***** $400.00 $0 $0 $0
</TABLE>
* 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.
**** Fiscal period July 12, 1999 through October 31, 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. Class A shares of the
Focus 30 Fund and Health & Biotechnology Fund commenced operations July 12,
1999 and July 15, 1999, respectively.
<TABLE>
<CAPTION>
Compensation to Compensation to
Fund Underwriters Dealers
------------ -------
<S> <C> <C>
Growth Fund $1,595 $2,657
39
<PAGE>
Info-Tech & $20,190 $33,788
Communications Fund
Strategic Natural $5,430 $8,942
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. Class B shares of the
Focus 30 Fund and Health & Biotechnology Fund commenced operations July 12,
1999 and July 15, 1999, respectively.
<TABLE>
<CAPTION>
Interest
Carrying or
other
Compensation to Financing
Fund Sales Personnel Charges
--------------- -------
<S> <C> <C>
Growth Fund $20 $111
Info-Tech & $1,940 $26,079
Communications Fund
Strategic Natural $13 $475
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
40
<PAGE>
compensation which is not disclosed separately. Transactions placed through
dealers who are serving as primary market makers reflect the spread between the
bid and asked prices.
With respect to equity and fixed income securities, the Adviser may effect
principal transactions on behalf of the Funds with a broker or dealer who
furnishes brokerage and/or research services, designate any such broker or
dealer to receive selling concessions, discounts or other allowances or
otherwise deal with any such broker or dealer in connection with the acquisition
of securities in underwritings. The prices the Funds pay to underwriters of
newly-issued securities usually include a concession paid by the issuer to the
underwriter. The Adviser 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: $9,293 for the Growth Fund, $1,801 for the
Info-Tech & Communications Fund and $81,999 for the Strategic Natural Resources
Fund.
For the fiscal year ended April 30, 1999, the Funds paid brokerage commissions
as follows: $21,022 for the Growth Fund, $102,306 for the Info-Tech &
Communications Fund and $137,895 for the Strategic Natural Resources Fund. For
the fiscal year ended October 31, 1999, the Focus 30 Fund paid brokerage
commissions of $12,228.
PURCHASE AND REDEMPTION OF SECURITIES BEING OFFERED
WAIVERS OF INITIAL SALES CHARGE FOR CLASS A SHARES. The initial sales charge
Class A 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
41
<PAGE>
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
42
<PAGE>
intended amount, the investor agrees to pay the additional amount of sales
charge applicable to such purchases, as set forth in "Terms of Escrow," below,
as those terms may be amended from time to time.
The investor agrees that shares equal in value to 5% of the intended amount will
be held in escrow by the Trust's transfer agent subject to the Terms of Escrow.
If the total eligible purchases made during the Letter of Intent period do not
equal or exceed the intended amount, the commissions previously paid to the
dealer of record for the account and the amount of sales charge retained by the
Distributor will be adjusted to the rates applicable to actual total purchases.
If total eligible purchases during the Letter of Intent period exceed the
intended amount and exceed the amount needed to qualify for the next sales
charge rate reduction set forth in the applicable prospectus, the sales charges
paid will be adjusted to the lower rate, but only if and when the dealer returns
to the Distributor the excess of the amount of commissions allowed or paid to
the dealer over the amount of commissions that apply to the actual amount of
purchases. The excess commissions returned to the Distributor will be used to
purchase additional shares for the investor's account at the net asset value per
share in effect on the date of such purchase, promptly after the Distributor's
receipt thereof.
In determining the total amount of purchases made under a Letter, Class A Shares
redeemed by the investor prior to the termination of the Letter of Intent period
will be deducted. It is the responsibility of the dealer of record and/or the
investor to refer to the Letter in placing any purchase orders for the investor
during the Letter of Intent period. All of such purchases must be made through
the Distributor.
Terms of Escrow
1. Out of the initial purchase (or subsequent purchases if necessary) made
pursuant to a Letter, Class A Shares of the Fund equal in value to 5% of the
intended amount specified in the Letter shall be held in escrow by the Fund's
transfer agent. For example, if the intended amount specified under the Letter
is $50,000, the escrow shall be shares valued in the amount of $2,500 (computed
at the public offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited to the
investor's account.
2. If the total minimum investment specified under the Letter is completed
within the thirteen-month Letter of Intent period, the escrowed shares will be
promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the total
purchases pursuant to the Letter are less than the intended amount specified in
the Letter, the investor must remit to the Distributor an amount equal to the
difference between the dollar amount of sales charges actually paid and the
amount of sales charges which would have been paid if the total amount purchased
had been made at a single time. Such sales charge adjustment will apply to any
shares redeemed prior to the completion of the Letter. If such difference in
sales charges is not paid within twenty days after a request from the
Distributor or the 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
43
<PAGE>
such shareholder's requests for redemption made during any 90-day period, up to
the lesser of $250,000 or 1% of the applicable Fund's net asset value at the
beginning of such period. The securities to be paid in-kind to any shareholders
will be readily marketable securities selected in such manner as the Board of
Trustees of the Trust deems fair and equitable. If shareholders were to receive
redemptions-in-kind, they would incur brokerage costs should they wish to
liquidate the portfolio securities received in such payment of their redemption
request. The Trust does not anticipate making redemptions-in-kind.
The right to redeem shares or to receive payment with respect to any redemption
of shares of the Funds may only be suspended (1) for any period during which
trading on the New York Stock Exchange ("NYSE") is restricted or such Exchange
is closed, other than customary weekend and holiday closings, (2) for any period
during which an emergency exists as a result of which disposal of securities or
determination of the net asset value of the Fund is not reasonably practicable,
or (3) for such other periods as the SEC may by order permit for protection of
shareholders of the Funds.
WAIVERS FOR CLASS C SHARES. Each fund may waive, where applicable, the CDSC on
redemption: (1) following the death of a shareholder, (2) if a shareholder
becomes unable to engage in any substantial gainful activity by reason of a
medically determinable physical or mental impairment which can be expected to
result in death or be of long-continued and indefinite duration, or (3) when a
total or partial redemption is made in connection with a distribution from IRAs
or other qualified retirement plans after attaining age 59-1/2.
The Distributor may waive the CDSC on the redemption of Class C shares of each
Fund owned by directors, trustees, officers and full-time employees of the
Trust, the Adviser, or the Distributor, including members of the immediate
families of such individuals and employee benefit plans established by such
entities. The funds may also waive the CDSC on the redemption of Class C shares
of each fund owned by banks, bank trust departments, savings and loan
associations, federal and state credit unions, trust companies, investment
advisers and broker-dealers, either in their fiduciary capacities or for their
own accounts. These institutions may charge fees to clients for whose accounts
they purchase shares at net asset value or for which the CDSC has been waived.
All CDSC's imposed on redemptions of each fund are paid to the distributor.
CLASS D SHARES OF THE FOCUS 30 FUND. Class D Shares of the Focus 30 Fund are
available for purchase by the following persons: (1) shareholders who were
shareholders of the ASM Index 30 Fund at the time of the reorganization of the
ASM Fund into the Focus 30 Fund and certain related accounts of those
shareholders, (2) employees, and certain related accounts of employees, of
Orbitex Financial Services Group, Inc. ("OFSG") and its affiliates; and (3)
certain institutional investors. "Related accounts" include: the shareholder,
one of the shareholder's immediate family members, a trust or individual
retirement account or self-employed retirement plan for the benefit of the
shareholder or the shareholder's immediate family members, and the estate of the
shareholder or the shareholder's immediate family.
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 represent
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
44
<PAGE>
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.
Automatic Account Builder. An investor may arrange to have a fixed amount of
$100 or more automatically invested in shares of a Fund monthly by authorizing
his or her bank account to be debited to invest specified dollar amounts in
shares of the Fund. The investor's bank must be a member of the Automatic
Clearing House System. Stock certificates are not issued to Automatic Account
Builder participants.
Further information about these programs and an application form can be obtained
from the Transfer Agent.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of a Fund will be determined for each class of
shares. The net asset value per share of a given class of shares of a Fund is
determined by calculating the total value of the Fund's assets attributable to
such class of shares, deducting its total liabilities attributable to such class
of shares in conformance with the provisions of the plan adopted by the Fund in
accordance with Rule 18f-3 under the 1940 Act., and dividing the result by the
number of shares of such class outstanding. The net asset value of shares of
each class of each Fund is normally calculated as of the close of regular
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.
The net asset value per share of the different classes of a fund's 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.
In determining each Fund's NAV per share, equity securities for which market
quotations are readily available are valued at current market value using the
last reported sales price. If no sale price is reported, the average of the last
bid and ask price is used. If no average price is available, the last bid price
is used. If market quotations are not readily available, then securities are
valued at fair value as determined by the
45
<PAGE>
Board (or its delegate). 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.
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
46
<PAGE>
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 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
of the 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 Funds will elect to
mark-to-market an identified PFIC to avoid the PFIC tax.
47
<PAGE>
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.
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, are being amortized on a straight line basis over a five year period
beginning at the commencement of operations of each Fund. 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. Costs for all other funds will not be amortized.
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:
48
<PAGE>
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 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 Cash 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 yield by 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 according to the
following formula:
365/7
Effective Yield = [(Base Period return + 1) - 1
49
<PAGE>
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 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
[name of auditors] 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
50
<PAGE>
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
The financial statements of the Orbitex Growth Fund, Orbitex Info-Tech &
Communications Fund, Orbitex Strategic Natural Resources Fund, and Orbitex
Health & Biotechnology Fund (the "Funds") for the year ended April 30, 1999,
which are included in the Funds' Annual Report to Shareholders dated April 30,
1999, and the financial statements of the Orbitex Focus 30 Fund (the "Fund"),
for the year ended October 31, 1999, which are included in the Fund's Annual
Report to Shareholders dated October 31, 1999, are incorporated herein by
reference. These financial statements include the schedules of investments,
statements of assets and liabilities, statements of operations, statements of
changes in net assets, financial highlights, notes and independent auditors'
reports.
51
<PAGE>
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, and as amended
and renewed March 16, 2000, by and between the Trust and Orbitex
Management, Inc. on behalf of the Orbitex Info-Tech & Communications
Fund, Orbitex Internet Fund. Orbitex Emerging Technology Fund, Orbitex
Strategic Infrastructure Fund, Orbitex Health & Biotechnology Fund,
Orbitex Energy & Basic Materials Fund, Orbitex Financial Services Fund,
Orbitex Focus 30 Fund, and Orbitex Growth Fund is filed herewith.
(2) Investment Advisory Agreement, dated March 16, 2000, by and between
the Trust and Clarke Lanzen Skalla Investment Firm, Inc. on behalf of the
Orbitex AdvisorOne Series Amerigo Fund and Orbitex AdvisorOne Series
Clermont Fund is filed herewith.
(e)(1) Distribution Agreement, dated June 1, 1997, between the Trust and
Funds Distributor, Inc. previously filed as Item 23(e)(1) in
Post-Effective Amendment No. 6 is incorporated herein by reference.
(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.
(f) Not applicable.
(g)(1) Custodian Contract, dated May 14, 1997, by and between the Trust
and State Street Bank and Trust Company previously filed as Item (g)(1)
in Post-Effective Amendment No. 6 is incorporated herein by reference.
(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 previously filed as Item
(h)(1) in Post-Effective Amendment No. 6 is incorporated herein by
reference.
(2) Transfer Agency and Service Agreement dated June 30, 1999, as amended
and renewed March 16, 2000, by and between the Trust and American Data
Services, Inc. on behalf of the Orbitex Info-Tech & Communications Fund,
Orbitex Internet Fund, Orbitex Emerging Technology Fund, Orbitex
Strategic Infrastructure Fund, Orbitex Health & Biotechnology Fund,
Orbitex Energy & Basic Materials Fund, Orbitex Financial Services Fund,
Orbitex Focus 30 Fund, and Orbitex Growth Fund is filed herewith.
(3) 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 previously filed as Item (h)(3) in
Post-Effective Amendment No. 6 is incorporated herein by reference.
<PAGE>
(4) Administration Agreement dated June 30, 1999, and amended March 16,
2000, by and between the Trust and American Data Services, Inc. on behalf
of the Orbitex Info-Tech & Communications Fund, Orbitex Internet Fund.
Orbitex Emerging Technology Fund, Orbitex Strategic Infrastructure Fund,
Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic Materials
Fund, Orbitex Financial Services Fund, Orbitex Focus 30 Fund, and Orbitex
Growth Fund filed herewith.
(5) 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 Cash Reserves Fund
and the Orbitex Focus 30 Fund previously filed as Item (i)(3) in
Post-Effective Amendment No. 6 is incorporated herein by reference.
(j)(1) Consent of Independent Accountants to be filed by subsequent
amendment.
(2) Power of Attorney, dated March 16, 2000, is filed herewith.
(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 March 16, 2000, is filed herewith.
(2) Class B Distribution Plan and Agreement Pursuant to Rule 12b-1 under
the Investment Company Act of 1940, and amended March 16, 2000, is filed
herein.
(3) Class C Distribution Plan and Agreement Pursuant to Rule 12b-1 under
the Investment Company Act of 1940 is filed herewith.
(4) 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) Revised Rule 18f-3 Plan for Multiple Classes of Shares dated March
16, 2000, is filed herewith.
.
<PAGE>
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 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 Advisers, Orbitex Management, Inc. and Clarke Lanzen Skalla
Investment Firm, 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. and Clarke
Lanzen Skalla Investment Firm, Inc. is incorporated by reference to Form ADV
filed by Orbitex Management, Inc. and Clarke Lanzen Skalla Investment Firm,
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.
<PAGE>
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
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.
<TABLE>
<CAPTION>
<S> <C>
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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Chairman and Director - William J. Nutt
</TABLE>
(c) Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
The following entities prepare, maintain and preserve the
records required by Section 31 (a) of the 1940 Act for the
Registrant. These services are provided to the Registrant
through written agreements between the parties to the effect
that such services will be provided to the Registrant for such
periods prescribed by the rules and regulations of the
Securities and Exchange Commission under the 1940 Act and such
records are the property of the entity required to maintain and
preserve such records and will be surrendered promptly on
request.
State Street Bank and Trust Company ("State Street") provides
custodian and accounting services pursuant to a Custodian
Contract between State Street and the Trust and provides
transfer agent and dividend disbursing services pursuant to
a Transfer Agency and Service Agreement between State Street
and the Trust. In such capacities, State Street provides
pricing for each Fund's portfolio securities, keeps records
regarding securities and other assets in custody and in
transfer, bank statements, canceled checks, financial books
and records, and keeps records of each shareholder's account
and all disbursement made to shareholders. Orbitex Management,
Inc., and Clarke Lanzen Skalla Investment Firm, Inc., pursuant
to their Investment Advisory Agreements with respect to the
Fund, maintains all records required pursuant to such agreement.
American Dela Services, Inc., pursuant to its administration
agreement State Street, pursuant to its Sub-Administration
Agreement, maintain all records required pursuant to such
agreements. 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.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Act of 1933, and Investment
Company Act of 1940, the Registrant has duly caused this amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the State of New York on the 22nd day of March 2000.
ORBITEX GROUP OF FUNDS
(Registrant)
By: ______________________________
Richard E. Stierwalt, President
Pursuant to the requirements of the Securities Act of 1933, as amended this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard E. Stierwalt Trustee, Chairman and March 22, 2000
Richard E. Stierwalt President
/s/ Ronald S. Altbach* Trustee March 22, 2000
Ronald S. Altbach
/s/ Stephen H. Hamrick* Trustee March 22, 2000
Stephen H. Hamrick
/s/ Vali Nasr Treasurer March 22, 2000
Vali Nasr
/s/ M. Fyzul Khan Secretary March 22, 2000
M. Fyzul Khan
</TABLE>
* By: Richard E. Stierwalt, Attorney -in-
Fact
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description
- ------- -----------
<S> <C>
(d)(1) Investment Advisory Agreement, dated June 1, 1997 and as amended and renewed March 16, 2000, by and
between the Trust and Orbitex Management, Inc. on behalf of the Orbitex Info-Tech & Communications
Fund, Orbitex Internet Fund. Orbitex Emerging Technology Fund, Orbitex Strategic Infrastructure
Fund, Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic Materials Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, and Orbitex Growth Fund.
(d)(2) Investment Advisory Agreement, dated March 16, 2000, by and between the Trust and Clarke Lanzen
Skalla Investment Firm, Inc. on behalf of the Orbitex AdvisorOne Series Amerigo Fund and Orbitex
AdvisorOne Series Clermont Fund.
(h)(2) Transfer Agency and Service Agreement dated June 30, 1999, as amended March 16, 2000, by and between
the Trust and American Data Services, Inc. on behalf of the Orbitex Info-Tech & Communications Fund,
Orbitex Internet Fund, Orbitex Emerging Technology Fund, Orbitex Strategic Infrastructure Fund,
Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic Materials Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, and Orbitex Growth Fund.
(h)(4) Administration Agreement dated June 30, 1999, and as amended March 16, 2000, by and between the
Trust and American Data Services, Inc. on behalf of the Orbitex Info-Tech & Communications Fund,
Orbitex Internet Fund. Orbitex Emerging Technology Fund, Orbitex Strategic Infrastructure Fund,
Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic Materials Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, and Orbitex Growth Fund.
(h)(5) Fund Accounting Agreement dated June 30, 1999, as amended March 16, 2000, by and between the
Trust and American Data Services, Inc. on behalf of the Orbitex Info-Tech & Communications Fund,
Orbitex Internet Fund, Orbitex Emerging Technology Fund, Orbitex Strategic Infrastructure Fund,
Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic Materials Fund, Orbitex Financial
Services Fund, Orbitex Focus 30 Fund, and Orbitex Growth Fund.
(j)(2) Power of Attorney, dated March 16, 2000.
(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 March 16, 2000.
(m)(2) Class B Distribution Plan and Agreement Pursuant to Rule 12b-1 under the Investment Company Act of
1940, and amended March 16, 2000.
(m)(3) Class C Distribution Plan and Agreement Pursuant to Rule 12b-1 under the Investment Company Act of
1940.
(o) Revised Rule 18f-3 Plan for Multiple Classes of Shares dated March 16, 2000, is filed herewith.
</TABLE>
<PAGE>
EXHIBIT (d)(1)
Investment Advisory Agreement
with Orbitex Management, Inc
THE ORBITEX GROUP OF FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the 1st day of June, 1997, and amended on March
16, 2000, 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 offers shares in the series named on Appendix A
hereto (such series, together with all other series subsequently established by
the Trust and made subject to this Agreement in accordance with Section 1.3,
being herein referred to as a "Fund," and collectively as the "Funds");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and administrative services to the Trust with respect to each Fund in
the manner and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. SERVICES OF THE ADVISER.
1.1 INVESTMENT ADVISORY SERVICES. The Adviser shall act as the
investment adviser to each Fund and, as such, shall (i) obtain and evaluate such
information relating to the economy, industries, business, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of each Fund in a manner consistent with its investment
objective(s), policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by each Fund, and implement
those decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; provided, that the Adviser will
place orders pursuant to its investment determinations either directly with the
issuer or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best price and execution of its orders, and (b) may
nevertheless in its discretion purchase and sell portfolio securities from and
to brokers who provide the Adviser with research, analysis, advice and similar
services and pay such brokers in return a higher commission or spread than may
be charged by other brokers.
<PAGE>
The Trust hereby authorizes any entity or person associated with the
Adviser or any Sub-Adviser retained by the Adviser pursuant to Section 7 of this
Agreement, which is a member of a national securities exchange, to effect any
transaction on the exchange for the account of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(iv).
The Adviser shall carry out its duties with respect to each Fund's
investments in accordance with applicable law and the investment objectives,
policies and restrictions set forth in each Fund's then-current Prospectus and
Statement of Additional Information, and subject to such further limitations as
the Trust may from time to time impose by written notice to the Adviser.
1.2 ADMINISTRATIVE SERVICES. The Adviser shall manage the Trust's
business and affairs and shall provide such services required for effective
administration of the Trust as are not provided by employees or other agents
engaged by the Trust; provided, that the Adviser shall not have any obligation
to provide under this Agreement any direct or indirect services to Trust
shareholders, any services related to the distribution of Trust shares, or any
other services which are the subject of a separate agreement or arrangement
between the Trust and the Adviser. Subject to the foregoing, in providing
administrative services hereunder, the Adviser shall:
1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to
the Trust, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Trust's need.
1.2.2 PERSONNEL. Provide, without remuneration from or other cost to
the Trust, the services of individuals competent to perform all of the Trust's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Trust or by the Adviser acting in some
other capacity pursuant to a separate agreement or arrangement with the Trust.
1.2.3 AGENTS. Assist the Trust in selecting and coordinating the
activities of the other agents engaged by the Trust, including the Trust's
shareholder servicing agent, custodian, administrator, independent auditors and
legal counsel.
1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the Adviser's
directors, officers and employees who may be elected or appointed as Trustees or
officers of the Trust to serve in such capacities, without remuneration from or
other cost to the Trust.
1.2.5 BOOKS AND RECORDS. Assure that all financial, accounting and
other records required to be maintained and preserved by the Trust are
maintained and preserved by it or on its behalf in accordance with applicable
laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the preparation of (but not pay
for) all periodic reports by the Trust to its shareholders and all reports and
filings required to maintain the registration and qualification of the Trust and
Trust shares, or to meet other regulatory or tax requirements applicable to the
Trust, under federal and state securities and tax laws.
2
<PAGE>
1.3 ADDITIONAL SERIES. In the event that the Trust establishes one or
more series after the effectiveness of this Agreement ("Additional Series"),
Appendix A to this Agreement may be amended to make such Additional Series
subject to this Agreement upon the approval of the Board of Trustees of the
Trust and the shareholder(s) of the Additional Series, in accordance with the
provisions of the Investment Company Act of 1940. The Trust or the Advisor may
elect not to make any such series subject to this Agreement.
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.
2.2.7 LEGAL AND ACCOUNTING FEES. All charges for services and expenses
of the Trust's legal counsel and independent accountants.
3
<PAGE>
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.
3. ADVISORY FEE.
4
<PAGE>
3.1 FEE. As compensation for all services rendered, facilities
provided and expenses paid or assumed by the Adviser under this Agreement, each
Fund shall pay the Adviser on the last day of each month, or as promptly as
possible thereafter, a fee calculated by applying a monthly rate, based on an
annual percentage rate, to the Fund's average daily net assets for the month.
The annual percentage rate applicable to each Fund is set forth in Appendix A to
this Agreement, as it may be amended from time to time in accordance with
Section 1.3 of this Agreement.
4. RECORDS.
4.1 TAX TREATMENT. The Adviser shall maintain, or arrange for others
to maintain, the books and records of the Trust in such a manner that treats
each Fund as a separate entity for federal income tax purposes.
4.2 OWNERSHIP. All records required to be maintained and preserved by
the Trust pursuant to the provisions or rules or regulations of the Securities
and Exchange Commission under Section 31(a) of the Act and maintained and
preserved by the Adviser on behalf of the Trust are the property of the Trust
and shall be surrendered by the Adviser promptly on request by the Trust;
provided, that the Adviser may at its own expense make and retain copies of any
such records.
5. REPORTS TO ADVISER.
The Trust shall furnish or otherwise make available to the Adviser
such copies of the Trust's Prospectus, Statement of Additional Information,
financial statements, proxy statements, reports and other information relating
to its business and affairs as the Adviser may, at any time or from time to
time, reasonably require in order to discharge its obligations under this
Agreement.
6. REPORTS TO THE TRUST.
The Adviser shall prepare and furnish to the Trust such reports,
statistical data and other information in such form and at such intervals as the
Trust may reasonably request.
7. RETENTION OF SUB-ADVISER.
Subject to the Trust's obtaining the initial and periodic approvals
required under Section 15 of the Act, the Adviser may retain one or more
sub-advisers, at the Adviser's own cost and expense, for the purpose of managing
the investments of the assets of one or more Funds of the Trust. Retention of
one or more sub-advisers shall in no way reduce the responsibilities or
obligations of the Adviser under this Agreement and the Adviser shall, subject
to Section 9 of this Agreement, be responsible to the Trust for all acts or
omissions of any sub-adviser in connection with the performance of the Adviser's
duties hereunder.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management and
administrative services to other investment
5
<PAGE>
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
9. LIMITATION OF LIABILITY OF ADVISER AND ITS PERSONNEL.
Neither the Adviser nor any director, officer of employee of the
Adviser performing services for the Trust at the direction or request of the
Adviser in connection with the Adviser's discharge of its obligations hereunder
shall be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with any matter to which this Agreement
relates, and the Adviser shall not be responsible for any action of the Trustees
of the Trust in following or declining to follow any advice or recommendation of
the Adviser or any sub-adviser retained by the Adviser pursuant to Section 7 of
this Agreement; PROVIDED, that nothing herein contained shall be construed (i)
to protect the Adviser against any liability to the Trust or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the Adviser's duties, or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement, or (ii) to protect any director, officer or employee of the
Adviser who is or was a Trustee or officer of the Trust against any liability of
the Trust or its shareholders to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office with the Trust.
10. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require to the Trust to
take any action contrary to its Declaration of Trust or its By-Laws or any
applicable law, regulation or order to which it is subject or by which it is
bound, or to relieve or deprive the Trustees of the Trust of their
responsibility for and control of the conduct of the business and affairs of the
Trust.
11. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first above
written, and unless sooner terminated as hereinafter provided, this Agreement
shall remain in effect for a period of two years from the date of this
Agreement. Thereafter, this Agreement shall continue in effect with respect to
each Fund from year to year, subject to the termination provisions and all other
terms and conditions hereof; PROVIDED, such continuance with respect to a Fund
is approved at least annually by vote of the holders of a majority of the
outstanding voting securities of the Fund or by the Trustees of the Trust;
PROVIDED, that in either event such continuance is also approved annually by the
vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons of either party hereto. The Adviser shall
furnish to the Trust, promptly upon its request, such information as may
reasonably be necessary to evaluate the terms of this Agreement or any
extension, renewal or amendment thereof.
12. AMENDMENT OR ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing signed by the
parties hereto; PROVIDED, that no such amendment shall be effective unless
authorized (i) by resolution of the Trustees of the Trust, including the vote or
written consent of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons of either party hereto, and (ii)
6
<PAGE>
by vote of a majority of the outstanding voting securities of the Fund affected
by such amendment. This Agreement shall terminate automatically and immediately
in the event of its assignment.
13. TERMINATION OF AGREEMENT.
This Agreement may be terminated as to any Fund at any time by either
party hereto, without the payment of any penalty, upon sixty (60) days' prior
written notice to the other party; PROVIDED, that in the case of termination as
to any Fund, such action shall have been authorized (i) by resolution of the
Trust's Board of Trustees, including the vote or written consent of Trustees of
the Trust who are not parties to this Agreement or interested persons of either
party hereto, or (ii) by vote of majority of the outstanding voting securities
of the Fund.
14. USE OF NAME.
The Trust is named the Orbitex Group of Funds and each Fund may be
identified, in part, by the name "Orbitex." The Adviser hereby grants to the
Trust a nonexclusive right and license to use the Orbitex name and as part of
the name of the Trust and each Fund of the Trust only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the Adviser's business as adviser or any extension, renewal or amendment
thereof remain in effect. The Trust agrees that it shall acquire no interest in
the name "Orbitex," that all uses thereof by the Trust shall inure to the
benefit of the Adviser and that is shall not challenge the validity or Adviser's
ownership thereof.
15. DECLARATION OF TRUST.
The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust or a Fund, as the case may be,
pursuant to this Agreement shall be limited in all cases to the Trust or a Fund,
as the case may be, and its assets, and the Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the Trust. In
addition, the Adviser shall not seek satisfaction of any such obligations from
the Trustees or any individual Trustee. The Adviser understands that the rights
and obligations of any Fund under the Declaration of Trust are separate and
distinct from those of any and all other Funds. The Adviser further understands
and agrees that no Fund of the Trust shall be liable for any claims against any
other Fund of the Trust and that the Adviser must look solely to the assets of
the pertinent Fund of the Trust for the enforcement or satisfaction of any
claims against the Trust with respect to that Fund.
16. This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
17. INTERPRETATION AND DEFINITION OF TERMS.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts, or, in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission validly issued pursuant to the
7
<PAGE>
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, when the effect of a requirement of the Act reflected in
any provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
18. CAPTIONS.
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date and
year first above written.
ORBITEX GROUP OF FUNDS
By: /s/ James L. Nelson
------------------------------------------
James L. Nelson
President
ORBITEX MANAGEMENT, INC.
By: /s/ James L. Nelson
------------------------------------------
James L. Nelson
President
8
<PAGE>
THE ORBITEX GROUP OF FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
FUNDS OF THE TRUST AS OF
MARCH 16, 2000
<TABLE>
<CAPTION>
Annual Advisory Fee as a
Name of Fund % of Average Net Assets of the Fund
------------ -----------------------------------
<S> <C>
Orbitex Info-Tech & Communications Fund 1.25%
Orbitex Internet Fund 1.25%
Orbitex Emerging Technology Fund 1.25%
Orbitex Strategic Infrastructure Fund 1.25%
Orbitex Health & Biotechnology Fund 1.25%
Orbitex Energy and Basic Materials Fund 1.25%
Orbitex Financial Services Fund 1.25%
Orbitex Focus 30 Fund 0.75%
Orbitex Growth Fund 0.75%
</TABLE>
<PAGE>
EXHIBIT (d)(2)
INVESTMENT ADVISORY AGREEMENT WITH
CLARKE LANZEN SKALLA INVESTMENT FIRM, INC
THE ORBITEX GROUP OF FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of March 16, 2000, between Orbitex Group of Funds, a
Delaware business trust (the "Trust"), and Clarke Lanzen Skalla Investment Firm,
Inc., a Nebraska 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 offers shares in the series named on Appendix A
hereto (such series, together with all other series subsequently established by
the Trust and made subject to this Agreement in accordance with Section 1.3,
being herein referred to as a "Fund," and collectively as the "Funds");
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940; and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory and administrative services to the Trust with respect to each Fund in
the manner and on the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto agree as follows:
1. SERVICES OF THE ADVISER.
1.1 INVESTMENT ADVISORY SERVICES. The Adviser shall act as the
investment adviser to each Fund and, as such, shall (i) obtain and evaluate such
information relating to the economy, industries, business, securities markets
and securities as it may deem necessary or useful in discharging its
responsibilities hereunder, (ii) formulate a continuing program for the
investment of the assets of each Fund in a manner consistent with its investment
objective(s), policies and restrictions, and (iii) determine from time to time
securities to be purchased, sold, retained or lent by each Fund, and implement
those decisions, including the selection of entities with or through which such
purchases, sales or loans are to be effected; provided, that the Adviser will
place orders pursuant to its investment determinations either directly with the
issuer or with a broker or dealer, and if with a broker or dealer, (a) will
attempt to obtain the best price and execution of its orders, and (b) may
nevertheless in its discretion purchase and sell portfolio securities from and
to brokers who provide the Adviser with research, analysis, advice and similar
services and pay such brokers in return a higher commission or spread than may
be charged by other brokers.
<PAGE>
The Trust hereby authorizes any entity or person associated with the
Adviser or any Sub-Adviser retained by the Adviser pursuant to Section 7 of this
Agreement, which is a member of a national securities exchange, to effect any
transaction on the exchange for the account of the Trust which is permitted by
Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T)
thereunder, and the Trust hereby consents to the retention of compensation for
such transactions in accordance with Rule 11a2-2(T)(a)(iv).
The Adviser shall carry out its duties with respect to each Fund's
investments in accordance with applicable law and the investment objectives,
policies and restrictions set forth in each Fund's then-current Prospectus and
Statement of Additional Information, and subject to such further limitations as
the Trust may from time to time impose by written notice to the Adviser.
1.2 ADMINISTRATIVE SERVICES. The Adviser shall manage the Trust's
business and affairs and shall provide such services required for effective
administration of the Trust as are not provided by employees or other agents
engaged by the Trust; provided, that the Adviser shall not have any obligation
to provide under this Agreement any direct or indirect services to Trust
shareholders, any services related to the distribution of Trust shares, or any
other services which are the subject of a separate agreement or arrangement
between the Trust and the Adviser. Subject to the foregoing, in providing
administrative services hereunder, the Adviser shall:
1.2.1 OFFICE SPACE, EQUIPMENT AND FACILITIES. Furnish without cost to
the Trust, or pay the cost of, such office space, office equipment and office
facilities as are adequate for the Trust's need.
1.2.2 PERSONNEL. Provide, without remuneration from or other cost to
the Trust, the services of individuals competent to perform all of the Trust's
executive, administrative and clerical functions which are not performed by
employees or other agents engaged by the Trust or by the Adviser acting in some
other capacity pursuant to a separate agreement or arrangement with the Trust.
1.2.3 AGENTS. Assist the Trust in selecting and coordinating the
activities of the other agents engaged by the Trust, including the Trust's
shareholder servicing agent, custodian, administrator, independent auditors and
legal counsel.
1.2.4 TRUSTEES AND OFFICERS. Authorize and permit the Adviser's
directors, officers and employees who may be elected or appointed as Trustees or
officers of the Trust to serve in such capacities, without remuneration from or
other cost to the Trust.
1.2.5 BOOKS AND RECORDS. Assure that all financial, accounting and
other records required to be maintained and preserved by the Trust are
maintained and preserved by it or on its behalf in accordance with applicable
laws and regulations.
1.2.6 REPORTS AND FILINGS. Assist in the preparation of (but not pay
for) all periodic reports by the Trust to its shareholders and all reports and
filings required to maintain the registration and qualification of the Trust and
Trust shares, or to meet other regulatory or tax requirements applicable to the
Trust, under federal and state securities and tax laws.
2
<PAGE>
1.3 ADDITIONAL SERIES. In the event that the Trust establishes one or
more series after the effectiveness of this Agreement ("Additional Series"),
Appendix A to this Agreement may be amended to make such Additional Series
subject to this Agreement upon the approval of the Board of Trustees of the
Trust and the shareholder(s) of the Additional Series, in accordance with the
provisions of the Investment Company Act of 1940. The Trust or the Advisor may
elect not to make any such series subject to this Agreement.
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.
2.2.7 LEGAL AND ACCOUNTING FEES. All charges for services and expenses
of the Trust's legal counsel and independent accountants.
3
<PAGE>
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.
3. ADVISORY FEE.
4
<PAGE>
3.1 FEE. As compensation for all services rendered, facilities provided
and expenses paid or assumed by the Adviser under this Agreement, each Fund
shall pay the Adviser on the last day of each month, or as promptly as possible
thereafter, a fee calculated by applying a monthly rate, based on an annual
percentage rate, to the Fund's average daily net assets for the month. The
annual percentage rate applicable to each Fund is set forth in Appendix A to
this Agreement, as it may be amended from time to time in accordance with
Section 1.3 of this Agreement.
4. RECORDS.
4.1 TAX TREATMENT. The Adviser shall maintain, or arrange for others to
maintain, the books and records of the Trust in such a manner that treats each
Fund as a separate entity for federal income tax purposes.
4.2 OWNERSHIP. All records required to be maintained and preserved by
the Trust pursuant to the provisions or rules or regulations of the Securities
and Exchange Commission under Section 31(a) of the Act and maintained and
preserved by the Adviser on behalf of the Trust are the property of the Trust
and shall be surrendered by the Adviser promptly on request by the Trust;
provided, that the Adviser may at its own expense make and retain copies of any
such records.
5. REPORTS TO ADVISER.
The Trust shall furnish or otherwise make available to the Adviser such
copies of the Trust's Prospectus, Statement of Additional Information, financial
statements, proxy statements, reports and other information relating to its
business and affairs as the Adviser may, at any time or from time to time,
reasonably require in order to discharge its obligations under this Agreement.
6. REPORTS TO THE TRUST.
The Adviser shall prepare and furnish to the Trust such reports,
statistical data and other information in such form and at such intervals as the
Trust may reasonably request.
7. RETENTION OF SUB-ADVISER.
Subject to the Trust's obtaining the initial and periodic approvals
required under Section 15 of the Act, the Adviser may retain one or more
sub-advisers, at the Adviser's own cost and expense, for the purpose of managing
the investments of the assets of one or more Funds of the Trust. Retention of
one or more sub-advisers shall in no way reduce the responsibilities or
obligations of the Adviser under this Agreement and the Adviser shall, subject
to Section 9 of this Agreement, be responsible to the Trust for all acts or
omissions of any sub-adviser in connection with the performance of the Adviser's
duties hereunder.
8. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Adviser or any
affiliated person of the Adviser to render investment management and
administrative services to other investment
5
<PAGE>
companies, to act as investment adviser or investment counselor to other
persons, firms or corporations, or to engage in other business activities.
9. LIMITATION OF LIABILITY OF ADVISER AND ITS PERSONNEL.
Neither the Adviser nor any director, officer of employee of the
Adviser performing services for the Trust at the direction or request of the
Adviser in connection with the Adviser's discharge of its obligations hereunder
shall be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with any matter to which this Agreement
relates, and the Adviser shall not be responsible for any action of the Trustees
of the Trust in following or declining to follow any advice or recommendation of
the Adviser or any sub-adviser retained by the Adviser pursuant to Section 7 of
this Agreement; PROVIDED, that nothing herein contained shall be construed (i)
to protect the Adviser against any liability to the Trust or its shareholders to
which the Adviser would otherwise be subject by reason of willful misfeasance,
bad faith, or gross negligence in the performance of the Adviser's duties, or by
reason of the Adviser's reckless disregard of its obligations and duties under
this Agreement, or (ii) to protect any director, officer or employee of the
Adviser who is or was a Trustee or officer of the Trust against any liability of
the Trust or its shareholders to which such person would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such person's office with the Trust.
10. EFFECT OF AGREEMENT.
Nothing herein contained shall be deemed to require to the Trust to
take any action contrary to its Declaration of Trust or its By-Laws or any
applicable law, regulation or order to which it is subject or by which it is
bound, or to relieve or deprive the Trustees of the Trust of their
responsibility for and control of the conduct of the business and affairs of the
Trust.
11. TERM OF AGREEMENT.
The term of this Agreement shall begin on the date first above written,
and unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect for a period of two years from the date of this Agreement.
Thereafter, this Agreement shall continue in effect with respect to each Fund
from year to year, subject to the termination provisions and all other terms and
conditions hereof; PROVIDED, such continuance with respect to a Fund is approved
at least annually by vote of the holders of a majority of the outstanding voting
securities of the Fund or by the Trustees of the Trust; PROVIDED, that in either
event such continuance is also approved annually by the vote, cast in person at
a meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Trust who are not parties to this Agreement or interested
persons of either party hereto. The Adviser shall furnish to the Trust, promptly
upon its request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment thereof.
12. AMENDMENT OR ASSIGNMENT OF AGREEMENT.
Any amendment to this Agreement shall be in writing signed by the
parties hereto; PROVIDED, that no such amendment shall be effective unless
authorized (i) by resolution of the Trustees of the Trust, including the vote or
written consent of a majority of the Trustees of the Trust who are not parties
to this Agreement or interested persons of either party hereto, and (ii)
6
<PAGE>
by vote of a majority of the outstanding voting securities of the Fund affected
by such amendment. This Agreement shall terminate automatically and immediately
in the event of its assignment.
13. TERMINATION OF AGREEMENT.
This Agreement may be terminated as to any Fund at any time by either
party hereto, without the payment of any penalty, upon sixty (60) days' prior
written notice to the other party; PROVIDED, that in the case of termination as
to any Fund, such action shall have been authorized (i) by resolution of the
Trust's Board of Trustees, including the vote or written consent of Trustees of
the Trust who are not parties to this Agreement or interested persons of either
party hereto, or (ii) by vote of majority of the outstanding voting securities
of the Fund.
14. USE OF NAME.
The Trust is named the Orbitex Group of Funds and each Fund may be
identified, in part, by the name "Orbitex." The Adviser hereby grants to the
Trust a nonexclusive right and license to use the Orbitex name and as part of
the name of the Trust and each Fund of the Trust only for so long as this
Agreement or any extension, renewal or amendment hereof remains in effect,
including any similar agreement with any organization which shall have succeeded
to the Adviser's business as adviser or any extension, renewal or amendment
thereof remain in effect. The Trust agrees that it shall acquire no interest in
the name "Orbitex," that all uses thereof by the Trust shall inure to the
benefit of the Adviser and that is shall not challenge the validity or Adviser's
ownership thereof.
15. DECLARATION OF TRUST.
The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Trust's Declaration of Trust and
agrees that the obligations assumed by the Trust or a Fund, as the case may be,
pursuant to this Agreement shall be limited in all cases to the Trust or a Fund,
as the case may be, and its assets, and the Adviser shall not seek satisfaction
of any such obligation from the shareholders or any shareholder of the Trust. In
addition, the Adviser shall not seek satisfaction of any such obligations from
the Trustees or any individual Trustee. The Adviser understands that the rights
and obligations of any Fund under the Declaration of Trust are separate and
distinct from those of any and all other Funds. The Adviser further understands
and agrees that no Fund of the Trust shall be liable for any claims against any
other Fund of the Trust and that the Adviser must look solely to the assets of
the pertinent Fund of the Trust for the enforcement or satisfaction of any
claims against the Trust with respect to that Fund.
16. This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
17. INTERPRETATION AND DEFINITION OF TERMS.
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts, or, in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission validly issued pursuant to the
7
<PAGE>
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities," "interested persons," "assignment" and "affiliated person," as used
in this Agreement shall have the meanings assigned to them by Section 2(a) of
the Act. In addition, when the effect of a requirement of the Act reflected in
any provision of this Agreement is modified, interpreted or relaxed by a rule,
regulation or order of the Securities and Exchange Commission, whether of
special or of general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
18. CAPTIONS.
The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed simultaneously in counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the date and year
first above written.
ORBITEX GROUP OF FUNDS
By: /s/ James L. Nelson
---------------------------------
James L. Nelson
President
CLARKE LANZEN SKALLA INVESTMENT FIRM, INC.
By: /s/
---------------------------------
President
8
<PAGE>
THE ORBITEX GROUP OF FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
FUNDS OF THE TRUST AS OF
MARCH 16, 2000
<TABLE>
<CAPTION>
Annual Advisory Fee as a
Name of Fund % of Average Net Assets of the Fund
------------ -----------------------------------
<S> <C>
Orbitex AdvisorOne Series Amerigo Fund 1.00%
Orbitex AdvisorOne Series Clermont Fund 1.00%
</TABLE>
I
<PAGE>
EXHIBIT (h)(2)
TRANSFER AGENCY AND SERVICE AGREEMENT
WITH AMERICAN DATA SERVICES, INC.
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the 30th day of June 1999, and amended on March 16, 2000 by and
between the ORBITEX Group of Funds, a Delaware Business Trust, having its
principal office and place of business at 410 Park Avenue, New York, NY 10022
(the "Trust"), and American Data Services, Inc., a New York corporation having
its principal office and place of business at the Hauppauge Corporate Center,
150 Motor Parkway, Suite 109, Hauppauge, New York 11788 ("ADS").
WHEREAS, the Trust(1) consists of various series (collectively referred to as
the "Funds") of diversified and non-diversified, open-end management
investment company registered with the United States Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust offers shares in the series (each such series,
together with all other series subsequently established by the Trust and made
subject to this Agreement in accordance herewith, being herein referred to as a
"Fund", and collectively as the "Funds") and the Trust offers shares of various
classes of each Fund (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes") listed in Schedule A; and
WHEREAS, the Trust on behalf of the Funds desires to appoint ADS as its
transfer agent, dividend disbursing agent and agent in connection with certain
other activities, and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the Trust and ADS hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF AMERICAN DATA SERVICES, INC.
1.01 Subject to the terms and conditions set forth in this agreement,
the Trust, on behalf of the Funds, hereby employs and appoints ADS to act as,
and ADS agrees to act as its transfer agent for the Fund's authorized and issued
shares of its common stock, ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the fund ("Shareholders") set out in the currently effective
prospectus and statement of additional information ("prospectus") of theTrust.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Trust and ADS, ADS shall:
I. Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation therefore to
the Custodian of the Trust authorized by the Board of Directors of the
Trust (the "Custodian");
II. Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
- ---------------------
(1) The term "Trust" shall refer to the ORBITEX Group of Funds, and each series
of the ORBITEX Group of Funds that is approved by the Board of Trustees of the
ORBITEX Group of Funds for inclusion under the terms of this agreement, and each
series that is so approved shall be subject to the terms of this Agreement
without the need for an amendment of or addition to this Agreement.
1
<PAGE>
III. Receive for acceptance redemption requests and redemption directions
and deliver the appropriate documentation therefore to the Custodian;
IV. 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;
V. Effect transfers of Shares by the registered owners thereof upon receipt
of appropriate instructions;
VI. Prepare and transmit payments for dividends and distributions declared by
the Trust;
VII. Maintain records of account for and advise the Trust and its Shareholders
as to the foregoing; and
VIII.Record the issuance of shares of each Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of shares of each Fund which
are authorized, based upon data provided to it by each Fund, and issued and
outstanding. ADS shall also provide each 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 each Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:
I. Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, receiving
and tabulating 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 redemption's 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 and reports which will enable each Fund to monitor the
total number of Shares sold in each State.
(c) In addition, the Trust shall (i) identify to ADS in writing
those transactions and shares to be treated as exempt from
blue sky reporting for each State and (ii) verify the
establishment of such transactions for each state on the
system prior to activation and thereafter monitor the daily
activity for each State as provided by ADS. The responsibility
of ADS for the Trust's blue sky State registration status is
solely limited to the initial establishment of transactions
subject to blue sky compliance by the Trust and the reporting
of such transactions to the Trust as provided above.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Trust and ADS.
2. FEES AND EXPENSES.
2.01 For performance by ADS pursuant to this Agreement, the Trust
agrees to pay ADS an annual maintenance fee for each Shareholder account and
transaction fees for each portfolio or class of shares serviced under this
Agreement (See Schedule A) as set out in the fee schedule attached hereto. Such
fees and out-of pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Trust and ADS.
2
<PAGE>
2.02 In addition to the fee paid under Section 2.01 above, the Trust
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Trust,
will be reimbursed by the Trust.
2.03 The Trust agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Trust reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Trust at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF AMERICAN DATA SERVICES, INC..
ADS represents and warrants to the Trust that:
3.01 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.02 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.03 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.04 ADS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE TRUST.
The Trust represents and warrants to ADS that;
4.01 It is empowered under applicable laws and by its Articles of
Incorporation, By-Laws, and Declaration of Trust to enter into and perform this
Agreement.
4.02 All proceedings required by said Articles of Incorporation,
By-Laws, and Declaration of Trust have been taken to authorize it to enter into
and perform this Agreement.
4.03 It is an open-end management investment company registered
under the Investment Company Act of 1940.
4.04 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Trust being offered for
sale.
5. INDEMNIFICATION.
5.01 ADS shall not be responsible for, and the Trust shall indemnify
and hold ADS harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
3
<PAGE>
(a) All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in
good faith and without gross negligence or willful misconduct.
(b) The Trust's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Trust's lack good faith, gross
negligence or willful misconduct or which arise out of the breach of
any representation or warranty of the Trust hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the
Trust, and (ii) have been prepared and/or maintained by the Trust or
any other person or firm on behalf of the Trust.
(d) The reliance on, or the carrying out by ADS or its agents or
subcontractors of any instructions or requests of the Trust.
(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.
5.02 ADS shall indemnify and hold the Trust harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by ADS as a result of ADS's lack of good faith, gross negligence
or willful misconduct.
5.03 At any time ADS may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Trust, 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 ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Trust, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. ADS, 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 Trust, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 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.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in
4
<PAGE>
any case in which the other party may be required to indemnify it except with
the other party's prior written consent.
6. COVENANTS OF THE TRUST AND AMERICAN DATA SERVICES, NC..
6.01 The Trust shall promptly furnish to ADS a certified copy of the
resolution of the Board of Trustees of the Trust authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trust 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.
6.03 ADS 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, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Trust and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Trust on
and in accordance with its request.
6.04 ADS and the Trust 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.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, ADS will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
inspection. ADS reserves the right, 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, and shall
promptly notify the Trust of any unusual request to inspect or copy the
shareholder records of the Trust or the receipt of any other unusual request to
inspect, copy or produce the records of the Trust.
7. TERMINATION OF AGREEMENT.
7.01 This Agreement shall become effective as of the date hereof. Upon
effectiveness of this Agreement, is shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Trust or any of the Funds.
7.02 This Agreement shall remain in effect for a period of three (3) years from
the date of its effectiveness and shall continue in effect for successive
twelve-month periods; provided , that a continuance is specifically approved at
least annually after the initial period by the Board or a vote of a majority of
the outstanding voting securities of the Fund.
7.03 This Agreement may be terminated with respect to the Trust or any
of the Funds at anytime (i) by the Board on 90 days' written notice to ADS or
(ii) by ADS on 90 days' written notice to the Fund.
7.04 The obligations of Sections 3 and 4 shall survive any termination
of this Agreement.
5
<PAGE>
7.05 Should any of the Funds exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by said Fund(s). Additionally, ADS reserves the right to charge for any
other reasonable expenses associated with such termination.
8. ADDITIONAL FUNDS AND CLASSES.
8.01 In the event that the Trust establishes one or more series of
Shares or one or more classes of Shares after the effectiveness of this
agreement, such series of Shares or classes of Shares, as is the case may be,
shall becomes Funds and Classes under this Agreement.
9. ASSIGNMENT.
9.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party.
9.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
10. AMENDMENT.
10.01 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 Trust.
11. NEW YORK LAWS TO APPLY.
11.01 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
12. MERGER OF AGREEMENT.
12.01 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.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Trust: To ADS:
M. Fyzul Khan Michael Miola
Secretary President
ORBITEX Group of Funds American Data Services, Inc.
410 Park Avenue, 18th Floor 150 Motor Parkway, Suite 900
6
<PAGE>
New York, NY 10022 Hauppauge, NY 11788
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ORBITEX Group of Funds AMERICAN DATA SERVICES, INC.
By: By:
-------------------------- -------------------------
James L. Nelson, President Michael Miola, President
8
<PAGE>
SCHEDULE A
FUND LISTING
Orbitex Internet Fund
Orbitex Emerging Technology Fund
Orbitex Strategic Infrastructure Fund
Orbitex Health & Biotechnology Fund
Orbitex Financial Services Fund
Orbitex Focus 30 Fund
SCHEDULE B
TRANSFER AGENCY AND SHAREHOLDER SERVICE FEE SCHEDULE
For the services rendered by ADS in its capacity as transfer agent, each
Fund approved by the Board of Trustees of the Trust for inclusion hereunder
shall pay ADS, within ten (10) days after receipt of an invoice from ADS at the
beginning of each month, a fee, calculated as a combination of account
maintenance charges plus transaction charges as follows:
ACCOUNT MAINTENANCE FEES
The greater of (no prorating for partial months):
(1) Minimum maintenance charge per portfolio/class $2,000.00/ month
OR,
(2) Based upon the total of all open/closed accounts (1) per portfolio/class
upon the following annual rates
(billed monthly):
<TABLE>
<CAPTION>
FUND TYPE:
<S> <C>
Dividend calculated and
paid annually, semi-annually, quarterly..............$14.00 per account
Dividend calculated and paid monthly.................$16.00 per account
Dividend accrued daily and paid monthly .............$18.00 per account
</TABLE>
All Closed accounts will be invoiced $ 2.00 per account on an annual basis. (2)
(1) All accounts closed during a month will be considered as open accounts for
billing purposes in the month the account is closed.
9
<PAGE>
(2) Closed accounts remain on the shareholder files until all 1099's and 5498's
have been distributed to the shareholders and send via mag-media to the IRS.
TRANSACTION FEES
New account set-up ...........................................$5.00 each
Retirement account set-up.....................................$10.00 each
24 HOUR AUTOMATED VOICE RESPONSE:
Initial set-up (one-time) charge per portfolio - $750.00
Monthly maintenance charge per portfolio - $50.00
On each annual anniversary date of this Agreement, the fees enumerated above may
be increased by the change in the Consumer Price Index for the Northeast region
(CPI) for the twelve month period ending with the month preceding such annual
anniversary date. Any CPI increases not charged in any given year may be
included in prospective CPI fee increases in future years.
IRA PLAN FEES
<TABLE>
<CAPTION>
The following fees will be charged directly to the shareholder account:
<S> <C>
Annual maintenance fee ............................... $15.00 /account *
Incoming transfer from prior custodian ............... $12.00
Distribution to a participant ........................ $15.00
Refund of excess contribution ........................ $15.00
Transfer to successor custodian ...................... $15.00
Automatic periodic distributions .................... $15.00/year per account
</TABLE>
* Includes Bank Custody Fee.
OUT OF POCKET EXPENSES
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive
of salaries, advanced by ADS in connection with but not limited to the costs for
printing fund documents, (i.e. printing of confirmation forms, shareholder
statements, redemption/dividend checks, envelopes, financial statements, proxy
statement, fund prospectus, etc.) proxy solicitation and mailing expenses,
travel requested by the
10
<PAGE>
Fund, telephone toll charges, 800-line costs and fees, facsimile and data
transmission costs, stationery and supplies (related to Fund records), record
storage, postage (plus a $0.085 service charge for all mailings), pro-rata
portion of annual SAS-70 audit letter, telex and courier charges incurred in
connection with the performance of its duties hereunder. ADS shall provide the
Fund with a monthly invoice of such expenses and the Fund shall reimburse ADS
within fifteen (15) days after receipt thereof.
SPECIAL REPORTS
All reports and/or analyses requested by the Fund that are not included
in the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
11
<PAGE>
EXHIBIT (h)(4)
ADMINISTRATION AGREEMENT
WITH AMERICAN DATA SERVICES, INC.
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 30th day of June 1999, and amended on March 16, 2000, by
and between the ORBITEX Group of Funds, a Delaware Business Trust, having its
principal office and place of business 410 Park Avenue, New York, NY 10022
(the "Trust"), and American Data Services, Inc., a New York corporation having
its principal office and place of business at the Hauppauge Corporate Center,
150 Motor Parkway, Suite 109, Hauppauge, New York 11788 (the "Administrator").
BACKGROUND
WHEREAS, the Trust(2) consists of various series listed in Schedule A
(collectively referred to as the "Funds") of diversified and non-diversified,
open-end management investment company registered with the United States
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in
providing administrative services to mutual funds and possesses facilities
sufficient to provide such services; and
WHEREAS, the Trust desires to avail itself of the experience,
assistance and facilities of the Administrator and to have the Administrator
perform for the Trust certain services appropriate to the operations of its
Funds and the Administrator is willing to furnish such services in accordance
with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the Trust and the Administrator hereby agree to
the following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Trust with the necessary office
space, communication facilities and personnel to perform the following services
for the Trust:
(a) Monitor all regulatory (1940 Act and IRS) and prospectus
restrictions for compliance;
(b) Prepare and coordinate the printing of semi-annual and annual
financial statements;
(c) Prepare selected management reports for performance and
compliance analyses as agreed upon by the Trust and
Administrator from time to time;
(d) Prepare selected financial data required for trustee' meetings
as agreed upon by the Trust and the Administrator from time to
time and coordinate trustees meeting agendas with outside legal
counsel to the Trust;
- ----------------------------
(2) The term "Trust" shall refer to the ORBITEX Group of Funds, and each
series of the ORBITEX Group of Funds that is approved by the Board of
Trustees of the ORBITEX Group of Funds for inclusion under the terms of this
agreement, and each series that is so approved shall be subject to the terms
of this Agreement without the need for an amendment of or addition to this
Agreement.
1
<PAGE>
(e) Determine income and capital gains available for distribution
and calculate distributions required to meet regulatory, income,
and excise tax requirements, to be reviewed by the Trust's
independent public accountants;
(f) Prepare the Trust's federal, state, and local tax returns to be
reviewed by the Trust's independent public accountants;
(g) Prepare and maintain the Trust's operating expense budget to
determine proper expense accruals to be charged to its Funds in
order to calculate their daily net asset value;
(h) 1940 ACT filings -
In conjunction with the Trust's outside legal counsel the
Administrator will:
- Prepare the Trust's Form N-SAR reports;
- Update all financial sections of the Trust's Statement of
Additional Information and coordinate its completion;
- Update all financial sections of the Trust's prospectus and
coordinate its completion;
- Update all financial sections of the Trust's proxy statement
and coordinate its completion;
- Prepare an annual update to Trust's 24f-2 filing
(if applicable);
(i) Monitor services provided by the Trust's custodian bank as well
as any other service providers to the Trust;
(j) Provide appropriate financial schedules (as requested by the
Trust's independent public accountants or SEC examiners),
coordinate the Trust's annual or SEC audit, and provide office
facilities as may be required;
(k) Attend management and board of trustees meetings as requested;
(l) The preparation and filing (filing fee to be paid by the Trust)
of applications and reports as necessary to register or maintain
the Trusts registration under the securities or "Blue Sky" laws
of the various states selected by the Trust or its Distributor.
The Administrator shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by the Administrator
as set forth herein for each portfolio approved for inclusion hereunder by the
Board of Trustees of the Trust, the Administrator shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Trust agrees to pay the Administrator the fees and reimbursement of
out-of-pocket expenses as set forth in the fee schedule attached hereto as
Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care
in carrying out the provisions of the Agreement, but shall be without liability
to the Trust for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
2
<PAGE>
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Trust, advice of the Trust, or of counsel
for the Trust and upon statements of the Trust's independent accountants, and
shall be without liability for any action reasonably taken or omitted pursuant
to such records and reports or advice, provided that such action is not, to the
knowledge of the Administrator, in violation of applicable federal or state laws
or regulations, and provided further that such action is taken without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties.
(b) The Administrator shall not be liable to the Trust for any error of
judgment or mistake of law or for any loss arising out of any act or omission by
the Administrator in the performance of its duties hereunder except as
hereinafter set forth. Nothing herein contained shall be construed to protect
the Administrator against any liability to the Trust or its security holders to
which the Administrator shall otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties on
behalf of the Trust, reckless disregard of the Administrator's obligations and
duties under this Agreement or the willful violation of any applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Trust shall indemnify and hold such persons
harmless from and against, any liability for and any damages, expenses or losses
incurred by reason of the inaccuracy of information furnished to the
Administrator by the Trust or its authorized agents or in connection with any
error in judgment or mistake of law or any act or omission in the course of,
connected with or arising out of any services to be rendered hereunder, except
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, by reason of reckless disregard of the
Administrator's obligations and duties under this Agreement or the willful
violation of any applicable law.
4. REPORTS.
(a) The Trust shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Trust representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator shall
not be responsible for the accuracy of any information furnished to it by the
Trust, and the Trust shall hold the Administrator harmless in regard to any
liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Trustees of the
Trust, on a quarterly basis, a report, in such a form as the Administrator and
the Trust shall from time to time agree, representing that, to its knowledge,
the Trust was in compliance with all requirements of applicable federal and
state law, including without limitation, the rules and regulations of the
Securities and Exchange Commission and the Internal Revenue Service, or
specifying any instances in which the Trust was not so in compliance. Whenever,
in the course of performing its duties under this Agreement, the Administrator
determines, on the basis of information supplied to the Administrator by the
Trust, that a violation of applicable law has occurred, or that, to its
knowledge, a possible violation of applicable law may have occurred or, with the
passage of time, could occur, the Administrator shall promptly notify the Trust
and its counsel of such violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
3
<PAGE>
6. RECORDS.
The records maintained by the Administrator shall be the property of
the Trust, and shall be surrendered to the Trust, at the expense of the Trust,
promptly upon request by the Trust, provided that all service fees and expenses
charged by the Administrator in the performance of its duties hereunder have
been fully paid to the satisfaction of the Administrator, in the form in which
such accounts and records have been maintained or preserved. The Administrator
agrees to maintain a back-up set of accounts and records of the Trust (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. The Administrator
shall assist the Trust's independent auditors, or, upon approval of the Trust,
any regulatory body, in any requested review of the Trust's accounts and
records. The Administrator shall preserve the accounts and records as they are
required to be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Trust.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, upon
ninety (90) days prior written notice.
Should the Trust exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, the Administrator reserves the right to charge for any
other reasonable expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the prior written consent
of the Administrator, or by the Administrator without the prior written consent
of the Trust.
10. NEW YORK LAWS TO APPLY.
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
4
<PAGE>
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. 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.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when delivered in person or by certified
mail, return receipt requested, and shall be given to the following addresses
(or such other addresses as to which notice is given):
To the Trust: To the Administrator:
M. Fyzul Khan Michael Miola
Secretary President
ORBITEX Group of Funds American Data Services, Inc.
410 Park Avenue, 18th Floor 150 Motor Parkway, Suite 109
New York, NY 10022 Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ORBITEX Group of Funds AMERICAN DATA SERVICES, INC.
By: By:
---------------------------- ------------------------
James L. Nelson, President Michael Miola, President
5
<PAGE>
SCHEDULE A
FUND LISTING
Orbitex Internet Fund
Orbitex Emerging Technology Fund
Orbitex Strategic Infrastructure Fund
Orbitex Health & Biotechnology Fund
Orbitex Financial Services Fund
Orbitex Focus 30 Fund
SCHEDULE B
ADMINISTRATIVE SERVICE FEE SCHEDULE
ADMINISTRATIVE SERVICE FEE
For the services rendered by the Administrator in its capacity as
administrator, the Trust shall pay the Administrator within ten (10) days after
receipt of an invoice from the Administrator at the beginning of each month, a
fee equal to the greater of the following, for each series of the Trust approved
by the Board of Trustees of the Trust for inclusion hereunder:
NET ASSET CHARGE (except for the Cash Reserves Fund) (based upon prior month
average net assets):
<TABLE>
<S> <C>
Assets up to $100 million...................... 10 basis points (.10%)
Assets from $100 million to $250 million....... 8 basis points (.08%)
Assets from $250 million to $500 million 5 basis points (.05%)
Greater than $500 million on................... 3 basis points (.03%)
</TABLE>
OR
MINIMUM FEE:
$40,000 per Fund per year
The Cash Reserves Fund shall pay a fee equal to two (2) basis points (.002%)
based upon prior month average net assets.
On each annual anniversary date of this Agreement, the fees enumerated above may
be increased by the change in the Consumer Price Index for the Northeast region
(CPI) for the twelve-month period ending with the month preceding such annual
anniversary date.
6
<PAGE>
Any CPI increases not charged in any given year may be
included in prospective CPI fee increases in future years.
STATE REGISTRATION (BLUE SKY) FEES
The fees enumerated above include the initial state registration, renewal and
maintenance of registrations (as detailed in Paragraph 1(l) DUTIES OF THE
ADMINISTRATOR) for three (3) states. Each additional state registration
requested will be subject to the following fees:
Initial registration ........... $295.00
Registration renewal ........... $150.00
Sales reports (if required) .... $ 25.00
OUT OF POCKET EXPENSES
The Trust shall reimburse the Administrator for any out-of-pocket
expenses, exclusive of salaries, advanced by the Administrator in connection
with but not limited to the printing or filing of documents for the Trust,
travel, telephone, quotation services, facsimile transmissions, stationery and
supplies, record storage, postage, telex, and courier charges, incurred in
connection with the performance of its duties hereunder. The Administrator shall
provide the Trust with a monthly invoice of such expenses and the Trust shall
reimburse the Administrator within fifteen (15) days after receipt thereof.
SPECIAL REPORTS
All reports and /or analyses requested by the Trust, its auditors,
legal counsel, portfolio manager, or any regulatory agency having jurisdiction
over the Trust, that are not in the normal course of fund administrative
activities as specified in Section 1 of this Agreement shall be subject to an
additional charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
7
<PAGE>
EXHIBIT (h)(5)
FUND ACCOUNTING AGREEMENT
WITH AMERICAN DATA SERVICES, INC.
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the 30th day of June 1999, by and between the ORBITEX Group of
Funds, a Delaware Business Trust, having its principal office and place of
business 410 Park Avenue, New York, NY 10022 (the "Trust"), and American Data
Services, Inc., a New York corporation having its principal office and place of
business at the Hauppauge Corporate Center, 150 Motor Parkway, Suite 109,
Hauppauge, New York 11788 ("ADS").
BACKGROUND
WHEREAS, the Trust(3) consists of various series listed in Schedule A
(collectively referred to as the "Funds") of diversified and non-diversified,
open-end management investment company registered with the United States
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Trust desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Trust certain services
appropriate to the operations of the Funds, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Trust and ADS hereby agree as follows:
1. DUTIES OF ADS.
ADS will provide the Trust with the necessary office space,
communication facilities and personnel to perform the following services for the
Trust:
(a) Timely calculate and transmit to NASDAQ the Funds' daily net
asset value and communicate such value to the Funds and their
transfer agent;
(b) Maintain and keep current all books and records of the Funds as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"),
that are applicable to the fulfillment of ADS's duties
hereunder, as well as any other documents necessary or advisable
for compliance with applicable regulations as may be mutually
agreed to between the Trust and ADS. Without limiting the
generality of the foregoing, ADS will prepare and maintain the
following records upon receipt of information in proper form
from the Funds or their authorized agents:
- Cash receipts journal
- Cash disbursements journal
- -------------------------------
(3) The term "Trust" shall refer to the ORBITEX Group of Funds, and each series
of the ORBITEX Group of Funds that is approved by the Board of Trustees of the
ORBITEX Group of Funds for inclusion under the terms of this agreement, and each
series that is so approved shall be subject to the terms of this Agreement
without the need for an amendment of or addition to this Agreement.
1
<PAGE>
- Dividend record
- Purchase and sales - portfolio securities journals
- Subscription and redemption journals
- Security ledgers
- Broker ledger
- General ledger
- Daily expense accruals
- Daily income accruals
- Securities and monies borrowed or loaned and collateral
therefore
- Foreign currency journals
- Trial balances
(c) Provide the Funds and their investment adviser with daily
portfolio valuation, net asset value calculation and other
standard operational reports as requested from time to time.
(d) Provide all raw data available from our fund accounting system
(PAIRS) for management's or the administrators preparation of
the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1a;
5. Annual proxy statement.
(e) Provide facilities to accommodate annual audit and any audits or
examinations conducted by the Securities and Exchange Commission
or any other governmental or quasi-governmental entities with
jurisdiction.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Trust in any way or otherwise be deemed an agent of the
Trust.
2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio approved for inclusion hereunder by the Board of
Trustees of the Trust, ADS shall be entitled to receive compensation and
reimbursement for all reasonable out-of-pocket expenses. The Trust agrees to pay
ADS the fees and reimbursement of out-of-pocket expenses as set forth in the fee
schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS shall be held to the exercise of reasonable care in carrying
out the provisions of the Agreement, but shall be without liability to the Trust
for any action taken or omitted by it in good faith without gross negligence,
bad faith, willful misconduct or reckless disregard of its duties hereunder. It
shall be entitled to rely upon and may act upon the accounting records and
reports generated by the Trust, advice of the Trust, or of counsel for the Trust
and upon statements of the Trust's independent accountants, and shall be without
liability for any action reasonably taken or omitted pursuant to such records
and reports or advice, provided that such action is not, to the knowledge of
ADS, in violation of applicable federal or state laws or regulations, and
provided further that such action is taken without gross negligence, bad faith,
willful misconduct or reckless disregard of its duties.
2
<PAGE>
(b) Nothing herein contained shall be construed to protect ADS against
any liability to the Trust or its security holders to which ADS shall otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Trust, reckless disregard of ADS'
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither ADS
nor its stockholders, officers, directors, employees or agents shall be subject
to, and the Trust shall indemnify and hold such persons harmless from and
against, any liability for and any damages, expenses or losses incurred by
reason of the inaccuracy of information furnished to ADS by the Trust or its
authorized agents.
4. REPORTS.
(a) The Trust shall provide to ADS on a quarterly basis a report of a
duly authorized officer of the Trust representing that all information furnished
to ADS during the preceding quarter was true, complete and correct in all
material respects. ADS shall not be responsible for the accuracy of any
information furnished to it by the Trust or its authorized agents, and the Trust
shall hold ADS harmless in regard to any liability incurred by reason of the
inaccuracy of such information.
(b) Whenever, in the course of performing its duties under this
Agreement, ADS determines, on the basis of information supplied to ADS by the
Trust or its authorized agents, that a violation of applicable law has occurred
or that, to its knowledge, a possible violation of applicable law may have
occurred or, with the passage of time, would occur, ADS shall promptly notify
the Trust and its counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed
exclusive, and ADS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of the
Trust, and shall be surrendered to the Trust, at the expense of the Trust,
promptly upon request by the Trust, provided that all service fees and expenses
charged by ADS in the performance of its duties hereunder have been fully paid
to the satisfaction of ADS, in the form in which such accounts and records have
been maintained or preserved. ADS agrees to maintain a back-up set of accounts
and records of the Trust (which back-up set shall be updated on at least a
weekly basis) at a location other than that where the original accounts and
records are stored. ADS shall assist the Trust's independent auditors, or, upon
approval of the Trust, any regulatory body, in any requested review of the
Trust's accounts and records. ADS shall preserve the accounts and records as
they are required to be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Trust.
3
<PAGE>
8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Trust exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Trust without the prior written consent
of ADS, or by ADS without the prior written consent of the Trust.
10. NEW YORK LAWS TO APPLY.
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. 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.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Trust: To ADS:
M. Fyzul Khan Michael Miola
Secretary President
ORBITEX Group of Funds American Data Services, Inc.
410 Park Avenue, 18th Floor 150 Motor Parkway, Suite 109
New York, NY 10022 Hauppauge, NY 11788
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ORBITEX Group of Funds AMERICAN DATA SERVICES, INC.
By: By:
------------------------------ -------------------------
James L. Nelson, President Michael Miola, President
SCHEDULE A
FUND LISTING
Orbitex Internet Fund
Orbitex Emerging Technologies Fund
Orbitex Strategic Infrastructure Fund
Orbitex Health & Biotechnology Fund
Orbitex Financial Services Fund
Orbitex Focus 30 Fund
SCHEDULE B
FUND ACCOUNTING FEE SCHEDULE
FUND ACCOUNTING SERVICE FEE
For the services rendered by ADS in its capacity as fund accounting agent, the
Fund shall pay ADS, within ten (10) days after receipt of an invoice from ADS at
the beginning of each month, a fee equal to:
MONTHLY FEE PER PORTFOLIO (BASED UPON PRIOR MONTH AVERAGE NET ASSETS):
Fund net assets up to $20 million:
$2,000 per Fund per month
$1,000 per additional class, in excess of initial class, per month
Fund net assets (except the Cash Reserves Fund) greater than $20 million:
$2,000 per Fund per month
$1,000 per additional class, in excess of initial class, per month
Two (2) basis points (.002%) on all assets between $25
million and $100 million
5
<PAGE>
One (1) basis point (.001%) on all assets greater than $100 million
Cash Reserves Fund net assets greater than $100 million:
$4,000 per Fund per month
$1,000 per additional class, in excess of initial class, per month
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve-month period ending with the month preceding such
annual anniversary date. Any CPI increases not charged in any given year may be
included in prospective CPI fee increases in future years.
OUT OF POCKET EXPENSES
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive of
salaries, advanced by ADS in connection with but not limited to the printing or
filing of documents for the Fund, travel, telephone, quotation services
(currently (1) $0.12 per equity valuation, $0.60 per bond valuation, and 1.50
for each foreign quotation or manual quote insertion), facsimile transmissions,
stationery and supplies, record storage, NASDAQ insertion fee ($22 (1) per
month), pro rata portion of annual SAS 70 review, postage, telex, and courier
charges, incurred in connection with the performance of its duties hereunder.
ADS shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(1) Rate subject to change on 30 days notice.
6
<PAGE>
SPECIAL REPORTS
All reports and /or analyses requested by the Fund, its auditors, legal counsel,
portfolio manager, or any regulatory agency having jurisdiction over the Fund,
that are not in the normal course of fund accounting activities as specified in
Section 1 of this Agreement shall be subject to an additional charge, agreed
upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
7
<PAGE>
EXHIBIT (j)(2)
POWER OF ATTORNEY
DATED MARCH 16, 2000
ORBITEX GROUP OF FUNDS
POWER OF ATTORNEY
We, the undersigned Trustees, of Orbitex Group of Funds (the "Trust")
hereby constitute and appoint Richard E. Stierwalt, Vali Nasr, M. Fyzul Khan,
and Max Berueffy, 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 16th of March, 2000.
/s/ Richard E. Stierwalt
- ---------------------------
Richard E. Stierwalt
/s/ Ronald S. Altbach
- ---------------------------
Ronald S. Altbach
/s/ Stephen H. Hamrick
- ---------------------------
Stephen H. Hamrick
1
<PAGE>
EXHIBIT (m)(1)
CLASS A DISTRIBUTION PLAN AND AGREEMENT
AS AMENDED MARCH 16, 2000
AMENDED 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 as of March
16, 2000 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 amended 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 Funds set forth in Appendix A, 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 0.40%, on an annualized
basis of the average net assets attributable to Class A shares of the Fund. Such
fees are to be paid by each Fund 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.
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 each Fund 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 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").
1
<PAGE>
4. This Plan may continue in full force and effect with respect to a Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan 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 the purposes for which such expenditures were made.
6. The Trust or any Fund may terminate this Plan 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 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 shall terminate automatically in the event of its assignment.
7. This Plan may not be amended to increase materially the amount of fees to be
paid by a Fund unless such amendment is approved by a vote of a majority of the
outstanding Class A shares of the affected Fund, and no material amendment to
the other provisions of this Plan 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 and account
maintenance fees with respect to a Fund will be payable by such Fund to FDI
until either this Plan and Agreement or the Distribution Agreement is terminated
or not renewed with respect to the Shares of that Fund. If either this Plan and
Agreement or the Distribution Agreement is terminated or not renewed with
respect to the Shares of any Fund, any distribution expenses incurred by FDI on
behalf of the Fund which are in excess of payments which FDI has received or
accrued through the termination date shall be the sole responsibility and
liability of FDI, and are not obligations of the Fund.
9. While this Plan 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, the terms "majority of the outstanding voting
securities," "assignment" and "interested person" shall have the same meanings
as those terms have in the 1940 Act.
2
<PAGE>
11. The Trust shall preserve copies of this Plan (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 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 Amended Class A
Distribution Plan and Agreement on the 16 day of March, 2000.
ORBITEX GROUP OF FUNDS
Attest: BY:
Secretary President
FUNDS DISTRIBUTOR, INC.
Attest: BY:
Secretary President
3
<PAGE>
APPENDIX A
ORBITEX Info-Tech & Communications Fund
ORBITEX Internet Fund
ORBITEX Emerging Technology Fund
ORBITEX Strategic Infrastructure Fund
ORBITEX Health & Biotechnology Fund
ORBITEX Energy & Basic Materials Fund
ORBITEX Financial Services Fund
ORBITEX Focus 30 Fund
ORBITEX Growth Fund
4
<PAGE>
EXHIBIT (m)(2)
CLASS B DISTRIBUTION PLAN AND AGREEMENT
AS AMENDED MARCH 16, 2000
AMENDED CLASS B DISTRIBUTION PLAN AND AGREEMENT PURSUANT TO RULE 12B-1
UNDER THE INVESTMENT COMPANY ACT OF 1940
PLAN AND AGREEMENT made as of May 27, 1998, and amended as of March 16, 2000 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 amended 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 B Shares of the Funds set forth in Appendix A, and of
such other series as may hereafter be designated (the "Funds") by the Trust's
Board of Trustees (the "Board") pursuant to which the Trust, with respect to
each Fund, will pay an account maintenance and a distribution fee to FDI in
connection with the distribution of the Class B Shares of the Fund; 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 account
maintenance services under this Plan and Agreement, an account maintenance fee
at the rate of 0.25%, and, as compensation for FDI's sales and promotional
activities and services under this Plan and Agreement, a distribution fee at the
rate of 0.75%, on an annualized basis of the average net assets attributable to
Class B shares of the Fund. Such fees are to be paid by each Fund 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. FDI shall use such fee, among other
things, to make the payments contemplated by Paragraph 2(B) below and to pay
interest and principal where such payments have been financed.
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.
2. A. The Trust hereby authorizes FDI to enter into Sub-Agreements [in the form
attached hereto] with certain securities dealers or brokers, administrators and
others ("Recipients") to provide compensation to such Recipients based on the
net asset value of shares of the Fund held by clients or customers of that
Recipient, for activities and services of the type referred to in Paragraph (B)
of this Paragraph 2.
B. FDI shall provide, or arrange for Recipients with which FDI has entered into
Sub-Agreements to provide, distribution and account maintenance services. The
distribution services shall include assistance in the offering and sale of
shares of each Fund and in other aspects of the marketing of the shares to
clients or prospective clients of the respective Recipients including any
advertising or marketing services provided by or arranged by FDI with respect to
a Fund. The account maintenance services shall include answering routine
inquiries concerning a Fund; assisting in the maintenance of accounts or
sub-accounts in a Fund and in processing purchase or redemption transactions;
making a Fund's investment plans and shareholder
1
<PAGE>
services available; and providing such other information and services to
investors in shares of a Fund as FDI or the Trust, on behalf of the Fund, may
reasonably request.
3. This Plan 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 person" of the Trust and have no direct or indirect financial
interest in the operation of this Plan or any agreements related thereto (the
"Independent Trustees").
4. This Plan may continue in full force and effect with respect to a Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan 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 the purposes for which such expenditures were made.
6. The Trust or any Fund may terminate this Plan 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 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 shall terminate automatically in the event of its assignment.
7. This Plan may not be amended to increase materially the amount of fees to be
paid by a Fund unless such amendment is approved by a vote of a majority of the
outstanding Class B shares of the affected Fund, and no material amendment to
the other provisions of this Plan 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 and account maintenance fees payable by any Fund
to FDI under this Plan 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
and account maintenance fees with respect to a Fund will be payable by such Fund
to FDI until either this Plan or the Distribution Agreement is terminated or not
renewed with respect to the Shares of that Fund. If either this Plan or the
Distribution Agreement is terminated or not renewed with respect to the Shares
of any Fund, any distribution expenses incurred by FDI on behalf of the Fund
which are in excess of payments which FDI has received or accrued through the
termination date shall be the sole responsibility and liability of FDI, and are
not obligations of the Fund.
9. While this Plan 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, the terms "majority of the outstanding voting
securities," "assignment" and "interested person" shall have the same meanings
as those terms have in the 1940 Act.
2
<PAGE>
11. The Trust shall preserve copies of this Plan (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 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 Amended Class B
Distribution Plan and Agreement on the 16 day of March, 2000.
ORBITEX GROUP OF FUNDS
Attest: BY:
Secretary President
FUNDS DISTRIBUTOR, INC.
Attest: BY:
Secretary President
3
<PAGE>
APPENDIX A
ORBITEX Info-Tech & Communications Fund
ORBITEX Internet Fund
ORBITEX Emerging Technology Fund
ORBITEX Strategic Infrastructure Fund
ORBITEX Health & Biotechnology Fund
ORBITEX Energy & Basic Materials Fund
ORBITEX Financial Services Fund
ORBITEX Focus 30 Fund
ORBITEX Growth Fund
4
<PAGE>
EXHIBIT (m)(3)
CLASS C DISTRIBUTION PLAN AND AGREEMENT
AS AMENDED MARCH 16, 2000
CLASS C DISTRIBUTION PLAN AND AGREEMENT PURSUANT TO RULE 12B-1
UNDER THE INVESTMENT COMPANY ACT OF 1940
PLAN AND AGREEMENT made as of March 16, 2000, 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 (a "Fund") 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 C Shares of the Funds set forth in Appendix A, and of
such other series as may hereafter be designated (the "Funds") by the Trust's
Board of Trustees (the "Board") pursuant to which the Trust, with respect to
each Fund, will pay an account maintenance and a distribution fee to FDI in
connection with the distribution of the Class C Shares of the Fund; 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 account
maintenance services under this Plan and Agreement, an account maintenance fee
at the rate of 0.25%, and, as compensation for FDI's sales and promotional
activities and services under this Plan and Agreement, a distribution fee at the
rate of 0.75%, on an annualized basis of the average net assets attributable to
Class B shares of the Fund. Such fees are to be paid by each Fund 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. FDI shall use such fee, among other
things, to make the payments contemplated by Paragraph 2(B) below and to pay
interest and principal where such payments have been financed.
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.
2. A. The Trust hereby authorizes FDI to enter into Sub-Agreements [in the form
attached hereto] with certain securities dealers or brokers, administrators and
others ("Recipients") to provide compensation to such Recipients based on the
net asset value of shares of the Fund held by clients or customers of that
Recipient, for activities and services of the type referred to in Paragraph (B)
of this Paragraph 2.
B. FDI shall provide, or arrange for Recipients with which FDI has entered into
Sub-Agreements to provide, distribution and account maintenance services. The
distribution services shall include assistance in the offering and sale of
shares of each Fund and in other aspects of the marketing of the shares to
clients or prospective clients of the respective Recipients including any
advertising or marketing services provided by or arranged by FDI with respect to
a Fund. The account
1
<PAGE>
maintenance services shall include answering routine inquiries concerning a
Fund; assisting in the maintenance of accounts or sub-accounts in a Fund and in
processing purchase or redemption transactions; making a Fund's investment plans
and shareholder services available; and providing such other information and
services to investors in shares of a Fund as FDI or the Trust, on behalf of the
Fund, may reasonably request.
3. This Plan 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 person" of the Trust and have no direct or indirect financial
interest in the operation of this Plan or any agreements related thereto (the
"Independent Trustees").
4. This Plan may continue in full force and effect with respect to a Fund for so
long as such continuance is specifically approved at least annually in the
manner provided for approval of this Plan 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 the purposes for which such expenditures were made.
6. The Trust or any Fund may terminate this Plan 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 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 shall terminate automatically in the event of its assignment.
7. This Plan may not be amended to increase materially the amount of fees to be
paid by a Fund unless such amendment is approved by a vote of a majority of the
outstanding Class C shares of the affected Fund, and no material amendment to
the other provisions of this Plan 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 and account maintenance fees payable by any Fund
to FDI under this Plan 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
and account maintenance fees with respect to a Fund will be payable by such Fund
to FDI until either this Plan or the Distribution Agreement is terminated or not
renewed with respect to the Shares of that Fund. If either this Plan or the
Distribution Agreement is terminated or not renewed with respect to the Shares
of any Fund, any distribution expenses incurred by FDI on behalf of the Fund
which are in excess of payments which FDI has received or accrued through the
termination date shall be the sole responsibility and liability of FDI, and are
not obligations of the Fund.
9. While this Plan 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, the terms "majority of the outstanding voting
securities," "assignment" and "interested person" shall have the same meanings
as those terms have in the 1940 Act.
2
<PAGE>
11. The Trust shall preserve copies of this Plan (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 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 Class C Distribution
Plan and Agreement on the 16 day of March, 2000.
ORBITEX GROUP OF FUNDS
Attest: BY:
Secretary President
FUNDS DISTRIBUTOR, INC.
Attest: BY:
Secretary President
3
<PAGE>
APPENDIX A
ORBITEX Info-Tech & Communications Fund
ORBITEX Internet Fund
ORBITEX Emerging Technology Fund
ORBITEX Strategic Infrastructure Fund
ORBITEX Health & Biotechnology Fund
ORBITEX Energy & Basic Materials Fund
ORBITEX Financial Services Fund
ORBITEX Growth Fund
ORBITEX Amerigo Fund
ORBITEX Clermont Fund
4
<PAGE>
EXHIBIT (o)
RULE 18f-3 PLAN
AS REVISED MARCH 16, 2000
ORBITEX GROUP OF FUNDS
REVISED RULE 18f-3 PLAN FOR MULTIPLE CLASSES OF SHARES
MARCH 16, 2000
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 each class of shares of beneficial
interest ("Shares") of each the series of the Trust (individually a "Fund" and
collectively the "Funds") and each class of Shares (individually a "Class" and
collectively the "Classes") listed in Appendix 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 March 16, 2000, 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 Act) (the "Independent Trustees"), approved and adopted
this Revised Multi-Class Plan and determined that this Multi-Class Plan is: (a)
in the best interest of the holders of Class A Shares of each Fund issuing those
shares; (b) in the best interest of the holders of Class B Shares of each Fund
issuing those shares; (c) in the best interest of the holders of Class C Shares
of each Fund issuing those shares; (d) in the best interest of the holders of
Class D Shares of Orbitex Focus 30 Fund; (e) in the best interest of the holders
of Class N Shares of each Fund issuing those shares; (f) in the best interest of
the holders of Institutional Class of the Orbitex Cash Reserves Fund; (g) in the
best interest of the holders of the Institutional Service Class of the Orbitex
Cash Reserves Fund Shares; and (h) 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 the distributor of the Shares (the
"Distributor") to individuals at net asset value plus any applicable sales
charge. The maximum sales charge for each 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. 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 .40% 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 six 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:
1
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES
YEARS AFTER PURCHASE CHARGE ON SHARES BEING SOLD
<S> <C> <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 six
years. Class B Shares are also subject to a distribution fee and an account
maintenance fee (as provided for by the Class B Distribution Plan and Agreement
Pursuant to 12b-1 under the Investment Company Act of 1940) of 0.75% and 0.25%
respectively, 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 C Shares are offered at their net asset value per share, without any
initial sales charge. However, there is a contingent deferred sales charge of 1%
on shares which are sold within eighteen months 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.
Class C Shares are also subject to a distribution fee and an account maintenance
fee (as provided for by the Class C Distribution Plan and Agreement Pursuant to
12b-1 under the Investment Company Act of 1940) of 0.75% and 0.25% respectively,
of the average daily net assets of the Fund. The minimum initial investment for
Class C Shares is $2,500 ($2,000 for individual retirement accounts).
Class D Shares are only available to shareholders who held shares of ASM Index
30 Fund on the date such fund was reorganized as the Orbitex Focus 30 Fund, to
employees of Orbitex Financial Services Group, Inc. or its affiliates (and
certain related accounts) and to certain institutional investors. The minimum
subsequent investments in Class D Shares of the Orbitex Focus 30 Fund by
individual investors is $100. Class D Shares are offered at their net asset
value per share without any initial sales charge and are not subject to any
asset-based distribution or account maintenance fee.
Class N Shares are only available to shareholders of the ORBITEX Amerigo Fund
and the ORBITEX Clermont Fund. Class N Shares are offered at their net asset
value per share without any initial sales charge and are not subject to any
asset-based distribution or account maintenance fee.
Institutional Class Shares are offered to qualified institutions and certain
fee-based investment and financial advisors at net asset value and are not
subject to any asset-based distribution or account maintenance fee. Investors in
the Class I Shares will be required to make a minimum investment of one hundred
thousand dollars ($100,000).
Institutional Service Class Shares are subject to a non 12b-1 shareholder
servicing fee of 0.25% of the average daily net assets of the Fund payable to
the Distributor for the provision of certain services. The Institution Service
Class Shares are offered at their net asset value per share without any initial
sales charge and are not subject to any asset-based distribution or account
maintenance fee.
Notwithstanding the foregoing, the aggregate amounts of any asset-based
distribution and/or account maintenance fee paid by the Trust shall not exceed
such amount as is permitted under Rule 2830 of the Conduct Rules of the National
Association of Securities dealers, Inc. (the "NASD"), as amended from time to
time, and any other rules or regulations promulgated by the NASD or the SEC
applicable to mutual fund distribution and service fees.
2
<PAGE>
SECTION 2. ALLOCATION OF CLASS EXPENSES
Class A, Class B, Class C, Class D, Class N, Institutional Class and
Institutional Service Class Shares of a Fund, if applicable, represent an
interest in the same portfolio of securities 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, account maintenance 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.
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
3
<PAGE>
By:
Title:
Attest:
4
<PAGE>
ORBITEX GROUP OF FUNDS
(RULE 18F-3) PLAN FOR MULTIPLE CLASSES OF SHARES
APPENDIX A:
FUNDS AND CLASSES
as of March 16, 2000
Fund Class
---- -----
Orbitex Info-Tech & Communications Fund Class A
Class B
Class C
Orbitex Internet Fund Class A
Class B
Class C
Orbitex Emerging Technology Fund Class A
Class B
Class C
Orbitex Strategic Infrastructure Fund Class A
Class B
Class C
Orbitex Health & Biotechnology Fund Class A
Class B
Class C
Orbitex Energy & Basic Materials Fund Class A
Class B
Class C
Orbitex Financial Services Fund Class A
Class B
Class C
Orbitex Focus 30 Fund Class A
Class B
Class D
Orbitex Growth Fund Class A
Class B
Class C
Orbitex Amerigo Fund Class C
Class N
Orbitex Clermont Fund Class C
Class N
A-1
<PAGE>
Orbitex Cash Reserves Fund Institutional
Institutional Service
A-2
