<PAGE>
As filed with the Securities and Exchange Commission on June 5, 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. 10
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 12
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:
[X] immediately upon filing pursuant to Rule 485,paragraph (b)
[ ] on _________________ 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)
[ ] 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
TECHNOLOGY COLLECTION:
ORBITEX INFO-TECH & COMMUNICATIONS FUND
ORBITEX INTERNET FUND
ORBITEX EMERGING TECHNOLOGY FUND
ORBITEX STRATEGIC INFRASTRUCTURE FUND
SECTOR COLLECTION:
ORBITEX HEALTH & BIOTECHNOLOGY FUND
ORBITEX ENERGY & BASIC MATERIALS FUND
ORBITEX FINANCIAL SERVICES FUND
CORE EQUITY COLLECTION:
ORBITEX FOCUS 30 FUND
ORBITEX GROWTH FUND
ADVISORONE ASSET ALLOCATION COLLECTION:
ORBITEX AMERIGO FUND
ORBITEX CLERMONT FUND
<PAGE>
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TABLE OF CONTENTS
<TABLE>
<S> <C>
FUNDS AT A GLANCE........................................... 3
Key Investment Concepts............................. 3
A Word about the Orbitex Group of Funds............. 3
THE ORBITEX TECHNOLOGY COLLECTION
Orbitex Info-Tech & Communications Fund............. 4
Orbitex Internet Fund............................... 10
Orbitex Emerging Technology Fund.................... 14
Orbitex Strategic Infrastructure Fund (Formerly
known as Orbitex Utilities Fund).................... 18
THE ORBITEX SECTOR COLLECTION
Orbitex Health & Biotechnology Fund................. 22
Orbitex Energy & Basic Materials Fund (Formerly
known as Orbitex Strategic Natural Resources
Fund)............................................... 26
Orbitex Financial Services Fund..................... 32
THE ORBITEX CORE EQUITY COLLECTION
Orbitex Focus 30 Fund............................... 36
Orbitex Growth Fund................................. 42
THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
Fund Structure and Common Investment Strategies..... 48
Orbitex Amerigo Fund................................ 49
Orbitex Clermont Fund............................... 55
FUND DETAILS................................................ 61
THE ORBITEX TECHNOLOGY COLLECTION
Orbitex Info-Tech & Communications Fund............. 61
Orbitex Internet Fund............................... 62
Orbitex Emerging Technology Fund.................... 63
Orbitex Strategic Infrastructure Fund............... 64
THE ORBITEX SECTOR COLLECTION
Orbitex Health & Biotechnology Fund................. 65
Orbitex Energy & Basic Materials Fund............... 66
Orbitex Financial Services Fund..................... 67
THE ORBITEX CORE EQUITY COLLECTION
Orbitex Focus 30 Fund............................... 68
Orbitex Growth Fund................................. 69
THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
Orbitex Amerigo Fund................................ 70
Orbitex Clermont Fund............................... 70
MORE INFORMATION ABOUT RISKS................................ 72
YOUR ACCOUNT................................................ 75
Types of Accounts................................... 75
Choosing a Class.................................... 75
Classes in Detail................................... 78
Rule 12b-1 Plans in Detail.......................... 81
Purchasing Shares................................... 82
Redeeming Shares.................................... 85
Exchanging Shares................................... 89
PRICING OF FUND SHARES...................................... 90
DISTRIBUTIONS............................................... 90
FEDERAL TAX CONSIDERATIONS.................................. 91
Taxes on Distributions.............................. 91
Taxes on Sales or Exchanges......................... 91
"Buying a Dividend"................................. 91
Tax Withholding..................................... 91
MANAGEMENT.................................................. 92
Investment Adviser.................................. 92
Other Service Providers............................. 92
FINANCIAL HIGHLIGHTS........................................ 94
</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>
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FUNDS AT A GLANCE - KEY INVESTMENT CONCEPTS
This Prospectus describes each fund's 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
judgment 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.
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.
Prospectus - 3
<PAGE>
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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 61).
- 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.
- 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.
- 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
Prospectus - 4
<PAGE>
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 NON-DIVERSIFICATION: Because the Orbitex Info-Tech & Communications
Fund is non-diversified, it may have a greater exposure to volatility than
other funds. Because a non-diversified fund may invest a large 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.
- RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than U.S.
investments because of factors such as unstable international political and
economic conditions, currency fluctuations, foreign controls on investment
and currency exchange, withholding taxes, a lack of adequate company
information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
WHO MAY WANT TO INVEST IN THE 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
Prospectus - 5
<PAGE>
--------------------------------------------------------------------------------
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 from year to 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
<TABLE>
<S> <C>
1998 43.43%
1999 167.86%
</TABLE>
The year-to-date return of Class A Shares for the period ended April 30, 2000
was 11.00%. 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).
Prospectus - 6
<PAGE>
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>
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 Funds 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, an unmanaged index, is a registered
trademark of McGraw-Hill Co., Inc. The Orbitex Group of Funds is neither
affiliated with, nor endorsed by, McGraw-Hill Co., Inc. 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.
Prospectus - 7
<PAGE>
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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
-------- -------- --------
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a %
of offering price) 5.75%(1) None None
Maximum Deferred Sales Charge (Load) (as a % of lower of
original purchase price or 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 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%
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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc. has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C do 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.
Prospectus - 8
<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 (as of the beginning of calendar year 2000) 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 $4,666 $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 $4,666 $4,785
</TABLE>
Prospectus - 9
<PAGE>
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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 62).
- 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.
- 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 stock 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 issuer's securities can
rise or fall dramatically with little or no warning based upon such things as
a better (or worse)
Prospectus - 10
<PAGE>
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 SMALL COMPANY STOCKS: The Orbitex Internet Fund may invest in a
company without regard to the total value of the company's outstanding stock,
or its "market capitalization." "Mid-cap" stocks (companies with a market
capitalization between $1 billion and $5 billion) and "small-cap" stocks
(companies with a market capitalization under $1 billion) are often more
volatile and entail greater risk than stocks of larger companies. Small- and
Mid-cap stocks may also be less marketable than the stocks of larger
companies, and may not pay dividends. Although income is not a primary goal
of the Fund, dividends can cushion returns in a falling market.
- 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:
- high long-term growth
- a stock fund to complement a portfolio of more conservative investments
- a stock fund that uses primarily a growth-oriented investment strategy
- a stock fund that invests in foreign and domestic companies
Prospectus - 11
<PAGE>
--------------------------------------------------------------------------------
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 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 2.16%(6) 2.16%(6) 2.16%(6)
----- ----- -----
Total Annual Operating Expenses 3.81% 4.41% 4.41%
Fee Waiver and Expense Reimbursement 1.81%(7) 1.81%(7) 1.81%(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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc. has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C do 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.
Prospectus - 12
<PAGE>
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 (as of the beginning of calendar year 2000) 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 $1,515 $1,472 $1,172
</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 $1,515 $1,172 $1,172
</TABLE>
Prospectus - 13
<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 63).
- 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.
- 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.
Prospectus - 14
<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 market as a whole. An individual issuer's securities can
rise or fall dramatically with little or no warning based upon such things as
a better (or worse) than expected earnings report, news about the development
of a promising product, or the loss of key management personnel. There is
also a risk that the price of a security may never reach a level that the
Adviser believes is representative of its full value or that it may even go
down in price.
- INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than U.S.
investments because of factors such as unstable international political and
economic conditions, currency fluctuations, foreign controls on investment
and currency exchange, withholding taxes, a lack of adequate company
information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
- RISKS OF SMALL COMPANY STOCKS: The Orbitex Emerging Technology Fund may
invest in a company without regard to the total value of the company's
outstanding stock, or its "market capitalization." "Mid-cap" stocks
(companies with a market capitalization between $1 billion and $5 billion)
and "small-cap" stocks (companies with a market capitalization under $1
billion) are often more volatile and entail greater risk than stocks of
larger companies. Small- and Mid-cap stocks may also be less marketable than
the stocks of larger companies, and may not pay dividends. Although income is
not a primary goal of the Fund, dividends can cushion returns in a falling
market.
- 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:
- high long-term growth
- a stock fund to complement a portfolio of more conservative investments
- a stock fund that uses primarily a growth-oriented investment strategy
- a stock fund that invests in foreign and domestic companies
Prospectus - 15
<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 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 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 2.16%(6) 2.16%(6) 2.16%(6)
----- ----- -----
Total Annual Operating Expenses 3.81% 4.41% 4.41%
Fee Waiver and Expense Reimbursement 1.81%(7) 1.81%(7) 1.81%(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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc.has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C Shares do 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.
Prospectus - 16
<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 (as of the beginning of calendar year 2000) 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 $1,515 $1,472 $1,172
</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 $1,515 $1,172 $1,172
</TABLE>
Prospectus - 17
<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 64). 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.
- 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
Prospectus - 18
<PAGE>
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 the diversification of certain telecommunications companies
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 the companies in the industry can change,
and this regulation may prevent or delay the utility company 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.
- 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 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.
- RISKS OF SMALL COMPANY STOCKS: The Orbitex Strategic Infrastructure Fund may
invest in a company without regard to the total value of the company's
outstanding stock, or its "market capitalization." "Mid-cap" stocks
(companies with a market capitalization between $1 billion and $5 billion)
and "small-cap" stocks (companies with a market capitalization under $1
billion) are often more volatile and entail greater risk than stocks of
larger companies. Small- and Mid-cap stocks may also be less marketable than
the stocks of larger companies, and may not pay dividends. Although income is
not a primary goal of the Fund, dividends can cushion returns in a falling
market.
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
Prospectus - 19
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX STRATEGIC INFRASTRUCTURE FUND
PERFORMANCE AND VOLATILITY
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
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 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 2.16%(6) 2.16%(6) 2.16%(6)
----- ----- -----
Total Annual Operating Expenses 3.81% 4.41% 4.41%
Fee Waiver and Expense Reimbursement 1.81%(7) 1.81%(7) 1.81%(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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc. has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C Shares do 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.
Prospectus - 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 (as of the beginning of calendar year 2000) 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 $1,515 $1,472 $1,172
</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 $1,515 $1,172 $1,172
</TABLE>
Prospectus - 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 65). 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 sell the securities of a company when the
industry in which the company operates has undergone a shift in focus or
industry dynamics.
[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.
Prospectus - 22
<PAGE>
- 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.
- INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- 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 the 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.
- 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.
WHO MAY WANT TO INVEST IN THE ORBITEX HEALTH & BIOTECHNOLOGY FUND?
We designed the ORBITEX HEALTH & BIOTECHNOLOGY FUND for investors who want to
capitalize on potential opportunities in the health and biotechnology industries
and who seek one or more of the following:
- high long-term growth
- a stock fund that invests in companies that are involved in the
healthcare and biotechnology industries
- a stock fund to complement a portfolio of more conservative investments
- a stock fund that uses primarily a growth-oriented investment strategy
- a stock fund that invests in domestic and foreign companies
Prospectus - 23
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX HEALTH & BIOTECHNOLOGY FUND
PERFORMANCE AND VOLATILITY
No performance information is included because as of June 5, 2000, the Orbitex
Health & Biotechnology Fund did not have a full calendar year of 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 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 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 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% 3.86% 3.86%
Fee Waiver and Expense 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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc. has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C Shares do 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.
Prospectus - 24
<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 (as of the beginning of calendar year 2000) 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-Registered Trademark- Index** N/A 4.83%
Lipper Health & Biotechnology Funds Index*** N/A 5.36%
</TABLE>
* CLASS A SHARES AND CLASS B SHARES COMMENCED OPERATIONS ON JULY 15, 1999.
** 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 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
Prospectus - 25
<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, 2000, 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 66).
- 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
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 market as a whole. An individual issuer's securities can
rise or fall dramatically with little or no warning
Prospectus - 26
<PAGE>
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 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 Energy & Basic Materials
Fund is non-diversified, it may have a greater exposure to volatility than
other funds. Because a non-diversified fund may invest a large 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.
- RISKS OF SMALL COMPANY STOCKS: The Orbitex Energy & Basic Materials Fund may
invest in a company without regard to the total value of the company's
outstanding stock, or its "market capitalization." "Mid-cap" stocks
(companies with a market capitalization between $1 billion and $5 billion)
and "small-cap" stocks (companies with a market capitalization under $1
billion) are often more volatile and entail greater risk than stocks of
larger companies. Small- and Mid-cap stocks may also be less marketable than
the stocks of larger companies, and may not pay dividends. Although income is
not a primary goal of the Fund, dividends can cushion returns in a falling
market.
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
- a stock fund that invests in foreign and domestic companies
Prospectus - 27
<PAGE>
--------------------------------------------------------------------------------
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 from year to 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
<TABLE>
<S> <C>
1998 (23.90)%
1999 38.54%
</TABLE>
The year-to-date return of Class A Shares for the period ended April 30, 2000
was 16.67%. 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).
Prospectus - 28
<PAGE>
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>
PAST 1 YEAR LIFE OF 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.
*** 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.
Prospectus - 29
<PAGE>
--------------------------------------------------------------------------------
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 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 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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc. has agreed contractually to waive its management
fee and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratios of Class A Shares, Class B Shares and
Class C Shares do 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.
Prospectus - 30
<PAGE>
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 (as of the beginning of calendar year 2000) 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 $2,130 $2,112 $1,812
5 $3,435 $3,477 $3,277
10 $6,457 $6,505 $6,596
</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 $2,130 $1,812 $1,812
5 $3,435 $3,277 $3,277
10 $6,457 $6,505 $6,596
</TABLE>
Prospectus - 31
<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 67). 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.
[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
Prospectus - 32
<PAGE>
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 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.
- 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 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.
- RISKS OF SMALL COMPANY STOCKS: The Orbitex Financial Services Fund may
invest in a company without regard to the total value of the company's
outstanding stock, or its "market capitalization." "Mid-cap" stocks
(companies with a market capitalization between $1 billion and $5
billion) and "small-cap" stocks (companies with a market capitalization
under $1 billion) are often more volatile and entail greater risk than
stocks of larger companies. Small- and Mid-cap stocks may also be less
marketable than the stocks of larger companies, and may not pay
dividends. Although income is not a primary goal of the Fund, dividends
can cushion returns in a falling market.
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
Prospectus - 33
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX FINANCIAL SERVICES FUND
PERFORMANCE AND VOLATILITY
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
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 1.25% 1.25% 1.25%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 2.16%(6) 2.16%(6) 2.16%(6)
----- ----- -----
Total Annual Operating Expenses 3.81% 4.41% 4.41%
Fee Waiver and Expense Reimbursement 1.81%(7) 1.81%(7) 1.81%(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 1.00%
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 are estimated for the current fiscal year.
(7) Orbitex Management, Inc. has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C Shares do 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.
Prospectus - 34
<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 (as of the beginning of calendar year 2000) 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 $1,515 $1,472 $1,172
</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 $1,515 $1,172 $1,172
</TABLE>
Prospectus - 35
<PAGE>
--------------------------------------------------------------------------------
THE ORBITEX CORE EQUITY COLLECTION
The Orbitex Core 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 it 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 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.
[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 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.
------------------------
* "Dow Jones Industrial Average" and "DJIA" are the property of Dow Jones &
Company. The Orbitex Focus 30 Fund is neither affiliated with, nor endorsed by,
Dow Jones & Company.
------------------------
** "S&P 500 Index" is a registered trademark of McGraw-Hill Co., Inc. The
Orbitex Focus 30 Fund is neither affiliated with, nor endorsed by, McGraw- Hill
Co., Inc.
Prospectus - 36
<PAGE>
- 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
Prospectus - 37
<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 are
applied to the Fund.
The bar chart and table below show the performance of Class D Shares of the
Orbitex Focus 30 Fund from year to year 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 SHARES
TOTAL RETURN FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<S> <C>
1992 5.70%
1993 13.33%
1994 1.04%
1995 29.05%
1996 24.78%
1997 24.51%
1998 16.78%
1999 27.68%
</TABLE>
The year-to-date return of Class D Shares for the period ended April 30, 2000
was (7.11%). 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).
Prospectus - 38
<PAGE>
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 PAST 5 YEARS LIFE OF FUND
<S> <C> <C> <C>
Orbitex Focus 30 Fund Class A* 21.46% 18.27% 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 AND CLASS B RETURNS PRIOR TO JULY 12, 1999 ARE THOSE OF CLASS D,
WHICH REFLECT NO 12B-1 FEE. IF CLASS A AND CLASS B 12B-1 FEES 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.
Prospectus - 39
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX FOCUS 30 FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A Shares, Class B Shares or Class D Shares of the Orbitex Focus 30 Fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS D
-------- -------- --------
SHARES SHARES SHARES
-------- -------- --------
<S> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum Sales Charge (Load) Imposed on Purchase (as a %
of offering price) 5.75%(1) None None
Maximum Deferred Sales Charge (Load) (as a % of lower of
original purchase price or redemption proceeds) None(2) 5.00%(3) None
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends/ Distributions None None None
Redemption Fee (as a % of amount redeemed, if applicable) None None None
Exchange Fee None None None
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED
FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(4) 0.00%
Other Expenses 4.47% 4.47% 4.47%
----- ----- -----
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% 2.00% 1.00%
===== ===== =====
</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) 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 been 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, Inc. 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 ratios of Class A
Shares, Class B Shares and Class D Shares do 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.
Prospectus - 40
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the
Orbitex Focus 30 Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated (as of the beginning of calendar year 2000) and then redeem all of
your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year, that you reinvest all dividends and
distributions, and that the Fund's operating expenses remain the same. Although
your actual costs and the return on your investment may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
YEAR CLASS A CLASS B CLASS D
---- -------- -------- --------
<S> <C> <C> <C>
1 $ 697 $ 690 $ 89
3 $1,789 $1,758 $1,174
5 $2,868 $2,894 $2,254
10 $5,506 $5,550 $4,933
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR CLASS A CLASS B CLASS D
---- -------- -------- --------
<S> <C> <C> <C>
1 $ 697 $ 190 $ 89
3 $1,789 $1,458 $1,174
5 $2,868 $2,694 $2,254
10 $5,506 $5,550 $4,933
</TABLE>
Prospectus - 41
<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:
- 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 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
Prospectus - 42
<PAGE>
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 GROWTH FUND?
We designed the ORBITEX GROWTH FUND for investors who seek one or more of the
following:
- high long-term growth
- a stock fund to serve as a core holding in an investor's portfolio
- a stock fund to complement a portfolio of more conservative investments
- a stock fund that uses a blend of value and growth investment styles
- a stock fund that invests in domestic and foreign companies
Prospectus - 43
<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 from year to 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
<TABLE>
<S> <C>
1998 7.55%
1999 98.39%
</TABLE>
The year-to-date return of Class A Shares for the period ended April 30, 2000
was (5.40%). 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).
Prospectus - 44
<PAGE>
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 RETURNS
PRIOR TO SEPTEMBER 16, 1998 ARE THOSE OF CLASS A, WHICH REFLECT A 12B-1 FEE
OF 0.40%. IF THE CLASS B 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 MULTI-CAP CORE 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.
Prospectus - 45
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX GROWTH FUND
INVESTOR EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Class A, Shares, 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 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 0.75% 0.75% 0.75%
Distribution and/or Service (12b-1) Fees 0.40% 1.00%(5) 1.00%(5)
Other Expenses 16.88% 16.88% 16.88%
------ ------ ------
Total Annual Operating Expenses 18.03% 18.63% 18.63%(6)
Fee Waiver and Reimbursement 16.03%(7) 16.03%(7) 16.03%(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 1.00%
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, Inc. has agreed contractually to waive its
management fee and to reimburse expenses, other than extraordinary or
non-recurring expenses, so that the expense ratios of Class A Shares,
Class B Shares and Class C Shares do 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.
Prospectus - 46
<PAGE>
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 (as of the beginning of calendar year 2000) 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 $3,826 $3,876 $3,576
5 $6,140 $6,248 $6,048
10 $9,749 $9,786 $9,817
</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 $3,826 $3,576 $3,576
5 $6,140 $6,048 $6,048
10 $9,749 $9,786 $9,817
</TABLE>
Prospectus - 47
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - 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 Funds' 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 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.
Prospectus - 48
<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 Orbitex Amerigo Fund is 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.
- 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 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 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.
Prospectus - 49
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX AMERIGO FUND
- 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.
- INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than U.S.
investments because of factors such as unstable international political and
economic conditions, currency fluctuations, foreign controls on investment
and currency exchange, withholding taxes, a lack of adequate company
information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
WHO MAY WANT TO INVEST IN THE 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
Prospectus - 50
<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 showing changes in the performance of Class N
Shares of the CLS Amerigo Fund from year to year and by showing how the Fund's
average annual returns compare with those of a broad measure of market
performance. Past performance does not necessarily indicate how the Fund will
perform in the future.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ORBITEX AMERIGO FUND CLASS N SHARES
<TABLE>
<S> <C>
TOTAL RETURN FOR THE YEAR ENDED DECEMBER 31
1998 16.50%
1999 41.22%
</TABLE>
The year-to-date return of Class N Shares for the period ended April 30, 2000
was (0.61%). During the period shown in the bar chart, the highest return for a
quarter was 26.23% (quarter ended December 31, 1999) and the lowest return for a
quarter was (13.87%) (quarter ended September 30, 1998).
Prospectus - 51
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX AMERIGO FUND
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
PAST 1 YEAR LIFE OF FUND
<S> <C> <C>
Orbitex Amerigo Fund(1) 41.22% 23.22%
S&P 500-Registered Trademark- Index(2) 21.04% 23.02%
Morningstar Multi-Asset Global Funds(3) Average 18.39% 10.31%
</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
charge. The annual returns shown in the bar chart and the average annual
total return shown above have not been adjusted to reflect these expenses or
sales loads. If they were, the returns would have been lower.
(2) 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.
(3) The Morningstar Multi-Asset Global Funds 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.
Prospectus - 52
<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>
CLASS C CLASS N
-------- -------
SHARES SHARES
-------- -------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
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 purchase price or redemption proceeds) 1.00%(1) None
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%(2) None
Other Expenses 1.29% 1.29%
----- -----
Total Annual Operating Expenses 3.29% 2.29%
Fee Waiver and Reimbursement 1.14%(3) 1.14%
----- -----
Net Expenses 2.15%(3) 1.15%(3)
===== =====
</TABLE>
--------------------------------------------------------------------------------
(1) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(2) Including a 0.25% shareholder servicing fee.
(3) Orbitex Management, Inc. has agreed contractually to waive its management
fee and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratios of Class C Shares and Class N Shares
do not exceed 2.15% and 1.15%, 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.
Prospectus - 53
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX AMERIGO FUND
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 (as of the beginning of calendar year 2000) 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 C CLASS N
---- -------- --------
<S> <C> <C>
1 $ 318 $ 117
3 $ 906 $ 606
5 $1,619 $1,121
10 $3,508 $2,537
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR CLASS C CLASS N
---- -------- --------
<S> <C> <C>
1 $ 218 $ 117
3 $ 906 $ 606
5 $1,619 $1,121
10 $3,508 $2,537
</TABLE>
Prospectus - 54
<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]
INVESTMENT OBJECTIVE
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.
[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.
- 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
securities 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 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
Prospectus - 55
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
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.
- INFLATION RISK: There is a possibility that rising prices of goods and
services may have the effect of offsetting the Fund's total return.
- RISKS OF FOREIGN SECURITIES: Foreign securities may be riskier than U.S.
investments because of factors such as unstable international political and
economic conditions, currency fluctuations, foreign controls on investment
and currency exchange, withholding taxes, a lack of adequate company
information, less liquid and more volatile markets, and a lack of
governmental regulation. Consequently, there is a risk that a foreign
security may never reach the price that the Adviser believes is
representative of its full value or that it may even go down in price.
WHO MAY WANT TO INVEST IN THE 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
Prospectus - 56
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
PERFORMANCE AND VOLATILITY
Before June 5, 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 showing changes in the performance of Class N
Shares of the CLS Clermont Fund from year to year and by showing how the Fund's
average annual returns compare with those of a broad measure of market
performance. Past performance does not necessarily indicate how the Fund will
perform in the future.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ORBITEX CLERMONT FUND CLASS N SHARES
<TABLE>
<S> <C>
TOTAL RETURN FOR THE YEAR ENDED DECEMBER 31
1998 6.93%
1999 18.03%
</TABLE>
The year to date return of Class N Shares for the period ended April 30, 2000
was 0.12%. 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).
Prospectus - 57
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
AVERAGE ANNUAL TOTAL RETURN (FOR THE PERIOD ENDED DECEMBER 31, 1999)(1)
<TABLE>
<CAPTION>
PAST 1 YEAR LIFE OF FUND
<S> <C> <C>
Orbitex Clermont Fund(1) 18.03% 10.69%
S&P 500-Registered Trademark- Index(2) 21.04% 23.02%
Morningstar Multi-Asset Global Funds(3) Average 18.39% 10.31%
</TABLE>
(1) The performance figures shown 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
charge. The annual returns shown in the bar chart and the average annual
total return shown above have not been adjusted to reflect these expenses or
sales loads. If they were, the returns would have been lower.
(2) 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.
(3) The Morningstar Multi-Asset Global Funds 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.
Prospectus - 58
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
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>
CLASS C CLASS N
-------- --------
SHARES SHARES
-------- --------
<S> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
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 purchase price or redemption proceeds) 1.00%(1) None
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%(2) None
Other Expenses 2.31% 2.31%
----- -----
Total Annual Operating Expenses 4.31% 3.31%
Fee Waiver and Reimbursement 2.16%(3) 2.16%
----- -----
Net Expenses 2.15%(3) 1.15%(3)
===== =====
</TABLE>
--------------------------------------------------------------------------------
(1) The CDSC applies to redemptions of Class C shares within eighteen months
of purchase.
(2) Including a 0.25% shareholder servicing fee.
(3) Orbitex Management, Inc. has agreed contractually to waive its management
fee and to reimburse expenses, other than extraordinary or non-recurring
expenses, so that the expense ratios of Class C Shares and Class N Shares
do not exceed 2.15% and 1.15%, 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.
Prospectus - 59
<PAGE>
--------------------------------------------------------------------------------
FUNDS AT A GLANCE - ORBITEX CLERMONT FUND
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 (as of the beginning of calendar year 2000) 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 C CLASS N
---- -------- --------
<S> <C> <C>
1 $ 318 $ 117
3 $1,111 $ 816
5 $2,016 $1,539
10 $4,334 $3,456
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
YEAR CLASS C CLASS N
---- -------- --------
<S> <C> <C>
1 $ 218 $ 117
3 $1,111 $ 816
5 $2,016 $1,539
10 $4,334 $3,456
</TABLE>
Prospectus - 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.
[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
Glen H. Frey manages the Orbitex Info-Tech & Communications Fund. Mr. Frey
joined Orbitex Management, Inc. in May 2000, bringing with him more than five
years experience as a technology manager and analyst. Before coming to Orbitex,
Mr. Frey had been a portfolio manager with Morgan Stanley Dean Witter Advisors.
Prospectus - 61
<PAGE>
--------------------------------------------------------------------------------
FUND DETAILS - ORBITEX INTERNET FUND
INVESTMENT DETAILS OF THE ORBITEX INTERNET FUND
[LOGO]
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.
[LOGO]
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 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.
[LOGO]
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
Glen H. Frey manages the Orbitex Internet Fund. Mr. Frey joined Orbitex
Management, Inc. in May 2000, bringing with him more than five years experience
as a technology manager and analyst. Before coming to Orbitex, Mr. Frey had been
a portfolio manager with Morgan Stanley Dean Witter Advisors.
Prospectus - 62
<PAGE>
--------------------------------------------------------------------------------
FUND DETAILS - ORBITEX EMERGING TECHNOLOGY FUND
INVESTMENT DETAILS OF THE ORBITEX EMERGING TECHNOLOGY FUND
[LOGO]
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.
[LOGO]
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, 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.
[LOGO]
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
Richard A. Begun is the portfolio manager for the Orbitex Emerging Technology
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.
Prospectus - 63
<PAGE>
--------------------------------------------------------------------------------
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 infrastructure industries.
The Fund defines an 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.
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
Kenneth Hoffman, CFA is the portfolio manager for the Orbitex Strategic
Infrastructure 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.
Prospectus - 64
<PAGE>
--------------------------------------------------------------------------------
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.
- 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 comes 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 Orbitex 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 1989-1995.
Prospectus - 65
<PAGE>
--------------------------------------------------------------------------------
FUND DETAILS - ORBITEX ENERGY & BASIC MATERIALS FUND
INVESTMENT DETAILS OF THE ORBITEX
ENERGY & BASIC MATERIALS FUND
Prior to June 5, 2000, 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),
- 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 Orbitex 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.
Prospectus - 66
<PAGE>
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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 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
The Orbitex Financial Services Fund is managed by a team of investment
professionals at Orbitex Management, Inc. who are primarily responsible for day
to day decisions regarding the Fund's investments.
Prospectus - 67
<PAGE>
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THE ORBITEX CORE EQUITY COLLECTION
--------------------------------------------------------------------------------
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 it 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 Orbitex 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.
Prospectus - 68
<PAGE>
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FUND DETAILS - ORBITEX GROWTH FUND
INVESTMENT DETAILS OF THE ORBITEX
GROWTH FUND
[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 Orbitex 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.
Prospectus - 69
<PAGE>
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THE ORBITEX ADVISORONE ASSET ALLOCATION COLLECTION
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")
STOCK SEGMENT
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 individual 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, 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
Prospectus - 70
<PAGE>
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 Orbitex Amerigo Fund and Orbitex Clermont Fund 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 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.
Prospectus - 71
<PAGE>
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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.
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 Info-Tech & Communications Fund,
Orbitex Strategic Infrastructure Fund, Orbitex Health & Biotechnology Fund,
Orbitex Energy & Basic Materials Fund, Orbitex Financial Services Fund and
Orbitex Growth 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
Prospectus - 72
<PAGE>
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.
PORTFOLIO TURNOVER RATES. The portfolio turnover rates for the fiscal year ended
April 30, 1999, of the Orbitex Info-Tech & Communications Fund, the Orbitex
Energy & Basic Materials Fund and Orbitex Growth Fund were 360%, 921% and 957%,
respectively. The portfolio turnover rate for the fiscal year ended October 31,
1999 of the Orbitex Focus 30 Fund was 61%. 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 Orbitex 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 Orbitex 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 Orbitex 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 91.
Prospectus - 73
<PAGE>
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MORE INFORMATION ABOUT RISKS
LITIGATION THAT MAY AFFECT THE ORBITEX 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 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. On
February 9, 2000, one suit was amended to allege claims against the former
directors of the ASM Fund for failure to supervise. The first suit also alleged
improper and unauthorized redemptions of ASM Fund Shares owned by the
plaintiffs. The relief sought is the recovery of the investment amounts and
interest thereon, additional general, consequential and incidental damages,
legal costs and disbursements, and declaratory and injunctive relief to preclude
the ASM 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 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.
Prospectus - 74
<PAGE>
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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 / /
---------------------------------------------------------
ORBITEX GROUP OF FUNDS 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 / / / /
Clermont Fund / / / /
</TABLE>
------------------------
* Class D Shares of the Orbitex 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.
Prospectus - 75
<PAGE>
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 81 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 eight 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
eight 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.
Prospectus - 76
<PAGE>
<TABLE>
<S> <C>
CLASS A--INITIAL SALES CHARGE CLASS B--CONTINGENT DEFERRED SALES CHARGE
- Initial sales charge of 5.75% or less (see - No initial sales charge. This allows 100%
chart on page 78). of your purchase price to be invested in
- Lower sales charges for larger investments the Fund.
(see page 78). - Deferred sales charge of 5.00% or less on
- Lower annual expenses than Class B Shares shares you redeem within eight years (see
due to lower marketing and service chart on page 80).
(12b-1) fee of 0.40%. - An annual fee of 1.00% under each Fund's
rule 12b-1 plan, 0.75% of which is for
marketing and 0.25% of which is for
shareholder services. This will result in a
lower total return than comparable Class A
Shares.
- Automatic conversion to Class A Shares
after eight years, thereby reducing future
annual expenses.
CLASS C--LEVEL LOAD CLASS D--NO SALES CHARGE
(ALL FUNDS EXCEPT THE ORBITEX FOCUS 30 FUND) (ORBITEX FOCUS 30 FUND ONLY)
- No initial sales charge. Note: Class D Shares are only available to
- Deferred sales charge of 1.00% paid only shareholders who were shareholders of the ASM
on shares redeemed within 18 months of Index 30 Fund, certain Institutional Investors,
purchase. and individuals specified on page 81.
- An annual fee of 1.00% under each Fund's - No initial or contingent deferred sales
rule 12b-1 plan, 0.75% of which is for charge.
marketing and 0.25% of which is for - No annual marketing or service (12b-1) fee.
shareholder services. This will result in a - Lower annual expenses than Class A,
lower total return than comparable Class A Class B or Class C.
Shares.
- Class C Shares do not convert to another
class.
CLASS N--(ORBITEX AMERIGO AND ORBITEX CLERMONT
FUNDS ONLY)
- No initial or contingent deferred sales
charge
- No annual marketing or service (12b-1)
fee.
- Lower annual expenses than Class A,
Class B or Class C.
</TABLE>
Prospectus - 77
<PAGE>
CLASSES IN DETAIL
CLASS A--INITIAL SALES CHARGE
The sales charge for Class A Shares of all Funds is 5.75% of the offering price.
However, the Adviser may reduce or waive this sales charge as described in
"Reduced Sales Charge."
REDUCED SALES CHARGE
You can qualify for a reduction or waiver of this sales charge by investing one
lump sum in a particular class of a Fund. You can also qualify for a sales
charge reduction or waiver through a right of accumulation or a letter of intent
if you are a United States resident. See the discussions of "Right of
Accumulation" and "Letter of Intent" on page 80."
If you are a United States resident and are investing more than $50,000, the
Adviser will reduce the sales charge you pay. The chart at the bottom of this
page shows the sales charge you will pay based on the amount of your purchase.
You can purchase Class A Shares without any initial sales charge if you are a
United States resident and invest $1 million or more in Class A shares. However,
if you redeem those shares within one year of the purchase, you must pay a
contingent deferred sales charge of 1%. We will waive the contingent deferred
sales charge only in the following situations:
- If the Fund involuntarily redeems your shares; or
- If you reinvest the proceeds from your redemption in the Funds within 90 days
of your redemption.
REDUCED SALES CHARGES FOR U.S. RESIDENTS
<TABLE>
<CAPTION>
SALES CHARGE AS A BROKER REALLOWANCE
SALES CHARGE AS A PERCENTAGE OF AS A
PERCENTAGE OF NET INVESTMENT PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE (NET ASSET VALUE) OFFERING PRICE(1)
------------------ -------------- ----------------- -----------------
<S> <C> <C> <C>
Less than $50,000 5.75% 6.10% 5.00%
$50,000 but less than $100,000 4.50% 4.71% 3.75%
$100,000 but less than $250,000 3.50% 3.63% 2.75%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None (See below)(2) None (See below)(2) (See below)(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 83) who initiate and are responsible for purchases by any single purchaser
who is a resident of the United States. For purchases of $1 million to $3
million, the Distributor will pay 1%, plus 0.50% on any amounts over $3 million
up to $50 million, and 0.25% on any amounts over $50 million.
Prospectus - 78
<PAGE>
RIGHT OF ACCUMULATION
For the purposes of determining the sales charge, the right of accumulation
allows you to include prior purchases of Class A Shares of any Orbitex Fund as
part of your current investment. To qualify for this option, you must be either:
- an individual;
- an individual and spouse purchasing shares for your own account or trust or
custodial accounts for your minor children; or
- a fiduciary purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401 or 457 of the
Internal Revenue Code, including related plans of the same employer.
If you plan to rely on this right of accumulation, you must notify the
Distributor at the time of your purchase. You will need to give the Distributor
your account numbers. If applicable, you will need to provide the account
numbers of your spouse and your minor children as well as the ages of your minor
children.
LETTER OF INTENT
The letter of intent allows you to count all investments within a 13-month
period in a Fund as if you were making them all at once for the purposes of
calculating the sales charges. The minimum initial investment under a letter of
intent is 5% of the total letter of intent amount. You may include a purchase
not originally made pursuant to a letter of intent under a letter of intent
entered into within 90 days of the original purchase.
EXCHANGES OF CLASS D SHARES OF ORBITEX FOCUS 30 FUND AND CLASS N SHARES OF
ORBITEX AMERIGO AND ORBITEX CLERMONT FUNDS INTO CLASS A SHARES OF OTHER ORBITEX
FUNDS.
You may exchange your Class D Shares of the Orbitex Focus 30 Fund, or your Class
N Shares of the Orbitex Amerigo Fund or Orbitex Clermont Fund, for Class A
Shares of another Orbitex Fund without paying any sales charge. If you close
your Class D account in the Orbitex 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 Orbitex Focus 30 Fund.
OTHER CIRCUMSTANCES
We also offer Class A Shares with low or no sales charges through various other
special arrangements. Your financial consultant can help you determine if any of
these programs is appropriate for you.
Class A Shares issued pursuant to the automatic reinvestment of income dividends
and capital gains distributions are not subject to any sales charges.
Prospectus - 79
<PAGE>
CLASS B--CONTINGENT DEFERRED SALES CHARGE
You will not pay an initial sales charge if you choose to invest in Class B
Shares. However, if you redeem your shares within six years, you will pay a
contingent deferred sales charge as described in the table below. The amount of
this charge is based on your original purchase price, or the current net asset
value of the shares you redeem, whichever is less.
We will waive the contingent deferred sales charge under the following
circumstances:
- redemptions made within one year after the death of a shareholder or
registered joint owner;
- redemptions made to facilitate minimum required distributions made from an
IRA or other retirement plan account after age 70 1/2; and
- involuntary redemptions made by a Fund.
Class B Shares issued pursuant to the automatic reinvestment of income dividends
and capital gains distributions are not subject to any contingent deferred or
other sales charges.
--------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE
<TABLE>
<CAPTION>
YEARS AFTER PURCHASE THAT YOU REDEEM YOUR SHARES CONTINGENT DEFERRED SALES CHARGE(1)
------------------------------------------------ -------------------------------------------
<S> <C>
1(st) Year 5.00%
2(nd) Year 4.00%
3(rd) Year 3.00%
4(th) Year 3.00%
5(th) Year 2.00%
6(th) Year 1.00%
7(th) Year None
8(th) Year None
After 8(th) Year 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) Effective for shares purchased on or after May 1, 2000, Class B Shares will
automatically convert to Class A Shares eight years after you purchase them.
This conversion relieves Class B shareholders who have held their shares for
more than eight 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."
Prospectus - 80
<PAGE>
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 ORBITEX 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 Orbitex Focus 30 Fund in exchange for your ASM
Fund Shares.
In addition, if you held shares of the ASM Fund on the date of reorganization,
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 ORBITEX AMERIGO FUND AND THE ORBITEX CLERMONT
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
Prospectus - 81
<PAGE>
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.
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 Orbitex 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 SIGN AN APPLICATION FOR EACH ACCOUNT YOU OPEN WITH EACH FUND.
The price for Fund shares is the Fund's net asset value per share (NAV) plus any
applicable sales charge. We determine the NAV as of the close of trading on the
New York Stock Exchange (normally 4:00 p.m. Eastern time) every day that the
Exchange is open. We will price your order at the next NAV calculated after the
Fund receives your order. For more information on how we price shares, see
"Pricing of Fund Shares" on page 90.
The Funds and the Distributor each reserve the right to reject any purchase for
any reason and to cancel any purchase due to non-payment. You must make all
purchases in United States dollars and draw all checks on United States banks.
If we cancel your purchase due to non-payment, you will be responsible for any
loss the Funds incur. We will not accept cash or third-party checks for the
purchase of shares.
Prospectus - 82
<PAGE>
<TABLE>
<S> <C>
METHOD OF
PURCHASE PURCHASE PROCEDURES
-------------------------------------------------------------------------------
THROUGH A Contact your financial consultant. Your Financial Consultant
FINANCIAL can tell you the time by which you must submit your order in
PROFESSIONAL order to begin receiving dividends that day. Your Financial
Consultant must transmit the order to the Funds before
[LOGO] 3:00 p.m.
-------------------------------------------------------------------------------
THROUGH The Distributor authorizes certain securities dealers, banks
SELLING GROUP or other financial service firms (collectively, "Selling
MEMBERS Group Members") to purchase your shares. To receive that
day's share price:
[LOGO] - you must place your order with the Selling Group Member
before the close of regular trading on the New York
Stock Exchange (normally 4:00 p.m. Eastern time); and
- the Selling Group Member must transmit the order to the
Funds before 5:00 p.m. Eastern time on that same day.
-------------------------------------------------------------------------------
BY MAIL To purchase Shares of the ORBITEX INFO-TECH & COMMUNICATIONS
FUND, ORBITEX INTERNET FUND, ORBITEX EMERGING TECHNOLOGY
[LOGO] FUND, ORBITEX STRATEGIC INFRASTRUCTURE FUND, ORBITEX
ENERGY & BASIC MATERIALS FUND, ORBITEX FINANCIAL SERVICES
FUND or ORBITEX GROWTH FUND, send your completed application
to:
Orbitex Group of Funds
P.O. Box 8069
Boston, Massachusetts 02266-8069
To purchase Shares of the ORBITEX HEALTH & BIOTECHNOLOGY
FUND, ORBITEX FOCUS 30 FUND, ORBITEX AMERIGO FUND, or
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.
</TABLE>
Prospectus - 83
<PAGE>
<TABLE>
<S> <C>
-------------------------------------------------------------------------------
BY WIRE - INITIAL PURCHASE: For ORBITEX INFO-TECH & COMMUNICATIONS
FUND, ORBITEX INTERNET FUND, ORBITEX EMERGING TECHNOLOGY
[LOGO] FUND, ORBITEX STRATEGIC INFRASTRUCTURE FUND, ORBITEX
ENERGY & BASIC MATERIALS FUND, ORBITEX FINANCIAL SERVICES
FUND OR ORBITEX GROWTH 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 ORBITEX HEALTH & BIOTECHNOLOGY
FUND or ORBITEX FOCUS 30 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."
- INITIAL PURCHASE: For ORBITEX AMERIGO FUND or 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: Firstar Bank, N.A. Cinti/Trust, ABA
No. 042-00001-3, Attn: Orbitex Group of Funds, Credit:
Name of Fund, DDA #486464423 for Orbitex Amerigo Fund and
DDA #486464431 for Orbitex Clermont Fund, FBO:
Shareholder Name, 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 the Funds at:
[LOGO] 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 4:00 p.m.
[LOGO] 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 88.
-------------------------------------------------------------------------------
SUBSEQUENT The minimum subsequent purchase is $250 per Fund, except for
PURCHASES reinvestment of dividends and distributions and Class D
purchases with minimum amount of $100.
[LOGO]
</TABLE>
Prospectus - 84
<PAGE>
<TABLE>
<S> <C>
-------------------------------------------------------------------------------
IMPORTANT NOTES Once you have requested a telephone transaction, and a
confirmation number has been assigned, the transaction
cannot be revoked. We reserve the right to refuse any
purchase request.
You can redeem shares that you purchased by check. However,
while we will process your redemption request at the
next-determined net asset value after we receive it, your
redemption proceeds will not be available until your check
clears. This could take up to ten calendar days from the
date of purchase.
</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 89.
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 88). 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 78.
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 million or more will pay a 1.00% 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 80.
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.
Prospectus - 85
<PAGE>
CLASS D SHARES. There are no a contingent deferred sales charges imposed on
redemptions of Class D Shares of the Orbitex Focus 30 Fund.
CLASS N SHARES. There are no contingent deferred sales charges imposed on
redemptions of Class N Shares of the Orbitex Amerigo Fund and the Orbitex
Clermont 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.
Prospectus - 86
<PAGE>
<TABLE>
<S> <C>
METHOD OF
REDEMPTION REDEMPTION PROCEDURES
-------------------------------------------------------------------------------
BY TELEPHONE You may authorize redemption of some or all shares in your
account with the Funds by telephoning the Funds at
[LOGO] 1-888-ORBITEX between 8:30 a.m. and 4:00 p.m. Eastern time
on any day the Funds are open. You will NOT be eligible to
use the telephone redemption service if you:
- have declined or canceled your telephone investment
privilege;
- wish to redeem less than $1,500;
- must provide supporting legal documents such as a
signature guarantee, or if necessary, for redemption
requests by corporations, trusts and partnerships; and
- wish to redeem from a retirement account.
-------------------------------------------------------------------------------
BY MAIL If you are redeeming Shares of the ORBITEX INFO-TECH &
COMMUNICATIONS FUND, ORBITEX INTERNET FUND, ORBITEX EMERGING
[LOGO] TECHNOLOGY FUND, ORBITEX STRATEGIC INFRASTRUCTURE FUND,
ORBITEX ENERGY & BASIC MATERIALS FUND, ORBITEX FINANCIAL
SERVICES FUND or ORBITEX GROWTH FUND, you may send your
redemption request to:
Orbitex Group of Funds
P.O. Box 8069
Boston, Massachusetts 02266-8069
If you are redeeming Shares of the ORBITEX HEALTH &
BIOTECHNOLOGY 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
</TABLE>
Prospectus - 87
<PAGE>
<TABLE>
<S> <C>
You must include the following information in your written
request:
- a letter of instruction stating the name of the Fund,
the number of shares you are redeeming, the names in
which the account is registered and your account number;
- other supporting legal documents, if necessary, for
redemption requests by corporations, trusts and
partnerships;
- a signature guarantee, if necessary
-------------------------------------------------------------------------------
BY WIRE You may request your redemption proceeds be wired directly
to the bank account designated on your application. The
[LOGO] Funds' transfer agent will charge you a $10.00 fee for each
wire redemption. The transfer agent will deduct the fee
directly from your account. Your bank may also impose a fee
for the incoming wire.
-------------------------------------------------------------------------------
REQUEST IN "GOOD For our mutual protection, all redemption requests must
ORDER" include:
- your account number
- the amount of the transaction
- for mail request, signatures of all owners EXACTLY as
registered on the account 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 NOTE Once we have processed your redemption request, and a
confirmation number has been given, the transaction CANNOT
be revoked.
</TABLE>
OPTIONS FOR REDEMPTION PROCEEDS
You may receive your redemption proceeds by check or by wire.
CHECK REDEMPTIONS. Normally we will mail your check within two business days of
a redemption.
WIRE REDEMPTIONS. Before you can receive redemption proceeds by wire, you must
establish this option by completing a special form or the appropriate section of
your account application.
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.
Prospectus - 88
<PAGE>
Orbitex reserves the right to refuse a telephone redemption or exchange if the
caller cannot provide:
- the account number
- the name and address exactly as registered on the account
- the primary social security or employer identification number as registered
on the account
We may also require a password from the caller.
Orbitex will not be responsible for any account losses due to telephone fraud,
so long as we have taken reasonable steps to verify the caller's identity. If
you wish to cancel the telephone redemption feature for your account, please
notify us in writing.
EXCHANGING SHARES
The exchange privilege is a convenient way to buy shares in each Fund in order
to respond to changes in your investment goals or in market conditions. You may
exchange your shares for shares of the same class of another Fund at no cost to
you (or, if you hold 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 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.
Prospectus - 89
<PAGE>
--------------------------------------------------------------------------------
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.
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 and Orbitex Growth Fund distribute dividends and capital gains
annually. These distributions will typically be declared and paid in December.
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 Amerigo Fund and Orbitex Clermont Fund distribute dividends and
capital gains annually. These distributions are declared 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.
Prospectus - 90
<PAGE>
--------------------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS
Your investment will have tax consequences that you should consider. Some of the
more common federal tax consequences are described here but you should consult
your tax consultant about your particular situation. ALTHOUGH IT IS NOT AN
INVESTMENT OBJECTIVE, THE FUNDS' ADVISER WILL ATTEMPT TO TAKE INTO ACCOUNT THE
TAX CONSEQUENCES OF ITS INVESTMENT DECISIONS. However, there may be occasions
when the Adviser's investment decisions will result in a negative tax
consequence for the Funds' shareholders.
TAXES ON DISTRIBUTIONS
You will generally be subject to pay federal income tax and possibly state taxes
on all Fund distributions. Your distributions will be taxed in the same manner
whether you receive the distributions in cash or additional shares of the Fund.
Distributions that are derived from net long-term capital gains will generally
be taxed as long-term capital gains. The rate of tax will depend on how long the
Fund held the securities on which it realized the gains. In general, for
individual shareholders, the maximum capital gain rate is 20 percent. All other
distributions, including short-term capital gains, will be taxed as ordinary
income. The Fund sends detailed tax information to its shareholders about the
amount and type of its distributions by January 31 for the prior calendar year.
TAXES ON SALES OR EXCHANGES
If you redeem your shares of a Fund, or exchange them for shares of another
Fund, you will be subject to tax on any taxable gain. Your taxable gain or loss
is computed by subtracting your tax basis in the shares from the redemption
proceeds (in the case of a sale) or the value of the shares received (in the
case of an exchange). Because your tax basis depends on the original purchase
price and on the price at which any dividends may have been reinvested, you
should keep your account statements so that you or your tax preparer will be
able to determine whether a sale or exchange will result in a taxable gain or
loss.
"BUYING A DIVIDEND"
Unless your investment is in a tax-deferred account, you may want to avoid
investing in a Fund close to the date of a distribution because you pay the full
pre-distribution price for your shares and then receive part of your investment
back as a taxable distribution.
TAX WITHHOLDING
The Funds may be required to withhold U.S. federal income tax at the rate of 31%
from all taxable distributions and from proceeds from certain sales and
exchanges payable to shareholders who fail to provide the Funds with their
correct taxpayer identification number or to make required certifications, or
who have been notified by the IRS that they are subject to backup withholding.
Any such withheld amounts may be credited against the shareholder's U.S. federal
income tax liability.
Prospectus - 91
<PAGE>
--------------------------------------------------------------------------------
MANAGEMENT
ORBITEX MANAGEMENT, INC.
Orbitex Management, Inc., is the investment adviser (the "Adviser") to the
following funds: 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. 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 Orbitex Info-Tech &
Communications Fund, 0% for the Orbitex Energy & Basic Materials Fund and 0% for
the Orbitex Growth Fund, 0% for the Orbitex Focus 30 Fund for the fiscal year
ended October 31, 1999. As of July 12, 1999, the Orbitex Health & Biotechnology
Fund commenced operations.
The Orbitex Internet Fund, Orbitex Emerging Technology Fund, Orbitex Strategic
Infrastructure Fund and Orbitex Financial Services 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 Orbitex
Amerigo Fund and the Orbitex Clermont Fund. The Adviser has been an investment
advisor to individuals, employee 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 EXCEPT FOR ORBITEX AMERIGO AND CLERMONT FUNDS
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
CUSTODIAN FOR ORBITEX AMERIGO AND CLERMONT FUNDS
Firstar Bank, N.A.
Firstar Tower
425 Walnut Street
Cincinatti, OH 45202
DISTRIBUTOR
Orbitex Funds Distributor, Inc.
14747 California Street
Omaha, Nebraska 68154
Prospectus - 92
<PAGE>
TRANSFER AND DIVIDEND DISBURSING AGENT FOR THE ORBITEX INFO-TECH &
COMMUNICATIONS FUND, ORBITEX INTERNET FUND, ORBITEX EMERGING TECHNOLOGY FUND,
ORBITEX STRATEGIC INFRASTRUCTURE FUND, ORBITEX ENERGY & BASIC MATERIALS FUND,
ORBITEX FINANCIAL SERVICES FUND, AND ORBITEX GROWTH FUND
Boston Financial Data Service, Inc.
Two Heritage Drive
North Quincy, Massachusetts 02171
TRANSFER AND DIVIDEND DISBURSING AGENT FOR THE
ORBITEX HEALTH & BIOTECHNOLOGY 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
Clifford Chance Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
Prospectus - 93
<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, for the Orbitex Info-Tech & Communications
Fund, Orbitex Energy & Basic Materials Fund (formerly Orbitex Strategic Natural
Resources Fund), Orbitex Focus 30 Fund and Orbitex Growth Fund, except for the
semi-annual 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.
This information for the Orbitex Amerigo Fund and the Orbitex Clermont Fund,
except for the semi-annual information, has been audited by KPMG 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 INFO-TECH & COMMUNICATIONS FUND
------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------
FOR THE PERIOD
ENDED FOR THE YEAR FOR THE PERIOD
OCTOBER 31, 1999 (B) ENDED ENDED
(UNAUDITED) APRIL 30, 1999 APRIL 30, 1998 (A)
-------------------- ---------------- ------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 30.62 $ 19.62 $15.00
------- ------- ------
Income (Loss) from investment operations:
Net investment gain (loss).............................. (0.22) (0.08) 0.00
Net realized and unrealized gain on investments and
foreign currency related transactions.............. 8.31 11.26 4.62
------- ------- ------
Total income from investment operations................. 8.09 11.18 4.62
------- ------- ------
Less distributions from net investment income............... -- -- --
Less distributions from net realized gains.................. -- (0.18) --
------- ------- ------
Total distributions from net investment income and net
realized gains..................................... -- (0.18) --
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 38.71 $ 30.62 $19.62
======= ======= ======
TOTAL RETURN(c)............................................. 27.59% 57.43% 30.80%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................... $64,236 $34,335 $2,440
Ratio of expenses to average net assets(d).............. 2.00% 2.07% 2.88%
Ratio of net expenses to average net assets (net of
custodial credits)(d).............................. 2.00% 2.07% 2.40%
Ratio of total expenses to average net assets before
waivers, reimbursements and custodial credits(d)... 2.69% 4.04% 39.06%
Ratio of net investment loss to average net assets(d)... (1.50)% (0.70)% (1.27)%
Portfolio turnover rate................................. 157% 360% 76%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was October 22,
1997 for Info-Tech & Communications Fund Class A Shares.
(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.
</TABLE>
Prospectus - 94
<PAGE>
<TABLE>
<CAPTION>
ORBITEX INFO-TECH &
COMMUNICATIONS FUND
------------------------------------------
CLASS B SHARES
------------------------------------------
FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1999 (B) ENDED
(UNAUDITED) APRIL 30, 1999 (A)
--------------------- ------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 30.48 $ 18.23
------- -------
Income (Loss) from investment operations:
Net investment loss..................................... (0.25) (0.08)
Net realized and unrealized gain on investments and
foreign currency related transactions................ 8.20 12.51
------- -------
Total income from investment operations................. 7.95 12.43
------- -------
Less distributions from net investment income............... -- --
Less distributions from net realized gains.................. -- (0.18)
------- -------
Total distributions from net investment income and net
realized gains....................................... -- (0.18)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 38.43 $ 30.48
======= =======
TOTAL RETURN(c)............................................. 27.25% 68.67%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................... $56,829 $18,904
Ratio of expenses to average net assets(d).............. 2.56% 2.41%
Ratio of net expenses to average net assets (net of
custodial credits)(d)................................ 2.56% 2.40%
Ratio of total expenses to average net assets before
waivers, reimbursements and custodial credits(d)..... 2.96% 4.41%
Ratio of net investment loss to average net assets(d)... (2.06)% (1.40)%
Portfolio turnover rate................................. 157% 360%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was September 16,
1998 for Info-Tech & Communications Fund Class B Shares.
(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.
</TABLE>
Prospectus - 95
<PAGE>
<TABLE>
<CAPTION>
ORBITEX HEALTH &
BIOTECHNOLOGY FUND
----------------------------------------------
CLASS A SHARES CLASS B SHARES
---------------------- ----------------------
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
OCTOBER 31, 1999 (A) OCTOBER 31, 1999 (A)
(UNAUDITED) (UNAUDITED)
---------------------- ----------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $10.00 $10.00
------ ------
Income (Loss) from investment operations:
Net investment loss....................... (0.04) (0.06)
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 0.27 0.28
------ ------
Total income from investment operations... 0.23 0.22
------ ------
Less distributions from net investment
income..................................... -- --
Less distributions from net realized gains.... -- --
------ ------
Total distributions from net investment
income and net realized gains.......... -- --
------ ------
NET ASSET VALUE, END OF PERIOD................ $10.23 $10.22
====== ======
TOTAL RETURN(b)............................... 2.30% 2.20%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...... $1,898 $1,329
Ratio of expenses to average net
assets(c).............................. 2.00% 2.60%
Ratio of total expenses to average net
assets before waivers and
reimbursements(c)...................... 13.02% 11.31%
Ratio of net investment loss to average
net assets(c).......................... (1.25)% (1.96)%
Portfolio turnover rate................... 62% 62%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was July 15, 1999.
(b) Total returns are historical and assume changes in share price,
reinvestment of dividends and capital gains distributions, and assume no
sales charge. Had the Advisor and Administrator 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>
Prospectus - 96
<PAGE>
<TABLE>
<CAPTION>
ORBITEX ENERGY & BASIC MATERIALS FUND
(FORMERLY ORBITEX STRATEGIC NATURAL RESOURCES FUND)
------------------------------------------------------------------
CLASS A SHARES
------------------------------------------------------------------
FOR THE PERIOD ENDED FOR THE YEAR FOR THE PERIOD
OCTOBER 31, 1999 (B) ENDED ENDED
(UNAUDITED) APRIL 30, 1999 (B) APRIL 30, 1998 (A)
---------------------- ------------------- -------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $14.92 $16.54 $15.00
------ ------ ------
Income (Loss) from investment operations:
Net investment gain (loss).............................. (0.04) 0.00(f) 0.38(e)
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions.......... (0.14) (1.25) 1.22
------ ------ ------
Total income (loss) from investment operations.......... (0.18) (1.25) 1.60
------ ------ ------
Less distributions from net investment income............... -- (0.37) (0.03)
Less distributions from net realized gains.................. -- 0.00(f) (0.03)
------ ------ ------
Total distributions from net investment income and net
realized gains..................................... -- (0.37) (0.06)
------ ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $14.74 $14.92 $16.54
====== ====== ======
TOTAL RETURN(C)............................................. (2.32)% (6.86)% 10.74%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................... $5,091 $4,286 $5,698
Ratio of expenses to average net assets(d).............. 2.00% 2.19% 2.45%
Ratio of net expenses to average net assets (net of
custodial credits)(d).............................. 2.00% 2.17% 2.40%
Ratio of total expenses to average net assets before
waivers, reimbursements and custodial credits(d)... 5.95% 8.76% 9.27%
Ratio of net investment income (loss) to average net
assets(d).......................................... (0.55)% 0.00% 6.12%(e)
Portfolio turnover rate................................. 414% 921% 519%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was October 23,
1997 for Class A Shares.
(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.
</TABLE>
Prospectus - 97
<PAGE>
<TABLE>
<CAPTION>
ORBITEX ENERGY & BASIC MATERIALS FUND
(FORMERLY ORBITEX STRATEGIC NATURAL
RESOURCES FUND)
------------------------------------------------------
CLASS B SHARES
------------------------------------------------------
FOR THE PERIOD ENDED FOR THE PERIOD
OCTOBER 31, 1999 (B) ENDED
(UNAUDITED) APRIL 30, 1999 (A)(B)
---------------------- -----------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $14.98 $12.22
------ ------
Income (Loss) from investment operations:
Net investment loss..................................... (0.09) (0.05)
Net realized and unrealized gain (loss) on investments
and foreign currency related transactions.......... (0.13) 3.21(e)
------ ------
Total income (loss) from investment operations.......... (0.22) 3.16
------ ------
Less distributions from net investment income............... -- (0.40)
Less distributions from net realized gains.................. -- 0.00(f)
------ ------
Total distributions from net investment income and net
realized gains..................................... -- (0.40)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $14.76 $14.98
====== ======
TOTAL RETURN(c)............................................. (2.64)% 26.92%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................... $1,368 $ 408
Ratio of expenses to average net assets(d).............. 2.56% 2.40%
Ratio of net expenses to average net assets (net of
custodial credits)(d).............................. 2.56% 2.40%
Ratio of total expenses to average net assets before
waivers, reimbursements and custodial credits(d)... 4.96% 8.49%
Ratio of net investment loss to average net assets(d)... (1.19)% (0.66)%
Portfolio turnover rate................................. 414% 921%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was September 21,
1998 for Class B Shares.
(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) 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.
(f) Amount represents less than $0.01 per share.
</TABLE>
Prospectus - 98
<PAGE>
<TABLE>
<CAPTION>
ORBITEX FOCUS 30 FUND
-------------------------------------------
CLASS A SHARES CLASS B SHARES
-------------------- --------------------
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
OCTOBER 31, 1999 (A) OCTOBER 31, 1999 (A)
-------------------- --------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $22.76 $22.76
------ ------
LOSS FROM INVESTMENT OPERATIONS:
Net investment loss..................................... (0.08) (0.10)
Net realized and unrealized loss on investments......... (0.72) (0.72)
------ ------
Total loss from investment operations................... (0.80) (0.82)
------ ------
Less distributions from net investment income............... -- --
Less distributions in excess of net income.................. -- --
Less distributions from net realized gains.................. -- --
------ ------
Total distributions from net investment income and net
realized gains....................................... -- --
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $21.96 $21.94
====== ======
TOTAL RETURN(B)............................................. (3.51)% (3.60)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................... $ 60 $ 10
Ratio of expenses to average net assets (c)(d).......... 3.58% 4.58%
Ratio of total expenses to average net assets before
waivers and reimbursements(c)........................ 6.22% 7.28%
Ratio of net investment loss to average net assets(c) (2.60)% (3.53)%
Portfolio turnover rate................................. 61% 61%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was July 12, 1999
for Class A Shares and Class B Shares.
(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
and Administrator 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.
(d) Ratio includes amounts relating to the general reserve
expense recognized in the period (see Notes 2 and 3). If
such expenses had not been incurred, the ratios of expenses
to average net assets for Classes A and B would be 1.00% and
1.60%, respectively.
</TABLE>
Prospectus - 99
<PAGE>
<TABLE>
<CAPTION>
ORBITEX FOCUS 30 FUND
-------------------------------------------------------
CLASS D SHARES (A)
-------------------------------------------------------
YEAR ENDED OCTOBER 31
-------------------------------------------------------
1999 1998 1997 1996 1995 (E)
--------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 19.02 $ 17.21 $ 14.13 $11.37 $ 9.78
------- ------- ------- ------ ------
Income (Loss) from investment operations:
Net investment income (loss)............................ (0.27) 0.32 0.18 0.08 --
Net realized and unrealized gain on investments......... 4.62 2.54 3.34 2.76 1.77
------- ------- ------- ------ ------
Total income from investment operations................. 4.35 2.86 3.52 2.84 1.77
------- ------- ------- ------ ------
Less distributions from net investment income............... -- (0.27) (0.18) (0.07) (0.05)
Less distributions in excess of net income.................. -- -- (0.11) (0.01) (0.13)
Less distributions from net realized gains.................. (1.40) (0.78) (0.15) -- --
------- ------- ------- ------ ------
Total distributions from net investment income and net
realized gains..................................... (1.40) (1.05) (0.44) (0.08) (0.18)
------- ------- ------- ------ ------
NET ASSET VALUE, END OF PERIOD.............................. $ 21.97 $ 19.02 $ 17.21 $14.13 $11.37
======= ======= ======= ====== ======
TOTAL RETURN(B)............................................. 24.08% 17.13% 25.18% 25.01% 18.10%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).................... $18,429 $29,535 $21,127 $9,315 $9,704
Ratio of expenses to average net assets(c).............. 3.11% 0.18% 0.42% 1.86% 3.01%(d)
Ratio of total expenses to average net assets before
waivers and reimbursements(c)...................... 4.41% 0.91% 1.05% 2.59% 5.77%
Ratio of net investment income (loss) to average net
assets............................................. (1.41)% 1.60% 1.51% 0.53% 0.04%
Portfolio turnover rate................................. 61% 196% 265% 391% 340%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) This information prior to July 12, 1999 reflects the
operations of the ASM Index 30 Fund, Inc., which was
reorganized into Class D Shares of the Orbitex Focus 30
Fund.
(b) Total returns are historical and assume changes in share
price, reinvestment of dividends and capital gains
distributions, and assume no sales charge. Had the Adviser
and Administrator not absorbed a portion of the expenses,
total returns would have been lower.
(c) 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 (see Note 3). If such expenses had not
been incurred, the ratio of expense to average net assets
would be 1.97% before waivers and reimbursements and 1.03%
after waivers and reimbursements.
(d) Includes $50,460 of interest expense not subject to expense
reimbursement agreement.
(e) Audited by predecessor auditor.
</TABLE>
Prospectus - 100
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROWTH FUND
---------------------------------------------------------------
CLASS A SHARES
---------------------------------------------------------------
FOR THE PERIOD ENDED FOR THE YEAR FOR THE PERIOD
OCTOBER 31, 1999 (B) ENDED ENDED
(UNAUDITED) APRIL 30, 1999 (B) APRIL 30, 1998 (A)
--------------------- ------------------ --------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $18.66 $17.93 $15.00
------ ------ ------
Income (Loss) from investment operations:
Net investment gain (loss)................ (0.13) (0.15) 0.26 (e)
Net realized and unrealized gain (loss) on
investments and foreign currency
related transactions................. 4.47 1.70 2.67
------ ------ ------
Total income from investment operations... 4.34 1.55 2.93
------ ------ ------
Less distributions from net investment
income..................................... -- (0.19) --
Less distributions from net realized gains.... -- (0.63) --
------ ------ ------
Total distributions from net investment
income and net realized gains........ -- (0.82) --
------ ------ ------
NET ASSET VALUE, END OF PERIOD................ $23.00 $18.66 $17.93
====== ====== ======
TOTAL RETURN(c)............................... 22.85% 9.07% 19.53%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...... $6,623 $1,422 $ 891
Ratio of expenses to average net
assets(d)............................ 2.00% 1.93% 2.11%
Ratio of net expenses to average net
assets (net of custodial
credits)(d).......................... 2.00% 1.88% 1.60%
Ratio of total expenses to average net
assets before waivers, reimbursements
and custodial credits(d)............. 8.55% 23.92% 50.13%
Ratio of net investment income (loss) to
average net assets(d)................ (1.24)% (0.85)% 4.41 % (e)
Portfolio turnover rate................... 314% 957% 448%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was October 22, 1997 for Growth
Fund Class A Shares.
(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.
</TABLE>
Prospectus - 101
<PAGE>
<TABLE>
<CAPTION>
ORBITEX GROWTH FUND
--------------------------------------------
CLASS B SHARES
--------------------------------------------
FOR THE PERIOD
ENDED FOR THE PERIOD
OCTOBER 31, 1999 (B) ENDED
(UNAUDITED) APRIL 30, 1999 (A)(B)
--------------------- ---------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.......... $18.61 $16.46
------ ------
Income (Loss) from investment operations:
Net investment loss....................... (0.17) (0.12)
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 4.48 3.11
------ ------
Total income from investment operations... 4.31 2.99
------ ------
Less distributions from net investment
income..................................... -- (0.21)
Less distributions from net realized gains.... -- (0.63)
------ ------
Total distributions from net investment
income and net realized gains.......... -- (0.84)
------ ------
NET ASSET VALUE, END OF PERIOD................ $22.92 $18.61
====== ======
TOTAL RETURN(C)............................... 22.70% 18.61%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)...... $ 118 $ 54
Ratio of expenses to average net
assets(d).............................. 2.43% 2.03%
Ratio of net expenses to average net
assets (net of custodial credits)(d)... 2.43% 2.00%
Ratio of total expenses to average net
assets before waivers, reimbursements
and custodial credits(d)............... 12.43% 18.75%
Ratio of net investment loss to average
net assets(d).......................... (1.69)% (1.05)%
Portfolio turnover rate................... 314% 957%
</TABLE>
------------------------------
<TABLE>
<C> <S>
(a) The commencement of investment operations was September 16, 1998 for Growth
Fund Class B Shares.
(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.
</TABLE>
Prospectus - 102
<PAGE>
<TABLE>
<CAPTION>
THE AMERIGO FUND
----------------------------------------------------------------------------------------------
CLASS N SHARES CLASS C SHARES
------------------------------------------------------------------ -------------------------
FOR THE SIX MONTHS FOR THE PERIOD FROM
ENDED OCTOBER 31, FOR THE YEAR FOR THE PERIOD FROM AUGUST 31, 1999* THROUGH
1999 ENDED JULY 14, 1997* THROUGH OCTOBER 31, 1999
(UNAUDITED) APRIL 30, 1999 APRIL 30, 1998 (UNAUDITED)
------------------ ------------------- ----------------------- -------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD:....................... $12.88 $11.37 $10.00 $13.19
------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income
(loss).................. (0.03) (0.05) 0.02 0.02
Net realized and unrealized
gain on investments..... 1.10 1.56 1.39 0.72
------ ------ ------ ------
Total........................ 1.07 1.51 1.41 0.74
------ ------ ------ ------
DISTRIBUTIONS:
From net investment income... -- -- (0.02) --
In excess of net Investment
income.................. -- -- (0.02) --
------ ------ ------ ------
Total........................ -- -- (0.04) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD... $13.95 $12.88 $11.37 $13.93
====== ====== ====== ======
TOTAL RETURN (EXCLUDES REDEMPTION
CHARGES AND ASSUMES
REINVESTMENT OF
DISTRIBUTIONS)................ 8.31%(1) 13.28% 14.11% (1) 5.61%(1)
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period.... $24,184,286 $19,533,954 $7,557,532 $29,049
Ratio of expenses to average
net assets(3)........... 1.15% (2) 1.15% 1.15% (2) 2.15%(2)
Ratio of net investment
income (loss) to average
net assets.............. (0.44)%(2) (0.51)% 0.15% (2) 3.63%(2)
Ratio of expenses to average
net assets, before
voluntary fee reductions
and reimbursements
(3)..................... 1.91% (2) 2.29% 4.45% (2) 2.79%(2)
Ratio of net investment
income (loss) to average
net assets before
voluntary fee reductions
amd reimbursements...... (1.20)%(2) (1.65)% (3.15)%(2) 2.99%(2)
Portfolio turnover rate 3.23% (1) 37.56% 14.36% (1) 3.23%(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 Funds
invest.
Prospectus - 103
<PAGE>
<TABLE>
<CAPTION>
THE CLERMONT FUND
---------------------------------------------------------------------------------------------
CLASS N SHARES CLASS C SHARES
----------------------------------------------------------------- -------------------------
FOR THE SIX MONTHS FOR THE PERIOD FROM
ENDED OCTOBER 31, FOR THE YEAR FOR THE PERIOD FROM AUGUST 31, 1999* THROUGH
1999 ENDED JULY 14, 1997* THROUGH OCTOBER 31, 1999
(UNAUDITED) APRIL 30, 1999 APRIL 30, 1998 (UNAUDITED)
------------------ ------------------ ----------------------- -------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD......................... $11.23 $10.81 $10.00 $11.15
------ ------ ------ ------
INVESTMENT OPERATIONS:
Net investment income
(loss)................... 0.07 0.14 0.17 0.02
Net realized and unrealized
gains from investments... 0.26 0.42 0.80 0.32
------ ------ ------ ------
Total......................... 0.33 0.56 0.97 0.34
------ ------ ------ ------
DISTRIBUTIONS:
From net investment income.... (0.07) (0.14) (0.16) (0.02)
In excess of net investment
income................... (0.02) -- -- (0.02)
From net realized gains....... -- -- -- --
------ ------ ------ ------
Total......................... (0.09) (0.14) (0.16) (0.04)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD.... $11.47 $11.23 $10.81 $11.45
====== ====== ====== ======
TOTAL RETURN (EXCLUDES REDEMPTION
CHARGES AND ASSUMES
REINVESTMENT OF
DISTRIBUTIONS)................. 2.96% (1) 5.31% 9.84% (1) 3.06% (1)
RATIOS / SUPPLEMENTAL DATA:
Net assets, end of period..... $8,530,166 $7,820,083 $4,440,554 $103
Ratio of expenses to average
net assets(3)............ 1.15% (2) 1.15% 1.15% (2) 2.15% (2)
Ratio of net investment income
(loss) to average net
assets................... 1.19% (2) 1.46% 2.53% (2) 0.90% (2)
Ratio of expenses to average
net assets, before
voluntary fee reductions
and reimbursements(3).... 2.82% (2) 3.31% 5.95% (2) 5.07% (2)
Ratio of net investment income
(loss) to average net
assets before voluntary
fee reductions and
reimbursements........... (0.48)%(2) (0.70)% (2.27)%(2) (2.02)%(2)
Portfolio turnover rate....... 2.86% (1) 64.67% 22.24% (1) 2.86% (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.
Prospectus - 104
<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)
IF YOU PURCHASED YOUR SHARES THROUGH A FINANCIAL INSTITUTION, YOU MAY CONTACT
THAT INSTITUTION FOR MORE INFORMATION.
The Orbitex Group of Funds' Investment Company Act File Number is 811-8037.
Prospectus - 105
<PAGE>
ORBITEX-Registered Trademark-
GROUP OF FUNDS
1-888-ORBITEX (1-888-672-4839)
www.orbitexusa.com
ORB-OCF-PRO1-0600
<PAGE>
-ORBITEX 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
Orbitex Cash Reserves Fund
STATEMENT OF ADDITIONAL INFORMATION
June 5, 2000
This Statement of Additional Information is not a Prospectus, but is an
incorporated part of each Prospectus and should be read in conjunction with
each 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>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
General Information and History.............................................................3
Investment Restrictions.....................................................................4
Description of Securities, Other Investment Policies
and Risk Considerations.....................................................................4
Management of the Trust.....................................................................32
Principal Holders of Securities.............................................................36
Investment Management and Other Services....................................................39
Administrator...............................................................................42
Sub-Administrator...........................................................................43
Custodian...................................................................................43
Transfer Agent Services.....................................................................44
Distribution of Shares......................................................................44
Brokerage Allocation and Other Practices....................................................48
Purchase and Redemption of Securities Being Offered.........................................49
Shareholder Services........................................................................52
Determination of Net Asset Value............................................................53
Taxes.......................................................................................54
Organization of the Trust...................................................................56
Performance Information About the Funds.....................................................57
Independent Accountants.....................................................................59
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Legal Matters...............................................................................59
Financial Statements........................................................................59
</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 a
"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 twelve 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 & Basic Materials Fund ("Energy & Basic
Materials Fund"), Orbitex Financial Services Fund ("Financial Services
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, Internet Fund, Emerging Technology Fund, Strategic Infrastructure Fund
and Financial Services Fund are diversified. Each Fund represents a separate
series of beneficial interest in the Trust having different investment
objectives, investment programs, policies and restrictions.
The Funds offer the following classes of shares:
<TABLE>
<CAPTION>
CLASS FUNDS OFFERING CLASS
----- --------------------
<S> <C>
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
Investor 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 adviser (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 "Adviser" or the "Advisers" in this
Statement of Additional Information.
The Orbitex Cash Reserves Fund seeks its investment objective by investing
all of its investable assets in the Money Market Portfolio (the "Portfolio"),
a series of AMR Investment Services Trust (the "AMR Trust") with investment
objectives and policies that are substantially similar to those of the
Orbitex Cash Reserves Fund. This type of an arrangement is referred to as a
"master-feeder" structure. AMR Investment Services, Inc. ("AMRIS") is the
Portfolio's investment adviser. The Cash Reserves Fund bears its pro rata
share of the expenses of the Portfolio.
American Data Services, Inc. ("ADS") is the administrator for each of the
Funds, and the accounting agent, transfer agent and dividend disbursing
agent for the Health & Biotechnology Fund and the Focus 30 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 Energy & Basic Material
Fund. State Street is the custodian for each of the Funds. Funds
Distributor, Inc. (the "Distributor") distributes the shares of each of
the Funds except the Cash Reserves Fund. Orbitex Fund Distributors, Inc.
("OFD") distributes the shares of the Cash Reserves Fund
INVESTMENT RESTRICTIONS
<PAGE>
The following policies and limitations supplement those set forth in the
Prospectuses. Unless otherwise noted, whenever a policy or limitation states
a maximum percentage of a Fund's assets that may be invested in any security
or other asset, or 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 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 OF ALL FUNDS
EXCEPT THE CASH RESERVES FUND.
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
<PAGE>
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 & Basic Materials Fund and 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 securities of companies in
communications, information or related technology sectors 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; (iii) the Emerging Technologies Fund will invest at least 25%
of its total assets in securities of emerging companies as defined in the
prospectus, (iv) the Strategic Infrastructure Fund will invest at least
25% of its total assets in the securities of infrastructure companies as
defined in the prospectus and (v) the Health & Biotechnology Fund will
invest at least 25% of its total assets in securities of companies in
health, biotechnology, or related industries as defined in the
prospectus; (vi) the Energy & Basic Materials Fund will invest at least
25% of its total assets in securities of companies in natural resource
industries or industries supportive to natural resource industries as
defined in the prospectus, and (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 ARE ADDITIONAL INVESTMENT LIMITATIONS OF ALL FUNDS EXCEPT THE
CASH RESERVES FUND. 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 other investment companies (including affiliated investment
companies) to the extent permitted by the Investment Company Act of 1940
("1940 Act") or exemptive relief granted by the Securities and Exchange
Commission ("SEC"). Notwithstanding this or any other limitation, the
Funds may invest all of their investable assets in an open-end management
investment company with substantially the same investment objectives,
policies and limitations as the Fund. For this purpose, "all of the
Fund's investable assets" means that the only investment securities that
will be held by the Fund will be the Fund's interest in the investment
company.
(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% (or, in the case of the Cash
Reserves Fund, 10%) of the net assets of the Fund would
<PAGE>
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.
SINCE THE FUNDAMENTAL AND NON-FUNDAMENTAL INVESTMENT LIMITATIONS OF THE
PORTFOLIO AND THE CASH RESERVES FUND ARE IDENTICAL, REFERENCES BELOW TO THE
"FUND" APPLY TO THE PORTFOLIO AS WELL.
THE FOLLOWING ARE THE FUNDAMENTAL INVESTMENT LIMITATIONS OF THE PORTFOLIO AND
THE CASH RESERVES FUND.
The Portfolio and the Cash Reserves Fund will not:
(1) Purchase or sell real estate or real estate limited partnership
interests, provided, however, that the Fund may invest in securities
secured by real estate or interests therein or issued by companies which
invest in real estate or interests therein when consistent with the other
policies and limitations described in the Prospectus.
(2) Purchase or sell commodities (including direct interests and/or leases
in oil, gas or minerals) or commodities contracts, except with respect to
forward foreign currency exchange contracts, foreign currency futures
contracts and when-issued securities when consistent with the other
policies and limitations described in the Prospectus.
(3) Engage in the business of underwriting securities issued by others,
except to the extent that, in connection with the disposition of
securities, the Fund may be deemed an underwriter under federal securities
law.
(4) Make loans to any person or firm, provided, however, that the making of
a loan shall not be construed to include (i) the acquisition for investment
of bonds, debentures, notes or other evidences of indebtedness of any
corporation or government which are publicly distributed or (ii) the entry
into repurchase agreements and further provided, however, that the Fund may
lend its portfolio securities to broker-dealers or other institutional
investors in accordance with the guidelines stated in the Prospectus.
(5) Purchase from or sell portfolio securities to its officers, Trustees or
other "interested persons" of the Trust, as defined in the 1940 Act,
including its investment advisers and their affiliates, except as permitted
by the 1940 Act and exemptive rules or orders thereunder.
(6) Issue senior securities except that the Fund may engage in when-issued
securities and forward commitment transactions.
(7) Borrow money, except from banks or through reverse repurchase
agreements for temporary purposes. The aggregate amount of borrowing for
the Fund is not to exceed 10% of the value of the Fund's assets at the time
of borrowing. Although not a fundamental policy, the Fund intends to repay
any money borrowed before any additional portfolio securities are
purchased.
<PAGE>
(8) Invest more than 5% of its total assets (taken at market value) in
securities of any one issuer, other than obligations issued by the U.S.
Government, its agencies and instrumentalities, or purchase more than 10%
of the voting securities of any one issuer, with respect to 75% of the
Fund's total assets; or
(9) Invest more than 25% of its total assets in the securities of companies
primarily engaged in any one industry, provided that: (i) this limitation
does not apply to obligations issued or guaranteed by the U.S. Government,
its agencies and instrumentalities; (ii) municipalities and their agencies
and authorities are not deemed to be industries; and (iii) financial
service companies are classified according to the end users of their
services (for example, automobile finance, bank finance, and diversified
finance will be considered separate industries).
THE FOLLOWING ARE ADDITIONAL INVESTMENT LIMITATIONS OF THE PORTFOLIO AND THE
CASH RESERVES FUND. THESE RESTRICTIONS ARE DESIGNATED AS NON-FUNDAMENTAL AND
MAY BE CHANGED BY THE BOARD OF TRUSTEES OF THE AMR TRUST OR TRUST WITHOUT THE
APPROVAL OF SHAREHOLDERS.
The Portfolio and the Cash Reserves Fund will not:
(1) Invest more than 10% of its net assets in illiquid securities,
including time deposits and repurchase agreements that mature in more than
seven days; or
(2) Purchase securities on margin, effect short sales (except that the Fund
may obtain such short term credits as may be necessary for the clearance of
purchases or sales of securities) or purchase or sell call options or
engage in the writing of such options.
The Fund may invest up to 10% of its total assets in the securities of other
investment companies to the extent permitted by law.
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 or, in the
case of the Cash Reserves Fund, AMRIS, 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 Fund and the Clermont Fund 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. Because the
Orbitex Cash Reserves Fund invests in the Portfolio through a "master-feeder"
structure, when the Cash Reserves Fund is described below as being able to
make a certain type of investment, the Fund makes that type of investment
through the Portfolio.
The Advisers may not buy all of these instruments or use all of these
techniques unless they believe 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
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principal amount is scheduled to be paid in 397 days or less is considered to
have a maturity equal to the period remaining until the next readjustment of
the interest rate. Many variable rate instruments are subject to demand
features which entitle the purchaser to resell such securities to the issuer
or another designated party, either (1) at any time upon notice of usually
397 days or less, or (2) at specified intervals, not exceeding 397 days, and
upon 30 days notice. A variable rate instrument subject to a demand feature
is considered to have a maturity equal to the longer of the period remaining
until the next readjustment of the interest rate or the period remaining
until the principal amount can be recovered through demand, if final maturity
exceeds 397 days or the shorter of the period remaining until the next
readjustment of the interest rate or the period remaining until the principal
amount can be recovered through demand if final maturity is within 397 days.
Floating rate instruments have interest rate reset provisions similar to
those for variable rate instruments and may be subject to demand features
like those for variable rate instruments. The interest rate is adjusted,
periodically (e.g., daily, monthly, semi-annually), to the prevailing
interest rate in the marketplace. The interest rate on floating rate
securities is ordinarily determined by reference to the 90-day U.S. Treasury
bill rate, the rate of return on commercial paper or bank certificates of
deposit or an index of short-term interest rates. The maturity of a floating
rate instrument is considered to be the period remaining until the principal
amount can be recovered through demand.
BELOW-INVESTMENT-GRADE DEBT SECURITIES (ALL FUNDS EXCEPT FOCUS 30 FUND AND
CASH RESERVES FUND). Each Fund may invest up to 35% of its net assets in debt
securities that are rated below "investment grade" by Standard and Poor's
Rating Group ("S&P") or Moody's Investors Services, Inc. ("Moody's") or, if
unrated, are deemed by the 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
<PAGE>
ability to service debt obligations may also be adversely affected by
specific developments affecting the issuer, such as the issuer's inability to
meet specific projected business forecasts or the unavailability of
additional financing. Similarly, certain emerging market governments that
issue lower quality debt securities are among the largest debtors to
commercial banks, foreign governments and supranational organizations such as
the World Bank and may not be able or willing to make principal and/or
interest repayments as they come due. The risk of loss due to default by the
issuer is significantly greater for the holders of lower quality securities
because such securities are generally unsecured and are often subordinated to
other creditors of the issuer. Lower quality debt securities frequently have
call or buy-back features which would permit an issuer to call or repurchase
the security from a Fund. In addition, a Fund may have difficulty disposing
of lower quality securities because they may have a thin trading market.
There may be no established retail secondary market for many of these
securities, and each Fund anticipates that such securities could be sold only
to a limited number of dealers or institutional investors. The lack of a
liquid secondary market also may have an adverse impact on market prices of
such instruments and may make it more difficult for a Fund to obtain accurate
market quotations for purposes of valuing the Fund's portfolios. A Fund may
also acquire lower quality debt securities during an initial underwriting or
which are sold without registration under applicable securities laws. Such
securities involve special considerations and risks.
In addition to the foregoing, factors that could have an adverse effect on
the market value of lower quality debt securities in which the Funds may
invest, include: (i) potential adverse publicity, (ii) heightened sensitivity
to general economic or political conditions and (iii) the likely adverse
impact of a major economic recession. A Fund may also incur additional
expenses to the extent the Fund is required to seek recovery upon a default
in the payment of principal or interest on its portfolio holdings, and the
Fund may have limited legal recourse in the event of a default. Debt
securities issued by governments in emerging markets can differ from debt
obligations issued by private entities in that remedies for defaults
generally must be pursued in the courts of the defaulting government, and
legal recourse is therefore somewhat diminished. Political conditions, in
terms of a government's willingness to meet the terms of its debt
obligations, also are of considerable significance. There can be no assurance
that the holders of 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.
<PAGE>
COMMERCIAL PAPER (ALL FUNDS). Each Fund may purchase commercial paper.
Commercial paper consists of short-term (usually from 1 to 270 days)
unsecured promissory notes issued by corporations in order to finance their
current operations.
DEALER (OVER-THE-COUNTER) OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Each
Fund may engage in transactions involving dealer options. Certain risks are
specific to dealer options. While the Fund would look to a clearing
corporation to exercise exchange-traded options, if the Fund were to purchase
a dealer option, it would rely on the dealer from whom it purchased the
option to perform if the option were exercised. Failure by the dealer to do
so would result in the loss of the premium paid by the Fund as well as loss
of the expected benefit of the transaction.
Exchange-traded options generally have a continuous liquid market while
dealer options have none. Consequently, the Fund will generally be able to
realize the value of a dealer option it has purchased only by exercising it
or reselling it to the dealer who issued it. Similarly, when the Fund writes
a dealer option, it generally will be able to close out the option prior to
its expiration only by entering into a closing purchase transaction with the
dealer to which the Fund originally wrote the option. While the Fund will
seek to enter into dealer options only with dealers 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
<PAGE>
foreign currency risks by engaging in foreign currency exchange transactions.
These may include buying or selling foreign currencies on a spot basis,
entering into foreign currency forward contracts, and buying and selling
foreign currency options, foreign currency futures, and options on foreign
currency futures. Many of these activities constitute "derivatives"
transactions. See "Derivatives", above.
Each Fund may invest in issuers domiciled in "emerging markets," those
countries determined by the Adviser to have developing or emerging economies
and markets. Emerging market investing involves risks in addition to those
risks involved in foreign investing. For example, many emerging market
countries have experienced substantial, and in some periods extremely high,
rates of inflation for many years. In addition, economies in emerging markets
generally are dependent heavily upon international trade and, accordingly,
have been and continue to be affected adversely by trade barriers, exchange
controls, managed adjustments in relative currency values and other
protectionist measures imposed or negotiated by the countries with which they
trade. The securities markets of emerging countries are substantially
smaller, less developed, less liquid and more volatile than the securities
markets of the United States and other more developed countries. Brokerage
commissions, custodial services and other costs relating to investment in
foreign markets generally are more expensive than in the United States,
particularly with respect to emerging markets. In addition, some emerging
market countries impose transfer taxes or fees on a capital market
transaction.
Foreign investments involve a risk of local political, economic, or social
instability, military action or unrest, or adverse diplomatic developments,
and may be affected by actions of foreign governments adverse to the
interests of U.S. investors. Such actions may include the possibility of
expropriation or nationalization of assets, confiscatory taxation,
restrictions on U.S. investment or on the ability to repatriate assets or
convert currency into U.S. dollars, or other government intervention. There
is no assurance that the Adviser will be able to anticipate these potential
events or counter their effects. These risks are magnified for investments in
developing countries, which may have relatively unstable governments,
economies based on only a few industries, and securities markets that trade a
small number of securities.
Economies of particular countries or areas of the world may differ favorably
or unfavorably from the economy of the United States. Foreign markets may
offer less protection to investors than U.S. markets. It is anticipated that
in most cases the best available market for foreign securities will be on an
exchange or in over-the-counter markets located outside the United States.
Foreign stock markets, while growing in volume and sophistication, are
generally not as developed as those in the United States, and securities of
some foreign issuers (particularly those located in developing countries) may
be less liquid and more volatile than securities of comparable U.S. issuers.
Foreign security trading practices, including those involving securities
settlement where Fund assets may be released prior to receipt of payment, may
result in increased risk in the event of a failed trade or the insolvency of
a foreign broker-dealer, and may involve substantial delays. In addition, the
costs of foreign investing, including withholding taxes, brokerage
commissions and custodial costs, are generally higher than for U.S.
investors. In general, there is less overall governmental supervision and
regulation of securities exchanges, brokers, and listed companies than in the
United States. It may also be difficult to enforce legal rights in foreign
countries. Foreign issuers are generally not bound by uniform accounting,
auditing, and financial reporting requirements and standards of practice
comparable to those applicable to U.S. issuers.
Some foreign securities impose restrictions on transfer within the United
States or to U.S. persons. Although securities subject to such transfer
restrictions may be marketable abroad, they may be less liquid than foreign
securities of the same class that are not subject to such restrictions.
American 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
<PAGE>
underlying foreign securities in their national markets and currencies.
However, ADRs continue to be subject to many of the risks associated with
investing directly in foreign securities. These risks include foreign
exchange risk as well as the political and economic risks of the underlying
issuer's country.
Investments in emerging markets can be subject to a number of types of taxes
that vary by country, change frequently, and are sometime defined by custom
rather than written regulation. Emerging countries can tax interest,
dividends, and capital gains through the application of a withholding tax.
The local custodian normally withholds the tax upon receipt of a payment and
forwards such tax payment to the foreign government on behalf of the Fund.
Certain foreign governments can also require a foreign investor to file an
income tax return and pay the local tax through estimated tax payments, or
pay with the tax return. Although not frequently used, some emerging markets
have attempted to slow conversion of their currency by imposing a
repatriation tax. Generally, this tax is applied to amounts which are
converted from the foreign currency to the investor's currency and withdrawn
from the local bank account. Transfer taxes or fees, such as stamp duties,
security transfer taxes, and registration and script fees, are generally
imposed by emerging markets as a tax or fee on a capital market transaction.
Each emerging country may impose a tax or fee at a different point in time as
the foreign investor perfects his interest in the securities acquired in the
local market. A stamp duty is generally a tax on the official recording of a
capital market transaction. Payment of such duty is generally a condition of
the transfer of assets and failure to pay such duty can result in a loss of
title to such asset as well as loss of benefit from any corporate actions. A
stamp duty is generally determined based on a percentage of the value of the
transaction conducted and can be charged against the buyer (e.g., Cyprus,
India, Israel, Jordan, Malaysia, Pakistan, and the Philippines), against the
seller (e.g., Argentina, Australia, China, Egypt, Indonesia, Kenya, Portugal,
South Korea, Trinidad, Tobago, and Zimbabwe). Although such a fee does not
generally exceeded 100 basis points, certain emerging markets have assessed a
stamp duty as high as 750 basis points (e.g., Pakistan). A security transfer
tax is similar to a stamp duty and is generally applied to the purchase, sale
or exchange of securities which occur in a particular foreign market. These
taxes are based on the value of the trade and similar to stamp taxes, can be
assessed against the buyer, seller or both. Although the 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 (ALL FUNDS EXCEPT CASH RESERVES FUND). 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.
<PAGE>
Losses on written covered calls and purchased puts on securities, excluding
certain "qualified covered call" options, may be long-term capital loss, if
the security covering the option was held for more than twelve months prior
to the writing of the option.
In order for each Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or currencies.
FOREIGN CURRENCY TRANSACTIONS (ALL FUNDS EXCEPT FOCUS 30 FUND AND CASH
RESERVES FUND). A forward foreign currency exchange contract involves an
obligation to purchase or sell a specific currency at a future date, which
may be any fixed number of days from the date of the contract agreed upon by
the parties, at a price set at the time of the contract. These contracts are
principally traded in the interbank market conducted directly between
currency traders (usually large, commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no commissions are
charged at any stage for trades.
Each Fund may enter into forward contracts for a variety of purposes in
connection with the management of the foreign currency exposure of its
portfolio. The Fund's use of such contracts would include, but not be limited
to, the following: First, when the Fund enters into a contract for the
purchase or sale of a security denominated in a foreign currency, it may
desire to "lock in" the U.S. dollar price of the security. By entering into a
forward contract for the purchase or sale, for a fixed amount of dollars of
the amount of foreign currency involved in the underlying security
transactions, the Fund will be able to protect itself against a possible loss
resulting from an adverse change in the relationship between the U.S. dollar
and the subject foreign currency during the period between the date the
security is purchased or sold and the date on which payment is made or
received.
Second, when the Adviser believes that one currency may experience a
substantial movement against another currency, including the U.S. dollar, or
it wishes to alter the Fund's exposure to the currencies of the countries in
its investment universe, it may enter into a forward contract to sell or buy
foreign currency in exchange for the U.S. dollar or another foreign currency.
Alternatively, where appropriate, a Fund may manage all or part of its
foreign currency exposure through the use of a basket of currencies or a
proxy currency where such currency or currencies act as an effective proxy
for other currencies. In such a case, the Fund may enter into a forward
contract where the 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
<PAGE>
"rolling" that contract forward) or may initiate a new forward contract.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the foreign currency. Should forward prices decline
during the period between the Fund's entering into a forward contract for the
sale of a foreign currency and the date it enters into an offsetting contract
for the purchase of the foreign currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of
the currency it has agreed to purchase. Should forward prices increase, the
Fund will suffer a loss to the extent of the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
Each Fund's dealing in forward foreign currency exchange contracts will
generally be limited to the transactions described above. However, each Fund
reserves the right to enter into forward foreign currency contracts for
different purposes and under different circumstances. Of course, the Fund is
not required to enter into forward contracts with regard to its foreign
currency denominated securities and will not do so unless deemed appropriate
by the Adviser. 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
<PAGE>
management tool, or as an efficient way for the Adviser to implement either
an increase or decrease in portfolio market exposure in response to changing
market conditions. A Fund may, purchase or sell futures contracts with
respect to any stock index. Nevertheless, to hedge the Fund's portfolio
successfully, the Fund must sell futures contacts with respect to indices or
sub-indices whose movements will have a significant correlation with
movements in the prices of the Fund's portfolio securities.
Interest rate or currency futures contracts may be used to manage a Fund's
exposure to changes in prevailing levels of interest rates or currency
exchange rates in order to establish more definitely the effective return on
securities or currencies held or intended to be acquired by the Fund. In this
regard, the Fund could sell interest rate or currency futures as an offset
against the effect of expected increases in interest rates or currency
exchange rates and purchase such futures as an offset against the effect of
expected declines in interest rates or currency exchange rates.
A Fund will enter into futures contracts which are traded on national or
foreign futures exchanges, and are standardized as to maturity date and
underlying financial instrument. Futures exchanges and trading in the United
States are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"). Futures are traded in London at the
London International Financial Futures Exchange in Paris at the MATIF and in
Tokyo at the Tokyo Stock Exchange. Although techniques other than the sale
and purchase of futures contracts could be used for the above-referenced
purposes, futures contracts offer an effective and relatively low cost means
of implementing the Fund's objectives in these areas.
Although the Funds have no current intention of engaging in futures or
options transactions other than those described above, they reserve the right
to do so. Such futures and options trading might involve risks which differ
from those involved in the futures and options described in this Statement of
Additional Information.
TRADING IN FUTURES CONTRACTS. A futures contract provides for the future sale
by one party and purchase by another party of a specified amount of a
specific financial instrument (e.g., units of a stock index) for a specified
price, date, time and place designated at the time the contract is made.
Brokerage fees are incurred when a futures contract is bought or sold and
margin deposits must be maintained. Entering into a contract to buy is
commonly referred to as buying or purchasing a contract or holding a long
position. Entering into a contract to sell is commonly referred to as selling
a contract or holding a short position.
Unlike when a Fund purchases or sells a security, no price would be paid or
received by the Fund upon the purchase or sale of a futures contract. Upon
entering into a futures contract, and to maintain the Fund's open positions
in futures contracts, the Fund would be required to deposit with its
custodian or futures broker in a segregated account in the name of the
futures broker an amount of cash, U.S. government securities, suitable money
market instruments, or other liquid securities, known as "initial margin."
The margin required for a particular futures contract is set by the exchange
on which the contract is traded, and may be significantly modified from time
to time by the exchange during the term of the contract. Futures contracts
are customarily purchased and sold on margins that may range upward from less
than 5% of the value of the contract being traded.
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.
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Although certain futures contracts, by their terms, require actual future
delivery of and payment for the underlying instruments, in practice most
futures contracts are usually closed out before the delivery date. Closing
out an open futures contract purchase or sale is effected by entering into an
offsetting futures contract sale or purchase, respectively, for the same
aggregate amount of the identical underlying instrument or index and the same
delivery date. If the offsetting purchase price is less than the original
sale price, the Fund realizes a gain; if it is more, the Fund realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Fund realizes a gain; if it is less, the Fund realizes a
loss. The transaction costs must also be included in these calculations.
There can be no assurance, however, that the Fund will be able to enter into
an offsetting transaction with respect to a particular futures contract at a
particular time. If the Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the futures contract.
For example, one contract in the Financial Times Stock Exchange 100 Index
future is a contract to buy 25 pounds sterling multiplied by the level of the
UK Financial Times 100 Share Index on a given future date. Settlement of a
stock index futures contract may or may not be in the underlying instrument
or index. If not in the underlying instrument or index, then settlement will
be made in cash, equivalent over time to the difference between the contract
price and the actual price of the underlying asset at the time the stock
index futures contract expires.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. VOLATILITY AND LEVERAGE.
The prices of futures contracts are volatile and are influenced, among other
things, by actual and anticipated changes in the market and interest rates,
which in turn are affected by fiscal and monetary policies and national and
international political and economic events. Most United States futures
exchanges limit the amount of fluctuation permitted in futures contract
prices during a single trading day. The daily limit establishes the maximum
amount that the price of a futures contract may vary either up or down from
the previous day's settlement price at the end of a trading session. Once the
daily limit has been reached in a particular type of futures contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and therefore
does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt liquidation of futures
positions and subjecting some futures traders to substantial losses.
Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss,
as well as gain, to the investor. For example, if at the time of purchase,
10% of the value of the futures contract were 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.
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Futures contracts may be closed out only on the exchange or board of trade
where the contracts were initially traded. Although each Fund intends to
purchase or sell futures contracts only on exchanges or boards of trade where
there appears to be an active market, there is no assurance that a liquid
market on an exchange or board of trade will exist for any particular
contract at any particular time. The reasons for the absence of a liquid
secondary market on an exchange are substantially the same as those discussed
under "Special Risks of Transactions in Options on Futures Contracts." In the
event that a liquid market does not exist, it might not be possible to close
out a futures contract, and in the event of adverse price movements, the Fund
would continue to be required to make daily cash payments of variation
margin. However, in the event futures contracts have been used to hedge the
underlying instruments, the Fund would continue to hold the underlying
instruments subject to the hedge until the futures contracts could be
terminated. In such circumstances, an increase in the price of underlying
instruments, if any, might partially or completely offset losses on the
futures contract. However, as described below, there is no guarantee that the
price of the underlying instruments will, in fact, correlate with the price
movements in the futures contract and thus provide an offset to losses on a
futures contract.
HEDGING RISK (ALL FUNDS EXCEPT CASH RESERVES FUND). 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
<PAGE>
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 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 AND
CASH RESEVRES 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
<PAGE>
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 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 Internet Fund, Emerging Technology Fund, Financial
Services Fund, Health & Biotechnology Fund, and the Strategic Infrastructure
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
<PAGE>
mortgage pool, net of certain fees, on the scheduled payment dates regardless
of whether the mortgagor actually makes the payment.
The principal governmental guarantor of mortgage pass-through securities is
GNMA. GNMA is authorized to guarantee, with the full faith and credit of the
U.S. Treasury, the timely payment of principal and interest on securities
issued by lending institutions approved by GNMA (such as savings and loan
institutions, commercial banks and mortgage bankers) and backed by pools of
mortgage loans. These mortgage loans are either insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. A "pool"
or group of such mortgage loans is assembled and after being approved by
GNMA, is offered to investors through securities dealers.
Government-related guarantors of mortgage pass-through securities (i.e., not
backed by the full faith and credit of the U.S. Treasury) include FNMA and
FHLMC. FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved sellers/servicers which include state and federally chartered
savings and loan associations, mutual savings banks, commercial banks and
credit unions and mortgage bankers. Mortgage pass-through securities issued
by FNMA are guaranteed as to timely payment of principal and interest by FNMA
but are not backed by the full faith and credit of the U.S. Treasury.
FHLMC was created by Congress in 1970 for the purpose of increasing the
availability of mortgage credit for residential housing. It is a U.S.
government-sponsored corporation formerly owned by the twelve Federal Home
Loan Banks and now owned entirely by private stockholders. FHLMC issues
Participation Certificates ("PCs") which represent interests in conventional
mortgages from FHLMC's national portfolio. FHLMC guarantees the timely
payment of interest and ultimate collection of principal, but PCs are not
backed by the full faith and credit of the U.S. Treasury.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers
may, in addition, be the originators and/or servicers of the underlying
mortgage loans as well as the guarantors of the mortgage pass-through
securities. The Funds do not purchase interests in pools created by such
non-governmental issuers.
Resets. The interest rates paid on the Adjustable Rate Mortgage Securities
("ARMs") in which a Fund may invest generally are readjusted or reset at
intervals of one year or less to an increment over some predetermined
interest rate index. There are two main categories of indices: those based on
U.S. Treasury securities and those derived from a calculated measure, such as
a cost of funds index or a moving average of mortgage rates. Commonly
utilized indices include the one-year and five-year constant maturity
Treasury Note rates, the three-month Treasury Bill rate, the 180-day Treasury
Bill rate, rates on longer-term Treasury securities, the National Median Cost
of Funds, the one-month or three-month London Interbank Offered Rate (LIBOR),
the prime rate of a specific bank, or commercial paper rates. Some indices,
such as the one-year constant maturity Treasury Note rate, closely mirror
changes in market interest rate levels. Others tend to lag changes in market
rate levels and tend to be somewhat less volatile.
Caps and Floors. The underlying mortgages which collateralize the ARMs in
which a Fund invests will frequently have caps and floors which limit the
maximum amount by which the loan rate to the residential borrower may change
up or down: (1) per reset or adjustment interval and (2) over the life of the
loan. Some residential mortgage loans restrict periodic adjustments by
limiting changes in the borrower's monthly principal and interest payments
rather than limiting interest rate changes. These payment caps may result in
negative amortization. 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
<PAGE>
the underlying mortgages.
OPTIONS (ALL FUNDS EXCEPT CASH RESERVES FUND). Writing Covered Call Options.
Each Fund may write (sell) American or European style "covered" call options
and purchase options to close out options previously written by the Fund. In
writing covered call options, the Fund expects to generate additional premium
income which should serve to enhance the Fund's total return and reduce the
effect of any price decline of the security or currency involved in the
option. Covered call options will generally be written on securities or
currencies which, in the Adviser's opinion, are not expected to have any
major price increases or moves in the near future but which, over the long
term, are deemed to be attractive investments for the Fund.
A call option gives the holder (buyer) the "right to purchase" a security or
currency at a specified price (the exercise price) at expiration of the
option (European style) or at any time until a certain date (the expiration
date) (American style). So long as the obligation of the writer of a call
option continues, he may be assigned an exercise notice by the broker-dealer
through whom such option was sold, requiring him to deliver the underlying
security or currency against payment of the exercise price. This obligation
terminates upon the expiration of the call option, or such earlier time at
which the writer effects a closing purchase transaction by repurchasing an
option identical to that previously sold. To secure his obligation to deliver
the underlying security or currency in the case of a call option, a writer is
required to deposit in escrow the underlying security or currency or other
assets in accordance with the rules of a clearing corporation.
Each Fund will write only covered call options. This means that the Fund will
own the security or currency subject to the option or an option to purchase
the same underlying security or currency, having an exercise price equal to
or less than the exercise price of the "covered" option, or will establish
and maintain with its custodian for the term of the option, an account
consisting of cash, U.S. government securities or other liquid securities
having a value equal to the fluctuating market value of the securities or
currencies on which the Fund holds a covered call position.
Portfolio securities or currencies on which call options may be written will
be purchased solely on the basis of investment considerations consistent with
the Fund's investment objective. The writing of covered call options is a
conservative investment technique believed to involve relatively little risk
(in contrast to the writing of naked or uncovered options, which the Funds
will not do), but capable of enhancing the Fund's total return. When writing
a covered call option, a Fund, in return for the premium, gives up the
opportunity for profit from a price increase in the underlying security or
currency above the exercise price, but conversely retains the risk of loss
should the price of the security or currency decline. Unlike one who owns
securities or currencies not subject to an option, the Fund has no control
over when it may be required to sell the underlying securities or currencies,
since it may be assigned an exercise notice at any time prior to the
expiration of its obligation as a writer. If a call option which the Fund has
written expires, the Fund will realize a gain in the amount of the premium;
however, such gain may be offset by a decline in the market value of the
underlying security or currency during the option period. If the call option
is exercised, the Fund will realize a gain or loss from the sale of the
underlying security or currency. The Fund does not consider a security or
currency covered by a call to be "pledged" as that term is used in the Fund's
policy which limits the pledging or mortgaging of its assets.
The premium received is the market value of an option. The premium the Fund
will receive from writing a call option will reflect, among other things, the
current market price of the underlying security or currency, the relationship
of the exercise price to such market price, the historical price volatility
of the underlying security or currency, and the length of the option period.
Once the decision to write a call option has been made, the Adviser, in
determining whether a particular call option should be written on a
particular security or currency, will consider the reasonableness of the
anticipated premium and the likelihood that a liquid secondary market will
exist for those options. The premium received by the Fund for writing covered
call options will be recorded as a liability of the Fund. This liability will
be adjusted daily to the option's current market value, which will be the
latest sale price at the time at which the net asset value per share of
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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.
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.
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
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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.
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 EXCEPT CASH RESERVES FUND). Each Fund may
purchase American or European style put options. As the holder of a put
option, the Fund has the right to sell the underlying security or currency at
the exercise price at any time during the option period (American style) or
at the expiration of the option (European style). The Fund may enter into
closing sale transactions with respect to such options, exercise them or
permit them to expire. The Fund may purchase put options for defensive
purposes in order to protect against an anticipated decline in the value of
its securities or currencies. An example of such use of put options is
provided below.
Each Fund may purchase a put option on an underlying security or currency (a
"protective put") owned by the Fund as a defensive technique in order to
protect against an anticipated decline in the value of the security or
currency. Such hedge protection is provided only during the life of the put
option when the Fund, as the holder of the put option, is able to sell the
underlying security or currency at the put exercise price regardless of any
decline in the underlying security's market price or currency's exchange
value. For example, a put option may be purchased in order to protect
unrealized appreciation of a security or currency where the Adviser deems it
desirable to continue to hold the security or currency because of tax
considerations. The premium paid for the put option and any transaction costs
would reduce any capital gain otherwise available for distribution when the
security or currency is eventually sold.
Each Fund may also purchase put options at a time when the Fund does not own
the underlying security or
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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 (ALL FUNDS EXCEPT CASH RESERVES FUND). 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 EXCEPT AMERIGO FUND AND CLERMONT FUND).
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.
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 an underlying
portfolio of mutual funds and closed-end funds involve certain additional
expenses and certain tax results which would not be present in
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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 Fund will 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 advisers of the underlying funds are
made independently of the Funds and their Manager. Therefore, the investment
adviser of one underlying fund may be purchasing shares of the same issuer
whose shares are being sold by the investment adviser 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 adviser, 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.
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
<PAGE>
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. If the Board approved the use of a master-feeder structure for a
particular Fund, the Fund (the "feeder" fund) would invest all of its
investable assets in an open-end management investment company (the "master"
fund) with substantially the same investment objectives, policies and
limitations as the Fund. For this purpose, "all of the Fund's investable
assets" means that the only investment securities that would be held by the
Fund would be the Fund's interest in the master fund. Under such a structure,
one or more "feeder" funds, such as the Funds, invest all of their assets in
a "master" fund, which, in turn, invests directly in a portfolio of
securities. If required by applicable law, the Funds will seek shareholder
approval before converting to a master/feeder structure. If the requisite
regulatory authorities determine that such approval is not required,
shareholders will be deemed, by purchasing shares, to have consented to such
a conversion and no further shareholder approval will be sought. Such a
conversion is expressly permitted under the investment objective and
fundamental policies of each Fund.
MASTER-FEEDER STRUCTURE (CASH RESERVES FUND). As of the date of this
Statement of Additional Information, the Cash Reserves Fund employs a
master-feeder structure and seeks to achieve its investment objective by
investing all of its investable assets in the Money Market Portfolio of the
AMR Trust. Accordingly, the Portfolio directly acquires portfolio securities
and the Fund acquires an indirect interest in those securities. The assets of
the Portfolio belong only to, and the liabilities of the Portfolio are borne
solely by, the Portfolio and no other series of the AMR Trust
THE PORTFOLIO. The Cash Reserves Fund's investment in the Portfolio is in the
form of non-transferable beneficial interests. All investors in a Portfolio
will invest on the same terms and conditions and will pay a proportionate
share of the Portfolio's expenses.
The Portfolio does not sell its shares directly to members of the general
public. Other investors in Portfolios, such as other investment companies,
that might sell their shares to the public are not required to sell their
shares at the same public offering price as the Fund, and could have
different advisory and other fees and expenses than the Fund. Therefore, the
Fund's shareholders may have different returns than shareholders in other
investment companies that invest in the Portfolios.
CERTAIN RISKS OF INVESTING IN THE PORTFOLIO. The Fund's investment in the
Portfolio may be affected by the actions of other large investors in the
Portfolio. For example, if the Portfolio has a large investor other than the
Fund that redeems its interest, the Portfolio's remaining investors
(including the Fund) might, as a result, experience higher pro rata operating
expenses, thereby producing lower returns. As there may be other investors in
the Portfolio, there can be no assurance that any issue that receives a
majority of the votes cast by a Fund's shareholders will receive a majority
of votes cast by all investors in the Portfolio; indeed, other investors
holding a majority interest in the Portfolio could have voting control of the
Portfolio.
<PAGE>
The Fund may withdraw its entire investment from the Portfolio at any time,
if the Board determines that it is in the best interests of the Fund and its
shareholders to do so. The Fund might withdraw, for example, if there were
other investors in the Portfolio with power to, and who did by a vote of all
investors (including the Fund), change the investment objective or policies
of the Portfolio in a manner not acceptable to the Board. A withdrawal could
result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) by the Portfolio. That distribution could result in a
smaller, less diversified portfolio of investments for the Fund. This could
in turn increase the Fund's expense ratio, and result in lower returns for
the Fund's investors. If the Fund decided to convert those securities to
cash, it would incur transaction costs. If the Fund withdrew its investment
from the Portfolio, the Board would consider what action might be taken,
including the management of the Fund's assets directly by the Adviser or the
investment of the Fund's assets in another pooled investment entity. The
inability of the Fund to find a suitable replacement investment, in the event
the Board decided not to permit the Adviser to manage the Fund's assets
directly, could have a significant impact on shareholders of the 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
<PAGE>
margin deposit in connection with such short sales; the Fund may have to pay
a fee to borrow particular securities and will often be obligated to pay over
any dividends and accrued interest on borrowed securities.
If the price of the security sold short increases between the time of the
short sale and the time the Fund covers its short position, the Fund will
incur a loss; conversely, if the price declines, the Fund will realize a
capital gain. Any gain will be decreased, and any loss increased, by the
transaction costs described above. The successful use of short selling may be
adversely affected by imperfect correlation between movements in the price of
the security sold short and the securities being hedged.
To the extent a Fund sells securities short, it will provide collateral to
the broker-dealer and (except in the case of short sales "against the box")
will maintain additional asset coverage in the form of cash, U.S. government
securities or other liquid securities with its custodian in a segregated
account in an amount at least equal to the difference between the current
market value of the securities sold short and any amounts required to be
deposited as collateral with the selling broker (not including the proceeds
of the short sale). The Funds do not intend to enter into short sales (other
than short sales "against the box") if immediately after such sales the
aggregate of the value of all collateral plus the amount in such segregated
account exceeds 10% of the value of the Fund's net assets. This percentage
may be varied by action of the Board of Trustees. A short sale is "against
the box" to the extent the Fund contemporaneously owns, or has the right to
obtain at no added cost, securities identical to those sold short.
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
the margin. However, if the value of a position increases because of
favorable price changes in the futures contract so that the margin deposit
exceeds the required margin, the broker will pay the excess to the Fund.
These subsequent payments, called "variation margin," to and from the futures
broker, are made on a daily basis as the price of the underlying assets
fluctuate making the long and short positions in the futures contract more or
less valuable, a process known as "marking to the market." Each Fund expects
to earn interest income on its margin deposits.
Although certain futures contracts, by their terms, require actual future
delivery of and payment for the underlying instruments, in practice most
futures contracts are usually closed out before the delivery date. Closing
out an open futures contract purchase or sale is effected by entering into an
offsetting futures contract sale or purchase, respectively, for the same
aggregate amount of the identical underlying instrument or index and the same
delivery date. If the offsetting purchase price is less than the original
sale price, the Fund realizes a gain; if it is more, the Fund realizes a
loss. Conversely, if the offsetting sale price is more than the original
purchase price, the Fund realizes a gain; if it is less, the Fund realizes a
loss. The transaction costs must also be included in these calculations.
There can be no assurance, however, that the Fund will be able to enter into
an offsetting transaction with respect to a particular futures contract at a
particular time. If the Fund is not able to enter into an offsetting
transaction, the Fund will continue to be required to maintain the margin
deposits on the futures contract.
For example, one contract in the Financial Times Stock Exchange 100 Index
future is a contract to buy 25 pounds sterling multiplied by the level of the
UK Financial Times 100 Share Index on a given future date. Settlement of a
stock index futures contract may or may not be in the underlying instrument
or index. If not in the underlying instrument or index, then settlement will
be made in cash, equivalent over time to the difference between the contract
price and the actual price of the underlying asset at the time the stock
index futures contract expires.
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
<PAGE>
security or currency. The operation of put options in other respects,
including their related risks and rewards, is substantially identical to that
of call options.
A Fund would write put options only on a covered basis, which means that the
Fund would maintain in a segregated account cash, U.S. government securities
or other liquid appropriate securities in an amount not less than the
exercise price or the Fund will own an option to sell the underlying security
or currency subject to the option having an exercise price equal to or
greater than the exercise price of the "covered" option at all times while
the put option is outstanding. (The rules of a clearing corporation currently
require that such assets be deposited in escrow to secure payment of the
exercise price.) The Fund would generally write covered put options in
circumstances where the Adviser wishes to purchase the underlying security or
currency for the Fund's portfolio at a price lower than the current market
price of the security or currency. In such event the Fund would write a put
option at an exercise price which, reduced by the premium received on the
option, reflects the lower price it is willing to pay. Since the Fund would
also receive interest on debt securities or currencies maintained to cover
the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security or
currency would decline below the exercise price less the premiums received.
Such a decline could be substantial and result in a significant loss to the
Fund. In addition, the Fund, because it does not own the specific securities
or currencies which it may be required to purchase in exercise of the put,
cannot benefit from appreciation, if any, with respect to such specific
securities or currencies.
UNITED STATES GOVERNMENT OBLIGATIONS (ALL FUNDS). These consist of various
types of marketable securities issued by the United States Treasury, i.e.,
bills, notes and bonds. Such securities are direct obligations of the United
States government and differ mainly in the length of their maturity. Treasury
bills, the most frequently issued marketable government security, have a
maturity of up to one year and are issued on a discount basis.
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 (ENERGY & BASIC MATERIALS FUND)
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
<PAGE>
practices, it differs from the United States in that it has an extensive
social welfare system, much more akin to European welfare states.
Canada is endowed with extensive energy resources, and is a large producer
and net exporter of natural gas, coal, hydropower and uranium. Within this
sector, Canada is a major supplier of electric power and natural gas to the
United States. In addition, Canada's other particularly strong commodities
are forest products, mining, metals, and agricultural products such as
grains. Accordingly, the Canadian stock market is strongly represented by
such basic materials stocks, and movements in the supply and demand of
industrial materials, agriculture, and energy, both domestically and
internationally, can have a strong effect on market performance.
The United States is Canada's biggest trading partner, representing over 80%
of total trade in 1997. Automobiles and auto parts accounted for the largest
export items followed by energy, mining and forest products. Canada is the
largest energy supplier to the United States, while the United States is
Canada's largest foreign investor. The United States investment has been
largely focused on financial, energy, metals, and mining industries. The
expanding economic and financial integration of the United States and Canada
will likely make the Canadian economy and securities markets increasingly
sensitive to U.S. economic and market events.
For United States investors in Canadian markets, currency has become an
important determinant of investment return. Since Canada let its dollar float
in 1970, its value has been in a steady decline against its United States
counterpart. While the decline has enabled Canada to stay competitive with
its more efficient southern neighbor, which buys four-fifths of its exports,
United States investors have seen their investment returns eroded by the
impact of the currency conversion.
MANAGEMENT OF THE TRUST
Trustees and Officers
Because Orbitex Group of Funds is a Delaware business trust, there are
Trustees appointed to run the Trust. These Trustees are responsible for
overseeing the general operations of the Adviser and the general operations
of the Trust. These responsibilities include approving the arrangements with
companies that provide necessary services to the Funds, ensuring the Funds'
compliance with applicable securities laws and that dividends and capital
gains are 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>
<S> <C> <C>
POSITION WITH THE TRUST AND PRINCIPAL OCCUPATION
NAME, AGE AND BUSINESS ADDRESS DATE OF BIRTH WITHIN THE PAST FIVE YEARS
Ronald S. Altbach (54) Trustee Chairman, Paul Sebastian, Inc. (1994 - present)
1540 West Park Avenue (Perfume distributor); President, Olcott Corporation
Ocean, New Jersey 07712 (1992 - 1994) (Perfume distributor).
<PAGE>
*Richard E. Stierwalt (46) President, President, Chief Executive Officer and Director,
410 Park Avenue Chairman and Orbitex Management, Inc. (1998- present) (Investment
New York, New York 10022 Trustee 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 (48) Trustee Carey Financial Corporation (1995 - present)
Carey Financial Corp. (Broker-dealer); Chief Executive Officer, Wall
50 Rockefeller Plaza Street Investors Services (1994 - 1995) (Retail
New York, New York 10020 brokerage firm); Senior Vice President, PaineWebber,
Inc. (1998 - 1994) (Investment Services).
Leigh Wilson (51) Trustee Chairman & CEO, New Century Care, Inc. (1989 -
53 Sylvan Road North present) (Merchant bank); Principal, New Century
Westport, Connecticut 06880 Living, Inc. (1995 - present);) Director, Chimney
Rock Vineyard and Chimney
Rock Winery; President
and Director, Key Mutual
Funds (1989 - present.
Keith Kemp (40) Vice-President Chief Operations Officer, Orbitex Management, Inc.
410 Park Avenue and Assistant (February 1999 - present) (Investment Adviser);
New York, New York 10022 Treasurer Vice-president, Fund Accounting and Administration,
Bank of New York
(February 1998 - February
1999) (Bank); Senior
Manager, Forum Financial
Group (November 1996 -
February 1998) (Mutual
Fund Administrator);
Business Unit Controller,
First Data Investor
Services Group (March
1995 - November 1996)
(Mutual Fund
Administrator).
M. Fyzul Khan (29) Vice-President Legal Counsel, Orbitex Management, Inc. (1998 -
410 Park Avenue and Secretary present); Attorney, CIBC Oppenheimer (1997 - 1998);
New York, New York 10022 Law student, Widener University School of Law (1994
- 1997).
Kevin Meehan (38) Vice-President Chief Operations Officer, Orbitex Financial Services
410 Park Avenue and Assistant Group, Inc. (1998-present); Manager, Investor
New York, New York 10022 Secretary Services Consulting, KPMG (1995-1998).
Vali Nasr (46) Vice-President Chief Financial Officer, Orbitex Management, Inc.
410 Park Avenue and Treasurer (1999 - present); Chief Financial Officer and Chief
New York, New York 10022 of the Trust 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).
<PAGE>
Catherine McCabe (33) Assistant Compliance Officer, Orbitex Management, Inc. (March
410 Park Avenue Vice-President 2000 -- present); Compliance Analyst, Mutual of
New York, New York 10022 and Assistant American (February 1996 to March 2000) (Life
Secretary Insurance Company); Sales Assistant, Smith Barney
(June 1993 - January 1996) (Broker-dealer).
Michael Wagner (49) Assistant Senior Vice-President, American Data Services, Inc.
150 Motor Parkway Treasurer (1987 - present) (Mutual Fund Administrator).
Hauppauge, New York 11788-0132
</TABLE>
Each Trustee of the Trust who is not an interested person of the Trust or
Adviser receives a fee of $1,250 for each regular and special meeting of the
Board that the Trustee attends. The Trust also reimburses each such Trustee
for travel and other expenses incurred in attending meetings of the Board.
COMPENSATION TABLE*
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION FROM REGISTRANT
COMPENSATION
RETIREMENT BENEFITS ESTIMATED ANNUAL AND FUND PAID
AGGREGATE COMPENSATION ACCRUED AS PART OF BENEFITS UPON TO
NAME OF PERSON FROM FUND FUND EXPENSES RETIREMENT TRUSTEES
<S> <C> <C> <C> <C>
Ronald S. Altbach $5,000 N/A N/A $5,000
Thomas T. Bachmann $0 N/A N/A $0
Otto J. Felber $0 N/A N/A $0
Stephen H. Hamrick $3,750 N/A N/A $3,750
John D. Morgan $5,413 N/A N/A $5,413
James L. Nelson $0 N/A N/A $0
Richard E. Stierwalt $0 N/A N/A $0
Leigh Wilson $0 N/A N/A $0
</TABLE>
* The compensation table covers the period May 1, 1998 through April 30, 1999.
As of December 31, 1999, Trustees and officers of the Trust, as a group,
owned less than 1% of each of the Funds.
Trustees and Officers of the AMR Trust
As discussed above, the Orbitex Cash Reserves Fund invests through a
"master-feeder" structure in the Money Market Portfolio of the AMR Trust. The
Trustees and officers of the AMR Trust are listed below, together with their
principal occupations during the past five years. Unless otherwise indicated,
the address of each person listed below is 4333 Amon Carter Boulevard, MD
5645, Fort Worth, Texas 76155.
<TABLE>
<CAPTION>
Position with
Name, Age and Address Each Trust Principal Occupation During Past 5 Years
--------------------- ------------- ----------------------------------------
<S> <C> <C>
<PAGE>
*William F. Quinn (52) Trustee and President, AMR Investment Services, Inc. (1986-Present);
President Chairman, American Airlines Employees Federal Credit Union
(1989-Present); Director, Crescent Real Estate Equities,
Inc. (1994-Present); Vice Chairman, United Way of Tarrant
County, Texas (1988-Present); Director, Southern Methodist
University Cox School of Business (1999-Present);
Director, Southern Methodist University Endowment Fund
Advisory Board (1996-Present); Trustee, American
AAdvantage Funds (1987-Present); Trustee, American
AAdvantage Mileage Funds (1995-Present); Trustee, American
Select Funds (1999-Present).
Alan D. Feld (63) Trustee Partner, Akin, Gump, Strauss, Hauer & Feld, LLP
1700 Pacific Avenue (1960-Present); Director, Clear Channel Communications
Suite 4100 (1984-Present); Director, CenterPoint Properties, Inc.
Dallas, Texas 75201 (1994-Present); Trustee, American AAdvantage Funds and
American AAdvantage Mileage Funds (1996-Present); Trustee,
American Select Funds (1999-Present).
Ben J. Fortson (67) Trustee President and CEO, Fortson Oil Company (1958-Present);
301 Commerce Street Director, Kimbell Art Foundation (1964-Present); Director,
Suite 3301 Burnett Foundation (1987-Present); Honorary Trustee, Texas
Fort Worth, Texas 76102 Christian University (1986-Present); Trustee, American
AAdvantage Funds and American AAdvantage Mileage Funds
(1996-Present); Trustee, American Select Funds
(1999-Present).
John S. Justin (83) Trustee Chairman (1969-Present), Chief Executive Officer
2821 West Seventh Street (1969-1999), Justin Industries, Inc. (a diversified
Fort Worth, Texas 76107 holding company); Executive Board Member, Blue Cross/Blue
Shield of Texas (1985-Present); Board Member, Zale Lipshy
Hospital (1993-Present); Trustee, Texas Christian
University (1980-Present); Director and Executive Board
Member, Moncrief Radiation Center (1985-Present); Trustee,
American AAdvantage Funds (1987-Present); Trustee,
American AAdvantage Mileage Funds (1995-Present); Trustee,
American Select Funds (1999-Present).
*Stephen D. O'Sullivan (64) Trustee Consultant (1994-Present); Trustee, American AAdvantage
Funds (1987-Present); Trustee, American AAdvantage Mileage
Funds (1995-Present); Trustee, American Select Funds
(1999-Present).
Roger T. Staubach (58) Trustee Chairman of the Board and Chief Executive Officer of The
15601 Dallas Parkway Staubach Company (a commercial real estate company)
Suite 400 (1982-Present); Director, Brinker International
Dallas, Texas 75001 (1993-Present); Trustee, Institute for Aerobics Research;
Member, Executive Council, Daytop/Dallas; Member, National
Board of Governors, United Way of America; Board of Directors,
PowerUP; former quarterback of the Dallas Cowboys professional
football team; Trustee, American AAdvantage Funds and
American AAdvantage MileageFunds (1995-Present); Trustee,
American Select Funds (1999-Present).
<PAGE>
Kneeland Youngblood (44) Trustee Managing Partner, Pharos Capital Group, LLC (a private
100 Crescent Court equity firm) (1998-Present); Director, L&B Realty Advisors
Suite 1740 (1998-2000); Trustee, Teachers Retirement System of Texas
Dallas, Texas 75201 (1993-1999); Director, United States Enrichment Corporation
(1993-1998); Director, Just For the Kids (1995-Present); Director,
Starwood Financial Trust (1998-Present); Member, Council
on Foreign Relations (1995-Present); Trustee, American AAdvantage Funds and
American AAdvantage Mileage Funds (1996-Present); Trustee, American Select
Funds (1999-Present).
Nancy A. Eckl (37) Vice Vice President, Trust Investments, AMR Investment President
Services, Inc. (1990-Present).
Michael W. Fields (46) Vice Vice President, Fixed Income Investments, AMR Investment
President Services, Inc. (1988-Present).
Barry Y. Greenberg (37) Vice President Vice President, Legal and Compliance, AMR Investment
and Assistant Services, Inc. (1995-Present); Attorney, Securities and
Secretary Exchange Commission (1988-1995).
Rebecca L. Harris (33) Treasurer Vice President, Finance (1995-Present), Controller (1991-1995), AMR
Investment Services, Inc.
John B. Roberson (41) Vice Vice President, Sales and Marketing, AMR Investment President Services,
Inc. (1991-Present).
Robert J. Zutz (47) Secretary Partner, Kirkpatrick & Lockhart LLP (law firm)
1800 Massachusetts Ave. NW
2nd Floor
Washington, D.C. 20036
</TABLE>
* Messrs. Quinn and O'Sullivan are deemed to be "interested persons" of
the Trust and AMR Trust as defined by the 1940 Act.
# The law firm of Akin, Gump, Strauss, Hauer & Feld LLP ("Akin, Gump")
provides legal services to American Airlines, Inc., an affiliate of
AMRIS. Mr. Feld has advised the AMR Trust that he has had no material
involvement in the services provided by Akin, Gump to American
Airlines, Inc. and that he has received no material benefit in
connection with these services. Akin, Gump does not provide legal
services to AMRIS or AMR Corporation.
As compensation for their service to the AMR Trust, the American AAdvantage
Funds, the American AAdvantage Mileage Funds, and the American Select Funds
(collectively, the "American AAdvantage Funds Complex"), the Independent
Trustees of the AMR Trust and their spouses receive free air travel from
American Airlines, Inc., an affiliate of AMRIS. The American AAdvantage Funds
Complex pays American Airlines the flight service charges incurred for these
travel arrangements. The American AAdvantage Funds Complex compensates each
Trustee with payments in an amount equal to the Trustees' income tax on the
value of this free airline travel. Mr. O'Sullivan, as a retiree of American
Airlines, Inc., already receives flight benefits. Prior to March 1, 2000, the
American AAdvantage Funds Complex compensated Mr. O'Sullivan up to $10,000
annually to cover his personal flight service charges and the charges for his
three adult children, as well as any income tax charged on the value of these
flight benefits. Beginning March 1, 2000, Mr. O'Sullivan will receive an
annual retainer of $20,000 plus $1,250 for each Board meeting attended.
Trustees are also reimbursed for any expenses incurred in attending Board
meetings. These amounts (excluding reimbursements) are reflected in the
following table for the fiscal year ended October 31, 1999. The compensation
amounts below include the flight service charges paid by the
<PAGE>
American AAdvantage Funds Complex to American Airlines.
<TABLE>
<CAPTION>
Total
Pension or Retirement Compensation from
Aggregate Benefits Accrued as the American
Compensation Part of the AMR Estimated Annual AAdvantage
from the AMR Trust's Benefits
Name of Trustee Trust Expenses Upon Retirement Funds Complex
--------------- ---- -------- --------------- -------------
<S> <C> <C> <C> <C>
William F. Quinn $0 $0 $0 $0
Alan D. Feld $56,517 $0 $0 $85,697
Ben J. Fortson $5,129 $0 $0 $7,778
John S. Justin $0 $0 $0 $0
Stephen D. O'Sullivan
$0 $0 $0 $0
Roger T. Staubach $19,124 $0 $0 $28,997
Kneeland Youngblood $42,942 $0 $0 $65,114
</TABLE>
As of December 31, 1999, all Trustees and officers of the AMR Trust, as a
group, owned less than 1% of the outstanding shares of any of the Funds in
the American AAdvantage Funds Complex.
PRINCIPAL HOLDERS OF SECURITIES
As of July 16, 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>
<S> <C>
ORBITEX GROWTH FUND - CLASS A% HELD
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
ORBITEX INFO-TECH & COMMUNICATIONS FUND - CLASS B
<PAGE>
None
ORBITEX ENERGY & BASIC MATERIALS FUND - CLASS A
Sidney Kimmel 35.78%
Arista Group
1 Rockefeller Plaza Rm. 1010
New York, NY 10020-2002
First Clearing 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 ENERGY & BASIC MATERIALS 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
<PAGE>
ORBITEX FOCUS 30 FUND CLASS B
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%
<PAGE>
FBO 092-45360-14
P.O. Box 3484
Church Street Station
New York, NY 10008-3484
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 each 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 of each Fund
pursuant to Investment Advisory Agreements that have been approved by the Board,
including a majority of the independent Trustees. The initial term of each
Investment Advisory Agreement is two years. However, the Investment Advisory
Agreements may continue in effect from year to year if approved at least
annually by a vote of a majority of the Board (including a majority of the
Trustees who are not parties to the Investment Advisory Agreements or interested
persons of any such parties) cast in person at a meeting called for the purpose
of voting on such renewal, or by the vote of a majority of the outstanding
shares of the particular Fund. The Advisory Agreement for all the Funds was last
renewed on March 16, 2000. The portfolio managers are supervised by John W.
Davidson, CFA, 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 Info-Tech & Communications Fund, 1.25% for the Internet
Fund, 1.25% for the Emerging Technology Fund, 1.25% for the Strategic
Infrastructure Fund, 1.25% for the Health & Biotechnology Fund, 1.25% for the
Energy & Basic Materials Fund, 1.25% for the Financial Services Fund, 0.75% for
the Growth Fund, 0.75% for the Focus 30 Fund, 1.15% for the Amerigo Fund, 1.15%
for the Clermont Fund and 0.15% for the Cash Reserves Fund.
Clarke Lanzen Skalla Investment Firm, Inc. ("CLS" or the "Adviser")") is the
investment adviser for the
<PAGE>
Amerigo Fund and the Clermont Fund. CLS is located at 14747 California
Street, Omaha, Nebraska 68154-1979. It has been an investment adviser 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 Adviser for
the past two fiscal years.
<TABLE>
<CAPTION>
ADVISORY FEES ADVISORY FEES WAIVED
PAID BY FUND BY THE ADVISER
------------ --------------
<S> <C> <C>
Info-Tech & Communications Fund
April 30, 1998* 0 $5,113
April 30, 1999 0 $211,268
Energy & Basic Materials Fund
April 30, 1998** 0 $25,989
April 30, 1999 0 $46,098
Growth Fund
April 30, 1998* 0 $2,423
April 30, 1999 0 $8,089
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 CLASS N PERIOD
---- ------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Info-Tech & Communications 2.00% 2.60% 2.60% N/A N/A 12/31/2000
Fund
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Internet Fund 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Emerging Technology Fund 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Strategic Infrastructure Fund 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Health & Biotechnology 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Energy & Basic Materials Fund 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Financial Services 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Focus 30 Fund 1.15% 1.75% N/A 0.75% N/A Until 7/1/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
1.40% 2.00% N/A 1.00% N/A 7/1 to 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Growth Fund 2.00% 2.60% 2.60% N/A N/A 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Amerigo Fund N/A N/A 2.15 N/A 1.15% 12/31/2000
------------------------------- --------- -------- -------- -------- ---------- ----------------------
------------------------------- --------- -------- -------- -------- ---------- ----------------------
Clermont Fund N/A N/A 2.15% N/A 1.15% 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. The Cash Reserves Fund commenced operations on May 30, 2000.
The Amerigo Fund and Clermont Fund commenced operations on June 5, 2000. The
Internet Fund, Emerging Technology Fund, Strategic Infrastructure Fund and
Financial Services Fund have not yet commenced operations.
<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
<PAGE>
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
Energy & Basic Materials Fund - Class A
April 30, 1998*** $55,295
April 30, 1999 $159,491
Energy & Basic Materials Fund - Class B
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 ****** $295,956
</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.
To the extent that the Orbitex Cash Reserves Fund invests all of its
investable assets in the Money Market Portfolio of the AMR Trust, the Adviser
does not receive a fee on behalf of the Cash Reserves Fund. For the fiscal
years ending October 31, 1997, 1998 and 1999, the Portfolio paid to AMRIS
approximately $2,813,000, $2,982,000 and $2,587,000, respectively in
management fees. In 1999, the Portfolio changed its fiscal year end to
December 31. For the two month period ended December 31, 1999, the Portfolio
paid approximately $598,000 in management fees to AMRIS.
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.
<PAGE>
Pursuant to an Administrative Service Agreement with the Funds, the
Administrator provides all administrative services necessary for the Funds,
subject to the supervision of the Board of Trustees. The Administrator may
provide persons to serve as officers of the Funds. 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.
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
<PAGE>
State Street is the sub-administrator of the Info-Tech & Communications Fund,
the Energy & Basic Material Fund and the Growth 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 Info-Tech & Communications Fund, the Energy & Basic Material Fund and the
Growth 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
Info-Tech & Communications Fund, the Energy & Basic Material Fund and the
Growth Fund; (ii) maintaining the books and records of the Info-Tech &
Communications Fund, the Energy & Basic Material Fund and the Growth 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 Info-Tech & Communications Fund, the Energy & Basic
Material Fund and the Growth Fund; (iv) preparing or assisting in the
preparation of all required tax returns, proxy statements and reports to
shareholders of the Info-Tech & Communications Fund, the Energy & Basic
Material Fund and the Growth 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 Info-Tech & Communications Fund, the Energy &
Basic Material Fund and the Growth 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 Info-Tech &
Communications Fund, the Energy & Basic Material Fund and the Growth 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 Info-Tech & Communications Fund, the Energy &
Basic Material Fund and the Growth Fund by the Trust's custodian; (ix)
evaluating expenses, projecting future expenses, and processing payments of
expenses; and (x) monitoring and evaluating performance of accounting and
related services provided to the Info-Tech & Communications Fund, the Energy
& Basic Material Fund and the Growth 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 Info-Tech & Communications Fund, $43,750
for the Energy & Basic Materials Fund and $43,750 for the Growth Fund.
For fiscal year ended April 30, 1999, fees of State Street accrued were:
$62,711 for the Info-Tech & Communications Fund, $62,858 for the Energy &
Basic Materials Fund and $62,711 for the Growth 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
<PAGE>
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 each of the
Funds, except as noted hereafter.
State Street provides transfer agent and dividend disbursing services to the
Info-Tech & Communications Fund, the Energy & Basic Materials Fund and the
Growth Fund.
The transfer agent for the Money Market Portfolio of the AMR Trust is
National Financial Data Services, an affiliate of State Street.
DISTRIBUTION OF SHARES
Orbitex Funds Distributor, Inc. (the "Distributor" or "OFD") serves as the
distributor of the shares of each class of each Fund pursuant to a
Distribution Agreement between OFD and the Trust. OFD'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 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
<PAGE>
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 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. The
Focus 30 Fund and Health & Biotechnology Fund commenced operations on July
12, 1999, and July 15, 1999, respectively. The Cash Reserves Fund commenced
operations on May 30, 2000. The Amerigo Fund and Clermont Fund commenced
operations on June 5, 2000. The Internet Fund, Emerging Technology Fund,
Strategic Infrastructure Fund and Financial Services Fund have not yet
commenced operations.
<TABLE>
<CAPTION>
Class A Distribution Fees
Paid to Investment Fund
Professionals Retained by OFD
------------- ---------------
<S> <C> <C>
<PAGE>
Info-Tech & Communications Fund
April 30, 1998* $809.40 $620.63
April 30, 1999 $33,787.95 $20,190.48
Energy & Basic Materials 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
Growth Fund
April 30, 1998* $549.20 $487.28
April 30, 1999 $2,656.81 $1,595.25
</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 OFD for
Class B shares of the Funds for the fiscal years ended April 30, 1998 and
April 30, 1999. The Focus 30 Fund and Health & Biotechnology Fund commenced
operations on July 12, 1999, and July 15, 1999, respectively. The Cash
Reserves Fund commenced operations on May 30, 2000. The Amerigo Fund and
Clermont Fund commenced operations on June 5, 2000. The Internet Fund,
Emerging Technology Fund, Strategic Infrastructure Fund and Financial
Services Fund have not yet commenced operations.
Class B Distribution and Services Fees
<TABLE>
<CAPTION>
Distribution Fees Paid
to Investment Distribution Fees Shareholder Service
Fund Professionals Retained by OFD Fees
------------- ---------------- ----
Retained by OFD
---------------
<S> <C> <C> <C>
Growth Fund
April 30, 1999* $0 $111.13 $20.27 $0
Info-Tech & Communications Fund
April 30, 1999* $0 $26,078.91 $1,940.14 $0
Energy & Basic Materials Fund
April 30, 1999** $0 $475.52 $158.50 $0
Focus 30 Fund
October 31, 1999*** $0 $9.30 $3.10 $0
</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.
The following table shows the sales charge revenues collected, and retained
by OFD for the past two fiscal years.
<TABLE>
<CAPTION>
Sales Charge CDSC Revenue
Revenue
Amount Amount Amount Amount
Paid Retained Paid Retained
Fund to OFD by OFD to OFD by OFD
------ ------ ------ ------
<S> <C> <C> <C> <C>
<PAGE>
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 OFD by OFD to OFD by OFD
------ ------ ------ ------
<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
Energy & Basic Materials Fund -
Class A
April 30, 1998*** $39,000 $0 $0 $0
April 30, 1999 $113,000 $0 $0 $0
Energy & Basic Materials 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. The Focus 30 Fund and
Health & Biotechnology Fund commenced operations July 12, 1999 and July 15,
1999, respectively. The Cash Reserves Fund commenced operations on May 30,
2000. The Amerigo Fund and Clermont Fund commenced operations on June 5,
2000. The Internet Fund, Emerging Technology Fund, Strategic Infrastructure
Fund and Financial Services Fund have not yet commenced operations. .
<PAGE>
<TABLE>
<CAPTION>
Compensation
to Compensation to
Underwriters DEALERS FUND
<S> <C> <C>
Info-Tech & $20,190 $33,788
Communications Fund
Energy & Basic $5,430 $8,942
Materials Fund
Growth Fund $1,595 $2,657
</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. The Focus 30 Fund and
Health & Biotechnology Fund commenced operations on July 12, 1999, and July
15, 1999, respectively. The Cash Reserves Fund commenced operations on May
30, 2000. The Amerigo Fund and Clermont Fund commenced operations on June 5,
2000. The Internet Fund, Emerging Technology Fund, Strategic Infrastructure
Fund and Financial Services Fund have not yet commenced operations.
<TABLE>
<CAPTION>
Interest
Carrying or
other
Compensation to Financing
FUND SALES PERSONNEL CHARGES
<S> <C> <C>
Info-Tech & $1,940 $26,079
Communications Fund
Energy & Basic $13 $475
Materials Fund
Growth Fund $20 $111
</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
<PAGE>
that equity securities will ordinarily be purchased in the primary markets,
whether over-the-counter or listed, and that listed securities may be
purchased in the over-the-counter market if such market is deemed the primary
market. In the case of securities traded on the over-the-counter markets,
there is generally no stated commission, but the price usually includes an
undisclosed commission or markup. In underwritten offerings, the price
includes a disclosed, fixed commission or discount.
For fixed income securities, it is expected that purchases and sales will
ordinarily be transacted with the issuer, the issuer's underwriter, or with a
primary market maker acting as principal on a net basis, with no brokerage
commission being paid by the Fund. However, the price of the securities
generally includes compensation which is not disclosed separately.
Transactions placed through dealers who are serving as primary market makers
reflect the spread between the bid and asked prices.
With respect to equity and fixed income securities, the 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: $1,801 for the Info-Tech & Communications
Fund, $81,999 for the Energy & Basic Materials Fund and $9,293 for the Growth
Fund.
For the fiscal year ended April 30, 1999, the Funds paid brokerage
commissions as follows: $102,306 for the Info-Tech & Communications Fund,
$137,895 for the Energy & Basic Materials Fund and $21,022 for
<PAGE>
the Growth 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
for 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 Adviser or the
Distributor; the immediate family members of any such person; any trust or
individual retirement account or self-employed retirement plan for the
benefit of any such person or family members; or the estate of any such
person or family members; (3) purchases by Selling Group Members, for their
own accounts, or for retirement plans for their employees or sold to
registered representatives or full time employees (and their immediate
families) that certify to the Distributor at the time of purchase that such
purchase is for their own account (or for the benefit of their immediate
families); (4) purchases by a charitable organization (as defined in Section
501(c)(3) of the Internal Revenue Code) investing $100,000 or more; (5)
purchases by a charitable remainder trust or life income pool established for
the benefit of a charitable organization (as defined in Section 501(c)(3) of
the Internal Revenue Code); (6) purchases with trust assets; (7) purchases in
accounts as to which a Selling Group Member charges an account management
fee; (8) purchases by any state, county, or city, or any governmental
instrumentality, department, authority or agency; (9) purchases with
redemption proceeds from another mutual fund (which is not a series of the
Trust) on which the investor has paid a front-end sales charge only; (10)
purchases of Class A Shares by clients of certain securities dealers offering
programs in which the client pays a separate fee to an adviser 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 Advisers 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
advisers or financial planners who place trades for their own accounts if the
accounts are linked to the master account of such investment adviser or
financial planner on the books and records of the broker or agent.
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 Adviser, nor the Distributor receives any part of the fees charged
clients of such securities dealers or financial advisers. 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
<PAGE>
(excluding any reinvestment of dividends or distributions or purchases made
at net asset value without sales charge), which together with the investor's
holdings of such funds (calculated at their respective public offering prices
calculated on the date of the Letter) will equal or exceed the amount
specified in the Letter to obtain the reduced sales charge rate (as set forth
in "How To Purchase Shares" in the Prospectus) applicable to purchases of
shares in that amount (the "intended amount"). Each purchase under the Letter
will be made at the public offering price applicable to a single lump-sum
purchase of shares in the intended amount, as described in the Prospectus.
In submitting a Letter, the investor makes no commitment to purchase Class A
Shares, but if the investor's purchases of Class A Shares within the Letter
of Intent period, when added to the value (at offering price) of the
investor's holdings of such Fund shares on the last day of that period, do
not equal or exceed the intended amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set forth
in "Terms of Escrow" below, as those terms may be amended from time to time.
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
<PAGE>
payment of such additional sales charge, the sales charge will be withheld
from the redemption proceeds.
4. By signing the Letter, the investor irrevocably constitutes and appoints
the transfer agent of the Trust as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. Shares held in escrow hereunder will automatically be exchanged for shares
of another Fund to which an exchange is requested, and the escrow will be
transferred to that other Fund.
In-Kind. Each Fund intends to pay all redemptions of its shares in cash.
However, each Fund may make full or partial payment of any redemption request
by the payment to shareholders of portfolio securities of the applicable Fund
(i.e., by redemption-in-kind), at the value of such securities used in
determining the redemption price. The Funds, nevertheless, pursuant to Rule
18f-1 under the 1940 Act, have filed a notification of election under which
each Fund is committed to pay in cash to any shareholder of record, all such
shareholder's requests for redemption made during any 90-day period, up to
the lesser of $250,000 or 1% of the applicable Fund's net asset value at the
beginning of such period. The securities to be paid in-kind to any
shareholders will be readily marketable securities selected in such manner as
the Board of Trustees of the Trust deems fair and equitable. If shareholders
were to receive redemptions-in-kind, they would incur brokerage costs should
they wish to liquidate the portfolio securities received in such payment of
their redemption request. The Trust does not anticipate making
redemptions-in-kind.
The right to redeem shares or to receive payment with respect to any
redemption of shares of the Funds may only be suspended (1) for any period
during which trading on the New York Stock Exchange ("NYSE") is restricted or
such Exchange is closed, other than customary weekend and holiday closings,
(2) for any period during which an emergency exists as a result of which
disposal of securities or determination of the net asset value of the Fund is
not reasonably practicable, or (3) for such other periods as the SEC may by
order permit for protection of shareholders of the Funds.
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 CDSCs 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.
<PAGE>
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 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
<PAGE>
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 of the Cash Reserves Fund is normally calculated at 4:00 p.m.
Eastern time on each day that the NYSE is open, except on the following
holidays: Columbus Day and Veterans Day.
It is the policy of the Portfolio and the Cash Reserves Fund to attempt to
maintain a constant price per share of $1.00. There can be no assurance that
a $1.00 net asset value per share will be maintained. The portfolio
instruments held by the Portfolio are valued based on the amortized cost
valuation technique pursuant to Rule 2a-7 of the 1940 Act. This involves
valuing an instrument at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium, even though the
portfolio security may increase or decrease in market value. Such market
fluctuations are generally in response to changes in interest rates. Use of
the amortized cost valuation method requires the Portfolio to purchase
instruments having remaining maturities of 397 days or less, to maintain a
dollar-weighted average portfolio maturity of 90 days or less, and to invest
only in securities determined by the AMR Trust Board to be of high quality
with minimal credit risks. The Portfolio may invest in issuers or instruments
that at the time of purchase have received the highest short-term rating by
two rating organizations, such as "D-1" by Duff & Phelps and "F-1" by Fitch
IBCA, Inc., and have received the next highest short-term rating by other
rating organizations, such as "A-2" by Standard & Poors and "P-2" by Moody's
Investors Service, Inc.
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 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
<PAGE>
which a Fund's net asset value is not calculated. Each Fund calculates net
asset value per share, and therefore effects sales, redemptions and
repurchases of its shares, as of the close of regular trading on the NYSE
once on each day on which the NYSE is open. Such calculation may not take
place contemporaneously with the determination of the prices of the majority
of the portfolio securities used in such calculation. If events materially
affecting the value of such securities occur between the time when their
price is determined and the time when the Fund's net asset value is
calculated, such securities will be valued at fair value as determined in
good faith in accordance with procedures approved by the Board of Trustees of
the Trust.
TAXES
Each Fund intends to qualify as a "regulated investment company" ("RIC")
under Subchapter M of the Internal Revenue Code. In general, to qualify as a
RIC: (a) at least 90% of the gross income of a Fund for the taxable year must
be derived from dividends, interest, payments with respect to loans of
securities, gains from the sale or other disposition of securities, or other
income derived with respect to its business of investing in securities; (b) a
Fund must distribute to its shareholders 90% of its ordinary income and net
short-term capital gains; and (c) a Fund must diversity its assets so that,
at the close of each quarter of its taxable year, (i) at least 50% of the
fair market value of its total (gross) assets is comprised of cash, cash
items, U.S. government securities, securities of other regulated investment
companies and other securities limited in respect of any one issuer to no
more than 5% of the fair market value of the Fund's total assets and 10% of
the outstanding voting securities of such issuer and (ii) no more than 25% of
the fair market value of its total assets is invested in the securities of
any one issuer (other than U.S. government securities and securities of other
regulated investment companies) or of two or more issuers controlled by the
Fund and engaged in the same, similar, or related trades or businesses.
In addition, each Fund must declare and distribute dividends equal to at
least 98% of its ordinary income (as of the twelve months ended December 31)
and at least 98% of its net capital gain (as of the twelve months ended
October 31), in order to avoid a federal excise tax. Each Fund intends to
make the required distributions, but they cannot guarantee that they will do
so. Dividends attributable to a Fund's ordinary income and net capital gain
are taxable as such to shareholders in the year in which they are received
except dividends declared in October, November and December to the
shareholders of record on a specified date in such a month and paid in
January of the following year are taxable in the previous year.
A corporate shareholder may be entitled to take a deduction for income
dividends received by it that are attributable to dividends received from a
domestic corporation, provided that both the corporate shareholder retains
its shares in the applicable Fund for more than 45 days and the Fund retains
its shares in the issuer from whom it received the income dividends for more
than 45 days. A distribution of net capital gain reflects a Fund's excess of
net long-term gains over its net short-term losses. Each Fund must designate
distributions of net capital gain and must notify shareholders of this
designation within sixty days after the close of the Trust's taxable year. A
corporate shareholder of a Fund cannot use a dividends-received deduction for
distributions of net capital gain.
Foreign currency gains and losses, including the portion of gain or loss on
the sale of debt securities attributable to foreign exchange rate
fluctuations are taxable as ordinary income. If the net effect of these
transactions is a gain, the dividend paid by the Fund will be increased; if
the result is a loss, the income 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.
<PAGE>
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 Energy & Basic Materials 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 Energy & Basic Materials 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. (ALL FUNDS EXCEPT THE CASH RESERVES
FUND). 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 do mark-to-market and
identified PFIC to avoid the PFIC tax.
If a Fund purchases shares in certain foreign passive investment entities
described in the Internal Revenue Code as passive foreign investment
companies ("PFIC"), the Fund will be subject to U.S. federal income tax on a
portion of any "excess distribution" (the Fund's ratable share of
distributions in any year that exceeds 125% of the average annual
distribution received by the Fund in the three preceding years or the Fund's
holding period, if shorter, and any gain from the disposition of such shares)
even if such income is distributed as a taxable dividend by the Fund to its
shareholders. Additional charges in the nature of interest may be imposed on
the Fund in respect of deferred taxes arising from such "excess
distributions." If the Fund were to invest in a PFIC and elect to treat the
PFIC as a "qualified electing fund" under the Internal Revenue Code (and if
the PFIC were to comply with certain reporting requirements), in lieu of the
foregoing requirements the Fund would be required to include in income each
year its pro rata share of the PFIC's ordinary earnings and net realized
capital gains, whether or not such amounts were actually distributed to the
Fund.
Pursuant to legislation enacted on August 5, 1997 any taxpayer holding shares
of "marketable" PFICs may make an election to mark that stock to market at
the close of the taxpayer's taxable year. A Fund making an irrevocable
election will mark its PFICs to market at taxable year-end for income tax
purposes and at
<PAGE>
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.
TAXATION OF THE MONEY MARKET PORTFOLIO. The Money Market Portfolio, in which
the Orbitex Cash Reserves Fund invests, should be classified as a separate
partnership for federal income tax purposes and is not a "publicly traded
partnership." As a result, the Portfolio is not or should not be subject to
federal income tax; instead, each investor in a Portfolio, such as the Fund,
is required to take into account in determining its federal income tax
liability its share of the Portfolio's income, gains, losses, deductions,
credits and tax preference items, without regard to whether it has received
any cash distributions from the Portfolio.
Because, as noted above, the Fund is deemed to own a proportionate share of
the Portfolio's assets and to earn a proportionate share of the Portfolio's
income for purposes of determining whether the Fund satisfies the
requirements to qualify as a RIC, each Portfolio intends to conduct its
operations so that its corresponding Fund will be able to satisfy all those
requirements.
Distributions to the Fund from the Portfolio (whether pursuant to a partial
or complete withdrawal or otherwise) will not result in the Fund's
recognition of any gain or loss for federal income tax purposes, except that
(1) gain will be recognized to the extent any cash that is distributed
exceeds the Fund's basis for its interest in the Portfolio before the
distribution, (2) income or gain will be recognized if the distribution is in
liquidation of the Fund's entire interest in the Portfolio and includes a
disproportionate share of any unrealized receivables held by the Portfolio,
and (3) loss will be recognized if a liquidation distribution consists solely
of cash and/or unrealized receivables. The Fund's basis for its interest in
the Portfolio generally will equal the amount of cash and the basis of any
property the Fund invests in the Portfolio, increased by the Fund's share of
the Portfolio's net income and gains and decreased by (a) the amount of cash
and the basis of any property the Portfolio distributes to the Fund and (b)
the Fund's share of the Portfolio's losses.
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 Energy
& Basic Materials 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
<PAGE>
Total Return Calculations
Each Fund may provide average annual total return information calculated
according to a formula prescribed by the SEC. Average annual total return
will be calculated separately for Class A, Class B and Class D Shares.
According to that formula, average annual total return figures represent the
average annual compounded rate of return for the stated period. Average
annual total return quotations reflect the percentage change between the
beginning value of a static account in the Fund and the ending value of that
account measured by then current net asset value of that Fund assuming that
all dividends and capital gains distributions during the stated period were
reinvested in shares of the Fund when paid. Total return is calculated by
finding the average annual compounded rates of return of a hypothetical
investment that would equate the initial amount invested to the ending
redeemable value of such investment, according to the following formula:
1/n
T=(ERV/P) - 1
Where:
T = average annual total return.
P = a hypothetical initial payment of $1,000.
n = number of years.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1,5,
or 10 year periods at the end of the1, 5,
or 10 year periods (or fractional
portion).
Each Fund, from time to time, also may advertise its cumulative total return
figures. Cumulative total return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Fund's shares and
assume that all 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
<PAGE>
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:
Effective Yield = [(Base Period return + 1) 365/7] - 1
The net change in the value of the account reflects the value of additional
shares, but does not include realized gains and losses or unrealized
appreciation and depreciation.
Yield fluctuations may reflect changes in the Fund's net income, and
portfolio changes resulting from net purchases or net redemptions of the
Fund's shares may affect its yield. Accordingly, the Fund's yield may vary
from day to day, and the yield stated for a particular past period is not
necessarily representative of the Fund's future yield. The Fund's yield is
not guaranteed, and its principal is not insured.
From time to time, in reports and promotional literature, each Fund's
performance may be compared to: (1) other groups of mutual funds tracked by:
(A) Lipper Analytical Services, a widely-used independent research firm which
ranks mutual funds by overall performance, investment objectives, and asset
size; (B) Forbes Magazine's Annual Mutual Funds Survey and Mutual Fund Honor
Roll; or (C) other financial or business publications, such as Business Week,
Money Magazine, and Barron's, which provide similar information; (2) the
Consumer Price Index (measure for inflation), which may be used to assess the
real rate of return from an investment in each Fund; (3) other government
statistics such as GNP, and net import and export figures derived from
governmental publications, e.g., The Survey of Current Business, which may be
used to illustrate investment attributes of each Fund or the general
economic, business, investment, or financial environment in which each Fund
operates; (4) Alexander Steele's Mutual Fund Expert, a tracking service which
ranks various mutual funds according to their performance; and (5)
Morningstar, Inc. which ranks mutual funds on the basis of historical risk
and total return. Morningstar's rankings are calculated using the mutual
fund's average annual returns for a certain period and a risk factor 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
<PAGE>
PricewaterhouseCoopers LLP whose address is 160 Federal Street, Boston,
Massachusetts 02110 serves as the Trust's Independent Accountants providing
services including (1) audit of annual financial statements, (2) assistance
and consultation in connection with SEC filings and (3) review of the annual
federal income tax returns filed on behalf of the Funds.
The independent auditor for the Portfolio is Ernst & Young LLP, Dallas, Texas.
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 Clifford Chance Rogers & Wells LLP, 200 Park Avenue, New York,
New York 10166, which serves as Counsel to the Trust.
The Trust has agreed that the word "Orbitex" in its name is derived from the
name of the Adviser; that such name is the property of the Adviser for
copyrights and/or other purposes; and that therefore, such name may freely be
used by the Adviser for other investment companies, entities or products. The
Trust has further agreed that in the event that for any reason, the Adviser
ceases to be its investment adviser, the Trust will, unless the Adviser
otherwise consents, promptly take all steps necessary to change its name to
one which does not include "Orbitex."
FINANCIAL STATEMENTS
The financial statements of the Orbitex Info-Tech & Communications Fund,
Orbitex Health & Biotechnology Fund, Orbitex Energy & Basic Materials Fund
and Orbitex Growth Fund, (the "Funds") for the semi-annual period ended
October 31, 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, and the financial statements of the Amerigo Fund and the Clermont
Fund, for the year ended April 30, 1999 are incorporated herein by reference.
The financial statements for the Internet Fund, Emerging Technology Fund,
Strategic Infrastructure Fund, Financial Services Fund and the Cash Reserves
Fund are not available because, as of the date of this Statement of
Additional Information, the Funds had not commenced operations. 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 accountants' reports.
<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 previously filed as
Item 23(d)(1) in Post-Effective Amendment No. 9 is incorporated
herein by reference.
(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 previously filed as Item 23(d)(2) in Post-Effective
Amendment No. 9 is incorporated herein by reference.
(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 previously filed as
Item 23(h)(2) in Post-Effective Amendment No. 9 is incorporated herein
by reference.
(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 previously filed as Item 23(h)(4) in Post-Effective
Amendment No. 9 is incorporated herein by reference.
(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 PricewaterhouseCoopers, LLP, Independent Accountants.
(2) Consent of KPMG, LLP, Independent Accountants.
(3) Power of Attorney, dated March 16, 2000, is filed herewith.
(4) 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, previously filed as Item 23(m)(1) in
Post-Effective Amendment No. 9 is incorporated herein by reference.
(2) Class B Distribution Plan and Agreement Pursuant to Rule 12b-1 under
the Investment Company Act of 1940, and amended March 16, 2000,
previously filed as Item 23(m)(2) in Post-Effective Amendment No. 9 is
incorporated herein by reference.
(3) Class C Distribution Plan and Agreement Pursuant to Rule 12b-1 under
the Investment Company Act of 1940 previously filed as Item 23(m)(3) in
Post-Effective Amendment No. 9 is incorporated by reference.
(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, previously filed as Item 23(o) in Post-Effective
Amendment No. 9 is incorporated by reference.
(p) Code of Ethics
<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.
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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
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Chairman and Director - William J. Nutt
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(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.
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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 5th day of June 2000.
ORBITEX GROUP OF FUNDS
(Registrant)
By: /s/ Richard E. Stierwalt
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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.
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Signature Title Date
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/s/ Richard E. Stierwalt Trustee, Chairman and June 5, 2000
Richard E. Stierwalt President
/s/ Ronald S. Altbach* Trustee June 5, 2000
Ronald S. Altbach
/s/ Stephen H. Hamrick* Trustee June 5, 2000
Stephen H. Hamrick
/s/ Vali Nasr Treasurer June 5, 2000
Vali Nasr
/s/ M. Fyzul Khan Secretary June 5, 2000
M. Fyzul Khan
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* By: Richard E. Stierwalt, Attorney -in-
Fact
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INDEX TO EXHIBITS
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Exhibit Description
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(j)(1) Consent of PricewaterhouseCoopers, LLP, Independent Accountants.
(j)(2) Consent of KPMG, LLP, Independent Accountants.
(p) Code of Ethics
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